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Dental Fraud Investigation Causes Targeted Dental Clinic Chain to File for Bankruptcy

May 7, 2012 — After television station WFAA revealed its discovery of Medicaid fraud among dental practices in Texas, one of the targeted dental clinic chains, All Smiles Dental Center, has filed for Chapter 11 bankruptcy. Since the story broke, the claim of clinics has been shrinking. A year ago, the chain boasted dozens of dental clinics, but now only a handful remain.

The remaining clinics seem to be just as brazen as ever, though. At least one clinic still advertises “Frenos Gratis Con Medicaid,” promising free braces for Medicaid recipients, according to WFAA. State regulations do not allow routine provision of free braces, however.

Although there was a time when All Smiles Medicaid billing matched that of the whole State of Illinois, in its bankruptcy filings, the chain of dental clinics claimed to have $50 to 100 million in liabilities and only $1 to 10 million in assets.

The founding dentist of the practice, Dr. Richard Malouf, is listed in the bankruptcy filings as a 28% owner of All Smiles, while a corporation, Valor Equity of Chicago, is listed as a 72% owner.

In addition to his $11 million mansion in Dallas, Dr. Malouf also owns two corporate jets, a Bentley, and a Porsche Carerra. The mansion is protected in the bankruptcy proceedings.

Earlier this year, Dr. Malouf agreed to a $1.2 settlement for Medicaid fraud between 2004 and 2007. In the settlement, Dr. Malouf did not admit to any wrongdoing. Moreover, from the information uncovered by WFAA, it appears his Medicaid billing grew over the years since 2007.

Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.

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