Dr. Behzad Nazari, D.D.S., ET AL. v. The State of Texas; Xerox Corp; and Xerox State Healthcare, LLC, f/k/a ACS State Healthcare, LLC, n/k/a Conduent Business Services, LLC

Despite all the claims, counter-claims, third, forth and fith party claims, here is the the short version:

Texas withheld reimbursement from several dentists due to a high suspicion of Medicaid fraud. Dr. Nazari, his clinic Antoine Dental and others argued they needed and deserved their money for all the honest and much needed work they had done on so many children with terrible orthodontic deformities and rotten baby teeth. They were the saving grace to the underserved population as they saw it.

Being royally pissed, Nazari suesTexas and Xerox (NYSE:XRX) (ACS) demanding his money.

The Feds (that is us, the US taxpayers) says “Hey Texas, we pay 50% of all you spend on Medicaid, and we want our money back!

Texas says, “We really have that kind of cash to hand back, we spent it already. But we will try to get it from Xerox. They ran the show down here for years. In fact we knew nothing about this until Byron Harris did a series of reports for WFAA in Dallas. We learned about it on the local evening news!”

Texas sues Xerox, under whatever name Xerox was using at the time. The suit ends up at the Texas Supreme Court.

Texas tells the Texas Supreme Court justices, it was no seeking actual damages from Xerox in a civil Medicaid fraud suit in a civil Medicaid fraud suit accusing the company of signing off on $1.1 billion in claims for orthodontic services without properly vetting them, and therefore the remedies it has sought aren't subject to proportionate responsibility calculations.

Xerox says that it is wrongly facing sole liability in the matter, despite the fact it trained paid employees to basically rubber stamp “Approvals” as fast as they could. Additionally, in early testimony it was learned they trained the dentists how to game the systems.

Yesterday, June 22, 2018, the Texas Supreme Court handed down its decision. Xerox, it is all on you guys. Pony up the $2 Billion!

Now, doing business as Conduent Business Services (CNDT) reports are that Conduent’s “benefit wallet” is empy and they will probably settle for $500 Million. 

Related:

Dentist the Menace blog posts on this matter

Case Details and Documents

Opinions posted on the SCOTX Blog

December 6, 2017 Oral Arguments Video

Emerging Advocacy Groups Support Small Business Dentistry

20 Apr 2018 Michael W. Davis, DDS

Small business dentistry is increasingly establishing advocacy groups designed to address specific issues. Areas of concern range from protecting the doctor/patient relationship against the intrusion of the insurance industry and corporate dentistry to honest evaluation and solutions for the public’s “access to care.”

These associations are springing up in a variety of different states. Because of their distinctive smaller sizes, they are highly attuned to specific predicaments unique to a given state. Larger national groups may have multiple and conflicting agendas, which too often grind effectiveness to a standstill. These smaller spearhead organizations often serve as the initial testing ground for addressing and solving challenges. Many times, state dental associations will later pick up the banner and carry forth with their added weight and power of membership.

Three organizations that exemplify this movement are the Concerned Dentists of Texas (CDoT), the Concerned Dentists of Washington State (CDWS), and the Massachusetts Dentists Alliance for Quality Care (MDAQC). Each of these relatively small associations is free to examine problems unique to its specific state and discover optimal mechanisms for local problem solving. They aren’t handicapped by the political or economic motivations of a faraway distanced leadership. They aren’t bogged down by neverending and do-nothing committee meetings. And, they lack multiple layers of leadership hierarchy, which often hinders effective action…

Read Dr. Davis’ entire article here.

Southern Dental Alliance and Sale to Pouschine Cook Capital

Keep in on your radar.

Sept 2017:

Deloitte Advises Southern Dental Alliance on Sale to Pouschine Cook

Deloitte Corporate Finance acted as exclusive financial advisor to Atlanta-based VSM Management d/b/a Southern Dental Alliance on its sale to Pouschine Cook Capital Management and its co-investor group.

Southern Dental is a multi-specialty dental service organization in the Southeastern U.S. with 32 clinic locations across eight brands.

“DCF’s assistance was indispensable for us throughout the transaction process, offering both expertise in the space and extensive resources. We are excited about our future growth prospects and the new partnership with Pouschine Cook,” said Mark Lakis, CEO of Southern Dental.

Tom Harbin, managing partner at Source Capital, echoed the sentiment, “DCF’s deep knowledge of the dental space was invaluable and helped lead to a successful transaction. We could not be more pleased with the outcome.”

http://www.abfjournal.com/dailynews/deloitte-advises-southern-dental-alliance-on-sale-to-pouschine-cook/

So far only 2 states have released their share of the $23,900,000 Benevis/Kool Smiles Dental Fraud Settlement

So far only 2 states have released their share of the $23,900,000 Benevis/Kool Smiles Dental Fraud Settlement that covers a 3 year period of Jan. 2009 to Dec. 2011. 

Arkansas - $478,500
Massachusetts – $1+M (the state is to receive $1,700,000 with a portion of that going back to the Federal Government)

They started their business model of “Abuse Children; Collect Medicaid $” in June of 2002 with Drs. Frick (Tu Tran) and Frack (Thein Pham) and Kool Smiles still at it today; it will soon be 16 years! 

One must never forget  Dr. Tu M. Tran and Dr. Thien Chi Pham were dentists working at Smile High Dentistry in Colorado. Smiles High Dentistry is part of the Small Smiles Dental chain in 2001.

That leaves 13 years of the same fraud and abuse that has gone unchecked.

Below is a post from Massachutches Attorney General Maura Healey’s facebook page which nearly caused me to have a seziure.

I have to comment:

"This is a story of an enormous company defrauding Medicaid and pushing unnecessary procedures onto kids. We investigated and reached a settlement. Now millions will be returned and this company will change its practices forever."

ARE YOU KIDDING ME!

First, that statement left out the fact these unnecessary procedures were accomplished whereby small children, even babies, were tied up and tortured for speedy traumatic and painful procedures.

This has been going on in state for over 15 years. MassHealth state auditors noted in a published report Kool Smiles and it's cousin Small Smiles had a high incident of crowns back in 2005 or 2006. I have that report somewhere, I’ll find it and post it for you.

In a report you state “With this settlement, we’re recovering more than $1 million for the state and will ensure this company cannot use these practices in the future.”  That is the most naive thing I've ever heard in my life. They were doing it before auditor walked in, while auditors were there, the minute auditors walked out the door and while they were signing this Settlement Agreement.

Question Attorney General Maura Healey: How much did Mass get in 2010 when Small Smiles was sanctioned $24M? Did they change their business practices? Uh...no! Actually, they doubled down! Small Smiles even signed a 5 year Quality of Care Corporate Integrity Agreement.

Imagine the millions of dollars pillaged and the number of children abused by this “enormous company”.

This is state-sanctioned child abuse, you just can't paint it any other way.

Virginia’s Attorney General Facebook page posted about the settlement as well.  Of course I had to comment:

As I’ve pointed out before, as far back as 2009 Kool Smiles has had representative on the Virginia Department of Medical Assistance (DMAS) Dental Advisory Board (DAC). First David Strange, the Paul Walker.  Small Smiles had representitives as well.

In January 2010 a similar “Settlement” was reached with Small Smiles Dental Centers—Kool Smiles’ step-cousin 2 times removed. 

Small Smiles even went to far as to signed a 5 year Quality of Care Corporate Integrity Agreement and agreed to pay nearly $24M (nearly $27M when you add in the separate amount for the state of New York.) plus interest.

By February 2012, Small Smiles filed for Chapter 11 Bankruptcy protection. Three years later in February 2015 Small Smiles filed Chapter 7 Bankruptcy.  It still owed $26,049.276.61 from the January 2010 settlement. 

What happened to Small Smiles?

They simply sold a few clinics to Kool Smiles, Adventure Dental (also root with Small Smiles) and DentaQuest, also operated by former Small Smiles executives and kept a few for themselves, esepcially in Georgia and South Carolina.

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)

$23,900,000.00 Benevis / Kool Smiles Dental Clinic Settlement Agreement with DOJ

This is for the period of January 1, 2009 through December 31, 2011.

That is 3 years.

They have been in business with this exact same business model since 2002, when FFL Partners found Dr. Tran and Dr. Pham at the Denver Small Smiles Dental Clinic and offered them an opportunity of a lifetime; to start their very own Medical Mill and become “owner dentists”.

It’s now January 2018. 

So, 15 years, right? This settlement covers 3 of 15 years.

The way I see it, they should pony up an additional $286,800,000.00.

I don’t see any Corporate Integrity Agreement; let’s hope that is a seperate Agreement yet to be released.

$23,900,000.00 Benevis Kool Smiles Dental Settlement Agreement with DOJ - January 2018

Related:

September 2009 Office Score Card

FY 2011 Texas Kool Smiles Stainless Steel Crowns Billed

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.

---

In 2016, 4 year old Liseth Lares died just days after visiting the same Yuma, AZ Kool Smiles clinic as 2 year old Zion Gastelum

YUMA, Arizona --

Two children, one dentist's office, each meeting the same tragic fate.
An Arizona mother is suing Kool Smiles in Yuma after her 4-year-old daughter died days after she visited the dentist's office in January 2016.

Francisca Lares said she is heartbroken, because she was only trying to do the right thing in getting care for her daughter, KNXV reports.

But when little Liseth Lares developed a fever, family attorney Marco Mercaldo said the dentist sent the girl home after a "relatively cursory exam."

"Told the mom essentially there is nothing to worry about, she'll be fine," Mercaldo said. "Unfortunately, the infection spread and she died of the infection."

Mercaldo argues Liseth could have survived the infection if Kool Smiles had given her the proper treatment.

Read full report here.

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

Boston Dental Group, LLC vs Affordable Care, LLC

Boston Dental Group, LLC (see more info at the end) and Affordable Care, LLC (Affordable Dentures and Implants) seem to be in a heated lawsuit in Nevada’s Federal Court.  I’ve not looked at the initial Complaint, (case no. 2:15-cv-01636) but I have read (link below) BDG’s Reply in Support of Partial Summary Judgement.  Appears BDG sued (for what I’m not sure) then Affordable Care filed a counter-suit., that seems to sound a whole lot like a SLAPP suit (boy, I’ve been there…lol).  But at this point in the story, I’m not even sure who is cheating who, as the song goes.

Link to Plaintiff’s Reply in Support of Partial Summary Judgement (24 pages) filed August 25, 2017 in United States District Court, District of Nevada.

Anywho…I’ve pulled out some interesting items in this pleading and posted below.  More interesting, much of the this pleading is redacted and all the exhibits are filed “Under Seal”.

Enjoy!

Page 3, Line 3

“The question of the legality of Affordable Care’s management agreements with dentists
goes straight to the heart of whether Affordable Care has enforceable trademark rights. All of
Affordable Care’s claimed rights in its “dental services” trademarks are purportedly through
“oral licenses” it has with independent dental offices around the country. If the financial
arrangements with those dental offices are illegal, this illegal activity cannot form the basis of
any trademark rights, and Affordable Care’s has trademarks are unenforceable.”

Page 3, Line 12

The illegality of Affordable Care’s management agreement was an issue throughout this case and multiple discovery requests by BDG sought information concerning this illegal arrangement.
Despite the numerous discovery requests, Affordable Care refused to identify any
witnesses or produce any financial documents on this issue. Regardless, Defendant did produce
its 2007 Management Services Agreement which is illegal on its face (prior to this case being
filed Affordable Care produced an unsigned copy of this document which began the
conversation on the illegal nature of its arrangement with its dentists).
Now for the first time, Affordable Care decides to bring forth a witnesses and a handful
of select documents to claim that the 2007 illegal management agreement was just a copy-andpaste template and the fact that both it and the Nevada dental office signed the agreement was meaningless. Such a claim is simply unbelievable.

Page 4, Line 12

“Moreover, the specific allegations that Affordable Care’s trademark is unenforceable and
that it has unclean hands due to a violation of Nevada law has been in issue throughout this case,
including in the pleadings and throughout discovery.

In BDG’s Answer to Defendant’s Counterclaim, BDG states the following affirmative
defenses, among others:

Defendant’s counterclaims are barred by unclean hands.
Defendant’s trademarks are invalid and/or unenforceable.
       See BDG’s Answer to Counterclaim, Doc. 10, p. 5, lines 24-25. (Filed under Seal)

In addition to the pleadings, both before and after this lawsuit was filed, counsel for
BDG repeatedly informed Affordable Care that its management agreement with its Nevada
dentist was illegal under Nevada law. This is apparently what prompted Affordable Care to
amend its management agreement with its Nevada dentist and back-date it to January 1, 2016.”

Page 5, Line 15

“Affordable Care’s actions constitute the illegal practice of dentistry in Nevada and cannot form
the basis of any claimed trademark rights for dental services.”

Page 5, Line 19

“As set out in more detail in BDG’s Motion to Strike, Affordable Care failed to name Mr.
Steelman as witnesses and failed to produce the financial information it now claims address
BDG’s arguments concerning trademark priority and the unenforceability of Defendant’s
trademarks. This declaration and these documents should be stricken and not considered by this
court.”

Page 5, Line 24

“Not only was this witness not identified during discovery and these documents not
produced, BDG requested this information and Defendant Affordable Care refused to produce
it. Specifically, BDG requested an identification of all witnesses and documents related to
financial information of the Las Vegas affiliated practice, including:

REQUEST FOR PRODUCTION NO. 9:
Please produce documents sufficient to show for Nevada and California
Affordable Care’s and any Nevada or California Licensee’s monthly and annual
net profit from goods for services sold under Affordable Care Marks from 2007 to
the present.

RESPONSE: In addition to the foregoing General Objections, Affordable
Care objects to this request as irrelevant to this action and not reasonably
calculated to lead to the discovery of admissible evidence. Neither Plaintiff’s
action for declaratory relief of non-infringement nor Affordable Care’s
counterclaims for trademark infringement, false designation of origin, and unfair
competition involves evidence of profit from goods or services sold under
Affordable Care Marks. See Doc. 32-7 as Exhibit 7, p. 3. (Filed under Seal)

INTERROGATORY NO. 11:
Please state in detail the factual basis, including, but not limited to,
identification of all documents and persons, all sums and amounts received by
you from your affiliated practices located in California and Nevada.

ANSWER: In addition to the foregoing General Objections, Affordable
Care objects to this Interrogatory because the revenue that Affordable Care has
received from its affiliated practices in Nevada and California is not relevant to
Plaintiff’s claims and defenses, or Affordable Care’s counterclaims, which all
relate to the use of the AFFORDABLE DENTURES Marks. Affordable Care
further objects to this Interrogatory because the information sought in this
Interrogatory is not proportional to the needs of the case.

INTERROGATORY NO. 13:
Please state in detail the factual basis, including, but not limited to,
identification of all documents and persons, of all reimbursements, including, but
not limited to, fee-for-service methods of reimbursements paid to you and/or paid
by you to your affiliated dental practices located in California and Nevada.

ANSWER: In addition to the foregoing General Objections, Affordable
Care objects to this Interrogatory because Affordable Care’s financial relationship
with its affiliated practices in Nevada and California is not relevant to Plaintiff’s
claims and defenses, or Affordable Care’s counterclaims, which all relate to the
use of the AFFORDABLE DENTURES Marks. Affordable Care further objects
to this Interrogatory because the information sought in this Interrogatory is not
proportional to the needs of the case. See Doc. 32-5 as Exhibit 2, p. 9-10. (Filed under Seal)

Affordable Care cannot refuse to produce this information or identify witnesses during
discovery and then attempt to get into evidence a new witness and select documents because it
now suits them.”

Page 7, Line 17

“C. Defendant’s Arrangement with its Nevada Dentist is Illegal Under Nevada
Law

1. The Evidence of Record in this Case Demonstrates that Affordable Care
Operated Illegally in Nevada.

Page 9, Line 9

“In addition to the fact that Affordable Care’s surprise declaration and exhibits were
never produced and should not be considered, this untimely evidence contradicts the evidence
that is properly of record in this case, including the sworn testimony of Affordable Care’s only
witness, Adam Siegal who testified (redacted) See Exhibit 5, Adam Siegal Deposition, p. 28 lines 17-24”

This was echoed by Dr. Cher Y. Chang who owns the Nevada dental practice. She
testified as follows: (redacted) See Exhibit 6, Cher Y. Chang, DMD Deposition, p. 12, line 16 - p. 13, line 19. (Filed under Seal)

As set out in detail in BDG’s Motion, this is a clear violation of Nevada law. See NRS
631.395 (“A person is guilty of the illegal practice of dentistry or dental hygiene who . . . 10.
Except as otherwise provided in NRS 631.385, owns or controls a dental practice, shares in the
fees received by a dentist or controls or attempts to control the services offered by a dentist if
the person is not himself or herself licensed pursuant to this chapter.”) emphasis added; See also
NRS 631.215(2)(h)(1) (stating that a person who provides goods or services to a dental practice
may not, “[p]rovide such goods or services in exchange for payments based on a percentage or
share of revenues or profits of the dental practice, office or clinic.”)”

Page 9, Line 24

“Even if this Court were to consider the declaration of Mr. Steelman and the undisclosed
Vegas Financial Statements and Vegas Fee Statements, the arrangement between Affordable
Care and its Nevada dental office appears to be illegal under Nevada law.”

Page 9, Line 28

“This is abundantly clear from the Vegas Financial Statements and the Vegas Fee Statements. (redacted) (See 2016 Management Services Contract, Doc. 54-1 as Exhibit A-4, p. 21 AFCA 0009190). (Filed under Seal)

Page 11, Line 6

“Mr. Steelman’s claim that the amounts paid by the Nevada dental practice are
contractually “fixed” simply does not hold up to scrutiny.

”Page 11, Line 15

“Affordable Care’s sham “fixed” fee simply does not stand up to scrutiny and is illegal under Nevada law.

Moreover, Affordable Care has not identified a single state where this type of arrangement
would be legal. Affordable Care’s business practices appear to violate the laws of every, or
nearly every, state it operates in.”

”Page 11, Line 20

“Illegal Activity Cannot Form the Basis of Any Trademark Rights
Affordable Care’s arrangement with the Nevada dental office is illegal under Nevada
law and cannot form the basis of any trademark rights. CreAgri, Inc. v. USANA Health Scis.,
Inc., 474 F.3d 626, 630 (9th Cir. 2007).” (Filed under Seal)

“In this case, BDG, a company owned by a licensed Nevada dentist, is merely seeking a
declaratory judgment that Affordable Care’s trademarks for dental services are invalid and
should be cancelled. Affordable Care (not BDG) filed a counterclaim for trademark
infringement. Thus, while Affordable Care’s priority date in this case is when it first obtained
enforceable trademark rights in order to bring its counterclaim, the relevant priority date for
BDG is when it first began using its allegedly infringing mark, namely when it opened its first
dental office in January 2008.”

“As detailed above, Affordable Care’s illegal practice of dentistry in Nevada was not
lawful commercial use and cannot form the basis of any trademark rights which pre-date BDG’s
use of its Affordable Dental mark. Plaintiff Boston Dental Group’s trademark rights in its
Affordable Dental mark, which began at least as early as January 2008, therefore have priority
over Affordable Care’s illegal activity.s

---

Boston Dental Group, LLC

Registered Agent and Managing Member:

David Tawei Ting, DMD
6960 Westcliff Dr., Ste 200
Las Vegas,NV  89145

Ting has as least 36 companies where he is the registered agent according to a search of the Nevada Secretary of State’s website.

Some of the more interesting ones are:

Affordable Dental At Laughlin, LLC
Affordable Dental at Westcliff, LLC
BDG Coaching, LLC (what exactly is being coached?)
Boston Dental Group at Anthem, LLC
Boston Dental Management, LLC
C and T Dental Laboratory, LLC
Cambridge Dental Consulting Group
Cambridge Dental Technology, Inc
Dapha Dental Technology, Inc.
Dentisting, LLC (huh?)
Friendly Ting, PC
Haider, Ting and Chung, LLC
Handpiece Club, LLC
Looting, LLC (WHAT!  I could run with this like Forrest Gump)
Vita Smile, LLC