Two years after agreeing to pay $23.9 million, plus interest to settle Medicaid fraud allegation Benevis (formerly NCDR, LLC) has filed for Chapter 11 Bankruptcy in the Southern District of Texas. (See Amended Petition here) (See LT Smiles Petition here)
In January 2018 Benevis and it's Kool Smiles branded dental clinics agreed to the settlement after the Department of Justice found the company "knowingly submitted" false claims for payment to state
Medicaid programs for medically unnecessary pediatric dental services.
Benevis and it's Kool Smiles clinics were featured on the first episode of CBS Whistleblower TV program that aired July 13, 2018. (see trailer here)
MARIETTA, Ga.--(BUSINESS WIRE)--Aug 3, 2020--
LT Smile
Corporation, along with its subsidiaries Benevis Holding Corporation,
Benevis Corporation, Benevis, LLC, Benevis Affiliates, LLC and Benevis
Informatics LLC (“Benevis” and “Company”), announced that it has filed
voluntary petitions for relief in the Southern District of Texas under
Chapter 11 of the United States Bankruptcy Code to effectuate a
recapitalization and sale of the business, and to improve its balance
sheet and operating position. Benevis and its employees will continue
their normal operations and their support of high-quality dental care at
supported dental practices throughout the process. None of the
Company’s supported dental practices are part of the Chapter 11 filing. https://www.businesswire.com/news/home/20200803005461/en/Benevis-Enters-Voluntary-Chapter-11-Reorganization
This is the same scenario as it was with the Small Smiles chain: Chapter 11 first then Chapter 7 soon followed.
Benevis claim to provide "back-office" services and that is true, but they also own and operate the clinics using company executives, such as dentists Dale Mayfield, David Veith, and Tu Tran as so called "owner-dentists". Dr. Tran may tried to claim he has nothing to do with the company but he is still being shown as "owner" and "incorporator" of Winchester Dental, PSC d/b/a Ruby Dental and Braces whose address just happens to be the same as Benevis'. Other current and/or past owner-dentists have included dentists Thien Pham and David Strange, Jr.
Since these places operate on volume and overtreatment (this my own opinion of course, but the DOJ agreed with me) the Corvid-19 pandemic has severely hit their bottom line.
According to Scott Mell's Declaration in the court filings, the companies new Chief Restructuring Officer, the company approximately 70% of the company's income was generated from state Medicaid and CHIP programs.
In the bankruptcy filings:
The company listed assets and
liabilities of as much as $500 million each in its bankruptcy petition.
Benevis provides support services to almost 200 dental practices across
the U.S., according to its website.
Scott Hornbuckle, Chief Financial Officer for Benevis stated, “The
additional financing and the reorganization process will help us
strengthen our balance sheet and solidify our path to future success. We
look forward to continued investments in the future and the
continuation of our long history of supporting outstanding dental care.”
Admittedly I nearly choked and puked on the "outstanding dental care" statement.
Below is the corporate structure according to Scott Mell and was included in his Declaration on page 4.
Maybe it's just me, but I think there might be a few things left out of this little stick drawing.
In the Amended Petition it lists the 30 largest unsecured creditors. Henry Schein, Inc., holds the number one spot with Benevis owing them $3,671,336.72! WHOA!
LT Smiles Bankruptcy Petition shows the Equity Security Holders as this. To save you some time, that address is New Mountain Capital.
With the COVID-19 Virus hitting every industry hard, and Wall Street crumbling, what will happen to places such as Heartland Dental, Aspen Dental, Kool Smiles, and the host of other dental chains across America that are backed by Private Equity firms and various other types of investors?
Rumor has it that Immiadent, operated by Samson Dental Partners, LLC, has closed the doors to many, if not all, of their offices. As of today, their website shows only 12 offices still open, that's down from 33. However, I'm told that they closed several and were going to rebrand using the name Bright Tiger Dental until about the time the COVID-19 hit, then suddenly, they fired all employees and closed the doors to all their clinics. This has not been verified.
In 2018 Samson and Immiadent agreed to pay $5.1 million to settle claims that it improperly billed Indiana’s Medicaid program as well as breaking Indiana law that forbids nondental managers from compromising clinical judgments by
rewarding or punishing dental staff based on productivity measures. Samson Dental Partners and their Immediadent offices were located in Indiana, Kentucky and Ohio.
I suspect we will be seeing more headlines as the one below in the coming months. However, during the first stage I suspect there will be more pressure on working dentists to overtreat as the chains try to stay afloat. I'll be watching.
The Signature Smiles dental office in Garden Oaks.Nothing seemed amiss on Jan. 17, when Amanda Leal took her two
daughters to the Signature Smiles dental office in Garden Oaks. The
Candlelight Estates resident said she joked with some of the employees
there after her girls had their checkups, and then Leal made
appointments for the following month.
Three days later, however, she got an email saying the office was non-operational.
“I’m just flabbergasted,” Leal said.
Several other Northwest Houston residents have had similar reactions
since the local Signature Smiles office, located at 3800 N. Shepherd
Dr., Suite 3A, abruptly closed Jan. 20. The business provided no
warning, according to multiple patients, and some said they aren’t sure
whether they can continue to receive treatment from the doctors who
worked there or recoup payments they made for services that have yet to
be provided.
“Today’s
settlement sends a very clear signal: Fraud in the federal healthcare
system will not be tolerated,” said U.S. Attorney John F. Bash for the
Western District of Texas. “Especially when that fraud involves
performing unnecessary procedures on kids—here, unnecessary baby root
canals and tooth extractions, among other procedures—we will not
hesitate to use every tool at our disposal to punish those who break the
law.”
“It
is intolerable when health care companies seek to boost profits by
defrauding Medicaid and exploiting children," said Special Agent in
Charge Phillip M. Coyne, HHS-OIG. "Systematically performing and billing
for medically unnecessary dental procedures undermines the well-being
of these young patients, corrupts the impartiality of medical
decision-making, and diverts money from taxpayer-funded health care
programs designed to pay for legitimate medical needs.”
Soon after they began rebranding each clinic to appear more individually owned and operated. But did they change their ways? Uh....nope!
The Complaint states that at least 50 children were treated with unsterilized instruments in March and April 2019.
Abry Partners has made an investment in Framingham, Massachusetts-based Dr. Dental Management, a dental management service organization. No financial terms were disclosed.
March 13, 2019
PRESS RELEASE
BOSTON–(BUSINESS WIRE)–Abry Partners (Abry), a Boston-based private
equity firm, today announced that it has completed a strategic
investment in Framingham, Mass.-based Dr. Dental Management, LLC (Dr.
Dental), a dental management service organization that provides
comprehensive management and administrative services to Dr.
Dental-branded offices.
Dr. Dental has a unique playbook for growth, successfully scaling the
company exclusively through new site openings to become one of the
largest dental management service organizations in New England, with 100
active dentists treating over 250,000 patients a year. With this
infusion of capital from Abry, Dr. Dental will continue to expand
organically by opening new locations but will now also target strategic
acquisitions of dental practices and groups throughout the Northeast.
Dr. Dental was founded in 2004 by the brother and sister team Alex
Faigel, CEO, and Dr. Julia Faigel, DMD, clinical director, with the
mission of providing quality dental care and great service at a lower
cost in convenient neighborhood locations. The organization has grown
from a single location to now 44 locations with 250 operatories
throughout Massachusetts, Connecticut, New Hampshire and New Jersey.
The Dr. Dental management service organization supports its
patient-care locations in all non-clinical aspects of dental practice,
including staffing, patient scheduling, billing and collections,
financial reporting and analysis, group purchasing, payroll, marketing,
education and training. This suite of services enables affiliated
dentists to focus exclusively on delivering high-quality patient care,
making Dr. Dental one of the leading brands as measured by patient
satisfaction in the Northeast.
“Abry’s investment in Dr. Dental is a true testament to our company
and the dedication of our doctors and their loyal patients,” said Alex
Faigel, Dr. Dental’s co-founder and CEO. “We’re excited to build on our
recent growth with Abry Partners and look forward to all that we can
achieve together. By combining our first-rate reputation and expertise
in organic growth with Abry Partners’ resources and guidance for
strategic acquisitions, we see Dr. Dental achieving record growth and
rapidly expanding its footprint over the next few years.”
The funds will also be used to hire additional management and
administration staff, and expand marketing and brand awareness for Dr.
Dental and its affiliates. Dr. Julia Faigel and Alex Faigel will
continue in their current management roles and run day-to-day
operations.
“We see a very bright future for Dr. Dental,” said T.J. Rose of Abry
Partners. “Alex, Julia and their team have built a strong business ripe
for further growth. This investment perfectly aligns with Abry’s
multi-site healthcare specialty platform – including dermatology,
dental, autism and urgent care – and we look forward to leveraging our
expertise to help accelerate growth organically by expanding with new
locations and through acquisitions.”
About Dr. Dental Management
Headquartered in Framingham, Mass., Dr. Dental is a leading Dental
Management Service Organization (“DSO”) in New England. Dr. Dental has
44 branded locations across four states (Connecticut, Massachusetts, New
Hampshire and New Jersey). Dr. Dental is focused on providing quality
and affordable care for all and has established itself as a leader in
patient satisfaction. For more information, visit www.mydrdental.com.
About Abry Partners
Abry Partners is one of the most experienced media, communications, and
information services sector-focused private equity firms in North
America. Since its founding in 1989, the firm has completed over $80
billion of transactions, including leveraged buyouts, growth financings
and recapitalizations. Currently, Abry manages over $12.0 billion of
capital in its active funds.
Xerox Pays $236 Million to Settle State of Texas Dental Fraud Case Legal Team: Whistleblowers Dr. Christine Ellis, Madelayne Castillo, Yarubi Morales and others Are Vindicated
AUSTIN, Feb. 20, 2019 – The $236 million settlement of the State of Texas’ Medicaid fraud claims against Xerox Corp. business units vindicated whistleblowers Dr. Christine Ellis, Madelayne Castillo, Yarubi Morales and other whistleblowers, their legal teams said today. The settlement is the largest recovery ever in a healthcare fraud recovery suit in Texas for Medicaid related claims.
The State’s lawsuit alleged that Xerox violated the Texas Medicaid Fraud Prevention Act and “rubber-stamped” prior authorization requests by unqualified clerical employees, allowing “vast numbers” of orthodontic procedures for children whose condition did not meet Medicaid criteria for treatment. The company, formerly known as Affiliated Computer Services, Inc., before Xerox acquired it, also was accused of making false statements or representations in Medicaid filings with the state.
Dr. Ellis, an orthodontist in Dallas, testified before a congressional committee in Washington in April 2012 about alleged Medicaid fraud in orthodontic billings by Texas dentists.
Ms. Castillo was an employee of the now-defunct All Smiles dental chain and West Texas Dental. Ms. Morales was a former employee of the now defunct All Smiles dental chain and Rodeo Dental.
Dr. Ellis, Ms. Castillo, Ms. Morales and several other whistleblowers all filed suits approximately two years before the State filed its suit. The State has acknowledged that the facts underlying its suit are the same as those underlying the whistleblowers’ previous filings.
Xerox became the state’s Medicaid administrator in 2003. Between 2004 and 2012, Texas expended approximately $1.1 billion on orthodontics under the Texas Medicaid program. According to the State’s lawsuit, Xerox, and ACS, Inc. before it, repeatedly represented to Texas Medicaid officials that their prior authorization system ensured proper predeterminations of qualifications.
Charles Siegel of Waters and Kraus said, “Because of Dr. Ellis and other whistleblowers who brought lawsuits against ACS/ Xerox, the State of Texas ultimately showed how Xerox and ACS, Inc. deeply compromised the integrity of the Texas Medicaid program. They faced vicious legal attacks in their courageous efforts to set the record straight.”
Rusty Tucker of the Law Offices of James R. Tucker, P.C. said, “Our legal team hopes this settlement sends a strong message that companies that prey upon Texas families and defraud the state will face the judgment of the courts. Companies who commit unlawful acts in violation of the Texas Medicaid Fraud Prevention Act will be held accountable. Dr. Ellis, Ms. Castillo, Ms. Morales and other whistleblowers who came forward should be recognized for helping expose this massive fraud.”
The case is “The State of Texas v. Xerox Corporation, et al.,” Cause No. D-1-GV-14-000581 in the 53rd Judicial District of Travis County, Texas.
CONTACTS: Rusty Tucker, Law Offices of James R. Tucker, P.C. (214) 505-0097 Charles Siegel, Waters and Kraus (214) 357-6244 James Moriarty, Law Offices of James R Moriarty (713) 857-1212
Xerox Corporation and its former subsidiary, Conduent, agreed Tuesday to a record $235.9 million settlement with the State of Texas, according to the Texas Attorney General's Office. It was the largest single Medicaid fraud-related settlement in a case filed by the Texas Attorney General.
Just an FYI, since I'm sure this information will be needed one day: Smiles 4 Kids, which had been purchasing many old Small Smiles clinics and Kool Smiles are both now operated by Tailwind Capital. Benevis is Kool Smiles and Resolution Dental
Lone Peak is Smiles 4 Kids as well as a few other names.
Financing for Benevis's sale to Tailwind seems to be, in part, by New Mountain Finance and happened during the 1st quarter of 2018. Probably before the ink on the Kool Smiles settlement was dry.
Our new investments were highlighted by a larger-size directed origination of a unitranched loan for Benevis, several club deals including a loan to ACA Compliance and one addition to both our net leased portfolio and our SBIC investing program. We believe that the consistency of our deal flow in this competitive market shows the strength of the broad sourcing network that we have built.
(unintranched debt: debt is a type of structured debt that obtains funding from multiple participants with varying term structures.)
The heartbroken family of a 2-year-old boy who died after a visit to the dentist last year is suing the Arizona clinic, claiming that a staff member repeatedly muted the alarm on a heart monitor that he was hooked up to, and that the oxygen tank he was supposed to be receiving supplemental air from was either faulty or empty.
Zion Gastelum’s mother, Veronica, brought her son to the Kool Smiles dental clinic in Yuma in December 2017 after it was determined that the boy needed crowns to address severe cavities. According to a police report obtained by ABC 15, Aaron Roberts was contracted by the clinic and was supervising the procedure, and a dentist later told responding officers that the procedure had gone “well.”
According to the family’s lawsuit, while under general anesthesia Zion had nine of his baby teeth worked on, including root canals and crowns on six of them. The complaint alleges that X-rays or further investigative exams were not conducted to confirm that the nine procedures were necessary.
By Deepa Bharath | dbharath@scng.com | Orange County Register
PUBLISHED: January 16, 2019 at 6:11 pm | UPDATED: January 18, 2019 at 2:19 pm
IRVINE — Sixty-five families whose children were infected by rare bacteria when they underwent pulpotomies, or “baby root canals,” at an Anaheim clinic two years ago filed a lawsuit Wednesday, Jan. 16, naming the clinic, its operators, the company that installs and maintains water filtration systems, and several dentists.
The lawsuit, which was filed in Orange County Superior Court in Santa Ana, alleges that Children’s Dental Group and dentists who provided services there performed hundreds if not thousands of unnecessary pulpotomies on children. Potentially deadly Mycobacterium abscesses was found in several samples the county’s Health Care Agency took from the clinic’s water system.
The children, ages 3 to 9, all underwent pulpotomies at the clinic between April and July 2016. In all, 500 children underwent the procedure during that time.
Children’s Dental Group has since become part of Western Dental. The clinic in question on East Lincoln Avenue is not owned or operated by Western Dental, but has changed hands.
So far, 150 families have filed lawsuits against the clinic and the number is expected to grow, said Dan Hodes, Irvine-based medical malpractice lawyer who is representing the children and their families.
Lone Peak is Smiles 4 Kids as well as a few other names.
