Another One Bites the Dust: Benevis - Kool Smiles Files For Chapter 11 Bankruptcy

August 3, 2020

Two years after agreeing to pay $23.9 million, plus interest to settle Medicaid fraud allegation Benevis (formerly NCDR, LLC) has filed for Chapter 11 Bankruptcy in the Southern District of Texas. (See Amended Petition here) (See LT Smiles Petition here)

In January 2018 Benevis and it's Kool Smiles branded dental clinics agreed to the settlement after the Department of Justice found the company  "knowingly submitted" false claims for payment to state Medicaid programs for medically unnecessary pediatric dental services.

Benevis and it's Kool Smiles clinics were featured on the first episode of CBS Whistleblower TV program that aired July 13, 2018. (see trailer here)

 

MARIETTA, Ga.--(BUSINESS WIRE)--Aug 3, 2020--

LT Smile Corporation, along with its subsidiaries Benevis Holding Corporation, Benevis Corporation, Benevis, LLC, Benevis Affiliates, LLC and Benevis Informatics LLC (“Benevis” and “Company”), announced that it has filed voluntary petitions for relief in the Southern District of Texas under Chapter 11 of the United States Bankruptcy Code to effectuate a recapitalization and sale of the business, and to improve its balance sheet and operating position. Benevis and its employees will continue their normal operations and their support of high-quality dental care at supported dental practices throughout the process. None of the Company’s supported dental practices are part of the Chapter 11 filing.  https://www.businesswire.com/news/home/20200803005461/en/Benevis-Enters-Voluntary-Chapter-11-Reorganization

 This is the same scenario as it was with the Small Smiles chain: Chapter 11 first then Chapter 7 soon followed. 

Benevis Corp., which provides back-office services to 150 dental offices, has filed for bankruptcy, saying its revenue fell more than 60% recently due to the coronavirus pandemic. https://www.wsj.com/articles/benevis-provider-of-support-services-to-dentists-files-for-bankruptcy-11596487729

Benevis claim to provide "back-office" services and that is true, but they also own and operate the clinics using company executives, such as dentists Dale Mayfield, David Veith, and Tu Tran as so called "owner-dentists". Dr. Tran may tried to claim he has nothing to do with the company but he is still being shown as "owner" and "incorporator" of Winchester Dental, PSC d/b/a Ruby Dental and Braces whose address just happens to be the same as Benevis'. Other current and/or past owner-dentists have included dentists Thien Pham and David Strange, Jr.

 Since these places operate on volume and overtreatment (this my own opinion of course, but the DOJ agreed with me) the Corvid-19 pandemic has severely hit their bottom line.

According to Scott Mell's Declaration in the court filings, the companies new Chief Restructuring Officer, the company approximately 70% of the company's income was generated from state Medicaid and CHIP programs.

In the bankruptcy filings:

 The company listed assets and liabilities of as much as $500 million each in its bankruptcy petition. Benevis provides support services to almost 200 dental practices across the U.S., according to its website.

Benevis has lined up as much as $30 million in financing from current lenders including New Mountain Finance Corp., according court papers. New Mountain has also agreed to serve as the stalking horse bidder for the company. https://news.bloomberglaw.com/bankruptcy-law/pe-backed-dental-services-company-files-bankruptcy-eyes-sale

Benevis has secured committed financing from its current lenders; including New Mountain Finance Corporation and several of its credit investing affiliates, to bolster liquidity and enhance ongoing operations during the reorganization process. https://www.businesswire.com/news/home/20200803005461/en/Benevis-Enters-Voluntary-Chapter-11-Reorganization

Scott Hornbuckle, Chief Financial Officer for Benevis stated, “The additional financing and the reorganization process will help us strengthen our balance sheet and solidify our path to future success. We look forward to continued investments in the future and the continuation of our long history of supporting outstanding dental care.”

Benevis’s legal advisor for the reorganization is Jackson Walker. Conway Mackenzie and Lincoln International LLC are serving as financial advisors to the Company. https://www.bakersfield.com/ap/news/benevis-enters-voluntary-chapter-11-reorganization/article_459a597a-b83e-50a0-bf5c-a198781a15f1.html

Admittedly I nearly choked and puked on the "outstanding dental care" statement. 

Below is the corporate structure according to Scott Mell and was included in his Declaration on page 4.

Maybe it's just me, but I think there might be a few things left out of this little stick drawing. 

In the Amended Petition it lists the 30 largest unsecured creditors.  Henry Schein, Inc., holds the number one spot with Benevis owing them $3,671,336.72!  WHOA!  

LT Smiles Bankruptcy Petition shows the Equity Security Holders as this. To save you some time, that address is New Mountain Capital.

New Mountain Capital SEC Filings

Another familiar name I noticed on the creditors list is Tailwind Capital. They are the PE firm that bought Lone Peak Management Group located in Utah and their Smiles 4 Kids clinics, mostly located in the Northwest. In 2018 a whistleblower came forward with serious allegation against the company and it's leadership.

 

 

$2.3 Million Malpractice Lawsuit in Filed in Virginia Against Kool Smiles

May 9, 2019

In January 2018, Dental Service Organization (DSO), Benevis, who operates Kool Smiles dental clinics across the country agreed to a Settlement of $23.9 million dollars to settle fraud charges with the federal government. Why the company was not placed under a Corporate Integrity Agreement is beyond me, not that they mean a whole lot, but still. 

“Today’s settlement sends a very clear signal:  Fraud in the federal healthcare system will not be tolerated,” said U.S. Attorney John F. Bash for the Western District of Texas. “Especially when that fraud involves performing unnecessary procedures on kids—here, unnecessary baby root canals and tooth extractions, among other procedures—we will not hesitate to use every tool at our disposal to punish those who break the law.”

“It is intolerable when health care companies seek to boost profits by defrauding Medicaid and exploiting children," said Special Agent in Charge Phillip M. Coyne, HHS-OIG. "Systematically performing and billing for medically unnecessary dental procedures undermines the well-being of these young patients, corrupts the impartiality of medical decision-making, and diverts money from taxpayer-funded health care programs designed to pay for legitimate medical needs.”

Soon after they began rebranding each clinic to appear more individually owned and operated. But did they change their ways?  Uh....nope!  

The Complaint states that at least 50 children were treated with unsterilized instruments in March and April 2019.

190509 Virginia Kool Smiles... by on Scribd

Kool Smiles PSC dba Ruby Dental in Kentucky

Kool Smiles PSC dba Ruby Dental in Kentucky-181102 by Dentist The Menace on Scribd

Evidence shows Benevis, LLC / Kool Smiles Dental Centers Knows the Laws.

Screen shot from Benevis website January 20, 2018:

They simply believe the laws don’t apply to them.
Ad from the Kentucky Dental Association Website.

Benevis, (formerly NCDR, LLC) is owned by FFL Partners and operates Medicaid dental clinics under the name Kool Smiles Dental, focused on children (perferably under the age of 5 from the looks of things).  However they operate a disturbing non-Medicaid division under the corporate umbrella of PSBB, PC, Inc. with Dale Mayfield CFO, Secretary and CFO.  Mayfield is the Chief Dental Officer at Kool Smiles.  In 2016, Mayfield was appointed to the Georgia Board of Dentistry by Governor Nathan Deal. (try not to puke if you read this link)

Mother speaks out against Yuma, AZ Kool Smiles Dental Clinic

A mother is speaking out following the death of two children who visited a dental office in Yuma.

Nearly six years later, Elva Aranda is sharing her experience at Kool Smiles, who claims her daughter was being choked by a dental assistant in Summer 2012.

"It was a horrible experience, a horrible experience because when you see someone else hurting your child, you feel helpless," said Aranda.

Aranda says while her daughter was getting her regular checkup, the dental assistant was acting aggressively towards her daughter during the procedure. She claims the dental assistant was adding pressure to her daughter's neck as if she was choking her without realizing it.

"You know the suction tool, she started putting that into my daughter's mouth, and that was making her "gag". I'm here looking at my daughter, and I'm seeing her gag because that tool was shoved in her mouth and I started comforting here saying "it's okay, you're going to be okay" but I did not see that this lady had her whole hand shoved into my daughter's neck choking her."

Read the entire report here.

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2-year-old Zion Gastelum dies after dental appointment at Kool Smiles

YUMA, AZ - An Arizona family is left confused, devastated and looking for answers about just what happened during a young boy's dental appointment.

The family of Zion Jay Gastelum said the 2-year-old died after a dentist appointment in Yuma last month. Zion's uncle told ABC15 the child's parents took him to Kool Smiles Dentist on December 16 for a crown and filling, and somehow either during or after the process, it appears Zion stopped breathing. 

According to family, Zion was transported to Yuma Regional Medical Center and then flown to Maricopa County, where he died several days later.

Read more here

What’s in a name: NCDR and CSHM rebranding

NCDR, LLC (Kool Smiles) can become Benevis, and CSHM (Small Smiles) can become First Quality Management (FQM) but the people are the same, the service is the same and the business model is the same.

  It would be interesting to hear from Adam Ditto, who has been with them all:

FORBA>CSHM>FQM (Small Smiles now “fill in the blank Smiles Youth Dentistry)

Hero Management  (Adventure Dental and Vision, taking over at least some of the old Small Smiles)

NCDR>Benevis (Kool Smiles and Resolution Dental)

 

 

 

 

 

 

 

What secrets does Adam Ditto hold?