'Small Smiles' Dental Chain Reaches Settlement for Medical Fraud

Jan. 20, 2010— -- It's a promise many parents make before taking their children to the dentist: Don't worry, it won't hurt too much. But at some "Small Smiles" dental clinics catering to low-income families on Medicaid, that promise was broken behind closed doors.

FORBA Holdings LLC, the parent company of the nationwide pediatric dental chain "Small Smiles," reached a $24 million settlement with the Department of Justice Wednesday for allegedly performing medically unnecessary or substandard procedures on children insured by Medicaid, to turn a profit.

The Justice Department claimed that some dental clinics performed unnecessary procedures, including removing teeth, x-rays, and pulpotomies -- also known as baby root canals -- and then charged Medicaid.

"This was a matter of profit over compassion," said Daniel Levinson, inspector general of the U.S. Health and Human Services. The company submitted "false and fraudulent claims to Medicaid for unnecessary and potentially dangerous services to children in an attempt to maximize profits."

Whistleblowers from inside the company told ABC News it all allegedly was done to bilk taxpayers and compensate for Medicaid's low reimbursement rates.

"They wanted us to tell parents that they needed services on teeth that were healthy," one whistleblower told ABC News.

"We have zero tolerance for those who break the law to exploit needy children," Assistant Attorney General Tony West said. "Illegal conduct like this endangers a child's well-being, distorts the judgments of health care professionals and puts corporate profits ahead of patient safety."

Dental Chain Did Not Admit Liability, Remains Open

FORBA, the country's largest dental management company, agreed to overhaul procedures to prevent similar violations from taking place, but did not admit liability.

"This comprehensive resolution encourages us to continue to focus on vital, high-quality dental care for children in America's low-income communities, and allows us to build on the improvements implemented since the company was acquired in September 2006," FORBA said in a statement. "We look forward to fulfilling our commitment to the dental health of underserved children for years to come."

The government's investigation into Medicaid fraud was sparked by three whistleblower lawsuits. The Department of Justice's investigation into individual dentists is ongoing.

"Small Smiles" has 68 clinics in 22 states and remains open for business. Dr. Anthony Bain's "Small Smiles Dentistry for Children" clinics in Texas are not affiliated with the chain.

In March 2009, "20/20" reported on the Medicaid Dental Center clinics in North Carolina, which allegedly performed more procedures than necessary and, parents claimed, traumatized their children. One child said he had an astounding 16 baby root canals -- nearly every tooth in his mouth.

Visit the "20/20" Web site and watch "20/20" Friday at 10 p.m. ET for an update to this report.