Why Compliance is not a Secret Healthcare Lawyer’s Word

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If you’re a healthcare company, whether you’re a healthcare start up or a mature healthcare company. You probably know that compliance is not a boring word. Compliance is something that you think about, it’s part and parcel of being in the health and wellness industry. It’s just what you do. It’s what you do as a company, you pay attention to compliance.

And you might be robust enough that you’ve got a compliance officer, or a regulatory officer, or healthcare lawyer that you consult.

Let me talk a little bit about compliance today, and tell you why it’s, not only not boring, but it’s one of the most important things that you can think about in your healthcare venture, especially when you’re starting up.

I’m doing this from my car, as you can see. I was like a scrappy start up, I’m just getting into that vibe today. I’ve been listening to stories of entrepreneurs, so it’s just me, gluten free. Low production value, but high content value. Propping up my iPhone with an empty box of crackers actually, off the car. But that’s okay, because I’m going to talk about things that matter.

One thing that clients who are interested in compliance ask over and over is they say,

I want such and such done, how much does it cost?

And, from a sales perspective we know it’s about two things. The pain points and the benefits.  Ultimately price is never the real objection.

There is a store that I visited, actually I only visited the outside of the store in Beverly Hills. And the reputation is that you can only get clothes there if you are a monarch, a king, a queen, descended from royalty, a billionaire. You need to actually have a half a million dollars on deposit, on retainer before you can even go in the door.

It’s similar to a law firm, except we’re off by a factor of a quite a few zeros there. Our standing retainer, as of this recording, is between five and ten thousand dollars. So, we’re not at the half million to a billion mark by quite a few decimal places or comma places, depending on how algebraic you are. But it does bespeak to bespoke service which is quality.

Today I happened to go to the dentist, and I chose the dentist based on reviews. I asked about the price after I scheduled the dental work. This was a very capable dentist, the anesthesia’s kind of wearing off, and did a remarkable job. Actually, his prices are reasonable. And I kind of knew from the review, but nobody talks about price, nobody talks about cost. That was the person that I knew would be the right dentist for me. And so, when you get a white glove service, you look for the white gloves. And they better be white, and they should fit. But, and you curious about the material, but you want quality advice.

Let me tell you… recently I even said to somebody, a potential client, “What do you care if the cost is 5000, or 6000, or 8000, or 9100 and penny?” Well, I have to defend it to the investors. Well, you are defending against a multi-million dollar exposure, so get the right advice. We say, don’t roll the dice, get the right advice.

Let me tell you a tale of three clients.

One, I’ve mentioned before this individual, this company, wanted their claims reviewed. And they actually, they didn’t have their claims reviewed.

That was actually the problem. They left it up to chance, and didn’t get it done.

And then got into a judgment by the FTC to the tunes of seven figures. Yeah, seven figures, that’s not a good idea. And what would have cost to have review? Depends on the depths of the review, depends on how many claims are on their website. So much depends up to the client and what they present, and then you need a capable, bright, attentive, caring, thoughtful, effective attorney who’s going to look and see what claims are there, and give very nuanced advice.

I’ve said before that the most in depth advice is not always the best advice. The advice that’s the most conservative is going to cost a lot of money, in terms of opportunity costs. The transaction with zero opportunity cost is going to cost a lot in terms of compliance, potential risk. So, it’s about mitigating, titrating risks. So this client actually had a seven figure judgment, which FTC graciously reduced by quite a bit, and it was still catastrophic.

The second client opened up a med spa, and actually had a lawyer who said he was a healthcare lawyer, and apparently relegated the job to the paralegal. And the client told me that the paralegal was in the right area of the law, but got the wrong statute. And so, as a result, and I’m not giving away the area, because I want to anonymize this as much as possible, in case the client is listening.

Could be a medical spa, could be a healthcare start up, could be a health and wellness venture, could be an integrative medicine clinic, and could be a telemedicine company, and so on. And what they did when they got the wrong statute is they gave the wrong advice, and as a result of the wrong advice, the physician who was involved in the venture, who did not get independent legal advice, because they just relied on the company, who said everything would be okay. And the company’s lawyer said everything would be okay. Never disclosed or discussed the conflict of interest.

And so this doctor found themselves before the medical board, were getting stripped of their medical license because the company got it wrong. Because the company used a lawyer who charged a lot of money and relied on a paralegal for research.

So how much was that advice worth?

How much it worth not to get the advice?

As always, it doesn’t cost a lot to put your seatbelt on, but what if you don’t put it on and you get into a crash? That’s very bad. So, don’t get into a crash. Don’t drive crazy, but don’t drive like an old grandmother. But you might be an old grandmother who has very current, and you might drive a fashionable vehicle. Eccentric yet safe, yet also edgy manner. So, we have to titrate risks here.

The third of example is a client who manufactured a dietary supplement. The only problem is they didn’t bother reading that a supplement has to be taken orally by mouth. It’s not something you put in your nose, or on your nose, or around your nose, or the nose is connected to the forehead, or the hair. It’s not something that you put on your skin. So, it’s a supplement, so they pretty much got their compliance regulatory strategy completely wrong, and this, again, was disastrous.

Somebody asked me today, what’s your sweet spot. Well, we can say our sweet spot is and we can look to the area of service, the areas of service on our services page. We can talk about telemedicine, cannabis, medical spas, integrative medicine clinics, functional medicine, or we can simply say we deal very broadly with health and wellness.

I want to talk about one more thing, so I can still get under 10 minutes. So here’s a little grid, and I don’t know if you can see this very well, but the point is, here’s cost going up. Low cost, high cost. And then you’ve got not okay versus okay. I put those in quotes because there isn’t a really yes, no. It’s more about a very nuance sensitive view, but the idea’s that if for low cost, you can get a green light, a yes, the client then is thrilled. You’re the savior, you’re the hero for as long as they remember, you’re the foundation of this company.

And we’ve had that result for quite a few company now.

What is low cost? 5000, 10000, 15000, it can depend.

But remember the ROI that someone is building a six, seven figure company very quickly off of that advice, so the ROI could be a hundred fold. On the other hand, if for low cost you get a no answer, well that sucks, because now they can’t move forward. But if you get a definitive now, it’s a win-win for the client.

So if you spend a five or ten thousand dollar retainer, you get a no, that’s a good result, because, for example, we had one client that decided not to move into California. They have huge revenues in another state. That state does not have a statute like California’s which definitively says no. I mean, there’s a non-ambiguous red light there.

A lot of the time what you get is you get a maybe or a probably not, but if you want to do it, you can take the risk. And here’s a whole bunch of statutes that don’t look good. And what I found is if you spend five to 10 thousand dollars there, you risk getting a client being angry. You risk anger management issues. All the stuff that lawyers ever did, all the things that anybody ever did. Literally all of their unconscious negativity, resentment comes up, so.

That’s a hard one because sometimes you have to work through that to get the answer, and the rules are tough. But at least then you’re in a position to make an informed decision, so really it’s a win-win.

Clients should regard us as heroes. And we regard you as heroes all the time, because you’re pushing the boundaries of health and wellness. And we’re pushing the boundaries of legal structures, so we can support you. Doesn’t mean we break laws, or advise about breaking, but we do give edgy advice. And we also give careful advice, it’s very nuanced. So, please consider carefully.

Michael H. Cohen. Cohen Healthcare Law Group. We look forward to working with you.


  • I would definitely recommend. I needed direction regarding the FDA and how the rules would affect my business. Responsive, accessible, and knowledgeable.

    Richard Freedland
    Richard Freedland GRAMedical, CEO
  • Impressive credentials are only overshadowed by their clear awareness of practical strategies to help Physicians navigate modern healthcare and achieve successful outcomes.

    James Riviezzo
    James Riviezzo Practice On Your Terms

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