Einiger & Associates

New York Healthcare Law

Category Archive for ‘Corporate Practice of Medicine’

Advice for Young Physiciansby Scott Einiger, Esq.

Physician Employment Agreements: General Advice for Young Physicians

As a young physician going into private practice, one of the first and most important decisions you will make is selecting a professional affiliation with another physician, group practice or hospital. This decision will have far-reaching effects and may likely shape the course of your professional career. It should not be undertaken lightly.

In deciding which employment offer to accept, meeting with your prospective employer, visiting his/her office and speaking with other employees of the Practice is critical in gaining a comfort level with the Practice philosophy and with the professional work environment. An equally important reflection of the Practice to be considered is the employment agreement presented by the employer. This document will govern the relationship between the parties and should incorporate all verbal representations to ensure that each party understands what benefits (s)he is entitled to and what duties each party is required to perform.

Most employment agreements to some degree contain many similar clauses. However, in order to ensure that your agreement incorporates all of the issues that you have discussed with the prospective employer, it is imperative that the document be reviewed carefully with your attorney to better understand what your primary objectives are, what you are seeking to accomplish and what promises have been made (e.g. of the employment agreements presented what is your geographic preference, what salary range are you seeking, what benefits are most important to you, how soon do you expect to become partner, etc.).

While there are many similarities in general provisions of employment agreements, careful analysis of the specific provisions is critical in ensuring that the agreement meets the expectations and verbal promises that have been made. For example, in most employment agreements the employer agrees to pay for the malpractice insurance of the employee during employment. Knowing whether this insurance coverage is claims made or occurrence coverage, is critical for the young physician who ultimately may leave the Practice, move out of State or no longer practice medicine. If the malpractice coverage provided to the employee was claims made coverage in some instances “tail” insurance is required to keep the policy in effect for prior acts after the employment terminates which can be very expensive to the party responsible. Clarifying what type of malpractice insurance is being offered and who pays for the tail coverage (if applicable) is critical. (See Frederick v Clark et al 150 AD 2d 981)

Some of the other pertinent clauses of an employment agreement include the length of the agreement; duties to be performed; whether it is an exclusive employment; what your compensation consists of (annual salary, bonus (objective v. subjective), benefits); when partnership will be offered and what the buy-in will be; the covenant not to compete (to be enforceable, it must be reasonable as to duration and geographic area); as discussed above the type of malpractice insurance offered (claims made v. occurrence policies); termination provisions (for cause); and severance pay.

Paying careful attention to the contract details will ensure that you achieve the terms you desire.

Grow Your Business without Endangering Your Licenseby Scott Einiger, Esq.

Marketing Your Practice through the Internet: Grow Your Business without Endangering Your License

If you would like more information about this topic or any other topic contact Scott Einiger.

I. Introduction
The advent of the internet has led to enticing advertising and communication prospects. Through this forum the medical community has access to an unlimited patient market that reaches out across the globe. Persons with professional licenses, however, need to be wary of the potential liability faced when marketing a medical practice across state lines. While utilizing this medium has a huge potential upside, the myriad of laws, both state and federal, create liability exposure that can implicate civil, licensure and even criminal laws.

Physicians have strict rules governing their advertising, both ethical and legal that can gravely impact their livelihood. This article addresses examples of real life landmines which lead to scrutiny of the unwary physician.

II. The Unauthorized Practice of Medicine
One of the major benefits of the internet is also one of its biggest detriments: the internet has no boundaries. A physician in New York can attract business anywhere in the world by placing information about themselves or their practice on a website. Problems arise when the information being placed on the internet crosses the boundaries from mere promotional or educational material to the “practice” of medicine in a state where the professional is unlicensed.

As each state requires the formal application and payment of a licensure fee by a physician to practice medicine in that state, and it is a rare occurrence that a physician placing information on the internet is licensed in every state, physicians must avoid “practicing” on the internet. Placing content on the internet, including offering diagnoses or treatment information to out of state “patients”, may constitute “practicing across state lines without a license, which can give rise to potential liability that could affect your professional license or perhaps violate a criminal statute. As an example, the unauthorized practice of medicine in NY State is a violation of civil, licensure and criminal law.

Each state draws its own line through statute or case law as to what constitutes treatment and/or services rendered on the Internet. Clear disclaimers (i.e., this site provides educational information only and is not intended to create a physician patient relationship) are recommended to our clients to limit the information to be used as general information.

The potential for unauthorized “practice” which could negatively impact ones license is not the only concern for physicians promoting their practice on the internet.

III. Advertising or Soliciting on the Internet
Issues with advertising or soliciting on the internet will be more prevalent than advertisements in other forms of media which are more short lived; the internet not only has a broad reach to a broader audience, but the message is available 24/7 to anyone, anywhere, at anytime to access the physicians message, be they competitor or patient. As such, what makes the internet such an attractive forum also makes it a liability trap if used inappropriately.
In New York, Education Law § 6530(27) establishes guidelines that control improper advertising or soliciting in any forum. Areas covered that may cause problems pertinent to advertising or soliciting on the internet are as follows:

a. Advertising that is false, fraudulent, deceptive, misleading, sensational, or flamboyant
As a proactive measure, any claims purported as true, such as positive treatment results, must be substantiated. Failing to substantiate claims will likely lead to a slue of liability for claims, such as, having “perfect results”, or offering treatment that “does not cause any pain”. Further, many physicians proffer themselves as “the top of the field”, or “world-renowned”, but to do so, means you must have the substantiating data to support your claims.

As an example of recent case law on the matter, a physician was convicted of deceptive advertising when he stated in a newspaper advertisement that he was “subspecialty trained in allergy, immunology, and rheumatology – children and adults.” Saunders v. Administrative Review Board for Professional Medical Conduct, 265 A.D. 2d. 695 (Dept. 3, 1999). The petitioner never completed the training in these specialties and further, did not retain hospital privileges in these specified areas. Id. The advertising was misleading “insofar as it implied that petitioner has the expertise to practice in specialty areas which he, in fact, does not possess.” Id. As such, the Third Department concluded that the finding in a disciplinary proceeding that the doctor engaged in deceptive advertising did not “lack…a rational basis in fact.” Id.

A health care provider must be careful in how he words advertisements. A dentist had a newspaper advertisement that stated the following: “When you buy one set of custom dentures at our incredible low price of $169, you get another set absolutely free.” Dubrowsky v. Ambach, 88 A.D.2d 1004, (Dept. 3, 1982). The dentist did not intend to give the patient a free bottom denture with the purchase of a top denture. Id. He merely would copy the denture that the patient was paying for, i.e. if the patient paid for a top denture then the dentist would give the patient another top denture free of cost. The State Board of Dentistry found that this advertising had been misleading. Id.
By contrast, a dentist was not convicted of false and misleading advertising when the information contained in the advertising was up for scientific debate. Callahan v. SUNY, 129 A.D,2d. 241 (Dept. 3, 1987). The court also said that “the capacity of advertising to mislead is judged by the entire context.” Id. The court declined to intervene in a “purely professional dispute concerning the effectiveness of two accepted methods of treatment.” Id.

b. Use of Testimonials
The use of testimonials has always been a popular method of conveying to the public positive results seen in practices, however, many physicians are unaware that under Education Law § 6530(27)testimonials are not allowed in physician advertising. While the statute does not define testimonials, the definition of a testimonial in the Merriam-Webster dictionary is expansive and may include: (1) a statement testifying to benefits received; (2) a character reference; or (3) a letter of recommendation. Further, through our communication with the Office of Professional Medical Conduct (“OPMC”), their position is that they read the education law as a literal definition of the statute, which states that “Advertising or soliciting not in the public interest shall include, but not be limited to, advertising or soliciting that: (iii) uses testimonials.”

Therefore, although physicians oftentimes may use testimonials on their websites, advertisements or other statements in their notices to the public, according to the enforcement agencies this could be the source of investigations involving licensure actions in the future. Unless the statute is amended or a definition limiting what testimonials are off limits (i.e., guarantees, etc.) testimonials are an improper means of promoting ones practice, which seems to fly in the face of the current trend, but nevertheless is prohibited under New York Law. As such, if you are currently using testimonials in advertisements or your website or are planning to do so in the future, we recommend you reconsider until this area of exposure is further clarified.

c. Guarantees of Service
Education Law § 6530(27), will feature potential liability for problems associated with guarantees of service. In many physician websites already up and running, doctors are publishing statements that may be interpreted as guarantees of service.

Guarantees of service may include the guarantee of end results, the guarantee of recovery time, and the guaranty of price and so on. It is unclear how/if the term “guarantee of service” will be interpreted. It is clear, however, that no matter how it is interpreted, physicians must be wary of the claims made on their websites.

d. Claims Relating to Products and Prices
As with services, physicians must be careful when marketing products online. Without properly substantiating claims concerning projected product results, physicians face a mountain of potential liability. Unlike other industries that may or may not be held liable for such claims, as such a highly regulated profession, medicine is held to a higher standard. Doctors cannot simply think just because other professions can sell products on ebay or make claims of success rates on personal websites it is alright for them to do so as well. All claims in physician advertisements MUST be substantiated.

e. Claims of Professional Superiority
If you are advertising on a website, any claims of professional superiority should be substantiated by your license. If you are not an anesthesiologist, but have one on staff it is imperative that such information is evident on your website.

f. Offers, Bonuses or Inducements
An offer, bonus or inducement in any form other than a discount or reduction in an established fee or price for a professional service or product may lead to potential liability. When trying to market towards the public, and attempting to bring in business by lowering product prices, or even treatment/service prices, physicians must be careful not to incentivize in an inappropriate way.

IV. Communication Via Internet
Using the internet as a means of communication with patients may result in liability by your office for breach of confidentiality if forwarded to unauthorized person. While email can be a valid, convenient, and inexpensive mechanism for communication with patients, at issue are privacy, confidentiality and security, which must be addressed to ensure the efficacy and effectiveness of email.

Currently, the Health Insurance Portability and Accountability Act (HIPAA) privacy and security regulations apply to email communications that contain a patient’s protected health information (PHI), as defined in HIPAA privacy regulations. [1] HIPAA requires encryption of messages when sending PHI over the Internet. [2] Therefore, if your practice is using a third party to manage your email system, HIPAA privacy regulations require a written business associate agreement with the service provider. Also, HIPAA requires physician office networks to have appropriate protection (firewalls and physical security) to prevent unauthorized individuals from gaining access to clinical email or medical records, and to have appropriate safeguards to prevent the loss or unauthorized access to or distribution of PHI. Moreover, as a practical concern, it is virtually impossible to ensure your patient is the one receiving properly sent messages; anyone could be on the receiving end, capable of viewing confidential information, which is why safeguards must be in place.

V. Conclusion
The aforementioned issues are by no means an exhaustive list of areas that present potential liability risks when utilizing the internet for personal or professional gain as a physician. These are but a few samples of real life issues that have arisen in our representation of clients involved in licensure proceedings and reported cases. The truth of the matter is, as an emerging area, the internet is still categorized as a vastly unknown quantity. The potential for advertising and communication for physicians is just beginning to be seen: pro and con. The coming years promise an enormous increase in both Telemedicine (mainly for hospitals and the government) and Telehealth (mainly for individual providers, currently being used predominantly for monitoring).

As such, please allow the information in this article to serve as a general alert when working with your marketing team to take into account your legal responsibilities to avoid additional cost and liability.
[1] 45 CFR § 160, 164
[2] Id.

Let the Unlicensed Bewareby Scott Einiger, Esq.

“View Article As Seen In New York County Medical Society – MM News: Legal Briefs”

The following article is provided by Scott Einiger, Esq. and Basil H. Kim, Esq., from the firm of the Medical Society of the State of New York’s special counsel, Abrams Fensterman.

The Corporate Practice of Medicine: Let the Unlicensed Beware

The Corporate Practice of Medicine (CPM) doctrine is a legal area often misunderstood by practitioners in New York and by those in other states that enforce this rule of law. Usually thought of as only a liability trap for the unwary practitioner, CPM instead creates a tremendous business advantage for MDs/DOs and is a substantial barrier to entry for potential competitors who are either unlicensed or in lower licenses. While there is no doubt that failing to structure the corporate or business relationship with lesser licensed or unlicensed individuals correctly may result in substantial civil and licensure implications, this article will focus on the substantial advantages to practicing in a state that enforces this rule of law as protective of an MD’s unique training and license.

The CPM doctrine was established by the American Medical Association for the protection of both the public and the profession of medicine. The primary intent of the CPM doctrine is to ensure that only licensed medical professionals deliver medical care and to remove the potential influence of external factors in treatment decisions. As the “practice” of medicine is increasingly viewed as the “business” of medicine, the CPM doctrine seeks to remove any potential conflicts of interest that may arise between a physician’s medical judgment and desire to provide quality patient care versus outside business and financial interests. The prohibition on the CPM is found in both statutory and common law.

“There is no doubt the state has a strong interest in protecting the health and safety of its citizens.” People v. Pustilnik, 14 Misc.3d 1237(A), 836 N.Y.S.2d 502 (2007). This is the fundamental basis upon which the CPM doctrine stands. In New York statutes, there is no single provision that directly prohibits the corporate practice of medicine. Rather, the restriction is based on an interpretation of several statutes, including New York Education Law §6522 and New York Business Corporation Law §1501.

Exceptions to the Doctrine
There are several exceptions to the CPM doctrine. First, not-for-profit medical or dental expense indemnity corporations or hospital service corporations organized under the Insurance Law may employ licensed physicians. Second, properly chartered medical schools may hire physicians, and teaching hospitals may enter into fee sharing arrangements commonly known as “faculty practice plans.” Third, employee health and school health programs, where physicians and nurses are on salary and premises to perform health services as needed, are permitted. Finally, businesses may hire physicians to serve in advisory or consultation roles where no direct patient care is administered.

One final “exception” to the doctrine is that professional corporations or partnerships that are owned only by physicians may employ other physicians and share fees and profits among themselves. It is this provision that provides both business advantages and opportunities for physicians in the State of New York.

The Business Advantage of the Corporate Practice of Medicine
Debates around continuing the CPM doctrine in New York State continue, especially in light of recent health care reforms and ballooning health care costs. One side of the debate holds that the corporate practice prohibition should be removed (as it has been in many states) because it hinders efficiencies and business relationships. The other side of the debate is that the removal of the prohibition would weaken the physician/patient relationship, affect the medical judgment of the physician and introduce an unwanted financial variable into the health care delivery equation.

Though physicians may view the CPM doctrine as a restriction on their ability to work for business entities or to create relationships as they desire, the doctrine also prohibits non-licensed (or lower licensed) individuals from entering into the marketplace and competing with physicians. For example:
John, a businessman, opens a limited liability company (LLC) in New York City where he employs physicians to provide health care screenings to community members at a discounted, out-of-pocket rate. John also provides all of the equipment and supplies necessary to provide these screenings. Satisfied patients spread the word and the business grows. Over time, John advertises his business and is able to make a profit, while also improving the community’s overall wellness through the screenings.

Although this LLC may appear to make sense from a business (and even from a community wellness) perspective, “John” is illegally engaged in the corporate practice of medicine. Non-physicians may not employ physicians. LLCs, because they are not professional corporations (PCs or PLLCs), may not provide professional medical services; in fact, professional corporations may only be owned by professionals, such as physicians. John and his LLC are considered to be fraudulently holding themselves out as permitted to practice medicine in New York State and are thereby prohibited from engaging in this business.

It is this very prohibition that ultimately benefits physicians. In other states where the CPM prohibition has been abolished, physicians are facing stiff competition from lay individuals, business persons and corporations looking to enter the marketplace and provide medical services. Additionally, some physicians in those states are facing challenges in their individual practices, being forced to balance their own medical decision making against the business interests of those who own and operate the health service entities.

Although the value of the CPM prohibition remains a source of debate in New York, it is still the law of the land. Note that this does not, however, mean that physicians cannot enter into business relationships with non-physicians. Rather, it simply means that the relationships must be created appropriately and in accordance with New York State laws. Providers should take advantage of this provision as providing a tremendous business advantage over potential competitors who are unlicensed or in lower licenses. Most importantly, the prohibition maintains the integrity of the medical profession and the crucial patient/physician relationship, preventing outside business influences from having an impact on medical decision making.

Copyright © 2014 — EEMDLAW