Many dentists practice as cash-pay businesses. Occasionally, a patient is unhappy with the results of work performed, and that sets the stage for a demand for a refund. The perceived shortcoming might be reasonable or not. And, many dentists will just tender the refund as the cost of doing business. What most dentists do not realize is how the demand is made and how the refund is given can mean the difference between breaking a federal law.
If a professional liability carrier makes a payment to settle or pay a judgment of a malpractice case, that entity has an obligation to report that payment to the National Practitioner Data Bank. The Data Bank launched in 1990; and in 2004, there were over 200,000 healthcare professionals who were listed as line items. Less clear were the rules related to dealing with demands by patients for their money back.
In a seminal case heard in the D.C. Court of Appeals in 1993, the American Dental Association challenged the premise that individual dentists were obligated to report refunds made to patients. American Dental Association v. Donna Shalala, Sec. H.H.S., 3 F.3d 445 (D.C.Cir. 1993). At the time, the Department of Health and Human Services had mandated that refunds were fair game. The Court of Appeals concluded yes and no.
They noted that if a patient demanded their money back, in writing, that opened the door to reportability. If the patient's demand was merely an oral request, the threshold for reportability was not met.
Next, the court concluded that if payment is made by the corporate entity, (even if a single person corporate entity), that payment must be reported. But, if the refund was tendered by the individual dentist, no reporting was required.
Hence, the analysis first addresses whether the demand was written or not? If so, the only way to avoid becoming a line item in the Data Bank is to make the payment from personal funds, out of pocket.
Often the subtext behind a demand for a refund is that, unless tendered, litigation will soon follow. And, on occasion, the demand for a refund escalates into a longer, more painful process. There, more money is requested, ostensibly to have another practitioner, perhaps a competitor, "repair" the work.
Finally, if a refund is offered, it is wise to obtain a written release. Such a release should be detailed and complete. That way the door cannot easily be re-opened for the patient to argue you never would have given money back unless you were negligent.
Jeffrey Segal, MD, is a board-certified neurosurgeon and the founder and CEO of Medical Justice Services Inc, a member-based organization that provides healthcare professionals with a proactive way to deter and defend themselves against frivolous lawsuits, defamation on the Internet, and unreasonable demands for refunds. He may be reached at info@medicaljustice.com or www.MedicalJustice.com.
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