Many doctors are employed as associate dentists. Some are retained by larger interstate dental service organizations (DSOs), some by small chain clinics, and others by solo dental offices. These doctors face many risks should their employer decide to discontinue business.
Smiles Smiles Dental was disbarred as a provider from government programs for failure to comply with a corporate integrity agreement. This was a result of multiple examples of alleged Medicaid fraud.1 Disbarment from Medicaid represented a death knell, because the bulk of this company’s revenues came from Medicaid billings.
The government granted a time extension to delay enforcement of the disbarment. This may have assisted the clinics’ corporate ownership to maximize yields by divesting clinics, prior to dissolving into chapter 7 bankruptcy.2 The delay also assisted staff by giving them time to find new employment. It was probably most harmful to disadvantaged children, whose care was continued under an abusive and fraudulent business model, as alleged by the US Department of Justice.
Allcare Dental was a former DSO that operated in 13 states in the East and the Midwest.3,4 One day its doors were open for business. The next day, the doors were locked, and all employees and patients were shut out. No notice was given to patients or staff. Patients were abandoned in mid-treatment. Dental services were paid for and never delivered. Legal actions were filed and threatened. States’ attorneys general and state dental boards also entered the fiasco.5-9
Associate dentists really had few places to turn for answers to their questions. How could they complete their patients’ treatments with no access to records or to a clinical facility? If there’s no one to pay the dental laboratory, how can the patient’s care be finalized? And, how might associates be on the hook for liability if they have no control?
It’s certainly a significant problem for a community when a single dental clinic instantly dissolves operation. It represents a threat to the public welfare on an entirely different level when a DSO or chain of clinics immediately ceases delivery of care. This issue is at the heart of why most states prohibit the unlicensed practice of corporate-controlled medicine. Unfortunately, those state statutes are largely unenforced for dentistry, with the exception of North Carolina.10,11
Since the bankruptcy of Allcare Dental, we’ve witnessed numerous other examples of chain clinic closures, as well as local individual clinic divestitures.12-18 Abandoned patients were forced to scramble, searching out a new dental home. Dental personnel were left high and dry, without employment, some without pay, and no one to answer questions about continued patient care.
There are valid reasons why the DSO industry may not be on firm financial ground.19-21 A substantial industry shakeup may be just around the corner. Recent quarterly reports of one of very few publicly traded DSOs were disclosed, and the numbers demonstrate a continued loss of profits, despite elevated revenues.22
Arturo R. Garcia, DMD
Arturo R. Garcia, DMD, of Austin, Texas, is a seasoned clinician who owns and practices at Smiles by Garcia. Previously, he worked for a variety of dentist and non-dentist owners.
“I had to learn the hard way. The owner can make you look bad in the patient’s eyes. And, with the encouragement of management, disgruntled patients can sue you,” Garcia said. “Ownership has no problem making cannon fodder out of associates.”
Garcia also said that after he resigned from certain a non-dentist owned clinic, it continued to use his name and reputation on all external and internal marketing. That practice closed operation only three weeks later.
Garcia then was sued by a patient who was fleeced out of approximately $40,000 by the unethical non-dentist owner for an oral rehabilitation that the bankrupt clinic would never provide. Garcia never examined or even met the patient. But his name was on the list of defendants because corporate ownership used it for marketing.
“My malpractice carrier told me it cost them approximately $25,000 in legal fees to get me off that BS suit!” Garcia said.
Associate doctors face many potential risks if their employer elects to terminate business operations, even after termination of an employment agreement. On the surface, it may seem counterintuitive for an associate dentist to plan an exit strategy even before employment begins. But that is exactly the most prudent path for associates to take. So next, we’ll provide some advice for proactive prevention and mitigation of these possible liabilities.
- US Department of Health and Human Services-Office of Inspector General. OIG excludes pediatric dental management chain from participation in federal health care programs, Fraud Report. Apr 3, 2014. https://oig.hhs.gov/newsroom/news-releases/2014/cshm.asp
- Company Overview of CSHM, LLC. (parent company of Small Smiles Dental), Bloomberg. Retrieved on Sept 9, 2018. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=30301916
- Hannah B. Allcare Dental and Dentures closes down nationally. 1Dental.com. Jan 5, 2011. https://www.1dental.com/blog/2011/01/05/allcare-dental-closes-down/
- Execs: bankrupt NY dental chain has sold equipment. Associated Press. Dec 12, 2011. https://newsok.com/article/feed/326299/execs-bankrupt-ny-dental-chain-has-sold-equipment
- Hagan D. David Bates, DDS, president of Allcare Dental Management and Allcare Dental and Dentures of New Hampshire surrendered his dental license to the state board of dental examiners. Dentist the Menace, May 21, 2012. http://blog.dentistthemenace.com/2012/05/david-bates-dds-president-of-allcare.html
- President of bankrupt dental chain loses state dental license. Dentistry Today. http://www.dentistrytoday.com/articles/practice-management/168-frontpage/todays-dental-news/7433-president-of-bankrupt-dental-chain-loses-state-license
- Brenckle L. Pennsylvania attorney general files suit against Allcare Dental and Dentures. The Patriot-News. Apr 6, 2011. https://www.pennlive.com/midstate/index.ssf/2011/04/pennsylvania_attorney_general_6.html
- Office of Ohio Attorney General. Attorney General DeWine sues Allcare Dental for consumer law violations. News Release. Jun 17, 2011. https://www.ohioattorneygeneral.gov/Media/News-Releases/June-2011/Attorney-General-DeWine-Sues-Allcare-Dental-for-Co
- McVicar B. Michigan attorney general working on Allcare Dental care. Muskegon News. Jan 6, 2011. https://www.mlive.com/news/muskegon/index.ssf/2011/01/michigan_attorney_general_work.html
- North Carolina State Board of Dental Examiners vs. Heartland Dental Care, Inc. et al. Randolph County, NC. Sup Court Div 11-CVS-2343; Sept 6, 2011. http://ncdentalboard.org/pdf/Heartland%20Consent%20Order%20Granting%20Injunction%209-6-11.pdf
- North Carolina State Board of Dental Examiners vs. Dental Care Partners, Dental One, Inc., et al. Wake County, NC. Sup Court Div 13-CVS-2336; Feb 27, 2013. https://www.scribd.com/document/128899582/North-Carolina-State-Board-of-Dental-Examiners-v-Dental-Care-Partners-Inc-Dental-One-Inc-et-al
- Dental business files for bankruptcy, leaving people without dentures. Dayton Daily News. Mar 31, 2014. https://www.mydaytondailynews.com/business/dental-business-files-for-bankruptcy-leaving-people-without-dentures/iD2IUve1iV01WQTHmYLzNL/
- Dutton A. Meridian dentist, accused of abandoning patients, faced same claim in Washington. Idaho Statesman. Mar 28, 2018. https://www.idahostatesman.com/news/local/community/west-ada/article206950094.html
- Prazan P. Employees of closed FLOSS Dental location say they haven’t been paid. KXAN News. Aug 22, 2018. https://www.kxan.com/news/investigations/employees-of-closed-floss-dental-location-says-they-haven-t-been-paid/1388735655
- Lindell C. Pediatric dental practice closing after Medicaid payments are cut off. Austin Statesman. Jan 30, 2013. https://www.statesman.com/NEWS/20130130/Pediatric-dental-practice-closing-after-Medicaid-payments-are-cut-off
- Minor C. Best Smiles dental offices closed without warning. WQAD Channel 8 News. Apr 6, 2018. https://wqad.com/2018/04/06/best-smiles-dental-offices-closed-without-warning/
- Coast Dental Services, Inc. US Security and Exchange Commission form 10-K. Annual report ending Dec 31, 2002; Recent Developments-Dental Center Closings; p 16: https://www.sec.gov/Archives/edgar/data/1018920/000095014403004313/g81157e10vk.htm
- Jacobson S. All Smiles Dental Centers turning away young Medicaid patients, closing clinics. The Dallas Morning News. Jul 2012. https://www.dallasnews.com/news/news/2012/07/26/all-smiles-dental-centers-turning-away-young-medicaid-patients-closing-clinics
- Davis MW. Potential storm clouds on horizon of DSO industry. Dental Economics. Jun 1, 2017. https://www.dentaleconomics.com/articles/print/volume-107/issue-6/macroeconomics/potential-storm-clouds-on-horizon-of-dso-industry.html
- Salierno C. Is there a DSO bubble? Dentistry IQ. Sept 25, 2017. https://www.dentistryiq.com/articles/2017/09/is-there-a-dso-bubble.html
- Giannini A. Is the DSO bubble about to burst? LinkedIn.com. Oct 21, 2016. https://www.linkedin.com/pulse/dso-bubble-burst-alex-giannini/
- Transcript-press release. Birner Dental Management Services (BMDS) CEO Fredric Birner on Q2 2018 results-earnings call transcript. Earnings Summary Aug 15, 2018. https://seekingalpha.com/article/4199561-birner-dental-management-services-bdms-ceo-frederic-birner-q2-2018-results-earnings-call
Dr. Davis practices general dentistry in Santa Fe, NM. He assists as an expert witness in dental fraud and malpractice legal cases. He currently chairs the Santa Fe District Dental Society Peer-Review Committee and serves as a state dental association member to its house of delegates. He extensively writes and lectures on related matters. He may be reached at firstname.lastname@example.org or smilesofsantafe.com.