Dental Practices That Install Video Surveillance Cameras Need to Carefully Balance Security With Patient Privacy Rights

For decades, businesses of all stripes and across all industries and professions – including dental practices - have used non-competition agreements to limit the ability of former employees to go head-to-head against their former employers. Over the past decade or so, however, there has been a concerted effort at the state and federal levels to either prohibit or significantly limit the use of such provisions. Those efforts have culminated with the U.S. Federal Trade Commission’s April 23, 2024 approval of a Final Rule that effectively bans all non-competes, except those for “senior executives” or related to the sale of a business. The ban was met with stiff resistance from the business community when the FTC first proposed it in January 2023, and, indeed, a federal lawsuit challenging the validity of the Final Rule was filed by the U.S. Chamber of Commerce and others within hours of its approval. Short of judicial intervention, the rule will become effective 120 days after its publication in the Federal Register. Accordingly, practice owners who currently use such agreements or provisions to protect their business interests need to prepare for a post-non-compete world and understand exactly what the new rule prohibits, and what it still allows. What Does The Final Rule Prohibit? With the two notable exceptions discussed below, the Final Rule renders all existing "non-compete clauses" null and void and forbids their use in the future. As defined in the rule, a prohibited “non-compete clause” is "a term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from: Seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or Operating a business in the United States after the conclusion of the employment that includes the term or condition." For purposes of the Final Rule, "term or condition of employment" includes, but is not limited to, a contractual term or workplace policy, whether written or oral. Non-Disclosure and Non-Solicitation Provisions Are Fine – As Long As They Don’t Act As a Non-Compete Non-disclosure or non-solicitation clauses and agreements are still permitted and enforceable under the Final Rule, so long they do not act as a non-compete as a practical matter. If any such agreement effectively "prohibits," "penalizes," or "functions to prevent a worker from" seeking or accepting work after the end of their employment, it may be deemed to be a prohibited non-compete. The FTC states that whether any given provision constitutes a "non-compete clause" is a "fact-specific inquiry." All Workers Other Than “Senior Executives” Are Covered by the Non-Compete Ban Other than "senior executives," as discussed below, the rule bans all non-competes for employees, independent contractors, externs, interns, volunteers, apprentices, sole proprietors who provide a service to a person, and a person who works for a franchisee or franchisor but does not include a franchisee in the context of a franchisee-franchisor relationship. Ban Does Not Apply to "Senior Executives" or if Connected to the Sale of a Business One significant change between the proposed and final rules is that the final version does not void any existing non-competes involving "senior executives." However, it prohibits employers from entering into or enforcing new non-competes with senior executives after the Final Rule's effective date. A "senior executive" is defined as a worker in a "policy-making position" who earns an actual or annualized sum of $151,164 (through salary, bonuses, and/or commissions, but excluding fringe benefits, retirement contributions, and medical/life insurance premium payments). A "policy-making position" means a business entity's president, chief executive officer, or the equivalent, any other officer with policy-making authority, or any other person with policy-making authority for the business, similar to an officer with policy-making authority. Importantly, for dentists who are considering purchasing or selling their practice, the Final Rule does not apply to a non-compete clause entered into by a person selling their ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets. Buyers of a dental practice can therefore still use reasonable non-compete provisions to limit the seller’s activities after the consummation of the transaction. Employers Must Notify Workers That Their Non-Compete Is No Longer Enforceable The proposed rule would have required employers to legally modify existing non-competes by formally rescinding them. The Final Rule streamlines these obligations, and employers must now simply notify any worker subject to a non-compete that it will not be enforced against them in the future. To aid employers' compliance with this requirement, the FTC included model language in the final rule that employers can use to communicate with workers. Regardless of the rule's ultimate fate in pending litigation, dental practice owners who rely on non-competition provisions to protect their business interests should engage counsel to review any non-competition language in their employment agreements and consider other options for protecting trade secrets and confidential information. If you have questions or concerns about the FTC’s Final Rule, or if you need a review of your employment agreements, please call Grogan Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation. 

Rare is the dental practitioner who enjoys the paperwork, bureaucracy, and other time-consuming hassles of dealing with and obtaining reimbursement from their patients’ dental insurers. Ask any dentist whether they would prefer having more patients or whether they would rather make more money providing fewer patients with more attentive, responsive, and personalized care, and the odds are pretty good they would take the latter option. This appealing combination of fewer insurance burdens, better patient care, and greater revenue is why an increasing number of practices are offering “concierge dentistry” programs in addition to or instead of the traditional pay-for-service model. Concierge dentistry, sometimes called boutique or retainer dentistry or “in-office membership care” practices, involves a direct financial relationship between patients and dentists in which patients typically pay an annual fee, membership fee, or retainer to a practice in exchange for enhanced, specified services, personalized care, and increased access. While this seems like a win-win for practices and patients alike – and often is – dentists interested in launching a concierge dentistry practice need to understand the unique legal issues and considerations involved in doing so. While you should consult with experienced counsel before offering concierge services, here are some of the issues raised by such arrangements: Legal and Regulatory Requirements Obviously, the most important consideration when starting a concierge practice is ensuring that doing so does not violate any applicable state and federal laws and regulations. While concierge dentistry is generally allowable, many of the same laws that apply to traditional fee-for-service care financed through health insurance are equally applicable to concierge practices, including anti-kickback and Stark Law (for any Medicare/Medicaid billing), HIPAA, and prohibitions on the corporate practice of dentistry. In 2019 Illinois, for example, passed a law specifically addressing and allowing for what it defines as “in-office membership” agreements and services in dentistry. The primary purpose of the In-Office Membership Care Act was to clarify that such arrangements do not constitute insurance and, therefore, are not a violation of nor subject to the Illinois Insurance Code. Other states may have similar laws. The Act sets forth detailed requirements as to what patient membership agreements must contain. Specifically, the agreement must identify: the dental care provider or providers and the patient or patients; the general scope of services as well as the specific services to be provided by the dental care provider as part of the in-office membership care agreement; the location or locations where services are to be provided; the amount of the direct fee and the time interval at which it is to be paid; and the term of the in-office membership care agreement and the conditions upon which the dental care provider may terminate it. The Act also requires in-office membership care agreements to be terminable at will upon written notice from the patient and that the dental care provider may refund to the patient all unearned direct fees associated with the covered services under the in-office membership care agreement. Insurance and Third-Party Payer Considerations Since one of the significant upsides of a concierge practice is the lack of insurance involvement, most are set up to only accept direct payments from patients. However, some practices may want to continue accepting insurance for covered services while charging patients for other non-covered aspects of concierge care. Similarly, while some practices may switch to a concierge model exclusively, others will want to establish a program alongside their traditional practice. In all of these cases, practice owners need to consider the implications that adopting a concierge model may have on any existing provider participation agreements and other policies of third-party payors. For example, many participation agreements mandate that providers must accept payment for covered services from the insurance company as “payment in full” and cannot seek prepayments “of any kind” from patients. Practices should have counsel review any participation agreements to ensure that their concierge efforts do not run afoul of their terms or threaten their relationships with insurers. Patient Abandonment If a dental practice decides to transition from a traditional pay-for-service practice to a concierge model, it must provide existing patients with adequate notice of the change and ensure continuity of care for those patients who elect not to join their concierge program. Additionally, practices can accommodate patients who may not be able to afford a concierge membership by offering a limited-time discounted rate so that they have more time to locate a new provider. As noted, concierge dental arrangements offer dentists the opportunity to increase the rewards and reduce many of the burdens involved in practicing. But taking this leap without thoughtful consideration and consultation with counsel could result in avoidable legal issues. If you would like to discuss or need assistance with establishing a concierge practice, please contact Grogan Hesse & Uditsky today. We focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices, and this blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.