Attorney General can’t confirm or deny fraud investigation into El Paso Children’s Hospital

The Texas Attorney General’s office on Wednesday said it could not confirm or deny if it was investigating the El Paso Children’s Hospital for medicaid fraud.

The issue stems from Childrens reporting to the government it paid $27 million in rent to University Medical Center (UMC), it’s next door neighbor and biggest creditor, when it really didn’t. County officials have also said it appears Children’s reported nine million dollars in payments to Texas Tech it never paid.

Children’s CEO Mark Herbers told me the hospital used accepted accounting principles. “Our cost reports are filed consistent with medicaid guidelines which matches our audit report,” he said in an interview last week.

Children’s received tens of millions of dollars back from the government based on the flawed expense reports. Now, the Health and Human Services Commission (HHSC) is reviewing whether Children’s needs to return money it was not entitled to receive. Herbers in bankruptcy court has said that appears to be unlikely. “Any material amount, is not probable and not estimable,” he repeated in an interview.

UMC and the El Paso County Commissioner Court disagree. Commissioner David Stout has said Children’s could owe the government anywhere between $22 and $66 million depending on penalties.

“There’s not just civil liability for these things but there’s criminal, potential criminal liabilities. It’s a very serious problem. I wouldn’t just brush it under the rug,” said Andy Krafsur, a former Bankruptcy attorney and trustee who has followed the case closely.

“The Medicaid Fraud Control Unit works only from referrals. If this is referred to the MFCU, we would process the referral and make a decision whether to investigate further,” said Katherine Wise, Deputy Press Secretary of the Texas Attorney General in an email Wednesday.

A letter from the HHSC appears to show it has had contact with the Attorney General about Children’s. The Commission wrote a letter to bankruptcy judge Christopher Mott objecting to Children’s latest plan and it was filed through the AG’s office.