IV Hydration Therapy Services Raise Legal Challenges
In today’s video, we talk about legal issues raised by IV hydration therapy, in particular in the area of COVID-19 aka coronavirus.
Here is today’s healthcare law scenario. Jim is a licensed medical doctor who wants to create an IV therapy business. His best friend, Ron, has a background in operations and marketing and is very good at getting patients to Dr. Jim’s practice. Dr. Jim has created a professional medical corporation where he is the sole shareholder as a licensed MD, while Ron has his own LLC. So, that’s the structure.
Dr. Jim has many questions about how best to work with Ron: should he ask Ron to give him shares in the LLC? Can Ron’s LLC be an MSO and collect a percentage as a management and marketing service fee for running the MSO that essentially finds customers who will turn into patients for Dr. Jim’s practice? And, what should they do about hiring a nurse? The nurse, the key person who is going to run around in a mobile unit and actually deliver the IV hydration therapy services?
Hi, I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry clients just like you navigate healthcare and FDA legal issues so you can launch, or continue to scale, your health and wellness service or product.
While there are a lot of dimensions to the MSO puzzle – and we address these in detail in various other videos on our You Tube channel, or in the video blog on our website, cohenhealthcarelaw.com – let’s zoom in today on the nurse, and let’s assume it’s an RN.
Dr. Jim pointed out that there are nursing staffing companies out there, and this nursing staffing is a bit of a legal grey zone. You have to have an employer of record, ideally it is the clinical company – in this case the professional medical corporation – that hires the RN, because it’s the MD that supervises the RN so it makes most sense for the RN to be an employee of the professional medical corporation in my view. Yet, many in the industry use a more aggressive model, and that is to have the nursing staffing company which essentially leases out the RN to the practice. This is a very common model.
There are nuances here so finding the right model is really more a matter of legal strategy that corresponds to your willingness to embrace regulatory risk, than it is about getting black-and-white, yes/no answers. But, one thing we can say is that you have to figure out what the nurse can and cannot do, and that depends on laws and regulations.
Here, a couple of legal definitions will be useful. Let’s take just three: administer, dispense, and furnish. Under California law, as an example, these are all defined differently, so you have to create a strategy as to what the nurse will do and not do under the parameters of supervision. “Administer” means directly applying a drug or device to the body. “Dispense” means “furnishing” drugs or devices upon a physician prescription or order. And “furnish” simply means “to supply by any means,” including by selling. Then there is a fourth definition, which is “dangerous drug.” A person cannot “furnish” a “dangerous drug,” except on a physician’s prescription.
You can see that these legal definitions pile up fairly quickly, and so you have to look at them all together, and have a working knowledge of the entire regulatory map in order to design a legal strategy for a particular business model. One thing we can say on this short video about these definitions, is that an RN cannot be a “prescriber”—which is also defined in the law—but, the RN can either “furnish” or “administer” when the physician is the prescriber. And once you know this, this will help Dr. Jim get a better sense of who should be the actual employer of the nurse, and, what are the limitations on the RN’s authority.
But then California law has additional restrictions on whether the IV therapy can be “administered” by a nurse based on a physician order outside the physician’s office (mobile unit), or, can only be “dispensed” by the physician in the medical office.
One coda here, even once we get through this issue, we have another legal issue, which involves the way the IV hydration business will market its claims. Recently, FTC cracked down on IV bars for making false or unsubstantiated claims about the efficacy of IV cocktails. Per usual, FTC requires that all healthcare claims be supported by “competent and reliable scientific evidence,” and this is a very high standard.
If you have a business model involving IV hydration therapy or any other healthcare service or product, and, you’re interested in an early read, you would benefit from having a Legal Strategy Session with a member of our Legal Team, and that’s the first step in your journey.
Thanks for watching. Here’s to the success of your healthcare venture, we look forward to speaking with you soon.
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