California Dental Association and Delta Dental of California Announce Proposed Settlement of Provider Contract Litigation
March 7, 2017
San Francisco — The California Dental Association (CDA) and Delta Dental of California (Delta Dental) jointly announced today a proposed class action settlement of litigation arising from CDA’s claims that Delta Dental breached its Participating Dentist Agreements (PDAs) with California dentists who participate in the Delta Dental Premier network. CDA and several dentists are serving as class representatives on behalf of a proposed class of all California dentists affected by the claimed breaches of the PDA at any time since January 1, 2011.
CDA and several dentists began this litigation with an arbitration claim in August 2013, followed by a Superior Court lawsuit in June 2014. The arbitration and the lawsuit challenged Delta Dental's actions in connection with the PDA, including certain amendments to the PDA announced by Delta Dental and its calculations of limitations on Premier fees. CDA claimed that Delta Dental's conduct breached the PDA and Delta Dental's obligation of "good faith and fair dealing" owed to California dentists under it. Delta Dental denied plaintiffs' 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.
After extensive litigation, and at the urging of the California Superior Court judge who is presiding over the lawsuit, the parties entered into mediation proceedings in February 2016. The proposed settlement announced today resulted from that mediation.
The key terms of the proposed settlement are:
- Delta Dental has agreed to provide 120 calendar days’ written notice of any future material changes to the PDA, significantly longer than the 45 business days’ notice the PDA currently provides, which is the minimum required by California law.
- Delta Dental has agreed that if it reduces "maximum amounts allowed" for Premier Contracted Fees under the PDA in the future, it must provide to each affected dentist an individualized calculation of the potential financial impact of the reduction for that dentist based upon the dentist's recent 12-month claims period with Delta Dental. This individualized notice must also be given 120 calendar days before the change. This will provide Premier dentists with individualized details about the change, what dental procedures are affected by it and the financial effect it may have on their practice. This will enable dentists to make more informed decisions regarding their practices.
- Delta Dental will pay up to $34,750,000 to be allocated among Premier dentists whose requests for fee increases submitted to Delta Dental since January 1, 2011, were limited by Delta Dental's application of an inflation adjustment limitation (known as INAP, which stands for inflation adjustment percentage). The allocation will be based upon the relative impact of the INAP on the payment of Premier dentists' claims since January 1, 2011. The allocation will be based on Delta Dental's computerized records of requests for fee increases and claims paid. Dentists will not be required to submit claim forms or other documentation in order to be eligible to receive a payment.
- In addition, Delta Dental will pay CDA $1,500,000 to defray a portion of the attorney's fees expended by CDA in bringing and maintaining the litigation since 2013. This payment will not reduce the amount paid to dentists under the settlement, but will be a separate payment made by Delta Dental.
- The proposed settlement and all related terms are subject to approval by the Superior Court at a hearing to be scheduled by the court after a formal written notice of the settlement is mailed to all dentists affected by the settlement.
Executives at both companies state that they are pleased a settlement has been reached.
“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,” said Delta Dental President and CEO Anthony S. Barth.
"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 CDA President Clelan Ehrler, DDS, MS. "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."
Under California law, the Superior Court will conduct a preliminary inquiry into the fairness of the settlement. The court will also review and approve the formal written notice of the proposed settlement that will be sent to all dentists affected by it and set a hearing date for final approval of the settlement. After the settlement receives preliminary approval, the formal Settlement Agreement, the notice and all significant related documents will be available online at DeltaDentalofCaliforniaSettlement.com.About CDA: The California Dental Association is the non-profit organization representing the dental profession in California. CDA is committed to the success of our members in service to their patients and the public. CDA's membership consists of more than 27,000 dentists, making it the largest constituent of the American Dental Association. For more information visit cda.org.
About Delta Dental: Delta Dental of California is part of a group of companies under common management who together provide dental benefits to 34.5 million people in 15 states plus the District of Columbia and Puerto Rico. It is part of the Delta Dental Plans Association, whose member companies collectively cover more than 73 million people nationwide.