Ala. nonprofit dental clinic sues state dental association

2008 08 29 15 39 44 564 Justice Scale 70

Sarrell Dental Center, a fast-growing nonprofit dental clinic that has been embroiled in a dispute with the Alabama Dental Association (ALDA), has filed a lawsuit against the group claiming the organization has launched an "illegal conspiracy" to drive the clinic out of business.

The suit, filed May 12, alleges that "the sole motive for the vindictive actions of ALDA was to suppress and/or eliminate the competition it perceived as emanating from Sarrell's provision of dental services to those who generally could not afford the same elsewhere from for-profit dentists."

Zack Studstill, interim executive director of ALDA, responded in an e-mail to "ALDA has no interest in shutting down organizations that service children and adults in need of dental care, nor does it have the power to do so."

The suit claims ALDA's actions amount to "unlawful restraint of trade" and "interference with business relations" under Alabama law.

Sarrell's suit alleges that because ALDA perceived it as a "threat," the group "vigorously encouraged its members to exert pressure and otherwise threaten and discourage dental professionals, including dentists and specialists, from conducting business of any sort with Sarrell and to otherwise 'freeze out' Sarrell."

The U.S. Federal Trade Commission (FTC) recently launched an investigation into whether ALDA engaged in unfair competition or deceptive acts by allegedly refusing to deal with Sarrell, which primarily treats young Medicaid patients.

In an April 26 letter to ALDA obtained by the Anniston Star, the FTC stated that its Bureau of Competition is conducting an investigation "to determine whether the Alabama Dental Association (ALDA) or others may be engaging in or may have engaged in conduct in violation of Section 5 of the Federal Trade Commission Act ... by engaging in concerted refusals to deal with competing dentists," in particular, low-cost, nonprofit, and public oral healthcare providers.

The University of Alabama at Birmingham School of Dentistry (UAB SOD) recently ended a five-year relationship with Sarrell Dental, which is the largest single provider of Medicaid dental services in Alabama -- a move the clinic claims is due to a turf battle with private practitioners.

The school's decision to end its relationship with Sarrell followed an ALDA meeting in January, during which members were recorded making comments about Sarrell and allegedly discussing ways to curtail the operations of the clinic.

The FTC has instructed the ALDA to preserve records relevant to the investigation, including communications between ALDA and individuals at the dental school.

Sarrell CEO Jeff Parker said FTC antitrust attorneys have contacted him about the situation, and he is cooperating with their investigation. Parker believes the dental school bowed to pressure from alumni dentists in its decision to terminate the contract.

UAB spokesman Dale Turnbough has contended that the conflict stems from a disagreement over the supervision of dental students.

Comments from the January meeting of the ALDA trustees are part of a slander lawsuit filed by Sarrell against Steve Mitchell, D.M.D., director of the dental school's pediatric dentistry department.

Sarrell's revenues in 2009 exceeded $6 million, almost all from Medicaid and other aid payments.

The acrimony is similar to turf battles in other states as companies, rather than private dentists, step in to care for young people covered by Medicaid.

The conflicts, which have been brewing for more than a decade, could become more common with the recent passage of the federal healthcare reform bill, which includes mandatory dental coverage for children.

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