Wednesday, February 16, 2011
By Dan Schulte, J.D.
MDA Legal Counsel
From the February 2011 issue of the Journal
Question: Our office has switched to all-electronic records. All of the forms we used to maintain paper copies of have been eliminated. Instead, the forms are displayed for the patient on a computer monitor, explained and electronically signed when necessary using a pen and screen attached to the computer. A patient has criticized my treatment and is questioning whether her electronic signature on my consent form is binding. I would like a confirmation that these electronic signatures are legally binding.
Answer: In 2000 the Michigan Legislature adopted the Uniform Electronic Transactions Act. This act contains provisions stating that an electronic signature "shall not be denied legal effect or enforceability solely because it is in an electronic form" (MCL 450.837(1)) and that a "contract shall not be denied legal effect or enforceability solely because an electronic record was used in its formation" (MCL 450.837(2)).
"Electronic Record" is broadly defined by the act as "a record created, generated, sent, communicated, received, or stored by electronic means" (MCL 450.832(g)). Your electronic dental record system would be included. An "electronic signature" is also broadly defined as "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record" (MCL 450.832(h)).
I assume you adequately explained your diagnosis and recommended treatment to this patient prior to asking her to sign your consent form. If so, and if the patient clearly understood she was signing a consent form, therefore, under Michigan law her electronic signature stored in your electronic record will have the same legal effect as her manual signature on a paper form.
Question: Should I be charging patients sales tax on crowns, implants and similar items? I think I pay sales tax to the lab I use. Sometimes crowns are sent back to the lab for modifications that the lab charges me for. Should I be paying sales tax to the lab on these modification charges?
Answer: Unless an exemption applies, sales tax must be collected by the seller every time a sale of tangible personal property is made at retail. It can at times be confusing determining whether a sale is of "tangible personal property," is at "retail," etc. Fortunately, when it comes to crowns and other dental prosthetic devices the sales tax law is fairly clear. The crown or prosthetic device is then deemed to be consumed in providing the dental service to the patient and is not considered to be "sold" by the dentist to the patient separate from the dental service.
Therefore, you should not charge the patient sales tax on the cost of the crown. Since your dental services are not deemed "tangible personal property" you would not charge sales tax on the amount being paid for your service either. The same is true for the lab when charging you for a crown or services to modify a crown. No sales tax should be charged on this sale of services.