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Nevada auditor: Scrap charitable contributions as part of complaint settlements

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The Nevada State Board of Dental Examiners and the state legislature, in response to a state audit of the board, locked horns during 2016 over whether the board may permit licensees to make charitable contributions to outside organizations as part of a "corrective action" agreement with a licensee.

At least two licensees paid charitable organizations $50,000 each as part of provisions imposed in board-approved stipulation agreements. Such agreements have generated controversy because they benefit the licensees in terms of public image as well as tax breaks.

The audit, conducted from February to March 2016, was initiated at the state legislature’s request, because legislators were receiving complaints about the board’s overcharging licensees to settle contested cases. The auditor noted several weaknesses in board practices, including failure to track investigation costs by licensee, and recommended scrapping the use of charitable contributions.

In fact, the terminology itself is at issue. What the board calls a “Corrective Action Non-Disciplinary Stipulation Agreement,” the state legislative counsel maintains, may be an informal disposition of a contested case, but it is inherently disciplinary. But both the legislative counsel and the state auditor agree that the board is not authorized to include a contribution to a charitable organization as part of such an agreement settling a complaint.

In an April 22 letter to the state auditor the legislative counsel said that the sanctions authorized by statute include a requirement that a licensee be supervised or reimburse a patient for the cost of treatment, and they include a requirement that a licensee perform community service without compensation. This does not extend to charitable contribution.

The board, noting that the licensees had agreed to the amounts that were charged, refused to agree that any overcharges had occurred. But the auditor stressed that the any amount the board recovers in excess of an actual incurred cost is an overcharge, regardless of licensee consent. The recovered costs can only include costs from investigative proceedings, not estimated amounts for future monitoring of licensees.

The auditor did not agree with the board that the costs it assessed are reasonable. According to the auditor, 46% of licensees were overcharged and 54% were undercharged. “Any amount recovered in excess of an actual cost attributable to a specific licensee’s investigation is not a reasonable cost Furthermore, the board determines assessments through a negotiation process that is not documented. As a result, the board has no documented basis for why one licensee was overcharged and another was undercharged. The negotiated process results in significant variation among licensees.