Compliance Issues for Medical Fitness Centers, Gyms, and Wellness Centers – Part 3

Compliance Issues for Medical Fitness Centers, Gyms, and Wellness Centers – Part 3. Physician Employment, Digital Health, MSOs, and Honest Advertising

This is the third in our series of articles on legal issues for medical fitness centers, gyms, and wellness centers. This article focuses on physician recruitment, digital health, telemedicine, and MSOs, and FTC and consumer advertising compliance. Previous articles discussed the role of the FDA in fitness centers, the False Claims Act, the AKS and Stark anti-referral laws, HIPAA, and other relevant agencies, laws, and regulations.

Physician recruitment agreement

As hospitals open up medical fitness centers – on site or off site – they need physicians to help run these facilities. They need doctors who can act as an interface between the hospital and staff that is providing hands-on treatment to patients which chronic back pain, diseases, and other health disorders.

One key factor that can raise a legal red flag is the topic of referrals. Hospitals who hire new physicians to run or work with the medical fitness center ideally want the physician to refer patients back to the hospital. Referral arrangements must be created carefully with the help of experienced healthcare lawyers or they can violate Stark Law, the Anti-Kickback Statute (AKS) and other anti-referral laws.

These laws were created to ensure that hospitals and doctors refer patients based on what is best for the patient and not what’s financially profitable for the hospital or the doctor.

Physician recruitment agreements and physician employment agreement may violate Stark and AKS if they are not reviewed by an experienced health care lawyer.

Doctor recruitment agreements generally benefit the hospital by generating referrals and by giving the hospital a chance to examine the doctor’s skills before any long-term arrangement is made. Newly recruited physicians get a base fee while they learn their profession.

As we wrote in the second article of this series, Stark Law is aimed at prohibiting referrals where the hospital or doctor has a financial interest in the medical fitness center – or wellness center or gym. The AKS statute focuses on prohibiting referrals based on payment, solicitation or other financial benefits. Both Stark Law and the AKS generally apply to payments where business is generated through federal programs such as Medicare and Medicaid.

Stark Law has a specific exception for physician recruitment agreements under § 411.357 e – titled physician recruitment. The AKS has a safe harbor titled “Practitioner recruitment.”

Physician employment contracts and personal service arrangements

Many of the same prohibitions that apply to physician recruitment agreements also apply to physician employment arrangements and personal service arrangements. A physician employment arrangement doesn’t necessarily involve a hospital. Agreements by doctors to work for a medical fitness center can run afoul of Stark Law and AKS if Medicare or Medicaid are involved (the AKS also prohibits payments through any federal agency) and if the referral would essentially encourage the doctor to make referrals that aren’t best for the patient’s health condition.

There is a separate “Bona fide employment relationship” exception in Stark Law and also a “personal service arrangement” exception in Stark Law. Other arrangements such as equipment rentals may qualify for other exceptions.

The AKS has similar, but not identical, safe harbor regulations for “personal services and management contracts and for other arrangements.

Digital Health and telemedicine

Medical fitness centers are likely to consider using telemedicine for different reasons:

  • If an emergency occurs such as a heart attack or injuries from a fall – it helps if the staff can speak to a physician if none are immediately available at the site.
  • Telemedicine is often used to review digital images such as X-Rays, CT-Scans, and MRIs. These images need to be evaluated correctly. With telemedicine, the patient can receive a test at the medical fitness center or a nearby facility. The test can then be sent to a specialist who can review the test
  • Telemedicine is also being used to evaluate skin diseases, for psychological care, and for other reasons.

Types of telemedicine for patients and consumers who use medical fitness centers and gyms

Some of the different types of telemedicine include:

  • Telemedicine can involve a patient speaking with and seeing/being seen by a healthcare provider in real time.
  • Store and forward. This is when data, which complies with HIPAA (Health Insurance Portability and Accountability Act) is stored at the gym or center and then sent electronically to a remote physician
  • Distance monitoring. This is a type of medicine that may be especially used by medical fitness centers and gyms. This type of telemedicine allows doctors and others to monitor patient essentials such as heart rate, glucose levels, and vital signs from afar. The patient usually wears some kind of a medical device which is monitored through software. If his/her heart rate goes to high during exercise, for example, the physician is notified that the patient is having a medical emergency.


Is HIPAA compliance a mystery to you? What do you have to do for HIPAA, and when?

Some of the relevant telemedicine legal issues

A skilled telemedicine healthcare lawyer will review the current federal and state laws that apply to the various types of digital health issues medical fitness centers and gyms use. These include:

  • Medication prescriptions. The types and amounts of drugs that can be prescribed are generally regulated by state laws and state medical societies. Prescribing medications to patients in different states is generally illegal.
  • Informed consent. Generally, physicians must explain the risks of any medications they prescribe and any treatments or procedures they recommend. Some informed consent issues for digital health include privacy issues in giving and getting informed consent, whether the consent should be in writing, and various state protocols.
  • Face-to-face meetings. Most states require that the first meeting with a patient be a personal face-to-face meeting so the physician can see, feel, and directly experience the patient’s health dangers. Telemedicine is generally, at best, acceptable for subsequent meetings between patient and doctor.

Other general issues involving physicians and medical fitness centers/gyms

Many of the legal issues that need to be reviewed with your healthcare lawyer are similar to those for medical spas. Some of these issues include:

  • Fee-splitting
  • Which tasks, if any, can be delegated by the physician to non-licensed staff members?
  • What state business laws apply?
  • What medical society regulations apply – including ethics laws?
  • What federal and state safety laws apply?
  • What consumer protection laws apply?
  • What ownership issues apply? In addition to Stark Law and AKS law, states such as California have laws that regulate who can own a medical practice. So, a critical item to review with your healthcare lawyer is – Is the medical fitness center, gym – a medical practice? Generally, only physicians can own a medical practice to protect the patient’s safety. In California, for example, the state does not allow corporations or non-physicians to own a medical practice. Usually, the physician must own the practice – or the fitness center must employ the physician. In some cases, a minority ownership interest by a non-physician may be allowed
  • Who has ultimate responsibility for procedures? Generally, physicians need to have final responsibility. There may be areas, which you should review with your healthcare compliance lawyer, where some treatments can be delegated to licensed and certified health professionals.
  • Who can order drugs and medical devices?
  • What products can be ordered and used and who should do the ordering?
  • Who can be a medical director of the medical fitness center or gym?
  • What does it mean to “medically supervise” treatments, exercises, and procedures? Generally, the doctor who supervises the treatment or procedure must be an employee or have an ownership of the center or facility.


Does health care reform discuss wellness and prevention?Yes, among other things, the Affordable Care Act (“ACA”) provides incentives for individuals to focus on wellness.

Management Service Organizations

Management Service Organizations (MSOs) help medical practices, including medical fitness centers, with the administrative end, the non-clinical end of the practice. The administrative end generally includes payroll, benefits, human resources, and compliance issues. MSOs can be owned by different types of entities. An MSO can even buy the physical assets of a medical practice and then sell/lease them to the practice.

Additional duties of an MSO may include:

  • Training the staff
  • Doing the medical billing, coding, and collections
  • Credentialing the staff to verify their licenses, education, and certifications
  • Helping with regulatory compliance including OSHA safety laws, HIPAA, the Family and Medical Leave Act, and other laws and regulations
  • Transcription
  • Marketing
  • Sales
  • Many other administrative duties

An MSO is often recommended by experienced health care lawyers to help meet the exceptions of the Stark Law and the AKS safe harbor. For example, the MSO can be created to meet the personal service arrangement exception, the fair market value exception, the rental of office space and equipment exception, and the payments by a physician for items and services exceptions under Stark Law.

There are a few balances your healthcare lawyer will explain if you are using an MSO for your fitness center, wellness center, or gym. MSOs generally cannot have an ownership interest in the business and can’t be involved in the daily practice of medicine. The MSO contract should be reviewed so the duties and obligations are set forth in detail.

Honest Representations

Medical fitness centers and gyms need to be especially vigilant that their marketing is truthful and that the labels on their products comply with federal FDA requirements.

Fitness centers, these days, promote themselves in many different ways including:

  • Websites
  • Social media campaigns
  • E-mail campaigns
  • Brochures and other written materials
  • Radio commercials
  • TV commercials
  • Print advertisements

All of these materials can and will be reviewed by the FDA to determine if the foods, medical devices, drugs, cosmetics, and dietary supplements are adulterated or misbranded.

  • False promises may result in an FDA warning letter that your product is being promoted as a drug and will require premarket approval.
  • The Federal Trade Commission has authority to review the truth and accuracy of virtually every online and offline claim that you make
  • The Bureau of Consumer Protections can also review the honesty of your promotional materials
  • State agencies can also review whether you are misleading the public in any way.

Photographs can’t be photo-shopped. If you use models to promote how well your fitness programs work, then consumers should clearly understand that models and not actual clients are being used for the promotions.

Violations of any of the relevant federal or state laws can result in substantial civil fines along with injunctions to cease and desist operations, providing specific treatments, or offering or prescribing specific products.

Medical fitness centers and gyms that use physicians are expanding as the health and wellness community understands the relationship between treating bad health such as heart disease and back pain with good health such as exercise and nutrition. The fitness centers, physicians, and other providers need to understand that federal agencies such as the FDA and the FTC and federal laws have one primary goal – to help ensure the safety of the patients. Individuals and companies who work in the fitness community need to understand which laws apply to their fitness practice and how to show they are in compliance with these laws.

Contact Cohen Healthcare Law Group, PC to schedule a consultation with an experienced healthcare compliance lawyer.

Contact Us

    Book your Legal Strategy Session now
    Cohen Healthcare Law Logo

    Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.

    Start typing and press Enter to search