Contract Issues

Percentage of Fees Taken Makes Florida PPM Contract Illegal

According to a report in the Tampa Bay Business Journal, a Florida Court of Appeals has affirmed an 18-month old Florida Board of Medicine decision involving a group of Tampa doctors who contracted with a West Palm Beach-based physician practice management company, PhyMatrix Corporation.

The Board found that the PhyMatrix contract with Access Medical Care, the primary care practice employing the physicians in question, was illegal. The contract called for Access, in exchange for various services, to pay PhyMatrix a percentage of the revenues doctors get from PPM-generated referrals. The Board said that such percentage payments amount to fee-splitting to pay for referrals, which is illegal under Florida law. The appeals court agreed. As a result, hundreds of Florida doctor-PPM contracts will likely have to be revamped.

The story quotes Alan Gassman, the attorney who represented Access in the case, as saying that doctors may have another concern as well-making sure they are not violating criminal statutes under Florida's Patient Brokering Act. Gassman said since the appeals court was the highest court to date to review a decision involving practice management contracts, doctors seeking to escape such pacts are now well-armed to do so in local courtrooms. Further, he said, the Florida decision could have influence in other states, most of which have similar laws against fee splitting.

Editor's Note: This ruling has important implications for EM in Florida and may serve as a guidepost in other states. Importantly, the actions of the Florida Board of Medicine point out a largely untapped resource to fight abusive contracts in EM. Under the fee-splitting prohibitions in Florida and other states, one should not be forced to split their fee in order to receive referrals. With the typical EM contract where the pit doctor gives up 30-50% of their fees in order to work in an ED and thereby receive referrals, these statutes are implicated. Emergency physicians in such arrangements should strongly consider reporting the physicians who front for the big groups or the "dictators" who are the sole owners of one or two lucrative contracts to their state Board of Medicine for investigation of fee-splitting. The various Boards of Medicine are primarily composed of physicians responsible for upholding the moral and ethical aspects of the profession and represent an important resource for EPs.

The most direct effect of this ruling is for emergency physicians in Florida whose contracts spell out a percentage-based formula for compensation. Since this ruling invalidates the contract, the rank and file emergency physicians in such a situation are now presented with an opportunity to break away from a contract group or a dictator and take control of their professional future. For more information on fee splitting the reader should access www.aaem.org.