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Stark Law waived to facilitate COVID related medical services

April 17th, 2020 by

stark law waiverBy: Jeff Cohen

The Secretary of Health and Human Services issued blanket waiver of the Stark Law on March 30th in order to facilitate COVID related medical services.  The waivers apply only to financial relationships and referrals related to COVID.  The circumstances and conditions under which the waivers apply are strictly and narrowly described.  Moreover, the waivers have no impact in the presence of fraud or abuse.  With respect to physicians wanting to provide designated health services (e.g. clinical lab services) related to COVID detection and treatment, for instance–

  1. the federal requirement that the DHS be provided in the same building as the physician office is waived; and
  2. the financial relationship limitations between the physician (or family member) and the DHS provider is waived.

The waiver also contains specific examples of waived interactions between providers and hospitals, including— read more

Noncompete Agreement Tips and Mistakes to Avoid After COVID-19

March 31st, 2020 by

noncompete agreement tips and mistakes to avoid during covid-19By: Jeff Cohen

COVID is proving to be so burdensome on employers that we are seeing lay-offs and furloughs all over the country. As the virus curve bends back in a positive direction and physician and patient concerns for safety wane, patients will stream back to office. But what happens to the laid off (or furloughed) employees and contractors with non-competes? Will they come back or will they have moved on, possibly in a way that violates their noncompetes? And will a court think a noncompete has been violated when an employee or contractor was let go and there is no specific provision in their written contract that allows the employer to immediately let someone go without notice due to this type of situation? How will the COVID based lay-offs and furlough affect noncompetes? The short answer is we don’t yet know, but widespread lay-offs and furloughs may result in a flood of cases being filed because (1) many have been let go, (2) there likely isn’t a provision in their contract with the employer that specifically authorizes that sort of termination, and (3) a contract’s “breach” (e.g. no contract based allowance for the prompt termination) is traditionally a defense to an action to enforce a noncompete.

The COVID Issue

Though there is an exception for unusual specialties or where there is essentially a community need, noncompetition covenants are generally enforceable in Florida with respect to doctors and other healthcare professionals. Many people think doctors in particular can’t be restricted from practicing medicine under any circumstances. That is just not true.

Getting to the bone of the issue, noncompetes are enforceable in Florida if: read more

Governor DeSantis’ order on COVID-19 and Non-essential Elective Medical Procedures

March 23rd, 2020 by

florida governor's orders for healthcare businesses during corona virus outbreakBy: Jeff Cohen

Florida’s Governor passed an Executive Order Friday which essentially shuts down all elective medical treatment.  The Order (20-72) only allows “non-urgent or non-emergency procedure or surgery which, if delayed, does not place a patient’s immediate health, safety, or wellbeing at risk, or will, if delayed, not contribute to the worsening of a serious or life-threatening medical condition.” read more

EKRA Affects Marketing Relationships with Labs and Addiction Treatment Businesses

January 15th, 2019 by

By: Jeff Cohen

For those following the federal legislative developments on the issue of compensating marketing people who market the services of labs and addiction treatment facilities there is a new update to take note of. Congress passed on October 24, 2018 the “Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act.”  Yes, that’s a real name!  Part of the law is the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”).

The core aspect of EKRA has to do with how to properly compensate marketing personnel who market the services of labs, addiction treatment facilities and recovery homes.   For those of you already familiar with existing federal law pertaining to compensation arrangements (e.g. the bona fide employee exception (the “BFE”) and the personal services arrangement and management contract safe harbor (the “PSA”)), the EKRA provisions will look familiar!  Key aspects of this law (which has to be read together with similar existing laws) include— read more

Healthcare Transactions Today: Selling a Medical Practice to Private Equity Buyers

November 12th, 2018 by

private equityBy: Jeff Cohen

Private money (e.g. private equity) is in full swing purchasing medical practices with large profit margins (e.g. dermatology). This is NOT the same thing as when physician practice management companies (PPMCs) bought practices the 90s.  Back then, the stimulus for the seller was (a) uncertainty re practice profits in the future, and (b) the stock price.  Selling practices got some or all of the purchase price in stock, with the hopes the purchasing company stock would far exceed the multiplier applied to practice “earnings” (the “multiple”).  Buyers promised to stabilize and even enhance revenues with better management and better payer contracting.  If the optimism of the acquiring company and selling doctors was on target, everyone won because the large stock price made money for both the buyer and seller. The private equity “play” today is a little different.

Today’s sellers are approaching the private equity opportunity the same way they did with PPMCs, except for the stock focus since most private equity purchases don’t involve selling doctors obtaining stock.  Sellers hope their current practice earnings will equate to a large “purchase price.”  And they hope the buyer have better front and back office management that will result in more stable and even enhanced earnings.  And for this, the private equity buyer takes a “management fee,” which they typically promise (though not in writing) to offset with enhanced practice earnings.     read more

State Court Ruling on Patient Brokering Act Threatens Healthcare Facilities and Providers

July 25th, 2018 by

patient brokering actA recent ruling by a state trial court handling the Palm Beach County Sober Home Task Force prosecutions against providers of addiction treatment and sober home services is creating lots of confusion and alarm around the state and could have very far reaching consequences for the entire healthcare industry well beyond addiction treatment.

The issue presented by the prosecution focuses on whether a person charged with violating the state’s Patient Brokering Act (PBA) can be found guilty even if he/she didn’t know what he was doing was unlawful. The PBA broadly prohibits paying someone for patient referrals, very much like the federal Anti-Kickback statute.  If allowed, the client would have gotten legal advice, paid for it, followed it, and still not be able to show a judge or jury that, despite all their best efforts, they simply followed the law as instructed.

Can a healthcare facility or provider be guilty of violating a criminal law [the PBA] if they’d gotten legal advice and followed it?  Traditionally, the answer would be a clear “no.”  The argument against the State’s position would be something like “How can someone intend to violate a criminal law if they got legal advice regarding how to comply with it and then followed that advice?”  The argument of the state might look something like “We don’t even think the judge or jury ought to be able to hear that the person got legal advice and followed it.”  The court punted the issue to the appellate court. read more

Real Medical Malpractice Defense

November 2nd, 2017 by

malpractice defenseBy: Jeff Cohen

Florida has long been a hot spot for medical malpractice lawsuits.  Professionals debate the causes frequently, but the fact remains:  Florida is a place where medicine has to be practiced defensively.  And it’s likely to get worse because the Florida Supreme Court recently tossed out the state cap on non-economic damages.

Since the cap was found to be unconstitutional, the risk of expensive med mal suits is expected to rise.  And the secondary effect will almost certainly be increased med mal insurance premiums.  If the upcoming premium rise is like any from the past (this is a cyclic phenomenon), it’s a sure thing that more physicians will decide to self-insure (not carry professional liability insurance). The State of Florida doesn’t require physicians to carry professional liability insurance provided that they have adequate financial backing or provide necessary patient notices         read more

Resurgence of Medical Practice Acquisitions in Private Equity

October 5th, 2017 by

medical practice saleBy: Jeff Cohen

Private money (e.g. private equity) is back chasing those selling medical practices and medical business acquisitions.  This time around it is very different from similar activity in the 90s.  Back then, the movement was public companies aggregating gross income dollars, which for a time drove stock prices.  Today’s private money buyers are looking to maximize profitability through achieving efficiency and aggregating large groups for leverage and the development of new income streams.  Though stock (in the form of warrants and options or stock itself) if often on the table, it doesn’t have to be.  Buyers are doing all cash deals, albeit to some degree on an earnings basis.  If you want the full price, you have to remain involved and do what you can to maintain revenues and perhaps even drive them up.

Physicians especially have to know what they’re dealing with and then have at least a basic understanding of the issues that will drive these deals.  To begin with, “private equity” simply means private investors (typically a group that pools their capital) that buy a portion or all of a company.  Their investments are usually much larger than venture capital firm deals.  They are not publicly traded entities.  What do they want?  To invest money in mature businesses, grow a company’s profitability and then “flip” their ownership to another buyer, typically in three to five years form their launch date.  In contrast, venture capital firms usually invest in start-ups, buy 100% of the company and require control. read more

Clinical Research & Healthcare Regulatory Compliance

August 17th, 2017 by

clinical research organizationBy: Jeff Cohen

Doctors often consider the idea of clinical research to be an easy “add on” to their practices.  The usual idea is “I already have the patients.  This’ll be easy.”  But that’s not the case when you start to look at the healthcare regulatory compliance issues!

Pharmaceutical companies (“Sponsors”) are often looking for resources for clinical research.  They usually turn to clinical research organizations (CROs) to find research centers (Sites) and to manage some of the healthcare regulatory compliance issues in a way that creates enough distance between the Sponsor and the Site in hopes that the metrics from the patients enrolled in the study will provide clarity re the efficacy of a tested drug.

Medical practices that think it’ll be easy to become a Site will be very surprised by some of the key challenges, which include– read more

Starting Healthcare Business: What to Consider

August 1st, 2017 by

By: Jeff Cohen

As a healthcare business lawyer, I’ve seen nearly everything entrepreneurs think might be a good idea.  They usually come to me when starting a healthcare business with questions like:

  1. Do you like an LLC better than an Inc., and if so why;
  2. Does the Stark Law (or the Anti-Kickback Statute) allow us to do this?;
  3. Is it ok to allocate ownership and profit distribution differently?;
  4. Will insurers pay for this?; and
  5. WWMT?  (What Would Medicare Think?).

These are great questions.  And they’re off base.  In fact, they’re not only off base. They’re also out of order.  Here’s one for you– read more