SmileDirectClub (NASDAQ:SDC) isn't smiling about its relationship with Delta Dental Plans. The company announced that it is suing the largest specialty dental insurer for its refusal to cover SmileDirectClub's aligner therapy, the product it is known for.
The company is bringing its suit against two entities, Delta Dental of Illinois Foundation and Delta Dental of California, in the two states where they are headquartered.
"With 60% of Americans not having access to healthcare and only 1% of the population being able to afford and access traditional orthodontic care, the importance of insurance providers not discriminating against a platform that expands access to care is paramount," SmileDirectClub wrote in its announcement.
The company claims that Delta Dental is the sole major health insurer refusing to provide coverage for its aligners, contravening the language in its policies. SmileDirectClub added that its orthodontic therapy is covered by companies such as Aetna, UnitedHealth Group, and Anthem, among numerous others.
SmileDirectClub added that now is a particularly inappropriate time not to provide such coverage given the coronavirus pandemic. Since its aligner therapy requires a patient to visit dental professionals far less frequently than with traditional orthodontics, it mitigates health risks.
In a statement quoted by Nashville Business Journal (SmileDirectClub is headquartered in the city), Delta Dental wrote that it "will vigorously defend against the groundless claims alleged by SmileDirectClub and will also continue to evaluate SmileDirectClub's model and practices in light of standards of care promulgated by leading dental and orthodontic specialty organizations."
On Wednesday, in contrast to the decline of the broader stock market, SmileDirectClub's shares rose by 2.5%.