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Dentistry Fraud: Open Wide!


May 24, 2012

When the dentist says "open wide", he's not talking about your mouth. He's talking about your wallet.

Isaac Gagnon stepped off the school bus sobbing last October and opened his mouth to show his mother where it hurt.

She saw steel crowns on two of the 4-year-old’s back teeth. A dentist’s statement in his backpack showed he had received two pulpotomies, or baby root canals, along with the crowns and 10 X-rays -- all while he was at school. Isaac, who suffers from seizures from a brain injury in infancy, didn’t need the work, according to his mother, Stacey Gagnon of Camp Verde, Arizona.


“I was absolutely horrified,” said the boy's mother, “I never gave them permission to drill into my son’s mouth. They did it for profit.” Isaac told his mother, “The dentist man got me".

Isaac kicked and screamed while several adults held him down on the dental table, according to a teacher’s aide, Stephanie Shultz.

The root canals were unnecessary and the number of X-rays was “excessive,” according to Bobby Lee Raber, a dentist in Prescott who reviewed the records for the Gagnons. Professional guidelines call for only four X-rays for a child Isaac’s age, Raber said.

Isaac should have been sedated to numb the pain and not held down, Raber said in a written review. He said he ends treatment and reschedules when children cry, and doesn’t sedate or restrain them without parental consent.

Isaac’s case and others like it are under scrutiny by federal lawmakers and state regulators trying to determine whether a popular business model fueled by Wall Street money is soaking taxpayers and having a malign influence on dentistry.

Isaac’s dentist was dispatched to his school by ReachOut Healthcare America, a dental management services company that’s in the portfolio of Morgan Stanley Private Equity, operates in 22 states and has dealt with 1.5 million patients. Management companies are at the center of a U.S. Senate inquiry, and audits, investigations and civil actions in six states over allegations of unnecessary procedures, low-quality treatment and the unlicensed practice of dentistry.


ReachOut is one of at least 25 dental management-services companies bought or backed by private-equity firms in the last decade. Some of them have been riding a boom in Medicaid outlays on dentistry, which rose 63 percent to $7.4 billion between 2007 and 2010, outstripping the 4.9 percent growth in other dental spending. ReachOut and several of its private equity-backed rivals seek patients like Isaac Gagnon, who are covered by Medicaid, the federal-state insurance program for the poor and disabled.

On May 2, All Smiles Dental Center Inc., a management company owned by Chicago-based Valor Equity Partners, filed for bankruptcy protection because of allegedly “excessive” and “inappropriate” orthodontic care. All Smiles was part of a state audit in which 90 percent of Medicaid claims for orthodontic braces were found to be invalid because they weren’t medically needed, according to Christine Ellis, one of the auditors.


Church Street is another dental management-services company under investigation for abusing patients and “grossly overcharging the United States government in Medicaid reimbursement claims,” and focusing “more on achieving self- imposed quotas via assembly line service than proper patient care,” U.S. Senators Charles Grassley and Max Baucus told the company.

Young dentists with student debt sometimes topping $300,000 “can’t get the loans they need to start their own practices,” said Bryan J. Shanahan, past president of the Arizona Dental Association. “So they look for work in a corporate setting where they get fast cash flow.”

Dental management firms can deliver patients and a six- figure income by sending teams to schools where they can treat Medicaid-eligible students in volume -- as many as 30 children in one visit. A ReachOut recruiting ad last year promised “15+ patients/day” and “$120K/year (+ bonus opportunity)” by working “school hours 1-5 days per week.” The ad appeared on the website of the University of Detroit’s dental school.

Wall Street buyout firms have also been attracted to dental practices because they are less regulated than physician groups, according to Sandy Steever, an editor with Irving Levin Associates in Norwalk, Connecticut, which tracks health-care transactions.

Texas is investigating dozens of cases where dentists, including affiliates of management companies, may have done unneeded work or billed Medicaid for undelivered services, according to spokesmen for the attorney general and other state agencies.


According to the Bloomberg report, Christine Ellis, a Dallas orthodontist, the “flagrancy of the fraud” she found in audits she performed for Texas Medicaid “is truly unbelievable,” with only 10% of the paid claims she reviewed actually qualifying for Medicaid coverage.

Dental management service companies, backed by private equity, may have given unnecessary dental services at schools without parental consent. In addition to the terror that small children suffered from unnecessary dental work, the government is upset about the money that was defrauded. Some dentists are also accused of billing Medicaid for services that were never performed.

These management companies are now “at the center of a U.S. Senate inquiry, and audits, investigations and civil actions in six states over allegations of unnecessary procedures, low-quality treatment and the unlicensed practice of dentistry,” according to Bloomberg. One Dallas orthodontist testified that only ten percent of the Medicaid cases she reviewed actually qualified for Medicaid coverage.

Investigators are looking at allegations that dentists placed crowns on children needing only less-expensive fillings, or put needless braces on 12-year-olds with baby teeth -- at taxpayer expense, said Joy Sparks, general counsel for the Texas State Board of Dental Examiners.

In Nevada, the Clark County School District ended its ReachOut program earlier this year. School nurses had complained about children returning to classrooms in pain after baby root canals and other work, according to Amanda Fulkerson, a spokeswoman for the district, which includes Las Vegas.

ReachOut’s model is built on the premise that low-income parents often don’t have time or transportation to take children to the dentist. So mobile teams pack equipment in large cases, load up a minivan, head to schools and set up in gyms, libraries or classrooms.

Management companies have “moved from being vendors of services,” such as patient billing, “into increasingly complex arrangements under which some -- not all -- have embedded themselves deeply into every aspect of the dental practice,” said Ken Burgess, an attorney for the North Carolina dental board.


In San Diego, Tina Richardson’s third grader, Alexander Henry, came home in March with four baby teeth missing after a school session with a ReachOut-affiliated dentist that was so painful he “waved his arms frantically,” “pushed everyone off him” and “bled so badly that they had to send him to the nurse’s office,” according to her complaint with the state dental board. Among other things, Richardson said the consent process wasn’t valid.

“Patient abuse.” “Wall Street money.” “Soaking taxpayers.” “Medicaid fraud.” That’s what a Bloomberg Businessweek article found when it examined the business practices of big, out-of-state, investor-owned “dental management services” corporations.

Bloomberg reported that some of those same corporations – and their private equity investors – are giving big money to keep the North Carolina House from passing a crackdown on the abuses. Some Texas’ dental practices billed Medicaid $184 million for Medicaid orthodontics — more than the rest of the United States combined.

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