Legal Department


The Legal Map to a Multi-discipline Practice
Legal Department
Written by Deborah A. Green, Esq.   
Friday, 22 April 2005 14:45

If done correctly, the multi-discipline practice is completely legal and will most likely have a longer life than the stand-alone chiropractic practice.

The reasons are simple. At one time, many states followed the corporate practice of medicine doctrine (the “Doctrine”). The Doctrine held that only a medical doctor was allowed to own shares in a corporation that rendered medical services. Today, more and more states are permitting allied health care practitioners to form professional entities together; this means that a chiropractor and a medical doctor may become shareholders in the same entity. Other states are eliminating the Doctrine entirely. In those states where the Doctrine has been eliminated, anyone may own an entity which renders medical care. The entity must, however, employ a medical physician who is responsible for making all medical decisions. The owner of the entity may have no input with respect to any medical decision concerning any patient unless she/he is a medical doctor or an osteopathic physician (hereinafter, “M.D.”) herself/himself.

Investigate Your State Laws

There are various sub-categories of the Doctrine in those states which still recognize it. Some states permit a chiropractor to hold shares in a medical professional entity, so long as an M.D. is also a shareholder; some states require that, in such a case, the M.D. hold a majority of shares, because the M.D. holds a plenary license whereas a chiropractor holds a limited license; other states require that the name of the entity not contain the word “medical” or “medicine” when a non M.D. owns shares in the entity, while other states consider the use of the word “medicine” or “medical” mandatory. Some states still do not permit anyone other than an M.D. to own shares in an entity which renders medical services. It is very important to ascertain what the status of the law is in your state with respect to the corporate practice of medicine Doctrine. Failure to comply with the Doctrine could result in contracts being declared void, loss of professional licensing, injunction against the practice’s business operation and a myriad of other sanctions.

Precautions in Billing

Regardless of what the law is in your state, you must be extremely careful in the way that services are billed. Never use the name and/or billing number of an M.D./D.O. who is not physically on the premises when a service is performed, except under very narrow circumstances. “Standing orders” (a situation where the M.D. sees patients once a month for a few hours and writes a “prescription” for chiropractic adjustments which are then performed by the DC but are billed in the name and number of the M.D., as if the M.D. were physically on the premises) should be avoided entirely. It is false billing and might land you in jail.

Setting up a Multi-disciplinary Practice

Establishing a multi-discipline practice owned by a chiropractor, in those states which have eliminated the Doctrine, is relatively simple. A single entity is formed, which is owned by the chiropractor. This entity enters into employment agreements with its employees, such as the M.D., nurse practitioner, chiropractor, physician assistant, and so on. Care must be taken that each health care practitioner renders services within the scope of his practice. The best way of ensuring this is to be familiar with the scope of practice of each practitioner that is hired.

In order to comply with the law of those states which uphold the Doctrine, certain contracts must be entered into by various entities. I recommend that three entities be formed:  A Management Company, a Professional Entity, and a Funding Company.

The following is an explanation, in a nutshell, of the interaction among the medical entity which is owned either solely by an M.D. or by both an M.D. and the chiropractor (the “Professional Entity”), a management company which is owned solely by the chiropractor (the “Management Company”) and a funding company which is also owned solely by the chiropractor (the “Funding Company”).

The Management Company

The Management Company charges a fee for every act and/or service that it performs on the Professional Entity’s behalf (e.g., all clerical duties, equipment rental, lease rental, etc.), pursuant to the terms of the Management Agreement in which it enters with the Professional Entity. The charges must be at a fair market value rate (value added if applicable), which is a set fee (under no circumstances should it be a percentage, as many states consider the payment of a percentage to the management company by the Professional Entity to be fee splitting), and payable regardless of whether the Professional Entity is actually paid for its services. Your accountant can help you determine the fair market value applicable to your area.

Caveat: Many doctors have found themselves in trouble because they did not treat the Management Company like an actual business. It is vital that you be familiar with all the terms of the Management Agreement and that you abide by them. You may no longer think of yourself as just a chiropractor—you are also the president of the Management Company and you must run that business properly.

The Medical Professional Entity

The shares of the medical professional entity  (“Professional Entity”) are owned by an M.D. (and, where permitted, also by the chiropractor). The chiropractor is named as Secretary of the Professional Entity for purposes of administrative convenience only. Under no circumstances may the chiropractor exercise control over any medical issues, which are left strictly in the purview of the M.D., who will also be the medical director of the Professional Entity.

The Professional Entity may employ various licensed health care professionals, such as physicians, physical therapists, chiropractors, etc., to render services to the Professional Entity’s patients. Each such health care professional enters into a written employment agreement for a term of no less than one year with the Professional Entity. Payment to each such health care professional is at a fair market value rate. Fair market value is determined by the going rate for such health care professionals in your community.

The Funding Company

The Funding Company is funded by you, personally. The Funding Company then provides a loan to the Professional Entity for any and all working capital requirements that the Professional Entity may have, e.g., the purchase of equipment, salaries, lease payments, management fees, taxes, your practice, etc. The Funding Company is repaid by the Professional Entity (interest only). The interest is paid to the Funding Company monthly. The principal amount is due on demand. In order to secure its loan, the Funding Company receives a Note and a lien on all accounts receivables and other assets from the Professional Entity, in addition to other security.

Caveat: The Funding Company will protect your investment in the event that the M.D. working in your practice gets divorced, dies, or goes bankrupt. Do not ignore this company—make sure that you use it properly. If you do not understand the reason for its existence, make sure that your lawyer explains it to you in detail.

If you have any questions with regard to the above or with respect to any other legal heath care issues, you may FAX your questions to Deborah A. Green, Esq., at 954-971-3787 or call 954-971-7778 or e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it . In future issues, she will be answering those questions which are of interest to the broadest audience.

Ms. Green has been a practicing attorney since 1977. She is admitted to the practice of law in the State of New York and Florida and is a member of the American Health Lawyers Association, the New York State Bar Association Health Care System Design Committee, the New York State Bar Association Health Care Providers Committee, the American Bar Association Health Law Section and the Florida Bar Health Law Section. She has formed numerous multi-discipline practices throughout the country.

DISCLAIMER

Because this column is being presented to you by an attorney, it would not be complete without a disclaimer. This column is provided subject to and governed expressly by the terms of this disclaimer. This column is provided for educational purposes only. The accuracy or timeliness of the information presented herein is not warranted. The information presented herein is not intended to be advice as to a specific fact pattern with which you may be presented.  Accordingly, please note that the information contained herein is not being presented as legal advice with respect to any matter and that no attorney-client relationship is hereby established.

 
How to Lower the Risk of Making Mistakes
Legal Department
Written by Larry Economos, Esq.   
Tuesday, 15 March 2005 03:10

The most obvious answer is don’t engage in intentional fraudulent schemes involving claim submissions to Medicare or private insurance programs seeking more compensation than you would otherwise be entitled. Keep in mind that, despite the fearsome issue of honest billing errors leading to criminal investigations, most criminal investigations stem from fraudulent conduct that is reported by an employee, third party, or an insurance program, itself. Health care fraud is a national problem that passes loss onto consumers in the form of higher premiums and poorer economic output.  Bear in mind that facts used to illustrate previous points in earlier articles are fictional and not to be confused with actual criminal cases or intended to suggest the guilt or innocence of any actual defendant.  United States prosecutors and investigators are honorable and discharge their responsibilities ably and well. Qualified defense attorneys perform equally well, but the rubber meets the road with the age old adage, “If you can’t do the time, don’t do the crime.”

And for those sailing with an ethical compass, but with a sloppy, poorly trained crew, don’t despair. Four words will help get you back in command and set your ship aright: Health care compliance audit. There’s nothing magical to this. No short cuts and no sweeping stuff under the rug. If you have a dirty kitchen, you either clean it up or it stays dirty. The answer to cleaning up sloppy billing procedures is no different. Just do it.

Where do you find these amazing problem solvers? From referrals from others; from trade journals and the Internet. But a word of caution: Check the resume. An unqualified person is going to do this job poorly and leave you with false security. Health care laws are complex. Folks make a living out of figuring them out. Proper health care billing, in all respects, requires a breadth of knowledge of various matters, from CMS regulations governing Medicare, to criminal codes, to private insurance program policies, to CPT terminology and industry interpretations, to common understandings of ordinary and customary billing practices.

After your compliance audit is completed, conduct an interview with the auditor; find out where your danger spots are and make corrections as advised. Then, schedule a tune up on a periodic basis to make sure time, and the laws are not passing you by. Be good to your practice and it will be good to you.

The other thing you can do is to take an inventory of your crew. If you started out from Bermuda, charted a course to the Bahamas, and ended up in Iceland, chances are that, no matter how much you know about sailing, something’s going awry when you’re not in the cockpit. If it’s not the boat itself, then, well, the source of the problem should be pretty obvious. If you have unqualified employees in positions of responsibility, requiring them to code medical procedures, fill out HFCA claim forms, interpret your handwriting on medical records, even type in input for your computer billing program, then you have a problem akin to a gambling addiction without any upside chance of ever hitting it big. You may as well spend your time painting placards that say,”I am innocent!” and march in circles around the nearest courthouse. In fact, there comes a point when recklessness creeps awfully close to deserving what one gets. Don’t be reckless. Don’t try to save expenses by hiring undereducated, under qualified wonder kids, expecting them to figure everything out for pennies to the dollar. If you have unqualified folks doing your billing, let them go.  If you don’t have any, just say, “No.”

Larry Economos, a civil and criminal defense attorney whose practice focuses on federal health care fraud defense, is a managing partner with Mills & Economos, LLP. Mr. Economos can be contacted via his website address, www.leconomoslaw.com, or by telephone at 800-456-0460, 704-375-9913, or 252-752-6161.

 
Warning Signs of a Potential Health Care Fraud Investigation
Legal Department
Written by Larry Economos, Esq.   
Tuesday, 15 February 2005 01:53

While some of the warning signs of a potential health care fraud investigation are obvious, others are not.  Consider the obvious ones to be flashing red lights signaling you to stop and make sure you can move in safety before starting again.  The less obvious warning signs are cautionary, yellow lights signaling you to slow down and proceed with care.  Both require attention. 

The obvious signs have one thing in common: The insurance company.  They are fourfold in increasing order of severity:

1.  A billed health insurance company notifies you of an internal audit indicating unusual billing errors;
2.  Representatives of a billed health insurance company ask that you submit billing records for their review;
3.  Representatives of a billed insurance company come to your office asking to review records; and
4.  A billed health insurance company demands that you pay back a significant amount of money for alleged improper billing. 

Signs 1 and 2 demand that you stop conducting business as usual and conduct your own internal audit of treatment records and submitted bills.  Have an attorney involved to make certain your audit remains private and privileged.  Discover your own errors and implement corrective measures.  Allow a qualified health care fraud defense attorney to represent you in all correspondence and dealings with the insurance company.

If you’ve handled signs 1 and 2 properly, signs 3 and 4 may never appear.  If they do, you have laid a foundation to establish your innocence due to billing errors rather than to intentional acts of fraud.  The less obvious warning signs are threefold:

1.  Word gets around that a disgruntled employee is threatening retaliation;
2.  An employee notifies you that insurance claims have been submitted with significant billing errors; and
3.  Either you or a partner keeps scanty treatment records, often not fully documenting all your services.

When any of these signs appear, implement an internal review of your billing practices.  Scrutinize some randomly selected submitted claims for billing errors, however small, and implement corrections for future submissions.  Begin proper treatment documentation.  If significant billing errors are found or suspected, consider yourself seeing a flashing red light and proceed to implement corrective measures, as outlined above, for obvious warning signs 1 and 2.

Final word of caution: Make certain that your attorney is qualified and experienced in health care fraud defense.  Regardless of their experience level in criminal defense, health care fraud is a specialized area that requires experience and knowledge in Health Care Financing Administration (HCFA) 1500 form billing, Medicare laws, state and federal criminal law, private insurance company adoption of billing regulations, contractual notice, Continuous Performance Tests (CPT) chiropractic coding, incidental billing practices, as well as customary health care billing practices.  Not many attorneys have this experience.  Ask about prior experience, including past contacts with qualified medical billing compliance officers.  Don’t be a lawyer’s guinea pig.

Larry Economos, a civil and criminal defense attorney whose practice focuses on federal health care fraud defense, is a managing partner with Mills & Economos, LLP. Mr. Economos can be contacted via his website address, www.leconomoslaw.com, or by telephone at 800-456-0460, 704-375-9913, or 252-752-6161.

 
Chiropractic Telemarketing Wins in Two State Supreme Court Rulings
Legal Department
Written by Deborah A. Green, Esq.   
Tuesday, 15 February 2005 01:49

gavelandscalesofjusticeThe highest courts in both Arkansas and Florida have ruled in favor of certain chiropractic marketing efforts. The Arkansas Supreme Court held that the Arkansas Chiropractic Board’s regulation prohibiting telemarketing to accident victims was an absolute prohibition on commercial speech and, therefore, violated the First Amendment. The Florida Supreme Court held that a statute making criminal the solicitation of accident victims was illegal on the same grounds.

In Arkansas, a licensed chiropractor employed a professional telemarketing company to build his client base. The telemarketing company accessed accident reports from the geographic area in which the doctor practiced, called the accident victims within days of the accident and scheduled appointments. The Arkansas Board of Chiropractic Examiners (“Board”) considered this “unprofessional acts.”

The facts in Florida involved the same type of marketing activity. Florida had a statute making this type of telemarketing activity criminal.

The Florida Supreme Court and the Arkansas Supreme Court applied the standards developed by the United States Supreme Court in Central Hudson Gas & Elec. v. Public Serv. Commission, 447 U.S. 557 (1980). In the Hudson case the U.S. Supreme Court imposed the following standards to determine whether a statute or regulation is constitutional: whether (1) the expression is protected by the First Amendment; (2) whether the asserted governmental interest is substantial; (3) whether the regulation directly advances the governmental interest asserted; and (4) whether the regulation or statute is not more extensive than is necessary to serve that interest.

Both courts held that the restriction on the chiropractor’s commercial speech was more extensive than necessary to serve the interest of the state in protecting its citizens from over reaching by the doctor. The courts held that the respective regulation and statute violated the doctors’ freedom of speech and was an unconstitutional infringement on commercial speech in violation of the First Amendment.

Do not take these cases as permission to freely telemarket without being very careful as to the content of your marketing. Both these cases could easily have gone the other way if the regulation or statute had been drafted more carefully and, in both cases, the consequences would have been severe.

If you have any questions with regard to the above or with respect to any other legal heath care issues, you may FAX your questions to Deborah A. Green, Esq., at 954-971-3787 or call 954-971-7778 or e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it . In future issues, she will be answering those questions which are of interest to the broadest audience.

Ms. Green has been a practicing attorney since 1977. She is admitted to the practice of law in the State of New York and Florida and is a member of the American Health Lawyers Association, the New York State Bar Association Health Care System Design Committee, the New York State Bar Association Health Care Providers Committee, the American Bar Association Health Law Section and the Florida Bar Health Law Section. She has formed numerous multi-discipline practices throughout the country.

DISCLAIMER

Because this column is being presented to you by an attorney, it would not be complete without a disclaimer. This column is provided subject to and governed expressly by the terms of this disclaimer. This column is provided for educational purposes only. The accuracy or timeliness of the information presented herein is not warranted. The information presented herein is not intended to be advice as to a specific fact pattern with which you may be presented.  Accordingly, please note that the information contained herein is not being presented as legal advice with respect to any matter and that no attorney-client relationship is hereby established.

 
How Can Chiropractors Minimize the Chances of Being Targeted for Criminal Investigation for Health Care Fraud?
Legal Department
Written by Larry Economos, Esq.   
Saturday, 15 January 2005 00:34

The answer is four fold in order of importance:

1)  Maintain good records;
2)  On some periodic basis, voluntarily submit to a health  care billing compliance audit conducted by a qualified compliance officer;
3) Associate with qualified office staff;    
4) Maintain professional relationships with all employees and medical associates.

Sounds easy, but it’s not.  Like a diet, the rules are simple, but often difficult to apply over the long haul.  Insulating oneself from criminal investigations in the midst of increasingly aggressive but wrong-headed prosecutions requires a no-excuses approach that measures success against a negative outcome.  In other words, it works, if you don’t get targeted for investigation.  But, without being targeted, you’ll never know whether all your efforts ever prevented a single investigation.  So, you might wonder, with no way to ever truly measure the success of your labors, why make any efforts?  Well, because there are side benefits to these basic efforts that will streamline your practice and make it more efficient and successful.  You will become a more disciplined and better professional.  And you will make more money.

1. Maintaining good records is more than employing a good office manager.  It means you must document, document, document.  These are the three “D’s”; forget about the others.  Discipline yourself so that, when in doubt, you  document.  Strive to reach the point in your practice where documenting your services—treatment, history, or mental notes—becomes as second nature as thinking about your patients’ problems.  Simply put: More is better; less is worse.  There are untold numbers of chiropractors who were either targeted or had investigations go haywire because of failing to properly document their treatment records.  And it’s good for your practice.  It provides you and others an ever-ready road map for efficient treatment.  It insulates you from complaints, no matter the origin—a patient, insurance company, employee, or cop.  And, don’t forget a back up to the records.  You need to put these records on disc every so often, in the event of fire or other damage.

2. Once every year or so, submit to a voluntary health care billing audit.  There are qualified personnel across the country, individuals who will come into your office and provide you with a business physical.  It’s no more discomforting than submitting to a urine or blood sample.  After a day or so, it’ll be over.  The cost isn’t so bad.  You will get a written report of some type.  Hire an attorney to maintain the reports for you so that any identified problems will remain private and privileged.  Read the report and implement at least some of the suggestions.  There is no better defense to the prevention of bad stuff.  It’s like taking a flu shot.

3. Do not associate with unqualified medical personnel,  at your office or elsewhere.  Of course, it may take some time to discover.  If so, once it becomes known, remove yourself from the situation, whether by firing, hiring, or fleeing.  Guilt by association is alive and well in health care fraud prosecutions.  One can  be  both courteous and firm when it comes to protecting a career.  Protect yours.

4. Finally, maintain professional relationships with employees and medical associates.  This means more than simply smiling and saying good morning.  Do not become involved in a side business deal or investment interest with any such person.  Limit your business deals with employees and medical associates to those involving your chiropractic practice. Play the stock market with someone else.  Invest in someone else’s real estate venture.  And, if a business arrangement limited to your chiropractic practice sounds too good to be true, well, it probably is.  So get some professional advice before you do it.  It’s better to pay a few hundred dollars now, to make sure everything’s on the up and up, than to struggle later trying to pay attorneys to fix problems you could never imagine were even possible.

Larry Economos, a civil and criminal defense attorney whose practice focuses on federal health care fraud defense, is a managing partner with Mills & Economos, LLP. Mr. Economos can be contacted via his website address, www.leconomoslaw.com, or by telephone at 800-456-0460, 704-375-9913, or 252-752-6161.

 
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