On July 2, the Washington State Dental Association (WSDA) Leadership Counsel filed a request with the state’s attorney general to investigate suspected antitrust practices by Washington Dental Service (doing business as Delta Dental of Washington) on behalf of member dentists. A letter to member dentists alleges Delta Dental of Washington may have engaged in “monopsony” practices.
Monopolist activities attempt to control a market by the supply side of goods and services. By contrast, monopsony activities attempt to control a market on the demand side of goods and services. Monopsony may be found to be predatory and anticompetitive, just as much as the practice of a monopoly. Unfair trade monopsony practices have commonly been perpetrated upon workers in company mining towns, logging communities, and company mill towns.
“We believe Delta Dental’s position and practices in Washington inappropriately leverage monopsony power for its corporate benefit, to the detriment of both dental service providers and their patients,” said WSDA president Cynthia Pauley, DDS. “We are optimistic that a careful examination of the facts will lead the Attorney General’s office to reach the same conclusion.”
The WSDA Leadership Counsel’s letter stated, “The impact of Delta’s market power is well-known to dentists and their patients. Given its predominant market share, the company wields substantial bargaining leverage when contracting with dentists. Delta effectively offers its contracts to dental providers on a ‘take it or leave it’ basis, with no room for negotiation, and with complete control of rates and terms.”
The WSDA contends that reimbursements for healthcare services to dentists were significantly lowered, while premiums were substantially elevated to consumers. That added revenue allegedly didn’t go toward increases in patient benefits, but to compensate Delta Dental officers at astronomical salaries.
“There is concern that patients are losing access to care as a result of Delta’s reimbursement rates and what many perceive as predatory behavior,” said WSDA executive director Bracken Killpack, noting that, in addition to driving some dentists to leave the market, others have been forced to sell their practices and retire earlier than they otherwise would have.
Another area of contention is that doctors observed how the insurance carrier disallowed preventive services and reduced standards of patient care. The WSDA stipulates that these tactics were employed solely to reduce benefit payouts and that they run counter to patient welfare.
It’s not uncommon for state dental associations to confront Delta Dental’s practices in their individual states.1-3 The legal arguments presented by the WSDA are particularly unique, as a state dental association confronts alleged abuses. However, allegations of unfair trade practices through monopsony have solid standing in case law.4
At this point, it’s unclear how the attorney general for Washington will proceed. Further, it’s also unclear if other elements of organized dentistry that confront alleged antitrust misconduct by Delta Dental will utilize this legal argument.
References
1. Delta Dental Pressroom. Status of settlement in litigation between Delta Dental of California and California Dental Association. Jun 29, 2017. https://www.deltadentalins.com/about/pressroom/2017/status-of-settlement-in-litigation-between-delta-dental-of-california-and-california-dental-association.html
2. Burger D. Delta Dental targeted by two states’ dentists. ADA News Jun 28, 2017. https://www.ada.org/en/publications/ada-news/2017-archive/june/delta-dental-targeted-by-two-states-dentists
3. Soderlund K. Delta Dental plan for employees limits cleanings for healthy adults to one per year. ADA News Mar 3, 2014. https://www.ada.org/en/publications/ada-news/2014-archive/march/delta-dental-plan-for-employees-limits-cleanings-to-one-per-year
4. Rosenfelt N. The Verdict on Monopsony. Loyola Consumer Law Review 2008; 20 (4): 1-12. https://lawecommons.luc.edu/cgi/viewcontent.cgi?article=1118&context=lclr
Dr. Davis practices general dentistry in Santa Fe, NM. He assists as an expert witness in dental fraud and malpractice legal cases. He currently chairs the Santa Fe District Dental Society Peer-Review Committee and serves as a state dental association member to its house of delegates. He extensively writes and lectures on related matters. He may be reached at mwdavisdds@comcast.net or smilesofsantafe.com.
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