Former Xerox Employee Files Lawsuit Claiming to be Original Whistleblower in Xerox/Texas Medicaid Fraud Case

Just when you thought the dust (and legal matters) had settled, a new wrinkle has developed in the Xerox/Conduent $2 billion Medicaid fraud case that was settled without any admission of wrongdoing for some $235 million back in February.

Worked at Xerox/Conduent from 2005 to 2007

Linda Reed, a former Xerox employee, has filed a lawsuit seeking to be named as the original whistleblower in the case. Ms. Reed worked in Xerox/Conduent’s dental prior authorization quality assurance division from 2005 to 2007. She had also worked as a claims adjudicator and quality assurance analyst for National Heritage Insurance Company (NHIC) from 1994 to 2004. NHIC was the Texas Medicaid claims administrator prior to Xerox/Conduent.

Ironically, when Ms. Reed left Xerox/Conduent in 2007 she started work for HHSC-OIG but in a capacity apparently not involving dental prior authorizations.

As TDMR reported back in February, several lawyers representing a number of others have filed a motion to obtain the whistleblower award from the settlement.  However, it appears from that press release, this is based on the actions of the relators in 2012.

Complained to Xerox/Conduent After Starting Work

Per the lawsuit pleadings, “Within six months of working at Xerox, she complained to her supervisor at Xerox that the orthodontic prior authorization process was broken. She provided specific examples of how Xerox’s prior authorization clerks were issuing prior authorization approvals for items that were not covered benefits, such as Sonic toothbrushes. She complained that Xerox’s dental director was not looking at orthodontic prior authorization requests, and she complained that those requests were not receiving a proper medical necessity review. “

Blew to Whistle to Sen. John Cornyn’s Office in 2007

When Xerox did nothing to address the problems, she wrote two emails to Senator John Cornyn outlining some of her concerns.

As a result, “Senator Cornyn’s office sent a letter to the Texas Health and Human Services Commission on February 2, 2007 requesting a response to her concerns. Between February 2, 2007 and February 14, 2007 HHSC acknowledged receiving the claims she made. HHSC opened an investigation. Senator Cornyn’s Office received a response dated February 15, 2007 from HHSC assuring they would “vigorously monitor ACS’ [Xerox’s] performance” and HHSC ould “be investigating” the matter… That HHSC investigation led to a formal published OIG audit, issued in August 2008. That audit found that “not all documentation that supports the Texas Medicaid Program benefits for orthodontic PA [prior authorization] requests, approved by the [Xerox] PA dental team, is reviewed.”

TDMR made public this audit back in early 2013.

HHSC did nothing even after audit investigation

As is well known, the Xerox-Conduent rubber stamping of orthodontic prior authorizations continued unabated until 2012 when dental managed care was brought in.

The question of why HHSC allowed it to continue is still unanswered.

It is probably buried in those 17,000 emails the OAG refused to give to Xerox/Conduent as part of the discovery process in the case.

Called “Whistleblower” by HHSC staff

Backing Ms. Reed’s claim as the original whistleblower is the fact that HHSC employees in 2013 referred to her as “the Whistleblower.”

“HHSC contacted Linda Reed on May 28, 2013 at her place of employment (Office of Inspector General Office) and requested an interview, as they believed she had information that could help their investigation into the Xerox orthodontic matter. HHSC employees Angela Branch and Beverly Luna interviewed Linda Reed, and both Ms. Branch and Ms. Luna referred to Ms. Reed as “the Whistleblower” and admitted that if “they” had listened to Ms. Reed back in 2007, it could have saved the State of Texas hundreds of millions of dollars…After the interview, Beverly Luna asked Linda Reed to visit with Jennifer Stansbury, who was also working at the OIG. Beverly Luna again introduced Linda Reed to Jennifer Stansbury as “the Whistleblower.” After the interview, Jennifer Stansbury sent Linda Reed an email on or about June 5, 2013 thanking her for meeting with HHSC’s Legal Division.”

$2 billion Medicaid fraud suit based on her report

Ms. Reed’s lawsuit also claims that the $2 billion Medicaid fraud lawsuit filed by the Office of Attorney General against Xerox/Conduent in May of 2014 was substantially framed around Ms. Reed’s 2007 report and that “she was a pivotal witness in this case, and provided two days of hard-hitting deposition testimony regarding Xerox’s fraudulent violations of Medicaid policy and process…”

Seeking 5% of settlement

The lawsuit seeks an award of 5% of the settlement as “there can be no reasonable dispute but that Ms. Reed’s information was the genesis of the largest Medicaid fraud lawsuit in Texas history, and the largest single Medicaid fraud settlement in Texas history.”