Legal Aspects Of Optometric Practice

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Welcome
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Legal Aspects Of Optometric Practice

• Pamela J. Miller, O.D., F.A.A.O., J.D.
• Highland, California

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Pamela J. Miller, O.D., J.D.

• Became owner 1974
• Staff size 3
• Member AOA, former member CA St. Bd. of
  Optometry, National Academies of Practice in
  Optometry, staff O.D. San Bernardino Co. Medical
  Center
• SCCO 1973

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Dr. Miller and staff
Mission statement To provide premium vision
care by a warm, caring and supportive doctor and
staff
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Legal terms you need to know

• Plaintiff
• Defendant
• Doctrine of informed consent
• Duty to warn
• Duty to mitigate
• Document
• The average reasonable person standard

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Legal concepts you need to know

• Respondeat superior Let the master answer
• Deep pockets
• Joint and severable liability
• Res ipsa loquitur The thing speaks for itself
• Rebuttable presumption of negligence instrument
  causing injury was in defendants exclusive
  control and the accident was one which ordinarily
  does not occur in the absence of negligence

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Documentation

• The most important piece of legal advice
• Document completely but judiciously
• Do not change, erase or alter a writing
• Adding to a writing is permissible sign, date,
  state why you are adding to the document (ex. new
  information, research, addendum, etc.)

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Contract law

• A promissory agreement between two or more
  persons that creates, modifies, or destroys a
• legal relation.
• An agreement consisting of a promise or mutual
  promises which the law will enforce or the
  performance of which the law in some way
  recognizes as a duty.

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Contract basics

• Oral or written
• Express or implied
• UCC commerce, goods
• Statute of frauds

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Contract statute of frauds

• No action shall be maintained on certain classes
  of contracts or engagements unless there shall be
  a note or memorandum thereof in writing signed by
  the party to be charged or his authorized agent.
• Personal services, sale of land, etc.

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Contract requirements

• Four corners of the document
• Offer
• Acceptance (mirror image)
• Consideration
• Parties with at least limited capacity (duress,
  fraud, free will, mental capacity)
• Mutuality of terms

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Its as simple as

• A Act
• B Breach
• C Consequences
• D Damages

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Damages

• Actual
• Compensatory
• Unforeseeable future earnings
• Foreseeable actual expenses, retraining, lost
  wages, counseling
• Nominal
• Punitive

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Contracts youll encounter

• Real estate - office
• Purchase rental
• Lease
• Rent
• Construction
• Practice
• Purchase
• Partnership
• Merger
• Shared overhead

• Employment
• Independent contractor
• Employee
• Equipment
• Purchase
• Lease
• Third party provider
• Panel member
• Employee health care

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Always read the fine print!
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Pre-nup

• Pre-nuptial agreement
• Pros and cons
• Spousal involvement in business
• Purchase/sale of office and assets
• Protection from liability
• Tax filing married, filing separately
• Keeping it separate vs. co-mingling

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Legal entities

• Solo its just you, all the way
• Partnership joint owners (equal?)
• Group 3 or more
• Affiliation share overhead separate (but
  equal?)
• Merger 2 or more practices join
• Franchise purchase the right to be part of a
• larger organization in return for
• specific privileges, expense sharing, etc

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Hiring Your responsibilities

• Human resources
• Educate
• Inform
• Follow-up
• Oversee
• Evaluate and re-evaluate

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Stop litigation before it starts

• Review your policies
• Keep up on the law
• Post required notices
• Accept no nonsense
• Set an example
• Treat everyone equally and fairly
• Watch your opinions

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New hires

• Contract
• Office policy manual
• Verify education, experience, references
• Background check, criminal or court records
• Complete all hiring forms copy of right to work
  verification federal forms
• Introduce to office, duties

• Continued employment predicated on successful
  completion of physical and
• drug test, if applicable
• Provide training
• Safety training passwords, keys, etc.
• Employee has opportunity to explain or refute
  information
• Learning, not probationary period

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Independent contractor orassociate
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Independent contractor

• New practice owners often are also
• independent contractors (or employees) in
• other settings to supplement their income
• Clearly defined by the IRS
• Not an employee
• Responsible for all taxes and contributions
• Look to the relationship between the parties

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Employee contracts

• Policy vs. contract
• What should I include
• What should I exclude
• How comprehensive should it be
• Court interpretation
• Burden of proof

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Employment at will

• Disclaimer
• Termination at any time
• With or without cause

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Protect interests by

• Confidentiality agreements
• Covenant not to solicit patients
• Covenant not to solicit employees
• Covenant not to compete during employment
• Return of property upon leaving the practice
• Beware of out-of-state corporations

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Confidentiality agreementNon-disclosure
agreements

• Designed to protect the employer, seller or
  partner from disclosure of trade secrets
• i.e. May contain trade secret protections
• Separate from non-competition clause
• May be severable from a non-compete agreement so
  not to violate right to work

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Confidentiality agreementNon-disclosure
agreements cont.

• Covenant not to compete arising from sale of
  business or partnership dissolution may be valid
• Employers may not force an employee to sign a
  covenant not to compete or a condition of
  employment unfair competition
• Look to geographic area, time, activity, publics
  right to receive care
• State court may differ from federal court

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Covenants

• Covenant not to compete
• Competition agreement
• Purpose To protect practice value and goodwill

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Covenant not to compete

• Restrictive or a restraint of trade
• Is it reasonable, consistent with public welfare
  and bargained for pursuant to lawful contact?
• Goal is to prevent patient or record stealing or
  punish someone who does
• Enforceable if reasonable in light of the facts
  and circumstances

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Covenant not to compete cont.

• Cannot restrain trade cannot be too restrictive
  and unfair to the parties involved or public
  welfare
• Generally not honored in CA check state law
• Reasonable time limit only long enough to enable
  former employer or buyer to protect the practice
• Part of an employment contract, purchase
  agreement, partnership or pre-existing
  relationship

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Compete clause(Employees, partners, mergers,
associates)

• Shows greater durability and enforceability
• Doctor 2 can leave doctor 1, BUT to practice in
  the same town, he or she must pay X to 1
• Holds up in court
• Must have consideration
• Must be reasonable and specific
• Designed to mitigate damages
• liquidated damages

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Boilerplate language

• Confidentiality
• Employment at will
• Privacy
• Electronic media
• Harassment
• Discrimination
• Zero tolerance

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Employer
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Taxes 2008

• Paid by Employer Employee
• FICA social security 6.20 6.20
• Medicare 1.45 1.45
• SDI (CA) 0.08
• Federal schedule
• State schedule
• SUI 3.4
• ETT 0.10 on 1st 7000
• (employer training tax)
• Workers comp schedule

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Hire to fire documentation

• Handbooks policy manual
• Handbooks vs. Application
• Be understanding of personal problems
• Supervisor Training
• Evaluations written warnings document
• Communicate, communicate, communicate
• Dont stress out

• Consistency praise suggestions for
  improvement
• Resignation
• Post-Termination
• No surprises
• No discussion once termination is necessary end
  of day, end of pay stand and escort to door
• Return keys, change codes

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Hire defensively

• Be specific about rules
• Be vague about rights
• Progressive discipline policies
• Oral warnings
• Written warnings
• Suspensions
• Terminations

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Employment application

• Authorizations
• Background check
• Reference check
• Drug alcohol testing
• Certification that all info provided by
• applicant is true

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Successfully enforce policies

• Dont ignore a situation or conflict
• Take action to achieve resolution
• Document your actions
• Employee should sign all performance
• reviews keep a copy
• Pyramid any disciplinary measures if possible

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Develop a game plan

• Address a complaint or issue immediately
• Employee rights
• Following through - consistency
• Posting
• Right of Privacy
• Annual review - Do not puff
• Review/update office policy manual periodically

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Boilerplate language

• Employment at will
• Employees are forbidden from disclosing, taking,
  or copying confidential information
• Zero tolerance
• Right of privacy
• ADA - reasonable accommodation

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What is sexual harassment or discrimination?

• Unwanted and offensive touching
• Objectionable behavior
• Unwelcome sexual advances
• Requests for sexual favors
• Boss has no special right
• Hostile environment

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Protect yourself

• Prompt and effective action to end alleged
  harassment after complaint
• Employee must make a complaint
• If no action is taken to resolve the complaint,
  the employee may sue and receive actual damages,
  court costs, attorneys fees, and even punitive
  damages for willful violation

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RED YELLOW GREEN

• RED Not allowed - always unacceptable
• YELLOW Questionable - Usually unacceptable or
  inappropriate
• GREEN Allowed - acceptable

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The golden rule

• All employees must be treated with dignity and
  mutual respect
• By everyone, at all times
• You set the example and are responsible for the
  whole office

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Office illness and injury prevention manual
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Leases purchase agreements

• Equipment
• Real property
• Practice

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Equipment lease

• Lease purchase annual tax paid
• 1 buy out or fair market value buy out
• May be higher cost shown as expense
• Doesnt show as an asset or liability
• Outright purchase vs. finance
• Write-off value depreciation per year
• Lease without option of purchase

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Office lease considerations

• Mistake to pay operating expenses based on leased
  space rather than on leasable space
• Lease rate rent operating expenses and how
  calculated increases
• Maintenance and upkeep remodeling
• Amount of free rent
• Length of time space has been available
  occupancy length of current tenants leases,
  lease incentives to current residents
• Any exclusionary businesses (i.e. other optical)

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Office lease considerations cont.

• In event of fire, loss of use, loss of
  space/contents remodeling, improvements, change
  of entrances, relocation hours of business
  square footage, parking
• Termination clause right to sublet
• Tax indemnification clause
• Ownership change buy-out clauses and
• down payments
• Insurance specifications
• Warranties on premises, equipment, etc.
• Included services, signage, hours of operation

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Is it better to purchase or own?

• Real property
• Purchase outright
• Finance
• Lease to own
• Equipment
• Purchase outright
• Finance
• Lease to own
• Employees

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Practice purchase or sale

• Lump sum is not the best option
• Serial sale interest on sale is paid monthly
  (with principal). Tax may be computed on this
  interest as a gift tax against the selling
  doctor unless the interest is already worked into
  the price
• Structured sale (best option) buyer has option
  to speed up payments
• Check with your accountant and tax attorney

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Own your own

• Advantages
• Cash accounting system
• Liability mitigation notice not required
• Control
• Disadvantages
• Repair and upkeep
• Annual price hikes or upon lease renewal
• Liability

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Partnerships
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Protect your partnership

• Choose wisely, carefully, consider a trial run
• Balance the work load establish your roles
• Compromise
• Have a contingency plan
• Consult an attorney and put it in writing
• Communication is important to avoid a divorce
• Keep your spouse out of the business

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Considerations

• Events causing termination of a relationship
• Retirement
• Voluntary termination to leave
• To start a competitive practice
• Involuntary termination principals disagree
• Death
• Disability
• Felony conviction loss of license

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Partnership contracts

• Name, time commitment prohibited acts, duration
• Contributions, allocations cash flow
• Loans leases partnership sale or adding new
  partner
• Income, expenses, capital expenditures
  withdrawals
• Books records
• Competition agreements
• Partner relations death, disability, buy out,
• resignation
• Insurance how to be paid?

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Read carefully

• Document everything
• Never argue never yell
• Never get angry
• Do your research
• Dont be greedy
• Remember, act in haste, repent in leisure
• Plan and prepare for the worst

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Going for help

• State chamber of commerce
• Professional associations
• Buying groups
• State/federal employment agencies

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To do list

• Take a basic tax preparation class
• Select a CPA for small businesses
• Review contracts and categorize by topic
• Create a profit-and-loss statement
• Set 5- 10-year financial practice goals
• Write or re-evaluate office policy document
• Establish emergency protocols
• Develop a mentor relationship

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References

• Classe, John, O.D., J.D. - Legal Aspects of
  Optometry
• Dufour, James T. - Optometric Office Injury
  Illness Prevention Guide
• Miller, Pamela J. O.D., J.D. - A Handbook for the
  Ophthalmic Practice Documentation and Record
  Keeping Made Easy
• AOA

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References cont.

• Primary Eyecare Network - Personnel File Desk
  Reference Set
• Steinberg, Craig S. O.D., J.D. - Employers Guide
  for Optometrists
• The Optometric Office and Illness Prevention
  Guide - Vision West
• California Compliance Catalog www.calbizcentral.c
  om

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Thank you

• Pamela J. Miller, O.D., F.A.A.O., J.D.
• 909.862.4053
• drpam_at_omnivision.com