The Other Side of the Texas Medicaid Orthodontic Fraud Debate

The following is an opinion piece written by Jason Ray, attorney for a number dentists who are being prosecuted by HHSC-OIG for their Medicaid orthodontic billings.  Mr. Ray is with the firm of Riggs Aleshire & Ray, P.C.

I am familiar with the salacious allegations that many Texas dentists got rich on the back of Medicaid by committing fraud. I represent several dentists who have been so accused.

Perhaps it needs to be pointed out again, but in America every individual is innocent until proven guilty. Unless, it seems, the alleged crime is Medicaid fraud and the defendant is a dentist.

Fraud allegations are serious, so the public does not have much sympathy for doctors, dentists, or lawyers who are accused of taking their already lucrative jobs and rejecting their legal and professional responsibilities in search of even more money. No one wants to see hard-earned tax dollars wasted. Fraudsters need to be punished.

Fraud allegations are like candy for children. They hit hard. They are quickly digestible for someone craving industry news. But outrageous claims immediately rot the public’s respect for dentists, especially if other dentists pick up the story and repeat it. And if, when the case is finally disposed of, a judge finds the charges never had any substance, there is no satisfaction for the dental industry. Having been told that the dentists are some sort of criminal, the public will believe that the guilty walked free; meanwhile the innocent dentist, professionally wrecked by rumors, is left to rebuild a Medicaid practice financially devastated by the State’s refusal to pay anything to the dentist—for years—while the case proceeded to trial.

And when the cases actually go to a hearing, the trials are long, complex and expensive. But the result is always the same. The State always loses, and loses badly. It leaves destruction in its wake both for the dentist and their Medicaid patients.

How can this be?

If these cases, which are not even being tried to a criminal level standard of proof (the well-known “beyond a reasonable doubt” standard) are losers, what is the problem? Three years after the State began this misguided witch-hunt, the public still believes that if the State is trying to prosecute someone for fraud, it must be doing the right thing. But the State has yet to win a case in court. In fact, the recent decision by a Texas HHSC in-house judge to reverse a finding of innocence for a Houston dental practice—though he never heard any part of the trial—is as close as the State has come to a win. The initial decision had been reached by two independent judges from the State Office of Administrative Hearings after listening to four days of testimony and taking months to craft their ruling.  But as was pointed out by the Austin American Statesman in their stories on the decision, HHSC was the prosecutor that decided to become the judge as well. That sort of self-dealing, which just serves to circumvent the system, does not make the State’s case a winner.

What is really going on?

First, the State’s story defies the facts. The State says dental care is black-and-white, cut-and-dried. But when all three judges from the Office of Administrative Hearings have independently found the definition of “ectopic eruption” is vague and subjective, and seen the wide divergence in scoring between dentists (even the State’s own experts often differ by as much as 15 points on a 30+ point scale), these cases look like simple disagreements among smart and well-meaning professionals.

Second, the State refuses to address the fact that it (through its independent agent ACS) reviewed every x-ray, picture, model, and ceph for every patient, and approved (indeed, required!!) every bracket, wire, and appliance to be placed before the work began. That fact is a huge elephant in the room in every trial, and the State has never been able to explain how it could require the dentists to do something and later claim that action was fraud.

So, if this is the case, why does the State continue to claim fraud? 

Here’s my opinion.

1. “We need to spend more money…, uh, oops, we didn’t mean to spend more money.”

In 2007, the U.S. Supreme Court in Frew said Texas was not providing sufficient services to Medicaid eligible children. In 2008, Texas went on a spending spree, increasing the Medicaid budget by more than $1.8 billion. Most went to Medicaid dental services, and some went to orthodontics. Orthodontics was an easy way for Texas to look responsive to the Supreme Court’s decision. But Texas bureaucrats were caught with their pants down when, in 2011, WFAA-TV in Dallas reported on the cost of Medicaid orthodontia in Texas. WFAA compared orthodontic program spending between states; in 2010, Texas spent $200 million on braces while California (the supposed bastion of liberal thought and the entitlement lifestyle) spent only $19 million. This was embarrassing to Texas’ leadership—even though that was exactly what the State had set out to do just three years before. Texas knew exactly what it was spending on orthodontics and why, but leaders knew explaining the situation would be career-ending. Texas needed a scapegoat.

2. Point the finger (but not at our friends).

Every single Medicaid orthodontia case since time immemorial has had to be pre-approved by the State’s Medicaid claims administrator, a private contractor.  Since 2004 that has been ACS, better known as TMHP. ACS is owned by Xerox. ACS has significant political connections. As Texans for Public Justice reported “ACS, its PAC and its executives contributed $234,042 to Texas state candidates and committees since the 2004 election cycle. Governor Perry received 64% of that money ($150,000).”

A 2008 audit of ACS showed that it was not using qualified people to review pre-approval requests. It employed only one dentist, who reviewed less than 10% of the thousands of applications every year. A 2012 follow-up audit showed that nothing had changed; ACS continued rubber-stamping pre-approvals for years and had “repeatedly misled HHSC” on the pre-approval process leading to “millions being expended on Medicaid Orthodontics.” As of today, the State has still refused to take any action against ACS, and refuses to make ACS part of its fraud lawsuits, even though the dentists have to defend themselves.

ACS denies it did anything wrong. We’ll see. Last month, I sued ACS for the dentists who relied on ACS’ pre-approvals; ACS’ failure to do its job has allowed the State to now claim that the dentists, who just did what ACS told them to do, provided medically unnecessary services.

3. Personal injury law firms try to wear the white hat.

Dentists are the target of lawyers like Jim Moriarty and Dallas law firm Waters and Kraus. These firms have a large investment in these orthodontic cases, and they stand to reap millions if fraud can be proved. In a highly unusual move, those law firms were hired by the State to help prosecute the Houston case at a cost of $250,000 to taxpayers. They still lost. Waters & Kraus has been targeting dentists since late 2010 when they obtained their texasdentalfraudlawyer.com domain name.

But until a judge who hears the evidence actually says that a dentist has done something wrong, the industry should scorn the latest HHSC move championed by Moriarty and his ilk. That recent decision by an in-house HHSC officer to reverse the SOAH judges who heard the State’s case against a Houston provider may sell papers, but it is does not pass the smell test. As was pointed out by the Austin American Statesman in their stories on the decision, HHSC was the prosecutor that decided to become the judge as well. Circumventing the system does not make the State’s case a winner, and it is just another way the State continues to follow one mistake with another.

The public needs to get beyond the hyperbole. Look at the facts. Most of these dentists were very successful in private practice well before they started serving the Medicaid population. They deserve a larger measure of respect until a judge says otherwise.

About Jason Ray
Mr. Ray was admitted to Texas Bar in 1997 and is Board Certified in Administrative Law. He received his law degree from Texas Tech University School of Law, Lubbock,  in 1996.

He has the following experience:

• Aide to U. S. Congressman Bill Sarpalius, Washington, D.C.
• Chief Clerk for House Committee on Public Safety, Austin, TX.
• Vinson & Elkins, Austin, TX.
• Litigation Attorney, Department of Public Safety, Austin, TX.
• Managing Director – Texas for GalleryWatch.com, Austin, TX.
• AAG, Administrative Law Division, Office of the Attorney General.