Self-referral, Kickback, and Fee-Splitting Legal Issues in Health Care

New York, like California and other states, has provisions prohibiting Self-referral, Kickback, and Fee-Splitting when physicians and other healthcare providers have an ownership or compensation interest in entities to which they refer.


These provisions apply both to conventional care and to complementary, alternative medicine and integrative care.

In New York, within Title VIII, the general provisions of Article 130 are applicable to all the health care professions.

            Subarticle 1 deals with licensing; subarticle 2 with regulatory responsibilities of the Board of Regents, the Education Department, and state boards for the professions; subarticle 3 with Professional Misconduct; and subarticle 4 with unauthorized practice (including aiding and abetting) and penalties. Under subarticle 4, professional misconduct includes:

      • Aiding and abetting unlicensed activities
      • Committing unprofessional conduct, as defined by the board of regents in its rules

            Subarticle 4 (also known as “6509-a” after the section of NYS Education Law) also contains the following additional definition of professional misconduct:

That any person subject to the above enumerated articles, has directly or indirectly requested, received or participated in the division, transference, assignment, rebate, splitting or refunding of a fee for, or has directly requested, received or profited by means of a credit or other valuable consideration as a commission, discount or gratuity in connection with the furnishing of professional care, or service, including x-ray examination and treatment, or for or in connection with the sale, rental, supplying or furnishing of clinical laboratory services or supplies, x-ray laboratory services or supplies, inhalation therapy service or equipment, ambulance service, hospital or medical supplies, physiotherapy or other therapeutic service or equipment, artificial limbs, teeth or eyes, orthopedic or surgical appliances or supplies, optical appliances, supplies or equipment, devices for aid of hearing, drugs, medication or medical supplies or any other goods, services or supplies prescribed for medical diagnosis, care or treatment under this chapter, except payment, not to exceed thirty-three and one-third per centum of any fee received for x-ray examination, diagnosis or treatment, to any hospital furnishing facilities for such examination, diagnosis or treatment.

                        IVC1a. “Groups” Exception

The definition in Section 6509-a, continues with an exception:

Nothing contained in this section shall prohibit such persons from practicing as partners, in groups or as a professional corporation or as a university faculty practice corporation nor from pooling fees and moneys received, either by the partnerships, professional corporations, university faculty practice corporations or groups by the individual members thereof, for professional services furnished by any individual professional member, or employee of such partnership, corporation or group, nor shall the professionals constituting the partnerships, corporations or groups be prohibited from sharing, dividing or apportioning the fees and moneys received by them or by the partnership, corporation or group in accordance with a partnership or other agreement; provided that no such practice as partners, corporations or in groups or pooling of fees or moneys received or shared, division or apportionment of fees shall be permitted with respect to care and treatment under the workers' compensation law except as expressly authorized by the workers' compensation law. Nothing contained in this chapter shall prohibit a medical or dental expense indemnity corporation pursuant to its contract with the subscriber from prorationing a medical or dental expense indemnity allowance among two or more professionals in proportion to the services rendered by each such professional at the request of the subscriber, provided that prior to payment thereof such professionals shall submit both to the medical or dental expense indemnity corporation and to the subscriber statements itemizing the services rendered by each such professional and the charges therefor.

            This additional definition of professional misconduct applies to persons licensed under articles 132 (chiropractic), 133 (dentistry, dental hygiene, and certified dental assisting), 136 (physical therapy and physical therapy assistants), 137 (pharmacy), 139 (nursing), 140 (professional midwifery), 143 (optometry), 144 (ophthalmic dispensing), 156 (occupational therapy), 159 (speech-language pathologists and audiologists), and 164 (respiratory therapists). Subsequent sections set forth the rules governing proceedings and penalties in cases of professional misconduct.

            Certain professions are not on this list (for example, medicine and acupuncture), but there still could be fee-splitting provisions in the licensing laws governing these professions. Further, the Rules of the Board of Regents (below) would likely govern these prohibitions.

To assess your healthcare legal and regulatory issues, contact the Michael H. Cohen Law Group.  Our healthcare and FDA legal team counsels health and wellness products and technologies, practices, and ventures, that accelerate health and healing.

Michael H CohenMichael H Cohen
The Los Angeles / San Francisco / Bay Area-based Michael H Cohen Law Group provides healthcare legal and FDA legal & regulatory counsel to health & wellness practices and ventures, including health technology companies (medical devices to wearable health and nanotech), healthcare facilities (from medical centers to medical spas), and healthcare service providers (from physicians to psychologists).Our legal team offers expertise in corporate & transactional, healthcare regulatory & compliance, and healthcare litigation and dispute resolution, in cutting-edge areas such as anti-aging and functional medicine, telemedicine and m-health, and concierge medicine.Our Founder, attorney Michael H. Cohen, is an author, speaker on healthcare law and FDA law, and internationally-recognized thought leader in the trillion-dollar health & wellness industry.