NC board nixes sale of dental practice to management chain
Article Thumbnail ImageNovember 21, 2011 -- A North Carolina dentist has agreed to settle charges by the state dental board that he illegally sold his practice to the Heartland Dental Care practice management chain through a complicated series of transactions, contracts, and employment agreements.
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Gary L. Cameron, DDS, was charged by the North Carolina State Board of Dental Examiners with trying to sell his practice, Asheboro Dental Care, to Illinois-based Heartland Dental in March 2010. As in many states, North Carolina's Dental Practice Act (DPA) specifies that only licensed dentists may own, manage, supervise, or control dental practices.

Following an investigation, the dental board found that through a complex series of contracts and agreements, Dr. Cameron had "given Heartland effective control and ownership, including selling the 'goodwill' of his longtime practice for $2.1 million," according to the charges.

Dr. Cameron, 62, who had operated his practice for 34 years, was also paid $249,000 in Heartland stock and $138,000 for accounts receivables for a total of $2.5 million, according to the charges. In addition, he signed employment agreements that would pay him $72,000 a year for treating his patients.

“I am concerned that corporate profits may begin to take precedence over patient care.”
— M. Alec Parker, DMD, executive
     director, North Carolina Dental
     Society

M. Alec Parker, DMD, the executive director of the North Carolina Dental Society, said the dental board acted properly in its investigation and ruling.

"In my opinion, the role of dental management companies should be to provide support services under a contractual arrangement that allows the dentist to remain in control of clinical decisions and administrative/financial policies that have the potential to influence how dental care is delivered to patients," Dr. Parker wrote in an email to DrBicuspid.com. "Many dental management companies share that same perspective and operate within the boundaries of the current law. We support those companies."

Under the terms of a consent order Dr. Cameron signed in September, he agreed to rescind the entire transaction, and any future management agreements between him and Heartland must be approved by the board. Dr. Cameron's license was suspended for two years, but the suspension was stayed if he follows several conditions, including providing financial reports to the board.

Heartland agreed to pay the dental board $36,817 for the investigation. According to its website, Heartland provides administrative support to dentists, works with more than 300 dental practices in 18 states, and employs more than 400 dentists.

Neither Dr. Cameron or Heartland responded to requests for comment.

Peter Son, DMD, who worked with Dr. Cameron, was formally reprimanded by the board for participating in negotiating employment contracts that violated the DPA.

How the deal was structured

According to the dental board's charges, Dr. Cameron assessed the value of his practice in 2009 and contacted Heartland about buying it. He then signed a purchase agreement that included a management agreement, employee lease, power of attorney, and a noncompete agreement.

"This was a management contract that was surrounded by a host of other documents which, taken together, clearly constituted the sale of a dental practice to an unlicensed entity," Ken Burgess, a partner with the Raleigh, NC, law firm Poyner & Spruill and attorney for the dental board, told DrBicuspid.com.

As part of the noncompete agreement, Dr. Cameron agreed not to practice within a 15-mile radius of his current office and not operate a competing business for five years. He was also required to fire all his employees with the understanding that Heartland would rehire them.

Dr. Cameron was then hired as a Heartland employee, and the practice continued to operate as Asheboro Dental Care.

Burgess described the situation as "the manager had hired the managed to help manage."

North Carolina lawmakers are currently considering legislation that would give the state dental board the authority to further specify the permissible parameters of management agreements.

But opponents of the bill say that the measure is overreaching and an intrusion into practice management. SB 655 calls for the dental board to examine and approve all business contracts entered into by dental practices in the state. It has been approved by the state Senate but won't be taken up again until next May.

"The board has become increasingly concerned about the expanding scope and nature of management company services and agreements and their impact on the control of dental practices by the licensed dentists," according to a position statement on the dental board's website.

Dr. Parker warned against companies who try to overstep the bounds of practice management to illegally take control of dental practices.

"There are dental management companies that apparently seek to expand their influence into areas of the practice that impact patient care," he said. "When this happens, I am concerned that corporate profits may begin to take precedence over patient care."