Update, April 3, 2014: Small Smiles will no longer be allowed to serve patients on Medicaid started Sept. 30, affecting hundreds of thousands of children, the inspector general of the Department of Health and Human Services announced today. CSHM LLL, which owns the management company serving Small Smiles, said it doesn’t plan to appeal the decision, which will bar the company from the Medicaid program for five years.

Small Smiles, which has been under federal scrutiny for years for performing unnecessary dental treatments on children, could be barred from the Medicaid program beginning next month.

The inspector general of the Department of Health and Human Services notified the chain last week that after years of monitoring, the company remains out of compliance with the terms of a 2010 settlement of a whistleblower lawsuit brought by the Justice Department.

The decision affects one of the nation’s largest dental chains, with clinics in 20 states. It could force thousands of children in low-income families to find a new dentist willing to treat them.

Small Smiles will be excluded from the Medicaid program in early April unless it appeals the decision. The owner of the company could not be reached for comment Monday.

The settlement of the Justice Department lawsuit required Small Smiles to refund $24 million to the Medicaid program for performing unnecessary treatments on children and to submit to independent monitoring to assure the problems are fixed. Last week’s letter cited a series of ongoing quality and reporting problems at Small Smiles clinics.

Small Smiles was first accused of paying dentists bonuses to hit production targets in a 2007 television news report by reporter Roberta Baskin. The Center for Public Integrity and FRONTLINE exposed similar practices at another chain, Kool Smiles, in a 2012 report titled Dollars and Dentists.

Small Smiles’s owner eventually sold its assets in May 2012 to a venture capital firm in Nashville called CSHM LLC.

The new owners say that problems found in 20 reports done by independent monitors mostly occurred under the previous owners. The five reports done while CSHM was in control were all done within the first five months of the sale, CSHM said in a statement.

“The new team immediately initiated an aggressive turnaround effort premised on patient care, clinic excellence and regulatory compliance,” the company said.

Sen. Charles Grassley, R-Iowa, praised the inspector general’s decision. Last year, Grassley encouraged the inspector general to cut Small Smiles out of the Medicaid program after a yearlong investigation by his staff. A report from that investigation said that some dental chains are run by corporate investors who place “profits above patient care.”

“Our oversight found that when states can’t hold owners accountable, then clinics are more likely to fail to meet standards that protect the children who should be helped,” Grassley said. “The actions of some dental practices strained the Medicaid program and put low-income children in traumatic, highly questionable situations.”

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