Dr. Bob Smith came to our law firm, he was a hospital physician with 15 years’ experience.  The hospital let go a lot of its staff, and Dr. Bob decided to open a telemedicine practice focusing on functional medicine, emphasizing nutrition, dietary supplement, and lifestyle.

Dr. Smith asked us for basic legal advice on how to structure his functional medicine, telemedicine venture.

Hi everyone, I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry clients navigate health and wellness, FDA legal issues and successfully grow their health and wellness product or service.

The first issue Dr. Smith faced was the online dispensary.  It offered him a 25% profit if he sent patients a link to his portal for the manufacturer for the distribution of the dietary supplements he would recommend to his patients.  Is this an impermissible conflict of interest? Dr. Smith asked us.

Ah, the impossible question. Most states prohibits kickbacks, and, kickbacks include simply making a profit simply for sending the patient somewhere.  In legal terms, we call this a “referral.”  Typically , we do think of a referral as sending the patient to a practitioner; but, in many states, like California, the concept of “referral” is very broad and includes, for example, sending the patient somewhere to buy something, such as, for example, a dietary supplement or cosmetic.

Now, whether states actually enforce this rule to the letter in situations involving physicians and online dietary supplement sales and portals, is another matter.  Let’s just say that we don’t believe a lawyer can give an unqualified green light here.  Having said that, Dr. Smith is willing to accept certain enforcement risks, and he has asked for help mitigating his legal and regulatory exposure.

Next, Dr. Smith wanted to create a care team, consisting of other medicinal healthcare professionals who would act as subcontractors for his practice.  We’ve faced this question before, and the question has been whether you can leverage off the fee of a fellow healthcare professional who serves as a contractor. It does raise kickback issues.  Then again, with physicians, this is the common model.

As to what happens when Dr. Smith tries the third thing, which is to mix and match practitioners, such as, a dietician, a nutritionist, a massage therapist, and a health coach, and a physician, and a psychologist—again, we cannot give Dr. Smith total immunity.  But we can say that employment does not pose the same anti-kickback or fee-splitting concern, and, is recommended in states like California that are tough on misclassification of independent contractors vs. employees.

Last, Dr. Smith wanted some assistance with basic corporate drafting such as, Office Policies; Telehealth and other Consent Forms; Disclaimers (for his social media, website, educational videos, newsletter, and online platforms); a Privacy Policy and Terms of Use, and an MSO agreement.

Once we straightened out Dr. Smith’s regulatory questions, we turned next to the agreements.  Dr. Smith survived getting fired by the hospital; in fact, it was a divine boon, it was the best thing that ever happened, as his telehealth, functional medicine practice took off.

Thanks for watching. It’s a pleasure to work with people like you. Here’s to the success of your healthcare venture, we look forward to speaking with you soon.