Month: October 2022

 Prepared by: Carlos Arce, Esq. 

Florida Healthcare Law Firm 

 It is a well settled presumption in Florida that healthcare providers can own a medical practice without the need for obtaining a Health Care Clinic License (HCCL). However, healthcare providers who bill motor vehicle insurances for personal injury benefits (PIP) need to be aware of the regulatory requirements and how enforcement has developed. Providers may know that each insurance plan has a Special Investigation Unit “SIU”, which is dedicated to detecting, deterring, and defeating insurance fraud. Providers may not realize that most recently, some of the biggest motor vehicle insurers have started taking action by pursuing litigation against providers who are not in compliance. The charges are serious! Fraud, unjust enrichment, Florida Deceptive and Unfair Trade Practices Act “FDUTPA”, and even using the Civil Racketeer Influenced and Corrupt Organization Act “Florida RICO.” Ignorance of these underlying laws will NOT be a defense for these cases. 

As such, providers need to understand the background and basis for the recent litigation. Under the Health Care Clinic Act, “Clinic” is defined as an entity that provides health care services to individuals and whereby charges for reimbursement for such services. Further, there is a list of entities and providers not to be deemed a “Clinic”, for purposes of this article, including sole entities, group entities, partnerships or corporations which are made up of various types of health care providers and are not required to be licensed as a Health Care Clinic. To further complicate things, at the end of the section in the Florida Statutes there are also exemptions. 

What does this mean? Providers who bill PIP must be licensed and wholly owned by one of the following: chapter 458 “Doctor of Medicine”; chapter 459 “Doctor of Osteopathic Medicine”; chapter 466 “Dentist”; chapter 460 “Doctor of Chiropractic Medicine”; chapter 395 “licensed hospital or surgical center”; clinic facility affiliated with an accredited medical school; entity certified as an outpatient physical therapy or speech pathology; or an entity that is owned by a publicly traded corporation, either directly or indirectly through its subsidiaries, that has $250 million or more in total annual sales of health care services provided by licensed health care practitioners if one or more of the persons responsible for the operations of the entity are health care practitioners who are licensed in this state and who are responsible for supervising the business activities of the entity and the entity’s compliance with state law. 

There are overlaying healthcare legal issues as well which relate to group practices owned by providers who are different types of providers, not meeting the “wholly owned” requirement, and providers who are allowed to be exempt, but bill independent contractors not licensed under the scope of the exempt entity. There are various cases that have been and are currently being brought by motor vehicle insurance companies against providers who do not adhere to these rules. 

Fortunately, applying for a Health Care Clinic License is far from an impossible task when working with proper counseling and support. Here is what providers can expect when applying for an HCCL: 

• The first step is figuring out what kind of license is needed. It depends on factors such as the provider specialty and objective of the practice. It may be that a Healthcare Clinic License is fine, or the provider may require another type under the AHCA guidelines. Do not make assumptions with respect to this step! 

• Second, a provider will need to verify that they meet all the requirements to receive said license. Factors such as ownership, specialty and practice objective all factor in this step as well. 

• The third step is completing the license application, which will require certain attestations, a copy of the provider’s agreement with a medical director, a financial responsibility portion which needs to be filled out by an accountant who regularly deals with these types of applications, and level two background checks for all the employees or contractors who shall have access to the clinic. A licensing fee is also required and will need to be submitted with the documentation. 

• Fourth, AHCA typically sends back an omission letter which states issues with the application and pending items. While this can be a cause for concern for many providers, it is actually a routine response from AHCA and the agency allows 21 days for correction of the issues mentioned in the omission letter. 

• The final step is on-site inspection. Providers will need specific policies, procedures and other legally supportive documents in order to successfully pass the inspection. Providers who arrive at and pass this step are presumptively issued a healthcare clinic license. 

Licensing concerns can be intimidating to correct alone, especially if providers learn of the issues from AHCA or worse, a PIP carrier raises them via a costly lawsuit. Ensuring compliance with the laws now is the best way to prevent problems later. 

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Attorney Carlos Arce works with the Florida Healthcare Law Firm in Delray Beach, FL. He has deep experience with bodily injury trial work and in health law. Carlos has handled multi-million-dollar healthcare transactions and serves as out-of-house counsel to various small to large types of healthcare entities. He can be reached via email at [email protected] or by calling 561-455-7700. 

Article By: CARR

Leases and lease renewals are not typically conducted on a level playing field. After all, the landlord is in the real estate business and most doctors are not. By planning ahead and having professional representation, it is possible to negotiate a lower lease rate and receive a substantial tenant improvement allowance and free rent.

HOW DOES THE LEASE RENEWAL PROCESS WORK?

An important clause found in a standard lease is the renewal option. This allows you to extend your lease for a predetermined amount of time (often three, five or ten years) by giving your landlord advance written notice. Renewal options include terms for specific lease rates, concessions such as free rent and tenant improvement allowance, and whether a new base year for operating expenses will be granted. Whether or not a renewal clause exists in the original lease, all of these terms are negotiable and play a large role in the financial structure of a lease renewal.

Renewal negotiations are most effective when conducted in the proper timeframe, by having multiple viable relocation options and creating a strong posture to maintain the upper hand.

WHEN SHOULD THE PROCESS BEGIN?

As a rule of thumb, you should begin to consider the renewal process 12 – 18 months in advance of your lease’s expiration. This is recommended so that you can compare all relocation options in the market before your current lease options expire. Tenants who miss their lease options incur more risk. Landlords view this as an opportunity to push rents higher as the window of opportunity to relocate closes. If tenants holdover (stay in the space after the lease expires), they often see penalties of 150 – 200% of their last month’s rent and can also incur damages if they holdover without permission. The bottom line is that if there is not ample time to relocate if necessary, the landlord has a strong upper hand.

WHAT TYPE OF COST SAVINGS CAN BE ACHIEVED THROUGH A SUCCESSFUL RENEWAL?

If properly negotiated, you can achieve significant rent savings, a build out allowance, free rent and other concessions. It is very common to start a lease renewal term at a lower lease rate than what you are currently paying. In many markets, landlords are offering aggressive concessions and more attractive lease terms to good tenants to keep their buildings leased and avoid vacancies. The amount of overall savings will depend on the availability of competitive vacancies, the efficiencies of the buildings, and your market knowledge and ability to negotiate business points.

WHAT ARE SOME COMMON MISTAKES PRACTICES MAKE DURING THE PROCESS?

One of the most common mistakes practices make is negotiating without the help of a commercial real estate professional, specifically one who specializes in representing healthcare providers. Some believe they can save money by not using an agent; but to benefit in real estate, leverage is the key to posture. Landlords are in the real estate business and negotiate with professional guidance. Selecting an expert to represent you provides the leverage needed to receive the best possible lease terms. Further, landlords are typically responsible for paying commissions so professional representation is available to you at no out of pocket cost.

Another mistake practices make when entering into a lease renewal negotiation is not being familiar with their current lease terms and risk exposure. Prior to contacting the landlord about a lease renewal, you should be well aware of your current lease terms including every option and deadline. Most leases contain options that must be exercised within a specific time period, typically six to twelve months prior to the lease’s expiration. If you allow this period to pass, you risk losing all rights outlined in the option, which can cause the negotiations to begin at a disadvantage.

HOW DO I CALCULATE WHAT I AM CURRENTLY PAYING PER SQUARE FOOT?

Knowing what you are already paying per square foot is especially important if you are thinking about renewing your lease. What you are paying now versus what buildings are leasing for in your immediate area can be vastly different, especially if your lease has had automatic escalations in the rate over the term of the lease. The way to calculate your price per square foot is to multiply your monthly rent by 12 months and divide it by your square footage. Keep in mind that NNN or CAM charges (operating expenses for the property) are also calculated the same manner.

SUMMARY

Successfully negotiating a lease renewal is more than bartering, bluffing, or asking for a good deal. Landlords and their professional representatives are in the full-time business of maximizing their profits, even if it means taking advantage of uninformed tenants. You can level the playing field by engaging your own professional representation, gaining competitive market knowledge, and by having multiple options for your office space. When done properly, a well-negotiated lease renewal can have a dramatic impact on your practice’s profitability.

Article By: CARR

Healthcare Real Estate by CARR

 Are you one of the rare healthcare providers or administrators who understands how much is at stake in commercial real estate negotiations? If so, then you probably know that commercial real estate is the highest negotiable expense for your healthcare practice. Consequently, most healthcare providers fall into the statistic that tells us that 80% of healthcare practices still take a ‘do-it-yourself’ approach to these crucial negotiations and site selection process. 

In this article, we will break down several reasons why doing commercial real estate without representation will likely cost you a significant amount of time and money.

TIME 

The average commercial real estate transaction takes dozens of hours to complete. When you calculate the hours of research, driving the market, communicating with listing agents, touring properties, negotiating letters of intent (LOI’s), negotiating lease contract terms, printing / signing / mailing documents, and the dozens of other miscellaneous tasks you encounter in almost every commercial real estate deal, you can easily spend 30-40 hours or more on a single transaction. That equates to an entire week of work! 

Given the fact you have a full-time job already, you have two options as to where you will find those hours: 

1) During normal business hours (when you could otherwise be generating revenue) or 

2) During your valuable time off that would normally be spent with your family, relaxing, taking care of personal errands or making memories with those you love. 

Neither option is a good one, especially when you consider how much money you could be making per hour if you invested that time into your practice. Since time is a commodity you cannot get back, it’s important it be invested where it can yield you the highest return. 

MONEY 

The average healthcare practice loses tens of thousands of dollars in this ‘do-it-yourself’ approach. 

In the vast majority of commercial real estate transactions, you will also be working with a listing agent. That agent has a fiduciary responsibility (legal obligation) to the landlord to ensure they get the best possible deal and that their interests are protected and paramount over any other party in the transaction. 

This is also the person who actually collects a commission on the transaction. The commission amount is set aside before the property is even listed, and it will either be paid to the listing agent only or it will be split between the listing agent and the agent you hire to represent your needs. Often times if there is no buyer / tenant agent, the listing agent gets paid an amount that equals a ‘double commission’. 

If you take the ‘do-it-yourself’ approach, someone else is making the money for doing the job you did yourself. The craziest part is, the person making money is opposing you in the transaction! And, you just helped that person collect twice as much as they would have if you would have hired an expert agent to represent your needs and protect your interests!

This could be because you don’t actually understand everyone’s role within a deal. After all, when you called the name on the sign, they told you they wanted to help you get into the space! 

The problem is that to them, you are just a customer. The landlord is their only client in the deal. That might not sound like a big difference, but it has a HUGE impact on the outcome of the terms that each party receives. They have a legal obligation (called a fiduciary) to ensure the landlord gets the best possible deal within your transaction. They have no such obligation to you, since you are not their client. 

Without representation that looks out for your best interests, you are almost guaranteed to leave a significant amount of money on the table during negotiations. 

EXPERIENCE 

Some tenants and buyers balk at the idea of hiring an agent to represent them in a commercial real estate transaction through an agency agreement. Those people typically don’t understand that agency is a term created by governmental bodies to protect the consumer (you). If you don’t have an agent involved to exclusively represent you in your transaction, then there is no real estate expert who has a fiduciary responsibility to protect your interests. 

The vast majority of landlords have an agent and other experts they regularly consult with that work diligently to ensure the landlord receives the best deal possible. 

Think about that for a moment… The landlord, who has done hundreds of real estate transactions and whose entire livelihood is based on real estate, hires an agent so they can leverage that agent’s experience. Why would a healthcare buyer or tenant who will only transact a few times over the course of their career try to do it alone? 

KNOWLEDGE 

This is the most important part of representation. We live in a world where “knowledge” is at our fingertips. The problem is, the knowledge that is available is often a cheap knockoff of the real thing. 

Have you ever had a patient confidently give you their diagnosis of what is happening to them because they looked it up on WebMD? When you explain to them their actual diagnosis, they say, “Are you sure?” 

They are trying to compare your thousands of hours of experience with their 15 minutes of Googling symptoms. There is a monumental differ

ence in your experience versus theirs. Be careful getting too frustrated, though, because many doctors and practice administrators do the same thing when it comes to commercial real estate. 

Those doctors and administrators will hop on a commercial real estate website for 15 minutes, and now they are suddenly a commercial real estate expert. What they fail to acknowledge is that anyone can find properties or call or email a listing agent to get a property brochure. The part where expert guidance is needed is found during the negotiations (and there is definitely more to a negotiation than simply the lease rate or purchase price). 

This concept is also important in deciding how you select your agent. Many doctors fail to realize the complexities of commercial real estate and imprudently hire a residential real estate friend or patient. That is similar to having a tooth ache and going to the veterinarian for help. Sure, they may have some dental experience (on felines), but it’s hardly the same thing. 

Ok, I need an agent. How do I go about picking the right one? 

Here is a quick guide to ensure you are covered. 

GOOD: Having a commercial real estate agent represent you in your real estate transaction. 

BETTER: Having a commercial real estate agent who only represents buyers and tenants represent you in your real estate transaction. (This prevents any potential conflict of interest and also ensures you will see every potential property available to you.) 

BEST: Having a commercial real estate agent who only represents healthcare buyers and tenants represent you in your real estate transaction. (This not only ensures you of their unwavering loyalty to you against any possible landlord, but it also ensures you have someone who understands your real estate needs and how to structure a deal that best suits your unique situation as a healthcare provider.) 

When it comes to ‘do-it-yourself’ real estate negotiations, you don’t save any money. Instead, you stand to lose a fortune. Hiring an agent will at a minimum save you a substantial amount of time. Hiring the right agent can ensure you get into the best possible situation and has the potential to save you tens to hundreds of thousands of dollars in your next transaction. 

Choosing a lawyer to help you start your healthcare business is a big decision. We want you to make the right one. Here’s a list of questions to ask before hiring a healthcare lawyer.

1. Have you worked with my type of healthcare business in the past?

2. What can you help me with?

3. How much will it cost?

4. What is your hourly rate?

5. Do you offer flat fees?

6. Do you provide patient forms?

7. Why do I need a lawyer?

8. How do I sign up?

9. What are your credentials?

10.  How does your retainer work?

11. Who will I work with?

12. What are the top issues that my type of healthcare business face?

With the growth of IV hydration therapy, many clinic owners wonder, do I need a sterile hood if I’m mixing bags in the clinic? Well, that depends. It depends on whether you are a physician, mixing outside of a manufacturing instructions, and more.

The FDA and state Boards of Pharmacy govern “compounding” facilities. When a facility is mixing, adulterating, or diluting, they’re considered to be “compounding”. This is not the case if you do so in accordance with directions on approved labeling provided by the product manufacturer.

Physicians fall under an exception, however. The FDA says that licensed physicians are exempt from 503A pharmacy laws and the FD&C Act if they are done in a clean and sterile environment, compounded based on a valid prescription, and compounded by the physician. So, it has to be compounded for a patient who presents with an immediate need for the product or because “it would not be safe for the patient to take the drug home for self-administration, and it would be more convenient for the physician to have the drug in his or her office to administer immediately upon diagnosis, rather than asking the physician to order the drug and have the patient return to the health care practitioner for administration.”

This guidance would exempt licensed physicians from requirements to utilize a hood for compounding.

If you’re not a physician, then you should follow FDA guidance on safe practices for compounding.

Starting a new business? Opening a new profit line in your existing business? Thinking about hiring a marketing team to help drive clients your way? Be cautious, because a signed contract means nothing until you have a dispute. And if you didn’t take a close look at that contract before signing, but now the relationship has soured, you’re not going to have an easy route forward.

So what should you look for specifically?

1. Early Termination Options and Penalties
   • What if the marketing company isn’t performing well? How can you terminate early? Are you locked in for a year? What type of penalty, if any, are you subject to for early termination? If you don’t review and negotiate these terms before signing, you might be locked in for a full year of services or face a penalty for terminating early (and not get any services, whether good or bad).
2. Restricted Terms
   • Healthcare businesses are some of the most heavily regulated businesses in the U.S. With the continued growth of social media enterprises, so comes new regulations. For example, Google and Facebook have significant restrictions on the adwords that can be used in connection with healthcare businesses. More significant, are the limitations on terms or phrases that are used. You must ensure that the company you contract with is aware of these terms and can actually deliver what they promise without violating these terms because if they do violate them, its your business that gets suspended, or banned, from advertising on such sites.
3. Payment Terms
   • What are the payment terms and what does it include/exclude? Is there a minimum spend? What portion of that is attributable towards a management fee versus ad spends? Does the fee take into account patient volume or value of sales? If so, you may be violating a Federal or State healthcare regulation (which often carry criminal implications!). It is so important that these terms are not only clear but legally compliant.