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California Dental Association achieves favorable settlement with Delta Dental

March 10, 2017

By David Burger

Sacramento — The California Dental Association has reached a proposed settlement agreement with Delta Dental of California in its lawsuit against the insurer regarding CDA's claims that Delta breached its contractual commitments with thousands of dentists in the state.

"CDA brought this case challenging Delta Dental's conduct because it would have been virtually impossible for our members to have done so on their own," said Dr. Clelan Ehrler, CDA president. "This agreement will provide Premier dentists with a significant potential economic recovery and unprecedented detail about the impact of future changes by Delta Dental months before they can be implemented. We are pleased to see the litigation resolved in a positive way."

The CDA filed the legal action in August 2013 in response to Delta Dental's plans to reduce reimbursement rates for the Premier plan by 8 to 12 percent. The CDA claimed that Delta Dental's attempt to amend the participating dentist agreement — or PDA — was a breach of contract and that Delta Dental had not adequately disclosed its plan to reduce reimbursement rates. During the course of litigation, the CDA also discovered that Delta Dental had been imposing additional limitations on provider annual fee filings for participation in the Premier network that the PDAs did not allow.

Delta Dental denied the CDA's allegations and claims, and maintained that the PDA expressly permitted the proposed amendments and that they were made in accordance with California's Knox-Keene Act governing health care service plans. The Knox-Keene Act is a law that regulates and licenses managed care plans.

"CDA accomplished this result on your behalf after 3 1/2 years of hard-fought litigation, including a lengthy mediation," Dr. Ehrler wrote in a letter to CDA members. "And during this entire period, we successfully blocked Delta Dental's attempt to reduce reimbursement rates for the Premier plan, which has saved providers nearly a half-billion dollars in fee reimbursements."

Said Delta Dental President and CEO Anthony S. Barth, "Although Delta Dental has at all times followed its contracts with Premier dentists and complied with both the letter and spirit of California's Knox-Keene Act, we're satisfied to put this litigation behind us and remain committed to all our participating dentists."

"The ADA is pleased that the California Dental Association has reached a settlement with Delta Dental with terms very favorable to the dentists of California," said Dr. Gary L. Roberts, ADA president. "We support CDA's efforts on behalf of its members to challenge unilateral revisions of its provider contracts. Ultimately, the settlement benefits the patient, the provider and the profession."
 
The CDA's proposed settlement agreement is on behalf of all California dentists who were contracted in the Delta Dental Premier network any time between Jan. 1, 2011, and Dec. 31, 2016. The settlement agreement has been submitted to the Superior Court of California in San Francisco, which will consider it in a public hearing later this month.

The following summarizes key outcomes of the proposed settlement, according to the news release:

  • Delta Dental must provide 120 days' written notice of significant PDA changes to all contracted providers, instead of the 45 days' notice currently required by California law.
  • Delta Dental must provide each Premier provider affected by any attempt to reduce reimbursement fee maximum levels with an individualized analysis of the potential financial impact to his or her practice, based on that dentist's prior 12-month submissions to Delta Dental.
  • Delta Dental must also provide 12 days' notice to the CDA of changes to PDAs so that CDA can have time to review the changes before they are implemented and be prepared to respond to member inquiries.
  • Delta Dental must pay $34,750,000 to Premier providers who filed annual fee adjustments with Delta Dental that were below the maximum amounts allowed but that were nonetheless reduced by Delta Dental based on its own self-determined "inflation adjustment percentage" (referred to by Delta Dental as "INAP"). Not every Premier provider had fees reduced by the INAP, in which case those individuals will not receive any payment. Those dentists who did have their fees limited by this procedure will receive some proportionate retroactive reimbursement.
  • None of this settlement amount goes toward attorney fees. In addition to the settlement amount, Delta Dental will pay CDA $1.5 million as reimbursement for a portion of the attorney's fees that it expended in pursuing the case. Delta Dental must also pay for the cost of implementing the settlement.
"This effort should remind all dentists who have contracts with any third-party payers to review your contracts", said Dr. Ronald D. Riggins, chair of the ADA Council on Dental Benefit Programs. "Dentists should request copies of their contract from the payer and explore whether future changes can be provided as redlined changes to the contract."

More information about the settlement is available at cda.org/delta. CDA members with questions about the settlement should contact the CDA at 1-800-232-7645. The ADA has posted a news release about the settlement.