A key issue in a health care transaction between licensed healthcare professionals and non-professionals providing comprehensive management services is whether the agreement will run afoul of state rules prohibiting the corporate practice of medicine, dentistry or other professions, and, if so, to what degree the governing state will enforce the prohibition.
Essentially all states have some form of corporate practice of dentistry prohibitions whether by statute or case law. Such states also have fee-splitting prohibitions between licensed and unlicensed individuals and entities that also are linked with these prohibitions. Significant risks arise when a non-professional vendor is engaged to manage or consult for a licensed professional or an entity owned by licensed professionals.
New Hampshire law defines owning, maintaining, operating or managing a “dental business” as the practice of dentistry. NH R.S.A. 317-A:20 (I)(b).
A settlement agreement matter that arose in the state of New York (NY has a heavily regulated dental/health care industry) found that Aspen Dental Management Inc. (Aspen) overstepped the boundaries related to management services and control of a dental practice. Aspen is a dental practice management company which provides business and administrative services to individually owned Aspen Dental brands across the US. The Attorney General of New York found that Aspen exercised undue control over the practices and was acting as a de facto owner. Such control was a violation of New York law.
New York regulators focused on Aspen’s “undue control” over compensation arrangement based on a percentage of the practice revenue, control over bank accounts, advertising and marketing practices, treatment plans and clinical staff employment matters.
Dental (and medical) professionals entering into health care transactions with companies providing management services should be careful to avoid any agreement or contract provisions that could be interpreted as preventing the practice owner(s) from having full control over their revenues, profits, incomes, disbursements, bank accounts and other financial decision making.
At Welts, White & Fontaine, P.C. our lawyers have experience representing owners of closely held businesses in a wide array of industries including professional practices, technology companies, manufacturers, car dealerships, franchisees, restaurants and a wide array of small businesses. We can help guide you through a successful navigation of New Hampshire’s business laws. Please contact Attorneys John Polgrean or Thomas “Jay” Leonard if you have questions or concerns about your business planning endeavors. (603) 883-0797. firstname.lastname@example.org or fill out our Contact Us form.
Author: John Polgrean
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.