HEALTH LAW SUPPLEMENT Spring 2005

A New York court says “Yes” to restrictive covenants (again). The employment contract of a pediatrician in Westchester contained restrictive covenants prohibiting her from practicing within a 10-mile radius of the White Plains office of her employer for 2 years after her employment ended. She was also required to resign staff privileges at hospitals within that radius and prohibited from soliciting patients of her former employer. An appellate court ruled that the restrictive covenants were not unreasonable in area and duration. Gazzola-Kraenzlin v. Westchester Medical Group 782 NYS2d 115 (2d Dept 2004).
The restrictive covenants in this case were typical of those required by large practices in New York suburbs, including Long Island. In New York City, the geographic distance is usually less. The pediatrician’s belief that the covenants would not be upheld by a court is a common misunderstanding. Some states do disfavor restrictive covenants as a “restraint of trade,” especially as applied to healthcare professionals. But New York courts, consistent with their general pro-employer slant, have upheld restrictive covenants on healthcare professionals if they are reasonable (i.e., reasonably necessary to protect the interests of the employer) and do not unduly prevent the practitioner from practicing her profession.
In negotiating employment contracts, restrictive covenants are often the most heavily negotiated terms. Healthcare groups are fearful of departing employees taking a significant portion of the practice with them, and prospective employees worry that the new job won’t work out and that the covenants will make them unable to find other acceptable employment in their field.
Legal counsel can facilitate agreement by suggesting what might be deemed reasonable, what is customary, and what provisions address the concerns of the parties. For instance, some practices are willing to limit the applicability of restrictive covenants to terminations initiated by the employee, when the employee will presumably have had time to find other employment.

Membership in professional associations and ethics complaints. Healthcare practitioners defending themselves in professional disciplinary proceedings before licensing boards sometimes forget (or are not properly advised) to consider their memberships in professional associations. Membership in professional associations is voluntary, and resignation is possible. A practitioner whose conduct has been complained about should weigh the advantages of membership against the disadvantage that becomes clear in these circumstances – by his or her membership, the professional is giving the ethics committee of the association jurisdiction over him or her.
Sometimes after fighting a bruising battle before a state board, a practitioner has no desire to mount another defense before an ethics committee. It should also be mentioned that while most malpractice insurance now covers, at least in part, the costs of defense for licensing board complaints, legal costs for ethics complaints usually are not covered. Finally, timing of any resignation can be crucial; most professional associations do not permit resignations to take effect while a complaint before their ethics committee is pending.

HIPAA redux. The security rule takes effect April 20, 2005. By then HIPAA compliant offices must have in place a plan to maintain the security of “protected health information” (or PHI) that is maintained on computers. Required are administrative (staff training), physical (physical access to computers) and technical (password protection, encryption) measures to maintain security. Most practitioners, especially smaller ones, will already have taken these measures two years ago when implementing the requirements of the privacy rule.

Late payments by insurers. Some clients have been successful in complaining to the State Insurance Department about late payments by insurers. New York’s “Prompt Pay Law,” Insurance Law § 3224-a requires insurers to pay claims within 45 days of receipt; for no-fault claims the limit is 30 days, §5106. Insurers are required to pay interest on late payments, at the rate of 24% (no-fault) or 12% (not no-fault). A complaint may be filed on-line at the website www.ins.state.ny.us or by mailing a letter (certified mail return receipt is recommended) to the New York Insurance Department, Consumer Services Bureau, One Commerce Plaza, Albany, New York 12257. Complaints are treated most seriously when a pattern of late payment has occurred.

Medicare has approved payment for the administration of psychological testing by technicians when they are supervised by psychologists. It had been clear that physicians could use technicians, but the permissibility of their use by psychologists was unclear. Interpretation and recommendations remain the exclusive province of psychologists and physicians, and rules regarding “incident to” services and billing are unchanged, i.e., a doctor must be on-site and directly supervise. This CMS rule change took effect January 1, 2005.
The New York State Board for Psychology, however, has stated that psychologists may not hire unlicensed technicians to administer testing, so psychologists are limited to hiring licensees, usually other psychologists, limited permit psychologists or social workers, and under certain circumstances, doctoral students. Perhaps licensees in the four new mental health professions, the first of which will be licensed in 2005, will provide a further and more cost-effective labor pool for psychologists to draw upon.

New CPT codes for psychological and neuropsychological testing are in the offing for 2006. They’ll replace the current codes (96100, 96117 and 96115) and distinguish testing conducted by psychologists from that done by assistants.

We’ve moved, but not far. We’ve moved upstairs in the same building we’ve been in for 11 years, from suite 100 to suite 205. We needed more space. Nothing’s changed but our suite number.

Bruce wrote something, a chapter, “The Ten Biggest Mistakes Physicians Make During Disciplinary Proceedings in The Biggest Legal Mistakes Physicians Make: A Legal Desk Reference for Physicians, S. Babitsky and J. Mangraviti, Editors, 2005, SEAK, Inc.: MA

INFORMATION IN THIS NEWSLETTER IS NOT LEGAL ADVICE FOR ANY PARTICULAR CLIENT OR SITUATION. CONSULT WITH AN ATTORNEY INDIVIDUALLY FOR LEGAL ADVICE REGARDING YOUR CIRCUMSTANCES.

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