Texas Attorney General Report Finds Medicaid Contractor Overcharged State by ‘Millions of Dollars’

Texas Attorney General John Cornyn (R) on July 16 released a report that found Dallas-based EDS, which administers Medicaid claims for the state, and its subsidiary National Heritage Insurance Co. overcharged the state "millions of dollars" between 1999 and 2000, the Austin American-Statesman reports. The report found that EDS paid performance bonuses to employees working on a project that finished two years behind schedule and over budget; mixed revenues and expenses from its Medicaid operations in other states with its account in Texas; charged the state $2,800 per month for a two-bedroom apartment for National Heritage's CEO; paid doctors and hospitals without proper identification; and paid for "fringe benefits" such as free ice cream, baby shower gifts and sports tickets for employees, among other things. The report came at the request of the state Health and Human Services Commission, state Rep. Rob Junell (D) and state Sen. Rodney Ellis (D). Their request came one year after a Travis County grand jury investigation into allegations that EDS improperly changed its accounting methods in order to increase its costs to the state. That investigation was halted when EDS agreed to reimburse the state $3.4 million, and no indictments resulted. Last week's report does not address any criminal charges and does not set a dollar amount for damages. The state will audit the Medicaid contract and will negotiate with National Heritage for any claims made. According to the American-Statesman, if negotiations are not satisfactory to the state, litigation may be pursued. However, state Medicaid officials said last week they would like to avoid a lawsuit (Copelin, Austin American-Statesman, 7/17).