Keys to Navigating Enforcement Risks & Legal Pitfalls When Owning & Operating Your Medical Spa

Many doctors are trying to cash in on the beauty of operating a medical. For some doctors, the attraction is doing work that patients appreciate. Other doctors think the hours are better and that the doctor is in more control of the practice. Often doctors who work in different professions such as pain management, dentistry, or plastic surgery see operating a medical spa as an opportunity to make additional money while running two practices.

Whatever the reasons for starting a medical spa, there are many legal pitfalls that must be addressed. Violations of the laws can mean a loss of your medical license, fines, penalties, and even possible imprisonment. Physicians should seek the counsel of an experienced medical spa attorney for the state where they practice medicine.

What Is a Medical Spa?

Medical spas are practices that offer surgical and medical procedures to help an individual look better.

Typical services include:

• Botox injections
• Facials
• Chemical peels
• Dermal fillers
• Microderm abrasion
• Coolsulpting
• Laser hair removal
• Liposuction
• Body contouring
• Hypnotherapy
• Meditation
• Acupuncture
• Eyelash extension

Medical spas generally use lasers, scalpels, light sources, microwave energy, chemicals, and thermal energy. Often substances are applied, inserted, or injected.

While some of these services (and additional services such as plastic surgery) are performed by licensed doctors, many of these services are performed with people who are not physicians. Many services are often conducted by people who don't have a medical license. While some workers such as aestheticians may have beauty certificates from accrediting cosmetology schools, a certificate is not a license.

According to the American Academy of Dermatology Association, sales for medical beauty treatments are expected to be close to $4 billion for 2017. The American Academy of Dermatology Association (AADA) has proposed to cover many of the following questions.

Why Are States and Medical Organizations Seeking to Regulate the Medical Spa Industry?

Currently, many states do not have laws that directly regulate medical spas. Regulations are also being sought because many of the treatments are being done by doctors, healthcare professionals, and others who do not have the proper training and expertise to perform surgeries and to oversee non-medical treatments.

Standards of practice should include:

• Training and education requirements for doctors and non-doctors
• Written plans for treatments
• Licensing and inspection standards
• Determining the adverse risks
• Obtaining informed consents
• Compliance with existing state and federal safety laws and other relevant laws

Without proper standards and supervision; patients risk death, treatments that can cause scarring and disfigurement, physical pain, and other negative consequences including making their appearance worse.

Which Laws Apply to Medical Spas?

Just a few states have any type of comprehensive medical spa law – Maryland, Iowa, and Colorado are some of the states the regulate medical spas. Many states do have related laws such as what are the legal requirements for creating a medical corporation, laws on the unauthorized practice of medicine, and laws on the proper use of laser equipment.

A few of the many federal laws that apply to medical spas are:

• Stark Law and the Anti-Kickback statute regulate referrals and fee-splitting between doctors and medical practices?
• The HIPAA ((Health Insurance Portability and Accountability Act of 1996) law affects the privacy of electronic medical records

Some of the state laws that likely affect the ownership and operation of a medical spa include:

• Business laws. How medical businesses, and any type of business, can be formed and how they can operate.
• Safety laws. These laws govern responsibility for using safe and non-defective equipment and protecting consumers and patients from any type of physical or emotional harm
• Licensing laws. States and local medical boards or agencies regulate the practice of medicine generally and within specialties
• Consumer protection laws. These laws protect buyers from deceptive and misleading practices
• Building code laws. Facilities must meet local building standards for physical safety, cleanliness, and emergency readiness.
• Ethics laws. States and medical associations generally have ethics requirements for the medical profession

States often also have specific laws that regulate specific services. For example, New York's General Business Law regulates:

• Nail services
• Waxing
• Hair Remove
• Chemical and hair services
• Treatments on the face or body

The AADA recommends that medical spas be inspected regularly for a broad range of patient protection issues. The AADA also recommends that every medical spa in every state should be required to have a license.

Which Agencies Govern Medical Spas?

Some of the various agencies that have rules and regulations that apply to medical spas are:

• FDA (Food and Drug Administration). This agency regulates many different types of medical procedures and the sale and use of different types of skin care, cosmetic, and aesthetic problems that can affect a person's health in any way.
• OSHA (Occupational Safety and Health Administration). This agency regulates the safety of the medical spa facility
• Medicare and Medicaid. Physicians must keep proper records, bill correctly, and meet many other requirements to be paid.
• Many other federal and state agencies

In addition, each state typically has a medical board or medical oversight entity.

What Are Some of The Ownership Issues Involved in Medical Spas?

Generally, only state-licensed physicians can own a medical practice. The reason for this is that the safety of the patient is paramount. While most medical spa treatments may often appear to be just cosmetic, many are actually medical procedures that require medical safeguards. While some tasks and procedures may be delegated, if appropriate conditions are met, the ultimate responsibility for most medical spa treatments rests with the doctor – so physicians should be the only ones to own the medical spa.

In California, for example, the corporate practice of medicine is not permitted. This means only doctors can own and operate a medical practice. Non-physicians, including nurses, cannot have an ownership interest in a medical business. Either the doctor must own the practice or be employed by the medical corporation or business (which is also owned by licensed physicians).

Nurses, physician assistants, and some other non-physician healthcare providers may, however, have a minority interest, in a medical corporation. Lay-people can't have any stock in a medical corporation. This prohibition also applies to businesses (including Managed Service Organizations) that do administrative work for health facilities such as medical billing, buying or selling of drugs and medical devices.

Any physician or non-physician who is exploring the creation, ownership, employment, or any business relationship with a medical spa should first consult with an experienced medical spa lawyer for the state(s) where the medical practice is located. Some of the questions the lawyer will review are:

• Who can own the medical equipment in a medical spa?
• What are the risks of owning a medical spa?
• Can non-physicians receive a percentage of the profits or must they be paid only for their services?
• Can a non-physician, such as a registered nurse, own a medical spa if she/he appoints a medical director?
• Who can order drugs or devices in the United States and overseas?
• Can medical spas sell skin care and other aesthetic products?

What Does It Mean to Be a Medical Director?

Generally, either a physician or a medical director runs a medical spa. The medical director is usually employed by other physicians who own the medical spa and is paid a salary. Physician-owners can manage their own medical spa facility.

The medical director or active physicians should:

• Have the ability to perform all the services that the medical spa offers. The medical director or supervising physician should understand how each procedure is performed even if the non-physician who is performing a procedure, Botox injections for example, is highly experienced?
• Take responsibility for the delegation of any services by the director or another physician to any non-physician staff in the medical spa.
• Perform the initial examination and diagnosis of the patient
• Establish the standard procedures for each medical procedure
• Advise the patient of the risks of any procedure and get an informed consent from the patient before doing the procedure
• Keep proper medical records of the patient in conformity with local, state, and federal law
• Review all medical data and charts
• Review any adverse events that occur in the medical spa facility
• Understand all the duties of being a supervising physician
• Understand the risks, such as infections and allergies, for each medication and beauty procedure

Can Some Medical Spa Duties and Procedures Be Delegated?

Some states allow a doctor to delegate procedures to trained and experienced non-physicians such as nurse practitioners, licensed registered nurse, or physician assistant. (Generally, a nurse practitioner has more training than a registered nurse). Physicians generally cannot delegate medical procedures to estheticians and medical assistants. They may be able to delegate cosmetic procedures that the state doesn't consider medical.

Some tasks, such as an initial examination, cannot be delegated and must be conducted by a state-licensed physician.

What Does Medical Supervision Mean?

Supervision is a legal term of art that is usually found in the rules of your state medical board. Don't assume supervision is proper without consulting with a qualified medical spa lawyer for your state. Doctors can only delegate to health professionals they know are qualified to perform the specific treatment.

Supervision must be real. A nurse or other non-licensed practitioner simply can't rent a licensed doctor who has their name on the medical spa business but doesn't actively take part in treating and protect the safety of the patients.

The AADA recommends that doctors should be present at the facility site when the procedure is being performed so they can immediately respond to any complications. The AADA also recommends that medical spas should have written protocols in place for each type of medspa procedure.

Some states, like California, have recently defined what it means to be immediately available to respond to complications when procedures are performed by nurses and other qualified licensed healthcare professionals.

Can Some Treatments Be Done by Non-Physicians?

Generally, using and prescribing medical devices and drugs is not cosmetology. It is the practice of medicine and is governed by the laws and regulations that apply to physicians. In most, if not all states, this includes Botox injections, cosmetic fillers, and laser treatments. Any treatment that is medical must either be performed by a physician. If delegation of a procedure or beauty task is permitted, the physician delegating the task must still supervise what the non-physician is doing.

Non-physicians who perform an aesthetic procedure must

• Have the proper certification for their task
• Must be properly trained and educated and have had the right clinical instruction
• Must be able to handle any emergencies
• Meet any continuing medical education requirements

The services performed by the non-physician should be supervised on-site and not remotely by the supervising doctor or the medical director

Issues for Specific Types of Treatments

For each procedure, it is generally advisable to use FDA approved equipment, staff who are properly trained and certified, and have written procedures in place for the non-physician to review and understand. Before treating patients for any procedure, doctors should review that procedure with an experienced medical spa healthcare lawyer to see what compliance and regulatory issues apply.

Some common questions to review for specific medical aesthetic procedures are:

• Are Botox parties legitimate? They may be legal if:
  • A licensed physician is present at the party
  • The patient is made aware of the price before the party
  • The HIPAA laws are met
  • The patients are made aware of the possible side-effects
• Are laser and IPL (intense pulsed light) procedures regulated? Some states do have laws on these treatments. For example, the New York State Board of Medicine, in 2002, recommended that laser and IPL treatments by considered medical treatments (requiring medical treatment or supervision) and not cosmetic
• Do OSHA laws apply? Can anyone operate laser equipment
• What is the difference between an esthetician, cosmetologist, physician assistant, and registered nurse and which procedures can each type of health care professional provide?

Registered Nurse Issues for Medical Spas

The rules that govern a registered nurse's authority to work in a medical spa vary from state to state. For a discussion of RN treatment in California, see the article by the Law Office of Michael H. Cohen Law Group. The article includes a review of the Medical Board of California's rules on:

• Who can perform physician-supervised medical treatments.
• Who can't perform aesthetic treatments under any condition
• Who can inject Botox – generally, physicians and the following people if properly supervised AND properly licensed:
  • Registered nurses
  • Physician assistants
  • Licensed vocational nurses
• Who can conduct cosmetic filler treatments?
• Who can perform microderm-abrasions?
• What limitations govern registered nurses who work in a medical spa such as:
  • The requirement for the establishment of standardized procedures
  • Why registered nurses should not be a medical spa medical director
  • That nurse practitioners can normally conduct a prior examination but registered nurses cannot conduct that exam
• The definition of a good faith examination in a medical spa
• Issues in videoconference exams
• Compliance issues for medical spas

What marketing concerns do medical spas face?

Many medical spas rely on Groupon discounts to drive their business. It may be a violation of the laws, though, to use Groupon, because it may be considered fee-splitting. There are federal and state laws such as Stark Law that govern splitting fees between doctors and businesses. Your medical spa attorney can explain whether Groupon is a legitimate form of marketing or violates the fee-splitting laws.

Marketing materials including Internet sites should clearly indicate:

• The licensing status of the medical spa
• The identity of the medical director/treating physicians
• Any medical specialties of the medical director/treating physicians
• Any board certifications of the physicians
• The education and training of the medical director/treating physicians

Marketing materials and ads can't mislead. Photographs can't be touched up. If models are used, then it should be clear and stated that models are being used.

Ads can't bait and switch to lure customers to pay for more expensive treatments

What additional medical spa regulations should be addressed in your legal review?

Other medical spa questions to consider are:

• Are the records that should be kept identical to those for any standard medical practice?
• Are commissions and tips allowed for specific procedures performed by non-physicians
• What privacy and other considerations can affect social media and email contacts?

What privacy and other considerations affect medical spa marketing?

Review Your Legal Risk with a Trusted Medical Spa Lawyer

Medical spas are a booming business. As the population ages, more women and men, are seeking the chance to look better through cosmetic and medical procedures. To learn the full range of legal risks in running a medial spa and to properly address those risks, please Contact Cohen Healthcare Law Group. Our healthcare lawyers are respected and admired for their experience as medical spa attorneys.