$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

NCDR–Kool Smiles and Resolution Dental says “main concern is financial”

Kristina Dorsey, HR Manager for NCDR, LLC - Kool Smiles PC & Resolution Dental, admits the main concern to the CEO’s and CFO’s is financial; truer words were never spoken. 

 

(Clip taken from interview on why they hired ADP to help them with the UnAffordable Care Act.)

NCDR, LLC–Kool Smiles-Resolution Dental wants you and your practice.

The private equity firm, FFL, who owns Kool Smiles Dental and Resolution Dental is moving away from opening their own clinics and moving toward the Heartland Dental business model—what I call the F & S business model. (S for suck, so you can figure out what the F stands for). 

F & S Business Model - This is where they come in, offer practice owners an unrealistic amount for their established practice, put the current owner and staff under employment contracts, then set unrealistic income quota’s that forces dentists and staff to make decisions not necessarily good for the patient. See A peek under the sheets of Heartland Dental

Rumors last years indicated Kool Smiles Dental had their highly questionable but lucrative Medicaid income stream reduced significantly due to what was apparently questionable dental treatment and billing practices. In 2013 they began switching many of their practices to Resolution Dental.

Now, they want to purchase already established dental centers. I’m sure this is a much faster way to increase the dwindling revenues.

They advertise:

Are you considering selling your practice? Let's talk.

They want locations “not in the hood” and are offering a “fast and furious” “too good to be true” amount cash for said locations. They want dentists willing to sign restrictive 2 years employment contracts, which will no doubt include a stiff penalties, especially for disparagement of the company. They also offer bribe your staff to stay on, but make no promises.

Dentists BEWARE -Kool Smiles Dental Center dentist thrown under the bus by NCDR, LLC

Looks like Dr. Tuan Truong aka Terry Troung is to Kool Smiles Dental what Robin Lockwood is to Ocean Dental. 
I bet ole Dr. Troung thought he was free and clear since leaving Kool Smiles.  If Dr. Troung thought NCRD, LLC was going to protect him, he was very wrong.  They will NOT! 
If you work for any of these type of places, you’ll be looking over your should for the rest of your life.
To Dr. Troung, and all other dentists working for these Medicaid mills, “I told you so.”.

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Published August 27, 2013
An Abilene dentist pleaded guilty in federal court Tuesday to one count of making a false statement in connection with a health care matter, according to a U.S. Department of Justice spokeswoman.
Dr. Tuan Truong, aka Terry Truong, admitted to falsely billing Medicaid for between $120,000 and $200,000 between June 2008 and July 2009, said Kathy Colvin, spokeswoman for the justice department. Truong practiced pediatric dentistry at Kool Smiles in Abilene.
U.S. District Judge Jorge A. Solis has not yet sentenced Truong, who faces a maximum penalty of five years in federal prison, a $250,000 fine and restitution.
“In summer 2008, Truong began working for Kool Smiles, which paid him a base salary and offered opportunities for bonuses based on additional procedures he performed in excess of daily targets set by Kool Smiles management,” Colvin said.
By falsely billing Medicaid, Truong collected $32,749 in bonuses he otherwise would not have collected.
The Medicaid Fraud Control Unit of the Office of the Attorney General for the State of Texas conducted the investigation.
 
Dr. Tuan (Terry) Truong, DDS TSBDE Action signed April 2011

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Senate Report On Corporate Dentistry in Medicaid (includes Kool Smiles)

Senators Max Baucus and Chuck Grassley issue 1,500 page joint report calling for corporate Medicaid dental clinics to be ousted from the program

Today, Senators Baucus and Grassley issued a 1,500 – 1517 pages to be exact — page report on claims I’ve been making here on Dentist The Menace for nearly 6 years. The report includes 66 exhibits.
The story accompanying the release of the Joint Staff Report On The Corporate Practice of Dentistry In The Medicaid Program can be found at The Center for Public Integrity, here.  In David Heath’s story, he reports the new owners Small Smiles Dental Centers state the following:

“only five of the 20 inspection reports mentioned in the Senate report fell under its watch.”

and

…"We've taken action to help CSHM improve its quality of care and management,"

and

…“The new team immediately initiated an aggressive turnaround effort premised on patient care, clinical excellence and regulatory compliance,” the company said.

Well, that’s nothing to be crowing about, since the “new management”  only legally acquired the company 13 months ago putting a guy by the name of David R. Wilson in charge. That was in June of 2012, (13 months ago) so 1/4 of the inspections mentioned in Bacus/Grassley report took place under their watch. This is not a good record in my opinion — heck it’s as bad if not worse than the Michael Lindley/Al Smith or DeRose Family regimes.  Nor it does it demonstrate anything close to “an aggressive turnaround effort on patient care”.  What it does demonstrate, however, is “business as usual”. 
CPI also reports twice last year the OIG threatened to shut Small Smiles out of the Medicaid program.

“Twice last year the HHS inspector general threatened to exclude Small Smiles from the Medicaid program. But in a letter to Grassley and Baucus, Inspector General Daniel R. Levinson said Small Smiles fixed the problems by selling the Manassas clinic, paying a $100,000 penalty and addressing other concerns.”

Now, did CSHM actually “sell” the Manassas, Virginia clinic?  That is highly suspect!  A guy out of Idaho left his own practice and moved his entire family to Virginia and slapped his name on the place, calling it Kids and Family Dentistry.  Coincidently, at the exact same time, the Small Smiles flagship clinic in Pueblo, Colorado changed it’s name to Family and Kids Dentistry, making the “owner” the same guy who was  the lead dentist working for Small Smiles at the time.  (Logos have a odd resemblance about them, don’t they?)  Anyone taking bets on whether the DeRose family — founders of Small Smiles —are somehow still involved with these two clinics?
As for the $100,000 penalty, that didn’t even cover 1/2 of the amount scammed in the x-ray scam in just one Colorado Small Smiles.  What would add insult to injury is it was probably on a payment plan, like the $24 million settlement in 2010.
The Bacus/Grassley report includes independent monitor reports on Small Smiles Phoenix, Arizona, Manassas, Virginia, Oxon Hill, Maryland and Youngstown, Ohio and others.  Small Smiles signed a Corporate Integrity Agreement with OIG in January 2010 agreeing to 63 pages of terms and conditions, including self-reporting.  Of course the “independent monitor” can only report on what they find.  But what about what they don’t find? 
I’ve not come close to reading the entire report just yet, but so far I’ve not read anything about the $200K x-ray scam in one of Colorado clinic that was NEVER self-reported, or the fact that a corporate staffer took the necessary Continuing Education courses to get the lead dentist in Mishawaka, Indiana credentialed in Indiana, making her effectively non-licensed to practice in Indiana to this very day or a host of other illegal activities going on behind the closed doors at Small Smiles Dental Centers and Church Street Health Management (CSHM). I doubt I find these things in the report, but you can find them here if you look.
It’s scary to think state dental boards and state Medicaid programs have not only turned a blind eye to the child abuse, but promoted and encouraged it.  Those of us following this industry also know this is just the tip of the iceberg. 
More on this eye opening report in the coming days.  In the meantime, I encourage everyone to read The Joint Staff Report On The Corporate Practice of Dentistry In The Medicaid Program and evidence attached by clicking here .

Kool Smiles Said to Have Received Offer of $700 Million Clinics

Oct. 4 (Bloomberg) -- American Securities LLC, a New York- based private-equity firm, is the leading bidder for a U.S. chain of dental clinics owned by Friedman Fleischer & Lowe LLC with an offer of about $700 million, according to people with knowledge of the auction.

Friedman Fleischer owns two companies, NCDR LLC and DPMS Inc., that provide facilities and support staff to dental groups operating under the Kool Smiles brand, according to the San Francisco-based firm’s website. TPG Capital also submitted an offer in the final round of bidding, said the people, who asked not to be identified because the deal hasn’t been completed.

The two companies are not really two companies, it's Kool Smiles and Kool Smiles 2.  KS is the clinics in the East and KS2 are the western most clinics.

Read the full article here: Business Week

However since after time passes and the stinch of a company begins to fill the offices of these PE firms, stories like this seem to vanish from the Internet.  So in case that happens, here is the full story:

By Cristina Alesci, Jeffrey McCracken and Jason Kelly

Oct. 4 (Bloomberg) -- American Securities LLC, a New York- based private-equity firm, is the leading bidder for a U.S. chain of dental clinics owned by Friedman Fleischer & Lowe LLC with an offer of about $700 million, according to people with knowledge of the auction.

Friedman Fleischer owns two companies, NCDR LLC and DPMS Inc., that provide facilities and support staff to dental groups operating under the Kool Smiles brand, according to the San Francisco-based firm’s website. TPG Capital also submitted an offer in the final round of bidding, said the people, who asked not to be identified because the deal hasn’t been completed.

Rajat Duggal, a managing director at Friedman Fleischer, couldn’t be reached for comment. Officials for American Securities and TPG declined to comment.

Private-equity firms have resumed dealmaking after a two- year lull following the global financial crisis that started in mid-2007, freezing credit markets and ending the biggest leveraged-buyout boom in history. There were $59 billion in deals in the third quarter, more than triple the amount a year earlier, according to data compiled by Bloomberg.

American Securities, which was founded in 1947 by a Sears Roebuck & Co. heir, has invested in companies including vacuum- cleaner maker Oreck Corp. and the El Pollo Loco chain of chicken restaurants, according to its website. The firm was a runner-up at the recent sales of Air Medical Group Holdings Inc. and Aspen Dental Management Inc., both owned by private-equity firms, according to a person with knowledge of the sales.

Air Medical, Aspen Dental

Leonard Green & Partners, the Los Angeles-based private- equity firm, is buying Aspen Dental from Ares Management LLC. Bain Capital LLC, the Boston-based leveraged buyout-fund manager, is acquiring Air Medical from Brockway Moran & Partners Inc. and MVP Capital Partners.

Kool Smiles caters to children enrolled in Medicaid, a federal-state health insurance program for the poor, and other state health insurance plans, according to Friedman Fleischer’s website. Some firms that looked at Kool Smiles were concerned that it was too reliant on Medicaid payments as governments face deficits, said one person familiar with the auction.

Private-equity firms are increasingly buying companies from each other as more than half the companies that submitted plans for U.S. IPOs in 2010 have yet to complete them. Sales among buyout firms allow the seller to return cash to investors, while the acquirer is able to deploy unused capital that was raised during the boom. Clients saw distributions last year fall to the lowest level since at least 2000, according to London-based research firm Preqin.

Opening Clinics

Smile Brands Group Inc., a separate dental chain backed by private-equity firm Freeman Spogli & Co., scrapped an initial public offering in May. The company, which relies on patients with private insurance for most of its revenue, is now shopping itself in a sale process that is still in early stages, according to a person with knowledge of the matter.

American Securities plans to expand Kool Smiles’ main business of opening clinics in places where access to dentists and other medical services is limited, the person said.

TPG has been pursuing deals. The Fort Worth, Texas-based firm and Goldman Sachs Group Inc.’s buyout arm agreed in July to purchase Belgian diaper-maker Ontex NV for $1.55 billion from London-based private-equity firm Candover Investments Plc. TPG also acquired a 35 percent stake in Creative Artists Agency for an undisclosed amount in a deal announced Oct. 1.

Friedman Fleischer has more than $2 billion under management, according to its website. Its holdings include Korn/Ferry International, the executive-recruiting firm, and Montpelier Re Holdings Ltd., a Bermuda-based property reinsurance company.

--Editors: Elizabeth Wollman, Larry Edelman
To contact the reporters on this story: Cristina Alesci in New York at Calesci2@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Jason Kelly in New York at jkelly14@bloomberg.net.

Tidbits Of Kool Smiles Information

Dr. Tu Tran and Dr. Thein Pham were top dentist's at Smile High clinic in Denver, owned and operated by Eddie, Michael and Dan DeRose where they learned the DeRose Way of spreading dental services to the underserved.

When they broke out on their own, they began with 1 clinic in 2002 and by December 2003 there were three clinics in Georgia.

After 2003 things took off.  By January 2006 the Kool Smiles clinic count had jumped to 14 clinics.  In January 2007 there were 29 clinics and by July of 2007 there were 36.

I know this by using the wayback machine and checking the old copies of the website.

According to what I can find, there are somewhere around 100 clinics across the US, which beats Small Smiles, so they can shut up about being the "Largest" ...unless they mean dirty rotten scoundrels....

Dr. David Malcolm Strange, DDS of Kool Smiles and Kool Kids Dental

Dr. David Strange who is listed as Chief Dental Officer at Kool Smiles is Dr. David M. (Malcolm) Strange, Jr.
His father goes by the name, Malcolm Strange.

I’m pretty sure this is the same Dr. David M. Strange, Jr. that is referred to working at Pediatric Dental Group of Colorado.  PDC has 7 locations in Colorado.

Here is the bio of the Dr. David Strange at Kool Smiles:

Dr. David M. Strange, Chief Dental Officer

Dr.David M Strange is a board certified pediatric dentist. He received his Doctor of Dental Surgery degree from the University of Colorado Health Sciences Center along with his certificate of Pediatric Dentistry from the Children's Medical Center in Dallas, TX and his MS from the Baylor College of Dentistry. Dr Strange was formerly an Associate Clinical Professor at the University of Colorado Health Sciences Center and previously served on the Constitution and By-Laws Committee of the American Academy of Pediatric Dentistry. He is currently serving on theCouncil for Dental Benefits of the American Academy of Pediatric Dentistry and the Virginia Dental Advisory Committee for the Smiles for Children Dental Medicaid program. Dr Strange is also a member in good standing with the American Dental Association, the American Academy of Pediatric Dentistry, the Colorado Academy of Pediatric Dentistry, the Georgia Dental Association and the Southwestern Society...