Texas files another lawsuit against Xerox in Medicaid scandal

In the latest development in the ongoing Texas Medicaid scandal, the state Health and Human Services Commission (HHSC) has filed a second lawsuit against Xerox, claiming the company is refusing to turn over patient records.

Without the documents, the state is out of compliance with federal regulations and at risk of incurring "massive federal fines," according to an HHSC statement.

The commission terminated the company's Medicaid claims administration contract in May, saying Xerox staff approved thousands of requests for orthodontic procedures that were not medically necessary. The Texas attorney general also filed a suit to recover millions of dollars for the work.

"Xerox has chosen to put information of Medicaid clients at risk and force the state to take court action to protect those records," said HHSC Commissioner Kyle Janek, MD.

The suit was filed August 26 in Travis County District Court seeking the immediate return of the data. HHSC transferred the Medicaid contract to a new vendor on August 1.

The transfer was done "with complete transparency and with the full knowledge and participation of the Health and Human Services Commission," Xerox stated in an email response to DrBicuspid.com.

"The retention of property includes Xerox material such as computer monitors, televisions, human resource files, internal financial records, and Xerox-branded collateral and posters, while the data represent proprietary Xerox information and was retained with the state's knowledge who declined repeated opportunities to review the material," the company added.

Xerox has asked the Travis County District Court to rule on their retention of the information.

Earlier this month, a federal report laid the responsibility for hundreds of millions of dollars spent on dental and orthodontic procedures that may have been medically unnecessary squarely on HHSC, the agency that oversaw the program.

The HHSC did not ensure that the prior-authorization process was used to determine the medical necessity of orthodontic services under state Medicaid guidelines, according to the report.

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 Office of Inspector General investigation found $6 billion in fraud and waste within Medicaid from 2004 to 2011.

During the contract transition, HHSC said it objected to attempts by Xerox to copy or take records related to its work for the state without appropriate court action to ensure security of the data.

However, Xerox acknowledged in a court filing on July 21 that it had removed records from servers and hard drives, and allowed those records to be stored and viewed by other vendors, HHSC said. The agency also said Xerox removed 244 boxes of information before the contract was transferred to a new vendor.

Xerox has refused to return the records or provide any information about efforts to ensure the security of the information, which HHSC believes includes client names, photographs, birth dates and medical and billing records, the agency said.

The refusal to return the data or provide information about its security has forced Texas to file a notice with the federal Office for Civil Rights that Xerox is now out of compliance with regulations designed to protect an individual's health information, the HHSC said. Violations of federal HIPAA regulations could lead to millions of dollars in fines against both Texas and Xerox, HHSC said.

"Once again, the reckless and irresponsible actions of this company put Texas tax dollars at risk," Dr. Janek said. "It really makes you wonder what they're trying to hide.