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False Claims Act Settlement Involving Ocean Dental Indicative of Widespread Fraud by Dentists

WhistleOn Friday, the United States Attorney for the Western District of Oklahoma and the Attorney General for the State of Oklahoma jointly announced that Ocean Dental, P.C. has agreed to pay $5 million to settle civil claims stemming from allegations that it violated the False Claims Act by submitting fraudulent Medicaid claims. Oklahoma-based Ocean Dental operates 28 clinics in seven states. As part of its practice, it provides dental services to patients, including children, covered by the Oklahoma’s Medicaid program. The federal government and the state of Oklahoma specifically alleged that Ocean Dental submitted false claims for payment to the Oklahoma Medicaid program for dental restorations that took place during the period from January 1, 2005 through September 30, 2010. Claims for dental restorations furnished to Medicaid beneficiaries by Ocean Dental’s then-employee Robin Lockwood, D.D.S., were false because they were either not performed, or upcoded by billing for more restored surfaces than were actually performed.

As part of the settlement agreement, Ocean Dental entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of the Inspector General which requires, among other things, additional record-keeping, reporting, and compliance requirements. In a separate, but related, criminal case, Lockwood pled guilty in July of 2012 to committing health care fraud for her role while employed at Ocean Dental. In November of 2012, Dr. Lockwood was sentenced to serve 18 months in federal prison and ordered to pay $375,672.27 in restitution to Medicaid.

The settlement comes on the heels of a report by the Office of the Inspector General released in August regarding questionable billing for Medicaid pediatric dental services in Louisiana. The report was to call attention to an emerging area of fraud throughout the country. The report identified 26 general dentists and one oral surgeon with questionable billing. Almost a third of the providers with questionable billing that were identified worked for two dental chains. In addition, four of these providers had previously been sanctioned by the State Board of Dentistry. So, while the report only focused on approximately two dozen dental professionals in Louisiana, it can be considered a snapshot of potential industry-wide problems. A similar report released in March targeted dental professionals in New York, where regulators indicated that they were “actively investigating and monitoring numerous orthodontists and general dentists.” For example, many dental practices have been accused of distributing kickbacks, such as gift cards, manicures, and amusement park tickets, in order to induce appointments for examinations by low-income families. Most importantly, these reports raise concerns about quality of care received and whether children treated by these providers were harmed by these procedures.

Medicaid is a social health care program for families and individuals with low income and limited resources. The states and the federal government jointly fund the program. Medicaid is the primary source of dental coverage for children in low-income families and provides access to dental care for approximately 37 million children. In recent years, a number of dental providers and chains have been prosecuted for providing unnecessary dental procedures to children with Medicaid and causing harm to them in the process. Medicaid’s Early and Periodic Screening, Diagnostic, and Treatment (“EPSDT”) benefit requires states to cover all medically necessary dental services for children 18 years of age and under. Medicaid dental services must include diagnostic and preventive services, as well as needed treatment and follow-up care. Diagnostic services may include x-rays of the mouth; preventive services may include cleanings, topical fluoride applications, and dental sealants. Dental treatment covers a wide range of services such as fillings; tooth extractions; and pulpotomies, which are often referred to as “baby root canals.”

In a number of instances, children have then been intentionally misdiagnosed and subjected to numerous root canals, a procedure that requires anesthesia and provides significant reimbursement from Medicaid. Earlier this year, for example, the Office of the Inspector General barred the dental management chain Church Street Health Management LLC from Medicaid, effective next month, for failing to comply with a corporate integrity agreement. The chain operates over 50 “Small Smiles Centers.” The agreement was entered into as part of a $24 million settlement under the False Claims Act to settle allegations that it fraudulently billed the federal government and 22 states for procedures involving young patients that were regularly given unnecessary root canals and anesthesia to increase reimbursement from Medicaid.

Ultimately, the reports recommend that states should enhance its monitoring of Medicaid dental providers. Qui tam actions serve an important role in monitoring fraud. They are an essential element in driving successful recoveries of taxpayer dollars under the False Claims Act. The Act imposes strong monetary penalties on violators and enables whistleblowers to share in the recovery of those penalties. It also provides ample employee protections against retaliatory actions by an employer because of the employee’s whistleblower’s activity.