They may not be all smiles, but Delta Dental and Smile Center clinics have reached a multimillion-dollar settlement over a fraud claim, avoiding a trial that was to begin next month in Hennepin County.
Smile Center has agreed to pay Delta Dental $750,000 and drop its claims to about $3.1 million that Delta Dental had held in escrow to cover disputed payments.
Delta Dental, which administers dental benefits for insurance companies and had no financial stake in the suit, will turn over the bulk of the $3.85 million settlement to Medica and Blue Cross Blue Shield of Minnesota, plus a handful of smaller health plans that receive state funding to provide dental care to poor Minnesotans. About 10 percent involves claims under Delta's commercial plans.
A portion of the plans' share will be returned to the state's Department of Human Services, said Robert Milis, an attorney with Blue Cross.
The Smile Center has clinics in Deerwood, Big Lake, Savage, St. Paul and Brooklyn Park. It was started in 1990 and states on its website that it takes insurance that many other dental offices do not, including government-funded insurance.
Smile Center sued Eagan-based Delta Dental in April 2009 for failing to reimburse care for low-income Minnesotans that dated back to mid-2008. Delta, the state's biggest dental benefits company, countersued, saying it wasn't paying the claims because they appeared to be fraudulent or abusive.
As part of the settlement, Delta and Smile Center deny liability or wrongdoing.
"We're happy to have it resolved," Delta Dental President David Morse said. "We take our responsibility in dealing with other people's money seriously."
He added: "We're obligated to look for fraud and abuse, potentially, and report it. That's what we've done here."
Lee Hanson, an attorney with Gray Plant Mooty in St. Cloud and one of Smile Center's business attorneys, denied all fraud allegations. He said Smile Center settled because it didn't have the money to continue the fight.
"Delta Dental is aggressive and pushy," Hanson said. "They don't like anybody complaining about the way they reimburse them. We're the first clinic that had enough [rejected] claims to make it worthwhile. Most dentists are single practitioners who can't afford to fight them."
Delta's Morse said the settlement, which was signed late last week, covers disputes through December 2009. The Smile Center clinics continue to see patients on state programs.
"Going forward, we'll treat them like any other provider," Morse said of Smile Center. "We'll continue to watch them and if there are recurring problems, we'll go back and visit them again."
Jackie Crosby • 612-673-7335