Texas Supreme Court
AUSTIN -- The Texas Supreme Court has found that a court of appeals lacked jurisdiction to hear an interlocutory appeal, vacating its judgment in litigation stemming from a Medicaid program.
Under the Medicaid program administered by the Texas Health and Human Services Commission, needy children can receive government-funded orthodontic services for which prior authorization has been granted, according to the high Court’s Oct. 9 opinion.
HHSC needed help with the “bureaucratic grind” of distinguishing medically necessary services and contracted with Conduent State Healthcare (formerly Xerox). The company spent almost a decade granting and denying prior-authorization requests based on the patient information provided by participating dentists.
“It didn’t go well, and everyone sued each other,” the opinion states. “The State of Texas sought civil penalties from Conduent under what was then called the Texas Medicaid Fraud Prevention Act, alleging that Conduent bilked the government out of millions of dollars by rubber-stamping dentists’ prior-authorization requests in violation of Medicaid policy.”
Conduent eventually settled the case, paying the state $236 million. In a separate case, Texas pressed similar Medicaid-fraud claims against dentists and dental practices that allegedly submitted false requests for prior authorization and payment. The Supreme Court had held that sovereign immunity barred the defendants’ counterclaims.
Three of those defendants, Dr. Diana Malone, Dr. Scott Malone, and M&M Orthodontics, paid $2 million to settle the state’s Medicaid-fraud claims. The Malones, another defendant, filed a suit of their own against Conduent and the state, which is the case at hand, alleging that Conduent injured them by approving their prior-authorization requests without rigorously reviewing for the medical necessity that Medicaid policy requires.
“The district court promptly granted the State’s plea to the jurisdiction on sovereign-immunity grounds,” the opinion states. “Conduent wasn’t so lucky.”
The district court denied Conduent’s plea and an appellate court affirmed.
“Because the court of appeals lacked jurisdiction to hear this interlocutory appeal, we have no choice but to vacate its opinion and judgment, and remand the case to the district court for further proceedings,” the opinion states. “On remand, the district court may wish to allow a permissive interlocutory appeal concerning Conduent’s sovereign-immunity and election-of-remedies arguments.”
Supreme Court case No. 24-0802
