Dentists and state regulators at odds over compliance fund spending

Indiana dentists and hygienists have for a decade paid a $20 compliance fee every other year as part of license renewals. But that changes this year, after a long-simmering dispute between dentists and state regulators boiled over, sparking a state investigation and legislation.

Lawmakers created a dental compliance fund in 2011 to pay for investigations of dental industry employees suspected of breaking profession-specific laws, plus enforcement of those laws. And they established the fees to fill the fund in 2013.

But when dentists discovered the Indiana Professional Licensing Agency (PLA) had spent hundreds of thousands of dollars from the fund on administrative expenses, one anonymous person accused the agency of misuse.

Indiana’s Office of the Inspector General — in a then-confidential December 2022 report released publicly last month — found no evidence of a crime or ethics violation, but suggested the parties get lawmakers to weigh in.

Mo’ money, mo’ problems

Lawmakers intended to fund a partnership between PLA and the Office of the Attorney General — the state’s law firm — for services, according to lawmakers, a key dentistry group and the report. Yet, they wrote in code that the agency could take the costs of administering the fund out of the account itself.

The dental compliance fund has raked in $1.75 million since 2013, according to the report, and PLA has spent $546,000 on its own employees’ salaries, benefits and other administrative expenses. Indiana Dental Association Executive Director Doug Bush said expense records also included computer programming and postage.

But PLA’s budget is comprised of licensing fees — and state guidance directs agencies to spend money out of “dedicated” funds before turning to the state’s General Fund.

So the agency calculated how much work it took to run its dental operations, and took that from the fund.

Bush described persistent difficulties in finding who at the agency was responsible for the fund, and how much was left. But one years-ago request from the agency, he said, prompted a closer look at spending.

“We were asked if they could use those monies to install a new public address system in their meeting room. And we know we’re not going to agree to that that,” Bush said. “I think they asked for our permission and when they didn’t get it, going forward, they began to use it without permission.”

The Professional Licensing Agency did not respond to numerous requests for comment.

‘Raiding’ funds

Association board of trustee documents reveal the group, which represents Hoosier dentists, had been skeptical of the fund from before its inception, despite backing the legislation.

“The [Indiana Dental Association] Board expressed support for the concept, and a desire to see the [Indiana State Board of Dentistry] begin using the funds as soon as possible, to avoid the possibility the fund would be raided for use for other State funding needs,” notes from a January 2011 meeting read.

“I thought somebody was prophetic, because that seems to be exactly what happened,” Bush said.

He said the association took particular offense to the spending because the State Board of Dentistry asked for the group’s support repeatedly — including to overcome a Gov. Mike Pence-era distaste for new taxes.

That’s because an initial attempt to pass the $20 fee failed.

“Apparently, since this fee was to be assessed to a particular group of people, the legislature deemed it a tax,” notes from a June 2012 meeting read. “Since that group of people referred to are the dentists of Indiana, which the IDA represents, the task force believed that, if we made a formal show of support, it could help the dental board to get this passed.”

But if the money wasn’t going to compliance efforts, dentists wanted out.

“We said, ‘We voluntarily do this.’ Now, we would like to voluntarily withdraw our agreement on that,” Rep. Dennis Zent, a retired dental specialist himself, said at a January committee meeting for the legislation he authored. The Republican from Angola declined an interview request.

Legislation goes into effect

The Inspector General’s report reveals that the association initially wanted to eliminate the fund altogether.

Instead, the group successfully lobbied to ditch the $20 fee, cutting off the fund’s largest and most consistent funding source. The bi-annual fee brought in about $180,000 in 2022, according to a fiscal analysis.

In comparison, penalties added “possibly” $8,100 that year.

In addition to deleting the fee, House Enrolled Act 1113 narrows the fund’s accepted uses: it now applies only to laws regulating dental professionals and can’t be used for administrative expenses.

“The Board of Dentistry came back to us and basically said, ‘Give us another shot at this,’” Bush said. “… They feel that the fund can still be helpful if used for its original intent. … That’s when we decided to not dissolve the fund.”

Dentistry Board Chair Dr. Ted Reese didn’t return multiple requests for comment.

Talks between PLA, the Dentistry Board and the association paused during the legislative session, but Dental Association Government Affairs Director Shane Springer said the parties plan to meet in the coming weeks to discuss a new memorandum of understanding with the Attorney General’s Office.

That could include compliance officers covering the northern, central and southern parts of the state, Springer said. He didn’t know of any annual cost estimates.

In March 2023, the fund contained nearly $700,000. Springer said he believed the fund could be “self-sustaining,” because of interest, investments, and the civil penalties and fines.

But Bush was clear that if the fund was used exclusively on compliance-related efforts, the association could be willing to support reinstatement of the fee in the future.

“It really wasn’t about the $20. I don’t think that $20, every two years, is going to bankrupt a dentist or hygienist. It had to do with the principles,” Bush said.

The lesson, he added: “Don’t leave money laying around in state coffers, because they’ll find something to spend it on.”

The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.