Dentists sue Comfort Dental over forced use of company labs

2014 03 14 15 01 02 730 Law Books 200

Two Colorado orthodontists are suing Comfort Dental, claiming they were forced to use inferior dental labs owned by the company. The dentists, who run clinics under franchise agreements with Comfort Dental, say they were threatened and intimidated when they used higher-quality labs.

Carl A. Bahr, DMD, and his brother Craig A. Bahr, DDS, who have orthodontic practices in Lakewood, are seeking to stop Comfort Dental from using "excessive and improper control over medical decisions and judgments" and from imposing improper demands to sell unregistered "discount" medical plans to patients, according to their complaint filed on March 25 in the U.S. District Court for the District of Colorado.

Plaintiffs CDMO and CDET (corporations owned by Drs. Bahr) operate six clinics in Missouri, Kentucky, and Indiana under franchise agreements with Comfort Dental. The dental chain owns 114 franchises in 11 states.

Comfort Dental attorney Graig Bears denied the accusations. "The allegations are baseless," he told DrBicuspid.com. "It's an attempt to create a sensational lawsuit, and we will vigorously defend ourselves."

According to the complaint, Comfort Dental didn't tell Drs. Bahr they would be required to use company-affiliated dental labs, which they claim "pose significant risks of harm to dental patients, including through excessive delays in delivery of devices, inferior quality of such devices, and the risk of repeat procedures when a defective device fails." The poor quality of the devices required dentists to spend "significant time repairing the devices themselves," the complaint states.

The lawsuit also claims Comfort Dental did not provide franchise disclosure documents required by the Federal Trade Commission. In 2012, the company agreed to stop violating franchise anti-fraud laws in Washington, including not being registered to sell franchises and failing to provide prospective franchisees with disclosure documents. Comfort Dental neither admitted nor denied the allegations in the consent decree.

Comfort Dental founder and CEO Rick Kushner, DDS, called those who used outside labs "hot dog dentists," noting that revenue from company labs were "massive difference makers for us," according to text from an email that was included in the complaint.

Drs. Bahr heard about the company while they were in dental school and responded to a Comfort Dental ad in a dental journal for "guaranteed referral network," the complaint states.

Fines, threats, and intimidation

Comfort Dental's attorney Bears also warned dentists about using outside labs. "The punishment is going to be severe," he wrote in emails to dentists, according to the complaint. Bears told DrBicuspid.com that franchise dentists can use any lab they want, but he acknowledged that they first must get permission from the company. "There's a cost and quality feature to it," he explained.

“We were subjected to unprofessional and abusive name-calling of the worst order, invective, threats, and hostile email messages.”
— Stephen Spencer, DMD

Stephen Spencer, DMD, who had a Comfort Dental franchise in Louisville, CO, and his partners occasionally used non-Comfort labs because the quality of outside lab appliances "was much higher and much more reliable ... one we felt comfortable putting in our patient's mouth," according to his court supplemental filed on May 30 in support of the plaintiff's motion for a preliminary injunction.

Comfort Dental's excecutive vice president of marketing, Neil Norton, DDS, sent a scathing, profanity-laced email to Dr. Spencer's partner, Doug Duey, DDS, a copy of which is attached to the end of the declaration. Dr. Duey was berated by Dr. Norton for the practice of buying appliances from alternative labs, according to Dr. Spencer.

"It's really taken out of context," attorney Bears told DrBicuspid.com regarding the email. "I realize it looks incredibly inflammatory, but there was lot of behind-the-scenes information that built up to that email."

When CEO Dr. Kushner heard about their "franchise violations," Dr. Spencer and another partner, Scott Lowry, DDS, were summoned for a meeting at company headquarters in Lakewood, CO. At the meeting, Dr. Kushner imposed a $50,000 penalty, due in two weeks. If they didn't have the money, he told them to apply for a bank loan, the declaration states.

"Dr. Kushner further threatened that if we did not timely pay the outside lab use fine, our franchise rights would be terminated, our ownership in the office would be forfeited, and our office would be given to others," Dr. Spencer recalled in the declaration.

Dr. Kushner also allegedly threatened Dr. Lowry, Dr. Spencer said. "During this meeting, Rick Kushner told Scott Lowry that 'he should take him out to the parking lot and beat the living shit out of him.' He then told Lowry to leave the meeting and not to return," Dr. Spencer said in his declaration.

The company also threatened to issue "remake fines" against dentists who returned more than 10% of defective lab products to be remade, according to the complaint.

Forcing franchise dentists to use company labs put them in "the untenable position of being ordered to sacrifice their patients' best interests and disregard state licensure laws, on the one hand, or on the other hand, face certain financial ruin at the hands of Comfort Dental through termination of the Subfranchisor Agreements without cure or advance notice, triggering a three-year covenant against competition," the complaint states.

The company forced out at least three other dentists who used outside labs, according to the complaint.

Franchise dentists were also required to buy all endodontic and clinical supplies from Comfort Dental's preferred vendors, the plaintiffs noted.

In the end, Dr. Spencer gave up his franchise rather than pay the $50,000 fine. He said he was not allowed to sell the interest in his practice, for which he had paid $450,000. "In the end, I just walked away from this sad chapter in my life," Dr. Spencer stated.

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