The Texas Supreme Court agreed this past week to hear arguments as to why the $16.5 million summary judgment against Dr. Richard Malouf should not be upheld. Oral arguments will be heard on January 31 next year.
A dozen years later
Here we are writing about 2024 when this whole orthodontia debacle hit the fan back in 2011 when orthodontists and dentists all over Texas were accused of allegedly falsifying HLD scores to get thousands of patients prior authorizations for orthodontic care, costing the state hundreds of millions of dollars over the years.
No Texas dentist, even Dr. Malouf, who drew public ire for his opulent lifestyle made from selling his All Smiles practice to a venture capital firm and suing some who criticized him, has been found guilty of falsifying HLD scores.
Intent to defraud?
Instead, the crux of the summary judgment against Dr. Malouf was not that fraudulent treatment was given to patients or that services billed to Medicaid were not delivered, but that approved treatment delivered to patients by other dentists in his practice was billed using his Medicaid number, an administrative practice about which he contends he had no knowledge.
And so there is an issue with the summary judgment. To be guilty of Medicaid fraud, one has to have had intent or scienter, the legal term meaning “a mental state in which one has knowledge that one’s action, statement, etc., is wrong, deceptive, or illegal.”
The case summary prepared by the court’s staff is instructive:
A primary issue in this case is whether the State can conclusively establish Medicaid fraud at summary judgment when scienter is an essential element of the claim.
Dr. Malouf is a dentist who owned a chain of dental offices. Dr. Malouf and his associates were approved Medicaid providers who provided dental and orthodontic services to Medicaid recipients. Over a three-year period, Dr. Malouf submitted forms falsely representing that he provided services to Medicaid recipients, although the dental services provided to the beneficiaries of those claims were actually performed by other dentists in Dr. Malouf’s practice.
Two private citizens brought separate qui tam actions against Dr. Malouf for violations of the Texas Medicaid Fraud Prevention Act. The trial court consolidated the cases after the State intervened in both. The State’s live petition at the time of summary judgment asserted that Dr. Malouf knowingly failed to identify the license type and Medicaid billing number of the treating dentist on more than 1,800 Medicaid claims, listing himself as the treating dentist, when, in fact, another dentist had provided the services. Both parties moved for summary judgment, the State on traditional grounds and Dr. Malouf on no-evidence grounds. The district court denied Dr. Malouf’s motion, granted the State’s, and awarded more than $16 million in civil penalties, attorney’s fees for the State and the private citizens who originally brought qui tam actions, and other costs and sanctions against Dr. Malouf.
Dr. Malouf filed a petition for review, arguing that the State did not conclusively show that he failed to indicate the treating dentist’s license type or that he acted knowingly. Specifically, Dr. Malouf contends that he did indicate the correct license type and that his testimony that he lacked personal knowledge of improper billing raised a genuine issue of material fact as to scienter. The Court granted the petition for review.
More years of litigation to come?
So it is possible for this summary judgment to be set aside and a trial set for Dr. Malouf at a future date. Another decade of litigation?
Every citizen inclusive of Dr. Malouf is entitled to due process & a right of appeal.
A situation CMS (includes dental Medicaid) wishes to prevent is to have de-credentialed or uncredentialed providers deliver care to disadvantaged beneficiaries. There is a significant volume of case law relating specificly to dental Medicaid w/ billings not billed through appropriate credentialed providers’ unique identifiers. Civil & criminal penalties have ensued.
Culpability certainly includes direct knowledge, but also includes a reckless disregard.
This is not the forum to litigate of relitigate Dr. Malouf’s case. However, there is a big lesson here.
NEVER allow Medicaid billings to be made under anyone’s credentialing, except the individual who actually provided those services.
Michael W Davis, DDS
Santa Fe, NM