1

113TH CONGRESS
"
1st Session

S. PRT.
113–16

!

COMMITTEE PRINT

JOINT STAFF REPORT ON
THE CORPORATE PRACTICE OF DENTISTRY
IN THE MEDICAID PROGRAM

PREPARED

BY THE

STAFF

OF THE

COMMITTEE ON FINANCE
UNITED STATES SENATE
MAX BAUCUS, Chairman
AND

COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
CHUCK GRASSLEY, Ranking Member

JUNE 2013

Printed for the use of the Committee on Finance

U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON

81–510

:

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congress.#13

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COMMITTEE ON FINANCE
MAX BAUCUS, Montana, Chairman
JOHN D. ROCKEFELLER IV, West Virginia ORRIN G. HATCH, Utah
RON WYDEN, Oregon
CHUCK GRASSLEY, Iowa
CHARLES E. SCHUMER, New York
MIKE CRAPO, Idaho
DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas
MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming
BILL NELSON, Florida
JOHN CORNYN, Texas
ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota
THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina
BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia
SHERROD BROWN, Ohio
ROB PORTMAN, Ohio
MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania
ROBERT P. CASEY, Jr., Pennsylvania
AMBER COTTLE, Staff Director
CHRIS CAMPBELL, Republican Staff Director

COMMITTEE ON THE JUDICIARY
PATRICK J. LEAHY, Vermont, Chairman
DIANNE FEINSTEIN, California
CHUCK GRASSLEY, Iowa
CHARLES E. SCHUMER, New York
ORRIN G. HATCH, Utah
DICK DURBIN, Illinois
JEFF SESSIONS, Alabama
SHELDON WHITEHOUSE, Rhode Island
LINDSEY GRAHAM, South Carolina
AMY KLOBUCHAR, Minnesota
JOHN CORNYN, Texas
AL FRANKEN, Minnesota
MICHAEL S. LEE, Utah
CHRISTOPHER A. COONS, Delaware
TED CRUZ, Texas
RICHARD BLUMENTHAL, Connecticut
JEFF FLAKE, Arizona
MAZIE HIRONO, Hawaii
BRUCE A. COHEN, Chief Counsel and Staff Director
KOLAN DAVIS, Republican Chief Counsel and Staff Director

(II)

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CONTENTS
Page

I. Preface ............................................................................................................
II. Executive Summary .......................................................................................
A. CSHM .......................................................................................................
B. ReachOut Healthcare America ...............................................................
III. Key Findings ..................................................................................................
IV. Church Street Health Management and Small Smiles Dental Centers
A. Corporate Structure ................................................................................
B. The Influence of Private Equity .............................................................
C. Federal Government Intervention .........................................................
D. Committee Staff Site Visit to Small Smiles of Oxon Hill, Maryland ..
E. CSHM Repeatedly Fails to Meet Quality and Compliance Standards .............................................................................................................
1. Phoenix, Arizona Independent Monitor Report ..............................
2. Manassas, Virginia Independent Monitor Report ..........................
3. Oxon Hill, Maryland Small Smiles Clinic ......................................
4. Oxon Hill, Maryland Small Smiles Overpayment ..........................
5. Youngstown, Ohio Clinic ..................................................................
F. Health and Human Services Office of Inspector General Notice of
Intent to Exclude .......................................................................................
G. Continuation of Abuses Following the Health and Human Services
Office of Inspector General Notice of Intent to Exclude and New
Ownership ..................................................................................................
1. Florence, South Carolina Independent Monitor Report ................
2. Lynn, Massachusetts Independent Monitor Report .......................
3. Mishawaka, Indiana Independent Monitor Report ........................
4. Colorado Springs, Colorado Independent Monitor Report .............
V. Dental Demographics ....................................................................................
VI. Recommendations ..........................................................................................
Appendix ...............................................................................................................
Exhibit 1 ........................................................................................................
Exhibit 2 ........................................................................................................
Exhibit 3 ........................................................................................................
Exhibit 4 ........................................................................................................
Exhibit 5 ........................................................................................................
Exhibit 6 ........................................................................................................
Exhibit 7 ........................................................................................................
Exhibit 8 ........................................................................................................
Exhibit 9 ........................................................................................................
Exhibit 10 ......................................................................................................
Exhibit 11 ......................................................................................................
Exhibit 12 ......................................................................................................
Exhibit 13 ......................................................................................................
Exhibit 14 ......................................................................................................
Exhibit 15 ......................................................................................................
Exhibit 16 ......................................................................................................
Exhibit 17 ......................................................................................................
Exhibit 18 ......................................................................................................
Exhibit 19 ......................................................................................................
Exhibit 20 ......................................................................................................
Exhibit 21 ......................................................................................................
Exhibit 22 ......................................................................................................
Exhibit 23 ......................................................................................................
Exhibit 24 ......................................................................................................
Exhibit 25 ......................................................................................................
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IV
Page

Appendix—Continued
Exhibit 26 ......................................................................................................
Exhibit 27 ......................................................................................................
Exhibit 28 ......................................................................................................
Exhibit 29 ......................................................................................................
Exhibit 30 ......................................................................................................
Exhibit 31 ......................................................................................................
Exhibit 32 ......................................................................................................
Exhibit 33 ......................................................................................................
Exhibit 34 ......................................................................................................
Exhibit 35 ......................................................................................................
Exhibit 36 ......................................................................................................
Exhibit 37 ......................................................................................................
Exhibit 38 ......................................................................................................
Exhibit 39 ......................................................................................................
Exhibit 40 ......................................................................................................
Exhibit 41 ......................................................................................................
Exhibit 42 ......................................................................................................
Exhibit 43 ......................................................................................................
Exhibit 44 ......................................................................................................
Exhibit 45 ......................................................................................................
Exhibit 46 ......................................................................................................
Exhibit 47 ......................................................................................................
Exhibit 48 ......................................................................................................
Exhibit 49 ......................................................................................................
Exhibit 50 ......................................................................................................
Exhibit 51 ......................................................................................................
Exhibit 52 ......................................................................................................
Exhibit 53 ......................................................................................................
Exhibit 54 ......................................................................................................
Exhibit 55 ......................................................................................................
Exhibit 56 ......................................................................................................
Exhibit 57 ......................................................................................................
Exhibit 58 ......................................................................................................
Exhibit 59 ......................................................................................................
Exhibit 60 ......................................................................................................
Exhibit 61 ......................................................................................................
Exhibit 62 ......................................................................................................
Exhibit 63 ......................................................................................................
Exhibit 64 ......................................................................................................
Exhibit 65 ......................................................................................................
Exhibit 66 ......................................................................................................

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I. Preface
The United States Senate Committee on Finance has jurisdiction
over the Medicare and Medicaid programs. As the Chairman and
a senior member and former Chairman of the Committee, we have
a responsibility to the more than 100 million Americans who receive health care coverage under these programs to oversee their
proper administration and ensure the taxpayer dollars are appropriately spent. This report describes the investigative work, findings, and recommendations of the Minority Staff of the Senate
Committee on the Judiciary and the Majority Staff of the Senate
Committee on Finance regarding the corporate practice of dentistry
in the Medicaid program. The issues are analyzed primarily in the
context of one company, Small Smiles. We received whistleblower
complaints about the company, it has been the subject of a False
Claims Act lawsuit, and it has been under a corporate integrity
agreement with independent monitoring by the Department of
Health and Human Services Office of Inspector General since January 2010. In addition, we briefly examined complaints received regarding ReachOut Healthcare America (ReachOut).
At the outset of this investigation, Church Street Health Management (CSHM), the parent company of Small Smiles, cooperated
with Committee staff until it emerged from bankruptcy. After
emerging from bankruptcy and hiring new counsel, CSHM ceased
cooperating. Under the old ownership, Committee staff was able to
obtain reports by the Independent Monitor, a private, independent
oversight entity whose services were mandated as part of CSHM’s
settlement agreement with the U.S. Department of Justice (DOJ).
However, the new owners and counsel refused to give Committee
staff access to on-going reports from the Independent Monitor.
ReachOut cooperated with the Committees’ investigation. More
than 10,000 pages of documents were obtained from CSHM,
ReachOut, whistleblowers, and Federal entities. The Committee
staff conducted six meetings with Small Smiles, six meetings with
the U.S. Department of Health and Human Services Office of Inspector General, one site visit, and various stakeholder meetings
throughout the course of the investigation. Likewise, the Committee staff met with ReachOut three times in addition to meeting
with various stakeholders.
II. Executive Summary
Across the country, there are companies that identify themselves
as dental management companies. These organizations are typically organized as a corporation or limited liability company. They
work with dentists in multiple states and purport to provide general administrative management services. In late 2011, whistleblowers and other concerned citizens came forward with information that some of these companies were doing more than providing
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management services. In some cases, dental management companies own the dental clinics and have complete control over operations, including the provision of clinical care by clinic dentists.
While there is no Federal requirement that licensed dentists,
rather than corporations, own and operate dental practices, many
states have laws that ban the corporate practice of dentistry. In
those states where owners of dental practices must be dentists licensed in that state, the ownership structure used by some dental
management companies is fundamentally deceptive. It hides from
state authorities the fact that all rights and benefits of ownership
actually flow to a corporation through contracts between the company and the ‘‘owner dentist.’’ These contracts render the ‘‘owner
dentist’’ an owner in name only.
Notably, these clinics tend to focus on low-income children eligible for Medicaid. However, these clinics have been cited for conducting unnecessary treatments and in some cases causing serious
trauma to young patients; profits are being placed ahead of patient
care.
In one case, the corporate structure of a dental management
company appears to have negatively influenced treatment decisions
by over-emphasizing bottom-line financial considerations at the expense of providing appropriate high-quality, low-cost care. As a
consequence, children on Medicaid are ill-served and taxpayer
funds are wasted.
Our investigation into these allegations began by examining five
corporate dental chains which were alleged to be engaged in these
practices:
• Church Street Health Management (CSHM), which at the time
owned 70 Small Smiles dental clinics in 22 states and the District of Columbia;
• NCDR, LLC, 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, Inc. (Heartland), which operates more
than 300 clinics in 18 states; and
• Aspen Dental Management, Inc., (Aspen) which operates more
than 300 Aspen Dental clinics in 22 states.
While we initially looked broadly at all five companies, the focus
shifted primarily to CSHM and ReachOut, due to similarities between the patient populations of these two companies. Both treat
Medicaid-eligible children almost exclusively and therefore are reimbursed using taxpayer dollars.
A. CSHM
CSHM has management services agreements with dental clinics
which extend far beyond providing typical management services.
Through its agreements, CSHM assumes significant control over
the practice of dentistry in Small Smiles clinics and is empowered
to take substantially all of a clinic’s profits.
CSHM has management services agreements with ‘‘owner dentists’’ who typically work at one of the Small Smiles clinics and also
‘‘own’’ several clinics nearby. These ‘‘owner dentists’’ are paid a sal-

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ary by CSHM as well as a flat fee when they sign state paperwork
declaring that they own other clinics. In a glaring departure from
industry practice, some ‘‘owner dentists’’ have never visited clinics
that they purport to own, are not allowed to make hiring decisions,
and do not even control the scheduling of patients. Moreover, Small
Smiles dentists are required by their parent company, CSHM, to
treat a high volume of patients daily, which subsequently has a significant impact on the quality of care delivered.
Defenders of this corporate structure are quick to claim that
without their organizations, the under-served Medicaid population
would not have access to dental care. Countless news reports cite
low Medicaid reimbursement rates as the principal cause for the
lack of access to dental care for low-income families. However, if
states and Medicaid are having difficulty recruiting good dentists
to serve such a vulnerable population due to lack of reimbursement, how are private investors so successful at producing huge
profits from those allegedly inadequate Medicaid reimbursements?
Do short-term profits come at the cost of quality care and a sustainable business model in the long run? Local dentistry practices
should be able to provide quality care to the Medicaid population
and still be profitable. Fortunes should not be made on Wall Street
by sacrificing proper care for the underprivileged.
B. ReachOut Healthcare America
The troubling case of Isaac Gagnon illustrates the concerns relating to the quality of ReachOut’s care and a pattern of treatment
without parental consent. A then 4-year-old ‘‘medically fragile’’ boy,
Isaac received invasive dental work in October 2011 from a mobile
services unit that held a contract with ReachOut Healthcare America.1 Notably, Isaac’s mother said that while she permitted
ReachOut to review dental hygiene education with Isaac, she also
expressed her wishes that no procedures be performed.2
On the day treatment was provided, the mobile dental unit visited Isaac’s special needs preschool. During treatment that lasted
approximately 40 minutes, three adults held down a screaming,
kicking, and gagging Isaac.3 This disturbing conduct violated
ReachOut’s own internal policy that a patient is never to be physically restrained in any manner, except by holding a patient’s
hands when the patient ‘‘presents [an] imminent danger of harm
to themselves.’’ 4 In the aftermath, Isaac was severely traumatized,
and according to his mother, a ‘‘complete mess, emotionally.’’ 5
Moreover, since the treatment, Isaac has exhibited increasingly aggressive behavior—namely, kicking, screaming, and punching.6
Ultimately, after Isaac’s mother informed the school superintendent, the school board voted to sever contractual ties with
ReachOut, and issued a cease and desist order.7 Isaac’s mother was
referred to a pediatric dentist who concluded after examining Isaac
1 Interview

with Stacey Gagnon, by Moriarty Leyedecker, PC at 2 (Nov. 11, 2011) (Exhibit 36).
id.
3 See id. at 3.
4 Letter from Reginald Brown, Attorney at WilmerHale, to Senators Baucus and Grassley at
5 (Feb. 23, 2012) (Exhibit 31).
5 Interview with Stacey Gagnon, by Moriarty Leyedecker, PC at 4 (Nov. 11, 2011) (Exhibit 36).
6 See id. at 5.
7 See id. at 4.
2 See

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that the two pulpotomies (root canals) and two silver crowns administered were both unnecessary, and in the case of the former,
performed incorrectly.8
Another troubling case occurred in December 2011. Nevada’s
Clark County School District, with a student population of almost
400,000, severed contractual ties with ReachOut after receiving
complaints from parents who alleged ReachOut did not give proper
notification before proceeding with serious procedures such as fillings and crowns.9 According to Amanda Fulkerson, spokesperson
for the Clark County School District, ‘‘They [ReachOut] were going
well beyond what we consider preventive care.’’ 10
The allegations against ReachOut that its dental practices were
abusing children and billing Medicaid for unnecessary procedures
were serious and disturbing, but we found that those practices
were not necessarily widespread. Unlike CSHM, ReachOut’s management services agreements truly provide only administrative and
scheduling support, and do not constitute de facto ownership and
control of its mobile dental clinics.11
In its Administrative Agreements with dentists, ReachOut uses
language similar to the following example, which ensures that the
sole authority to practice dentistry remains with the licensed dentist:
Sole Authority to Practice. Notwithstanding any other provision
of this Agreement, Provider shall have exclusive authority and
control over the healthcare aspects of Provider and its practice
to the extent they constitute the practice of a licensed profession, including all diagnosis, treatment and ethical determinations with respect to patients which are required by law to be
decided by a licensed professional.12
ReachOut maintains administrative services agreements with
local dentists, or principal shareholders (PCs), who largely provide
mobile services to schools, but also the military and in some states,
nursing homes.13 At the time of this report, ReachOut has contracts with 23 dental practices in 22 states. The contracts between
ReachOut and dental practices relate only to nonclinical aspects.14
ReachOut is paid set fees by the dentists for facilitating the mobile
dentistry services. These services include providing equipment and
supplies, maintaining inventory, and providing information systems, financial planning, scheduling, reporting, analysis, and customer service.15
8 See

id.
Ken Alltucker, Mobile dental clinics drawing scrutiny, AZCentral.com (Aug. 18, 2012)
http://www.azcentral.com/business/articles/20120810mobile-dental-clinics-scrutiny.html.
10 Id.
11 See, e.g., Administrative Agreement between ReachOut and [REDACTED] DDS, PC (July
2, 2006) (bates RHA 0000007–0000021) (Exhibit 32).
12 Administrative Agreement between ReachOut and [REDACTED], DDS at 9 (Apr. 23, 2009)
(bates RHA 0000030) (Exhibit 33). Small Smiles has what is arguably similar language to that
found in ReachOut’s administrative agreement. However, ReachOut’s language appears to be focused more on limiting its liability. Moreover, our investigation found that Small Smiles’ contractual language is at odds with actual practice. See report Section IV(a); see Management
Services Agreement, Small Smiles Dentistry for Children, Albuquerque, PC and FORBA, LLC
at 2 (Oct. 1, 2010) (Exhibit 6).
13 See Administrative Agreement between ReachOut and Big Smiles Colorado at 2–3 (July 1,
2009) (bates RHA 0000051–0000065) (Exhibit 34).
14 See Letter from Reginald Brown, Attorney at WilmerHale, to Senators Baucus and Grassley
at 2 (Feb. 23, 2012) (Exhibit 31).
15 See id.
9 See

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The basic plan behind the Administrative Agreement between
ReachOut and the mobile dentists is ‘‘to provide administrative and
financial services as set forth herein, so that the PC can focus on
furnishing high-quality dental care directly and through thirdparty dentists to needy, primarily low-income, children in schools
and out-of-home placement agencies needing mobile dentistry
through the services of the PC’s dentist(s).’’ 16 The compensation for
ReachOut is divided into two categories: direct expenses and administrative services. Administrative services are billed at a fee of
$500 per visit for all services provided.17 Direct expenses are billed
at the actual cost plus 15% of the entire professional corporation
(PC)’s employee salaries and expenses paid from the PC’s account.18
Before children can receive treatment during school hours, they
must obtain parental approval. ReachOut America maintains that
all offered services must be pre-approved by the child’s parents or
legal guardians. Verification of the legal guardianship of the child
is the responsibility of the school. However, per contractual agreement, ReachOut facilitates the delivery of the Provider consent
forms and coordinates the completion of the consent forms:
• Arrange for the delivery of the Provider consent forms to the
proper school employee in each school for each student to take
home.
• Coordinate that each school obtains completed consent forms
by the students and that they are provided to the Administrator [ReachOut].19
In ReachOut’s case, the reported problems of unnecessary procedures, lack of parental consent, and patient abuse appear to be the
result of ReachOut having management agreements with several
unscrupulous dentists. Given the administrative nature of their arrangement, ReachOut lacks ability to police such bad actors. As of
last year, the company had no standards for dentists with whom
they contract to obtain parental consent for treatment—leaving
each mobile clinic to devise its own forms and procedures. While
these factors appear to have contributed to many of the problems
reported to us involving the company, it is also evidence that
ReachOut does not significantly control the operations of clinic dentists, and simply contracts with dentists to provide support services.

16 Administrative Agreement between ReachOut and [REDACTED] DDS, PC at 1 (July 2,
2006) (bates RHA 0000007–0000021) (emphasis added) (Exhibit 32).
17 See id. at 9.
18 See id.
19 Administrative Agreement between ReachOut and [REDACTED] D.D.S., Big Smiles Maryland PC, at 5 (Apr. 1, 2009) (bates RHA 0000246) (Exhibit 35).

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III. Key Findings
1. Through management services agreements with dentists,
CSHM is the de facto owner of all Small Smiles clinics. It retains
all the rights of ownership, employs all staff, recruits all staff,
makes all personnel decisions, and receives all income from each
Small Smiles clinic.
2. CSHM entered into a Corporate Integrity Agreement (CIA)
with the U.S. Department of Health and Human Services (HHS)
Office of Inspector General (OIG) as part of the company’s settlement with the U.S. Department of Justice (DOJ). As part of the
agreement, an Independent Monitor (IM) conducts extensive audits
of CSHM’s clinics. During the last 3 years, the IM has found massive amounts of taxpayer dollars being recklessly spent on unnecessary procedures on children in the Medicaid program by Small
Smiles clinics.
3. After 2 years of intense scrutiny by HHS OIG through the
CIA, and attempting to follow newly prescribed rules, CSHM went
bankrupt.
4. After 3 years of monitoring by the HHS OIG and emerging
from bankruptcy with new ownership and leadership changes,
CSHM has repeatedly failed to meet quality and compliance standards set forth in the CIA with HHS OIG. Breaches in quality and
compliance include: (1) unnecessary treatment on children; (2) improper administration of anesthesia; (3) providing care without
proper consent; and (4) overcharging the Medicaid program.
5. Despite CSHM’s repeated violations of the CIA, resulting in
both monetary fines and an HHS OIG-issued Notice of Intent to
Exclude the company from Medicaid, HHS OIG has allowed Small
Smiles to continue to participate in the program.
6. Despite state laws against the corporate practice of dentistry,
numerous states have allowed companies such as CSHM to operate
dental clinics under the guise of management services agreements.
These practices appear contrary to the purpose of state law requiring clinics to be owned and operated by licensed dentists. The result is poor quality of care, billing Medicaid for unnecessary treatment, and disturbing consumer complaints.
7. Access to dental care is a problem in certain parts of the country, particularly rural areas for the dual reasons of fewer employment opportunities and lower reimbursement rates than urban
counterparts. It is also a problem for some patients served by the
Medicaid program due to the number of dentists who are unwilling
to accept patients on Medicaid. Access is complicated by the burden
of extremely high student loans of dentists graduating from dental
school that makes serving rural or Medicaid populations problematic.

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IV. Church Street Health Management and
Small Smiles Dental Centers
Church Street Health Management was the successor company of
an organization called FORBA (For Better Access). FORBA was
founded in Pueblo, Colorado on February 9, 2001 by Dan DeRose.20
At the time of incorporation, FORBA operated only a handful of
Small Smiles clinics in Colorado and New Mexico.21 Eventually,
the company grew and expanded to a nationwide chain with more
than 60 clinics, and benefitted from an influx of private equity dollars, including investments by The Carlyle Group and Arcapita.22
Today, Small Smiles’ mission is ‘‘to provide the highest quality dental care to low-income children in the Medicaid and [S]CHIP populations.’’ 23
An investigative report in 2008 by the ABC–7 I–Team in Washington, DC revealed serious abuses at Small Smiles clinics. Featured clinics prohibited parents from accompanying their children
during treatments and excessively used a device called a papoose
board, which is used to strap down young patients and immobilize
them during treatment. The clinics performed a high number of
crowns and pulpotomies on children who did not require such aggressive treatment and engaged in improper X-ray billing. The
quality of care was significantly below any recognized medical
standard according to independent pediatric dentists interviewed
by ABC–7.24
This explosive report was triggered by several qui tam actions 25
initiating the investigations by the Department of Justice and the
Department of Health and Human Services Office of Inspector General.26 Acting Associate Attorney General Tony West went so far as
to describe the conduct of Small Smiles as ‘‘really horrific stuff,’’
and further stated, ‘‘[T]he behavior in that [clinic] was so egregious
that we had to—I think we were compelled to be very aggressive
about going after [the] fraud in that case.’’ 27 The company eventually settled with the government and entered into a CIA, which
provided for extensive audits by an Independent Monitor.28 On
February 20, 2012, after struggling to comply with the CIA, Church
Street Health Management filed for Chapter 11 Bankruptcy protec20 Articles of Incorporation of FORBA, Inc., Secretary of the State of Colorado, signed by Dan
DeRose (Feb. 9, 2001) (Exhibit 1).
21 See Small Smiles History, http://www.smallsmiles.com/small-smiles-history.php (last visited Mar. 22, 2013).
22 Press Release, Arcapita, Arcapita Completes Largest US Corporate Transaction (Jan. 15,
2007) (http://www.arcapita.com/media/presslreleases/2007/01–15–07.html); Sydney P. Freedberg, Dental Abuse of U.S. Poor Dodges Ejection from Medicaid, BLOOMBERGBUSINESSWEEK,
June 26, 2012, http://www.businessweek.com/printer/articles/268590?type=bloomberg; Dr. Steven Adair Joins FORBA Dental Management as Chief Dental Officer, BUSINESS WIRE, Sept. 19,
2008 (on file with author).
23 See Small Smiles FAQs, http://www.smallsmiles.com/faqs.php (last visited Mar. 22, 2013).
24 I–Team: Small Smiles Investigation, http://www.youtube.com/watch?v=pIoMaw4zC9Q (last
visited Mar. 22, 2013).
25 See BALLENTINE’S LAW DICTIONARY (2010) (‘‘An action to recover a penalty brought by an
informer in the situation where one portion of the recovery goes to the informer and the other
portion to the state’’).
26 Civil Settlement Agreement, FORBA and Dep’t of Justice (Jan. 15, 2010) (Exhibit 2).
27 Interview with Tony West, Acting Associate Attorney General, Department of Justice, in
Washington, D.C. (Mar. 18, 2013) (on file with authors).
28 Corporate Integrity Agreement, Department of Health and Human Services and FORBA
Holdings, LLC (Jan. 15, 2010) (Exhibit 3).

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tion.29 The company emerged from bankruptcy under the moniker
CSHM, which is how we will generally refer to the company in this
report.
A. Corporate Structure
CSHM argues that it does not own any dental clinics, but rather
that it has management services agreements with dentists who
own the clinics.30 However, courts have voided management services agreements with similar characteristics to the agreements between CSHM and their dental clinics.31 Based on our review of several management services agreements, employment contracts, and
the payment structure, it appears that these arrangements are designed to give the appearance of complying with state laws requiring that dental clinics be owned by licensed dentists.32 However, in
practice, dental clinics are not owned by dentists in any meaningful
sense.
Typically, an agreement between the owner of a business and a
third-party management company would simply involve the business owner paying a fee to the management company in return for
services. The arrangements between CSHM and its dental centers,
however, are much more complex. Like traditional third-party
management agreements, dental clinics are obligated to pay CSHM
a management fee under the terms of their management agreements. However, in that the benefits of the dental operations are
heavily weighted toward CSHM, this fee is unlike traditional
agreements on account of the sheer asymmetry benefitting CSHM.
Specifically, each calendar month, a dental clinic must pay CSHM
the greater of: (i) $175,000; or (ii) 40% of the ‘‘Gross Revenues’’; 33
or (iii) 100% of the ‘‘Residual.’’ 34 ‘‘Residual’’ is defined as ‘‘the
Gross Revenues and income of any kind derived, directly or indirectly, from the Business . . . based on the net amount actually collected after taking into account all refunds, allowances, and discounts.’’ Notably, ‘‘residual’’ excludes ‘‘owner dentist’’ or staff compensation and benefits (and other expenses).35 Therefore, at a minimum for any given month, CSHM is collecting a $175,000 management fee from dental clinics, even if the clinic loses money. However, for banner months CSHM is poised to reap 100% of a clinic’s
gross revenues and income, minus ‘‘owner dentist’’ and staff salaries and benefits.
29 Bankruptcy Filing, Case 3:12–bk–01573 (Feb. 2, 2012) (Exhibit 4).
30 Letter from Theodore Hester, Attorney at King & Spalding, to Senators Baucus and Grassley (Nov. 29, 2011) (Exhibit 5).
31 See, e.g., Consent Order Granting Permanent Inj. at 4, N.C. State Bd. of Dental Exam’rs
v. Heartland Dental Care, Inc., 11 CVS 2343 (N.C. Gen. Court of Justice Super. Ct. Div. 2011)
(rescinding the Management Services Agreements between Heartland and Drs. Cameron & Son)
(Exhibit 61).
32 See Appendix A. See generally Jim Moriarty, Survey of State Laws Governing the Corporate
Practice of Dentistry, Moriarty Leyendecker 2012, at 10–11, http://moriarty.com/content/
documents/MLlPDFs/cpmdl4.10.12.pdf.
33 See Management Services Agreement, Small Smiles Dentistry for Children, Albuquerque,
PC and FORBA, LLC at 8 (Oct. 1, 2010) (Exhibit 6). (‘‘Gross Revenues shall mean all fees and
charges recorded or booked on an accrual basis each month by or on behalf of Practice as a result of dental services furnished to patients by or on behalf of [dental] Practice as a result of
dental services furnished to patients by or on behalf of [dental] Practice or the Clinic, less a
reasonable allowance for uncollectable accounts, professional courtesies and discounts.’’).
34 See id. (emphasis added).
35 Id. at 9.

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According to a December 2011 letter from CSHM, ‘‘owners typically pay themselves a fixed administrative fee from the practices
they own.’’ 36 However, when Senate staff interviewed a Small
Smiles ‘‘owner dentist,’’ a different story emerged. After claiming
that she owned five clinics in Maryland and Virginia, the
interviewee stated that she was paid a flat fee by the company, as
opposed to paying herself a fixed administrative fee.37 Claiming
that she had no input in choosing the amount of said fee, the
‘‘owner dentist’’ further indicated she did not know if she was entitled to additional payments based on the number of clinics she supposedly owned, but was currently receiving one flat fee as if she
owned only one clinic.38 When asked why she chose to tell state authorities that she owned additional clinics for no additional compensation, the ‘‘owner dentist’’ stated that CSHM told her the clinics would close if someone else could not be found to list as the
owner.39 This arrangement is in direct contradiction to the representations made by CSHM in its December 16, 2011, letter to
Senators Grassley and Baucus.40
At Small Smiles, ‘‘owner dentists’’ enjoy none of the traditional
benefits normally associated with ownership. The ‘‘owner dentist’’
has no equity in the practice in any meaningful sense of the word.
According to the Buy-Sell Agreement, CSHM can replace the
‘‘owner dentists’’ at will, and the ‘‘owner dentist’’ has no right to
sell the practice without consent from CSHM.41 Furthermore, the
Buy-Sell Agreement states that should an Event of Transfer occur,
a Small Smiles representative is then entitled to buy all of the
‘‘owner dentist’s’’ ownership interests.42 Event of Transfer includes
(but is not limited to) the following: owner’s death, owner’s loss of
license to practice dentistry, owner’s ineligibility to participate in
Medicare or Medicaid, loss of owner’s professional liability insurance, or owner’s termination or end of employment with CSHM or
Small Smiles.43 In the event of an Event of Transfer or Involuntary
Transfer,44 the ‘‘owner dentist’’ is only entitled to the purchase
price of $100.45 Notably, pursuant to stock pledge agreements with
CSHM, ‘‘owner dentists’’ are prohibited from issuing additional
shares of capital stock in the dental clinic without first obtaining
36 Letter from Graciela M. Rodriquez, Attorney at King & Spalding, to Senators Baucus and
Grassley (Dec. 16, 2011) (Exhibit 7).
37 See Interview with Gillian Robinson-Warner, DDS, Lead Dentist of Small Smiles Clinic
Oxon Hill, Md. (Mar. 7, 2012).
38 See id.
39 See id.
40 See Letter from Graciela M. Rodriquez, Attorney at King & Spalding, to Senators Baucus
and Grassley (Dec. 16, 2011) (Exhibit 7).
41 Id; see, e.g., CSHM/Small Smiles Dentistry for Children, Albuquerque, PC, Buy-Sell Agreement with [REDACTED] at 1 (Oct. 1, 2010) (CSHM–00000950) (Exhibit 8).
42 CSHM/Small Smiles Dentistry for Children, Albuquerque, PC, Buy-Sell Agreement with
[REDACTED] at 1 (Oct. 1, 2010) (CSHM–00000950) (Exhibit 8).
43 CSHM/Small Smiles Dentistry for Children, Albuquerque, PC, Buy-Sell Agreement with
[REDACTED] at 2–3 (Oct. 1, 2010) (CSHM–00000950) (Exhibit 8).
44 See id. at 3 (‘‘involuntary transfer’’ is an event ‘‘in which Owner shall be deprived or divested of any right, title or interest in or to any Ownership Interest, including, without limitation, upon the death of Owner, transfer in connection with marital divorce or separation proceedings, levy of execution, transfer in connection with bankruptcy, reorganization, insolvency
or similar proceedings. . . .’’).
45 See Interview with Gillian Robinson-Warner, DDS, Lead Dentist of Small Smiles Clinic
Oxon Hill, Md. (Mar. 7, 2012); see, e.g., CSHM/Small Smiles Dentistry for Children, Albuquerque, PC, Buy-Sell Agreement with [REDACTED] at 2–3 (Oct. 1, 2010) (CSHM–00000950)
(Exhibit 8).

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CSHM’s discretionary express written consent.46 Additionally,
‘‘owner dentists’’ may also not amend, alter, terminate or supplement the clinic’s Articles of Incorporation, corporate Bylaws, and/
or other vital documents without first obtaining CSHM’s express
written consent.47
All lease agreements for the clinic buildings, property, and equipment are with CSHM, not the ‘‘owner dentist.’’ 48 The ‘‘owner dentist’’ cannot determine the schedule or number of patients that they
or their dentists see each day.49 Furthermore, the ‘‘owner dentist’’
cannot hire or fire employees or purchase new equipment without
receiving approval from CSHM.50
The purpose of these arrangements is made abundantly clear in
a 2006 memorandum assessing CSHM’s (formerly FORBA) value:
Due to the state regulations prohibiting the corporate practice
of dentistry, FORBA does not technically provide dental care to
the patient, own any interest in its affiliated practices, or employ the dentists in the clinic. However, FORBA selects the
new sites, negotiates the lease, oversees construction of the
clinics, purchases the equipment, installs the IT and billing infrastructure, employs the staff, recruits the dentists and receives all of the income. Thus, it effectively owns and manages
the clinics.51
Thus, by this description, it is clear that the dental management
company actually maintains ownership and control over Small
Smiles clinics. Moreover, the facts and circumstances surrounding
the creation and implementation of the CIA illustrate that this particular ownership structure undermined the independent, professional, and clinical judgment of Small Smiles dentists. That is precisely the harm that state laws requiring that dentists own dental
practices are designed to prevent.
In addition to the many other ways that CSHM limits the exercise of professional judgment by its dentists, the CIA requires
CSHM to ensure compliance with quality of care standards,52 perform regular audits,53 and establish, implement, and distribute a
Code of Conduct articulating consequences for non-complying dentists.54 For example, the agreement requires CSHM’s board to ‘‘ensure that each individual cared for by [CSHM] and in [CSHM] facilities receives the professionally recognized standards of care.’’ 55
While the CIA provisions to ensure CSHM follows recognized
standards of care are well-intentioned, it creates an affirmative
duty for CSHM to exercise control over the professional judgment
46 CSHM/Small Smiles Dentistry for Children, Albuquerque, PC, Stock Pledge Agreement with
[REDACTED] at 3 (Oct. 1, 2010) (CSHM–00000959) (Exhibit 65).
47 See id.
48 See Interview with Gillian Robinson-Warner, DDS, Lead Dentist of Small Smiles Clinic
Oxon Hill, Md. (Mar. 7, 2012).
49 See, e.g., e-mail from Dr. [REDACTED] to Dr. [REDACTED] (May 19, 2011, 4:57 pm) (Exhibit 9).
50 Id.; see also Interview with Gillian Robinson-Warner, DDS, Lead Dentist of Small Smiles
Clinic Oxon Hill, Md. (Mar. 7, 2012).
51 MIC Memorandum, FORBA, LLC, Arcapita at 6 (June 2006) (FORBAl0046011) (Exhibit
10) (emphasis added). Arcapita was the private equity firm that owned FORBA, LLC.
52 Corporate Integrity Agreement Between the Office of Inspector Gen. of the Dep’t of Health
& Human Serv. and Forba Holdings, LLC, at 13–14 (Jan. 14, 2010) (Exhibit 3).
53 Id. at 10–11.
54 Id. at 11–12.
55 Id. at 8.

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of dentists in states that do not allow a corporation to own dental
clinics or interfere with dentists’ professional judgment. Therefore,
the CIA has the effect of enhancing control over dental clinic operations by CSHM which is a corporation that is not licensed to practice dentistry.
B. The Influence of Private Equity
Venture capital and private equity deals are central to economic
growth and innovation. However, the interest of private equity targeting dental practices within the Medicaid system is alarming—
especially considering the regular complaints of private dentists
and doctors about low Medicaid reimbursement rates. If a dentist
in a small family practice cannot afford to take Medicaid patients
because of low reimbursement rates, why would private equity invest capital in this business model? What can firms backed by private equity investment do to make money from Medicaid patients
that locally owned and operated practices cannot or will not do?
The answer is ‘‘volume.’’
Through various meetings—both with CSHM executives and employees at the Small Smiles Oxon Hill facility—Committee staff
were told that CSHM’s business model was to increase patient volume as much as possible. In order to do this, CSHM executives and
staff claimed that due to the population the clinics are serving,
they must over-book appointments. This means, at times, two to
three patients will be scheduled for a single time slot. CSHM
claims that Medicaid patients tend to be unreliable, often not showing up for scheduled appointments. This is confirmed by a 2006
memorandum assessing FORBA’s (CSHM’s precursor) value:
Importantly, FORBA’s unique business model mitigates the
33% broken appointment challenge in that patients are not
scheduled to have appointments with specific dentists. Instead,
any one of four dentists at a clinic can see a patient. Therefore,
since FORBA employs a minimum of three to four dentists per
clinic, FORBA can leverage its critical mass of dentists and
over-schedule appointments by 25%.56
CSHM has also employed the use of bonuses as a way to
incentivize their employees, both dentists and non-dentists, to
maximize volume and profit. Under FORBA’s leadership, employees received both a salary and productivity-based bonuses based on
contests amongst dental clinics. Bonuses were based on: (1) daily
average productivity, (2) broken appointment rates, (3) number of
patients seen per day, and (4) number of patients converted from
providing simple hygiene to operative dental work (at a higher reimbursement rate).57 Based on a clinic’s productivity level, employees could receive up to $1,000.58 FORBA would hold these contests
multiple times throughout the year.

56 MIC Memorandum, FORBA, LLC, Arcapita at 26–27 (June 2006) (FORBAl0046011) (Exhibit 10) (emphasis added). Arcapita was the private equity firm that owned FORBA, LLC.
57 See FORBA, March Madness at 1 (FORBA 0236082/CSHM–00002086) (Exhibit 11).
58 See FORBA, The Road to the Super Bowl (FORBA 0230059/CSHM–00002004) (Exhibit 45).

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Under management by CSHM, compensation is based on the revenue of that dental clinic as well as the collections of each dentist.59 This productivity-based compensation arrangement prioritizes volume, operative procedures over preventive care, and encourages unnecessary care.60 In fact, when asked what aspects of
her job were the most dissatisfying in an exit interview with
CSHM, one Lead Dentist disclosed, ‘‘Only after doctors were converted to production[-]based compensation. This conversion caused
distractions and realignment of priorities. Inability to concentrate
only on dentistry and patient needs.’’ 61 [sic]
If dentists in a CSHM clinic feel the schedule is unmanageable,
they are not permitted to hire additional employees to handle the
increased workload without approval from CSHM executives. Nor
do they have the authority to reduce their own patient load. For
example, in a May 2011 e-mail from a Lead Dentist to CSHM management, the Lead Dentist complained to CSHM management that
staffing was not at the appropriate level to handle the patient load
they were carrying.62 CSHM replied that, ‘‘As we discussed yesterday, the patient load will not be reduced without collaboration from
CSHM.’’ 63 The Lead Dentist replied, ‘‘I will not be [held] responsible for errors in my center when we have asked for help numerous times.’’ 64
C. Federal Government Intervention
In 2010, after a lengthy investigation into the company by the
United States Department of Justice, CSHM entered into a CIA
with the United States Department of Health and Human Services,65 as well as settlement agreements with the United States Department of Justice and 22 states.66 The Department of Justice settlement cites conduct by FORBA (now CSHM) from the time period
of September 2006 through June 2010.67 Specifically, the conduct
noted in the agreement includes submitting Medicaid reimbursement claims for medically unnecessary pulpotomies, crowns, extractions, fillings, sealants, x-rays, anesthesia, and behavior management; failing to meet professionally recognized standards of care;
and provision of care by unlicensed persons.68 CSHM’s CIA with
the Department of Health and Human Services required CSHM to
institute rigorous compliance procedures and programs, as well as
submit to regular audits and reviews by an Independent Monitor.69
To date, the Independent Monitor has audited and reviewed 60
Small Smiles clinics through an onsite review or desk audit since
2010. Consistently, the Independent Monitor reports reveal that
59 See CSHM/Small Smiles Dental Center of Holyoke, LLC, Lead Dentist Employment Agreement with Dr. [REDACTED] at 4–6 (Aug. 30, 2010) (Exhibit 12).
60 Id.
61 CSHM Exit Interview, Medrina Gilliam at 1 (July 1, 2011) (CSHM–00006826) (Exhibit 13).
62 See E-mail chain from Dr. [REDACTED] to Dr. [REDACTED] (May 19–20, 2011) (Exhibit
9).
63 Id.
64 Id.
65 Letter from Dep’t Health and Human Services, OIG, to Senators Baucus and Grassley, re:
Corporate Integrity Agreement with CSHM, w/attach. at 2 (Oct. 4, 2012) (Exhibit 14).
66 CSHM/FORBA Holdings, LLC, State Settlement Agreement with the State of N.Y. (Jan. 20,
2010) (Exhibit 15).
67 See Civil Settlement Agreement, FORBA and Dep’t of Justice (Jan. 15, 2010) (Exhibit 2).
68 See id.
69 See Letter from Dep’t Health and Human Services, OIG, to Senators Baucus and Grassley,
re: Corporate Integrity Agreement with CSHM, w/attach. at 2 (Oct. 4, 2012) (Exhibit 14).

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clinic employees had little awareness of the new compliance procedures, and that CSHM was giving its dentists passing grades on
chart audits which the Independent Monitor says they clearly
failed.70 In fact, of the 14 reports that graded the clinic doctors on
a 100-point scale, CSHM gave their doctors grades that were on average 44% higher than the grade that the Independent Monitor
awarded.71
D. Committee Staff Site Visit to Small Smiles of Oxon Hill,
Maryland
On March 7, 2012, Committee staff arranged a site visit at a
Small Smiles Dental Center in Oxon Hill, Maryland, during an
audit by the Independent Monitor.72 The center was large, reasonably well kept, and clinic employees were friendly and welcoming.
Signs informing parents of their right to join their children in the
treatment area were prominently displayed in both English and
Spanish: 73

70 See

Independent Monitor Report, Oxon Hill, Md. at 11 (Apr. 20, 2012) (Exhibit 16).
Independent Monitor Report, Worcester, Mass. at 5 (Jan. 4, 2011) (Exhibit 46); Independent Monitor Report, Thornton, Colo. at 6 (Feb. 4, 2011) (Exhibit 47); Independent Monitor
Report, Santa Fe, N.M. at 6 (Mar. 7, 2011) (Exhibit 48); Independent Monitor Report, Albuquerque, N.M. at 5 (Apr. 8 2011) (Exhibit 49); Independent Monitor Report, Myrtle Beach, S.C.
at 6 (May 9, 2011) (Exhibit 50); Independent Monitor Report, Augusta, Ga. at 6 (July 1, 2011)
(Exhibit 51); Independent Monitor Report, Austin, Tex. at 6 (July 29, 2011) (Exhibit 52); Independent Monitor Report, Mattapan, Mass. at 6 (Sept. 6, 2011) (Exhibit 53); Independent Monitor
Report, Manassas, Va. at 8 (Sept. 22, 2011) (Exhibit 23); Independent Monitor Report, Youngstown, Ohio at 5 (Oct. 14, 2011) (Exhibit 27); Independent Monitor Report, Oklahoma City, Okla.
at 6 (Nov. 4, 2011) (Exhibit 54); Independent Monitor Report, Mishawaka, Ind. at 6 (Oct. 5,
2012) (Exhibit 40); Independent Monitor Report, Brockton, Mass. at 6 (Nov. 9, 2012) (Exhibit
55); Independent Monitor Report, Denver, Colo. at 7 (Dec. 7, 2012) (Exhibit 56). The 44% figure
was calculated by averaging the CSHM score and the Independent Monitor score for each doctor
in the listed reports. The difference was found between each score, which resulted in 44% higher
average in CSHM scores than Independent Monitor scores.
72 Id. at 8.
73 See Small Smiles Clinic, Oxon Hill, Md. Photograph of signs (Exhibit 37).
71 See

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15
Committee staff was given the opportunity to sit in with the
Independent Monitor during the interview of three employees of
the clinic and ask supplemental questions.
The first employee interviewed was the clinic’s Office Manager/
Compliance Liaison.74 The role of the Compliance Liaison is to
keep up-to-date with CSHM compliance policies and ensure that
staff is knowledgeable and well-trained in compliance policies.75
For example, the Compliance Liaison is responsible for regularly
checking the company’s web portal to see if there are any new compliance trainings on topics such as X-ray safety, record management, and billing practices.76 During questioning, it became increasingly clear that the Compliance Liaison was simply too busy
running the clinic to keep up with his compliance duties. This particular clinic treats as many as 70 children each day, and makes
appointments for well over 100.77
The Compliance Liaison also indicated that he was previously
the Office Manager and Compliance Liaison at yet another troubled
Small Smiles clinic in Manassas, Virginia.78 When asked whether
he thought there were any problem areas with the Manassas clinic,
he responded that he did not think so.79
The next employee interviewed was the Clinical Coordinator. The
Clinical Coordinator is typically a facilitator—making certain that
the busy treatment area operates efficiently. The Clinical Coordinator maintains and orders supplies, monitors patient flow, and
keeps things moving. During the interview, it was clear that the
Clinical Coordinator was not knowledgeable about important safety
and compliance policies. For example, when the Independent Monitor asked what should be done when a child has evidence of tooth
decay, but will not sit still for X-rays, the Clinical Coordinator responded that the dental assistant or available staff should sit with
the child in the X-ray area and hold the child still.80 However, pediatric dental education literature emphasizes that given ‘‘associated risks and possible consequences of [protective stabilization],
the dentist is encouraged to evaluate thoroughly its use on each patient and possible alternatives.’’ 81 A dentist must consider the following factors prior to using protective stabilization: ‘‘1. alternative
behavior guidance modalities; 2. dental needs of the patient; 3. the
effect on the quality of dental care; 4. the patient’s emotional development; [and] 5. the patient’s medical and physical considerations.’’ 82 The Clinical Coordinator was terminated.
Finally, Committee staff questioned the ‘‘owner dentist’’ of Oxon
Hill Small Smiles, who was also the Lead Dentist. The ‘‘owner dentist’’ appeared nervous when speaking with the Independent Monitor and Committee staff, but appeared genuinely passionate about
74 See generally Interview with Marty Reyes, CDA, EFDA, Office Manager and Compliance Liaison of Small Smiles Clinic Oxon Hill, Md. (Mar. 7, 2012).
75 See CSHM Office Manager’s Manual, v. 06–2011, at 15 (Dec. 17, 2010) (Exhibit 17).
76 See Interview with Marty Reyes, CDA, EFDA, Office Manager and Compliance Liaison of
Small Smiles Clinic Oxon Hill, Md. (Mar. 7, 2012).
77 See Daily Patient Flow at 5 (Apr. 13, 2011) (Exhibit 18).
78 Interview with Marty Reyes, CDA, EFDA, Office Manager and Compliance Liaison of Small
Smiles Clinic Oxon Hill, Md. (Mar. 7, 2012); see discussion at Parts E.2.
79 Id.
80 Id.
81 34 AM. ACAD. OF PEDIATRIC DENTISTRY, REFERENCE MANUAL: GUIDELINE ON BEHAVIOR
GUIDANCE FOR THE PEDIATRIC DENTAL PATIENT 176 (1990) (emphasis added) (Exhibit 19).
82 Id.

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dental care for underprivileged children. When asked about the details of her compensation, the ‘‘owner dentist’’ stated that she receives a salary, and an additional flat payment for being the
‘‘owner dentist.’’ 83 When asked how many Small Smiles Dental
Centers she owned, she stated that she owned five clinics and had
just recently become the owner of the Manassas, Virginia clinic.84
She was then asked if she received an additional flat fee payment
for each clinic that she owned, and she stated that she did not.85
Following up on that question, she was asked why she chose to become the owner of the troubled Manassas 86 clinic for no additional
compensation, and she stated that she was told it would have to
close if she did not agree to become the owner.87 The ‘‘owner dentist’’ was then asked if she could name any of the dentists under
her employ at the Manassas clinic she purported to own.88 She
could not name a single dentist at that facility. When asked if she
had ever been to the Small Smiles clinic in Manassas, she replied
that she had not.89 When asked whether she knew the names of
any of the dentists at another Maryland clinic she purported to
own, she struggled for some time before recalling one dentist’s first
name.90
The next line of questioning for the ‘‘owner dentist’’ was regarding her control over operations at the clinics she supposedly owns.
She was adamant that all medical decisions remain under her control. However, she conceded that CSHM receives 100% of the proceeds of the business, pays all of the staff salaries at her clinic,
pays her salary, dictates the number of patients to be scheduled for
each day, sets the budget for supplies, rents the space the clinic
uses, and has complete control over all hiring and firing decisions.91 When pressed further regarding her ability to hire additional staff should the clinic need an additional dentist to keep up
with demand and provide quality care, she did not wish to engage
in the hypothetical discussion, but conceded that she had never
hired or fired anyone without the permission of CSHM.92
Despite the language in the management services agreement regarding the payment structure and management fees paid to
CSHM, it is clear that the ‘‘owner dentists’’ have no idea where the
money from the procedures for which they bill Medicaid actually
ends up. ‘‘Owner dentists’’ are merely paid a salary by CSHM and
receive a flat fee to assert ownership to their respective state, but
they exercise none of the traditional elements of ownership.

83 Interview with Gillian Robinson-Warner, DDS, Lead Dentist of Small Smiles Clinic Oxon
Hill, Md. (Mar. 7, 2012).
84 Id.
85 Id.
86 See discussion at Parts E.2.
87 Id.
88 Interview with Gillian Robinson-Warner, DDS, Lead Dentist of Small Smiles Clinic Oxon
Hill, Md. (Mar. 7, 2012).
89 Id.
90 Id.
91 Id.
92 Id.

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E. CSHM Repeatedly Fails to Meet Quality and Compliance
Standards
The Department of Health and Human Services Office of Inspector General and the Independent Monitor have closely monitored
Small Smiles clinics and their corporate owners since 2010. Monitoring has included audits, site visits, fines, penalties, and changes
to management, and yet CSHM repeatedly fails to meet basic quality and compliance standards. According to Independent Monitor
reports, the company is still rushing through dental treatments,
providing substandard and in some cases dangerous care, performing medically unnecessary treatments, and risking the safety
of children—all of which are ultimately financed by taxpayers
through the Medicaid program.93
Each time the company fails to meet its obligations or the Independent Monitor uncovers problems, the company promises to do
better, and HHS OIG gives CSHM another chance. The following
sections outline the major failures of CSHM during the monitoring
period, and the seemingly endless capacity for the government to
grant the company more chances.
1. Phoenix, Arizona Independent Monitor Report
The Independent Monitor visited a Small Smiles clinic in Phoenix, Arizona on December 23, 2010, relatively early on in the monitoring period. At this clinic, the Lead Dentist informed the Independent Monitor that she automatically performed pulpotomies on
primary anterior teeth that received a NuSmiles crown.94 A
NuSmiles crown is a stainless steel crown (SSC) with a naturallooking, tooth-colored coating.95 According to the Lead Dentist, ‘‘the
amount of tooth structure removal necessary to prepare the teeth
for the crowns endanger the pulp and necessitated pulpotomies.’’ 96
However, a pulpotomy is only necessary when the nerve is exposed,
and is typically only indicated in one-third of patients.97 Therefore,
if the patient population is typical, two-thirds of the pulpotomies
that the Lead Dentist in Phoenix performed were potentially unnecessary, at a total cost of approximately $5,300 per 100 Medicaid
patients.98 Not only is this a quality of care issue, with children receiving unnecessarily prolonged treatments, but it is also a drain
on the Medicaid system. When dentists perform unnecessary
pulpotomies, it is the Medicaid system that initially foots the bill,
and then ultimately the taxpayers. It is unclear whether outside influence or information compelled the dentist to do pulpotomies
every single time, but this case illustrates that the trainings and
compliance programs necessitated by the CIA were largely ineffectual.
Of the 30 records reviewed by the Independent Monitor, 15 documented children being strapped down to a papoose board during
93 See

IMR Oxon Hill, Md. at 27 (Exhibit 16).
Monitor Report Phoenix, Ariz. at 3 (Dec. 23, 2010) (Exhibit 20).
Pediatric Crowns, http://www.nusmilecrowns.com (last visited Mar. 22, 2013).
96 IMR Phoenix, Ariz. at 3 (Exhibit 20).
97 Thikkurissy, Sarat, et al., Pulpotomy to Stainless Steel Crown Ratio in Children With Early
Childhood Caries: A Cross-sectional Analysis Pediatric Dentistry, Pediatric Dentistry, vol. 33 n.
7, 496, (Nov./Dec. 2011) (Exhibit 21).
98 Arizona Health Care Cost Containment System—Schedule of Dental Rates (Jan. 1, 2007)
(Exhibit 22). Each pulpotomy costs $81. Id. at 2.
94 Independent
95 NuSmile,

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treatment.99 However, none of these patients received nitrous
oxide/oxygen anesthesia, which is the preferred method of calming
young dental patients.100 Furthermore, one child was documented
as being on the papoose board for 1 hour and 45 minutes, without
monitoring of vital signs or a bathroom break.101 This is a clear
violation of CSHM’s policies and is dangerous and distressing for
the child.102
This early Independent Monitor report demonstrates that many
of the problems identified in prior news reports and flagged by DOJ
in 2007 and 2008 were still common practice at Small Smiles in
late 2010, including unnecessary procedures, overuse of the papoose board on distressed children, and a general lack of understanding by Small Smiles dentists regarding how children should
be treated.
2. Manassas, Virginia Independent Monitor Report
The Independent Monitor visited a Small Smiles clinic in Manassas, Virginia on September 22, 2011—nearly one year after the initiation of compliance programs, training, and monitoring by the
government. The Independent Monitor found many of the same
problems, and nearly an identical case involving the misuse of a
papoose board. Both dentists at the clinic scored lower on the Independent Monitor’s evaluation than on a previous internal audit
conducted by CSHM. These dentists did not follow proper protocols
for implementing and documenting dental procedures, and this ultimately resulted in one dentist receiving an automatic failure from
the Independent Monitor.103 This fact is critical. The purpose of the
monitoring period is that, at the end of 5 years, CSHM should be
able to use its own internal monitoring and compliance programs.
In numerous Independent Monitor reports, however, CSHM’s audits have given dentists passing grades, while the subsequent Independent Monitor’s review found that these same dentists clearly
failed.104 Therefore, despite the passage of time and ample guidance from the government, CSHM is still unable to rely on its own
internal monitoring and compliance programs.
Just like the Phoenix clinic, one dentist at the Manassas clinic
utilized a papoose board on a patient for 1 hour and 45 minutes,
a violation of CSHM use of restraint policy,105 and in violation of
generally recognized standards from the American Academy of Pediatric Dentists.106
99 IMR

Phoenix, Ariz. at 17 (Exhibit 20).
at 18.
at 17.
102 Id. at 17–18.
103 Independent Monitor Report Manassas, Va. at 2 (Sept. 22, 2011) (Exhibit 23).
104 Independent Monitor Report, Worcester, Mass. at 5 (Jan. 4, 2011) (Exhibit 46); Independent Monitor Report, Thornton, Colo. at 6 (Feb. 4, 2011) (Exhibit 47); Independent Monitor
Report, Santa Fe, N.M. at 6 (Mar. 7, 2011) (Exhibit 48); Independent Monitor Report, Albuquerque, N.M. at 5 (Apr. 8 2011) (Exhibit 49); Independent Monitor Report, Myrtle Beach, S.C.
at 6 (May 9, 2011) (Exhibit 50); Independent Monitor Report, Augusta, Ga. at 6 (July 1, 2011)
(Exhibit 51); Independent Monitor Report, Mattapan, Mass. at 6 (Sept. 6, 2011) (Exhibit 53);
Independent Monitor Report, Manassas, Va. at 8 (Sept. 22, 2011) (Exhibit 23); Independent
Monitor Report, Youngstown, Ohio at 5 (Oct. 14, 2011) (Exhibit 27); Independent Monitor Report, Oklahoma City, Okla. at 6 (Nov. 4, 2011) (Exhibit 54); Independent Monitor Report,
Mishawaka, Ind. at 6 (Oct. 5, 2012) (Exhibit 40); Independent Monitor Report, Denver, Colo.
at 7 (Dec. 7, 2012) (Exhibit 56).
105 CSHM Policy on Protective Stabilization at 3 (Jan. 14, 2012) (Exhibit 24).
106 Guideline on Behavior Guidance for the Pediatric Dental Patient, American Academy of Pediatric Dentistry, vol. 33 no. 6, 167–68 (2011/2012) (Exhibit 25).
100 Id.
101 Id.

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Another example includes one dentist automatically failing due
to the lack of documentation for medical necessity.107 Manassas
clinic dentists billed Medicaid for reimbursement of X-rays even
though the Independent Monitor’s audit found no evidence that the
X-rays were actually performed.108 Five records revealed patients
receiving treatment for 8 to 12 teeth during a single visit without
the proper amount of anesthesia being administered. Of 244
pulpotomies performed, 104 ‘‘were not medically necessary,’’ 109
costing taxpayers and the Medicaid program a total of $8,391.110
This audit also revealed that CSHM’s chart audit tool failed to uncover several documentation errors and improper anesthesia
use.111

Allegations of abuse plagued the Manassas clinic, leading to its
eventual closure by CSHM. The Committee staff have received information that the Virginia Department of Health Professions will
be reviewing the dentists who practiced at the Manassas clinic.
Contrary to assertions that a vulnerable population would go un107 See

IMR Manassas, Va. at 2 (Exhibit 23).

108 Id.
109 Id.

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at 3.
110 Virginia Smiles for Children—Schedule of Allowable Fees (Exhibit 66). Each pulpotomy
costs $80.69.
111 Id.

20
treated without Small Smiles, the patients of the Manassas clinic
and other clinics closed by CSHM have been absorbed into other
practices with little difficulty.112
3. Oxon Hill, Maryland Small Smiles Clinic
The report issued by the Independent Monitor after the site visit
at the Oxon Hill Small Smiles confirms the findings of the Committee staff who observed the clinic with the Independent Monitor.
First, the Independent Monitor discovered numerous quality of
care issues. It found that the clinic was inappropriately documenting and administering local anesthetics and nitrous oxide.113
Notably, the Independent Monitor observed that ‘‘[t]he maximum
dose of local anesthetic was not calculated for patients treated by
the Lead Dentist before she administered local anesthetic.’’ 114
Rather, local anesthetic calculations were performed and filled in
after the fact.115 Moreover, the clinic was found to be substituting
the papoose board for anesthesia or nitrous oxide.116 This means
that the child was both experiencing pain while also being restrained. Out of 30 records, there were six instances in which a
child younger than 5 years old was restrained during treatment
without the use of local anesthetic, and seven instances in which
primary teeth fillings on children younger than 7 years old were
administered without local anesthesia or nitrous oxide.117
Second, the Independent Monitor found alarming practices that
had threatened patient safety at Oxon Hill, Maryland clinic. One
notable incident involved a child treated with a pulpotomy and a
stainless steel crown who was restrained using a patient stabilization device (PSD):
[C]hild screamed and fought the entire time. The patient kept
moving her head, making it difficult to keep it secured. She
vomited approximately half way through the procedure. The
dentist immediately turned the patient on her side and
suctioned her mouth and throat. This child’s airway was in
jeopardy because the mouth prop opened her mouth so wide it
restricted her ability to swallow and protect her airway. The
patient was screaming and gasping, leaving her airway open
and vulnerable. Cotton pellets used during the pulpotomy were
placed and removed while SSC’s were fitted and removed on a
moving, combative, and hysterical child with no methods employed to protect the airway.118
Notably, the dentist resumed treatment despite the child’s vomiting.
Most shocking was the Independent Monitor’s final observation
regarding the clinic:
Treatment was provided to restrained children who were fighting, crying, and basically hysterical, using large mouth props
112 See Interview with Church Street Health Management, in Washington, D.C. (Feb. 21,
2012).
113 See IMR Oxon Hill, Md. at 27 (Exhibit 16).
114 Id. at 36.
115 Id.
116 Id.
117 See id. at 27.
118 Id. at 36 (emphasis added).

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that overextended their mouths, compromising their ability to
swallow and protect their airways. Water spray from hand
pieces, cotton pellets used for pulpotomies, and stainless steel
crowns (SSCs) that are fitted and removed all presented potential risk to these children’s airways.
Preparedness and anticipation was lacking on the part of the
dental assistants during procedures on uncooperative young
children.119
Third, the Independent Monitor found instances in which no
medical necessity was provided for treatments performed. In 9 of
the 30 records reviewed by the Independent Monitor, no documentation or X-rays were provided to support the medical necessity
of treatments provided to patients.120 Therefore, in 30% of the
records reviewed, the Medicaid program was billed for unjustified
and potentially unnecessary treatments. Larger sampling at this
and other clinics could reveal massive overpayments by the government to CSHM.
4. Oxon Hill, Maryland Small Smiles Overpayment
At the Oxon Hill Small Smiles Center, mentioned above, HHS
OIG was alerted to an $852,492.74 overpayment.121 Not only was
this clinic providing substandard care, according to the Independent Monitor, it was also providing unnecessary treatments and
getting excessive payments from Medicaid. Shortly after the overpayment was identified, CSHM satisfied its obligations under the
CIA to refund the overpayment.122
5. Youngstown, Ohio Clinic
Similar problems occurred at the Youngstown, Ohio clinic, where
the Independent Monitor found that the clinic provided unnecessary care and also had billing, reimbursement, and records management issues. HHS OIG even went as far as to demand that
Small Smiles pay a $100,000 stipulated penalty and issued a Notice of Material Breach and Intent to Exclude to the Youngstown
clinic. Such notices signal that HHS OIG intends to exclude a facility from the Medicaid program. Exclusion would prohibit a facility
from treating Medicaid beneficiaries and seeking state and Federal
reimbursement. HHS OIG cites the Independent Monitor report
findings as the primary reason to exclude the Youngstown facility
from participating in the Medicaid program.123
Specifically, 7 of the 15 records reviewed by the Independent
Monitor revealed a lack of documentation or radiographic evidence
to support medical necessity for treatments provided by Small
Smiles.124 Of those 7 records, 6 revealed pulpotomies were performed without medical necessity, while one record showed no X119 Id.

at 5.
at 29.
121 See Letter from CSHM to HHS OIG, re: Reporting of Substantial Overpayment to Small
Smiles Dental Centers of Oxon Hill at 2 (May 22, 2012) (Exhibit 57).
122 See id.
123 Letter from HHS OIG to CSHM, re: Demand for Stipulated Penalties and Notice of Material Breach and Intent to Exclude (June 22, 2012) (Exhibit 26).
124 Id. at 4–5.
120 Id.

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rays or photographs were taken to support the medical necessity
for treatment provided.’’ 125
The Independent Monitor report found ‘‘poorly performed fillings
and stainless steel crowns, undiagnosed recurrent decay or faulty
restorations, lack of rationale for extractions, no use of local anesthesia for placement of fillings in teeth with deep decay, use of
multiple surface fillings without any substantiation as to why
stainless steel crowns were not used.’’ 126 In perhaps the most troubling violation observed by the Independent Monitor, the report describes:
A combative 4-year-old child received a cut to the tongue while
three teeth were being treated with fillings, a pulpotomy and
a [stainless steel crown]. The documentation in the patient’s
record did not record the size of the cut and reported the patient was ‘‘very strong and vocal.’’ Four people were required
to help manage the patient. Documentation also showed that
a protective stabilization device (PSD) was used and the patient was ‘‘double wrapped’’ in order to provide treatment. The
e-mail communication related with this case did not show that
X-rays were requested; therefore, it appeared there was no
evaluation to determine whether the treatment rendered was medically necessary.127
On July 3, 2012, HHS OIG received confirmation that CSHM
paid the $100,000 stipulated penalty.128 On August 23, 2012, HHS
OIG sent a letter to CSHM stating that it determined that CSHM
‘‘cured the breaches identified in the OIG’s Notice, and will not proceed with an exclusion action against CSHM’s Small Smiles Dental
Centers of Youngstown at this time.’’ 129 CSHM advised HHS OIG
of its effort to cure the specific breaches through various actions,
including: (1) evaluation and termination of nine staff people;
(2) the temporary, 2-day closure to conduct training; and (3) the development of an ongoing oversight and monitoring plan by the
Chief Compliance Officer, Chief Dental Officer, the Regional Director, and the Senior Vice President of Operations.130
F. Health and Human Services Office of Inspector General
Notice of Intent to Exclude
On March 8, 2012, HHS OIG sent a Notice of Material Breach
and Intent to Exclude to CSHM. HHS OIG states in its letter that
due to CSHM’s ‘‘repeated and flagrant violation of certain provisions’’ of the CIA, the OIG is exercising ‘‘its right under the CIA
to exclude CSHM from participation in the Federal health care programs.’’ 131 HHS OIG largely cites violations occurring at the Manassas, Virginia clinic as primary reasons for its intent to exclude.
Specifically, HHS OIG points to five main areas in which CSHM
125 Id.
126 Id.

at 5.
127 Independent Monitor Report Youngstown, Ohio at 11 (May 25, 2012) (Exhibit 27) (emphasis added).
128 See Letter from HHS OIG, to CSHM, re: Resolution of the Stipulated Penalties and Notice
of Material Breach and Intent to Exclude Matter at 2 (Aug. 23, 2012) (Exhibit 28).
129 Id. at 1.
130 See id.
131 Letter from HHS OIG to CSHM, re: Notice of Material Breach and Intent to Exclude at
1 (Mar. 8, 2012) (Exhibit 29).

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violated the terms of the CIA: (1) management certifications and
accountability; (2) policies and procedures requirements; (3) change
to termination policy and procedure; (4) CSHM review of pulp-tocrown ratios and provision of medically unnecessary services at
other CSHM facilities; and (5) quality of care reportable event requirements.132
Part of complying with the CIA requires CSHM to certify that
each employee knows and understands his/her responsibilities and
duties under Federal law, state dental board requirements, and
professionally recognized standards of care. The certification also
requires the employee to ‘‘attest that his/her job responsibilities include ensuring compliance with regard to the area under his/her
supervision. . . .’’ 133 On March 15, 2011, CSHM submitted a report
to the HHS OIG, including a certification for LaTanya O’Neal, the
Lead Dentist in the Manassas, Virginia clinic. On November 16,
2011, HHS OIG conducted a site visit to the Manassas Clinic to
gauge if the clinic was in compliance with its obligations under the
CIA. During this site visit, the OIG interviewed Ms. O’Neal to ascertain her level of compliance and discuss her oversight role as
Lead Dentist. Unfortunately, Ms. O’Neal was not able to address
‘‘any compliance-related obligations that she oversaw at Manassas
Center.’’ 134 Additionally, Ms. O’Neal could not ‘‘recall signing an
annual certification or any specific steps that she took to evaluate
compliance at Manassas Center for purposes of signing that certification.’’ 135 Ultimately, HHS OIG found Ms. O’Neal’s certification to
be false.136 CSHM responded that it could not cure the breach of
having submitted a false certification, but indicated that the Certifying Employee who signed the false certification is no longer employed by CSHM. Additionally, CSHM ‘‘implemented significant
training and revamped [its] process for certifications.’’ 137 These
two actions were enough to satisfy HHS OIG.
Section III.B.2.u of the CIA requires CSHM to have written Policies and Procedures in place to terminate employees who have been
found to have violated professionally recognized standards of
health care.138 In January 2012, CSHM revised its ‘‘Adverse
Events, Quality of Care Reportable Events, and OMIG Patient
Care Matters’’ policy which states the following:
Practitioners who have violated professionally recognized
standards of healthcare, including the AAPD Guidelines, the
CSHM Clinical Policies and Guidelines for CSHM Associated
Dental Centers, and any applicable state or local standards or
guidelines, and whose violation has been deemed by the Chief
Dental Officer to be a Quality of Care reportable event will be
terminated or will undergo a remediation plan developed by the
Chief Dental Officer with approval of the OIG.139
132 Id.
133 Id.
134 Id.

at 2–8.
at 2.
at 3.

135 Id.
136 See Letter from HHS OIG to CSHM, re: Notice of Material Breach and Intent to Exclude
at 3 (Mar. 8, 2012) (Exhibit 29).
137 Letter from HHS OIG, to CSHM, re: Notice of Material Breach and Intent to Exclude at
2–3 (Mar. 13, 2012) (Exhibit 30).
138 Id.
139 Id. at 6 (emphasis added).

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The CIA does not allow for the Chief Dental Officer to dismantle
the termination process with a remediation plan. Therefore, HHS
OIG found this revision to directly contradict the requirements of
the CIA because it allowed the Chief Dental Officer to avoid the
termination requirement with his/her own remediation plan.140
Part of every audit conducted under the CIA includes a desk
audit report. Included in each desk audit is a review of all of the
dental work associated with that clinic. The Manassas, Virginia
clinic desk audit report ‘‘indicated that of 244 pulpotomies reviewed
by the Monitor, 104 were medically unnecessary.’’ 141 The desk
audit also found that as a result, CSHM improperly billed the Medicaid program. CSHM issued a response to the findings on October
31, 2011, stating that it ‘‘agrees that pulpotomies were performed
that were not medically necessary . . . [and that] CSHM’s systems
were ineffective in identifying this issue.’’ 142
Included in the October 2011 response, CSHM also identified 13
dentists with high pulp-to-crown ratios similar to those at the Manassas Clinic in its response to the desk audit.143 CSHM was planning on addressing these 13 dentists by ‘‘monitor[ing] the pulp-tocrown ratio for each of these 13 individuals’’ and providing ‘‘indirect pulp therapy as an alternative to pulpotomies.’’ 144 After its
October 2011 response, CSHM clarified that it had identified 12
dentists, and not 13 dentists, who exhibited high pulp-to-crown ratios.145 However, HHS OIG was not able to determine whether
CSHM ‘‘had performed or planned to perform a financial review of
claims it submitted on behalf of the 12 identified dentists to determine whether CSHM had any overpayment or other liability for
claims that were associated with high pulp-to-crown utilization.’’ 146
HHS OIG determined this was a breach of CSHM’s duty to develop
and implement a policy to promptly and appropriately investigate
compliance issues.147
CSHM had 30 days to demonstrate to HHS OIG that its material
breach had been cured. CSHM submitted a written response on
March 12, 2012, and met with HHS OIG on March 13, 2012.148
Later that day, on March 13, 2012, HHS OIG sent CSHM a letter
formalizing the terms of the agreement with CSHM whereby the
OIG would not proceed with an exclusion action for the CIA
breaches identified in the March 8, 2012 notice.149
With respect to the Manassas facility, HHS OIG agreed not to
pursue an exclusion action that would apply to the entire company
if CSHM agreed to: (1) a voluntary exclusion of Manassas Center
within 90 days of the date of March 13, 2012, letter; and (2) comply
with additional program integrity-related obligations that will be
140 Letter from HHS OIG to CSHM, re: Notice of Material Breach and Intent
6 (Mar. 8, 2012) (Exhibit 29).
141 Id.
142 Id.
143 Id. at 7.
144 Id.
145 See id.
146 Letter from HHS OIG to CSHM, re: Notice of Material Breach and Intent
7 (Mar. 8, 2012) (Exhibit 29).
147 Id. at 7–8.
148 Letter from CSHM, to HHS OIG, re: Notice of Material Breach and Intent to
12, 2012) (Exhibit 64).
149 Letter from HHS OIG, to CSHM, re: Notice of Material Breach and Intent to
13, 2012) (Exhibit 30).

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incorporated as an amendment to the CIA by the March 13, 2012
letter. On June 4, 2012, CSHM sold the Manassas Clinic to a third
party buyer, satisfying the first requirement.
The additional integrity-related provisions HHS OIG placed on
CSHM include the following:
1. Compliance Program Onsite Reviews of CSHM Facilities.
‘‘Within 30 days CSHM shall develop and implement a process
by which the Chief Dental Officer, the Compliance Officer, and
Regional Dentists shall conduct at least one onsite review each
month to a CSHM facility for the purpose of evaluating and ensuring compliance with all Federal health care program requirements, state dental board requirements, and the obligations of the CIA. The OIG will require CSHM to recruit Regional Pediatric Dentists who will assist with the Onsite Reviews. . . .’’ 150
CSHM has completed its hiring of Regional Pediatric Dentists.151
2. Quality Improvements Initiatives. ‘‘Within 30 days, CSHM
shall develop and implement a process by which CSHM identifies specific risk areas and relevant quality benchmarks, taking
into account the recommendations of the Independent Monitor.
. . .’’ 152
CSHM fulfilled this requirement within the allocated time
frame set forth by the HHS OIG.153
3. Referral Process. ‘‘Within 30 days, CSHM shall develop and
implement guidance for each CSHM facility regarding patient
referrals from CSHM facilities to other facilities better
equipped to treat a patient in specific circumstances involving
concerns for patient safety, including but not limited to anesthesia requirement[s] and behavior guidance techniques.’’ 154
CSHM fulfilled this requirement within the allocated time
frame set forth by the HHS OIG.155
4. Certifying Employee Certifications. ‘‘Within 30 days, CSHM
shall develop a process by which Certifying Employees shall
perform a comprehensive assessment of the areas of his/her responsibility under Federal law, state dental board requirements, and the obligations under the CIA.’’ 156

150 Id.

at 3.
151 E-mail chain between Committee Staff and HHS OIG re: Reporting Substantial Overpayments to Small Smiles Dental Centers of Oxon Hill (Mar. 7, 2013) (Exhibit 59).
152 Letter from HHS OIG, to CSHM, re: Notice of Material Breach and Intent to Exclude at
4 (Mar. 13, 2012) (Exhibit 30).
153 E-mail chain between Committee Staff and HHS OIG re: Reporting Substantial Overpayments to Small Smiles Dental Centers of Oxon Hill (Mar. 7, 2013) (Exhibit 59).
154 Letter from HHS OIG, to CSHM, re: Notice of Material Breach and Intent to Exclude at
4 (Mar. 13, 2012) (Exhibit 30).
155 E-mail chain between Committee Staff and HHS OIG re: Reporting Substantial Overpayments to Small Smiles Dental Centers of Oxon Hill (Mar. 7, 2013) (Exhibit 59).
156 Letter to CSHM, from HHS OIG, re: Notice of Material Breach and Intent to Exclude at
4–5 (Mar. 13, 2012) (Exhibit 30).

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CSHM fulfilled this requirement within the allocated time
frame set forth by the HHS OIG.157
5. Pulp-to-Crown Medical Necessity Review. ‘‘Within 120 days,
CSHM shall review claims by those dentists with high ‘pulpto-crown ratios’ to determine whether such documentation supports the medical necessity of the services.’’
The Independent Monitor will give CSHM the appropriate
pulp-to-crown ratio and CSHM will compare all dentists to that
standard.158 HHS OIG has directed CSHM to conduct a new
and more expansive review of the pulp-to-crown Medical Necessity Review requirement, due in part to the change in ownership in 2012.159
During the course of the breach, CSHM emerged from bankruptcy in June 2012 and began operating under a new owner, a
new Board of Directors, and a new senior management team. The
new senior management team consists of a new Chief Executive Officer, Chief Compliance Officer, Chief Dental Officer, and new General Counsel. HHS OIG has stated that ‘‘The [Independent] Monitor has further indicated to OIG that the onsite visits to CSHM’s
facilities under the new ownership structure have all been positive.’’ 160
G. Continuation of Abuses Following the Health and Human
Services Office of Inspector General Notice of Intent to
Exclude and New Ownership
The new owners have only been in place a relatively short time,
but the issues involving quality of care and abuse of taxpayer dollars still remain. Time and time again, CSHM has demonstrated
that its Small Smiles clinics do not operate in compliance with the
CIA. The core of the problem appears to be structural. The new
CSHM ownership acquired and has maintained their predecessors’
flawed management services agreements, which remove traditional
ownership authority from dentists. These agreements fundamentally limit the ability of the dentists to exercise independent clinical judgment.161 Despite management changes and assurances
that the company is improving, the same problems that were uncovered in 2008 and ultimately led to the CIA persist. It is unacceptable that this type of activity has been allowed to continue for
4 years despite aggressive oversight by the Independent Monitor
and HHS OIG.
As stated above, in October 2012 HHS OIG declared that ‘‘The
Monitor has further indicated to OIG that the onsite visits to
CSHM’s facilities under the new ownership have all been posi157 E-mail chain between Committee Staff and HHS OIG re: Reporting Substantial Overpayments to Small Smiles Dental Centers of Oxon Hill (Mar. 7, 2013) (Exhibit 59).
158 Letter from HHS OIG, to CSHM, re: Notice of Material Breach and Intent to Exclude at
5 (Mar. 13, 2012) (Exhibit 30).
159 E-mail from Hinkle of HHS OIG, to CSHM from re: Reporting of Substantial Overpayment
to Small Smiles Dental Centers of Oxon Hill (Mar. 7, 2013, 11:22 a.m.) (Exhibit 58).
160 Letter from Dep’t Health and Human Services, OIG, to Senators Baucus and Grassley, re:
Corporate Integrity Agreement with CSHM, w/attach. at 5 (Oct. 4, 2012) (Exhibit 14).
161 See Letter from Theodore Hester, Attorney at King & Spalding, to Senators Baucus and
Grassley, at 1–2 (Nov. 29, 2011) (Exhibit 5).

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tive.’’ 162 However, a review of Independent Monitor Reports following the establishment of new CSHM ownership in June 2012
and the subsequent Notice of Intent to Exclude, paints a very different picture—the abuses that plagued Small Smiles clinics have
yet to subside. Although documenting different locations, the Independent Monitor’s reviews of CSHM clinics under new ownership
from late 2012 reveal findings of the same violations that plagued
the Oxon Hill, Manassas, and other aforementioned clinics. Curiously, despite having previously received numerous Independent
Monitor reports of misconduct at CSHM facilities, in October 2012
HHS OIG nonetheless proceeded to relay and seemingly endorse an
inaccurate Monitor assertion that new CSHM ownership had begun
to implement changes. Below are a few examples of the glaring errors that HHS OIG considers positive.
1. Florence, South Carolina Independent Monitor Report
In 2011, the Independent Monitor conducted a desk audit of the
Florence, South Carolina Small Smiles clinic. A desk audit does not
involve an onsite audit but instead involves an exchange of documents followed by a review. The desk audit report laid out a number of findings and recommendations for the staff.163
On July 3, 2012, the Independent Monitor followed up with an
onsite visit of the Small Smiles clinic in Florence, South Carolina.
This site visit occurred almost 4 months after HHS OIG issued its
Notice of Material Breach and Intent to Exclude to CSHM. When
the Monitor interviewed the staff and dentists, it was clear that
none of them was aware of the findings or recommendations from
the desk audit:
The Compliance Liaison reported she had been in communication with several members of CSHM’s management team and
determined from their questions there was a report. However,
when she asked about it, she was told it had been divided and
distributed by department.164
Additionally, the Independent Monitor found that the clinic continued to perform unnecessary procedures, while failing to diagnose
and treat other problems. In three recorded cases, pulpotomies
were performed without removing the required amount of pulpal
tissue, and two patients were fitted with oversized crowns.165 The
records also indicated that a patient’s mesial decay went
undiagnosed and a single surface occlusal amalgam filling was
placed on the tooth leading to further decay and the need for a
stainless steel crown.166 Moreover, the Independent Monitor noted
that one associate dentist administered Septocaine to a child
younger than 4 years of age—a practice that has not been approved
by the FDA.167
162 Letter from Dep’t Health and Human Services, OIG, to Senators Baucus and Grassley, re:
Corporate Integrity Agreement with CSHM, w/attach. at 5 (Oct. 4, 2012) (Exhibit 14).
163 Independent Monitor Report Florence, S.C. at 2–3 (July 3, 2012) (Exhibit 38).
164 Id.
165 See id. at 3.
166 See id.
167 See id.

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2. Lynn, Massachusetts Independent Monitor Report
A month after the Florence report, the Independent Monitor
found similar issues with the Lynn, Massachusetts clinic. After reviewing the post-operative X-rays, the Monitor found five poorly
performed pulpotomies, where the tissue from the pulp chamber
was not properly removed.168 There was also one record that
showed a failure to use a local anesthesia when it was required,
and two instances where the wrong anesthetic was used.169
Similar to the report from Akron, the Monitor found that 10
records did not justify using surface fillings over stainless steel
crowns.170 The Monitor also found 11 records where the same teeth
were treated multiple times.171 As was reported in Akron, failing
to use the proper filling can result in further decay and multiple
treatments to the same tooth.
Despite the continued attention from HHS, the clinic has yet to
fulfill all of the recommendations from the initial 2011 Independent
Monitor review. Following its interviews, document review, and
treatment observations, the Independent Monitor determined that
‘‘CSHM had successfully met and implemented 19 of the 29 recommendations’’ from the Independent Monitor’s previous report.172
3. Mishawaka, Indiana Independent Monitor Report
On October 5, 2012, the Independent Monitor’s findings from its
review of the Mishawaka Small Smiles clinic revealed evaluation
discrepancies, patient safety concerns, and questions involving
medical necessity. As part of its desk audit, the Independent Monitor examined a 2012 internal CSHM chart audit by replicating the
testing parameters and initiating its own assessment.173 The
CSHM chart audit ultimately issued passing scores for all three audited dentists.174 While concurring in the finding that two dentists
passed,175 the Independent Monitor issued an automatic failure to
the third dentist based on a ‘‘lack of documentation and radiographic evidence to support the medical necessity for treatment.’’ 176 Notably, prior to the Independent Monitor’s replicated
audit, CSHM had given this very same dentist a score of 100%, the
highest score of all three audited dentists.177
More disturbing than the discrepancies in the CSHM evaluations
of dentists are the incorrect calculations for administering anesthesia. In 4 of 15 records reviewed, the Independent Monitor found
miscalculations of the anesthesia dosage, and, while finding that
the administered dosage never exceeded the prescribed maximum,
the miscalculations ‘‘allowed for the possibility of patient harm.’’ 178
Furthermore, in three of these four miscalculations, a review revealed the use of anesthesia ‘‘without the recognition of a total
168 See
169 See

Independent Monitor Report Lynn, Mass. at 3 (Aug. 2, 2012) (Exhibit 39).
id.

170 Id.
171 Id.
172 Id.

at 9–10.

173 Independent

Monitor Report Mishawaka, Ind. at 6 (Oct. 5, 2012) (Exhibit 40).
id.
id. (‘‘The Monitor also identified instances of under-treatment and over-treatment that
resulted in lower scores for the Clinic and passing dentists.’’)
176 Id.
177 See id.
178 Id. at 23.
174 See
175 See

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maximum allowable dose . . . regardless of patient weight or age’’
and ‘‘no evidence of calculation adjustments for overweight patients
based on their healthy weight range.’’ 179
The Independent Monitor’s findings also raised questions about
the medical necessity of performed care. In 1 of 15 records reviewed, it was discovered that neither documentation nor X-rays
were provided to justify the medical necessity for a performed pulpotomy.180 In fact, the review found that along with a complete lack
of X-rays to determine the depth of tooth decay, the patient’s file
lacked a ‘‘descriptive narrative’’ and ‘‘the digital photographs did
not support the need for a pulpotomy on [said] tooth.’’ 181 Approximately 6–7% of all pulpotomies performed by that clinic would be
unnecessary if the records reviewed are a representative sample of
the clinic’s business. Taxpayers needlessly spend $100 in Indiana
every time an unnecessary pulpotomy is performed on a Medicaid
patient.182
4. Colorado Springs, Colorado Independent Monitor Report
As late as November 15, 2012, the Small Smiles clinic in Colorado Springs was committing violations resembling those found at
numerous other Small Smiles clinics: under-utilization of X-rays,
inadequate documentation of medical necessity, questionable procedure rationale, and quality of care issues. First, out of 24 records
reviewed, the Independent Monitor found 5 records containing
medically unnecessary X-rays and 12 records revealed evidence of
under-utilization of diagnostic X-rays.183
Second, questions of medical necessity also emerged from the
Colorado Springs Small Smiles clinic. Notably, the Independent
Monitor observed a trend of treatment being provided without diagnostic X-rays and further found 5 out of 24 patient records lacked
‘‘documentation and/or radiographic evidence to support the medical necessity for treatment[s]’’ which included pulpotomies, a
stainless steel crown, and a 4-surface filling.184
Third, the Independent Monitor review exposed questionable rationales for performed procedures. Along with finding a trend of
under-utilizing stainless steel crowns, the review revealed 5 out of
24 records lacked documentation for choosing to perform multiple
surface filings and not stainless steel crowns.185
Fourth, the review confirmed that, much like its fellow Small
Smiles clinics around the country, quality of care issues were evident in the Colorado Springs clinic. Out of 24 records reviewed, 2
patient records lacked an explanation as to why teeth with noted
decay were left untreated.186 Lastly, and of great concern, is that
3 out of 24 records revealed that treatment was administered without the requisite informed and documented consent.187
These five clinic findings reflect that, despite HHS OIG’s Intent
to Exclude and the new ownership structure, CSHM has continued
179 Id.
180 See

id.

181 Id.
182 Indiana

Health Coverage Programs, IHCP Bulletin at 5 (Apr. 15, 2010) (Exhibit 62).
Independent Monitor Report Colorado Springs, Colo. at 16 (Nov. 15, 2012) (Exhibit 41).
at 18.
185 Id. at 19.
186 Id. at 20.
187 Id.
183 See
184 Id.

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to leave patients with decaying teeth untreated, while performing
needless surgery on other patients. In other words, CSHM continues to treat a high volume of patients while sacrificing quality
care and benefitting from the Medicaid system. The needless procedures ensure higher reimbursements, while mismanaged treatments ensure return visits that require more intensive treatments.
What is most disconcerting from these reports is the timing in
which these violations occurred. Although subpar dental treatment
to children should never be tolerated, it is even more unforgivable
when it follows admonishment from the Department of Justice and
the Department of Health and Human Services Office of Inspector
General.
V. Dental Demographics
When the Committee staff started investigating dental management companies, a common refrain emerged: if their businesses did
not employ dentists to provide care to those in need, the Medicaid
population would go untreated. As such, we began to take a closer
look into the demographics of today’s dentists. Although it is undeniable that certain parts of our country, particularly rural areas,
have a shortage of dental providers, this same problem plagues all
areas where Small Smiles Clinics are found. Ultimately, the current model is not sustainable, and dentists will not be able to meet
the growing demand for treatment. Thus, maybe it is time to begin
discussing the incorporation of mid-level providers in order to alleviate the treatment needs of and provide dental care to patients.
Mid-level dental providers’ education and skill level would place
them between a dentist and dental hygienist. They would be qualified and licensed to perform relatively minor, but common procedures, such as cavity fillings and simple teeth extractions.188
According to Oral Health America, the adequate ratio of dentists
to population is 1 to 1,500.189 Today, that ratio is 1 to 2,000 and
in some states, such as Washington, the distribution is even greater having only one dentist for 12,300 people.190 If this uneven distribution is not corrected, the problems will worsen. The U.S. Department of Labor, Bureau of Labor Statistics expects the dental
profession to grow by 21% from 2010 to 2020.191 The potential for
a large gap between the number of dentists needed and the number
of dentists practicing is due to a number of variables. First, there
will be a need for more complicated dental procedures for the baby
boom generation.192 In addition, each generation is more likely to
keep their teeth than the last, and studies continue to link dental
188 See Phil Cauthon, National advocates for mid-level dental providers meet in Kan., KHI
NEWS SERVICE (Dec. 5, 2012), http://www.khi.org/news/2012/dec/05/national-advocates-midlevel-dental-providers-meet/.
189 Combating the Silent Epidemic: The Shortage of Dentists in America, Staff Care, at 4,
http://www.staffcare.com/pdf/Dentistry-WhitePaper2007.pdf.
190 U.S. Dep’t of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook, Dentists
Job Outlook, http://www.bls.gov/ooh/Healthcare/Dentists.htm#tab-6 (last visited Mar. 22,
2013); Clair Gordon, Extreme Dentist Shortage Leads To ‘Dental Therapists’ Filling Cavities,
AOL Jobs [hereinafter Gordon] (Apr. 16, 2012, 2:14 PM), http://jobs.aol.com/articles/2012/04/
16/extreme-dentist-shortage-leads-to-dental-therapists-filling-ca/.
191 U.S. Dep’t of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook, Dentists
Job Outlook, http://www.bls.gov/ooh/Healthcare/Dentists.htm#tab-6 (last visited Mar. 22,
2013). Nationwide there are 48.7 million Americans who live in areas with a shortage of dental
care.
192 See id.

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health with overall health.193 Also, 5.3 million more children will
qualify for dental services under the Affordable Care Act.194 However, ‘‘without changes in state policies, expanded coverage is unlikely to translate into more dental care for every child in need.’’ 195
Children’s susceptibility to tooth decay is particularly problematic,
because dental problems starting at a young age will compound
into larger problems through adulthood.
The lack of care for both children and adults has resulted in 27
percent of children and 29 percent of adults having untreated cavities in 2003 and 2004.196 The risks of untreated dental conditions
are not confined to poor oral health, but can have devastating effects on overall health. Many Americans end up in the emergency
room from tooth abscesses that keep them from eating or cause an
infection that can travel to the brain and kill.197 This horrifying result of tooth decay was the impetus for the ABC–7 I–Team investigative report into the Small Smiles clinics. The report identified
a 12-year-old Maryland boy, Deamonte Driver, who died of a brain
infection resulting from tooth decay that was not properly treated.198
In 2009, more than 830,000 visits to the emergency room nationwide were the result of preventable dental problems.199 In Florida
alone the bill exceeded $88 million.200 Although many of these
problems can be solved by preventive measures, the fundamental
problems of lack of care and substandard care persist.201
As more dentists graduate from school with an average debt of
$181,000, with one out of five exceeding $250,000,202 it is less economical for dentists to open practices in rural areas. Compounding
the problem is available data which suggests low dentist participation in Medicaid,203 and the fact that some of those clinics that are
providing care to Medicaid patients, such as Small Smiles, are
doing so at a substandard level. The cost of correcting dental problems is much more expensive than the preventive measures, but
193 See

id.
of Labor, Dentists Job Outlook; The State of Children’s Dental Health: Making Coverage Matter, The Pew Center on the States (May 2011), 208, 209, and 210; Louis W. Sullivan,
Dental Insurance, but No Dentists, N.Y. TIMES [hereinafter Sullivan], Apr. 8. 2012, http://
www.nytimes.com/2012/04/09/opinion/dental-insurance-but-no-dentists.html?lr=2&.
195 The State of Children’s Dental Health: Making Coverage Matter, The Pew Center on the
States (May 2011).
196 Gordon. The 2003 and 2004 data is the latest available when the article was written.
197 Sullivan.
198 I–Team: Small Smiles Investigation, http://www.youtube.com/watch?v=pIoMaw4zC9Q
(last visited Mar. 22, 2013). In a similar news story a, 24-year-old single father, Kyle Willis died
of a brain infection that was the result of untreated tooth decay. Gretchen Gavett, Tragic Results When Dental Care Is Out of Reach, PBS (June 26, 2012, 9:50 PM), http://www.pbs.org/
wgbh/pages/frontline/health-science-technology/dollars-and-dentists/tragic-results-when-dentalcare-is-out-of-reach/.
199 Sullivan.
200 Id. Dental disease is the number one chronic child disease that creates more children needing medical care than asthma. Id. In Maine a recent report has indicated that 55 percent of
MaineCare children go without dental care even though they have insurance, resulting in more
money being spent on fixing dental problems that preventing them. Report Details Dental Care
Shortage in Rural Maine, Boston Globe (Feb. 5, 2013), http://www.boston.com/news/local/
maine/2013/02/05/report-details-dental-care-shortage-rural-maine/NkYZrj1bb1OEMKGFQZ1E
5O/story.html.
201 Sullivan.
202 Gordon.
203 See U.S. GOV’T ACCOUNTABILITY OFFICE, GAO–11–96, ORAL HEALTH: EFFORTS UNDER WAY
TO IMPROVE CHILDREN’S ACCESS TO DENTAL SERVICES, BUT SUSTAINED ATTENTION NEEDED TO
ADDRESS ONGOING CONCERNS 12 (2010) (Exhibit 60).
194 Dep’t

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clearly the cost of providing preventive measures is not cheap or
easy in certain parts of our country.
To address dental care access problems, two states have taken
novel approaches to immediately address the lack of dental care.
Alaska and Minnesota have been training dental therapists who
provide fewer services than a dentist and more than a dental hygienist.204 These dental therapists are able to perform basic dental
procedures that are in great demand, such as filling cavities and
extracting childrens’ primary teeth.205 These training programs are
shorter than dentistry school, and the therapists receive pay that
is roughly half of what a dentist would receive. This program has
opened up dental care in rural areas of Minnesota and Native villages in Alaska. The ADA has opposed these positions out of fear
that mid-level providers will provide substandard care.206
VI. Recommendations
Recommendation 1: HHS OIG should exclude from participating in the Medicaid program CSHM, Small Smiles
clinics, and any other corporate entity that employs a
fundamentally deceptive business model resulting in a
sustained pattern of substandard care.
• Despite a change in ownership and repeated professed improvements, CSHM and Small Smiles clinics continue to operate under fundamentally deceptive contracts that circumvent
state laws passed to ensure licensed dentists own dental practices, and thus, that the owners are held accountable to maintain a professional standard of care. As a result, Small Smiles
clinics continue failing to meet basic quality and compliance
standards, providing unjustified and deficient procedures, improperly withholding and recklessly administering anesthesia,
and performing dubious internal audits. All of these actions
strain the Medicaid system. Excluding CSHM and companies
with similarly deceptive ownership structures from the Medicaid program would deter companies from engaging in similar
egregious behavior in the future.
Recommendation 2: States should enforce existing laws
against the corporate practice of dentistry and, where
appropriate, take enforcement action against those that
violate the law.
• State authorities have either ignored or been oblivious to dental management services agreements like those used by CSHM
that allow companies to operate dental clinics under the guise
of providing administrative and/or financial management support.
204 Sullivan. Kansas, New Mexico, and Vermont are also debating legislation that would create similar training programs; Gordon.
205 Gordon.
206 See AM. DENTAL ASS’N, BREAKING DOWN BARRIERS TO ORAL HEALTH FOR ALL AMERICANS:
REPAIRING THE TATTERED SAFETY NET 16 (2011); see also AM. DENTAL ASS’N, BREAKING DOWN
BARRIERS TO ORAL HEALTH FOR ALL AMERICANS: THE ROLE OF WORKFORCE 11 (2011) (‘‘[A] critical attribute that the ADA opposes unequivocally: Allowing non-dentists to perform surgical
procedures, often with little or no direct supervision by fully trained dentists.’’).

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• In the 22 states and the District of Columbia that ban corporate dentistry, appropriate action should be taken to eliminate such circumvention of the law.
Recommendation 3: If states consider licensure of mid-level
dental providers, such as dental therapists, the Federal
Government should allow them to be reimbursed by the
Medicaid program.
• According to GAO findings, the dental profession has low Medicaid participation rates and thus has failed to provide needed
care and treatment to lower-income individuals in Medicaid.
While struggling to encourage the providers to adequately participate and serve the Medicaid program, the dental profession
has done little to curb the abuses described in this report.
• States have already begun creating mid-level dental providers,
such as dental therapists, and licensing them to practice in
their states in order to better meet the unmet needs of their
populations.
• Some in the dental profession argue that ‘‘low Medicaid reimbursement rates’’ are the root cause of the types of abuses described in this report. Yet, the dental profession has also opposed allowing mid-level providers into the program who could
provide much of the needed care at the current reimbursement
rates.

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APPENDIX

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