Alabama dental clinics operating illegally, Senate report says
by Eddie Burkhalter
eburkhalter@annistonstar.com
Jul 25, 2013 | 11626 views |  0 comments | 70 70 recommendations | email to a friend | print
A worker on Wednesday walks into the Aspen Dental building under at the Oxford Exchange. (Photo by Stephen Gross/The Anniston Star)
A worker on Wednesday walks into the Aspen Dental building under at the Oxford Exchange. (Photo by Stephen Gross/The Anniston Star)
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Several Alabama dental clinics are operating in violation of state law, and are putting profits before patient care, according to a report released this week by the U.S. Senate Finance Committee.

Those clinics are performing unnecessary procedures to pay the corporate investors that own the clinics, the report states. The report recommends that state and federal agencies end that practice by enforcing existing laws.

The 1,500-page report, put out by Sens. Charles Grassley, R-Iowa, and Max Baucus, D-Mont., marks the end of a two-year investigation into the practice of corporate dentistry by the staff of the Senate’s Committee on Finance.

Among the companies investigated was Aspen Dental, a nationwide chain of dental clinics that is opening an office in Oxford this year.

Small Smiles dental clinic — one of the largest dental chains in the U.S. — operates clinics in Dothan and Montgomery, and is the center of much of the Senate investigation and report.

According to the report, Small Smiles, managed by Nashville-based Church Street Health Management, skirts laws in states — including Alabama’s Dental Practice Act — that ban dental clinics from being owned by anyone other than a licensed dentist.

The company does that by entering into contracts with “owner” dentists licensed in the state in which the clinic operates, according to the report. CSHM claims to only manage the clinics, the report’s authors write.

But the company retains control of daily operation, according to the report, from hiring, firing and training staff to controlling the bank account and setting production goals that require dentists to treat large numbers of mostly low-income children eligible for Medicaid.

Among the report’s recommendations are that the Department of Health and Human Service’s inspector general exclude Small Smiles from receiving Medicaid payments, “and any other corporate entity that employs a fundamentally deceptive business model resulting in a sustained pattern of substandard care.”

In a statement to The Star Wednesday, CSHM wrote that the report is based on old findings, and that the company changed hands last year and is under new management.

“The content of those reports largely reflects the activities of the former company, Church Street,” the statement read.

The report focused largely on Small Smiles and ReachOut Healthcare America, both nationwide companies that receive large Medicaid payments, but another dental practice with clinics in Alabama was one of five dental chains  investigated by the committee.

Aspen Dental, managed by Aspen Dental Management Inc., operates more than 300 clinics in 22 states. The company opened a clinic in Dothan in 2012, and clinics in Trussville and Florence this year. Aspen Dental’s Oxford clinic is expected to open this fall.

ADMI is owned by the private-equity firm Leonard Green & Partners.

The New York-based chain is the focus of a class-action lawsuit filed in 2012 that alleges it illegally owns the clinics and deceives patients.

Rather than cater to children who receive Medicaid assistance, Aspen Dental focuses on older, low-income adults, the suit alleges.

The lawsuit alleges that Aspen Dental “places its local offices primarily in low-income areas and targets blue-collar workers and unwitting consumers who are unfamiliar with proper dental care.”

ADMI’s business model, the lawsuit alleges, has forced many consumers into debt and led to complaints patients being overcharged and billed for dental services that they did not receive or authorize.

Patients at Aspen Dental are given free examinations followed by a treatment plan recommendation and are billed before any work is done, according to the lawsuit. If the patient cannot afford to pay up front, he or she is offered health-care credit cards.

A 2012 investigation of Aspen Dental by the Center for Public Integrity, a nonprofit journalism organization, found that “the same business model that makes Aspen Dental accessible to people short on cash can also lock people into debt and has led to complaints of patients being overcharged or given unnecessary treatments.”

Kasey Pickett, director of communications for ADMI, wrote in an email to The Star that the company declines to comment on the lawsuit, but wrote that the “accusations are entirely without merit.  Our motion to dismiss the complaint is currently pending and we look forward to the court’s decision.”

Pickett noted that the Senate report focused on dental practices that accept Medicaid, which Aspen Dental does not, and that “we’re proud of the access to high quality, affordable dental care the dental practices supported by Aspen Dental Management, Inc. provide to millions of Americans, and we look forward to opening an office in the Oxford community soon.”

State oversight

The Senate report also recommends that states enforce existing laws against the corporate practice of dentistry and, “where appropriate, take enforcement action against those that violate the law.”

“State authorities have either ignored or been oblivious to dental management services agreements like those used by CSHM that allow companies to operate dental clinics under the guise of providing administrative and/or financial management support,” according to the report.

Susan Wilhelm, director of the Alabama Dental Board of Examiners, the agency responsible for regulating the practice of dentistry in the state, told The Star in an interview last week, prior to the release of the report, that she did not believe Small Smiles was operating illegally.

“I believe that they are wholly-owned corporate entity by an Alabama dentist,” Wilhelm said.

Wilhelm said that the board investigates clinics after receiving complaints that state laws are being violated.

“So you’re giving me information that I didn’t have,” Wilhelm told a reporter last week, when asked about business practices of Small Smiles and Aspen Dental.

Asked if the board had received complaints about Small Smiles or Aspen Dental, Wilhelm said that information was “privileged and confidential under Alabama Statute.”

In a Jan. 2010 meeting of the Alabama Dental Association, in which Board of Examiners then-president  Dr. Thomas Willis was present, Small Smiles was discussed as possibly being a corporate dental practice, and as such illegally operating in the state.

In a phone interview last week, prior to the release of the report, Dr. Willis told The Star that he recalled some discussion of Small Smiles when the company began looking into opening offices in Alabama, but that the legality of the practice was uncertain.

“The dental practice act basically says no dental practice can be owned other than by a licensed dentist, that’s pretty much all it says. That creates somewhat of a gray line,” Willis said.

Willis said that as a regulatory board, the Board of Examiners can only act on complaints, and that “we never had any complaints against Small Smiles.”

Willis said the board had no “official” complaints about the nonprofit Sarrell Dental Clinic either, but in 2010 the board formed a committee to look into Sarrell’s operation in Alabama, saying at the time that Sarrell was operating illegally.

Sarrell, based in Anniston, operates 13 office across Alabama, serving more than 350,000 patients since it opened in 2004.

Willis said that Sarrell’s CEO, Jeff Parker, who is not a doctor, was hiring dentists and that the Alabama Dental Practice Act “also says you have to be employed by a licensed dentist.” That’s why Sarrell was examined in 2010, Willis said.

Sarrell was at the center of much criticism from Alabama dentists and members of the Alabama Dental Association in 2010. In that January 2010 dental association meeting, board members discussed ways to close the large Anniston-based dental clinic.

Parker told The Star in 2010 that he believed the attack on his company, which serves largely low-income children eligible for Medicaid, was because “Sarrell is the biggest in the state.”

Legislation passed by Alabama lawmakers in 2011 clarified that nonprofits operating dental clinics are legal, and requires the nonprofit to register with the dental board.

Asked why the board investigated Sarrell and not Small Smiles or Aspen Dental, Willis said it’s because it’s not clear who actually owns Small Smiles, the “owner” dentist or the corporation. Willis reiterated that the board has received no complaint about either companies.

In 2010, Small Smiles’ managing corporation, then called FORBA Holding LLC, agreed to pay $24 million to the federal government and to participating states in a settlement after the U.S. Department of Justice sued the chain alleging Medicaid fraud.

The suit alleged that FORBA submitted Medicaid claims “for a wide range of dental services provided to low-income children that were either medically unnecessary or performed in a manner that failed to meet professionally-recognized standards of care.”

FORBA changed names to Church Street Health Management in 2011, and the company is currently paying the Alabama Medicaid Office back $160,423 as part of that 2010 settlement. The state has received $66,935 to date, Robin Rawls, director of communications at the state Medicaid Office, wrote in an email to The Star.

Asked about that settlement, and whether that was proof enough the company should be investigated by the Board of Examiners, Willis said “Why don’t you call Medicaid? If they were frauding Medicaid, has Medicaid looked into them?”

Willis said he couldn’t comment on whether Small Smiles performs unnecessary or substandard care, because he’s never examined a patient that’s been to one of the clinics.

Asked to comment on the Senate report, and on why Sarrell was the focus of the Board of Examiners but not Small Smiles or Aspen Dental, Parker, CEO of Sarrell, wrote in an email to The Star on Wednesday that “our mission is to help the economically disadvantaged children of Alabama.  I cannot speak to the motivations of anyone that wants to attack our mission.”

Wilhelm responded Wednesday to a request by The Star for comment after the Senate report was released.

“The Board takes very seriously its duty to protect the public by, among other things, ensuring that all patients receive appropriate treatment and that the treatment is within the standard of care,” Wilhelm wrote. “All dental patients in Alabama, especially children, are entitled to safe, appropriate dental treatment.  As I mentioned earlier, I cannot comment on subject, status, or even the existence of a pending investigation.”

Staff writer Eddie Burkhalter: 256-235-3563. On Twitter @Burkhalter_Star.
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