Health Law Pointers - Volume X, No. 1

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Principles In Establishing

A Successful Business Partnership (Part One)


            What can you do to boost your chances for a successful business and professional partnership? Many advisors will emphasize the need for a written agreement that will integrate the “deal” into a single legal document, eliminate ambiguity and effectively limit the potential for a contentious dispute. But it’s the personal relationship and trust that partners enjoy that truly is the key to success.


            Think of your planned partnership as a marriage of ideas and goals and do your best to match your expectations with your partner’s vision and abilities. Just as you would want to get to know your future life partner before you propose marriage, invest the necessary time and effort in evaluating the strengths and weaknesses of your potential business partner, even if you have known your prospective partner for a long time.


·                    Do you share common business and professional goals?

·                    Do you respect each other?

·                    Will each of you bring something of value to the business table?

(Do you complement each other?)

·                    Is his or her business and professional philosophy and style compatible with your own?

(Where do you agree and disagree?)

·                    Are there any personal problems that may interfere with a successful launch of the new venture?

·                    Will each of you have the patience and financial strength to survive setbacks in the early stages of operation?


Equally important, your business plan should be mutually agreed upon, and all parties should be comfortable with the plan. This will require some compromise (give and take) in the planning process, and it will be helpful if your partner is not rigid but malleable in his or her personality and approach to doing business. Consensus on the critical elements should be achieved early on - with the assistance of counsel if necessary - and then reduced to writing in the form of a term sheet or summary of the proposal so that there is no doubt as to your intentions and agreement.


NEXT ISSUE: What Makes a Successful Partnership Agreement


E-mail Confidentiality


            If questioned, many of our Health Law Pointers readers would bet that e-mail communications with their lawyers are confidential and protected by the attorney client privilege under New York State law, particularly if the e-mail communication involves material prepared by their attorney in anticipation of litigation (the “work product” doctrine).


            Don’t be so sure! In a recent New York State Supreme Court decision, e-mail correspondence between a physician and his legal counsel was not protected when the communication took place on the hospital’s computer system and an unambiguous hospital e-mail policy made it clear that hospital employees had no personal privacy rights in any material created, received, saved or sent using the hospital computer system.


            In Scott vs. Beth Israel Hospital, a physician employed by the hospital in an administrative capacity, as Chairman of the Orthopaedics Department, used hospital e-mail to communicate with his lawyer on a pending dispute involving the hospital. When hospital counsel notified physician’s attorney of its possession of this correspondence, physician’s attorney asserted both the attorney client privilege and work product doctrine in an effort to protect the content of the letter from disclosure. The court held that the physician effectively waived his privileged communications by using the hospital e-mail address and computer system when he knew, or should have known, that the hospital had a “no personal use” policy and reserved the right to monitor such communication, and chastised physician’s counsel for not taking greater care in protecting privileged work product. In the view of the court, having the lawyer simply add a pro forma notice at the end of every e-mail noting that “this message is intended only for the use of the Addressee and may contain information that is privileged and confidential” was not sufficient to offer clients reasonable care for the protection of client communication.


Provider Withdrawal From Single HMO Product


            May a participating provider in New York withdraw from a single HMO product without fully withdrawing from all products? Our clients have recently raised this issue when an HMO indicated that it was their business practice to enforce such a rule. After looking to the Public Health Law, Insurance Law and Code of Rules and Regulations, we determined that New York law is silent on this issue. However, the Department of Health, Bureau of Managed Care, has indicated that the issue is a contractual one and may be left to the discretion of the HMO. This is consistent with the principle that the specific policy terms of provider contracts are within the purview of the contracting parties.


Discovery Of Billing Errors


            It is not uncommon for a professional practice to discover that a coding error inadvertently has been committed for many years, based on an accepted office (billing) practice. Perhaps you learned of the mistake through a casual conversation with a colleague or by attending a compliance seminar. Although you have been fortunate in that the mistake has never come to the attention of third party payor auditors, essentially you have been overpaid for your work.


            Don’t ignore the problem. DO address the overpayment before the error is discovered and allegations of fraud are lodged against you and/or your practice.


·                    Undertake an “in house” review of the billing procedure(s).

·                    Identify the nature of the problem - - How did it arise? Who was responsible?

·                    Consider consulting a recognized billing specialist if necessary.

·                    Develop an action plan and take immediate steps to correct the problem.

·                    Determine the amount of the overpayment.

·                    Advise the carrier in writing of the problem, the corrective action taken, and the amount of the overpayment.

·                    Offer repayment in full for the overpayment.


Your best bet is a thorough assessment of the problem, and a candid and honest presentation to the third party payor, using your lawyer to guide and assist you in the preparation of any written disclosure or payment offer.



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