“But Everyone Else Is Doing It!”: Why Common Activities Can Get You In Trouble
You’ve observed colleagues and competitors engaging in business practices that your attorney says aren’t permissible. Does that give you cover? We discuss how to assess the situation.
If you’re starting a healthcare practice, you may look to colleagues or other healthcare practices for advice about naming conventions, business structure, or hiring practices. If you consult with an attorney, though, they might tell you what other healthcare professionals are doing is impermissible under the law. “But everyone else is doing it!” you might think. So why, then, is your attorney saying you shouldn’t?
There are a few good reasons why your attorney might advise against a seemingly common practice.
Reason #1: A Case Of Hidden Compliance
Sometimes, healthcare compliance looks simple on the surface. Behind the scenes, it may be more complicated.
For instance, say your goal is to open and operate a comprehensive healthcare practice. You intend to employ doctors, therapists, and other healthcare professionals. It might appear that plenty of businesses operate in several different specialties under one brand name. But in many states, an attorney might say you may not have one comprehensive medical practice due to the “Corporate Practice of Medicine” or “CPOM” doctrine. How can this be?
Workarounds to CPOM may involve creating separate “management services organizations” or “MSOs.” Thus, in reality, what you see as one large business might actually be a series of interconnected businesses.
So, while a healthcare attorney might deem your original idea impermissible, we may be able to work with you to find a compliant workaround that suits your goals.
Reason #2: You Need To Balance Enforcement And Your Risk Tolerance
Other times, you’re observing activities that actually are unpermitted practices. For example, in Illinois, all LLCs that provide licensed professional services must be professional limited liability companies (PLLCs). Moreover, for certain types of Illinois PLLCs, such as social work, all members must be from the same profession. In response to this news, you might think, “Wait, there’s no compliant workaround, yet lots of people I know aren’t following these rules.”
Not everyone will be caught breaking the rules. So, in situations like these, you should consider two things — the risk of enforcement and your individual risk tolerance.
The Risk of Enforcement
Some laws are more likely to be enforced than others. The risk of enforcement can depend on many factors. Such factors include how long the law has been in place, what state or federal agency enforces it, and whether the agency conducts random audits.
An attorney can help you consider a law’s enforcement history and its implications for your business practices.
Your Individual Risk Tolerance
In addition to the actual enforcement risk, how comfortable are you with taking that risk? As attorneys, this is what we like to call your “individual risk tolerance.” You can determine your individual risk tolerance by looking at the penalties for breaking a rule, how prepared you are to pay them, and how comfortable you are practicing in a non-compliant fashion.
Some professionals might be okay with not being strictly compliant. Many small healthcare practices believe they are “flying under the radar” concerning compliance, with the target being on large healthcare systems.
But enforcement of the law can happen to practices of all sizes. Moreover, any angry patient or disgruntled employee could report alleged wrongdoing, inviting scrutiny in multiple areas of your practice. And non-compliance can be costly.
Your risk tolerance is unique to you, based on your own analysis and comfort with uncertainty. Overall, when you see others breaking the rules, it might feel safe to follow their lead. Instead, determine your best business practices by looking at the law and its enforcement, what the risks are, and how you feel about taking that risk.
Keep in mind that attorneys are ethically prohibited from helping you break the law. Therefore, if you have a high risk tolerance, you may need to proceed without legal support.
Reason 3: Laws Can Have Gray Areas And Be Subject To Different Interpretations
Often, when a new law is passed, there are gray areas. The initial application of a new law is seldom clear. At the outset, the agency charged with enforcing the law cannot clarify how it applies in every possible situation. For example, the No Surprises Act has left many providers asking questions about how the provisions of the law apply to their specific practice policies.
Meanwhile, groups such as your professional organization might provide their interpretation of how the law applies to your practice. Sometimes, this may diverge from other interpretations, meaning their take could differ from what your attorney tells you. In these cases, sometimes, only time will determine the correct interpretation.
Until enforcement occurs more frequently, it’s hard to know how a new law works in practice. Therefore, always consider the reasoning behind differing interpretations and think through your possible courses of action while gray areas remain.
Make an Informed Decision
It can be frustrating to see “everyone else” get away with something supposedly forbidden. Whether you choose to follow the crowd or not, your decision should be an informed one; ignorance of the law is not often a defense. A knowledgeable attorney can help you understand what’s right, what’s wrong, and how to calculate your own risk tolerance when it comes to healthcare compliance.
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 and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.