Small Smiles owner excluded from Medicare, Medicaid programs

2013 05 15 09 12 03 636 Capitol Hill 200

CSHM, which owns 53 Small Smiles dental clinics in 19 states and the District of Columbia, has been excluded from participation in the Medicaid and Medicare programs for a minimum of five years by the U.S. Department of Health and Human Services (HHS).

The exclusion follows a recommendation by a U.S. Senate committee that the Small Smiles chain should be excluded from the Medicaid program for encouraging dentists to perform unnecessary treatments to boost profits.

The March 7 exclusion letter sent from the HHS' Office of Inspector General (OIG) and signed by Robert DeConti, the assistant inspector general for legal affairs, cited CSHM for failing to cure several breaches of the Corporate Integrity Agreement (CIA) between CSHM and the OIG. The letter was addressed to CSHM's chief compliance officer.

CSHM officials did not return calls for comment.

The violations in the exclusion letter include the following:

  • Failure to file quality of care reportable events at an Oklahoma Smiles Dental Center in Tulsa, OK, and a Small Smiles center in Mattapan, MA
  • Failure to maintain disclosure logs at Oklahoma Smiles that were supposed to include a patient's quality of care reportable event; also failure include the chief dental officer's October 22, 2013, disclosure to the chief compliance officer about the incident
  • Failure to implement policies to inform patients, parents, and guardians when a substantiated incident of patient harm occurs
  • Failure to have the chief dental officer, regional dentist, or chief compliance officer participate in compliance review visits at CSHM facilities
  • Failure to perform annual general training in the third reporting period
  • Failure to comply with compliance officer certification: On March, 14, 2013, CSHM submitted a false certification by the chief compliance officer with its third annual report to the OIG, the exclusion letter stated.

CSHM's exclusion from federal healthcare programs is effective April 7 unless the company appeals. CSHM has told that they do intend to appeal.

In July, 2013, an investigative report by a U.S. Senate committee concluded that the Small Smiles dental chain should be excluded from the Medicaid program for encouraging dentists to perform unnecessary treatments to boost profits.

The report followed a two-year Senate investigation by Sens. Charles Grassley (R-IA) and Max Baucus (D-MT) of dental chains owned by private-equity firms. The 1,500-page report recommended that corporate-owned chains that use similar deceptive business models should be ousted from the federal program as well.

Investigators looked at five dental chains that allegedly used deceptive business models that gave managers rather than dentists control over the clinics. In addition to CSHM, the investigation included NCDR, which owns 130 Kool Smiles clinics in 15 states and the District of Columbia; ReachOut Healthcare America (ReachOut), which operates mobile clinics that treat children at schools in several states; Heartland Dental Care, which operates more than 300 clinics in 18 states; and Aspen Dental Management, which operates more than 300 Aspen Dental clinics in 22 states.

The Senate report focused on CSHM and ReachOut because both companies treat Medicaid children almost exclusively.

Small Smiles changed hands in 2012 while in bankruptcy and claimed at the time that it is "mending its ways."

“The U.S. Office of Inspector General has concluded that Small Smiles may no longer bilk the taxpayers while it harms little children.”
— Jim Moriarty, attorney

The Senate report recommended that HHS and the OIG exclude Small Smiles from Medicaid and "any other corporate entity that employs a fundamentally deceptive business model resulting in a sustained pattern of substandard care."

Houston attorney Jim Moriarty, who has lawsuits pending against Small Smiles on behalf of parents who say the chain's dentists performed unnecessary procedures on their children at clinics in New York state, wasn't surprised the company was booted from the Medicare and Medicaid programs.

"After six years of news media investigations, a $24 million qui tam (whistleblower) settlement, and a U.S. Senate Committee report blasting the private-equity ownership of Medicaid dental clinics, the U.S. Office of Inspector General has concluded that Small Smiles may no longer bilk the taxpayers while it harms little children," he told

The 2011 lawsuits claim that 30 young children were subjected to an "emotional and physical nightmare," often "struggling, screaming, and crying during dental procedures," at various Small Smiles clinics in Onondaga and Schenectady between 2005 and 2009.

In October, 2013, a jury found that Small Smiles dentists did not perform unnecessary dental procedures on one of the children, Jeremy Bohn. However, the judge found that corporate ownership of the clinics was illegal under state law, but the jury found no liability by the company or the dentists.

In November, a judge ordered a new trial in the Small Smiles case after ruling that a lawyer for the insurance company stalked the jury during the trial. The judge found that the lawyer's misconduct intimidated the jury and probably influenced the verdict in favor of Small Smiles.

In 2010, Small Smiles paid $24 million to settle allegations of Medicaid fraud brought by the U.S. Department of Justice. A total of $3.45 million of that went to the state of New York, where the company operates several clinics.

More than 90% of the company's $161 million in revenues in 2011 came from Medicaid and New York's Children's Health Insurance Program.

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