Wednesday, November 01, 2006
By Daniel J. Schulte
MDA Legal Counsel
Published in the November 2006 issue of the Journal
Question: In my community there is a dentist who is paying beauty salon and spa owners a $20 fee for every patient they refer to his office seeking bleaching or other teeth-whitening services. Is this practice either legal or ethical?
Answer: No. This practice is illegal under Michigan law and is also impermissible pursuant to §4.E of the Michigan Dental Association and American Dental Association Combined Codes of Ethics.
Michigan’s Public Health Code (§16221) allows the state of Michigan to investigate activities related to the practice of a health profession by a licensee, such as a dentist. Following its investigation, the state may hold hearings, order testimony and report its findings to an appropriate disciplinary subcommittee, such as the Michigan Board of Dentistry.
There are several grounds listed in §16221 that would require the Board of Dentistry to pursue disciplinary action. These grounds include a dentist’s negligence or negligent supervision; personal disqualifications (such as incompetence, mental or physical inability, conviction of certain crimes, lack of good moral character, etc.); certain prohibited acts, such as committing fraud or deceit in obtaining a license; and certain types of unprofessional conduct and unethical business practices. Included in the list of unethical business practices is the following: "Dividing fees for referral of patients or accepting kick-backs on medical or surgical services, appliances or medications purchased by or in behalf of patients."
Certainly, the paying of a $20 referral fee directly to a beauty salon or spa owner upon the providing of bleaching or other teeth-whitening services to a patient referred by the beauty salon or spa owner would be considered the type of dividing of fees or kick-back contemplated by §16221 of Michigan’s Public Health Code. This conduct, therefore, is illegal.
The possible sanctions include a reprimand, fine (up to $50,000), probation, community service, a denial of future licensure, and/or restitution.
The Combined ADA/MDA Code of Ethics (§4.E.) states that member dentists shall not accept or tender "rebates" or "split fees." It certainly appears that the referral fee arrangement described above would violate this ethical rule. A complaint could be made to the MDA Peer Review/Ethics Committee regarding this arrangement if the dentist paying the referral fees and/or kick-backs is an MDA member. Possible sanctions by the MDA include censure, probation, suspension or expulsion from membership in the association.
Both §16221 of Michigan’s Public Health Code and §4.E. of the ADA/MDA Code of Ethics contain the fee splitting prohibitions based on the same principle. The principle is that all referrals for dental services should be based on the skill and quality of the dentist to whom the patient has been referred. Economic considerations (especially direct payments for referrals of the type mentioned above) of the dentist making the referral should not form the basis for or even be a consideration factoring into the decision of who to refer a patient.
The combined ADA/MDA Code of Ethics is available from the MDA by calling (800) 589-2632, or can be downloaded from the MDA Web site.