Understanding General Business Lease Agreements

By: Mathew J. Levy, Esq. & Stacey Lipitz Marder, Esq. 
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Overview:

When evaluating a business, the lease is often considered one of the most important assets as location is crucial to the success of a business, and the lease is often one of the largest expenses.  While a favorable lease can certainly increase the value of a business, a lease can also be debilitating in the event that the terms are not favorable. Therefore, prior to entering into a lease arrangement it is imperative to evaluate the legal and business issues. We have highlighted a few key issues below that all tenants should be aware of prior to entering into a lease.

Parties/Guaranty:

It is recommended that the tenant be a corporate entity as opposed to an individual from an asset protection standpoint, as the entity would be liable under the lease instead of the individual.  However, even if the tenant is a corporate entity, the landlord may require that the corporate entity’s owner personally guaranty the lease, meaning that the landlord can sue the owner personally in the event there is a default. If a personal guaranty is required, negotiations should involve limiting the personal guaranty. 

Term of Lease and Options to Renew/Exit Strategy:

Potential tenants should make certain that they understand how long the lease is in effect for, as well as whether there is an option to renew the lease. Otherwise, there may be a chance that a practice is forced to relocate which may cause unnecessary stress, expense and aggravation.  Furthermore, tenants should make sure that they have an exit strategy and can terminate the lease in the event things do not work out.  Otherwise, the tenant may be in breach for terminating the lease and may be responsible to make all payments for the entire term, in addition to other penalties. 

Build out:

Often times, a space needs to be completed renovated prior to occupancy. Should a build-out be required, approval should be given by the Landlord with respect to work to be done prior to entering into a lease agreement, as any alteration to the premises often requires consent of the landlord. All parties should also be in agreement with respect to who will be performing the work, who will be paying for such construction/modifications, as well as who will be responsible to obtain any required permits and consents. In many instances, if the tenant is responsible for paying for the build-out, the landlord may offer rent abatement to offset the cost of the build-out since it essentially benefits the landlord. Additionally, tenants must be aware of their obligations upon termination with respect to any renovations made. Many leases require tenants to “convert” the space back to its original form at the tenant’s sole cost upon termination or expiration of the lease.

Rent:

When evaluating rent, potential tenants should look at their total financial obligations. For instance, a lease may be a triple net lease, whereby the tenant is responsible to pay all or part of the taxes, insurance and maintenance associated with use of the property, in addition to the tenant’s regular monthly rent.  In that case, the tenant would want to make sure that it is clear exactly what the tenant’s financial obligations are and how such amounts are calculated.  The tenant may also consider adding a cap with respect to increases in fees.  In the event the lease is for a multi-year term, the tenant should be aware of what the financial obligations are each year, including increases in monthly rent. Increases should generally be no more than cost of living adjustments per year.

Assignment/Subletting:

Many businesses in today’s environment sublet space to other individuals/businesses. Many leases contain language indicating that any assignment/sublease/license must be approved by the landlord via a specific consent process, and that the tenant is responsible for additional fees in connection with such assignment/sublease/license.  In order to avoid this process, it is recommended that language be added permitting the tenant to sublease/license a certain percentage of the space without obtaining the landlord’s consent.

Landlord Responsibilities:

The lease should also clearly specify exactly what services the landlord is going to be providing. For instance, is garbage removal and parking lot maintenance included in the rental fee? If there is a crowded parking lot, are there a certain number of spots reserved for the business? Is electricity and elevator service provided seven (7) days a week and twenty four (24) hours per day?  Is the landlord responsible for snow removal and sidewalk maintenance, if applicable? Who is responsible to fix the hvac unit and general structural issues?  What are the landlord’s responsibilities in the event of a natural disaster, such as a flood? This was especially important in dealing with the aftermath of Hurricane Sandy. Unfortunately many business had no protections in their lease with respect to such disaster.

Liability/Insurance:

Most leases contain language indicating that the tenant has to maintain certain insurance at its sole cost. Tenants need to understand specifically what insurance is required, as well as the costs to obtain such insurance.  It is further recommended that the landlord also maintain insurance to protect the space. With respect to liability, most leases indicate that the tenant is responsible for any damage to the premises or injuries that occur on the premises.  Such liability should be mutual, and language should be added noting that the landlord is also liable, provided the landlord (or its contractors, employees or agents) are responsible for such damage or injuries.

Competition in the Building:

Imagine if a business invested a lot of money in a space, only to find out that the landlord leased the space next door to a competitor. Businesses should considering adding language to the lease making sure that competitors are not allowed in the building.

Conclusion:

As noted above, the lease is a very important part of a business from a financial and liability standpoint.  Prior to entering into a relationship with a landlord for space, it is important to evaluate the lease agreement in order to ensure that the arrangement offers protections for the business. To that end, it is in the best interest of the business to have such lease agreement reviewed by an attorney since there may be serious implications as the result of an unfavorable lease.

Mathew J. Levy is a Partner of the firm and co-chairs the Firms corporate transaction and healthcare regulatory practice. Mr. Levy has particular experience in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, healthcare fraud & billing fraud, insurance carrier audits including prepay and post payment review, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-926-3320 or email: mlevy@app-60705ed4c1ac183264fb7857.closte.com.

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Emergency Services and Surprise Bills

By: Mathew J. Levy, Esq.
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In order to avoid patients receiving “surprise bills” from out-of-network providers and to help patients make informed decisions with respect to care, as of March 31, 2015, physicians and other healthcare professionals are now required to make certain disclosures to patients with respect to out-of-network providers (Public Health Law §23). It is imperative that health care providers comply with these new disclosure requirements, as failure to comply may be considered misconduct as defined by New York State Education Law, which may result in fines and penalties, including but not limited to the loss of a healthcare provider’s license.

In accordance with the new disclosure requirements, prior to the provision of non-emergency services, health care professionals, group practices of health care professionals, and diagnostic and treatment centers (hereinafter “Providers”) must disclose to patients or prospective patients verbally at the time an appointment is scheduled and in writing or through an internet website the health care plans in which they are participating providers and the hospitals with which the Providers are affiliated

Furthermore, if the Provider does not participate in the network of a patient’s or prospective patient’s health care plan, the Provider must inform the patient that upon the patient’s request, he/she will be provided with the amount or estimated amount the Provider will bill for such services. If such request is made, the Provider must disclose to the patient or prospective patient in writing the amount or estimated amount that will be billed to the patient, absent unforeseen medical circumstances that may arise.

Patients and prospective patients must also be provided with the name, practice name, mailing address, and telephone number of any health care provider scheduled to perform anesthesiology, laboratory, pathology, radiology or assistant surgeon services in connection with care to be provided in the physician’s office for the patient or coordinated or referred by the physician for the patient at the time of referral or coordination of services.

When a patient is scheduled for a hospital admission or outpatient hospital services, the patient and hospital must be provided with the name, practice name, mailing address and telephone number of any other physician whose services will be arranged by the physician, as well as information as to how to determine the health care plans in which the physician participates.

The new legislation also provides a dispute resolution process to handle emergency services or surprise bills. The Superintendent of the Department of Financial Services has the authority to grant and revoke certifications of Independent Dispute Resolution entities to conduct the dispute resolution process.  (Financial Service Laws §601.)

Conclusion

It is important for physicians and other health care professionals to comply with the Patient Disclosure requirements of Public Health Law Section 24.  Failure to comply with the requirements of the law may subject the physician to fines and other penalties.  In addition, while it is not the purpose of the article to discuss the Dispute Resolution Process to be established under Article 6 of the Financial Services Law, compliance with the requirements of Public Health Law §24 may avoid a “Surprise Bill” that is subject to the Dispute Resolution Process. 

Mathew J. Levy is a Partner of the firm and co-chairs the Firms corporate transaction and healthcare regulatory practice. Mr. Levy has particular experience in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, healthcare fraud & billing fraud, insurance carrier audits including prepay and post payment review, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-926-3320 or email: mlevy@app-60705ed4c1ac183264fb7857.closte.com.

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Understanding Physician Lease Agreements

By: Mathew J. Levy, Esq. & Stacey Lipitz Marder, Esq.
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Overview:

When evaluating a medical practice, the lease is often considered one of the most important assets as location is crucial to the success of a practice, and the lease is often one of the largest expenses.  While a favorable lease can certainly increase the value of a medical practice, a lease can also be debilitating in the event that the terms are not favorable. Therefore, prior to entering into a lease arrangement it is imperative to evaluate the legal and business issues. We have highlighted a few key issues below that all health care tenants should be aware of prior to entering into a lease.

Parties/Guaranty:

It is recommended that the tenant be a corporate entity as opposed to an individual from an asset protection standpoint, as the entity would be liable under the lease instead of the individual.  However, even if the tenant is a corporate entity, the landlord may require that the corporate entity’s owner personally guaranty the lease, meaning that the landlord can sue the owner personally in the event there is a default. If a personal guaranty is required, negotiations should involve limiting the personal guaranty. 

Term of Lease and Options to Renew/Exit Strategy:

Potential tenants should make certain that they understand how long the lease is in effect for, as well as whether there is an option to renew the lease. Otherwise, there may be a chance that a practice is forced to relocate which may cause unnecessary stress, expense and aggravation.  Furthermore, tenants should make sure that they have an exit strategy and can terminate the lease in the event things do not work out.  Otherwise, the tenant may be in breach for terminating the lease and may be responsible to make all payments for the entire term, in addition to other penalties. 

Build out:

Often times, a space needs to be completed renovated prior to occupancy. Should a build-out be required, approval should be given by the Landlord with respect to work to be done prior to entering into a lease agreement, as any alteration to the premises often requires consent of the landlord. All parties should also be in agreement with respect to who will be performing the work, who will be paying for such construction/modifications, as well as who will be responsible to obtain any required permits and consents. In many instances, if the tenant is responsible for paying for the build-out, the landlord may offer rent abatement to offset the cost of the build-out since it essentially benefits the landlord. Additionally, tenants must be aware of their obligations upon termination with respect to any renovations made. Many leases require tenants to “convert” the space back to its original form at the tenant’s sole cost upon termination or expiration of the lease.

Rent:

When evaluating rent, potential tenants should look at their total financial obligations. For instance, a lease may be a triple net lease, whereby the tenant is responsible to pay all or part of the taxes, insurance and maintenance associated with use of the property, in addition to the tenant’s regular monthly rent.  In that case, the tenant would want to make sure that it is clear exactly what the tenant’s financial obligations are and how such amounts are calculated.  The tenant may also consider adding a cap with respect to increases in fees.  In the event the lease is for a multi-year term, the tenant should be aware of what the financial obligations are each year, including increases in monthly rent. Increases should generally be no more than cost of living adjustments per year.

If a healthcare provider is leasing space from another healthcare provider and there are referrals between the parties, the parties need to ensure that sure lease is in compliance with applicable rules and regulations, including the anti-kickback statute and stark law.  In order to comply with such regulations, amongst other factors, the lease should be in writing and be for a period of at least 1 year. The rental amounts should also be fair market value, which do not take into account the value or volume of referrals. If the rental amount is too low or too high, it can be perceived as payment for referrals.

Assignment/Subletting:

Many medical practices in today’s environment sublet space to other healthcare providers. Many leases contain language indicating that any assignment/sublease/license must be approved by the landlord via a specific consent process, and that the tenant is responsible for additional fees in connection with such assignment/sublease/license.  In order to avoid this process, it is recommended that language be added permitting the tenant to sublease/license a certain percentage of the space to a healthcare provider without obtaining the landlord’s consent.

Landlord Responsibilities:

The lease should also clearly specify exactly what services the landlord is going to be providing. For instance, is garbage removal and parking lot maintenance included in the rental fee? If there is a crowded parking lot, are there a certain number of spots reserved for the medical practice? Is electricity and elevator service provided seven (7) days a week and twenty four (24) hours per day?  Is the landlord responsible for snow removal and sidewalk maintenance, if applicable? Who is responsible to fix the hvac unit and general structural issues?  What are the landlord’s responsibilities in the event of a natural disaster, such as a flood? This was especially important in dealing with the aftermath of Hurricane Sandy. Unfortunately many medical practices had no protections in their lease with respect to such disaster.

Liability/Insurance:

Most leases contain language indicating that the tenant has to maintain certain insurance at its sole cost. Tenants need to understand specifically what insurance is required, as well as the costs to obtain such insurance.  It is further recommended that the landlord also maintain insurance to protect the space. With respect to liability, most leases indicate that the tenant is responsible for any damage to the premises or injuries that occur on the premises.  Such liability should be mutual, and language should be added noting that the landlord is also liable, provided the landlord (or its contractors, employees or agents) are responsible for such damage or injuries.

Competition in the Building:

Imagine if a medical practice invested a lot of money in a space, only to find out that the landlord leased the space next door to a competitor in the medical practice’s specialty. If the medical practice has a certain specialty, language should be added to the lease making sure that competitors are not allowed in the building.

Right to Enter:

Many leases contain language allowing the landlord to enter the premises at the landlord’s discretion. Since there are patients involved, it is important that the landlord not have the ability to disrupt the continuity of patient care, or have access to information in violation of HIPAA.  As such, any access to the premises by the landlord should be upon mutually agreed upon times.

Conclusion:

As noted above, the lease is a very important part of a medical practice from a financial and liability standpoint.  Prior to entering into a relationship with a landlord for space, it is important to evaluate the lease agreement in order to ensure that the arrangement offers protections for the medical practice. To that end, it is in the best interest of the medical practice to have such lease agreement reviewed by a healthcare attorney since there may be serious implications as the result of an unfavorable lease.

Mathew J. Levy is a Partner of the firm and co-chairs the Firms corporate transaction and healthcare regulatory practice. Mr. Levy has particular experience in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, healthcare fraud & billing fraud, insurance carrier audits including prepay and post payment review, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-926-3320 or email: mlevy@app-60705ed4c1ac183264fb7857.closte.com.

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Understanding Financial Arrangements Between Chiropractors And Other Licensed Healthcare Professionals

By Mathew J. Levy, Esq. & Stacey Lipitz Marder, Esq.
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Overview:

For many chiropractors, there are several benefits associated with working with physicians and other licensed healthcare professionals from both a clinical and financial perspective.  However, prior to entering into these business structures, chiropractors must evaluate the legal implications as there are several federal and New York State rules and regulations which govern how these relationships can be structured.  As such, we have outlined three (3) different models involving financial arrangements between chiropractors and other licensed healthcare professionals including physicians, bearing in mind that each of these models are susceptible to numerous variations in detail. 

Management Company Model:

Although a chiropractor is not permitted to have a joint venture with a physician, a chiropractor can provide office space to physicians or other healthcare providers, as well as other non professional services including but not limited to billing services, and the provision of non professional personnel through a management company.  The specific terms of this arrangement would be outlined pursuant to a facilities use and administrative services agreement.  

In the event that a chiropractor goes forward with the management company model, it is imperative that the compensation for the services provided (including the space) be fair market value, be fixed in advance and not take into account, directly or indirectly, the volume or value of referrals or other business generated between the parties.  Furthermore, the services provided, including space, must be legitimate.  For instance, a physician should only rent space of a size and for a time that is reasonably necessary to carry out the physician’s business purpose for the rented space.  It is especially important that the management company model be structured in such a way since otherwise the Office of the Inspector General (the “OIG”) of the Department of Health may perceive such relationships to be disguised kickbacks to induce referrals which is in violation of the Federal Anti-Kickback Statute.

PLLC Model:

As per New York State law, a chiropractor is permitted to have a joint venture with licensed healthcare professionals including for instance physical therapists and occupational therapists[1]. In the event that a chiropractor goes forward with this model, the chiropractor would have to form a professional limited liability company (“PLLC”) with the other licensed healthcare professional.  By forming a professional entity with a physical therapist for example, the chiropractor would be able to offer chiropractic services and physical therapy through the PLLC.  It is important to note that with respect to this model, the owners of the PLLC must be professionals who are licensed in the specialties provided to patients of the PLLC. Therefore, a PLLC that is owned by chiropractor and a physical therapist can only provide chiropractic and physical therapy services to its patients.  

In the event that a chiropractor does go forward with this arrangement, it is imperative that there be an operating agreement in place which governs the relationship between the owners including percentage of ownership interest, withdrawal/buy-outs and compensation.  

Employer / Employee Model:

Although New York State prohibits a physician from being employed by a chiropractor, a physician can hire a chiropractor as a direct employee. Prior to entering into an employment relationship with a physician, chiropractors need to take into account several factors.  As an employee, the chiropractor would lose autonomy with respect to his/her practice as he/she would be working directly for the physician.  However, this may be a benefit for many chiropractors who rather focus on helping patients as opposed to dealing with the operation of a practice.  Furthermore, chiropractors have to carefully evaluate certain terms of the employment relationship including for instance termination, and a restrictive covenant prohibiting the chiropractor from rendering services upon termination within a set geographic location within a certain amount of time. In order for chiropractors to protect themselves with respect to termination, it is advisable to consider having a guaranteed severance.  In the event a chiropractor pursues this model, it is imperative to negotiate an employment contract that is mutually beneficial. 

With respect to compensation in the Employer / Employee Model, the chiropractor’s compensation has to be structured so as to comply with the bona fide employee Safe Harbor regulations under the Anti-Kickback Statute, as well as the New York law permitting “fee-splitting” with employees.  As such, permissible forms of compensation include the chiropractor receiving a percentage of the collections received by the practice for services personally rendered by the chiropractor or a set salary with a potential bonus.  

Furthermore, if the chiropractor is an out of network provider, this also may present an issue if the physician’s practice is in network.  

Conclusion:

Having a financial relationship with a licensed healthcare professional can be very beneficial for many chiropractors; however, there are many issues that need to be evaluated both from a business and legal standpoint.  To that end, it is in the best interest of the chiropractor to retain a team of professionals specializing in health care – attorneys and accountants– to ensure that the arrangement is appropriate and in the best interest of the chiropractor.  Although an arrangement may be appropriate for some chiropractors, it may not be as beneficial for others.  

About the Authors:

Mathew J. Levy, Esq. is a Principal of Weiss Zarett Brofman Sonnenklar & Levy, PC. Mr. Levy is nationally recognized as having extensive experience representing healthcare clients in transactional and regulatory matters. Mr. Levy has particular expertise in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, criminal law, healthcare fraud & billing fraud, insurance carrier audits, litigation & arbitration, and asset protection-estate planning.  You can reach Mathew Levy at 516-627-7000 or mlevy@weisszarett.com.

Stacey Lipitz Marder is an associate at Weiss Zarett Brofman Sonnenklar & Levy, PC with experience representing chiropractors in connection with transactional and regulatory matters including the formation and structure of business entities, negotiating and drafting contracts and commercial real estate leases, stock and asset acquisitions and general corporate counseling.  Ms. Marder also has experience advising healthcare clients on a wide range of regulatory issues including Stark, the Anti-Kickback Statute, fraud and abuse regulations, HIPAA, reimbursement and licensing matters.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions. 

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[1] A chiropractor is not permitted to form an entity with physicians, dentists, veterinarians, licensed clinical social workers, mental health counselors, psychoanalysts, creative arts therapists, or marriage and family therapists.

Understanding Physician Partnership/Shareholders’/Operating Agreements

By Mathew J. Levy, Esq. & Stacey Lipitz Marder, Esq.

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OVERVIEW:

For many physicians there are several benefits associated with partnering with one or more physicians- You can share administrative costs involving the operation of the practice, have built in coverage when you are away, and plan for the future to name a few [1].  Although there are many benefits associated with entering into a partnership with other physicians, prior to entering into such relationships physicians must carefully evaluate the arrangement in order to ensure that the arrangement is indeed appropriate based upon the physician’s goals and current situation.  In the event that you do enter into a partnership arrangement with other physicians (either through ownership in a PC, PLLC or LLP) it is imperative that you enter into an agreement outlining the terms of the relationship with the other physician(s).  This agreement is referred to as either a Partnership Agreement, Shareholders’ Agreement or Operating Agreement (hereinafter “Agreement”) depending on what type of entity the physicians render services through (ie LLP, PC or LLC)[2].   The parties must all be on the same page prior to entering into such a relationship or else it will not work out.  We have outlined some key concepts that need to be addressed prior to physicians entering into partnership arrangements with other physicians.

MANAGEMENT/VOTING:

When a physician joins forces with other physicians, decisions regarding the practice will no longer be made solely by that physician.  Since decisions will now be made by all of the physicians, it is important to dictate how such decisions will be made.  For instance, will decisions regarding the practice be made by a majority vote or by a unanimous vote of the physicians?  If there are more than two (2) physicians in the practice and decisions are made by a majority vote, there is always a chance that a majority of physicians can team up against the minority physicians. Even if ordinary decisions are to be made by a majority vote, the parties can agree that certain decisions are to be made by a unanimous vote including for instance admitting new physicians, dissolving the practice, changing the compensation of the physicians, terminating physicians, entering into litigation regarding the practice, selling the practice, and purchases exceeding a certain amount.

COMPENSATION/BENEFITS/EXPENSES:

The physicians must also all be on the same page regarding compensation and expense reimbursement.  With respect to compensation, the physicians need to determine how they will be compensated and how net profits will be divided.  It is important that the physicians look at the practice’s cash flow in order to ensure that the practice is able to make such payments and pay administrative costs involving the operation of the practice.  Prior to determining compensation structure it is advisable to speak with your accountant regarding the practice’s cash flow.   Additionally, the physicians need to determine what expenses and benefits will be paid for by the practice (ie CMEs, automobile allowance, cell phone, conferences, books, license and registration fees, disability, health and life insurance).  In the event the physicians’ expenses would be vastly different, it may be advisable for each physician to have a predetermined expense account. 

TERMINATION:

Physicians must also be cognizant of termination provisions in the Agreement.   Physicians should especially be concerned if the Agreement allows for the physician owners of the practice to be terminated without cause upon a majority vote of the other physician owners.  In order to protect the physician, the Agreement should allow for termination only in limited circumstances including for instance if the physician loses his/her license to practice medicine.  Additionally, the Agreement should outline the specific terms involving termination/withdrawal, including the amount of notice that must be provided in the event a physician voluntarily withdraws from the practice, as well as the practice’s and withdrawing physician’s responsibilities upon withdrawal.  

BUY-OUTS:

Physicians must also consider whether or not there will be a buy-out in the event of termination (including for retirement, death, disability, voluntary or involuntary withdrawal), as well as whether such buy-out will be deminimis or significant.  The buy-out can differ depending on the reason for withdrawal. For instance, the buy-out for death or disability can be the value of the physician’s life insurance or disability policy, while the buy-out for a voluntary withdrawal can be the withdrawing physician’s share of the accounts receivable of the practice.  The parties should also discuss when such buy-out payments shall commence, as well as how payments will be made and over what duration.  Furthermore, it is important to have a provision in the Agreement to protect the practice from having to make several buy-out payments simultaneously which could place a significant financial strain on the practice.  This provision is often in the form of a cap, and payments exceeding such cap are deferred.  

MALPRACTICE/TAIL COVERAGE:

This is especially important in the event a physician has a “claims made” policy, which only offers protection to a physician while the policy is in effect. If a “claims made” policy is discontinued, the physician would have to obtain “tail” coverage, which is very expensive.  As such, the physician should ensure that the Agreement indicates that upon withdrawal the practice will be responsible for paying for such tail coverage if such situation arises.

RESTRICTIVE COVENANT:

Physicians also need to consider the scenario in which one of the physicians is no longer affiliated with the practice.  Specifically, physicians need to ensure that the practice is protected, and it is often recommended that there be a restrictive covenant which restricts the former physicians from competing with the practice within a specified time and location. However, if several established physicians in an area are joining together to form a practice it may not make sense to have a restrictive covenant if the physicians already were established in the community.

BUY-IN:

In the event a physician is offered the opportunity to buy-in to an existing practice and become a partner, the physician must review the terms of the buy-in, including how much the physician is required to pay to become an owner in order to ensure that the buy-in is financially worthwhile.  Furthermore, before buying into a practice, the physician must do his/her homework so the physician knows exactly what he/she is buying into and that the practice is financial sound.  It is recommended that the physician obtain a valuation of the practice by a certified healthcare appraiser or accountant.  

CONCLUSION:

Being presented with an offer to enter into a relationship with other physicians can be very exciting, however, there are many issues that need to evaluated both from a business and legal standpoint.  To that end, it is in the best interest of the physician to retain a team of professionals specializing in health care – attorneys and accountants– to ensure that the partnership arrangement is appropriate and in the best interest of the physician.  

ABOUT THE AUTHORS:

Mathew J. Levy is a Partner of the firm and co-chairs the Firms corporate transaction and healthcare regulatory practice. Mr. Levy has particular experience in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, healthcare fraud & billing fraud, insurance carrier audits including prepay and post payment review, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-926-3320 or email: mlevy@weisszarett.com.

Stacey Lipitz Marder is an associate at Weiss Zarett Brofman Sonnenklar & Levy, PC., with experience representing healthcare providers in connection with transactional and regulatory matters including the formation and structure of business entities, negotiating and drafting contracts and commercial real estate leases, stock and asset acquisitions and general corporate counseling.  Ms. Marder also has experience advising healthcare clients on a wide range of regulatory issues including Stark, the Anti-Kickback Statute, fraud and abuse regulations, HIPAA, reimbursement and licensing matters. 


[1] As per New York State Law, physicians can only partner with other physicians with respect to provision of professional services.  

[2] Many physicians who are owners of a practice also have an employment agreement with the practice which dictates certain terms including for instance termination and compensation.

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