It looks like North Carolina is taking the lead to put an end to the corporate take over of dentistry. Now, if they would just look into the Smile Starters agreement with Root Dental Management, and the sales agreement between Dr. Rivera and Dr. Michael DeRose another income flow to the DeRose family might be cut off.
If you want to understand how the corporation do business, you should read this. It lays it all out for you.
North Carolina State Board of Dental Examiners (NCBDE)
vs.
Heartland Dental Care, Inc
d/b/a Heartland Management, Inc
Gary Cameron and Associates, P.C and';
Gary L. Cameron, DDS
Case 11-CVS-2343
Heartland Dental Permanent Injunction
Dr. Cameron was selling his dental practice to a corporation, “an unlicensed individual or entity.”
Heartland denied Dr. Cameron transferred ownership or management to anyone and maintained Dr. Cameron merely sold certain assets to Heartland then entered into a lawful management agreement with Heartland.
This violates North Carolina’s Dental Practice Act (N.C. Gen. Stat. 90-22) and the Management Arrangement Rule (21 N.C. Admin. Code 126X.0101).
Heartland Dental denied the allegation that Dr. Gary Cameron transferred ownership or management to anyone and maintained Dr. Cameron merely sold certain assets to Heartland Dental then entered into a lawful management agreement with Heartland.
[I’m seriously trying not to roll on the floor while laughing at Heartland’s position]
However, in 2009, Dr. Cameron hired Roger K. Hill and Company to assess and valuate his dental practice and provide him with a valuation of $2,350,800.00. I’m not even going to get into what was likely done to make sure the the clinic had a high value.
By December 1, 2009 Dr. Cameron and Heartland agreed on a price of $2,450,000.00 PLUS the value of his accounts receivable and entered into a “Letter of Intent to Acquire Certain Assets”. In this letter of intent it listed the “assets of the Seller” to be:
”All operating assets, leasehold improvements, office equipment, dental equipment, supplies, inventory, trade receivables, licenses, contracts,
trademarks, and other tangible and intangible property necessary to the operation of the Seller”
In January 2010 Dr. Cameron established a new company called Gary Cameron and Associates, P. C. with him being the sole owner.
On March 31, of 2010 Dr. Cameron executed an Asset Purchase Agreement that listed various schedules listing acquired assets such as fixtures, furnishings, equipment, proprietary rights to the assumed name, computer, software, insurance policies. Dr. Cameron also executed a Bill of Sale and an Employment Agreement with Heartland Dental as well as an Assignment of Lease.
Also executed on that day were the following agreements:
“Management Agreement”with Heartland Dental,
“Addendum to Management Services Agreement”,
“Employee Lease”,
“Power of Attorney”,
“Assumption Agreement”,
“Subscription Agreement”
“Investment Representations”
“Non-Competition Agreement”
By giving all this to Heartland, including a “Power of Attorney”, Dr. Cameron was paid, $2,200,016.00 in cash and Heartland Dental common stock valued at $249,984.00, plus $138,396.00 for the accounts receivable. Total amount to Dr. Cameron was $2,588, 396.00.
Heartland wired Dr. Gary Cameron $1,800,016 and agreed to pay him $400,000.00 later and issued Dr. Cameron 5,208 shares of Heartland Dental stock valued at $48.00 per share.
The Asset Purchase Agreement required Dr. Cameron to fire all his employees. Heartland said it would screen former employees and possibly rehire them. [whatever].
Heartland did rehire most of the employees as then being employees of Heartland Dental but “leased” the employees back to Gary Cameron and Associates P.C., the company he created earlier.
Dr. Cameron also signed employment agreements. One with Heartland Dental and one with his own company, Gary Cameron and Associates. Heartland agreed to pay Dr. Cameron a salary which was the “greater of 15% of the amount collected by Heartland on behalf of Gary Cameron and Associates” that resulted from Dr. Cameron’s own dental treatment on his patients or $72,000.00 annually.
Since Dr. Cameron was now an employee of Heartland Dental he would be eligible for bonuses.
Now remember, Dr. Cameron also has an employment agreement with his own company, Gary Cameron and Associates, P.C. That agreement says he will be paid the “greater of 10% of the amount collected from his treatments or a minimum of $48,000.00 annually, with includes hygiene, x-rays and other dental treatments.
Dr. Cameron would be getting an annual salary of a minimum of $120,000.00 per year with 40% coming from his own company and 60% coming from Heartland Dental. While getting $2.5 million as a cherry on top.
Sure sounds like a complicated way to sell your dental center and be hired by the company who bought it, isn’t it?
Well, that’s because it friggin’ illegal!!!
Here is why. A corporation’s fiduciary duty is to it’s shareholders, which would then include Dr. Cameron. A medical professional, such as a doctor or dentist, has a fiduciary duty to the patient.
Remember too, all of Dr. Cameron’s old employees now work for Heartland Dental, they too are eligible for bonuses. Dr. Cameron has agreed to lease back his employees from Heartland to come work for Gary Cameron and Associates, P.C.
The Management Agreement and Employee Lease Agreement made between Heartland Dental and Gary Cameron and Associates, P.C. said the P.C would:
1. Lease his clinical employees from Heartland, excluding any other dentists.
2. Give Heartland direct or indirect control or authority to approved or give input into the material terms of the relationship between the P.C and the dentist and other personnel who worked at Gary Cameron and Associates P. C.
In other words, Gary Cameron and Associates, P.C. could not boss the employees around and gave Heartland the authority to call all the shots.
So far it appears Dr. Cameron gets all the $’s doesn’t it? You might be asking what is in this for Heartland Dental.
Simply put, all the rest.
Heartland Dental would received “monthly payments” from Gary Cameron and Associates, which was not really for management services rendered nor payment for the employees leased, it amounted to Heartland Dental’s return on investment.
Remember, Heartland collects all the funds and was to pay Dr. Cameron a salary. On paper, I suppose Heartland dental could divided 100% of the net profits as being paid to Heartland Dental by Gary Cameron and Associates for employee leasing or for Heartland providing management services. But of course, Gary Cameron and Associates, P.C. never really saw income, nor wrote checks for expenses. Heartland took care of all of that as part of the “management services”.
The Power of Attorney Dr. Cameron gave Heartland Dental was on behalf of Gary Cameron and Associates, P.C. which granted Heartland unconditional authority over Gary Cameron and Associates, P.C., to do all billing, pay all bills, sign leases, open bank accounts; complete control.
Dr. Cameron operated under these conditions from March 31, 2010- the sale closing date- and August 2011. Dr. Cameron allowed Heartland to use his name, diploma and license to operate his former dental practice.
On September 6, 2011 Heartland Dental and Dr. Cameron agreed there was sufficient evidence to support the Dental Board’s position and agreed to a Permanent Injunction which rescinded the entire transaction. I call it a “HAM”-hot ass mess.
The Injunction required all contracts and transactions to be rescinded by September 30,2011 including those with Dr. Peter I. Son.
The Injunction also prevents the parties from executing any other contracts or agreements without prior approval by the Dental Board.
Other stipulations include:
1. ”A Promissory Note for the purpose of reconveying to Heartland all assets he received”.
Dr. Cameron can sign a note giving him a chance to pay back the money he received for the dental practice he said he did not sell (sarcasm) minus any tax liability he will incur from the proceeds he received for “not selling” (sarcasm) his business. This note has to be between Heartland Dental and Dr. Cameron personally and not Heartland and any company of Dr. Cameron’s
Dr. Cameron can’t use the dental practice or any of it’s equipment as collateral for the promissory note to Heartland Dental. So Dr. Cameron would have to use his personal assets as collateral, such as his house, property, stocks, bonds,boats or aircraft and those sort of things. All payments made to Heartland Dental to pay back the money he received must be made in the name Dr. Cameron.
The Promissory Note can’t be connected to any new management agreement either.
2. “All assets and other consideration conveyed to Heartland by Dr. Cameron and/or the Existing P.C shall be returned to Dr. Cameron. Any assets conveyed by Dr. Cameron to the Existing P.C. may be retained by the Existing P.C. or transferred to the new P.C.”
The stuff Dr. Cameron “did not sell” (sarcasm) to Heartland who then transferred it to the newly created entity must be returned to Dr. Cameron, but the stuff Dr. Cameron transferred to the new PC he and Heartland had created he can keep, either in the new PC they had created or in a new clean PC he is allowed to create. Basically, Dr. Cameron must get his stuff back from Heartland and added back to the stuff he kept.Clear as mud?
4. Dr. Cameron can create a fresh new company as a Subchapter S Corporation and must remain owner or must be owned by another dentist or dentists holding a valid dental license in the state of North Carolina.
3. A new Management Services Agreement whereby Dr. Cameron and Heartland can enter into another agreement approved by the dental board which is SEALED!
5. The Management Services Employment Agreement between Heartland and Dr. Cameron must be rescinded.
6. The Management Services Employment Agreement between Heartland and Dr. Son must be rescinded.
Peter I. Son. DDS and associate dentist with Dr. Cameron was reprimanded for his part in the scam.
7. All employees will now be employees of Dr. Cameron and not Heartland. Talk about confusing!
8. Heartland and any of its affiliates or successors are enjoined from entering any new management agreements with North Carolina licensed dentists for 5 years, except this amended management agreement with Dr. Cameron.
9. Heartland can’t be named or identified as a third-party beneficiary of any employment agreement between Dr. Cameron and Dr. Son or any companies or other dentists hired by them.
10. Heartland had to pay the Dental Board $36,817.50 as “partial” reimbursement of the cost of the investigation.
11. Everyone has to like what they signed and can’t appeal it and they all had to pay their own attorney fees.
Dr. Gary Cameron’s dental license was suspended for 2 years. But stayed for 5 years as long as Dr. Cameron follows all terms set out by the Dental Board.
BUT WAIT! Dr. Cameron did not sell his practice, said Heartland Dental,
Links to Documents:
