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New York AG settles with Aspen Dental (non-dentists): $450k civil penalty

By June 22, 2015March 31st, 2023Michael's Operatory

On June 18th, the New York Attorney General, Eric T. Schneiderman, announced a settlement with Aspen Dental Management, Inc. (“Aspen“) concerning how it operates in New York State. According to the statement released by the Attorney General, the settlement requires Aspen to “overhaul the way it does business in New York, so that it does not dictate the care provided by dentists and hygienists at dental practices, does not split patients’ fees with the clinics, which is illegal in New York, and makes clear to consumers that Aspen Dental Management is not a provider of dental services”.

By way of background, Aspen is a Syracuse-based company that provide business and administrative support to dental practices (with 500 locations in the U.S., 7 dental practices operating 40 “Aspen Dental” offices in New York State, and $645-million in annual revenues). According to the Attorney General’s office, it received over 300 consumer complains since 2005 concerning patients’ experiences at “Aspen Dental” offices. An investigation was commenced and the Attorney General’s office concluded that Aspen was not merely acting as a dental support organization (i.e. providing back-end business and administrative support). Rather, it was doing things that extended beyond the law and intruded on patient care. According to the Attorney General’s office, this included: Aspen pressuring dentists and hygienists to promote certain patient care, having significant control over the dental practice (including their finances, processing payment, hiring staff, etc.), sharing profits with dentists (which was prohibited), and marketing under the “Aspen Dental” trade name (which created misconceptions about common ownership, philosophy and standards and constituted misleading advertising).

New York State laws prohibits non-dentists from practicing dentistry. And only professional service corporations or professional service limited liability corporations can practice dentistry (which Aspen was not). Furthermore, dentists face sanctions (including having their license revoked, suspended or annulled) for splitting fees with non-dentists.

For its part, Aspen defended its business practices and blasted the allegations as “sensationalized”. The company issued a statement saying that patient care has always been paramount and that its business involves providing business support to the independent dentists who own and operate Aspen Dental branded practices (without getting involved in clinical aspects of the dental practice).

On June 18, the Attorney General’s office announced a settlement with Aspen, which included the following:

  • Over the next 3 years, Aspen will stop exercising control over practice’s clinical decisions (no more communicating with staff about dental care)
  • Each practice’s clinical staff must operate as independent practices without limitation on their practice of dentistry.
  • Aspen has to let the practices keep full control of their finances.
  • Aspen cannot receive compensation or payment from dental practices that depend upon the dental practice’s profits, revenues, deposits or any other income or earnings (including a percentage of a dental practice’s revenues and profits). Aspen may charge fixed fees for business support services that can be negotiated no more frequently than once every few months (e.g. 3 months or six months).
  • Aspen has to make clear to the public that the practices are independently owned and operated by licensed dentists.
  • Aspen must train its employees to clearly identify the dental practice in communications with the public.
  • Aspen must pay a $450,000 civil penalty.
  • Aspen must pay an independent monitor to oversee how the settlement is put in place over the next 3 years.

In a statement, the New York Attorney General said: “Medical and dental decisions should be made by licensed providers using their best clinical judgment, and should not be influenced by management companies’ shared interest in potential profits..By enforcing New York’s laws banning the corporate practice of medicine and fee-splitting between medical practitioners and nonlicensed individuals and entities, today’s agreement ensures that New Yorkers receive quality dental care.”

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.