AUSTIN, Texas (CN) – Xerox and a former subsidiary agreed Tuesday to pay Texas over $235 million to settle claims they oversaw the payment of fraudulent Medicaid dental claims for over seven years.
Texas Attorney General Ken Paxton said the settlement “represents the largest single resolution in a case filed” by his office regarding Medicaid fraud.
Filed in Travis County Court in 2014, Texas’ lawsuit claimed Xerox and former subsidiary Conduent rubber-stamped a substantial number of children’s dental and orthodontic claims from 2004 to 2012. Xerox was contracted as the state’s Medicaid administrator at the time and processed $1.1 billion in orthodontic claims in total.
Texas claimed the defendants did not hire enough medical professionals to judge the prior authorizations to screen out unnecessary claims and only employed one dentist. It claimed Xerox and Conduent only hired unlicensed “specialists” to judge the claims, resulting in so many bad claims being paid.
The companies tried to argue before the Texas Supreme Court last year that they only share partial responsibility for the bad claims and the dental providers should be on the hook. The high court disagreed, concluding it was their sole responsibility for the state’s Medicaid fraud losses.
“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,” Paxton said in a statement. “We’re proud of this recovery of taxpayer money.”
Xerox said it will not pay anything under the settlement, that it only bought Conduent’s predecessor in 2010. The subsidiary was spun off six years later.
“Xerox was not responsible for performing services under the contracts and was not involved in the management of the contract or the services provided by the state,” the company said in a statement. “Xerox will not make any payment as part of the settlement.”
Conduent said it is “please to put this legacy issue behind us” and that the settlement “provides clarity on the financial impact” to the company, stating it has sufficient liquidity.
The 24-page settlement agreement and release is final, but Paxton said his office still has litigation pending against individual dental and orthodontic providers for filing fraudulent claims.