Texas dental clinics provide new front in predatory litigation

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 Texas dental clinics provide new front in predatory litigation

August 8, 2012



Frivolous lawsuits are nothing new. Neither are the contrived disputes Estate of Denial® routinely sees with abusive probate actions or other cases involving wills, trusts, guardianships or powers of attorney. Market conditions change and like any business, the legal industry adjusts to find new revenue-generating opportunity. The legal system theoretically rights wrongs, but in today’s world, the legal industry is also recognized for sometimes manufacturing harms to ensure its own continued revenue streams. Based on current interest, dental management service organizations (DMSOs) seem poised as a new legal target and Texas may become one of the battlegrounds.



Dental industry business models have begun to evolve in recent years. The traditional dental practice has tailored itself around providing care for a small number of high-margin patients, allowing dentists to practice with abbreviated hours and availability compared to the traditional medical market. Not surprisingly, like other healthcare segments such as pharmacies, lab testing and diagnostic imaging, there is an opportunity for innovative providers to offer care at a lower cost where higher demand exists.



DMSOs have become primary providers to accommodate this market segment and the medical care is often accessed through government programs or consumer credit. As with any other dental practice, DMSOs are a for-profit business. To be profitable in a low reimbursement environment, the model demands cost controls, efficient operational practices and higher patient demand. These all become critical business management issues that, if not handled successfully, threaten DMSOs long-term business viability as well as their ongoing ability to provide dental care for an already underserved patient base.



DMSO companies operating in Texas have received media scrutiny in recent months. Questions over services provided within government programs, allegations of fraudulent Medicaid billing practices are serious issues in need of prompt, competent review. “Greedy DMSOs” are a convenient culprit yet other credible perspective suggests the manner in which government programs were established and administered also has culpability. The public deserves answers on how their tax dollars are being spent. And if waste, fraud or abuse is found, those responsible – be it public or private interests – should be held accountable.



To our knowledge there have been no studies done comparing the rate of wrongdoing by individual dentists versus those working with DMSOs. While DMSOs with established brand names and large patient bases provide an attractive target for media and law firms, the logic does not follow that these organizations would commit wrongdoing at a higher rate than the general population of dentists. In fact, the incentives are opposite. Savvy investors use third party auditors to assure the veracity of financial statements and, as we have learned, the same scrutiny exists on the clinical side in many DMSOs. Auditing, medical oversight and compliance teams are frequently introduced to assure the quality of treatment and prevent fraud, specifically to improve the value of the investment. The incentives play out in other industries as well, for example, large chain restaurants have stellar food safety records because of the risk posed by any individual restaurant negatively affecting the overall brand. These are systems that private practices do not have available and we rely solely on the credentials of the rendering provider.



In addition to the oversight and auditing, the DMSO pay structures create more conservative incentives than in private practice. Many offer attractive base pay and retirement incentives with limited commissions on actual work completed. The steady pay and retirement benefits can quickly be lost if the private oversight identifies any wrongdoing. Private practices are run entirely on commissions and corrective actions rely on state oversight, appeals and even politics before action can be taken. DMSOs have strong incentives to rid themselves of poor dentists before they can tarnish the reputation of the brand.



The trial lawyers are predictably entering the fray. Ironically, not one of them has won a class action claim against a dentist. However, they are likely to seek settlements from frustrated dentists in the wake of the worst type of weapon: egregious, reputation damaging, plaintiff advertising. One DMSO, Kool Smiles, is fighting back against a San Antonio law firm by suing them in federal court. In addition to TV ads that even the trial bar reprimanded the lawyers for, the firm created a website suggesting the potential of legal claims against Kool Smiles that “has opened over 35 clinics in Texas, including clinics in El Paso, McAllen, Weslaco, Mission, Brownsville, Eagle Pass and Laredo.” If children were “strapped down to a papoose board,” “upset, crying, terrified, or traumatized” or were diagnosed as needing “multiple stainless steel crowns” or “multiple root canals/pulpotomies,” the site says “You may have a CLAIM.” It goes on to say “many of these dental clinics have exploited our children to increase their revenue.” That the legal industry would recognize an opportunity for exploitation is certainly no surprise.



The statements are damaging to the entire medical industry. They demonize commonly used medical procedures that are recommended by the major dental associations and papoose boards which are used by almost any pediatric medical provider. Is a child crying at the dentist really worth the burden to our legal system? Could any dentist or medical provider stand against these types of frivolous claims?



While the system through which taxpayer dollars fund dental services needs significant review, let’s not lose sight that these dentists offer important access to a population that only has more costly alternatives, primarily in taxpayer-funded emergency rooms. If this new DMSO model can succeed here, it could break new ground in providing more affordable dental care options for all of us. If problems exist, they need to be addressed through established oversight with all dentists. Letting attorneys dictate the story by trolling for clients and driving corporate “shakedowns” will leave the attorneys richer, innovators out of business and put poor children back in the emergency room. All at our expense.



If the issue is with government oversight or individual fraud, waste and abuse, it should be treated as such. Allowing the media and attorneys to divert attention to DMSOs is a red herring and could be terribly costly to the consumer and taxpayer.



As Texans increasingly rebuke a predatory legal industry in favor of meaningful tort reform, this may be our next battleground area.



Lou Ann Anderson is an advocate working to create awareness regarding the Texas probate system and its surrounding culture. She is the Online Producer at www.EstateofDenial.com, a Policy Advisor with Americans for Prosperity – Texas and a Director of Women on the Wall. Lou Ann may be contacted at info@EstateofDenial.com.

Editor's note: Nice article Lou Ann.