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Nationwide antitrust class action alleges Delta Dental colluded to suppress dentists' pay rates

Lawsuits

By Scott Holland | Dec 9, 2019

Dentist

CHICAGO — Dental insurance company Delta Dental is facing a sweeping class action accusing the insurer of violating antitrust laws by allegedly forcing dentists across the country into agreements that unfairly suppress payments to dentists.

The complaints, brought primarily by dentists across the country, have been consolidated in federal court in Chicago. Named defendants include the Delta Dental Plan Association, affiliated national entities Delta Dental Insurance Company, DeltaCare USA and Delta USA Inc., 39 independent Delta Dental companies operating in all 50 states and Puerto Rico, as well as Dentegra Group and Renaissance Health Service Corporation, which fully or partially own several of the 39 state plans.

The first of the complaints were filed in mid-October. In a more recent complaint, filed Nov. 26, the Chicago-based American Dental Association joined the litigation, as well, alleging Delta's agreement requring dentists to abide by noncompetitive geographic areas is a conspiracy that suppresses compensation for dentists below levels that otherwise would prevail in a fairly competitive market. The plaintiffs also said this arrangement limits “the value and choices of dental care available” to more than 80 million patients who have Delta Dental insurance.

The complaint said in 2014 Delta Dental claimed it processed roughly 1.8 million claims per week and posted $19.5 billion in revenue.

Another complaint asserted Delta Dental has roughly 200,000 locations and is the largest provider of dental insurance in the Unites States. Based on an alleged market allocation mechanism, the different Delta agencies are able to fix prices, the complaint said, as well as restrict competition. Since patients want to be treated by dentists that accept insurance from the largest carrier in he nation, these providers “have little or no choice but to acquiesce” to the “noncompetitive and artificially low reimbursement rates.”

The complaints say Delta entities don’t negotiate fee clauses with providers, but coordinate with each other as much as possible to make sure compensation rates are close to uniform. They detail “draconian rate decreases” in dentist compensations contrasted with rapidly escalating executive compensation, cash investments and premium revenues, and note those dollar amounts are in conflict with the entities’ preferred nonprofit status.

The ADA said the average income for dentists from 2001-2018, adjusted for inflation, “has declined significantly, due in large part to the conduct” of the assorted Delta defendants. But according to 2016 tax documents, compensation for executives of the state entities exceeded more than $1 million for more than half of those groups, going as high as $7.6 million for Gary Radine, former president and CEO of Delta Dental Delaware, and more than $9.2 million for Laura Czelada, president and CEO of Delta Dental Plan of Ohio.

To illustrate the reality of market suppression, the complaints point to growth in the cosmetic procedure market, typically not covered by dental insurance. Since providers are able to set rates without “significant interference by dental insurers,” patients freely choose dentists based on process and services. As such, the cosmetic dentistry market is growing and projected to continue doing so.

By extension, the complaints continue, unless a court intervenes to stop Delta Dental from using its alleged monopsony power as the largest buyer of their services, by far, the providers will continue to lose money, compared to what they could earn in a fully competitive market. Under the status quo, the dentists say they are forced to accept less favorable rates and contracts and have access to far fewer patients than would be possible, absent the alleged collusion.

Plaintiffs are represented by a number of firms, including attorneys with Quinn Emanual Urquhart & Sullivan LLP, of Chicago and New York; Carney Bates & Pulliam, of Little Rock, Ark.; Malkinson & Halpern P.C., of Chicago; and Kaplan Fox & Kilsheimer LLP, of New York, among others.

Delta Dental and its affiliated entities are represented by the firms of Faegre Baker Daniels LLP, of Chicago and Indianapolis; Mayer Brown LLP, of Chicago; Sidley Ausin LLP, of Chicago; and Blackwell Burke P.A., of Minneapolis.

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Organizations in this Story

Sidley Austin LLPAmerican Dental AssociationBlackwell Burke P.A.Quinn Emanuel Urquhart & SullivanKaplan Fox & Kilsheimer, LlpFaegre Baker Daniels, LlpMalkinson & HalpernMayer Brown,LlpDelta Dental Plan Association

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