A recent article in the MCA Journal addressing fee splitting, billing and payment for referral issues has been widely interpreted as precluding chiropractors from engaging associate doctors as “independent contractors.” While we certainly agree that chiropractors need to be mindful of the statutory prohibition against fee splitting, must be very careful about how they bill, and should not violate legal prohibitions against payments for referrals, Minnesota law does not preclude chiropractors entering into independent contractor relationships.
There is nothing in Minnesota law that per se precludes an independent contractor relationship between chiropractors or between professional firms and chiropractors. Minnesota Statutes § 148.10, subd. 1(e)(4), which provides that it is unprofessional conduct for a chiropractor to charge for “services not rendered”, has sometimes been held up as a basis for prohibiting billing for services not personally provided, but that attribution is misplaced. That statutory provision only addresses the obvious – that a chiropractor should not charge for services that are not provided. However, the statute neither addresses nor restricts who can render the services. Further, such an interpretation conflicts with other provisions of Minnesota law that very clearly permit the use of independent contracting by professionals. The Minnesota Professional Firms Act, Minnesota Statutes § 319B.06, subd. 2(a), explicitly states that professional firms may provide professional services through licensed professionals who are independent contractors, as well as through owners and employees.
Minnesota law prohibiting fee splitting by chiropractors makes no mention of independent contractor relationships. Minnesota Statutes § 148.10, subd. 1(a)(16) is very general and provides no specific prohibition against providing services through independent contractors. While no interpretive Rules have been promulgated, the courts have determined that there must be an explicit agreement to apportion income from a referral for there to be fee splitting. In the only applicable Minnesota case, Pietsch v. Minnesota Board of Chiropractic Examiners, 662, N.W.2d 917 (Minn. Ct. App. 2003), the Minnesota Court of Appeals explicitly rejected the proposition that fee splitting includes any payment out of a professional licensee’s income for the referral of patients, and found that where there is no agreement to apportion income that is directly attributable to referrals made between the parties, there is no fee splitting. As a result, independent contractor agreements that predicate compensation on a basis other than referrals, such as a payment for hours worked or services performed and not fees billed or collected, do not involve prohibited fee splitting. It is thus entirely possible to structure an independent contractor agreement between chiropractors that does not invoke the fee splitting prohibition.
Finally, whether chiropractors may bill for their independent contractor physicians under a single clinic number depends on the requirements of the specific payer involved. There is no blanket requirement applicable to all patients that only the rendering provider may be the billing provider. The CMS-1500 Form universally used for chiropractic billing provides for identifying both the rendering provider and the billing provider. The Minnesota Standards For Use Of The CMS-1500 Health Insurance Claim Form only provide that the Form be signed by the physician who is authorized or accountable to sign. That person may, but need not be the rendering provider. There is nothing in the Form or related Minnesota Standards that precludes a chiropractor billing for a rendering provider that is an independent contractor. If anything, chiropractors should be aware of individual payer billing requirements and make sure to complete the CMS-1500 form accordingly.
I would appreciate MCA publishing this letter to clarify the confusion over the permissibility of independent contractor arrangements. They are certainly legally acceptable in Minnesota if properly structured.
Very truly yours,
LOCKRIDGE GRINDAL NAUEN P.L.L.P.
Henri G. Minette
First, let me emphasize it is not my personal belief that doctors of chiropractic should not be allowed to employ independent contractors. My comments have always been limited to what the applicable laws provide. I would love for someone to establish that doctors of chiropractic can legally employ other DCs, or MTs, PTs, acupuncturists, etc., as independent contractors. Mr. Minette and I simply disagree on the proper interpretation of the law.
There is nothing in Minnesota law that per se authorizes an independent contractor relationship between doctors of chiropractic or between professional firms and doctors of chiropractic. That in large part is the problem: the law is unclear on this point.
Minn. Stat. Sect. 319B.06, subd. 2 (a) provides in relevant part: “…a professional firm may also hire or retain properly licensed professionals as … independent contractors to furnish professional services on the professional firm’s behalf.” The problem is that the Professional Firms Act does not address prohibitions on charging for services or payment arrangements. For that we have to look at the enabling statute for practicing chiropractic.
As I have stated in my articles and emails, I frankly do not think it is possible for a relationship to be created among DCs that truly qualifies as an “independent contractor” relationship as that term is defined by tax law and workers’ compensation law. However, if we assume for the sake of argument that it is possible, we must recognize that an independent contractor is by definition a separate legal entity. That is the sine qua non of being “independent.”
Minn. Stat. Sect. 148.10, subd. 10 (e) (4) prohibits “… charging for services not rendered.” If an independent contractor is a separate legal entity, then the “employing” doctor or firm cannot charge for services rendered by an independent contractor. Contrary to Mr. Minette’s assertions, I have had the MBCE advise a DC I represented that it would be a violation of this statute to charge for services not rendered by the DC or an employee of the DC.
Minn. Stat. Sect. 148.10, subd. 10 (a) (16) prohibits “splitting fees, or promising to pay a portion of a fee or a commission, or accepting a rebate.” It is true this statute makes no mention of independent contractor relationships. It does not limit the prohibition to independent contractor relationships and it does not provide an exception for independent contractor relationships. It prohibits splitting fees, paying a portion of a fee, and paying commissions without any exceptions. It is noteworthy that the provision in the medical doctors’ enabling statute dealing with splitting fees specifically does make an exception for payment of employees on a percentage basis.
I also disagree with Mr. Minette’s assertion that there must be an explicit agreement to apportion income from a referral for there to be a violation of 148.10, subd. (a) (16). In Pietsch, the MBCE ruled that Dr. Pietsch had violated the fee-splitting provision of the statute even though he paid his employees a set salary simply because the employees were being paid for convincing victims of MVAs to treat with Dr. Pietsch. The court of appeals reversed emphasizing that the persons being paid were salaried employees, not independent contractors. The court would likely have affirmed the finding of a violation had the persons been independent contractors not employees. Moreover, there is nothing in 148.10, subd. (a) (16) stating or even implying that the prohibitions are limited to payments in return for referrals; Minnesota has a completely different statute prohibiting kickbacks for referrals, Minn. Stat. Sect. 62J.23, subd.2, which means that Mr. Minette’s proposed interpretation of subd. (a) (16) would render it redundant; and subd. (a) (16) does not only prohibit splitting fees, it also prohibits paying a portion of a fee, and commissions.
My conclusion from reading these statutes is that DCs cannot charge for services rendered by independent contractors in their own names because they did not render the services; cannot claim ownership of fees generated by independent contractors because they did not render the services; and cannot pay a portion of a fee or a commission to independent contractors. This effectively eliminates all advantages of employing other providers as independent contractors, even assuming that is legally possible.
Everyone should note this is an unsettled legal issue. I am not saying I know for a fact my interpretation of the statutes will be adopted by the MBCE and the courts. We will not likely know the answer to these questions until some doctor is investigated by the MBCE for alleged violations. I doubt any DC, including Mr. Minette’s clients, would like to volunteer to be the test case. In the mean time, each DC will need to decide whether the risk of violating the above statutes is justified by whatever advantage there may be to employing another DC as an independent contractor as opposed to an employee or as a tenant.
-David Wulff
