California Dental Association files legal action against Delta Dental of California

Adjustments in 2023 include significant fee reductions for many providers, increased administrative burdens

The California Dental Association filed a legal action in late December 2022 against Delta Dental of California challenging Delta's 2023 adjustments to Premier and PPO provider agreements in California.

The "swift and severe" adjustments, effective Jan. 1, include significant fee reductions for many California dentists, increased administrative burdens and diminished value of benefit plans, according to the complaint.

CDA alleges in the Superior Court of California that the board of directors of Delta Dental violated its fiduciary duties by, among other things, failing to conduct appropriate analysis of the need for and impact of the contract changes to Delta Dental's provider networks and patients.

"CDA is committed to supporting our members in their practices and ensuring the patients we serve can access dental care," said CDA President John Blake, D.D.S., in a statement to member dentists. "As a dental benefit plan company, Delta Dental has a responsibility to be transparent about such significant changes that affect its provider networks and their patients. CDA believes that Delta Dental failed to adequately consider the basis for and impact of these changes and has failed to offer sufficient justification for these actions."

CDA had sought clarification from Delta Dental on the methodologies used to justify the contractual amendments and reimbursement changes, including 20-40% rate reductions for most periodontists, endodontists and oral surgeons.

Delta Dental, however, would not provide any additional information, claiming that it is confidential and proprietary, according to the CDA.

"Challenges with dental benefit plans are a top concern for CDA members, as we are keenly aware that current dental benefit structures are not working for patients or dentists," said Dr. Blake in the statement. "This litigation is a step toward increasing transparency and accountability. Significant work must be done to develop quality, standardized and meaningful dental benefit plan requirements that meet the oral health care needs of Californians."

Using Delta Dental's 2019 public tax filings, the complaint enumerates the compensation paid to members of the Delta Dental board, which the CDA says is "higher than that paid to directors and officers in other nonprofit companies." For example, defendant Lynn L. Franzoi, a member of the Delta Dental board since 2011 and chair from August 2017 until December 2019, allegedly was paid $330,574 in 2016 for a position that required an average of one hour of work weekly.

The complaint states that this case challenges the "actions and decisions of Delta Dental, a nonprofit, tax-exempt corporation that receives billions of dollars in annual revenues and pays its directors hundreds of thousands of dollars per year and its officers millions of dollars per year."

The complaint continues: "Defendants have operated Delta Dental as a private insurance company for their own financial gain without regard for the extraordinary community of dentists and their teams who actually provide the critical oral health care to the adults and children who need these services. As a result, defendants are obtaining substantial wealth at the expense of Delta Dental's dentist members."

In 2018, CDA and Delta Dental of California reached a $65 million settlement agreement on behalf of Premier providers who had their fees reduced improperly by Delta Dental's "inflationary adjustment percentage," resulting in payments ranging from $500 to many thousands of dollars for 14,000 dentists.

In that settlement, CDA also secured 120 days' written notice of material changes to participating dentist agreements to all contracted Delta Dental providers in California and an individualized illustration of how those reductions would potentially affect the dentist's practice.