Who's Legally Liable in State's Dental Drama?

The state's sweeping Medicaid fraud investigation into dentists and orthodontists accused of giving unnecessary treatments to poor children has left Texas attorneys with lots of questions. 

Who’s accountable for the Texas orthodontic patients abandoned mid-treatment when the state pulled the plug on their doctors? Could the state be held legally liable for giving doctors permission to perform medically unnecessary dental procedures in the first place? And ultimately, does the state’s method of cracking down on providers — halting funding the moment an investigation is opened — grant sufficient due process to the accused, or could the government be counter-sued for destroying the businesses of providers later found innocent?

Looking for ways to curb the state's budget woes, lawmakers have directed health investigators to amp up their pursuit of fraud and to oust providers who purposefully filed medically unnecessary or fraudulent Medicaid claims. Many of the accused providers have their funding frozen, and can't treat Medicaid patients in the meantime. In the words of Sen. Jane Nelson, R-Flower Mound, “using patients to game the system – and then abandoning those patients when you get caught – is shameful abuse.”

Medicaid fraud lawyers say they still aren’t sure whether dental providers could be held legally accountable for cutting off patient care, either because they're under investigation, or because they're reacting to the state's crackdown on dental and orthodontic care. 

Some Medicaid dental providers, even those not accused of any wrongdoing, argue that it takes two to tango, and abuse of the system escalated because the state was not doing a good job weeding out medically unnecessary claims. They argue the state should take responsibility for the complicit role it played in approving medically unnecessary treatments in the first place.

That brings us to a key term: “medical necessity.” Medicaid is intended to cover only that dental care for children deemed medically necessary. Preventive and dental decay treatments qualify, but straightening crooked teeth shouldn't — unless a cleft palate, birth defect or disease has rendered the child incapable of eating, breathing or swallowing without corrective orthodontic care.

Despite this definition of medical necessity, it was common knowledge among Texas dental providers that the company contracted by the state to administer Medicaid dental claims, Texas Medicaid and Health Partnership, and its subcontractor, ACS Xerox, rubber-stamped most claims to put braces on children. The federal and state governments are currently auditing that since-replaced orthodontic authorization process, but state officials have already fired the dental director of TMHP and admitted they’ve found problems in the prior authorization process. Lawyers say it’s possible the state could pursue fraud charges against those contractors for approving medically unnecessary claims, but it seems unlikely, particularly because it would mean acknowledging mismanagement of the program.

The state may also have dodged a bullet by announcing in July that managed care dental plans would facilitate the transfer of abandoned orthodontic patients to new providers, and put less stringent diagnostic requirements on doctors and dentists who could finish a patient’s treatment within six months. Technically, it’s possible patients could still argue that the state denied them access to care by making them wait months to have their braces adjusted, fixed or checked while Texas sorted out the Medicaid reimbursement scandal. 

Dental providers also argue the problem of abandoned patients was compounded by the state’s actions. The state has begun relying heavily on a new rule in federal health reform that allows them to freeze Medicaid payments almost instantly while they investigate allegations of fraud. The new rule is controversial. The accused providers put on payment holds believe they’re being denied due process. While they wait for the results of months-long investigations, they say, they are often forced out of Medicaid and sometimes, out of business, amplifying the problem of abandoned patients. 

Dr. Robert Anderton, a lawyer and former dentist working with some of the accused dental clinics, said providers are required to exhaust all administrative appeals options before they can go to court. Because of provisions in the legal contracts they signed with the state in order to become Medicaid providers, he said, it’s unlikely they’ll be able to counter-sue over how the state’s actions adversely affected their business.