Transparent as it was, on May 25, 2012, All Smiles Dental petitioned the court to allow for a Management Incentive Bonuses to be paid during bankruptcy procedures. [shaking head]
First they tried to establish the separation of the Professional Corporation and the plain ole Corporation, and the Debtors. Kind of like “church and state” but better. Keep the chart below handy as you follow along.
Debtors – All Smiles Dental Center, Inc. and AS Property Holdings, LLC
Inc. – All Smiles Dental Center, Inc.
PC – All Smiles Dental Professionals, P.C.
“Inc, and PC believe that PC must exit the orthodontic practice in an expedited manner”. Inc will help PC do this in a manner consistent with the State Board of Dental Examiners rules. [Doc. 90, paragraph 6]
Debtors are asking that 8 “Key Employees” who are “vital” to the ongoing operations in assisting the PC’s exit the orthodontic business be given a bonus for their outstanding work, just in case they provide some. They argue, since other employees have quit or been fired, these “Great 8” have “asked” to take up the slack.
Debtors claim these 8 have been “efficient in the administration of the Debtor’s estate” and present that any reorganization of the company could not happen without them.
To reward these 8 outstanding people, Neil Minihane, (acting president) devised a “Management Incentive Bonus Plan, at Inc. to reward them for their efforts based on “specifically identifiable milestones”, up to $180,250.00, with installments up to $90,125.00. – [Doc. 90, paragraph 10]
Mr. Minihane believes PC cannot exit the fraudulent [they didn’t say they were fraudulent, of course, I did] orthodontics services without this bonus plan and paying the “Great 8” the proposed bonus is “necessary, reasonable and in the best interest of the Debtor’s estate.”
The plan is to make two payments to the “Great 8”. The first one is when Inc. converts PC over to strictly “general dentistry”. [Stainless Steel Crown manufacturers, gear up!] The payments will be at the discretion of Inc.
Yes, I think we are understanding this correctly – Inc (debtor) wants to reward Inc (itself) with a bonus, since Inc (itself) has to follow Dental Board rules closing its “fraud” department (orthodontics).
Here is exactly what it says in Doc.90, paragraph 8 :
The Management Incentive Bonus Plan consists of two bonus payments. At the discretion of the Debtors' management, the first bonus payment will be payable upon the Debtors' successful management of PC's exit from orthodontic services. This is a key element to PC being able to shift its practice area to solely general dentistry, and hence, to the Debtors' reorganization into a company only supporting a general dentistry practice. The Debtors, with the critical assistance of the Key Employees, are currently working toward this goal. This includes labor-intensive tasks such as providing staff, record access, and logistics related to the orthodontists' preparation of letters to patients advising of termination of treatment or managing the SBDE professional dismissal process while managing the customer services issues with orthodontic patients and their families. Without the assistance of the Key Employees, PC would not be able to timely and professionally exit the orthodontic practice, resulting in significant additional costs to PC and the Debtors' estates arising from lack of organization and profitability in the orthodontic business at PC.
The second payout Inc wants to pay itself for work it already does, would take place when they Inc. exits the bankruptcy. They say, when PC stops its fraud (orthodontics) practices, the “Great 8” will still be “required in order to complete the myriad of tasks associated with the successful restructuring of PC as a general dentistry practice”. They further stated the Debtors believe they have demonstrated sound business judgment in this process and should be granted their motion for bonuses. [Doc 90, paragraph 20]
The motion stated, Inc will continue to do as it did before they filed bankruptcy – manage PC. By management of PC, Inc listed “properly restructuring the general dentistry practice, along with negotiating and managing the implementation of the Corporate Integrity Agreement contemplated in the State Settlement Agreement.”
Here is exactly what is said in Doc 90, paragraph 9:
At the discretion of the Debtors' management, the second bonus payment will be payable upon the Debtors' successful exit from bankruptcy, as evidenced by this Court's confirmation of a plan of reorganization. After the Debtors facilitate PC's exit from the orthodontic practice, the services of the Key Employees will continue to be required in order to complete the myriad of tasks associated with the successful restructuring of PC as a general dentistry practice managed by Inc. These services include, but are not limited to, removing Inc. personal property, turning over the facilities to the respective landlords, reorganizing the management operations to support the different PC needs, record relocation and organization, identifying and installing processes and procedures associated with the State Settlement Agreement Requirements,4 identifying the executory contracts and leases to be assumed or rejected by the Debtors, developing financial projections, identifying the amount of exit financing necessary, working through the myriad of patient and employee uncertainty issues associated with the bankruptcy process and answering general questions associated with the plan and with the Debtors' business.
The “Great 8” employees of Inc. are:
John Bevill – Operations Director – West (Former District Manger at Kool Smiles)
Esther Castaneda – HR Manager
John Garry – Controller – (Previous with Lending.com – online mortgage broker)
Spring Helser – Doctor Recruiter – (used to work at CVS)
Diana Loft – Facilities Director – (PlainsCapital Bank, now at Chem-Aqua, left AS 7-2012 after 5 years of employment.
Michael Lozich – Chief Compliance Officer – LinkedIn page says he’s at Broadlane, Inc. since 2009, must need updating, here is press release he issued for All Smiles July 27, 2012)
John Morgan – VP of Information Technology – (Formerly Cano Petroleum, started AS in Aug. 2010)
Lisa Mullinix – Operations Director – East – (Former Regional Manager at Small Smiles)
Specifically the Motion told the court that the “…specific amount of the…payment each…will be eligible to receive will be based upon percentage of the …salary ranging from 15% to 25%.” They motioned for the details of the “Great 8” salaries and detail of the Management Incentive Bonus Plan be placed under seal by the court.
They further stated that, “seven of the Key Employees received offer letters upon the commencement of their employment proposing bonus payments consistent with this percentage of their salary. The remaining Key Employee did not receive such an offer letter. This Key Employee will be eligible to be paid a bonus at the low end of the percentage range.”
In other words, these employee were told they would receive bonuses when we hired them, and we still want to hand out bonuses, capeesh, Mr. Judge?
It was a great attempt to extort more money from the bank accounts of All Smiles Dental. However, 11 days later, On June 5, 2012, Inc. withdrew the Motion on June 5, 2012.
Imagine the danger All Smiles currently poses. Regional directors who were given lots of power and leeway from the top two Medicaid dental mills all under the Malouf roof! Shakes me to the core.
Lisa Mullinix was a Regional Director of Operations for Small Smiles Dental Centers. She is the person who came up with the “scripts” distributed to employees to stop parent from accompanying children back into the operatory.
Much more to come on Ms. Mullininx. Stay tuned.
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