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Kool Smiles and management company settle False Claims case

On Behalf of | Jan 18, 2018 | Health Care Investigations |

The U.S. Department of Justice announced recently that it has achieved a settlement with Kool Smiles dental clinics and their management company, Benevis. The clinics and management company are accused of charging Medicaid programs in 17 states for unnecessary pediatric dental services and for services that were never performed. This allegedly violated the False Claims Act.

The government alleges that these unnecessary and unperformed procedures were the result of a system of production incentives. “Unproductive” dentists were disciplined and “productive” ones were given substantial cash awards based on how much revenue they generated. These incentives made encouraged the dentists to look beyond sound dental practices and increase their billings regardless of the value to patients.

“Billing Medicaid programs for dental procedures that are not necessary contributes to the soaring costs of healthcare,” says an acting assistant attorney from the Justice Department’s Civil Division. “When healthcare providers put vulnerable patients at risk by performing medically unnecessary procedures to achieve financial goals, we will take action.”

Between January 2009 and December 2011, the Justice Department says, Kool Smiles clinics and Benevis knowingly submitted Medicaid claims for pulpotomies (root canals on babies), tooth extractions and stainless steel crowns performed on children. They allegedly also billed for pulpotomies that were not performed.

The settlement requires Benevis and Kool Smiles clinics to pay a total of $23.9 million, plus interest, to the federal government and 17 states. Cases are still pending in Connecticut and Texas.

This investigation was initiated by five whistleblower lawsuits, which is common in False Claims Act cases because the whistleblowers can receive financial rewards. As is also usual in such cases, the investigation grew into a collaborative effort between federal and state agencies. In these cases, the agencies included:

  • The Commercial Litigation Branch of the Justice Department’s Civil Division
  • The U.S. Attorney’s Office for the District of Connecticut
  • The U.S. Attorney’s Office for the Eastern District of Virginia
  • The U.S. Attorney’s Office for the Southern District of Texas
  • The U.S. Attorney’s Office for the Western District of Texas
  • The National Association of Medicaid Fraud Control Units (NAMFCU)
  • The Office of Inspector General for the Department of Health and Human Services
  • The Department of Defense Criminal Investigative Service

Many healthcare organizations offer financial incentives for high producers. This is perfectly legal in most cases — but you do need to be sure your production goals are realistic and based on sound medical or dental practices.

State and federal agencies have a great deal of time, energy and resources to spend on investigating practices which seem to burden government programs. Before you become involved in a costly, disruptive regulatory investigation, contact a health law attorney for an evaluation of your legal compliance.

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