Practice ownership at heart of consent order in North Carolina
Morrisville, N.C.—A North Carolina state court in September entered a consent order resolving a complaint by the North Carolina State Board of Dental Examiners against Heartland Dental Care Inc. and an individual dentist after the dental board alleged the dentist violated the state’s Dental Practice Act’s ownership provisions.
Related to that matter, the state dental board also issued an official reprimand against another dentist.
The consent order stipulated that Dr. Gary Cameron sold his dental practice, Asheboro Dental Care, to Heartland Dental, an Effingham, Ill.-based corporation, on or about March 31, 2010. The North Carolina Dental Practice Act specifies that only licensed dentists may own, manage, supervise, control or conduct a dental practice, said Dr. Alec Parker, executive director of the North Carolina Dental Society.
Dental management companies are allowed to exist in North Carolina as long as a licensed dentist is in control of the operation of the practice, Dr. Parker said.
“In my view, it comes down to who’s making the decisions,” Dr. Parker said. “I don’t want to paint all of them with the same brush. Some of the management companies that we have operating in North Carolina, as best as we can tell, are operating within the letter of the law. And more power to them. We just don’t feel it’s appropriate to operate outside the law and sometimes, when a management company is making decisions, it affects patient care."
Dr. Peter Son, who worked with Dr. Cameron in his practice, was formally reprimanded by the board. The dental board said Dr. Son had knowledge and directly participated in negotiating employment contracts with Dr. Cameron and Heartland. Dr. Son has since rescinded his agreements with Heartland and Dr. Cameron and has agreed to not have any future agreements with Heartland, according to the order.
The dental board settled its complaints with Heartland and Dr. Cameron in separate consent orders. Bobby White, chief operations officer for the board, said because all parties agreed to the settlement, there can be no challenges against the ruling.
Dr. Cameron and officials with Heartland said they are disappointed with the ruling. Dr. Cameron said the dental board did not show any specific examples for how the change in business structure for his practice affected patient care. He emphasized the dental board’s decision was based on how he has chosen to run his practice, not the quality of care.
“I believe I should have that choice,” Dr. Cameron said. “At all times I’ve been in complete control of my practice and made the clinical decisions for my practice.”
In a statement, John M. Slack, chief development officer for Heartland, said he’s disappointed in the outcome.
“We are proud of the quality and level of the services we provide to the dentists and dental offices in the communities where we do business. In our 14-year history, we have never encountered an issue like this with any regulatory board in any state where we operate. Despite our attempts to address the concerns of the North Carolina dental board, we were unable to reach a resolution to maintain our initial agreements with Dr. Cameron,” the statement said. “At no point in the careers of Dr. Gary Cameron and Dr. Peter Son, two exemplary dentists, has there ever been a question about the quality of their clinical care. Ensuring that these dentists can continue to serve the patients in their community was the one and only reason we decided to accept the terms imposed by the North Carolina dental board. We will continue to provide administrative services to Dr. Cameron’s practice in Asheboro for the foreseeable future under a modified agreement that has been approved by the North Carolina dental board.”
According to its website, Heartland Dental Care provides administrative support to dentists in human resources, accounting, supply and equipment procurement, marketing and customer support. It works with more than 300 dental practices in 18 states, employing more than 3,050 people, including more than 400 dentists.
The consent order, which Dr. Cameron and Heartland agreed to, outlines how beginning in 2009, Dr. Cameron had the value of his practice assessed, contacted Heartland about purchasing the practice and ultimately entered into a purchase agreement, which included a management agreement, employee lease, power of attorney, assumption agreement, subscription agreement and investment representation and a noncompetition agreement. Heartland paid Dr. Cameron $2.2 million for his practice and $138,396 for his accounts receivable and gave him nearly $250,000 in Heartland stock, according to the consent order.
“By the time you follow the trail, there’s not much doubt that that agreement was against the current statute in North Carolina,” Dr. Parker said.
As part of the noncompetition agreement, Dr. Cameron agreed not to provide dental services within a 15-mile radius of his practice and not to run a competing business for the next five years. Dr. Cameron was required to fire all of his employees with the understanding Heartland would hire them back. Dr. Cameron could not hire any of the employees for five years.
Dr. Cameron was also hired as an employee of Heartland. From the time he sold his practice until August of this year, the practice continued to operate as Asheboro Dental Care.
Under the consent order, Dr. Cameron’s license is suspended for two years, but the suspension will be stayed for five years if he follows a list of conditions, including not violating the Dental Practice Act, providing a written audit report of the financial statements for his professional entity, and not having any contract with Heartland other than what is stipulated in the order.
The order also states that all agreements or contracts between Heartland and Dr. Cameron must be canceled or nullified; Heartland and Dr. Cameron are permitted to enter into an amended management services agreement that must be approved by the dental board; and Heartland must pay the dental board $36,818 for its investigation, among other orders.
There is legislation pending in the North Carolina State House of Representatives and Senate that would strengthen the Dental Practice Act and clarify the law as far as how dental management companies can operate. Dr. Parker expects the bill to be heard in the next legislative session in spring 2012.
Dr. Cameron believes the current version of the practice act and the proposed amendments are outdated. He understands the dental board is just following the law, but he believes the state should be working to solve the problem of North Carolina’s low number of dentists per capita rather than restricting innovative practices that provide quality care.
For a new dentist, entering into an agreement with a dental services organization is a chance to accelerate their practice, Dr. Cameron said. For a dentist nearing retirement, it’s a way to smooth the transition and keep practice staff employed, said Dr. Cameron, who is 62.
“This is a time when North Carolina could use more help in their economy not more restrictions,” Dr. Cameron said.
Heartland officials agree.
“The North Carolina dental board’s actions will restrict North Carolina dentists from freely entering into business arrangements that do not impact clinical care in any manner, and this will have a chilling effect on the ability of North Carolina dentists to realize the full economic value of their dental practices,” according to the company’s statement. “In a state where the number of dentists per capita is among the lowest in the country, we believe the actions of the North Carolina dental board will result in reduced access to quality dental care for North Carolina citizens.”