A Florida dentist is suing the Heartland Dental chain, claiming the company fired him after illegally taking over his practice through a complicated series of transactions and employment agreements. The suit is similar to a 2011 case in which a North Carolina dentist illegally sold his practice to Heartland.
Herbert G. Salisbury III, DMD, said he sold his 30-year Panama City practice to Heartland Dental Holdings in 2013 for $1.04 million, consisting of $790,000 cash and $250,000 in company stock, after the company assured him that he would continue to "run the show" and "be in charge" of the practice, according to the 26-page complaint filed March 19 in Florida's 14th Judicial Circuit Court for Bay County.
Illinois-based Heartland Dental is one of the country's biggest dental service organizations (DSOs), with more than 550 affiliated dental offices and 4,000 employees in 26 states. In 2012, the Ontario Teachers' Pension Plan of Canada bought a majority stake in Heartland Dental Care for $1.3 billion.
John Pantazis, Heartland Dental's vice president and general counsel declined to comment on the suit.
As in most states, it is illegal in Florida for anyone other than licensed dentists to own, manage, supervise, or control dental practices.
Herbert G. Salisbury III, DMD
After Dr. Salisbury heard from a colleague that Heartland had paid him a "handsome" price for his practice in 2013, Dr. Salisbury sold his practice to the company in June 2013, according to the complaint. After the deal was signed, Heartland "kicked Dr. Salisbury out of the practice," refused to pay part of the deal's compensation, and is now threatening him with legal proceedings to enforce the illegal agreements, according to the complaint.
When the issue of Florida's prohibition against unlicensed dentists owning dental practices arose, Heartland assured Dr. Salisbury that it would structure the sale to be "legal" under state law, according to the complaint.
According to the suit, Heartland colluded with the other defendants named, Veronica Thompson, DDS, and Leonard Badger, DDS, who act as "shills" to operate a "sham" corporation for Heartland, Comfortable Care Dental Health Professionals, which has three Florida dental offices.
Drs. Thompson and Badger have both been disciplined by the Florida Board of Dentistry for gross incompetence and violation of Florida statutes regulating the practice of dentistry, according to the complaint.
According to Comfortable Care's 2013 annual report, Dr. Badger is its sole shareholder; in 2012 Dr. Thompson was the company's sole shareholder. Prior to that, another dentist, George Strickland, DDS, who also had been disciplined by the dental board, had been Comfortable Care's sole shareholder.
The transaction by Dr. Salisbury was done through a "maze of vague, confusing, and deceptive interrelated contracts," which essentially gave Heartland complete control over Dr. Salisbury's practice. When Dr. Salisbury refused to "kowtow" to Heartland regarding treatment plans, office procedures, pricing, and collection, "Heartland threw him out of the practice he spent 30 years building," the complaint states.
Under Heartland's employment agreement with Dr. Salisbury, he was to be paid $84,000 per year plus 10% of net collections for hygiene services.
The purchase agreement was a "convoluted maze of legalese and doublespeak," which "created a trap from which there was no escape," the complaint states.
Heartland subject of federal investigation, Medicaid fraud lawsuit
Dr. Salisbury's suit is similar to a 2011 case in which North Carolina dentist Gary Cameron, DDS, agreed to settle charges by the state dental board that he illegally sold his practice to Heartland Dental through a complicated series of transactions, contracts, and employment agreements. The North Carolina State Board of Dental Examiners found that 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.
The North Carolina dental board subsequently passed a law adding more regulatory oversight to contracts between DSOs and dental practices.
Heartland was one of five dental chains owned by private-equity firms that were investigated by a U.S. Senate committee for allegedly using deceptive business models that give managers rather than dentists control over the clinics. In 2013, the Senate issued a report recommending that corporate-owned chains which use deceptive business models should be ousted from the Medicaid program for encouraging dentists to perform unnecessary treatments to boost profits.