September 14, 2012 — Back in 2010, Dallas dentist Richard Malouf, founder of All Smiles Dental Center, was making so much money outfitting low-income children with Medicaid-sponsored cosmetic braces and stainless steel crowns that the clinic caught the interest of the Chicago private equity firm, Valor Equity. Today, the venture capitalists own the majority interest of All Smiles and the clinics are in bankruptcy.
Malouf is a defendant in two lawsuits charging him with massive fraud against the Texas Medicaid Program. The suits have been filed by the Texas Attorney General and by a private whistleblower represented by Dallas lawyers Waters & Kraus and Houston lawyer Jim Moriarty. The lawsuits allege that Malouf violated the Texas and federal False Claims Acts by fraudulently billing Medicaid for millions of dollars to place cosmetic braces on low-income children’s teeth and to perform unnecessary dental work, including stainless steel crowns and pulpotomies (root canals on baby teeth) — all of which are not reimbursable by Medicaid.
Malouf appears optimistic about his situation, however. At least that’s true if you consider the current construction underway at the two chateaus on his Texas-sized property in a glitzy Dallas neighborhood.
You can’t actually watch the construction from the street, but according to WFAA, the expansion plans have been filed with the Dallas Planning Commission. Malouf appears to be building exercise rooms, a bowling alley, a rock climbing wall, an additional pool and the family’s own private water park. Describing the compound expansion as bordering on “obscene,” attorney Jim Moriarty explained: “The taxpayers of the State of Texas paid to build that house, and are paying to expand that house for a guy who claims to have made his money treating the people of Texas.”
Many are familiar with the Texas homestead exemption, which prevents creditors from seizing a resident’s primary home to satisfy unpaid debts. According to Moriarty, however, Malouf’s two homes on the same property may not be protected by the exemption: “If that home is purchased with stolen money, or that home is based on money that has been earned by falsehood or deceit, then that home is not protected at all.”
Dan Hargrove and Charles Siegel of Waters & Kraus are proud to represent Dr. Christine Ellis and the State of Texas in the Qui Tam lawsuit against Malouf and All Smiles. Many similar instances of Medicaid dental fraud are brought to light by dental clinic dentists and employees who are expected to take part in the fraud. By reporting such scams, whistleblowers play a critical role in holding wrongdoers accountable for the waste of taxpayer dollars. To encourage people to come forward with what they know, the qui tam sections of federal and state False Claims Acts allow a whistleblower to share in any recovery by the government.
Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.