Case Update: Park Dental vs. American Dental Partners

Case Update: Park Dental vs. American Dental Partners

Douglas S. Wolff, DDS, J.D*., and Angela M. Lutz Amann, J.D.**:

As Minnesota dentists wrestle with licensing of a mid-level oral health practitioner, last year a Hennepin County District Court heard a potentially landmark case that raised significant questions about the definition of the practice of dentistry in Minnesota. In the case (PDG, P.A. and The Dental Specialists of Minnesota, P.A. vs. PDHC, Ltd.), a group of dentists (PDG) from Park Dental sued its administrative management company, American Dental Partners (ADP). PDG alleged that, among other things, ADP - headquartered in Wakefield, MassachusettsA - was practicing dentistry in Minnesota without a license. Given the subject matter of the lawsuit, we thought it would be informative to update you on the facts and the outcome of the case.

Minnesota law requires a license to practice dentistry. An unlicensed person is illegally practicing dentistry if he or she is a manager, proprietor, operator, or conductor of a place where dental operations are performed. The rationale behind this type of law is to prevent business decisions from impeding patient care. Some states have similar laws, and other states permit non-dentist ownership of dental practices. In addition, the Minnesota Board of Dentistry has promulgated rules as to the level of licensed dentist supervision for both dental assistants and dental hygienists.

As detailed in the court filings, the events that created the basis for the lawsuit are as follow. In 1996, PDG sold the rights to provide non-dental administrative services for its dental clinics to ADP. The 40-year service agreement made PDG one of the first dental groups in the nation to seek a partnership with a dental management service organization. ADP purchased the name Park Dental, assumed all of the leases to the clinics, and employed the clinical and non-clinical staff, with the exception of the dentists. The service agreement had to comport with Minnesota law regarding the unlicensed practice of dentistry. To accomplish that end, the service agreement left the Park Dental dentists in a professional corporation, PDG, P.A., to provide direct patient care, hold contracts with third-party payers, and be the stewards of the patients' dental records. Dr. Greg Swenson, co-founder of Park Dental, served as the president of PDG and ADP's Minnesota affiliate.

In 2004, the relationship between PDG and ADP began to sour when Dr. Swenson was relieved of his duties at ADP. After Swenson left, PDG contended that ADP's Minnesota affiliate was operating the Park Dental clinics without direction from a Minnesota licensed dentist, or any dentist for that matter. PDG further argued that not only was ADP in violation of the Minnesota Dental Practice Act because it was acting as the manager, proprietor, or operator of a place where dental operations are performed, but also that the ADP clinical employees lacked direct dentist supervision. PDG also claimed that ADP began firing clinical and non-clinical staff that the PDG dentists wished to retain and hiring replacements without consulting the PDG dentists.

In January of 2006, PDG's board of directors authorized a lawsuit against ADP for breaches of the service agreement contract and violations of the Minnesota Dental Practices Act. In March of 2007, PDG gave notice of cancellation of the service agreement, with nine months notice for the parties to engage in an orderly transition. Since ADP owned the Park Dental name, the facilities, and the staff, it was PDG's intent to set up entirely new facilities to serve their patients. However, PDG claimed that as PDG looked to set up new clinics, ADP proceeded to interfere with PDG's potential landlords, dental suppliers, and PDG's associate dentists. It appears that ADP did not want to be left with 31 dental clinics and no dentists to staff them, so they created their own dental professional limited liability corporation using one of the dentists from another ADP affiliated clinic.

Dr. James Ludke, who practices at Forward Dental in Waukesha, Wisconsin, obtained his Minnesota dental license July 20, 2006, a couple of months after PDG began legal proceedings against ADP. Using Dr. Ludke's Minnesota dental license, ADP created James Ludke, D.D.S., P.L.L.C. PDG argued that ADP staff used targeted recruiting and signing bonuses to get PDG dentists to join the Ludke corporation and work in the Park Dental clinics. Ultimately, this competing professional corporation under Ludke's name was one of the issues that caused the jury to issue a jaw-dropping $130 million award in favor of the PDG dentists. The jury found that ADP breached several provisions of the service agreement contract. In addition, the jury found that ADP breached its fiduciary duties toward PDG; in other words, ADP failed to act in the best interests of their business partner, PDG.After the jury's verdict, the parties entered court-ordered mediation, and the resulting settlement returned 25 clinics to the PDG dentists. ADP kept six of the clinics where the dentists had signed with the Ludke corporation. ADP affiliated clinics in Minnesota include Metro Dentalcare, Valley Dental Group, Assure Dental, and Orthodontic Care Specialists, making the publicly-traded ADP the largest provider of dental care in Minnesota.

The case had the potential to clarify the definition of practicing dentistry in Minnesota as it relates to practice management organizations such as ADP. Unfortunately, the jury did not specifically address this issue in its verdict. Thus, as shown above, ADP and other practice management organizations are still operating in Minnesota, and many of the questions regarding practice management organizations and the definition of practicing dentistry still remain. The MDA is working with the Board of Dentistry and other entities to attempt to address these issues. The MDA will continue to monitor these arrangements and update you as needed.

*Dr. Wolff is a member of the Dental Marketplace Committee of the Minnesota Dental Association. He is a general dentist and an attorney practicing in Stillwater, Minnesota.

*Angela Lutz Amann is legal counsel for the Minnesota Dental Association and a shareholder in the law firm of LeVander, Gillen & Miller, P.A.,
South Saint Paul, MN. E-mail is