UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION THE UNITED STATES OF AMERICA, —:_~—CIVIL ACTION NO. 4:1 1-cv-792 THE STATE OF CONNECTICUT, THE DISTRICT OF COLUMBIA, : FILED IN CAMERA AND UNDER THE STATE OF GEORGIA, SEAL IN ACCORDANCE WITH THE STATE OF INDIANA, 31 U.S.C. §3730(B)(2) OF THE THE STATE OF LOUISIANA, FEDERAL FALSE CLAIMS ACT THE STATE OF MARYLAND, : THE COMMONWEALTH OF : DONOT PLACE IN PRESS BOX MASSACHUSETTS, : DONOT ENTER ON PACER THE STATE OF NEW MEXICO, 5 THE STATE OF OKLAHOMA, THE STATE OF TEXAS, and THE COMMONWEALTH OF VIRGINIA, : JURY TRIAL DEMANDED EX REL. POONAM RAI, D.D.S. and . ROBIN FITZGERALD, Plaintiffs, v. NCDR, LLC, NCDR HOLDING CORPORATION FRIEDMAN, FLEISCHER & LOWE, FRIEDMAN FLEISCHER & LOWE CAPITAL PARTNERS II, L-P., KOOL SMILES, P.C., KOOL SMILES HOLDING CORP. DR. DAVID M. VIETH, P.C., DR. DAVID M. VIETH 2, P.C., DAVID VEITH D.DS.,P.C., DENTISTRY OF BROWNSVILLE, P.C. KS AZ-1,P.C. KS AZ-4, P.C. KS GASM, P.C. KS2 MS, P.C., KS2NM, P.C., KS2TX, P.C,, KOOL SMILES, P.S.C., KOOL SMILES DC, P.C., KOOL SMILES DENTISTRY, P.C., KOOL SMILES DENTISTRY 2, P.C., KOOL SMILES IN FT. WAYNE, P.C.,KOOL SMILES INI-1, P.C., KOOL SMILES INI-2, P.C., KOOL SMILES IN-3, P. KOOL SMILES MAC, P.C. KOOL SMILES OK, P.C. KOOL SMILES SC-2 P. KOOL SMILES VAN, P.C. DR. DALE MAYFIELD D.M_D., P.C. PAUL WALKER D.D.S. PA, and DOES 1 THROUGH 50 INCLUSIVE, Defendants. THIRD AMENDED COMPLAINT PURSUANT TO THE FEDERAL FALSE CLAIMS ACT, 31 U.S.C. §31 U.S.C. §3729 ET.SEQ. AND PENDENT STATE FALSE CLAIMS ACTSIL I. Vv. TABLE OF CONTENTS, JURISDICTION AND VENUE THE PARTIES... A. PLAINTIFFS... B. DEFENDANTS... THE FEDERAL AND STATE FALSE CLAIMS ACTS.... FACTS A. THE KOOL SMILES BUSINESS PLATFORM... 1. Kool Smiles Crams As Many Patients Into A Day As Possible... 2. Kool Smiles Requires Dentists And Clinics To Hit Continually Increasing Monthly Revenue And Procedure Quotas .. 3. Kool Smiles Uses Salaries That Are Grossly Above The Market Rate To Induce Dentists And Hygienists To Perform Medically Unnecessary Procedures B. KOOL SMILES EMPLOYEES REGULARLY PROVIDE UNNECESSARY SERVICES, PERFORM SERVICES THEY AREN’T AUTHORIZED TO PERFORM, AND BILL FOR SERVICES THAT AREN’T PERFORMED .. 1. Kool Smiles Providers Perform Unnecessary Services On Children Covered By Medicaid And Other Government Healthcare Programs a, Dental assistants and hygienists take unnecessary x-rays. b. Dentists commonly use papooses and nitrous oxide to keep-up with the patient volumes and satisfy the revenue quotas Kool Smiles demands. c. Dentists routinely perform unnecessary pulpotomies, crowns and alveoplasties.. d. Dentists routinely perform unnecessary fillings and sealants. ©. Procedures are performed on the wrong patients.. 2. Kool Smiles Providers Commonly Perform, And Bill Government Healthcare Programs For, Dental Procedures They Aren’t Authorized To Perform a. Dentists perform dental procedures on minors without first obtaining informed consent from their parents or guardians b. — Uncertified hygienists, dental assistants, and student interns take x-rays. ©. Kool Smiles dentists use the DEA registration numbers of other dentists to prescribe pain medication.. : d. Unauthorized use of nitrous oxide on patients.. . Hygienists and dental assistants apply sealants and perform cleanings without dentist orders... 7£. _ Dentists provide services to patients though they aren’t credentialed by CHIP and other government healthcare program: 3. Kool Smiles Bills Government Healthcare Programs For Services That Are Not 76 Reimbursable 1 a. Defendants are in violation of state laws governing dental practice ownership... 78 b. Kool Smiles flouts the Medicaid Provider Enrollment Process.. 88 ©. Kool Smiles employees often do not complete and sign patient charts until days, weeks, or months after the patient visit, causing charts and the resultant bills to frequently be inaccurate . 4. Kool Smiles engages in widespread up-coding... €. Kool Smiles bills for crowns, pulpotomies, space maintainers, fillings, and limited oral evaluations that either were not performed or were of such poor quality that the services were essentially worthless. 7 £. Kool Smiles bills for periodontal diseases exams that aren’t documented properly and are therefore worthless. Kool Smiles bills Texas Medicaid for First Dental Home services without meeting the conditions of payment: h. Defendants bill the Texas Medicaid THSteps program for medically ‘unnecessary dental treatments. i. Defendants fail to abide by certain Texas Medicaid requirements including verifying patients are accompanied by an adult and obtaining written informed consent before treatment 90 96 Vv. COUNTS. Vi. REQUESTS FOR RELIE] VII. DEMAND FOR JURY TRIAL1. Plaintiffs Poonam Rai, D.D.S. and Robin Fitzgerald (hereinafter collectively referred to as “Relators”) bring this action on behalf of the United States of America as well as the State of Connecticut, the District of Columbia, the State of Georgia, the State of Indiana, the State of Louisiana, the State of Maryland, the Commonwealth of Massachusetts, the State of New Mexico, the State of Oklahoma, the State of Texas, and the Commonwealth of Virginia, (hereinafter collectively referred to as “Plaintiff States”), against Friedman, Fleischer & Lowe, Friedman Fleischer & Lowe Capital Partners, Il, L-P., NCDR Holding Corporation, NCDR, LLC, Kool Smile, P.C., Kool Smiles Holding Corporation, and the remaining Defendants named above and below for violations of the Federal False Claims Act (31 U.S.C. §§ 3729(a)(1)(A)- (B)), the Connecticut False Claims Act (Conn, Gen. Stat, §§ 17b-301b(a)), the District of Columbia False Claims Act (D.C. Code Ann. §§ 2-308.14(a)), the Georgia State False Medicaid Claims Act (Ga, Code Ann. §§ 49-4-168.1(a)), the Indiana False Claims and Whistleblower Protection Act (Ind. Code § 5-11-5.5-2(b)), the Louisiana Medical Assistance Programs Integrity Law (La. Rev. Stat. §§ 46:438.3), the Maryland False Health Claims Act (Md. Code Ann., Health-General §§ 2-602(a)), the Massachusetts False Claims Law (Mass. Ann. Laws. Ch. 12, § 5B), the New Mexico Medicaid False Claims Act (N.M. Stat. Ann. §§ 27-14-4), the New Mexico Fraud Against Taxpayers Act (N.M. Stat. Ann. §§ 44-9-3A), the Oklahoma Medicaid False Claims Act (Okla, Stat. Tit. 63, §§ 5053.1), the Texas Medicaid Fraud Prevention Act (Tex. Hum. Res. Code §§ 36.002), and the Virginia Fraud Against Taxpayers Act (Va. Code §§ 8.01- 216.3), (hereinafter collectively referred to as the “State False Claims Acts” or “State FCAs”) to recover all damages, civil penalties and all other recoveries provided for under the Federal False Claims Act and State FCAs.2. As detailed more fully below, Kool Smiles directs the operations of and controls a chain of 100+ dental clinics that focus primarily on providing dental services to children of low income families who are insured by Medicaid or other government healthcare programs. Kool Smiles has built a business platform and created a culture that systematically causes all of its clinics to place maximizing profits ahead of patient care. Under this business model, Kool Smiles maintains a vise-like grip on each clinic’s financial performance by dictating the number of patients that dentists and hygienists must treat and the procedures dentists perform (e.g., crowns, pulpotomies, sealants, fillings, and extractions) through procedure and revenue quotas and then forcing dentists to satisfy the quotas to maintain both their jobs and outsized pay packages, a significant portion of which is based upon how much revenue the dentists personally generate, 3. Hence, the dental providers — dentists and hygienists — are relegated to following Kool Smiles’ protocols, rather than their own professional judgment, in performing dental procedures on children. And, while making money is the primary function of business, the Kool Smiles model requires its clinics to significantly compromise the quality of care they provide — often rising to the level of physically abusing patients — and to engage in the following fraudulent Practices, among others, to meet the company’s revenue demands: + Hygienists and dental assistants commonly take unnecessary x-rays; + Medicaid is billed for incomplete hygiene services because hygienists are limited to 15 minutes per patient, regardless of the clinical presentation of the patient. + Dentists frequently perform unnecessary pulpotomies, crowns, fillings, and sealants; + Dentists routinely use papooses and nitrous oxide to speed-up procedures — not out of medical necessity; + Dentists perform unnecessary alveoplasties; + Dentists often perform dental procedures without obtaining informed consent from the patients’ parents;+ Uncertified hygienists, dental assistants, and student intems frequently take x-rays; + New dentists that aren’t registered with the DEA commonly prescribe pain medication; + Dentists and dental assistants often administer nitrous oxide without required permits; + Hygienists and dental assistants routinely apply sealants and perform cleanings without dentists’ orders; + Dentists often provide dental services to patients before they are credentialed by a government healthcare program, yet still subsequently bill the programs for their services; + Clinics routinely bill Texas Medicaid for the First Dental Home service even though they do not provide all of the required components of the service; + Clinics engage in widespread up-coding; + Clinics bill for crowns, pulpotomies, space maintainers, fillings, and limited oral evaluations that either were not performed or were of such poor quality that the services were essentially worthless; and + Clinics bill for periodontal disease exams that aren’t documented properly and are therefore worthless. 4, Through these efforts, Defendants have been systematically defrauding the United States and the Plaintiff States since as far back as 2004 and continuing to the present, by knowingly filing false claims to Medicaid and other government healthcare programs. I. JURISDICTION AND VENUE 5. Jurisdiction is founded upon the FCA, 31 U.S.C. § 3732(a) & (b), and 28 U.S.C. §§ 1331 and 1345. 6. Venue is proper in the Southern District of Texas under 31 U.S.C. § 3732(a) & (b) and 28 US.C. § 1391(b) & (c).M. ‘THE PARTIES A. PLAINTIFFS 7. The United States is a plaintiff to this action, which it brings on behalf of the Department of Health and Human Services (“HHS”), the Centers for Medicare and Medicaid Services (“CMS”), and other Federally-funded healthcare programs, including Medicaid, the Children’s Health Insurance Program (“CHIP”), and TRICARE. 8. Medicaid is a government health insurance program jointly-funded by the Federal and State governments. See 42 U.S.C. § 1396 ef seq. Each State administers its own Medicaid program. However, each State program is govemed by Federal statutes, regulations and guidelines. The Federal portion of each State’s Medicaid payment — the Federal Medical Assistance Percentage — is based on that State’s per capita income compared to the national average. During the relevant time period, the Federal Medical Assistance Percentage was between approximately 50% and 80%. 9. CHIPis a government health insurance program jointly-funded by the Federal and State governments. Each State administers its own CHIP program. CHIP provides insurance to low-income children who are ineligible for Medicaid but cannot afford private insurance. States receive an enhanced Federal match to provide for this coverage. 10. TRICARE is a Federally-funded program providing medical benefits to military personnel, their families, retired veterans, and reservists called to duty. See 32 C.F.R. § 19 et seq. 11. Medicaid, CHIP, and TRICARE are collectively referred to as “Government Payers”. 12, Atal relevant times, Defendants directly or indirectly claimed that Kool Smiles Clinics provided the dental services specified herein to Medicaid, CHIP, and TRICARE beneficiaries in the State of Arizona, the State of Arkansas, the State of Connecticut, the District 4of Columbia, the State of Georgia, the State of Indiana, the State of Kentucky, the State of Louisiana, the State of Maryland, the Commonwealth of Massachusetts, the State of Mississippi, the State of New Mexico, the State of Oklahoma, the State of South Carolina, the State of Texas, the Commonwealth of Virginia, and the State of Washington. 13. Relator Poonam Rai, BDS, D.D.S. (hereinafter “Dr. Rai”) is a citizen of the United States and a resident of Texas. From December 2008 through January 2011, Dr. Rai was ‘employed as an Associate Dentist by the Kool Smiles clini Amarillo, Texas. 14, Relator Robin Fitzgerald (hereinafter “Fitzgerald”) is a citizen of the United States and a resident of Texas. From November 2008 to August 2010, Fitzgerald served as clinic manager for the Kool Smiles clinic in Amarillo, Texas. In addition to performing the clinic ‘manager duties for the Amarillo clinic, Fitzgerald also spent time at several other Kool Smiles clinics in Texas training new clinic managers. And, for a period of time during her employ at Kool Smiles, Fitzgerald performed the responsibilities of West Texas Area Manager. 15, The allegations in this Complaint are based upon information Relators discovered through their work at Kool Smiles, through their own personal efforts, observations, and investigation. Relators know that the fraudulent and abusive practices alleged in this Complaint are being engaged in at most, if not all, Kool Smiles clinics, nationwide, for the following reasons, among others: + All Kool Smiles clinics are centrally controlled and operate under the same business platform as alleged herein; + Kool Smiles’ central billing processes claims for all of the 100+ Kool Smiles clinics; + Kool Smiles is illegally engaged in the corporate practice of dentisty; ' As used herein the term “clinic” means the dental practices conducted under the name “Kool Smiles” at the specific location or locations.+ Kool Smiles fraudulently induced State Medicaid Programs to accept its dentists as. providers; + Along with other managers of the various Kool Smiles clinics, Fitzgerald participated in weekly conference calls hosted by Kool Smiles executives where revenue and procedure quotas were enforced and clinic managers were rebuked if their clinics failed to satisfy the quotas; + Dr. Rai has audited numerous charts and records of patients that were treated at ‘numerous different Kool Smiles clinics and has seen similar evidence of fraud at each location; + Fitzgerald visited and worked at other Kool Smiles clinics, and observed similar evidence of fraud at each location; + Dr. Rai and Fitzgerald had numerous conversations with colleagues at other clinics who acknowledged that the fraudulent and abusive practices alleged herein occur at their clinics; and + Dr. Rai and Fitzgerald have reviewed documents that show all clinics were managed and operated the same manner. B. DEFENDANTS 16. Defendant NCDR is a management company that operates, manages and controls Kool Smiles, P.C. along with the 100+ dental practices that do business as Kool Smiles. NCDR has been providing dental services through the Kool Smiles clinics since 2002, when the company was founded. A private equity firm, Friedman Fleischer & Lowe, is the owner of NCDR. NCDR maintains its principal place of business at 1090 Northchase Parkway. SE, Ste. 150, Marietta, GA 30067. 17. Defendant NCDR Holding Corporation is a company that upon information and belief is an affiliate or wholly owned subsidiary of FFL and holds some or all of the outstanding stock of NCDR. Jeff Lane is on the Board of Directors of NCDR Holding Corporation, and as of January 2013, was supporting NCDR as interim President, and was on the “Operating Team” ofDefendant FFL.? Defendants NCDR and NCDR Holding Corporation are collectively referred to hereafter as “NCDR.” 18. To get around the constraints imposed on its business after Georgia Medicaid disqualified Kool Smiles as a provider for billing for procedures that were determined to be unnecessary, NCDR formed DPMS, Inc. in or around November 2006. Through DPMS, Inc., NCDR opened, managed, and controlled new dental clinics that do business as Kool Smiles. Internally, employees referred to NCDR as “Kool Smiles 1” or “KS1” and DPMS as “Kool Smiles 2” or “KS2.” In or around May 2010, DPMS merged into NCDR and ceased existing as an independent legal entity. 19, Defendant Friedman Fleischer & Lowe (“FFL”) is a sponsor and manager of private equity funds structured as limited partnerships. FFL has more than $2 billion under management, Its investors include a variety of pension funds, endowments and other institutional investors, It seeks to invest in the United States and Canada and typically invests in companies with values between $30 million and $500 million. FFL maintains its principal place of business at One Maritime Plaza, 22" Floor, San Francisco, CA 94111. FFL formed NCDR to skirt state law prohibitions against anyone but dentists from owning dental practices, and NCDR is the vehicle through which FFL collects all revenues generated by Kool Smiles. 20. Defendant Friedman Fleischer & Lowe Capital Partners Il, L.P. (“Capital Partners IP”) a limited partnership organized under Delaware law, is a private equity fund that was formed by FFL in 2004 to invest in outsourced business services, consumer products, financial services, education, healthcare, marketing and media sectors. FFL was the general partner of Capital Partners II. The address of Capital Partners Il is the same as FFL. ? Lane also had offices in NCDR’s principal place on business on Northchase Parkway in Marietta, GA, on the same floor as Kool Smiles’ Chief Dental Officer, Dr. Dale Mayfield. 721. Defendant Kool Smiles, P.C. is an affiliate of NCDR and employs all of the dentists that work at the various dental clinics identified herein that do business under the name Kool Smiles. Kool Smiles, P.C. also owns and operates at least 12 dental clinics that do business as Kool Smiles. These clinics are located at: (i) 2107 E. Walnut Ave., Dalton, GA 30721, (ii) 5495 Old National Highway, Atlanta, GA 30349, (iii) 1756 Candler Rd., Decatur, GA 30032, (iv) 2900 S. Cobb Dr., Ste. B-2, Smyma, GA 30080, (v) 4030 Lawrenceville Highway #13 Lilbum, GA 30047, (vi) 4458 Jonesboro Rd., Forest Park, GA 30297, (vii) 4519 Woodruff Rd., Ste. 10, Columbus, GA 31904, (viii) 2113 Bemiss Rd., Valdosta, GA 31602, (ix) 1344 Gray Highway, Ste. 1380, Macon, GA 31211, (x) 112 Broad St. Sumter, SC 29150, (xi) 3227 W. Blue Ridge Dr., Greenville, SC 29611, and (xii) 3203 W. Blue Ridge Dr., Greenville, SC 29611. Kool ‘Smiles, P.C.’s principal place of business is 1090 Northchase Pkwy. SE, Ste. 290, Marietta GA 30067. 22. Defendant Kool Smiles Holding Corp., an affiliate of NCDR and/or FFL, is a Delaware corporation with its headquarters at 400 Galleria Parkway, Suite 800, Atlanta, GA 30339, and upon information and belief is a holding corporation that owns, controls or operates the Kool Smiles clinics in conjunction with Kool Smiles, P.C. 23. Defendant Dr. David M. Vieth, P.C. owns and operates at least two dental clinics that do business as Kool Smiles. The clinics are located at: (i) 1147 University Blvd. East, Takoma Park, MD 20912, and (ii) 6471 Marlboro Pike, District Heights, MD 20747. 24. Defendant Dr. David M. Vieth 2, P.C. owns and operates at least five dental clinics that do business as Kool Smiles. The clinics are located at: (i) 1580 Wesel Blvd., Ste. O, Hagerstown, MD 21740, (ii) 2429 Frederick Ave., Baltimore, MD 21223, (iii) 4173 PattersonAve., Baltimore, MD 21215, (iv) 7839 Eastpoint Mall, Ste. 7842, Baltimore, MD 21224, and (v) 406 N. Fruitland Bivd., Salisbury, MD 21801. 25. Defendant David M. Vieth D.D.S., P.C. owns and operates at least eight dental clinics that do business as Kool Smiles. The clinics are located at: (i) 2820 Louisville Ave., Monroe, LA 71201; (ii) 3735 Jewella, Ave., Shreveport, LA 71109, (iii) 3455 Government St., Baton Rouge, LA 70806, (iv) 2706 Ryan St., Lakes Charles, LA 70601, (v) 2001 NE Evangeline Thruway, Lafayette, LA 70501, (vi) 3057 Gentilly Blvd., New Orleans, LA 70122, (vii) 6 Westside Shopping Center, Gretna, LA 70053, and (viii) 2222 Clearview Parkway, Metairie, LA 70001. 26. Defendant Dentistry of Brownsville, P.C. owns and operates at least 15 dental clinics that do business as Kool Smiles. The clinics are located at: (i) 1100 Lowes Bivd., Killeen, TX 76540, (ii) 213 E. Expressway 83, Mission, TX 78572, (iii) 5341 Antoine Dr., Houston, TX 77091, (iv) 1601 Veterans Blvd., Del Rio, TX 78840, (v) 529 N. Valley Mills Dr, Waco, TX 76710, (vi) 432 S. Bibb Ave., Eagle Pass, TX 78852, (vii) 5300 San Dario Ave., Laredo, TX 78041, (viii) 2921 Boca Chica Blvd., Ste. 15, Brownsville, TX 78521, (ix) 1301 E. US. Highway 83, McAllen, TX 78501, (x) 3125 S. Texas Ave., Bryan, TX 77802, (xi) 5601 Bandera Rd,, Leon Valley, TX 78238, (xii) 3850 S. North Braunfels Ave., Ste. 101, San Antonio, TX 78223, (xiii) 2400 Richmond Rd., Ste. 9, Texarkana, TX 75503, (xiv) 2316 S. Zapata Highway #190, Laredo, TX 78046, and (xv) 1004 N. Texas Blvd., Weslaco, TX 78596. 27. Defendant KS AZ-1, P.C. owns and operates at least three dental clinics that do business as Kool Smiles. The clinics are located at: (i) 3554 W Glendale Ave., Phoenix, AZ 85051, (ii) 2383 West 24th St., Yuma, AZ 85364, and (iii) 2930 S. 6th Ave., Tucson, AZ 85713.28. Defendant KS AZ-4, P.C. owns and operates least one dental clinic located at 5504 East 22nd St., Ste. 140, Tucson, AZ 85711 that does business under the name Kool Smiles. 29. Defendant KS GASM, P.C. owns and operates least one dental clinic located at 5158 Memorial Dr., Stone Mountain, GA 30083 that does business under the name Kool Smiles. 30. Defendant KS2 MS, P.C. owns and operates least five dental clinics that do business as Kool Smiles. The clinics are located at: (i) 2650 Beach Blvd., Ste. 31, Biloxi, MS 39531, (ii) 809 Ellis Ave., Ste. 34, Jackson, MS 39208, (iii) 3720 Hardy St., Ste. 23, Hattiesburg, ‘MS 39402, (iv) 401 S. Gloster St, Ste. 101, Tupelo, MS 38801, and (v) 4463 N. State St., Jackson, MS 39206. 31. Defendant KS2 NM, P.C. owns and operates least one dental clinic located at 1300 El Paseo Rd., Las Cruces, NM 88001 that does business under the name Kool Smiles. 32. Defendant KS2 TX, P.C. owns and operates least 23 dental clinics that do business as Kool Smiles. The clinics are located at: (i) 3711 Gregory St., Wichita Falls, TX 76308, (ii) 5130 Fairbanks Dr., El Paso, TX 79924, (iii) 4754 S. 14th St., Abilene, TX 79605, (iv) 615 Zargoza Rd., Ste. 88, El Paso, TX 79907, (v) 2916 N. U.S. Highway 75, FWY Ste. 900, Sherman, TX 75090, (vi) 1000 N. Midkiff Rd., Midland, TX 79701, (vii) 2212 Bell St, Amarillo, TX 79106, (viii) 400 N. Timberland Dr., Lufkin, TX 75901, (ix) 1613 N. County Rd.,W1-A, Odessa, TX 79763, (x) 6065 Montana Ave., Ste. B4-B10, El Paso, TX 79925, (xi) 2539 Judson Rd., Longview, TX 75605, (xii) 1926 E. Southeast Loop 323, Tyler, TX 75701, (xiii) 1923 Marsha Sharp Freeway, Ste. 103, Lubbock, TX 79415, (xiv) 1840 N. Lee Trevino Dr., El Paso, TX 79912, (xv) 6910 N. Mesa St., Ste. C, El Paso, TX 79936, (xvi) 2903 50th St., Lubbock, TX 79413, (xvii) 710 Estes Dr., Ste. 105, Longview, TX 75602, (xviii) 3900 Aldine Mail Rd., Houston, TX 77039, (xix) 4403 Sherwood Way, San Angelo, TX 76901, (xx) 1650 10State Highway 351, Abilene, TX 79601, (xxi) 1601 Walton Dr., Waco, TX 76705, (xxii) 3864 Highway 64 West, Tyler, TX 75704, and (xxiii) 2000 9th Ave., Texas City, TX 77590. 33. Defendant Kool Smiles, P.S.C. owns and operates least two dental clinics that do business as Kool Smiles. The clinics are located at: (i) 1211 W. Broadway, Louisville, KY 40203 and (ii) 3510 Bardstown Rd., Louisville, KY 40218, 34. Defendant Kool Smiles DC, P.C. owns and operates least one dental clinic located at 1531 Maryland Ave. N.E., Washington, D.C. 20002 that does business under the name Kool Smiles. 35. Defendant Kool Smiles Dentistry, P.C. owns and operates least two dental clinics that do business as Kool Smiles. The clinics are located }) 105 Myrtle St, New Britain, CT 06051, and (ii) 531 Elm St., New Haven, CT 06511. 36. Defendant Kool Smiles Dentistry 2, P.C. owns and operates two dental clinics that do business as Kool Smiles. The clinics are located at: (i) 728 Wolcott St., Waterbury, CT 06705, and (ii) 1888 Main St, Hartford, CT 06120. 37. Defendant Kool Smiles In Ft. Wayne, P.C. owns and operates a dental clinic located at 1852 Bluffton Rd., Ft. Wayne, IN 46809 that does business under the name Kool Smiles. 38. Defendant Kool Smiles INI-1, P.C. owns and operates a dental clinic located at 3658 S. East St., Indianapolis, IN 46227 that does business under the name of Kool Smiles. 39. Defendant Kool Smiles INI-2, P.C. owns and operates a dental clinic located at 2248 E. 53rd St., Indianapolis, IN 46220 that does business under the name of Kool Smiles. 40. Defendant Kool Smiles IN-3, P.C. owns and operates at least seven dental clinics doing business as Kool Smiles. The clinics are located at: (i) 400 E. Diamond Ave., Evansville,IN 47711, (ii) 8327 Indianapolis Blvd., Highland, IN 46322, (iii) 1800 Fort Harrison Rd., Terra Haute, IN 47804, (iv) 1021 W Sth Ave., Gary, IN 46402, (v) 1313 W. Chicago Ave., East Chicago, IN 46312, (vi) 4315 Commerce Dr., Lafayette, IN 47905, and (vii) 3701 S. Main St., Ste. A150, Elkhart, IN 46517. 41. Defendant Kool Smiles MAC, P.C. owns and operates least seven dental clinics doing business as Kool Smiles. The clinics are located at: (i) 137 Hathaway Rd., New Bedford, MA 02746, (ii) 715 Crescent St., Ste. 9, Brockton, MA 02302, (iii) 933 Pleasant St., Ste. 102- 103, Fall River, MA 02723, (iv) 217 South St., Holyoke, MA 04010, (v) 2181 Washington St., Ste. 101, Roxbury, MA 02119, (vi) 1096 Revere Beach Parkway, Chelsea, MA 02150, and (vii) 1 Porter Square, Ste. 11, Cambridge, MA 02140. 42. Defendant Kool Smiles OK, P.C. owns and operates a dental clinic located at 1200 S. Air Depot Blvd., Midwest City, OK 73110 that does business under the name of Kool Smiles. 43. Defendant Kool Smiles SC-2, P.C. owns and operates at least three dental clinics that do business as Kool Smiles. The clinics are located at: (i) 4400 Dorchester Rd., Ste. 108, Charleston, SC 29405, (ii) 5422 Forest Dr., Columbia, SC 29206, and (iii) 3 Kmart Plaza, Greenville, SC 29605. 44. Defendant Kool Smiles Van, P.C. owns and operates at least 12 dental clinics that do business as Kool Smiles. The clinics are located at: (i) 3824 Mechanicsville Pike, Unit #12, Richmond, VA 23223, (ii) 400C Southpark Blvd., Colonial Heights, VA 23834, (iii) 4239 Holland Road, Ste. 762-A, Virginia Beach, VA 23452, (iv) 5900 E. Virginia Beach Blvd., Ste. 70, Norfolk, VA 23502, (v) 4722-24 N. Southside Plaza St., Richmond, VA 23224, (vi) 2338 E. Little Creek Rd., Norfolk, VA 23518, (vii) 4072 Victory Blvd., Portsmouth, VA 23701, (viii) 1214346 Warwick Blvd. #9, Newport News, VA 23223, (ix) 3533 Plank Rd., Ste. A, Fredericksburg, VA 22407, (x) 2000 Daniel Stuart Square, Woodbridge, VA 22191, (xi) 2165 Cunningham Dr., Hampton, VA 23666, and (xii) 6537-B Arlington Blvd., Falls Church, VA 22044, 4. Defendant Dr. Dale Mayfield D.M.D., P.C. owns and operates at least three dental clinics that do business as Kool Smiles. The clinics are located at: (i) 8104 Evergreen Way, Ste. B, Everett, WA 98203, (i 7809 N.E. Vancouver Plaza Dr., Unit B-210, Vancouver, WA 98662, and (jii) $24 E. Francis Ave., Spokane, WA 98208. 46. Defendant Paul Walker D.DS. P.A., owns and operates a dental clinic located at 2000 South University Ave., Little Rock, AR 72204 that does business under the name Kool Smiles. 47. _ In view of NCDR and DPMS, Inc.’s apparent practice of establishing entities to hold ownership of the dental clinics, there may be additional entities that own and operate dental clinics that do business under the name Kool Smiles. Because Relators are presently unaware of the true names and capacities of these entities, they consequently sue them under the fictitious names “Does | through 50, inclusive” (hereinafter referred to as the “Doe Defendants”). 48. At all relevant times, the management, supervision, control, reporting, and financial exchanges by and between Kool Smiles and the various clinics doing business as Kool ‘Smiles have been so inextricably intertwined that in effect they have operated as one single entity. They acted in concert together to foster, facilitate, and promote the unlawful conduct alleged herein. 49. All Defendants named in this lawsuit will be collectively referred to as “Defendants” or “Kool Smiles.” 13I. THE FEDERAL AND STATE FALSE CLAIMS ACTS. 50. The Federal False Claims Act (“FCA”) provides, among other things, that any person who (1) “knowingly presents, or causes to be presented, a false or fraudulent claim for Payment or approval,” or (2) “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim” is liable to the United States for a civil monetary penalty plus treble damages. 31 U.S.C. §§ 3729(a)(1)(A)-(B). 51. The term “knowingly” means “that a person, with respect to information (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information.” 31 U.S.C. §§ 3729(b\1)(A)(i)-iii). Proof of specific intent to defraud is not required. 31 U.S.C. § 3729(6(1)(B). 52. The term “claim” means “any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that (1) is presented to an officer, employee, or agent of the United States; or (2) is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government's behalf or to advance a Government program or interest, and if the United States Government (a) provides or has provided any portion of the money or property requested or demanded; or (b) will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded ....” 31 U.S.C. §§ 3729(b)(2)(A(i)-(ii). 53. “{T]he term ‘material’ means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b\(4). 54. Each of the Plaintiff States has individually enacted False Claims Acts modeled after the FCA that contain provisions similar to those quoted above, Relators assert claims under the State FCAs to recover for the Plaintiff States the amounts they provided Defendants in 14payment of the false claims presented to the States’ Medicaid, CHIP, and other healthcare programs alleged herein. Iv. FACTS A. THE KOOL SMILES BUSINESS PLATFORM 55. In 2004, the year that Capital Partners II private equity fund was sold to investors, FFL created NCDR, which its website described as a company that “provides non-clinical services to dental group practices, including providing dental facilities, support staff and other business services.” FFL"s website states, with respect to its relationship to Kool Smiles, that: “NCDR’s principal client is Kool Smiles, a nationally-branded provided of dental care focused primarily on children enrolled in Medicaid and State Children’s Health Insurance Programs.” 56. NCDR was, in fact, owned by Capital Partners II, which was managed and controlled by FFL and NCDR owns the Kool Smiles trademark, which it registered in 2004 when NCDR was formed. 57. The funds raised from the sale of the limited partnership interests in Capital Partners II were intended to be used for the acquisition of most or almost all of the assets of portfolio companies to be chosen by the general partner — FFL — which was also expected to ‘manage the portfolio companies. For these services FFL received both a management fee and a share of all profits eamed by the portfolio companies, 58. Not only did FFL’s interest in the profits of portfolio companies provide a significant incentive to maximize those profits, FFL also intended to sponsor additional private ‘equity funds, and its success in attracting investors in subsequent funds would depend greatly on the returns eared by investors in the existing funds managed by it. The management fees and general partner's share of profit of portfolio companies of private equity funds significantly exceed management fees for investments such as mutual funds or exchange traded funds. 15Accordingly, it is necessary for the profitability of portfolio companies of such funds to materially exceed that of competing managed investments for sponsors of the funds like FFL to attract investors to invest in their subsequent investment offerings. 59. To accomplish that result, FFL analyzed the businesses in which the fund invested, and established a business model for the investment. This includes estimating revenues and expenses and any other factors affecting profitability, and designing business practices affecting profitability which are expected to produce the desired return. The general partner then exercised control over the portfolio company to assure that the business model was followed and the desired retum is achieved. Private equity funds such as FFL differ in that respect from other investors in that they control the companies in which they invest, rather than acting as passive investors. 60. At the time of the Capital Partners I investment in NCDR/Kool Smiles, there were only a handful of Kool Smiles clinics. By 2005, there were six clinics in Georgia, two in Indiana, and there were plans to open new clinics in Massachusetts and Virginia. The clinics had no trouble finding patients, because Medicaid dental payments in states with the most generous payments were approximately one third lower than commercial rates so that very few dentists were willing to accept pediatric patients with only Medicaid coverage. Indeed, in some areas pediatric Medicaid patients had no alternatives to Kool Smiles. 61. To bridge the gap between Medicaid payments and commercial rates, Kool Smiles personnel, as described herein, were required to complete dental procedures in shorter periods of time to increase the number of procedures for which reimbursements could be obtained. To induce dentists to perform more procedures, Kool Smiles offered above-fair- market-value (“FMV”) salaries, and provided bonuses and other financial incentives based 16strictly on revenue production. Thus, the revenues Capital Partners II could receive from the NCDR/Kool Smiles business were materially below commercial rates, while the expenses of that business were materially higher. This is directionally inconsistent. Medicaid reimbursement is well below FMY, yet Kool Smiles paid dentists well above FMV; at the same time, Kool Smiles generated rivers of revenue to satisfy the voracious appetites of investors. Stated differently, Kool Smiles’ entire business model required fraudulent billing in order to function. This is explained in more detail below. 62. The laws of virtually every state preclude persons who are not dentists from owning dental practices. Thus, NCDR was created so that Capital Partners I could exercise firm control over the Kool Smiles clinics. However, because NCDR owned the name Kool Smiles, and, on information and belief, owns the clinics’ other assets, and had the right to hire and fire clinic personnel, and controlled the day to day operation, NCDR effectively owned the practices. 63. In addition to exercising control over NCDR as the general partner of Capital Partners Il, investment professionals of FFL were on the Board of Directors of NCDR and otherwise participated in the management and direction of NCDR, including Tully Friedman, David Lowe, Aaron Money, Cas Schneller and Rajat Duggal. FFL also owned DPMS, which ‘was merged with NCDR. 64. Moreover, Relator can state that Dale Mayfield (Kool Smiles’ Chief Dental Officer and alleged “President” of 43 Kool Smiles clinics) and Steve Savage (at one time the President of Kool Smiles II), had offices on the same floor in NCDR’s principal place of business in Marietta, GA. Mayfield and Savage travelled together, went to church together, and more importantly, were closely and jointly involved in the day-to-day operations of the clinics. Mayfield and Savage were often copied on each other’s quota-based emails, and they often 7jointly reviewed various financial reports (discussed at length below) which were issued on a daily, weekly, and/or monthly basis, and which were utilized to execute the fraud alleged herein. 65. Further, Relator Fitzgerald can state that Savage specifically told her that he regularly reported the information on the quota-based reports, and the performance of the clinics (or lack thereof) to FFL. 66. As the general manager of Capital Partners Il, FFL made the decisions about the investments of the funds of that private equity fund, which were used to finance the opening of the new Kool Smiles Clinics, which increased in number from approximately 6 in 2005 to more than 130 by 2012. 67. Expense levels for each of the Kool Smiles Clinics were readily ascertainable in that employees’ salaries were known, and, as set forth herein, expenses were carefully controlled such that, as described herein, if supplies were exhausted during a month the clinic had to do without the supplies if they could not be obtained from another clinic. Based on these known expense levels, revenue requirements were established which would attain the desired rate of return, and, as described herein, clinic employees were induced to achieve those revenues by a system of punishment and reward. Moreover, the Kool Smiles regional Dental Directors, which were described in Kool Smiles’ publicity as persons who conducted regular chart reviews to insure professional quality, instead instructed clinic employees in methods to perform unnecessary procedures to increase Medicaid revenues, or to perform procedures inadequately or otherwise maximize Medicaid revenues at the expense of dental quality and Medicaid regulations. Further, medical requests for payment were not audited in a manner that would detect unnecessary, inadequately performed, or other non-reimbursable claims that violated > In fact, during one of the contests held by Kool Smiles on President’s Day, the facial likenesses of Mayfield and Savage were pictured on dollar bills and were distributed company-wide. 18Medicaid regulations, and patients could not evaluate treatment and usually had no alternative providers, which meant that the likelihood that false Medicai claims would be detected was quite low. 68. By 2007, when the Georgia organizations responsible for administering Medicaid payments in that state concluded, as described herein, that the Kool Smiles Clinics used crowns excessively and unnecessarily and discontinued use of those clinies as Medicaid providers, it was evident that the returns earned by the Georgia clinics were the result of improprieties. Medicaid payments for crowns were $230 each or more, while the crowns themselves cost $8.00 or less. However, Me aid payments for fillings were only approximately $100. Moreover, fillings took considerably longer dentist time. 69. In public statements, Kool Smiles quoted a dental professional who said that crowns might be desirable even if they were not currently necessary because in the case of Medicaid patients the dentist could not be sure that the pediatric patient would retum to the dentist in a timely fashion. However, Medicaid does not pay for crowns which are not currently necessary, but might be necessary in the future, nor did parents of children receiving crowns know that they were consenting to the use of crowns which would only be necessary if the child id not return for treatment in the future, if, indeed, the parents gave any informed consent at all. 70. As described herein, each Kool Smiles clinic had a revenue target which was designed to achieve the desired return. Employees were punished, rewarded, and even fired in accordance with the extent to which they achieved goals related to that desired return. In order to meet that desired retum, they were compelled to resort to all manner of unnecessary and incomplete procedures and other improprieties which resulted in the filing of false Medicaid claims as described herein. This was done was done at the behest of, infer alia, FFL on behalf of 19Capital Partners II, which was the beneficiary of these efforts, such that by 2010 Capital Partners II received a bid of $700 million for NCDR, a very large return on Capital Partners II's investment in NCDR. 71. FFL as general partner of Capital Partners Il established the business requirements necessary to attain the desired rate of return from the Kool Smiles clinics and directed NCDR to undertake these steps necessary to achieve those retums knowing that those returns would and did include the submission of false Medicaid claims. Accordingly, FFL and Capital Partners II are liable for the submission of those false claims as detailed herein. 72. Approximately 80% of Kool Smiles” patients are children covered by Medicaid or CHIP. There are more than 130 Kool Smiles clinics spanning 16 States and the District of Columbia. 73. On information and belief, Kool Smiles’ annual Medicaid billings exceeded $180 million by 2010. 74. Although Kool Smiles like to portray itself as helping the underserved, in reality they are taking advantage of and harming children of low income families to generate massive profits. Notably, Kool Smiles clinics are not located in areas that HHS has determined to be medically underserved. 75. Kool Smiles has built a business platform and created a culture that systematically causes clinics to place maximizing profits ahead of patient care. Although making money is the primary function of business, the Kool Smiles model requires employees, including dental hygienists and dentists to undertake various illegal activities in order to meet the company’s demands. Under the Kool Smiles business model, Kool Smiles controls the quantity and quality of patient care. The medical providers — dentists and hygienists — are relegated to following Kool 20Smiles’ quota-driven protocols and performing medical procedures on children as dictated by Kool Smiles. Hence, Kool Smiles operates its dental clinics like retail stores, and patients are viewed as sources of profit. They are lined up and are indiscriminately subjected to invasive and medically unnecessary procedures, which are often performed by unqualified employees who do not have enough time to perform the procedures in a manner that justifies reimbursement. The result is physical abuse of children, horrible dental care, and the waste of government funds. 76. Kool Smiles has established numerous standard operating procedures and internal policies to make it appear as though the company complies with accepted dental standards and Federal and State regulations. However, Kool Smiles does not comply with these procedures and policies. Instead, in the culture and environment Kool Smiles has created and continues to foster, quantity matters more than quality, and the primary objective is to maximize profits. 1. Kool Smiles Crams As Many Patients Into A Day As Possible 77. Nearly all Kool Smiles clinics are set up the same way. Typically, each clinic is staffed with three dentists and three hygienists. Two dental assistants are assigned to each dentist for operative procedures. One dental assistant is assigned to each hygienist for hygiene procedures. The clinics also have a dental assistant who serves as the clinical team lead (“CTL”). Each clinic has a “hygiene bay” that houses, on average, 14 dental chairs ~ two rows of seven chairs — with no dividers or walls between chairs. Each clinic also has 7 to 14 operating rooms. 78. Patients often perspire heavily and/or urinate on themselves as a result of the trauma and anxiety caused by operative procedures and/or from being restrained in papooses, which are routinely used at Kool Smiles to allow dentists to perform operative procedures more quickly. Therefore, Kool Smiles equips each clinic with hairdryers, hairspray, hairbrushes, a washing machine, and clothes dryer. This is standard equipment that dental assistants at Kool 2‘Smiles clinics use after operative procedures to make disheveled children more presentable when they are returned to their parents in the waiting room, 79. Another common feature among all Kool Smiles clinics is that none of them handle billing. Kool Smiles maintains a central billing department in Atlanta, Georgia that prepares and submits claims on behalf of the Kool Smiles clinics. 80. There are two categories of services Kool Smiles provides: operative procedures and hygiene procedures. 81. The most common operative procedures are fillings, sealants, crowns, pulpotomies (j.e., baby root canals), and extractions. Kool Smiles’ platform is designed to cause dentists to perform as many operative procedures as possible, but, in no event, no less than 14 operative procedures per day. This is on top of the large volume of hygiene patients dentists must see each day. 82. Kool Smiles also pressures dentists to perform “same day care,” or SDC — i performing operative procedures on hygiene patients diagnosed with a condition during the same office visit — whenever possible and not less than the minimum quota Kool Smiles sets for the dentist. Clinics were continually pushed to maximize SDC, and the issue was a consistent topic at Core Team Meetings (meetings held on a weekly basis at every Kool Smiles clinic to discuss revenue quotas). By way of an example of the executive support to maximize SDC, in October 2009, Dr. Dale Mayfield, on a nationwide conference call, stated that to increase SDC’s, dentists should consider placing sealants on every tooth in a child’s mouth that didn’t already have decay. Indeed, when revenue was low, doctors were often pressured to meet quotas of SDCs, regardless of clinical need. For example, in April 2010, revenue at the Amarillo clinic was only 71% of the 2quota. To help solve the “problem,” doctors were pressured to agree to see at least 4 SDCs a day, regardless of clinical need. 83. The medically accepted standard of care for a hygiene appointment is for a dentist to obtain the child’s medical history through a pre-consultation with the parent or guardian to ensure itis safe to perform a cleaning and, if necessary, take x-rays. If the dentist determines that a cleaning and x-rays are appropriate, the dentist will prescribe these services for the patient. A dental assistant will take the prescribed x-rays, and a hygienist will perform the cleaning. After the cleaning, the dentist examines the child’s teeth. And if the dentist diagnoses a problem during the exam, the dentist devises a treatment plan. 84. Kool Smiles clinics do not follow this standard of care. To maximize profits, hygienists and dental assistants perform all aspects of the hygiene procedure other than the oral exam. Consequently, as discussed more fully in Part IV-B-1-a below, without dentists’ orders and before dentists ever see the patients, dental assistants take x-rays based on a corporate chart (which, in effect, is an algorithm which determines when x-rays must be performed). In most situations, the chart is nearly the complete opposite of what the dental x-ray guidelines formulated by the American Dental Association and the Food and Drug Administration tell dentists to do, Accordingly, medical decisions are being made by corporate personnel who are neither qualified nor have the authority to make those decisions. 85. Due to a lack of experience and training (most Kool Smiles dentists are recent dental school graduates), coupled with pressure to perform as many operative procedures as possible, Kool Smiles dentists turn a blind eye to the fact that x-rays and cleanings are being done without their prior orders or involvement. 2386. Moreover, under corporate guidelines, the hygiene procedures, which include setting-up, performing a pre-consult, taking x-rays, performing a cleaning, performing a post- consult, and cleaning-up, are to be completed in less than 15 minutes. Based on the less than 15 minutes per patient policy, Kool Smiles, which controls the hygiene schedules for all clinics, schedules at least four patients per hour for each hygienist. 87. But because 15 minutes is not enough time to properly perform all of the hygiene services on each child, hygienists and dental assistants hurry through nearly every hygiene procedure performed and constantly cut comers when providing treatment, such as failing to censure x-rays are taken properly, performing inadequate cleanings where plaque and tartar are left behind, and performing fluoride treatments improperly. 88. On information and belief, Kool Smiles has a corporate-wide policy that hygienists who do not comply with its less than 15 minutes per patient rule are put on probation. ‘And, if they subsequently continue to take more than 15 minutes to perform hygiene procedures, they are terminated. For example, after a series of counseling sessions did not result in improvement, Fitzgerald was directed by former NCDR Vice President of Human Resources, John Puterbaugh, to terminate hygienist Teresa Lawler, who had 13 years of experience and who was considered an excellent hygienist, because she insisted on performing proper (and more thorough) cleanings that often required more than 15 minutes. 89, At Relators’ Amarillo clinic, which was staffed with three dentists and three hygienists, the average number of patients treated per day is 90, with as many as 120 patients treated in a single day. Other clinics have similar patient volumes. 90. Other consequences of Kool Smiles’ oppressive scheduling are serious sterility and cleanliness problems. Dental assistants are under tremendous pressure to treat larger and 24larger numbers of children, so they often lack the time to properly wash and sterilize instruments, trays, towels, and chairs before they are re-used for another patient. On many occasions, Relators witnessed dentists, hygienists, and dental assistants using instruments, towels, and trays in treating a patient that were still dirty and/or blood stained from a prior patient. 91. As a result of the unmanageable daily scheduling requirements set by Kool Smiles, dentists, hygienists, and dental assistants are in a continuous rush to keep up and are forced to constantly cut comers and disregard their professional and legal obligations to properly treat every patient. The fraudulent and abusive practices that are customary at all Kool Smiles clinics are set forth in Part IV-B below. 2. Kool Smiles Requires Dentists And Clinics To Hit Continually Increasing Monthly Revenue And Procedure Quotas Revenue and APC Reports 92. In addition to grossly over-scheduling patients, Kool Smiles sets monthly procedure and revenue quotas for each clinic to ensure profit maximization. Again, while secking profit is legal, setting the quotas described below forces medical providers to provide substandard patient care to their patients, to perform procedures that are not necessary, to report performing services that aren’t actually performed, to allow other employees to provide services that dentists are required to perform, and to provide treatments they aren’t legally authorized to provide. 93. To enforce its quotas, every day Kool Smiles disseminates an “Office Revenue Scorecard” to all clinic managers across the country setting daily and monthly revenue quotas for every Kool Smiles clinic, In setting these revenue quotas, Kool Smiles knows the quotas can only be met if employees engage in the fraudulent practices described in Part IV-B below. 2594. The Office Revenue Scorecard provides every clinic's daily and month-to-date revenue totals and ranks the clinics based on their revenue. The report lists the day’s revenue, the monthly revenue to date, and how those two figures measure up, on a percentage basis, to the “Revenue Target” created by Defendants. Each individual clinic’s “ranking” is then utilized to either congratulate strong performers, or, more commonly, whip weaker performing clinics to meet their quotas. The relevant portion of an Office Scorecard from July 2010 appears below: 26recta etuene TS Sommer oe ONL" Tw 82" Tntwamecemawe [Ewin stays yan an — al haan tah SS Bao Siren ei dei ok BW Rl Sh ee Boss ‘Bin osm ace Piaf She tm oes mean sae ion thes tm a cant Fea ase $a a aig set Sicrormape rie Fee Eta fie wa ome al[s ams stare iss mom tome Hist tee tier — tre — Seana $s i cy Sana es al anaes Eisia $ soe fam om lls 3 te han tom pies Gece Ma oe BH fiat her dns ee fe he io fem? gat te om ft = a | se Soa aE See 27This report, and others like it, demonstrates conclusively that revenue quotas were in effect at Kool Smiles clinics across the country, including clinics in the following cities and states listed on the first page of the report: 95. Atlanta, GA; Killeen, TX; Lake Charles, LA; Laredo, TX; Las Cruces, NM; Lawrenceville, GA; Leon Valley, TX; Lexington, KY; Little Rock, AR; Longview, TX; Louisville, KY; Lubbock, TX; Lufkin, TX; Macon, GA; Mcallen, TX; Midland, TX; Mission, TX; Monroe, LA; New Bedford, MA; New Britain, CT; New Haven, CT; Odessa, TX; Phoenix, AZ; Pine Bluff, AR; Porter, MA; San Antonio, TX; Sherman-Denison, TX; Shreveport, LA; Spokane, WA; Springfield, MA; Sumter, GA; Target Ctr, IN; Terre Haute, IN; Texarkana, TX; Tucson, AZ; Tyler, TX; Vancouver, WA; Waco, TX; Washington St, MA; Waterbury,CT; Wichita Falls, TX; and Yuma, AZ. Kool Smiles also disseminates a second report, which it calls the Average Patient Cost (“APC”) Report. The APC Report sets forth the average dollar amount each clinic is expected to bill per patient for hygiene procedures (“HYG APC”) and operative procedures (“OPR APC”) that month. The APC Report also contains the month-to-date hygiene and operative APCs to show clinics’ progress, on a percentage basis, toward meeting their quotas. In setting the APC quotas, Kool Smiles knows the quotas can only be met if employees engage in B the fraudulent practices described in Part IV-B below. The relevant portion of an APC Report from July, 2010 appears below: 28EERURTREREGERIEE apeCEREEpSS SSR ECESES GET OBE i ‘TESCTOREESESCEu Ag peas enlen poe sE Os OD eDBEGRERRRR GEE peasgesage2 geeeCgnetey BEREREDERIEE pseseasa) SeeREgSEgE GE pnesanyse pBy penseses| Pbezansphzasbhesssesazszaseoaqepsssesssazzey 2996. This report, and others like it, demonstrates conclusively that APC quotas were in effect at Kool Smiles clinics across the country, including clinics in the following cities and states listed on the first page of the report: Fort Smith, AR; Little Rock, ine Bluff, AR; Phoenix, AX; Tucson, AZ; Tucson East, AZ; Yuma, AZ; Bridgeport, CT; New Britain, CT; New Haven, CT; Waterbury, CT; Buford, CA; Candler, GA; Cobb, GA; Columbus, GA; Dalton, GA; Forest Park, GA; Lawrenceville, GA; Macon, GA; SW Atlanta, GA; Evansville, IN; Fort Wayne, IN; Gary, IN; Highland, IN; Keystone, IN; Target Ctr, IN; Terre Haute, IN; Lexington, KY; Louisville-Bashford, KY; Louisville- Broadway, KY; Baton Rouge, LA; Lake Charles, LA; Monroe, LA; Shreveport, LA; Brockton, MA; Chelsea, MA; Fall River, MA; Holyoke, MA; New Bedford, MA; Porter, MA; Springfield, MA; Washington St., MA; Baltimore-Broadway, MD; Baltimore-Eastpoint, MD; Baltimore-Patterson, MD; Baltimore-Westside, MD; District Heights, MD; Hagerstown, MD; Biloxi, MS; Hattiesburg, MS; Jackson, MS; Jackson-N. State, MS; Tupelo, MS; Las Cruces, MS; Anderson, SC; Greenville, SC; Sumter, SC; Abilene, TX; Amarillo, TX; Brownsville, TX; Bryan, TX; Eagle Pass, TX; El Paso-Montana, TX; El Paso ~ Zaragoza, TX; El Paso-Fairbanks, TX; El Paso-Lee Trevino, TX; El Paso-Mesa, TX; Houston, TX; Killeen, TX; Laredo, TX; Leon Valley, TX; Longview, TX; Longview-Estes, TX; Lubbock, TX; Lufkin, TX; McAllen, TX; Midland, TX; Mission, TX; Odessa, TX; San Antonio, TX; Sherman-Denison, TX; Texarkana, TX; Tyler, TX; Waco, TX; Wichita Falls, TX; Colonial Heights, VA; Falls Church, VA; Hampton, VA; Janaf, VA; Little Creek, VA; Mechanicsville, VA; Newport News, VA; Portsmouth, VA; South Richmond, VA; Virginia Beach, VA; Everett, WA; Spokane, WA; and Vancouver, WA. 97. Moreover, the APC Reports graphically reflect the intentional pressure applied on employees by Defendants to meet quotas. Utilizing July 2010 as an example, the first clinic listed on the report is located in Fort Smith, Arkansas. Any hygiene patient who did not receive enough services to allow Defendants to book their revenue quota ~ in this case, $123 per child who hits the treatment chair — would cause the clinic average to fall. On July 6, 2010 — the day the report was issued — the Fort Smith clinic failed to meet both its daily APC quotas, and its month-to-date APC quotas, for both hygiene and operative procedures. 98. Specifically, on July 6, 2010, Fort Smith “only” averaged $106 in revenue per hygiene patient seen at the clinic, and thus was only “88% to Avg,,” ie, it failed to meet its daily 30hygiene quota. As to its operative APC, the clinic’s performance was worse; its quota, per patient, was $376, but it averaged only $218 per child, and thus was only “58% to Avg.”* 99. The amounts listed in the quotas themselves are remarkable: together, they add up to an average of $499 per patient visit ($123 + $376 = $499). What is more troubling is that the executives running Kool Smiles viewed anything less that $499 as a failure, and thus management was fiercely and routinely critical of the employees’ failure to meet the quotas. Indeed, employees who did not were routinely subject to discipline and/or termination 100. Contrariwise, any child who received enough services to allow Defendants to book more than $499 in revenue would cause the clinics APC’s to rise. Management lauded such efforts, and paid employees meaningful bonuses for achieving them. 101. However, such “good times” were doomed to be short-lived. Defendants created “moving revenue quotas” based on each clinic’s maximum revenue achievements. For example, if.a clinic somehow meets the quotas set by Kool Smiles — let’s say, by having a record revenue ‘month in August, when children are more available to go to appointments and there are 31 days in the month — the company resets that clinic’s quota to a higher number. This places the clinic’s staff in an untenable position in September, when children are back to school and there are only * When dentists fell behind on their quotas, management quickly stepped in to enforce them, including in the form of individual communications which required certain levels of production regardless of the severity of the dental problems the dentists were encountering in their patients? mouths. For example, when Relator Rai fell behind on her hygiene quota, she was quickly “counseled” by supervising dentist Dr. Ray Gifford as follows: 3-4 hygiene patients per hour is not asking too much. We all do it as well as see ops patients. I understand when those numbers extend beyond that it becomes more difficult to manage, but 3-4 hygiene patients per hour and 2 columns of ops is expected and is not asking more than is clinically capable. Your schedule this afternoon only has 3 columns of hygiene and two in ops scheduled. Even if all of them show, you should be able to do that, and I know you are capable of that. Not seeing more than 2 hygiene checks per hour is not acceptable. * These management techniques are discussed in more detail infra. 3130 days in the month. In order to meet or attempt to meet the higher quotas, providers are forced to perform more procedures and engage in the fraudulent practices described in Part IV-B below. 102, As previously noted, throughout the month Kool Smiles tracks each clinic’s progress toward hitting its revenue quota, HYG APC quota, and OP APC quota on a single report known as the Business Process Management report (“BPM Report”). The BPM Report summarizes, among other things, how much a clinic is above or below its revenue quota, HYG APC quota, and OPR APC quota. 103. The BPM Report is typically distributed, to clinics nationwide, each Friday. The BPM is reviewed the following Monday, via national conference call hosted by Kool Smiles’ senior managers. These calls include as participants the managers of all the clinics, nationwide. ‘The purpose of the calls is to highlight which clinics are on track to meet their various quotas and which are lagging behind. As with the other reports, the BPM is color coded and summarizes ‘each clinic's performance in a number of revenue critical areas, including APC performance (including a separate APC breakout for “Medicaid Children”), “Same Day Care” performance, etc. Invariably, each clinic’s BPM contains multiple areas in red which reflect failures to meet various quotas. 104. To motivate clinic managers to meet their quotas, senior management utilizes, inter alia, the BPM to “call-out” the managers of those clinics that aren’t meeting their quotas and requires them to explain to the entire country the reasons for the underperformance and how they will resolve the problem. * Notably, these calls were not directed at clinical care concems, * It should also be noted that the BPMs ~ which summarized the overall performance of each clinic across all revenue-based metrics — were an important part of the corporate strategy, and the contents of these reports were routinely shared with FFL. Indeed, Rene Sauerteig, Vice President of Operations, stated many times on these nationwide conference calls that the BPM 32nor were clinicians invited to be on the calls. Instead, the calls were focused nearly exclusively on revenue. Consistent with that focus, the admonitions issued by senior executives were directed at clinic managers, all of whom had the authority to discipline and even terminate underperforming providers, including dentists, 105. Thus, these calls were a critical part of the Kool Smiles machine — clinic managers that missed their quotas were placed on what is tantamount to a probationary program: the “Performance Improvement Plan.” Clinic managers on the Performance Improvement Plan must prepare additional “Action Plans” and report their progress to Kool Smiles’ senior managers on a daily basis. Consequently, after the national weekly teleconferences, and at other times, underperforming clinic managers were highly motivated to push “their” dentists and hygienists to perform more procedures, which generated more medically unnecessary hygiene and dental work, and which denigrated the quality of the work that was medically necessary. Ifa clinic continued to miss its revenue or APC quotas, the clinic manager was terminated. 106. The BPM reports were also part of so-called “Core Team Meetings” which are held weekly at Kool Smiles clinics nationwide. Mandatory attendees include the clinic manager, the dentists, and the CTLs (who are responsible for, inter alia, maximizing billing). Core Team Meetings involve, inter alia, close reviews of the BPM and APC Reports described immediately above, and how the clinic is “measuring up” to its quotas that week/month. At the meetings, dentists are shown quotas and performance numbers, and they are required to “sign off” on the discussion and action items that were discussed during the meeting. Most of the action items involve increasing the dentists’ revenue numbers. Copies of the executed Core Team Meeting was created, in part, to provide ongoing, substantive information regarding quota performance to Defendant FFL. 33minutes are then faxed to corporate, who utilize the reports to pressure individual dentists who fail to meet their quotas. Dentist Report Cards 107. Another tactic Kool Smiles employs to ensure profit maximization is Dentist Report Cards. These reports set forth and track monthly operative procedure and revenue quotas for each dentist. For each dentist, Kool Smiles tracks on a daily basis the number of patients seen, the type and volume of each procedure performed, and average time spent on each patient. By setting operative procedure and revenue quotas and exerting significant pressure on dentists to meet them —even though dentists cannot control or forecast the services their patients will require— Kool Smiles effectively compels dentists, who are already overwhelmed as it is, to provide substandard patient care, to perform procedures that are not necessary, to report performing services that aren’t actually performed, to allow other employees to provide services that dentists are required to perform, and to provide treatments they aren’t legally authorized to provide. 108. Dentists that fail to meet their procedure quotas are counseled by the Regional and Area Dentists assigned to their clinic as to how they must perform more procedures. Here again, through the Regional and Area Dentists, Kool Smiles effectively compels dentists to perform procedures based on quotas and reimbursements, not on patient needs and patient outcomes. Dentists who continue to miss their quotas are placed on Performance Improvement Plans by the Regional Dentists and have to explain the reasons why they aren’t meeting the quotas and how they are going to correct the problem going forward. 34109. Another tactic Kool Smiles uses to increase underperforming dentists? productivity is reducing their salaries. When all these tactics fail to spur a dentist to meet their quotas, Kool Smiles forces the dentist to resign. 110. Below is a Dentist Report Card from June 2010 that Kool Smiles used to track dentists’ performance, nationwide. This report, among others, graphically demonstrates how Kool Smiles ruthlessly whipped practitioners to over-treat patients and overbill government payers, and how the company terminated dentists who failed to “get with the program.” As can be seen below, the sole criterion for dentists is their revenue. Dentists who are generating high revenues appear, not coincidentally, in dollar-green.” Dentists who are failing to meet Kool ‘Smiles’ revenue quotas appear in red. Dentists who fall somewhere in between appear in yellow. As of December, 2010, the top 10 dentists at Kool Smiles were Jared Martin (Southside, VA), Yuan Shek (Chelsea, MD), Aishwa Chandesh (Mission, TX), Joyce Gitangu (Roxbury, MA), Miria Al-Hashimi (EI Paso, TX), Yolanda Robinson (Portsmouth, VA), Brenda Donato (Fort Smith, AK), Angeline Julian (Bryan, TX), Aaron Blackwelder (Longview, TX), and Dhileep Jinna (Salisbury, MD). On average, this group generated revenue of $6,415 per day. Ifa dentist worked, say, 23 days per month, that is $147,545 in revenue per dentist, most of which was paid by Medicaid. 35111. That the Kool Smiles quota system was ruthlessly executed on a national basis is immediately apparent by examining the recommendations made with respect to the underperforming dentists. Listed below are the “Recommendations” from Kool Smiles with respect to the dentists appearing on the first page of the report, accompanied by the cities and states where these dentists worked: + “Term, Tolerate with base reduction” [i.e., terminate, or tolerate with a reduction in salary] © Dr. Zahra Khorrami from New Bedford, MA, and five other dentists on this one page received the same recommendation, including Sneha Reddy from New Bedford, MA, Ping Ge fromNew Haven, CT, Yunhan Ding from Leon Valley, Texas, Sara Trombetti from Louisville, KY, and Vidya Bettagere, from Target Center, IN * “Follow-up with DPR & Expectations” {i.e., counsel and re-direct the dentist to meet revenue quota] © Dr. Navdeep Sidhu from Springfield, MA, and five other dentists on this one page received the same recommendation, including Nicole Makhoul, Roxbury, MA, Mark McCatty from Texarkana, TX, Racha Khireiwish from Killeen, TX, Sharlette Tolliver from Lexington, KY, and Afsaneh Samimi from Keystone, IN. ‘© “Ramping Neg” [i.e., underperforming, and the revenue is “ramping” lower] © Dr. Azita Khanbodaghi from Brockton, MA, and three other dentists on this one page received the same recommendation, including Wanda Puckett from Waterbury, CT, Yalice Cardona from Monroe, LA, and Yvondia Scott from Monroe, LA. ‘* “PIP” [ie., place on a “Performance Improvement Plan” to improve revenue] © Dr. Noreen Orinda from Holyoke, MA and six other dentists on this one page received the same recommendation, including Farah Khan from New Britain, CT, Richard Manwaring from Mission, TX, Nguyen Hathuc from Bryan, TX, Falastin Abu-Samn from Keystone, IN, and Molly Braun from Louisville, KY. “Tolerate” ‘© Dr. Wendy Sharpe from Springfield, MA, and seven other dentists including Azra Saleem from New Britain, CT, Kenny Durandis from Brockton, MA, Dianne Hoganthrower ftom Springfield, MA, Joanne Tsagas from Roxbury, MA, 37Melinda Alfree-Kararoodi from Laredo, TX, Audrey Torma from Eagle Pass, TX, Rosetta Shelby-Calvin from Pine Bluff, AK, and Daniel Aldulescu from Target Center, IN. Hygiene Procedures Reports 112. X-rays are a major source of revenue for Kool Smiles. So to make sure as many x-rays are taken as possible, Kool Smiles, not the dentists, tells dental assistants and hygienists which patients should get x-rays, 113. As discussed in more detail in Part IV-B-1-a below, to maximize x-ray volume, Kool Smiles requires dental assistants and hygienists to follow its corporate chart (the “Corporate X-Ray Chart”) to determine whether x-rays are to be taken and to determine the type of x-rays to take — i.e., periapicals, bitewings, or panoramics. This Corporate X-Ray Chart categorizes patients by age and condition and directs which x-rays are to be taken for each category. 114. And to make sure that dental assistants and hygienists are taking all of the x-rays the Corporate X-Ray Chart tells them to take, Kool Smiles uses a report entitled the Hygiene Procedures Report to monitor their compliance with the chart. Here again, if clinics are not taking as many x-rays as Kool Smiles requires, the clinic manager is scolded by Kool Smiles’ senior management and required to prepare an action plan. For example, an email to all Texas clinic managers on July 9, 2010, stated that “[fJor those of you who are not taking enough x-rays please get with your docs to address the reasons and potential action items to correct as necessary.” 115. And, ifthe clinic continues to not take all of the x-rays the Corporate X-Ray Chart requires ~ regardless of whether the patients needed the x-rays — the clinic manager is terminated. 383. Kool Smiles Uses Salaries That Are Grossly Above The Market Rate To Induce Dentists And Hygienists To Perform Medically Unnecessary Procedures Dentists 116. According to the U.S. Department of Labor's Bureau of Labor Statistics, the ‘median annual wages of salaried general dentists in May 2008 was $142,870. (See U.S. Dept. of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook - Dentists (2010-11), http://www. bls.gov/oco/ocos072.htm). 117. On information and belief, over 50% of the dentists employed by Kool Smiles cam more than $250,000 a year, and some dentists earn more than $1 million a year. Many of these dentists are fresh out of dental school, and their salaries are not justified by market conditions. Moreover, in addition to their above-FMV salaries, dentists are “bonused” based on the number of billable procedures they perform for Kool Smiles. 118. In addition to above-market salaries, Kool Smiles also uses a revenue-based bonus system to influence dentists’ medical judgments. Kool Smiles awards dentists 10% of all operative revenue they report over a $2,500 average daily threshold. Thus, a dentist who works 21 days during a month and has an average personal operative revenue per day of $4,000 will receive a “Personal Operative Bonus” of $3,150 (10% x ($4,000 average - $2,500 threshold) x 21 days). By way of example, in 2008, Kool Smiles provided dentists the following chart to delineate their monthly bonus payout at various revenue points: 39| Operative Revenue Per Day | $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,300 119. Significantly, the dentists’ bonus system developed by Kool Smiles only rewards dentists for operative revenue. They receive no bonus for hygiene revenue. This system is designed to cause dentists to focus on performing as many operative procedures as possible and to relinquish some or all of their hygiene responsibilities (i.e., taking a medical history and ordering the x-rays and cleanings), to hygienists and dental assistants. 120. Moreover, Kool Smiles takes other, more aggressive steps ensure that its dentists ~ once they are hired — are beholden to the quotas that Kool Smiles dictates. For example, at the ‘ime of initial hire, Kool Smiles provides sign-on bonuses that range from $5,000 to $50,000. In order to get the bonus, dentists are required to enter into agreements that require them to repay the sign-on bonus, plus interest, if they leave or are terminated by Kool Smiles within one year. Thus, impressionable young dentists who are failing to meet quotas feel threatened to “get with the program” rather than leave. 121, Similarly, Kool Smiles requires dentists to provide at least 60-days-notice, or in some cases 90-days-notice, before leaving the company. If a dentist does not provide the 60- or 90-days-notice, Kool Smiles requires them to pay $500 per day for each day within the notice period that they not provide notice. For example, if a dentist’s employment agreement Fequires 60 days notice but the dentist only provides 30 days-notice, the employment agreement requires the dentist to pay $15,000 (30 days x $500 per day) 40122, Through these bonuses and notice requirements, Kool Smiles is able to essentially lock-in dentists to its business platform for at least one year, because, if a dentist finds the quotas repugnant to their training and knowledge of the practice of dentistry, they face a significant financial setback by resigning. 123. Importantly, Kool Smiles is not paying above market compensation to attract experienced and highly-trained dentists. Rather, they are paying these oversized compensation packages to lure recent dental school graduates. These dentists are targeted because of their lack of experience and concomitant lack of knowledge of the law related to fraudulent practices. Moreover, these recent graduates have a strong motivation to eam money to pay-off sizable student debts. 124, _Inexperienced dentists are a critical element of Kool Smiles’ success because they ‘are more apt to accept and rely upon Kool Smiles’ directives and practices and are less capable of recognizing that these directives and practices do not comply with accepted standards of care and violate the law. Relators estimate that 95% of the dentists employed by Kool Smiles have less than five years of experience. 125. Additionally, many of the dentists Kool Smiles hires are not citizens of the United States, but rather are in the country under a work visa. Many of the young foreign dentists are unfamiliar with Federal and State regulations governing Medicaid and healthcare administration. Others simply comply with Kool Smiles’ profit-driven practices out of fear that, if they don’t, they will be fired and deported. For example, when a particular foreign dentist raised concems about Kool Smiles’ improper practices to Fitzgerald, the dentist specifically asked that Fitzgerald not take the issue to upper management for fear of reprisal. 41126. It should also be noted that although the vast majority of Kool Smiles” patients are children, few of the dentists it employs have completed a pediatric dentistry residency, which is a two-year program following dental school. The American Academy of Pediatric Dentistry describes the training obtained through a pediatric residency as follows: ‘The trainee leams advanced diagnostic and surgical procedures, along with child psychology and clinical management, oral pathology, child- related pharmacology, radiology, child development, management of oral/facial trauma, care for patients with special needs, conscious sedation and general anesthesia. 127. Although almost none of the dentists at its 100+ clinics have completed a pediatric residency, Kool Smiles has created a false public perception that Kool Smiles dentists are specialists that have an expertise in pediatric dentistry. However, the extent of dentists’ training normally consists of two days of orientation and occasional lectures from their Regional Dentist. Hygienists 128, Hygienists are also a critical component of Kool Smiles’ business model. They too are paid far above FMV. For instance, hygienists at the Amarillo clinic were paid, on average, $45/hour. By comparison, experienced hygienists at competing dental clinics were paid approximately $24/hour. 129. As previously noted, a major part of Kool Smiles’ business model is for the dentists to spend their time maximizing operative procedure volume and revenue. The consequence of this policy is that dentists do not have time to perform all of their hygiene responsibilities, such as a pre-consultation to determine the patient’s medical history and to determine whether x-rays are necessary. As a result, hygienists are required to take on significantly more responsibility — including the responsibility to make treatment decisions that 42by law should be made by the dentist ~ and must be able to complete their work in less than 15 minutes per Kool Smiles’ policy. The direct result of this is inadequate and in many cases worthless care. Dental Assistants 130. Typically, dental assistants join Kool Smiles clinics directly from dental assistant school. A large percentage of the dental assistants employed by Kool Smiles did not graduate from high school. 131. In addition to dealing with huge patient volumes, Kool Smiles dental assistants are responsible for completing patient charts. 132. The dental assistants are likewise paid above market rates. During Fitzgerald’s employment, dental assistants at the Amarillo clinic were paid, on average, $14/hour, compared to the approximately $9/hour market rate. Clinic Managers 133, Clinic managers play a critical role in Kool Smiles’ efforts to hijack clinical decisions from the hands of dentists. Clinic managers, such as Relator Fitzgerald, are responsible for ensuring that dentists, hygienists, and dental assistants comply with Kool Smiles’ directives and meet their revenue and procedure quotas. Indeed, they can discipline and even terminate members of the clinical staff, including dentists. Clinic managers are also responsible for hiring and training staff employees. As a practical matter, in the Kool Smiles world, clinic ‘managers have more “say” in clinical decisions than dentists. 134. Moreover, Kool Smiles customarily recruits people who were formerly employed by retail stores to fill clinic manager positions, as this fits the company’s “retail dentist” philosophy. Most clinic managers have no healthcare experience or college education. When 43dentists and other healthcare providers complained to Kool Smiles about the lack of ti ing and experience of the Office Managers, they were rebulled. For example, all three dentists at the Amarillo, TX, clinic were concerned that the candidate to replace Relator Fitzgerald was previously employed at PETCO, had a high school education, had no experience in health care, and had no knowledge of billing, licensing, or Medicaid, They were told that the candidate was well positioned to assume her new responsibilities. 135, And assume them she did, quickly falling in line with Kool Smiles’ offer of a high salary and bonus opportunities. Kool Smiles pays clinie managers bonuses when their clinics meet or exceed revenue quotas, and when the clinics? bills have a high rate of first-time acceptance by Medicaid. The following chart outlines how clinic managers’ monthly revenue bonuses were calculated in 2008: i 115% $1,050 114% $1,000 113% $950 112% $900 11% $850 110% $800 109% $750 108% $700 107% $650 106% $600 105% $550 104% $500 103% $450 102% = $400 101% $350 100% $300 99% $200 98% $150 OT a ‘$100 96% $50 95% 50 The Medicaid claims acceptance rate bonus, which is referred to as the First Time Approval rate, 44or FTA, is determined as follows: | SkisseariieApprovalRate] nn Bor 99% $500, 98.5% $300 98% $200 97.5% ‘$100 97% $50 Bonus Contests 136. Another method Kool Smiles uses to incentivize employees to generate more revenue is conducting bonus contests. For instance, the “Mad Dash to May” is a contest in which clinic staff can obt cash rewards — dentists can receive up to $500 ~ if the cline meets or exceeds a patient volume quota set by Kool Smiles. In the “Summer Sizzle,” two clinics compete against each other, and Koo! Smiles awards $25 to each staff member of the clinic that generates the most revenue, 137. On Martin Luther King Day clinies open early and close late, and if patient and revenue quotas set by Kool Smiles are met, Kool Smiles awards cash to each member of the clinic’s staff. Below is an intemal notice from January 2010 that outlines the “MLK Day Special Incentives”: 45Moanin Lofner King Day Mielely lelucieala Here's how the MLK Day Speclal Incentive works... + Hit150% or> of your Revenue Target for the day OR 150% or> of your Patients Per Day Target for the day. NOTE: Onlyoné of hes¢ opportunites At count. In other words youRit1SCRof your Fey taget AND your PHO target the ‘nly qulfes youtorasieglepayout Wait, there's even more... We have aspecial prize forthe Top 3 Olfices {that Nit 150% or more of their REVENUE TARGET — each team member willreceive KOOL BUCKS! How many? Each office wil 50,000 Kool Bucks 30,000 Kool Bucks 1 to May 2010, employees could redeem “Kool Bucks,” which were awarded in many of the bonus contests, at Kool Smiles" private on-line store, which sells everything from Kool Smiles scrubs to high-end electronics. The Kool Bucks program has since been phased-out. 138. Additionally, each month all clinics are ranked based on how much revenue they generate. A five foot trophy called the “Kool Cup” along with a $500 gift card, which can be used toward an office party, is awarded to the two clinics with the highest monthly revenue rank. 139. Upper management directed these quota programs. For example, in an email sent in June 2009 with respect to the Summer Sizzle, Steve Savage, then-President of Kool Smiles Il, singled out several clinics, including Relators’ for meeting their “Sizzle Targets” every day since 46the promotion began. Savage also noted that on June 24, 2009, Kool Smiles broke a previously set revenue record. 140. In addition, Kool Smiles incentivizes patients and their caregivers to complete positive patient surveys or refer someone for treatment by giving them free electric toothbrushes. B. KOOL SMILES EMPLOYEES REGULARLY PROVIDE UNNECESSARY SERVICES, PERFORM SERVICES THEY AREN’T AUTHORIZED TO PERFORM, AND BILL FOR SERVICES THAT AREN’T PERFORMED 141. The patient volume demands, the intense pressure to satisfy procedure and revenue quotas, the delegation of dentists’ responsibilities to dental assistants and hygienists, together with the bonus systems described above, by Kool Smiles’ design, created a procedure and revenue driven environment at all Kool Smiles clinics where the following fraudulent practices, among others, are commonplace: + Employees perform dental procedures on beneficiaries of Medicaid and other government healthcare programs that aren’t medically necessary; + Employees provide dental services to beneficiaries of Medicaid and other government healthcare programs even though they aren’t legally authorized to provide the services; and + Employees bill Medicaid and other government healthcare programs for services that aren’t performed or that are otherwise not reimbursable. 142. Kool Smiles designed these fraudulent schemes. They created and implemented a business model which compensated dentists well above FMV, while at the same time, Kool ‘Smiles was received below FMV reimbursement from the State Medicaid programs. This directionally inconsistent structure, when coupled with the high investment returns expected by investors, REQUIRED false billing to government programs in order to sustain itself. As the architect of the structure, Kool Smiles knew, within the meaning of the FCA, that false claims were being made to government payers. Indeed, Kool Smiles was aware that audits of Kool Smiles clinics in both Massachusetts and Georgia found considerable evidence of false billings 47to government payers, yet Kool Smiles continued to drive the quotas and whip clinics, and dentists, if they failed to meet the quotas. 1. Kool Smiles Providers Perform Unnecessary Services On Children Covered By Medicaid And Other Government Healthcare Programs a. Dental assistants and hygienists take unnecessary x-rays 143. As recognized by the American Academy of Pediatric Dentistry (AAPD), “{rJadiographs are valuable aids in the oral health care of infants, children, adolescents, and persons with special health care needs.” (AAPD Guideline on Prescribing Dental Radiographs for Infants, Children, Adolescents, and Persons With Special Needs (2009). The AAPD explains that “[x-rays] are used to diagnose oral diseases and to monitor dentofacial development and the progress of therapy.” Id. 144. In 2002, the American Dental Association (ADA) developed guidelines for prescribing dental x-rays, which the AAPD, along with other dental specialty organizations, participated in the review and revision of. Id. The Food and Drug Administration accepted the guidelines in 2004. Id, In 2006, the ADA updated the guidelines. Id. The APD endorses the ADA/FDA’s guidelines. Id, In fact, some State Medicaid Programs incorporate these guidelines into their Provider Manuals. See, e.g, Texas Medicaid Provider Procedures Manual, 2009 Online Edition, Section 19.8 (“Texas Medicaid has adopted the ADA "Guidelines" to serve as a guide and reference for dentists who treat THSteps clients”). 145. The ADA/FDA guidelines with respect to child and adolescent patients are set forth in the chart below: 48|| Individuatized radiographic | Individualized radiographic || exam consisting of selected | exam consisting of posterior periapical/ocelusal views __| bitewings with panoramic and/or posterior bitewings if | exam or posterior bitewings proximal surfaces cannot be | and selected periapical visualized or probed. Patients. | images. without evidence of disease and with open proximal contacts may not require a radiographic exam at this time. Individualized radiographic exam consisting of posterior bitewings with panoramic exam oF posterior bit and selected peri images. A full mouth intraoral radiographic exam is preferred when the patient has clinical evidence of generalized dental disease or a history of extensive dental treatment. Posterior bitewing exam at 6-12 month intervals if proximal surfaces cannot be examined visually or with a probe Posterior bitewing exam at 12-24 month intervals i proximal surfaces cannot be examined visually ot with a probe Posterior bitewing exam at 18-36 month intervals, Clinical judgment as to the need for and type of radiographic im periapical images of areas where periodontal disease (other than identified clinically. ages for the evaluation of periodontal disease. Imaging may consist of, but is not limited to, selected bitewing and/or nonspecific gingivitis) can be Clinical judgment as to need for and type of radiographic "| images for evaluation and/or monitoring of dentofacial growth | and development Clinical judgment as to need for and type of radiographic images for evaluation and/or monitoring of dentofacial growth and development, Panoramic or periapical exam to assess developing third molars monitoring in these circumstances, Clinical judgment as to need for and type of radiographic images for evaluation and/or 49radiographs may be indicated include but are not limited to: A. Positive Historical Findings |. Previous periodontal or endodontic treatment 2. History of pain or trauma 3. Familial history of dental anomalies 4, Postoperative evaluation of healing ‘5, Remineralization monitoring 6. Presence of implants or evaluation for implant placement 2. Large or deep restorations 3. Deep carious lesions 4. Malposed or clinically impacted teeth 5. Swelling, 6. Evidence of dental facial trauma 7. Mobility of teeth 8. Sinus tract (“fistula”) 9. Clinically suspected sinus pathology 10. Growth abnormalities TI. Oral involvement in known or suspected systemic disease 12. Positive neurologic findings in the head and neck 13, Evidence of foreign objects 14, Pain and/or dysfunction of the temporomandibular joint 15, Facial asymmetry 16. Abutment teeth for fixed or removable partial prosthesis 17. Unexplained bleeding 18. Unexplained sensitivity of teeth 19. Unusual eruption, spacing or migration of teeth 20. Unusual tooth morphology, calcification or color 21. Unexplained absence of teeth 22. Clinical erosion **Factors increasing risk for ‘caries may include but are not demineralization 2. History of recurrent caries 3. High titers of cariogenic bacteria 5. Poor oral hygiene 6. Inadequate fluoride exposure 7. Prolonged nursing (bottle or breast) 8. Frequent high sucrose content in diet 9. Poor family dental health 10. Developmental or acquired ‘enamel defects 11, Developmental or acquired disability 13, Genetic abnormality of teeth 14, Many multisurface restorations 15. Chemo/radiation therapy 16. Eating disorders 17. Dnig/alcohol abuse 18, Irregular dental care 146, These guidelines were developed to “serve as an adjunct to the dentist’s professional judgment.” Id, In summarizing the ADA/FDA guidelines, the ADP instructs that dentists should prescribe x-rays based on “each child’s individual circumstances,” which “can be determined only after reviewing the patient's medical and dental histories, completing a clinical examination, and assessing the patient’s vulnerability to environmental factors that affect oral health”: The timing of the initial radiographic exami mn should not be based upon the patient’s age, but upon each child’s individual circumstances. Because each patient is unique, the need for dental radiographs can be determined only after revi clinical examination, and assessing the environmental factors that affect oral health. Id, (emphasis added). 50 ig the patient’s medical and dental histories, completing a patient's vulnerability to147. The AADP further instructs that “{rJadiographs should be taken only when there is an expectation that the diagnostic yield will affect patient care.” Id. (emphasis added). 148. To increase the number of patient x-rays taken at its clinics, Kool Smiles wholly disregards the ADA/FDA and ADP guidelines and instead requires: + Dental assistants and hygienists to rely on a corporate chart to determine whether x-rays are appropriate, rather than the clinical judgment of a dentist that is based von a review of patient’s health history and the results of a clinical examination; + Dental assistants and hygienists to take x-rays that have no affect on patient care. 149, Kool Smiles directs dental assistants and hygienists to rely on its “Corporate X- Ray Chart” to determine whether x-rays are appropriate, rather than the clinical judgment of a dentist that is based upon a review of patient’s health history and the results of a clinical examination, as the ADA, FDA, and AADP recommend. 150, The Corporate X-Ray Chart, which is posted in the x-ray room of every clinic, directs whether x-rays are to be taken and the type of x-rays to be taken based on the patient’s age and their risk for tooth decay. A copy of the Corporate X-Ray Chart is appended below: SI‘Scenario 0- 5 (<6) ‘X-rays to be taken 4 yr old new patient arrives for a C.O.E.” The patient has large ‘2PA—s22. caries on all 4 of her second molars. 2BW - sz0 3 yr old recall patient arrives for a P.O.E. The patient had no No X-rays restorative work done on his last visit, he has no signs of caries and he has open contacts. 2 yr old new patient arrives fora C.O.E. The patient has @ 2PA— sz fracture on #E and all primary teeth are erupted closed contacts. 2BW -sz0 5 yr old new patient arrives for a C.O.E. The patient has. 2PA—s22 previous restorative work and poor OHI. 2BW ~sz0 1172 yr old new patient arrives for a C.OE. The patient has poor 2PA—s22 OHI and obvious caries on her upper anterior teeth. Her second primary molars have not erupted. ‘Scenario 6- 8 (<9) X-rays to be taken 8 yr old recall patient arrives for a P.O.E. You look in his chart 2PA-s22 and see that the patient had dental work done in the last 6 2BW- sz months. "Tyr old recall patient arrives for a P.O.E. The patient had no No x-rays previous work done in the last 12 months, no signs of caries and Good OHI. 6 yr old new patient arrives for a C.O.E. The patient is 2PA-s2 complaining of pain on the upper right and you notice an abscess IPA-sz0 on#A. 2BW - sz2 Pano "Tyr old new patient arrives for a C.O.E. The patient has poor 2PA- sz OHI, closed contacts and many amalgam restorations. 2BW -sz2 Pano ‘@ yr old recall patient arrives for a P.O.E. The patient had dental 2PA— sz. ‘work done on last visit and is complaining of pain on #9. 2BW sz ‘Scenario 9- 18 and older X-rays to be taken 15 yr old recall patient arrives for a P.O.E. The patient has good 2BW - sz OHI but had restorative work done on his last visit. ‘9 yr old new patient arrives for a C.O.E. The patient has closed 2BW—s2 ‘contact and good OHI. Pano 18 yr old recall patient arrives for a P.O. The patient has good No x-rays Fil and no restorative work done in the last 12 months. 19 yr old new patient arrives for a C.O.E. The patient has poor IPA-s2 OHI, had treatment done on his last visit and a large amalgam 4BW -s22 restoration has fractured on tooth #2. The patient in complaining Pano of pain on that tooth. 11 yr old recall patient arrives for a P.O.E. The patient has good 2BW-s2 ‘OHI but has operative work that she did not retum to have Or completed. 4BW ~ sz? (if 2nd molar erupted) * The abbreviations in the X-Ray Chart are common to the field of dentistry: C.O.E. comprehensive oral exam; P.O.E. = periodic oral exam; OHI = oral hygiene instruction; PA periapical radiograph; BW = bitewing radiograph; Pano = panoramic radiograph. 52151. As a result, all x-rays taken at Kool Smiles clinics are taken by dental assistants and hygienists, who, in accordance with corporate practices, take the x-rays before the dentists even see the patients and without a dentist's order. As to hygiene procedures, the custom and practice at Kool Smiles is for dentists to simply sign-off on whatever hygiene procedures are (allegedly) performed even though they did not prescribe them. 152. Kool Smiles also tracks each clinic’s compliance with the Corporate X-Ray Chart. More particularly, Kool Smiles uses a report, entitled the “Hygiene Procedure Report,” to monitor whether employees are complying with its x-ray chart by taking every x-ray the chart instructs them to take on each patient. 153, In addition, Kool Smiles sets an average HYG APC quota for every clinic, nationwide. Revenue from x-rays is a significant component of the APC quota that each clinic must meet. 154, When the Hygiene Procedures Report shows that a clini is not maximizing x- rays, or when a clinic is not on track to meet its HYG APC quota, Kool Smiles requires the clinic manager to compose an action plan stating how performance will be improved. 155. An action plan sent by CTL Shawna Gossett from the Amarillo clinic to clinic manager Cynthia Turner on December 15, 2010, shows how dental assistants and hygienists are trained to make x-ray decisions using the Corporate X-Ray Chart as well as to perform x-rays to satisfy the HYG APC quota set by Kool Smiles: With our Hygiene APC report and what I believe to be the root cause of our lack of x-rays being taken being lack of x-rays due to Dr. request. It is imperative that x-rays are being taken before a patient is even seated, eliminating the opportunity for an x-ray to be denied and for proper x-ray protocol to be followed. In order to get this accomplished, during huddle on Friday 12-17-2010 I will be addressing the need for patients to be handled in this matter [sic] without fail. ... After the Friday morning huddle I will also be posted in the Hygiene bay in order to help the hygiene staff embrace the concept and to be available for any 53questions or concems and also for back-up in helping get the x-rays taken. My goal is for the hygiene staff to be fully accustomed to doing x-rays in this manner and for the transition to be smooth before the new year. ... In all this action plan will take place immediately and will bring our hygiene APC score up by the second week in January.... I will also be reviewing the x-ray protocol monthly with the staff in order to reiterate it, make it fresh and to make sure no one has any questions... (Emphasis added). 156. Asa result of the Corporate X-Ray Chart and HYGe APC quota, the vast majority of x-rays taken and billed for by Kool Smiles are not based on the clinical judgment of a dentist. To the contrary, the x-ray practice at Kool Smiles is tantamount to a robo-dentist system that takes x-ray decisions out of dentists’ hands and puts them under the control of Kool Smiles so as to increase the volume of x-rays taken. This practice, which is the complete opposite of the professional standard and the ADA/FDA and AADP guidelines, results in a massive number of unnecessary x-rays being performed on children, not to mention the radiation to which those children are exposed. 157. There are untold numbers of claims that were submitted for reimbursement to government healthcare programs by Kool Smiles for unordered/unnecessary x-rays. Some examples appear below: 12/22/08 | El Paso, TX E | Took and billed for a periapical x-ray even though less (Montana Ave.) than 3 weeks earlier took and billed for the same periapical x-ray. Over a two-year span, Kool Smiles took 5 sets of x-rays on this Medicaid patient. 7790 | Tucson, AZ RP | Took and billed for 2 periapical and 2 bite-wing x-rays one week after taking and billing for the same x-rays. 10/6/10 | Amarillo, TX |~ GS | Dental assistant took 2 periapical x-rays though dentist ordered only | periapical x-ray. 12/10/08 | Amarillo, TX | MD | Dental assistant took 2 bite-wing and 2 periapical x- rays that dentist did not order. 34b. Dentists commonly use papooses and nitrous oxide to keep-up ith the patient volumes and satisfy the revenue quotas Kool Smiles demands 158. It has been estimated that 85 percent of children are generally cooperative in dental treatment settings, while the remaining 15 percent require more advanced behavior management approaches in order to provide dental care. (U.S. Dept. of Health & Human Services, Centers for Medicare & Medicaid Services, Guide to Children’s Dental Care in Medicaid (Oct. 2004) at 6). 159. There are various communicative techniques to calm disruptive patients, such as tell-show-do, voice control, positive reinforcement, or distraction. Another technique is to have the patient’s parent present for the procedure.” 160. Nonetheless, children may need to be physically restrained for a medically necessary dental procedure because of disruptive behavior, or to prevent injury to themselves or others. The AAPD has recognized that the use of papooses has the potential to produce serious consequences, such as physical or psychological harm, loss of dignity, violation of patient’s rights, and even death. (AAPD Clinical Guideline on Behavior Guidance for the Pediatric Dental Patient (2008). Because of the associated risks and potential negative consequences of being papooses the AAPD instructs that dentists should evaluate its use on each patient as well as possible alternatives. Id. The decision to use a papoose should take into consideration: Other alternate behavior guidance modalities; Dental needs of the patient; The effect on the quality of dental care; Patient’s emotional development; and Patient’s physical considerations. 161. Nitrous oxide is an analgesic that is indicated for use in the following patients: * This technique is anathema to Kool Smiles’ business model. Kool Smiles’ takes extraordinary measures to keep parents out of the hygiene and operative rooms so that they do not witness ‘what happens to their children, and/or so they are not in a position to object or otherwise revoke or limit their consent to the treatment of their child. 55A fearful, anxious, or obstreperous patient; Certain mentally, physically, or medically compromised patients; A patient whose gag reflex interferes with dental care; A patient for whom profound local anesthesia cannot be obtained; or A cooperative child undergoing a lengthy dental procedure. AAPD Guideline on Appropriate Use of Nitrous Oxide for Pediatric Dental Patients (2009). The decision to use nitrous oxide must take into consideration alternative behavioral guidance modalities, the patient’s dental needs, the effect on the quality of dental care, the patient's emotional development, and the patient's physical considerations. See id. Patients who are not breathing through their nose due to resistant behavior are poor candidates. See id. During nitrous oxide treatment, continual clinical observation of the patient’s responsiveness, color, and respiratory rate and rhythm must be performed. See id 162. Additionally, informed consent must be obtained from the parent and documented in the patient's record prior to the using a papoose or administering nitrous oxide. 163. To maximize procedure volume and to meet corporate quotas, Kool Smiles employees routinely use papoose boards and/or nitrous oxide when they are not medically necessary and in disregard of the consequences and risks. Papooses and/or nitrous oxide are used even though the child is not “fearful, anxious, or obstreperous” or disruptive. And, in cases where children are in fact anxious, the dentists automatically have them wrapped in a papoose because they don’t have time to try to ease their fears through one of several recognized ‘communicative techniques, and because parents are not allowed in the treatment areas, 164, Specific cases in which Kool Smiles dentists used a papoose and administered nitrous oxide simultaneously to a Medicaid patient include, but are not limited to: 56Sate tinier ini 6/3/2008 EI Paso, TX (Montana Ave.) M 6/13/2008 EI Paso, TX (Montana Ave.) AL) 11/26/2008 El Paso, TX (Montana Ave.) KL 11/26/2008 El Paso, TX (Montana Ave.) ‘YD 12/5/2008 El Paso, TX (Montana Ave.) AE 12/8/2008 EI Paso, TX (Montana Ave.) | AR 77272008 EI Paso, TX (Montana Ave.) A 1/8/2009. El Paso, TX (Zaragoza Rd.) D 1/8/2009 El Paso, TX (Zaragoza Rd.) G 1/8/2009 El Paso, TX (Zaragoza Rd.) G 1/16/2009 EI Paso, TX (Montana Ave.) AE 1/21/2009 El Paso, TX (Montana Ave.) AG 2/12/2009 El Paso, TX (Montana Ave.) A 3/3/2009 El Paso, TX (Montana Ave.) W 3/13/2009 EI Paso, TX (Montana Ave.) A 7721/2009 El Paso, TX (Montana Ave.) FS. 165. In addition to allowing the denti s to work more quickly, admis ering nitrous oxide and using papooses helps the providers meet their revenue quotas because often these procedures can be billed separately from the operative procedure being performed. 166. From the trauma and anxiety caused by an operative procedure and/or from being restrained in a papoose, children frequently perspire heavily and/or urinate on themselves while they are wrapped in the papoose. In fact, this happens so regularly at Kool Smiles that each clinic is equipped with hairdryers, hairspray, and hairbrushes so dental assistants can dry the children’s sweat-soaked hair and then brush and spray it so their parents don’t learn about the trauma they just suffered. All clinics also have washers and dryers to clean the pants of children that urinate ‘on themselves while wrapped in the papoose. Again, this is done to conceal from the parents the fear and angst the child experienced from being restrained in a papoose as the dentist performed dental work on their teeth. 167. Relator Fitzgerald is aware of an incident that occurred in Summer 2009 where a child, covered by Medicai who Dr. Danielle Jones wrapped in a papoose for a procedure she 37Performed at the Amarillo clinic, was forced to stand naked in a utility closet with a dental assistant while his pants were washed so other patients would not see him without pants on. 168. Furthermore, contrary to accepted practices, dentists and dental assistants often leave patients that are wrapped in a papoose and receiving nitrous oxide alone while they attend to other patients. For example, on August 3, 2009, while Fitzgerald was visiting the Odessa, Texas clinic, a four-year-old boy with the initials ZH was strapped in a papoose and left alone ‘when the treating dentist, Dr. Lopes, and the dental assistant left the room to see another patient. ‘The patient squirmed so much in the papoose he fell out of the dental chair onto the floor. With his arms and legs restrained, he had no way to break the fall and thus landed on his face and lacerated his lip. Upon returning to the room and seeing the four-year-old boy on the floor with a bloodied lip, Dr. Lopes placed the child back in the dental chair and, without consent, sutured the lip with four stitches, Dr. Lopes then proceeded to perform a filling, two pulpotomies, and two stainless steel crowns. Only after the treatment was completed did Dr. Lopes explain to the patient’s mother what had happened. 169. Kool Smiles closely monitors dentists’ use of papooses and nitrous oxide, Teporting the volume for each dentist in the “Dentist Scorecard.” Moreover, clinics receive a huge number of complaints from parents concerning Kool Smiles unnecessary and/or undisclosed use of papooses, many of which are documented in Incident Reports that the clinics provide to Kool Smiles. Thus Kool Smiles is aware of the widespread abuse, yet it does nothing to stop it, nor does Kool Smiles report the abuse, as required by law. 170. According to WellCare of Georgia, Inc., which is a care management organization. for Georgia Medicaid that barred Kool Smiles from its network of approved dentists in 2007, children treated at Kool Smiles clinics are 300% more likely to be physically restrained 58during dental procedures, than children who are treated at other dental clinics. (Aug. 27, 2007 WellCare of Georgia, Inc. Press Release entitled “WellCare Assures Medicaid Members of ‘Access to Quality Dentists, Kool Smiles Removed from Network — DCH Reviewing Allegations of Over- Utilization of Services, ‘Unusual Pattern of Restraint”). 171. An example of unnecessary and excessive papoose use is Dr. Qadri’s use of apooses on 10 patients on December 18, 2008. Dr. Qadri, from the Mission, TX clinic, performed operative procedures on 16 Medicaid patients that day. The charts for 10 of those 16 children (or 62.5%) contain an entry on December 18, 2008 for CDT Code D920 "Behavior Management." In other words, 62.5% of the Medicaid patients on whom Dr. Qadri performed operative procedures on December 18, 2008 were wrapped in a papoose. Texas Medicaid was the payer for all of those operative procedures, and for the papoosing. 172. Kool Smiles clinics have billed Medicaid and other government healthcare programs for untold numbers of medically unnecessary papoose and nitrous oxide procedures. 173. More broadly, Kool Smiles is in violation of Medicaid Program Reimbursement Rules in various states. For example, in Texas, “[p)roviders are required to report abuse or neglect...” Texas Medicaid Provider Procedures Manual, Section III, Appendix K.7.1. To meet this requirement “{a}ll providers shall develop training for all staff on the policies and procedures in regard to reporting child abuse, including sexual abuse and neglect. New staff shall receive this training as part of their initial training or orientation.” Id. at Appendix K.7.1.2. 174, These requirements are conditions of payment: “the General Appropriations Act, Article Il, Rider 33 under DSHS, and Rider 13 under HHSC, of Senate Bill (S.B.) 1, 79th Legislative Regular Session, 2005, require that [Texas Medicaid] distribute or provide appropriated funds only 10 recipients who show good faith efforts to comply with all child abuse 59and reporting requirements set forth in the Texas Family Code (TFC), Chapter 261, relating to investigations of reports of child abuse and neglect.” Texas Medicaid Provider Procedures ‘Manual, Section Ill, Appendix K.7.1. 175. Here, then, the Texas Legislature has specifically conditioned the receipt of Medicaid funds on providers’ efforts to train employees to recognize and report abuse, and who actually undertake good faith efforts to do so. 176. Relators can state that it was common for abused and/or neglected children, including many low income children and children in foster care, to come to Kool Smiles for dental care. Relators can further state that Kool Smiles undertook no efforts to train employees regarding abuse or neglect. Indeed, the opposite was true. Kool Smiles affirmatively promoted an environment which was conducive to concealing abuse and neglect. In fact, on several occasions, Relator Fitzgerald reported abuse, but was reprimanded for doing so by Susan Jerezeck, Vice-President of Operations. 177. For example, in early 2010, Jane Doe, a young foster child, came to Kool Smiles’ ‘Amarillo clinic with a large bruise on her cheek and an open laceration. Fitzgerald asked the child what happened to cause the injuries. The child responded that her foster mother hit her in the face with a shoe because the child had not put her belongings away in the correct location. Fitzgerald reported the incident to, inter alia, the local police department. When Jerezeck Teamed that the incident had been reported to authorities, she reprimanded Fitzgerald for doing $0. 178, Perhaps more importantly, Kool Smiles itself abused children, and got paid to do it. In fact, with respect to abuse administered by Kool Smiles employees — such as the abusive papoose incidents and other injuries caused by Kool Smiles which are detailed in this complaint 60— clinic managers were instructed not to report abuse, otherwise “word will get out, and we will lose patients.” This is in direct contravention to the will of the Texas Legislature, which has directed that public funds not flow in the direction of such providers. c. Dentists routinely perform unnecessary pulpotomies, crowns, and alveoplasties 179. To generate more revenue, Kool Smiles repeatedly instructed dentists to perform more pulpotomies and place more crowns because they present opportunities to perform procedures that have a higher reimbursement rate than fillings. This is often done by the Regional Dentists while they review operative procedure volumes set forth on the Dentist Scorecard with the dentists. 180. A pulpotomy is a procedure that is medically necessary when cavity removal results in pulp exposure in a primary tooth with normal pulp. APD Guideline on Pulp Therapy for Primary and Young Permanent Teeth (2009). 181. In accordance with Kool Smiles’ directives and to satisfy their procedure and revenue quotas, dentists commonly perform pulpotomies on primary teeth where the cavity can be removed without exposing pulp. 182. Stainless steel crowns are pre-fabricated crown forms that are adapted and cemented to individual teeth. Crowns are indicated for, among other things, the restoration of primary and permanent teeth with caries as well as to protect teeth after pulpotomies. 183. And so by performing a pulpotomy, rather than a simple filling, Kool Smiles can also place, and bill for, a crown on the same tooth, generating a significantly higher reimbursement from the Government Payers. 184, In addition to placing crowns after unnecessary pulpotomies, Kool Smiles directs, dentists to routinely place crowns on teeth even though they are not medically necessary. For 61instance, to meet Kool Smiles’ quotas and to collect bonuses, dentists commonly place crowns on primary teeth that they know, based on the child’s age, will be falling out within a short period. 185. In or around January 2010, the Regional Dentist for Texas, Dr. Diane Earle, informed Fitzgerald that the three dentists at the Amarillo clinic were not doing enough crown procedures. Dr. Earle then directed Fitzgerald to instruct the dentists to perform pulpotomies and crowns rather than three surface fillings. Based on this directive, dentists would apply a crown to any tooth requiring three surface fillings even though it might be ready to fall out. 186. Additionally, since crowns generate a higher reimbursement than fillings and fillings take more time to perform, it is normal practice at Kool Smiles for dentists to perform crowns instead of fillings though a filling is the appropriate treatment, 187. In the Dentist Scorecard, Kool Smiles monitors the number of pulpotomies and crowns each dentist performs. Once again, while reviewing the Dentist Scorecards with the dentists, Regional Dentists often instruct the dentists that more crowns must be performed. 188, Through audits of patient cases it can be shown that unnecessary pulpotomies and ‘crowns are a pervasive practice at Kool Smiles clinics. 189, For example, during an audit of a July 30, 2009 case performed at the Mission, Texas clinic on a seven-year-old Medicaid patient whose initials are VM, it was found that the dentist performed pulpotomies and placed stainless steel crowns on two teeth (D & G) even though the x-rays clearly reveal each tooth had root resorption, which is the breakdown of the root structure of the tooth, and thus would not benefit from the pulpotomies and crowns. 190. Similarly, on November 26, 2008 at the El Paso, Texas (Montana Ave.) clinic, a Medicaid patient with the initials ME received a crown on tooth L even though the roots were 62resorbed. Eight months later the crowned tooth was extracted. Accordingly, Medicaid paid for ~ and the child endured — the placement of an unnecessary and worthless crown, and the extraction of the underlying tooth. 191. On November 10, 2009, the Mission, Texas clinic performed two crowns (teeth E & F) on a Medicaid patient with the initials EH. However, a note in the chart and the attached x- rays show the teeth merely had general decalcification, which results from excessive plaque build-up and can be reversed with proper oral hygiene (as opposed to a crown). 192. Furthermore, it is not uncommon for multiple pulpotomies and crowns to be performed on the same patient on the same day, unnecessarily subjecting the children to lengthy painful procedures. 193, For instance, on April 14, 2009 Dr. Thomas of the Mission, Texas clinic performed 8 pulpotomies (teeth D, E, F, G, I, J, L & K) and 10 crowns (teeth D, E, F, G, H, J, K, 1, L & M) ona five-year-old Medicaid patient with the initials IF. The child was papoosed for the lengthy procedure. The following day Dr. Thomas performed 4 additional pulpotomies (teeth B, C, S & R) and crowned 10 more teeth (A, B, C, N, O, P, Q, R, S & T). Thus, over two days, Dr. ‘Thomas performed 12 pulpotomies and 20 crowns ~ a crown on every tooth — on this five-year- old patient 194, Another example of Kool Smiles performing excessive and unnecessary crowns is an August 11, 2009 case from the Mission, Texas clinic where 11 crowns and pulpotomies were performed during one visit on a Medicaid patient whose initials are JP. Notably, the audit revealed that three of the teeth (E, F & G) did not require pulpotomies. 195. Likewise, on November 14, 2008, the El Paso, Texas (Montana Ave.) clinic performed a pulpotomy and crown on a Medicaid patient with the initial E when the x-ray clearly 63showed that the tooth was abscessed and root was resorbed. Based on this diagnosis the tooth should have been extracted, as it would not benefit from a pulpotomy and crown. Moreover, by inappropriately placing a crown on the tooth, Kool Smiles may have harmed the growth of the erupting permanent tooth. 196. WellCare of Georgia, Inc., which is a care management organization for Georgia Medicaid, barred Kool Smiles from its network of approved dentists in 2007 after analysis of claims data revealed that when compared with other dentists a child treated by Kool Smiles is: Five times more likely to receive crowns; Four times more likely to receive five or more crowns; 40% more likely to have teeth pulled or extracted; and Three times more likely to be physically restrained during dental procedures. (Aug. 27, 2007 WellCare of Georgia, Inc. Press Release entitled “WellCare Assures Medicaid Members of Access to Quality Dentists, Kool Smiles Removed from Network — DCH Reviewing Allegations of Over-Utilization of Services, ‘Unusual Pattern of Restraint’”). 197, WellCare further noted that 14 Kool Smiles patients under the age of ten had ‘endured having 14 or more crowns placed in their mouth. See id. 198. Although Kool Smiles represented only 5% of its dental network, Well Care determined that Kool Smiles made up approximately 20% of WellCare’s general dentistry costs. See id. 199. Alveoplasty, which is a surgical procedure done to improve the shape and condition of the alveolar bone, is another unnecessary procedure performed at Kool Smiles. 200. For example, Dr. Martin of Kool Smiles’ Richmond, Virginia clinic frequently performs alveoplasty or multiple alveoplasties after he does an extraction, including in 3" molar areas. In fact, during the two-day period July 5 to July 6, 2010, the Richmond clinic and Dr. ‘Thomas performed at least 45 alveoplasty surgical procedures on adult Medicaid patients: 6475/2010 |__ SI Alveoplasty on all 4 quads 7/5/2010 |_ TE Alveoplasty on all 4 quads 7/5010 |__QO Alveoplasty on 1 of 4 quads 7/5/2010 |_RE ‘Alveoplasty on all 4 quads 7/5/2010 | _AF Alveoplasty on 3 of 4 quads 77672010 |_ MP Alveoplasty on all 4 quads 77672010 |_KB Alveoplasty on 3 of 4 quads 77612010 |_AM Alveoplasty on 1 of 4 quads 77612010 | _CN Alveoplasty on 3 of 4 quads 77672010 |_ PI Alveoplasty on 3 of 4 quads 71612010 |_JB Alveoplasty on 2 of 4 quads 77612010 |__KE Alveoplasty on all 4 quads 76/2010 |_RM. Alveoplasty on 2 of 4 quads 71612010 |_DS Alveoplasty on 3 of 4 quads 77672010 [_NR Alveoplasty on all 4 quads d. Dentists routinely perform unnecessary fillings and sealants 201. As a result of the revenue and procedure quotas, dentists are also effectively compelled to perform unnecessary fillings and sealants. The Regional Dentists instruct dentists that they need to perform more fillings and scalants while reviewing the Dentist Scorecards with them. 202. Due to this pressure, dentists commonly diagnose small lesions and mere stains as cavities that require fillings. Likewise, they indiscriminately place sealants. 203. That unnecessary fillings are commonly being performed is evidenced by a review of the pre-operative x-rays, which in many cases show that the cavities indicated on patients’ charts do not exist. 204. For example, on November 26, 2008 the El Paso, Texas (Montana Ave.) clinic performed 5 fillings (teeth 3, 14, 18, 30 & 31) on a Medicaid patient with the initials DM even though the x-rays show that the decay was limited to the enamel layer of each tooth and did not penetrate the dentin. On the same day, the El Paso clinic performed 3 unnecessary two-surface 65fillings on a Medicaid patient with the initials JM. The Amarillo clinic performed a filling (tooth J) ona Medicaid patient with the initials MM on April 27, 2009, despite the fact that the x-ray shows no decay. 205. Moreover, the senior supervising dentists themselves order unnecessary fillings. For instance, the Area Dentist for Arizona, Dr. Joshua Martin, who was visiting the Amarillo clinic on July 20, 2010, diagnosed multiple cavities for each patient he saw (the patients” initials were DM, GB, MC and ES) and then asked Dr. Rai or Dr. Preethi Prakash to perform the fillings. After re-examining each of these patients, Drs. Rai and Prakash determined that the purported cavities did not exist. 206. Kool Smiles dentists are trained to presume all of their Medicaid patients have poor dental hygiene and are at a high risk for caries and to treat them accordingly. Due to this, influence as well as the pressure to hit revenue targets, Kool Smiles unnecessarily treats a significant number of children covered by Medicaid as if they have poor dental hygiene and are at risk high risk for caries though they are not. 207. Placement of unnecessary sealants is another example of Kool Smiles mislabeling patients as high-risk for caries to create an excuse to perform billable services. In fact, some Kool Smiles dentists referred to sealants as a "gold mine” because they are performed quickly (often by hygienists as alleged in Part IV-B-2-e below) and on a huge number of patients, ‘generating substantial revenue for Kool Smiles and the dentists. 208. An example of a Medicaid patient who was not at high risk for caries receiving ‘unnecessary sealants is the case in which the Mission, Texas placed 11 sealants (on teeth A, B, C,D,E, F, G, H, I, J & K) ona six-year-old Medicaid patient who had no history of caries.€. Procedures are performed on the wrong patients 209. As a result of limited budgets and unmanageable scheduling dictated by Kool Smiles, clinics fail to use ILD. bracelets to ensure they are performing the right treatment plan on the correct patient. Indeed, the practice at Kool Smiles is to call and identify the patient by the number on the dental chair to which they are assigned. For instance, patients are typically referred to as “Chair 1,” “Chair 2,” “Chair 3,” etc., not by their names, Dental assistants are instructed to affix a Post-It note on each hygiene patient’s chest listing which x-rays should be taken. 210. Not using LD. bracelets and knowing patients only by their chair number has led to treatment plans being carried out on the wrong patients on many occasions. 2. Kool Smiles Providers Commonly Perform, And Bill Government Healthcare Programs For, Dental Procedures They Aren’t Authorized To Perform ‘a, Dentists perform dental procedures on minors without first obtaining informed consent from their parents or guardians 211. In the case of a minor, informed consent is the process of providing the custodial parent or legal guardian with relevant information regarding diagnosis and treatment needs so they can make an educated decision regarding the proposed treatment. AAPD Guideline on Informed Consent (2009). 212. Statutes and decisional law from individual States govern informed consent. ‘Some States allow oral discussions, which should be documented in the medical record, while others require written consent. Although the specific standard for informed consent varies among, States, all States require that the treating practitioner disclose information they consider material to the decision-making process and provide a warning of death or serious bodily injury where that is a known risk of the procedure. Id. 67213. In many instances, including in states which require written informed consent, none is obtained. For example, when Relator Fitzgerald took over as manager of the Amarillo clinic in November 2008, she conducted a chart audit and could not find a single record that showed informed consent had been obtained from the parent or guardian of a single patient. ‘When she held a meeting to discuss the issue with staff, no one appeared to know that consent ‘was even part of the process, 214. To the extent that consent is sought, the custom and practice at Kool Smiles is for dental assistants — not the dentists themselves — to tell the parents what treatments the dentists believe the children require without reviewing treatment options, risks, or how the procedures will be performed. For instance, dental assistants are trained to tell the parent that if a child becomes overly agitated as a last resort the child may be wrapped in a papoose when the dental assistant knows that the child is going to be automatically put in a papoose if there is any sign of anxiousness. So while Kool Smiles may obtain consent, it is not informed consent. That is because Kool Smiles does not want parents to engage in an educated decision-making process that might cause them to seek a second opinion or decline the proposed treatment. Kool Smiles takes no steps to ensure proper informed consent is provided. Dental assistants are merely trained to obtain parents’ signatures. 215. Fitzgerald regularly witnessed dental assistants provide grossly inadequate disclosures to parents about the treatment and procedures that were planned for the child. In some cases, the parents could not understand the already inadequate disclosures because they do not understand English. 216. Similarly, Fitzgerald received numerous post-operative complaints from parents that the providers never informed them that their child was going to be restrained in a papoose, 68administered nitrous oxide, or receive multiple crowns. In fact, Fitzgerald had to devote a large portion of her time trying to assuage irate parents and lecturing dental assistants to obtain proper informed consent. 217. Moreover, if and when “consent” has been obtained, Kool Smiles’ takes extraordinary measures to keep parents out of the hygiene and operative rooms so that they do not witness what happens to their children, and/or so they are not in a position to object or ‘otherwise revoke or limit their consent to the treatment of their child. Below is an excerpt from Kool Smiles’ Clinical Training Manual: Since every child is unique and handles new situations differently, it is necessary to have the child’s undivided attention during this very new and unique experience. For that reason, parents are asked to wait in the reception room during treatment. This allows the dentist to establish a direct and close rapport with the child. When a parent is in the room, the child’s attention is divided and it is difficult to gain his/her confidence and attention. Many children handle the situation very well without the parent present and though the child may be upset at first; he/she will likely calm down and cooperate once seated in the dental chair. Although the Clinical Training Manual dubiously asserts that the reason for the policy is that the parent will cause the child to be distracted, the real reason for the policy is Kool Smiles does not ‘want parents to witness, and object to, what is happening to their child. 218. In fact, Kool Smiles does not permit dentists to interact with patients’ parents — Kool Smiles requires the dentists to remain in the treatment areas at all times. The only time a dentist is permitted to meet with a parent is if the parent insists upon same. 219. Procedures that Kool Smiles performs on minors without a parent’s or guardian's informed consent constitute violations of State law. Despite a lack of authority to perform these procedures, and despite the fact that carrying out the procedures violates State law, Kool Smiles submits claims to government healthcare programs to obtain reimbursement. 69b. _Uncertified hygienists, dental assistants, and student interns take x-rays 220. Almost every State requires hygienists and dental assistants wishing to perform x- rays to obtain a permit from their respective State Board of Dental Examiners. In violation of these regulations, at Kool Smiles dental assistants and hygienists as well as student interns perform x-rays even though they are not certified to do so. 221. Kool Smiles monitors the status of each employee’s required certifications and licenses through a computer program, and thus knows if a service has been provided by an uncertified or unlicensed individual. 222. Fitzgerald repeatedly witnessed hygienists, dental assistants, and interns who did not have an x-ray permit, take x-rays, including Ashley Smith, Dustin Vega, Anthony Hernandez, and Alison Hemandez. These x-rays were subsequently billed to Medicaid. 223. In addition, because dental assistants, hygienists, and interns lack proper training and/or are under great time pressure, the x-rays they take are often not of diagnostic quality and are consequently worthless. This requires x-rays to be re-taken — frequently, more than once ~ and exposes children to further radiation. Moreover, due to their lack of training and unmanageable schedules, it is not uncommon for the hygienists, dental assistants, and interns to fail to drape lead aprons on patients prior to taking x-rays, leading to further unnecessary radiation exposure. 224. When doctors raise concems about radiation and the medical necessity of taking certain x-rays, they are overruled by non-clinical staff who are bonused on the number of x-rays Kool Smiles bills. For example, when Dr. Rai complained about the number of x-rays being taken, Shawna Gosset — a CTL with no significant provider training ~ created an action plan on December 15, 2010, designed to keep the x-ray numbers at a maximum. Specifically, Gossett 70recognized that “the root cause of our lack of x-rays being taken . .. [is] due to Dr. request” for the x-rays to not be taken, Gossett’s solution, consistent with Kool Smiles policy, was to “go around” the doctors: t] is imperative that x-rays be taken before a patient is even seated, eliminating the opportuni for an x-ray to be denied [by a doctor]. 225. Moreover, if a dentist omits a worthless x-ray from the patient’s chart so that the x-ray is not billed to Medicaid, Kool Smiles’ central billing is instructed to cause dental assistants to go-back and attach the worthless x-rays to the chart so they can be billed. Accordingly, Kool Smiles knowingly bills the Government Payers for worthless x-rays. 226. Examples of non-diagnostic x-rays that were billed to the government healthcare programs include: 6/3/2008 El Paso, TX (Montana Ave.) 12/87/2008 El Paso, TX (Montana Ave.) Left bite-wing 12/22/2008 EI Paso, TX (Montana Ave.) Right bite-wing 6/5/2009 EI Paso, TX (Montana Ave.) Upper periapical 7131/2009 illo, TX. Periapical 8/6/2009 ‘Amarillo, TX Upper periapical 8/6/2009 ‘Amarillo, TX Upper periapical 8/11/2009) Mission, TX Right bite-win ce Kool Smiles dentists use the DEA registration numbers of other dentists to prescribe pain medication 227. Dentists employed by Kool Smiles, in the ordinary course of their practice, distribute or dispense controlled substances, as defined by the Controlled Substances Act, 21 USC. § 801 ef seq. Asa result, the dentists must comply with the provisions of the Controlled Substances Act and its implementing regulations. Most basically, the Controlled Substance Act requires dentists to obtain an annual registration with the Attomey General and be assigned a registration number by the United States Drug Enforcement Agency. See 21 U.S.C. § 822(a)(1). nIt is unlawful for any person to distribute or dispense a controlled substance in violation of the Controlled Substances Act, including through the use of a DEA registration number issued to another person. See 21 U.S.C. § 841(a)(1). 228. As stated above, many of the dentists working at Kool Smiles join the company immediately or shortly after they graduate from dental school and start providing dental services before they obtain their DEA registration number. 229. In violation of the Controlled Substances Act, the unregistered dentists use the DEA registration number of other Kool Smiles dentists to issue pain medications, such as Tylenol with Codeine and Vicodin, both of which are controlled substances. 230. Kool Smiles, which tracks each employee’s certifications and licenses, is aware of these practices but does nothing to stop it. In fact, the company’s Chief Dental Officer, Dr. Dale Mayfield, as well as other supervising dentists have provided their DEA registration numbers to unregistered dentists to enable them to prescribe pain medications. 231. Kool Smiles’ misuse of the DEA registration numbers resulted in pharmacies unsuspectingly submitting claims to Medicaid and other government healthcare programs for invalid prescriptions. 4, Unauthorized use of nitrous oxide on patients 232. Nearly all of the States in which Kool Smiles does business require dentists to obtain a permit before administering nitrous oxide to a patient. 233. Kool Smiles requires newly hired dentists to immediately begin performing procedures. Frequently the new dentists haven’t obtained a permit authorizing them to administer nitrous oxide when they start seeing patients. Nevertheless, these new dentists administer nitrous oxide in connection with operative procedures. Here again, another dentist that does have a nitrous oxide permit will sign the chart so the rendering dentist can bill for the procedure. 2234. Additionally, because of the volume of procedures Kool Smiles requires, it is commonplace for dental assistants to administer nitrous oxide on a new patient while the dentist is finishing a procedure on another patient. This practice violates State regulations that prohibit dental assistants from administering nitrous oxide at all or without the supervision of a dentist. 235. Although these dentists and dental assistants are violating State law, Kool Smiles still bills Medicaid and the other Government Payers for the service. 236. Fitzgerald repeatedly witnessed dentists and dental assistants administer nitrous oxide, despite not having the required credentials, including, but not limited to, Dr. Danielle Jones, Shauna Gossett (Amarillo Clinical Team Lead), dental assistants Anthony Hemandez, Lorie Sananikone, Dustin Vega, and Paula Butler. 237. Furthermore, Kool Smiles monitors whether employees have obtained all required licenses, certifications, and permits, but nevertheless allows unauthorized use of nitrous oxide to occur and allows the service to be billed to government healthcare programs. Thus Kool Smiles, with knowledge of the quotas and time pressures it placed on its employees and the corrupt culture it has created, knowingly bills Government Payers for non-reimbursable procedures. ¢. Hygienists and dental assistants apply sealants and perform cleanings without dentist orders 238. A dental sealant is a thin plastic film painted on the chewing surfaces of teeth to prevent cavities. Sealants are a recognized technique to reduce the risk of cavities. 239, The Academy of General Dentistry describes a sealant placement procedure as follows: Your dentist can apply sealants easily, and it takes only a few minutes to seal each tooth. The dentist first cleans the teeth that will be sealed, which may require the use of a dental drill to open the grooves of the teeth and determine if decay is present. Then he or she will roughen the chewing surfaces with an acid solution, which will help the sealant stick to the Bteeth. The dentist then “paints” the sealant on the tooth. It bonds directly to the tooth and hardens. Sometimes your dentist will use a special curing light to help the sealant harden. Sealant treatment is painless and takes anywhere from five to 45 minutes to apply, depending on how many teeth need to be sealed. Sealants must be applied properly for good retention. 240. Many States allow certified hygienists and dental assistants to apply sealants, but only after a dentist performs an oral exam and prescribes the sealant. When sealants are placed by a hygienist or dental assistant, the standard of care requires that the sealant be subsequently inspected by a dentist to ensure proper application. If a sealant is not applied properly, it provides an enclosed space for plaque and cavities to form. 241. To meet revenue and HYG APC quotas, hygienists and dental assistants automatically place sealants on children’s teeth whenever a pit or fissure is observed during a cleaning, regardless of whether a dentist has examined the child and regardless of whether the dentist ordered the procedure. In addition, Kool Smiles dentists normally do not check sealants afier they have been placed to ensure they were done properly because they don’t have time to perform their own jobs correctly, let alone supervise the work of others. 242. An example of sealants being placed without a dentist’s order occurred on August 12, 2010, when a hygienist at the Amarillo, Texas clinic placed 8 sealants on a Medicaid patient with the initials BP. An Open Case Report issued in January 2011 stated that Dr. Rai had performed the sealants. Upon reading the Open Case Report Dr. Rai entered the following note on the patient’s chart, “I have not clinically seen this patient [and] cannot sign chart on the alleged completion date of service. 243. Likewise, the practice at Kool Smiles is for hygienists to perform cleanings before the dentist takes a medical history or conducts an oral exam. This practice violates the standard of care, which requires a dentist to obtain the child’s medical history through a pre-consultation 74with the parent or guardian to ensure it is safe to perform a cleaning or determine whether the child has a condition that requires prescribing antibiotic prophylaxis before the dental procedure is performed, 244. A recent incident that occurred at the Amarillo, Texas clinic demonstrates why cleanings should not be performed without a dentist’s order. On January 11, 2011, a one-year-old Medicaid patient with the initials CM, who had been attacked by a dog six days earlier, came to the Amarillo clinic. His left cheek had suffered serious and permanent damage. A wound more than an inch wide was clearly visible on the child’s cheek. The wound had been surgically stitched together, with stitches made internally and externally. Yet, without a dentist’s order or medical history ~ indeed, before the child was seen by a dentist — hygienist Herlinda Goytia performed a cleaning and fluoride treatment. Predictably, during the cleaning, the intemal stitches on the wounded cheek ripped open and began to bleed. Dr. Rai saw the patient immediately afterward and became upset that she was not consulted as to whether a cleaning could be performed. 245. An incident at the Mission, Texas clinic in October 2008 similarly shows why cleanings should only be performed pursuant to a dentist’s order. A hygienist performed a cleaning without a dentist's order on a two-year-old Medicaid patient whose initials are AL. Unbeknownst to the hygienist, the patient’s medical history noted that she had heart surgery earlier in the year. Without antibiotics, a dental cleaning can result in endocarditis or even an infection in the heart, as bacteria from the mouth can easily enter the bloodstream. 246. Another example of hygienists performing cleanings without a dentist’s order is the cleaning performed on a Medicaid patient with the initials CM at the Amarillo, Texas clinic on January 3, 2011. As described in the note on the patient’s chart, a hygienist completed the 15cleaning on this patient, who had a tooth implant, prior to obtaining a dentist's order. Rather than using a non-abrasive plastic cleaning device, the hygienist used a cavitron, scratching the surface of the implant. The integrity of the implant was ruined and will need to be replaced. Although the cleaning was unordered and damaged the implant, Kool Smiles still billed Medicaid for the cleaning. 247. Although hygienists and dental assistants improperly apply sealants without a dentist's order and inspection, and though hygienists likewise perform cleanings without a dentist’s order, Kool Smiles nevertheless bills the government healthcare programs for these unauthorized procedures. 248. As evidence of the extent to which hygienists and dental assistants impermissibly performed cleanings, placed sealants, and/or took x-rays, there were numerous instances at the ‘Amarillo, Texas clinic where such activity took place even though no dentist was present in the building. For instance on April 24, 2009, patients received treatment from two hygienists approximately 15 to 25 minutes before a dentist arrived at the clinic. Fitzgerald had to write-up Teresa Lawler, Herlinda Goytia and other hygienists and dental assistants for performing hygiene procedures when no dentist was present in the clinic, Similarly, the Texas State Board of Dental Examiners has received complaints that hygienists and dental assistants at the Lubbock, Texas clinic treated patients without a dentist being present. f. Dentists provide services to patients though they aren’t credentialed by CHIP and other government healthcare programs 249. The practice at Kool Smiles clinics is for newly hired dentists to immediately start providing dental services to beneficiaries of government healthcare programs even if they are not yet credentialed by the program(s). 76250. To circumvent the enrollment and credentialing requirements and obtain reimbursement for the procedures performed by the un-credentialed dentists, Kool Smiles either (1) falsifies who performed the procedures, or (2) falsifies the date that the procedures were performed. 251. When a dentist provides dental services to a beneficiary of a government healthcare program from which they are not credentialed, they are instructed by supervisory dentists to have another dentist, who is credentialed, endorse the chart so as to make it appear like that dentist was the rendering provider even though they never saw the patient. 252. For example, Dr. Joshua Martin, who as Area Dentist for Arizona is a dentist supervisor, was not credentialed by the State of Texas’ STARDent program. On July 19, 2010, Dr. Martin placed stainless steel crowns on a STARDent patient with the initials JH. To bill for the crowns Kool Smiles instructed a clinical team lead to have one of the dentists at the clinic that is credentialed by STARDent to sign the chart as the providing dentist. Days later Dr. Rai ‘was presented the chart and was led to believe JH was her patient and that she had performed the crowns. She mistakenly signed the chart and Medicaid was billed. 253. A second scheme Kool Smiles often uses to obtain reimbursement for services rendered by un-credentialed dentists is instructing central billing to hold-off on submitting bills until after the rendering dentists are eventually credentialed and to falsify the date the dental services were provided. Central billing sends the clinics a monthly list of claims that could not be billed until the dentists are credentialed. A comparison of the electronic medical records against the paper charts for patients treated by un-credentialed dentists shows that the treatment date in the electronic medical records were changed to a later date. 3. Kool Smiles Bills Government Healthcare Programs For Services That Are Not Reimbursable oaa. Defendants are in violation of state laws governing dental Practice ownership 254. In each of the following States, which includes virtually all of the States where Kool Smiles operates clinics, there are laws which prohibit corporations from controlling the clinical decisions made by licensed health care providers such as dentists: Alabama : ALA. CODE §§ 10A-4-1.03, 10A-4-3.01, 10A-4-3.06, 10A-4-2.04,Alaska: ALASKA ADMIN. CODE tit, 12, §§ 10-45-030, 10.45.050, 10.45.060, Arkansas: ARK. CODE ANN. § 4-29-406, California: CAL. BUS. & PROF. CODE § 1805; CAL. CORP. CODE §§ 13401.5,13405(a), 13406(a), Colorado: COLO. REV. STAT. § 12-36-134, Connecticut: CONN. GEN. STAT. § 33- 182d, 33-182g, Delaware: DEL. CODE ANN. tit. 8, §§ 605 ~ 607, DC: D.C. CODE §§ 29- 505(a), 29-508(b). Florida: FLA. STAT. §§ 621.006, 621.009, Georgia: GA. CODE ANN. §§ 14-7-4, 14-7-5(a). Hawaii: HAW. REV. STAT. §§ 4154-9, 415A-6, 415A-14, Idaho: IDAHO CODE ANN. §§ 30-1308, 30-1315, Illinois: 10 ILL. COMP. STAT. 7, 11, 15, Indiana: IND. CODE §§ 23-1.5-2-4, 23-1.5-2-5, 23-1.5-3-1(a), Iowa: IOWA CODE § 496C.7, 496C.10, 496C.16, Kansas: KAN. STAT. ANN §§ 17-2712, 17-2713, Kentucky: KY. REV. STAT. ANN. §§ 274.017(1), 274.027(1), 274.045, Louisiana: LA. REV. STAT. ANN. §§ 12.982, 12:985, Maryland: MD. CODE ANN., CORP. AND ASS'N §§ 5-105, 5-109%(a), 5-117(a), Massachusetts: MASS. GEN LAWS Ch. 156A, §§ 5, 9, 10, Michigan: MICH. COMP. LAWS §§ 450.4904, 450.4905, Minnesota: MINN. STAT. §§ 319B.02(19), 319B.07, 319B.09, Missouri: MO. REV. STAT. §§ 356.081, 356.091, 356.111, Montana: MONT. CODE ANN. §§ 35-4-207, 35-4-301, Nebraska: NEB. REV. STAT. § 21-2208, Nevada: NEV. REV. STAT. § 89.070(1), 89.230, New Hampshire: N.H. REV. STAT. ANN. §§ 294-A:5, 294-A:8, 294-A:20, New Jersey: NJ. STAT. ANN. §§ 14A:17-6, 14A:17-7, 14A:17-10(a), New York: NY BUS. CORP. LAW §§ B1504, 1507(a), 1508(a), North Carolina: N.C. GEN. STAT. §§ 55B-4(2) - (3), 55B-6.,, 55B-8, Oklahoma: OKLA. STAT. tit. 18, §§ 809, 810, 811, 814, Oregon: OR. REV. STAT. § 58.156(1). Pennsylvania: 15 PA. CONS. STAT. §§ 2923(a), 2924(a), Rhode Island: R.1. GEN LAWS §§ 7- 5.1-3(@), 7-5.1-6A, South Carolina: 8.C, CODE ANN. §§ 33-19-130, 33-19-200, 33-19-300, South Dakota: S.D. CODIFIED LAWS § 47-12-3, Tennessee: TENN. CODE ANN §§ 48-101- 607, 48-101-610(a)(2), 48-101-618, Texas: TEX. BUS. ORGS. CODE ANN. §§ 301.006(b), 301.007(b), Vermont: VT. STAT. ANN., tit. 11, §§ 823, 830(a), 840, Virginia: VA. CODE ANN. §§ 13.1-544, 13.1-546, 13.1-553(B), Washington: WASH. REV. CODE §§ 18.100.060(1), 18,100.060(2), 18.100.065, 18.100.090, West Virgi W.VA. CODE §§ 30-4-28(b), (c); W.Va. Bd. of Dental Exam. R. § 5-6-3, Wisconsin: WIS. STAT. §§ 180.1903(1), 180.1911(1), and Wyoming: WYO. STAT. ANN. §§ 17-3-101, 17-3-102. 255. The reasons behind such rules are clear: “[tJhe prohibition on the corporate employment of physicians is invariably supported by several public policy arguments which espouse the dangers of lay control over professional judgment, the division of the physician's loyalty between his patient and his profitmaking employer, and the commercialization of the profession.” Berlin v, Sarah Bush Health Center, 688 N.E.2d 106, 110 (Ill. Supr. 1997). 256. Given the complexity of modem healthcare, many exceptions to the corporate practice of medicine and dentistry have developed. For example, “numerous jurisdictions have recognized either judicial or statutory exceptions to the corporate practice of medicine doctrine which allow hospitals to employ physicians and other health care professionals.” Id, at 111 citations omitted). However, no such exceptions have developed which permit the corporation 0 control clinical decisionmaking. Thus, “{i}f a corporate employer seeks to impose or substitute its judgment for that of the physician in any of these functions, or the employment is 79otherwise structured so as to undermine the essential incidents of the physician patient relationship, the Medical Practice Act will have been violated.” Louisiana State Board of Medical Examiners Position Statement, (Sept. 24, 1992). 257. Consistent with the above, under Texas law, only dentists or P.C.s of dentists are licensed to run dental practices. Corporations such as NCDR cannot own, operate, control or interfere with the practice of dentistry at a dental practice. Tex. Occ. Code Ann. § 256.001- 256.002. Corporate ownership or control is prohibited and is a felony. Id, § 264.151(a). The other States have State-specific laws or regulations which have the same goal, The purpose of these laws is clear — clinical decisions must be made by licensed professionals, not corporations bent on profit. 258. The case In Re OCA, Inc., 552 F.3d 413, 416 (5" Cir. 2008) involved defendant Orthodontic Centers of America, Inc. (“OCA”). OCA contracted with a number of dentists, and ‘was deeply involved in their practices. Under the contracts, OCA: [was] responsible for billing patients, filing insurance claims, hiring nondental personnel, setting dress codes, and managing a bank account through which the dental practice's funds flowed. The Orthodontists were not authorized to withdraw funds from the operating account, so OCA periodically transferred money from these accounts to pay the Orthodontists their compensation. In exchange, the Orthodontists agreed to work a minimum number of hours each week at the practice and not to perform orthodontic work outside that office. The Orthodontist, would receive an hourly rate for seeing patients, and OCA would receive an hourly management fee in addition to being reimbursed for its overhead. Profits were then split according to the respective ownership interests of OCA and the Orthodontists. InRe OCA, Inc., 552 F.3d at 416 (S" Cir. 2008). Under these facts, the 5" Circuit held that the contracts (known as “BSA’s”) were illegal, given the pervasiveness of the involvement in the practice of dentistry that the BSAs require OCA to engage in, the fact that every district court that has considered whether similar BSAs violate Texas law has held that they were void for illegality, and the longstanding tradition in Texas preventing . . . unlicensed 80individuals or corporations (other than professional corporations in the relevant profession) from in substance owning a controlling equity interest in the practice ofa licensed leaned health professional. As written, the BSAs create an interlocking set of obligations that required OCA to exercise considerable contro! over the Orthodontists’ practices. For instance, OCA conducted the financial and marketing activity of the practices, and it maintained the facilities, equipment, and support personnel required to operate the practices. The BSAs also stipulated how much each Orthodontist was required to work, and greatly restricted their ability to perform services outside of the BSAs. In exchange for these services, OCA charged a fee that was tied to the profits of the practices. The BSAs provided little to no ability for the Orthodontists to oversee any of OCAs decisions related to their practice. Ultimately, the Orthodontists were essentially only left with control over diagnosing and treating their patients. Accordingly, the subject matter of the agreement runs afoul of section 251.003(a)(4)'s prohibition of unlicensed persons from owning, operating, ‘or maintaining a premises at which those persons also employ or engage another person to practice dentistry. Id, at 423, citing Garcia v. Texas Board of Medical Examiners, 384 F. Supp. 434, 437-440 (W.D. Tex. 1974), and Flynn Bros. Inc. v. First Medical Associates, 715 S.W.2d 782, 784-85 (Tex. App.—Dallas 1986, wait ref'd nz... 259. Kool Smiles’ control over its clinics was far more pervasive than OCA’s control of its dentists. At least the OCA dentists retained “control over diagnosing and treating their patients.” Jd, Here, not only was Kool Smiles in complete control of the financial and marketing activities of the practice (including control over billing, payments, and a national marketing strategy), the facilities, the equipment, and the support personnel, Kool Smiles controlled the clinical decision-making of the dentists and other providers through quotas and its punishment of employees for failing to meet them. As stated by another Texas court, if corporations are effectively running health care practices, [t]o whom does the doctor owe his first duty -- the patient or corporation? Who is to preserve the confidential nature of the doctor-patient relationship? What is to prevent or who is to control a private corporation from engaging in mass media advertising in the exaggerated fashion so familiar to every American? Who is to dictate the medical and administrative procedures to be followed? Where do budget considerations end and patient care begin? 81Garcia v. Texas Board of Medical Examiners, 384 F.Supp. 434, 440 (W.D. Tex., 1974). 260. Relators hereby allege that nowhere in modern American history has a corporation had such a degree of control over the clinical decisions being made by licensed health care practitioners. 261. Nor can Kool Smiles hide behind the alleged “Owners” and “Presidents” of its clinics. As alleged herein, Kool Smiles established entities and named individuals — professional corporations (P.C.s) and dentists — to purportedly hold ownership and exercise control of Kool ‘Smiles’ dental clinics. However, the P.C.s and dentists named as “Owners” or “Presidents” of these entities are “straw” men/corporations who do not exercise independent control of their dental clinics, even in the slightest. Instead, Kool Smiles is in control. 262. Drs. Tu M. Tran, Dale G. Mayfield, David M. Veith are allegedly “Presidents” of nearly 130 dental practices controlled by Kool Smiles as described in this Complaint. 263. Amazingly, Tran is listed as the President of 54 clinics in the following cities and states: Atlanta, GA; Brockton, MA; Brownsville, TX; Bryan, TX; Cambridge, MA; Chelsea, MA; Christianburg, VA; Colonial Heights, VA; Columbus, GA; Dalton, GA; Danville, VA; Decatur, GA; Del Rio, TX; Eagle Pass, TX; Evansville, IN; Fall River, MA; Falls Church, VA; Forest Park, GA; Fort Wayne, IN; Fredericksburg, VA; Hampton, VA; Hampton, VA; Highland Bra, IN; Holyoke, MA; Holyoke, MA; Houston, TX; Killeen, TX; Laredo, TX; Laredo, TX; Leon Valley, TX; Lilburn, GA; Louisville, KY; Louisville, KY; Macon, GA; McAllen, TX; Mission, TX; New Bedford, MA; Norfolk, VA; Norfolk, VA; Portsmouth, VA; Richmond, VA; ; Roxbury, MA; San Antonio, TX; Smyma, GA; Stone Mountain, GA; Terra Haute, IN; Texarkana, TX; Valdosta, GA; Virginia Beach, VA; Waco, TX; Weslaco, TX; Winchester, VA; and Woodbridge, VA. 82264. Mayfield is listed as the President of 43 clinics in the following cites and states: Abilene, TX; Amarillo, TX; Biloxi, MS; Corpus Christie, TX; Edinburg, TX; El Paso, TX;; Everett, WA; Hattiesburg, MS; Houston, TX; Jackson, MS; Killeen, TX; Las Cruces, NM; Longview, TX; Lubbock, TX; Lufkin, TX; Midland, TX; Midwest City, OK; Odessa, TX; Phoenix, AZ; San Angelo, TX; Sherman, TX; Spokane, WA; Temple, TX; Texas City, TX; Tucson, AZ; Tucson, AZ; Tupelo, MS; Tyler, TX; Vancouver, WA; Waco, TX; and Wichita Falls, TX. 265. Veith is listed as the President of 30 clinics in the following cities and states: Anderson, SC; Baltimore, MD; Baton Rouge, LA; Brooklyn, MD; Charleston, SC; Columbia, SC; District Heights, MD; East Chicago, IN; Elkhart, IN; Gary, IN; Greensville, SC; Hagerstown, MD; Hartford, CT; Lafayette IN; Lafayette, LA; Metairie, LA; Monroe, LA; New Britain, CT; New Haven, CT; New Orleans, LA; Orangeburg, SC; Rock Hill, SC; Salisbury, MD; Shreveport , LA; and Takoma Park, MD. 266. All of these clinic locations have separate billing numbers, but all of them are directly controlled by Kool Smiles. 267. These entities are but threads in a large corporate web spun by Kool Smiles. Indeed, in the course of its billing operations, Kool-Smiles-controlled operations have made the following representations: * Veith, Mayfield, or Tran are the alleged Presidents of the above-mentioned 127 clinics. Yet, Veith’s clinic in Greenville, SC, has a business address of 1090 Northchase Parkway SE, Ste. 150, Marietta, GA 30067, which is NCDR’s principal place of business, and which is the same business address for Mayfield’s clinic in Amarillo, TX, and Tran’s clinic in New Bedford, MA. Additionally, “President” Mayfield’s business mailing address for his clinic in El Paso, TX, is 400 Galleria Parkway SE, Suite 800, Atlanta, GA 30339, which is Defendant Kool Smiles Holding Corporation’s headquarters. Moreover, the phone number for “President” Veith at his Greenville, SC clinic is (770) 916-5028, which is the same phone number provided for “President” Mayfield in El Paso, TX, and the same phone number provided for “President” Tran in Houston, TX. 83© The phone number provided for President Mayfield’s Amarillo, TX clinic is (770) 916- 9000, which is NCDR’s phone number in Atlanta, GA. Meanwhile, the alleged phone number for Dr. Tran’s Houston, TX, clinic is (800) 920-9947, which is Kool Smiles’ (800) number, and the same number allegedly belonging to President Mayfield’s clinic in EI Paso, TX. © And the beat goes on. Even in the face of the government’s investigation, when Kool ‘Smiles acquired numerous clinics in 2012 from Resolution Dental, Mayfield and Tran were again named as Presidents of the clinics. For example, Mayfield was named President of the Abilene, TX clinic, while Tran was named President of the Hampton, VA clinic. NCDR’s phone number — (770) 916-9000 — is the phone number listed for both clinics, and (770) 916-5028 is listed as the number where both Mayfield and Tran can be contacted. 268. The chart below summarizes these relationships, and is but an exemplar; virtually every Kool Smiles clinic is a tendril spun from the same web:Organization #1 Information (LBN): KS2 TX, PC Doing Business As KOOL SMILES ‘Authorized Official Information Dr. Dale Mayfield, DMD, President Phone: 770-916-5028 Provider Business Mailing Address 1090 Northchase Pkwy, Suite 150 Marietta, GA 30067 Phone: 770-916-5028 Provider Business Practice Location Address 3840 Aldine Mail Rd. Houston, TX 77039 Phone: 678-904-5665 nization #5 Information (LBN): Dentistry of Brownsville, PC Doing Business As KOOL SMILES Authorized Official Information Dr. TuM Tran, DDS, President Phone: 770-916-5028 Provider Business Mailing Address 1090 Northchase Pkwy, Suite 150 Mariewa, GA 30067 Phone: 770-916-5028 Provider Business Practice Location ‘Address 5341 Antoine Drive Houston, TX 77091 Phone: 800-920-9947 Organization #2 Information (CBN): KOOL SMILES SC-2, PC Doing Business As KS Authorized Official Information. Dr. David M. Veith, DDS, President Phone: 770-916-5028 Provider Business Mailing Address 1090 Northchase Pkwy, Suite 150 Marietta, GA 30067 Phone: 770-916-5028 Provider Business Practice Location Address 3K Man Plaza Greenville, SC 29605 Phone: 770-916-5028 Organization 6 Information (LBN): KS2 TX, PC Doing Business As KOOL SMILES Authorized Official Information Dr. Dale G. Mayfield, DMD, President Phone: 770-916-5028 Provider Business Mailing Address 400 Galleria Pkwy Suite 800 Atlanta, GA 30339 Phone: Provider Business Practice Location Address 6910 N Mesa Street EI Paso, TX 79912 Phone: 800-920-9947 infon (UBNY: KS2 TX PC Doing Business As KOOL SMILES: Authorized Official Information Dr. Dale G. Mayfield, DMD, President Phone: 770-916-5028 Provider Business Mailing Address 1090 Northchase Pkwy, Suite 150 Marietta, GA 30067 Phone: 770-916-5028 Provider Business Practice Location Address 2212 Bell Street Amarillo, TX 78106 Phone: 770-916-9000 tion #7 Information (LBN): BETHEL P.C. Doing Business As RESOLUTION DENTAL ‘Authorized Official Information Dr. TuM Tran DDS, President Phone: 770-916-5028 Provider Business Mailing Address 1090 Northchase Pkwy SE, Suite 150 Marietta, GA 30067 Phone: 770-916-5028 Provider Business Practice Location Address 1194 Big Bethel Rd Hampton, VA 2366606 Phone: 770-916-9000 85 Organization #6 Information (LBN): KOOL ‘SMILES MAC, PC Doing Business As KS Authorized Offici Information Dr. TuM Tran, DDS, President Phone: 770-916-5028 Provider Business Mailing Address 1090 Northehase Phowy, Suite 150 Marietta, GA 30067 Phone: 770-916-5028 Provider Business Practice Location Address 137 Hathaway Road New Bedford, MA Phone: 508-992-7226 Information (BN); HIGHWAY 351PC DBA RESOLUTION DENTAL ‘Authorized Official Information. Dr. Dale G. Mayfield DMD, President Phone: 770-916-5028 Provider Business Mailing Address 1090 Northchase Pkwy, Suite 150 Marietta, GA 30067 Phone: 770-916 Provider Business Practice Location Address 1784 State Highway 351 Abilene, TX. 79601 Phone: 770-916-9000269. Relator Fitzgerald can state that the alleged “Owners” or “Presidents” were such in name only. For example, in addition to his alleged roles described above, Mayfield was Kool Smiles’ Chief Dental Officer. Fitzgerald stated that Mayfield almost never appeared at any of the clinics to which his name was attached, and that the associate dentists — many of whom were fresh out of dental school, with little or no pediatric training — commonly complained that they could not get, from Mayfield or any other dentists in management positions, the clinical support and instruction they needed to properly care for their patients. Mayfield’s response to their needs was to complain to Fitzgerald that he had to visit the Texas clinics at all, given that he lived in Atlanta, It is no surprise that an Atlanta-based trainer once told Fitzgerald that “none of the dentist owners do their jobs.” 270. Moreover, Mayfield knew that he was not meeting the law’s requirements. At ‘one point, he told Fitzgerald that Kool Smiles “paid him very well to use his name,” but that he “planned to get out” because Kool Smiles’ use of his name was “getting too risky.” 271. Here, in violation of Texas law, and the other States’ laws, the corporate Defendants exercise management, supervision and control of the clinics down to the smallest detail. Dentists are relegated to delivering the care that the corporation(s) decide is appropriate. Texas and the other States have legislated that clinical decisions must be the province of licensed professionals. Here, Kool Smiles has hijacked that authority by acting as the effective owner of the clinics, and thus is practicing dentistry throughout the United States in the name of licensed dentists. Relators assert that every claim submitted to the government for care provided at these clinics is a false claim." .g., Texas Medicaid Provider Manual, Section 19.2 (“All owners of a dental practice must maintain an active license status with the TSBDE to receive reimbursement from Texas Medicaid”). 86272. There are additional State law violations which lead to liability under the Federal and State FCA’s. For example, the owners of certain Kool Smiles clinics in Texas (including Defendants Dentistry of Brownsville, P.C.; KS2 NM, P.C.; and Does | through 50) are also in violation of Texas law for allowing their dental practices to be controlled by Kool Smiles: a dentist (or a professional corporation formed by dentists) must not permit his/her practice “to be used or made use of, directly or indirectly, or in any manner whatsoever, so as to create or tend to create the opportunity for the unauthorized or unlawful practice of dentistry by any person, firm, or corporation.” 22 Tex. Admin. Code § 108.1(4). 273. Improper control or influence over a dental practice can take a number of

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