Dr. Michael W. Davis maintains a general dental practice in Santa Fe, NM. He serves as chairperson for Santa Fe District Dental Society Peer-Review. Dr. Davis also provides a fair amount of dental expert legal work for attorneys. He may be contacted via email: MWDavisDDS@comcast.net
The US healthcare industry is corrupted by crony capitalism1 of government special treatment and favoritism, from big corporate healthcare political donors. A classic example is the McCarran-Ferguson Act of 19452, which exempts the healthcare insurance industry from federal antitrust regulation and statutes, which every other American industry must comply with. Insurance industry lobbyists have successfully defeated repeal attempts, throughout multiple decades of different political administrations. Money talks in Washington regardless of political party.
In the dental healthcare industry specifically, we’ve witnessed countless examples of government support for big business interests. The donor class3 of major political parties doesn’t care about labels such as Republican or Democratic. They expect special treatment and favoritism from government, for the moneys they pay in.
Examples of Dental Industry Crony Capitalism
In 2012, North Carolina attempted to establish statutes to protect the doctor/patient relationship, and a patient’s right to full disclosures within the dental informed consent process. The state was met with a heavy barrage of out-of-state big dollar opposition from the dental service organization (DSO) industry. (Author’s note: “Dental Service Organization” is an intentional misnomer created by this industry, which either beneficially owns dental clinics, or is subordinate to private equity investment groups which do. The allegation of support limited strictly to non-clinical services, and not patient care, is a bogus claim.4) Republican lobbyist old-boys Jeb Bush, Haley Barbour, Bill First, Tommy Thompson, Grover Norquist, and many others descended en masse into North Carolina, for this test case state legislation.5,6
The private equity investment industry, which controls most of corporate dentistry, pulled out all the stops. They funded a massive advertising campaign of misinformation relating to “access to care” and low-cost dental treatment. Through DSO industry lobbyists and private equity investment firms, “donation” dollars flowed to local state politicians. The initial legislation designed to protect the public interest from the unlicensed and unlawful practice of dentistry by a corporate third party, without the knowledge or consent of patients, was largely stifled. A watered down bill was eventually signed by the governor.
Crony capitalism of the federal government’s support for big business dentistry is well established. The Federal Trade Commission (FTC) stated the aforementioned North Carolina consumer protection legislation for dental patients risked reduction in trade competition.7 The FTC blindly accepted arguments of the DSO industry at face value, while totally ignoring the federal Fifth Circuit Court of Appeals ruling 07-30430.4
The FTC followed the same course of crony capitalism in support of the DSO industry in Texas.8 Absurd spin generated by the DSO industry became talking points of the FTC in an advisory letter to the Texas State Board of Dental Examiners’ legal counsel, “Proposed 22 TEX. ADMIN. CODE § 108.74 would make dentists who own, maintain, or operate a dental practice that employs a dentist “responsible for all administrative and operational” functions. Although the proposed rules do not expressly refer to Dental Service Organizations (“DSOs”), the rules seem likely to discourage dentists from affiliating with DSOs by mandating that dentists assume responsibility for the types of functions that DSOs typically provide, and by expanding the Board’s authority to take disciplinary action against dentists who enter into such prohibited agreements.”
The entire position of the FTC is based on a false premise of the doctor owning the dental practice and in full control of clinical decisions. Federal Fifth Circuit Court of Appeals ruling 07-30430, which is largely based on Texas state law, demonstrated the ridiculousness of that assumption. Dentists are employees, and are only nominee owners at best. They generally take orders from unlicensed managers. They can’t sell “their” asset of the dental practice without authority of the controlling party (beneficial owner), the DSO. Fee splitting of the doctor’s production billings are awarded to the DSO and are standard fare. Bonuses and quotas for clinical production are commonplace. Doctors retained for employment by a DSO rarely if ever have control over selection of clinical supplies or laboratories, in a patient’s best interest. Auxiliary clinical staff like hygienists and dental assistants is truly not under the direct control doctors, and too often freely engaged in unlicensed activities sanctioned by their employer, the DSO. Often the DSO, not the doctor, mandates which clinical specialists a doctor must give patient referrals to. Obviously, the DSO is intimately involved in the unlicensed and unlawful practice of dentistry. It’s in the interest of the DSO industry and the private equity investment industry to subvert government oversight and regulation, which they’ve been very successful in doing.
A master at the political and big business game of “pay to play” was former New Mexico Governor “Dollar” Bill Richardson (D-NM). His foray into the dental industry was through the New Mexico State Investment Counsel (SIC), which he chaired. The SIC was established to award low interest loans and grants, to New Mexico based businesses, in an effort to grow the state’s economy. $550,000 of state taxpayer money went to Small Smiles Dental (operated under the DSO title Forba). Forba was not headquartered in New Mexico, but Nashville, TN. Further at that time, the principle owner was Arcapita Bank (a today defunct Islamic Sharia compliant investment bank), in the Arabic Kingdom of Bahrain. To date, those taxpayer funds have never been accounted for.9
Nationally, numbers of DSOs have gone bankrupt, locked their doors to staff and patients, and abandoned patients in mid-treatment with citizen/patient funds on account. Examples include smaller DSOs in Texas10, but also larger corporate interstate chain dental clinics such as All Care Dental and Dentures.11 Prior warnings to government from concerned dentists did little to motivate state governments unwilling to take regulatory preventive action. State and federal authorities seem mired in the fantasy myth of doctors, and not corporate managers, as controlling corporate dentistry. With enough corporate money, reality gets distorted and government puppets dance to the tune, which they’ve been hired and paid for.
Blowback against Crony Capitalism in Dental Healthcare
Most states have statutes against fee splitting in healthcare professions, as it’s considered a highly unethical practice, and not in the interest of patients.12 (Author’s note: A doctor and most healthcare professionals have an ethical and fiduciary responsibility to place patient interests to the fore, because of their vastly superior expert knowledge and training.13 By contrast, a corporation has a primary ethical and fiduciary responsibility to generate profits for shareholders.14 The conflict-of-interest is self-evident. Neither doctors nor free market corporate managers can serve two masters. Healthcare isn’t the buying and selling of widgets.)
The North Carolina State Board of Dental Examiners (NCSBDE) filed suit against Dental One (a/k/a Dental Works), an interstate DSO, alleging the unlicensed and unlawful practice of dentistry by a non-dentist entity.15-6 This action filed by the NCSBDE has today been settled. Dental One has severe restrictions for alleged unlawful practice of dentistry, but only in North Carolina.
Washington State’s Department of Financial Institutions examined the dental franchise operation of Comfort Dental (chain of alleged dental franchises) and viewed them to be in violation of open disclosure laws of Washington, which largely mirror federal statutes.17A cease and desist order was agreed upon in the consent order of April, 2012. Yet, Comfort Dental continues to market so-called franchise opportunities in OH, IN, KY, MO, NE, KS, OK, TX, CO, NM, AZ, MT, as well as Washington, as of the date of this article.18 Seemingly, the cease and desist order within the consent agreement represents a meaningless “speedbump”, to the operation of Comfort Dental and its principles; Rick Kushner, Neil Norton and Graig Bears.
The Washington State insurance commissioner issued in August of 2015, a cease and desist order against the aforementioned Comfort Dental.19 This time the alleged violation was over the company’s “Gold Plan”. This is a discounted fee plan, which very closely resembles a duly registered and bonafide insurance vehicle, which it is not. Dentist franchise operators have expressed concerns in their individual states over potential misrepresentation to the public of Gold Plan as an insurance offering, specifically in MO, KY, and IN.20Unfortunately, franchise dentists are contractually obligated to honor Gold Plan regardless of possible violation to state law. Doctors are squeezed “between a rock and a hard place”.
More recently (February 1, 2016), the Hearing Unit Office of the Washington State Insurance Commissioner issued another cease and desist order against Comfort Dental Gold Plan, LLC.21 This order was required, as the previous order was allegedly disregarded by Comfort Dental. The insurance commissioner’s final order is well supported in detailed case law. The fines against Comfort Dental for non-compliance with the law are serious. Yet, one wonders if a few dollars placed in the “right” politician’s hand might not reverse this order? We’ll see.
One big complaint nationally by dentists working for Comfort Dental is their contract requirement to strictly use Budget Dental Lab for their patients. Serious concerns over dubious lab quality and negative patient outcomes have been expressed.20This problem isn’t restricted to Comfort Dental, but is a highly universal issue within the DSO industry negatively affecting patient care involving corporate unlicensed practice of dentistry.
Washington State hit Comfort Dental with yet another cease and desist order (July 5, 2016) for unlawful fee splitting via a “royalty” fee based on gross clinic collections, as well as the illegal practice of dentistry by a corporate entity.22 This action by Washington in many ways mirrors the earlier case by the NCSBDE against Dental One. The state’s brief is well structured, and again well supported in case law precedence.
One wonders how Comfort Dental and their directors; Rick Kushner, Neil Norton and Graig Bears will respond? Interestingly in the manner of organized crime Mafia figures, Rick Kushner (no longer a licensed dentist), is referenced as “the Godfather” on Facebook and by colleagues. One ponders how the DSO industry can continue the absurd myth, of not actively engaging in the unlicensed and unlawful practice of dentistry? How many palms need to be greased?
Corporate Dentistry Fights Back
The case was clearly made how corporate dentistry fought for their interests, over public interests, in North Carolina. That battle has been waged by the DSO industry nationally and on many fronts.23 Through media outlets and state and national legislatures, corporate dentistry has pounded home their self-serving messages. Money can purchase political favors, buy media attention, and even buy-off the dental profession itself (as the author will demonstrate later).
However, few in corporate dentistry have been so ham-fisted in squelching dissenting opinion, as Comfort Dental. Comfort Dental filed defamation suits again four individual University of Colorado dental professors, for alleged remarks made to students.24 That case has since been settled and parties aren’t talking, because of non-disclosure agreements in the settlements. Regardless, Comfort Dental has established corporate dentistry precedence, for shutting down opposition voices. The alleged slander was no worse than can routinely be found in online patient reviews of Comfort Dental, or most DSOs.
The DSO industry is currently fighting hard in Washington State, to put forth their misrepresentations, in spite of the disturbing activities of Comfort Dental and many others.25 Hired advocates place DSO myths and distortions in business publications such as Forbes.26 Money buys access, influence, and usually results.