Delta Dental reaches $3.85M settlement with Smile Center

Delta Dental of Minnesota has reached an out-of-court settlement with the Smile Center dental clinics, resolving a lawsuit pending since early 2009 in Hennepin County District Court.

In a lawsuit filed in April 2009, five Minnesota Smile Center Clinics -- which provide dental care to low-income patients and employ 34 dentists and 40 dental hygienists -- accused Delta Dental of Minnesota of using its "economic stranglehold" to force its dentists to provide less care than the low-income enrollees deserve, according to a 2009 story in the Minneapolis Star Tribune.

Delta subsequently countersued Smile Center for the return of additional funds it believed had been paid for "fraudulent and abusive services."

Under the terms of the settlement, announced March 21, the Smile Center clinics will pay Delta Dental $750,000 and Delta Dental will distribute that amount and another $3.1 million escrowed from claims submitted by the Smile Center clinics that Delta Dental believed were fraudulent or abusive.

Delta Dental administers dental benefits for several healthcare plans engaged by the state of Minnesota to provide services for low-income Minnesotans. Delta began its investigation when a dentist sent Delta an anonymous letter, the company explained in a press release. Delta's review found what it believed to be abnormally high utilization rates for several mostly routine dental procedures, the company said.

About 90% of the claims originated under Delta-administered, state-funded public programs. The remaining 10% involve claims submitted under Delta's commercial dental benefit plans.

When Delta concluded that the Smile Center clinics had billed for services that Delta suspected were possibly fraudulent or abusive, Delta asked for sound clinical explanations for the utilization rates.

In Delta's view, "no reasonable clinical explanations were provided and Delta thus withheld and offset monies that would otherwise have been paid to the Smile Center clinics," the company said, adding that the right to offset is included in Delta's provider agreements.

"Delta has an antifraud plan on file with the Minnesota Department of Commerce, as required by Minnesota law," said David Morse, Delta Dental president and CEO, in the release. "Delta's health plan contracts have specific reporting requirements for suspected fraud and abuse. Delta believes it has met its legal and contractual responsibilities in this case."

All of the public program funds recovered will be returned to Delta's health plan contractors. On the commercial side, approximately 85% of the recovery will be credited to Delta's self-insured groups, and the remaining 15% should help moderate Delta's rates for risk groups.

In the settlement, both Delta and the Smile Center clinics deny any liability or wrongdoing.

Calls to the Smile Center and its legal representatives for comment had not been returned as of press time.