In today’s video, we return to legal risks and risk mitigation for a healthcare startup deploying IV therapies.

Hi everyone, 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 grow or launch your healthcare business.

Previously, we talked about FTC enforcement with respect to the claims made by certain IV therapy manufacturers and clinics.  FTC had found the claims about treatment for diseases to be deceptive and misleading.  FTC is a powerful legal watchdog when it comes to your marketing, and there’s state regulators too.

There are also other legal risks besides deceptive advertising when you are providing IV therapies.  They are not necessarily insurmountable, but you have to know about the risks and how to mitigate them.

So, for example, let’s just say that our client Bob comes to us with these legal questions.

1. Hi, I’m Dr. Bob and I’m an MD. I’ve got a professional medical corporation in which I own 51% of the shares and my RN owns 49%. Let’s say we also co-own the MSO or technology platform. Can we set this up so 99% of the profits flow to the technology platform which is the venture? Because we can sell that that and get rich.

Well, no, that would violate corporate practice of medicine and as well possibly constitute fee-splitting.  You can’t just suck all the profit out of the professional medical clinical side and stick it in the MSO. The reason is, the MSO has to earn its fees at fair market value for the services and technology it provides.

2. Can I hire a medical director for the venture?

We get this question a lot, we typically disfavor the concept of a medical director, because it makes it look like you’ve got the venture hiring the doctor.  It’s better to have this structure that we typically use where there are two entities, one is the clinical and the other is the management and marketing company. So, we call that the MSO model.

3. Is this going to violate self-referral and Stark if I refer patients from my practice?

Not necessarily because these self-referral laws only apply when you have DHS, Designated Health Services.  If you don’t have DHS, then you might not have a Stark issue but you might have anti-kickback laws to worry about.

4. Can the RN prescribe the medications?

The answer is “No”; typically, the physician must be the prescriber and the RN would be the one furnishing and administering to the patient.  In California, licensed RNs are able to administer medications and therapeutic agents that are ordered by and within the scope of practice of a physician, dentist, podiatrist or clinical psychologist – as long it’s within their scope of practice.

So, you see, when you get a puzzle like this, it might seem like there are clear lines and the way I phrase the questions – there might be unambiguous yesses and no’s, but more typically what you’ve got to do is navigate all these different components of healthcare law, some are more nuanced than other, so that’s how you navigate with more knowledge and assurance about the legal boundaries, risks and regulatory pitfalls.

Thanks for watching. Please contact us with your questions. We have helped hundreds and hundreds of healthcare industry clients build their dream.  We look forward to working with you on your journey to success!