CAMLAW: Complementary and Alternative Medicine Law Blog

Drafting legal contracts for medical spa and integrative medicine clinics to address kickback and fee-splitting issues

Many business owners think that handling Stark, kickback and fee-splitting issues in the medspa or integrative care clinic is simply a matter of drafting standard contracts for independent contractors or employees.

And on the surface, drafting contracts seems like a simple matter: just draft, and review!!! 

The problem is the cost of getting it wrong.  A poorly drafted agreement can result in a lot of liability down the road.  This can include civil liability (monetary damages), loss of professional licensure, and potentially criminal investigation and liability. This can happen when the business owner does not get the documents properly drafted and reviewed by an attorney; or chooses to rely on their usual corporate attorney, who may be a great business lawyer for general transactions but will probably be unfamiliar with all the relevant law and creative ways to structure business deals while still remaining legally compliant.


Our law firm has received many clients call from the "other side" of a transaction--i.e., when facing legal jeopardy.  It is always more cost-effective to invest in good legal advice before entering a transaction.  Sharp business people see legal costs as an investment in their business, not an expense.  Many will invest far more in furniture, office space, and equipment, but the sharp ones do not skimp on proper advice. 

Creating Legally Successful, Multidisciplinary Health Care Practices: Fee-Splitting, Kickbacks, Stark Analysis, Corporate Practice of Medicine, Unlicensed Practice, Employment, and Other Issues

Many law firms will try to compete by offering a cut-rate, but legal services are not like selling a used car.  The cost today may be cheap but the price tomorrow steep.

Our law firm has a track record of serving clients in the medical spa, wellness, and complementary / alternative / integrative medicine industries. We do not stop with drafting a standard contract.  Nor do we build out cookie-cutter corporations, when the law may call for more complex arrangements.  For example, when advising on appropriate entities, we will look at the intersection of state laws governing the corporate of medicine, incorporation laws, and rules of the applicable state professional board (e.g., medical board, cosmetology board, board of dentistry, nursing board, etc.). The goal is to account for the complexity inherent in the law without making matters unduly complicated.  Complexity without complication equals proper service to the client--documents that will hopefully withstand the test of later regulatory scrutiny.

Some of the services our law firm provides are:

  • Analysis of proposed compensation arrangements (including revenue-sharing) with regard to Stark, anti-kickback and fee-splitting issues, and recommendations concerning use of "Mall" vs. "Center" model.
  • Draft of a legal memorandum analyzing Stark, anti-kickback and fee-splitting issues and outlining compliant compensation arrangements, to serve as back-up justification in case of later regulatory action or lawsuit.
  • Legal analysis and advice regarding state law self-referral and anti-kickback issues and design of flow-of-payments accordingly.
  • Review and legal advice concerning legal issues surrounding designation as "medical director."
  • Legal advice concerning degree of supervision necessary for spa or other therapies.
  • Drafting of contract between MD/DO and Center/Clinic/Practice/Spa; drafting of contracts with health care practitioners; drafting of other employment agreements; legal analysis of independent contractor vs. employee arrangement.
  • Review and analysis of malpractice liability risks relating to therapies the practitioner offers.
  • Assessment of practice or entity's liability (vicarious liability) for acts of associated and affiliated practitioners and recommendations regarding legal structure to help create protection.
  • Review and analysis of claims and/or guarantees made in the practice.
  • Review and analysis of clinical use of any potential “medical devices” under the federal Food, Drug & Cosmetic Act.
  • Review and analysis of legal issues pertaining to dietary supplement / nutraceutical / cosmesecutical recommendations by clinicians.
  • Review and legal analysis of issues pertaining to dietary supplement sales by the physician or other clinician, or clinical practice, or clinic or spa.
  • Review and legal analysis of FDCA risks relating to therapies that could be considered off-label or experimental.
  • Proper accounting for role of physician as primary care doc vs. specialized care (i.e., integrative medicine, aesthetic medicine, etc.).
  • Legal advice concerning potential disciplinary issues (including standard of care issues inherent in novel or non-standard therapies).
  • Scope of practice issues involving non-physician providers including both allied health practitioners (such as nurse, physician assistant, psychologist) in the clinic and CAM providers (such as acupuncturist, massage therapist, chiropractor, energy healer); issues relating to non-licensed healer, hypnotherapist, homeopath, naturopath, and others.
  • Review and legal advice concerning insurance arrangements, including Medicare status (par v. non-par v. opted out) and expected patient population.
  • Draft Medicare ABN Notice and Patient Assignment or Waiver Forms.
  • Draft non-participation letter for insurance companies with whom MD/DO has contract through medical school or hospital affiliation, managed care or MSO contracts.
  • Legal advice with regard to insurance arrangements such as proper CPT and E&M coding for the super-bill; discussion of issues of upcoding, unbundling, medical necessity, scope of practice, discounts and waivers, fraud and abuse “incident to” billing, all of which can present unintentional regulatory traps.
  • Recommendations regarding professional liability insurance.
  • Draft letter to malpractice carrier regarding coverage of CAM.
  • Discussion of patient's insurance coverage of CAM and aesthetic medical therapies; whether therapies can be deemed medically necessary v. experimental.
  • Recommendations concerning general liability insurance (e.g., spa liability;  general business liability; employee benefits liability; group health insurance; healthcare billing errors and omissions; directors and officers; employment practices; workers compensation).
  • General Informed Consent Form for medicine, chiropractic, acupuncture, massage, etc. (or non-licensed practitioner if state law mandates disclosures).
  • Draft Nutrition Notice (if applicable—e.g., CA).
  • Review of confidentiality practices
  • Draft of Privacy Form (non-HIPAA, mirror form; or state-specific, compliant HIPAA Manual if billing electronically).
  • Review of marketing materials including website for FTC (Federal Trade Commission) and other potential liability issues.
  • Legal review with regard to FDA (Food and Drug Administration) issues concerning claims and labeling.

The list of issues can expand or contract accordion-like according to the particular project. However, it takes experience and judgment to decide which issues should be flagged and which can be deferred, and strong business judgment in consultation with a health care lawyer versed in medical spa and integrative medicine legal issues to determine how to proceed.  

The best way to build trust with your health care legal expert is to briefly describe your project and have the attorney highlight areas of concern that are best addressed before opening your center.  Feel free to contact our law office to see how we can help.  Sometimes a short call can establish the list of priorities, and at other times an initial consult is a valuable way to forge the relationship that will launch your enterprise.

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For those who are always looking to be within budget, we strive to be cost-effective and efficient, without the layers of usual law firm bureaucracy.  However, do not compete on price but on value.  We hope our work will stand the test of time, and that you will find our services so amazing that, like many satisfied clients, you will happily refer everyone you know. 

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Our law office has attorneys with legal experience  in FDA matters, including guiding  clients involved in health care  delivery, group medical and private  medical practice, who are concerned  about issues at the interface of  federal and state law, concerned  about medical board discipline or  medical malpractice liability  issues.  We also review and draft informed  consent forms and guide  clients concerning a variety of health care law  issues.

If you have legal questions concerning self-referral, kickbacks and fee-splitting or patient brokering in New York, California, Massachusetts, Washington DC, and other states, contact  a lawyer who knows the rules.

Consult an experienced  health care law attorney who knows complementary medicine and integrative  medicine for legal advice pertaining to any project involving allied health or CAM     professionals.

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Healthcare & FDA attorney Michael H. Cohen is a thought leader in healthcare law & FDA law, pioneering legal strategies in healthcare. wellness, and lifestyle markets. As a corporate and transactional lawyer, FDA regulatory attorney who also handles healthcare litigation, healthcare mediation and healthcare arbitration, and international healthcare & wellness law speaker, Los Angeles / Bay Area healthcare & FDA lawyer Michael H. Cohen represents conscious business leaders in a transformational era. Clients seek healthcare & FDA attorney Michael H. Cohen's legal savvy on all aspects of business law, healthcare law, and FDA law, including:

Whether advising start-ups or established companies, Los Angeles / San Francisco / Bay Area healthcare & FDA attorney Michael H. Cohen brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges.  

The Michael H. Cohen Law Group counsels healthcare practices, entities, and companies, such as clinical laboratories, physicians, psychologists, chiropractors, acupuncturists, naturopaths, nurses, healers, medical spas, sleep centers, addiction treatment centers, surgery centers, anti-aging centers, integrative medicine clinics, anti-aging practices, mental and behavioral health counselors, medical service organizations, telemedicine and mobile (m-health) companies, online health ventures, stem cell and cord blood entities; and other health and wellness enterprises.

Healthcare and FDA lawyer Michael H. Cohen is admitted to practice in California, Massachusetts, New York, and Washington, D.C. Our clientele is national and international, and we also counsel healthcare and FDA clients in Los Angeles, San Diego, Ventura, San Francisco Bay Area, San Jose, Santa Barbara, Sacramento, San Bernadino, Alameda, Contra Costa County, and other California cities and counties.  

Contact our Los Angeles, Ventura County, & San Francisco Bay Area FDA & healthcare attorneys today if you need a telemedicine lawyer, concierge medicine lawyer, HIPAA lawyer, FDA lawyer or FDA regulatory consultant (dietary supplements, medical devices, cosmetics, OTC drugs), advertising compliance lawyer, healthcare mediator or arbitrator, concierge medicine attorney, management services organization attorney, or other specialized healthcare legal advice or FDA regulatory consulting.

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COMPLEMENTARY & ALTERNATIVE MEDICINE LAW BLOG

Michael H. Cohen, Esq.; 468 North Camden Dr. | Beverly Hills, California 90210 | 310-844-3173