On June 11, 2021, the Appellate Division of the Superior Court of New Jersey affirmed a lower court decision favoring SmileDirectClub (SDC) in a case involving the New Jersey corporate practice of dentistry (CPOD) statute.
The New Jersey Dental Association (NJDA), along with New Jersey dentist Dr. Scott D. Galkin, alleged that SDC (1) engaged in the practice of dentistry through its teledentistry and clear aligner enterprise and (2) held itself out to the public as practicing dentistry through its marketing in violation of the CPOD statute. Their claim alleged that such practices constitute unfair competition that threatens to harm the traditional brick-and-mortar settings dentists rely on for business.
SDC is a dental support organization that provides nonclinical support services to licensed dentists. It markets clear aligners for misaligned teeth directly to patients on behalf of contracted dentists through various media, including its website. At issue in this case was SDC’s arrangement with Smile of New Jersey, a dental practice, to provide administrative services, including providing Smile of New Jersey with access to SDC’s teledentistry platform and sourcing clear aligners for Smile of New Jersey from an FDA-certified manufacturer.
The arrangement functioned as follows: First, patients either ordered an impression kit from SDC’s website or booked a 3D scan in an SDC “SmileShop” to generate scans of the mouth. These images were then sent to a laboratory operated by SDC doctors and support technicians who evaluated the quality of the images and developed a draft treatment plan for each patient. SDC then sent these draft treatment plans and scans to assigned licensed dentists in the individual patient’s state of residence to determine if the patient was a good candidate for treatment, and if so, the dentist developed a formal treatment plan. If the dentist and patient opted to proceed, the dentist prescribed aligners, which SDC sourced from a contracted manufacturer. The dentist and patient met periodically via their own arrangements to evaluate the patient’s progress and clinical needs. Under the arrangement, the patient paid SDC for the aligners, and Smile of New Jersey paid SDC for the nonclinical services it provided; SDC did not pay dentists or require them to treat patients who did not make good candidates for treatment.
NJDA and Galkin sued for injunctive relief, arguing that SDC “is engaged in the unlawful practice of dentistry” under New Jersey’s CPOD statute. The relevant portions of the statute include N.J.S.A. § 45:6-12, which prohibits corporations and any unlicensed person from practicing dentistry, and § 45:6-19, which defines “practicing dentistry.” Specifically, § 45:6-19 allows the “making of artificial … appliances for the correction of … malposition … to … teeth … provided that such … appliances … shall not be advertised [or] sold … directly or indirectly, to the public by the dental technician or dental laboratory.”
The lower court, with the Appellate Division affirming, was satisfied that SDC did not practice dentistry within the meaning of the statutes, nor did it control Smile of New Jersey or its dentists. NJDA and Galkin never alleged that Smile of New Jersey was a sham corporation or that its purpose was to allow SDC to evade insurance requirements or regulations. In addition, the plaintiffs presented no evidence that SDC controlled Smile of New Jersey or its dentists in making treatment decisions. In fact, the contracts between SDC and Smile of New Jersey contained explicit language that prohibited SDC from obtaining control over Smile of New Jersey, including a succession agreement that required Smile of New Jersey to be owned by a New Jersey-licensed dentist for the duration of the arrangement.
The Superior Court likewise rejected the plaintiffs’ arguments that SDC’s website advertisements violated § 45:6-19. First, the Superior Court found SDC only marketed its clear aligners to the public on behalf of contracted dentists; it did not treat patients. Therefore, since dentists, and not SDC, used their clinical judgment to prescribe aligners, SDC could not be a “dental technician or dental laboratory.” Furthermore, all of SDC’s advertising informed potential patients that licensed, contracted dentists were responsible for all clinical judgment and treatment decisions. Even where SDC’s marketing implied that it was “in the business of straightening teeth,” such language was deemed mere “puffery” and could not reasonably be taken literally.
The Superior Court determined that, under the CPOD statute, SDC was not engaged in the practice of dentistry and its marketing materials did not imply that it was. Therefore, the Superior Court determined that SDC was not in violation of CPOD restrictions in New Jersey.
The author wants to acknowledge the assistance in preparing this article of Bryan Frederick, a summer associate as part of McGuireWoods’ 2021 program for law students. He is not licensed to practice law.
