Provided by: Jennifer Kirschenbaum, Esq.
May 15, 2018
What's the deal with corporate practice of medicine. Still a concern in NY and payment?
Familiar with Malella? If you do No Fault work you may have heard of the seminal case that gave payors (specifically No Fault) a corporate sword to yield and deny reimbursement for fraudulent structure. The precedent is alive and well, and fairly solidified, and the kin cases continue to evolve and give us dicta and direction in corporate structure tips. A fairly recent opinion of note is the case of Andrew Carothers, M.D., P.C. v. Progressive Ins. Co., 2017 NY Slip Op 02614 (https://law.justia.com/cases/new-york/appellate-division-second-department/2017/2013-10969.html). The two key elements are ownership and control. In this instance, Carothers, a radiologist, was found to be absent from operations at his 3 facilities in 2005 and 2006 while it was rendering 38,000 MRIs. He was not practicing out of the location and was paying obscene rental fees for equipment ($75,000 per month for MRI equipment when the manager was paying $9,800 per month for the same machine). The court sites hiring and check writing authority as a factor, as well as inequities in compensation. The managers received $12mil while over the same period, Carothers made $133,000.
Whether an enterprise is appropriately structured is a litmus test with many factors. If you have a concern, its worth getting the arrangement reviewed. Look before you leap, and if doesn't smell right, get out.