Judge finds credible evidence of Medicaid fraud by Texas clinic

By Donna Domino, DrBicuspid.com features editor

March 5, 2014 -- A Texas judge has upheld payment holds on Medicaid payments for Houston dental clinic Antoine Dental Center (ADC), citing credible evidence of Medicaid fraud. The clinics billed about $8.1 million for orthodontic services in less than three years.

The 36-page ruling was issued February 28 by Judge Rick Gilpin, an administrative law judge for the Texas Health and Human Services Commission (HHSC).

Reimbursements for Medicaid claims by ADC, which has two clinics in Houston, have been on hold since 2012, pending an investigation by the HHSC and the Texas Office of Inspector General (OIG) for Medicaid fraud involving orthodontic care. ADC ranked in the top 25 providers for Medicaid payments; about 70% of ADC's patients were Medicaid recipients, the ruling stated.

“The fact that ADC billed for comprehensive orthodontic services when their patients did not qualify for that treatment is a program violation and warrants a payment hold.”
— Administrative Law Judge Rick Gilpin

ADC has appealed the payment holds, and a judge ruled last year that ADC should be paid until the investigation is complete. HHSC and the OIG then appealed that decision, which resulted in Gilpin's final ruling last week.

"The fact that ADC billed for comprehensive orthodontic services when their patients did not qualify for that treatment is a program violation and warrants a payment hold," Gilpin concluded. He also noted that ADC failed to provide requested records for more than a year after the OIG asked for them.

"ADC's record-keeping violations, together with evidence of its fraud and willful misrepresentations, gives rise to substantial concern regarding ADC's compliance with Texas Medicaid law and policy," Gilpin wrote. He ruled that the clinics' payment suspension may be continued until the fraud investigation is finished.

Houston lawyer James Moriarty, who represented the HHSC/OIG, said ADC can appeal the ruling in the Texas district court, but predicted the outcome would be the same.

"It's over: game, set, match. They're done. This battle is over. It's time for them to start hauling their wounded off the field before we go out and shoot them, too," Moriarty told DrBicuspid.com. "He nailed it," Moriarty said of Gilpin's ruling.

ADC could be liable for a total of $20 million to $24 million, including penalties, Moriarty said.

James Moriarty
James Moriarty.

Attorneys for ADC did not respond to calls for comment.

In 2007, Texas lawmakers approved a 50% rate increase for dentists to help expand access to dental services for children on Medicaid. Spending on orthodontic care in Texas has increased from $102 million in 2008 to $185 million in 2010.

In general, orthodontic benefits were limited to the treatment of children 12 years or older with severe handicapping malocclusion. Prior authorization was required by the Texas Medicaid & Healthcare Partnership (TMHP), a group of businesses led by ACS State Healthcare (owned by Xerox), the contractor hired as the Medicaid claims administrator. TMHP was responsible for evaluating whether orthodontic services were medically necessary.

Dentists were required to submit an index score and supporting dental records. The Handicapping Labio-lingual Deviation (HLD) index is used to measure the severity of the malocclusion and determines whether the Medicaid patient meets the criteria for orthodontic services, the ruling stated.

Correction of severe handicapping malocclusion with full braces generally requires a minimum score of 26 points.

The HHSC determined that TMHP's staff did not have the dental credentials necessary to evaluate orthodontic eligibility, and, in 2011, the HHSC started fraud investigations against many Medicaid providers, including ADC.

Orthodontist Larry Tadlock, DDS, a professor at the Texas A&M Baylor College of Dentistry, reviewed 63 of ADC's cases that were included in an audit and found that the records of 62 Medicaid patients did not support the HLD scores for ectopic eruptions. HHSC issued Medicaid payment holds, saying ADC made false statements to meet prior authorization requirements and billed for services that weren't reimbursable, according to the ruling.

ADC contended that 58 of 59 cases scored HLD indexes of 24 or more points of ectopic eruption. But Dr. Tadlock testified that such findings were "mathematically dubious," adding that it was "simply not possible" for a patient to have eight ectopic teeth as claimed by ADC.

Wael Kanaan, DDS, an orthodontist who worked for ADC, found the requisite HLD score to qualify for Medicaid reimbursement on precisely the same teeth on many patients -- the four upper and lower incisors, the ruling noted.

"Remarkably, Dr. Kanaan denied seeing a suspicious pattern in these results," Gilpin noted, which demonstrated a "reckless disregard of his scoring technique." The judge also found a "substantial number" of prior authorization requests submitted by ADC included "false statements or material misrepresentations."

Texas Medicaid spending

Texas has been rocked by allegations of fraud by dentists and orthodontists accused of bilking the state Medicaid program out of tens of millions of dollars. An OIG investigation found $6 billion in fraud and waste within Medicaid from 2004 to 2011.

A report by the HHSC revealed that in 2010 Texas orthodontists charged Medicaid as much for services as the rest of the U.S. combined, and that the TMHP, tasked with evaluating and approving claims, was rubber stamping them.

In 2009, Texas spent 72% ($145.4 million) as much as the entire U.S. ($210 million) on Medicaid orthodontics. In 2010, Texas spent $200.8 million on Medicaid orthodontics for 80,000 children, records show. More than 18,000 of them were children younger than 12, who usually don't have their permanent teeth yet.

Between 2008 and 2011, Texas spent $705 million on Medicaid orthodontics.

The state now is holding payments back from 91 Medicaid providers, including dozens of dentists and orthodontists, for credible allegations of fraud.

The Texas attorney general's office has recovered more than $1 billion from Medicaid fraud investigations over the last 10 years, including $1.8 million in dental Medicaid fraud. But dozens of investigations into alleged fraud at dental offices are ongoing.


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