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.
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.
The following are typical questions that many young physicians have when leasing their first office, or office share.
1. What is a personal guarantee and a “good guy clause” and what does this mean to me?
A personal guarantee means that you are guaranteeing the performance and payment of the obligations of another party signing the lease, like your professional corporation. In a general personal guarantee, the guarantor is on the hook for the entire term of the lease. A “good guy clause” is effectively a personal guarantee which exposes your personal assets to ensure the performance of the obligation on the lease but is more limited than a general guarantee. A “good guy clause” takes your personal assets off the hook when a certain set of terms and conditions are met. These conditions are usually:
Giving a certain amount notice of intent to vacate the premises,
Payment of any rent still due, up until that date,
Vacating the premises and turning the keys over to the landlord on or before that date.
Every physician and health care provider has heard of the term “fee splitting”. Unfortunately, few really look beyond the most simplistic application of the prohibition, a mistake that could have serious consequences for their career as fee splitting is a violation of professional misconduct regulations.
An allegation of fee splitting is more likely to arise in a dispute with a third party such as an insurance company, independent contractor, or an employee than it is by direct investigation by the Department of Health or Department of Education. This exposes a provider to a greater risk since an adversarial party is the one bringing it to attention of the Office of Professional Medical Conduct (OPMC) or Office of Professional Discipline (OPD in the case of a non physician health care provider).
Any arrangement where one party’s compensation or contract fees are based on a percentage of a provider’s revenue is likely to fall under fee splitting prohibitions. There are limited exemptions, one of the most common being partners/shareholders/owners of a professional organization or professional employee’s incentive bonus (providing they are the same license). Non-professionals do not have a license to lose and are not affected by an allegation for professional misconduct based on fee splitting. As laypeople the OPMC and OPD have no authority over them, so physicians and other health care providers must be extra cautious when dealing with them.