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DOJ: Production incentives led to false dental claims

The Department of Justice and a large number of states collaborated on a settlement with dental management company Benevis LLC and over 130 Kool Smiles dental clinics that Benevis provided services for. The clinics and Benevis have agreed to settle allegations of false claims made against state Medicaid programs. The companies allegedly submitted claims for medically unnecessary dental procedures, and procedures that were not performed, on Medicaid-insured children.

The settlement resolves an investigation that was initiated under the False Claims Act's whistleblower provision. Three former Kool Smiles employees blew the whistle against a regime of aggressive production goals which contributed to false claims being submitted. The settlement totals $23.9 million and the whistleblowers will share over $2.4 million in rewards.

According to the Department of Justice, between January 2009 and December 2011, Benevis and Kool Smiles locations in 17 states knowingly submitted false claims to state Medicaid programs. These were typically for unnecessary pulpotomies, which are root canals for babies, tooth extractions and crowns -- all for Medicaid-insured children. In addition, Medicaid was billed for pulpotomies that were never performed. Kool Smiles clinics in Texas are alleged to have sent in false claims to the Texas Medicaid Program for First Dental Home, a program for children under 3. Some billed services were never provided.

"The allegations in these cases are particularly egregious because they involved medically unnecessary dental services performed on children," said one U.S. Attorney. "Exploiting needy children for financial gain is inexcusable."

Interestingly, the Justice Department pointed to a system of high-pressure production incentives as a factor in the false claims. The system allegedly disciplined "unproductive" dentists while giving substantial bonuses to "productive" ones. Kool Smiles clinics allegedly ignored dentists' reports that unnecessary services were being provided or that false billings were being generated.

As we've discussed before on this blog, research has shown that aggressive production goals can set the stage for misconduct. When unrealistic goals are set, some managers and workers feel pressure to report the "right" numbers regardless of whether gains have been made. To justify those numbers, many people re-interpret "gray" areas and game the system.

That may sound familiar to you. If you work in an organization which provides services for the government, you may be in a position to notice fraud, waste or abuse. If you are ready to blow the whistle, we recommend contacting a lawyer familiar with the False Claims Act and other qui tam statutes in order to protect your rights and ensure you receive any financial award you are due.

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