Dental Industry Contracts Unfairly Require Arbitration

Michael W. Davis, DDS


Forced arbitration is becoming commonplace in many dental industry agreements. It replaces potential litigation through the civil legal process, as well as via state or federal regulatory agencies.

Forced arbitration requires an employee or consumer to submit to a binding arbitration process, and the decision of that process is final. Binding arbitration prevents parties from filing a lawsuit or joining a legal class action. Right of appeal is lost. The arbitration’s decision is not made public.

Dental personnel inclusive of associate doctors frequently encounter forced arbitration clauses in employment contracts. Increasingly, dental practices are asking dental consumers to sign forced arbitration agreements before they are accepted as patients. Dental patients also encounter forced arbitration agreements in credit contracts that provide third-party financing for dental treatments.

Proponents of forced arbitration contend this process is faster, fairer, and better for workers and consumers, versus going through the cumbersome court system or a governmental regulatory agency.

In a 7-1 decision in 2016, the US Supreme Court upheld the validity of the Federal Arbitration Act (FAA) requiring courts to place arbitration agreements on an equal footing with all other contracts. Though they are 100% lawful, are forced arbitration agreements truly fair, and should anyone sign one?

National Association of Consumer Advocates

The National Association of Consumer Advocates (NACA), a nonprofit group of attorneys and consumer advocates, says that it is actively engaged in promoting a fair and open marketplace that forcefully protects the rights of consumers, particularly those of modest means. In its mission statement, the NACA “serves as a voice for consumers in the ongoing struggle to curb unfair or abusive business practices that harm consumers.”

NACA says that nothing is wrong with arbitration, as long as it is voluntary, and notes that everyone always has the right to arbitrate. However, people should never want to give away the right to sue if arbitration does not work, the nonprofit said. Companies want people to give up that right because they have the advantage in arbitration and can evade accountability, NACA added.

NACA specifically spells out the problems and dangers of forced arbitration.

First, individuals are often unaware that they have agreed to forced arbitration. Most Americans have accepted goods, services, or a job with forced arbitration as a condition, yet very few individuals report having noticed a forced arbitration clause in the terms of agreements or contracts they’ve accepted.

Second, forced arbitration severely limits consumer options for resolving a dispute. Before any problem arises, you lock yourself into only one option, forced arbitration, for resolving all future disputes or problems. The contract typically also names the arbitration company that must be used, and it’s the one preferred by the company.

Third, forced arbitration clauses generally bind the consumer, not the company. Many forced arbitration clauses are written so the seller retains its rights to take any complaint to court while the consumer can only initiate arbitration.

Next, arbitration is a private system without a judge, jury, or right to an appeal. Arbitrators aren’t required to account for the law or legal precedent in making their decisions. There is no appeal or public review of decisions to ensure the arbitrator got it right.

Also, employees cannot sue for discrimination, harassment, abuse, retaliation, or wrongful termination. In forced arbitration, the laws that protect us from discrimination based on age, sex, religion, race, disability, and unequal pay for equal work, such as the Civil Rights Act and the Equal Pay Act, become meaningless and unenforceable in court. Employees lose important protections for blowing the whistle on waste or fraud or for fighting retaliation for taking family medical leave.

Finally, consumers cannot sue for negligence, defective products, or scams. Just by buying a product or service, consumers can lose their right to hold a company accountable. Even if a retirement account disappears, a home is dangerous and defective, or a loved one suffers harm in a nursing home, a forced arbitration clause means there is no right to take the company responsible to court.

American Association for Justice

The American Association for Justice (AAJ) produced a 39-page white paper, “The Truth about Forced Arbitration,” in September 2019.

“Forced arbitration is a rigged system designed by corporations in which injured workers and consumers have no meaningful chance of finding justice. Forced arbitration requires Americans to ‘agree’ to surrender fundamental constitutional rights—often without ever realizing they’ve done so,” the AAJ boldly said.

“When corporations harm workers and consumers by cheating, stealing, or even breaking the law, cases that should be heard by a judge or jury are instead funneled into a secret system controlled by the wrongdoers in which there is no right to go to court, no right to a jury, no right to a written record, no right to discovery, no transparency, no legal precedents to follow, no opportunity for group actions when it would be too difficult or costly to file a claim alone, no guarantee of an adjudicator with legal expertise, and no meaningful judicial review,” the AAJ continued.

“Without such checks and balances, the deck is stacked heavily against workers, patients, and consumers, and systemic misconduct is allowed to continue in secret,” it said. 

The AAJ report demonstrated that in consumer financial arbitrations, only 2.2% of consumers prevailed in arbitration. Those limited participants who won in binding arbitration only received 0.2% of their alleged damages. 

During a five-year period, of the nearly 60 million US workers currently subjected to forced arbitration agreements, only 0.02% elected to pursue a claim. These numbers are assumed to be influenced by the extremely low rates of consumers who have prevailed in binding arbitration.

Dental Employment Contracts

Nearly every dental employer of any significant size, inclusive of the dental support organization (DSO) industry, includes a mandatory clause for dispute resolution in their employment agreements. Wording invariably supports the employer’s interests.

Dentists are encouraged to retain specialized legal counsel specific to dental workplace employment prior to entering into such agreements. Fees for contract review, amendments, and negotiation range from $3,000 to $4,000. Attorney fees for getting out of a bad DSO contract may easily range from $30,000 to $40,000, if possible, at all.

Typically, dental support employees who earn substantially less income may also face forced arbitration wording in their employment contracts. Retaining legal representation prior to employment generally isn’t economically feasible. For hourly employees earning less than $20 an hour, such clauses in employment contracts seem outlandish. 

A corporate employment recruiter may say something like, “Don’t worry about that contract wording. It’s only boilerplate. Everyone signs it. It’s not enforceable anyway.” If so, they are not to be trusted.

The US Supreme Court has upheld and supports the validity of arbitration agreements. Further, if a contract clause is not lawfully enforceable, it still requires attorney’s fees to advocate one’s case.

Specific employers in dentistry are notorious for violations of workplace safety and state and federal labor laws. These abuses include misclassification of employees as independent contractors, misclassification of hourly workers as salaried management, cheating workers out of mandated scheduled breaks and lunch periods as well as overtime pay, neglectful infection control methods, deceitful compensation or bonus schemes, and discrimination against protected minorities.

Dispute resolution per the employment contract may mandate a civil legal filing in another state, especially in states where the DSO is headquartered. One particular DSO requires disputes to be remedied in a rural state district court with a city population of 12,500 where it is the second largest employer. Obviously, some DSOs do not attempt to even pretend to present an equitable playing field for dispute resolution.

More employment agreements are subject to private forced arbitration versus litigation. For reasons that NACA and the AAJ has expanded upon, such arbitration almost never favors employees. Forced arbitration in an employment contract is a rigged game. The worker is most often played for a sucker.

Patient Care Conditional on Binding Arbitration Agreement

Corporate medicine has included patient signatory signoffs on forced arbitration prior to healthcare delivery for some time. A recent report by Heather Perlberg in Bloomberg Businessweek highlighted how patients’ rights to file a malpractice claim are aborted.

Perlberg made the case why private equity beneficially owned and operated medical facilities favor forced arbitration agreements.

“The private equity playbook involves acquiring practices in fields such as dermatology, gastroenterology, and obstetrics and rolling them up into enormous medical networks with hundreds of doctors’ offices and thousands of individual doctors under a single brand. For these big practices, arbitration may be especially useful,” Perlberg wrote. 

“Jury trials, even in the era of tort reform, can still lead to awards in the tens or even hundreds of millions of dollars for plaintiffs. Juries, understandably, are likely to have less sympathy for a well-capitalized Wall Street owner than for a grieving mother who’s been treated poorly,” Perlman continued.

“Crucially for private-equity-owned medical groups, arbitration is almost always conducted in private, which means that big brands can avoid the negative publicity that comes with a lawsuit. Jury trials, on the other hand, are a matter of public record. When malpractice verdicts are rendered, patients can use that information to figure out which doctors to avoid and which ones to seek out,” she said.

“It’s unclear how many other private-equity-backed groups use binding arbitration, because patient forms are generally kept private. They are well known to doctors, though, who see the agreements as part of a larger pattern in which investors roll up practices and then cut costs frantically in an effort to groom the business for sale, generally to an even larger company,” she added.

“A Businessweek investigation published in May found that some private-equity-owned medical practices buy cheaper, and sometimes substandard, medical supplies and hire providers who aren’t as well trained as doctors, such as nurse practitioners and physician assistants, to do work that would traditionally have been performed by an MD,” concluded Perlberg.

Forced arbitration agreements for healthcare may or may not be enforceable under every state’s statutes. In some states, healthcare cannot be denied if a patient refuses to sign a forced arbitration agreement, particularly in an emergency situation. Under Ohio State Codes 2711.23(A), “The agreement shall provide that the care, diagnosis, or treatment will be provided whether or not the patient signs the agreement to arbitrate.”

Unfortunately for our patients, few have significant legal acumen. Many have no idea what they are agreeing to with a signature. They may have no idea if the agreement is lawfully enforceable and may understandably assume the opposite of reality. They may place trust in their doctors, but also extend that trust to the management company that directs their doctors’ care.

The dental profession, unlike the medical profession, is not currently dominated by large groups and corporate healthcare chains backed by private equity. Some people wish dentistry would follow the path of medicine, which apparently has forfeited much of the doctor/patient relationship to unlicensed corporate managers. Others desire dentistry to afford patients optimal transparency in healthcare delivery and facilitate a thorough patient informed consent process without manipulation or misrepresentations.

One DSO’s patient arbitration agreement is tucked in the wording of its patient Consent and History:

“I hereby agree that any dispute regarding the products and services offered through SmileDirectClub and/or by my affiliated dental professionals, including but not limited to medical malpractice disputes, will be resolved through final and binding arbitration before a neutral arbitrator and not by lawsuit filed in any court, except claims within the jurisdiction of Small Claims Court. I understand that I am waiving any right I might otherwise have to a trial by a jury,” the agreement says.

To initiate arbitration, patients must send a demand for arbitration via the US Mail, with postage prepaid to the company’s Office of the General Counsel in Nashville.

“The Demand for Arbitration must be in writing to all parties, identify each defendant, describe the claim against each party, state the amount of damages sought, and include the names of the patient and his/her attorney,” it continues.

“I agree that the arbitration shall be conducted by a single, neutral arbitrator selected by the parties and shall be resolved using the rules of the American Arbitration Association. I further agree that any arbitration under this agreement will take place on an individual basis, that class arbitrations and class actions are not permitted, and that I am agreeing to give up the ability to participate in a class action,” it says.

Apple Tree Dental situates its agreement to arbitrate within a series of forms including patient information, medical history, dental history, HIPAA policy, and financial policy, and asks that it is signed by patients, parents, or guardians.

Apple Tree Dental is a tax-exempt 501(c)(3) nonprofit with a collection of dental clinics primarily focused on a low-income demographic, often of limited formal education, with many lacking English as a primary language.

According to the company, its public mission is to “Provide dental services to underserved populations, including long-term care facility residents, persons with disabilities, and other lacking access to dental care.”

However, Apple Tree Dental’s arbitration agreement (see the attachment, above) is complex, and members of this vulnerable patient population may be poorly equipped to understand it. They may be signing away their rights with little if any understanding.

Forced Arbitration for Third-Party Financing of Dental Care

Forced arbitration clauses are common in the credit card industry. Public advocates contend that these agreements are very unfair to consumers.

“Forced arbitration clauses are a ‘Get out of Jail Free’ card for companies that violate the law,” said Lauren Saunders, associate director at the National Consumer Law Center’s office in Washington, DC.

“They take away our constitutional right to our day in court, and they ban us from banding together when companies defraud thousands or even millions of people,” she added. “It’s terrible for Chase and for the credit card market.”

On December 10, 2013, the US Consumer Financial Protection Bureau (CFPB) ordered CareCredit and its parent company GE Capital Retail Bank to refund consumers $34.1 million for deceptive credit card enrollment tactics.

Dental and medical patients signed onto credit cards that many of them assumed were interest free. In reality, the full accrued interest kicked in if the balance in full was not paid off in the promotional period. That accrued interest rate was 26.99%.

Today, CareCredit is an industry leader. Its in-house teams educate healthcare personnel on providing full financial disclosures to consumers. Transparency, compliance, and monitoring were mandated in its agreement with the federal government. CareCredit has strict rules in its agreement with healthcare providers that are designed for consumer protections.

Unfortunately, some third-party finance companies for dental care are far less transparent and more onerous. Required binding arbitration clauses to obtain their credit card are lengthy, complex, and obtuse for any consumer lacking a law degree.

Such forced arbitration is the norm in the subprime lending markets, which too often target dental consumers of dubious credit worthiness. Managers may derive their early training in lease-to-own business schemes and payday loan operations, which frequently prey upon less educated consumers.

The US Federal Trade Commission (FTC) has established protocols to help resolve disputed credit card billings. Binding arbitration frequently precludes the implementation of reasonable FTC solutions.

In fact, some argue that hand-in-glove relationships have been established between certain troubling dental providers and third-party financiers who take on patient debt, especially in the subprime market.

One example includes patients financing for an extensive amount of dental treatment that is paid for and financed in advance. Once the dental provider company receives payment in full, it often is no hurry to complete treatment.

In 2010, the Pennsylvania Attorney General’s Office settled with one prominent DSO for multiple alleged credit violations, with no admission of wrongdoing. Among multiple charges, the DSO allegedly failed to provide consumers with protection afforded under 73 Pa. Stat. § 2186.

For example, under the statute, every contract between the buyer and a credit services organization for the purchase of the organization’s services shall be in writing, dated, and signed by the buyer.

Also according to the statute, the contract must include a conspicuous statement in size equal to 10-point bold type or the size type used for the contract provisions, whichever is larger, in immediate proximity to the space reserved for the signature of the buyer.

The statement must read “You, the buyer, may cancel this contract at any time prior to 12 midnight of the fifth day after the date of the transaction.” A notice of cancellation form that explains this right must be attached.

Further, the contract must include the terms and conditions of payment, including the total of all payments to be made by the buyer, whether to the credit services organization or to some other person.

The contract must additionally include a full and detailed description of the services to be performed by the credit services organization for the buyer, including all guarantees and all promises of full or partial refunds, as well as the estimated date by which such services are to be performed or estimated length of time for performing such services.

Patients become frustrated by delayed dental care or by partially completed treatment that does not meet their desired outcomes. Understandably, they demand a partial or complete refund. These dental consumers may soon discover their subprime dental credit card is less than helpful in securing a payment refund. They can waste their time and efforts with binding arbitration, complain to their state’s attorney general, or just pound sand.

All the while, interest charges in the neighborhood of 25% and higher continue to accrue on the entire paid and unpaid balance, if not fully paid in the early promotional timeframe. This can add an element beyond insult to injury for a dental patient frequently of modest means and in need of extensive and often complex dental services.


Forced arbitration agreements almost never serve the public welfare. These clauses habitually function as a mechanism for the wealthy and powerful to control those they potentially harm of lesser means and ability. Legislation, and especially enforcement of legislation, must counter abuses of forced arbitration.

Voluntary arbitration can be a wonderful service for all sides of a dispute. However, one’s Constitutional legal rights should never be forfeited simply to gain access to dental or medical healthcare or to a job.

Dentistry has the option to follow the medical model and integrate under the domain of private equity interests and Wall Street. The alternative and much more challenging path is to keep the concerns of patients, dental industry workers, and the public to the fore.

In earlier times, dentists were questioned if they were in fact “real doctors.” Today, physicians and not dentists are far more likely to be questioned if their clinical decisions are impacted by big business. Foisting forced arbitration upon an unwary public and workforce is simply one more signpost down a very slippery slope.  

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 or

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