Fee Splitting/Kickbacks

BYLINE: Palm Beach Post Staff and Wire Reports
DATE: July 2, 1999
PUBLICATION: The Palm Beach Post
EDITION: FINAL
SECTION: BUSINESS
PAGE: 7D
MEMO: In brief

A state appellate court has upheld a ruling that doctors can't pay a percentage of their profits to physician management companies that run their offices and handle their business affairs.

The ruling by the 1st District Court of Appeal in Tallahassee upheld a November 1997 order by the Florida Board of Medicine. The June 25 ruling went against PhyMatrix Corp., a company formerly based in West Palm Beach
that bought and managed doctors' practices. At issue was a 30 percent annual fee PhyMatrix charged doctors based on a practice's net income.

The Board of Medicine had said fees based on a percentage violate state law that prohibits paying or receiving payment in exchange for patient referrals. The board said a flat fee would have been acceptable under the
law.

The case, involving a 15-doctor practice in the Tampa area, was brought by Magan Bakarania, a cardiologist who was considering joining the practice.

PhyMatrix is now getting out of the physician practice management business. This year the company moved to Providence, R.I., and changed its name to Innovative Clinical Solutions.