- Associated Press - Friday, May 9, 2014

AUSTIN, Texas (AP) - Texas on Friday dropped Xerox Corp. as its longtime Medicaid claims processor and sued the company to recover hundreds of millions of dollars for dental work the state says wasn’t necessary.

Xerox responded in a statement that the lawsuit is misdirected and doesn’t target dentists who took advantage of the system.

“Dentists were putting braces on children who clearly didn’t meet the Medicaid standard for that care, and Xerox didn’t have the processes in place to review those cases before paying them,” Texas Health and Human Services Commissioner Kyle Janek said.

Texas has used Xerox to handle Medicaid processing for the last decade, when the state spent $1.1 billion on orthodontic claims, according to the lawsuit filed in Austin. The suit doesn’t specify how much of that amount was allegedly fraudulent.

Scrutiny over alleged Medicaid dental fraud in Texas has been mounting. By 2010, the state’s Medicaid program for dental and orthodontic work was spending more on braces than the other 49 states combined, according to federal auditors.

Medicaid only covers work when the alignment of the teeth is so bad that a child has trouble eating or breathing. The state says Xerox didn’t properly review requests for braces.

Xerox denied those accusations and said the company had implemented a program designed by the state.

“Unfortunately, this misdirected lawsuit focuses on Xerox rather than on the dentists who took advantage of the program,” the company’s statement reads. “We have never engaged in fraudulent activity and always operated with complete transparency.”

Xerox had been under contract for up to 2017. Last year, the state paid the company $168 million.

State officials said that Accenture LLP, the largest subcontractor under Xerox, will take over during the transition.

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Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber

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