The infection prevention and control (“IPAC”) craze has had dentists scratching their heads for quite some time wondering where to turn for answers about IPAC, Public Health Ontario (“PHO”) inspections, which of the many IPAC guidelines to follow, how to respond to inspectors, etc. If you’re out of the loop and need to find out more about the “craze” that started last summer, see our previous IPAC blogs by clicking here.
The description of the checklists on the PHO website states:
These checklists were developed to assist public health units and others during IPAC lapse investigations and can be used to conduct inspections, audits and reviews of IPAC programs in dental practice settings.
That’s helpful, right? But it appears that an inspector who comes to your practice may be using these two checklists to assist in ensuring compliance. The language is not definitive and room is left for inspectors to use other documents. What’s more, the checklists reference sources from the RCDSO guidelines and Dispatch articles, the Occupational Health and Safety Act, PHO documents, Provincial Infectious Diseases Advisory Committee (PIDAC) documents, the Centres for Disease Control and Prevention (CDC) documents, etc.
So, although instructive on the matter, the new checklists may not be the definitive answer dentists were waiting for about their IPAC obligations!
The RCDSO put out a news release early this month stating that they have worked closely with PHO to develop the new checklists.
The RCDSO also took the opportunity to confirm that the RCDSO has always and continues to suggest that dentists’ professional obligations include
following public health guidelines as well as the recommendations of manufacturers of sterilization and other dental office equipment to ensure patient safety at all times.
They also hint at “potential changes” to the RCDSO Guidelines but confirm that no changes are anticipated until at least the new year.
What’s interesting is that despite recommendation that dentists follow public health guidelines and manufacturer recommendations for sterilization, they also state the current RCDSO guidelines will remain in effect and that “We have had no reports of any dental office that follows the current Guidelines being closed” which is a confusing message to send to dentists.
Right now, dentists don’t know where to turn for authoritative IPAC information. They are pulled in every direction from PIDAC to RCDSO to CDC to CDA – each of which have their own guidelines, recommendations and IPAC documents – some of which are similar but not always the same. And with confusing and contradictory information about which document to follow for proper IPAC measures in their dental practice, no wonder there is so much head scratching going on.
Although not the definitive answer dentists were waiting for, the new checklists are certainly instructive and a step in the right direction. But it is my hope that the PHO and RCDSO continue to collaborate to create a consolidated guideline document for dental practices that will help dentists to easily access one authoritative document and then feel safe and at ease knowing that they are conducting their IPAC using the authoritative guideline on the matter.
In the meantime, dentists should be familiar with both PIDAC and RCDSO guidelines on IPAC. If you are a dentist in Ontario you should absolutely use the new checklists to conduct an internal inspection and to see if your office would comply if an inspector walked into your dental practice today! And be sure to familiarize yourself with the other documents cited in the checklists!
Please note that the information provided herein should not be considered legal advice and is provided for informational and educational purposes only. If you need advice about IPAC at your dental practice, please contact me (Ljubica Durlovska), Jonathan Borrelli, David Mayzel or Michael Carabash. We are your legal dental team.
Accommodation is a process mandated by the Ontario Human Rights Code where an employee requires some sort of modification to their schedule or duties due to disability or some other reason protected by the Human Rights Code (i.e. family obligations, addiction, religious needs, etc.).
Employers are required to accommodate employees who genuinely require accommodation to the point of undue hardship. For more on what may be considered “undue hardship” read my blog To What Extent Do Dentists Have to Accommodate Employees.
In certain circumstances, and as part of the accommodation process, employers may ask employees to provide a doctor’s note outlining the prognosis and any accommodation requirements which the employee needs to return to work. For more information on your obligations when an employee is sick, read my blog Staff On Sick Leave: What Are Your Obligations As An Employer. But what happens if that note is contradictory (i.e. says the employee does not need accommodation but you notice that the employee cannot perform their job due to the disability) or if the note is from a doctor who is unqualified (i.e. the employee brings a note from their chiropractor regarding the employee’s cancer treatment – a medical issue they are unqualified to diagnose or treat)? Well in circumstances such as these, employers may be justified in asking for a second opinion or independent medical examination (“IME”).
Recently, the Ontario Divisional Court upheld a decision by the Human Rights Tribunal which ruled that an employer may, in certain instances, require an employee to undergo an independent medical examination (“IME”) during the accommodation process without the need for specific contractual provisions (Bottiglia v. Ottawa Catholic School Board, 2017 ONSC 2517). Mr. Bottiglia had worked for the Ottawa Catholic School Board (“OCSB”) for over 40 years. He started off as a teacher and progressed to superintendent. Mr. Bottiglia became ill in 2010 and was unable to work for approximately two years. He communicated in February 2012 that he was unable to return to work and that his recovery would take a prolonged period of time. In June 2012, the OCSB received a letter from Mr. Bottiglia’s doctor stating that he was unable to attend work and that a return to the OCSB might place him at a serious risk of a relapse. Then in August 2012, the OCSB was told that Mr. Bottiglia was capable of returning to work on a limited basis sometime in the next two months. The OCSB required Mr. Bottiglia to submit to an IME with a doctor of their choosing. Mr. Bottiglia refused to do so and filed a complaint of discrimination with the Human Rights Tribunal.
The Tribunal assessed Mr. Bottiglia’s case and found it reasonable, given the significant and unexpected changes in Mr. Battiglia’s stated ability to return to work, that the OCSB would want further information about his medical condition and ability to return to work. The OCSB also found it suspect that Mr. Bottiglia’s return to work coincided with the end of his paid leave, which the Tribunal also took into consideration. Ultimately, the Tribunal found that there was no discrimination and that Mr. Bottiglia should have submitted to the IME requested by the OCSB.
The Divisional Court, when reviewing the Tribunal’s decision stated that:
In my view, the Tribunal’s decision on this issue was a reasonable one. In certain circumstances, the procedural aspect of an employee’s duty to accommodate will permit, or even require, the employer to ask for a second medical opinion. Without attempting to define all of those circumstances, they will include the circumstances that the Tribunal reasonably found existed here, where the employer had a reasonable and bona fide reason to question the adequacy and reliability of the information provided by its employee’s medical expert. [emphasis added]
As the OHRC says in its Policy, an employer is not entitled to request an IME in an effort to second-guess an employee’s medical expert. An employer is only entitled to request that an employee undergo an IME where the employer cannot reasonably expect to obtain the information it needs from the employee’s expert as part of the employer’s duty to accommodate.
It is important to note that in August 2017 the Court of Appeal for Ontario refused Mr. Bottiglia’s application for leave to appeal, thereby confirming that the Divisional Court decision remains good law in Ontario and employers may, in some cases, be justified in requiring employees to undergo IME.
The Human Rights Commission has advice of their own (which is cited by the Court in the Bottiglia case):
While the employer is entitled to get all the information needed to make the accommodation, it must also accept accommodation requests in good faith and respect the dignity of employees. A request for a second opinion, an opinion from a specialist or an independent medical examination (IME) must be necessary to provide accommodation. Such a request should not be made to refute whether the employee has the disability in the first place or to avoid providing the accommodation.
Example: An employee provides a doctor’s note that asks for accommodation but does not state any particular diagnosis. The employee shows no observable symptoms of illness in the workplace, and the employer suspects that the employee is making up a disability to get more flexibility in her work arrangements. The employer wants to prove this by having the employee take an independent medical examination. Such an approach would not be consistent with the Code.
It is not normally advisable for an employer to second-guess the validity of an employee’s doctor’s advice, only on a suspicion that it is not objective because it is based on the employee’s own perceptions. Avoid challenging a medical note or requiring a second opinion unless there is evidence that the doctor’s recommendations are based on something other than his or her best opinion as to what is needed to make sure the patient recovers.
The legitimacy of a request for more medical information will depend on the information already received. A request for more medical information will be appropriate if there is a reasonable and objective basis for seeing the initial information as inadequate or inaccurate. Examples might be if there appears to be a problem with the degree of expertise or type of expertise of the doctor who provided the initial medical opinion, or if there is some reasonable basis to believe that the employee is not fit to do the job despite the existence of a medical report to the contrary. Document reasons for requesting more medical evidence.
Example: After a serious car accident, an employee is cleared by her doctor to return to work. On more than one occasion, she becomes dizzy at the end of her 12-hour night shift operating a machine and narrowly misses hurting herself. The employer asks for more information from her doctor about possible accommodations. Once again, the doctor’s note indicates that the employee is fit to work and that no accommodation steps are needed. The employer then asks the employee to attend an assessment by a doctor of her choosing, with expertise in workplace accommodations.
If a second opinion or independent medical exam (IME) is warranted, a good approach is to select a doctor who is acceptable to both the employee and the employer, and the union (if there is one) rather than insisting that an employee meet with a doctor that the employer has chosen. Give the employee enough information to understand the purpose of such an examination, who will conduct it and what assessments will be used.
As an employer, you are required to accommodate employees who are genuinely in need of such accommodation. However, as my colleague Jonnathan Borrelli always says, “accommodation is a two-way street” – see his blog Your Staff Must Co-Operate in Obtaining Accommodation. Employees cannot simply dictate the type and amount of accommodation they need. As an employer you can request information from a medical professional to help guide the accommodation process. In certain, albeit limited circumstances, you may have occasion to ask the employee to submit to a second opinion or an IME.
Please note that the information provided herein should not be considered legal advice and is provided for informational and educational purposes only. If you need advice about your obligations as an employer under the Ontario Human Rights Code, or need help with the accommodation process, please contact me (Ljubica Durlovska), Jonathan Borrelli, David Mayzel or Michael Carabash. We are your legal dental team.
Infection prevention and control and Public Health inspections are a hot topic! Dentists are worried about their practices and asking us for help. Here is a quick overview of what you need to know about Public Health Ontario (“PHO“) inspections.
The Health Protection and Promotion Act, RSO 1990, c H.7 (“HPPA“) provides the legislative basis on which PHO can receive complaints, conduct inspections and issue/enforce orders.
Yes. There is no protocol in place for PHO to do random inspections of dental offices. At present they only inspect in the event of:
Once a complaint is received, the inspector must notify the RCDSO and will work collaboratively with the RCDSO to conduct the inspection. If necessary, other government branches will be notified, such as the Ministry of Labour if, for example, the investigation uncovers issues under the Occupational Health and Safety Act (for more information about your duties under this Act, click here).
An inspector may enter the premises at “reasonable times” to make inquiries. If you deny entry to the inspector, they may apply to a judge for a warrant to enter and conduct the inspection provided there are reasonable and probable grounds for believing that access is necessary.
Once on the premises, the inspector has the power to do any number of things, including:
Inspectors are looking for compliance with the RCDSO guidelines, PIDAC’s best practices document, and manufacturer’s guidelines (where applicable). Here is a list of some of the infractions that inspectors have found upon entering dental and other offices:
If one or more infractions – also called infection prevention and control (“IPAC“) lapses – are found at the dental practice, then the inspector has powers to make orders to correct those lapses. An order may be made orally, on the spot, if taking the time to put the order in writing will increase the health hazard.
Orders may include:
Appeals from orders of inspectors lie with the Health Services Appeal and Review Board. However, launching an appeal does not automatically preclude you from having to comply with an inspector’s order unless the Board specifically allows it pending a hearing.
Then, the inspector or medical officer may direct its staff to carry out the order, including posting a public notice about the existence of a health hazard. If this occurs, then you will be responsible for paying for the work required plus legal costs. If you refuse to pay, then the amount will be tacked onto your property tax bill.
Failure to comply is an offence punishable by:
Note: directors, managers and officers are automatically liable for corporations under HPPA unless they can prove that they took all reasonable steps to prevent the commission of the offence.
Other remedies available to PHO if you refuse to comply include obtaining an injunction from the Superior Court of Justice which is an order by the court requiring you to comply. Refusal to comply with a court order may culminate in contempt of court plus imprisonment.
Where an investigation is undertaken due to a complaint, the complainant must be notified of the results of that investigation.
Where an investigation was undertaken and one or more IPAC lapses were identified and orders made, Each public health unit of PHO must publish both the initial report (consisting of findings and orders made) and the final report (consisting of how lapse was corrected). For your information, there are 36 public health units across Ontario and each one has their own website where lapses are posted.
Currently there are about 10 IPAC lapse reports posted about dental offices across Ontario. Here are links to the IPAC lapse reports, as found on each health unit’s website that may help you decipher what public health will be looking for if they enter your office:
Note: IPAC lapse reports are only required to be posted for 12 months. These reports will eventually be taken down (and hence you may find that some links will, in time, go stale).
Beyond the IPAC lapse reports, in some instances, the public health unit may advise patients of the lapse, if the lapse has the possibility of affecting them, as was done in the case of Guelph Dental Associates:
Also, if the media picks up on a closure or IPAC lapse, you may find yourself in the midst of a flurry of negative press, as Guelph Dental Associates has in the past few months:
If you want to avoid a complaint in the first place, you should do the following:
Please note that the information provided herein should not be considered legal advice and is provided for informational and educational purposes only. If you have any questions about HPPA or PHO inspections, need advice about your obligations as an employer under the OHSA, or need help coming up with and implementing a new office policy manual, please contact me (Ljubica Durlovska), Jonathan Borrelli, David Mayzel or Michael Carabash. We are your legal dental team.
So this blog is all about class actions launched against dentists (because of their infection control practices – or lack thereof).
As I write this, a Guelph dental practice is about to get sued in a class action by patients. By way of background, Guelph Dental Associates (which also operate under the name “Growing Smiles”) was shut down by public health inspectors and its 3,600 patients were urged to get tested for hepatitis B and C and HIV as a result of improper sterilization. This all started after the parents of a young patient complained about developing a bacterial infection after a trip to the dentist in June, which triggered an inspection and the shutdown. Weeks later, with the practice still not open, Gary Will of Will Davidson LLP says he signed up a few patients in a class action lawsuit (which could theoretically include all 3,600 patients) and is seeking millions of dollars in damages.
So what exactly would patients be suing the dental practice / dentist(s) for?
Well, let’s look at the case of Healey v. Lakeridge Health Corp.  O.J. No. 231, to gain some insight, shall we? There, the Ontario Court of Appeal had to deal with class actions against Lakeridge Health Corporation (“Lakeride“) and some physicians arising from incidents in which large numbers of people were exposed to 2 patients with tuberculosis (“TB“). IMPORTANTLY: none of the persons suing had actually tested positive for TB. But they sued anyways on behalf of a class of patients because they received noticed advising them that they should be tested and that in turn caused them MENTAL ANXIETY, SUFFERING, and DISTRESS. They admitted that they didn’t have a psychiatric illness. So the question before the Ontario Court of Appeal was: could they receive compensation for their suffering?
Now, in order to prove that Lakeridge was responsible, the patients would have to demonstrate (1) that Lakeridge owed them a duty of care; (2) that Lakeridge’s behaviour breached the standard of care; (3) that the patients sustained damage; and (4) that the damage was caused, in fact and in law, by Lakeridge’s breach. So let’s look at each of those things now…
Duty of Care
So the first thing the court examined was whether Lakeridge owed a DUTY OF CARE to uninfected persons. The Court of Appeal said YES it does: Lakeridge owes a duty of care to patients and visitors at the hospital to take reasonable care to prevent the transmission of infectious diseases. Importantly, this duty of care to avoid physical harm to person or property “embraces the category of claims for nervous shock” (paragraph 37). Whoa… what’s this “nervous shock” category all about?
“Nervous shock” or “psychological injury” is a type of claim that, if proven, can result in a court paying compensable damages. In order to establish damages for nervous shock, the patients would have to prove (1) they suffered the type of damages that are compensable and (2) that the psychological injury was caused by Lakeridge’s negligence (was the damage a reasonably foreseeable consequence of the defendant’s negligence)? After reviewing a long-line of cases in Canada, the UK and Australia, the Court of Appeal found that that claimants DID NOT prove that they had suffered the type of damages that are compensable. Here’s what they wrote:
Now, even though the Court of Appeal dismissed the case on the grounds that the patients had not proven “nervous shock” or “psychological harm”, the Court went on to talk about the other factors that make up a successful claim for negligence – starting with “Causation”. In other words: even if the patients suffered and that suffering could be compensated, was their suffering caused by Lakeridge’s actions / omissions? The Court of Appeal stated that yes, there could be causation and it could be determined at a trial (if it ever got there). Keep in mind that the Court had already dismissed the case, but wanted to complete their analysis in case they got something wrong.
The Court of Appeal went on to examine whether the patients could receive “aggregate damages”. Aggregate damages are covered in section 24(1) of the Class Proceedings Act and say that a court can determine aggregate damages for an entire class of claimants where certain criteria are met. Here, the Court felt that the assessment of damages required proof of harm suffered by the INDIVIDUAL class members, so relying on “aggregate damages” wasn’t available to the class claimants. There were significant and numerous individual issues pertinent to the issue of liability and damages that must be determined.
The Court of Appeal held that the harm suffered by the class members was NOT compensable because they hadn’t proven that they had suffered from a physical disability or illness, had not suffered from a recognizable psychiatric illness, and had not suffered from any serious / prolonged psychological injury. Objectively speaking, they had suffered upset, disgust, annoyances, anxieties, fear, and / or agitation that falls short of actual injury.
There’s no denying that Dental Service Organizations (DSOs) will continue to “affiliate” with dental practices in Canada much faster than ever before. David Mayzel and I just returned from the definitive DSO conference in the U.S. (New Orleans) a few weeks back and we want to share our knowledge on the topic with Canadian dentists. We are neither for or against DSOs. It’s up to dentists if they want to work for or sell their practices to DSOs. We just want to make sure that all parties understand the legal framework that currently exists for dentists and DSOs so that we can avoid the mishaps and pitfalls that have plagued our U.S. neighbours.
So with that said, I figured it would be a good idea to start talking about how DSOs have gotten into trouble in the U.S. Let’s start with Colorado, shall we? And let’s take a look at some court decisions that came out over a decade ago in Colorado.
Colorado (2007): Illegal
In Mason v. Orthodontic Centers of Colorado, Inc., 516 F. Supp. 2d 1205, 2007 U.S. Dist. LEXIS 68121 (decided September 14, 2007), Dr. James H. Mason sought to have the Colorado District Court declare a BSA invalid and unenforceable under Colorado law because it was contrary to public policy. Pursuant to the BSA, a non-dentist management company – OCA, Inc. and its wholly owned subsidiaries (“OCA”) – provided various dental office management services (e.g. hiring and managing staff, leasing office space and equipment, providing bookkeeping, collections and other administrative services) in exchange for a certain percentage of the office’s monthly fees. Dr. Mason argued that this constitutes illegal sharing of fees. OCA responded by saying that the law only prohibited the sharing of referral fees, that the fees payable are for marketing services as permitted by law, and that any professional discipline imposed on Dr. Mason for improperly sharing fees should not void the BSA.
The Court rejected all three of OCA’s arguments.
First, interpreting fee sharing to only prohibiting the sharing of referral fees was not grounded in any authority, was at odds with the dictionary definition of “fee splitting”, and was nonsensical (if permitted, it could allow a dentist to enter into an agreement to share patient fees with their landlord, barber, etc. so long as it was not based on patient referrals – which was not the object of the statue).
Second, OCA’s claim that the fees payable were for marketing services (which was an exception to the fee-splitting prohibition) was rejected because OCA received monthly service fees for other categories of service not related to marketing. As per the court: “The marketing services the Defendants provide are a relatively small component of the overall package for which they are compensated, particularly compared to such services as office rent and equipment leasing. Thus, even if some portion of the Plaintiffs’ fees are devoted to advertising, the bulk of the monthly service fee is impermissible fee sharing.”
Finally, the Court noted that, although the laws against fee-sharing affect Dr. Mason, it would be contrary to public policy to enforce an illegal contract. First, disciplining a dentist for fee sharing was not an exclusive remedy (i.e. voiding a contract could be a further penalty). The Court conducted a thorough analysis of when public policy could void private contracts. After weighing all the factors (e.g. the parties’ justified expectations, any forfeiture that would result if enforcement were denied, any special public interest in the enforcement of a particular term, the strength of the public policy at issue, the likelihood that refusal to enforce will further that interest, the seriousness of the misconduct involved and its willfulness, and the directness of the connection between the misconduct and the agreement). Based on these factors, the Court found that: OCI had some justifiable expectation that the BSA would be enforced, OCI could however seek an equitable claim for unjust enrichment if the BSA was voided, public policy dictates that non-dentists not interfere in professional decision-making (which could result in a significant penalty to the dentist involved), the BSA does allow fee-splitting and voiding the BSA would promote the public policy of prohibiting fee-splitting, and the legislature never intended agreements such as the BSA to be enforceable (logically, OCI cannot seek to enforce the BSA into the future, as doing so would force Dr. Mason to continuously violate state law. As such, public policy would permit the BSA to be voided retrospectively). Accordingly, upon full consideration of all the relevant factors, the Court finds that the public interest prohibiting fee splitting outweighs any private interests OCI might have in enforcing the payment term of the Agreement. The public interest is a strong one, and the conduct contemplated by the Agreement directly contravenes the purposes that the public policy advances. Although voiding the contract works some degree of inequity upon OCI, they are not unreasonably prejudiced, as the law likely permits them to recover the reasonable value of the services they have provided to Dr. Mason. Thus, the Court finds that the portion of the agreement that permits fee splitting — namely, the formula for calculating the monthly service fee — is void as against public policy.
The Court then went on to discuss whether OCI was a “proprietor of a place where dental…services are performed”, and therefore illegally engaged in the practice of dentistry, contrary to Colorado law. A “proprietor” is defined as someone who “places in possession of a dentist… such dental material or equipment as may be necessary for the management of a dental office on the basis of a lease or any other agreement for compensation for the use of such material, equipment or offices”. A “proprietor” is also someone who “retains ownership or control of dental equipment or material or a dental office and makes the same available in any manner for use by dentists”. Based on this prohibition and definitions of “proprietor”, the Court found that OCI was engaged in the practice of dentistry as “proprietors” of a dental office. Among other things, the BSA required OCA to acquire equipment reasonably required for the operation of the practice and then lease the equipment back to the dentist. The BSA also stated OCI owned the equipment at all times. Finally, OCI leased or otherwise arranged for the offices and premises of Dr. Mason’s practice and subleased the offices to Dr. Mason. As such, OCI was considered “proprietors” of a dental practice”. The Court was somewhat sympathetic to the poorly drafted definition of proprietor (which could include a landlord as someone who could be engaged in the practice of dentistry), but the Court suggested that any such drafting problems were better directed at the legislature, not the Court.
For these reasons, certain portions of the BSA were deemed void as against Colorado public policy (e.g. the fee splitting formula and the provisions that require OCI to lease all the furniture and equipment, and to obtain and sublease offices, to Dr. Mason and his professional corporation), leaving it to the parties to determine the appropriate course of conduct to follow as a result.
Colorado (2007): Illegal
In Theresa L. Shaver, D.D.S., et al. v. Orthodontic Centers of Colorado, Inc., et al., 2007 U.S. Dist. Lexis 71615 (September 26, 2007), Dr. Shaver asked the Colorado District Court to declare a BSA illegal under Colorado law. The Court noted that other Colorado courts have both issued orders in favour of dentists like Dr. Shaver in almost identical circumstances: namely, Mason v. Orthodontic Centers of Colorado, Inc. and Weinbach v. Orthodontic Centers of Colorado Inc. The Court found that the opinions and orders issued in those cases are “thorough and sound, and that the reasoning in those Orders applies equally to the BSA at issue in this case. Accordingly, I adopt the reasoning in those Orders and find that portions of the BSA at issue (those portions which can be interpreted to require fee sharing or which provide for maintenance of a dental proprietorship by the defendants) are illegal as against Colorado public policy.”
Colorado (2007): Illegal
In Jonathan R. Weinbach, D.D.S., M.S. et al. v. Orthodontic Centers of Colorado, Inc., et al., 2007 U.S. Dist. LEXIS 70614 (September 24, 2007). Dr. Jonathan Weinbach asked the Colorado District Court to declare a business management agreement (“BMA”) invalid and unenforceable under Colorado law. Pursuant to the BMA, a non-dentist management corporation, Orthodontic Centers of Colorado (“OCC”) was obligated to provide business and administrative support services reasonably required for the day-to-day operations of Dr. Weinbach’s practice. Those services included: (1) marketing support, (2) employment and training of all office staff, (3) providing and maintaining all necessary equipment and supplies (including dental equipment and dental supplies), (4) billing, collection, bookkeeping and other financial services, (5) processing and payment of accounts receivable and trade receivables, (6) preparation of statistical analyses and financial statements and (7) consulting advice. Under the BMA, Dr. Weinbach and his professional corporation appointed OCC as their “sole business manager” for the provision of the foregoing services. Furtheremore, OCC was appointed as Dr. Weinbach’s “true and lawful attorney-in-fact” to collect all payments made by Dr. Weinbach’s patients and all payments made by insurance companies. Such funds were deposited into an “Orthodontic Entity Account”, which OCC had signing authority over the and the exclusive right to make disbursements from. In exchange for its services, OCC was paid a monthly management fee that included, but was not limited to, fifty percent (50%) of Dr. Weinbach’s Net Operating Margin.
The Colorado District Court found that the BMA was illegal under Colorado law because it violated the fee-sharing prohibition of the Colorado Dental Practice Law. Under that Law, the State Board of Dental Examiners may discipline a dentist, among other things, for “sharing any professional fees” with anyone other than a dentist, except that a dentist may pay independent advertising agents for marketing services [see: Colo. Rev. Stat. § 12-35-129(1)(v)]. The Court held that the BMA creates an arrangement by which, for at least 20 years, OCC would be entitled to receive approximately fifty percent (50%) of Dr. Weinbach’s profits. In response, OCC argued that (1) the legislative history of that Law suggests it was intended to prohibit the sharing of referral fees and (2) OCN fit within the exception for entities providing marketing services to dentists. To the Court, however, neither of those arguments was convincing.
As in Mason v. Orthodontic Centers of Colorado Inc., 516 F. Supp. 2d 1205, 2007 U.S. Dist. LEXIS 68121., the Court in this case held that fees included “any professional fees” (not just referral fees), and that sharing fees of any kind is prohibited unless the dentist is sharing the fees with other dentists. With respect to the exception for paying independent advertising agents for marketing services, the Court simply referred back to the BMA to point out that OCC was obliged to do much more than just that (see above). As per the Court: “A small portion of the services specified in the BMA may fall within this exception, but the vast bulk of the services specified in the BMA do not fall within this exception.” As such, the BMA violated the fee-sharing prohibition of the Law.
Interestingly, OCC tried to argue that the Law does not declare agreements to share fees void or illegal, but merely unethical for the dentist. Here, the Court concluded that the public interest in preventing conflicts of interest between dentists and unlicensed entities such as OCC substantially outweighs OCC’s private interests in enforcing the payment terms of the BMA. To support this view, the Court adopting the ruling in James H. Mason, D.D.S., et al. v. Orthodontic Centers of Colorado, Inc., et al.
516 F. Supp. 2d 1205, 2007 U.S. Dist. LEXIS 68121, which involved similar facts and which had been decided a few days earlier. In that case, the Colorado District Court found that: (1) the rationale behind fee splitting includes the need for dentists to avoid financial conflicts of interest, the need for informed consent by the patient, and the necessity of avoiding non-professional interference in professional decision making, (2) voiding the BMA would further the public policy of prohibiting fee splitting, (3) the fact that the statute only proposed discipline against the dentist is not persuasive evidence that the legislature intended such agreements to be enforceable against the dentist and (4) any unfairness that results to OCC from voiding the BMA is largely mitigated by the available remedy of a claim for unjust enrichment (which could exist beyond the BMA).
Worth mentioning is that the Court found that the BSA was illegal because OCC was engaged in the illegal practice of dentistry, contrary to the Colorado Dental Practice Law. That Law only allows dentists to practice dentistry. It goes on to say that a “person shall be deemed to be practicing dentistry if such person… [i]s a proprietor of a place where dental operation, oral surgery, or dental diagnostic or therapeutic services are performed” [see: Colo. Rev. Stat. § 12-35-112(1).]. Here, a “proprietor” means someone who leases dental equipment to a dentist or someone who retains ownership or control of dental equipment and makes the same available in any manner for use by dentists. The Court reviewed the aforementioned terms of the BMA and concluded that OCC was a “proprietor” within the meaning of the Law. The BMA provided that OCC would lease equipment back to Dr. Weinbach but would still retain ownership of all the equipment and supplies used in the dental practice while making same available for use to Dr. Weinbach. The Court concluded that OCC had practiced dentistry, contrary to the Law.
Based on the above, the Court found the provisions of the BMA that require fee sharing and those portions that provided for the maintenance of a dental proprietorship by OCC were voided for being contrary to the public policy of the state of Colorado. As such, the BMA was declared to be illegal.
Colorado (2007): Illegal
In John Gentile, D.D.S., et al v. Orthodontic Centers of North Dakota, Inc. et al, 2007 U.S. Dist. LEXIS 72322 (September 27, 2007), Dr. John Gentile asked the Colorado District Court to declare a BSA invalid and enforceable under Colorado law. Pursuant to the BSA, a non-dentist management corporation, Orthodontic Centers of North Dakota Inc. (“OCN”) was obligated to provide business and administrative support services reasonably required for the day-to-day operations of Dr. Gentile’s practice. Those services included (1) marketing support, (2) employment and training of all staff (except dentists), (3) billing, collection, bookkeeping and other financial services, (4) consulting advice, (5) legal services, and (6) payment of taxes. The BSA also required OCN to sublease the office to Dr. Gentile’s professional corporation at the full lease price and acquire or otherwise arrange for all furniture and fixtures and equipment required by Dr. Gentile’s professional corporation. In return for its services, OCN was to be paid a “service fee” consisting of: (1) being reimbursed all expenses incurred for running the office, (2) a flat fee of twenty two dollars and twenty two cents ($22.22) for each hour or operating during which patients are being treated, and (3) a performance fee equal to fifty percent (50%) of the practice’s gross revenues, less the cost of running the office, the flat fee per patient hour, Dr. Gentile’s base compensation and fifty percent (50%) of the cost of any new fixed assets. The BSA states that the parties acknowledge that the fees provided for in the BSA “in no way represent a division, splitting or other allocation of fees”. The BSA accords Dr. Gentile’s professional corporation with complete control and sole responsibility for all professional aspects of the practice and provides that OCN is not authorized or qualified to practice dentistry under the applicable laws. Finally, the BSA states that it is OCN’s intention to act and perform as an independent contractor of Dr. Gentile and his professional corporation, and the BSA did not intend to create a partnership or employment relationship between them.
The Colorado District Court found that the BSA was illegal under Colorado law because it violated various provisions of the Colorado Dental Practice Law. That Law only allows dentists to practice dentistry. And it goes on to say that a “person shall be deemed to be practicing dentistry if such person… [i]s a proprietor of a place where dental operation, oral surgery, or dental diagnostic or therapeutic services are performed” [see Colo. Rev. Stat. § 12-35-112(1).]. Here, a “proprietor” means someone who leases dental equipment to a dentist or someone who retains ownership or control of dental equipment and makes the same available in any manner for use by dentists. The Court reviewed the aforementioned terms of the BSA and concluded that OCN was a “proprietor” within the meaning of the Law. The Court noted that the law did not restrict landlords from renting space (so long as it’s not space outfitted as a dental office) or prohibit dentists from purchasing equipment themselves. The Court concluded that OCN had practiced dentistry, contrary to the Dental Practice Law and irrespective of the fact that the BSA expressly and repeatedly provided that OCN will not practice dentistry. “Call itself what it will, a space is a space”. The Court further noted that the Dental Practice Law prohibits the unlicensed practice of dentistry by corporate entities.
Worth mentioning is that Dr. Gentile sought to void the BSA on the basis that it created a profit-sharing arrangement, contrary to the Dental Practice Law. Under that Law, the State Board of Dental Examiners may discipline a dentist, among other things, for “sharing any professional fees” with anyone other than a dentist, except that a dentist may pay independent advertising agents for marketing services [See Colo. Rev. Stat. § 12-35-129(1)(v)] In response, OCN argued that (1) the legislative history of that Law suggests it was intended to prohibit the sharing of referral fees and (2) OCN fit within the exception for entities providing marketing services to dentists. To the Court, however, neither of those arguments was “even marginally available”.
The Court used Webster’s dictionary to define “share” as “to divide and distribute in portions” and “fee” as “compensation often in the form of affixed charge for a professional service”. As such, the Colorado Legislative Assembly, in enacting the Law, sought to deter dentists from dividing their professional compensation with non-dentists. The Court concluded that there was nothing in the statute to suggest that the sharing of fees ought to be limited only to referral fees; if the Colorado General Assembly had intended to bar only referral fees, it would have written the statute to reflect such intent (because it had done so with other regulated health professionals). The historical changes of the Law also revealed how it went from specifically prohibiting dentists from making referral fees to broadly barring a dentist from sharing any professional fees with non-dentists.
With respect to the argument that OCN fit within the exception for entities providing marketing services to dentists, the Court simply referred back to the BSA to point out that OCN was obliged to do much more than just that (see above). As per the Court: “While one small aspect of [OCN’s] obligations under the BSA might fit into that narrow exception, [OCN] cannot cram the myriad other aspects of the BSA into the exception like so many clowns into a Volkswagen Beetle.” As such, the BSA violated the Law’s fee-sharing prohibition.
Interestingly, OCN tried to argue that the Law does not declare agreements to share fees void or illegal, but merely unethical for the dentist. OCN further noted that it would be unfair to reward Dr. Gentile’s unethical conduct with the recision of the agreement. The Court acknowledged that the Law deals with conduct which dentists (rather than their contractual counterparties) may be professional disciplined. But it does not mean that a court must enforce a contract that requires conduct expressly barred by statute. And even if the BSA merely mandates unprofessional (as opposed to “squarely illegal”) conduct, the Court held that public policy warranted voiding the BSA: a contractual provision is void if the interest in enforcing it is clearly outweighed by a contrary public policy. In this situation, the Court concluded that the public interest in “preventing conflicts of interest between dentists and unlicensed entities such as [OCN] heavily outweighs [OCN’s] expectations under the BSA.” To support this view, the Court cited the ruling in James H. Mason, D.D.S., et al. v. Orthodontic Centers of Colorado, Inc., et al.
In the end, the Court would not save the BSA by severing the offending “fee sharing” provisions because doing so would, in effect, “eviscerate the core bargain” between the parties.
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