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Legal Services

by Richard D. Weber, J.D.
MDA Legal Counsel
Published in the November 1998 issue of the Journal

Question: I am closing my practice and would appreciate knowing what legal requirements exist with regard to patient notification and other requirements or suggestions I might consider as I plan the closing. If I am able to sell my practice would your advice be the same?

Answer: When a dentist closes his practice through retirement or death, patients should be notified and urged to find a new dentist and should be informed that upon written authorization, records will be sent to another dentist specified by the patient. The retiring dentist, or the estate of a deceased dentist, should obtain written assurance from the new dentist that treatment records will be retained for not less than ten years after the performance of the last service by the retiring or deceased dentist. Retention of such treatment records for ten years is required under the Public Health Code. The question of whether treatment records should be kept longer, and the retention period for non-treatment records, should also be considered. The statutes of limitations applicable to malpractice claims and contracts should be considered, in addition to the patient's possible need for records. The malpractice statute of limitations is two years from the alleged malpractice occurrence, but failure to discover the claim could extend the statute for six years. A person eight years of age or less has until his/her tenth birthday to commence a cause of action. In view of these statutes of limitation, and the fact that the breach of contract statute is six years, it would be unwise to destroy any records prior to seven years, with the reminder that treatment records must be kept at least ten years.

Since patients may procrastinate or not respond at all, it would be appropriate to send a postcard asking that the patient check a box which would direct that the records be sent to a dentist specified by the retiring dentist or the estate of the deceased dentist, returned to the patient or sent to another dentist specified by the patient in a blank space on the postcard.

Another important consideration relates to continuing coverage under a malpractice insurance policy. Since policies in recent years have typically evolved from occurrence to claims made, it is essential that the retiring dentist, or estate of the deceased dentist, confirm or purchase tail coverage. That is, coverage should be afforded with respect to claims made subsequent to the retirement or death.

In the event the practice is sold, the same considerations apply. In addition to selling furniture, fixtures, equipment and other assets, the sale generally includes good will. This includes the opportunity on the part of the purchasing dentist to take over patients of the seller's practice. The use of a simple postcard asking the patient to check off, sign and return the same can also be used in this instance. The notification can be more tailored to the practice sale. For example, patients could be notified that the selling dentist is transferring his practice to another dentist who will retain custody of the records unless the patient requests otherwise in writing within a reasonable specified time.

If for any reason the selling or retiring dentist, or the personal representative of the estate of a deceased dentist, is not satisfied that the records will be retained and protected, copies should be made and retained. A reasonable charge may be made for the cost of duplicating records.

Retiring dentists should also be cognizant of the Continuing Dental Educational courses necessary to retain licensure. Most retired dentists elect to retain their licenses to practice dentistry which requires compliance with Michigan laws. CDE requirements can be obtained from MDA.

Another practical consideration for retiring dentists is to notify professional associations, such as ADA, MDA and component societies. Membership status and dues adjustments are triggered by retirement.

Patient notification, records, malpractice coverage, licensure requirements and professional association notification represent the primary professional concerns that should be addressed in the event a dentist retires, dies or sells his practice. There are a myriad of other business issues that must be addressed, depending upon the practice circumstances. Other insurance policies must be considered. Disability insurance may be dropped. Life insurance should be revisited and possibly readjusted, depending upon the circumstances. Business interruption insurance and other insurance relating to the business of the practice should no longer be needed. Business leases or other interests in real estate must be addressed and resolved. Final business taxes for the professional corporation, partnership, limited liability company or sole proprietorship must be computed and paid. In the event the practice is closed, the legal entity should be properly dissolved under Michigan law. On a sale of the practice, multiple contractual issues must be addressed which are beyond the scope of this column.

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