Health Law (for physician practices)
Should I form a professional corporation or limited liability company?
Despite the modest cost involved in forming a professional corporation or limited liability company, there are many benefits from doing so—most notably, to protect your personal assets from claims that are business-related. Except for malpractice claims that relate to acts or omissions personally attributable to you, a professional corporation or limited liability company will insulate your personal assets, such as your home and bank accounts, from the reach of your creditors. For example, if your P.C. or LLC got sued for not paying the amount owed to an equipment lessor, that third-party vendor could not generally sue you personally for such debt. It could only sue your P.C. or LLC. This means that the only assets available to satisfy such debt would be those of the P.C. or LLC. If the P.C. or LLC did not have sufficient assets to pay such debt, the equipment lessor would be out of luck—he could not sue you simply because you were the owner of that entity.
What is “fee-splitting” and why is it illegal?
New York State's Education Law prohibits physicians and many other healthcare providers from sharing the income they receive in the practice of their profession with people who are not licensed in that same profession. Any financial arrangement between a licensed professional and a non-licensed professional which is a percentage of, or otherwise, dependent upon such professional collections will be considered illegal "fee-splitting." For example, it would be improper for a physician to structure a rental arrangement with his landlord which is based on a percentage of the monthly collections which he receives from his practice. The public policy underlying the "fee-splitting" prohibition is simple—the government does not want business people to be in a position to interfere with, or influence, a physician's independent professional judgment on how he or she should be treating patients.
What’s a “tail” policy?
If you have a "claims-made" malpractice policy which is terminating for any reason, you will not be covered for claims which are filed after the policy terminates (even if they relate to acts or omissions which took place while the policy was in effect). This is the biggest drawback of "claims-made" policies. However, there is a way to protect yourself from such future claims. Most insurance companies will allow you to purchase a "tail" policy within a short period of time after your "claims-made" policy terminates. The "tail" policy effectively converts your "claims-made" coverage to "occurrence" coverage by obligating the insurance company to defend and indemnify you from acts or omissions that took place during the policy period, even if the lawsuit is not filed until after the policy terminated. Note that many insurance companies will provide you with a free "tail" policy if you die; if you become permanently disabled; or if you retire from practice after a certain age and after having maintained a "claims-made" policy for a specified number of years.
What’s the difference between “claims-made” and “occurrence” malpractice policies?
There are basically two types of malpractice insurance policies that are available to physicians and other healthcare professionals who practice in New York State. The less expensive policy is written on a "claims-made" basis and the more expensive policy is written on an "occurrence" basis. If you are covered under a "claims-made" policy, two things must happen in order for your insurance carrier to be legally obligated to defend and indemnify you from the lawsuit filed against you: (a) the underlying act or omission must have taken place while the policy was in effect; and (b) the actual lawsuit must have been filed while the policy was in effect. If the lawsuit is filed after your policy terminated or lapsed for any reason (even if the claim relates to something you did or did not do while the policy was in effect), you will not be covered. Under an "occurrence" policy, it does not matter when the lawsuit is filed. So long as the underlying act or omission took place while the policy was in effect, you will be covered.
Are restrictive covenants really enforceable?
In New York State, a restrictive covenant is legally enforceable if the court determines that it is reasonable. The court will look at a number of issues in reaching its conclusion. Most of these focus on whether the covenant is (a) overly broad (in which case it will not generally be enforced), or (b) reasonably tailored to protect the employer's legitimate business interests without inhibiting the individual's ability to make a living or interfering with an important public interest (in which case it will probably be enforced). The court will look at the following elements of the restrictive covenant to determine its overall reasonableness: (1) the scope of activities which are being restrained; (2) the length of time that the employee is being restrained from engaging in such activities; and (3) the geographic area that is covered by the restrictive covenant.