Delta Dental resolves lawsuit against Smile Center clinics

Delta Dental^® of Minnesota announced today it has reached an out-of-court settlement with the Smile Center dental clinics, resolving a lawsuit pending in Hennepin County District Court. Under the terms of the settlement, the Smile Center clinics will pay Delta Dental $750,000 and Delta Dental will distribute that amount and about another $3.1 million escrowed from claims submitted by the Smile Center clinics that Delta Dental believed were fraudulent or abusive.

Delta Dental is a dental benefits plan administrator for several health care plans engaged by the state of Minnesota to provide services for low-income Minnesotans. Delta began its investigation when a dentist sent Delta an anonymous letter. Delta's review found what it believed to be abnormally high utilization rates for several mostly routine dental procedures. When Delta concluded that the Smile Center clinics had billed for services that Delta suspected were possibly fraudulent or abusive, Delta asked for sound clinical explanations for the utilization rates. In Delta's view no reasonable clinical explanations were provided and Delta thus withheld and offset monies that would otherwise have been paid to the Smile Center clinics. The right to offset is included in Delta's provider agreements. When the Smile Center clinics sued Delta for the withheld funds, Delta counter-claimed for the return of additional funds it believed were paid for fraudulent and abusive services. In the settlement, both Delta and the Smile Center clinics deny any liability or wrongdoing.

About 90 percent of the claims originated under Delta-administered, state-funded public programs. The remaining 10 percent involve claims submitted under Delta's commercial dental benefit plans.

Delta Dental President and CEO David Morse said, "We are glad to have this case resolved. Delta Dental takes its responsibility to act as an effective public steward of other people's money very seriously. Delta has an anti-fraud plan on file with the Minnesota Department of Commerce as required by Minnesota law. Delta's health plan contracts have specific reporting requirements for suspected fraud and abuse. Delta believes it has met its legal and contractual responsibilities in this case."

All of the public program funds recovered will be returned to Delta's health plan contractors. On the commercial side, approximately 85 percent of the recovery will be credited to Delta's self-insured groups and the remaining 15 percent should help moderate Delta's rates for risk groups.

Delta is headquartered in Eagan, Minn. The Smile Center clinics are located in Big Lake, Savage, Deerwood, St. Paul and Brooklyn Park, Minn.

The settlement ends litigation initiated in early 2009. The case was scheduled for trial in April.