Dentist Who Built a Strait Lane Waterpark Held Liable For $16.5M in Medicaid Violations

This came in on Tuesday, and longtime readers of this site will recognize the name, Dr. Richard Malouf. He built what may well be the only backyard waterpark in Dallas one estate south of Dallas Mavericks legend Dirk Nowitzki, complete with a lazy river.

I was the first reporter in town to cover the waterpark house. In fact, I broke the story.

In speaking engagements, I tell the story of what clued me in on the water park construction before any other media. Dr. Malouf promptly sued me, Byron Harris, Brett Shipp, Belo Corp. and WFAA, Laura Wilson, CultureMap, AOL Real Estate, and all media outlets that carried my story, including Curbed.com and a smattering of Dallas Morning News reporters.

Evans is bearing the brunt of the blame for her work on CandysDirt.com and with WFAA. The Maloufs accuse Evans of working closely with Wilson to gain access to their home. Wilson, a renowned photographer, lives on Strait Lane with her husband, Bob. They are the parents of Hollywood heartthrobs Andrew, Luke and Owen Wilson. 

“It’s hard to tell where Candy Evans stops and WFAA starts,” Richard Malouf testified during a pre-trial hearing in December. “They are all conspirators in this.”

As then Dallas Observer reporter Eric Nicholson put it, “the man files defamation lawsuits the way other dentists hand out free samples of dental floss.”

I’ll never forget when I first learned I’d been sued by Richard and LeeAnn Malouf, his wife. I was sitting in the car wash at Preston and Northwest Highway, at the Chevron Station, checking emails. Later that day I’d be in a downtown Dallas courthouse trying to figure out what was going on.

Living Large on Medicaid Billings

Richard Malouf founded the All Smiles Dental Centers in Dallas, which he sold to a hedge fund shortly before the state began investigating him. The State of Texas began to notice Medicaid payments for pediatric orthodontics procedures spiking — like a python swallowing an elephant, said Houston prosecutor James Moriarity, who sued Malouf on behalf of the state.

Prosecutors say Malouf lived lavishly at his 4.3-acre Strait Lane estate with waterpark, bowling alley, and gymnasium with a family logo painted on the floor center.

Moriarity is a private attorney who was hired to represent the state on orthodontic cases and the attorney for Dr. Christie Ellis, a Dallas orthodontist on her qui tam case against Malouf and XEROX. 

Dr. Malouf dodged the fraud charges for years. He hired teams of attorneys, donated $10,000 to a Dallas DA Craig Watkin’s campaign who happened to also be investigating him (the funds were returned), went to court, and sued everyone who crossed his path.

Here’s what Nicholson wrote about Malouf and his clinics (some of the links are so old, they may be expired):

In 2010, for instance, it billed the state for $10.2 million for orthodontics work performed at its 51 dental clinics, or three times the amount paid out for braces by the Medicaid program in Georgia. Texas Attorney General Greg Abbott sued Malouf and All Smiles in the summer of 2012 over allegations of Medicaid fraud.

Malouf has been ordered to pay about $16.5 million to the State of Texas by a district court judge. The court also found fraudulent billing for pediatric dentistry services that were actually provided by another dentist. This included billings filed while Dr. Malouf was on vacation, out of the country.

To be sure, Malouf was not the only dentist profiting hugely in this manner. In fact, I had begun gathering notes on the elaborate homes of other pediatric dentists like Malouf who were billing Medicaid for thousands of services and raking in the cash, then spending it on huge homes where it was asset protected. Byron Harris over at WFAA-Channel 8, won a Columbia Dupont award for his reporting on some of these dentists.

An Epic Estate With Every Amenity

But my gig was real estate, so all I was ever interested in was the house and the waterpark. The home is no longer owned by the Maloufs. I have since been inside the estate — all I can say is WOW. Here are some of the highlights:

• two linked properties on 4.3 acres
• 37,000 square feet of living space
• 10 bedrooms, 22 bathrooms
• 10 living areas, four dining areas.
• 10-car garage
• Two basketball courts
• Dog washing station
• Tennis court
• Gymnasium
• Bowling alley
• Lazy River

Of note: the Maloufs once owned this home on Camellia, now owned by Tyler Seguin, which we wrote about last October when it was heavily damaged by the Preston Hollow EF 4 tornado.

In May, state district court judge Catherine Mauzy granted a summary judgment against Malouf that held him responsible for 1,842 violations under the Texas Medicaid Fraud Prevention Act. When I asked Moriarity, known for tackling corporate healthcare fraud, why there had been no trial, he said “because the evidence was so obvious and egregious.”

“I applaud my litigation team, the court and the Health and Human Services Commission for stopping this misconduct and recovering taxpayer money,” said Attorney General Ken Paxton in a statement. “Identifying and preventing Medicaid fraud continues to be a top priority for my office and I remain committed to ensuring that Medicaid dollars are preserved for those who most need them.”  

Or as Jim Moriarity puts it: “It’s about time!”