In an article on Dentaltown, dated October 2012 Comfort Dental founder, Rick Kushner said: -
“Corporate dentistry scares the hell out of me for two reasons: first, whether they get their money from the public or from private equity, corporate dentistry will always have only one priority: demonstrate more profit. (By the way, Comfort Dental has only one original money source: me. Oh and a couple of local banks. Of course, every single Comfort partner is equity invested in his/her own Comfort partnership.) And secondly, as a dental “chain” we are unfairly lumped together with corporate dentistry by ignorant dentists including DSIs (dental school instructors) and of course, some patients. Structurally and philosophically we at Comfort are as far from corporate dentistry as traditional private practice. Had the profession listened to me instead of attacked me over the past few decades, the professional landscape would be saturated with Lean & Mean group type practices so prosperous that there would have been neither need nor room for corporate dentistry. So again, how did corporate dentistry happen? It’s dentists’ fault. It’s DSIs (dental school instructors) fault. It’s not my fault; it’s their fault. Dental practices were so bad for so long with their 80 percent overheads and their hygiene-heavy practices that businessmen in business suits looked at them and instinctively knew they could do better and keep the difference in profits. And guess what? They were right. Businessmen in business suits looked at dental practice and knew they could handle our business better than dentists. So they did. Not my fault. I warned dentists but they were smarter than me. Graduates laden with debt and corporate dentistry are a match made in heaven. “
I would agree with 90% of that statement.
However a Complaint filed March 25, 2014 in Colorado US District Court accuses Comfort Dental of “exerting excessive and improper control over medical decisions and judgment of dentists practicing in Missouri, Kentucky and Indiana” appears to indicate Comfort Dental is more “corporate” than Mr. Kushner likes to think.
A Brief filed with the Compliant, seeing an Injunction against Comfort Dental states:
“Comfort Dental’s illegal conduct exposes Plaintiffs to immediate and irreparable harm. Comfort Dental’s demands that the Plaintiffs participate in the MLRP (Mandatory Lab Referral Program) and sell the Gold Plan (unregistered discount medical plan) force Plaintiffs to make an impossible choice: lose their 25 year franchise or violate the laws of multiple jurisdictions.…it impermissibly interferes with, and exerts control over, dentists’ independent medical judgment and forces Comfort Dental dentists to place the financial interests of Comfort Dental’ s owners over the best interest of their dental patients…threatens irreparable harm by threatening to terminate Plaintiff’s franchise, and by demanding that they engage in potently illegal conduct which could expose them to penalties, professional licensure actions and damage to their patients relationships and reputations. “
I read this to say, instead of dentists being fired, their Subfranchisee Agreement can be terminated without notice or opportunity to correct problems that may arise.This sounds a whole lot like more like “corporate dentistry” than independent franchise owners to me. As always I could be wrong.
However, before getting into what meticulously laid out in the Complaint and other pleadings, you need to know the players:
THE CAST
Rick Kushner – Master Franchisor
Carl and Craig Bahr - SubFranchisors
SubFranchisees – Owner Dentists (could be one or more partners). Barry Kushner – Shareholder and General Partner in Budget Dental Lab dba Premier Dental Lab
Neil Norton – Comfort Dental Executive Vice President, and shareholder
Graig Bears – Comfort Dental in-house legal counsel
Roy Martin – Shareholder
C. Michael Bloss – Shareholder
Bruce W. Irick - Shareholder
THE TANGLED WEB
COMFORT DENTAL, Inc – Rick A. Kushner, Founder, CEO and principal shareholder.
CDMO, Inc – FY & KMA, Inc, majority shareholder , Craig Bahr, CEO and a principal.
CDET, Inc - Craig Bahr and Carl Bahr are principal shareholders
B. Bros. Inc. - Carl Bahr principal shareholder
FY & KMA, Inc. - B. Bros, Inc. is the principal shareholder of FY & KMA, Inc.
CDMO Holding - entity controlling the property for CDMO, Inc
CDET Holding - entity controlling the property for CDET, Inc
M’KNIB – Company that operates Budget Dental Lab dba Preimer Dental Lab; owned by Rick and Barry Kushner
M’KNIB Created in 1995
Original directors:
Rick A. Kushner, 17404 W. 53rd Drive, Golden, CO 80403
Roy Martin, 570 W. Sutton Crl., Lafayette, CO 80026
C. Michael Bloss, 13110 W. Yale Place, Lakewood, CO 80228
Bruce W. Irick, 13775 W. 67th Crl, Arvada, CO 80004
Neil G. Norton, 6634 Window Rock Lane, Morrison, CO 80465
Barry A. Kushner, 2025 Miller, Lakewood, CO 80215Trade Names of M’KNIB:
Table Mountain Seminars, Inc
Budget Dental Labs, Inc
Comfort Dental Gold Plan
Bahr CSMO/ET Lab Rebates, created 11-26-2013, withdrawn 2-25-2014
Confused? You are supposed to be.
THE COMPLAINT
The 225 page Complaint, filed by Carl and Craig Bahr, (twin brothers) seeks to void various binding Agreements they say they were duped into signing by accusing Comfort Dental misleading them for 8 plus years. They say Kushner forced them to force “Subfranchisees” to peddle “improper and unregistered” “discount medical plans” – The Gold Plan —as well as use Kushner’s favorite dental lab—Budget Dental Lab aka Premier Dental Lab—that just happens to be owned by Kushner and his brother, Barry Kushner., among others.
The Complaint includes details of the grievances, copies of the Master Franchisor Agreement, Sub Franchisee Agreements as well as several examples of Kushner’s intimidation and threatening communication to franchisees.
THE SUPPOSED HOODWINKING
In 2000, still in dental school, the Bahrs responded to an ad place by Rick Kushner, Comfort Dental’s CEO. It’s unclear exactly what kind of relation developed between the Bahrs and Kushner, the Complaint simply says, “during the next several years, the Bahrs had personal contact with Dr. Kushner and Neil Norton (another principal in Comfort Dental.) What is clear is these young dental students drank the Kool-Aid, as they say.
In 2003, the Bahrs met with Comfort Dental executives in Colorado and “discussed the possibility that Carl and Craig Bahr would join Comfort Dental after they completed their orthodontics residency in 2005.” (Talk about planning ahead!)
Still in their orthodontics residency, on December 9, 2003 they signed a “Franchise Agreement” with Comfort Smile, which “they believed to be a sister company of Comfort Dental”. The Franchise Agreement allowed them to operate franchises in 3 territories in the Denver area.
Five years later, in August 2008 they signed a “Subfranchisor Agreement”
The Bahrs say, after an 8 year relationship (2000-2008) with Kushner and Comfort Dental on Thursday, August 21, 2008 they were hoodwinked (my words, not his) into signing the “Subfranchisor Agreement” with Comfort Dental , allowing them to sell Comfort Dental franchises to dentists, opening offices in Missouri. The first opened in 2009.
Then on Saturday, (August 23, 2008), at what sounds like a clandestine type meeting, they were hoodwinked again! OMG! A double hoodwink! (Apparently the boys failed “Hoodwinking 101” class while in high school.)
The meeting took place inside a restaurant in Thornton, Colorado where the Bahrs and three other dentists (5 total) along with their wives met with Craig Bears, Comfort Dental’s General Counsel. This is where Bears presented to the group yet another franchise agreement which, according to the Complaint “pertained to the formation and operation” of the Bahr’s company, CDMO, Inc. and the establishment of Comfort Dental franchised dental and orthodontic offices in Missouri. Graig Bears requested everyone sign it.
Here we are,14 years (March 2014) after first meeting with Kushner and Comfort Dental, 5 ½ years after the dinner meeting, and the Bahrs are complaining that Comfort Dental and Bears failed to give the 5 dentists any franchise offering circular or Franchise Disclosure Document (FDD) that is required by the Federal Trade Commission. Say what?! Ok, they failed Hoodwinking 101 AND are slower learners.)
But the hoodwinking didn’t stop there; oh no!
Once again, on February 18, 2011 Comfort Dental hoodwinked not just the Bahrs but CDMO, Inc.! Yes, a corporation can be hoodwinked! Comfort Dental forced CDMO to enter into a second Master Franchise Agreement! (Is there also corporation neurosurgeons? What about dentists for corporations; they seem to be all but human these days)
Apparently, happy with how things had progressing for 2 years, in 2010 Craig Bahr created two companies in Wyoming; CDET and CDET Holdings. Comfort Dental and CDET began their business arrangement and yet another Master Franchise Agreement was signed; dated July 1, 2011.This Master Franchise Agreement governed the operation of “Subfranchised” dental offices in Kentucky and Indiana.
THE AGREEMENTS
CDMO, Inc (anyone besides me not get that this mean Comfort Dental Missouri?) was authorized to offer “subfranchises” in Missouri and CDET, Inc was authorized to offer “subfranchises” in Kentucky and Indiana. (Comfort Dental Extraterrestrial?) The rights to offer these subfranchises, included using Comfort Dental’s Mark and License Method within a set geographic area.
In return for use of the Comfort Dental Mark and License Methods, along with the fine management services (sarcasm) offer by Comfort Dental , the Bahrs (CDMO and CDET) agreed pay Comfort Dental $50,000 franchise fee and to hand over a 1% of the monthly Gross Collections as a Master Franchise Royalty Fee. They would also pay Comfort Dental $50,000.00 for each subsequent office they opened in their assigned territory.
There are several instances in the Agreements where it is clear dentists have to choose between having their “Subfranchisee Agreement terminated,(fired) and being sued by Kushner for the violation or violate dental practice acts; none of which is a welcoming choice.
FORCED TO USE KUSHNER’S LAB
Here is where I have to ask, is Comfort Dental about delivering quality care at reasonable prices or is about shafting patients, doctors, taxpayers (they accept Medicaid) and their insurance companies out of millions?
Presently the “Subfranchisees” are forced to purchase and use subpar appliances that can be detrimental to patients’ health. Effectively Comfort Dental’s Rick Kushner is practicing dentistry without a license (his have all lapsed) by overruling the dentists’ best judgment for their patients. There are times the appliance may be completely different that what was prescribed for the patients yet; dentists are reluctant send the appliance back to be remade.
Why? Because Kushner will penalize them.
Yes, if Kushner’s lab sends defective appliances—dentures, bridges, crowns etc.— for the patient’s mouth, you being the patient, the prescribing dentist can be penalized for not putting it in the said patient’s mouth—your mouth. It doesn’t matter if it fit, if it causes pain, renders you unable to take in nourishment. I would hate to be the patient whose dentures didn’t fit but sending it back for repair would impose a 10% penalty, wouldn’t you?
Imagine your primary care physician prescribing Warfarin for your heart condition and the pharmacist giving you Adderall, and your primary care physician can’t complain, without getting a bill from the pharmacy. It’s the same thing.
In a July 31, 2012 email Kushner to dentists in New Mexico, it’s clear it’s his way or the highway:
“Hi guys, I was recently made aware of your franchise violation regarding sending unapproved lab work out of the organization. I expect that the violation was relatively minor and that we will all move forward from this Nevertheless, I would like to add my disappointment in your actions. It always saddens and concerns me when a Comfort partner acts. l like any other “hotdog” dentist and feels he/she can act independently of the organization for his/her personal desires. I am confident that all of our partners understand that Comfort’s mandatory in-house lab concept is one of the tiny few massive differences-makers for us. We at Comfort are truly teaching the work how dentistry should be delivered and actions like your retard our efforts. In addition to the legal penalties for your violation, I feel an obligation to show this example to all of our partners for their edification. Additionally, your partnership will be scrutinized going forward for additional franchise violations. Again, the early development of your office had been good, so it puzzles me as to why you would risk this incredible opportunity.”
Eventually, dentists at the NM clinics were forced out, some left the state, and I am told the clinics are now corporate owned clinics.
In an August 30, 2012 email sent to Comfort Dental dentists from Comfort Dental attorney Graig Bears, he writes:
“…right now the corporate office is dealing with an office that has been using a non-Budget/Premier dental lab. It is not a one-time or even a sporadic use but rather continued and severe. Please, if any of you are using an outside lab, stop now. The money saved is not worth losing your franchise. Thanks, Graig”
In yet another email from Rick Kushner to “all docs” it says:
“As you can see, two offices…failed to meet my remake requirement of 12% for the third quarter. Therefore, they are subject to a 10% penalty on their lab bill for October, November and December. Other offices, as you can see, were very close to being penalized. This penalty will be billed on the monthly M’KNIB maintenance invoice under “lab penalty”. Please note that my stated goal for ALL offices is 10%...As promised, these ridiculous remake levels will no longer be tolerated. You were warned and apparently some of you ignored me…Some of you didn’t take my rants at quarterly meetings concerning the large range of remakes percentages seriously. The profession believes that a 10% remake rate is acceptable. I know 10% to be TERRIBLE. Our remake range for June 2010 was 0% to 22.37%...How such an incredible range can exist with offices using the same lab, the same practice style, the same treatment planning philosophy and the same lab requirements is a complete mystery to me and will now end…In order to avoid punishing all offices by raising lab fees because of high remakes rates, all office with 3rd quarter remakes rates of greater than 12% will pay a 10% penalty on total lab bills for the next quarter…Ultimately the penalty will apply to all remake percentages above 10. This is entirely my decision and I wanted to implement the penalty immediately but your lab management team convinced me to wait 3 more months so they may support your effort to reduce your remake percentage…I scrutinize your monthly statistics each and every month and you should all do the same...I’m tired of waiting up to 2 weeks to see your stats…Please do not cause me to implement a penalty for your failure to comply…”
The same email goes on to say,
“…Please remember that your overhead/draw reporting purposes, consulting agreement payments and royalties are added back in as profit…If any new partner feels as though he/she is not being properly mentored by senior partners into the “Lean & Mean/Comfort Dental philosophy, please do NOT hesitate to contact me personally. I will solve the problem promptly…Finally, learn what a hand held email device is and buy one.”
(Personally, I would hate to be the next couple of patients after my dentist just got this tongue lashing, wouldn’t you?)
In his Declaration filed with the court, Craig Bahr states:
“The problems and complaints include problems with the quality, appearance and suitability of various dental devices, as well as significant delays in delivering them to and from the Colorado-based Comfort Dental Lab…Comfort Dental has repeatedly emphasized that mandated lab referrals and revenues from the Comfort Dental Labs are critical to the Comfort Dental business, and that Comfort Dental “does not survive without the lab[s]”
Let’s not forget, the patient—YOU—are in the middle of this hoopla. I would be beyond pissed if I was waiting for the proper fitting appliance so I could eat!
Here is one of Kushner’s recent tweets:
April 28, 2014 - What is your lab% of overhead? 18, 14, 10 if u r lucky? At Comfort we do a bazillion lab services and our lab% is an astounding 6%! Buy in!
In a December 2, 2013 email, to “all docs” Comfort Dental’s EVP for Franchise Communications, Roy Martin writes:
November was a record month for REMAKES!! WTF???? 21 offices exceeded the 10 remake limit set by RK. You are all flirting with FIRE. Check the report you got Monday and if your office is in the “top” 21, respond to this email and tell me what the problem is ASAP. The highest C&B offices by volume are clattered in the UNDER 5% group!! 22 offices had “0” remakes. No one likes remakes, least of all would be you and your patients, so get after it so we can get all of you back under the limit before the end of December. If you don’t take action, PENALTIES will ensue; your life will continue to be frustrating.
In some states, dental labs must be licenses and registered; Texas for example. It wasn’t until March 26, 2014 (one day after this lawsuit was filed) that Premier Dental Lab, owned by Rick and Berry Kushner, Roy Martin, C. Michale Bloss, Bruce Irick, and Neil Norton was registered with the Texas State Board of Dental Examiners.
MARKETING SLUSH FUND
In the Agreements, each clinic (Subfranchisee) is to pay $4000 a month into a Regional Marketing Fund to be administered by the Subfranchisors; in this case, the Bahr brother’s CDMO and CDET. The fund was designed to be used for marketing in the select territory and to benefit the clinics of said territory. This sounds reasonable, and above all logical.
In January 2013 two emails were sent out to the stating “corporate is taking over the marketing management” and all funds should be transferred to Master Franchisor—Comfort Dental. This was in direct violation of the Agreements.
Despite this being in breach of the Agreement, the Bahr brothers complied and turned the money over the Kushner’s team at Comfort Dental. So, corporate did spend $100,000—nearly 1/3 of the marketing budget— on sponsorship of the Kansas City Royals baseball team, that only benefited 6 clinics (15 dentists) but for 4 month the wrong phone number was on all the advertising. I’m not kidding! Must of the radio air time was broadcast into BF Egypt, where it’s not likely to reach any potential patients.
According to the Complaint, in Kentucky and Indiana they sent out Valpak mailer with the wrong phone number as well. Money wasted on part of the business end of things? Yes. But the silver lining is patients were saved from less than ideal crowns, bridges, and dentures shoved in their mouth.
Did corporate know the needs of their franchisees; apparently they didn’t have a clue. Documents say they ran a promotion at a local jazz festival in Kentucky were dollars were spent on promotional products. “Someone from Colorado flew to Kentucky, rented a car, stayed at a hotel and attended the event”.
Just so happens they failed to speak with the local Subfranchisee about this big promo at the festival and it was a flop. In fact, it wasn’t remotely close to the Subfranshiee’s Comfort Dental clinic. I’m not kidding, this is what it says.
Further problems have caused wrong prices being advertised, radio of ads for braces in clinics that don’t even do orthodontics; it’s a cluster you know what. After complaints, the Subfrancisees received an inquiry from the Missouri Attorney General over this event and, through legal counsel reached a settlement agreement.
In New Mexico, the dental board sanctioned 3 doctors for repeated violation of the advertising regulations, all thanks to Kushner’s fine “lean and mean” system after taking over advertising.
THE GOLD PLAN
The Gold Plan is a discount medical plan dentists are directed to sell to patients. Joining the Gold Plan, patients received the providers lowest fee rate. Concerned the plan may not be registered as required in some states—Missouri, Kentucky and Indiana—in November (2013) the Bahr’s starting asking questions about this “plan”. It was learned that the plan wasn’t registered in Missouri, Indiana or Kentucky, as required by law.
Despite concerns raised in a letter to Kushner and his counsel, in February (2014) Kushner sends out another threat telling dentists to continue to peddle the Gold Plan “to avoid violating your franchise agreement”.
Trying to reach some sort of settlement and address the concerns of the Subfranchisors and Subfranchisees has been difficult. Kushner sent an email telling the Bahrs to not contact Graig Bears, the in house counsel for Comfort Dental.
In his November2013 email Kushner states;
“…I will not permit Mr. Bears to communicate with you. He does not represent Comfort Dental in this matter and if he ever told you that he did, he made a mistake. In fact, as a result of his actions in this matter, his future here is quiet in jeopardy and it is likely that by the time you do speak with me in person, Graig will no longer be my employee…I have no counsel in this case and intend on represent Comfort Dental myself for the foreseeable future.”
KUSHNER’S APPROVED VENDORS LIST
The Subfranchisee Agreement states Kushner reserves the right to “approve and/or designate, from time to time, manufacturers, vendors, distributors, suppliers, services providers and producers, terms and distributions methods for any services and products (which include, but are not limted to, servecies, products, insurance, supplies, equipment and materials.” Not only must the Bahr brothers purchase from the list of vendors but they must also adhere to “terms and in the manner designated by Comfort Dental “.
Anytime I see the term “from time to time” used, to me it’s a red flag. It is usually used in a way to make things seem lacks and casual; it seldom is.
TROUBLE IN WASHINGTON STATE
In 2012 Comfort Dental, by executives Rick Kushner, Neil Norton and Graig Bears signed a Consent Agreement agreeing to cease and desist from offering or selling franchises, after being found in violation of several Franchise Investment and Anti Fraud in Washington State. In the settlement, it is stated that Comfort Dental “assists” dentists in securing financing to purchase equipment and supplies. (Oddly, Comfort Dental has a very specific list of vendor Subfranchisees must use.) They in turn pay him a franchise fee ranging from $37,000 to $75,000. (Interesting)
Dentists were offered a smorgasbord of plans:
1. Development Partnership – Open a new location
2. Growth Partnership – Purchase Interest in an expanding practice
3. Retirement/Replacement Partnership – Purchase interest of a dentist leaving (fired?)
Comfort Dental licensed the Comfort Dental names and Marks and required franchisees to enter a 10 year “consulting” agreement of $2,200 to $5,500 per year and pay a royalty of 2-5% for the life of the practice. In addition to $4,000 a month payment into a regional marketing fund, the dentists were required to rent their space from Kushner and Comfort Dental and use his brother’s Colorado lab; Budget Dental, aka Premier Dental. (Many contradictions in the land of Comfort Dental. Maybe the guys are using Budget and should be using Premier!)
LEAN POT MEETS MEAN KETTLE
You can check out several hundred of Kushner’s tweets at RickKushner1. You can almost taste the disgust in his tweets about “elitism” and dentists in general. I got the feeling he doesn’t particularly like dentists.
February 19, 2014 - Perhaps a working definition of elitism is needed? Simple Truth is a good start.
March 21, 2014 - …I've argued with stupid dentists my entire career. Got me nowhere.
April 13, 2014 - Too often Elitism=Overtreatment. Sometimes it's good to say "The best dentistry is no dentistry", make dental buddies. Bunts not homers.
April 24, 2014 - We don't lose many but 90+% of our partner departures are personal/professional character issues or other personal problems. Maddeningly sad
May 2, 2014 - “Wouldn't this be a grand profession if some dentists' lack of character and personal problems didn't stink up their professional lives?
May 4, 2014 - Again in April, stats at Comfort Dental KILLED. 2 entire markets, Ohio/ New Mexico had biggest months in history. I love our gang. Join us?
May 5, 2014 - ELITISM kills.
Frankly that May 5, 2014 tweet sounds like a threat on someone’s life, a rant of someone who should have put down the highball glass a few hours earlier or both.
In contrast Kushner tweets:
March 5, 2014 - I've created more success in dentistry than anyone in history. OK, I've had some help, but can you name anyone else? Join us at Comfort.
March 20, 2014 - Oh and politely request an exam/Xrays for next time. You know, make a dental buddy with anti-arrogance. Arrogance is a practice killer.
February 23, 2014 - At Comfort Dental in 2013, we Collected $15 Million more than we Produced completely legally and ethically. Learn how we do this every year.
On Comfort Dental’s website, Kushner boasts Comfort Dental as being “the most profitable dental practice organization in the world.”
From Dentaltown website:
“So, Cindy and I spent our time with our sons, caring for our Comfort Dental Partners investing in real estate, and entertaining our partners in Colorado and around the county (often in our own jet and in our own resorts). “
All of this sounds a little elitist to me.
A few other quotes from the former licensed dentist, Rick Kushner:
“Nobody listened and a few schools graduate dentist who can’t do endo or extractions and therefore aren’t even dentists.”
Speaking about a Utah sole practitioner who joined Comfort Dental:
“He is one of the precious few elitist rats to have successfully accomplished jumping the elite ship.”
You can find these and many others on Dentaltown
http://www.dentaltown.com/images/dentaltown/magimages/0506/dtmay06pg08.pdf
By golly, I think folks are finally starting to get it; corporations operating dental clinics are illegal, immoral and detrimental to every American. Kushner takes issue with being referred to as a Corporate Dental company, but I don’t know how else it could be characterized, do you?
I hope the Bahr brothers have learned from their missteps and successfully correct course.
