| What does New York Law Say About Medical | | | | 50 percent of the fees for the tests. In another |
| Fee Splitting? | | | | case, a corporation employed doctors and |
| Generally, New York law bans fee splitting in the | | | | provided them with office space and equipment in |
| practice of medicine. This prohibition applies to | | | | exchange for a percentage of their income. |
| both corporate and individual settings. Specifically, | | | | Another example is one of a physician who had |
| New York Public Health Law section 4501(1) | | | | his license suspended for paying referral fees to a |
| expressly forbids both businesses and individual | | | | women's health center that had been referring to |
| practitioners to practice medicine for profit in a | | | | him patients for abortions. |
| manner that includes "the referral or | | | | Are there any exceptions? |
| recommendation of persons to a physician, | | | | Yes. The law permits physicians to practice |
| dentist, hospital, health related facility, or | | | | medicine and share fees through partnerships, |
| dispensary for any form of medical or dental care | | | | professional corporations, university faculty |
| or treatment of any ailment or physical condition." | | | | practice plans, hospitals, HMOs, and employee |
| The law also prohibits physicians and other health | | | | student health programs. While permitted, such |
| care professionals and facilities "to accept for | | | | arrangements are subject to limitations. For |
| medical or dental care or treatment any person | | | | example, a physician who is not a member of a |
| referred or recommended for such care or | | | | partnership may not share fees with the |
| treatment by a medical or dental referral service | | | | partnership. |
| business located in or doing business in another | | | | What about paying salaries to employees? |
| state if the medical or dental referral service | | | | Paying salaries to employees is not illegal fee |
| business would be prohibited... if the business were | | | | sharing unless the salaries are contingent on the |
| located in or doing business in New York." In | | | | physician's income and are a certain percentage of |
| simple words, it is prohibited to give or accept | | | | the income. Fee sharing with another physician is |
| fees for patient referrals. | | | | permitted under certain circumstances, such as in |
| Does the law make any distinction between | | | | the case with a consultant or professional |
| individual and corporate practice of medicine when | | | | subcontractor. |
| it comes to sharing fees? | | | | Is it a problem for a physician to employ a billing |
| In New York, businesses and non-profits | | | | company or a collection agency? |
| organizations are not allowed to practice medicine | | | | That depends on the type of the agreement |
| per se unless they are so certified by the Public | | | | between the physician and the billing company. By |
| Health Council. Therefore, any New York physician | | | | default, many billing businesses prefer a |
| who shares or allows others to share in the fees | | | | contingency-based model where they charge the |
| for medical services with a business entity will be | | | | doctor a percentage of the doctor's income. While |
| disciplined under NY Education Law section | | | | permissible for the billing companies, such practice |
| 6530(19). Illegal fee-sharing involving business | | | | is a sure way to professional discipline for the |
| entities may take many forms. For example, in a | | | | physician. The right way would be to arrange for |
| recent case, the court held that payment of a | | | | a fixed rate representing fair market value of the |
| portion of physicians' income from their private | | | | services. However, this is different with the |
| clinic practice to a university as a condition of the | | | | collections agencies. Paying collections agencies on |
| physicians' employment with the university was an | | | | a contingency basis depending on the amount |
| illegal fee-splitting arrangement where the | | | | recovered is not illegal fee-splitting. |
| physicians were not employees of the university | | | | What are the legal consequences of violating the |
| faculty practice corporation, and the university | | | | fee-splitting laws and corporate practice of |
| was not providing the physicians with salary, | | | | medicine? |
| employee benefits, facilities, supplies, staff, or | | | | In the latter case, since businesses are not |
| malpractice insurance. (Odrich v Trs. of Columbia | | | | allowed to practice medicine, such practice is |
| Univ.) Illegal fee-splitting does not always involve | | | | considered "unlicensed practice of medicine", which |
| money payments. Giving or receiving any valuable | | | | is a class E felony. If convicted, the defendant |
| benefit such as credit, omission, discount, gratuity, | | | | may serve between one to four years in prison |
| etc. may qualify as fee sharing. | | | | and incur monetary penalties. The entity itself will |
| So what is corporate practice of medicine or illegal | | | | be dissolved. Physicians who enter into contracts |
| fee splitting? | | | | with unlicensed business entities may be charged |
| By way of example, several court cases | | | | with fraudulent practice of medicine or practicing |
| demonstrate corporate practice of medicine and | | | | beyond authorized scope and be subjected to |
| illegal fee splitting. In one case, a doctor entered | | | | professional discipline. Illegal fee-splitting is a |
| into an agreement with his technicians that | | | | professional misconduct and any physician found |
| provided that the technicians would perform EEG | | | | to have violated the fee sharing rules will be |
| and ECHO tests and the doctor would pay them | | | | disciplined. |