Western Dental Services, facing a state lawsuit over alleged shoddy patient care and a federal criminal probe of alleged insurance fraud, accused California regulators Tuesday of violating their own procedures and conducting a witch hunt.
Western, the state’s biggest dental HMO, said the California Department of Corporations set a “secret higher standard” to “make Western look bad” during a survey that resulted in a report highly critical of Western’s operations.
The report has not yet been made public, though details of its findings are included in court papers. Western’s criticism of the state in a Los Angeles Superior Court filing was its first detailed response to the April lawsuit.
Citing a decade-long record of “shoddy, dangerous” patient care and licensing violations, the corporations agency sued to put Western Dental into receivership--effectively assuming control of its management. The state is also seeking a $3-million fine against the Garden Grove-based company.
Meanwhile, lawyers for Western Dental and the state have been trying to negotiate a settlement to avoid a costly court fight. A hearing on the receivership action is scheduled for Monday.
A state source close to the negotiations said the parties had “gotten close” to a settlement previously but that talks have stalled over the amount of the fine, the terms of receivership and other issues.
The government accused Western of operating a “mass production, low-quality dental mill” that encourages dentists to over-treat patients to maximize profit. One of the state’s conditions of settlement, the source said, is eliminating bonuses paid to Western Dental managers based on “production, or total office billings.”
Separately, the FBI and U.S. postal inspectors are investigating Western for possible insurance billing fraud.
State regulators have said the chain of 100 dental clinics, headed by retired dentist Robert Beauchamp Jr., overtreats patients in order to help the Beauchamp family rake in “enormous profits.”
In its response, Western claimed that the corporations agency departed from its normal procedure of doing a random check of patient files. Instead, the agency “directed its consultants to look at what are likely the most problematic cases Western handled,” such as cases that were the subject of malpractice lawsuits, patient complaints or ones involving very complicated dental work.
It also complained that a dentist retained as a consultant for the state survey graduated last in his dental school class and flunked the dental board exams twice before passing.
An agency spokeswoman defended the probe as “very comprehensive regardless of what Western Dental is claiming.”
Western Dental contends that the state’s legal action would “effectively ruin Western’s dental business, irreparably damage its reputation and deprive a large segment of the population of one of the only affordable alternatives available for quality dental services.”
Western Dental’s clinics are often located in low-income neighborhoods where many other dentists do not want to locate their practices.
Meantime, the corporations agency confirmed that its main offices in Los Angeles were burglarized over the weekend. The spokeswoman said that numerous pieces of office and computer equipment were stolen but that she didn’t know if any of the agency’s files were tampered with or stolen.
The agency, which regulates health maintenance organizations, securities firms and other businesses, has access to many sensitive corporate documents. The California Highway Patrol is investigating.