Current through Register Vol. 39, No. 6, September 16, 2024
(a) No dentist or
professional entity shall enter into a management arrangement, contractual
agreement, stipulation, or other legal binding instrument with a business
entity, corporation, proprietorship, or other business entity, for the
provision of defined business services, bundled business services, or other
business services, the effect of which may provide control of business
activities or clinical/professional services of that dentist or professional
entity, unless such management arrangement meets the requirements of Paragraphs
(b) and (c) of this Rule. This Rule shall not apply to agreements for the
provision of legal, financial, or other services not related to the provision
of management services for a fee or to employment arrangements between an
employee and the dentist or professional entity.
(b) Any management arrangement, contractual
agreement, stipulation, or other binding instrument shall:
(1) be in a writing that:
(A) is signed by all parties to the
agreement;
(B) sets forth all
material terms of the arrangement between or among the parties
thereto;
(C) describes all of the
types of services to be provided by the management company and the time periods
during which those services will be provided; and
(D) sets forth the aggregate compensation to
be paid under the management arrangement, contractual agreement, stipulation,
or other legal binding instrument with a business entity or the precise
methodology for calculating such compensation.
(2) be reviewed by the Board.
(c) No management arrangement
shall provide for or permit any of the following:
(1) direct or indirect ownership of, or
control over clinical aspects of, the dental business of a dentist or
professional entity by a management company or the grant to the management
company or another non-professional entity control over the distribution of a
revenue stream or control over a line of business of the professional entity
except for the sale of fixed assets of a dentist or professional entity
permitted under the laws of the State of North Carolina;
(2) ownership or exclusive control of patient
records by a management company;
(3) direct or indirect control over, or input
into, the clinical practices of the professional entity or its dentists or
ancillary personnel by a management company;
(4) direct or indirect control over the
hiring and firing of clinical personnel or material terms of clinical
personnel's relationship with the dentist or professional entity by a
management company or a related person;
(5) authority in the management company to
enter into or approve any contract or other arrangement, or material terms of
such contract or arrangement, between the professional entity and a dentist for
the provision of dental services or the requirement that the management company
or related person approve or give input into such contract or
arrangement;
(6) direct or indirect
control over the transfer of ownership interests in the professional entity by
a management company or other non-professional entity including, without
limitation, any agreement or arrangement limiting or requiring in whole or in
part the transfer of ownership interests in a professional entity;
(7) payment to the management company of
anything of value based on a formula that will foreseeably increase or decrease
because of the increase or decrease in profitability, gross revenues or net
revenues of the dentist or professional entity; or
(8) payments to the management company that,
at the time of execution of an agreement as required under Paragraph (b) of
this Rule, are likely, foreseeably and purposely in excess of the likely
profits of the professional entity not taking into account the compensation to
be paid to the management company under the management arrangement.
(d) Notwithstanding Subparagraphs
(c)(7) and (c)(8) of this Rule, a management arrangement may provide for the
following:
(1) increased payments to the
management company based upon the lowering of costs to the professional entity
or dentist;
(2) decreased payments
to the management company based upon increases in costs to the professional
entity or dentist; or
(3)
collection of monies, or payment of costs, of the professional entity or
dentist by the management company so long as the amounts retained by the
management company following payment of any costs of the professional entity or
dentist comply with the provisions of this Rule relating to compensation to the
management company and all sums collected or retained by the management company
in excess of costs paid by the management company plus its compensation are
paid at least monthly and at regular intervals to the professional
entity.
(e) No dentist
or professional entity shall enter into an oral or written arrangement or
scheme that the dentist or professional entity knows or should know has a
material purpose of creating an indirect arrangement that, if entered into
directly, would violate this Rule.
(f) For purposes of this Rule, the following
terms shall have the following meanings:
(1)
"Ancillary personnel" shall mean any individual that regularly assists a
dentist in the clinical aspects of the practice of dentistry;
(2) "Clinical" shall mean of or relating to
the activities of a dentist as described in
G.S.
90-29(b)(1)-(10);
(3) "Employment arrangement" shall mean an
arrangement between a professional entity or dentist and an individual who is
considered an employee of the professional entity or dentist under the common
law test of an employer/employee relationship, or a leased employee working
under a written employee leasing agreement which provides that:
(A) the individual, although employed by the
leasing company, provides services as the leased employee of the dentist or
professional entity; and
(B) the
dentist or professional entity exercises control over all actions taken by the
leased employee with regard to the rendering of services to the same extent as
the dentist or professional entity would exercise such control if the leased
employee were directly employed by the dentist or professional
entity;
(4) "Management
arrangement" shall mean any one or more agreements, understandings or
arrangements, alone or together, whether written or oral, between a management
company and a dentist or professional entity whereby:
(A) a management company regularly provides
services for the clinical-related business of a dentist or professional entity;
or
(B) a management company exerts
control over the management or clinical aspects of the business of a dentist or
professional entity or its or their employees or contractors; or
(C) a management company receives a
percentage of the net or gross revenues or profits of a dentist or professional
entity.
(5) "Management
company" shall mean any individual, business corporation, nonprofit
corporation, partnership, limited liability company, limited partnership or
other legal entity that is not a professional entity or dentist;
(6) "Professional entity" shall mean a
professional corporation, nonprofit corporation, partnership, professional
limited liability company, professional limited partnership or other entity or
aggregation of individuals that is licensed or certified or otherwise
explicitly permitted to practice dentistry under North Carolina General
Statutes; and
(7) "Related person"
shall mean any person or entity, other than a dentist or professional entity,
that owns, is employed by, or regularly receives consideration from, a
management company or another related person.
Authority
G.S.
90-29(b)(11);
90-48;
Eff. April 1,
2001;
Pursuant to
G.S.
150B-21.3A, rule is necessary without
substantive public interest Eff. January 9,
2018.
