CLASS ACTION COMPLAINT

JURY TRIAL DEMANDED

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

David J. Swiecinski, DDS, on behalf of himself and

all others similarly situated,

Plaintiff,

v.

Delta Dental Insurance Company; DeltaUSA; Delta

Dental Plans Association; Arizona Dental Insurance

Service, Inc., d/b/a Delta Dental of Arizona; Delta

Dental Plan of Arkansas, Inc.; Delta Dental of

California; Colorado Dental Service Inc. d/b/a Delta

Dental of Colorado; Delta Dental of Connecticut;

Delta Dental of Delaware, Inc.; Delta Dental of the

District of Columbia; Hawaii Dental Service; Delta

Dental of Idaho, Inc. d/b/a Delta Dental of Idaho;

Delta Dental of Illinois; Delta Dental of Indiana,

Inc.; Delta Dental of Iowa; Delta Dental of Kansas,

Inc.; Delta Dental of Kentucky, Inc.; Maine Dental

Service Corporation, d/b/a Delta Dental Plan of

Maine; Dental Service of Massachusetts Inc. d/b/a

Delta Dental of Massachusetts; Delta Dental Plan of

Michigan, Inc.; Delta Dental of Minnesota; Delta

Dental of Missouri; Delta Dental of Nebraska; Delta

Dental Plan of New Hampshire, Inc., Delta Dental of

New Jersey, Inc.; Delta Dental Plan of New Mexico,

Inc.; Delta Dental of New York Inc.; Delta Dental of

North Carolina; Delta Dental Plan of Ohio, Inc.;

Delta Dental Plan of Oklahoma; Oregon Dental

Service d/b/a Delta Dental of Oregon; Delta Dental

of Pennsylvania; Delta Dental of Puerto Rico, Inc.;

Delta Dental of Rhode Island; Delta Dental of South

Dakota; Delta Dental of Tennessee; Delta Dental

Plan of Vermont, Inc., Delta Dental of Virginia;

Delta Dental of Washington; Delta Dental Plan of

West Virginia, Inc.; Delta Dental of Wisconsin, Inc.;

Delta Dental Plan of Wyoming d/b/a Delta Dental of

Wyoming,

Defendants.

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TABLE OF CONTENTS

I. INTRODUCTION ...............................................................................................................2

II. JURISDICTION AND VENUE...........................................................................................6

III. INTERSTATE COMMERCE .............................................................................................7

IV. PARTIES .............................................................................................................................8

A. Plaintiff ....................................................................................................................8

B. Defendants ...............................................................................................................8

V. FACTUAL ALLEGATIONS ............................................................................................14

A. Background ............................................................................................................14

B. Defendants’ Market Allocation Conspiracy ..........................................................20

C. Defendants’ Joint Anticompetitive Compensation of Dentists..............................24

VI. CLASS ACTION ALLEGATIONS...................................................................................31

VII. CAUSES OF ACTION ......................................................................................................33

COUNT ONE.....................................................................................................................33

COUNT TWO....................................................................................................................35

PRAYER FOR RELIEF ....................................................................................................36

JURY DEMAND...............................................................................................................37

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Plaintiff David J. Swiecinski, DDS (“Plaintiff”), on behalf of himself and proposed classes

(defined below) of all others similarly situated, brings this class action against defendants Delta

Dental Insurance Company; Arizona Dental Insurance Service, Inc., d/b/a Delta Dental of

Arizona (“DDAZ”); Delta Dental Plan of Arkansas, Inc. (“DDAR”); Delta Dental of California

(“DDCA”); Colorado Dental Service Inc. d/b/a Delta Dental of Colorado (“DDCO”); Delta

Dental of Connecticut (“DDCT”); Delta Dental of Delaware, Inc. (“DDDE”); Delta Dental of the

District of Columbia (“DDDC”); Hawaii Dental Service (“HDS”); Delta Dental of Idaho, Inc.

d/b/a Delta Dental of Idaho (“DDID”); Delta Dental of Illinois (“DDIL”); Delta Dental of Indiana,

Inc. (“DDIN”); Delta Dental of Iowa (“DDIA”); Delta Dental of Kansas, Inc. (“DDKS”); Delta

Dental of Kentucky, Inc. (“DDKY”); Maine Dental Service Corporation, d/b/a Delta Dental Plan

of Maine (“DDME”); Dental Service of Massachusetts Inc. d/b/a Delta Dental of Massachusetts

(“DDMA”); Delta Dental Plan of Michigan, Inc. (“DDMI”); Delta Dental of Minnesota

(“DDMN”); Delta Dental of Missouri (“DDMO”); Delta Dental of Nebraska (“DDNE”); Delta

Dental Plan of New Hampshire, Inc. (“DDNH”), Delta Dental of New Jersey, Inc. (“DDNJ”);

Delta Dental Plan of New Mexico, Inc. (“DDNM”); Delta Dental of New York Inc. (“DDNY”);

Delta Dental of North Carolina (“DDNC”); Delta Dental Plan of Ohio, Inc. (“DDOH”); Delta

Dental Plan of Oklahoma (“DDOK”); Oregon Dental Service d/b/a Delta Dental of Oregon

(“DDOR”); Delta Dental of Pennsylvania (“DDPA”); Delta Dental of Puerto Rico, Inc.

(“DDPR”); Delta Dental of Rhode Island (“DDRI”); Delta Dental of South Dakota (“DDSD”);

Delta Dental of Tennessee (“DDTN”); Delta Dental Plan of Vermont, Inc. (“DDVT”), Delta

Dental of Virginia (“DDVA”); Delta Dental of Washington (“DDWA”); Delta Dental Plan of

West Virginia, Inc. (“DDWV”); Delta Dental of Wisconsin, Inc. (“DDWI”); and Delta Dental

Plan of Wyoming d/b/a Delta Dental of Wyoming (“DDWY”) (collectively, the

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“Delta Dental State Insurers”); and DeltaUSA and Delta Dental Plans Association (together with

the Delta Dental State Insurers, “Delta Dental” or “Defendants”), demanding a trial by jury of all

issues so triable. Plaintiff alleges the following, based upon personal knowledge as to matters

relating to himself, and upon information and belief, documents from related litigation, and the

investigation of counsel as to all other matters.

I. INTRODUCTION

1. This case involves a contract, combination, or conspiracy among the Defendants

and their co-conspirators to allocate territories of operation within the United States and its

territories, in violation of Sections 1 and 3 of the Sherman Act (15 U.S.C. §§ 1, 3) and the New

Jersey Antitrust Statute (N.J.S.A. § 56:9-1, et seq) in order to suppress compensation paid by

Defendants to Plaintiff and members of the proposed Classes at rates that are below levels that

would prevail in a competitive marketplace to dentists who are members of the Delta Dental

provider network (the “Delta Dental Providers”).

2. Horizontal agreements among competitors to divide markets and fix prices, such

as the agreement alleged herein, are per se illegal under Section 1 of the Sherman Act.

Defendants’ conduct has suppressed competition, fixed, raised, and stabilized reimbursement

rates paid by Defendants to Delta Dental Providers, reduced consumer choice and consumer

welfare, and caused Plaintiff and members of the proposed Classes antitrust injury in the form of

receiving lower reimbursement rates than those that would have prevailed in a market

undistorted by the Defendants’ anticompetitive conduct.

3. Plaintiff is a New Jersey dentist that has accepted Delta Dental insurance plans and

provided services to patients insured by Delta Dental in return for reimbursements from Delta

Dental. Plaintiff seeks to represent the proposed nationwide Class and the New Jersey Class

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(defined below) which include tens of thousands of unique dental practices operating within

the United States generally and New Jersey specifically, most of which are small solepractitioner operations.

4. The Delta Dental State Insurers are predominantly not-for-profit dental services

corporations that, in the words of the Delta Dental Plan Association, collectively comprise the

“nation’s leading provider of dental insurance.” The Delta Dental State Insurers provide dental

insurance to more than 78 million U.S. customers in all 50 states, the District of Columbia, and

Puerto Rico. As of 2014, Delta Dental processed “97 million dental claims or approximately 1.8

million every week” and reported $19.5 billion in revenue.1

5. As dental insurance companies, the Delta Dental State Insurers contract with

dental practices, including Plaintiff and members of the proposed Classes, for rates at which the

Delta Dental State Insurers agree to reimburse dental practices for dental goods and services

provided to patients with Delta Dental insurance plans.

6. Although the Delta Dental State Insurers are independent companies, all are

members, or affiliates of members, of the Delta Dental Plans Association. Defendants facilitated

the conspiracy alleged herein through the Delta Dental Plans Association, including by requiring

each Delta Dental State Insurer to enter into uniform contracts with the Delta Dental Plans

Association. These contracts restrict each Delta Dental State Insurer to an assigned territory,

prevent Delta Dental State Insurers from competing with each other, and restrict the Delta Dental

State Insurers from offering dental insurance plans outside of the Delta Dental brand.

7. The Delta Dental State Insurers have each secured market power within their

1 The Delta Dental Organization Fact Sheet 2015, http://dentalinsurancealabama.com/wpcontent/uploads/2017/02/DDPAFactSheet-2015.pdf. (Google cache version available Jan. 31,

2020).

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assigned territories, and Defendants, as a unified enterprise, have secured market power over the

market for dental insurance across the United States. Leveraging their market power,

Defendants agreed to fix the reimbursement rates at which they reimburse Delta Dental

Providers for services provided to patients with Delta Dental insurance at below-market levels.

Because each of the Delta Dental State Insurers has market power in its assigned territory, Delta

Dental Providers have no choice but to accept patients with Delta Dental insurance and accept

the anticompetitive reimbursement rates required by the Delta Dental insurance plan.

8. Defendants’ conspiracy was the subject of prior lawsuits and governmental

actions.

9. For example, the California Dental Association (“CDA”) and certain dentists

brought a lawsuit against DDCA, alleging contractual and unfair competition claims associated

with DDCA’s proposal in 2011 to lower compensation to dentists under its standardized provider

agreement for the Delta Dental Premier network. See California Dental Ass’n v. Delta Dental of

Cal., No. CGC 14-538849 (S.F. Cal. Super. Ct.) (the “CDA Case”). The case was settled in 2015

for over $65 million. The settlement was granted final approval in 2018.2

10. Similarly, in June 2018, the Washington State Dental Association (“WSDA”)

filed a complaint with the Antitrust Division of the Washington State Attorney General’s Office,

alleging that DDWA engaged in illegal practices. The WSDA explained in detail how DDWA’s

anticompetitive conduct (including 2011 rate cuts similar to those applied by DDCA) has

injured both dentists and patients:3

2 California Dental Association, Delta Dental Litigation Resolution, available at

https://www.cda.org/Portals/0/pdfs/delta_settlement_summary.pdf (last visited Apr. 10, 2020).

3 WSDA, WSDA Asks Attorney General to Investigate Potential Delta Antitrust Practices,

(July 2, 2018), https://www.wsda.org/member-center/delta/2018/07/02/wsda-asks-attorneygeneral-to-investigate-potential-delta-antitrust-practices (last visited Apr. 10, 2020).

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Unfortunately, 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.

For example, in 2011, Delta unilaterally and dramatically reduced its

reimbursement rates for network dentists by approximately 15 percent. These new

rates failed to cover many dentists’ costs for the provision of some services.

In the first five years following that precipitous reduction, Delta increased its

benefit plan enrollees by 27 percent, its premium revenue by 30 percent, and its

premium revenue-per-patient by 2 percent.

During that same period, Delta’s Chief Executive Officer’s compensation

increased by 127 percent and its Board Chairman’s compensation increased by

115 percent. Only 10 percent of Delta’s increased premium revenue-per-patient

was directed towards patient care and the company’s cash and investments

increased by 67 percent.

While the company dramatically reduced reimbursements to dentists, it appears

Delta retained the bulk of its savings for its corporate benefit, rather than passing

these savings along to the dental patients covered by its plans.

“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,” says 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.

Delta’s actions have had other negative consequences for patients as well, including

reduced access to innovations in dental care. For example, patient radiation

exposure from digital X-rays can be as little as 10 percent of the exposure from

film-based radiography. But reduced reimbursement means that many dentists can

no longer afford these capital-intensive technological advances for their practices

and their patients.

Similarly, [Delta’s] fee reduction has forced many dentists to eliminate or reduce

the volume of Medicaid patients or uncompensated care they provide. Because

Washington's Medicaid reimbursement rates are already extremely low, serving

these patients places a significant financial burden on dental practices. When

Delta unilaterally reduced reimbursement rates for non-Medicaid patients, whose

care would otherwise help a dental practice cover this burden, it made it

unaffordable for many dentists to provide discounted or free care to meet the

needs of this underserved population.

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Other changes imposed by Delta aren’t driven by, or aligned with, improved

patient care. The company requires preventive periodontal services or treatments

to be made in multiple visits simply for administrative, not clinical reasons. It has

changed benefit coverage of some diagnostic procedure codes, including

eliminating coverage for bitewing films essential in detecting disease between

teeth, increasing intervals between coverage for panoramic X-rays, and refusing

coverage for certain standard periodic X-rays for children.

Over the years, patients have come to expect these and similar basic diagnostic

services to be covered by their dental benefit plans. When these necessary

diagnostic tools aren’t covered, patients are surprised and often frustrated to learn

that they now must bear the cost. Some who may be unable to afford the

additional expense are forced to refuse important procedures, running the risk that

they may require more complex and expensive future care.

11. But for the conspiracy alleged herein, dental plan sponsors and members

would have a greater choice as to the dental insurance they choose to purchase, Delta Dental

State Insurer reimbursement rates would be significantly greater, and the Delta Dental

Providers would have a greater choice in the dental insurance they choose to accept from their

patients.

II. JURISDICTION AND VENUE

12. Plaintiff brings federal antitrust claims under Sections 1 and 3 of the Sherman

Act, 15 U.S.C. §§ 1 and 3, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26.

This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337, and 1367.

13. This Court has personal jurisdiction over each Defendant on multiple bases,

including: (1) Defendant Delta Dental of New Jersey, Inc. (“DDNJ”) is headquartered in,

incorporated in, located in, and/or has entered into contracts with Dental Service Providers in

New Jersey; (2) all of the Defendants have significant business in and contacts with New Jersey

through national insurance programs, both by way of their provision of dental goods, services,

and facilities to consumers insured by Delta Dental in New Jersey and by their division of

revenue resulting from such provision; (3) all Defendants conspired with Delta Dental Plans

Association and DDNJ; and (4) all of the Defendants require Dental Service Providers who are

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in the individual provider networks of each Defendant to accept patients of the other Defendants,

including DDNJ-insured patients.

14. This Court has personal jurisdiction over Defendants under Section 12 of the

Clayton Act, 15 U.S.C. § 22, because the Defendants transacted business in this District. This

Court also has personal jurisdiction because Defendants participated in a conspiracy in which

Delta Dental entities and their conspirators committed acts in furtherance of the conspiracy in

and directed at New Jersey. This Court also has personal jurisdiction because Defendants in

person or through their agents and co-conspirators transacted in business, contracted to supply

goods and services, regularly do business, and derive revenue within New Jersey.

15. Venue is proper in this District under Section 12 of the Clayton Act, 15 U.S.C. §

22, because Defendants transact business in this District, and 28 U.S.C. § 1391, and because a

significant part of the events, acts and omissions giving rise to this action occurred in the

District.

III. INTERSTATE COMMERCE

16. Defendants’ activities as set out in this Complaint have substantially affected and

are within the flow of interstate trade and commerce. Many of the Delta Dental Providers

provide services, goods, or facilities to persons who reside in other states.

17. The Delta Dental Plans Association is involved in interstate commerce. It

controls many of the operations of each of the individual Plans, controls the marketing and use of

the “Delta Dental” brand by each of the Plans, and dictates the terms and conditions of the

standardized Delta Dental Provider Agreement that each Plan imposes on dentists who become

part of the Delta Dental network.

18. Plaintiff and members of the proposed Classes have used interstate banking

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facilities and have purchased substantial quantities of good and services across state lines for use

in providing dental services to Delta Dental insured consumers.

IV. PARTIES

A. Plaintiff

19. Plaintiff David J. Swiecinski, DDS (“Plaintiff”) is a dental services provider

located in Pitman, New Jersey. During the Class Period defined below, Plaintiff provided dental

goods and services to patients insured by Delta Dental pursuant to his in-network contract with

DDNJ. Due to the anticompetitive conduct alleged herein, Plaintiff was deprived of the choice

of accepting dental patients under a greater number of insurance plans than he would have been

in a competitive market, and Plaintiff was reimbursed less for providing dental goods and

services than he would have been but for Defendants’ anticompetitive conduct alleged herein.

Consequently, Plaintiff has been injured in his business or property as a result of Defendants’

violations of the antitrust laws.

B. Defendants

20. Defendant Delta Dental Plans Association is located at 1515 22nd St # 450, Oak

Brook, IL 60523, USA. Delta Dental Plans Association is a national association of 39

independent Delta Dental companies. The member Plans of the Delta Dental Plans Association

vote on its actions and elect its officers, who are oftentimes officers of an individual Plan.

21. Defendant Delta Dental Insurance Company is located at P.O. Box 2059

Mechanicsburg, PA 17055-2059 and has Payer #AARP1. Delta Dental Insurance Company is the

Delta Dental licensee for Alabama, Florida, Georgia, Louisiana, Mississippi, Montana, Nevada,

Texas, and Utah.

22. DeltaUSA is located at 1515 W 22nd Street, Suite 450, Oak Brook, IL 60523.

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DeltaUSA is a subsidiary of Delta Dental Plans Association and facilitated the conspiracy

alleged herein.

23. Defendant DDAZ is located at P.O. Box 43026, Phoenix, AZ 85080, and

has Payer #86027. Throughout the Class Period, DDAZ exercised control over the Delta

Dental Plans Association. DDAZ is the Delta Dental licensee for Arizona.

24. Defendant DDAR is located at P.O. Box 15965, N. Little Rock, AR 72231- 5965,

and has Payer #CDAR1. Throughout the Class Period, DDAR exercised control over the Delta

Dental Plans Association. DDAR is the Delta Dental licensee for Arkansas.

25. Defendant DDCA is located at P.O. Box 997330, Sacramento, CA 95899-

7330, and has Payer #77777. Throughout the Class Period, DDCA exercised control over the

Delta Dental Plans Association. DDCA is the Delta Dental licensee for California.

26. Defendant DDCO is located at P.O. Box 173803, Denver, CO 80217-3803, and

has Payer #84056. Throughout the Class Period, DDCO exercised control over the Delta

Dental Plans Association. DDCO is the Delta Dental licensee for Colorado.

27. Defendant DDCT is a subsidiary of Defendant DDNJ and has Payer #22189.

Throughout the Class Period, DDCT exercised control over the Delta Dental Plans

Association. DDCT is the Delta Dental licensee for Connecticut.

28. Defendant DDDE shares an address with Defendant DDPA, and has Payer

#51022. Throughout the Class Period, DDDE exercised control over the Delta Dental

Plans Association. DDDE is the Delta Dental licensee for Delaware.

29. Defendant DDDC shares an address with Defendant DDPA and has Payer

#52147. Throughout the Class Period, DDDC exercised control over the Delta Dental

Plans Association. DDDC is the Delta Dental licensee for the District of Columbia.

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30. Defendant HDS is located at 700 Bishop Street, Suite 700, Honolulu, HI 96813,

and has Payer #99010. Throughout the Class Period, HDS exercised control over the Delta

Dental Plans Association. HDS is the Delta Dental licensee for Hawaii.

31. Defendant DDID is located at P.O. Box 2870, Boise, ID 83701, and has Payer

#82029. Throughout the Class Period, DDID exercised control over the Delta Dental Plans

Association. DDID is the Delta Dental licensee for Idaho.

32. Defendant DDIL is located at P.O. Box 5402, Lisle, IL 60532, and has Payer

#05030. Throughout the Class Period, DDIL exercised control over the Delta Dental Plans

Association. DDIL is the Delta Dental licensee for Illinois.

33. Defendant DDIN is located at P.O. Box 9085, Farmington Hills, MI 48333- 9085,

and has Payer #DDPIN. Throughout the Class Period, DDIN exercised control over the Delta

Dental Plans Association. DDIN is the Delta Dental licensee for Indiana.

34. Defendant DDIA is located at P.O. Box 9000, Johnston, IA 50131-9000, and has

Payer #CDIA1. Throughout the Class Period, DDIA exercised control over the Delta Dental

Plans Association. DDIA is the Delta Dental licensee for Iowa.

35. Defendant DDKS is located at 1619 N. Waterfront Parkway, P.O. Box 789769,

Wichita, KS 67278-9769, and has Payer #E3960. Throughout the Class Period, DDKS exercised

control over the Delta Dental Plans Association. DDKS is the Delta Dental licensee for Kansas.

36. Defendant DDKY is located at P.O. Box 242810, Louisville, KY 40224- 2810,

and has Payer #CDKY1. Throughout the Class Period, DDKY exercised control over the Delta

Dental Plans Association. DDKY is the Delta Dental licensee for Kentucky.

37. Defendant DDME is located at P.O. Box 2002 Concord, NH 03302-2002, and has

Payer #02027. Throughout the Class Period, DDME exercised control over the Delta Dental

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Plans Association. DDME is the Delta Dental licensee for Maine.

38. Defendant DDMA is located at P.O. Box 2907, Milwaukee, WI 53201, and has

Payer #04614. Throughout the Class Period, DDMA exercised control over the Delta Dental

Plans Association. DDMA is the Delta Dental licensee for Massachusetts.

39. Defendant DDMI is located at P.O. Box 9085, Farmington Hills, MI 48333- 9085,

and has Payer #DDPMI. Throughout the Class Period, DDMI exercised control over the Delta

Dental Plans Association. DDMI is the Delta Dental licensee for Michigan.

40. Defendant DDMN is located at P.O. Box 59238, Minneapolis, MN 55459- 0238,

and has Payer #26004 or 07000. Throughout the Class Period, DDMN exercised control over the

Delta Dental Plans Association. DDMN is the Delta Dental licensee for Minnesota and North

Dakota.

41. Defendant DDMO is located at P.O. Box 8690, St. Louis, MO 63126-0690, and

has Payer #43090. Throughout the Class Period, DDMO exercised control over the Delta Dental

Plans Association. DDMO is the Delta Dental licensee for Missouri.

42. Defendant DDNE is located at P.O. Box 245, Minneapolis, MN 55440- 0245, and

has Payer #07027. Throughout the Class Period, DDNE exercised control over the Delta Dental

Plans Association. DDNE is the Delta Dental licensee for Nebraska.

43. Defendant DDNH is located at P.O. Box 2002 Concord, NH 03302-2002, and has

Payer #02027. Throughout the Class Period, DDNH exercised control over the Delta Dental

Plans Association. DDNH is the Delta Dental licensee for New Hampshire. DDNH also offers

dental insurance plans in New Hampshire, Maine, and Vermont under the business name

Northeast Delta Dental.

44. Defendant DDNJ is located at P.O. Box 222, Parsippany, NJ 07054, and has

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Payer #22189. Throughout the Class Period, DDNJ exercised control over the Delta Dental Plans

Association. DDNJ is the Delta Dental licensee for New Jersey.

45. Defendant DDNM is located at 2500 Louisiana Blvd., N.E., Suite 600,

Albuquerque, NM 87110, and has Payer #85022. Throughout the Class Period, DDNM exercised

control over the Delta Dental Plans Association. DDNM is the Delta Dental licensee for New

Mexico.

46. Defendant DDNY shares an address with Defendant Delta Dental Plans

Association and has Payer #11198. Throughout the Class Period, DDNY exercised control over

the Delta Dental Plans Association. DDNY is the Delta Dental licensee for New York.

47. Defendant DDNC is located at P.O. Box 9085, Farmington Hills, MI 48333-

9085, and has Payer #56101. Throughout the Class Period, DDNC exercised control over

the Delta Dental Plans Association. DDNC is the Delta Dental licensee for North Carolina.

48. Defendant DDOH is located at P.O. Box 9085, Farmington Hills, MI 48333-

9085, and has Payer #DDPOH. Throughout the Class Period, DDOH exercised control over the

Delta Dental Plans Association. DDOH is the Delta Dental licensee for Ohio.

49. Defendant DDOK is located at P.O. Box 548809, Oklahoma City, OK 73154-

8809, and has Payer #22229 and CDOK1. Throughout the Class Period, DDOK exercised

control over the Delta Dental Plans Association. DDOK is the Delta Dental licensee for

Oklahoma.

50. Defendant DDOR is located at 601 SW 2nd Avenue, Portland, OR 97204, and has

Payer #CDOR1. Throughout the Class Period, DDOR exercised control over the Delta Dental

Plans Association. DDOR is the Delta Dental licensee for Oregon.

51. Defendant DDPA is located at P.O. Box 2105, Mechanicsburg, PA 17055-6999,

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and has Payer #23166. Throughout the Class Period, DDPA exercised control over the Delta

Dental Plans Association. DDPA is the Delta Dental licensee for Pennsylvania and Maryland.

52. Defendant DDPR is located at P.O. Box 9020992, San Juan, Puerto Rico 00902-

0992, and has Payer #680652604. Throughout the Class Period, DDPR exercised control over

the Delta Dental Plans Association. DDPR is the Delta Dental licensee for Puerto Rico.

53. Defendant DDRI is located at P.O. Box 1517, Providence, RI 02901-1517, and

has Payer #05029. Throughout the Class Period, DDRI exercised control over the Delta

Dental Plans Association. DDRI is the Delta Dental licensee for Rhode Island.

54. Defendant DDSD is located at P.O. Box 1157, Pierre, SD 57501, and has

Payer #54097. Throughout the Class Period, DDSD exercised control over the Delta Dental

Plans Association. DDSD is the Delta Dental licensee for South Dakota.

55. Defendant DDTN is located at 240 Venture Circle, Nashville, TN 37228-1699,

and has Payer #CDTN1. Throughout the Class Period, DDTN exercised control over the Delta

Dental Plans Association. DDTN is the Delta Dental licensee for Tennessee.

56. Defendant DDVT is located at P.O. Box 2002 Concord, NH 03302-2002, and has

Payer #02027. Throughout the Class Period, DDVT exercised control over the Delta Dental

Plans Association. DDVT is the Delta Dental licensee for Vermont.

57. Defendant DDVA is located at 4818 Starkey Rd., Roanoke, VA 24018-8510, and

has Payer #54084. Throughout the Class Period, DDVA exercised control over the Delta Dental

Plans Association. DDVA is the Delta Dental licensee for Virginia.

58. Defendant DDWA is located at P.O. Box 75983, Seattle, WA 98175, and

has Payer #91062. Throughout the Class Period, DDWA exercised control over the Delta

Dental Plans Association. DDWA is the Delta Dental licensee for Washington.

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59. Defendant DDWV shares an address with Defendant Delta Dental Plans

Association, and has Payer #31096. Throughout the Class Period, DDWV exercised control over

the Delta Dental Plans Association. DDWV is the Delta Dental licensee for West Virginia.

60. Defendant DDWI is located at P.O. Box 828, Stevens Point, WI 54481, and has

Payer #39069. Throughout the Class Period, DDWI exercised control over the Delta Dental

Plans Association. DDWI is the Delta Dental licensee for Wisconsin.

61. Defendant DDWY is located at P.O. Box 29, Cheyenne, WY 82003-0029, and

has Payer #CDWY1. Throughout the Class Period, DDWY exercised control over the Delta

Dental Plans Association. DDWY is the Delta Dental licensee for Wyoming.

V. FACTUAL ALLEGATIONS

A. Background

62. Delta Dental was founded in 1955 when the International Longshoremen’s Union

and Warehousemen’s Union (together, “ILWU”) decided to partner with dental associations in

California, Oregon and Washington to provide dental healthcare for ILWU members’ children.

63. An October 29, 2018 presentation by Delta Dental of California shows how Delta

Dental expanded across the nation over time:4

4 Delta Dental, Delta Dental of California: Form a Hearing at 5 (Oct. 29, 2018), available at

https://dfr.oregon.gov/business/reg/insurer/mergers/Documents/moda-delta/20181029-

presentation-slides.pdf (last visited on April 10, 2020).

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64. The presentation states that as of October 2018, Delta Dental was the “[l]argest

dental carrier in [the] country,” with “$9.2 billion in revenue,” and “$1.5 billion in general

reserves.”5 DDCA presents itself as one of the leading pillars of the Delta Dental “enterprise,”

noting how it grew over time by creating or joining with other Delta Dental State Insurers.

65. Delta Dental’s national website states that “[i]n 1966, Delta Dental Plans

Association was created in order to coordinate dental insurance for companies with employees in

multiple states.”6 That coordination between Delta Dental Plans Association and the Delta

5 Id. at 4.

6 Delta Dental, About Us, https://www.deltadental.com/us/en/about-us.html (last visited Apr.

10, 2020).

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Dental State Insurers is a crucial element of the conspiracy alleged herein.

66. In the late 1980s, DDCA won the bid for the Civilian Health and Medical

Program of the Uniformed Services (“CHAMPUS”) dental insurance program.7 The U.S.

Government Accountability Office describes CHAMPUS as “a fee-for-service health insurance

program that pays for a substantial part of the health care that civilian hospitals, physicians, and

others provide to [Department of Defense] beneficiaries.”8 Because Delta Dental’s CHAMPUS

program covered uniformed service members nationwide, this program led to even more

coordination between Delta Dental’s national operations and their state member entities. In 1990,

DeltaUSA connected state and local plans to the same “National Provider File” database of dental

providers, which enabled Delta Dental member entities to provide Delta Dental coverage to

organizations with employees and subscribers located in multiple states.9 The National Provider

File also gave Delta Dental Plans Association and its members access to the rates charged by

dental providers nationwide, which in turn facilitated the conspiracy alleged herein. In the 1990s,

the Antitrust Division of the U.S. Department of Justice (“DOJ”) challenged DDRI’s use of a

“most favored nations” contractual clause that required dentists in its network to give DDRI any

lower price that they furnished to other health insurers. A federal district court refused to dismiss

the DOJ’s lawsuit, finding it had alleged a viable antitrust claim. See United States v. Delta

Dental of R.I., 943 F. Supp. 172, 179-80 (D.R.I. 1996). DDRI eventually entered

7 See Hillsboro Dentistry, Delta Dental, https://eastwinddentalcare.com/dental-post/delta-dentalinsurance-dentist-hillsboro-oregon/ (last visited Jan. 31, 2020).

8 U.S. Gen. Acct’g Off., GAO/HEHS-94-174, Defense Health Care: Uniformed Services

Treatment Facility Health Care Program 1, n.2 (June 1994), available at

https://www.gao.gov/assets/220/219701.pdf (last visited Apr. 10, 2020).

9 See Hillsboro Dentistry, Delta Dental, https://eastwinddentalcare.com/dental-post/delta-dentalinsurance-dentist-hillsboro-oregon/ (last visited Apr. 10, 2020).

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into a consent decree, agreeing to abandon the most favored nations clause practice.10 On May

19, 1995, DOJ entered into a similar consent decree with DDAZ.11 In spite of these

governmental actions, Defendants’ anticompetitive practices continue to this day.

67. Today, the Delta Dental System “provide[s] coverage to more Americans than any

other dental insurance company.”12 “Delta Dental serves more than 80 million Americans” are

covered by Delta Dental plans across all “50 states, Puerto Rico and other U.S. territories.”13

68. The DDCA website describes the Delta Dental Plans Association as “a network of

companies that provides dental coverage to 80 million people in the U.S.” DDCA continues by

stating that “Delta Dental of California, Delta Dental of New York, Inc., Delta Dental of

Pennsylvania and Delta Dental Insurance Company, together with our affiliate companies, form

one of the nation’s largest dental benefits delivery systems, covering 36.8 million enrollees. All

of our companies are members, or affiliates of members, of the Delta Dental Plans Association, a

network of 39 Delta Dental companies throughout the country.”14 The Delta Dental State

Insurers are referred to on Delta Dental’s website as “the national network” “of 39 independent

Delta Dental companies that provide dental insurance.”15

10 Final Judgment, United States v. Delta Dental of R.I., No. 96-113P, (D.R.I. July 2, 1997),

https://www.justice.gov/atr/case-document/final-judgment-68 (last visited Apr. 10, 2020).

11 Second Am. Final Judgment, United States v. Delta Dental Plan of Ariz., Inc., Civ. No. 941793

(D. Ariz. May 19, 1995), https://www.justice.gov/atr/case-document/second-amended-finaljudgment-0 (last visited Apr. 10, 2020).

12 Delta Dental, About Us, https://www.deltadental.com/us/en/about-us.html (last visited Apr. 10,

2020).

13 Id.

14 DDCA, Why do 80 million enrollees trust their smiles to Delta Dental?,

https://www.deltadentalins.com/about/ (last visited Apr. 10, 2020).

15 Delta Dental, About Us, https://www.deltadental.com/us/en/about-us.html (last visited Apr. 10,

2020); see also https://www.deltadental.com/us/en/dental-insurance/state-dental-insuranceplans.html (Apr. 10, 2020).

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69. Defendants operate a variety of dental insurance health plans that can be

purchased through the Delta Dental State Insurers, including: Delta Dental Premier, Delta Dental

PPO, and DeltaCare USA.

70. Delta Dental Premier is a traditional fee-for-service plan that allows a subscriber

to visit any licensed dentist and to change dentists without first obtaining permission from Delta

Dental. According to Delta Dental, this plan “offers the largest network of dentists.”16

71. The Delta Dental PPO plan is a preferred provider program. According to Delta

Dental, “[w]ith Delta Dental PPO you have access to a network of dentists who accept reduced

fees for covered services....”17

72. Defendants also offer a “Delta Dental PPO Plus Premier” plan, which combines

the Delta Dental PPO and Premier networks. According to Delta Dental, “[w]ith this plan,

even if your Delta Dental Premier dentist is not in the PPO network, you still receive the

benefit of that dentist’s contracted fee.”18

73. The DeltaCare USA plan is a prepaid plan that features set copayments, no annual

deductibles and no maximums for covered benefits. In most states, a patient must select a

primary care dentist in the DeltaCare USA network from whom they will receive treatment.

Typically, a patient’s out-of-pocket expenses will be lower with DeltaCare USA than with Delta

Dental Premier or Delta Dental PPO.

74. Defendants also offer Delta Dental Patient Direct, a dental service discount plan

where the subscriber chooses from a panel of participating dentists who charge discounted fees.

16 Delta Dental, Dental Insurance, https://www.deltadental.com/us/en/dental-insurance.html (last

visited Apr. 10, 2020).

17 Id.

18 Id.

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The subscriber pays these fees to the dentist at the time of treatment.

75. Defendants also offer a specialized plan for members of the American

Association of Retired Persons (“AARP”).

76. DDCA’s website provides the following description of which Plans

provide which programs:19

Delta Dental of California offers and administers Delta Dental PPOTM and other

fee-for-service dental programs for groups headquartered in the state of California.

Delta Dental of New York offers and administers Delta Dental PPO and other feefor-service programs in New York.

Delta Dental of Pennsylvania and its affiliates offer and administer Delta Dental

PPO and other fee for-service dental programs in Delaware (Delta Dental of

Delaware), Maryland, Pennsylvania, West Virginia (Delta Dental of West Virginia)

and the District of Columbia (Delta Dental of the District of Columbia).

Delta Dental Insurance Company offers and administers Delta Dental PPO and

other fee-for-service dental programs to groups headquartered or located in

Alabama, Florida, Georgia, Louisiana, Mississippi, Montana, Nevada and Utah,

and vision programs to groups headquartered in West Virginia. In Texas, Delta

Dental Insurance Company offers and administers fee-for-service dental programs

and provides a dental provider organization (DPO) plan.

DeltaCare® USA is underwritten in these states by these entities: AL — Alpha

Dental of Alabama, Inc.; AZ — Alpha Dental of Arizona, Inc.; CA — Delta Dental

of California; AR, CO, IA, MA, ME, MI, MN, NC, ND, NE, NH, OK, OR, RI, SC,

SD, VA, VT, WA, WI, WY — Dentegra Insurance Company; AK, CT, DC, DE,

FL, GA, KS, LA, MS, MT, TN, WV — Delta Dental Insurance Company; HI, ID,

IL, IN, KY, MD, MO, NJ, OH, TX — Alpha Dental Programs, Inc.; NV — Alpha

Dental of Nevada, Inc.; UT — Alpha Dental of Utah, Inc.; NM — Alpha Dental of

New Mexico, Inc.; NY — Delta Dental of New York, Inc.; PA — Delta Dental of

Pennsylvania. Delta Dental Insurance Company acts as the DeltaCare USA

administrator in all these states. These companies are financially responsible for

their own products.

The AARP® Dental Insurance Plan is insured by Delta Dental Insurance Company

(Contract 1230) in AK, AL, DC, DE, FL, GA, LA, MD, MS, MT, NV, NY, PA,

PR, TN, TX, UT, VI and WV, by Dentegra Insurance Company (Contract 1230) in

19 DDCA, Who We Are, https://www.deltadentalins.com/about/legal/who-we-are.html

(last visited Apr. 10, 2020).

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AR, AZ, CA, CO, CT, HI, IA, ID, IL, IN, KS, KY, ME, MI, MN, MO, NC, ND,

NE, NH, NJ, NM, OH, OK, OR, RI, SC, SD, VA, VT, WA, WI and WY, and by

Dentegra Insurance Company of New England (Contract 1230) in MA. The plan

is administered by Delta Dental Insurance Company. For Texas residents your

Master Policy Form number is TX-AMD-MC-DPO-D-DC (DELTAUSA1-2005).

These companies are financially responsible for their own products.

77. Although the Delta Dental State Insurers operate in different states and

territories, they offer a common set of dental insurance programs from which subscribers can

choose. These programs operate on a nationwide basis in terms of the overall structure of how

participating dental providers are compensated.

78. The Delta Dental State Insurers have achieved an unprecedented degree of

dominance in the market for dental insurance as a result of the anticompetitive conduct

detailed herein. The Delta Dental State Insurers are typically the largest providers of dental

insurance plans within their respective territories.

B. Defendants’ Market Allocation Conspiracy

79. The Delta Dental Plans Association is a network of the 39 independent

Delta Dental State Insurers.20

80. The Delta Dental State Insurers are the members of, and govern, the Delta

Dental Plans Association. The Delta Dental Plans Association is entirely controlled by its

member Plans, all of whom are independent dental insurance companies or an affiliate of those

companies. The Board of Directors of the Delta Dental Plans Association is comprised of

Presidents and CEOs of the independent Delta Dental State Insurers.

81. The Delta Dental Plans Association promotes this group of independent

20 See Delta Dental, About Us, https://www.deltadental.com/us/en/about-us.html (last visited

Apr. 10, 2020).

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companies as a single provider (“Delta Dental”) and names it as the nation’s largest dental

insurance, covering more than 80 million Americans, and Delta Dental’s website states that

“Delta Dental Plans Association is comprised of a network of . . . independent Delta Dental

companies . . . operating in all 50 states, Puerto Rico and other U.S. territories, and together [it]

provide[s] coverage to more Americans than any other dental insurance company.”21

82. Although the Defendant Delta Dental State Insurers do not compete directly with

each other using the “Delta Dental” brand in any other states or territories, and have never done

so since the Delta Dental organization was created in 1966, the independent Delta Dental State

Insurers are horizontal competitors.

83. The Delta Dental Plans Association is an instrumentality of the Defendant Delta

Dental State Insurers. The Delta Dental State Insurers elect the Board and appoint the officers of

the Delta Dental Plans Association. The members of the Board and the officers of the Delta

Dental Plans Association are officers of the Defendant licensees. The Delta Dental State Insurers

vote on any major actions of the Delta Dental Plans Association. The Delta Dental State Insurers

thus exercise actual control over the major decisions of the Delta Dental Plans Association.

84. The Defendant Delta Dental State Insurers have used their control over the Delta

Dental Plans Association to coordinate their activities. The Delta Dental Plans Association and

its license agreements are key vehicles used by the Delta Dental State Insurers to enter into

agreements that restrain competition. Each Delta Dental State Insurer has entered into a licensing

agreement with the Delta Dental Plans Association. Each Defendant who is a licensee of the

Delta Dental Plans Association is an independent company or legal entity. Because of the control

that the Delta Dental State Insurers exercise over the Delta Dental Plans Association, the

21 Id.

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territorial allocation imposed by the Delta Dental Plans Association through these licenses is, in

fact, a territorial allocation that the member Plans have agreed to implement.

85. Because the Delta Dental Plans Association is controlled by its member Delta

Dental State Insurers, any agreement between the Delta Dental Plans Association and one of its

member Plans constitutes a horizontal agreement between and among the Delta Dental State

Insurers themselves.

86. The affiliate license agreements limit each Delta Dental State Insurer to compete

on a branded basis only in its own assigned territory. Thus, each Delta Dental State Insurer is

only licensed to provide “Delta Dental” branded dental insurance in a single territory, and has

not sought to operate outside the territory using the “Delta Dental” name. Through the license

agreement and the Delta Dental Plans Association – which the Delta Dental State Insurers

collectively control – each Defendant agrees that the Delta Dental State Insurers will not

compete under the “Delta Dental” trademarks and trade names outside of their designated

territory and reports no revenue received from other territories. Thus, the territorial restraints

imposed upon the Delta Dental State Insurers are nationwide.

87. The affiliations of “independent Delta Dental member companies” were fully

encouraged by Delta Dental Plans Association. The organizations that were early to the Delta

Dental development initiative won licenses in multiple states. As the Delta Dental Plans

Association stated in a 2015 Form 990 filed with the Internal Revenue Service (“IRS”):22

22 Supplemental Information to Form 990 (Schedule O, Form 990, Part VI, Section A, line 7a),

Delta Dental Plans Association (2015), available at

https://projects.propublica.org/nonprofits/display_990/362551984/2017_02_EO%2F36-

2551984_990O_201512 (last visited Apr. 10, 2020).

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88. Under this approach, “affiliate” membership in the Delta Dental Plans

Association can include any non-profit or for-profit entity that “desires to cooperate with the

[Delta Dental Plans Association] and/or its affiliates in providing dental prepayment programs

to the public.”

89. The Delta Dental State Insurers’ annual statements to state insurance departments

also confirm that insurance premiums are “Allocated by States and Territories.”23 These

statements also confirm that Defendants obtain revenues exclusively from their exclusive

territories.

90. Accordingly, efforts by a Delta Dental State Insurer using the “Delta Dental”

brand to branch out of its territory and seek the business of an employer or group in another

state have been rebuffed. This includes, for example, a Delta Dental State Insurer seeking to bid

on a national retailer’s dental insurance business being told that the account was reserved for

another state’s Delta Dental State Insurer.

91. The affiliate license agreements between Delta Dental Plans Association and the

Delta Dental State Insurers directs that the Delta Dental State Insurers are allowed to conduct

23 See, e.g., Annual Statement, Delta Dental of Rhode Island (for year ending Dec. 31, 2018),

https://dbr.ri.gov/documents/divisions/insurance/financial_info/2018/Delta_Dental_of_Rhode_I

sland_-_YE_2018.pdf (last visited Apr. 10, 2020).

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marketing and advertising using the Delta Dental trademarks and copyrights in exchange for

adhering to various rules governing the scope and conduct of their business. Defendants

collectively police the Delta Dental State Insurers’ compliance with the license agreements to

ensure the Delta Dental State Insurers are abiding by its rules, and possess the power to

terminate a Delta Dental State Insurer’s contract in the event of non-compliance.

92. Defendants’ scheme to provide dental insurance under the “Delta Dental” brand

in exclusive territories constitutes a contract, combination, or conspiracy in violation of the

antitrust laws.

93. This restriction on competition enforced by the Delta Dental Plans Association

and implemented by its members and their affiliates is not in the individual self-interest of

each Delta Dental State Insurer, limits the Delta Dental State Insurers’ abilities to grow and

increase output, and effectively shackles the Delta Dental State Insurers as competitors.

94. As a result of the anticompetitive agreements and practices alleged herein,

Defendants have grown collectively to become the leading dental care insurer in the

United States.

C. Defendants’ Joint Anticompetitive Compensation of Dentists

95. As reflected in the allegations, Defendants wield their considerable market power

by compelling dentists to accept onerous reimbursement terms for services provided to Delta

Dental-insured patients. This compulsion is implemented through standardized provider service

contracts which, as the WSDA explained in the quotation above, are offered “on a ‘take it or

leave it’ basis, with no room for negotiation, and with complete control of rates and terms.”24

24 WSDA, WSDA Asks Attorney General to Investigate Potential Delta Antitrust Practices,

(July 2, 2018), https://www.wsda.org/member-center/delta/2018/07/02/wsda-asks-attorneygeneral-to-investigate-potential-delta-antitrust-practices (last visited Apr. 10, 2020).

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Thus, for example, when Delta Dental adjusts its compensation rates for dentists under the Delta

Dental PPO plan or the Delta Dental Premier plan, it endeavors to ensure that those adjustments

are applied on a nationwide basis by all of the member Delta Dental State Insurers to the greatest

extent possible. This ensures that Delta Dental programs have common compensation structures

and operate as similarly as possible across the nation.

96. In the Second Amended Complaint filed on April 21, 2017 in the CDA case, the

CDA attached a sample form provider agreement used by DDCA. The provider agreement

contains the following clause:25

The term “Contracted Fee” is defined in this sample agreement as follows:26

25 Second Amended Complaint Ex. B, California Dental Ass’n v. Delta Dental of Cal., Trans.

ID# 60505636, No. CGC 14-538849 (S.F. Cal. Super. Ct. Apr. 21, 2017).

26 Id.

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97. Current Delta Dental provider contracts contain similar non-negotiable fee

clauses. For example, the DDVA PPO form provider agreement states that “[i]n our Delta Dental

PPO program, we base our payments on Delta Dental PPO Allowances. You agree to accept

Delta Dental PPO Allowances as payment in full for Covered Benefits that you provide to Delta

Dental PPO Enrollees.”27

98. Similarly, the DDCO standard agreement for dentists in its Premier network states

that “[t]he Corporation agrees to compensate the Dentist for covered benefits in the following

manner. The submitted charge for any covered service will be compared to the Maximum Plan

Allowance (the allowable amount as determined by Delta Dental for a procedure). The lesser of

27 DDVA, Delta Dental PPO Participating Dentist Agreement,

https://www.deltadentalva.com/uploadedFiles/Dentists/DeltaDentalPPOcontract.pdf (cached

version last visited Apr. 10, 2020).

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the submitted charge or the Delta Dental Maximum Plan Allowance will be used to compute the

patient copayment and compensation due to the Dentist . . . .”28

99. Likewise, the DDRI provider agreement states that “[t]he Dentist shall be

compensated for the provision of Covered Services in accordance with (i) the compensation

arrangements established by Delta Dental from time to time; and (ii) the terms and conditions of

the agreements entered into from time to time by Delta Dental or other Qualified Entities

regarding provision of dental services to covered persons.”29

100. The DDNC PPO Provider Agreement states that “DDNC herein agrees to pay me

for each commonly performed procedure performed by me to an eligible DDNC Subscriber in

accordance herewith and covered by such subscriber’s agreement with DDNC an amount equal

to the Maximum Plan Allowance as established by DDNC and incorporated by reference herein,

which fees may be amended from time to time by DDNC in its sole discretion.”30

101. Defendants leverage their market power to suppress and fix reimbursement rates

paid to Delta Dental Providers. Numerous examples of Delta Dental’s unilateral and unfair

pricing practices have been revealed in recent years.

102. For example, on June 15, 2011, DDWA imposed an average reduction of dentist

compensation rates of 15 percent for providers in the Delta Dental Premier network and

28 DDCO, Delta Dental Premier Participating Dentist Agreement ¶ 8(a),

https://www.deltadentalco.com/uploadedFiles/Dentists/PremierAgreement.pdf (last visited

Apr. 10, 2020).

29 DDRI, Participating Dentist Agreement ¶ 2(a),

https://www.deltadentalri.com/Content/Docs/ProvidersContract.pdf (last visited Apr. 10, 2020).

30 DDNC, Delta Dental PPO Participation Application and Agreement ¶ 3,

https://northcarolina.deltadental.com/content/dam/member-companies/north-carolina/formlibrary/Dentist%20Premier%20Contract.pdf (last visited Apr. 10, 2020).

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5 percent for those in the Delta Dental PPO network.31

103. In 2011, DDID reduced reimbursement rates in Idaho between 4 and 13 percent.32

In 2013, DDNJ and DDCT instituted similar reductions.33 Thereafter, DDMO cut dentist

reimbursements in New Jersey by 4-5%, in Missouri by an average of 7 percent, and DDNH and

DDVT implemented 4 percent rate cuts in their respective territories.34 The same reason was

given for all of the cuts: Delta Dental wanted to “remain competitive.”35

104. The same course of conduct was attempted in California. In August 2013, DDCA

declined to honor its contractual commitment to dental service providers under its Premier Plan to

calculate maximum reimbursement rates “based on actuarial calculation, and taking into account

filed fees, health care inflation rates, market pricing by competitors, and acceptability by

customers.” Instead, DDCA allowed maximum fees existing as of January 1, 2011 for each dental

procedure to remain in effect as the maximum allowable fee. This change in policy had the effect

of eliminating language in dental service provider contracts that DDCA Delta will only lower its

maximum amount payable if “participating dentists’ filed or submitted fees decrease to

31 Kelly Soderlund, Delta Dental Cuts Reimbursement Fees for New Jersey and Connecticut

Dentists, ADA News, (June 18, 2012), http://www.ada.org/sitecore/content/homeada/publications/ada-news/2012-archive/june/delta-dental-cuts-reimbursement-fees-for-newjersey-and-connecticut-dentists (last visited Apr. 10, 2020).

32 Id.

33 Id.

34 Financial Management: Managed Care Update, Advanced Practice Management,

https://advancedpracticemanagement.com/financial-management-managed-care-update/ (last

visited Nov. 22, 2019).

35 Kelly Soderlund, Delta Dental Cuts Reimbursement Fees for New Jersey and Connecticut

Dentists, ADA News (June 18, 2012), http://www.ada.org/sitecore/content/homeada/publications/ada-news/2012-archive/june/delta-dental-cuts-reimbursement-fees-for-newjersey-and-connecticut-dentists (last visited Apr. 10, 2020).

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such an extent that Delta is warranted in reducing the maximum amount allowed.” As noted

above, the CDA responded by filing a suit for injunctive and monetary relief against DDCA in

January of 2014. On March 27, 2015, the Superior Court denied DDCA’s motion to dismiss for

lack of standing and its demurrer to the complaint.36 As noted above, the suit eventually resulted

in a class action settlement for $65 million.

105. In Massachusetts, DDMA since 1990 had used a Consumer Price Index (“CPI”) in

calculating fees for dentists who provided services pursuant to its Delta Premier network.

Dentists challenged those fees before the Massachusetts Department of Insurance (“MDOI”), and

in April 2009, MDOI issued an opinion condemning this fee methodology and ordering DDMA

to replace it.37 The Hearing Examiner stated:38

Delta has not justified why the cost to an urban consumer of purchasing a

basket of goods and services on a retail basis constitutes a reasonable basis upon

which to cap reimbursements of Premier participating dentists. Delta has not

demonstrated that its CPI reflects a Massachusetts dentist’s cost of doing business.

I am not persuaded that these costs are tracked or mirrored by the consumer price

index that Delta employs.

** *

Another problem with Delta’s CPI adjustment is that, if the CPI-driven nature

of the April 1, 2008 periodic update is duplicated for several periodic updates ad

seriatim, the “customary maximum allowable fee” for a procedure will lag further

and further behind the amount that lies at the 90th percentile of participating dentists’

“usual fees” for that procedure. Over years of updates, the “customary” aspect of

Premier’s fee methodology would depart, for the vast majority of dental procedures,

further and further from the reality of the 90th percentile at which Massachusetts

dentists usually are charging their nonsubscriber patients. A fee methodology with

such a dramatic disconnect is inherently unreasonable.

36 Order Denying Delta’s Motion to Dismiss, California Dental Ass’n v. Delta Dental of Cal.,

Trans. ID# 56991002, No. CGC 14-538849 (S.F. Cal. Super. Ct. Mar. 27, 2015).

37 Decision and Order Regarding the Fee Methodology of the Delta Dental Premier Plan,

No. G2008-10 (Mass. Div. Ins. Apr. 14, 2009),

https://www.mass.gov/files/documents/2016/07/ny/g2008-10.pdf.

38 Id. at 14-15.

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106. In 2016, DDMA introduced a “Total Choice” plan, a new PPO product that

reimbursed dentists at about 25 to 30 percent less than they received under the then-current

Premier Plan. The director of dental practice and membership engagement services for the

Massachusetts Dental Society, Ellen Factor, stated that the new PPO plan “was communicated

to dentists with very short notice and caused considerable concern for dentists, employers and

legislators.”39 However, due to DDMA’s market power in Massachusetts, Delta Dental

Providers were forced to either accept this new product offering or lose the business of their

patients with Delta Dental insurance.

107. In September 2019, DDMA abandoned use of the CPI and announced that

reimbursements to providers would be further reduced by 8.8 percent for standard fee schedule

rates.40

108. Defendants’ anticompetitive practices significantly impacted Plaintiff and Class

members during the Class Period. Unlike other professional industries in which inflationadjusted incomes have increased in recent years, average inflation-adjusted net income for

dentists has steadily declined over the past decade, due in part to the conduct of Defendants.

Meanwhile, Defendants’ revenues have increased over the same time period.

109. If Delta Dental State Insurers could compete with each other in the territories in

which other Delta Dental State Insurers operate, the resulting competition would provide

dentists with more opportunities to receive fairer compensation.

39 David Burger, Delta Proposes New Fee Methodology in Massachusetts, ADA News (June 27,

2018), https://www.ada.org/en/publications/ada-news/2018-archive/june/delta-proposes-newfee-methodology-in-massachusetts (last visited Apr. 10, 2020).

40 Michael W. Davis, Delta Dental of Massachusetts Patient Letter Upsets Dental Community,

Dentistry Today (Oct. 8, 2019), https://www.dentistrytoday.com/news/todays-dentalnews/item/5452-delta-dental-of-massachusetts-patient-letter-upsets-dental-community (last

visited Apr. 10, 2020).

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110. Defendants’ conspiracy has also injured dental patients. As one Texas dentist said

about Delta Dental’s plans to disallow payments for certain dental procedures:41

This is all about money and money only regardless of what Delta states.

They want to discourage treatment and make the dentist work harder and take

more time to complete a procedure. The less money they pay, the more they make

and profit. Also, Delta is hopeful that the patient will not return for the other

quadrants of treatment. Again, money saved is money profited.

***

Insurance has cut the fees for dentistry by 30-70 percent for most common

dental procedures. There is nothing about Delta or any other insurance for that

matter, that they care or have any interest in “quality care.”

111. Defendants’ compensation practices also undermine dentists’ ability to serve

Medicaid patients. Because Delta Dental compensation levels do not adequately cover

dentists’ rising costs, they have less ability to take time from their commercially insured

customers and serve the dental needs of Medicaid patients.

VI. CLASS ACTION ALLEGATIONS

112. Plaintiff brings this action under Rule 23(a) and Rule 23(b)(1), (b)(2), and (b)(3)

of the Federal Rules of Civil Procedure, seeking damages and injunctive relief on behalf of

himself and the following proposed nationwide class (the “Nationwide Class”):

All Delta Dental providers, not owned or employed by any of the Defendants, that

provided dental goods or services to a Delta Dental insured pursuant to a Delta

Dental insurance policy within the United States and its territories and within four

years of the date of filing of this action.

113. Plaintiff also brings this action on behalf of himself and as a class action under

Rule 23(a) and Rule 23(b)(1), (b)(2), and (b)(3) of the Federal Rules of Civil Procedure, seeking

monetary damages and injunctive on behalf of the following proposed statewide New Jersey

41 William H. Miller, Letters: Delta Disallow Policy, ADA News (Aug. 22, 2016),

https://www.ada.org/en/publications/ada-news/viewpoint/letters-to-theeditor/2016/august/delta-disallow-policy (last visited Apr. 10, 2020).

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class (the “New Jersey Class”):

All Delta Dental Providers in the State of New Jersey, not owned or employed by

any of the Defendants, that provided dental goods or services to a Delta Dental

insured pursuant to a Delta Dental insurance policy within the State of New

Jersey and within four years of the date of filing of this action.

114. The two Classes defined above are be referred to collectively herein as the

“Classes.”

115. Plaintiff believes there are tens of thousands of members of the Classes, the exact

number and their identities being known by Delta Dental, making Class members so numerous

and geographically dispersed that joinder of all members is impracticable.

116. There are numerous questions of law and fact common to each Class member,

including, but not limited to:

a. Whether the conduct of Defendants alleged in this complaint constituted

an unlawful market allocation conspiracy in violation of Sections 1 and 3

of the Sherman Act;

b. Whether the conduct of Defendants alleged in this complaint constituted

an unlawful price-fixing conspiracy in violation of Sections 1 and 3 of the

Sherman Act;

c. Whether the conduct of Defendants alleged in this complaint caused

damages to Plaintiff and other members of the Classes, and the amount

and extent of those damages;

d. Whether the conduct of Defendants alleged in this complaint is ongoing

and should be enjoined; and

e. For the New Jersey Class, whether the conduct of Defendants alleged in

this complaint violated the New Jersey Antitrust Act.

117. Plaintiff’s interests are typical of, and not antagonistic to, those of other or absent

members of the Classes, such that it can fairly and adequately represent and protect the interests

of absent Class members.

118. Plaintiff is represented by counsel who are competent and experienced in the

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prosecution of antitrust and class action litigation.

119. The prosecution of separate actions by individual members of the Class would

create a risk of inconsistent or varying adjudications.

120. The questions of law and fact common to the members of the Class predominate

over any questions affecting only individual members, including legal and factual issues relating

to liability and damages.

121. A class action is superior to other available methods for the fair and efficient

adjudication of this controversy. Treatment as a class action will permit a large number of

similarly situated persons to adjudicate their common claims in a single forum

simultaneously, efficiently, and without the duplication of effort and expense that numerous

individual actions would engender. The Classes are readily definable, and records of the Class

members should exist in the files of Delta Dental Plans Association and the Delta Dental State

Insurers. A class action will eliminate the possibility of repetitious litigation.

122. Class treatment will also permit the adjudication of relatively small claims by

many members of the Class who otherwise could not afford to litigate claims such as those

asserted in this complaint. This class action presents no difficulties of management that would

preclude its maintenance as a class action.

VII. CAUSES OF ACTION

COUNT ONE

VIOLATION OF THE SHERMAN ACT, 15 U.S.C. § 1, et seq.

123. Plaintiff incorporates the allegations set forth in the foregoing paragraphs as

though set forth herein.

124. Plaintiff brings this claim under Section 4 of the Clayton Act (15 U.S.C. § 15) for

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treble damages and interest on behalf of all National Class members, not owned or employed

by any of the Defendants, that provided dental goods or services pursuant to a Delta Dental

insurance policy within the United States and its territories within four years of the date of

filing of this action.

125. As alleged more specifically above, Defendants have engaged in a market

allocation and price-fixing scheme that represent a contract, combination, or conspiracy in

restraint of trade within the meaning of Section 1 and 3 of the Sherman Act (15 U.S.C §§ 1, 3).

126. Defendants have agreed to divide and allocate the geographic markets for the

provision of dental insurance into a series of exclusive territories for each of the Delta Dental

State Insurers. By so doing, Defendants have also entered into a contract, combination or

conspiracy to suppress competition and reduce compensation to dental providers in violation of

Sections 1 and 3 of the Sherman Act. Due to the lack of competition resulting from

Defendants’ illegal conduct, providers who choose not to be in-network with Delta Dental have

an extremely limited market for the dental services they provide and are undercompensated for

those services. Defendants’ anticompetitive acts are illegal per se under Section 1 and 3 of the

Sherman Act or, at least, are subject to a “quick look” rule of reason analysis.

127. As a direct and proximate result of Defendants’ continuing violations of

Sections 1 and 3 of the Sherman Act, the Plaintiff and members of the proposed Nationwide

Class have suffered and continue to suffer injury and damages of the type that the federal

antitrust laws were designed to prevent. Such injury flows directly from that which makes

Defendants’ conduct unlawful. These damages consist of having been paid less, having been

forced to accept far less favorable rates and other contract terms, and/or having access to far

fewer patients than they would have absent Defendants’ anticompetitive agreement.

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128. Defendants’ unlawful conduct threatens to continue to injure Plaintiff. Plaintiff

seeks a permanent injunction pursuant to Section 16 of the Clayton Act (15 U.S.C. § 26)

prohibiting Defendants and all others acting in concert from continuing their illegal contract,

combination, or conspiracy, and ordering Defendants to take appropriate remedial action to

correct and eliminate any remaining effects of their illegal contract, combination, or conspiracy.

129. Plaintiff reserves the right to seek preliminary injunctions as needed.

COUNT TWO

VIOLATION OF THE NEW JERSEY ANTITRUST ACT,

N.J.S.A. § 56:9-1 et seq.

130. Plaintiff incorporates the allegations set forth in the foregoing paragraphs as

though set forth herein.

131. Plaintiff brings this claim under the New Jersey Antitrust Act for treble damages

(N.J.S.A. § 59:9-12), costs, and attorneys’ fees on behalf of all New Jersey Class members, not

owned or employed by any of the Defendants, that provided dental goods or services pursuant

to a Delta Dental insurance policy within the State of New Jersey within four years of the date

of filing of this action.

132. Plaintiff is a “person” within the definition set forth in the New Jersey Antitrust

Act, N.J.S.A. § 59:9-2(a).

133. As alleged more specifically above, Defendants have engaged in a market

allocation and price-fixing scheme that represents a contract, agreement, combination, or

conspiracy in restraint of trade or commerce within the meaning of Section 56:9-2(b) of the

New Jersey Antitrust Act, N.J.S.A. § 56:9-2(b).

134. Defendants have agreed to divide and allocate the geographic markets for the

provision of dental insurance into a series of exclusive territories for each of the Delta Dental

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State Insurers. By so doing, Defendants have also entered into a contract, agreement,

combination, or conspiracy to suppress competition and reduce compensation to dental providers

in violation of Section 56:9-3 of the New Jersey Antitrust Act. N.J.S.A. § 56:9-3. Due to the

lack of competition which results from Defendants’ illegal conduct, New Jersey providers who

choose not to be in-network have an extremely limited market for the dental services they

provide and are undercompensated for those services.

135. As a direct and proximate result of Defendants’ continuing violations

of Section 56:9-3 of the New Jersey Antitrust Act, Plaintiff and members of the proposed New

Jersey Class have suffered and continue to suffer injury and damages to their business or

property. Such injury flows directly from that which makes Defendants’ conduct unlawful.

These damages consist of having been paid less, having been forced to accept far less favorable

rates and other contract terms, and/or having access to far fewer patients than they would have

but for Defendants’ anticompetitive agreement.

136. Defendants’ unlawful conduct threatens to continue to injure Plaintiff. Plaintiff

seeks a permanent injunction pursuant to violation Section 56:9-10 of the New Jersey Antitrust

Act (N.J.S.A. § 56:9-10) prohibiting Defendants and all others acting in concert from

continuing their illegal contract, agreement, combination, or conspiracy and ordering them to

take appropriate remedial action to correct and eliminate any remaining effects of their illegal

contract, agreement, combination, or conspiracy.

PRAYER FOR RELIEF

137. WHEREFORE, Plaintiff, on behalf of himself and the proposed Classes of

similarly situated persons and entities, respectfully requests that the Court:

a. Determine that this action may be maintained as a class action

under Rule 23 of the Federal Rules of Civil Procedure and Appoint

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Plaintiff as a Class Representative, and Counsel for

Plaintiff as Class Counsel;

b. Adjudge and decree that Defendants have violated

Sections 1 and 3 of the Sherman Act;

c. Adjudge and decree that Defendants have violated the

New Jersey Antitrust Act;

d. Permanently enjoin Defendants from entering into, or from

honoring or enforcing, any agreements that restrict the

territories or geographic areas in which any of the Delta

Dental State Insurers may compete;

e. Permanently enjoin Defendants from continuing with

any price-fixing and to remedy all effects or vestiges

of their conspiracy;

f. Permanently enjoin Defendants from retaliating

against Plaintiff for participation in the litigation;

g. Require ongoing periodic reporting on compliance by the

Defendants, monitoring by the Court, and a process

through which Class members will be represented in any

compliance issue at Defendants’ cost, all of which

should continue until Defendants show that they have

corrected the effects of their illegal conduct;

h. Award the Plaintiff and the Classes treble the amount of

damages suffered by Plaintiff and members of the

Classes as proven at trial;

i. Award costs and attorneys’ fees to Plaintiff;

j. Award prejudgment interest; and

k. Award any such other and further relief as may be just and

proper.

JURY DEMAND

Pursuant to Fed. R. Civ. P. 38(c), Plaintiff demands a trial by jury on all issues

so triable.

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DATED: April 10, 2020

Simon B. Paris

NJ ID # 049821996

Patrick Howard

NJ ID # 022802001

Charles J. Kocher

NJ ID # 016952004

SALTZ, MONGELUZZI,

& BENDESKY, P.C.

1650 Market Street, 52nd Floor

Philadelphia, PA 19103

Telephone: (215) 496-8282

Facsimile: (215) 754-4443

sparis@smbb.com

phoward@smbb.com

ckocher@smbb.com

Attorneys for Plaintiff and

the Proposed Classes

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