, .
THE STATE OF TEXAS
ex r DR CHRISTINE ELLIS, DDS.
Plaint, v.
ASDC HOLDINGS, LLC (ASDC), ALL SMILES DENTAL CE NTER CE NTER,, INC, ALL SMILES DENTAL PROFESSIONALS, PC, DR RICHARD MALOUF, DDS, LEWISVILLE SMILES, PLLC, ST FRANCIS FRAN CIS SMILES, SMILES, PLLC, GARLAND ROAD SMILES, PLLC, JACKSBORO SMILES, PLLC, JACKSBORO SMILES SMIL ES BY WIRE, PLLC, VALLEYVIEW V ALLEYVIEW SMILES, PLLC, PLANO P LANO MINYARDS SMILES, PLLC, HALTOM CITY SMILES, PLLC, HALTOM CITY SMILES, PLLC /a ALL SMILES DENTAL & ORTHODONTICS, NORT NORTHWEST HWEST HIGHWAY SMILES, PLLC, FORT WORTH SMILES BY WIRE, PLC, GARLAND ROAD SMILES BY WIE, PLLC, GARLAND ROAD SMILES PLLC, /a ALL SMILES DENTAL & ORTHODONTICS, S HAMPTON SMILES, PLLC, S HAMPTON SMILES, PLLC, /a ALL SMILES DENTAL & ORTHODONTICS, PARK PLAZA SMILES, PLLC, d PARK PLAZA SMILES, PLLC, /a ALL SMILES DENTAL & ORTHODONTICS
§ IN THE DISTRICT COURT OF § § Fi fn !he § Distr ict ict Cour o av s s ont, T § exxas e § § § § § § TAVIS COTY, TEXAS § § § § § § § § § § § § JUDICIAL DISTRICT § § § § § § § § § § § §
f�
Defendants. PLAINTIFFS' FIRST AMENDED PETITION
'
H JG he tate of exas ("tate), by and through the ttoey General of exas, Greg bbott, brings this cause of action under the exas edicaid Fraud Prevention ct, (the ct or "FP), EX HU.
Rs
ODE . chapter 36 he tate has primary
responsibility for prosecuting this action under section 36.107(a) of the P. Private llis, ... ("r. llis) is the elator in this case cas e and Person Plaintiffelator r. hristine llis,... Person Plaintiffelator as such is a named par Plaintiff. he ate and r. llis will be collectively referred to as "exas. he action from which this case was severed was led under seal on or about the 24 day of pri2012,by r. llis under under section section 36.102 of the P. n or about the 25 day of June 2012, the tate exercised its prerogative under section 36.104 of the P d formally led its otice ofnterention. n or about June 25,2012, 25, 2012, the ourt granted leave to exas to sever and unseal the claims against these efendants om the original case.
I. DISCOVERY CONTROL PLAN 1.1
Plaintiffs designate this case as a evel 3 case requiring a discovery control plan
tailored to the circumstances of this specic suit.
II. JURISDICTION VENUE
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.
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his cour co ur has sub subjectmatte jectmatterr jurisdictio jurisdiction n over this case pursuant to section secti on 36.052( 36. 052( d) d)
of the P P, ,which provides statutory remedies remedies to redress redress the conduct of e efendants. he P P provides authori for this action to be brought by the ttoey General and by r. llis. ex. Hum. es. ode§§ ode§§ 36.052, 36.102. 2.2
his our has jurisdiction over over each of the efendants efendants named in this Petition because
each efendant does business in the tate of exas and committed the unlaw acts alleged all eged in whole or in part in the tate 2.3
enue is proper in ravis ounty under section 36.052(d) of the exas Human
esources ode and additionally because many of the unawl acts committed by the efendants were committed i ravis oun, including the maing of the false statements and misrepresentations of material material fact to the exas exas edicaid Program.
III PARTIES PLAINTIFFS 3.1
Plaintiff THE STATE OF TEXAS represented by the toey General,
IS
authorized to bring this action under section 36.052 of the exas Human esources ode. 3.2
elator I Paintiff DR CHRISTINE ELLIS, DDS, MSD, is an individual
authorized to bring this action under section 36.102 of the exas Human esources ode.
DEFENDANTS 3.3
efendant ASDC HOLDINGS, LLC (ASDC) is a eaware limited liabili
company doing business in the tate of exas. ts principal place of business is 200 outh
Pae3
ichigan venue, uite 1020, hicago, llinois. t may be served with process by serving its registered agent, agent ,lan B. oth,at 225 Wacer rive #2800, hicago, hicago, llinois. 60606. 60606 . his hi s efendant, owns, operates, or controls the business affairs of many of the other efendants. 3.4
efendant is a exas cooration with its
principal place of business at a t 401 BJ Freeway, uite 100, allas, exas 75244. t may be served serve d with process proc ess by serving its registered agent, ooration ystem, 350 orth t. Paul treet, t reet, uite 200, allas, exa exass 75201. his defendant, in combination with , , owns, operates, controls, and orchestrates the business affairs of my of the other defendts. 3.5
efendant efe ndant is a ex exas as prof professi essional onal
cooration with its principal place of business at 401 BJ Freeway, uite 100, allas, exas 75244. t may be served with process by serving its registered agent, drian odel, at 401 BJ Freeway, Fr eeway, uite 400,allas, exas 75244. r. r. ichard alouf is listed with the exas ecretary ecreta ry of tate as this defendant's defendant' s president and only director on on its bod. ne of o f its subsidiaries is Property Holdings, , a elawe limited liability company. 3.6
efendant J is a dentist licensed (#16206) by the
exas tate Bod Bo d of ental xaminers and may be served with process at his principal place of busine ss, 00 illm treet, uite 200, allas, exas 75243. n June 30, 2010, alouf entered into an agreement with Holdings, () under which acquired approximately 71 percent of ll miles ental enter, nc. n July 2010, acquired all al l interest in ll miles ental enter, nc. nc.
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efendant LEWISVILLE SMILES, PLLC is a exas professional limited liabili
company with its principal place of business at 401 BJ Freeway, F reeway, uite 100, allas, exas 75244 t may be sered with process by sering its registered agent, agent, drian odel, at 401 4 01 BJ Freeway, uite 400,allas, exas exas 75244 38
efendant ST FRANCIS SMILES, PLLC is a exas professional limited liabili
company with its principal pr incipal place of business at 401 BJ Freeway, uite 100, allas, exas 75244 t may be sered wi process by sering ser ing its registered agent, drian odel, at 401 40 1 BJ Freeway, uite 400, allas, exas 75244 3
efendant GARLAND ROAD SMILES, PLLC is a exas professional limited
liabili company with its principal place of business at 401 BJ Freeway, uite 100, allas, exas 75244 t may be sered with process by sering its registered agent, drian odel, at 401 BJ Freeway, uite 400, allas, exas 75244 310 efendant JACKSBORO SMILES, PLLC is a exas professional limited liabili company with its princpal place of business busine ss at 401 BJ Freeway, Fre eway, uite 100, allas, exas 75244 t may be sered with process by sering its registered r egistered agent, drian odel, at 401 4 01 BJ Freeway, uite 400, allas, exas 75244 311
efendant JACKSBORO SMILES BY WIRE, PLLC is a exas professional
limited liabili company company with its principal place of business at 401 BJ Freeway, uite 100, allas, exas 75244
may
be sered with process by sering its registered agent, drian
odel, at 401 BJ Freeway, F reeway, uite 400, allas, exas 75244
Pge55 Pge
3.12 efendant V ALLEYVIEW ALLEYVIEW SMILES, PLLC is a exas professional limited liabili company with its principal place of business at 401 BJ Freeway, uite 100, allas, exas 75244. t may be sered with process by sering its registered agent, drian odel, at 401 BJ Freeway, uite 400, allas, exas 75244. 3.13
efendant PLANO MINYARDS SMILES, PLLC is a exas professional limited
liability company with its principal place of business at 401 BJ Freeway, uite 100, allas, exas 75244. t may ma y be sered with process by sering its registered agent, drian odel, at 401 BJ Freeway, uite uite 400, allas, exas 75244. 3.14
efendant HALTOM CITY SMILES, PLLC is a exa exass professional limited liabili liabili
company with its principal place of business at 401 BJ Freeway, Fr eeway, uite 100, allas, exas 75244. t t may be b e sered with process by sering its registered agent, drian odel, at 401 BJ Freeway, uite 400, allas, exas 75244. 3.15 efendant HALTOM CITY SMILES, PLLC
d/b/a ALL
SMILES DENTAL
liability company with its principal place ORTHODONTICS is a exas professional limited liability of business at 401 BJ Freeway, uite 100, allas, exas 75244.t may be sered with process by sering its registered agent, dri odel, at 401 BJ Freeway, uite 400, allas, exas 75244. 316
efendant NORTHWEST HIGHWAY HIGHWAY SMILES, PLLC is a exas professional
limited liabili company with its principal place of business at 40 1 BJ Freeway,uite 100, allas, exas 75244. t may be b e sered with process proces s by sering its registered agent, drian odel, at 401 BJ Freeway, uite 400, allas, exas 75244.
Pag6
317 efendant FORT WORTH SMILES BY WIRE PLLC is a exas professional limited liability company with its principal place of business at 401 BJ Freeway, uite 100 allas, exas 75244. t may be sered with process by sering its registered agent, dri odel, at 401 BJ Freeway, Fre eway, uite 400 4 00 allas, exas 75244. 3.18
efendant GARLAND ROAD SMILES BY WIRE PLLC is a exas professional
limited liabili company its principal place of business at 401 BJ Freeway, uite 100 allas, exas 75244 t may be sered with process by sering its registered agent, drian odel, at 401 BJ Freeway, uite uite 400, 40 0, allas, exas 75244. 3.1
efendant GARLAND ROAD SMILES PLLC
d/b/a ALL
SMILES DENTAL
OTHODONTICS is a exas professional limited liability company with its principal
place of business at 401 BJ Freeway, uite 100 allas, exas 75244 t may be sered with process by sering its registered agent, drian odel, at 401 BJ Freeway, uite 400, allas, exas 75244 320 efendant HAMPTON SMILES PLLC is a exas professional limited liabili company with its principal place of business at 401 BJ Freeway, uite 100 allas, exas 75244. t may be sered with process by sering its registered agent, drian odel, at 401 4 01 BJ Freeway, uite 400, allas, exas 75244. 3.21 efendant PARK PLAZA SMILES PLLC is a exas professional limited liabili company wi its principal place of business at 401 BJ Freeway, uite 100 allas, exas 75244. t may be b e sered with process by sering its registered agent, drian odel, at 401 Freeway, uite 400, allas, exas 75244 BJ Freeway, BJ
Page7 Page 7
3.22
efendant PARK PLAZA SMILES PLLC,
d/b/a
ALL SMILES DENTAL
ORTHODONTICS is a exas professional limited limited liabili company with its principal place of business at 4901 BJ Freeay, uite 100, allas, exas 75244. t may be sered with process by sering its registered agent, drian odel, at 4901 BJ Freeway, uite 400, allas, exas 75244.
IV PRELIMINARY STATEMENT AND NATURE OF THIS ACTION 41
his is a law enforcemen enforcementt action brought under the FP Plaintiffs see to
recover ( 1) 1) the amount of any payments or the value of any monetary or inind benets provided under the edicaid program, program , directly or indirectly, as a result of the efendants' unlawl acts; (2) pre-judgment pre-judgment interest on the amount of the payments or the value of such payments; (3) two times e amount of the payments or the value of such payments; (4) civil · penalties in an amount not less than $5,500 or more than $15,000 for each unlawl act committed by the defendants; (5) the costs, atoeys fees, and expenses incurrd by the tate and r llis in obtaining relief under the P ; and ( 6) 6) any and all other remedies r emedies that may be allowed under chapter 36 of the TEXAS HUMAN ESOURCES ODE. dditionally, the tate sees injunctive injunctive relief pursuant to section 36051 of the TEXAS HUMAN ESOURCES ODE. 4.2
edicaid dental/orhodontic providers who eat exas edicaid recipients are
entitled entitle d to be reimbursed by the exas edicaid Program for their serices 1 TEX. M ODE§ 354.1221.
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43
efendant edicaid dental/orhodontic dental/or hodontic providers voluntarily and aatively sought
and atained paricipation in the edicaid program To do this they enrolled and signed a provider agreement with Texas edicaid 44
efendant edicaid dental/orhodontic dental/orhodontic providers are required by law to "maintain al
records necessary to lly disclose the serices provided 1 TEX DM DM ODE§ ODE§ 3541004 efendants are required to retain these records for either "ve years om the date of the seice or until al audit questions are resoved whichever is longer. ld 45
s a mater of aw by becoming paricipants in the edicaid program the efendants
are charged with the duty to know the stattes ules and regulations regulations of the nited tates and of the tate of Texas perinent to the edicaid edicaid program 1 TEX DM ODE§ 3711615; see aso: Hecker v. Cm Heath Servs. of Crawford Coun, Inc 467 51 64-5 (1984); North Mem' Me Ctr
v.
Gomez 59 F3d 735 (8th ir 1995) efendants knowingly knowingly or
intentionally made false representations including misrepresentations by silence and omission to the Texas edicaid Program about denta/orhodontic seices 46
s a result of efendants' misrepresentations of their provision of dental/orhodontic
seices Texas edicaid oveaid those efendants efendants' misrepresentations failures to disclose, d false representations caused the Texas edicaid Program to pay far more for dental/orhodontic seices than was authorized by law
9
v
BACKGROUND 51
The federal govement enacted the edicaid program in 1965 as a cooperative
undertaking between the federal and state goveents to hep the states provide medica ce to lower income individuals ach state administers administers its own edicaid edicaid proam edicaid is nded jointly by the federal d state goveents 42 § 1396
52
The Texas edicaid edica id Program reimburses dental/orthodontic dental/orthodontic providers who provide
dental/orthodontic services to edicaid clients clients This reimbursement is based on criteria set out in state and federal aw
53
rthodontic rthodont ic services may only be reimbursed if the providers obtained prior approval
om edicaid 25 TEX DMI ODE ODE§ § 33 71 This prior authorization requires siicant documentation dditionaly, orthodontic serices are imited to strict criteria criteria speled out inthe Texas edicaid Providers Procedure anua, the Texas dministrative ode, and other state and federal law
54
efendants did not folow the proper criteria set out in state and federal law, which
resulted in oveayments to efendants and others
VI ACTIONABLE CONDUCT OF DEFENDANTS 61
When efendants applied for prior approval of orthodontic serices and when
efendts led edicaid claims and other documentation, efendants had a duty to report the tre nature of the serices, which they provide to edicaid clients The efendants knowingly or intentionally submitted false information, and misrepresented material facts,
10
when seeking prior approval for orthodontic orthodontic services services efendants also submitted false information and misrepresented material facts when they submitted other edicaid documentation efendants submitted claims for services which ey did not provide and misrepresented or concealed the tre nature of the services which they provided efendts thus committed unlawl acts under the that resulted in e payment of excessive reimbursement to edicaid providers for the dental/orthodontic services 6.2
efendants knowingly misrepresented at they were providing: medically necessary
dental/orthodontic services as dened by edicaid criteria proper documentation of dental/ orodontic orodontic serices appropriate and qualied providers to provide dental/ dental/orthodo orthodontic ntic services and billing only for dental/orthodontic serices which were actually provided efendants also knowingly paid or received received consideration as a condition of the provision of dental/orthodontic serices by unlawl recruiting and paying kickbacks for the recruiting of edicaid clients 6.3
n one or more mo re of the following ways the th e efendants acted knowingly in making false
statements and misrepresentations of material fact to the Texas edicaid program and in concealing or failing to disclose the truth to the Texas edicaid program:
By providing dental/orthodontic seric serices es which were not medically necessary as dened by edicaid criteria;
B
By providing dental/orthodontic services whic failed to meet the appropriate edicaid standard standards; s;
By failing to properly document document as to medical necessity necessity as dened by edicaid criteria and oerwisethe dental/orthodontic serices which were provided;
1
6.4
.
By alowing unqualied persons to perform dental/o dental/orhodont rhodontic ic ser serices ices for hich they were not legally alowed to perform, because those persons lacked l acked the required qualications, cerication,or credentials;
.
By biling for dental/orhodontic services which were simply not provided;
F.
By upcoding, or billing for dental/orhodontic serices which were more expensive than those which wh ich were actuay provided;
G
By recruiting edicaid cients cients through a system of paying kickbacks to thosee clients, and to others; and thos
H
By otherwise failing to follow applicabe law, including the Texas edicaid roviders rocedure anual,the anual, the Texas dminisative ode, and other state and federa law.
The Texas edicaid proam used efendants' efendants' false representations of the serices
they provided as a basis for calculating payment to those efendants. efendats' unlawl unl awl conduct resulted result ed in harm to the Texas Texa s edicaid program, the beneciaries thereof, and the tpayers f Texas.
VII. THE DEFENDANTS' ACTIONS CONSTITUTE "UNLAWFUL ACTS UNDER THE TEXAS MEDICAID FRAUD PREVENTION ACT 71
t various times in the past, and continuing through the present date, efendants
knowingly or intentionally made false statements or misrepresentations to e Texas edicaid rogrm regding dental/ohodontic serices they provided to edicaid clients. 72
efendants began committing ese unlawl acts on eptember 7, 2007
73
efendants committed unlawl acts by: .
Knowingy making or causing to be made a false statement or misrepresentation of a material fact to peit a person to receive a benet or
12
payment under the ediaid program that is not authorized or that is eater than the benet benet or payment that is authorized. TEX. HUM Rs DE § 36.002()() & (B). B.
Knowingly onealing or failing to dislose infoation that permits a person to reeive a benet or payment under the ediaid program that is not authorized or that is greater than the benet or payment that is authorized. TEX. HUM RS DE § 36.002(2).
.
Knowin gly making Knowingly making,, ausing to be made, induing, or seeking to indue the ming of a false statement or misrepresentation of material fat oneing information required to be provided by a federal or state law, rule, regulation, or provider agreement agreement pertaining to the ediaid ediaid program. TEX. HUM Rs DE§ 36.002(4)(B).
owingly paying or reeiving onsideration as a ondition to the provision of a serie if the t he ost of the servie is paid for, in whole or in pt, under the ediaid program. TEX. HU Rs DE§§ 36.002(5), 36.002(13).
.
Knowingly paying, harging, soliiting, aepting, or reeiving an unauthorized gi,money, gi, money,donation donation or other onsideration as a ondition to the provision,,or ontinued provision, of a serie provision s erie or produt when that th at serie seri e or produtt was paid for, in whole or in par, under the ediaid program. produ progr am. TEX. HUM Rs DE § 36.002(5)
F.
Knowing presen presenting ting or ausing to be presented a laim for payme payment nt under the ediaid program for a servie rendered by a person who is not liensed to render the servie or is not liensed liensed in the manner laimed. TEX. HUM Rs DE§ 36.002(6).
G.
owing making or ausing to be made a laim under the ediaid program for a serie that has not been approved or aquiesed in by a treating health are provider, or a serie that is substantially inadequate or inappropriate when ompared to generally reognized dental/orthodonti standards. TEX. HUM Rs DE§ 36.002(7).
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III CIIL REMEDIES UNDER THE TMFPA 81
nder the th e TP, each efendant efendant is liable to e tate of Texas for the amount of o f
any payment provided under the th e edicaid program, directly or indirectly, as a result of its unlawl acts, plus interest om the date of the payment, wo times the amount of the payment, and a civil penalty for each unlawl act committed, in addition to the fees, expenses, and costs of the ttoey General d the elator in investigating and obtaining 36052 52 360 36007 07 civi remedies and injunctive injunctive relief in this this matter TEX HuM Rs ODE§§ 360
36110(c) 82
Plaintiffs invoke in the broadest sense all relief possible under § 36052 whether
specied in this pleading pl eading or not Plaintiffs will seek an amount as civil penalties that will be justied and appropri appropriate ate under the facts and the law 83
The amounts sought om each efendant efendant e in excess of the minimum jurisdictional
limits of this ourt 84
The TP is a statute of absolute liability There are no statutory, euitable, or
common law defenses for any violation of its provisions urther, Texas jurisprudence provides that the defenses of estoppel, laches, and limitations are not available against the tate of Texas, as a overeign Sae v. Durham 860 W2d 63 67 {Tex 1993) 85
The efendants' unlawl acts have cost the tate of Texas many millions of dolls
The tate is unable, pending ll ll discove pursuan pursuantt to the Texas ules of ivil Procedure, to determine the total extent of the oveayments caused by efendants' audulent conduct
14
I
STATUTORY INNCTION UNDER§ 36.051 OF THE ACT 91
There is good reason for the ttoey General to believe the efendants are
committing, have committed, or are about to commit unlawl acts as dened by the enjoined under § 36051 of the ct, and under TP. These illegal acts may be enjoined TEXGV DE§ 2001202 2001202
X RY DEMAND 101
Plaintiffs respectlly reuest a trial by jury pursuant to Texas ule of ivil Procedure
216 X.
REQUESTS FOR DISCLOSURE 111
efendants are reuested reuested to disclose, within 50 days of the serice serice of is reuest, all
of the information or material described in Texas ule of ivil Procedure 1942(a)-(l) 1942(a)-(l)
XII PRAYER 121
Plaintiffs ask that judg judgment ment be entered upon tri�l of this case in favor of the tate and
e elator against efendants to the maximum extent allowed by law 122
The tate of Texas asks that it recover om efendants: (1)
restitution of oveayments,
(2)
prejudgment pre judgment interest,
(3)
two times the amount of the oveayments,
15
12.3
(4)
civil penalties and
(5)
expenses costs and attoeys' fees.
The elator ass that it be awded (1)
its expenses costs d attoeys' fees
(2)
elator' elato r'ss share as provided by the TP TP currently 15% to 25% as provided by ection 36.110(a).
12.4 The tate ass the ourt to grant an injunction ordering efendants to immediately stop violating the TP as required by law 12.5 Plaintiffs pray for such oer and her relief to which they may show themselves entitled. espectly submitted GRE O ttoey General of Texas ANIEL T. HODE irst ssistant ttoey General JoH B. CO
epu irst ssistant ttoey General
tate B o. 21791950 hie ivil edicaid edi caid raud ivision ARARE OOE tate Bar o. 14360050 (512) 936-1319 direct dial eputy hief ivil edicaid raud ivision A INAL
16
tate B o. 06502452 (512) 9361703 direct dial AVID WRI tate Bar o. 00789965 (512) 936-1486 direct dial AMO A MON N T. N N tate B o 24065846 (512) 936-6615 direct dial A IR tate B o 24051959 (512) 9361420 direct dial BADN CIVINS tate Bar o 24080836 (512) 4637975 direct dial ssistant ttoeys General P Box 12548 ustn Texas 787112548 787112548 (512) 4990712 fax ttoeys for the tate of Texas
f» AN HARROV tate B o. 00790822 600 avarro, uite 500 an tonio, Texas Texas 78205 (210) 3490515 phone (210) 349-3666 fax CE EGEL tate Bar o. 18341875 3219 cKinney venue allas, Texas 75204 (214) 357-6244 phone (214) 357-7252 fax ttoeys for the Private Person Plaintiff, r Christine Ellis, . .. .
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