Citing a continual drain on its operating capital, the state Department of Corporations has revoked the license of Professional Dental Services Inc., a Newport Beach dental-care service plan with about 25,000 members statewide.
Despite the revocation, which becomes effective July 24, the plan's members are not expected to suffer an interruption in service. A spokesman for Professional Dental Services said the company has made arrangements and won approval from the Department of Corporations to transfer its members to the Greater California Dental Plan in Canoga Park.
A department attorney said the license revocation was one in a series of recent steps the state has taken to police the growing number of pre-paid health-care referral plans.
Members of these plans, typically employees of small businesses or workers without regular dental insurance, receive discounted dental services directly from a variety of approved providers. The plan, which provides no dental services, collects an enrollment fee for getting the discounted services and monitoring their quality. Customers of Professional Dental pay about $150 annually for a family of four.
Richard Camilli, assistant corporations commissioner for health-care plans, said William McNeill, founder and owner of Professional Dental Services, repeatedly withdrew funds from his business, leaving it with less than the state-required operating minimum.
Alan Weinger, a lawyer for the department, said Professional Dental was required to have a tangible net equity--the value of its assets after the deduction of liabilities--of at least $40,000 to assure smooth operation of the plan.
"We thought it was dangerous for them to operate because there was no guarantee they could continue to operate," Weinger said of the company's latest dip below the $40,000 level.
Barbara Braunstein, another department attorney, said McNeill repeatedly withdrew money from the plan to "pursue other interests than the administering of the plan."
McNeill declined to comment on the allegations, other than to say members would be protected because of the pending transfer of the clients to Greater California Dental Plan.
McNeill's attorney said McNeill, who had operated Professional Dental Services since 1978, would begin working for Greater California Dental Plan as a salesman. He said McNeill would be paid a commission for the transferred cases.
Orange County Superior Court Judge Tully Seymour last month issued a permanent injunction preventing McNeill from operating a health-care service plan after July 24 or from accepting new enrollees.