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| Title: “Doctor No Control” |
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
Doctors Selling Practices to Corporate Dentistry; or Dancing with the Devil
More and more, dentists owning and operating private practices are approaching retirement age. In today’s dental practice sales market, and within numbers of demographics, practice buyers are limited. Younger practitioners are saddled with student loan debts between $250,000 and $330,000 upon graduation. These junior professionals usually lack adequate credit ratings to assume the purchase of a small business. They often must pay down mountains of debt over an extended period of years, to demonstrate credit worthiness.
Most states have statutes which require only duly licensed dentists may own and clinically operate dental practices. These laws were established because a doctor has a primary ethical and legal obligation to place interests of patients to the fore. By contrast, a corporate entity has a primary obligation to place generation of profits and the interests of shareholders (not patients) to the fore. The conflict of interest is obvious.
The dental service organization (DSO) industry (a/k/a corporate dentistry) has stepped into the mix seeing an opportunity to generate profits for Wall Street and the private equity investment industry. Over most of the past decade, the feds have kept interests rates artificially low for the intended purpose of economic stimulation. DSOs have moved into this buying opportunity and purchased many hundreds of dental practices.
DSOs often retain selling doctors for a limited time after the sale of their dental practices. However, with maximal profit generation being the bottom line, not patient welfare, these doctors are usually dispensed in short order. A recent dentist graduate may be retained, regardless of limited skill and clinical experience, for far less salary remuneration.
Also favorable to the DSO, the recent grad employee doctor has little emotional or professional ties to the existing patient base. These doctors are unlikely to question policies of the DSO diminishing quality of patient care. If they do raise ethical questions, they are quickly replaced with others who play along with the DSO’s practice of dentistry, with the ultimate goal of maximizing quarterly profits. Most of these young doctors are primarily focused on paying down educational loans, and moving out of the DSO clinic, as soon as reasonably possible. Most of these doctors truly do care about providing patients with the best care possible, but their hands are tied.
(Author’s note: To circumvent state statutes about only doctors owning dental practices, DSOs establish shell companies for nominee ownership of their dental practices.1-6 These may be individual dentists who purportedly “own” one or several dental clinics, or a group of dentists who are assigned “ownership” status for an entire chain of clinics. In no case do these doctors exercise any real control or benefits of ownership of these dental practices. The “big lie” of the DSO industry is that they only control the non-clinical aspects of a dental practice and doctors contract with them for this service. In reality, doctors are employees of corporate management and do what they’re told, or forced out or fired.)
Case of Dr. Susan McMahon vs. Refresh Dental Management, LLC, et al
Legal cases arising out of disputes between selling doctors and the DSO industry is highlighting many of these problems. Dr. Susan McMahon alleged in her action against Refresh Dental Management, et. al., that she was financially and professionally damaged after selling her practice, to a shell company subordinate of a DSO.7,8 Within a couple of years, she was terminated from employment, as is common.
(Author’s note: Dr. McMahon’s resume includes very substantial clinical achievements, as well as professional teaching assignments. Although the legal filing was against Refresh Dental Management, LLC, et al, the parent company is North American Dental Group9, which is in the private equity portfolio of ABRY Partners- a Boston-based private equity investment firm.10)
Dr. McMahon alleged that for numbers of months after leaving employment, her name remained on the DSO’s clinic signage and advertising from insurance companies. Clinic staff was instructed to misrepresent to patients her employment status; claim she now worked in the restaurant industry, and claim she had a license suspension for abuse of controlled substances, or had retired from dentistry, all according to signed affidavits in Dr. McMahon’s legal pleadings. Dr. McMahon further alleged that patient records were denied her, upon patient request. Allegedly, Refresh Dental staff was using the name and positive reputation of Dr. McMahon to get patients in the clinic door, but invent falsehoods as to why she wasn’t there when they got there—the classic bait-&-switch scam.
In reality, Dr. McMahon had established a new dental practice after her dismissal by Refresh Dental, which was the required distance from her former practice per her contract covenant—this too included in her legal pleadings.
Case of Dr. James Zora vs. Professional Dental Alliance, LLC
A similar case was filed by Dr. James Zora against Professional Dental Alliance11 (subordinate company to North American Dental Group and in portfolio of ABRY Partners9,10). He too sold his dental practice to a subordinate company operating on behalf of a DSO. He stayed on three years as an employee.
(Author’s note: It’s unclear as to Dr. Zora’s exact motivation to stay with his former employer (defendant) as an employee, from the legal case filing. It most probably seems Dr. Zora’s desire to cash-out junk-grade securities, which were obtained in the practice sale 3-years earlier. It’s common practice for a DSO not to pay the full sales price upfront, but to offer backend junk-grade securities as payment. These securities are not freely traded, and may only be redeemed under very limited and restrictive circumstances established by the issuer.) 
Dr. Zora similarly alleged the DSO generated misrepresentations to Dr. Zora’s former patients, upon his termination of employment. Dr. Zora went to lengths in his legal filing stating his full compliance with terms of the practice sale. He alleged the DSO acted in bad faith by altering the non-compete covenant after the fact, without his knowledge or consent. Patients who desired to continue their doctor/patient relationship (legal contract) with Dr. Zora were allegedly proffered lies by DSO staff that Dr. Zora had retired or reenlisted in the US Navy, when that was decidedly not the truth. Dr. Zora is seeking damages on that basis.
(Author’s note: It’s very easy to get confused by the various layers of subordinate dental companies and their assorted agent companies, which are ultimately beneficially owned and in the portfolio of a private equity investment company. Even employees within these companies may have no idea, who their ultimate managers are, who pull the strings. This is by corporate design12.)
Case of Dr. Gary Cameron
Dr. Cameron attempted to sell his North Carolina dental practice to Heartland Dental Services, as alleged by the North Carolina Board of Dental Examiners (NCBDE).13-15 Unlike most states, the dental board of North Carolina takes its responsibility to enforce statutes against the non-doctor ownership of dental practices quite seriously.16,17 The NCBDE retains outside legal counsel (versus less-motivated state worker attorneys) to review contracts dentists sign with the DSO industry, and take appropriate legal action when necessary.
In the final settlement consent agreement; Dr. Cameron was not permitted to sell his dental practice to Heartland Dental Services, the doctor incurred significant public record sanctions from the NCBDE (including financial), and Heartland Dental moved on with hardly a wrist-slap.
Case of Dr. Herbert Salisbury, et al vs. Heartland Dental Services, et al
This case presents an interesting pleading by Dr. Salisbury, in that the plaintiff goes into great detail describing the alleged pattern of problematic unethical business practices of Heartland Dental in Florida.18,19
(Author’s note: in research for this report, public record data from the Florida Board of Dentistry and a variety of public domain media reports fully substantiated many of plaintiff’s disturbing claims of Heartland Dental’s agents.)
Likewise, Dr. Salisbury had sold his dental practice to a corporate dentistry group, and alleged damages and serious misrepresentations subsequent to the transition of ownership. The introduction to Dr. Salisbury’s declarative pleadings reads as follows:
“1. Plaintiffs are victims of a recurring, unlawful scheme that Defendants have repeatedly employed throughout the State of Florida. The unlawful purpose of the scheme is the proprioritorship of Florida dental practices by Heartland and its Canadian partner, HDH. In 2013, Heartland, HDH, and Dr. Badger employed the scheme to illegally purchase, own and operate Dr. Salisbury’s dental practice in Panama City, Florida. After the transactions were consummated, Heartland kicked Dr. Salisbury out of the practice, declared a forfeiture of a substantial portion of the consideration paid to purchase the practice,1 and now threatens Dr. Salisbury with legal proceedings, in Illinois, to enforce Heartland’s “rights” under the illegal agreements.
- 1. As alleged supra, twenty-five percent of the purchase price is being held in escrow in Effingham County, Illinois, pursuant to an Escrow Agreement executed as part of the purchase agreements.
2. Florida Statutes prohibit the proprietorship of dental practices by persons who are not dentists or entities that are not professional corporations comprised solely of dentists. Consequently, Defendants employ a surreptitious and clandestine scheme to acquire, own and operate dental practices in Florida in contravention of the Florida Public Policy as codified in Florida Statutes.
3. For approximately the past eight years, Heartland, in collusion with Dr. Thomson and Dr. Badger, has secretly controlled and operated a sham professional corporation, Comfortable Dental. Heartland exercises its control through tacit arrangements and agreements with Dr. Thompson and Dr. Badger, whose own employment prospects as dentists are severely limited as a result of disciplinary actions taken against them by the Florida Board of Dentistry, and the financial failure of their own dental practices. In exchange for long-term employment with Heartland, Dr. Thomson and Dr. Badger acted as shills for Heartland. Taking turns, they agree to serve as sham “shareholders” and “officers” of Comfortable Care, while ceding functional decisional control over the professional corporation entirely to Heartland.
4. In 2013, Heartland used Comfortable Care as a vehicle to purchase Plaintiffs’ dental practice. This transaction was accomplished through a maze of vague, confusing and deceptive interrelated contracts, the unlawful purpose and effect of which was to transfer ownership and decisional control over Plaintiffs’ dental practice to Heartland, including control over personnel decisions as well as policies and decisions relating to pricing, credit, refunds, warrantees, and advertising, among other things, The “Purchase Agreement”. In the process, Dr. Salisbury became an employee of Heartland subject to termination- and the resulting total loss of his dental practice and professional career- at Heartland’s whim. When Dr. Salisbury subsequently refused to kowtow to Heartland’s directives regarding treatment plans, office procedures, and pricing, billing and collection practices, Heartland threw him out of the practice he spent 30 years building.”
Any doctor contemplating the future sale of their dental practice to a corporate group is invited to read the entire public record pleading presented by Dr. Salisbury. Dr. Salisbury’s attorneys crafted documents which serve as a primer on the dangers to doctors (and the public), presented by corporate dentistry. In fact, the briefs in this case should be mandatory reading for every state dental board attorney or legislator involved with fashioning statutes amending a state’s dental practice act.
Dance Lessons Learned from the Devil
The DSO industry has the means to retain high quality legal teams, which are beyond the ability to match for most doctors, or even most state dental regulatory boards.6,7 There is a consistent pattern of evidence of the DSO industry violating contract agreements with doctors, and basically thumbing their nose, because of their superior legal and financial resources.
Corporate dentistry may engage various branding tactics like stealth branding or multi-branding, to further cloud the public’s view.12 Various façade shell companies are often layered between the dental clinic and the ultimate corporate owners on Wall Street.1-6 This effort is often designed to deflect and misdirect regulatory actions, as well as private civil litigation.
(Author’s note: the DSO, North American Dental Group in the portfolio of ABRY Partners, a Boston-based private equity investment firm, which beneficially owned and managed the former practices of Drs. McMahon and Zora, was also the DSO managing a practice in Michigan (Southfield Dental Care- under the corporate umbrella of Dental Care of Michigan, which 
is also subordinate to North American Dental Group), in which a patient recently died allegedly from needless irresponsible clinical protocols.20,21 Diverse façade shell company names may serve to obscure information from the public and public regulators, and shield those ultimately responsible at the top.5)
The dental consumer public is at a severe disadvantage.They may be in a total fog, as to who may be injected into their doctor/patient relationship (contract). Is their doctor freely able to discuss with them all reasonable clinical treatment options? Is their doctor forced to use a low-end offshore dental lab, at some corporate manager’s direction? Are the number and quality of dental supplies of their doctor’s selection, or that of a faceless corporate director, who answers to Wall Street? Is their doctor forced to recommend full crowns for adults, and steel crowns and pulpotomies (baby root canals) to children, because of a pay structure and quotas established by outside incognito corporate management? Is their doctor totally out-of-the-loop, when the dental hygienist advises deep cleaning of scaling and root planing, placement of gingival antibiotics, gingival irrigation with anti-microbial solutions, or the added cost of an in-office purchased electric toothbrush? Is the office staff manager working for the doctor, when employing arm-twisting sales techniques? In short, are citizens being hustled with bait-and-switch and upselling games, all of minimal to no value, and all beyond the power of their doctor to control?
It is imperative patients have full disclosure on who actually beneficially owns dental practices. This is critical data not only for the public, but also state and federal regulators, as well as the dental profession. Obscuring dental clinic true beneficial ownership, if not total outright misrepresentation of clinic ownership, is common practice for overwhelming numbers within the DSO industry (corporate dentistry). This must be stopped. Patients merit knowing who beneficially owns and operates their dental clinic and whom their doctor is paid by. Yes, we’re discussing the entire chain of ownership, from figurehead sham-owners at the bottom, to layers of dummy shell companies, to those at the top in the private equity investment business.5
I implore my colleague doctors, “If you dance with the devil you may well be forced to pay the fiddler.” Dealing in contract agreements with corporate dentistry reminds me of mating practices of black widow spiders. And you doctor, are the much smaller prey, who may be painfully sucked-dry and consumed (financially, emotionally, and health). That much larger, more powerful, and more toxic spider wants to strike a deal with you. Unfortunately, it also has a habit of devouring you after consummation of the agreement.
(Author’s final notes: In research for this report, the author was in communication with a Texas dentist who sold his practice to Heartland Dental, who couldn’t have been happier. He today works to reform that corporate organization from the inside out, in a management capacity. He has been the primary mover in establishment of an in-house continuing professional education program for dentists, which is truly second to none. He maintains the very highest of ethical and professional standards, unlike some others in his mixed corporation, which he attempts to reform.
The overwhelming majority of doctors selling to corporate dentistry contacted were either somewhat unhappy or decidedly very displeased in their dealings with DSO practice buyers. Almost none wanted to be interviewed on-the-record, because of non-disclosure agreements signed with corporate dentistry or ongoing litigation. Their feelings ranged from anger, shame, severe frustration, to total burnout.
Another Texas dentist was of particular interest. He sold his dental practice to a large DSO which is headquartered in Texas and operates in Texas and neighboring states. He then moved into management of this DSO, which relies upon stealth branding and multi-branding to obscure true beneficial ownership. In contrast to the aforementioned doctor, who seeks to mentor junior colleagues and advance the dental profession, this doctor takes delight in corrupting junior colleagues. One of his personal favorites is demonstrating how to scam the dental Medicaid program, by placing sealants on posterior teeth, and billing out to government (taxpayers) for multi-surface posterior restorations. He is most pleased by his additional income generated and “beating” the system.
What fascinated the author most was the transition of corporate dental practices from a dishonest seller, to a dishonest buyer. Examples include the Small Smiles Dental fiascos. This involved the so-called “Pueblo, Colorado Mafia” of the DeRose family and their cronies, to a who’s who in the private equity investment world, to the Waller Lansden law firm. In fact Don Moody of Waller is listed as number 21 in the 32 Most Influential Person’s in Dentistry as published by Incisal Edge Magazine.
Another wild example was All Smiles Dental (Texas-based chain of Medicaid dental clinics) transition from Dr. Richard Malouf to Valour Partners (Chicago based private equity firm). Allegations of misrepresentation flew back-and-forth, as one witnessed which snake would come out on top, in a bizarre sporting contest. Both DSO dental chains (Small Smiles Dental and All Smiles Dental) focused on Medicaid fraud and abuse of disadvantaged children in their business models. 
If the reader can imagine P.T. Barnum attempting to out-scam Bernie Madoff, or Charles Ponzi attempting to pull a confidence scam over on Dr. Edgar R. R. “Painless” Parker, one can better appreciate the convoluted levels of their disturbing schemes. The motion picture, “The Sting”, featuring the late Paul Newman and Robert Redford, has nothing on the real-life extent of these highly involved and twisted corporate dental practice swindles. Unfortunately, the dental profession takes a black-eye and the public (patients and taxpayers) get hurt.)
References (Accessed 1-2-2017)
1. Davis MW. Dental practice ownership versus nominee ownership. Aug 2015. Peers Journal; 1 (3): 34-5. https://issuu.com/de63/docs/link_vala
2. Davis MW. Basic economical models of large scale corporate dentistry. June 5, 2015. Dentist the Menace online dental blog. http://blog.dentistthemenace.com/2015/06/basic-economic-models-of-large-scale.html
3. Davis, MW. Support for Limiting Private Equity Dentistry- Report to New Mexico Board of Dental Health Care. June 13, 2012. http://www.scribd.com/doc/97584307/Limiting-Private-Equity-Dentistry-A-Report-by-Michael-Davis-DDS
4. Davis MW. Our junior colleagues and interstate medicaid clinics. NM Dent Jour 2011; 62(4): 24-28. http://blog.dentistthemenace.com/2011/10/dr-michael-w-davis-reports-on.html
5. Davis MW. Basic organizational chart of chain dental clinics in the US. https://www.scribd.com/document/267615015/DSO-Organizational-Chart-By-Michael-W-Davis-DDS
6. Davis MW. Contract Risks for Dentists Involved with Corporate Dentistry. Nevada Dent Assoc Jour 2016; 18 (2): 20-4. http://www.nvda.org/docs/librariesprovider33/default-document-library/ndajournal_08662_summer16-web.pdf?sfvrsn=0
7. Susan McMahon, DMD vs. Refresh Dental Management, LLC, et al. US District Court for the Western District of PA. Case no. 2:16-cv-00170 CB-CRE; https://casetext.com/case/mcmahon-v-refresh-dental-mgmt-llc
8. Dentist sues refresh dental, management company. New Castle News. Apr 1, 2016. http://www.ncnewsonline.com/dentist-sues-refresh-dental-management-company/article_2aba3a82-fcfc-11e5-a47b-5ba60c880f1e.html
9. North American Dental Group website. Our brands & locations. http://www.nadentalgroup.com/locations/
10. ABRY Partners. Investment portfolio. http://www.abry.com/Investments.aspx
11. James R. Zora, DMD vs. Professional Dental Alliance, LLC. Court of Common Pleas of Allegheny County, PA. Civil Div. Case no. GD 15-013444.
12. Davis MW. Corporate dental branding- what dental consumers need to know. Dentist the Menace online dental blog. Dec 14, 2016. http://blog.dentistthemenace.com/2016/12/corporate-dental-branding-what-dental.html
13. Consent Order Gary L Cameron DDS, North Carolina State Board of Dental Examiners. Aug 30, 2011. http://www.ncdentalboard.org/pdf/Cameron%20Gary%20-%20CO%20Aug%2011.pdf
14. Consent Order granting injunction. North Carolina State Board of Dental Examiners vs. Heartland Dental Care, Inc, et al. NC General Court of Justice Superior Court Div. Case no. 11 CVS 2343. http://ncdentalboard.org/pdf/Heartland%20Consent%20Order%20Granting%20Injunction%209-6-11.pdf
15. Hagan D. North Carolina dental board nixes Heartland Dental’s attempt to take root, taking the bull by the horns. Dentist the Menace online dental blog. Nov 4, 2011. http://blog.dentistthemenace.com/2011/11/north-carolina-dental-board-nixed.html
16. Soderlund K. N.C. dental board and dentists file suits against DentalCare Partners Inc. ADA News; Mar 21, 2013: http://www.ada.org/en/publications/ada-news/2013-archive/march/nc-dental-board-and-dentists-file-suits-against-dentalcare-partners-inc
17. Childress S. DentalWorks chain misdiagnosed for money, dentists say. PBS Frontline; Mar 13, 2013. http://www.pbs.org/wgbh/frontline/article/dentalworks-chain-misdiagnosed-for-money-dentists-say/
18. Herbert G. Salisbury, III, DMD, et al, vs. Heartland Dental Holdings, Inc, et al. Circuit Court for the Fourteenth Judicial Circuit of the State of Florida- in and for Bay County. Case no. 14-000369-CA; https://www.scribd.com/document/218659571/herb-salisbury-dmd-v-heartland-dental
19. Domino D. Fla dentist sues Heartland Dental over sale of practice. DrBicuspid.com online dental journal; Apr 21, 2014: http://www.drbicuspid.com/index.aspx?sec=sup&sub=bai&pag=dis&ItemID=315580
20. Fox News.com Michigan woman dies after dentist visit, family claims. Fox News Health; Apr 12, 2016: http://www.foxnews.com/health/2016/04/12/michigan-woman-dies-after-dentist-visit-family-claims.html
21. Edwards B. Mich Family wants answers after woman dies following dental visit. The Root; Apr 12, 2016: http://www.theroot.com/articles/news/2016/04/mich_family_wants_answers_after_woman_dies_after_dentist_visit/
22. Legal deposition Randall Ellis, DDS. Nevaeh Simons, at al vs. DeRose Management, et al. State of CO District Court- Denver County case no. 2012-CV-3650. Time stamped Oct 23, 2014; Hansen and Company Inc (Reg. Prof. Reporters): pg 250 (line 23)-282.
