Feds Now Helping Texas Fight Dental Medicare Fraud. What Could That Mean for Water Pick Park… or Us?

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The Medicaid nukes are coming to town from Washington, D.C. to infuse more power into Greg Abbot’s investigation of dental Medicaid fraud, the kind that Byron Harris has brought to the radar. He and other whistleblowers say abusing Medicaid reimbursements helped pediatric dentists like Richard Malouf roll in billions and build enormous homes, buy second and third homes, build backyard waterparks and live amazingly lavish lifestyles on the tab of U.S. taxpayers. Malouf may be crazy enough to build a water park in his back yard on Strait, but there are other guys just like him in humungo homes paid for with dental Medicaid funds that may be perfectly legit… or may not be.

Tune into WFAA Channel 8 Tuesday night for another juicy Byron Harris report.

Getting tough is a good thing, yes. But could this sudden new “get tough” mode limit more patient access to healthcare? Yes, says the Texas Medical Association.

The Texas Tribune reported last week that the office of Inspector General at the  Department of Health and Human Services is teaming up, bringing in more resources and stepping up the investigations. Sources tell me the FBI may be coming to town, and not just to visit John Wiley Price. I was told to carefully read the Texas Tribune story, like this graph:

” State authorities familiar with the task force’s investigations said the group is committed to recovering all taxpayer funds lost to dental fraud, from both dental providers and the Texas Medicaid and Healthcare Partnership, which was responsible for evaluating the medical necessity of dental claims and approving payment.”

So many times these investigations turn up with empty pockets — the crooks have spent the money and are “broke”. This time, however, I hear the Feds are onto a hot lead with deep pockets. Like a local company you may have heard of called Affiliated Computer Systems on Central Expressway that is now owned by Xerox.

The other question I have is this: who are the folks IN AUSTIN who let this rampant, in my view obscene rip off of Medicaid resources take place? There is one thing I will say about Richard Malouf and the others: he may have taken advantage of a situation that was wide open to him, the perfect pass. But the Texas Department of Health and Human Resources under Rick Perry, was totally asleep at the wheel on this one. They can say–

Most of the rise in Medicaid dental claims was probably legitimate, said Stephanie Goodman, spokeswoman for HHSC, because the state had increased reimbursement rates by 50 percent to expand access to care. “Those other factors kind of masked the fact that there was also probably an increase of bad actors in the program,” she said.

From an earlier Texas Tribune Report, it appears that those in charge of the Medicaid hen house in Austin were rubber-stamping, or approving, just about everything and somehow not noticing the swelling reimbursements:

“…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.

Texas became the poster child for dental fraud after 2007, when after a lawsuit, the Legislature allotted an additional $1.8 million for Medicaid children’s dental services to increase access to care. Still, this was their job: watching the henhouse. Perhaps the state bureaucrats, who are by now long gone, should be prosecuted? Will be prosecuted?

Stories like this peel back the way government often works, and leaves me more skeptical than ever of government-controlled health care. Medicaid reimburses dentists and physicians very little for honest health care services because funding is sparse. And Medicaid patients tend to be needier, the sickest of the pool, so they utilize more services. Therefore many physicians won’t take on Medicaid patients. They tend to be bigger liability risks. Even if they do agree to treat them, with reimbursements pennies on the dollar, docs cannot find specialist referrals. Once the state of Texas increased reimbursement rates by 50% for pediatric orthodontics, the corporate dental clinics or DSO’s couldn’t get here fast enough.

Then I ask, where the hell was the Texas Dental Association when all this happened and what are they doing to punish these dentists? One whistleblower out of Fort Worth told the Texas Tribune that –

” she had to remove six teeth in a child’s mouth that had abscessed less than six months after Medicaid paid for the child to be treated at a nearby dental clinic. “When I see this type of situation, I’m pulling patient records, I’m keeping patient records, I’m calling the [Office of the Inspector General],” said Staffel.”

If true, this is child abuse, no different than Elizabeth Escalona super-gluing her daughter’s hands to the wall. I’m told there are hundreds of children in San Antonio with metal mouths, children who will need serious repair work because of these clowns, some who may be left WITHOUT TEETH! And if you have ever seen how an infant is put into a “papoose” — strapped down in a mini strait jacket, noses pinched, well! My son had this done when he was small for stitches after he ripped his arm open on our fence. I could not bear to watch. A necessary evil for truly injured children, but for orthodontics?

And it will affect all of us. Already the Texas Health and Human Services Commission has adopted new rules that make every single billing error a physician or their staff make turn the provider into a suspect for fraud and abuse. Medicaid billing is extremely complex, and physicians who check the wrong box could now be investigated as fraud suspects. HHSC is are doing exactly what the banks did after the housing bubble burst: corporal punishment, swinging the pendulum back,  getting unreasonably tough on everyone now because they have major egg on their face. The result is exactly what Mitt Romney said during the last presidential debate: physicians will not participate in Medicaid, severely limiting health care access to millions. Here’s what the Texas Medical Association says:

Without due process protections and other important changes in the rules as proposed, “the pervasive fear among physicians that they will be incorrectly accused of fraud, waste, or abuse, or denied meaningful recourse in a fraud investigation will continue to contribute to the decline in physician participation in Medicaid.”

But oh well, Richard Malouf has a waterpark in his backyard for his family. Who cares about the rest of us?



Candy Evans

A real estate muckraker, Candy Evans is one of the nation’s leading real estate reporters. She is also the North Texas real estate editor for Forbes.com, CultureMap Dallas, Modern Luxury Dallas, & the Katy Trail Weekly. Candy has written for Joel Kotkin’s The New Geography, Inman Real Estate News, plus a host of national sites. Constantly breaking celebrity real estate news, she scooped former president George W. Bush's Dallas home in 2008. She is the founder and publisher of her signature CandysDirt.com, and SecondShelters.com, devoted to the vacation home market. Her verticals have won many awards, including Best Blog by the venerable National Association of Real Estate Editors, one of the nation’s oldest and most prestigious journalism associations. Candy holds an active Texas real estate license but does not sell. She is on the Board of Directors of Braemar Hotels & Resorts (BHR).

Reader Interactions


  1. Michael W Davis, DDS says

    Dear Cindy,

    How did the hearing go today, in which Dr & Mrs Malouf wanted to silence you 1st Amendment rights?

    Michael W Davis, DDS
    Santa Fe, NM

  2. Michael W Davis, DDS says

    Dear Cindy,

    How did the hearing go today, in which Dr & Mrs Malouf wanted to silence you 1st Amendment rights?

    Michael W Davis, DDS
    Santa Fe, NM


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