Health Care Matters

   A Complimentary Newsletter From:

Law Offices Of David S. Barmak, LLC

Managing Risk for Long Term Care and Health Care Providers

Volume 14, Issue 9                  ADVERTISEMENT             September 2013

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In This Issue
The Risks of Physician Productivity and Incentive Bonuses
Brandon Goldberg, Esq. Appointment
Resident's Rights in Preference of Caretaker versus Employees' Rights to a Workplace Free From Discrimination
Redefining the Role of Independent Contractors
Corporate Practice of Medicine Update
What Does Our CFO Do In His Spare Time?

David Barmak, Esq.


Matthew Streger

Matthew Streger, Esq.



Brandon Goldberg, Esq.


Jennifer Cohen

Jennifer Cohen, Esq.


Aaron Rubin

Aaron Rubin, Esq.




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             1 Hour

   Webinar Replay   


 HIPAA & HITECH Update: What You Need to Know

1 Hour Webinar


 Overview of Employer Responsibilties Under the Patient Protection and Affordable Care Act (PPACA)


Presented by:

Lewis D. Bivona, Jr., CPA, AFE and David S. Barmak, Esq.     



The Risks of Physician Productivity and Incentive Bonuses    

By: Aaron Rubin, Esq.


Nursing home administrators beware! You may often be approached by healthcare professionals who will pitch what seem to be harmless business proposals. Please keep in mind that oftentimes these "deals" can violate both federal and state healthcare statutes and regulations.


Consider the following example. You are the administrator at a local skilled nursing facility (SNF). One day the office manager of a high patient volume internal medicine physician practice approaches you and offers you a deal that appears to be too good to be true. The manager promises that the physician will exclusively refer ALL of his patients to your SNF in exchange for an annual base salary plus a productivity bonus equal to 20% of the net collections plus an incentive bonus that could total up to 10% of the productivity bonus.


Is this deal tempting? Absolutely! Depending upon the potential patients' payor sources, this could be a monetary bonanza for your SNF.


Keep in mind, however, that such an arrangement can violate the federal Stark Law. In fact, a recent lawsuit has some uncomfortable similarities with the above case. The lawsuit involved a hospital that incentivized surgeons to perform their surgeries exclusively at the hospital in exchange for a similar productivity bonus and incentive bonus. The federal government sued the hospital, and a jury found that the hospital violated the federal Stark Law which prohibits a healthcare provider from contracting with outside physicians to provide certain designated healthcare services, reimbursed by Medicare and / or Medicaid, in the healthcare provider's facility and for the healthcare provider to pay the physicians a productivity bonus. Moreover, the jury found that the hospital also violated the federal False Claims Act by employing this illegal compensatory arrangement. As things stand now, the government is seeking treble damages plus as much as $11,000 per submitted claim.


Perhaps the old adage is alive and well: if the deal is too good to be true - it is probably not true!


For more information relating to the risks of physician productivity and incentive bonuses and the federal Stark Law, please contact Aaron Rubin, Esq. at 609-454-5351 or

Brandon C. Goldberg, Esq. Appointed to

 American Bar Association Position      

Attorney Brandon C. Goldberg has been named the Health Law and Policy Liasion for the American Bar Association's Long Term Care Task Force. In this role, he will analyze ongoing legal and public policy developments throughout the nation. He will work with the task force and greater Health Law Section to determine the repercussions of new issues for the long term care industry. We congratulate Brandon on joining the task force's leadership.   
Resident's Rights in Preference of Caretaker versus Employees' Rights to a Workplace Free From Discrimination

 By: Jennifer Cohen, Esq.   


When residents make requests - or sometimes, demands - regarding racial preference in caretakers, what are the provider's obligations?  To the resident? To the employee?


Consider recent news stories in which nursing staff allege discrimination, after having assignments adjusted so that certain caucasian residents are cared for only by caucasian caretakers.  In these cases, facilities oftentimes allege that they are observing residents' rights while also protecting staff members from potential allegations by disgruntled residents.


Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex and national origin.  Meanwhile, the Federal Nursing Home Reform Act, enacted as part of the Omnibus Budget Reconciliation Act of 1987 (OBRA 87), gives residents' rights, one of which is the right to choose a care provider.  How can the two be reconciled?  While OBRA 87 preserves the right of residents to choose their physicians, it does not allow for residents to  make decisions based on the race or ethnicity of a caretaker.


The Equal Employment Opportunity Commission (EEOC) takes a very clear stance on this, residents' rights aside.  It is their position that resident preference is no excuse for racial discrimination in the workplace.  The EEOC maintains its goal of eradicating race and color discrimination from the workplace by seeking enforcement efforts to address overt, subtle, or implicit bias.


Considering the racial and ethnic diversity of both residents and caretakers in most facilities, it is essential that caretakers have a thorough understanding and sensitivity of multicultural diversity in order to effectively communicate with residents. Healthcare providers should provide training for their caretakers and ensure that unlawful discriminatory behavior is not tolerated in the facility.


For additional information and dealing with these issues, please contact Jennifer Cohen at 609-454-5351 or


Redefining the Role of Independent Contractors 

 By: Brandon C. Goldberg, Esq.   


As Affordable Care Act implementation arrives, many employers are reclassifying employees as independent contractors to avoid health insurance mandates. However, it is important to know exactly what that entails in the healthcare context. Laws concerning fraud and abuse prevention as well as privacy apply to all those working in the building, regardless of their classification. Business associates and all vendors are expected to follow all laws affecting their relationship with the provider. Independent contractors, who would fall into one or both of those categories, must continue to act in full compliance with both the laws and the provider's policies in following those laws.


All independent contractors should acknowledge compliance with the necessary policies and laws. Trainings should either be carried out directly through the individuals or through the independent contractor company. Often, independent contractors will be set up as a company. That company would then enter into an agreement with the provider and supply the people actually doing the work. This can be done even if the independent contractor is a single person-entity. In fact, having such a company structure is a component government agencies look at to determine whether an independent contractor by name really is an independent contractor and not simply an employee with the title "independent contractor." It creates a legal, financial and structural formality that legitimizes these relationships.


There are numerous factors used by government agencies, and the IRS in particular, in distinguishing independent contractors from employees, and making sure a provider's relationship with independent contractors is appropriate and is very important for avoiding potential regulatory issues down the road. If you have any questions regarding independent contractors, you can contact Brandon Goldberg, Esq. at 609-454-5351 or

Corporate Practice of Medicine Update      

 By: Aaron Rubin, Esq.     


New York and New Jersey, as well as most other states, are very strict about what businesses can provide healthcare professional services. If a business is not licensed to provide most state regulated healthcare professional services, (e.g.; hospital and skilled nursing facility) or is not entirely owned and controlled by a healthcare professional, (e.g.; physicians), or is permitted through some other legal exception, it can neither employ licensed healthcare professionals nor provide most state regulated healthcare professional services. To do so would unlawfully violate the "prohibition against the corporate practice of medicine." Although the specifics of this prohibition vary depending on state law, this prohibition doctrine originates with the historical societal bias that healthcare professionals will prioritize the well-being of their patients over profits; and that business people will prioritize in reverse.


In New York and New Jersey, for example, this doctrine reaches beyond the provision of traditional physician services. Rather, it applies to certain other healthcare professions. Please note that this prohibition could lead to serious accusations involving insurance fraud and / or unlawful fee-splitting. Additionally, in numerous advisory opinions the New York State Department of Health has stated that certain payment arrangements between certain healthcare professionals and non-professionals violate the prohibition against the corporate practice of medicine.


All businesses contemplating financial arrangements with healthcare professionals must first recognize what is unlawful and then develop a lawful strategy to achieve the business goals while minimizing liability for all parties involved. There are various lawful strategies to consider, including, for example, establishing a "management services organization;" however, a myriad of options must be considered depending upon the parties and their individual and mutual goals. Finding the right relationship for the right parties is like finding a needle in the haystack - depending upon the facts, very challenging but doable.


For more information related to the prohibition against the corporate practice of medicine as well as management services organizations, please contact Aaron Rubin, Esq. at 609-454-5351 or                   


What Does Our Chief Financial Officer

Do In His Spare Time?      

Barry Jackson, our Chief Financial Officer has many talents including writing novels. His latest released in June of this year is entitled FURRY PAW, MIDDLE CLAW. It is a story of a man's journey through a loveless childhood, finding his soul mate in New York City, her CATS, their marriage, MORE CATS, their son's diagnosis of autism and how the cats helped them pull their son from its crippling effects. Inspired by true events, FURRY PAW is in the September issue of England's "Your Cat" magazine and the October issue of "Cat Fancy".


Meet the cats and check out rave reviews at FURRY PAW is available in hardcover or e-reader at a bookstore near you,, Kobo, Barnes& or


Law Offices Of David S. Barmak, LLC      


Our law firm provides integrated regulatory, transactional, employment and litigation/advocacy services to healthcare organizations.


Representative Clients: 

Entities:  Skilled nursing facilities; Home health agencies; Hospice agencies; Hospitals.


Providers: Physicians; Therapists; Orthotists and Prosthetists; Non-profit providers.


Suppliers:  Durable medical equipment; Long-term care pharmacies; Retail pharmacies.


Businesses: Billing; Management service organizations; Independent provider associations; Vendors for healthcare providers.


Regulatory Issues: Corporate Compliance Programs (Fraud, waste & abuse; Privacy & Data Security; Employment); Healthcare facility; Professional provider; Medicare & Medicaid (certification, survey and reimbursement); Auditing (legal; clinical; administrative; and reimbursement).


Transaction Issues: General Counsel Services; Contracts.
Employment Issues: Wage and hour; Equal employment opportunity; Discrimination; Whistle-blowing; Employment agreements; Severance packages; Employee release agreements, Non-compete agreements; Non-solicitation agreements; Confidentiality agreements, Employee leave issues, Electronic monitoring and employee privacy, Employee separation (suspensions, terminations and reductions in force); Documentation.


Litigation/Advocacy: Contracts; Employment; Fiduciary issues; Commercial leases; Payment (Managed Care Organizations; Medicare; Medicaid); Guardianship; Professional and facility licensing; Healthcare regulatory; Fraud and privacy issues.
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This newsletter has been prepared by the Law Offices Of David S. Barmak, LLC for informational purposes only and is not intended to provide legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.


For more information, please contact:

David S. Barmak, Esq.

Telephone (609) 454-5351
Fax (609) 454-5361

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