SCARINCI & HOLL One River Centre 331 Newman Springs Road Building 3, Suite 310 Red Bank, NJ 07701-5692 P: 732-780-5590 F; 732-695-8108 Joel N. Kreizman, Esq Attorney LD. No. 269491971 Attorneys for Plaintifis BECK, LLC UST OF NJ 23. COUNTY AFFORDABLE DENTURES ~ SUPERIOR COURT OF NEW JERSEY AUDUBON, MICHELLE AITKEN, DDS, | CHANCERY DIVISION: P.A.; AFFORDABLE DENTURES ~ CUMBERLAND COUNTY VINELAND, MICHELLE AITKEN, DDS, | DOCKETNO. (¥ -(57 P.A. and MICHELLE AITKEN, DDS; t oI Civil A ion Plaintiffs, VERIFIED COMPLAINT vs AFFORDABLE CARE, LLC, a North Carolina limited liability company, AFFORDABLE DENTURES DENTAL | LABORATORIES, INC., a North Carolina} Corporation, VINELAND : CONSTRUCTION CO., a New Jersey Corporation, 800 BHP LLC, a New Jersey | limited liability company, John Doe 1-100; | and Jane Doe 1-100 Defendants, Plaintiffs Affordable Dentures ~ Audubon, Michelle Aitken, DDS, P.A. (“Audubon Dental Practice”) and Affordable Dentures ~ Vineland, Michelle Aitken, DDS, P.A. (“Vineland Dental Practice” and, together with the Audubon Dental Practice, the “Dental Practices”), and Michelle Aitken, DDS (jointly “Plaintiffs” or “Dr. Aitken”), by way of Complaint against Defendants, say: 4820-4753-1897, v.2 IINTRODUCTION 1. Plaintiffs seck to enjoin the Defendants Affordable Care, LLC (“AC”) and ‘Affordable Dentures Dental Laboratories, Inc. “ADDL” and, together with AC, “Defendants") from enforeing agreements with the Plaintiffs, which violate the statutes and regulations governing the practice of dentistry in the state of New Jersey and from breaching parts of those agreements which provide some limited protections to the Plaintiffs. Plaintiffs further seek to have this Court enjoin the Defendants’ violations of the New Jersey Franchise Practices Act and violations of the common law and publie policy of this state. 2. The Plaintiffs and Defendants are party to multiple related, interlocking, coterminous agreements through which AC, directly or indirectly through affiliates, provides management services, dental equipment, leases dental office professional space, and provides dental laboratory services to the Dental Practices. Dr. Aitken has made serious and good faith efforts to resolve regulatory and compliance concerns before seeking judicial intervention. Those efforts have been to no avail. Dr. Aitken sought to have various interlocked contractual agreements between the parties separated i to stand-alone agreements consistent with Allstate Insurance Company v Northfield Medical Center, P.C., 228 N.J. 596 (May 2017) where the New Jersey Supreme Court noted “Health care services are highly regulated.” The Court quoting with approval New Jersey Medical Board’s former Executive Director, Kevin B. Earle (“Earle I Advisory Letter”) said: [Although] administrative contracts between a management company and a professional practice [is permitted], the Board nonetheless expects that a licensee shall retain the right to terminate any such contract for legally permissible reasons including for cause... T]he Board would find it highly imprudent for a physician (through the Professional Association) to enter into a contract with the same management company which also leases space and 4820-4783-1857, v 2 2equipment and provides administrative services” because the physician would be subject to coercive influences including foreseeable total disruption of an ongoing professional practice if the physician later sought to cease using the management company to provide any of those individual services”....The Earle 1 advisory letter underscored the need to neuter any coercive influences by cautioning that, ata minimum “each such contract should be parate and without interlocking features” 228 N.J. at 417 (emphasis added.) 3. The coterminous, interlocking structure of these agreements coupled with Defendants’ conduct, reveal that the Defendants are operating and controlling the Dental Practices and practicing dentistry without a license in the state of New Jersey. The Defendants’ improper control over the Plaintiffs and their disregard for regulatory boundaries and Plaintiffs" objections threatens the Plaintiffs as well as the continuity of eare to thousands of patients in the state of New Jersey. Defendants are thus causing or threatening to cause irreparable harm to dental patients in New Jersey, irreparable harm to the Plaintiffs, irreparable harm to the goodwill Dr. Aitken has and the created, and irreparable harm to the going concern value of the Audubon Dental Practi Vineland Dental Practice, 4. AC represents itself as being “in the business of managing certain aspects of dental practices” and “in the business of providing administrative and business services to certain professional corporations and associations.” In actuality, AC controls the Dental Practices, including controlling the commercial dental office leases and finances of the Dental Practices, treating the practicing dentists as employees. AC has exercised that control without regard for (i) New Jersey statutes and regulations, (ii) its contracts with Plaintiffs, or (iii) its direct and indirect impact on patient care. 4820.4759-1857, v.2THE PARTIES 5. Dr. Aitken is a resident of Villanova, Pennsylvania. She graduated from The University of Maryland School of Dentistry in 2002. She completed a General Practice Dental Resideney at the VA Hospital in New Orleans, Louisiana in 2003. Dr. Aitken has held a dental license in New Jersey since 2004. She practices demtistry at the Audubon Dental Practice located in Audubon, Camden County and at the Vineland Dental Practice located in the City of Vineland, Cumberland County, 6. Affordable Dentures ~ Audubon, Michelle Aitken, DDS, P.A. is a professional association wholly owned by Michelle Aitken, DDS. The Audubon Dental Practice is located at 800 Black Horse e, Mount Ephraim, New Jersey 08059. if Affordable Dentures — Vineland, Michelle Aitken, DDS, P.A. is a professional association wholly owned by Michelle Aitken, DDS. The Vineland Dental Practice is located at 60 West Landis Avenue, Vineland, New Jersey 08360, 8. Affordable Care is a limited liability company of the state of North Carolina, According to the Affordable Dentures website, AC is in the business of providing administrative and business services to dental practices. AC was owned by two dentists (Dr. Donald Henson and Dr. George Edwards) when Dr. Aitken signed her original Audubon Dental Practice agreements. AC is not a dental professional corporation authorized or licensed to practice dentistry in the state of New Jersey. In 2015, Berkshire Partners LLC acquired a majority interest in AC, Berkshire Partners LL( is not a dental professional corporation authorized or licensed to practice dentistry in the state of New Jersey. 4820-4759-1857,¥ 2 49. Affordable Dentures Dental Laboratories, Inc. is a corporation of the state of North Carolina and is affiliated with AC. ADDL is not a dental professional corporation authorized or licensed to practice dentistry in the state of New Jersey. 10. 800 BHP LLC is a New Jersey Limited Liability Company and the owner of 800 Black Horse Pike, Mount Ephraim, New Jersey 08059. 800 BHP LLC is the landlord to AC. AC subleases the professional dental office space to the Audubon Dental Practice. 11. Vineland Construction Co. is a New Jersey Corporation and the owner of 60 W. Landis Avenue, Vineland, New Jersey 08360. Vineland Construction Co. is the landlord 0 AC. ‘AC subleases the professional dental office space to the Vineland Dental Practice. 12, Both 800 BHP LLC and Vineland Construction Co. are made defendants solely because they ate landlords for leases Plaintiffs seek to reform. No allegations of wrongdoing are made against them. MATERIAL FACTS RELEVANT TO ALL COUNTS 13. In 2003, AC recruited Dr. Aitken to purchase the Audubon Dental Practice. In order to acquire the Audubon Dental Practice, AC required the use of AC as the dental practice business manager. AC negotiated, financed, and brokered the dental practice sale to Dr. Aitken. Dr. Aitken ‘was not permitted to meet or confer with the selling dentist (that office originally opened in 1998). Among the contractual promises made to Dr. Aitken by AC was the provision that AC (i) “would ‘manage the practice with the PC’s best interests in mind and in accordance with all applicable laws and regulations” and (ii) would modify the agreements should the structure of the agreements be in violation of the laws or regulations of state or federal laws. 4820-4769-1887.¥.2 514, To complete the acquisition of the Audubon Dental Practice, Dr. Aitken formed Affordable Dentures - Audubon, Michelle Sperry, DDS, P.A. in 2004. The name of the legal entity was subsequently amended to reflect Dr. Aitken’s married name, 15, At the time of Dr. Aitken’s purchase of the Audubon Dental Practice, AC was leasing the dental professional office space directly from a landlord. The dental office was fully equipped with dental equipment. Included in the professional dental office space was a fully functional, on-site dental laboratory, staffed with laboratory technicians who were employees of ADDL 16. On February 1, 2004, Dr. Aitken signed four interlocking agreements, all drafted by AC (collectively the “Audubon Agreements”). Each of the agreements is coterminous with the others, a. Agreement to Provide Management Services To A Dental Practice (the “Audubon Management Agreement”, see Exhibit A); b. Managing Dentist Employment Agreement (the “Employment Agreement”, see Exhibit BY; c. Faeility and Equipment Lease (the “Audubon Dental Office Lease”, see Exhibit Cy; and d. Agreement to Provide Dental Laboratory Services between ADDL and Audubon P.A. (the ADDL Agreement, see Exhibit D) 17. The initial term of the Audubon Management Agreement was twenty years, unless earlier terminated. The Audubon Management Agreement may be terminated by AC for cause oF upon a fee dispute. 4820-4753-1857, v.2 618. The Employment Agreement requires each shareholder of the Audubon Dental Practice to enter into an employment agreement substantially similar to the sample provided by ‘AC. Dr. Aitken is prohibited from entering into any amendments to the Employment Agreement that would directly breach, or cause a breach, of the Audubon Management Agreement, Dr. Aitken is required to provide AC with a copy of all employment agreements and modifications thereto. Le Dr. Aitken’s Employment Agreement with the Audubon Dental Practice is effectively an Employment Agreement with herself. However, she is not permitted to make modifications to the Employment Agreement or risk a breach of the Audubon Management Agreement. The Employment Agreement, drafted by AC, listed Dr. Aitken’s base annual salary, the number of vacation, sick and personal days she was entitled to, and a limited reimbursement for continuing education. Days not worked by Dr. Aitken in excess of the allotted number of vacation, sick and personal days were to be uncompensated and deducted from her salary in full- day inerements based on a 260-day work year. A breach of Dr. Aitken’s Employment Agreement is cause for termination of the Audubon Management Agreement and the Audubon Dental Office Lease with AC. 20. The Employment Agreement has a post-employment restrictive covenant for a period of two (2) years which covers “economy dentures services or related services” within a 50- mile radius of any dental practice managed by AC. Defendants are third party beneficiaries to Dr. Aitken’s Employment Agreement permitting AC the right to enforce non-compete and non- solicitation provisions within the Employment Agreement, AC has such rights even though it is a manager and not a practicing dent who could be harmed by violations of those provisions. 21. The Audubon Dental Office Lease . in reality, a sublease whereby AC is the tenant/sub-lessor and the Audubon Dental Practice is the sub-tenant/sub-lessee. AC has the 14820.4753-1857, v2 7primary lease with the property’s landlord, 800 BHP LLC, and in tur subleases the dental office to the Audubon Dental Practice. Dr. Aitken pays for the costs and expenses associated with the primary lease, plus a monthly Real Estate Services Fee to AC. The sublease is subject to the continuation of the Audubon Management Agreement thereby making the leased space effectively controlled by AC, as the professional dental office space reverts to AC upon termination of the Audubon Management Agreement. 22, Under the Audubon Agreements, the Audubon Dental Practice pays numerous AC and ADDL fees on a monthly basis. Fees are for both specified and unspecified functions/services. These fees are comprised of (i) the Management Services Fee to compensate AC for the value of all services provided; (ii) the Central Office Services Fee to partially compensate AC for financial/management budgets and reports, payroll related services, accounts payable services, human resources services, front desk auxiliary support, and patient services program; and (iii) the IT Support Fee. The Audubon Dental Practice also reimburses AC for certain out of pocket expenses incurred by AC or ADDL on the practice’s behalf. 23. AC has inereased these fees over time. AC notifies Dr. Aitken by general mail of ‘Management Services Fee increases; other fees are increased without any communication except as shown on the financial statements provided by AC. If the new Management Services Fee is rejected by the Audubon Dental Practice (a “Fee Dispute”), and the parties are unable to otherwise agree on a fee going forward, either party is permitted to terminate the Audubon Management ‘Agreement. AC sets any of the monthly fees charged at its sole discretion, and if the Audubon Dental Practice disagrees with the set fee, AC can terminate the Audubon Dental Office Lease. To 's Fee is set, which is in date, AC has not provided any basis for how the Management Servi addition to the Central Office Services Fee charged to the Audubon Dental Practice for providing 4820-4759-1867, v.2 8similar management-related services. In July 2016, Dr. Aitken wrote AC Chief Executive Officer and Director, Doug Brown and AC Chief Financial Officer and Director, Paul Steelman an email {questioning the Management Services Fee. Mr. Brown and Mr, Steelman did not answer her email In 2017, again, Dr. Aitken inquired about how AC was calculating the Management Services Fee. On February 13, 2017, AC Vice President and Chief Legal Counsel, David Slezak wrote: Since there is no FMV requirement under the NJ Dental Practice Act, how we determine our fees, or even the amount of those fees, are irelevant. See Exhibit P. 24. AC has not provided a rationale for how the Audubon Dental Practice Management Services Fee is calculated and this fee continues to increase. If Dr. Aitken disputes this fee, AC can terminate the Audubon Management Agreement, Termination of the Audubon Management Agreement terminates the Audubon Dental Office Leas , leaving Dr, Aitken and her associate dentists without a location in which to treat the patients of the Audubon Dental Practice. Patients who would be affected by this total disruption of the business include: a, Patients who expect a lifelong relationship with their dentist; b, Patients with warranties on dental procedures performed or prostheses placed (some warranties are up to 7 years); c. Patients who have dental procedures in process; 4. Patients who have yet to finish their treatment plan; €. Patients who wish to have follow-up appointments performed by the dentist 1 procedures; and 4820.4759-1087,¥.2 9f Patients wearing temporary prostheses who have prepaid for a final prosthesis with delivery times around twelve (12) to eighteen (18) months, or more in some cases, afier the placement of the temporary prostheses. 25, Termination of the Audubon Management Agreement, for a reason such as a Fee Dispute, triggers: a, Termination of the lease between AC and the Audubon Dental Pra b. Termination of the ADDL Agreement; and c. Repurchase of the Audubon Dental Practice’s dental equipment and leasehold improvements by AC. Essentially, thus, termination of one agreement terminates them all, and Dr. Aitken loses everything she has worked to build over the last 13 years in the Audubon Dental Practice including substantial goodwill. 26. In 2011, Dr. Aitken became aware that AC was recruiting a New Jersey licensed dentist to both own a Vineland “Affordable Dentures” Dental Practice and use AC's management services via a posting in the “jobs” section of Craigslist.com, AC was aware that a large portion of Dr. Aitken’s patients came from the Vineland area, Opening a Vineland dental office, accordingly, would deleteriously effect Dr. Aitken’s Audubon Dental Practice. Nevertheless, Dr. Aitken’s business manager and, thus, fiduciary, proceeded regardless. 27. — To protect her interests, Dr, Aitken purchased the Vineland Dental Practice. 28. On September 27, 2012, Dr. cen signed three interlocking, coter ous agreements, regarding the Vineland Dental Pra 1 (collectively the “Vineland Agreements”). AC drafied the Vineland Agreements, Each agreement is coterminous with the others. 4820-4753-1857, 2 10a, Services Contract (the “Vineland Services Contract”, and together with the Audubon Management Agreement, the “Practice Management Agreements”), see Exhibit E); b. Facility Lease (the “Vineland Dental Office Lease”, and together with the Audubon Dental Office Lease, the “Pra tice Leases”) see Exhibit F); and c. Business Associate Agreement (see Exhibit G). 29, The initial term of the Vineland Services Contract was twenty years, unless earlier terminated. As with the Audubon Management Agreement, the Vineland Services Contract may be terminated for cause or upon a fee dispute. 30. Each of the Practice Management Agreements contains an obligation of the Parties to modify the contracts for prospective events. The Practice Management Agreements state: In the event any state or federal laws or regulations, now existing or enacted or promulgated after the effective date of this Agreement, are interpreted by judicial decision, a regulatory agency, or legal counsel for both parties in such a manner as to indicate that the structure of this Agreement may be in violation of such laws or regulations, the PC and ‘ACI shall amend this Agreement as necessary. 31. The Vineland Dental Office Lease is, in reality, a sublease whereby AC is the tenan/sub-lessor and the Vineland Dental Practice is the sub-tenant/sub-lessee. AC has the primary lease with Vineland Construction Co. and in tum subleases the dental office to the Vineland Dental Practice. Dr. Aitken pays for all costs and expenses associated with the primary lease, plus a monthly Real Estate Services Fee to AC. The sublease is subject to continuation of the Vineland Services Contract thereby making the leased space effectively controlled by AC, as the professional dental office space reverts to AC upon termination of the Vineland Services Agreement. 4820.4753-1857, 2 "32. Under the Vineland Agreements, the Vineland Dental Practice pays variety of AC and ADDL fees on a monthly basis. Fees are for both specified and unspecified functions/serviees. ‘These fees are comprised of (i) the Management Services Fee to compensate AC for the value of all services provided; (ii) the Central Office Services Fee to partially compensate AC for financial/management budgets and reports, payroll related services, accounts payable services, human resources services, front desk auxiliary support, and patient services program; and (ii) the IT Support Fee. The Vineland Dental Practice also reimburses AC for certain out of pocket expenses ineurred by AC or ADDL on behalf of the Vineland Dental Practice 33. AC has inereased these fees over time. AC notifies Dr. Aitken by general mail of Management Services Fee increases. Other fees are increased without any indication except increases on the financial statements as provided by AC. If the new Management Services Fee is rejected by the Vineland Dental Practice (a “Fee Dispute”), and the parties are unable to otherwise agree on a fee going forward, either party is permitted to terminate the Vineland Services Contract, AC can set any of the monthly fees at its sole discretion, and if the Vineland Dental Practice disagrees with the set fee, AC can terminate the Vineland Dental Office Lease. As with the Audubon Dental Practice, to date, AC has not provided any basis for how the Management Services Fee is set which is in addition to the Central Office Services Fee charged to the Vineland Dental Practice for providing similar management-related services 34, AC has not provided a rationale for how the Vineland Dental Practice Management Serviees Fee is calculated and this fee continues to increase. If Dr. Aitken disputes this fee, AC can terminate the Vineland Services Contract. Termination of the Vineland Services Contract terminates the sublease, leaving Dr. Aitken and her associate dentists without a location in which 4820-4769-1887, 2 12to treat the patients of the Vineland Dental Practice. Patients who would be affected by this total disruption of business include: a. Patients who expect a lifelong relationship with their dentist; b. Patients with warranties on dental procedures performed or prostheses placed (warranties up to 7 years); c. Patients who have dental procedures in process; d. Patients who have yet to finish their treatment plan; ¢. Patients who wish to have follow-up appointments performed by the dentist who performed prior procedures; and {Patients wearing temporary prostheses who have prepaid for final prosthesis with delivery times up to twelve (12) to eighteen (18) months, or more in some cases, alter the placement of the temporary prostheses. 35. ‘The Management Services Fees that AC charges to the Audubon Dental Practice differs significantly from the Management Services Fees that AC charges to the Vineland Dental Practice for providing these same management related services. Additionally, AC changes these fees periodically. The changing nature of the fees, the faet that the fees, according to AC, are not related to fair market value, and the vast discrepancies between the amounts charged by AC for purportedly providing the same services to the two Dental Practices demonstrate that the Management Services Fees are not related to the services provided. Rather, they appear to be set by AC to correlate directly with anticipated practice revenue and profits, It is evident that the fees charged by Defendants are meant to transfer practice profits from Plaintiffs to AC. 4820-4753-1857,v.2 1336. The Vineland Services Contract allows AC to terminate the Vineland Services Contract upon the occurrence of a Fee Dispute. Termination of the Vineland Services Contract triggers: a, Termination of the lease between AC and the Vineland Dental Practice; and b. Repurchase of the Vineland Dental Practice’s dental equipment and leasehold improvements by AC. FE ally, thus, terminati n of one agreement terminates them all, and Dr. Aitken loses everything she has worked to build over the last 5 years in the Vineland Dental Practice 37. On September 1, 2014, Dr. Aitken and AC signed several agreements drafted by AC. They are: a. First Amendment to Management Services Agreement entered into by AC, Dr. Aitken and the Audubon Dental Practice (see Exhibit 11), First Amendment To Amendment To Exhil C of Management Agreement (see Exhibit I); c. Equipment Purchase and Sale Agreement entered into by AC and the Audubon Dental Practice (see Exhibit J); d. Agreement Regarding Venue entered into by the AC, ADDL, Dr. Aitken, and the Audubon Dental Practice (the “Audubon Venue Agreement”) (see Exhibit i); e, First Amendment to Services Contract entered into by AC, Dr. Aitken and the Vineland Dental Practice (see Exhibit L); 7 Amendment to Exhibit C of Services Contract (see Exhibit M): g. Equipment Purchase and Sale Agreement entered into by AC and the Vineland Dental Practice. (see Exhibit N); and 4820-4759-1857, v.2 4h. Agreement Regarding Venue entered into by the AC, ADDL, Dr. Aitken, and the Vineland Dental Practice (see Exhibit O). 38, The First Amendment to Management Services Agreement extended the term of the Audubon Management Agreement from 2024 to 2034, Dr, Aitken and AC agreed that: PC shall have control of the Practice, and the patties agree that PC shall be the sole manager, proprietor, operator, and conductor of the Practice in accordance with the laws and regulations of the State of New Jersey. 39. Both the Audubon Venue Agreement and the Vineland Venue Agreement (the “Venue Agreements”) set forth the venue for any disputes under the current laws of the State of New Jersey. Section 1 (a) states: notwithstanding anything to the contrary in the Aitken Agreements, it is hereby agreed by the parties that the location or venue of any arbitration or litigation between the parties shall be in the State of New Jersey. ‘The Venue Agreements also state the following in Section 1(b): Should New Jersey law change and permit ACI or ADDL to own dental equipment or real estate, then the parties hereby agree that Section 1(a) of this Agreement shall become null and void, and the location or venue of any arbitration or litigation between the parties regarding any of the Aitken ‘Agreements shall be as is set forth in the respective Aitken Agreements without reference to this Agreement. 40, Both the Amendment to Exhibit C of the Audubon Management Agreement and the Amendment to Exhibit C of the Vineland Services Contract added a $200 monthly Real Estate Services Fee “to compensate [AC] for services related to the facility lease between ACI and PC”, 41. In the 2004 Audubon Dental Office Lease, the equipment and leasehold provements were owned by AC. Dr. Aitken paid AC for leasing the equipment and facility improvements over five years, plus an eight percent (8.0%) return on investment to AC. 4820-4753-4857,v.2 Is42, In the 2012 Vineland Facility Lease, the equipment and leaschold improvements were owned by AC. Dr. Aitken paid AC for leasing the equipment and facility improvements over five years, plus an eight percent (8.0%) return on investment to AC. 43. In 2014, the owners! of the dental equipment was purportedly changed through the Equipment Purchase and Sale Agreements for the Dental Practices. The purchase price of the Audubon Dental Practice equipment was a $15,847.23, The purchase was secured by a promissory note with an interest rate of 8%, ‘The purchase price was in addition to the moneys Dr. Aitken had previously paid to AC for the Audubon Dental Practice dental equipment and leasehold improvements. There was a bill of sale for the dental equipment included in the transaction. The purchase price for the Vineland Dental Practice equipment was $194,789.58, The purchase was secured by a promissory note payable over forty-two (42) months at an interest rate of eight percent (8.0%). The purchase price was in addition to the moneys Dr. Aitken had previously paid to AC for the Vineland Dental Practice dental equipment and leasehold improvements. There was a bill of sale for the dental equipment included in the transaction, 44, Despite the apparent attempt to make it appear that Dr. Aitken owned the dental equipment, each of the Equipment Purchase and Sale Agreements included a Repurchase Option (as defined therein) by AC upon the occurrence of a “Repurchase Event” (as defined therein). A Repurchase Event is defined as: (i) the expiration or other termination for any reason of the {Audubon Management Agreement] between the parties, dated as of February 1 2004, as the same may be amended, supplemented or replaced from time to time; ....or (iv) the filing of any petition for or any other documents causing or intended to cause a judicial, administrative, voluntary or involuntary dissolution of Purchaser, or causing or intended to cause a judicial, arbitral, or administrative review or challenge to the enforceability of this [Equipment Purchase 4820.4759-1887,v.2 16and Sale] Agreement or any other agreement between Seller and Purchaser. 45. The Equipment Purchase and Sale Agreement isa fraud. AC bas the ability to retake the equipment and leasehold improvements from the Audubon Dental Practice and Vineland Dental Practice, even if the equipment and Icaschold improvements have been paid in full, upon the oceurrence of a Repurchase Event. Furthermore, the Equipment Purchase and Sale Agreement allows AC to collaterally assign its rights and benefits under this agreement to any lender, for security purposes or as collateral, from which AC or its affiliate obtains financing. AC has not relinquished dominion and control over the dental equipment. The repurchase price for the dental equipment is the greater of one dollar ($1.00) or the dental equipment’s book value as determined by AC, less any principal or accrued interest outstanding. As set forth in the Equipment Purchase and Sale Agreement, “[t]he [book value] determination of Seller (AC) shall be final and conclusive.” 46, Since 2014 (as of September 30, 2017), Dr. Aitken has paid $184,505.81 for the dental equipment listed in the Equipment and Purchase Agreements, This does not include moneys she previously paid for the dental equipment plus the eight percent (82%) return on investment or moneys that she paid for leaschold improvements plus the eight percent (8%) return on investment. Despite those payments, the dental equipment could be repurchased by AC if: a. Dr. Aitken disputes the Management Services Fees causing termination of agreements; b. Dr. Aitken challenges the enforceability of any of the 14 agreements with AC; Dr. Aitken’s agreements with AC are terminated for another reason; 4820-4753-1857, v.2 7d. Dr. Aitken files a petition intended to cause a judicial, arbitral or istrative review of the Equipment Purchase and Sale Agreements; €. Dr. Aitken challenges the enforceability of the Eqi Sale Agreements, or any agreement between Dr. Aitken and Defendants; f The Audubon Management Agreement expires; or g. The Vineland Services Contract expires. 47. In 2015, David Slezak, Vice President and Chief Legal Counsel of AC, sent an email indicating AC wanted to assign the primary leases to the Audubon Dental Practice and the Vineland Dental Practices. [W]e would like to do what we can to protect you vis-a-vis ‘NJ's arcane regulatory requirements on real estate by taking the conservative approach of assigning the leases for your Audubon and Vineland practices to your respective professional associations, rather than having you sublease them from ACI. As part of the transaction, ACI will be signing a full guaranty of each lease to the respective landlords, so ACI remains “on the hook” for what is owed the landlords. ‘This will be discussed during our call tomorrow, and I wanted you to have copies of the documents prior to our conversation, See Exhibit O (emphasis added). 48, Mr. Slezak’s email was a further attempt to appear to comply with New Jersey regulatory requirements. As with the purported equipment sale, the proposed lease assignments were fiaudulent, The Assignment and Assumption of Lease and Novation Agreement for both the Audubon Dental Office Lease and the Vineland Dental Office Lease (see Exhibit R) contained the following language, which AC refused to eliminate or modify: Assignor, Assignee and Landlord acknowledge and agree that in the event Assignor or Assignee shall default under this Agreement or terminate, in any manner, or for any reason, its affiliation with Assignor or any of the 4920-4753-1857, v.2 18practice/management agreements entered into between Assignor and Assignee, Assignor shall have the absolute right under this Agreement, the Lease and the Lease Guaranty Agreement (“Guaranty”), executed of even date, to enter and take possession of the premises and fulfill all of Assignee’s obligations under the lease. 49. Dr. Aitken did not execute either the Audubon or the Vineland Assignment and ‘Assumption of Lease and Novation Agreement with this language included as it permitted AC to take back the lease upon termination of Dr. Aitken’s Practice Management Agreements, which may oceur for variety reasons. ‘The proposed lease change was one of form rather than substance. Plaintiffs made it clear to the Defendants that the ability to enter and take possession of the respective premises upon termination of either the Audubon Management Agreement or the Vineland Services Contract amounted to control of the leased space, and that the assignment presented was merely a fiction. 50. Plaintiff want to enter into an unconditional assignment of the primary practice leases. AC’s repossession of the leased space of either the Audubon Dental Practice or Vineland Dental Practice would prevent (i) the patients of Dr. Aitken and her associate dentists from access to continued care; (i) halt treatment that was in-process; and (iii) prevent post-care treatment from being rendered. In addition, pursuant to the original practice leases and subsequent Audubon and Vineland Equipment Purchase and Sale Agreements, Plaintiffs have paid for the cost of facility and leasehold improvements, plus an eight percent (8.0%) return on investment to AC (Dr. Aitken does not know the exact amount because AC is holding all of the books and records). Any reversionary interest held by AC in the assignment of the Audubon and Vineland Dental Office Leases, triggered by a termination of the Audubon Management Agreement or Vineland Services Contract, would cause PlaintiffS direct financial harm. Lastly, Dr. Aitken has practiced dentistry at the Audubon Dental Practice since February 2004, and the Audubon Dental Practice has over 4820-4785-1867, v2 1925,000 patients. Dr. Aitken has practiced at the Vineland Dental Practice since 2012 and the Vineland Dental Practice has almost 6,000 patients. Dr. Aitken and her dental associates have built jon substantial goodwill in the community resulting in significant intangible value. AC’s repossess of the Audubon Dental Office Lease or the .cland Dental Office Lease upon termination of what is supposed to be only a business management agreement would translate into significant loss of tangible and intangible value to Dr. Aitken, negatively affect patient care, and affect all employees of the Dental Practices. 51, Pursuant to the ADDL Agreement and the Vineland Services Contract, ADDL provides dental laboratory services to the Audubon Dental Practice and the Vineland Dental Practice. These agreements requite Plaintiffs to utilize and pay ADDL. for services provided at the Dental Practices. The Audubon ADDL Agreement states in Section 2 (Exclusivity): PC agrees that it will use only ADDL to perform the dental laboratory procedures set forth on Exhibit “A” which are required in connection with the dental practice of the PC. PC shall be free to use any other laboratory for procedures not performed by ADDL. The Vineland Services Contract states in Section 1 of Exhibit A (Onsite Dental Laboratory Services): PC shall use ADDL to perform the above-listed dental procedures; PC shall be free to use any other laboratory for procedures not performed by ADDL. provided that PC promptly informs ACT of such outside lab services. 52, The Dental Practices are contractually obligated to pay ADDL the sum of () all costs, whether paid or accrued, of ADDL directly related to work performed at the Dental Practices, including, without limitation, personnel costs (including salaries, benefits, airfare, lodging, relocation expenses, ete,), a reasonable amortization of laboratory equipment and instruments, and costs of purchasing lab inventories and supplies, as ordered by ADDL employees 4820.4759-1857, v.2 20in their sole discretion, (the “Direct Costs”); plus (ii) an amount, as reasonably determined by ADDL, representing an allocation of ADDL’s administrative and management costs (the “Indirect Costs"). Dr. Aitken entered into this arrangement in good faith and trust that AC would manage ADDL's staff’ and related costs in the best interest of the Dental Practices. For the year to date period ending August 31, 2017, the Audubon Dental Practice has paid $207,062.18 in ADDL Direct Costs and the Vineland Dental Practice paid $131,514.56 in ADDL Direct Costs and the Dental Practices paid $42,987.00 in Indirect Costs. In total, Dr. Aitken paid AC $381,563.74 through August 31, 2017 for ADDL labeled expenses. Although Dr. Aitken is required to pay for all direct and indirect eosts of ADDL, she has no control over these expenses. Cancellation of the ADDL Agreement or breaching its exclusivity provisions, cancels Dr. Aitken’s Dental Office Leases. 53. In October 2016, the Audubon Dental Practice requested AC recruit for open laboratory technician positions in the dental laboratory operated by ADDL. In March 2017, the Vineland Dental Practice also requested that AC recruit for an open laboratory technicii position in that dental laboratory operated by ADDL. During this recruiting period, the Dental Practices ‘were incurring large expenses for temporary lab personnel provided by ADDL Laboratory Support Staff placements (referred to as “LSS"), LSS fees range anywhere from two to three times the cost of an onsite employee of ADDL. Dr. Aitken, moreover, is required to pay for airfare, hotel, meals, luggage fees, and car rental for the LSS employees ADDL brings in from around the United States, These amounts totaled $33,946.46 at the Audubon Dental Practice and $14,961.79 at the Vineland Dental Practice. Affer several months had elapsed with no candidates presented to Dr. Aitken, she became concerned that AC was not performing its contractual obligation to act in the best interest of the Dental Practices. Dr. Aitken reviewed the career section of AC’s website where 4520-4783-1857, v 2 21AC lists open positions for laboratory techni positions ins for ADDL laboratories. After confirming that ‘were not listed, even though AC Vice President of Laboratory Operations Mike Thomas had confirmed they were, Dr. Aitken requested an accounting of AC’s efforts to recruit new dental laboratory technicians for the Dental Practices. In addition, Dr. Aitken requested the details of the costs charged to her for the services of the L ‘Thomas wrote: See Exhibit S. 54. The Dental Practi of their laboratory services needs, directly impacts Dr. Aitken and her associate den Dr. Aitkin (sic) Having taken some time to study our services agreement with your practices, | am responding to your recent requests for alist of all recruiting postings for lab technicians over the past year, and for an itemized breakdown for LSS and trainer fees and related costs over the past year. Please understand that ADDL is not obligated to track and provide an accounting of its recruiting activities, and furthermore, we consider this to be proprietary and confidential information, For these reasons, we are not in a position to fulfill this request. Assuming the request i LLShtrainer fees is to prove the legitimacy of ADDL charges = we have already done this via your lab financial statement by notating the dates and names of ADDL. staff who performed the work. Again, we are not obligated to provide additional detailed information so we respectfully are declining to honor this request. I want you to know that the ADDL staff will continue to provide laboratory services to your practices as our agreement states and to the best of our ability. ‘Ss assigned to the Dental Practices, In response, Mr requirement, to exclusively use ADDL for substantially all sts” ability 0 service the patients of the Dental Practices. Dr. Aitken entered the agreement with the mutual, contractual understanding with AC that 14820.4759-1857, .2 22All laboratory work shall...meet all reasonable deadlines and quality standards imposed on such work by the PC and the Practice Owner. The obligation that ADDL’s laboratory work was to be performed in a timely manner and meet all reasonable deadlines and quality standards imposed on such work by Dr. Aitken was critical to Dr. Aitken entering into the ADDL Agreement and the Vineland Services Contract. Furthermore, it ‘was mutually agreed that: [T]he Practice Owner shall supervise the quality of the products produced by the lab technicians at the PC's premises and shall provide periodic reviews of the technicians’ work product. On September 13, 2017, Dr. Aitken emailed AC and ADDL representatives quality related training recommendations and staffing recommendations for ADDL laboratory personnel performing lab work for the Dental Practices. In an email dated September 13,2017, AC Vice President and Chief Legal Counsel, David Slezak wrote a response to Dr. Aitken’s recommendations. The email from Mr. Slezak included the following language: Dr. Aitken has no right to tell us how to make dentures or to staff our labs. Our obligation to her is to produce dentures according to prescriptions that she and her associate dentists send to our labs. See Exhibit 7 55, Dr. Aitken and the Dental Practices pay monthly fees to AC in order to perform various administrative and business functions, Furthermore, Dr. Aitken’s Dental Practices pay for all the direct and indirect costs for ADDL’s personnel, supplies and equipment. These various fees and expenses for both Dental Practices, .cluding ADDL expenses, equal approximately One Hundred Thousand Dollars ($100,000.00) per month. In a continuation of the above email on September 13, 2017, David Slezak wrote: 4820-4759-1897,¥. 2 23It also seems that Dr. A enjoys causing a ruckus with her demands. While neither Don or I can communicate directly with Dr. A (since she is represented by counsel), we may want to give some thought to, in the appropriate circumstance, to respond that we are also represented by counsel, and that sh nave her attorneys contact Don and me. That will do two things: 1) increase the costs to Dr, ‘A of this type of behavior: and, 2) interject someone with, hopefully, more common sense who can explain to his client (Dr. A) the things that she does not like to hear directly from us, (Emphasis added.) Although Dr. Aitken was represented by counsel, Dr. Aitken has an ongoing business relationship with ADDL and AC that requires day-to-day communication, including adhering to and enforeing contractual obligations or rights. AC continues to take Management Services Fees, Central Office Services Fees, IT Support Fees, and various other charges and fees from the Dental Practices’ bank accounts and, as such, should continue to fulfill the business obligations in the various agreements between the Parties. Dr. Aitken should not have to communicate day-to-day business issues ‘through counsel. Furthermore, Mr. Slezak’s email (i) breaches various AC contractual obligations intimates that AC, as including the obligation to act in the best interest of her Dental Practice; (i her business manager, wants to increase her already substantial costs of doing business with AC and ADDL: and (ii) unfairly disparages, criticizes, negatively characterizes and casts Dr. Aitken in an unfavorable light simply because she wants AC to fulfill its contractual obligations. Further, Mr. Slezak, who has installed himselfas the Secretary and Assistant Treasurer of each of the Dental Practices, is breaching his fiduciary duties to those Practices by seeking to increase their costs, 56, AC has complete control over and possession of the money received at the Vineland Dental Practice and Audubon Dental Practice. Moneys received from dental procedures are deposited into depository bank accounts (the “Depository Accounts”). The money is swept daily by AC into a central bank account controlled by AC (the “Central Disbursement Account”). Dr 4820.47531857,v.2 24Aitken was contractually promised that she would have ability to withdraw from the Depository Account afier advance notice to AC. Pl ffs, in fact, have no direct access to funds collected for dental services. In November 2016, Dr. Aitken requested checkbooks for each of the Dental Practices because she had an issue with AC paying for an invoice. AC refused to give Dr. Aitken a checkbook for her own Dental Practice bank accounts. In an email dated November 30, 2016, AC wrote: All checks are written out of a centralized disbursement ‘aecount so expenses can be recorded appropriately as checks are disbursed. This allows us to track disbursements and maintain accurate records for financial reporting and auditing purposes. Balances are not maintained in either of the practice operating accounts to cover disbursements. See Exhibit U. 57. Dr. Aitken, the President and owner of 100% of the stock of the Dental Pra tices, has no direet access to the Dental Practices’ money. For Dr. Aitken to pay an invoice of the Dental Practices, the approved invoice has to be sent to AC for disbursement. In 2016, AC failed to pay an invoice approved by Dr. Aitken. AC later indicated there was a question about the submitted invoice, but rather than ask Dr. Aitken about the invoice, it simply ignored the requests. In December 2016, AC questioned a charitable donation Dr. Aitken wanted to make to her church In July 2017, an air conditioning unit needed to be replaced at the Audubon Dental Practice. It was July and temperatures were in the high 90s. Dr. Aitken quickly solicited three bids for the install a new air conditioning unit, Dr. Aitken selected Climate Mechanics to perform the work. Dr. Aitken requested that AC Facility Manager provide Climate Mechanics with a deposit for the new air conditioning unit since she has no direct access to the Dental Practice funds or bank accounts. In an email dated July 21, 2017, AC Facility Manager responded to Dr. Aitken’s request (4820-4753-1857, v.2 251 just got your text message about the new ac unit. [NAME REDACTED] from Climate Mechanics just called me about a deposit. We have a couple of issues with this request. We knew nothing about your ac issues you are having. She has asked for a deposit on a 9K new unit. She couldn’t give me any information on the new unit because she didn’t have the paperwork. We cannot give her any money without paperwork and it is 1:30 here and we can’t overnight checks this late in the aftemoon for delivery tomorrow. We have procedures we have to go by. I am not sure how to help you this late in the game. See Evhibit V. 58. Employees of Dr. Aitken's Audubon Dental Practice as well as employees of ADDL were working without air-conditioning in the middle of summer. These employees and patients receiving treatment (many of whom are elderly) were directly impacted by the inability of Dr. Aitken to write a check out of the Dental Practice’s funds. 59, Further, as a result of Dr. Aitken not having access to a checkbook, any patient due, resulting from either an overpayment or other reasons for a refund, must be submitted cre to AC for reimbursement if the patient paid for services using cash or check. The timeline of the refund is determined by AC in its sole discretion. On occasion, submissions have been ignored for lengthy periods of time, resulting in upset patients. This directly impacts patient satisfaction and thus the goodwill of Dr. Aitken’s Dental Practices. 60. Through documents prepared by AC, or its representatives, AC installed its officers or other personnel into officer positions within the Dental Practices, and these officers were given wide-ranging authority to act on behalf of the Dental Practices by AC. Dr. Aitken executed these documents prepared by AC relying upon the contractual obligation that AC act in the Dental Practices’ best interests and at all times in accordance with all laws and regulations. Those officers and their offices are: Secretary and Assistant Treasurer, David Slezak; Treasurer and Assistant 4820.4759-1857, v2 26Secretary, $. Paul Steelman; and Assistant Secretaries, Randal G. Ammons, Annette Rodriguez Lebron and Kathy Miller. 61. The Audubon Management Agreement states: Manager will procure property, casualty, and general liability insurance for the PC in appropriate amounts through, a suitable insurance broker selected by the Manager However, the procurement of professional liability coverages for the PC and its employees shall be the sole responsibility of PC. (Emphasis added.) ‘The Vineland Services Contract states: ACI will procure property, casualty, and general liability insurance for the PC in appropriate amounts through a suitable insurance broker. ACI shall provide certificates of such insurance to PC upon request. However, the procurement of professional liability coverage for the PC and its employees shall be the sole responsibility of the PC. though ACI may assist. (Emphasis added.) In late 2016, upon reviewing charges on her financials as prepared by AC, Dr. Aitken discovered AC was taking money from the dental practices for “The Doctors Company”. Dr. Aitken inquired about this charge and learned that AC was procuring professional liability insurance for AC’s benefit in various dentists’ names, including hers’, without any of the dentist’s knowledge, consent or approval. AC was procuring these policies on its own through an insurance company AC selected. Dr. Aitken already had professional liability insurance, as did her associates. AC was also causing inereased expenses to the Dental Practices by obtaining duplicate policies. In addition, De. Aitken objected to AC procuring such policies in dentists’ names without their knowledge. 62. Dr. Aitken is supposed to have control of staff'and ADDL employee bonuses, which are direetly paid out of the Dental Practices. AC, apparently recognized that requirement as an AC employee wrote in a 2012 email: 4820-4753-1087, v2 27..-bonuses only per the doc. We will not be calculating any bonuses. Any bonus paid will have to be calculated by the Doc and email to payroll. After discussion with Mike Thomas earlier, he agreed to allow Doc to do the same with the lab team, In another 2012 email, another AC agent wrote: As you can see below, no bonuses for your office will be paid until the calculations by you are sent in to payroll, Lab included. Sce Exhibit W. 63. In 2016, AC recommended an employee bonus plan titled “Revenue Growth Incentive Bonus Plan”. The AC recommended bonuses were based directly on the revenue increases of the Dental Practices. The letter stated: Of course, the compensation of your staff is your decision, Please advise us if you do not want to adopt this plan.... We encourage you to share this information with your staff and continuously make them aware of the daily revenue target required to earn a quarterly bonus. Dr. Aitken declined to pai pate in the Revenue Growth Incentive Bonus Plan as recommended by AC in part because such bonus appeared to violate a New Jersey Board of Dentistry regulation, Dr. Aitken advised AC Vice President of Practice Operations, Karol Twilla of this via email. Despite Dr. Aitken’s objections Ms. Twilla told Dr. Aitken “ADDL will continue 10 participate in this bonus program” (Exhibit W). AC proceeded to take money out of the Dental Practice’s bank accounts for the Revenue Growth Incentive Bonus Plan against her objections and contrary to prior assurances from AC, ADDL employees’ bonuses were paid from Dental Practice funds. 65. ‘The Audubon Management Agreement and the Vineland Services Agreement state 4820.4753-1087, v.2 28Both parties expressly acknowledge that the PC shall have sole authority and responsibility for all employee hiring, termination, performance review, and pay rate decisions. In April 2017, without Dr. Aitken’s authority, consent or knowledge, AC posted job advertisements for full-time dentist positions at the Audubon Dental Practice and the Vineland Dental Practice. Dr. Aitken did not have a full-time dentist position available or open at either location, Additionally, Dr. Aitken previously told AC employees that all job advertisements placed for the Dental Practices should include her contact information including her email address. ‘The only contact information for these full-time dentist advertisements was AC’s. The job advertisements were posted on LinkedIn.com, Glassdoor.com, Indeed.com, and Affordable Denture’s Career website, These unilateral job advertisements included phrases such as (i) “Paid time off personal days and vacation package” (ii) “Annual CE allowance” (iii) “License and DEA, reimbursement”, See Exhibit Y. 66, The Audubon Management Agreement states that “Nothing in this Agreement is intended, or shall be deemed or construed, to allow Manager to direct, control or interfere with PC's exercise of its independent professional judgement (sic), or that of any dentist or dental staff employed by or under contract with the PC.” Nevertheless, AC has asserted an authority to control the scope of dental services offered by the Practice. When Dr. Aitken hired an associate dentist t0 perform general dentistry services as needed and required for appropriate dental treatment, unrelated to the provision of dentures or denture related services, AC wrote Dr. Aitken a letter asserting ils purported right to determine the scope of dental services offered. The letter stated: You have informed us that [NAME REDACTED] has been hired by your practice to provide fillings, cleanings, exams, crowns, bridges, and build-ups on Wednesdays and Thursdays. We understand that [NAME REDACTED] will work from the operatory that you used to use for implants, The provision of these additional dental services at the 14820-4753-1857, v.2 29facility concems us. Foremost in our minds is that additional services at the facility could tarnish the Affordable Dentures mark. Affordable Care, though, is willing to consent to [NAME REDACTEDY’s provision of fillings, cleanings, ‘exams, crowns, bridges, and build-ups at the facility through the remainder of 2010, provided that there is no advertising whatsoever of these additional services. During this period, Afffordable Care also expects that your practice will not neglect its denture services and will comply with its contractual commitments regarding its normal operations, such as hours of operation, having at least one dentist other than [NAME REDACTED] on site, and your personal, full time engagement at the practice (subject to your matemity leave). Toward the end of the period, we will need to access together [NAME REDACTED]’s impact upon your practice and discuss how we can move forward. Please understand that Affordable Care necessarily will be protective of the Affordable Dentures brand, so please do not interpret our acceptance of this trial period as any indication that we will be agreeable to ongoing, non-denture services at the facility See Exhibit Although AC reluctantly agreed to such provision of such general dentistry procedures, the permission is instructive as to AC’s understanding of its right to control how Dr. Aitken practices dentistry. 67. The Management Agreements further place restrictions on the Dental Practices from corporate borrowing which is a useful and “normal course” business activity. It is another example of how AC restricts the owner’s actions, because, in fact, it acts as is the owner, 68. AC has, accordingly, repeatedly acted without regard to or in knowing violation of the statute and regulations governing the practice of dentistry in the state of New Jersey as well as Dr. Aitken’s contractual rights. AC has treated her not as an owner or practicit 1g dentist, but as an exploitable employee. 69. AC has wrongfully, and in violation of the public policy of the state of New Jersey, sought to intimidate the Plaintiffs into not seeking to have statutory, regulatory or contractual rights enforced. AC did so by inserting the following language into both of the 2014 Equipment Purchase 4820-4759-1897,v.2 30and Sale Agreements. AC defined a “Repurchase Event,” which essentially allowed a termin: Dental Practices, to include: causing or intending to cause judicial, arbitral or administrative review or challenge to the enforceability of this_Agreement_or_any_agreement_between_seller_and purchaser. (Emphasis added.) COUNTI ations of the Statute Governing the Practice of Dentistry) wi 70. Plaintiffs repeat and re-allege all allegations contained in paragraphs 1-69 of this, Complaint as if set forth in length herein, 71. Both in the structure of the relationship between Plaintiffs and Defendants and in Defendants’ conduct, Defendants have acted in complete disregard of the statute governing the practice of dentistry in the state of New Jersey. 72. N.JS.A, 45:6-12. (Practice of dentistry by corporations prohibited; practice under firm name regulated) provides: No corporation shall practice or continue to practice, offer or undertake to practice, or hold itself’ out as practicing dentistry. No person shall practice or continue to practice dentistry under any firm name or trade name or under any name other than his true name. 7B. N.LS.A. 45:6-19. (“Practicing dentistry” defined) states: Any person shall be regarded as pract the meaning of this chapter who (2) Is a manager, proprietor, operator, or conductor of a place where dental operations are performed; ing dentistry within 74, The terms “manager, proprietor, operator or conductor” are defined by N.1.S.A. 45:6-19 to include any person who: (1) Employs operators or assistants; or 4820.4753-1857, v.2 31(2) Places in the possession of any operator, assistant, or other agent such dental material or equipment as may be necessary for the management of a dental office on the basis of a lease or any other agreement for compensation for the use of such material, equipment or office; or (3) Retains the ownership or control of dental material, equipment or office and makes the same available in any manner for the use by operators, assistants or other agents... 75. ‘The documents and evidence of AC’s conduct reveal that AC is illegally practicing dentistry within the state of New Jersey. In accordance with statutory definitions, AC is a “manager, proprietor, operator or conductor of [places] where dental operations are performed” within this State at Plaintiffs’ Audubon and Vineland Dental Practices. 76. AC places in possession of Dr. Aitken and her associates equipment which is necessary for the management of a dental office and for compensation paid by the Dental Practices. 77. AC retains the ownership or control of equipment and office and makes the equipment and office available for use by Dr. Aitken and her associates despite a pretense of relinquishing the leaseholds and equipment ownership through the repossession clause in the proposed Assignment and Assumption of Lease and Novation Agreements and the repurchase option in the Equipment Sale and Purchase Agreements. 78. AC has, moreover, manifest its total control of the Dental Practices in a myriad of ways which include: a, AC’s complete control of the Dental Practices’ finances and money received from the practice of dentistry depriving Plaintiffs of access to those finances. b. AC's refusal to account to Dr. Aitken for its handling of the Dental Practices’ finances despite the contractual provision stating “PC [Dr. Aitken] shall be allowed 4820-4753-1857.v.2 32access at all reasonable times to the books and records maintained by Manager on behalf of PC, with a right to audit such books and records. c. ‘The requirement that the Dental Practices use AC labs exclusively, 4. AC’s and ADDL’s refusal to follow the contractual obligation that “{tJhe Practice Owner shall supervise the quality of products produced by laboratory technicians and shall provide periodic reviews of the technicians’ work product.” To the contrary, AC’s Chief Legal Counsel wrote in an email: “Dr. Aitken has no right to tell us how to make dentures or to staff our labs.” ©. AC's lack of concern about lab quality and timeliness issues brought to its attention by Dr. Aitken. f. ADDL’s refusal to provide Dr. Aitken with information regarding its g efforts for open lab positions. g. ADDL’s refusal to allow Dr. Aitken to review documents under! charges to the Dental Practives for temporary lab employees. h. —_AC’s charging fees and inereasing fees without providing a basis despite repeated requests by Dr. Aitken i, AC's misuse of the Dental Practices’ funds to place unapproved advertisements. J. AC's misuse of Dental Practices’ funds to pay for unapproved and likely illegal bonuses. k, misuse of Dental Practices’ funds to purchase duplicate malpractice policies, 4820-4759-1857, v.2 331 AC’s purchasing duplicate malpractice policies despite the contractual provisions making the Dental Practices responsible for obtaining professional liability coverage. m. AC's installation its own personnel as officers in the Dental Practices. n. AC's plan, led by its Chief Legal Counsel, who is also the Secretary and Assistant Treasurer of each of the Dental Practices, to increase Dr. Aitken’s costs because of her assertion of her legal rights, which is a violation of the most basic of fiduciary duties, AC's placing job advertisements to hire new dentists at the Dental Practices without the knowledge or consent of Dr. Aitken. AC’s threat, including the terrorem clause found in the Equipment Purchase and Sale Agreement, to terminate the Dental Practices’ Management Agreements and Practice Leases, as well as the threat to repurchase their equipment if Dr. Aitken asserts her legal rights. 79. All such indicia reveal that Dr. Aitken is, in reality, an employee, and that AC is, the manager, proprietor, operator and conductor of the Dental Practices in which the services are performed within the meaning and intent of N.J.S.A. 45:6-19. That statute is, accordingly, violated by the structure and conduct of AC in operating, managing and controlling the Dental Practices. WHEREFORE, Plaintiffs demand judgment against the Defendants as follows: a. Reforming the leases so that the Dental Practices are direct tenants of the respective landlords, or, in the alternative, enjoining enforcement of the coterminous provisions in the Dental Practice Lease agreements between Plaintifis and AC; b, Requiring AC to provide Dr. Aitken with direct access to practice funds and bank accounts; 4820.4753-1857,v.2 34¢. __ Requiting AC to provide Dr. Aitken with invoices for all services rendered by AC for approval prior to any and all payments made on behalf of the Dental Practices; 4. Enjoining enforcement of the repurchase provisions in the fraudulent Equipment Purchase and Sale Agreements; €. Enjoining enforcement of the provisions in the subject agreements whereby Plaintiffs must utilize the services of the ADDL laboratory exclusively; Enjoining enforcement of the provisions in the subject agreements whereby Defendants may terminate the Management Agreements due to Plaintiffs filing of this complaint with the Court; Permitting Dr. Aitken to enter into her own Employment Agreement with each Dental Practice; h, Awarding Plaintiffs damages for fee overcharges, as well as other misuse of Dental Practice funds; i, Requiring a mechanism for determining the Management Services Fees and increases in those fees; i) Requiring Defendants to account for moneys taken from the Plaintiff Dental Practices; k. Awarding Plaintififs reasonable attorneys’ fees; and 1. Awarding such other and further relief as the Court deems applicable and in the interest of justice COUNT I (Violation of Regulations Governing Dental Practices) 80. Plaintiffs repeat and re- Hege all allegations contained in paragraphs 1-79 of this Complaint as if set forth n length herein. 4820.4759-4857, v.2 3581. Both in the structure of the agreements between Plaintiffs and Defendants and in Defendants’ conduct, Defendants have acted in complete disregard of the regulations governing. dental practices in the state of New Jersey. Defendants are not merely managing certain business aspects but are in fact, wholly operating and managing Dr. Aitken’s Dental Practices. AC’s Violations of the regulations governing dental practices cause irreparable harm to the Plaintiffs, irreparable harm to the substantial goodwill Dr. Aitken has created, irreparable harm to thousands of patients receiving services from the Dental Practices, and jeopardizes Dr. Aitken's dental license, 82. N.J.A.C. 13:30-8.13 (Permissible Business Structures, Prohibition on Referral Fees and Fee Splitting) paragraph (b) directs: Dentists may engage in the practice of dentistry in any permissible business format in which they are not shielded from liability for their own breaches of professional duties, they retain responsibility for the quality of care and the appropriateness of their professional judgments, and they are assured access to information and involvement in issues pertaining to quality of care, professional judgment, recordkeeping, advertising practices, and the finances of the permissible business format. 83. N.L.A.C. 13:30-8.13 (Permissible Business Structures, Prohibition on Referral Fees and Fee Splitting) paragraph (e) directs: Dentists shall not participate in any arrangement or agreement, with any person other than an associate, whereby any remuneration received by that person in payment for the provision of space, professional services, facilities, equipment, personnel, marketing or management services used by the dentist is to be determined or calculated as a fixed percentage of, or otherwise dependent upon, the income or receipts derived from the practice of dentistry. 84. NJLA.C. 13:30-8.19 (Prac ice Name) directs: 4820-4753-1867, v2 36A licensee shall not engage in the practice of dentistry under a practice name, which is misleading in any way as to the legal form of the practice or as to the persons who are partners, members or shareholders of the practice. 85. Dr. Aitken entered into the Agreements relying on the obligations of AC to act in the best interest of the Dental Practices and in accordance with the laws and regulations of the state of New Jersey. 86. Defendants have breached the above regulations in several ways: a. AC's total control of AC’s finances and bank accounts coupled with AC's refusal to supply complete records or submit to audit, despite contractual requirements violates the regulatory edict that dentists are “assured access to information and involvement pertaining to... the finances of the permissible business format.” b. AC's enforcement of i determination that “Dr. Aitken has no right to tell [AC and ADDL] how to make dentures or to staff our labs” impacts Dr. Aitken’s responsibility for “the quality of care” as well as her “involvement in issues pertaining to quality of care.” AS a result of Defendants’ exclusion of Dr. Aitken from a say in laboratory operations, they have ignored Dr. Aitken’s complaints and recommendations concerning the quality and timeliness of product produced by the respective labs and her recommendations for staffing and training of lab personnel ©. AC's assertion of the ability to control the scope of the dental services offered by the Dental Practices interferes with Dr. Aitken’s regulatory responsibility for exercising professional judgment regarding patient care. d. AC's placement of advertisements unapproved by Dr. Aitken but utilizing practice funds for the unapproved advertisements violates the regulatory requirements that the dentist have “access to information and involvement in issues pertaining to... advertising, 4820-4783-1857, v 2 37practices...” Such placements of unapproved advertising, furthermore, subjects Dr. Aitken to Aiscipline for violating New Jersey State Board of Dentistry regulations inasmuch as, pursuant to N.LA.C. 13:30-6.2 (p): A licensee shall be presumed to have approved and shall be personally responsible for the form and contents of an advertisement which contains the licensee’s name, office address, or telephone number which is published or caused to be published by an e1 which the licensee has paid a fee. AC's and ADDL! s decision to use Dental Practice funds to pay employee bonuses based on a “Revenue Growth Incentive Bonus Plan” appears to be violative of NJL.A.C.13:30-8,19, Dr, Aitken, concemed about whether the regulation was violated, objected. Nevertheless, AC and ADDL proceeded with the bonus plan. 87, AC has caused a large sign to be placed in front of each of the Dental Practices utilizing its trade names, with Dr. Aitken’s name in small letters at the bottom of the signs. Despite the fact that Dr. Aitken paid for these signs as a result of the Equipment Purchase and Sale Agreements, AC would not allow her to control the signs. In addition, some of the advertisements placed by AC, utilizing Dental Practice funds, do not contain board required elements such as name, address and phone number. Dr. Aitken objected to these signs and advertisements, which appear to violate N.J.A.C.13:30-8.19, 88. AC and ADDL have, accordingly, engaged in several violations of regulations governing the practice of dentistry in New Jersey. ‘Those violations have negatively impacted the Dental Practices professionally and financially and at the risk of regulatory sanetions for actions over which Plaintifi's have no control 4820.4759-4857, v2 38WHEREFORE, Plaintiffs demand that this Court enter judgment: a, Requiring AC to provide Dr. Aitken with direct access to Dental Practice funds and bank accounts; b. Requiring AC to provide Dr. Aitken invoices for all services rendered for which payment will be made by on behalf of the Dental Practices; c. Requiring AC and ADDL to account for all Dental Practice income and expenditures; 4 Enjoin AC and ADDL from interfering with Dr. Aitken professional and contractual responsibility “to exercise independent professional judgement” regarding the pra tice of dentistry, including, without limitation, her right and responsibility to supervise ADDL laboratories located at the Dental Practices; e. _Enjoining Defendants from placing any advertisements or utilizing Dental Practice funds for advertisements, without Dr. Aitken’s express approval; £ _Enjoining Defendants from engaging in any bonus programs without Dr. Aitken’s express approval; 2. Requiring AC to adjust signage at the Dental Practices to more appropriately reflect that the Dental Practices are owned and operated by Dr. Aitken and not AC; and h. Awarding Plaintiff such other and further relief as the Court deems to be equitable and in the interest of justice including attomey fees. COUNT IL (Breaches of Contracts) 89, Plaintiffs repeat and re-allege ll statements and allegations contained in paragraphs 1-88 of this Complaint as if set forth at length herein. 90. Defendants have breached explicit provisions of their contracts with the Plaintiffs 4820-4753-4857, v 2 39a, The Audubon Management Services Agreement asserts that AC and Dr. Aitken mutually desired “that the Manager (AC) perform its du s hereunder subject to and in accordance with all applicable requirements of New Jersey law and regulations.” As stated in Count 1 and Count II, Defendants did not act in accordance with all applicable requirements of New Jersey law and regulations. b. ‘The Audubon Management Services Agreement states “The duties and authorities of Manager hereunder shall not extend to any aetivity (1) that would constitute the practice of den stry under the laws, rules and regulations of New Jersey which practice of dentistry is fully and exclusively reserved to the PC and for its employee dentists....” As is set forth in Count I, AC has, n fact, engaged in the practice of dentistry in the state of New Jersey. Each of Management Agreements specifically state: In the event any state or federal laws or regulations, now existing or enacted or promulgated after the effective date of” this Agreement, are interpreted by judicial decision, a regulatory agency, or legal counsel for both parties in such a manner as to indicate that the structure of this Agreement may be in violation of such laws or regulations, the PC and ACI shall amend this Agreement as necessary. Dr. Aitken has made serious and good faith efforts to restructure the various agreements between the Parties to be consistent with the statute and regulations governing Dentistry in New Jersey and as discussed in Allstate Insurance Company v Northfield Medical Center, P.C., 228 N.J, 596 (Ma 2017). Dr. Aitken notified AC’s executives of the latter ruling. AC has breached it obligation to amend the agreements between the Parties for conform with the law. 4. The Vineland Services Contract states in Exhibit C, paragraph 6 that “ACI and the PC agree that fees shall not be adjusted in any manner inconsistent with fair market value”. 4820-4759-1857, v.2 40Dr. Aitken has repeatedly inquired as to how AC was calculating the Management Services Fee, and the increases of the Management Services Fee. In 2017, David Slezak responded: Since there is no FMV requirement under the NJ Dental Practice Act, how we determine our fees, or even the amount of those fees, are irrelevant. ‘AC has breached Exhibit C, paragraph 6 of the Vineland Services Contract, e. The First Amendment to Exhibit C of Management Agreement states in paragraph 1(a) “...[Management Services Fees] will be collaboratively discussed by the Parties and reasonably set going forward. These items discussed shall include fee increases, rates, and duration.” AC, however, continues to unilaterally set the Management Services Fees without collaborative discussion between the Parties. AC has breached paragraph I(a) of The First Amendment to Exhibit C of Management Agreement. f The ADDL Agreement states that “ADDL shall perform such work with skill and quality no less than that commonly provided by other dental laboratories within the state of New Jersey”, Dr. Aitken sent AC representatives photos of laboratory products showing work of less quality than commonly provided by other dental laboratories within the state of New Jersey which were not delivered to patients. g The ADDL Agreement states “ADDL shall perform all laboratory work assigned to it by the PC in a timely manner and meet all reasonable deadlines imposed on such work by PC”. ADDL failed to meet time service guidelines provided by their own advertisements and commitments h, The Vineland Services Contract states: “the PC, the Practice Owner, and ACI (AC) each desire to enter into this entire agreement, as a legally binding contract, subject to and at all times in accordance with all applicable requirements of State law and regulation.” As 4820.4788-1887, v.2 41stated in Count I and Count I, Defendants did not act in accordance with all applicable requirements of State Jaw and regulations. i ‘The Vineland Services Contract states: “The duties and authorities of ACI, however, shall not extend to any activity (i) which would constitute the practice of dentistry under the laws, rules, and regulations of the State, which practice of dentistry is fully and exclusively reserved to PC and its employee dentists”. AC’s (ACI) activities do constitute the practice of dentistry under the statutes and regulations of the state of New Jersey as detailed in Count I and Count II of this Complaint. j. The Vineland Services Contract states: “The Practice Owner shall supervise the quality of the products produced by the laboratory technicians at the PC’s premises and shall provide periodic reviews of the technicians’ work product.” When Dr. Aitken made recommendations about a technician’s work product and pointed out problems which needed correction for the benefit of all dentists and pa nts at the Dental Practices, an AC agent stated that “Dr. Aitken has no right to tell us how to make dentures or to staff our labs.” k. ‘The Vineland Services Contract states: All laboratory work shall be performed in a timely manner and meet all reasonable deadlines and quality standards imposed on such work by the PC and the Practice Owner. ADDL will be responsible for and manage all of its ‘employees performing work, provided that the employees and their work shall be subject to the clinical supervision of the Practice Owner as necessary in his or her professional judement; the Practice Owner shall supervise the quality of the products produced by the lab technicians at the PC's premises ADDL has repeatedly breached this requirement which has jeopardized the patient relationships with Dr. Aitken and her associate dentists at both Dental Practices, and jeopardizes substantial goodwill. 4820-475-1857,v.2 42|. The Audubon Management Services Agreement states “At all times Manager is obligated to manage the Practice with the PC’s best interest in mind and in accordance with all applicable laws and regulations.” AC has failed many times to act in the Dental Practices’ best interest and in accordance with all applicable laws and regulations as set forth in Count I and Count Il in this Complaint. Some examples of AC not acting in the best interest of the PC include: i AC’s violation of the New Jersey Statutes governing the practice of dentistry; ii AC’s violation of the New Jersey regulations governing the practice of dentistry; AC’s production of fraudulent Equipment Purchase and Sale Agreements; iv. AC’s refusal to assign the dental office leases free and clear; v. AC’s failure to charge fair market value for management services provided; vi AC’s failure to modify the structure of the agreements between the Parties following the decision of Allstate Insurance Company v Northfield Medical Center, P.C., 228 N.J. 596 (May 2017); vii. AC’s refusal to provide Dr. Aitken a checkbook or other access to Depository Accounts; AC’s advertising for dentistry services at the Dental Practices, using Dr, Aitken’s name, without Dr. Aitken’s approval: ix. AC's placement of recruitment advertisements for full-time dentists without the knowledge or consent of Dr. Aitken; 482047531857, v.2 43x. AC’s payment of bonuses to ADDL employees based directly on revenue of the Dental Practices, xi AC’s failure to advertise for all open ADDL laboratory pos various career sites when the Dental Practices needed positions filled; AC’s determination to inerease costs for the PC by increasii attorney fees to Dr. Aitken; xi ‘AC's issuing instructions to AC and ADDL employees that Dr. Aitken cannot direct how dentures are to be made; and xiv. AC’s refusal to issue an accounts payable check for services received by the Dental Practice properly approved by the Audubon Dental Practice. m. The Audubon Management Agreement states: Depository Checking Account ~ this account shall be located in a bank selected by PC within the vicinity of the Practice and PC shall deposit therein all money received from the operation of the PC. Withdrawals from this account shall be made only by appropriate employees of PC after advance notice to Manager or by Manager's transfers from this account to the operating checking account. Despite that language Dr. Aitken was denied a checkbook which would give her the ability to withdraw from her Dental Practice bank account, n. ‘The Audubon Management Agreement states: Manager agrees to provide accounting reports to PC upon request at any time. PC shall be allowed access at all reasonable times to the books and records maintained by Manager on behalf of PC, with a right to audit such books and records Despite requests for access to certain books and records of the Audubon Dental Practice, access has been denied to Plaintiffs. 4820-4753-1857, v 2 44