Business Service Agreements: A Tool for Deception within the Corporate Dental Support Industry
By Michael W. Davis, DDS
Business Service Agreements (BSAs), also called Business Service Contracts or Management Service Agreements (MSAs), are a tool created by the dental support industry (a/k/a dental support organizations) to mask their true business operational models. These contracts are generated between the unlicensed ownership (corporate beneficial owner) and the sham figurehead owner (nominee owner dentist(s)).
These agreements contain a variety of misrepresentations specifically designed to circumvent the rule of law. These BSAs serve as a lynchpin supporting the unlawful house of cards, of largely unlicensed and unregulated healthcare entities. Please note: the term “dental support organization” is also an intentional misrepresentation, to mask beneficial ownership.
Case precedent was established in federal Fifth Circuit ruling 07-30430)
1., in which the court determined a Dental Support (Service) Organization (DSO), Orthodontic Centers of America (beneficial owner of dental clinics), was engaged in the unlicensed and unlawful practice of dentistry. The court also ruled the business agreements with so-called “owner” dentists were unenforceable and non-severable (denying one part could be enforced while another could not), because elements in these contracts were unlawful, the entire contract was rendered unenforceable.
Nationally, every DSO has created different BSAs. And, within different states, different DSOs will produce different agreements. However, there exist common features worth examination in the vast majority of these contracts.
Dental Clinic Ownership
The DSO generally will deny ownership of the dental practice. Yet, the DSO usually owns the facility or is the landlord on the lease agreement. The DSO owns the dental equipment, supplies, and any possible leasehold improvements.
The DSO enjoys contract rights to control what dentists or entity may be artificially designated as “owners”. An owner dentist(s) may not freely sell “their” asset of a dental practice, and thus are merely façade nominee owners. The DSO controls the bank accounts of the “owners’” clinic bank accounts, which are swept out several times per week, or daily. These are central points in the lawsuit against Dental One Partners, DentalWorks, et al, by 14 duly licensed North Carolina dentists enjoined by the North Carolina Board of Dental Examiners, in 2013.
2.
