Delta Dental, Smile Center Settle Fraud Suit

Under the terms of the settlement, Smile Center will pay Delta Dental $750,000, and it will dismiss its claims to $3.1 million that Delta had escrowed from claims that the company believed were fraudulent.

Delta Dental of Minnesota on Monday announced that it has reached an out-of-court settlement to resolve a lawsuit pending in Hennepin County District Court involving a dispute with Smile Center clinics.

Under the terms of the settlement, Smile Center will pay Eagan-based Delta $750,000, as well as dismiss its claims to roughly $3.1 million that Delta had escrowed from claims submitted by Smile Center that Delta believed to be fraudulent.

Delta administers dental plans for several health care providers through which the state provides services to low-income Minnesotans. Smile Center sued Delta in 2009, accusing the company of withholding funds that it argued should have been used to reimburse care for low-income patients. Delta countersued, claiming that it declined to hand over the funds because it suspected that the services it was billed for were fraudulent. Delta also asked for the return of certain funds that it claimed were paid for fraudulent services.

Delta said that it asked Smile Center for “sound clinical explanations” for “abnormally high utilization rates for several mostly routine dental procedures.” The company said that it did not receive the explanations, and chose to exercise its right to withhold the money.

As part of the settlement, neither Smile Center nor Delta admits to any wrongdoing.

“We are glad to have this case resolved,” Delta President and CEO David Morse said in a statement. “Delta Dental takes its responsibility to act as an effective public steward of other people's money very seriously.”

Delta said that about 90 percent of the claims involved Delta-administered, state-funded programs, so the bulk of the settlement money will be returned to those programs. The remaining 10 percent involves claims submitted under Delta's commercial dental benefit plans.

The Smile Center has clinics in Big Lake, Savage, Deerwood, St. Paul, and Brooklyn Park. Delta serves 8,000 employer groups with more than 3.8 million members in Minnesota and throughout the United States.