Legal Issues

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Although many of the answers to these questions in this section have been formulated by attorneys, coding experts or other professionals, we are unable to render legal or other advice.  You should consult with a competent healthcare attorney regarding these issues. General information is available on our Legal Resources page. Please visit that page.  There is a large amount of valuable information there.

Use of the word “Center”. Proper form of incorporation.

The Department of Health has stated that you may only use the terms “center” or “clinic” in your name if you are an Article 28 facility.  There are also limitations on corporate structure.  There are several important sections of this portion of the NYCRR, and we will deal with them individually.

The following are from 10 NYCRR § 600.8:

Criteria for determining the operation of a diagnostic or treatment center under article 28 of the Public Health Law.
(a) Any provision of medical or health services by a provider of medical or health services organized as a not-for-profit or business corporation other than a professional service corporation shall constitute the operation of a diagnostic or treatment center.
(b) It shall be prima facie evidence that a diagnostic or treatment center is being operated when any provider of medical or health services describes itself to the public as a “center”, “clinic”or by any name other than the name of one or more of the practitioners providing these services.
*
*”Diagnostic or treatment center” is another name for an Article 28 facility. An Article 28 facility has received a certificate of need and been given an operating certificate, which is an arduous process.

We will deal with section (b) first:  Many OBS facilities have chosen to use the term “Center” in the name of the facility.  This may be problematical. If you do so, the DOH may investigate you for misrepresenting yourself as an Article 28 facility, especially now that there is a new administration in place.  Insurance companies may state that you have misrepresented your OBS facility as an Article 28 facility, which may trigger an audit and an attempt to recoup funds.   A change of name can be accomplished, but it should not be attempted without the advice of a competent healthcare attorney.  Of note is that according to this code, the name of the physician must be in the facility name, but this is not being enforced by the DOH.

In regard to incorporation, the DOH is still reviewing the topic.  You may not need to be incorporated.  That should be discussed with a competent healthcare attorney, but if you do not have the proper corporate structure as described in section (a), you will be viewed as being an Article 28 facility, even though you have not qualified as such.

The proper form of structure for an OBS facility (if it chooses to be incorporated) is as a PC, PLLC or LLP.  This means that an OBS facility may not be structured as a business corporation e.g. an S or C corporation, a LLC, or any corporation which has an “Inc.” after its name.   If you are not sure of the legal name of your OBS facility, you may check if it is incorporated in New York in the New York State Database.  You may also wish to check the name of your facility as listed on the DOH website.  These names should be the same. We have noted many circumstances in which members have entered an incorrect name for their entity in their application for NYOBS.

If you do not have a proper corporate structure, and you bill for any facility fee, you will be billing a fee  as a non-professional corporation.  Billing by a non-professional corporation for a healthcare service may only be done by an Article 28 facility.

In a letter to the MSSNY, an attorney from the DOH has stated that an OBS facility billing as a business corporation  would potentially subject you to both civil and criminal penalties.  We therefore urge you to discuss this immediately with a competent healthcare attorney.  If you do not have one, please let us know and we will be happy to give you the name of one.

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Page last modified on: March 2nd, 2013