Delta Dental, CDA agree to settle reimbursement lawsuit

Delta Dental of California could pay more than $34 million to certain California dentists in a proposed settlement of a class-action lawsuit between the insurer and the California Dental Association (CDA).

The CDA and Delta Dental jointly announced the settlement on March 8, which would bring to a close more than three years of litigation around the insurer's plans to reduce reimbursement rates for its Premier network.

"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," Delta Dental President and CEO Anthony S. Barth stated in a joint press release.

Reduced reimbursement

The dispute centered around plans Delta Dental rolled out in 2013 to reduce reimbursement rates for the Premier network by 8% to 12%. CDA claimed this was a breach of the insurer's "duty of good faith and fair dealing" and that Delta Dental had not "fairly and adequately" given notification of the proposed reduction.

The CDA filed an arbitration claim in August 2013, which was followed by a lawsuit in California Superior Court in June 2014.

The focus of both the arbitration and the lawsuit was the insurer's actions around its participating dentist agreement (PDA), which Delta Dental required for dentists to be a part of the Premier network. The CDA challenged some of Delta's amendments to the PDA and its calculations of limitations on fees paid to participating dentists.

The insurer responded that the proposed amendments were not only permitted but were made in line with California's Knox-Keene Act governing healthcare service plans.

The presiding Superior Court judge asked the parties to consider mediation, which began in February 2016, according to the press release. The mediation process produced the proposed settlement, which includes the following provisions:

• Delta Dental will pay up to $34.75 million to be allocated among Premier Plan dentists whose requests for fee increases submitted to Delta Dental between January 1, 2011, and December 31, 2016.
• Delta Dental has agreed to change the written notice given for any future material changes to the PDA to 120 calendar days, up from 45 business days.
• If Delta Dental proposes to reduce the "maximum amounts allowed" for Premier contracted fees under the PDA, the insurer has to give each affected dentist an individualized calculation of the potential financial impact of the reduction for that dentist. This calculation must be provided 120 days in advance of the proposed reduction.
• Delta Dental will pay $1.5 million to CDA for a portion of the association's attorney's fees.

According to a settlement document on CDA's website, a court hearing for final approval is expected to occur in late March or April 2017 followed by a 45-day period in which either party can opt out of the settlement. Cash payments are expected to be made over a six-month period after the court gives final approval.

"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," stated CDA President Clelan Ehrler, DDS. "We are pleased to see the litigation resolved in a positive way."