PDS Loses Legal Appeal Against New Mexico Dental Board

Michael W. Davis, DDS


New Mexico is unique among the states in that almost any legal entity may own or partially own a dental practice. That may include a dentist or dentists, hygienists, or a potential non-dentist owner. Under current state law, non-dentist owners are required to file for a separate state license, specifically as a “non-dentist owner” of a dental practice or practices.

As such, non-dentist owners of dental practices are regulated under state law, prompting the New Mexico Board of Dental Healthcare (NMBDHC) to adopt three regulatory amendments in the New Mexico Administrative Code. Doing business as Modern Dental, Pacific Dental Services (PDS) filed an appeal against the NMBDHC and these amendments in the New Mexico State Court of Appeals (No. A-1-CA-36235). On March 13, 2019, the court ruled in a unanimous, 18-page, three-judge decision that these amendments would stand.  

The Pros and Cons of the Amendments

The first amendment requires non-dentist owners of practices to maintain patient records for a minimum of six years after a practice closes, relocates, or terminates operation. As the plaintiff in the appeal, PDS argued that this rule was redundant in that this record-keeping requirement already applied to dentists.

The NMBDHC successfully countered by citing examples in a public hearing prior to enacting new rules of dental service organizations (DSOs) divesting clinics, relocating, or filing for bankruptcy. Patients and their new doctors were not able to procure copies of records. Even the state’s dental board was unable to obtain patient records in cases of DSO clinic closures. Associate dentists and “owner dentists” within a DSO business structure also couldn’t gain access to patient records in multiple instances. These records may be vital in future civil or administrative law proceedings or even in continued patient dental healthcare services.

The second rule change that PDS challenged said that “no person other than a New Mexico licensed dentist shall have direct control or interfere with the dentist’s or dental hygienist’s clinical judgement and treatment,” adding that this includes “referrals or prescription of laboratory services.” PDS claimed this rule change was confusing and redundant “in light of existing regulations and statutes that prohibit anyone from interfering with a dentist’s clinical judgement.”

The prior public hearing and two prior closed hearings on the NMBDHC’s rule changes (all held consecutively on January 27, 2017) were cited in Judge Linda M. Vanzi’s written opinion.

“We fail to see how the comments (in the three separate hearings prior to the rules changes) are not ‘of a kind commonly relied upon by reasonably prudent people in the conduct of serious affairs.’ Notably, all of the commenters, besides Plaintiff’s attorney, were local professionals in the field of dentistry. Some of the commenters were also members of the Board’s rules committee in charge of drafting the amendments. Many, if not all, of their comments were based on firsthand knowledge,” Vanzi wrote.  

The public hearing cited examples of patient “steering” by DSOs. The management of a DSO, and not the treating doctor in consultation with the patient, selected and directed specialist services, as well as dental laboratory services. Specific examples were delivered at the hearings in which this ran counter to patients’ best interests and primarily were designed to serve the financial benefit of the DSO.

The court also cited an example of how corporate dental managers “pressured their dentists into performing more procedures in order to increase profits.” The court additionally noted that “The rule gave young dentists the ability to stand up to coercive non-dentist superiors.”

The third failed challenge raised by PDS involved a doctor’s “patient referrals based on contractual obligations.” The NMBDHC successfully argued “that the purpose of the regulation was to cover situations where the dentist’s contractual obligations influenced their decision on where to refer patients, which was not already proscribed by other regulations or statutes.”  

The NMBDHC further successfully defended “that the purpose was to protect the public by requiring dentists to refer their patients to whomever the dentist believed would be best, regardless of their contractual obligations.”

“Given the number of the comments in favor of the amendments and the qualifications of those making the comments, we hold that the Board’s adoption of the amendments was not arbitrary, capricious, an abuse of discretion, or against the clear weight of substantial evidence,” Vanzi and her two state appellate jurists determined.

The court unanimously affirmed the NMBDHC’s decision to adopt amendments. Attorneys for PDS and the New Mexico Attorney General’s office did not respond to questions about the likelihood of an appeal to the state Supreme Court.

“The New Mexico Dental Association welcomes the court’s decision in this matter. The Board of Dental Health Care’s first responsibility is the public’s health and safety, not the interests of the practitioners they regulate,” said Tom Schripsema, DDS, executive director of the New Mexico Dental Association. “The real winner in this decision is the public who can be reassured of the Board’s integrity and fairness in the process.”

Robert Gherardi, DMD, a former member of the NMBDHC who served on the board for nine years, says he also is pleased with the court’s ruling.

“The board has always been very conscientious about receiving and considering testimony about any ruling they make. These decisions are not made in a vacuum or behind closed doors,” said Gherardi.

“It is said when special interest groups such as Pacific Dental come to the board meetings with their three-lawyer legal teams attempting to intimidate the board into bending to their wishes and ignoring other stakeholders,” said Gherardi.

“In this instance, Pacific Dental was just upset because the board didn’t buy their argument as valid and ruled otherwise. Bringing lawsuits just because you lose an argument is a sign of the bullying attitude some groups have. It is justifying to see the courts uphold the process,” said Gherardi.

Disclosure: Michael W. Davis, DDS, was one of a number of doctors to testify at the public hearing on January 27, 2017, in support of the NMBDHC’s rule amendments.

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 mwdavisdds@comcast.net or smilesofsantafe.com.

Related Articles

Iowa Dentist Prevails in Denial of Claims Appeal

Healthcare Reform Report Holds Significant Implications for Dentistry

Is Dentistry Really the Fourth Best Profession?