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PE-Owned Aspen Dental Faces Yet Another Investigation for Deceptive Practices

The State of Massachusetts is suing private-equity-owned Aspen Dental Management for deceptive practices, alleging that the company has “has cheated thousands of Massachusetts consumers through a series of bait and switch dental advertising campaigns in a variety of media, including online advertisements that collectively appeared millions of times, lining its pockets with millions of dollars.”[1] This is the second time the state has investigated and sued Aspen for deceptive practices while under private equity ownership.

Aspen Dental is majority (80%)-owned by private equity firms Leonard Green & Partners and Ares Management, with the remaining 20% owned by private equity firm American Securities, as well as Aspen Dental’s management and dentists.[2] It is the second largest Dental Services Organization (DSO) in the US, with more than 1,000 locations in 46 states and 15,000 employees.[3]

During the period of Leonard Green’s, Ares’, and American Securities’ ownership, Aspen has paid at least $1.7 million in settlements with state attorneys general in Pennsylvania, Massachusetts, New York, and Indiana.[4]

Despite repeated investigations for deceptive practices that hurt patients, Leonard Green, Ares, and American Securities have reaped at least $1.1 billion in debt-funded dividends from Aspen Dental since 2012.

The lawsuit comes as private equity investment in dentistry is expanding dramatically and private equity firms dominate the Dental Service Organization (DSO) industry.[5]

The rise of private-equity-backed DSOs and corporate dentistry raises concern. The private equity investment model, which typically targets outsized returns over relatively short time horizons, may incentivize profit-seeking tactics that are harmful to patients.[6]

See our 2021 report: Deceptive Marketing, Medicaid Fraud, and Unnecessary Root Canals on Babies: Private Equity Drills into the Dental Care Industry

Massachusetts Attorney General: Aspen “Preyed on Upon Consumers in Pain”

In December 2021, Massachusetts Attorney General Maura Healy filed suit against Aspen for allegedly cheating thousands of Massachusetts consumers through a series of bait and switch advertising campaigns. The AG alleged that the deceptive practices violate the state’s Consumer Protection Law and assurances Aspen made in a previous settlement with the state regarding similar deceptive practices.[7]

In 2014, the Attorney General notified Aspen that it had discovered the company was misleading the public with deceptive advertisements. The AG alleged that between September 2009 and December 2013 Aspen ran confusing advertising and charged customers for services months before they were provided. It also allegedly advertised “free” services that were in reality not free and refused to provide patients refunds for services not performed.[8] In order to avoid litigation, Aspen agreed to pay a $1 million settlement that included assurances that it would cease the deceptive practices.[9]

Massachusetts’s new suit alleged that Aspen violated its agreement in almost all aspects, and even violated its agreement to pay restitution to patients.[10]

The AG’s allegations include:[11]

  • Deceptively advertising and marketing dental services and products in Massachusetts
  • Misrepresenting third party credit arrangements
  • Misrepresenting its refund policies and failing to provide refunds to patients for services that have not been rendered
  • Billing thousands of Massachusetts residents for hundreds of thousands of dollars of services it deceptively represented as free and unfairly withholding tens of thousands of dollars in refunds owed to hundreds of Massachusetts consumers
  • Participating in incentivizing and training Massachusetts Aspen Dental office personnel to engage in unfair and deceptive marketing
  • Participating in training Massachusetts Aspen Dental office personnel to engage in additional unfair practices, including unfairly charging Massachusetts consumers for services and treatments before they were performed
  • Engaging in unfair and deceptive debt collection practices

The AG alleges that Aspen deceptively advertised that it worked with all insurance, when it did not work with MassHealth, the state-sponsored (Medicaid) medical and dental coverage for low-income Massachusetts residents. The AG’s complaint also alleges that:

“This deception was especially pernicious because it worked to bait low-income Massachusetts residents who depend on MassHealth to cover the cost of dental services to seek out care at Aspen Dental offices, where they would be forced to pay cash, or take out high interest loans to cover the cost of any treatment.”[12]

Additionally, the AGO alleges that Aspen engaged in unfair and deceptive debt collection by unlawfully reporting patients’ purported debts to collections agencies even though the company knew that no debt was owed.[13]

Not Aspen’s First Rodeo

Over the last decade Aspen has paid at least $1.7 million in settlements with state attorneys general in Pennsylvania, Massachusetts, New York, and Indiana.[14]

A 2015 investigation by the New York Attorney General alleged that Aspen exerted undue control over affiliated practices that directly impacted patient care, including “incentivizing and otherwise pressuring staff to increase sales of dental services and products, implementing revenue-oriented patient scheduling systems, and hiring and oversight of clinical staff, including associate dentists and dental hygienists.”[15]

The same year, Indiana Attorney General Greg Zoeller announced a settlement with Aspen as a result of a year-long investigation that found that the company used deceptive advertising and other unfair tactics to promote services. In announcing the settlement, AG Zoeller highlighted the impact of Aspen’s deceptive marketing on elderly patients: “Misleading customers about the true cost of dental services is deceptive and unlawful, and this behavior placed unanticipated financial burden on Hoosiers, many of which were senior citizens.”[16]

Leonard Green & Partners, Ares Management, and American Securities Reap Massive Payouts

Despite repeated investigations and settlements with state regulators, Aspen’s private equity owners have reaped massive payouts from the company by loading Aspen with debt to pay themselves dividends: since 2012 Aspen has paid over $1.1 billion in dividends to Leonard Green & Partners, Ares Management, and American Securities.

DateDividend Payment
February 2012$127 million
April 2018$85 million
February 2020$50 million
June 2021$835 million

This includes a $835 million debt-funded dividend in June 2021, which brought Aspen’s debt/EBITDA ration to 7.4x and triggered led Moody’s to downgrade Aspen Dental’s credit outlook from stable to negative. In its rating, Moody’s also noted that “Bad reviews on-line or bad publicity stemming from a small number of unhappy clients could result in material harm to the company’s revenue and cash flow.”[17]

Moody’s expected Aspen to generate about $90 million of free cash flow in 2021 meaning the June 2021 dividend amounted to more than 9 times the company’s expected free cash flow.[18]

Private Equity’s Incursion into Dentistry

Aspen is one of the largest Dental Service Organizations (DSO) in the US. DSOs are companies that handle the business side of dental practices, such as administrative, marketing, bookkeeping, and financial services. In most states, dentists are legally required to own their practices. To circumvent laws regulating dental practice ownership, investors create separate entities that provide related practice management and business services. This is sometimes referred to as “corporate dentistry.”

Private equity firms dominate the DSO industry; PESP found that nine of the top 10 DSOs are owned by private equity firms, and 27 of the top 30 DSOs are private-equity-owned. This amounts to approximately 84% of practice locations that contract with the top 30 DSOs.[19]

The private equity investment model, which typically targets outsized returns over relatively short time horizons, may incentivize profit-seeking tactics that are harmful to patients. Payment structures between DSOs and dentists have been found to create perverse incentives that lead to overtreatment of patients, misleading advertising schemes, Medicaid fraud, and other problematic practices in order to reach revenue targets set by DSOs and maximize profit.[20]

Increasing Liability Exposure for Private Equity

Until recently, private equity firms have largely escaped liability for the practices of their portfolio companies. Instead, private-equity-owned companies have typically assumed full liability for settlements related to unlawful behavior, regardless of the level of involvement in operations by the company’s private equity owners.

See our report: “Money for Nothing: How Private Equity has Defrauded Medicare, Medicaid, and Other Government Health Programs, and How that Might Change

However, this appears to be changing. Recent cases underscore a new willingness by states and the federal government to pursue private equity owners of health care companies for fraudulent behavior.[21]

Notably, Massachusetts AG Maura Healy and the US Department of Justice reached a $20 million settlement in 2021 with private equity firm H.I.G. Capital for alleged Medicaid fraud at a mental health company it owned. AG Healy said it was the largest settlement of its kind with a private equity firm.[22]

Holding Leonard Green, Aspen and American Securities accountable would represent a positive step in holding private equity firms accountable for the impacts of their business model on patient care.


[1] Commonwealth of Massachusetts v. Aspen Dental Management, Inc. (Suffolk County Superior Court 2021). https://www.mass.gov/doc/admi-complaint Pg. 1.

[2] “Moody’s changes ADMI Corp.’s outlook to negative; affirms B2 CFR,” Moody’s Investor Service, March 27, 2020. https://www.moodys.com/research/Moodys-changes-ADMI-Corps-outlook-to-negative-affirms-B2-CFR–PR_420927

[3] “Aspen Dental Opens 14th Practice in Oregon,” Aspen Dental press release, June 3, 2021. https://www.businesswire.com/news/home/20210603005784/en/Aspen-Dental-Opens-14th-Practice-in-Oregon ; Pitchbook, accessed June 2021.

[4]Pennsylvania for $175,000 (2010), Massachusetts for $990,000 (2014), New York for $450,000 (2015), Indiana for $95,000 (2015).

[5]https://pestakeholder.org/wp-content/uploads/2021/08/PESP_DSO_July2021.pdf

[6]Ibid.

[7]https://www.mass.gov/news/ag-healey-sues-aspen-dental-over-deceptive-advertising-scheme-that-harmed-thousands-of-massachusetts-consumers

[8] Mark Payne, “Aspen Dental to pay $1 million settlement for alleged false advertising,” Legal Newsline, December 23, 2014. https://legalnewsline.com/stories/510450819-aspen-dental-to-pay-1-million-settlement-for-alleged-false-advertising

[9] Commonwealth of Massachusetts v. Aspen Dental Management, Inc. Pg. 6.

[10] Ibid.

[11] Commonwealth of Massachusetts v. Aspen Dental Management, Inc. Pg. 3.

[12] Commonwealth of Massachusetts v. Aspen Dental Management, Inc. Pg. 26

[13] Commonwealth of Massachusetts v. Aspen Dental Management, Inc. Pg. 48.

[14]Pennsylvania for $175,000 (2010), Massachusetts for $990,000 (2014), New York for $450,000 (2015), Indiana for $95,000 (2015).

[15] “A.G. Schneiderman Announces Settlement With Aspen Dental Management That Bars Company From Making Decisions About Patient Care In New York Clinics,” Office of Attorney General Eric T. Schneiderman, June 18, 2015. https://ag.ny.gov/press-release/2015/ag-schneiderman-announces-settlement-aspen-dental-management-bars-company-making

[16] “ Aspen Dental settles false advertising accusations,” Fort Wayne Business Weekly, October 23, 2015. https://www.fwbusiness.com/business/latest/businessweekly/article_af219008-7981-11e5-bf2f-6b666a311370.html

[17]https://www.moodys.com/research/Moodys-affirms-ADMI-Corps-B2-Corporate-Family-Rating-outlook-changed–PR_447749

[18]Ibid.

[19]https://pestakeholder.org/wp-content/uploads/2021/08/PESP_DSO_July2021.pdf

[20]Ibid.

[21]https://pestakeholder.org/wp-content/uploads/2021/02/Private-Equity-False-Claims-Act-PESP-022221-.pdf

[22]https://www.reuters.com/legal/government/private-equity-firm-hig-capital-settles-fraud-case-20-million-2021-10-14/

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