DOJ $24 Million Child Welfare Fraud Settlement

The Department of Justice press release January 20, 2010 announced a False Claims Act settlement against FOBRA Holdings, LLC a dental management company that provides business management and administrative services to 69 clinics nationwide known as “Small Smiles Centers.” Under the agreement, FORBA will pay the United States and participating states $24 million, plus interest, to resolve allegations that it caused bills to be submitted to state Medicaid programs for medically unnecessary dental services performed on children insured by Medicaid, which is funded jointly by the federal and state governments. FORBA has further agreed to put in place various remedial measures designed to prevent similar unlawful conduct from occurring in the future. The government’s investigation of individual dentists is ongoing, and FORBA is cooperating with that investigation by providing information about dentists who may have violated professional standards.

The United States alleged that FORBA was liable for causing the submission of claims for reimbursement for a wide range of dental services provided to low-income children that were either medically unnecessary or performed in a manner that failed to meet professionally-recognized standards of care. These services included performing pulpotomies (baby root canals), placing crowns, administering anesthesia (including nitrous oxide), performing extractions, and providing fillings and/or sealants.

“We have zero tolerance for those who break the law to exploit needy children,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Illegal conduct like this endangers a child’s well-being, distorts the judgments of health care professionals, and puts corporate profits ahead of patient safety.”


“We will not tolerate Medicaid providers who prey on vulnerable children and seek unjust enrichment at taxpayers’ expense,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “This settlement reaffirms our commitment to protect the health and well-being of Medicaid beneficiaries and to ensure the integrity of this essential health care program.”

Now, let's examine what was not covered in the settlement, and that is foster care fraud scheme. The DOJ describes the following fraud scheme:

In one complaint, a former Small Smiles employee-turned-whistleblower alleges that she was trained by FORBA employees on a policy known as “conversion,” through which they converted their routine patients into “patients receiving procedures beyond routine check-ups and cleanings.”


After a routine checkup with a child, the Small Smiles staff would consult with the parents and allegedly pressure them to sign consent forms for immediate additional procedures, the complaint says. The procedures were done the same day because Small Smiles employees thought (1) the patients and parents would never return for the additional procedures, and (2) the parents might seek out second opinions for their children.

In foster care, parents/guardians are typically not involved in the medical procedures of the children, even though it is provided for by States statutes. When a child is under the auspices of the state, the state is the legal authority for decision-making for the child.

The responsibility of making sure the child's medical passport (medical records during time in foster care) is maintained, typically, is contracted to private child placing agencies (CPA). CPAs are mitigatory regulated with little to no penalties, and training for billing compliance or basic internal controls for fraud prevention in CPAs is a concept far too complex and would tarnish the perfect reputation of infallibility in decisions to remove children and recommend termination of parental rights.

The "conversions" automatically come into play in the foster care fraud scenario because there is nobody to challenge as the files are sealed from the public eye.

In essence, foster children can be billed, continuously for services never rendered, even after they have been adopted out because they are issued new Social Security numbers, meaning a secondary fraudulent conversion begins simultaneously with the previous fraudulent billing.

Medicaid investigations of other individual dentists have cropped up over the years:

In the most recent case, a Kentucky dentist was sentenced to five years in prison on Jan. 4 for Medicaid fraud and drug trafficking. He pleaded guilty and was ordered to pay $4,900 in restitution to Kentucky Medicaid. The state alleges that from March 1988 to September 2004, he billed for dental extractions that either were not performed or weren’t necessary.

A Missouri dentist was charged with 13 counts of Medicaid fraud in November 2008. The state said he submitted false Medicaid claims from November 2005 to June 2006 for services not performed on pediatric patients, including X-rays, root canals, resin-based composite restorations and amalgam restorations.

A New Mexico dentist received a deferred sentence in May 2009 after she pleaded guilty to three counts of Medicaid fraud. She allegedly submitted fraudulent billings from 2003 through 2005. As part of her sentence, she was ordered to reimburse Medicaid $17,522 and was banned from participating in Medicaid for five years. Her practice was permanently excluded from the program.

So, the $24 million dollar settlement was negotiated, with no idea of what the foster care levels of fraudulent conversion were.

What should be taken away from this is if you detect fraud in child welfare, report it...you just might make a few millions during the process.

The government’s investigation was initiated by three lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in any recovery. These actions are pending in the U.S. District Courts for the District of Maryland, the Western District of Virginia, and the District of South Carolina. As part of today’s resolution, the three whistleblowers will receive payments totaling more than $2.4 million from the federal share of the settlement. “In this case, FORBA put greed and profits before the well-being of children,” said Timothy J. Heaphy, U.S. Attorney for the Western District of Virginia. “It endangered the health and safety of innocent children and defrauded the taxpayer of millions of dollars. Today’s settlement addresses these egregious acts and sends a clear message that Medicaid fraud will be expeditiously addressed by this Department.”