TODAY | December 11, 2012
>>> imagine that your child was subject to unnecessary and painful procedures at the dentist's. small smiles, a dental chain with clinics in 21 states. nbc correspondent lisa myers has more on this. lea lisa, good morning.
>> reporter: hey, matt, good morning. it's hard to imagine that anyone would abuse a young child just to collect more money from the government. three years ago, that's exactly what small smiles dental clinics were accused of doing. the company promised never to do it again. but our investigation found that children still are being subjected to painful, unnecessary procedures, billed to taxpayers.
>> yeah, yeah.
>> reporter: nathan hatchman is a healthy, happy 5-year-old. his mother, autumn, says for mon months he would not smile.
>> he wasn't the same for a long time after we brought him home.
>> reporter: 2 1/2 years ago, autumn took nathan , then almost 3, to a small smiles dental clinic. how would you describe your experience there?
>> reporter: the dentist performed six fillings, two baby root canals and three caps, all in 25 minutes. at one point, autumn heard screaming and burst into the room.
>> he was screaming. he was crying. he was trying to get -- you know, trying to move.
>> reporter: autumn believes her son wasn't given enough anesthesia and says he left traumatized and in pain. did he cry?
>> he cried a lot. he cried a lot. the night terrors were the worst. i mean, it was a lot of sleepless nights .
>> reporter: a dentist who later reviewed nathan 's records said the work was shoddy and many of the procedures unnecessary. this is the clinic where nathan was treated. internal company documents reveal that his dentist pulled in almost $1 million in revenue that year. almost 90% of it was taxpayer money from medicaid . only a month before nathan 's ordeal, small smiles settled with the justice department over allegations that it billed taxpayers by doing unnecessary and substandard procedures. this 2007 news report on small smiles helped to trigger that investigation.
>> we have zero tolerance for those who break the law to exploit children in need .
>> reporter: without admitting wrongdoing in 2010 , small smiles agr agreed to pay $24 million and significantly change its practices. but three years later, an nbc news investigation found many of the same complaints, from parents, government investigators and former employees. yet small smiles still is raking in medicaid money, $150 million last year. dr. shaw worked briefly for the company last year and was so upset by what he saw that he quit.
>> for this particular patient it was brutal restraint.
>> reporter: he showed us his notations about abusive treatment of kids. you saw children getting invasive, even painful procedures that they didn't need?
>> yes. that would be yes.
>> reporter: a few times, frequently?
>> in my opinion, very frequently.
>> reporter: reports by independent monitors obtained by nbc news showed what the government called repeated and flagrant violations over the last 15 months. in virginia, kids given insufficient anesthesia in 60% of cases reviewed. children were resisting treatment because they were being hurt. in ohio, six of seven records showed unnecessary baby root canals. and in maryland, treatment was provided to restrain children who were fighting, crying and basically hysterical, using large mouth props that overextended their mouths. why would anyone perform an unnecessary, even painful dental procedure on a child?
>> reporter: senator chuck grassley says small smiles still hasn't cleaned up its act and should be ban friday medicaid .
>> the taxpayers are being fleeced and children are being abused sfwlr a lawyer for the federal agency that monitors small smile's 63 clinics, lisa raye , says the company has been fined for bad practices.
>> five clinics have been the worst.
>> reporter: how bad have they been?
>> as bad as they can get.
>> reporter: but ray says throwing small smiles out of medicaid could leave half a million children without dental care . and she says new management and a new owner took over the company in june. this company has gotten at least four bites at the apple. when do you say enough is enough?
>> dentists have been fired. clinics have been closed and this is not the same company. an independent monitor is telling us that the care is progressively improving.
>> reporter: the new ceo told us he has hired 50 new dentists, highly qualified managers and is complying with government rules.
>> what we're trying to do is take targeted action against bad clinics and preserve good care for these children who otherwise may not have any.
>> reporter: that's cold comfort to jasmine brown, who took her son to small smiles earlier this year. he end ed up with fillings and caps in most of his mouth. and, months later his gums still are discolored along the caps and says his teeth hurt all the time.
>> sometimes he won't eat just because he's afraid to eat because it hurts.
>> reporter: she blames herself for not being able to afford better care.
>> it's kind of my fault because if i had the money he wouldn't have felt any of that pain he had to go through.
>> reporter: the new ceo of the company declined to comment on any specific allegations. he says his company's mission is to ensure that every clinic provides excellent care. matt?
>> lisa myers on this story for us in washington. lisa, thank you very much.