Much speculation and rumor exists in New York with regard to obtaining a Certificate of Need from the Department of Health for a Surgery Center or a Diagnostic and Treatment Center. These Certificate of Need facilities are sought after by doctors and non-doctors alike, since the ability to collect a facility fee provides a wide range of opportunities not available in a traditional practice. Additionally, it permits non-doctors to be owners of such a facility which is specifically approved by the New York State Department of Health.
Many physicians and healthcare professionals are very concerned, when faced with professional misconduct complaints and allegations. This is due to the potentially damaging nature of many claims, as well as the risk of having such an investigation remain on their record throughout their professional career.
Providers often rush to resolve a misconduct allegation in a way that seemingly makes the charges against them go away by executing a settlement agreement (often known as a “Consent Agreement”). These providers, looking to get rid of a terrifying and often embarrassing proceeding by entering into such an agreement as quickly as possible, often do so without realizing that it can have lasting ramifications should they wish to apply for privileges or employment in the future. Currently, Medicaid has even taken the position in New York that the mere execution of a settlement agreement for any form of professional misconduct allegation, operates as an automatic basis for exclusion, despite case law and rulings to the contrary.
In many northeastern states, including New York, as well as many other states across the country, the theory behind the Corporate Practice of Medicine Doctrine is the belief that a medical practice not owned by a physician or medical professional, is not going to function and provide the same quality of care as a physician-owned practice or similar health care provider. This belief is due to the fact that the practice would become beholden to non-doctor shareholders who would dictate treatment based upon economics rather than quality of care.
Typically there are many concerns that come up with a physician or health care professional, hiring and paying another professional to work for their practice as an independent contractor. This is often done because the potential worker wishes not to have payroll taxes taken out of their compensation. However, there are numerous issues and problems that arise with this type of structure, some unique to the practice of medicine and related health professions, and other more general issues that come up in many industries.
While this might be a favorable tactic in a worker’s attempt to minimize their taxes, it raises issues that could be potential breaches of professional responsibility, severely impacting a health care provider’s license. In addition, providers are generally not permitted to be paid as a 1099 independent contractor if their compensation is based upon a percentage. This runs the danger of becoming illegal fee splitting which is professional misconduct.