Benevis and Kool Smiles to pay $23.9 million to settle whistleblower claims

THE UNITED STATES DEPARTMENT OF JUSTICE (DOJ) and the dental services organization Benevis LLC (formerly NCDR LLC) announced Wednesday afternoon that they had reached a settlement agreement for $23.9 million, plus interest. (1)

The settlement agreement marks the end of the DOJ's seven-year investigation of Benevis and its affiliate Kool Smiles for allegations that they had "knowingly submitted" false claims for payment to state Medicaid programs for medically unnecessary pediatric dental services between January 2009 and December 2011. (1)

“The allegations in these cases are particularly egregious because they involved medically unnecessary dental services performed on children,” said US Attorney John H. Durham for the District of Connecticut in a statement from the DOJ. (1) "Exploiting needy children for financial gain is inexcusable."

The investigation, which involved Kool Smiles clinics across 17 states, began when former Kool Smiles employees filed five lawsuits on behalf of the United States under the False Claims Act's whistleblower provision. (1) According to the DOJ's statement, the lawsuits alleged that

• Kool Smiles dental offices submitted Medicaid claims for medically unnecessary pulpotomies, extractions, and crowns;
• Kool Smiles offices sought payment for pulpotomies that were never performed;
• dentists working in Kool Smiles offices were under pressure to meet production goals, due to a cash bonus system that distinguished between those who were "productive" and those who were "unproductive";
• dentists' reports of overuse of procedures were ignored by Kool Smiles; and
• Kool Smiles offices in Texas falsely billed Texas's First Dental Home Medicaid program for dental services to children under three years old, but the services were not fully provided.

Dentist Michael Greenwald, who previously worked for three different Kool Smiles offices in Connecticut, told the Hartford Courant that he blew the whistle due to "appalling practices" at one of the offices he worked at. These practices, according to Greenwald's lawyer, James P. Brennan, included swaddling pediatric patients to keep them still and stocking a hair dryer to be used if children wet themselves during dental procedures. (2) Brennan also told the Courant that Kool Smiles dentists were advised to anticipate that low-income families would not return for treatment and to incorporate as many procedures as possible into a single appointment.

Of the five lawsuits, three were resolved with yesterday's settlement, with two still pending resolution in Connecticut and Texas. (1) Approximately $14 million, plus interest, will be paid to the federal government, and close to $10 million, plus interest, will be paid to the states that funded the Medicaid payments. (1) Per the whistleblower provision of the False Claims Act, $2.4 million from the federal government's portion will be paid to whistleblowers Adam Abendano, Poonam Rai, and Robin Fitzgerald. (1)

In a statement, Benevis emphasized that it voluntarily entered the settlement agreement due to the time and expenses already incurred during the seven-year investigation and the anticipation of future expenses. (3)

Benevis said it disagrees with the allegations and described the federal government's investigation as having "largely focused on professional disagreements between qualified dentists in determining the appropriate level and cost of care." (3) According to Benevis, which supports more than 130 Kool Smiles dental offices across the United States, the government took issue with less than 1% of the procedures billed during the investigation's review period. (3)

Both the DOJ and Benevis noted that the settlement only resolves allegations and does not indicate any determination of liability or admission of wrongdoing by Benevis, Kool Smiles, or their employees. (1,3)

Apex360 contacted representatives of Benevis for additional comment this morning and, as of the time of publication, has not yet received comment.

Editor's note: This article first appeared in the Apex360 e-newsletter. Apex360 is a DentistryIQ partner publication for dental practitioners and members of the dental industry. Its goal is to provide timely dental information and present it in meaningful context, empowering those in the dental space to make better business decisions. Subscribe to the Apex360 e-newsletter here.

References

1. Dental management company Benevis and its affiliated Kool Smiles dental clinics to pay $23.9 million to settle false claims act allegations relating to medically unnecessary pediatric dental services [news release]. Washington, DC: US Department of Justice; January 10, 2018. https://www.justice.gov/opa/pr/dental-management-company-benevis-and-its-affiliated-kool-smiles-dental-clinics-pay-239. Updated January 10, 2018. Accessed January 11, 2018.

2. Mahoney EH. Dental chain will pay $24M to settle false billing claims over unnecessary work on children. Hartford Courant website. http://www.courant.com/news/connecticut/hc-dental-settlement-20180110-story.html. Published January 10, 2018. Accessed January 11, 2018.

3. Statement regarding Kool Smiles and Benevis voluntary settlement with U.S. Department of Justice [news release]. Marietta, Georgia: Benevis; January 10, 2018. https://www.prnewswire.com/news-releases/statement-regarding-kool-smiles-and-benevis-voluntary-settlement-with-us-department-of-justice-300581064.html. Accessed January 11, 2018.

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