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Firm announces $232M contract with Indiana, just two days after settling huge Medicaid fraud case in Texas

February 21, 2019

Two days after paying Texas $236 million to settle Medicaid fraud charges, New Jersey-based Conduent Inc. announced it has won a $232 million, four-year contract with the Indiana Family and Social Services Administration.

The pact extends a contract that began in 2009 under which the company helps needy Hoosiers apply for state benefits, including Medicaid, food assistance and temporary financial assistance for pregnant women and families.

“We’ve built a trusted partnership with the state over the last 10 years by sharing a commitment to serve Indiana,” Marcus Collier, group chief executive of Conduent’s government division, said in a press release.

Under the Indiana contract, Conduent also will help with screening, scheduling, initial case processing and data collection.

Conduent—which also is a partner in ParkIndy, the private consortium that runs Indianapolis' parking meters—has about 200 employees in Indianapolis.

The Indiana FSSA pact comes on the heels of the announcement that Conduent agreed to pay a record $236 million to resolve a lawsuit brought under the Texas Medicaid Fraud Prevention Act.

The lawsuit accused Conduent of rubber-stamping prior-authorization requests for orthodontic services for Medicaid patients over nearly a decade.

“As a result, taxpayer-funded orthodontic work was performed on thousands of children who either didn’t meet the Medicaid standard for braces or didn’t require treatment,” Texas Attorney General Ken Paxton’s office said in announcing the settlement on Tuesday. It was the largest single resolution in a case filed by Texas for Medicaid-related claims.

At the time, Conduent was owned by Xerox Corp. In 2017, Xerox spun off Conduent into an independent, publicly traded company.

Conduent, based in Florham Park, New Jersey, said all the allegations concerning Texas occurred “when the company was owned by predecessor companies.” Xerox had bought the operation, then known as Affiliated Computer Services Inc., for about $6 billion in 2010. Before the purchase, it was an independent company, founded in 1988 and based in Dallas.

The settlement ends seven years of litigation for Conduent and Xerox. In April 2012, Texas had launched a formal investigation, and two years later, filed a lawsuit. Last year, the Texas Supreme Court ruled that Xerox was responsible for the conduct and could not deflect its liability by blaming the dentists who submitted the prior authorization requests.

According to the Houston Chronicle, the lawsuit had initially sought $2 billion for what state and federal regulators claimed was a scheme that caused taxpayers to pay for thousands of unnecessary dental and orthodontic procedures between 2004 and 2012. Texas had been forced to reimburse the federal government more than $100 million for the procedures.

Conduent was supposed to evaluate applications for Medicaid-funded dental procedures. The company was supposed to have dental professionals carefully review each application to make sure the tooth repairs were medically necessary, the Chronicle said.

Instead, according to the lawsuit, Conduent hired untrained workers who barely glanced at the medical records, molds and X-rays—in effect “rubber-stamping” the paperwork.

As part of the settlement agreement with Texas, Conduent denied any improper action. “We are pleased to put this legacy issue behind,” Ashok Vemuri, CEO of Conduent. As part of the settlement, the company agreed to pay $235.9 million over three years.

Jim Gavin, spokesman for Indiana FSSA, said the contract was competitively bid and procured through the Indiana Department of Administration.

“Conduent was selected from a field of three as the highest scoring respondent based on information included in their responses to the request for proposals,” he said in an email. “The services provided by Conduent in Texas are not the same as those in the scope of Indiana‘s contract.”

Although the company announced the contract on Thursday, the start date was Jan. 1, with a transition period that began Oct. 1, 2018.

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