The Weight of a Physician’s Signature: 3 Ways to Get in Trouble (and How to Protect Yourself)

We discuss three common ways that a physician’s signature can turn into legal liability, along with protective measures to avoid trouble.

Van Gogh’s can turn a pleasing painting of the night sky into a hundred-million-dollar masterpiece. Michael Jordan’s can transcend an old pair of worn-down sneakers into a symbol of greatness. A president’s can approve the use of nuclear weapons. 

A physician’s signature? Well, it carries a lot of weight, too. But it can also land the doctor in big trouble. This post will offer guidance on how physicians can avoid having their signatures of approval turn into legal liability. 

Anybody who’s tried to decipher which physician has approved an order knows that doctors don’t have the neatest signatures. To be fair, they are busy; a typical doctor signs dozens of documents every day. But how can they know that what they are signing won’t come back to hurt them? How can physicians provide efficient patient care without exposing themselves to civil, or even criminal, liability? Learn about three common areas of risk.

The Case of the Blank Prescription Pad

The Food and Drug Administration (FDA), along with many states, bans physicians from pre-signing prescriptions. Rule-makers don’t want controlled substances getting into the wrong hands. Signing a blank prescription is illegal because you can never know with certainty how others will use it. Here, you open the door for employees, support personnel, or even family and friends to misuse your authority. Such misuse exposes you to heavy monetary penalties, board disciplinary action, or even criminal charges.  

“But it saves so much time!” you argue.  Pre-signing prescriptions may indeed improve efficiency, especially when a physician is on vacation or otherwise out of the office. Still, it’s not worth the risk. 

Recently, for example, a doctor pre-signed blank prescriptions to be used for refills for established patients. Unbeknownst to him, his office manager struggled with opioid addiction, and the blank prescription pads allowed her to obtain thousands of oxycodone tablets illegally. The doctor did not know about his office manager’s fraudulent activity. However, the federal government didn’t care and charged him with violating the Controlled Substance Act. Ultimately, the physician paid a $300,000 settlement. 

How do you reduce your risk? It’s all about maintaining control. Physicians have a responsibility to ensure proper prescribing, and pre-signing prescriptions undermines that responsibility. Additionally, keep prescriptions and prescription pads in secure places. Avoid leaving that new script on the printer! Last, you can regularly check your state’s prescription monitoring database to screen for any unauthorized activity. 

“I’ll Make it Worth Your While” Is a No-Go in Healthcare 

The Anti-Kickback Statute (AKS) is a federal law, which prohibits knowingly and willfully exchanging compensation for a referral of services payable by Medicare. In simple terms, doctors aren’t allowed to pay someone to refer patients to their practice. If they do, and then send claims to Medicare, they risk both criminal and civil liability. These penalties apply to both the party making and receiving the kickback.  

Watch this video on YouTube.

This law aims to ensure that doctors make treatment decisions free from the influence of potential monetary gain. For example, the government recently investigated a Texas-based doctor for violating the AKS. The doctor had regularly signed forms certifying patients for home-health treatment despite not examining them. Why? Because the home-health agency compensated him for every referral. Soon, though, this lucrative scheme collapsed; the doctor had to pay $475,000 to resolve the allegations. 

Additionally, most states have enacted prohibitions against fee-splitting. These laws make it illegal for a doctor to pay a commission to a referring provider in exchange for the referral. Like the AKS, bans on fee-splitting aim to avoid conflicts of interest— doctors should make treatment decisions based solely upon what is best for the patient, not on what is best for their bank accounts. Unlike the AKS, these state laws apply to all healthcare transactions—not just those billed to the federal government.  

How can you protect your practice? First, educate coworkers and employees. Create and actively promote organizational policies and procedures. Such policies will help your colleagues spot red flags. Second, develop effective lines of communication. Consider setting up an anonymous hotline for anybody to report potential abuse or fraud. And third, be careful what you sign. If you sign off on only patient referrals unconnected to financial gain, you likely won’t attract attention from enforcement agencies.

You Might Be on the Hook for That 

Healthcare is an exciting, fascinating, and potentially lucrative industry. As a result, people of all stripes are looking for ways to jump into the field. In most states, however, only medical professionals can legally own medical practices. 

The Role of Management Services Organizations (MSOs)

The corporate practice of medicine (CPOM) doctrine bars corporations from practicing medicine or employing physicians. This doctrine is reflected in many state’s physician practice laws. Courts want to keep business and medicine separate. Once entangled, medicine may be commercialized. Here again, an unlicensed entity may interfere with the physician’s clinical judgment.  

So how do non-doctors enter the industry? Many create a management services organization (MSO). Under this model, there are two companies: one that offers the medical services, and another, the MSO, that offers management services. 

The MSO can run the practice’s billing, non-medical hiring and firing, janitorial services, etc.—anything besides medical services. The relationship between the MSO and the medical practice is formalized in a Management Services Agreement (MSA). Essentially, this is a big, complicated contract that outlines each company’s duties and obligations. Both parties to the MSA must understand their obligations and potential liability.  

MSOs and Risks for Physicians

What, then, are the risks for the physicians who own the medical practice? If the MSO defaults on the business loan, will creditors pursue the physicians? When an MSO fails to safeguard patient data, will the physicians be on the hook for violating HIPAA? If the MSO sends a false claim to Medicare, will they be subject to government penalties?

It depends. Even if the MSO handles all these tasks, the medical practice may be listed as a party to the transaction. In other words, you may absorb some of the liability. Here’s the key: don’t sign anything without having an attorney read it first. A lawyer may use an indemnification provision, also called a hold harmless provision, to shift risk away from you and toward the MSO. A lawyer can also make sure your payments to the MSO don’t violate any state fee-splitting laws. For added protection, consider adding or enhancing your liability insurance. A robust business insurance policy can make sure your practice is protected. 

Conclusion 

Although perhaps not as powerful as a president’s, a physician’s signature carries weight. Knowing common ways your signature can put you in hot water can drastically reduce your risk of liability. An experienced lawyer, such as the healthcare attorneys at Jackson LLP, can provide the guidance you need to keep your focus on patient care. If you’re a physician or business owner in one of the states that we serve, book a free consultation to learn how we can help you.  

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.

Free Attorney Consultation

Book Now