You are on page 1of 6

5 PRSRT STD

U.S. POSTAGE
PAID HEALTH
LAW
Bellmawr, NJ
Permit No. 58

2007 Free Luncheon Seminars for Entrepreneurs


Free luncheon seminars will be held from 11:30 a.m. to 2 p.m. in Flaster/Greenberg’s Conference Center,
1810 Chapel Avenue West
Cherry Hill, NJ 08002-4609
Return Service Requested
REPORT
at 1810 Chapel Avenue West, in Cherry Hill. To register, contact Stacie Koch, at 856-661-2281;
A Newsletter from the Health Care Law Practice Group WINTER 2007
e-mail firm@flastergreenberg.com; or register on-line at www.flastergreenberg.com. Seating is limited.

Tuesday, February 13, 2007 Tuesday, May 8, 2007


“Top 10 Mistakes New Businesses Make “Smart Business Moves — Recent case underscores importance of
in Employment Law — How To Avoid Them With What to Look for in Your Next Lease”
Your Business” Speakers: Allen P. Fineberg, Esq. and shareholders’ agreements
Speaker: Michael Homans, Esq. Steven H. Gartner, President,
Metro Commercial Real Estate, Inc. BY MARKLEY S. RODERICK was goodwill in the practice, but not much. The departing doctor
Tuesday, March 13, 2007 was owed something for her shares, but this was more than offset
“A Survival Guide to Protecting a Tuesday, June 12, 2007 When two or more doctors form a practice by money she owed back to the corporation. Various claims made
Good Name: How to Capitalize on together, they naturally focus on things like by the doctors against one another and third parties were dismissed.
“Dealing with First Employees: Stock Options,
Your Brand or Business Name” signing up with insurance carriers,
Inventions, and Restrictive Covenants” Based on our experience with similar situations, the case probably
maintaining relationships with referral sources
Speaker: Jordan A. LaVine, Esq. Speakers: Michael D. Homans, Esq. had consequences beyond those described in the judge’s opinion.
and, of course, seeing and treating patients.
and Elliot D. Raff, Esq. For one thing, the dispute probably destroyed the personal and
Tuesday, April 10, 2007 Often, the physicians pay too little attention
professional relationships that brought the partners together in the
“What to do When the IRS & Division of to the development of a Shareholders’
first place. For another thing, it consumed an enormous amount of
Taxation Come Knocking” Agreement among themselves. A recent court
their time and energy, with a high financial cost and an emotional
Speaker: Alan H. Zuckerman, CPA, Esq. case illustrates what can – and often does – go wrong.
cost (stress, anxiety) that cannot be calculated. Finally, it would not
The case involved three doctors who formed an orthopedic be surprising if the partners incurred legal fees in excess of $100,000.
surgery practice. At the beginning of his 33-page opinion, the judge
The lesson of the case was stated succinctly by the judge: “This
offered the following wistful summary:
case highlights the need for a shareholder agreement to be in place
The doctors appear to be gifted and talented physicians.
However, in their zeal to focus on their developing medical (continued on page 2)
practice, they appear to have paid little, if any, attention to the
business management aspects of their practice – the corporate
structure, office policies and controls, and particularly,
developing an agreement should there by a death, divorce, or Editor’s Note…
Health Care Practice Group Services HEALTH CARE LAW PRACTICE GROUP departure of one of their colleagues. This case stands as a stark This issue of the Health Law Report
For additional information, please contact the lawyers listed below, and clear example for all doctors to heed the biblical discusses three very diverse issues
or the lawyer in the firm with whom you are regularly in contact. admonition set forth in Luke 4:23: “Physician, heal thyself.” resulting from two court decisions and a
◆ Sales and Acquisitions of Practices ◆ Licensing Board Representation new statute. Mark Roderick describes
Richard J. Flaster Stephen M. Greenberg Markley S. Roderick The doctors in this case were indeed highly trained, skilled, and the disaster that can arise if health care
856-661-2260 856-661-2261 856-661-2265 successful. They left the world of academic medicine to start a private
◆ Starting a Practice or Business ◆ Buying or Leasing Real Estate rick.flaster@flastergreenberg.com steve.greenberg@flastergreenberg.com mark.roderick@flastergreenberg.com practitioners do not have a carefully
practice with every indication that the practice would be lucrative. drafted Shareholders Agreement. Alma
◆ Employment Agreements ◆ Ambulatory Surgical Centers and Julie K. Assis Alma L. Saravia Laura B. Wallenstein Although they met with a lawyer to form a professional corporation, Saravia’s article discusses the
856-382-2255 856-661-2290 856-661-2263 for one reason or another the lawyer did not prepare a Shareholders’
Ambulatory Care Centers overwhelming authority of the New
◆ Shareholder Agreements julie.assis@flastergreenberg.com alma.saravia@flastergreenberg.com laura.wallenstein@flastergreenberg.com Agreement. The consequences became apparent when one of the Jersey State Board of Medical Examiners
◆ Medical Management Companies Kenneth S. Goodkind Thomas D. Scholtes Alan H. Zuckerman doctors decided to leave the practice and move to Mississippi. to discipline physicians, even if there was no patient harm.
◆ Admitting and Terminating Partners 856-382-2227 856-661-2266
856-661-2273 Questions immediately arose: Should the departing doctor Finally, Julie Assis, the newest member of our Health Care
◆ Internet-Based Healthcare Businesses ken.goodkind@flastergreenberg.com thomas.scholtes@flastergreenberg.com alan.zuckerman@flastergreenberg.com
◆ Lobbying receive money as a buyout? Was there “goodwill” in the practice Practice Group, covers issues that arise in the New Jersey
◆ Emergency Health Systems Development Vincent J. Nolan III Elliot D. Raff and, if so, how much? Was the departing doctor bound by a Advance Directives for Mental Health Care Act.
◆ Litigation and Dispute Resolution 856-661-2275 856-382-2241
Our second in a series of three presentations designed for
elliot.raff@flastergreenberg.com
restrictive covenant if she decided to return to the area? Who owned
◆ HIPAA Compliance vincent.nolan@flastergreenberg.com
the accounts receivable? Had the doctors entered into an oral physicians and other health care providers, entitled, “Does an
◆ Fraud and Abuse and Other Regulatory
contract about anything? Ambulatory Surgery Center Make Sense for My Practice” will
Advice be held in our conference center on January 17th at 5:30
PRACTICE AREAS Meeting followed meeting, lawyers got involved, and eventually
p.m. More information can be found inside. This promises to
Alternative Dispute Resolution; Bankruptcy; Business & Corporate Services; Closely-Held Businesses; Construction Law; E-Commerce & Internet; the lawsuit was filed.
be an informative and helpful evening and we look forward
Emerging Business; Employee Benefits; Environmental Law & Litigation; Estate Planning & Administration; Family Law & Adoption; Health Ce; By the time the court sorted through the testimony, it is fair to to seeing you.
Intellectual Property; Labor & Employment; Litigation; Real Estate & Land Use; Redevelopment; Securities; Taxation. say that no one walked away happy. The court found that that there

www.flastergreenberg.com Copyright © 2007 Health Law Report • Flaster/Greenberg P.C.


2 3 4

New Law Encourages Documentation of Mental Health Supreme Court Upholds Right of New Jersey Board of Medical Flaster/Greenberg invites you to attend a series of seminars and wine
Care Preferences Examiners to Discipline Physicians Even If No Patient Harm tasting receptions for physicians and other health care providers.
BY ALMA L. SARAVIA which reversed the BME’s penalty because it concluded that the
BY JULIE K. ASSIS Potential conflicts may arise if instructions in the two directives
penalty was “excessive” and “unduly harsh” since there was no
“Does an Ambulatory Surgical Center Make Sense for my Practice?”
contradict each other, or if different proxies are named in the
Individuals with mental health conditions The New Jersey State Board of Medical patient harm. Wednesday, January 17, 5:30 p.m.
directives without a specific description of each proxy’s scope of
Examiners (“BME”) licenses more than
now have an additional legal tool intended to authority. These concerns must be carefully considered when The BME appealed to the New Jersey Supreme Court and it Seminar Overview: Are you performing procedures in your physician groups; structuring compensation arrangements and buy-
help document mental health care 33,000 physicians, podiatrists and other office? At the hospital in the outpatient area? In a surgery center of ins and buy-outs; developing billing compliance plans; and
drafting the directives. held that the BME can revoke a physician’s license when it decides
preferences and allow greater control over professionals and it has broad statutory and which you are not an owner? If your answers are yes, you may be a designing qualified retirement plans for medical practices. He is
Despite these limitations, a mental health directive can provide a that he or she has committed numerous dishonest acts even when
care. The New Jersey Advance Directives for regulatory authority over its licensees. candidate to develop and be an owner in a Medicare certified/State admitted to practice in New Jersey and Pennsylvania.
way for individuals with mental health conditions to document there is no patient harm involved. In re License Issued to Zahl, 186
Mental Health Care Act (the “Act”), passed During my years of representing physicians licensed Ambulatory Surgery Center. Find out the requirements for Richard Wagar, M.B.A., president of Surgery Center
treatment preferences and add legal weight to the patient’s wishes. N.J. 341, 895 A.2d 437 (N.J. 2006). Of concern to the Supreme
earlier this year, generally parallels New Jersey and other licensed healthcare providers an ASC and if it is the 2007 plan for your practice at a seminar on Management Services, Inc. (SCMS), heads a health care
In addition, the Act has the potential to facilitate discussion and Court was Dr. Zahl’s willingness to be dishonest in smaller matters, Wed., January 17, from 5:30 to 7 p.m., followed by a wine tasting
medical advance directive law in language, before the licensing boards, I have advised consulting/ management group that specializes in the development
heighten awareness of mental health issues—which may be exactly which the Court thought demonstrated that he would be likely to and dinner reception from 7 to 8 p.m. in Flaster/Greenberg’s
but contains notable distinctions in application. clients that if a patient files a complaint against a licensee, he may be and management of ambulatory surgery centers. His experience
the effect the New Jersey Mental Health Association anticipated do the same in larger matters. Conference Center, located at 1810 Chapel Avenue West in Cherry
disciplined even if the patient was not harmed. Recently, the New with ASCs ranges from planning through financing, development,
Both types of advance directives “speak” for the individual when when lobbying for it. ◆ Jersey Supreme Court reaffirmed the As mitigating evidence, Dr. Zahl had Hill, NJ. Registration begins at 5 p.m. construction and staffing, certification, licensure, accreditation,
he is unable to effectively communicate his wishes, due to either concept that the BME may discipline a testified that he had made mistakes; but he managed care reimbursement contract negotiation, management
mental illness or a physical condition. Both also allow an individual physician, including revoking his Recently, the New Jersey Supreme defended some of his actions as having been Speakers and facility billing. Since 1993, Richard’s group has provided
to specify a person (called a “proxy”) to make medical or mental medical license, even though there was taken out of context by the BME. His Stephen M. Greenberg, shareholder at Flaster/Greenberg, services to over two dozen surgery centers in NJ, NY, PA and DE
Court reaffirmed the concept that the concentrates his practice in health care law, tax, and corporate legal and currently is managing four surgery centers in NJ and in the
health decisions on his behalf (a “proxy directive”). no direct patient harm. patients had also testified that they were
Recent case underscores importance of BME may discipline a physician, services, including all types of business transactions, mergers and development stages with one in NJ and one in PA. He has
When applied, however, the two laws are markedly different happy with the treatment he had provided.
including revoking his medical acquisitions. He has particular expertise in: mergers and acquisitions developed a proven turn-key model that results in efficient, cost-
because mental health directives are by nature intended for people shareholders’ agreements Background Despite the mitigating evidence
of health care provider and physician practice groups; tax effective, profitable facilities.
with non-terminal conditions. In contrast to the medical advance license, even though there was no demonstrating that no patient’s health or
In implementing its mission to structuring of business transactions and corporate reorganization; Register today. For more information or to register, contact
directive law’s focus on an individual’s right to reject life-sustaining
(CONTINUED FROM PAGE 1) direct patient harm. safety had been even minimally tax planning for individuals, estates and trusts; and employee
protect the health and welfare of the Stacie Koch at Flaster/Greenberg, P.C. at 856-661-2281; email
treatment, the Act focuses on an individual’s right to control day- at the outset so that the valuation upon leaving is determined by compromised, the Supreme Court noted that benefits. His special understanding of the health care industry
public, the BME is authorized to healthcare@flastergreenberg.com; or register on-line at
to-day treatment decisions. The preferences an individual may consensus on day one of the firm and not imposed by a court.” Dr. Zahl offered inconsistent testimony, encompasses: regulatory law and managed care issues; formation of
investigate the conduct of a licensee and www.flastergreenberg.com. Seating is limited.
specify in a mental health directive include issues such as lacked remorse at hearings and continued to exhibit a sense of practice entities and surgery centers; antitrust issues surrounding
In truth, valuation is just one of the issues that should be deny, suspend or revoke his or her license. The BME is comprised
commitment to a psychiatric facility, choice of physicians, treatment entitlement. The Supreme Court upheld the revocation of Dr.
addressed by a Shareholders’ Agreement. Others include: of 21 members appointed by the Governor, including 12 physicians,
modalities and medications. Zahl’s license and ordered him to pay costs of over $250,000, based
a podiatrist, a bioanalytic lab director, a physician’s assistant, a nurse
The laws governing these two types of advance directives both
• How much money each doctor will contribute
midwife, a representative of the Governor, the Commissioner of
on its contention that practitioners must demonstrate good moral How to Avoid the 10 Biggest Legal & Economic Mistakes Made
• Ownership percentages character in order to be safe to the public. in Physician Buy-Ins & Buy-Outs
attempt to address the question of whether individuals should be Health and Senior Services and three public members. At the end
allowed to make medical decisions against the advice of their • The compensation of the physicians of 2005, Acting Governor Codey appointed ten new members to This Supreme Court decision does not mean that the BME will Tuesday, March 6, 5:30 p.m.
physicians and established medical standards. Medical advance the BME and the new BME appears to be imposing more severe now automatically seek such a harsh penalty against a physician who
• Management and decision-making Seminar Overview: A professional practice usually has Speakers
directive case law limits an individual’s right to make potentially penalties upon the licensees that it disciplines. has violated a regulation or committed fraud and who has not
• Restrictive covenants (non-compete agreements) three components of value: (1) net tangible assets (2) collectible
harmful medical decisions to those situations in which (a) the harmed a patient. However, it does reaffirm that a physician who Richard J. Flaster, shareholder at Flaster/Greenberg,
accounts receivable, and (3) goodwill. Whether fashioning buy-
person has an underlying medical condition that will ultimately • Time commitment Supreme Court Decision appears before the BME must recognize the BME’s substantial provides legal counsel to commercial and professional entities and
ins for new physician-owners or buy-outs for the existing
result in death and (b) the person bases his or her decisions on a power. A cooperative approach with experienced counsel will their owners on matters involving taxation, pensions, estate
• Profit distributions In 2003, four years after it filed a Complaint against Kenneth owners, the issues are the same, and the agreements should
usually result in a better outcome than taking an adversarial stance planning, negotiation and documentation of contracts. He has
wish to be free from medical intervention rather than a specific Zahl, MD, an anesthesiologist, the BME found that he had properly reflect each component of value in the most tax-
• Buy-sell issues (buyouts on death, etc.) against the BME. Once the BME has made a final determination, structured and documented numerous buy-in and buy-out
intent to die. However, this is clearly inapplicable to mental health “willfully engaged in numerous dishonest acts over a course of advantaged structure possible. However, the parties often fail to
arrangements for his clients in the healthcare field. He has written
advance directives. Dealing with these issues when a practice is formed takes a little the authority of the court to overturn a penalty is limited and it will address the economic realities of the situation as well as to
years, including Medicare and insurance fraud and maintaining numerous articles and two books on tax law and regularly delivers
time, costs a little money, and can be a little uncomfortable, precisely continue to be deferential to the BME. ◆ consider several important tax issues, which could materially
lectures on tax issues for professional associations. He is admitted
In an attempt to include similar limitations, the Act provides improper patient records.” The BME It voted to revoke his license
because the issues are important and the partners may come to the lower the net after-tax cost of the transaction.
that an individual’s preference expressed in a mental health directive to practice medicine and Dr. Zahl appealed to the Appellate Court, to practice in New Jersey and New York.
table with different expectations. As the recent case illustrates, This issue is just one of the 10 most common tax and
can be overridden by a health care professional when he or she Markley S. Roderick, shareholder at Flaster/Greenberg,
however, the cost of not dealing with the issues is many times economic mistakes health care providers make in fashioning
determines that it would violate accepted medical standards, a court concentrates his practice on the representation of closely held and
order, or a statutory provision, or would endanger the health or life
greater. Physicians who start their business relationship on a solid Office Locations buy-ins and buy-outs. These dilemmas and their solutions will
emerging growth companies, including companies in the health
foundation are far less likely to encounter difficulty in the future. ◆ 1810 Chapel Avenue West 89 Headquarters Plaza North 8 Penn Center be discussed and reviewed, touching upon such topics as: how
care and technology industries. He frequently provides counsel in
of the patient or another person. Unfortunately, this provision is Cherry Hill, NJ 08002-4609 14th Floor, Suite 1472 1628 JFK Boulevard to minimize taxation on the buy-in; what protections are
written so broadly that it may severely limit the Act’s intended grant such areas as taxation, corporate and partnership law, business sales
Tel 856-661-1900 • Fax 856-661-1919 Morristown, NJ 07960 Philadelphia, PA 19103 needed; how to handle accounts receivable and goodwill; what
of individual control. For example, a mental health advance Tel 973-605-1799 • Fax 973-605-1344 Tel 215-279-9393 • Fax 215-279-9394
and acquisitions, start-up businesses, and venture capital. He is
protections should be built in for buy-out; how to provide for
This report is for general use and information, 2900 Fire Road, Suite 102A admitted to practice in New Jersey and Pennsylvania.
directive can be overridden when an individual specifies that he does the cost of collecting the practice’s receivables, providing for the
and the content should not be interpreted as Egg Harbor Twp., NJ 08234 441 East State Street 913 North Market Street, Suite 1001 Register today. For more information or to register, contact
not wish to be given extreme treatment such as electroconvulsive Tel 609-645-1881 • Fax 609-645-9932 contingency of multiple concurrent buy-outs and how to plan
rendering legal advice on any matter. Specific Trenton, NJ 08608 Wilmington, DE 19801
for the taxable gain realized on payments “In Kind” upon buy- Stacie Koch at Flaster/Greenberg, P.C. at 856-661-2281; email
therapy, if his physician determines that withholding such treatment Tel 302-351-1910 • Fax 302-351-1919
situations may raise additional or different issues Tel 609-695-4000 • Fax 609-695-5111
out or practice break-up healthcare@flastergreenberg.com; or register on-line at
would endanger his health. and such information should be coordinated with
190 South Main Road www.flastergreenberg.com. Seating is limited.
Another difficultly with the Act involves the interaction between professional legal advice. Vineland, NJ 08360
an individual’s mental health directive and medical directive. Tel 856-691-6200 • Fax 856-696-8150

Health Law Report • Flaster/Greenberg P.C. www.flastergreenberg.com Health Law Report • Flaster/Greenberg P.C.
2 3 4

New Law Encourages Documentation of Mental Health Supreme Court Upholds Right of New Jersey Board of Medical Flaster/Greenberg invites you to attend a series of seminars and wine
Care Preferences Examiners to Discipline Physicians Even If No Patient Harm tasting receptions for physicians and other health care providers.
BY ALMA L. SARAVIA which reversed the BME’s penalty because it concluded that the
BY JULIE K. ASSIS Potential conflicts may arise if instructions in the two directives
penalty was “excessive” and “unduly harsh” since there was no
“Does an Ambulatory Surgical Center Make Sense for my Practice?”
contradict each other, or if different proxies are named in the
Individuals with mental health conditions The New Jersey State Board of Medical patient harm. Wednesday, January 17, 5:30 p.m.
directives without a specific description of each proxy’s scope of
Examiners (“BME”) licenses more than
now have an additional legal tool intended to authority. These concerns must be carefully considered when The BME appealed to the New Jersey Supreme Court and it Seminar Overview: Are you performing procedures in your physician groups; structuring compensation arrangements and buy-
help document mental health care 33,000 physicians, podiatrists and other office? At the hospital in the outpatient area? In a surgery center of ins and buy-outs; developing billing compliance plans; and
drafting the directives. held that the BME can revoke a physician’s license when it decides
preferences and allow greater control over professionals and it has broad statutory and which you are not an owner? If your answers are yes, you may be a designing qualified retirement plans for medical practices. He is
Despite these limitations, a mental health directive can provide a that he or she has committed numerous dishonest acts even when
care. The New Jersey Advance Directives for regulatory authority over its licensees. candidate to develop and be an owner in a Medicare certified/State admitted to practice in New Jersey and Pennsylvania.
way for individuals with mental health conditions to document there is no patient harm involved. In re License Issued to Zahl, 186
Mental Health Care Act (the “Act”), passed During my years of representing physicians licensed Ambulatory Surgery Center. Find out the requirements for Richard Wagar, M.B.A., president of Surgery Center
treatment preferences and add legal weight to the patient’s wishes. N.J. 341, 895 A.2d 437 (N.J. 2006). Of concern to the Supreme
earlier this year, generally parallels New Jersey and other licensed healthcare providers an ASC and if it is the 2007 plan for your practice at a seminar on Management Services, Inc. (SCMS), heads a health care
In addition, the Act has the potential to facilitate discussion and Court was Dr. Zahl’s willingness to be dishonest in smaller matters, Wed., January 17, from 5:30 to 7 p.m., followed by a wine tasting
medical advance directive law in language, before the licensing boards, I have advised consulting/ management group that specializes in the development
heighten awareness of mental health issues—which may be exactly which the Court thought demonstrated that he would be likely to and dinner reception from 7 to 8 p.m. in Flaster/Greenberg’s
but contains notable distinctions in application. clients that if a patient files a complaint against a licensee, he may be and management of ambulatory surgery centers. His experience
the effect the New Jersey Mental Health Association anticipated do the same in larger matters. Conference Center, located at 1810 Chapel Avenue West in Cherry
disciplined even if the patient was not harmed. Recently, the New with ASCs ranges from planning through financing, development,
Both types of advance directives “speak” for the individual when when lobbying for it. ◆ Jersey Supreme Court reaffirmed the As mitigating evidence, Dr. Zahl had Hill, NJ. Registration begins at 5 p.m. construction and staffing, certification, licensure, accreditation,
he is unable to effectively communicate his wishes, due to either concept that the BME may discipline a testified that he had made mistakes; but he managed care reimbursement contract negotiation, management
mental illness or a physical condition. Both also allow an individual physician, including revoking his Recently, the New Jersey Supreme defended some of his actions as having been Speakers and facility billing. Since 1993, Richard’s group has provided
to specify a person (called a “proxy”) to make medical or mental medical license, even though there was taken out of context by the BME. His Stephen M. Greenberg, shareholder at Flaster/Greenberg, services to over two dozen surgery centers in NJ, NY, PA and DE
Court reaffirmed the concept that the concentrates his practice in health care law, tax, and corporate legal and currently is managing four surgery centers in NJ and in the
health decisions on his behalf (a “proxy directive”). no direct patient harm. patients had also testified that they were
Recent case underscores importance of BME may discipline a physician, services, including all types of business transactions, mergers and development stages with one in NJ and one in PA. He has
When applied, however, the two laws are markedly different happy with the treatment he had provided.
including revoking his medical acquisitions. He has particular expertise in: mergers and acquisitions developed a proven turn-key model that results in efficient, cost-
because mental health directives are by nature intended for people shareholders’ agreements Background Despite the mitigating evidence
of health care provider and physician practice groups; tax effective, profitable facilities.
with non-terminal conditions. In contrast to the medical advance license, even though there was no demonstrating that no patient’s health or
In implementing its mission to structuring of business transactions and corporate reorganization; Register today. For more information or to register, contact
directive law’s focus on an individual’s right to reject life-sustaining
(CONTINUED FROM PAGE 1) direct patient harm. safety had been even minimally tax planning for individuals, estates and trusts; and employee
protect the health and welfare of the Stacie Koch at Flaster/Greenberg, P.C. at 856-661-2281; email
treatment, the Act focuses on an individual’s right to control day- at the outset so that the valuation upon leaving is determined by compromised, the Supreme Court noted that benefits. His special understanding of the health care industry
public, the BME is authorized to healthcare@flastergreenberg.com; or register on-line at
to-day treatment decisions. The preferences an individual may consensus on day one of the firm and not imposed by a court.” Dr. Zahl offered inconsistent testimony, encompasses: regulatory law and managed care issues; formation of
investigate the conduct of a licensee and www.flastergreenberg.com. Seating is limited.
specify in a mental health directive include issues such as lacked remorse at hearings and continued to exhibit a sense of practice entities and surgery centers; antitrust issues surrounding
In truth, valuation is just one of the issues that should be deny, suspend or revoke his or her license. The BME is comprised
commitment to a psychiatric facility, choice of physicians, treatment entitlement. The Supreme Court upheld the revocation of Dr.
addressed by a Shareholders’ Agreement. Others include: of 21 members appointed by the Governor, including 12 physicians,
modalities and medications. Zahl’s license and ordered him to pay costs of over $250,000, based
a podiatrist, a bioanalytic lab director, a physician’s assistant, a nurse
The laws governing these two types of advance directives both
• How much money each doctor will contribute
midwife, a representative of the Governor, the Commissioner of
on its contention that practitioners must demonstrate good moral How to Avoid the 10 Biggest Legal & Economic Mistakes Made
• Ownership percentages character in order to be safe to the public. in Physician Buy-Ins & Buy-Outs
attempt to address the question of whether individuals should be Health and Senior Services and three public members. At the end
allowed to make medical decisions against the advice of their • The compensation of the physicians of 2005, Acting Governor Codey appointed ten new members to This Supreme Court decision does not mean that the BME will Tuesday, March 6, 5:30 p.m.
physicians and established medical standards. Medical advance the BME and the new BME appears to be imposing more severe now automatically seek such a harsh penalty against a physician who
• Management and decision-making Seminar Overview: A professional practice usually has Speakers
directive case law limits an individual’s right to make potentially penalties upon the licensees that it disciplines. has violated a regulation or committed fraud and who has not
• Restrictive covenants (non-compete agreements) three components of value: (1) net tangible assets (2) collectible
harmful medical decisions to those situations in which (a) the harmed a patient. However, it does reaffirm that a physician who Richard J. Flaster, shareholder at Flaster/Greenberg,
accounts receivable, and (3) goodwill. Whether fashioning buy-
person has an underlying medical condition that will ultimately • Time commitment Supreme Court Decision appears before the BME must recognize the BME’s substantial provides legal counsel to commercial and professional entities and
ins for new physician-owners or buy-outs for the existing
result in death and (b) the person bases his or her decisions on a power. A cooperative approach with experienced counsel will their owners on matters involving taxation, pensions, estate
• Profit distributions In 2003, four years after it filed a Complaint against Kenneth owners, the issues are the same, and the agreements should
usually result in a better outcome than taking an adversarial stance planning, negotiation and documentation of contracts. He has
wish to be free from medical intervention rather than a specific Zahl, MD, an anesthesiologist, the BME found that he had properly reflect each component of value in the most tax-
• Buy-sell issues (buyouts on death, etc.) against the BME. Once the BME has made a final determination, structured and documented numerous buy-in and buy-out
intent to die. However, this is clearly inapplicable to mental health “willfully engaged in numerous dishonest acts over a course of advantaged structure possible. However, the parties often fail to
arrangements for his clients in the healthcare field. He has written
advance directives. Dealing with these issues when a practice is formed takes a little the authority of the court to overturn a penalty is limited and it will address the economic realities of the situation as well as to
years, including Medicare and insurance fraud and maintaining numerous articles and two books on tax law and regularly delivers
time, costs a little money, and can be a little uncomfortable, precisely continue to be deferential to the BME. ◆ consider several important tax issues, which could materially
lectures on tax issues for professional associations. He is admitted
In an attempt to include similar limitations, the Act provides improper patient records.” The BME It voted to revoke his license
because the issues are important and the partners may come to the lower the net after-tax cost of the transaction.
that an individual’s preference expressed in a mental health directive to practice medicine and Dr. Zahl appealed to the Appellate Court, to practice in New Jersey and New York.
table with different expectations. As the recent case illustrates, This issue is just one of the 10 most common tax and
can be overridden by a health care professional when he or she Markley S. Roderick, shareholder at Flaster/Greenberg,
however, the cost of not dealing with the issues is many times economic mistakes health care providers make in fashioning
determines that it would violate accepted medical standards, a court concentrates his practice on the representation of closely held and
order, or a statutory provision, or would endanger the health or life
greater. Physicians who start their business relationship on a solid Office Locations buy-ins and buy-outs. These dilemmas and their solutions will
emerging growth companies, including companies in the health
foundation are far less likely to encounter difficulty in the future. ◆ 1810 Chapel Avenue West 89 Headquarters Plaza North 8 Penn Center be discussed and reviewed, touching upon such topics as: how
care and technology industries. He frequently provides counsel in
of the patient or another person. Unfortunately, this provision is Cherry Hill, NJ 08002-4609 14th Floor, Suite 1472 1628 JFK Boulevard to minimize taxation on the buy-in; what protections are
written so broadly that it may severely limit the Act’s intended grant such areas as taxation, corporate and partnership law, business sales
Tel 856-661-1900 • Fax 856-661-1919 Morristown, NJ 07960 Philadelphia, PA 19103 needed; how to handle accounts receivable and goodwill; what
of individual control. For example, a mental health advance Tel 973-605-1799 • Fax 973-605-1344 Tel 215-279-9393 • Fax 215-279-9394
and acquisitions, start-up businesses, and venture capital. He is
protections should be built in for buy-out; how to provide for
This report is for general use and information, 2900 Fire Road, Suite 102A admitted to practice in New Jersey and Pennsylvania.
directive can be overridden when an individual specifies that he does the cost of collecting the practice’s receivables, providing for the
and the content should not be interpreted as Egg Harbor Twp., NJ 08234 441 East State Street 913 North Market Street, Suite 1001 Register today. For more information or to register, contact
not wish to be given extreme treatment such as electroconvulsive Tel 609-645-1881 • Fax 609-645-9932 contingency of multiple concurrent buy-outs and how to plan
rendering legal advice on any matter. Specific Trenton, NJ 08608 Wilmington, DE 19801
for the taxable gain realized on payments “In Kind” upon buy- Stacie Koch at Flaster/Greenberg, P.C. at 856-661-2281; email
therapy, if his physician determines that withholding such treatment Tel 302-351-1910 • Fax 302-351-1919
situations may raise additional or different issues Tel 609-695-4000 • Fax 609-695-5111
out or practice break-up healthcare@flastergreenberg.com; or register on-line at
would endanger his health. and such information should be coordinated with
190 South Main Road www.flastergreenberg.com. Seating is limited.
Another difficultly with the Act involves the interaction between professional legal advice. Vineland, NJ 08360
an individual’s mental health directive and medical directive. Tel 856-691-6200 • Fax 856-696-8150

Health Law Report • Flaster/Greenberg P.C. www.flastergreenberg.com Health Law Report • Flaster/Greenberg P.C.
2 3 4

New Law Encourages Documentation of Mental Health Supreme Court Upholds Right of New Jersey Board of Medical Flaster/Greenberg invites you to attend a series of seminars and wine
Care Preferences Examiners to Discipline Physicians Even If No Patient Harm tasting receptions for physicians and other health care providers.
BY ALMA L. SARAVIA which reversed the BME’s penalty because it concluded that the
BY JULIE K. ASSIS Potential conflicts may arise if instructions in the two directives
penalty was “excessive” and “unduly harsh” since there was no
“Does an Ambulatory Surgical Center Make Sense for my Practice?”
contradict each other, or if different proxies are named in the
Individuals with mental health conditions The New Jersey State Board of Medical patient harm. Wednesday, January 17, 5:30 p.m.
directives without a specific description of each proxy’s scope of
Examiners (“BME”) licenses more than
now have an additional legal tool intended to authority. These concerns must be carefully considered when The BME appealed to the New Jersey Supreme Court and it Seminar Overview: Are you performing procedures in your physician groups; structuring compensation arrangements and buy-
help document mental health care 33,000 physicians, podiatrists and other office? At the hospital in the outpatient area? In a surgery center of ins and buy-outs; developing billing compliance plans; and
drafting the directives. held that the BME can revoke a physician’s license when it decides
preferences and allow greater control over professionals and it has broad statutory and which you are not an owner? If your answers are yes, you may be a designing qualified retirement plans for medical practices. He is
Despite these limitations, a mental health directive can provide a that he or she has committed numerous dishonest acts even when
care. The New Jersey Advance Directives for regulatory authority over its licensees. candidate to develop and be an owner in a Medicare certified/State admitted to practice in New Jersey and Pennsylvania.
way for individuals with mental health conditions to document there is no patient harm involved. In re License Issued to Zahl, 186
Mental Health Care Act (the “Act”), passed During my years of representing physicians licensed Ambulatory Surgery Center. Find out the requirements for Richard Wagar, M.B.A., president of Surgery Center
treatment preferences and add legal weight to the patient’s wishes. N.J. 341, 895 A.2d 437 (N.J. 2006). Of concern to the Supreme
earlier this year, generally parallels New Jersey and other licensed healthcare providers an ASC and if it is the 2007 plan for your practice at a seminar on Management Services, Inc. (SCMS), heads a health care
In addition, the Act has the potential to facilitate discussion and Court was Dr. Zahl’s willingness to be dishonest in smaller matters, Wed., January 17, from 5:30 to 7 p.m., followed by a wine tasting
medical advance directive law in language, before the licensing boards, I have advised consulting/ management group that specializes in the development
heighten awareness of mental health issues—which may be exactly which the Court thought demonstrated that he would be likely to and dinner reception from 7 to 8 p.m. in Flaster/Greenberg’s
but contains notable distinctions in application. clients that if a patient files a complaint against a licensee, he may be and management of ambulatory surgery centers. His experience
the effect the New Jersey Mental Health Association anticipated do the same in larger matters. Conference Center, located at 1810 Chapel Avenue West in Cherry
disciplined even if the patient was not harmed. Recently, the New with ASCs ranges from planning through financing, development,
Both types of advance directives “speak” for the individual when when lobbying for it. ◆ Jersey Supreme Court reaffirmed the As mitigating evidence, Dr. Zahl had Hill, NJ. Registration begins at 5 p.m. construction and staffing, certification, licensure, accreditation,
he is unable to effectively communicate his wishes, due to either concept that the BME may discipline a testified that he had made mistakes; but he managed care reimbursement contract negotiation, management
mental illness or a physical condition. Both also allow an individual physician, including revoking his Recently, the New Jersey Supreme defended some of his actions as having been Speakers and facility billing. Since 1993, Richard’s group has provided
to specify a person (called a “proxy”) to make medical or mental medical license, even though there was taken out of context by the BME. His Stephen M. Greenberg, shareholder at Flaster/Greenberg, services to over two dozen surgery centers in NJ, NY, PA and DE
Court reaffirmed the concept that the concentrates his practice in health care law, tax, and corporate legal and currently is managing four surgery centers in NJ and in the
health decisions on his behalf (a “proxy directive”). no direct patient harm. patients had also testified that they were
Recent case underscores importance of BME may discipline a physician, services, including all types of business transactions, mergers and development stages with one in NJ and one in PA. He has
When applied, however, the two laws are markedly different happy with the treatment he had provided.
including revoking his medical acquisitions. He has particular expertise in: mergers and acquisitions developed a proven turn-key model that results in efficient, cost-
because mental health directives are by nature intended for people shareholders’ agreements Background Despite the mitigating evidence
of health care provider and physician practice groups; tax effective, profitable facilities.
with non-terminal conditions. In contrast to the medical advance license, even though there was no demonstrating that no patient’s health or
In implementing its mission to structuring of business transactions and corporate reorganization; Register today. For more information or to register, contact
directive law’s focus on an individual’s right to reject life-sustaining
(CONTINUED FROM PAGE 1) direct patient harm. safety had been even minimally tax planning for individuals, estates and trusts; and employee
protect the health and welfare of the Stacie Koch at Flaster/Greenberg, P.C. at 856-661-2281; email
treatment, the Act focuses on an individual’s right to control day- at the outset so that the valuation upon leaving is determined by compromised, the Supreme Court noted that benefits. His special understanding of the health care industry
public, the BME is authorized to healthcare@flastergreenberg.com; or register on-line at
to-day treatment decisions. The preferences an individual may consensus on day one of the firm and not imposed by a court.” Dr. Zahl offered inconsistent testimony, encompasses: regulatory law and managed care issues; formation of
investigate the conduct of a licensee and www.flastergreenberg.com. Seating is limited.
specify in a mental health directive include issues such as lacked remorse at hearings and continued to exhibit a sense of practice entities and surgery centers; antitrust issues surrounding
In truth, valuation is just one of the issues that should be deny, suspend or revoke his or her license. The BME is comprised
commitment to a psychiatric facility, choice of physicians, treatment entitlement. The Supreme Court upheld the revocation of Dr.
addressed by a Shareholders’ Agreement. Others include: of 21 members appointed by the Governor, including 12 physicians,
modalities and medications. Zahl’s license and ordered him to pay costs of over $250,000, based
a podiatrist, a bioanalytic lab director, a physician’s assistant, a nurse
The laws governing these two types of advance directives both
• How much money each doctor will contribute
midwife, a representative of the Governor, the Commissioner of
on its contention that practitioners must demonstrate good moral How to Avoid the 10 Biggest Legal & Economic Mistakes Made
• Ownership percentages character in order to be safe to the public. in Physician Buy-Ins & Buy-Outs
attempt to address the question of whether individuals should be Health and Senior Services and three public members. At the end
allowed to make medical decisions against the advice of their • The compensation of the physicians of 2005, Acting Governor Codey appointed ten new members to This Supreme Court decision does not mean that the BME will Tuesday, March 6, 5:30 p.m.
physicians and established medical standards. Medical advance the BME and the new BME appears to be imposing more severe now automatically seek such a harsh penalty against a physician who
• Management and decision-making Seminar Overview: A professional practice usually has Speakers
directive case law limits an individual’s right to make potentially penalties upon the licensees that it disciplines. has violated a regulation or committed fraud and who has not
• Restrictive covenants (non-compete agreements) three components of value: (1) net tangible assets (2) collectible
harmful medical decisions to those situations in which (a) the harmed a patient. However, it does reaffirm that a physician who Richard J. Flaster, shareholder at Flaster/Greenberg,
accounts receivable, and (3) goodwill. Whether fashioning buy-
person has an underlying medical condition that will ultimately • Time commitment Supreme Court Decision appears before the BME must recognize the BME’s substantial provides legal counsel to commercial and professional entities and
ins for new physician-owners or buy-outs for the existing
result in death and (b) the person bases his or her decisions on a power. A cooperative approach with experienced counsel will their owners on matters involving taxation, pensions, estate
• Profit distributions In 2003, four years after it filed a Complaint against Kenneth owners, the issues are the same, and the agreements should
usually result in a better outcome than taking an adversarial stance planning, negotiation and documentation of contracts. He has
wish to be free from medical intervention rather than a specific Zahl, MD, an anesthesiologist, the BME found that he had properly reflect each component of value in the most tax-
• Buy-sell issues (buyouts on death, etc.) against the BME. Once the BME has made a final determination, structured and documented numerous buy-in and buy-out
intent to die. However, this is clearly inapplicable to mental health “willfully engaged in numerous dishonest acts over a course of advantaged structure possible. However, the parties often fail to
arrangements for his clients in the healthcare field. He has written
advance directives. Dealing with these issues when a practice is formed takes a little the authority of the court to overturn a penalty is limited and it will address the economic realities of the situation as well as to
years, including Medicare and insurance fraud and maintaining numerous articles and two books on tax law and regularly delivers
time, costs a little money, and can be a little uncomfortable, precisely continue to be deferential to the BME. ◆ consider several important tax issues, which could materially
lectures on tax issues for professional associations. He is admitted
In an attempt to include similar limitations, the Act provides improper patient records.” The BME It voted to revoke his license
because the issues are important and the partners may come to the lower the net after-tax cost of the transaction.
that an individual’s preference expressed in a mental health directive to practice medicine and Dr. Zahl appealed to the Appellate Court, to practice in New Jersey and New York.
table with different expectations. As the recent case illustrates, This issue is just one of the 10 most common tax and
can be overridden by a health care professional when he or she Markley S. Roderick, shareholder at Flaster/Greenberg,
however, the cost of not dealing with the issues is many times economic mistakes health care providers make in fashioning
determines that it would violate accepted medical standards, a court concentrates his practice on the representation of closely held and
order, or a statutory provision, or would endanger the health or life
greater. Physicians who start their business relationship on a solid Office Locations buy-ins and buy-outs. These dilemmas and their solutions will
emerging growth companies, including companies in the health
foundation are far less likely to encounter difficulty in the future. ◆ 1810 Chapel Avenue West 89 Headquarters Plaza North 8 Penn Center be discussed and reviewed, touching upon such topics as: how
care and technology industries. He frequently provides counsel in
of the patient or another person. Unfortunately, this provision is Cherry Hill, NJ 08002-4609 14th Floor, Suite 1472 1628 JFK Boulevard to minimize taxation on the buy-in; what protections are
written so broadly that it may severely limit the Act’s intended grant such areas as taxation, corporate and partnership law, business sales
Tel 856-661-1900 • Fax 856-661-1919 Morristown, NJ 07960 Philadelphia, PA 19103 needed; how to handle accounts receivable and goodwill; what
of individual control. For example, a mental health advance Tel 973-605-1799 • Fax 973-605-1344 Tel 215-279-9393 • Fax 215-279-9394
and acquisitions, start-up businesses, and venture capital. He is
protections should be built in for buy-out; how to provide for
This report is for general use and information, 2900 Fire Road, Suite 102A admitted to practice in New Jersey and Pennsylvania.
directive can be overridden when an individual specifies that he does the cost of collecting the practice’s receivables, providing for the
and the content should not be interpreted as Egg Harbor Twp., NJ 08234 441 East State Street 913 North Market Street, Suite 1001 Register today. For more information or to register, contact
not wish to be given extreme treatment such as electroconvulsive Tel 609-645-1881 • Fax 609-645-9932 contingency of multiple concurrent buy-outs and how to plan
rendering legal advice on any matter. Specific Trenton, NJ 08608 Wilmington, DE 19801
for the taxable gain realized on payments “In Kind” upon buy- Stacie Koch at Flaster/Greenberg, P.C. at 856-661-2281; email
therapy, if his physician determines that withholding such treatment Tel 302-351-1910 • Fax 302-351-1919
situations may raise additional or different issues Tel 609-695-4000 • Fax 609-695-5111
out or practice break-up healthcare@flastergreenberg.com; or register on-line at
would endanger his health. and such information should be coordinated with
190 South Main Road www.flastergreenberg.com. Seating is limited.
Another difficultly with the Act involves the interaction between professional legal advice. Vineland, NJ 08360
an individual’s mental health directive and medical directive. Tel 856-691-6200 • Fax 856-696-8150

Health Law Report • Flaster/Greenberg P.C. www.flastergreenberg.com Health Law Report • Flaster/Greenberg P.C.
5 PRSRT STD
U.S. POSTAGE
PAID HEALTH
LAW
Bellmawr, NJ
Permit No. 58

2007 Free Luncheon Seminars for Entrepreneurs


Free luncheon seminars will be held from 11:30 a.m. to 2 p.m. in Flaster/Greenberg’s Conference Center,
1810 Chapel Avenue West
Cherry Hill, NJ 08002-4609
Return Service Requested
REPORT
at 1810 Chapel Avenue West, in Cherry Hill. To register, contact Stacie Koch, at 856-661-2281;
A Newsletter from the Health Care Law Practice Group WINTER 2007
e-mail firm@flastergreenberg.com; or register on-line at www.flastergreenberg.com. Seating is limited.

Tuesday, February 13, 2007 Tuesday, May 8, 2007


“Top 10 Mistakes New Businesses Make “Smart Business Moves — Recent case underscores importance of
in Employment Law — How To Avoid Them With What to Look for in Your Next Lease”
Your Business” Speakers: Allen P. Fineberg, Esq. and shareholders’ agreements
Speaker: Michael Homans, Esq. Steven H. Gartner, President,
Metro Commercial Real Estate, Inc. BY MARKLEY S. RODERICK was goodwill in the practice, but not much. The departing doctor
Tuesday, March 13, 2007 was owed something for her shares, but this was more than offset
“A Survival Guide to Protecting a Tuesday, June 12, 2007 When two or more doctors form a practice by money she owed back to the corporation. Various claims made
Good Name: How to Capitalize on together, they naturally focus on things like by the doctors against one another and third parties were dismissed.
“Dealing with First Employees: Stock Options,
Your Brand or Business Name” signing up with insurance carriers,
Inventions, and Restrictive Covenants” Based on our experience with similar situations, the case probably
maintaining relationships with referral sources
Speaker: Jordan A. LaVine, Esq. Speakers: Michael D. Homans, Esq. had consequences beyond those described in the judge’s opinion.
and, of course, seeing and treating patients.
and Elliot D. Raff, Esq. For one thing, the dispute probably destroyed the personal and
Tuesday, April 10, 2007 Often, the physicians pay too little attention
professional relationships that brought the partners together in the
“What to do When the IRS & Division of to the development of a Shareholders’
first place. For another thing, it consumed an enormous amount of
Taxation Come Knocking” Agreement among themselves. A recent court
their time and energy, with a high financial cost and an emotional
Speaker: Alan H. Zuckerman, CPA, Esq. case illustrates what can – and often does – go wrong.
cost (stress, anxiety) that cannot be calculated. Finally, it would not
The case involved three doctors who formed an orthopedic be surprising if the partners incurred legal fees in excess of $100,000.
surgery practice. At the beginning of his 33-page opinion, the judge
The lesson of the case was stated succinctly by the judge: “This
offered the following wistful summary:
case highlights the need for a shareholder agreement to be in place
The doctors appear to be gifted and talented physicians.
However, in their zeal to focus on their developing medical (continued on page 2)
practice, they appear to have paid little, if any, attention to the
business management aspects of their practice – the corporate
structure, office policies and controls, and particularly,
developing an agreement should there by a death, divorce, or Editor’s Note…
Health Care Practice Group Services HEALTH CARE LAW PRACTICE GROUP departure of one of their colleagues. This case stands as a stark This issue of the Health Law Report
For additional information, please contact the lawyers listed below, and clear example for all doctors to heed the biblical discusses three very diverse issues
or the lawyer in the firm with whom you are regularly in contact. admonition set forth in Luke 4:23: “Physician, heal thyself.” resulting from two court decisions and a
◆ Sales and Acquisitions of Practices ◆ Licensing Board Representation new statute. Mark Roderick describes
Richard J. Flaster Stephen M. Greenberg Markley S. Roderick The doctors in this case were indeed highly trained, skilled, and the disaster that can arise if health care
856-661-2260 856-661-2261 856-661-2265 successful. They left the world of academic medicine to start a private
◆ Starting a Practice or Business ◆ Buying or Leasing Real Estate rick.flaster@flastergreenberg.com steve.greenberg@flastergreenberg.com mark.roderick@flastergreenberg.com practitioners do not have a carefully
practice with every indication that the practice would be lucrative. drafted Shareholders Agreement. Alma
◆ Employment Agreements ◆ Ambulatory Surgical Centers and Julie K. Assis Alma L. Saravia Laura B. Wallenstein Although they met with a lawyer to form a professional corporation, Saravia’s article discusses the
856-382-2255 856-661-2290 856-661-2263 for one reason or another the lawyer did not prepare a Shareholders’
Ambulatory Care Centers overwhelming authority of the New
◆ Shareholder Agreements julie.assis@flastergreenberg.com alma.saravia@flastergreenberg.com laura.wallenstein@flastergreenberg.com Agreement. The consequences became apparent when one of the Jersey State Board of Medical Examiners
◆ Medical Management Companies Kenneth S. Goodkind Thomas D. Scholtes Alan H. Zuckerman doctors decided to leave the practice and move to Mississippi. to discipline physicians, even if there was no patient harm.
◆ Admitting and Terminating Partners 856-382-2227 856-661-2266
856-661-2273 Questions immediately arose: Should the departing doctor Finally, Julie Assis, the newest member of our Health Care
◆ Internet-Based Healthcare Businesses ken.goodkind@flastergreenberg.com thomas.scholtes@flastergreenberg.com alan.zuckerman@flastergreenberg.com
◆ Lobbying receive money as a buyout? Was there “goodwill” in the practice Practice Group, covers issues that arise in the New Jersey
◆ Emergency Health Systems Development Vincent J. Nolan III Elliot D. Raff and, if so, how much? Was the departing doctor bound by a Advance Directives for Mental Health Care Act.
◆ Litigation and Dispute Resolution 856-661-2275 856-382-2241
Our second in a series of three presentations designed for
elliot.raff@flastergreenberg.com
restrictive covenant if she decided to return to the area? Who owned
◆ HIPAA Compliance vincent.nolan@flastergreenberg.com
the accounts receivable? Had the doctors entered into an oral physicians and other health care providers, entitled, “Does an
◆ Fraud and Abuse and Other Regulatory
contract about anything? Ambulatory Surgery Center Make Sense for My Practice” will
Advice be held in our conference center on January 17th at 5:30
PRACTICE AREAS Meeting followed meeting, lawyers got involved, and eventually
p.m. More information can be found inside. This promises to
Alternative Dispute Resolution; Bankruptcy; Business & Corporate Services; Closely-Held Businesses; Construction Law; E-Commerce & Internet; the lawsuit was filed.
be an informative and helpful evening and we look forward
Emerging Business; Employee Benefits; Environmental Law & Litigation; Estate Planning & Administration; Family Law & Adoption; Health Ce; By the time the court sorted through the testimony, it is fair to to seeing you.
Intellectual Property; Labor & Employment; Litigation; Real Estate & Land Use; Redevelopment; Securities; Taxation. say that no one walked away happy. The court found that that there

www.flastergreenberg.com Copyright © 2007 Health Law Report • Flaster/Greenberg P.C.


5 PRSRT STD
U.S. POSTAGE
PAID HEALTH
LAW
Bellmawr, NJ
Permit No. 58

2007 Free Luncheon Seminars for Entrepreneurs


Free luncheon seminars will be held from 11:30 a.m. to 2 p.m. in Flaster/Greenberg’s Conference Center,
1810 Chapel Avenue West
Cherry Hill, NJ 08002-4609
Return Service Requested
REPORT
at 1810 Chapel Avenue West, in Cherry Hill. To register, contact Stacie Koch, at 856-661-2281;
A Newsletter from the Health Care Law Practice Group WINTER 2007
e-mail firm@flastergreenberg.com; or register on-line at www.flastergreenberg.com. Seating is limited.

Tuesday, February 13, 2007 Tuesday, May 8, 2007


“Top 10 Mistakes New Businesses Make “Smart Business Moves — Recent case underscores importance of
in Employment Law — How To Avoid Them With What to Look for in Your Next Lease”
Your Business” Speakers: Allen P. Fineberg, Esq. and shareholders’ agreements
Speaker: Michael Homans, Esq. Steven H. Gartner, President,
Metro Commercial Real Estate, Inc. BY MARKLEY S. RODERICK was goodwill in the practice, but not much. The departing doctor
Tuesday, March 13, 2007 was owed something for her shares, but this was more than offset
“A Survival Guide to Protecting a Tuesday, June 12, 2007 When two or more doctors form a practice by money she owed back to the corporation. Various claims made
Good Name: How to Capitalize on together, they naturally focus on things like by the doctors against one another and third parties were dismissed.
“Dealing with First Employees: Stock Options,
Your Brand or Business Name” signing up with insurance carriers,
Inventions, and Restrictive Covenants” Based on our experience with similar situations, the case probably
maintaining relationships with referral sources
Speaker: Jordan A. LaVine, Esq. Speakers: Michael D. Homans, Esq. had consequences beyond those described in the judge’s opinion.
and, of course, seeing and treating patients.
and Elliot D. Raff, Esq. For one thing, the dispute probably destroyed the personal and
Tuesday, April 10, 2007 Often, the physicians pay too little attention
professional relationships that brought the partners together in the
“What to do When the IRS & Division of to the development of a Shareholders’
first place. For another thing, it consumed an enormous amount of
Taxation Come Knocking” Agreement among themselves. A recent court
their time and energy, with a high financial cost and an emotional
Speaker: Alan H. Zuckerman, CPA, Esq. case illustrates what can – and often does – go wrong.
cost (stress, anxiety) that cannot be calculated. Finally, it would not
The case involved three doctors who formed an orthopedic be surprising if the partners incurred legal fees in excess of $100,000.
surgery practice. At the beginning of his 33-page opinion, the judge
The lesson of the case was stated succinctly by the judge: “This
offered the following wistful summary:
case highlights the need for a shareholder agreement to be in place
The doctors appear to be gifted and talented physicians.
However, in their zeal to focus on their developing medical (continued on page 2)
practice, they appear to have paid little, if any, attention to the
business management aspects of their practice – the corporate
structure, office policies and controls, and particularly,
developing an agreement should there by a death, divorce, or Editor’s Note…
Health Care Practice Group Services HEALTH CARE LAW PRACTICE GROUP departure of one of their colleagues. This case stands as a stark This issue of the Health Law Report
For additional information, please contact the lawyers listed below, and clear example for all doctors to heed the biblical discusses three very diverse issues
or the lawyer in the firm with whom you are regularly in contact. admonition set forth in Luke 4:23: “Physician, heal thyself.” resulting from two court decisions and a
◆ Sales and Acquisitions of Practices ◆ Licensing Board Representation new statute. Mark Roderick describes
Richard J. Flaster Stephen M. Greenberg Markley S. Roderick The doctors in this case were indeed highly trained, skilled, and the disaster that can arise if health care
856-661-2260 856-661-2261 856-661-2265 successful. They left the world of academic medicine to start a private
◆ Starting a Practice or Business ◆ Buying or Leasing Real Estate rick.flaster@flastergreenberg.com steve.greenberg@flastergreenberg.com mark.roderick@flastergreenberg.com practitioners do not have a carefully
practice with every indication that the practice would be lucrative. drafted Shareholders Agreement. Alma
◆ Employment Agreements ◆ Ambulatory Surgical Centers and Julie K. Assis Alma L. Saravia Laura B. Wallenstein Although they met with a lawyer to form a professional corporation, Saravia’s article discusses the
856-382-2255 856-661-2290 856-661-2263 for one reason or another the lawyer did not prepare a Shareholders’
Ambulatory Care Centers overwhelming authority of the New
◆ Shareholder Agreements julie.assis@flastergreenberg.com alma.saravia@flastergreenberg.com laura.wallenstein@flastergreenberg.com Agreement. The consequences became apparent when one of the Jersey State Board of Medical Examiners
◆ Medical Management Companies Kenneth S. Goodkind Thomas D. Scholtes Alan H. Zuckerman doctors decided to leave the practice and move to Mississippi. to discipline physicians, even if there was no patient harm.
◆ Admitting and Terminating Partners 856-382-2227 856-661-2266
856-661-2273 Questions immediately arose: Should the departing doctor Finally, Julie Assis, the newest member of our Health Care
◆ Internet-Based Healthcare Businesses ken.goodkind@flastergreenberg.com thomas.scholtes@flastergreenberg.com alan.zuckerman@flastergreenberg.com
◆ Lobbying receive money as a buyout? Was there “goodwill” in the practice Practice Group, covers issues that arise in the New Jersey
◆ Emergency Health Systems Development Vincent J. Nolan III Elliot D. Raff and, if so, how much? Was the departing doctor bound by a Advance Directives for Mental Health Care Act.
◆ Litigation and Dispute Resolution 856-661-2275 856-382-2241
Our second in a series of three presentations designed for
elliot.raff@flastergreenberg.com
restrictive covenant if she decided to return to the area? Who owned
◆ HIPAA Compliance vincent.nolan@flastergreenberg.com
the accounts receivable? Had the doctors entered into an oral physicians and other health care providers, entitled, “Does an
◆ Fraud and Abuse and Other Regulatory
contract about anything? Ambulatory Surgery Center Make Sense for My Practice” will
Advice be held in our conference center on January 17th at 5:30
PRACTICE AREAS Meeting followed meeting, lawyers got involved, and eventually
p.m. More information can be found inside. This promises to
Alternative Dispute Resolution; Bankruptcy; Business & Corporate Services; Closely-Held Businesses; Construction Law; E-Commerce & Internet; the lawsuit was filed.
be an informative and helpful evening and we look forward
Emerging Business; Employee Benefits; Environmental Law & Litigation; Estate Planning & Administration; Family Law & Adoption; Health Ce; By the time the court sorted through the testimony, it is fair to to seeing you.
Intellectual Property; Labor & Employment; Litigation; Real Estate & Land Use; Redevelopment; Securities; Taxation. say that no one walked away happy. The court found that that there

www.flastergreenberg.com Copyright © 2007 Health Law Report • Flaster/Greenberg P.C.