Dental firm sues to toss Medicaid pick

It says state unfairly disqualified its bid to provide benefits, tarnished reputation

A Boston company has asked a judge to overturn an Arkansas official's decision that resulted in the firm losing a bid for a multimillion-dollar contract to manage dental benefits for Medicaid recipients.

In a lawsuit filed Monday in Pulaski County Circuit Court, DentaQuest contends that state Procurement Director Edward Armstrong erred in February when he disqualified the company for failing to disclose a federal lawsuit that had been filed against it in Massachusetts.

Armstrong also disqualified Irvine, Calif.-based Liberty Dental for similar omissions. His ruling left Sherwood-based Delta Dental and Fort Lauderdale-based Managed Care of North America as the winning bidders for the Arkansas contracts.

DentaQuest's suit contends that its omission of the Massachusetts case, filed on behalf of children who had been denied orthodontic care, was "immaterial" and shouldn't have resulted in the company's bid being disqualified.

Managed Care of North America also failed to disclose information, including two fines of $250 each imposed by the Texas Medicaid program in 2012 for failure to perform an administrative service in a timely manner, the Boston firm's suit says.

The Florida company also didn't disclose that it had submitted a corrective action plan in 2011 to address shortcomings identified by Texas officials during a "readiness review," DentaQuest contends.

DentaQuest cited the omissions in a protest it submitted to Armstrong on March 6.

In a March 24 ruling, Armstrong declined to consider the merits of that objection, saying it wasn't raised, as state law requires, within 14 days of the date DentaQuest knew or should have known of the omissions.

DentaQuest contends in the lawsuit that Armstrong damaged the company's reputation in that ruling when he said, in a footnote to the March 24 ruling, that the company's omission of the Massachusetts case "has all the hallmarks of being an intentional representation."

Armstrong was referring to the company's statement in its bid that it did not have "any resolved, pending or threatened litigation, administrative or regulatory proceedings or similar matter related to the subject matter of the services sought in this" bid solicitation.

Although the solicitation required bidders to disclose any litigation related to Medicaid managed-care contracts within the past five years, DentaQuest interpreted that to mean only litigation related to Arkansas contracts, the company's attorneys have said.

Armstrong's March 24 ruling was "cited by the State of Nebraska in its decision to disqualify DentaQuest from a similar solicitation in that state, and that decision did not even go so far as characterizing DentaQuest's non-disclosure as intentional," DentaQuest's attorneys, including former Arkansas Attorney General Dustin McDaniel, said in the lawsuit.

Jake Bleed, a spokesman for the Arkansas Department of Finance and Administration, which includes the procurement office, said Wednesday that the department doesn't comment on pending litigation.

DentaQuest's lawsuit, assigned to Judge Wendell Griffen, asks for Managed Care of North America to be disqualified and for the contracts to be rebid.

If they aren't rebid, DentaQuest wants to be reimbursed for the cost of preparing the bid and its "lost profits for the full term of the contract."

DentaQuest also wants to be reimbursed for "potential lost profits on the contract in Nebraska," as well as lost profits on "other future public and private contracts as a result of the injury to its reputation inflicted by Armstrong's allegation that DentaQuest intentionally failed to disclose" facts requested in the bid solicitation.

The winners of the contracts are set to provide dental benefits, starting next year, for about 750,000 Arkansans enrolled in the state's traditional Medicaid program, including about 500,000 children, in exchange for fixed monthly payments for each enrollee. The state's Medicaid program now pays dentists directly on a fee-for-service basis.

Information submitted by the bidders indicates that the payments are expected to total about $300 million over two years.

The Stephen Group, a Manchester, N.H.-based consultant to a legislative task force, estimated last year that such contracts would save the state about $5 million in annual spending on dental care while also generating more than $3 million a year in state insurance-premium taxes that would be levied on the dental plans.

All four companies that responded to the bid solicitation, issued in September, proposed the minimum cost allowed under the solicitation but differed in their scores on the technical merits of their proposals.

In an evaluation of the bids by a committee of state employees, DentaQuest received the highest score, followed by Delta Dental, Liberty Dental and Managed Care of North America.

Metro on 04/13/2017

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