A year after a big-dollar campaign over corporate involvement with dental practices hit North Carolina TV screens, regulators are suing an Ohio company they accuse of illegally operating 27 dental offices statewide and boosting profits by pushing unneeded treatments.
Fourteen dentists last year turned on the company behind the Dental Works chain and provided authorities with secret side contracts that show their practices are shams the company created "to give the false and deceptive appearance that the dental practices are operating lawfully," the State Board of Dental Examiners said in its lawsuit, filed in Wake County court late last month.
Independence, Ohio-based DentalCare Partners Inc. and its related companies are seeking to transfer separate lawsuits by the state board and the 14 dentists to federal court.
The management company kept two sets of financial books to hide the fact it owns all or most of all 27 practices in Charlotte, Greensboro, Winston-Salem, Fayetteville, Raleigh, Wilmington and their suburbs, the regulators' lawsuit said.
"This structure permits the DCP Defendants to receive all or most of each NC Dental Practice's profits," the board's lawsuit said.
Dr. Eric Roman, a partner in three Fayetteville DentalWorks locations, said in a statement that the 14 dentists who turned on the company didn't realize that their contracts may be illegal until DentalWorks and similar companies launched a public lobbying campaign in 2011 pushing the General Assembly to cut the state's regulatory oversight of management companies.
North Carolina law allows only dentists to own, manage or control a dental practice. The question of what control of a practice means was at the heart of a lobbying and advertising campaign pitting dentists against the management companies increasingly operating the business side of their practices.
"Powerful lobbyists in Raleigh are pushing a new law that will drive up your dental costs, put your dentist out of business, and bring Washington-style regulation to North Carolina," said one ad by the Alliance for Access to Dental Care, a lobbying group created by DentalCare Partners and other dental management companies. The group spent at least $370,000 last year on TV ads hoping to sway seven Republican legislators from Charlotte to Rocky Mount.
Alliance for Access to Dental Care also reported contributing $277,000 to candidates and political committees in the two-year election cycle that included last November's elections and $216,000 to lobby the Legislature, according to state reports.
In a rival ad, the North Carolina Dental Society said: "Out-of-state special interests are spending big money in North Carolina. They want to force your local dentist out of business, and put in big, for profit, investor-owned corporate dentistry instead."
The North Carolina Dental Society reported $236,000 in contributions during the same two-year period and almost $411,000 on lobbying for issues that included the battle over regulating dental management companies.
In addition to DentalCare Partners, the affiliated companies named in the litigation are DCP Equity Partners LLC and Dental One Inc. The companies haven't filed a response to the lawsuits, but in-house lawyer Mark Solls said the facts will show they operated legally.
Dental One Inc. CEO Keith Newton said in a court affidavit that the company risked losing more than $700,000 a month after a judge blocked it from collecting service fees from the dental practices. He said the company provides only management services and "does not at any time perform or exercise any control over any of the clinical aspects of the practice."
DentalCare Partners, formerly known as Sears Family Dental Centers, describes its business as taking care of the crucial small-business tasks that doctors likely didn't learn in their studies: site selection, facility planning, payroll and collections. Efficient back-office operations allow dentists to keep prices low, dental management companies say.
That's especially important in North Carolina, the companies say, since the 4,205 dentists active in 2011 gave the state one of the lowest dentist-to-resident ratios in the country, according to new data from the Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill.
The company has DentalWorks-branded practices in strip malls and retail centers, as well as practices without that name in Arizona, Colorado, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah and Wisconsin.
The regulators' lawsuit said the company pushed its dentists since at least 2008 to aggressively diagnose gum disease, treat it with a procedure called scaling and root planning, and prescribe a drug the company was pushing in coordination with the drug-maker. The company even encouraged hygienists to diagnose and treat the ailment, creating "an incentive to misdiagnose patients with periodontal disease, including documenting inaccurate clinical information," the lawsuit said.
The result was unnecessary treatments and bills, the dental board said.