10 Legal Pitfalls
To Avoid When Starting An
Aesthetics Practice
Sara Shikhman
MedSpa Attorney
Establishing an aesthetic practice can be exciting for medical professionals and business owners. Understanding the most common legal issues with new aesthetics practices is crucial to avoid costly legal mistakes. Here are ten of the biggest legal mistakes to avoid when starting an aesthetics practice:
Failing to Choose the Right Legal Structure
Knowing how to structure your aesthetics business is crucial, especially when it comes to complying with laws regarding non-physician ownership of medical businesses. One recommended structure is the MSO/MSA model, where a non-physician owns a Management Services Organization (MSO) and partners with a physician’s professional business entity through a Management Services Agreement (MSA). This structure allows non-physicians to operate an aesthetics business within the legal parameters of their state. However, it is essential to consult with a licensed attorney to determine the best structure for your specific circumstances.
Ignoring Licensing and Permits
One of the first legal hurdles to overcome when starting an aesthetic practice is obtaining the necessary licenses and permits. The requirements vary depending on your location, so it is important to research and understand the specific regulations governing your area. When applying for licenses and permits, ensure you have all the necessary documentation, such as proof of education, certifications, and any required insurance coverage. It’s also important to stay updated on any regulation changes affecting your practice.
Failing to Obtain Informed Consent
Failing to obtain informed consent when starting an aesthetic practice can have serious consequences for both the practitioner and the patient. Before consenting, patients must fully understand the risks, benefits, and potential outcomes of any aesthetic procedure. Patients may be left vulnerable to unexpected complications or dissatisfaction with the results without proper informed consent.
Additionally, failing to obtain informed consent can lead to legal and ethical issues for the practitioner, including potential lawsuits and damage to their professional reputation. To avoid these pitfalls, practitioners must prioritize open and honest communication with their patients, providing them with all the necessary information to make an informed decision about their aesthetic treatment. This includes discussing potential risks, alternative options, and realistic expectations. By obtaining informed consent, practitioners can foster trust, transparency, and a positive patient-provider relationship in their aesthetic practice.
Breaching Patient Confidentiality
Patient confidentiality is the basis of the healthcare profession, and it is crucial to maintain the trust and privacy of each individual who seeks treatment. When starting an aesthetic practice, it is essential to establish strict protocols and guidelines to uphold patient confidentiality. To further protect patient confidentiality, obtaining written consent from patients before sharing any of their information with third parties is advisable. This ensures that patients are fully aware of how their data may be used and allows them to opt out if they wish.
Not Having Proper Contracts
Not having proper contracts when starting an aesthetic practice can leave you vulnerable to various potential issues. Contracts serve as legally binding agreements that outline the rights and responsibilities of all parties involved. Contracts can outline the scope of services you will provide, the payment terms, cancellation policies, and any other relevant details. By having these agreements in writing, you can prevent any confusion or misinterpretation that may arise later on. This includes agreements like the MSA (Management Services Agreement), Delegation and Supervision Agreements, Non-Competes, etc.
Failing to Maintain Proper Records
Maintaining proper records is not only a matter of good business practice and a legal requirement. Failure to meet record-keeping standards can lead to severe consequences, including fines, loss of licenses, and even legal action. As an aesthetics practice, you will handle personal information such as medical history, contact details, and treatment records. Establishing and maintaining robust data protection protocols to ensure compliance with privacy laws, such as the Health Insurance Portability and Accountability Act (HIPAA) in the United States is vital.
Violating Advertising Regulations
When starting an aesthetic practice, it is crucial to be aware of and adhere to advertising regulations. It is essential to understand the guidelines and ensure that your advertising efforts are in compliance. It is crucial to provide accurate information to your clients, ensuring that they have realistic expectations about the results they can achieve. To avoid violating advertising regulations, we recommend to reviewing the guidelines set by regulatory bodies in your area and consulting with legal professionals specializing in healthcare marketing. By doing so, you can ensure that your advertising efforts are compliant and aligned with industry standards.
Missing Insurance Coverage
It is necessary to have the right insurance coverage to provide the highest level of security for your company, your patients, and yourself. In the aesthetics industry, two crucial types of insurance to consider are general liability and medical malpractice insurance. Requirements for malpractice coverage can vary between states, and different insurers have varying degrees of coverage for aesthetic, complementary, and alternative medical therapies. Professional liability insurance policies can often be complex and filled with technical language, making understanding what is included and excluded challenging. In such cases, seeking guidance from an attorney who can help decipher these policies into more easily understandable terms can be beneficial.
Not Complying with Labor & Employment Laws
Labor and employment laws are designed to protect the rights and interests of workers. They cover various aspects such as minimum wage requirements, overtime pay, working hours, employment contracts, workplace safety, and discrimination prevention. One of the main risks of non-compliance is the potential for legal penalties. Consulting with legal professionals specializing in employment law can provide valuable guidance in establishing compliant policies and procedures. Regularly reviewing and updating these policies is crucial to ensure ongoing compliance, as regulations may change over time.
Ignoring Anti-Kickback &
Fee-Splitting Considerations
Federal law prohibits physicians from receiving an illegal discount or payment in exchange for referring patients. The prohibited practice, also known as a “volume-based inducement,” is codified in the so-called “Stark” and federal anti-kickback laws, and often mirrored in state fee-splitting laws. These rules also have numerous exceptions (known on the federal side as “safe harbors”), such as rules that would allow physicians under certain circumstances to have legitimate fee-sharing arrangements within a professional medical corporation or a properly structured group practice.
