You just can't make this stuff up.
HHS just contracted with Conduent again
Texas just rehired Conduent, the company it had fired in 2014 as its lead Medicaid contractor and then accused of $1.2 billion in Medicaid fraud which it then settled with in 2019 for a record $235 million. Last year, a Delaware jury found the company guilty of insurance fraud in trying to get its insurers to pay part of the Texas settlement.
Trial judge ruling on jury decision
This week's ruling by the Delaware Superior Court trial judge to vacate the jury decision comes from a motion by Conduent to set aside/amend/ alter the judgment, request for a new trial as a matter of law. The company held that there was "the need to correct clear error of law or to prevent manifest injustice.” The judge agreed.
Her opinion begins, "In almost 20 years on this bench, I have never set aside a jury verdict.! Jury verdicts are entitled to great deference. Altering a jury’s decision should only be done under circumstances in which justice otherwise would be denied.”
Problematic Texas OAG submission and press release
Unbelievably, two of the main reasons given for her decision would be the use by the insurer's attorneys of a submission to the court by Raymond Winter, the head of the Civil Medicaid Fraud division of the Texas Office of Attorney General and Attorney General Ken Paxton's original press release on the 2019 settlement with Conduent.
Here are those salient parts of the decision.
The first problem with the trial involved an unusual document. The Office of the Texas Attorney General declined to provide any witness for deposition (or to otherwise cooperate in any manner) in this case. After much negotiation, the parties agreed to put certain written questions to Raymond Winter (“Winter’’), as he lone representative of the Texas Attorney General’s Office."’
The Winter Submission clearly is inadmissible hearsay, indeed double and triple hearsay. Winter was not subject to cross-examination. The trial was replete with testimony from other witnesses about Winter’s credibility and alleged bias. Nevertheless, the parties had agreed before trial that this document could be used at trial. Against my better judgment, I acquiesced to the parties’ agreement. This is the generally-accepted practice in Superior Court civil cases. If the parties agree to admissibility, the Court will not interpose its own judgment. However, the red flags were there. From my many years of experience, I suspected that this document could create a ripple effect of thorny evidentiary issues, for the very reasons that the hearsay rule is designed to prevent. In short order, Winter’s credibility became a centerpiece of the trial. And there was no way the jury could adequately evaluate the validity of the Winter Submission in the absence of the declarant or Winter’s out-of-court testimony, subject to cross examination.
AIG argued that certain language in the Settlement Agreement was drafted for the sole purpose of obtaining insurance coverage that otherwise would not have existed. The meeting, between Conduent and the Texas Attorney General’s Office, that was the most crucial to AIG’s argument occurred on December 14, 2018. Winter was not present at that meeting. Winter wrote: “The Texas OAG does not recall what may have been discussed on December 14, 2018 regarding how settlement funds would be allocated or characterized.’ Nevertheless, Winter stated his opinion, in response to several questions about what the Texas Attorney General and Conduent agreed concerning whether the settlement was for breach of contract and tort claims, or only for Medicaid Fraud claims. In addition to Winter lacking any personal knowledge of what was agreed at the meeting, Winter’s written answers are directly contradictory of the explicit terms of the Settlement Agreement.
The Settlement Agreement stated that the “Settlement Amount is allocated to reimburse . . . the STATE for monetary losses claimed to have resulted from alleged failures to comply with obligations by Conduent Healthcare . . . under the 2003 Contract and 2010 Contract ....” Further: “No portion of the Settlement Amount shall be allocated or attributed to the payment of fines, penalties, or other punitive assessments, or to disgorgement of revenues.” It is undisputed that the Settlement Agreement by its terms expressly allocated payment on the basis of contractual claims, and not to any penalties or fraud claims.
The Settlement Agreement also provided: “Prior to entering into and reaching this Agreement, the STATE advised DEFENDANTS that it was prepared to amend the State Action to add causes of action for breach of contract of the 2003 Contract and 2010 Contract, including the claimed contractual breaches discussed in the Audit reports and in the notice of Termination, and negligence in the performance of contractual services for HHSC.” In response to written questions, Winter stated that this “statement was not a true statement.” Winter gave no explanation why the Deputy Attorney General for Civil Litigation Office of the Attorney General of Texas nevertheless signed the Settlement Agreement on February 15, 2019. Nor did Winter offer any reasons why he viewed the statement as untrue as of the time the Settlement Agreement was executed.
The jury found that Conduent and the State of Texas did not engage in collusion in connection with the State Action Settlement. The jury found that Conduent was solely responsible for fraud, by finding no collusion on the part of the State of Texas. The Deputy Attorney General’s signature on the Settlement Agreement is inconsistent with those verdicts. If the settlement was in fact for fraud or penalties (not covered by insurance), instead of for breach of contract damages (covered by insurance), the Settlement Agreement is a misrepresentation. If, as Winter wrote, the statement was false, it appears that the Texas signatory colluded with Conduent.
Use of the Press Release
After the Settlement Agreement with the Texas Attorney General was executed, the Attorney General’s Office issued the following Press Release:
AG Paxton Recovers Record $236 Million for Texas in Medicaid Fraud Settlement
Attorney General Ken Paxton today announced that Xerox Corporation and several of its former subsidiaries — including Conduent, Inc. — agreed to a $235.9 million settlement with the State of Texas to resolve a lawsuit brought under the Texas Medicaid Fraud Prevention Act (TMFPA) and other grounds regarding the processing of prior authorization requests by dentists to deliver orthodontic services to Medicaid patients.
The announced settlement represents the largest single resolution in a case filed by the attorney general’s office for Medicaid-related claims.
Xerox and its companies were responsible for reviewing and approving or denying requests by Medicaid providers to deliver orthodontic services between January 2004 and
March 2012. Under Texas law, only those requests that meet strict Medicaid program requirements are allowable. The Medicaid program does not pay for braces for
cosmetic purposes.
The attorney general’s office determined that employees of Xerox, Conduent and related companies rubberstamped orthodontic prior authorization requests without assuring the required review of each request by qualified clinical personnel, which violated its responsibilities. As a result, expensive, taxpayer-funded orthodontic work was
performed on thousands of children who either didn’t meet the Medicaid standard for braces or didn’t require treatment.
“Misconduct by employees of Xerox and its related companies compromised the integrity of the Medicaid program — the very program Texas hired the Xerox defendants to safeguard through the administration of a proper prior authorization review,” Attorney General Paxton said. “We’re proud of this recovery of taxpayer money. My office is committed to ensuring that Medicaid dollars are preserved for those who need it most.”
Attorney General Paxton credited the close cooperation, support and assistance of the Texas Health and Human Services Commission — which runs the state Medicaid program — for helping his office achieve a final settlement.
The settlement is the culmination of investigative work and litigation by Attorney General Paxton’s Civil Medicaid Fraud Division. In April 2012, it launched a formal investigation into Xerox. In May 2014, the attorney general’s office filed a lawsuit against the Xerox defendants. Last year, the Texas Supreme Court ruled that Xerox was responsible for its conduct and could not deflect its liability by blaming the dentists who submitted the prior authorization requests in the first place.
Though the settlement with the Xerox defendants is final, Attorney General Paxton’s office still has pending litigation against dental and orthodontic providers who allegedly committed unlawful acts under the TMFPA in connection with their requests for reimbursement for delivering orthodontic services
Since 2000, the Civil Medicaid Fraud Division of the attorney general’s office has recovered more than $2 billion for taxpayers under the Texas Medicaid Fraud Prevention Act.
The Press Release is replete with factual conclusions about issues that were hotly-disputed at trial. The bolded title of the Press Release directly contradicts the agreed-to language in the Settlement Agreement. Further, the Press Release contains information previously ruled inadmissible for the trial.
...
The Press Release was unquestionably hearsay, had indicia of a lack of credibility and political motivation, there was no date of creation, no author was identified, no cross-examination was possible, and the language directly contradicted the stated terms of the Settlement Agreement. In short, the Press Release had the potential to be unduly prejudicial. In disregard of the Court’s unambiguous ruling, AIG repeatedly referred to and the Press Release in the presence of the jury.
My goodness. We look forward to the new trial.