The Pennsylvania Attorney General's Health Care Section has filed suit against Allcare Dental & Dentures and three top company officials, accusing them of numerous violations of Pennsylvania's consumer protection and credit laws leading up to the company's sudden closure in January of this year.
In addition to the company and several affiliated companies, the lawsuit names Allcare President Robert S. Bates, DDS; CEO David T. Pennington; and Stephen A. Reny, CEO of Allcare Dental Management.
"The sudden closure of Allcare offices across Pennsylvania and throughout the U.S. in January has triggered a flood of complaints from hundreds of consumers who prepaid for dental services that were not delivered or were not given the proper disclosures about financing, discounts, and other offers," said Acting Attorney General Bill Ryan in a news release. "In addition, Allcare allegedly failed to safeguard or escrow the money it received in consumer prepayments, as required by Pennsylvania's Credit Services Act and a previous settlement between the company and the Attorney General's Office."
Ryan said the Attorney General's Health Care Section has received more than 800 complaints from consumers, many of whom paid $1,000 to $7,000 for dental and denture services from Allcare. Many of those consumers received third-party financing for part or all of the treatments, with the money paid in advance to Allcare, Ryan noted.
According to the lawsuit, Allcare allegedly used high-pressure sales tactics to induce consumers to agree to expensive treatment plans. In addition, Allcare provided assistance to consumers who were in need of third-party financing, applying for credit on their behalf and by submitting credit applications via the Internet or telephone.
Ryan said that under Pennsylvania law, Allcare was acting as a credit services organization when it assisted consumers who needed financing for their dental care.
"The law is very clear: Any money paid by consumers to a credit services organization for services that have not yet been provided must be placed in a secure bank account or a bond must be obtained to safeguard the funds," Ryan said. "Without that bond or an escrow account, credit service organizations cannot accept advance payments from consumers."
Allcare officials also allegedly continued to accept payments, including cash, credit card charges, and third-party financing, even though company officials knew or should have known that they would not be able to deliver the products or services that consumers had purchased, Ryan said.
The lawsuit also accuses Allcare of engaging in unfair and deceptive business practices, failing to provide consumers with required cancellation notices, and violations of a previous Assurance of Voluntary Compliance (consumer protection settlement) reached in March 2009.
According to the lawsuit, all three company officials -- Bates, Pennington, and Reny -- had direct and integral roles in the operation of the company and should be held personally responsible for violations of Pennsylvania law. The lawsuit also argues that four different related companies all operated as a single entity and should all be held liable for their unlawful conduct.
The lawsuit seeks restitution for all consumers who were harmed by Allcare's unfair business practices along with fines and penalties of $1,000 to $5,000 per violation.
