Chiropractors Cannot Own & Control Medical Practice: 'Doc-in-the-Box' Scheme Defeated.

Author:Zalma, Barry
Position::ON MY RADAR

Insurance fraud appears in many different schemes. When a chiropractor wishes to increase his practice and the fees charged in order to defraud insurers who compensate people injured in accidents, creates a "Doc-in-the-Box" scheme where the physician merely sells his or her name and license to a chiropractor for a fee, the action is a fraudulent violation of state law.

Plaintiff Allstate Insurance Company (Allstate) sued a group of doctors and lawyers who created what Allstate believed was a scheme to commit insurance fraud against defendants Robert P. Borsody, Esq., a New York attorney, and Daniel H. Dahan, a California chiropractor (collectively, defendants). After a bench trial, defendants were found to have violated the Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to 30, by assisting a New Jersey chiropractor in the late 1990s in the creation of an unlawful multi-disciplinary practice, which submitted medical insurance claims to Allstate.

The trial court determined that Borsody and Dahan violated the IFPA to the extent they promoted and assisted in the creation of a practice structure that was designed to circumvent regulatory requirements with respect to the control, ownership, and direction of a medical practice.

In Allstate Insurance Company v. Northfield Medical Center, P.C. (A-27-15), Supreme Court of New Jersey (076069), 2017 WL 1739692 (May 4, 2017), the Appellate Division reversed because it held Allstate had not established that defendants knew that a violation of those regulatory requirements could constitute insurance fraud under the provision of the IFPA that creates liability for one who "knowingly assists, conspires with, or urges any person or practitioner to violate any of the provisions of [the IFPA]."

Defendants extensively promoted a professional practice structure that a factfinder could reasonably conclude was little more than a sham intended to evade well-established prohibitions and restrictions governing ownership and control of a medical practice by a non-doctor.

State of New Jersey Rules for Medical Practices

The Board of Medical Examiners established limits on the corporate practice of medicine. Section 6.16(f) lists the appropriate types of private practices--for example, solo practice, partnership, and medical corporation--and explicitly provides that a medical doctor with a plenary scope of practice may not be employed by a licensee with a more limited scope of practice, such as a chiropractor.


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