Health Care Law
The delivery of health care services is governed by a complicated set of state and federal statutes, regulations, and rules that impact providers, patients, insurers, and others. For physicians, advance practice professionals (APPs), and their employers, doing business in the health care field is by no means “business as usual,” which is why they turn to the attorneys at Kreis Enderle.
We advise medical practices, hospitals, clinics, and joint ventures, and provide a wide range of legal services that include:
- Medical practice formation
- Employment agreements and compliance
- Purchase and sale of medical practices and health care facilities
- Real property development, purchases, sales, leasing, and build-outs
- Equipment leases and purchases
- Contract negotiations with various health care vendors (Information Systems, billing and collections, etc.)
- Preparation and negotiation of Professional Services Agreements (PSAs)
- Review of third-party billing agreements
- Advocacy in insurance claim denials
- Regulatory compliance with HIPAA, Stark, Anti-Kickback, and Medicare and Medicaid
Besides representing businesses and corporate entities, we also represent medical professionals individually, helping them navigate legal issues throughout their careers, such as:
- Licensure, credentialing, investigations, and disciplinary proceedings
- Employment contracts and immigration status
- Shareholder and Member agreements
- Succession planning and partner retirements and withdrawals
- Estate planning
- Tax compliance and planning
Health care is the fastest-growing sector of the economy, and its impact is felt in every community in Michigan and across the country. The practice of medicine is now the business of medicine, and the reason doctors and other health care providers rely on Kreis Enderle when they want to pursue new opportunities and manage risk.
What factors should be considered when selecting a business entity for a medical practice or health care facility?
Health care laws limit who can own the entity and how ownership may be structured. In Michigan, providers of professional medical services – such as MDs and DOs, surgeons, and dentists – must incorporate as either a professional service corporation (PC) or a professional limited liability company (PLLC). Under certain conditions, APPs also have the ability for ownership interests in such entities.
Because of physician-patient confidentiality, professional decorum, and medical ethics concerns, state law requires that shareholders in a PC and members in a PLC must be licensed or legally authorized in Michigan to provide the professional service for which the entity was organized. There is an exception, however, that allows nonprofit entities like hospitals and both nonprofit and for-profit nursing homes to employ medical professionals. There may be opportunities for medical professionals (with or without non-healthcare professionals as co-owners) to own ancillary businesses, such as entities that own medical equipment or the buildings in which health care services are performed, as long as the PC or PLLC that renders those services remains separate and other state and federal statutory and regulatory requirements are met. Consulting an attorney with health care, business, real estate, and tax law experience is highly recommended when pursuing such ventures.
What kinds of provisions should be included in a physician’s employment agreement?
PCs and PLCs/PLLCs often have employment contracts with their professional employees who work for them, although certain elements and clauses are quite different from non-health care employment agreements.
Beyond the contract term and termination details, the agreement should address fundamental rights and responsibilities including total compensation, salary, signing bonuses, and incentive pay, which can vary depending upon the individual’s experience, training, area of specialty, and the geographic location of the practice. Employee benefits are also an important issue to be addressed, covering not only health and malpractice insurance, but also professional membership dues, relocation expenses, student loan repayment, reimbursement for continuing education, and leave situations.
It may also be necessary for an employment agreement to specifically address the employee’s opportunities for future ownership, whether outside employment will be permitted, and how the practice will treat income the employee earns for work outside the practice (i.e., research, inventions, speeches and presentations, teaching positions, consulting, board service, and directorships). Memorializing expectations in writing can avoid unnecessary disagreements and disputes.
Restrictive covenants such as non-competition and non-solicitation clauses are commonly found in most health care provider employment contracts. A non-compete provision can limit the health care provider’s ability to practice medicine within a specific timeframe, geographic area, and specialty, thereby precluding him or her from competing with his or her current and former employer. Non-solicitation language seeks to prevent a departing health care professional from luring other professionals, staff, and business partners from the practice. Restrictive covenants pose important considerations to all parties involved, and careful drafting and thoughtful negotiation are essential to later enforcement.
How does the Michigan Bureau of Professional Licensing (BPL) pursue disciplinary actions against a health care professional?
An allegation must first be lodged against the licensee for the BPL, a division of the Michigan Department of Licensing and Regulatory Affairs (LARA), to begin the process. Allegations are generally based on claims that the provider rendered substandard care or practiced beyond the scope of his or her license. Once filed, BPL representatives review the allegation to determine if the licensee violated Michigan’s Public Health Code, which results in a formal investigation of the allegation or closing the allegation with no further action.
In an investigation, a BPL official collects evidence and conducts interviews of the person who filed the allegation, potential witnesses, the licensee, and anyone else who might offer additional information. If sufficient evidence exists, the investigator will refer the allegation for review by an expert with the same or similar education, training, and experience as the provider.
If the expert concludes that the licensee failed to act within the minimal standards for the profession, the file is transferred for the drafting of an administrative complaint. Once served, the licensee has 30 days to respond in writing or the matter will result in automatic sanctions, although the State of Michigan can summarily suspend the provider’s license or registration if it believes there is an imminent threat to the public’s health, safety or welfare.
A compliance conference is conducted after the licensee responds to the complaint. The parties have the chance to then negotiate a settlement that might include a fine, probation, reprimand, license restriction or suspension, conditions for continued licensing, or dismissal. If a settlement is not reached, an administrative law judge (ALJ) holds a hearing with an assistant attorney general representing the State of Michigan. It is important for a health care provider to be represented by an attorney experienced in professional licensing matters, and professional liability insurance will often pay for a good portion of the attorney fees incurred.
Following the hearing, the ALJ issues a proposal for a decision that is presented to the disciplinary subcommittee for final determination. The subcommittee may accept the ALJ’s decision and issue sanctions, dismiss the complaint, or reverse the ALJ’s decision and issue its own findings. The subcommittee’s decision can be appealed to the Michigan Court of Appeals for further review.
What are the different “fraud and abuse” laws that apply to physicians?
Physicians can face criminal penalties, incur monetary fines, and risk loss of professional licenses if they violate federal fraud and abuse statutes. Here’s a breakdown of the three most prominent federal laws.
The False Claims Act (FCA) makes it illegal for a health care provider to submit a Medicare or Medicaid payment claim that the provider knew or should have known is false or fraudulent. The “knew or should have known” requirement means that the physician either actually knew of the falsity or that he or she “acted in deliberate ignorance or reckless disregard of the truth.”
The Anti-Kickback Statute (AKS) prohibits physicians from giving or accepting “remuneration” for patient referrals. Remuneration can be cash, expensive meals and hotel accommodations, excessive compensation for medical directorships or consultancies, and other items of value. AKS also prohibits remuneration for business opportunities that involve drugs, supplies, or health care services for which the federal government pays.
Under the Stark Law – also known as the Physician Self-Referral Law – it is illegal for physicians to refer patients to entities that provide “designated health services” payable by Medicare or Medicaid if the physician or an immediate family member has a financial relationship with those entities. Designated health services include clinical laboratories, physical and occupational therapy, radiology and diagnostic imaging, home health services,
outpatient prescription drugs, and inpatient and outpatient hospitals. Michigan also has statutes that cover the same issues but in different ways, and both the federal and state laws must be considered when reviewing any proposed health care arrangement.