Judge Orders Texas to Pay Whistleblowers Share of Record $212.3M Texas Medicaid Fraud Settlement

Court orders State to pay whistleblowers rightful share for exposing Medicaid fraud

AUSTIN, Texas, Dec. 24, 2024 /PRNewswire/ -- After more than a decade of litigation, three whistleblowers have been awarded a statutory share of a $212.3 million settlement over Texas Medicaid fraud allegations against Xerox State Healthcare, LLC, lawyers at Waters Kraus Paul & Siegel and their co-counsel announced today.

On Thursday, the Hon. Maya Guerra Gamble, of the 459^th District Court in Travis County, ordered the State of Texas to pay whistleblowers Alexandra Alvarez, Joshua LaFountain, and Dr. Christine Ellis, D.D.S., 17.5 percent of a record 2019 settlement with Xerox State Healthcare, LLC (formerly known as ACS State Healthcare, LLC) – or about $37.1 million, plus prejudgment interest.

In early 2012, the three each filed suit against Xerox for violations of the Texas Medicaid Fraud Prevention Act (TMFPA), which provides that whistleblowers are entitled to a share of any recovery resulting from their suits. The State of Texas chose to intervene in, partially unseal, and attempt to settle the whistleblowers' claims in 2013, and eventually filed a separate TMFPA suit restating the whistleblower allegations in May 2014. The State and Xerox reached a settlement in 2019, but refused to pay the whistleblowers their rightful share as required by the TMFPA..

Before the whistleblower lawsuits were filed in 2012, Dr. Ellis, a Dallas-area orthodontist, spent years trying to stop the fraud and abuse she observed in the Texas Medicaid program. She testified before a U.S. congressional committee regarding alleged Medicaid fraud in orthodontic billings by Texas dentists and corporate dental chains. She also repeatedly reported her allegations of fraud by Xerox directly to the State before filing her suit in 2012.

A subsequent State investigation corroborated her and the other whistleblowers' allegations, finding that unqualified Xerox employees had improperly approved prior authorization requests for orthodontic services without verifying the medical necessity of the services. This alleged failure to properly manage the prior authorization program violated the company's contract with the State. Taxpayers thus paid for medically unnecessary dental and orthodontic procedures on thousands of children.

The three whistleblowers are represented by Charles S. Siegel and Caitlyn E. Silhan of Waters Kraus Paul & Siegel in Dallas; James Moriarty of the Law Offices of James R. Moriarty in Houston; and James "Rusty" Tucker of the Law Offices of James R. Tucker in Dallas.

Ms. Silhan, who led the team's efforts in obtaining the award, said, "We're disappointed the State has sought for years to avoid paying these whistleblowers their statutorily-mandated share of the settlement, but we're pleased that our clients have prevailed. As the Court's order acknowledges, their important fight to expose Medicaid fraud ultimately led to a massive recovery of funds for Texas taxpayers."

Mr. Tucker said, "Because of these three courageous whistleblowers, the State of Texas ultimately showed how Xerox / ACS, Inc. deeply compromised the integrity of the Texas Medicaid program. Their efforts to set the record straight on the practices of corporate dental practices, led to a historic recovery by the state and will help protect taxpayers going forward."

Dr. Ellis said, "I am thankful to my legal team for their dedication to this lengthy process and for the Court's decision to protect my and my fellow whistleblowers' legal rights."

The case is In Re: State of Texas v. Xerox Corporation, et al. Settlement Proceeds, Cause No. D-1-GN-19-004849.

CONTACT: Erin Powers, Powers MediaWorks LLC, for Waters Kraus Paul & Siegel, 281.703.6000, [email protected]. 

SOURCE Waters Kraus Paul & Siegel