The suit comes 2 days after California Governor Gavin Newsom signed a bill aimed at consumer protections for patients who receive dental treatment via teledentistry, including patients who receive treatment via a direct-to-consumer orthodontic company, like SmileDirectClub.
According to Bloomberg, the company alleges that the board had an investigator conduct a “series of coordinated raids” on the company’s retail locations, known as SmileShops.
The suit—filed on behalf of the company and Jeffrey Sulitzer, DMD, chief clinical officer at SmileDirectClub, and his private practice—seeks damages as a result of a “campaign of harassment, intimidation, and anti-competitive conduct.” It alleges that the board’s enforcement unit conducted simultaneous, statewide raids on the company’s SmileShop locations in Oakland, San Francisco, and Hollywood, Calif, in May 2018. According to the lawsuit, employees who witnessed the raids were “frightened and intimidated,” and were subjected to “aggressive behavior, including unreasonable demands for information and documents.” Moreover, the company alleges that customers present during the raids also felt intimidated and some left the store as a result.
The company further claims in the lawsuit that Joseph Tippins, DDS, a investigator with the board’s enforcement unit, sent letters to SmileDirectClub-affiliated dentists in September 2019 demanding patient dental records under the threat of fines, after the board closed its prior investigation in July. Tippins is named as a defendant in the lawsuit.
According to Market Insider, shares of SmileDirectClub tanked on Thursday, falling 9%, after a short-seller tweeted that the company’s SmileShop retail stores had been raided by the Dental Board of California. As of Thursday, the company’s shares were down about 60% since the September IPO.