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THE STATE OF TEXAS
§ I THE DISTRICT COURT OF § ex re § Filed fn Th Dstrct Cou § o r a av vs Count, x a as s MADELAYNE MADELAYNE CASTILLO § § JUN 2 5 2012 AMC Plaint, § At § Amala Rodrigue z z--Mendo z zaa § RICHARD J MALOUF; RICHARD J § MALOUF, D.S, PC.; RICHARD J § TRAVIS CONTY, TEXAS MALOUF, DD.S., PA.; STAIGHT § FAMILY LANE FAMLY, L.P; CAMELIA § FAMILY LIMITED PARTERSHP; § FORT WORTH SMILES BY WIRE, PLLC; § GARLAND ROADS SMLES, PLLC; § GARAND ROADS SMILES BY WIR, § PLLC; HALTHOM HALTHOM CITY SMILES, PLLC; § JACKSBORO SMILES, PLLC; § ACKSBORO SMILES BY WIRE, PLLC; § LEWISVILLE SMILES, PLLC; NORTHWEST NORTHWEST HIGHWAY SMILES, PLLC; PLANO MINYARD SMLES, PLLC; ST. FRANCIS SMILES, PLLC;VALLEYVIEW PLLC;VALLEYVIEW SMLES, PLLC; RGS DENTAL MANAGEMENT SERVICE, LLC; RMAL HOLDIGS, LLC; DISCOUNT DENTAL SUPPLY, LLC; AS PROPERTY HOLDNGS, LLC; M HOLINGS, LLC; HYPERMART • HOLDIGS LP, LLC; d Dr RAFFY KOUYOUMDJIAN
Defendants.
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JUDICIAL DISTRICT
§ § § § § § § § § §
PLAINTIFFS' FIRST AMENDED PETITION .·
T TH HRAB JDG: The State of Texas (State), by and trough the Attoey General of Texas, Greg Abbott, brings this cause of action under the Texas Medicaid Fraud Prevention Act, (the Act or TPA), TPA), TEX. H. Rs COE chapter 36. The State has primary responsibility responsibi lity for prosecuting this action under section 36.107(a) of the TPA. Private Person Plaintiff/Relator Madelayne Castillo Relator Castillo) is the Relator in this case and as such is a· named par par Plaintiff. The State and Relator Castillo will be collectively referred to as Texas. The action om which this case was severed was led under under seal on or about the 23d day of May 2012, by Relator Castillo Castillo under under section 36.102 of the TPA TPA n or about the 25 day of June 2012, the State exercised its prerogative under section 36.104 f the TPA TPA and formally led its otice of ntervention. n or about June 25, 2012, the t he Court granted leave to Texas to sever and unseal the claims against theseDefendants these Defendants om the original case. I. DISCOVERY CONTROL C ONTROL PLAN
1.1
Plaintiffs designate this case as a evel 3 case requiring a discovery control plan
tailored tailor ed to the circumstances of this specic speci c suit. II. JURISDICTION VENUE
2.1
This court cour t has subjectmatter subjectmatter jurisdiction over ov er this case pursuant to section 36.052(d) 36.052( d)
of the TPA, which provides statuto remedies to redress the conduct of theDefendants.
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The TMFPA TMFPA provides authority for this action to be brought by the Aoey General and by Rel&tor Castillo TEX H Rs COE§§ 36052, 36102 22
This Court hasjurisdiction has jurisdiction over each of theDefenda theDefendants nts named in this Petition because bec ause
eachDefendant does business in the State of Texas and comited e unlawl acts alleged in whole or in part in the State 23
enue is proper in Travis County under section 36052(d) 36052( d) of the Texas Human
Resources Code and additionally because many of the unlawl acts commied by the Defendants were commited in Travis County, including the ming min g of the false statements and misrepresentations of material fact to the Texas Medicaid Program 31
Plaintiff , represented by the Atoey General,
IS
authorized to bring this action uner section 36052 of the Texas Human Resources Code 32
Relator I Plaintiff PlaintiffY Y is an individual authorized to bring
this action under section 3610 361022 of the Texas Human Resources Resou rces Code Relator Castillo wored in the Jacsboro Highway location of All Smiles in 2008 3 3
Defendant J. is a dentist licensed (# (#16206) by the Texas State
Board ofDental xaminers xaminers and may be served with process at his principal place of business, 9090 Sillman Street, Suite 200C, Dallas, Texas 75243
Page33 Page
34
Defendant RICHARD J. MAOUF, D.D.S., P.C. is a Texas limited liability
company t may be served with process by serving its registered agent, Richard J Malouf, at 3100 Matloc, Suite 101, Arlington T 76015 35
Defendant RICHARD J. MAOUF. D.D.S., P.A. is a Texas limited liabili
association t may be served with process by serving its registered agent, ichard J Malouf, at 9090 Sillman St, Suite 200, Dallas, Texas 75243 36
Defendant 2009 STRAIT ANE FAMIY, .P. is a Texas limited partnership. t
may be served with process by serving its registered agent, Richard J Malouf, at 9090 Sillman St, Suite 200, Dallas, Texas 75243 37
Defendant CAMEIA FAMIY IMITED PARTNERSHIP is a Texas limited
partnership t may be served served with process by serving its registered agent, agent, Richard J Malouf, at 9090 Sillman St, Suite 200, Dallas, Texas 75243 38
Defendant FORT WORTH SMIES BY WIRE, PC is a Texas limited liability
company with its principal pri ncipal place of business at 4901 BJ Freeway, Freeway, Suite 400, Dallas, Texas 75244 t may be served with process by serving its registered agent, agent, Adrian Codel, at 4901 BJ Freeway, Suite 400, 40 0, Dallas, Texas 75244 7524 4 39
Defendant GARAND ROAD SMIES, PC is a Texas limited liability company
with its principal place of business at 4901 BJ Freeway, Suite 400, Dallas, Texas 75244 t may be served with process by serving its registered agent, Adri Codel, at 4901 BJ Freeway, Suite 400, Dallas, Dallas, Texas 75244
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3.10 Defendant GARLAND ROAD SMILES BY WIRE PLLC is a Texas limited liabili compy with its principal place of business at 4901 BJ Freeway, Suite 400, Dallas, Texas 75244. t may be served with with process by by serving its registered agent, agent, Adrian Codel, at 4901 BJ Freeway, Suite 400, Dallas, Texas 75244. 3.11 Defendnt HAL HALTOM TOM CITY SMILES PLLC is a Texas professional limited liability company with its principal pace of business at 4901 BJ Freeway, Suite 100, Dallas, Texas 75244. t may be served with process by serving its registered agent, Adrian Codel, at 4901 BJ Freeway, Suite 400, Dallas, Texas 75244. 3.12 Defendant JACKSBORO SMILES PLLC is a Texas professional limited iability company with its principal place of business at 4901 BJ Freeway, Suite 100, Dallas, Texas 75244. t may be served with process by serving its registered agent, Adrian Codel, at 4901 4 901 BJ Freeway, Suite 400, Dallas, Texas 75244. 3.13 Defendant JACKSBORO SMILES BY WIRE PLLC is a Texas professional limited liability company with its principal place of business at 4901 BJ Freeway, Suite 100, Dallas, Texas 75244 t may be served with process by serving its registered agent, Adrian Codel, at 4901 BJ Freeway, Suite 400, Dallas, Texas 75244. 3.14 Defendant LEWISILLE SMILES PLLC is a Texas professional limited liability company with its principal place of business at 4901 BJ Freeway, Suite 100, Dallas, Texas 75244. t may be served with wi th process by serving its registered agent, Adrian Codel, at 4901 BJ Freeway, Suite 400, Dallas, Texas 75244.
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315 Defendant NORTHWEST HIGHWAY SMILES, PLLC is a Texas professional limited liabili company with its principal place of business at 4901 BJ BJ Freeway, Freeway, Suite S uite 100, Dallas, Texas 75244. t may be served with process by serving its registered agent, Adrian Codel, at 4901 BJ Freeway, Suite Su ite 400, Dallas, Texas 75244. 3.16 Defendant PLANO MINYARDS SMILES, PLLC is a Texs professional limited liability company with its principal place of business at 4901 BJ Freeway, Suite 100, Dallas, Dallas, Texas 75244 t may be served with process by serving its registered agent, Adrian Codel, at 4901 490 1 BJ Freeway, Suite 400, Dallas, Texas 75244 317 Defendant ST FRANCIS SMILES, PLLC is a Texas professional limited liability company with its principal princi pal place of business at 4901 BJ Freeway, Suite 100, Dallas, Texas 75244 t may be served with process by serving its registered agent, Adrian Codel, Codel, at 4901 BJ Freeway, Suite 400, Dallas, Texas 75244 professional limited liability 3.18 Defendant VALLEYVIEW SMILES, PLLC is a Texas professional company with its principal place of business at 4901 BJ Freeway, Suite 100, Dallas, Texas 75244 may be served with process by serving its registered agent, Adrian Codel, at 4901 BJ Freeway, Suite 400, Dallas, Texas 75244. 3.19 Defendant RGS DENTAL MANAGEMENT SERVICES, LLC is a Texas professional limited liability company. t may be served with process by serving its registered agent for process, Richard J. Malouf, at 9090 Sillman St, Suite 200, Dallas, Texas 75243.
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3.20 Defendant RMAL HOLDINGS LLC is a Texas professional limited iabili company t may be served with process by serving its registered agent for process, Richard J Malouf, at 9090 Sillman Sil lman St, Suite 200, Dallas, Texas 75243. 3.21 Defendant DISCOUNT DENTAL SUPP SUPPLY LY LLC is a Texas professional limited liability company t may be served with process by serving its registered agent for process, Richard J. Malouf, at 9090 Silman St, Suite 200, Dalas, Texas 75243. 322 Defendant AS PROPER PROPERTY TY HOLDINGS LLC is a Texas professional imited liabiity liabi ity company t may be served with process by serving its registered agent for process, Richard J Malouf, at 9090 Silman St, Suite 200, Dallas, Texas 75243. 3.23 Defendant M5 HOLDINGS LLC is a Texas profesiona limited liability company t may be served with wi th process by serving its registered agent for process, Richard J. Malouf, at 4570 Westgrove Dr, Suite 240, Addison, T 75001. 3.24 Defendant HYPERMART LOT 6, LLC is a Texas professional limited liability company may be served with process by serving its registered agent for process, Richard J. Malouf, at 9090 9 090 Silman St, Suite 200, Dallas, Texas 75243. KOUYOUMDJIAN is is a dentist icensed (#23066) by the 325 Defendant DR. RAFFY KOUYOUMDJIAN
Texas State Board ofDental xaminers and may be b e served with process at his principal princi pal place of busine business, ss, 2319 Clar St, Dallas, T 75204.
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IV. PREIMINARY STATEMENT D NATURE OF THIS ACTION
4.1
This is a law enforcement action brought under the TPA TP A Plaintiffs see to
recover: (1) (1) the amount of any payments or the value of any monetary or in-ind benets provided under the Medicaid program, directly or indirectly, as a result of the Defendants unlawl acts; (2) prejudent prejudent interest on the amount of the payments or the value of such payments; (3) two times the amount of of the payments or the value of of such payments; ( 4) civil penalties in an amount not less than $5,500 or more than $5,000 for each unlawl act committed by the defendants; (5) e costs, attoeys' fees, and expenses incurred by the State and Relator Castillo in obtaining relief under the TPA; and (6) any and all other remedies that may be allowed under chapter 36 of the TEX HN REOE COE Additionally, the State sees injunctive relief pursuant to section 36.051 of the TEX HN EOE COE 42
Medicaid dental/orthodontic providers who treat Texas Medicaid recipients are
entitled to be reimbursed by the Texas Medicaid Medicaid Program for their services 1 TEX AN COE§ 354.1221. 433 4
Defendant Defend ant Medicaid dental/orodontic providers voluntarily and an d armatively sought
and attained participation in the Medicaid proam To do this, they enrolled and sied a provider agreement with Texas Medicaid
Page 8
4.4.
Defendant Medicaid dental/ orhodontic orhodontic providers are required by law to "maintain all a ll
records necessary to lly disclose the serices serices provided. provided. 1 TEX. AIN. AIN. COE§ COE§ 354.1004. Defendants are required to retain these records for either "ve yes om the date of the serice, or until all audit questions are resolved, whichever is longer. !d. 4.5
As a mater of law, by becoming picipants in the Medicaid proam the theDefendants Defendants
are charged with the duty to now the statutes, statutes, rules, and regulations of the United States and of the State of Texas pertinent to the Medicaid program program.. 1 TEX. AIN AIN COE§ 371.1615; U.S. 51, 64-5 (1984); (1984); see also: al so: Heckler v Cm HealthServs ofCrawfordCoun, Inc. 467 U.S. North Mem 'l Med Ctr v Gomez 59 F.3d 735 (8th Cir. 1995). Defendants nowingly or
intentionally made false representations, including misrepresentations by silence and omission, to the Texas Medicaid Proam about dental/orhodontic dental/orhodontic services. 4.6
As a result ofDefendants' misrepresentations of their provision of dental/ orthodontic orthodontic
serices, Texas Medicaid oveaid those Defendants. Defendnts' misrepresentations, failures to disclose, and false representations caused e Texas Medicaid Proam to pay fr more for dental/orthodontic serices than was auorized by law. v.
BACKGROUND
5.1
The federal goveent enacted the Medicaid proam in 1965 as a cooperative
undertaking between the federal and state goveents to help the states provide medical care to lower income individuals. ach state administers its own Medicaid Medicaid program. Medicaid is nded jointly by the th e federal and state goveents 42 U.S.C. § 1396.
age 9
52
The Texas Medicaid Medicai d Program Program reimburses dental/orthodontic dental/orthodontic providers who provide
dental/orthodontic services to Medicaid clients This reimbursement reimbursement is based on criteria set out in state and federal law 53
rthodontic services service s may only be reimbursed if the providers obtained prior pri or approval
om Medicaid 25 TEX AIN AIN COE COE§ § 3 371 This prior authorization requires signicant documentation Additionally orthodontic services are limited to to sict criteria spelled out inthe Texas Medicaid Providers Procedure Manual e Texas Administrative Code and other state and federal law 5. 4
Defendants did not follow the proper criteria set out in state and federal law which
resulted in oveayments to Deenda Deendants nts and others others VI. ACTIONABE CONDUCT OF DEFENDANTS
61
When Defendants applied for prior approval of orthodontic serices and when
Defendants led Medicaid claims and other documentation Defendants had a duty to report the true nature of the services which they provide to Medicaid clients The Defendants knowingly or intentionally submitted false information and misrepresented material facts when seeking prior pproval for orthodontic serices Defendants also submitted false information and misrepresented material facts when they submitted other Medicaid documentation Defendants submitted claims for services which they did not provide and misrepresented or concealed the true nature of the th e serices which they provided Defendants
Page 10
thus coited unlaw unlawll acts under the TPA TPA that resulted in the payment of excessive reimbursement to t o Medicaid providers for the dental/orhodontic dental/orhodontic serices misrepresented that they they were providing: medically necessa 6.2 Defendants knowingly misrepresented dental/orhodontic serices as dened by Medicaid criteria, proper documentation of denta/orhodonticc services, appropriate and qualied providers to provide dental/orodontic denta/orhodonti services, and billing only for dental/orhodontic dental/orhodontic serices which were actually provided 6.3
n one or more of the following ways, eDefend Defendants ants acted knowingly in making false
statements and misrepresentations of material fact to the Texas Medicaid program, and in concealing, or failing to disclose, the trth to the Texas Medicaid program: A
By providing dental/orhodontic serices or products which were not medically necessary as dened by Medicaid criteria;
B.
By proiding dental/orhodontic serices or products which failed to meet the appropriate Medicaid standards;
C
By failing to proper properly ly document document as to medical necessity necessity as dened by Medicaid criteria criteria and otherwi otherwise se the dental/orh dental/orhodont odontic ic serices or productss which were provided; product
D.
By allowing unqualied person personss to perform dental/orhodontic serices for which they were not legally allowed to perform, because those persons lacked the required qualications, cerication, or or credentials;
By billing for dental/orhodontic serices or products which were simply not provided;
F.
By upcoding, or billing for dental/orhodontic services or products which were more expensive than those which were actually provided; and
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G
644 6
By otherwise failing to follow applicable law, including the Texas Medicaid Medic aid Providers Procedure Manual, the Texas Adminisative Code, Code, and other state and federal law
The Texas Medicaid program used Defenda Defendants' nts' false representations representations of the services
they provided as as a basis for calcula calculating ting payment to to thoseDefendants Defendants Defendants' unlawl conduct resulted in harm to the Texas Medicaid program, the beneciaries thereof, and the t he tpayers of Texas VII. TE DEFENDANTS' ACTIONS CONSTITUTE "UNLAWFUL ACTS UNDER TE TEXAS MEDICAID FRAUD PREVENTION ACT
711 7
At various times in the past, and continuing trough the present date, Defendants
nowingly or intentionally made false statements or misrepresentations to the Texas Medicaid Proam regarding dental/orhodontic services they provided to Medicaid clients 72
Defendants began committing these unlawl acts on September 7, 2007
73
Defendants comitted unlawl acts by: A.
Knowingly maing or causing to be made a false statement or misrepresentation of a material fact to permit a person to receive a benet or paymentt under the Medicaid proam that is not authorized or that is greater paymen than the benet or payment that is authorized TEX H COE § 36002(1)(A) & (B)
B
Kowingly concealing or failing to disclose information that permits a person to receive a benet or payment under the Medicaid progr that is not authorized or that is greater than the benet or payment that is authorized �EX H COE § 36002(2)
C
Knowingly maing, causing to be made, inducing, or seeing to induce the maing of a false statement or misrepresentation of material fact conceing information reuired to be provided by a federal or state law, rule, regulation,
age 12
or provider agreement prtaining to the Medicaid Medicaid program TEX H COE § 36002(4)(B) D
Kowingly applying for and receiving benets or payments on the behalf of other persons under the Medicaid program and convering any part of those benets or payments to a use other than for the benet of those persons Tx. H COE § 36002(3)
.
Knowingly paying or receiving consideration as a condition to the provision of a service if the cost of the service is paid for, in whole or in par, uder the Medicaidd program TEX H COE §§ 36002(5), Medicai 360 02(5), 36002(3)
F
Knowingly paying, charging, soliciting, accepting, or receiving unauthorized gi, money, donation or other consideration consideration as a condition condit ion to the provision, or continued provision provision,, of of a service or product when that service or productt was paid for, in whole or in part, under the Medicaid program TEX produc H COE§ 36002(5)
G
Kowing presenting or causing to be presented a claim for payment under the Medicaid proam for a service rendered by a person who is not licensed to render the service servic e or is is not licensed in the manner manner claimed TEX H COE § 36002(6)
H
Kowing making or causing to be made a claim under the Medicaid proam for a service that has not been approved or acquiesced in by a treating health care provider, or a service that is substantially inadequate or inappropriate when compared to generally recognized dental/orthodontic standards TEX H COE § 36002(7)
Kowing ly making a claim Kowingly claim under the Medicai Medicaidd program nd knowingly failing faili ng to indicate the th e type of license and license identication number of the health care provider who provided the service TEX H COE § 36002(8)
J.
Knowingly entering into an agreement, combination, or conspiracy to deaud the state by obtaining obtaini ng or aiding another person in obtaining an unauthorized payment or benet om the Medicaid proam Tx H COE § 36002(9)
Pag 13
VIII. CIVIL REMEDIES UNDER THE TMFPA
8.
Under the TPA, each Defendant is liable to the State of Texas for the amount of
any payment provided under the Medicaid program, directly or indirectly, as a result of its unlawl acts, plus interest om the date of the payment, two times the amount of the payment, and a civil penal for each unlawf unlawful ul act committ committed, ed, in additio additionn to the fees, expenses, and costs of the Attoey Attoey General and the Relator in investigating and obtaining civil remedies and injunctive injunctive relief in this matter. TEX. H COE§ COE§§ § 36.052, 36.007, 36.0(c) 82
Plaintiffs invoe in the broadest sense all relief possible under § 36.052, whether
specied in this pleading or not Plaintiffs will see an amount as civil penalties that will be justied nd appropriate under the facts and the law. 8.3
The amounts sought om eachDefendant each Defendant are in excess of the minimum jurisdictional
limits of this Court. 8. 4
The TPA is a statute of of absolute liability. There are no stattory, equitable, or
coon law defenses for any violation of its provisions. Furher, Texas jurisprdence provides that the defenses of estoppel, laches, and limitations are not available avai lable against the State of Texas, as a Sovereign. State v. Durham 860 S.W.2d 63, 67 (Tex 993) 8.5
The Defendants' unlawl acts have cost the State of Texas many millions of dollars.
The State is unable, pending ll discovery pursuant to the Texas Rules of Civil Procedure, to determine the total exten of the overpayments overpayments caused caused byDefendants' audulent conduct. conduct.
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IX. STATUTORY INNCTION UNDER§ 36.051 OF THE ACT
9.1
There is good reason reason for the Attoey General to believe believe the the Defendants are
comiting, have commited, or are about to comit unlawl acts as dened by the enjoined joined under § 36.051 of the Act, and under TPA. These illegal acts may be en TEX.GOV. COE§ 2001.202. X. JURY DEMAND
jury pursuant to Texas Rule of Civil Procedure 10.1 Plaintiffs respectlly request a trial by jury 216. XI. REQUESTS FOR DISCOSURE
11.1 Defendants are are requested to disclose, disclose, within 50 days of the service of this request, all of the information or material described in Texas Rule of Civil Procedure Procedure 194.2(a)(l). XII. PRAYER
th e State and 12.1 Plaintis ask that judent be entered upon trial of this case in favor of the the Relator against Defendants to the maximum extent allowed by law. 12.2 The State of Texas asks that it recover fromDefendants: (1)
restitution of oveayments,
(2)
prejudgment pre judgment interest,
(3)
two times the amount of the oveayments,
(4)
civil penalties, and
Pag 15
(5)
expenses costs and atoeys fees. fees.
123 The Relator asks that it be awarded: (1)
its expenses costs and atoeys fees
(2)
Relators Relato rs share as provided by the TPA currently 15% to 25% as provi provided ded by Section 36.110(a)
12.4 The State asks the Cour to grant an injunction ordering Defendants to imediately stop violating the TPA as required by law. 12.5 Plaintiffs pray for such other and rher relief to which they may show themselves entitled. Respectlly submitted GE AO Atoey General of Texas DEL T HOE First Assistant Atoey General JO B SO Deputy First Assistant Atoey General
State Bar o. 21791950 Chief Civil Medicaid Fraud Division ME MOOE State Bar o. 14360050 (512) 936-1319 direct dial Depu Chief Civil Civi l Medicaid Fraud Division L State Bar o 06502452 (512) 936-1703 direct dial
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DVDE WI State B o 00789965 (512) 9361486 direct dial DO T. State Bar o 24065846 (512) 9366615 direct dial ME MLLE State Bar o. 24051959 (512) 936-1420 direct dial BE CV State Bar o 24080836 (512) 4637975 direct dial Assstant Attoeys General P Box 12548 Austin, Texas Texas78711-2548 (512) 499-0712 fax Attoeys for the State of Texas
State Bar o. 20272020 E O JE R. TE, .C 3710 illanova St, Suite 200 Dallas, T 75225 214-740-3000 phone 214-740-30011 fax 214-740-300 Attoeys for the t he Private Person Plaintif Madelayne Castillo
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