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Business Succession Planning for Dental Practice Owners - Part III:

Wed, 15 Apr 2026 19:35:47 GMT

How Defining Your Goals Will Shape Your Dental Practice’s Business Succession Plan

Every type of plan, in any context, shares one thing in common: a goal. The success, failure, or utility of a plan all depend on whether it accomplishes at the end what it was designed to achieve at the beginning. For dental practice owners who are contemplating their future and that of their practice, clearly defining their personal, professional, financial, and practical objectives at the outset is the foundational step that will ultimately determine the structure of their business succession plan and the mechanisms needed to turn their intentions into reality. Without that clarity, even the most technically impressive and sound plan may prove to be disappointing or even counterproductive when executed.

Before any document is drafted, before any concrete steps are taken or decisions made, dental practice owners need to spend the time necessary to answer the fundamental, if existential, question: “What’s next?” Working closely with counsel and articulating what you want from your planning will lay the foundation for a plan that delivers the benefits and outcomes you want for yourself, your family, and your practice.

Are you interested in speaking with one of our attorneys? Click here to contact us now.

Start With Personal Goals

Before addressing the future of the practice you spent years or decades building, you need to step back and evaluate your personal priorities. Ask yourself: What does an ideal transition look like for me?

For some dentists, the primary goal of a succession plan is financial security, ensuring that the proceeds from a sale or transition will support a comfortable retirement or future ventures. For others, it may be maintaining a reduced clinical role or continuing to treat long-time patients, while gradually reducing other day-to-day or strategic responsibilities of running the practice. Basically, how do you envision spending your time in the years ahead?

You should also consider lifestyle goals. Do you want to retire fully, relocate, or pursue other interests? Are you open to staying on as an associate for a period of time? These decisions will directly influence the structure of your succession plan, including deal terms, timelines, and the type of buyer you pursue, whether it is a merger with another practice, transitioning ownership or control to a partner, or selling to a dental services organization (DSO).

Define Your Financial Objectives

Once your personal vision is clear, the next step is translating that vision into dollars-and-cents terms. Understanding the value of your practice is, of course, essential to determining what is realistic and whether your goals align with the financial resources you will have at your disposal. But a deeper dive is also required and includes ascertaining:

· The minimum amount you need from a transition to meet your long-term financial goals.

Whether you are willing to accept payments over time (such as earn-outs or seller financing).
Your tolerance for risk in exchange for potentially higher returns.

For example, selling to a DSO may offer a higher upfront valuation but come with performance-based incentives. Conversely, selling to an associate or partner may involve more flexible terms but lower immediate cash.

Cementing Your Legacy

The practice you built isn’t necessarily or entirely defined by its financial success. For many dental practice owners, solidifying their legacy and protecting the goodwill they’ve worked so hard to earn is just as important as any financial outcome. You’ve built relationships with patients, trained staff, and established a reputation in your community. Naturally, you want that to continue, and doing so involves addressing issues such as continuity of care, retention of key dentists and staff, and preservation of your practice's culture and core values.

These considerations will play an oversized role in your choice of successor. A private buyer, such as an associate dentist, may be more aligned with preserving your practice identity, while a larger, faceless DSO may integrate the practice into a broader system at the expense of the very real but more intangible qualities that lie at the heart of your practice’s success.

Neither option is inherently better, but the right choice depends on your priorities. The key is to explicitly define what “success” looks like beyond the numbers.

Establishing a Timeline

Timing is a critical component of any succession plan. As we discussed at length in this previous post , the best time to start your business succession planning is right now. Yet many dentists approach such planning reactively, waiting until burnout, serious and unexpected health issues, or declining market conditions or financial circumstances force their hand and send them into panic mode.

By acting proactively and not under the pressures and muddled decision-making that come with a crisis, you can maximize the value of your practice, implement tax-efficient strategies, and prepare your team and patients for the transition.

Your timeline should reflect both your personal readiness and market realities. For example, if your goal is to exit within five years, you may need to begin preparing now by strengthening financial performance, formalizing operations, and addressing any compliance or legal issues. From a legal standpoint, early planning also provides flexibility. Certain structures and tax strategies require time to implement effectively, and last-minute decisions often limit your options.

Share Your Plans and Goals With Key Stakeholders – Including Your Attorney

While your business succession plan may be designed around your goals, the impacts and implications of your plan involve a whole host of stakeholders - family members, partners, and staff, as well as your attorney and financial and tax advisors.

While you don’t need to disclose every detail immediately, having a clear plan allows you to communicate with confidence and consistency. This helps build trust and reduces uncertainty during the transition process, and can minimize or neutralize potential conflicts among partners, potential successors, or others.

Clearly articulate your objectives, concerns, priorities, and timing to your attorney, as your expressed intentions will serve as the jumping-off point for their work crafting your business succession plan. You provide the destination, and your counsel will deliver a clear, comprehensive map to get you there.

If you have questions or would like to discuss business succession planning for your dental practice, please call Grogan, Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation.

At Grogan Hesse & Uditsky, P.C., 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. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.

Business Succession Planning For Dental Practice Owners – Part II

Thu, 02 Apr 2026 19:43:16 GMT

How Buy-Sell Agreements Determine the Success of Your Transition

You spent years or decades building your dental practice from the ground up, recruiting talented associates and staff, cultivating a loyal patient base, and investing in the technology and infrastructure that have made it an enduring success. You made that happen, but what happens if something were to happen to you? What if you pass away suddenly and unexpectedly, you become disabled or incapacitated, or you simply want to call it a day and retire? Without a properly and thoughtfully drafted buy-sell agreement in place, your departure or absence could be the beginning of the end for the practice and the legacy you spent a career building.

A buy-sell agreement, sometimes called a buyout agreement or a business continuation agreement, is the defining document of your practice’s business succession plan. It is the key to every transition, no matter the nature of the business or industry, but having a buy-sell agreement in place is particularly critical for dental practice owners. Professional licensing requirements, patient relationships, and practice goodwill create layers of complexity that most other business owners don’t face. As we discussed in our first post in this series on succession planning , now is the time to work with your counsel to get this done, before circumstances deprive you of the opportunity to plan for your future and that of your practice.

Are you interested in speaking with one of our attorneys? Click here to contact us now.

What Is a Buy-Sell Agreement?

A buy-sell agreement is a legally binding contract between co-owners of a business, or between an owner and the business itself, that governs what happens to an ownership interest when a triggering event occurs. Common triggering events include the death of an owner, permanent disability, retirement, divorce, personal bankruptcy, or the voluntary decision to sell.

In the dental practice context, these events carry additional stakes and greater potential risks or disruptions. Unlike other business owners, who can choose pretty much anyone they want to take over their ownership interest – a family member, a company executive, employees – state laws typically prohibit non-dentists from owning a dental practice. That means if a co-owner dies and their ownership interest passes to a non-licensed spouse or heir, a practice could face serious legal and regulatory exposure. A well-structured buy-sell agreement prevents that scenario by dictating exactly who can own an interest, under what conditions, and at what price.

 Cross-Purchase vs. Entity Redemption

There are two fundamental structures for buy-sell agreements, and the right choice depends on the number of owners, your tax situation, and your long-term objectives.

Cross-purchase agreement. In this arrangement, the remaining owners purchase the departing owner's interest directly. This structure works well in smaller two- or three-dentist practices and offers the surviving owners a stepped-up tax basis in the acquired interest, which can reduce capital gains exposure if the practice is later sold.
Entity redemption agreement. Here, the practice itself buys back the departing owner's interest. This is simpler to administer in larger group practices and avoids the logistical challenge of each owner carrying separate life insurance policies on every other owner.

The Valuation Situation

Valuation of the practice is probably the single most contested issue in buy-sell disputes. When that triggering event happens, and a buyout time arrives, determining how much the practice and its ownership interests are worth, and agreeing on how to get to that figure, can be fraught with disagreement or conflict.

Dental practices have unique valuation challenges. Patient retention rates, the personal goodwill of the departing dentist, the transferability of key referral relationships, and the quality and age of equipment all factor into value. General business metrics and the dollars-and-cents on a balance sheet do not adequately capture these nuances. The agreement should specify the valuation method upfront, whether that is a fixed price updated annually, a formula based on collections or EBITDA, or a third-party appraisal conducted by a healthcare-focused business valuator. Leaving valuation undefined, or using a formula that made sense years ago but no longer reflects market reality, is a recipe for litigation.

Funding the Buyout

A buy-sell agreement is only as good as the funding mechanism behind it. The most common method is life insurance, which provides an immediate lump sum in the event of an owner's death. Disability buyout insurance is equally important and significantly underutilized in most funding arrangements.

For retirement or voluntary buyouts, installment payment structures are the norm. The agreement should specify payment terms, interest rates, and security arrangements, such as a promissory note secured by the practice assets, so that neither the buyer nor the seller is left in an untenable position.

Dental Practice-Specific Provisions

In addition to limitations on who can acquire ownership interests in a dental practice, other issues unique to the profession should be addressed in the buy-sell agreement. Restrictive covenants. Non-compete and non-solicitation clauses are subject to ever-changing state laws governing their allowable scope and enforceability, so they must be carefully drafted to withstand judicial scrutiny in order to protect the purchasing owners from having the departing dentist reopen two miles away and call every former patient.

Associate buyout pathways, if your practice uses them to attract and retain talent, should also be addressed to avoid disputes when an associate is ready to exercise their option. Additionally, if your practice operates under a DSO (Dental Support Organization) model or has any affiliation with a management services organization, those contractual relationships need to be accounted for in the buyout structure.

Do Not Wait for a Crisis to Start Planning

If you are a dental practice owner and you do not have a current, properly funded buy-sell agreement in place, you, your practice, and your retirement plans are all flying without a net. Don’t let all you’ve worked so hard for come crashing down. If you have questions or would like to discuss business succession planning for your dental practice, please call Grogan, Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation.

It’s Not Me; It’s You: Terminating a Relationship With a Difficult Dental Patient

Mon, 09 Mar 2026 22:11:52 GMT

Most relationships, whether personal or professional, start with a certain level of mutual trust and respect, compatibility, and shared goals and priorities. But those characteristics don’t always last, and a once-promising partnership can devolve into disputes, distrust, or outright hostility. The dentist-patient relationship is not immune to such deterioration. There may come a day when the differences between a dentist and their patient make continued treatment undesirable or impractical.

A patient, of course, is free to call it quits with their dentist at any time, or the patient and dentist can mutually agree to part ways. But when a dentist wants to stop treating a problematic or disruptive patient and terminate the relationship, things can be a bit stickier. It is crucial that a dentist handles the break-up carefully and in accordance with the law and ethical standards so as to avoid claims of patient abandonment that could threaten their professional license or expose them to liability.

Are you interested in speaking with one of our attorneys? Click here to contact us now.

Dentists Have a Right To Unilaterally Dismiss a Patient For Reasonable Cause

As a preliminary matter, dentists may choose to responsibly end their relationship with a patient for any reasonable, legally permissible cause. As the American Dental Association (ADA) guidelines put it:

The dentist has the right to dismiss a patient in situations where it is impossible to resolve differences or if the dentist cannot abide the patient’s behavior within the practice, as long as the dismissal is not for a legally impermissible discriminatory reason.

Accordingly, a dentist may not end a patient relationship because of the patient’s race, religion, gender, color, age, national origin, disability, or other characteristics protected by federal and state anti-discrimination laws. Notably, political opinions are not a protected characteristic under the law.

Common reasons a dentist may justifiably terminate a patient include:

Hostility or abusive behavior toward the dentist, staff, or other patients
Harassment or sexual abuse of dentist, staff, or other patients
Repeatedly missing appointments
Refusal to undergo recommended testing or treatment
Lack of trust or confidence in the dentist’s abilities or recommendations
Consistent failure to follow office policies
Showing up to appointments under the influence of alcohol or drugs
Refusing to adhere to infection-control precautions and policies, such as masking
Nonpayment

Patient Dismissal vs. Patient Abandonment

A dentist who chooses to dismiss a patient can’t simply show them the door, send them a break-up text, or refuse to answer their calls. Dentists must end the relationship such that they avoid any claim that they have abandoned their patient.

According to the ADA’s Principles of Ethics and Code of Professional Conduct Section 2.F.:

Once a dentist has undertaken a course of treatment, the dentist should not discontinue that treatment without giving the patient adequate notice and the opportunity to obtain the services of another dentist. Care should be taken that the patient’s oral health is not jeopardized in the process.

Patient abandonment is a serious ethical violation. For example, the Illinois Dental Practice Act lists “abandonment of a patient” as one of the many reasons the Illinois Department of Financial and Professional Regulation may revoke, suspend, refuse to issue or renew, reprimand, or take other disciplinary or non-disciplinary action against a dentist. A dentist also exposes themself to a malpractice claim if injuries result from their termination of the patient at the wrong time during the course of treatment or without proper notice.

Best Practices For Terminating a Patient Relationship

As noted, adequate notice, providing the patient an opportunity to find alternative care, and facilitating continuity of ongoing care are the keys to responsibly ending the dentist-patient relationship and avoiding a claim of abandonment. We suggest that dentists take the following steps to minimize the likelihood of any disputes or claims arising from the termination of the relationship:

provide written notice to the patient, preferably by certified mail;
provide the patient with the reasons for terminating the relationship;
offer to continue treatment and access to services for a reasonable period (such as 30 days) to allow the patient to secure another dentist’s services;
state that you will provide emergency services for a designated period;
help the patient locate another dentist; and
offer to transfer the patient’s records to a new dentist and/or advise the patient of their right to obtain a copy of their records for a fee.

Additionally, a dentist experiencing issues with a patient should contemporaneously document all communications, incidents, statements, or behavior suggesting a breakdown in the relationship.

Of course, while a dentist can control how they handle the end of a patient relationship, they can’t control how the patient will react to being “dumped.” Even when the dentist acts professionally and cordially, as they should, there is no guarantee that the patient will do the same. If a patient responds with hostility or anger, tread carefully and do not respond in kind.

Contact Us With Any Questions or Concerns

If you have any questions or concerns about ending a patient relationship, please give us a call. At Grogan, Hesse & Uditsky, P.C., 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.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Why a Phase I Environmental Assessment Is Critical When Buying a Property for Your Dental Practice

Wed, 04 Mar 2026 20:37:43 GMT

What Lies Beneath

You’re a dental practice owner in search of a new location for your growing enterprise. You’ve decided to purchase rather than lease your new space and have identified an attractive free-standing building that fits the bill. Undoubtedly, you (and likely a professional inspector you retain) will give that structure a thorough once-over to ensure it is suitable and that there are no significant problems that need to be addressed.

But that building wasn’t erected in a vacuum – it was built on a piece of land. If your pre-closing due diligence doesn’t include an equally rigorous inspection of that land and, more importantly, what lies below its surface, you could be purchasing a ticking time bomb of environmental liability and remediation obligations.

That is why most lenders require buyers of commercial property to conduct a Phase I environmental site assessment (ESA) before they will agree to finance the purchase. Even though such an assessment is not required by law, lenders understand the risks involved if contamination or other environmental hazards are later found to be present. And those risks and accompanying exposure can fall squarely on you and your dental practice, even though you had no role in contaminating the property.

However, a Phase I ESA is not only about protecting a lender’s interests, but it also serves as a critical legal and financial protection tool for property purchasers and owners. If you are on the market for a new professional home for your dental practice, here's what you need to know about Phase I ESAs, whether you need one, when to get it, and how the process works.

Why a Phase I ESA Matters

Phase I ESAs exist because of the environmental contamination legal framework established under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund. CERCLA imposes strict, joint, and several liability on "potentially responsible parties" for the cost of cleaning up contaminated properties. As noted, that liability can attach to current owners of contaminated land even if they had nothing to do with creating the contamination.

However, amendments to CERCLA in 2002 provide protection and a safe harbor from liability for certain purchasers and owners. The "innocent landowner" or "bona fide prospective purchaser" (BFPP) defense can serve as a shield against liability if a buyer has conducted " all appropriate inquiries " (AAI) into the property's prior uses before closing. A properly conducted Phase I ESA satisfies this AAI requirement. Skip it, and you could be on the hook for cleanup costs that run into the hundreds of thousands — or millions — of dollars, even for contamination left behind by a tenant or prior owner decades ago. And good luck seeking indemnification from a long-gone or judgment-proof seller or former owner.

Many states, including Illinois, have their own environmental cleanup regimes, but federal CERCLA liability is the primary driver behind Phase I requirements in commercial transactions.

When to Order a Phase I ESA

Timing matters. A Phase I ESA must be completed within 180 days before the closing date to satisfy the ASTM E1527-21 standard and the federal AAI rule. However, certain components, such as interviews with government officials and a review of government databases, must be completed within one year of closing. If your Phase I is more than 180 days old at the time you close, it will need to be updated or a new one commissioned.

Accordingly, it is a good idea to order your Phase I ESA early in the due diligence period, not as an afterthought in the final week before closing. If the assessment identifies a Recognized Environmental Condition (REC), a finding that suggests possible contamination, you'll want time to negotiate with the seller, commission a Phase II investigation (which involves actual soil and groundwater sampling), or potentially walk away from the deal. Rushing that process is a costly mistake.

How the Process Works

A Phase I ESA is conducted by a qualified environmental professional — typically a licensed engineer or geologist with appropriate credentials. The assessment involves four core components:

Records review (federal and state databases, historical maps, aerial photographs, etc.)
Site reconnaissance (a physical inspection of the property and adjoining properties)
Interviews with current owners, occupants, and local government officials; and
Preparation of a written report.

The process typically takes two to four weeks and costs anywhere from $1,500 to $5,000 or more for a standard commercial property, depending on size and complexity.

Environmental concerns may not immediately rise to the surface when you are looking to purchase property for your practice, but a Phase I ESA and the guidance of an experienced commercial real estate attorney throughout the process can help ensure that problems don’t bubble up later that could put you in a legal and financial mess.

If you have questions about Phase I ESAs or any other issues relating to the purchase of property for your dental practice, please call Grogan, Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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

Thu, 26 Feb 2026 15:35:39 GMT

Like every other business, dental offices are vulnerable to criminal acts or disruptions that could put both people and property at risk. Whether it be burglary or vandalism that costs a practice tens of thousands of dollars or a random act of violence that causes incalculable losses, the potential for such incidents has led most dental practices to institute a variety of security measures to protect their patients, employees, and facilities. For many practices, this includes the installation of video surveillance cameras inside and outside their offices. But the added security provided by these cameras can also come with unanticipated risks if they violate the privacy of patients and/or their medical records.

The danger that security cameras may run afoul of patient privacy rights is most acute if those cameras record audio as well as video, and if they are placed in areas where patients reasonably expect privacy, including in treatment areas.

While laws regarding video and audio recordings vary from state to state, the fundamental concerns regarding surveillance cameras are the same everywhere and are two-fold:

Violating a patient’s (and employee’s) reasonable expectation of privacy
Violating HIPAA and other obligations regarding protected health information (PHI)

Are you interested in speaking with one of our attorneys? Click here to contact us now.

Patient Expectations of Privacy

There are some areas of a dental office where a “reasonable expectation of privacy” is a no-brainer, such as restrooms and changing rooms. Do not install cameras in such locations. But patients likely have a similar expectation in private treatment rooms or operatories. If cameras are to be used in these areas, the patient should be advised in advance and sign a consent and release form agreeing to their use. If a patient, for whatever reason, does not consent, disable the camera or cease recording during the course of treatment.

Employees also have a reasonable expectation of privacy, at least in areas like breakrooms or lunch rooms. Inform all employees, in writing, that cameras are in use. You do not need their permission, but you do need a signed acknowledgment, which you should keep in their employee file.

In all circumstances, patients and employees alike should be given notice that your office is under video surveillance; surreptitious recordings or hidden cameras are ill-advised. In common areas like reception areas and waiting rooms, place signage stating that there is a nearby security camera in use. This discourages claims that someone reasonably expected the area to be private and supports a legitimate purpose — safety and security. Additionally, have a consistent policy on how recordings may be used and how long they will be kept.

Many states have strict laws against eavesdropping such that audio recordings present particularly tricky issues. Some states require the consent of both parties before making an audio recording, while others permit recording with only one party’s consent. Given the legal risks associated with audio recordings, and the limited additional security benefits audio provides, the most prudent course is to make video recordings only.

Potential HIPAA Violations

Critically, dental practice owners should consider HIPAA and data privacy rules when installing cameras in their offices. Ensure that cameras are not able to capture a computer screen or charts that contain a patient’s PHI. But PHI extends beyond records and includes the mere fact that a patient is at your office for treatment. As such, recordings from exterior cameras as well as those inside must be protected from dissemination or disclosure. You can disclose any such recordings to law enforcement if they request the information by subpoena.

The bottom line is that dental practice owners have every right to take the steps needed to protect their facilities, patients, and employees, including installing and using video cameras. But they should do so in ways that ensure that those being recorded are aware of and consent to that fact, that the cameras do not impinge on personal expectations or privacy, and that all PHI is sufficiently shielded from unauthorized disclosure.

If you have any questions regarding the use of video surveillance cameras in your offices, please call Grogan Hesse & Uditsky today.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Business Succession Planning For Dental Practice Owners

Wed, 25 Feb 2026 18:21:22 GMT

Why TODAY Is The Time To Prepare Your Practice – and Yourself - For an Uncertain Tomorrow

Whether you hung up your shingle a year ago or spent decades building a thriving and well-respected business serving generations of patients, your dental practice is deeply personal to you. The patients grateful for the care you provide, the associate dentists and staff who are happy to work for you, the reputation and goodwill you’ve cultivated – you made that happen. But what happens to all that if something happens to you?

Business succession planning is all about providing answers to that question. It’s not just a matter of preparing for and funding your retirement years or decades from now, though that is undoubtedly a big part of the rationale. It’s about protecting your practice, your employees, your patients, and your family if an unexpected event took you out of the picture tomorrow. That means today is the time to get your succession planning into gear.

Your Practice Isn’t Like Other Businesses, Because You Are The Business

Unlike a traditional corporation or partnership in any other industry, a dental practice is tethered to its owner in ways most businesses are not. Your name may be on the front door, and your reputation is why so many patients walk through it. Critically, in most states, including Illinois, a dental practice can only be legally owned by a licensed dentist. This means that, unlike other business owners who can hand off the reins to their spouse, children, partners, or employees, practice owners are much more limited in their succession options, and their unexpected departure or withdrawal from the practice becomes fraught with far greater peril and disruption.

This reality creates a specific and urgent set of legal, financial, and operational problems that don't resolve themselves on their own. Without a succession plan, the practice you worked a lifetime to build can unravel in a matter of weeks.

The Cascading Disaster That Happens Without a Succession Plan

Consider the following common scenarios that illustrate the potentially disastrous consequences that flow from not having a comprehensive succession plan in place for a dental practice:

A dentist and practice owner in her mid-50s suffers a stroke. She survives, but is unable to return to treating patients or running the practice for at least eighteen months, if ever. Without a plan designating an associate or partner to manage clinical operations and a legal structure allowing for that transition, the practice is rudderless and adrift, hemorrhaging patients and revenue. By the time the owner returns, half of her patient base has moved on.
A solo practitioner passes away unexpectedly with no buy-sell agreement, no identified successor, and no valuation in place. Her family is left trying to sell a practice under enormous time pressure, often at a fraction of its actual value, while simultaneously grieving and managing a probate process.
A retiring dentist decides to sell and discovers that key documents, such as shareholder agreements, lease assignments, and equipment ownership records, are disorganized or misplaced. The sale drags on for a year, the associate who was interested in buying walks away, and the dentist ends up negotiating from a position of weakness.

These undesirable outcomes and other fallout are 100% preventable with a well-crafted business succession plan, because your plan will cover every base and put in place structures that ensure continuity, stability, and clarity for your practice and your financial security, as discussed below.

What a Succession Plan Does

A comprehensive dental practice succession plan is not a single document. It is a coordinated set of legal, financial, and operational arrangements that seamlessly work together to protect the practice under a variety of circumstances. At minimum, your succession plan should address:

Ownership Transition Mechanisms. A buy-sell agreement is the cornerstone of any business succession plan. It establishes in advance who can purchase your interest in the practice, at what price, and under what triggering conditions, such as death, disability, retirement, or voluntary departure. Without this agreement, disputes over valuation and ownership can tie up a practice in litigation for years.
Practice Valuation. Dental practices should be formally valued regularly so that a relatively recent, accurate figure is in place in the event of an unexpected ownership event. A practice that was worth $500,000 five years ago may be worth $1.5 million today, and an outdated number can shortchange your estate or create conflict among your heirs.
Disability Planning. Disability is statistically far more likely than death during a dentist's working years. Your plan should designate who manages the practice if you are temporarily or permanently unable to practice, and your disability insurance coverage should be structured to align with that plan.
 Integration With Estate Plan. Your succession plan must align with your broader estate plan. Ownership interests in the practice need to be properly titled, and your will, trust, and beneficiary designations should all be coordinated to avoid conflicts or unintended outcomes. Your estate planning and succession planning teams should work together to ensure that everything is in sync.

Why You Should Act Now To Put Your Succession Plan Together

As noted, there is a common misconception that succession planning is something you do when you're close to retirement. In reality, the best time to build a succession plan is when you have the luxury of not needing it yet; when you have time to be thoughtful, when your options are broadest, and when you're negotiating from a position of strength rather than urgency. The peace of mind you provide your colleagues, employees, patients, and yourself is well worth the effort, and your planning today will ensure the legacy you’ve worked so hard to build endures.

The Tax Implications Of a Dental Practice Sale: How You Sell Is As Important As What You Sell

Mon, 09 Feb 2026 16:19:38 GMT

Those benefits – today and far into the future - depend on many factors, but few have as much impact as how the Internal Revenue Service treats the gains you realize from the sale of your practice. How you structure the sale, the nature of the entity you’re selling, the specific assets involved in the sale, and any special considerations like earnouts or deferred payments will determine how much winds up in your pocket vs. how much you’ll be sending to Uncle Sam.

Here are some fundamental tax considerations to understand if you are looking to sell your dental practice in 2026:

Are you interested in speaking with one of our attorneys? Click here to contact us now.

What Type of Entity Are You Selling?

As noted in the title of this post, how you structure the sale of your practice is as important as the nature and value of the practice you’re selling. However, the entity structure you chose when you formed your practice still has a significant impact on how you’ll be taxed when you walk away.

If you organized your practice as a C corporation, all proceeds from the sale of the corporation’s assets will be taxed on the corporate level. This means these proceeds may be taxed twice: once at the corporate level and again when you distribute those monies to yourself.

If, however, your practice is a regular partnership (such as a limited liability company or a limited liability partnership) or an S Corporation, you may pay tax on both ordinary and/or capital gains income on your personal income tax return, depending on the structure of the sale.

Capital Gains v. Ordinary Income

If you make a profit when you sell an asset, you make a capital gain. But not all such gains are subject to capital gains tax. Sometimes, the IRS taxes profits as ordinary income at the taxpayer’s individual rate. Since the current individual rate is around 37 percent, sellers would rather pay the currently lower capital gains rate (the maximum of which is 20%) to the extent possible.

Notably, the capital gains tax only applies to profits on assets held for more than 12 months. Unless a dental practice goes from zero to 60 or acquisition to sale in less than a year, which is rarely the case, the sale will implicate the capital gains tax.

Accordingly, structuring your deal to maximize the amounts taxed as capital gains vs. ordinary income is one of the most significant considerations in minimizing your tax liabilities. This depends, to a large degree, on how you allocate and treat the assets you are selling.

Asset Allocation

Most sales of dental practices are structured as asset sales, meaning the purchaser is acquiring specific assets of the practice rather than its stock. Dental practices are comprised of several different kinds of assets—equipment, supplies, real property, goodwill—and separate accounting and tax rules apply to each type of asset.

Tangible Assets : These include equipment, furniture, office and medical supplies, and other physical assets. Typically, tangible assets are treated as depreciated property, so gains on the sale of these assets are usually subject to recapture rules, where depreciation deductions taken in prior years may be "recaptured" and taxed as ordinary income.
Accounts Receivable : Any outstanding accounts receivable can be part of the sale. For cash-basis taxpayers (the most common for dental practices), accounts receivable are taxed as ordinary income since they represent payments for services already rendered but not yet received.
Goodwill and Intangible Assets : The goodwill of your dental practice, which includes the value of your brand, client base, and reputation, is generally taxed at the capital gains rate. This is advantageous because the long-term capital gains rate is often lower than the ordinary income rate. Other intangible assets may also qualify for capital gains treatment, depending on how they are classified.

If you have taken depreciation deductions on your practice’s equipment or real property, the IRS requires that depreciation be "recaptured" and taxed as ordinary income up to the amount of prior depreciation. While this applies to equipment and other depreciable assets, goodwill, and certain intangibles do not face depreciation recapture.

Earnouts: Deferred Purchase Price Payment or Compensation?

From the IRS’ perspective, how and when you receive payment for the sale of your practice will determine its tax treatment. If those payments come in the form of earnouts, the key issue is whether the IRS views each payment as a deferred purchase price payment or the payment of compensation.

Earnout provisions are often included in practice sale agreements and provide for contingent additional payments from the buyer to the seller upon the practice meeting specified financial targets or other milestones in the future. Earnout payments are generally treated as part of a deferred purchase price so long as the seller is not performing services for the buyer and the practice after the consummation of the sale. The earnout payments may be treated as compensation income if the seller provides services for the buyer or target company after the acquisition or, in some cases, if the purchase agreement includes a non-competition provision.

If the IRS treats earnout payments as deferred purchase price payments (for a non-corporate seller), they will be capital gains, which, as noted, are taxed at a much lower rate than ordinary income. However, if the IRS determines that the earnout constitutes compensation to the seller, the IRS will consider it ordinary income that can be subject to tax rates as high as 37 percent, along with employment taxes (such as Social Security and Medicare taxes).

Accordingly, the sale agreement should specifically refer to earnout payments as part of the purchase price to support the treatment of such payments as capital gains rather than ordinary income. However, what you call the payments in the documentation is far from determinative, as the IRS will look beyond the language of the agreement to consider several substantive factors when deciding how earnout payments should be classified. This is where careful structuring and documentation can play an outcome-determinative role in how these substantial sums will be treated for tax purposes.

You put a lot into your dental practice over the years. How much you take out and whether your sale will reap the benefits you anticipate depends on how well your professional team of attorneys, accounting professionals, and financial advisors do their jobs when crafting your transaction. That is one of many reasons why you should consult with an experienced dental practice sale and acquisition attorney to discuss and understand your options.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Bogus ADA Claims Regarding Dental Practice Websites Are Rampant

Wed, 04 Feb 2026 16:15:35 GMT

Bogus ADA Claims Regarding Dental Practice Websites Are Rampant. Your Lawyer Can Help You Tell the Difference Between a Real Problem and a Real Shakedown.

Over 25 years have passed since the Americans with Disabilities Act (ADA) quite literally reshaped the landscape for people with disabilities. From building entrances to parking lots to restrooms to elevators, from hiring and employment opportunities to restaurants, stores, and websites, disabled Americans have far greater access to the same facilities, services, and opportunities as everyone else.

Harassment at Best, Extortion at Worst

For all the good it has accomplished, however, the ADA has also been abused by opportunistic individuals and attorneys who have used the law in bad faith to shake down small businesses, including dental practices, for alleged violations that have not actually caused any harm or infringed upon any rights afforded by the act. These self-appointed ADA compliance "testers" have filed thousands of nuisance ADA suits that have cost American businesses millions of dollars. According to one analysis, ADA lawsuits have increased by 320% since 2013, with over 4,000 suits filed in 2024 alone. Many plaintiff's law firms file hundreds of cookie-cutter ADA lawsuits each year. One person can visit multiple businesses or websites in a single day solely to identify even the slightest accessibility transgressions in order to generate claims.

While these suits can focus on any number of alleged ADA shortcomings, those relating to website accessibility (discussed in detail in this earlier post ) filed by a handful of law firms and serial plaintiffs have earned the scorn of small businesses and practices across the country. That's because these "testers" and the lawyers who represent them specifically target small businesses, as they typically have limited means to defend themselves, may not be able to discern between legitimate and bogus claims, and often see a quick payoff as the path of least resistance.

Here’s how the shakedown typically goes down:

A plaintiff or their attorney sends the practice a demand letter in which they claim that the practice’s website is inaccessible to people with disabilities (e.g., missing image alt text, inaccessible forms, incompatible with screen readers).
They cite a violation of Title III of the ADA.
They make a demand for a cash settlement, often ranging from $2,500 to $25,000, alongside a request for accessibility fixes.
The business/practice cuts a check in exchange for a release of any ADA claims by that plaintiff related to the website.
The business/practice may then receive more demand letters, often from the same firm, on behalf of other plaintiffs who make the same claim, and the extortion continues.

Don’t Act Impulsively – Do This Instead

All this is not to say that dental practice owners should consider all such claims and demands to be frivolous or ignore their ADA obligations relating to their website. To be sure, a meritorious ADA lawsuit can indeed expose a practice to significant financial and reputational damage. Before reflexively giving in to an ADA demand letter and settling a supposed claim, practice owners should take the following steps:

· Don't Panic, But Don't Ignore It. As noted, a demand letter with legalese and ominous language doesn’t mean that you’ve done anything wrong or actually violated the law. While your immediate reaction may include fear, confusion, or anger, don’t act impulsively. By the same token, don’t assume it is a bogus threat; crumble up the letter and throw it in the recycling. Deadlines in these letters are real, and failing to respond appropriately to a viable claim could lead to litigation.

· Contact Your Attorney Immediately. This is not a DIY situation. Before responding to the letter or contacting the sender, consult with an attorney experienced in ADA compliance and website accessibility issues. Your lawyer can evaluate the demand letter or complaint, the validity of the claim, and the law firm behind it before formulating an appropriate response. Testers send many cookie-cutter letters that may contain boilerplate allegations of deficiencies that do not actually exist.

· Evaluate Your Actual Compliance. Work with your attorney and website accessibility experts to have your website assessed against the Web Content Accessibility Guidelines (WCAG) , which courts often reference in ADA website cases. Understanding your site's actual accessibility helps inform whether settlement, remediation, or another approach makes sense and whether you need to take additional steps to avoid future claims. Keep in mind that this isn't just about legal compliance—it's good business. An accessible website serves all patients better and demonstrates your commitment to inclusivity.

If you have questions about your business's ADA obligations and how to protect it from accessibility complaints, please call Grogan, Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation.

What to Do – and NOT Do - When ICE Comes Knocking at Your Dental Practice

Wed, 21 Jan 2026 16:20:27 GMT

For employers and employees alike, in workplaces from restaurants to factories to dental practices, the specter of a visit from ICE, CBP, or other federal immigration forces looms large. Trepidation and fear are common feelings in this perilous climate, exacerbated by uncertainty as to one’s rights and how to respond when militarized agents arrive at a workplace. For dental practice owners, protecting their employees, patients, and business is a top priority, as is doing so in a legal, peaceful, and effective manner that doesn’t make a difficult situation worse. That is why it is so critical that you understand your rights and obligations in the face of such intrusions.

While you should absolutely and immediately contact counsel if immigration agents show up at your practice, here is some practical guidance to help keep you and your employees safe.

Different Responses to Different Types of ICE Actions

Historically, ICE has conducted three types of workplace actions: I-9 audits (Notice of Inspection or “NOI”), which are administrative reviews of employment eligibility verification forms; worksite enforcement operations, which may include arrests; and searches pursuant to a warrant. Unfortunately, these customary practices have recently expanded to include warrantless, legally unauthorized, and sometimes violent entry into workplaces. The type of action the agency takes determines your obligations and your rights.

An I-9 audit begins with a formal notice, typically giving you three business days to produce your I-9 forms and supporting documentation. A worksite enforcement operation or raid, however, often comes without warning. Understanding which situation you're facing is the critical first step.

When ICE Arrives Without Notice – Keep Calm, Call Your Lawyer, and Ask For Authority

If ICE agents appear at your workplace without prior notice, remain calm and follow these essential steps:

· Keep calm , and don’t make any quick or impulsive decisions. Politely ask the agents to wait while you contact your attorney. You are not required to let agents enter non-public areas of your workplace without proper legal authority. While agents can enter your reception area or other common spaces as any member of the public could, they cannot access private areas such as treatment rooms, back offices, lunchrooms, or labs without your consent, a valid warrant, or an emergency.

· Ask to see credentials and any warrants or legal documents. Scrutinize these thoroughly and understand this crucial distinction: an administrative warrant (Form I-200 or I-205) is not the same as a judicial warrant signed by a judge. Administrative warrants alone do not give ICE the authority to enter your private property or detain individuals. A judicial warrant, however, must be honored, though you should still speak with your lawyer who can help verify that it's properly signed, dated, and identifies the correct location and individuals.

· Designate a single point of contact , ideally yourself as practice owner or an office manager, to communicate with the agents. Instruct other employees not to answer questions or provide information without guidance. This prevents confusion and minimizes the chances of miscommunication or escalation.

Understanding Your Rights

Employers have constitutional rights that apply during ICE encounters. The Fourth Amendment protects against unreasonable searches and seizures. As noted, without a judicial warrant or your consent, ICE generally cannot enter private areas of your practice, search filing cabinets or computer systems, or detain employees based solely on their immigration status.

You have the right to refuse consent to a search. Exercise that right. If agents don't have a warrant, you can politely but firmly state: "I do not consent to a search of the premises. If you have a warrant signed by a judge, I would like to see it and have my attorney review it." If they have a warrant, verify it carefully to check that the address is correct, the signature is from a federal judge (not an ICE officer), and it's dated recently.

Despite the recent rhetoric and actions of ICE agents and officials, you have an absolute right to observe, record, video, and document what's happening and what the agents are doing, so long as you do not interfere with or impede their operations. If ICE does enter your practice, you or your designated representative has the right to, and should, accompany agents to witness their actions.

Protecting Your Employees

Your employees also have rights, regardless of their immigration status. They have the right to remain silent and do not have to answer questions about their immigration status, where they were born, or how they entered the country. They have the right to refuse to show documents beyond what's necessary to demonstrate identity, unless they're under arrest. They should not lie or present false documents, as this can create additional legal problems.

Before an ICE visit occurs, consider holding a "know your rights" training for employees. Inform them that if ICE arrives, they should remain calm, not run, and not present false documents. Provide them with a card that includes information about their rights and the contact information for your practice's attorney.

You should never lie to federal agents or provide false information. However, you are not required to volunteer information or answer questions beyond what's legally necessary. If asked about specific employees, you can politely decline to answer and refer agents to your attorney. Once ICE agents leave, immediately document everything that occurred and save any videos or recordings so you can send them to your attorney.

Preparing Before ICE Arrives

The best time to prepare for an ICE visit is before it happens. Consider the following proactive steps:

· Develop a written policy for your practice that designates who will handle ICE encounters, what steps to take, and how to contact your attorney.

· Conduct an internal I-9 audit to identify and correct any paperwork errors or gaps.

· Train office managers and supervisors on the protocol. Everyone should know not to consent to searches, not to answer questions without guidance, and to remain professional and calm. Post "know your rights" information for employees in common areas.

If you have any questions or concerns regarding ICE or immigration enforcement activities at your 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.

What Practice Owners Need to Understand About Post-Closing Liability “Caps” and “Baskets” in a Dental Practice Sale

Wed, 14 Jan 2026 16:49:11 GMT

Selling a dental practice is a lengthy and involved process that involves due diligence, negotiation, drafting, financing, and other elements, culminating in the seller handing over the keys to the business to the buyer. But the parties’ signatures on the final purchase agreement and ancillary documents hardly mean that the now-former owner can ride off into the sunset without a care in the world. That is because the purchaser will want and require the seller to be responsible for any undisclosed or undiscovered problems with the practice they just bought.

For this reason, every dental practice purchase agreement will inevitably contain indemnification provisions that address what happens if problems emerge after closing. These clauses determine who bears the risk for post-closing discoveries and how much exposure each party faces. While the purchaser wants the assurances and protections that come from the contract’s indemnification provisions, the seller doesn’t want to make an open-ended, potentially limitless promise that could eviscerate the financial upsides of the transaction and leave them forever on the hook for millions of dollars in possible liability.

That is why deal savvy dental practice attorneys usually require that the purchase and sale agreement’s indemnification provisions include “caps” and “baskets” that establish the maximum exposure a seller will face as well as the minimum amount that must be at issue before any indemnification obligations are triggered.

Given the significance that these maximums and minimums have for both parties, it is critical that buyers and sellers understand how caps and baskets work and the best ways to protect their respective interests in a dental practice sale.

It All Starts With the Seller’s Representations and Warranties

In any dental practice sale, the seller makes certain representations and warranties about the practice and its current condition. These disclosures might include assurances that all patient records are accurate, all equipment is in good working order, the practice has no pending lawsuits or liabilities, all taxes have been paid, and certain personnel matters are in order.

If any such representations prove to be false, the indemnification provisions give the buyer the right to seek compensation from the seller for any losses incurred.

Liability Caps Establish the Seller’s Maximum Indemnification Exposure

A liability cap limits the total amount a seller must pay for breaches of representations and warranties. In dental practice transactions, caps can range from 10% on longer transactions to 100% of the purchase price on practices trending below $1,000,000, with 25% to 50% being most common for middle-market acquisitions.

Where the parties ultimately land as to that percentage is a factor of each party’s risk tolerance and the practice's characteristics. A well-established practice with meticulous records, abundant goodwill, and comprehensive due diligence might justify a lower cap. Conversely, a practice with a limited or checkered financial history or significant operational complexity might warrant a higher cap to protect the buyer.

Most liability caps exclude certain matters for which the seller remains on the hook for an unlimited amount. Such issues can include overt fraud or fundamental misrepresentations regarding the seller's authority to sell the practice or having clear title to assets. Tax obligations, environmental issues, and employee-related liabilities might also receive special treatment with separate, higher caps than provided for other matters.

Baskets Are Like Deductibles

While caps address maximum liability, baskets establish minimum thresholds before indemnification obligations arise. Think of a basket like a deductible in an insurance policy. Just as an insured is responsible for paying amounts up to the deductible before the insurer’s obligations kick in, a basket establishes the threshold below which the purchaser must bear any costs or liabilities for post-closing problems, even for matters covered by the contract’s indemnification provisions.

Dental practice sales typically include one of two basket types:

· A “true deductible” basket provides that the buyer absorbs all losses until reaching the threshold amount, after which they are entitled to recover all sums above it. For example, with a $25,000 true deductible basket, if the buyer’s losses total $30,000, the seller pays only $5,000.

· A “tipping” basket , sometimes called a dollar-one basket, provides that once the buyer’s losses exceed the designated threshold, the seller pays from dollar one. Using the same example, the seller would pay the entire $30,000 once that threshold is crossed.

Basket amounts in dental practice sales typically range from $5,000 to $25,000, depending on deal size. A $500,000 practice might have a $5,000 basket, while a $3 million practice might see a $25,000 threshold, for example.

How Caps and Baskets Impact the Parties After Closing

These provisions significantly impact post-closing dynamics. A seller who negotiates a low cap and high basket will minimize their exposure, while a buyer who secures a high cap and low basket gains significant protection and reassurance. Since negotiations over indemnification caps and baskets aren’t conducted in a vacuum, a party that secures an advantageous cap and basket arrangement can expect more challenging negotiations when discussing other aspects of the transaction, such as a higher purchase price or less favorable payment terms.

Unanticipated liabilities can wreak havoc for dental practice buyers and sellers alike long after the ink has dried on their agreement. Dentists on either side of a practice sale should work closely with experienced legal counsel to negotiate terms that strike an appropriate balance between protection and practicality.

Contact Grogan, Hesse & Uditsky Today

If you are a practice owner anticipating a sale or transition, 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.

Wrapping Up the Right Way: Handling Patients and Records When Closing a Dental Practice

Mon, 12 Jan 2026 15:40:11 GMT

When looking ahead towards retirement and the next chapter in life, many dentists will plan to sell their practice to another dentist or perhaps to a DSO. But plenty of dentists decide that closing-up shop and locking the door behind them is the better course of action when moving on. Nothing wrong with that, of course, so long as the practice owner does right by their patients, including providing them with proper notice and handling of their records in accordance with their legal and ethical obligations.

Closing a practice, especially after years or decades of serving patients and the community, is no small decision and no simple process. As such, a foundational step in wrapping up a practice is assembling a team of trusted professionals – attorneys, accountants, and financial professionals – who have experience in the dental space and can ensure that all issues are fully considered and addressed.

Are you interested in speaking with one of our attorneys? Click here to contact us now.

Sharing The News With Patients

Once an owner has decided to close their practice, one of the top priorities is breaking the news to their patients.

While sooner rather than later is always preferable, most state laws require that health care practitioners, including dentists, provide both their patients and the public at large with notice prior to closing their practice. For example, Illinois law ( 735 ILCS 5/8-2001(f) ) requires at least 30 days prior notice of closure, and that the notice include an explanation of how patients can access copies of their records. In addition to letters sent to active patients of record, the law allows notice to be given “by publication in a newspaper of general circulation in the area in which the health care facility or health care practitioner is located.”

The American Dental Association (ADA) has produced the following sample letter that practice owners can send to patients when announcing a closing:

Dear [Patient]:

Our records indicate that you are a patient of record at this dental office. Due to (give a reason, if possible) this office will be closing on (date). It has been our pleasure to serve your dental needs and we thank you for your patronage. You should begin looking for another dentist. Oftentimes, the recommendation of friends and relatives or contacting the local dental society, are ways of locating another dentist. With your permission, copies of the pertinent information from your record can be made available to a dentist of your choosing. Please do not hesitate to telephone us during normal business hours before the last scheduled day, if you have questions.

After the closing date, all inquiries about the records or other matters should be directed to (name of custodian) located at ____. Again, thank you for having been a part of this practice.

Sincerely,

DDS or agent of the dentist

The ADA also has a sample newspaper announcement that owners can use to provide notice to the public:

The dental office of Dr. _located at phone number is closing on (date) due to (give a reason, if possible). We thank you for your patronage. It has been our pleasure to serve your dental needs.

At your request, copies of the pertinent information from your record can be made available to a dentist of your choosing. If you wish to make a request regarding your patient record, please contact the office before the permanent closing day, as we shall need your written authorization to make your records available to another dentist. After that day, you will have to direct your inquiry about the record to (name of dentist or record custodian)__, located at _.

Patient Record Retention and Release

The other main obligation of practice owners to their patients when shutting down their practices is handling, transferring, and maintaining patient records and protected health information (PHI).

Again, in Illinois dentists must maintain patient records for ten years. When closing their practice, many owners retain third-party custodians to store their records and address patient requests. Any owner seeking to use such an outside custodian should ensure that the vendor specializes in medical records such that they understand and comply with HIPAA and other relevant laws and requirements regarding patient privacy.

Whether they hire an outside vendor or maintain the records themselves, practice owners are allowed to charge a reasonable reimbursement fee for reproducing and transferring records to another practice upon the patient’s request. As the ADA notes, however, “failure (or refusal) to release necessary information to another dentist for a patient’s continuing care may be illegal and may be viewed as an unethical practice… You should not refuse to release a patient’s treatment information or records due to an outstanding payment.”

Before transferring records to another practitioner, it is prudent to obtain the patient’s written consent. The patient can be provided with a simple release form for transfer of the records to either the patient or another health care provider. To be signed by the patient, this release form should specify:

Patient's name and identifying information
Address of the health care professional or institution directed to release the information
Description of the information to be released
Identity of the party to be furnished the information
Language authorizing the release of information
Signature of patient or authorized individual
The period for which release remains valid

Of course, patient notification and record retention and transfer issues are not the only matters that owners must address when closing their practice. It is a multifaceted and multistep process that practice owners should not undertake without experienced counsel on their team.

At Grogan, Hesse & Uditsky, P.C., 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.

If you are considering closing your dental practice, please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Garelli Grogan Hesse & Hauert Appoints New Lawyer

Tue, 06 Jan 2026 14:27:07 GMT

Elmhurst, IL, October 1, 2012–Garelli Grogan Hesse & Hauert (GGHH), a multi-practice law firm serving businesses and individuals throughout the Midwest, is pleased to announce that Jordan Uditsky has joined the firm as a partner to further expand its existing business transactional practice. Mr. Uditsky brings a wealth of experience to GGHH as both a […] The post Garelli Grogan Hesse & Hauert Appoints New Lawyer appeared first on GGHH Law.

Mr. Uditsky brings a wealth of experience to GGHH as both a lawyer and an entrepreneur. He has been advising clients in a wide range of businesses and real estate transactions for almost 15 years and delivers a unique perspective through his personal experience as the owner and general counsel of a multi-million dollar manufacturing company. Mr. Uditsky has a diverse corporate practice focused primarily on representing startups, closely held and emerging companies, commercial real estate transactions, and tax and estate planning. He advises clients in a broad range of general corporate, real estate and corporate transactional matters, regulatory issues, compliance matters, employment policies, and legal issues related to general operations and business strategy.

About Garelli Grogan Hesse & Hauert

GGHH offers the sophistication and experience of a large law firm while providing the cost-effective representation and personal attention common to smaller firms. With varied educational and professional backgrounds, GGHH attorneys offer practical business solutions tailored to clients’ needs. They provide legal advice and counsel on a wide variety of complex legal issues with practice areas that include corporate transactions, commercial litigation, estate planning, real estate, family law, and securities litigation.

The post Garelli Grogan Hesse & Hauert Appoints New Lawyer appeared first on GGHH Law .

Handle With Care: Protecting Patient Records Upon Sale of a Dental Practice

Wed, 17 Dec 2025 16:28:21 GMT

The care that dentists need to provide their patients doesn’t end when they get up from the chair. Dental offices, and the computers, networks, servers, and files maintained within (and outside of) their walls, contain patient files and information that must be kept protected from data breaches and unauthorized disclosure. Failure to handle these records properly can not only breach patient trust, but it can also create regulatory and licensing headaches for dentists and practice owners. That’s why ensuring that patient records are transferred securely and appropriately is of the utmost importance when a dental practice changes hands from one owner to the next.

When selling a dental practice, one of the most critical yet often overlooked aspects of the transaction involves the proper handling of patient records. As an attorney who has advised numerous healthcare providers through practice transitions, I can tell you that mishandling patient records can expose both the selling and buying dentists to significant legal liability, regulatory penalties, and damage to professional reputation. Understanding your obligations under federal and state law is essential to protecting yourself and your patients during this transition.

HIPAA Considerations Are the Highest Priority

Patient dental records are governed by both federal regulations, primarily the Health Insurance Portability and Accountability Act (HIPAA), and state-specific laws that vary considerably across jurisdictions. Under HIPAA, patient records are protected health information (PHI), and any transfer of a patient’s protected health information (PHI) must comply with the law’s strict privacy and security requirements. Additionally, most states have dental practice acts and regulations that impose specific recordkeeping and transfer obligations on licensed dentists. The downsides of failing to thoroughly and carefully follow these requirements arguably represent the biggest potential legal threat to buyers and sellers alike in a practice sale.

The selling dentist remains the legal custodian of patient records until the practice sale is complete and proper transfer protocols have been followed. This means that the practice owner cannot simply hand over file cabinets or hard drives to the buyer without taking appropriate legal steps. The seller’s fiduciary duty to their patients continues through the transition period and beyond.

Notifying Patients

Obviously, patients want and deserve to know that their dentist’s office is changing hands. While HIPAA does not explicitly require advance notice of a practice sale, it does require that patients be informed about who has access to their records. More importantly, many state laws explicitly require written notification to patients when a practice changes hands.

The seller should inform patients of the new practice owner's identity, the date of the transition, their options regarding their records, and how they can obtain copies of their records if they choose to seek care elsewhere. Typically, this notification should be sent 30 to 60 days prior to the sale closing, allowing patients sufficient time to make informed decisions about their care.

The Actual Transfer Itself

The purchase agreement should clearly specify how the records will be transferred, who will bear the costs of transfer, and in what format the records will be transferred. For electronic health records (EHRs), the seller may need to coordinate with their EHR vendor to ensure the proper migration of data to the buyer's system or to maintain access if the buyer intends to use the same platform.

For practices that still maintain paper records, the physical transfer must be handled securely to prevent unauthorized access or data breaches. Consider using a secure courier service and keeping a detailed inventory of all records transferred.

Record Retention Obligations

Generally, upon closing, the buyer assumes the responsibility for maintaining patient records going forward and must retain them for the period required by state law, which typically ranges from five to ten years from the last date of treatment. However, the seller may retain copies of records for their own protection, particularly if there's potential for future liability claims related to treatment provided before the sale.

For patients who choose not to continue with the new owner and who do not request their records be sent to another provider, the buyer typically assumes responsibility for storing these inactive records for the required retention period. The purchase agreement should clearly allocate these ongoing obligations and any associated costs.

Selling a dental practice is often the culmination of decades of hard work and the start of a new chapter in which the now-former practice owner can reap the benefits of those efforts. However, missteps in the handling of patient records could compromise those plans and leave the seller vulnerable to potential liability. By working closely with experienced counsel throughout the sales process, practice owners can wrap up their careers with clarity, confidence, and conclusiveness.

If you are a practice owner anticipating a sale or transition, please contact Grogan, Hesse & Uditsky today.

Contact Grogan, Hesse & Uditsky Today

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.

Insurer’s Proposed Acquisition of Dental Practices Raises Serious Conflict of Interest and Patient Care Concerns

Wed, 19 Nov 2025 16:08:26 GMT

Whatever shortcomings and deficiencies there may be in the dynamic between dental practices and insurance companies, their distinct roles in patient care are not among them. While dentists certainly want to maximize reimbursements for the services they provide, they are not beholden to insurers and remain in a position to advocate for their patients and challenge an insurer’s cost-related decisions without fear of retribution.

But a recent unprecedented move by Delta Dental in Wisconsin threatens to upend this relationship model and has raised serious concerns among industry groups, patient advocates, and regulators about conflicts of interest, competition, and provider independence.

Over the summer, Delta Dental announced that it had acquired Cherry Tree Dental, which owns and operates 31 clinics, 25 of which are in Wisconsin. The American Dental Association (ADA) is among several organizations that have vocally opposed the transaction. As the ADA wrote shortly after the deal was announced:

When an insurance company becomes both health care provider and insurance payer, questions arise regarding potential conflict of interest. From a business standpoint, dental insurance companies seek to minimize cost and maximize profit. As a result, patients may find their treatment options limited to what is most cost-effective for the insurer, not necessarily what is most effective for their oral health. The ADA believes that the health interests of patients are best protected when dental practices and other private facilities for the delivery of dental care are owned and controlled by a dentist licensed in the jurisdiction where the practice is located.

In November, the ADA filed a letter with the Wisconsin Office of the Commissioner of Insurance expanding on its concerns and opposition, including worries about provider independence in making care decisions:

Direct ownership by Delta Dental could compromise dentists’ ability to advocate for patients. In traditional arrangements, dentists can appeal plan decisions regarding patient care or choose to leave a network if plan policies are overly restrictive. However, the ADA warned that when dentists are employed by the payer, challenging cost-related decisions could label them as “problem employees,” potentially discouraging proper patient care.

The potentially anti-competitive effects of such arrangements were also raised by the ADA, which noted that “Delta Dental’s acquisition could influence agreements, business practices, and fee schedules between Cherry Tree and other payers, potentially creating unfair competition.”

In addition to the ADA, the acquisition has drawn concerns from the Wisconsin Dental Association, the American Economic Liberties Project, and the Alliance of Independent Dentists.

The fallout of this acquisition, if consummated, could ripple through other markets, potentially leading to a seismic shift in the provider-insurer landscape. We will continue to monitor developments and provide updates as warranted.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Movin’ On Up: Understanding Dental Associate Buy-In Structures

Wed, 05 Nov 2025 16:18:44 GMT

For many associate dentists, the sound of opportunity knocking comes in the form of an offer to become a co-owner of the practice where they work. Rare is the dentist who would reject out of hand the chance to reap the rewards of years of hard work and move from employee to owner. For the practice owner who opens the equity door for their associate, such a “buy-in” can infuse cash and value into the business, laying the foundation for a seamless ownership transition upon their retirement.

The key to a successful buy-in is a clear and equitably structured deal that is workable for both parties in terms of how the associate will pay for their equity interest. However, there is no one-size-fits-all approach. The structure of a dental associate buy-in can vary significantly depending on factors such as the associate’s financial capacity, the practice’s value, and the owner’s long-term objectives.

Whether you are the associate or the practice owner in such an anticipated transaction, you should consult with an experienced dental practice attorney to understand your options and determine which structure provides you with the most value. Your discussions with your attorney will likely include some or all of these common dental associate buy-in arrangements:

Cash Purchase

A cash purchase is the most straightforward buy-in model. With either cash on hand or through financing (the more likely scenario), the associate purchases an agreed-upon percentage of the practice (for example, 25% or 50%) for a lump sum based on the appraised value of the practice. That appraisal will likely use metrics such as collections, earnings before interest and taxes (EBIT), or a percentage of annual gross revenue.

The main advantage of a cash purchase is its simplicity and immediacy. The associate becomes an owner right away, while the practice owner receives a clean and full payout for the equity sold. However, obtaining the needed financing may be easier said than done for an associate dentist, and a large cash payout may also come with unwanted tax ramifications for the owner.

Buy-in documents for a cash purchase should address governance rights, profit distribution, and exit mechanisms. They should also define what happens if an associate departs, how future buyouts are valued, and whether non-compete or non-solicitation covenants apply.

Installment Sale

An installment sale allows the associate to purchase equity over time, making periodic payments instead of an upfront lump-sum payment. After the practice value is determined, the associate agrees to buy a certain percentage of ownership through regular payments (e.g., monthly or quarterly) over several years. Payments may include interest, and ownership may be transferred incrementally or upon full payment.

This is a good option for associates who do not have the means for a full cash buy-in immediately. For owners, this arrangement provides a steady income stream – so long as the associate does not leave before completing payments. That is why the documentation should clearly outline the timing of ownership right transfers and provide robust default remedies, such as forfeiture of prior payments or reversion of ownership interests.

Sweat Equity

In a sweat equity buy-in, the associate essentially cashes in their years of service, earning ownership over time based on their contribution to the practice’s growth or profitability rather than through an immediate cash investment.

In a typical sweat equity arrangement, the associate receives equity credits or options tied to measurable performance benchmarks, such as production levels, collections, or tenure. Once those targets are met, a portion of ownership is granted or sold at a reduced price. This structure enables talented but liquidity-challenged associates to become owners without initial financial strain. It also incentivizes them to grow the practice and stay long-term.

Shadow Account (a/k/a Phantom Equity)

As I discussed in detail in this post , a shadow account (also known as a phantom equity plan) is an increasingly popular buy-in model, especially when the owner is not yet ready to transfer real equity but wants to reward the associate as if they were an owner.

In this model, the associate receives the right to cash payments equal to the value of the shares at a specified later date or distribution event. That value can be established through an appraisal or an agreed-upon formula. The selected events that give an associate a right to a payout can include such things as achieving performance goals, termination, or retirement.

There are two types of shadow account/phantom stock plans. In an "appreciation only” plan, the cash payout upon vesting does not include the value of the underlying shares, only the increase in value of that stock since it was granted. In a “full value” plan, the practice pays both the underlying value of the stock and the amount the stock has appreciated while held by the associate.

Like actual stock, phantom stock has a defined value and tracks the practice’s performance, but an associate holding phantom stock typically does not have either minority shareholder rights or voting rights in the practice. This makes phantom stock plans attractive for owners who want to provide associates with a sense of equity ownership without giving up any actual control. The practice has broad discretion and flexibility in designing the plan, including valuation formulas and vesting conditions, and the administrative burdens are less than for traditional stock option plans.

As noted, the “best” buy-in structure depends on the unique goals of both parties. No matter which model is ultimately adopted, well-crafted documentation, preceded by careful consideration and consultation with counsel, is essential. That is because these deals do more than just transfer ownership - they can lay the foundation for a stable, profitable partnership that preserves the practice’s legacy and rewards everyone’s investment, financial or otherwise.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

FTC Drives Final Nails Into the Coffin of a Nationwide Non-Compete Ban

Wed, 15 Oct 2025 15:16:25 GMT

For years, state courts and legislatures have taken a skeptical eye toward non-competition agreements. Judges here in Illinois and elsewhere routinely struck down overly broad and overreaching provisions, while an increasing number of jurisdictions have passed legislation or ordinances banning non-competes outright or limiting their scope and enforceability.

During the Biden administration, the federal government injected itself into the heretofore state and local assault on non-competes. Both the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) took the position, in a Final Rule and counsel's opinion, respectively, that almost all existing and future non-competes were void and unenforceable. Those actions were immediately challenged in court, and litigation about the FTC's ban resulted in dueling district court rulings, with injunctions issued against its enforcement in some cases, while other judges found the FTC had properly issued the Final Rule. The FTC subsequently appealed federal court rulings in Texas and Florida that invalidated or enjoined, respectively, the FTC's non-compete ban.

Then came Election Day 2024.

Nationwide Ban Abandoned, but Challenges to Non-Competes Remain

Unsurprisingly, for an administration with a penchant for being business-friendly and regulation-averse, the newly comprised FTC quickly changed its tune on a nationwide non-compete ban. A series of moves this year has made it clear that the federal government, at least for the next three years, is abandoning any such blanket efforts. Specifically, the FTC moved in September to dismiss its appeals of two district court decisions that had struck down the Final Rule. Simultaneously, the commission took steps towards acceding to the vacatur of the non-compete ban .

At the same time, however, the FTC has also indicated, through recent enforcement actions and warning letters , that it will continue to pursue remedies against employers on a case-by-case basis for the unlawful use of post-employment non-competes under Section 5 of the FTC Act, which prohibits "unfair methods of competition."

Those FTC efforts, which are nothing new, mean the battle over the validity of non-compete agreements will continue to be fought largely at the state and local levels. Once again, dental practice owners and other employers will need to tailor their non-competition agreements to comply with the patchwork of jurisprudence, laws, and regulations of the states and localities where they have employees while remaining mindful of anti-competitive overreach that could attract the FTC's attention.

With the nationwide non-compete ban dead and buried, but restrictions on and litigation about the enforceability of such agreements very much alive, now is an opportune time for practice owners to consult with experienced employment counsel who can review and revise any existing or contemplated non-competition provision as necessary.

If you have questions about your company’s non-competes or would like assistance reviewing or drafting such agreements, please call Grogan Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Negative Online Reviews of Your Dental Practice Can Sting, But an Ill-Advised Response Can Cause You Even More Pain

Fri, 19 Sep 2025 15:38:57 GMT

As a 17 ^th -century French playwright, actor, and poet, Molière probably received his fair share of stinging, negative reviews of his work. While we may not know exactly how he felt about such critiques, he did offer some sage advice that dentists should heed when confronted with a patient’s scathing, hurtful, or untrue online review: “ A wise man is superior to any insults which can be put upon him and the best reply to unseemly behavior is patience and moderation .”

Human nature being what it is, patience and moderation can be in short supply when a dentist reads a review that casts doubt on their competence, integrity, or professionalism, especially if they believe that the review’s content contains abject falsehoods or misrepresentations. Not only can such online comments make blood boil and bruise the ego, but even one negative review can have a devastating impact on a practice and its reputation.

84% of the public trusts online reviews to help them make consumer decisions, including those involving healthcare providers. According to some surveys, more than 70% of patients say they read reviews before selecting a healthcare provider, and nearly half would not consider a provider with fewer than four stars. Negative reviews can disproportionately influence perception, even if they represent a small fraction of feedback.

Given that a single negative review can stand out in an otherwise glowing profile and, if left unaddressed, may deter potential patients, dentists understandably will want to respond, correcting misstatements or otherwise neutralizing the misrepresentations or assertions contained in the review. But those responses, if made reflexively and without careful consideration of legal and ethical boundaries, can make a bad situation worse or make the dentist appear petty and vindictive. Additionally, dentists who do decide to respond to a patient’s negative review publicly may inadvertently reveal confidential patient information in their attempts to refute allegations of poor or substandard care. Such transgressions can have catastrophic licensing and regulatory consequences for dentists.

So what should dentists do when faced with a horrible review that every prospective patient can see? As discussed below, responses can, and often should, be made, but with the patience and moderation Molière recommended.

Hitting Back v. Hitting HIPAA

Perhaps the biggest risk dentists take when publicly responding to a patient’s negative review is inadvertently violating their HIPAA patient privacy obligations.

Unlike other businesses, dentists cannot freely discuss the details of a patient’s complaint in a public forum. The HIPAA Privacy Rule prohibits disclosing protected health information (PHI) without patient authorization. Even acknowledging that the reviewer is a patient may constitute a privacy violation.

For example, if a patient writes, “I had a terrible root canal here,” the dentist cannot reply with, “We offered you antibiotics, but you refused.” That would be a clear HIPAA violation. Instead, dentists should respond in general terms that neither confirm nor deny treatment specifics.

Best Practices for Responding to Negative Reviews

When deciding how and whether to respond, dentists should keep the following principles and tips in mind:

Cool Off Before Going Off. The worst thing a dentist can do with a bad online review is to immediately post a response in the throes of anger and indignation, however justifiable those emotions may be. Before deciding whether and how to respond, take the time needed for your professionalism and rationality to come back to the fore.
Stay Professional and Neutral. Never respond defensively or emotionally. A hostile reply can escalate the issue and further damage your reputation. Even if the review feels unfair, professionalism is key.
Acknowledge Without Confirming. Responses should not confirm that the reviewer is or was a patient. Instead, use neutral language such as: “We take all feedback seriously and strive to provide excellent care. We encourage you to contact our office directly to discuss your concerns.”
Take the Conversation Offline. Invite the reviewer to call or email the office to resolve the issue privately. This demonstrates attentiveness while protecting confidentiality.
Highlight Practice Values. Use responses as an opportunity to reaffirm commitment to patient care. For example: “Our goal is to make every patient feel comfortable and well cared for. We welcome feedback to help us improve.”

When Silence May Be Golden

Not every negative review needs a reply. If the comment is clearly unreasonable, inflammatory, or fraudulent, sometimes the best response is no response—or a simple flagging of the review for removal.

Consider not responding in the following circumstances:

Abusive or Fake Reviews. If a review contains profanity, slander, or appears fraudulent, flag it for removal instead of responding.
Ongoing Legal Disputes. If the complaint relates to malpractice or litigation, responding publicly can backfire and give the patient more ammunition for their claims.
Obvious Spam. Automated or irrelevant reviews do not require acknowledgment.

Can You Sue for Defamation? Sure. Will You Win? Probably Not.

On more than one occasion, a panicked and indignant dentist or other client of mine has called me to ask whether they could and should sue their former patient for defamation for a harsh online review. The answer, of course, is that you are well within your rights to sue “YourDentalPracticeSucks123” or whoever it is that is trying to take a wrecking ball to your career. You can sue anybody for anything. Whether such a lawsuit will be successful or has any legal basis is another matter entirely.

The fact is that even the most scathing negative online review, if susceptible to the principle of “innocent construction” (meaning the allegedly libelous statement is given a non-defamatory interpretation because it is deemed ambiguous) or is composed of opinions rather than demonstrably false allegations of misconduct, will likely not qualify as actionable defamation in most jurisdictions. Furthermore, such lawsuits can expose the offended dentist or other professional to backlash, ridicule, and bad publicity in the fast-moving and fickle world of social media.

If you look to hold online review sites and other platforms responsible for false and defamatory information posted by reviewers, you won’t get terribly far. While you may be able to get a website to remove a particularly egregious post, Section 230 of the federal Communications Decency Act largely immunizes such sites from claims based on comments or reviews posted by third-party users.

Is It a Subjective Opinion or a Factual Allegation?

The most common issue that arises in defamation cases based on online reviews is the question of whether or not a statement was false. Only false statements of fact can form the basis of a defamation claim, not opinions, no matter how histrionic or counterfactual they may be. A statement of fact is one that can be objectively proved or disproved. Consider the two following hypothetical reviews of a dentist:

“She was rude, impatient, and treated me disrespectfully. It was perhaps the worst experience I’ve ever had with a dentist in my entire life. She is horrible.”

“He stole money from my purse and touched me inappropriately while I was under sedation.”

The former is a non-actionable opinion, as the dentist will not be able to objectively prove whether or not she was, in fact, rude, disrespectful, and the cause of one of the worst experiences in the patient’s life. Contrast that with the latter statement that accuses the dentist of specific actions and misconduct that can be proven or disproven with evidence.

Proactive Reputation Management

The best defense against negative reviews is a steady stream of positive ones. Dentists can encourage satisfied patients to leave feedback by:

Sending follow-up emails with review links
Placing QR codes in the office for easy access
Training staff to request reviews after successful appointments

A high volume of positive reviews will dilute the impact of the occasional negative one and provide a more accurate picture of patient satisfaction.

If you have questions or concerns about negative online reviews or reputation management for your dental practice, please contact Grogan Hesse & Uditsky today at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

7 Ways The “One Big Beautiful Bill Act” Impacts Dental Practices and Owners

Wed, 20 Aug 2025 15:11:28 GMT

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. One may question whether this sprawling piece of legislation deserves to be called “beautiful,” but it undoubtedly earns the “big” in its name, especially for small businesses like dental practices. That is because it contains several provisions that could have a significant impact on the tax obligations of practices and their owners. Most notably, the OBBBA solidifies significant tax reforms and exemptions that were part of the 2017 Tax Cuts and Jobs Act (TCJA).

Here are seven aspects of the OBBBA that are of particular interest to dental practices and their owners.

1. Permanent Qualified Business Income (QBI) Deduction

The 20 percent small business tax deduction (also known as the section 199a deduction) for sole proprietorships, partnerships, S-corporations, and LLCs, which was scheduled to expire at the end of 2025, is made permanent and extends the amount of income subject to the phase-out rules. Specifically, the income threshold for single taxpayers is expanded by $25,000 and for joint filers by $50,000. The bill also includes a new minimum deduction of $400 for taxpayers with at least $1,000 of qualified business income from one or more actively conducted trades or businesses in which they materially participate.

2. Expanding Section 179 Expensing

The bill increases the Small Business Expensing Cap from $1.22 million to $2.5 million. It also brings back and makes permanent “bonus depreciation,” which allows for an immediate write-off of 100 percent (versus 40 percent) of the cost of new qualified property acquired after January 19, 2025, such as equipment, vehicles, and software.

3. Qualified Small Business Stock

The OBBBA modifies the Qualified Small Business Stock (QSBS) provisions contained in Section 1202 of the Internal Revenue Code by increasing the amounts that can be excluded from gross income, raising the size limit for QSBS investments, and shortening the holding period so investors can take advantage of the provision's benefits earlier than before.

Specifically:

For QSBS issued after OBBBA's July 4, 2025, effective date, the per-taxpayer gain exclusion cap for the sale of QSBS is raised from $10 million to $15 million, with that threshold being adjusted for inflation starting in 2027. The exclusion amount will now be $15 million or 10x the basis in the stock, whichever is greater.
The aggregate gross assets a C corporation may have for its stock to qualify as a qualified small business is now $75 million – up from $50 million - for stock issued after July 4, 2025, with the new limit to be adjusted for inflation beginning in 2027.
For QSBS acquired after July 4, 2025, the holding period required to qualify for the QSBS gain exclusion drops from five years to three years. After three years, a 50% exclusion is available, increasing to 75% after four years, and reaching 100% exclusion after five years.

4. Enhancing the Employer-provided Childcare Credit

Section 45F of the tax code, which is designed to incentivize businesses to invest in childcare, now provides qualifying small businesses (gross receipts of $25 million or less for the preceding five years) with a maximum tax credit of up to $600,000 per year on up to 50 percent of qualified childcare expenses provided to employees. This credit is effective beginning in 2026.

5. Employer-provided Student Loan Repayment Assistance

The OBBBA makes the employer-provided student loan repayment benefit permanent, allowing employers to contribute up to $5,250 per year towards employees' student loans, tax-free for both the employer and employee. This annual limit will be adjusted for inflation starting in 2026, ensuring the benefit keeps pace with rising education costs.

6. Permanent, Inflation-Indexed Estate & Gift Tax Exemption

The OBBBA permanently increases the unified federal estate and lifetime gift tax exemption to $15 million per individual ($30 million for married couples), indexed for inflation starting in 2026. If the TCJA’s exemption provisions had expired, the threshold would have dropped to approximately $7 million per individual. This stability allows ultra-high-net-worth individuals to accelerate lifetime gifting and fund trusts efficiently. Techniques such as SLATs (Spousal Lifetime Access Trusts) are now more powerful planning tools given the increased exemption scope.

The generation-skipping transfer (GST) tax exemption is now also aligned with the $15 million per individual exemption, also indexed for inflation.

7. SALT Deduction Raised – For Some

The law increased the state and local tax (SALT) deduction cap from $10,000 to $40,000; however, this cap is not universally available. If your modified adjusted gross income (MAGI) exceeds certain thresholds, the $40,000 cap will be phased out.

For single filers, the phase-out starts at $250,000 MAGI.
For joint filers, the phase-out starts at $500,000 MAGI.
The deduction is reduced by 30% of the amount exceeding these thresholds until it reaches the original $10,000 cap for the highest earners.
The income thresholds for the phase-out will increase by 1% annually from 2026 to 2029.

If you have questions about the OBBBA and what it means for you and your practice, please contact Grogan Hesse & Uditsky today at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Don’t You Be My Neighbor: The Importance of Exclusive Use Provisions in Dental Office Leases

jnuditsky@gmail.com (Jordan Uditsky) — Wed, 06 Aug 2025 15:05:35 GMT

Dental practices that choose to lease rather than purchase and own their business location have several options for setting up shop. While plenty of practices operate out of stand-alone buildings, even more lease space in retail shopping centers, professional buildings, or office complexes.

The terms of that lease – from the rent to the term to build-out, termination, or assignment rights – can have an outsized impact on the growth and success of a practice. But one lease provision, in particular, can determine whether your practice faces stiff and unwanted competition from another practice just steps from your office’s front door: the exclusivity (or exclusive use) clause.

What Is An Exclusive Use Provision in a Dental Practice Lease?

As the name implies, an exclusive use clause in a lease limits the landlord’s ability to lease space in the same complex or building to another tenant engaged in the same type of business.

Think about why you would choose a particular location for your practice. Aside from the features of the space itself, it is likely because of favorable characteristics like foot traffic, accessibility, parking, and the lack of other similar practices in the surrounding area. If, after conducting demographic research and spending time and resources selecting the perfect location for your practice, your landlord could wipe out those efforts with the stroke of a pen by leasing space nearby to a competing practice, it could be a devastating blow.

Negotiating an Exclusive Use Provision

Most commercial leases are initially prepared by the landlord. As such, they are unsurprisingly skewed in favor of the landlord’s interests. It is unlikely that a landlord would voluntarily and preemptively tie their hands by limiting the pool of potential tenants. That is why the burden is usually on the tenant to push for and negotiate an exclusivity provision.

When negotiating the terms of your dental practice lease (which you should only do with the help and counsel of an experienced attorney), the goal will be to get your landlord to agree not to rent space to other dental practice tenants. If your landlord refuses to limit their ability to lease space to other dentists generally and you nevertheless want to pursue the desired space, you may be able to be more specific and agree to a provision that restricts the landlord’s ability to lease to a particular competing specialty such as pediatric dentists, orthodontists, periodontists, etc.

Protecting Yourself From a Landlord’s Breach of an Exclusivity Clause

The contracts most likely to be broken are those with few, if any, consequences for violating their terms. That is why the value of an exclusivity provision is directly related to the price that the landlord will pay for entering into a lease with a competitor despite the clause in your lease. Given the potentially catastrophic impact of having a neighbor in the same building siphoning off your patients and diluting your hard-earned goodwill, that price should be significant.

Several different penalties can serve to protect your practice from a breach of an exclusivity provision:

Rent Abatement. One of the most straightforward and commonly used remedies is rent abatement. If the landlord allows a competing business to open in violation of the exclusive use clause, an abatement penalty can entitle you to a full or partial reduction in base rent or other charges. This abatement typically remains in effect until the violation is cured or the competing tenant leaves. The lease should specify the amount of rent to be abated (e.g., 50% of base rent) and whether the abatement applies to other charges such as common area maintenance fees or percentage rent.
Termination Right. A strong lease will give the tenant the option to terminate the lease entirely if the landlord fails to cure the violation within a specified period after notice. This is a significant penalty that underscores the seriousness of the exclusive use protection.
Liquidated Damages. Liquidated damages provide a pre-agreed amount that the landlord must pay if it breaches the exclusive use clause. This can be calculated based on the tenant’s projected loss in revenue, estimated lost profits, or some other measurable metric tied to the tenant’s business performance.
Injunctive Relief. Ideally, the lease should give you the right to seek injunctive relief from a court to stop the violation of the exclusive use provision, such as requiring the landlord to terminate the lease or evict the competing tenant.

Getting a landlord to agree to a strong exclusivity provision with equally strong penalties for breaches of it requires deft and persuasive negotiating skills, and is yet another reason why dental practice owners should never enter into or negotiate a lease without the assistance of experienced counsel. If you are considering a lease for your practice, please contact Grogan Hesse & Uditsky today at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Amendments to Illinois Dental Practice Act Provide More Flexibility When Hiring New Dental School and Dental Hygienist Graduates

jnuditsky@gmail.com (Jordan Uditsky) — Wed, 09 Jul 2025 15:12:28 GMT

Recent amendments to the Illinois Dental Practice Act (the “Act”), which Gov. JB Pritzker is expected to soon sign into law, will make it easier for newly minted dental professionals to begin practicing while their license applications are pending.

The amendments, which would take effect on January 1, 2026, establish the following criteria under which license-pending dentists and dental hygienists can practice under the delegation of a licensed general dentist:

The Applicant has completed and passed the IDFPR-approved licensure exam and presented their employer with an official written notification indicating such;
The Applicant has completed and submitted the application for licensure; and
The Applicant has submitted the required licensure fee.

Once obtained, authorization for dentists and dental hygienists to practice under these provisions can be terminated upon the occurrence of any of the following:

The Applicant receives their full-practice license;
IDFPR provides notification that the Applicant’s application has been denied;
IDFPR requests that the Applicant stop practicing as a license-pending dentist/dental hygienist until the Department makes an official decision to grant or deny a license to practice; or
Six months have passed since the official date of the Applicant’s passage of the licensure exam (i.e., the date on the formal written notification of such from the Department).

IDFPR has yet to post anything on its website regarding these amendments, but we will provide an update if and when it does. If you have any questions about these new provisions regarding the employment of license-pending dentists and hygienists, please contact Grogan Hesse & Uditsky today at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Credit Where Credit Is Due: Accounting for Unused Patient Credits When Buying or Selling a Dental Practice

rhaney@ghulaw.com (Robert Haney) — Wed, 25 Jun 2025 15:17:47 GMT

As all dental practice owners know, insurance companies frequently make adjustments to their reimbursement amounts, leading to the common circumstance that a patient who paid a certain amount at the time of treatment may be entitled to a credit from the practice. That credit, usually kept on the practice’s books so that the patient can apply it to future services, has two distinct qualities that have significant legal and financial implications when a practice is about to be purchased or sold. Failure to account for and address such outstanding patient credits early in a transaction can lead to unwanted surprises as well as potentially costly penalties.

That is because a patient credit is not only a liability on the books of the practice, it is also the as-yet unclaimed personal property of the patient. That latter characteristic comes with legal obligations under state unclaimed property laws.

If you are buying or selling a dental practice, here is what you need to know about handling patient credits during and after the transaction.

Accounting For Credits in the Purchase Price

More often than not, unused patient credits remain just that – unused. If a practice purchaser knew for an absolute certainty that the patient would never return and ask for the credit to be applied to new services, it would not impact the underlying practice valuation or sale price. Of course, nothing is certain, and if a practice has thousands, tens of thousands, or hundreds of thousands of credits on the books, even a fraction of those credits, if redeemed, could have a significant impact on the practice’s profitability.

That is why any patient credits should be disclosed, identified, and addressed as early in the transaction as possible so that neither the buyer nor seller find themselves in the uncomfortable position of renegotiating the purchase price or providing the buyer with a credit.

Reporting and Accounting Obligations Under Unclaimed Property Laws

Any business holding goods or funds that belong to a customer, client, or other company or individual cannot simply pocket that property or money because its owner may have forgotten about it or is unaware of its existence. If a business holding such property, which includes patient credits, loses contact with the owner for a certain period set by law (called the “dormancy period”), the company effectively becomes the trustee of that property, holding it for the benefit of the owner until they make a claim for its return.

In Illinois, that claim may come after the owner searches the Illinois State Treasurer’s unclaimed property database . The information in that database comes from businesses that must provide the Treasurer’s Office with detailed and frequent reports about any unclaimed property they hold pursuant to the requirements of Illinois’ Revised Uniform Unclaimed Property Act (the “Act”). Most U.S. states have adopted this model act, so the following discussion of Illinois’ version is representative of unclaimed property laws generally.

When Does Property Become “Unclaimed”?

As noted, property is considered unclaimed and abandoned if it has not had any activity within a designated “dormancy period” and the holder is unable to locate the property owner. Under Sec. 15-201 of the Act, the dormancy period is three years for most types of property, though others have longer or shorter periods. For example, there is a 15-year period for traveler's checks, a five-year period for money orders, and a one-year period for payroll checks. Patient credits would fall under the three-year period.

Reporting and Notice Obligations For Holders of Unclaimed Property

Any for-profit and not-for-profit business entities that conduct business in Illinois are required to electronically report unclaimed property to the Treasurer’s Office on an annual basis. Even businesses not holding any unclaimed property must file a negative report advising as such if they meet any of the following criteria:

Annual sales of more than $1,000,000;
Securities that are publicly traded;
A net worth of more than $10,000,000; or
More than 100 employees.

The deadline for Illinois dental practices to file unclaimed property reports for unused patient credits is May 1 of each year. The report should reflect one year of account activity three years prior to the last calendar year. Example: If your report is due May 1, 2018, your report will cover activity from January 1, 2014, through December 31, 2014.

The detailed requirements as to what must be included in the report are set forth in Section 760.410 of the Illinois Administrative Code . At the same time the report is filed, unclaimed property must be remitted to the Treasurer’s Office.

Holders of unclaimed property also must make efforts to reach out to the owner before filing their report and remitting the property. Specifically, the holder of property presumed abandoned shall send a due diligence notice to the apparent owner by first-class U.S. Mail between 60 days and one year before reporting the property. The required contents of the due diligence notice are set forth in Section 760.460 of the Illinois Administrative Code .

Consequences of Non-Compliance

Holders of unclaimed property face significant penalties for failing to comply with the reporting, notice, and remittance requirements of the Act. Interest and penalties may be imposed on the failure to file, pay, or deliver property by the required due date. Specifically, the state can charge interest at 1% per month on the value of the unreported/unpaid property and impose a penalty of $200 per day up to a maximum of $5,000 until the date a report is filed or the unclaimed property is paid or delivered.

For businesses that may have neglected their obligations under the Act, Illinois (and most other states that have adopted the uniform act) offers a Voluntary Disclosure Agreement (VDA) program for unclaimed property holders. In exchange for voluntary compliance through an executed VDA, the Treasurer's Office will agree to forgo the right to assess penalties and interest outlined in the Act.

How To Address Unclaimed Property Obligations in a Practice Sale

As part of transactional due diligence, a practice purchaser should ensure that the seller has satisfied all of its reporting obligations under applicable law. If it has not, the purchaser should require the seller to complete a Voluntary Disclosure Agreement prior to closing and also include a robust indemnification clause in the purchase agreement should the practice later face penalties for noncompliance.

Because of the financial complexities and legal risks involved relating to unclaimed patient credits, practice buyers and sellers alike should consult with experienced counsel to help them navigate this significant and oft-neglected aspect of the practice’s finances and operations.

If you are a dental professional considering a sale, acquisition, or merger, please contact us at ddslawyers.com at (630) 833-5533 or contact us online to arrange for your complimentary initial consultation.

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.

CTA Dead Forever? Reporting Deadlines Are Once Again On Hold, and Domestic Companies May Soon Be Permanently Relieved of All CTA Obligations.

Wed, 12 Mar 2025 14:59:30 GMT

Once again, mandatory Beneficial Ownership Information (BOI) reporting deadlines under the Corporate Transparency Act (CTA) have been put on hold. Not only have all deadlines been scrapped but domestic reporting companies may soon be permanently relieved of any CTA obligations whatsoever.

Just days after stating it would enforce new March 21, 2025 deadlines, FinCEN issued a February 27, 2025, alert announcing that “ it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update” BOI reports by the current deadlines “until a forthcoming interim final rule becomes effective and new relevant due dates in the interim final rule have passed.

FinCEN said that no later than March 21, 2025, it “intends to issue an interim final rule that extends BOI reporting deadlines, recognizing the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.”

Just two days after FinCEN’s announcement suspending existing deadlines, the Department of the Treasury went even further. In a March 2, 2025 release , the department said that “not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.” That is because “the Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.”

The bottom line is that it appears the new administration has decided to kill the CTA altogether as to domestic reporting companies.

We will, of course, provide updates as warranted. If you have questions about this latest development or the CTA generally, please contact Jordan Uditsky at Grogan Hesse & Uditsky, P.C.

Should Your Practice Take a Closer Look At An “Invisible DSO”?

Wed, 19 Feb 2025 16:03:34 GMT

In a previous post , we discussed the pros and cons and ins and outs of selling a dental practice to a dental services organization (DSO). The DSO model continues to be attractive and popular. According to Grand View Research , the U.S. DSO market size was estimated at $26.9 billion in 2023 and is projected to grow at an annual rate of 16.4% from 2024 to 2030.

Despite the exponential growth of DSOs, and the large amounts of private equity that fuel that expansion, they are still a relatively recent development in the dental industry. As such, the DSO model is still evolving and being refined in response to market conditions and demands. That evolution includes a new form of DSO – the “Invisible DSO” (IDSO) – designed to provide financial and operational support to private dental practices without the significant loss of autonomy and leadership that makes many owners wary of joining a traditional DSO.

What Makes an IDSO “Invisible”?

Unlike traditional DSOs that often impose centralized control over management and branding, IDSOs operate discreetly - almost “invisibly” - in the background. IDSOs allow dentists to keep their brand identity and operational independence without having to rebrand under a corporate umbrella. As important, dentists in an IDSO can still make clinical decisions without external interference – for the most part.

Key Features of an IDSO

That retention of leadership and control comes with many of the benefits of group affiliation within a traditional DSO, including:

Equity Partnership Model. Dentists sell a portion of their practice (typically 51% to 80%) to the IDSO in exchange for a combination of cash and equity in the more extensive dental group. This allows dentists to "de-risk" their financial position while still maintaining ownership and influence over the practice.
Operational and Administrative Support. As with traditional DSOs, IDSOs provide back-office support, including billing, human resources, marketing, compliance, and IT. This helps streamline operations without the dentist having to give up control over daily clinical decisions.
Access to Growth Capital. As noted, private equity is the backbone of the DSO industry, including IDSOs. This readily available cash facilitates the ability of individual practices to expand, recruit more staff, and update technology, equipment, and infrastructure.
Group Negotiation Power. By being part of a more extensive network, practices gain better negotiated rates on supplies, lab costs, and insurance reimbursements (which can be as much as 20% higher than independent practices). This reduces overhead and increases profit margins.
Financial Security and Liquidity. Selling a portion of the practice to an IDSO provides dentists with an immediate financial payout. This can be a useful strategy for retirement planning or reducing financial risk while still retaining practice ownership. Additionally, the private equity behind DSOs may provide dentists with an opportunity to benefit from a future liquidity event, such as a sale to a larger investment group.
Reduced Administrative Burden. One of the most appealing aspects of an IDSO is the ability to unburden themselves of many administrative functions, freeing dentists to focus on patient care and facilitating lower stress and higher job satisfaction.
 Stronger Competitive Positioning. Solo dental practices face growing competition from corporate dental chains. IDSOs provide the resources needed to compete effectively while maintaining independence.

Potential Downsides of Joining an IDSO

While an IDSO can be a more attractive option than its traditional counterpart, it is not without potential downsides. These include:

Invisibility Isn’t Absolute. The key distinguishing feature of an IDSO, as noted, is the ability of the practice owner to retain control of their practice, clinical decisions, and brand. However, that autonomy, while significant, is not limitless. Even if the dentist holds on to a great deal of decision-making power, the IDSO may influence staffing, marketing, financial decisions, and even treatment protocols. This can lead to conflicts between corporate interests and clinical judgment, potentially pressuring practitioners to prioritize profitability over patient care.
Revenue Sharing. Since the IDSO takes a significant equity stake in the practice, profits must be shared. Accordingly, dentists might earn less per year compared to full ownership.
Long-term Commitments. Most IDSOs require a long-term commitment, often 5–10 years. Dentists looking for total independence in the short term may find these agreements restrictive.
Potential for Future Policy and Ownership Changes Although IDSOs promise, and usually deliver, autonomy, private equity-backed groups may eventually adjust policies or introduce new financial structures that affect dentists’ control. If a larger organization acquires the IDSO, there could be unexpected changes in how the practice is managed. An IDSO can change hands multiple times, and a practice owner could be stuck with the company even if their relationship with the organization otherwise goes south.

Before joining an IDSO, it's essential to carefully review the terms, understand the long-term implications, and ensure that the partnership aligns with your personal and professional goals and your practice’s culture and outlook. Consulting with an experienced dental industry attorney can help you navigate the complexities of the decision.

If you are a dental professional considering a sale or merger, please contact us at ddslawyers.com at (630) 833-5533 or contact us online to arrange for your complimentary initial consultation.

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.

Dentists Have New Obligations and Limitations Regarding Third-Party Financing Under Recently Passed Illinois Law

Wed, 15 Jan 2025 16:18:12 GMT

Many dentists and dental practices offer financing arrangements as a way to help patients, especially the uninsured, pay for their care and treatment. For those who utilize third-party vendors for such financing, recently enacted amendments to the Illinois Dental Practice Act impose new disclosure and transparency obligations on dentists and practices and place limits on what staff can do and say in their interactions with patients regarding the subject. The amendments became effective January 1, 2025.

With other states enacting or considering similar legislation regarding external patient financing for health care providers, these changes serve as a reminder to dentists in every jurisdiction about the importance of staying up to date on changes in their state’s laws and regulations.

Here is what you need to know and do about these changes in order to ensure compliance once the calendar turns to the new year.

No Establishing, Promoting, or Assisting With Third Party Financing

A dentist, employee of a dentist, or agent of a dentist may not “arrange for, broker, or establish financing extended by a third party for a patient.” That term encompasses and prohibits submitting an application to a third-party creditor, lender, or creditor's intermediary for approval or rejection on behalf of a patient.

It also prohibits dental practices from providing patients with software, links, or QR codes that have been customized with the practice’s branding. Practices can, however, provide patients with a third party’s marketing and advertising materials so long as they are not customized to the practice.

Beyond providing or displaying generalized third-party advertising materials, dentists and staff cannot do much more in terms of helping a patient apply for or obtain financing. Anyone associated with a practice cannot do any of the following:

Complete any portion of an application for financing extended by a third party for a patient or patient's guardian.
Provide the patient or patient's guardian with an electronic device to apply for financing extended by a third party.
Promote, advertise, or provide marketing or application materials for financing extended by a third party to a patient who
has been administered or is under the influence of general anesthesia, conscious sedation, moderate sedation, or nitrous oxide;
is being administered treatment; or
is in a treatment area, including, but not limited to, an exam room, surgical room, or other area when medical treatment is administered, unless an area separated from the treatment area does not exist.

Mandatory Disclosure

When discussing or providing applications for financing extended by a third party, a dentist, employee of a dentist, or agent of a dentist must provide the following written notice in at least 14-point font:

DENTAL SERVICES THIRD-PARTY FINANCING DISCLOSURE

This is an application for a CREDIT CARD, LINE OF CREDIT, OR LOAN to help you finance or pay for your dental treatment. This credit card, line of credit, or loan IS NOT A PAYMENT PLAN WITH THE DENTIST'S OFFICE. It is a credit card, line of credit, or loan from a third-party financing company. Your dentist does not work for this company. Your dentist may not complete or submit an application for third-party financing on your behalf.

You do not have to apply for a credit card, line of credit, or loan. You may pay your dentist for treatment in another manner. Your dentist's office may offer its own payment plan. You are encouraged to explore any public or private insurance options that may cover your dental treatment.

The lender or creditor may offer a "promotional period" to pay back the credit or loan without interest. After any promotional period ends, you may be charged interest on portions of the balance that have already been paid. If you miss a payment or do not pay on time, you may have to pay a penalty and a higher interest rate. If you do not pay the money that you owe the creditor or lender, then your missed payments can appear on your credit report and could hurt your credit score. You could also be sued by the creditor or lender.

If your dentist's office has completed or submitted an application for third-party financing on your behalf, you may file a complaint by contacting the Illinois Department of Financial and Professional Regulation at https://idfpr.illinois.gov/admin/dpr/dprcomplaint.html or by calling (312) 814-6910."

Penalties for Non-Compliance

A violation of these new rules and limitations is punishable by a fine of up to $500 for the first violation and a fine of up to $1,000 for each subsequent violation. IDFPR has the power to take additional disciplinary action as well.

If you have any questions about these new requirements or third-party financing for dental services generally, please contact Jordan Uditsky at Grogan Hesse & Uditsky.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Hiring a New Associate Dentist? Don’t Overlook Fundamental Due Diligence

Wed, 04 Dec 2024 19:22:30 GMT

Few decisions a dental practice owner makes are as impactful as who they hire as an associate dentist. Whether a freshly minted dental school graduate or a more seasoned lateral hire, the associate you bring on board will hold the well-being of your patients, as well as the reputation, culture, and financial trajectory of your practice, in their hands. Making an informed decision, and conducting the due diligence necessary to do so, is critical and will go a long way towards fostering a mutually productive professional relationship.

There is a multitude of considerations that go into the associate dentist hiring decision matrix – technical expertise, skill sets that match your needs, demeanor and communication skills, cultural fit, and agreed compensation structure, among others. But all of these factors, as important as they are, are irrelevant if the candidate lacks the fundamental ability to practice dentistry in your state or has issues of concern in their record that cast doubt on their suitability for your practice.

If you have a seemingly ideal associate dentist candidate in your sights and are ready to move forward with an offer, make sure you cover all of the following fundamental licensing, credentialing, and disciplinary bases before doing so.

Verify Licensure In Your Jurisdiction: Confirm the associate holds a valid dental license in your state or is in the process of obtaining their license. Obtain a photocopy or digital copy of the state dental license and verify the license status and validity using your state dental board’s online system.
Check Educational Background: Request transcripts or diplomas from accredited dental schools.
Specializations: If the candidate claims additional certifications, specialization, or training, ensure they provide supporting documentation.
DEA Certification: Ensure the new associate has a valid DEA certificate. Get a copy of the certificate and confirm the registration number and expiration date.
Malpractice History: Inquire about past claims or lawsuits. Ask about the underlying allegations and how the matters were resolved.
Malpractice Insurance: If the associate will be responsible for maintaining their own malpractice insurance coverage, obtain proof of their current coverage, and verify policy limits, policy number, the insurance provider’s contact information, and the policy renewal dates.
Assess Clinical Skills and Competence: Ask the candidate to present cases they’ve handled, including treatment plans and outcomes, and consider having candidates perform a procedure or shadow your team to observe their techniques and patient interaction.
Peer Recommendations: Speak to previous employers, mentors, or colleagues about the candidate’s skills and areas for improvement.
Conduct a Thorough Background Check: Ensure the candidate has no criminal history or legal issues beyond malpractice claims that could jeopardize patient safety, their licensure status, or your practice's reputation.
Employment History and Contractual Obligations: Verify the candidate’s employment history and inquire about their reasons for leaving previous positions. Also ask about any contractual restrictions on their ability to join your practice, such as non-competition or non-solicitation agreements.
Understanding of Ethics and Compliance Obligations: Inquire as to their knowledge and appreciation of and commitment to fundamental ethical and legal compliance obligations.

We Focus on You So You Can Focus on Your Patients

As noted, the hiring and onboarding of a new associate dentist is a multifaceted, multistep endeavor. No matter how impressive a putative associate may seem and perhaps is, confirming that they possess the foundational requirements and attributes needed to contribute to your practice and care for your patients is indispensable.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Handling Your Office Lease – And Protecting Yourself From Liability - When Selling Your Dental Practice

Wed, 09 Oct 2024 19:34:09 GMT

If you are considering selling your dental practice, you likely want the conclusion of the transaction to be precisely that – conclusive. That is, when the documents are signed and the money changes hands, you want to be able to walk away feeling that nothing will come back to bite you; that all potential claims and liabilities have been accounted for, resolved, or shifted to the purchaser. But if the sale of your practice includes an assignment of your office’s lease, that may be easier said than done.

A lease assignment involves transferring the obligations and benefits of the lease from you (the assignor) to the purchaser of your practice (the assignee). There are many complexities to a lease assignment as part of a dental practice sale. Some of those issues may throw a wrench into the sale and prevent its smooth consummation. Others could lead to unwanted or unintended risks after the completion of the deal if not addressed with both the landlord and the lease assignee during the transaction.

Here is what dental practice owners who lease rather than own their offices should be cognizant of when assigning their lease during the sale of their practice.

What Does The Lease Say About Assignment?

As with every other matter pertaining to the landlord-tenant relationship, your rights and limitations as to assignment are governed by the express provisions of the lease. Almost all commercial leases contain a clause that accounts for the possibility that the tenant will want or need to assign their lease to another party during the lease term.

Some leases – hopefully not yours - explicitly prohibit assignment. However, it is far more common for a lease to allow for assignment so long as certain conditions are met. Those conditions usually involve obtaining the lessor’s consent to the assignment. How freely that consent will be given depends both on lease terms that may define how and why the landlord may approve or deny the proposed assignment as well as the finesse with which the tenant and their assignee approach the landlord during negotiations.

Obtaining The Landlord’s Consent to Assignment

If the lease requires your landlord’s approval for assignment, how your putative assignee handles this aspect of the process can make or break your practice sale.

Since the purchaser will be using the space in the same manner and for the same purposes as your practice did, the landlord’s primary, if not exclusive, concern is ensuring that the new tenant will be able to meet all of its obligations under the lease. Since no obligation means more to the landlord than getting their rent payments, reassuring them that the lessee has the financial wherewithal to do so consistently and throughout the lease term is critical.

To expedite this process, you should work with the purchaser to gather the information, documents, statements, business plans, and references that can provide a clear financial history and strong business case for the assignee’s assumption of the lease. Doing so transparently and affirmatively can help reassure the landlord and potentially smooth over any concerns they may have.

During negotiations, the landlord may ask for changes to the lease or additional guarantees. For example, the landlord may require a personal guarantee from the assignee or request changes in rent rates or other lease terms. These negotiations are a normal part of the process, but they can lead to delays or complications if not handled properly.

The Landlord Isn’t The Only One Who Cares About The Assignee’s Finances

You have just as much interest in the purchaser’s ability to meet its lease obligations as your landlord does. Assigning a lease to a financially unstable buyer could lead to complications down the line, especially if you remain liable for breaches of the lease after the assignment.

And there is a good chance that you will, in fact, still be on the hook for any failure of the purchaser to fulfill the lease terms. While you should attempt to negotiate for and obtain a release of liability from the landlord, they may not be amenable to providing you with one. In such a situation, you essentially become the purchaser’s surety and guarantor as to the lease, an undesirable arrangement, to say the least.

There are a couple of ways you can protect yourself in the event that the landlord will not release you from liability. You could make the sale of your practice contingent on obtaining a release, but if you do so, you are essentially giving your landlord the ability to scuttle your exit plans. Alternatively, you can make sure that your sale agreement contains a strong indemnification provision such that you can recover from the purchaser any amounts you may have to pay to the landlord due to the purchaser’s breach of the lease, including any attorney’s fees you may incur.

Timing and Closing the Transaction

The timing of the lease assignment is also critical. The lease should be assigned at the time the practice sale is completed, but the process of obtaining landlord approval and negotiating lease terms can take several weeks or even months. Both the buyer and seller should plan for these delays and ensure that the sale agreement takes the lease assignment timeline into account.

Finalizing the lease assignment at the same time as the practice sale ensures a smooth transition and avoids disruptions in operations and patient care. The lease should be legally assigned, and all required documents should be signed and executed before the sale is officially closed.

To discuss the potential sale of your dental practice, including any issues related to an assignment of your lease, please contact Grogan Hesse & Uditsky today at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Isn’t That Specialist? What Dentists Need to Know About Advertising Specialty Services

Wed, 25 Sep 2024 15:20:36 GMT

In the legal profession, we are very careful with our words. We understand that specific terms have equally particular meanings, and that there are things we should say, things we must say, and things we can’t say, especially when we are advertising our services to the public. For example, even though I focus a large part of my practice on and have a lot of experience representing dentists and dental practices, I can’t say that I specialize or am an expert in that area of the law. That’s because, under the rules that govern my profession, lawyers can't claim to be experts or certified specialists in legal advertising unless they have been certified by a designated and accredited organization.

The same general principle applies to the dental profession. Dentists and practices that offer specialty dental services must tread with caution when advertising those services so as not to run afoul of state regulations that set forth in great detail when and how dentists can hold themselves out to the public as a licensed “specialist” or “specializing” in a particular field of dentistry.

Specialty License Required If Using Specialty-Implying Words In Advertising

Section 1220.421 of the Illinois Administrative Code governs advertising for dentists generally and the advertising of specialty services in particular. The prime directive for dental advertising is to not say anything that is “fraudulent, deceptive, inherently misleading or proven to be misleading in practice.”

While the Code allows a dentist or practice to include information in advertising “any specialty licenses held, Board certification, professional society memberships and any limitations or concentrations of practice,” it also prohibits them from advertising “professional services that the dentist is not licensed to render.” Even the mere implication that a dentist is a specialist, without using that term, can cross the line.

More specifically, Section 1220.421(f) provides that “When words relating to specialty practice are used in an advertisement, the advertisement must not imply that the dentist offering those services is licensed as a specialist unless he holds a specialty license issued by the Division.”

Unless a dentist is licensed in the corresponding dental specialty, they cannot use the following words or variations thereof in any advertising or communications with the public:

Endodontist
Pedodontist
Pediatric Dentist
Periodontist
Prosthodontist
Orthodontist
Oral and Maxillofacial Radiologist
Oral and Maxillofacial Surgeon

Disclaimers Required

If a dentist uses terms such as "Specialist," "Practice Limited To," or "Limited To Specialty Of," with the name of the branch of dentistry practiced as a specialty, (endodontics, periodontics (pediatric dentistry), periodontics, prosthodontics, orthodontics, oral and maxillofacial radiology, and oral and maxillofacial surgery), that serves as prima facie evidence that they are holding themself out to the public as a specialist.

A general dentist who advertises, in any media, using words or phrases customarily used by a specialist, except those prohibited above, but who does not hold a specialty license, shall include in the advertisement a prominent disclaimer that they are licensed only as a general dentist.

Additionally, any advertisements offering the availability of the recognized dental specialties listed above or offering the availability of some other "specialty" practice shall contain a prominent disclaimer in the form of a statement setting forth the specialties in which the dentist is licensed in Illinois and/or a statement that the dentist is licensed to practice as a general dentist in Illinois.

Examples of language requiring the foregoing disclaimers include:

Family dentistry
Cosmetic dentistry
Restorative dentistry
Preventive dentistry
Hospital dentistry
Implant dentistry
TMJ
Cranio mandibular dentistry

Finally, for practices with multiple dentists that offer both general dentistry and any licensed specialty, all advertising for the specialty shall include the name of the licensed dental specialists who perform the specialty services.

The consequences of an advertising-related violation can be extremely serious and lead to disciplinary action, including the suspension or revocation of a dentist’s professional license. Accordingly, dentists should consult with experienced dental counsel regarding any proposed advertisements or other communications with the general public to ensure compliance with state advertising rules.

Call Grogan, Hesse & Uditsky Today

If you have questions or concerns about your practice’s advertising, please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

The HIPAA Breach Notification Rule: What Dental Practices Must Do When Patient Information Is Compromised

Wed, 07 Aug 2024 15:52:34 GMT

Every dental practice is sitting on a fortune. The patient information they electronically collect, maintain, store, and use is a potential gold mine for hackers, cybercriminals, and other technological bad actors who can sell and leverage that data for their own gain or nefarious ends. For these reasons, dentists and all other healthcare providers, facilities, and the vendors they work with are ripe and continuous targets for cyberattacks and data breaches.

Such occurrences can quickly metastasize into a legal, financial, and reputational nightmare for dental practice owners. And dental practices and dental service organizations are waking up to these nightmares with increasing frequency. According to the Ponemon Institute , dental practices experienced a 45% increase in data breaches in the last two years, with the average cost of a healthcare data breach reaching $9.23 million.

As we discussed in this earlier post , the HIPAA Security Rule imposes detailed and technical compliance obligations on dental practices regarding the protection of patients’ electronic personal health information (ePHI). But when a breach does occur, practice owners must take quick, decisive actions on several fronts to triage the situation and remediate the damage. This includes making required disclosures and providing notice of the breach as set forth in the HIPAA Breach Notification Rule .

The Breach Notification Rule mandates that covered entities, including dental practices, notify affected individuals, the Secretary of the Department of Health and Human Services (HHS), and, in certain cases, the media of a breach of unsecured PHI.

What Constitutes a Breach?

For purposes of the Breach Notification Rule, a breach is defined as the acquisition, access, use, or disclosure of PHI in a manner not permitted under HIPAA, which compromises the security or privacy of the PHI. This does not include unintentional access by a workforce member, inadvertent disclosure by a person authorized to access PHI, or when the unauthorized person to whom the disclosure is made would not reasonably have been able to retain the information.

PHI is considered unsecured if it is not rendered unusable, unreadable, or indecipherable to unauthorized individuals through the use of encryption or destruction. Breaches of secured PHI (i.e., encrypted data) do not require notification as set forth below.

Risk Assessment and Notification Requirements After Breach Discovered

Once a practice becomes aware of a potential data breach, it must conduct a risk assessment to determine if there is a low probability that the PHI has been compromised. Factors to consider in such an assessment include the nature and extent of the PHI involved, the unauthorized person who used or received the PHI, whether the PHI was actually acquired or viewed, and the extent to which the risk has been mitigated.

Within 60 days after the discovery of a breach, a dental practice must provide notice to any affected patients that includes:

A description of the breach
The types of information involved
The steps individuals should take to protect themselves
What the practice is doing to investigate and mitigate the breach, and
Contact information for further inquiries.

Notice to HHS

For breaches affecting more than 500 residents of a state or jurisdiction, practices must notify HHS as well as local media outlets of the breach. Specifically, the practice must notify HHS at the same time it provides notice to affected individuals. That notice must be given “without unreasonable delay” and in no case later than 60 calendar days after the discovery of a breach of security. For breaches involving fewer than 500 people, covered entities must notify HHS annually and no later than 60 calendar days following the end of the year.

What Dentists Need To Do To Comply With The Breach Notification Rule

While the Notification Rule’s obligations don’t kick in until after a breach, dental practices should take several steps before a breach happens to ensure compliance and minimize the damage and fallout:

Develop and Implement Policies and Procedures: Dentists should establish written policies and procedures for managing PHI and addressing potential breaches. These should include processes for identifying, investigating, and responding to breaches, conducting risk assessments, and notifying affected individuals and the appropriate authorities.
Regular Staff Training: All staff members should be trained on HIPAA regulations, including the Breach Notification Rule, and the office's specific policies and procedures for handling PHI. Regular training ensures that staff members are aware of their responsibilities and can recognize and report potential breaches.
Implement Security Measures: As noted, dentists should implement administrative, physical, and technical safeguards to protect PHI as set forth in the HIPAA Security Rule. This includes using encryption for electronic PHI, securing physical records, controlling access to information, and using secure communication channels.
Establish a Breach Response Team: Having a designated team responsible for managing breaches ensures a coordinated and effective response. This team should include individuals from different areas of the practice, such as IT, legal, and compliance.
Maintain an Incident Response Plan: An incident response plan outlines the steps to take when a breach is suspected or detected. It should include procedures for containment, investigation, risk assessment, notification, and mitigation.

Compliance with the Breach Notification Rule is just one of many actions dental practices must take in the unfortunate event of a data breach. In our next post, we will discuss several other aspects of data breach response and mediation, all of which are crucial to protecting practices and patients alike.

HIPAA Breach Notification Questions? Call Grogan, Hesse & Uditsky Today

If you have questions or concerns about your practice’s compliance with the HIPAA Breach Notification Rule, please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

FTC’s Non-Compete Ban In Litigation Limbo After Recent Court Injunction

Wed, 24 Jul 2024 15:13:46 GMT

In theory, the vast majority of existing and future non-competition agreements should become void and unenforceable as of September 4, 2024. That is the scheduled effective date for the Final Rule approved by the U.S. Federal Trade Commission (FTC) on April 23, 2024, which effectively bans all non-competes, except those for “senior executives” or ones related to the sale of a business. (Click here for our detailed discussion of the ban). In reality, however, pending litigation, including a recently issued order enjoining enforcement of the Final Rule, has cast serious doubt on the ban’s fate.

Several lawsuits challenging the Final Rule’s legality were filed within hours of the FTC’s approval. In one of those cases, Ryan, LLC v. Federal Trade Commission , a federal judge in Texas issued a preliminary injunction on July 3, 2024 that held that the FTC likely lacked the legal authority to prohibit non-competes. Judge Ada Brown of the U.S. District Court for the Northern District of Texas found that:

“…the text, structure, and history of the FTC Act reveal that the FTC lacks substantive rulemaking authority with respect to unfair methods of competition under Section 6(g). The Court GRANTS the motion for preliminary injunction and postpones the effective date of the Rule as applied to the Plaintiffs. While this order is preliminary, the Court intends to rule on the ultimate merits of this action on or before August 30, 2024.”

As the order notes, the preliminary injunction only applies to the plaintiffs in that case, including the U.S. Chamber of Commerce. However, if the court reaches the same conclusion when it considers the underlying merits of the challenge to the ban, it could issue a nationwide injunction that would prevent it from going into effect on its September 4 effective date. As the judge notes, that decision could come down only a few days before that date.

Other cases attacking the non-compete ban remain pending as well. Though the Final Rule’s ultimate fate remains clouded in uncertainty, it is still set to go into effect in September until and unless a court says otherwise. Accordingly, dental practice owners who rely on non-competition provisions to protect their business interests should presume that any such provisions will no longer be valid. Owners should engage counsel to review non-compete 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 the impact of this recent court ruling, please call Grogan Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation.

The 5 Essential Aspects of Informed Consent For Dental Practitioners

Fri, 28 Jun 2024 17:06:24 GMT

All dentists, on an intellectual level at least, understand the moral, ethical, and legal necessity of obtaining informed consent from a patient before embarking on a course of treatment. Unfortunately, there is often a disconnect between principle and practice when it comes to informed consent.

Part of the problem lay in a lack of consistency or the failure to establish and follow clear protocols when discussing a proposed procedure and securing a patient’s assent. Conversely and somewhat contradictorily, a failure to tailor informed consent efforts to a patient’s particular needs or limitations can lead to miscommunication and misunderstandings that leave the patient neither informed nor in a position to effectively consent.

However, perhaps the biggest stumbling block for dental practitioners regarding informed consent is the term itself. It implies that there are only two aspects to this fundamental duty: informing the patient, and obtaining their consent. This is a gross oversimplification of what dentists must do to both satisfy their obligations and insulate themselves from malpractice claims based on a lack of informed consent.

The reality is that informed consent is a multi-step process that involves conversation and documentation, education and evaluation, the patient and most of all, patience. Specifically, informed consent encompasses five separate and equally important components:

Disclosure
Comprehension
Voluntariness
Competence
Consent

Disclosure

The first step in informed consent is disclosure, where the dental professional provides the patient with all relevant information about the proposed treatment. This information should be comprehensive and include the nature of the procedure, its purpose, the expected benefits, potential risks, and possible complications. Additionally, the dentist should discuss alternative treatment options – including no treatment whatsoever – as well as the likely consequences of each course of action.

For example, if a patient needs a root canal, the dentist should explain what the procedure involves, why they believe it is necessary and appropriate, the expected outcome, and the risks, such as infection or failure to remedy the underlying issue. The dentist should then present root canal alternatives, such as extraction or antibiotic treatment, along with their respective pros and cons.

Comprehension

The most detailed and thorough explanation of a treatment, alternatives, and potential outcomes is as good as spouting incomprehensible jibberish if the patient does not understand what the dentist is telling them. And that lack of understanding can negate the existence of informed consent.

Comprehension means that the patient understands the information well enough to make an informed decision. This can be challenging, as dental procedures often involve complex medical terminology and concepts that may be unfamiliar to patients.

It is a challenge that we in the legal profession are familiar with. We frequently must discuss complicated or opaque legal issues with our clients. Doing so in “legalese” or using gratuitous Latin phrases that sound impressive but mean nothing to most people does little to inform our clients or make them comfortable with their representation. That is why I aspire to “accessible expertise” when speaking with clients about their matters.

For dentists, “accessible expertise” means using plain language and/or visual aids and repeating information as necessary. They should also encourage questions and provide clear, direct answers. Assessing comprehension might involve asking the patient to repeat the information in their own words or to explain their understanding of the treatment plan and its implications.

Special attention must also be paid to the language capabilities of the patient. If a patient has limited English language proficiency, the dentist must take steps to ensure that they receive accurate oral or written translations of the information being provided.

Voluntariness

Informed consent must be given voluntarily, free from coercion, manipulation, or undue influence. This means the patient’s decision to accept or decline treatment must be made independently, without pressure from the dentist, staff, or family members. Voluntariness is a critical aspect of respecting patient autonomy and ensuring that their choices reflect their own values and preferences.

For instance, a dentist should avoid using scare tactics to persuade a patient to undergo a particular procedure. Instead, they should provide balanced information and support the patient in making a decision that aligns with their own health goals and personal circumstances.

Competence

Competence refers to the patient’s ability to understand the information provided and make a rational decision based on that understanding. This element is particularly important when dealing with vulnerable populations, such as minors, elderly patients, or those with cognitive impairments. Competence is assessed by evaluating the patient’s ability to comprehend the nature and consequences of the proposed treatment and reason and deliberate about their choices.

For patients who are deemed incompetent, such as young children or individuals with severe cognitive impairments, the dentist must obtain informed consent from a legally authorized representative, such as a parent, guardian, or legal custodian. In such cases, the representative’s decision should reflect the best interests of the patient.

Consent

The final step in the informed consent journey is obtaining the actual consent from the patient. This consent can be given verbally, in writing, or through implied actions, depending on the nature of the procedure and the circumstances. Written consent is typically required for more invasive or risky procedures, while verbal or implied consent might suffice for routine or minor treatments.

When obtaining written consent, dentists should use a form that is clear, comprehensive, and devoid of unnecessary complexity. It should summarize all the information provided and include a statement confirming that the patient has had the opportunity to ask questions and that their questions have been answered to their satisfaction. The patient (or their representative) should sign and date the form, and the dentist should also sign it as a witness to the consent process.

Practical Implementation Of Informed Consent Protocols

Satisfying all of the conditions necessary to ensure informed consent, as essential as it is, can tax a dentist’s schedule and patience. To make this process as efficient as it is effective, consider adopting some or all of the following practices and protocols:

Have Educational Materials At The Ready : Maintain a library of brochures, pamphlets, or links to videos that explain common dental procedures, their benefits, risks, and alternatives. These materials can serve as a foundation for further discussion and help reinforce and increase comprehension of verbal explanations.
Interactive Communication : Engage in two-way communication with patients. Encourage them to ask questions and express their concerns. Use open-ended questions to gauge their understanding and clarify any misconceptions.
Maintain Meticulous Documentation : Maintain thorough records of the informed consent process. Document the information provided, the patient’s questions and responses, and the consent given. This documentation is essential for legal protection and continuity of care.
Use a Tailored Approach : Adapt the informed consent process to the individual needs of each patient. Consider factors such as age, language proficiency, cultural background, and cognitive abilities. Use interpreters or translation services when necessary to ensure comprehension.
Train and Educate Staff : Ensure that all dental staff are trained in the principles and practices of informed consent. Regular training sessions can help staff stay updated on best practices and legal requirements.
Allocate Sufficient Time : Schedule adequate time for patient consultations to ensure that informed consent discussions are not rushed.

If you have questions or concerns about informed consent and would like to discuss them (in clear, plain language), please contact Jordan Uditsky at Grogan, Hesse & Uditsky, P.C. 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.

Urgent Cybersecurity Alert: Hackers Targeting Dental Practitioners With Phishing Scams, FBI Warns

Tue, 21 May 2024 17:40:19 GMT

Because they possess a treasure trove of personal, financial, and health information about hundreds or thousands of patients, physicians, dentists, and other healthcare practices and facilities are the frequent targets of hackers and cyberattacks. That threat has not diminished, and in a May 6, 2024 notice to the American Dental Association (ADA) and the American Association of Oral and Maxillofacial Surgeons (AAOMS), the Federal Bureau of Investigation (FBI) warned of a credible, active cybersecurity threat to the practices of oral and maxillofacial surgeons. While this current threat is focused on oral and maxillofacial surgeons, the FBI has expressed concern that the practices of general dentists and other specialists could also eventually be targeted.

According to the ADA, the FBI suspects that the group behind the cyberattacks may be shifting tactics to oral and maxillofacial surgery practices after targeting plastic surgeons last year. Accordingly, all dental practices and practitioners need to be on high alert against such attacks, which focus on “social engineering scams” — such as phishing (email), SMSishing (through text or instant messaging apps), and vishing (using phone calls and voicemail) — to gain access to sensitive personal data such as electronic protected health information.

In particular, the FBI warns of “spear phishing,” which refers to a phishing email that appears to be from a trusted contact. Through these scams, the FBI says, “threat actors try to convince people to reveal sensitive information, or to click on a link, open an attachment or visit a website that causes malware to be deployed. This malware can lead to ransomware, which blocks system and/or file access until money is paid.”

The FBI provided an example of such a scam:

A threat actor poses as a new patient or says they want to become a patient at the practice to obtain new patient forms online. Once the forms are received, the threat actor will then contact the practice to report they are having trouble submitting them online and ask if they can scan the forms and email them instead. The threat actor then emails the “forms” as an attachment. When the attachment is opened, malware is deployed through a phishing scheme.

The FBI requests dental practices that experience any fraudulent or suspicious activities to report them to the FBI Internet Crime Complaint Center at ic3.gov .

Precautions Dental Practices Can Take To Protect Against Phishing and Other Cyberattacks

The Cybersecurity & Infrastructure Security Agency (CISA) recommends four vital ways to protect your practice from cyberthreats:

Teach your team to recognize and avoid phishing

Require strong passwords

Require multi-factor authentication

Update all business software

Additionally, practices should have policies and protocols in place to immediately respond to and remediate any data breaches that result from a phishing scam or other cyberattack.

The following resources are also available to support dental professionals:

A CISA.gov toolkit aids healthcare practices in building cybersecurity foundations and implementing more advanced, complex tools to stay secure and ahead of current threats.

The U.S. Department of Health and Human Services’ Knowledge on Demand resource offers five free cybersecurity trainings that align with the top five threats named in HHS’ Health Industry Cybersecurity Practices. HHS also provides information on how the HIPAA security rule can help defend against cyberattacks .

The Office of the National Coordinator for Health Information Technology’s Security Risk Assessment Tool , a resource designed to help medium and small providers conduct a security risk assessment as required by the Health Insurance Portability and Accountability Act.

The U.S. Department of Health and Human Services Office of Information Security and Health Sector Cybersecurity Coordination Center’s “ Artificial Intelligence, Cybersecurity and the Health Sector ” guide shares how healthcare entities help protect against AI-enhanced cyberthreats.

Additional resources can be found at ADA.org/riskmanagement

Call Grogan, Hesse & Uditsky Today

If you have questions or concerns about your practice’s compliance with HIPAA, please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

More Dental Workers Likely to Be Considered Employees Not Independent Contractors Under Final Department of Labor Rule

Tue, 21 May 2024 17:34:06 GMT

Like owners of other businesses, dental practice owners often hire staff members as independent contractors rather than as employees. They do so to keep expenses down, minimize tax obligations, and reduce time spent worrying about personnel and payroll matters such as overtime pay, sick leave, insurance, and other employment law issues. Ultimately, however, whether an associate dentist, hygienist, or other team member is appropriately classified as an employee or contractor isn’t up to the practice owner. It is up to the law and the rules promulgated by the U.S. Department of Labor (DOL). And under a DOL Final Rule that became effective on March 11, 2024, more dental workers are now likely to be considered employees instead of contractors, no matter what label a practice owner uses for them.

The Final Rule, which was initially published in January 2024, revises the DOL’s analysis for determining employee or independent contractor classification under the Fair Labor Standards Act (FLSA). Specifically, the new Final Rule rescinds a rule promulgated under the previous administration which identified five “economic reality factors” to be used in determining whether a worker was an employee or independent contractor. Under the prior rule, two of the five factors— “the nature and degree of control over the work and the worker's opportunity for profit or loss” were designated as “core factors” that were to carry more weight in the analysis.

Six-Factor “Economic Reality Test” To Determine Proper Classification

That rule was generally seen as more employer-friendly in that it made it easier to classify a worker as a contractor. Under the new Final Rule, the “core factors” mentioned above are no longer part of the analysis. Instead, the new rule uses a “totality-of-the-circumstances” approach and an “economic reality test” that looks at the economic reality of the worker’s activities and the nature of the working relationship with the employer.

The new rule sets forth six factors to be used in determining whether the “economic realities of the working relationship” reveal a worker to be economically dependent on the employer – in which case they would be likely considered an employee – or whether the worker is in business for themselves such that they are an independent contractor. These factors, described in the economic reality test of the final rule, are:

opportunity for profit or loss depending on managerial skill;
investments by the worker and the potential employer;
degree of permanence of the work relationship;
nature and degree of control;
extent to which the work performed is an integral part of the potential employer’s business; and
skill and initiative.

No one factor or subset of factors determines if a worker is an employee or independent contractor. Rather, all the circumstances of the relationship should be examined. The weight given to each factor may depend on the facts and circumstances of the particular relationship. Also, additional factors may be relevant if they in some way indicate if the worker is in business for themself as opposed to being economically dependent on the employer for work.

In the case of associate dentists, these factors in the abstract would likely make most such practitioners employees rather than contractors. As noted, however, the ultimate determination as to the proper classification comes down to the specific circumstances of each employment relationship.

In conjunction with the publication of the Final Rule, the DOL has issued guidance for employers through Frequently Asked Questions and a Small Entity Compliance Guide . These resources provide important insights for dental practice owners as they evaluate the status of their current employment relationships and make any needed adjustments to comport with the new rule’s classification standards. However, given the fact-specific nature of the classification analysis established by the rule, practice owners are strongly advised to consult with experienced counsel to ensure compliance. The financial cost of non-compliance to the practice can be substantial, but it can also cost owners personally, as they can be held liable individually for any intentional misclassification.

To avoid such consequences, dental practice owners should discuss any questions or concerns with an experienced employment and dental practice attorney .

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Non-Competes No More? What Dental Practice Owners Need To Know About The FTC’s Recent Ruling

Thu, 25 Apr 2024 20:29:42 GMT

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.

Considering a Concierge Dentistry Practice? Consider These Issues First.

Wed, 03 Apr 2024 15:26:17 GMT

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.

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.

Unforced Private Insurance Billing Errors By Dentists Can Lead To Significant Losses and Liability. Avoid These 6 Common and Costly Mistakes.

Wed, 06 Mar 2024 16:16:20 GMT

Over the years, countless healthcare companies and practitioners have been fined, sanctioned, or even jailed for fraudulent or illegal billing practices involving Medicare and Medicaid or equivalent state programs. Such transgressions against government payors are vigorously prosecuted by the U.S. Department of Justice and their state-level counterparts, primarily under the federal False Claims Act (FCA). However, the FCA only applies to fraud against the government, not activities that defraud private insurers.

Unlike care and services provided by other practitioners, most of the services offered by dentists are not covered by Medicare or Medicaid, meaning that the vast majority of their billing and reimbursement activities involve private payors. Given the government’s focus on the FCA and fraud against Medicare and Medicaid, dentists may be under the mistaken impression that they can be less vigilant and compliant and more lax in their practices when billing private insurers. This can be a costly, disruptive, and damaging misconception.

Just like whistleblowers can report provider billing fraud and initiate actions under the FCA, those who discover and identify fraudulent billing practices by dentists involving private insurers can do the same under state specific laws, such as the Illinois Insurance Claims Fraud Prevention Act in Illinois. Of course, insurers themselves have their own contractual and other remedies for billing misconduct by dentists under their participation agreements.

Many, if not most, insurance billing mistakes by dental practices are just that – errors made without any fraudulent or nefarious intent. But, as is often said, ignorance of the law is no excuse. Such is the case with insurance billing by dentists.

Here are six of the most common billing errors by dentists when making claims or seeking reimbursement from private payors:

Billing For Services Not Rendered/Double Billing

Billing fraud doesn’t get any simpler than submitting claims for reimbursement for services that were never provided to the patient. Similarly, billing the insurer twice for the same services is Fraud 101.

Inadequate Documentation

One prevalent mistake made by dentists is insufficient documentation of procedures and patient records. Proper documentation is crucial for insurance claims, and failure to maintain detailed records can lead to claim denials or even allegations of fraud. Dentists should ensure that each patient's file includes comprehensive details about the diagnosis, treatment plan, and any communication with the insurance company.

Upcoding and Unbundling of Services

Dentists and other practitioners may try to maximize their reimbursements by improperly coding and billing procedures and services.

Upcoding occurs when a dentist inflates requests for reimbursement by submitting false medical codes—that is, billing for diagnoses and services that are more serious and expensive than the services rendered. Another form of improper medical coding and fraud is unbundling, also referred to as “fragmentation.” This occurs when a dentist fragments or unbundles billing codes to receive a higher aggregate reimbursement amount.

Both upcoding and unbundling are illegal under federal and state laws and regulations and can result in hefty fines, loss of licensure, and even criminal charges. Dentists should carefully review billing codes to ensure accurate representation of the provided services.

Ignoring Preauthorization Requirements

Some dental procedures necessitate preauthorization from insurance companies before treatment. Ignoring these requirements and proceeding without obtaining preauthorization may lead to denied claims and disputes. Dentists should familiarize themselves with the specific preauthorization requirements for various procedures and ensure compliance to avoid legal complications.

Billing Inaccuracies

Submitting inaccurate or false information on insurance claims is a serious legal offense. Whether intentional or due to oversight, inaccuracies in billing can lead to allegations of fraud, resulting in severe consequences such as fines, imprisonment, and damage to professional reputation. Dentists must implement rigorous quality control measures to ensure the accuracy of all billing information.

Waiving of Coinsurance or Copayments

If you think it is savvy or generous to waive patients’ deductibles and copays, you could quickly find that it is neither. Dentists cannot waive patients’ deductibles or copayments as it drives up premium costs for policyholders and could encourage patients to request unnecessary treatments. This practice constitutes illegal overbilling and is considered fraudulent.

As noted, most of the acts that lead to legal and contractual problems with billing private insurers are mistakes, not attempts to game the system and commit fraud. But unforced errors can be just as costly as intentional misconduct. If you have any questions or concerns about your billing practices or would like assistance establishing policies and protocols to minimize the chances of billing problems, please give us a call. At Grogan, Hesse & Uditsky, P.C., 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.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Your Dental Practice Likely Has New, Complicated, and Rapidly Approaching Reporting Obligations Under The Federal Corporate Transparency Act

Thu, 22 Feb 2024 16:31:23 GMT

Dental practices already have a long list of regulatory obligations that require their compliance, from those related to licensing to billing to patient privacy to employment policies and practices. But as of January 1, 2024, practice owners now have a new, non-negotiable, and complicated disclosure requirement to add to the pile.

That is because almost every dental practice is considered a covered “Reporting Company” under the federal Corporate Transparency Act (CTA). Under this law, dental practices will need to provide the federal government with detailed information about their ownership and identify any other individuals who exert control over their practice.

With mandatory reporting deadlines approaching, and with steep penalties awaiting practices that fail to comply, practice owners need to act now to ensure that they understand and comply with the CTA’s disclosure mandates.

What Is The CTA?

The CTA was signed into law in 2021 as part of the federal government’s efforts to combat illegal money laundering and "the use of shell and front companies by illicit actors who use them to obfuscate their identities and launder ill-gotten gains through the United States."

Accordingly, the focus of the CTA is on revealing the identities of the individuals and entities that actually own or control a business. This is accomplished by requiring all covered companies to disclose "Beneficial Ownership Information" (BOI) to the Financial Crimes Enforcement Network (FinCEN) division of the U.S. Treasury Department.

While dental practices may seem like unlikely vessels for money laundering and similar nefarious activities, it does not matter. In fact, the CTA is focused on smaller businesses like individual practices since most larger companies already have ownership reporting obligations under various federal regulatory schemes. That is why the government estimates that approximately 90% of all businesses and organizations in the U.S. will need to comply with the CTA’s reporting requirements.

Almost Every Dental Practice Is a Covered "Reporting Company" Under the CTA

As defined in the CTA, a "Reporting Company" that must comply with the CTA is any corporation, limited liability company, or any other entity created by filing a document (e.g., Articles of Incorporation) with a secretary of state or equivalent agency. This includes “professional corporations” established under most state laws, the corporate form that most dentists choose for their practices. Entities like general partnerships or sole proprietorships that can be created without such filings are not subject to the CTA's disclosure and reporting requirements (but any dentist who practices as such should remedy that dangerous and ill-advised situation immediately).

While the CTA includes a long list of entities exempted from the CTA , it is unlikely that any active small or mid-size dental practice will fall into any of these categories. Unless your counsel determines that your practice is exempt, you should presume that you will need to provide FinCEN with your practice’s BOI.

What Is The “Beneficial Ownership Information” Practices Must Disclose?

In addition to basic corporate information such as name, address, and tax ID number, Reporting Companies must provide FinCEN with BOI about two groups of individuals: "Company Applicants" and "Beneficial Owners."

A "company applicant" is "the individual who directly files the document that first creates the domestic reporting company" and "the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document." Effectively, the person who filed the documents with the secretary of state forming the practice entity is a "Company Applicant" whose BOI must be reported.

Notably, the reporting of applicant information only applies to Reporting Companies created from and after January 1, 2024. Such new Reporting Companies need not provide FinCEN with updates regarding Company Applicant information after their initial disclosure.

"Beneficial Owners"

All Reporting Companies must also disclose information about their "Beneficial Owners." As defined in the Final Rule implementing the CTA, a "Beneficial Owner" is any person who, directly or indirectly, either:

Owns or controls at least 25% of a reporting company's ownership interests; or
Exercises “substantial control” over a reporting company.

Who Has "Substantial Control" Over a Dental Practice?

Determining whether a person exercises "substantial control" over dental practice such that they are considered a "Beneficial Owner" involves an analysis of the person's actual authority and the actions they are empowered to take on behalf of the practice. Under the Final Rule, an individual has "Substantial Control" over a practice if they:

Serve as a senior officer of the practice;
Have authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body) of the practice; or
Direct, determine, or have substantial influence over important decisions made by the practice, such as:
Entry into and termination of contracts.
Acquisition, sale, or lease of the practice's principal assets.
Reorganization, dissolution, or merger.
Amendment of any governance documents of the practice.

BOI That Dental Practices Must Be Report to FinCEN

Non-exempt dental practices must provide FinCEN with the following information regarding individuals who qualify as Company Applicants or Beneficial Owners:

Full legal name.
Date of birth.
Street addresses (identified as a current residential or business street address).
Non-expired state identification document or passport.

Reporting Deadlines Depend On When Practice Was Established

The CTA's compliance deadlines largely depend on when the "Reporting Company" was formed.

Entities Formed in Calendar Year 2024 : Covered Reporting Companies created or registered on or after January 1, 2024, and before January 1, 2025, must submit their BOI report within 90 days after the date of the entity's formation (i.e., the filing date of its Articles or Certificate).

Entities Formed Before January 1, 2024 : Covered Reporting Companies formed before 2024 must report their BOI on or before January 1, 2025 .

Entities Formed on or After January 1, 2025 : Covered Reporting Companies formed after 2024 must file their BOI within 30 days after its date of formation .

Penalties for Non-Compliance

Covered dental practices that fail to comply with the CTA's reporting requirements face significant penalties. Any entity or person that "willfully provides, or attempts to provide, false or fraudulent information or willfully fails to report when required" faces civil penalties of $500 per day, criminal fines of up to $250,000, and a maximum of five years in federal prison.

While this new federal obligation may be another annoyance for practice owners, the consequences of failing to comply are far more than an inconvenience. For questions and assistance with your practice’s reporting under the Corporate Transparency Act, please contact Grogan Hesse & Uditsky today.

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.

Understanding Dental Office AED Requirements in Illinois

Wed, 15 Nov 2023 17:55:22 GMT

Automated External Defibrillators (AED) save tens of thousands of lives every year. Many of those instances involve first responders, physicians, and hospital personnel. But a significant number of people – one estimate is 1700 individuals annually – are revived and spared from the worst consequences of a cardiac arrest by bystanders and other non-professionals who have access to an AED in a public location.

The life-saving capabilities of AEDs are the reason that Illinois is one of several states that has passed legislation requiring that AEDs be installed or available at specific types of facilities and businesses and that employees at those locations be trained in the use of these devices. This includes almost every dental office in the state.

Dental Offices Must Take “Reasonable Measures” To Have a “Trained AED User” On Duty

In addition to requiring that all dental offices develop and implement an emergency medical plan, Section 44.5 of the Illinois Dental Practice Act also provides that “All dental offices that administer anesthesia or sedation… must contain at least one automated external defibrillator (AED) on the premises at all times.”

While the Dental Practice Act does not contain any specific requirements as to training staff in the use of an AED, the state’s broadly applicable Automated External Defibrillator Act (AED Act) mandates that any entity acquiring an AED must take reasonable measures to ensure that “The automated external defibrillator is used only by trained AED users.”

As defined in the AED Act, a “trained AED user” is:

“A person who has successfully completed a course of instruction in accordance with the standards of a nationally recognized organization such as the American Red Cross or the American Heart Association or a course of instruction in accordance with the rules adopted under this Act to use an automated external defibrillator, or who is licensed to practice medicine in all its branches in this State.”

Accordingly, all Illinois dental offices (that administer anesthesia or sedation) must have at least one person on staff who is a “trained AED user” as defined above. Since the AED Act requires that dental offices take reasonable measures to ensure that the AED be used only by a trained user, there should ideally be more than one trained individual on a dental office’s staff such that there is always a trained staff member on duty when patients are being seen and treated.

The AED Act and corresponding regulations also set forth requirements as to the maintenance and testing of AEDs, registration with local EMS System Resource Hospitals, and other reporting obligations. If you have questions or concerns about AEDs or AED training for your dental office staff, please contact Grogan Hesse & Uditsky today.

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.

Do Dentists Have To Share Their Clinical Notes With Patients?

Wed, 01 Nov 2023 15:42:21 GMT

Medicine, including dentistry, has historically been characterized as both a science and an art, a mix of the objective and the subjective. For every objective x-ray, test result, or observable condition, there is a corresponding subjective analysis, opinion, or interpretation as to what they mean, as well as other thoughts or comments the provider may have about a patient. For dentists and other physicians, these latter components of a patient’s health records are usually reflected in their clinical notes. While those notes can contain critical insights and information regarding a patient’s condition and care, they may also include observations or commentary that, left to their own devices, a dentist would rather not share with the patient.

But as all dentists are well aware, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) provides their patients with a legal right to review and obtain a copy of their protected health information (PHI) upon request, and to have that information transmitted to another provider or other designated entity. And, under the subsequently enacted 21 ^st Century Cures Act (“Cures Act”), in almost all cases that right includes access to a dentist’s clinical notes.

Signed into law in 2016, the Cures Act contains robust “information blocking” prohibitions (also referred to as “open notes” provisions) that dramatically limit the electronic health information (EHI) a dentist can withhold from a patient when they seek access to their records. Pursuant to the Cures Act Final Rule released by the Office of the National Coordinator for Health Information Technology (ONC) in 2020, patients have the right to rapid, free, and complete access upon request to test results, medication lists, referral information, and clinical notes, all in electronic format. This includes:

Consultation notes
Discharge summary notes
Procedures notes
Progress notes
Imaging report narratives
Lab report narratives
Pathology report narratives
History and physical (H&P) examinations

The final rule established several specific exceptions to the Cures Act’s information-blocking provisions. A dentist may be able to withhold their clinical notes from a patient if:

It is reasonable and necessary to prevent harm to a patient or another person.
It is necessary in order to preserve the patient’s privacy.
It is necessary to protect the security of the patient’s EHI.
The request is infeasible.
The records are temporarily unavailable due to needed maintenance or upgrading of health IT.

Given that the failure to comply with the Cures Act can result in substantial fines as well as patient disputes, dentists should presume that their notes must be shared with or transmitted to a patient along with all of their other PHI. If you have concerns or questions about your obligations as to a specific request or set of notes, please contact

Grogan Hesse & Uditsky today.

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.

Congratulations to Timothy Oliver on his CEPA Certification

Thu, 21 Sep 2023 15:45:28 GMT

Tim Oliver, partner in the firm’s corporate and transactional group, recently earned his certification as a Certified Exit Planning Advisor (CEPA). Tim advises dentists and other small business owners in buying and selling their businesses, protecting their brands through trademark and other general business matters. Over the course of managing many business sales, Tim was often asked by his selling owners if they were getting a good deal. He realized that many of his clients didn’t understand the value of their business or weren’t personally prepared for life after selling. Dental practice owners often have heard of a valuation “multiple,” but most don’t understand the range or how they can adapt to achieve a greater price for their business. As a CEPA, Tim has the tools and network to prepare owners for what is likely to be the biggest liquidity event in their lives. Through educating clients on different transaction types, de-risking their businesses through strong contracts, connecting them to his network of experts in other practice areas, among other exit planning strategies, Tim adds value to his clients beyond the sale itself – he gives them confidence that they’re making the right deal.

Golden Ticket Or Black Hole? High Valuations From DSOs Can Blind Practice Owners To The High Risk Of Losing Everything

Thu, 21 Sep 2023 15:13:33 GMT

To paraphrase the warning we all see in our cars’ side mirrors, “Numbers in an offer may be larger than they appear.” Those are the cautionary words every dental practice owner should keep top-of-mind when a dental services organization (DSO) makes what appears at first glance to be a generous offer to purchase their practice. Shiny top-line figures such as high practice valuations and purchase prices and promises of substantial returns on equity investments, all fueled by the flood of private equity into the dental industry, can blind practice owners to the significant – and potentially catastrophic – financial risks that come with handing over the keys to a DSO.

That was the harsh lesson learned by a group of dentists who sold their practices to one of the nation’s largest DSOs. As alleged in a recently filed lawsuit , the owners all received equity interests in the DSO in lieu of a portion of the purchase price, as is usually the case in practice acquisitions. As is also common, the DSO they sold their practices to was subsequently acquired by another DSO. The management of that DSO then made decisions that significantly decreased and diluted the value of their ownership interests in the DSO. The dilution of their equity interests decimated the dentists’ retirement and left them with little, if any, recourse.

Undoubtedly, these dentists sold their practices after receiving robust practice valuations and being told that the sale would make them multimillionaires. Instead, they find themselves embroiled in litigation and an existential case of seller’s remorse.

This case underscores the importance of looking behind the attractive numbers thrown around by DSOs to understand what you actually stand to receive when you sell your practice – as well as what you stand to lose.

Taking Equity In a DSO Means Taking Away Any Control Over Your Investment

But, as noted, many DSOs require that a portion of the purchase price be paid in the form of an equity investment in the DSO. But what exactly are you investing in, and when – if ever – will you see returns on your equity investment?

For example, a selling dentist with a $1M valuation may be required to “rollover” 20% of the purchase price into DSO equity. In effect, that dentist is making a $200,000 investment in the DSO. But what the valuation is of the DSO and whether that is a “good” investment is the big question. The reality is that you are making something of a leap with very little control over your investment and minimal information on the DSO you are investing in.

As happened in the case above, the DSO can dilute your shares, and the DSO can change hands multiple times. This means you could be stuck in a relationship with a company you have never dealt with and that may have priorities and practices that do not align with yours.

The Value of Hold-Backs and Earn-Outs Can Be As Illusory As Equity

Individual purchasers of dental practices typically pay the full purchase price at closing, cashing out the seller with no contingencies. On the other hand, many DSO purchase offers include “hold-back” or “earn-out” provisions in which the DSO retains a portion of the purchase price, typically around 20% until and unless specific targets are met. Receipt of that remainder of the purchase price is usually contingent on either the seller’s future performance or a pre-determined post-closing collection threshold.

In addition to significant tax considerations regarding earn-outs, selling dentists need to understand that these contingent payments may never materialize or that they may need to put considerable time and effort to reach whatever revenue or other thresholds must be met to get their money. For dentists looking to retire in the near future or who want to throttle back the hours they put in, the loss or delay of a significant portion of the sale price and the need to continue working may be a deal-breaker, even when that price is substantially higher (in theory) than what a private buyer would offer.

No Way Out

Dentists who relinquish their practices to DSOs largely put themselves at the mercy of distant corporate decision-makers with whom they have never dealt, as well as economic downturns or shifts in the dental industry landscape that could impact their financial security down the line. Additionally, DSO contracts typically include various terms and conditions that can change over time. These clauses can encompass anything from non-compete agreements to unexpected fee adjustments, further limiting the dentist's ability to make financial decisions in their best interests.

Making matters worse, selling dentists have little ability to protect themselves or fight back if and when things go south with the DSO. They are stuck with that relationship in perpetuity. In that sense, selling to a DSO is akin to purchasing a time-share vacation property. A flashy presentation and sunny tales of future good times eventually give way to unexpected costs and unwanted burdens, with no way to get out.

For all of these reasons, dental practice owners who are considering offers from DSOs should proceed with caution and in consultation with experienced counsel who can see the risks, costs, and other potential issues that lie behind high practice valuations and promises of a secure financial future that could prove to be illusory.

If you are a dental professional considering a sale or merger, please contact us at ddslawyers.com at (630) 833-5533 or contact us online to arrange for your complimentary initial consultation.

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.

Is Your Dental Practice’s Digital “Front Door” Accessible To People With Disabilities?

Wed, 02 Aug 2023 15:12:58 GMT

Why Your Website Must Comply With The ADA And How To Do So

As a dentist and a practice owner, you are likely aware that you have a legal obligation to make your offices and services accessible and available to people with disabilities under Title III of the Americans With Disabilities Act (ADA). That is why you have a ramp to your front door, a wheelchair-accessible restroom, designated parking spaces, and other physical modifications to ensure that all current and prospective patients can avail themselves of the dental care you provide.

But the ADA’s accessibility requirements are not limited to your practice’s physical facilities and presence. Your virtual front door – your practice’s website – must also be accessible to people with disabilities especially if you are providing services through your website, such as a scheduling feature or other informational videos. Your website should accommodate visitors who are blind or have limited vision, are deaf or have hearing loss, or have limited movement, speech disabilities, photosensitivity, and other conditions that impact their ability to view, navigate, and interact with a site.

Failure to have an ADA-compliant website could subject you and your practice to the same potential lawsuits and liability you would face if a patient in a wheelchair rolled up to your offices and looked up at a flight of stairs that prevented them from getting the dental care they needed. And the risk of your practice becoming the target of such a suit is far from theoretical. In 2022, plaintiffs filed 3,255 web accessibility lawsuits in federal court, a 12% increase from 2021.

That is why dental practice owners who may not have been aware of their website accessibility obligations need to understand those imperatives and take the steps necessary to ensure compliance. But the odds of even the most web-savvy dentists knowing how to do that on their own are slim to none.

DIY On ADA Compliance Is Ill-Advised

Like most business owners, dental practice owners have little or no clue about the inner workings of website design generally, much less the technical steps and requirements involved in making a website ADA-compliant. That is why they hire web designers and digital marketing specialists to create and manage their online presence. And if you entrust your website’s appearance, user-friendliness, and effectiveness to such a company without ensuring that they are doing what needs to be done to comply with the law, you leave your practice exposed to unnecessary and avoidable risk – and leave behind patients who want and need your services.

“Many, if not most, of our clients aren’t even aware that the ADA applies to their website or that they need to factor accessibility into its design,” says Nat Rosasco, Principal and Chief Marketing Officer of Villa Park-based digital marketing firm Olive Street Design.* “But we certainly are, which is why we make it a core part of our services, integrating fully compliant accessibility features into our sites as a matter of course.”

Why Dental Practice Websites Must Be Accessible And What That Means

Title III of the ADA prohibits discrimination on the basis of disability by places of public accommodation, which includes any business open to the public. Businesses open to the public must take steps to provide appropriate communication aids and services where necessary to make sure they effectively communicate with individuals with disabilities.

When the ADA was signed into law in 1990, the internet was in its infancy and commercial websites were non-existent. Legislators did not and could not conceive how much the internet would come to dominate so much of our commerce, business, and lives. Because a website with inaccessible features can limit the ability of people with disabilities to access a public accommodation’s goods, services, and privileges, the Department of Justice (DOJ), which enforces the ADA, has taken the position that Title III’s accessibility requirements apply to business websites. However, to the frustration of businesses and disability activists alike, the DOJ has never issued regulations specifying exactly what must be done for a website to comply with the ADA.

In March 2022, however, the DOJ issued its long-awaited guidance on website accessibility under the ADA . While emphasizing that businesses still “have flexibility in how they comply with the ADA’s general requirements of nondiscrimination and effective communication,” the guidance recommended that businesses use existing standards like the Web Content Accessibility Guidelines (WCAG) and the Section 508 Standards , which the federal government uses for its own websites.

Olive Street Design’s Rosasco says that they have been following WCAG standards and other technical accessibility protocols for years, including providing users with various accessibility options.

“It is really about giving people a menu of alternative ways to view and use a site that they can tailor to their needs or limitations,” he says. “That could mean anything from larger fonts and modified color schemes, to making all functionality available from a keyboard, to providing users additional time to read and use content, to not designing content in a way known to cause seizures.”

Rosasco says that all of these accommodations can be typically incorporated in a separate menu such that the overall look and functionality of the website is unaffected.

“If you understand the technical, coding aspects of website accessibility, it is a relatively easy fix,” he says. “We can still give the client the website they want while ensuring they can serve all clients or patients regardless of disability. Even putting legal obligations aside, that is a definite win-win.”

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

*Olive Street Design designed and manages Grogan Hesse & Uditsky’s website, including its ADA-compliant accessibility features.

The No Surprises Act: A Compliance Refresher For Dental Practices

Wed, 19 Jul 2023 15:13:18 GMT

It has been a few years since the federal No Surprises Act (the “Act”) went into effect. Enacted as part of the Consolidated Appropriations Act of 2021, the Act focuses on protecting patients from unexpected health care bills. For dentists, much of the law is irrelevant, such as provisions relating to balance billing. But the Act’s billing transparency requirements, including providing good-faith estimates to certain types of dental patients, are very much applicable.

Hopefully, your dental practice has long since been in compliance with the Act. But by way of a quick refresher, here is what practice owners need to know and do to satisfy the law’s billing provisions.

Only Applicable to Uninsured and Self-Pay Patients

The Act’s disclosure requirements do not apply to all dental patients, only uninsured or self-pay patients. An uninsured patient is one who is not enrolled in a group or individual dental plan, a Federal health care program, or a Federal Employees Health Benefits (FEHB) program health benefits plan. A self-pay patient is a person who has dental benefits but elects not to submit a claim to a dental plan for payment. A non-covered service or any cost exceeding the annual maximum for the patient’s dental plan is also considered “self-pay.”

Good Faith Estimate Upon Request

Dentists' primary obligation under the Act is to provide written good-faith estimates in advance of services to uninsured and self-pay patients upon their request. Information regarding the availability of good-faith estimates must be written in clear and understandable language and prominently displayed on the practice’s website and in its offices. CMS has developed a model notice that providers can use to satisfy this requirement.

If an uninsured or self-pay patient asks for a good-faith estimate, the dentist must provide a written summary of their expected costs for services and items within the following timeframes:

For a primary item or service scheduled at least three business days before the date the item or service is to be furnished, the dentist must provide the good-faith estimate no later than one business day after the date of scheduling.
When a primary item or service is scheduled at least ten business days before such item or service is to be furnished, the dentist must provide the estimate no later than three business days after the date it is scheduled.
When an uninsured or self-pay individual requests a good-faith estimate, the dentist must provide the good-faith estimate no later than three business days after the date of the request.

CMS has established a detailed list of what providers should include in the good-faith estimate, including, among other items:

A list of items and services the dentist expects to provide for the period of care
Any services that an outside agency associated with the facility may provide (e.g., if oral surgery requires the use of an anesthesiologist, the estimate must include their costs and services)
Diagnostic and service codes
Notification that if the bill is significantly higher than the estimate, it may be updated, negotiated, or financial assistance may be available
Dispute resolution information and instructions

On that last point, the rules implementing the Act provide that if the bill for the primary procedure is more than $400 higher than the good-faith estimate, the patient can dispute the charges through the Patient-Provider Dispute Resolution process established by CMS.

If you have any questions or concerns about compliance with the No Surprises Act, please give us a call. At Grogan, Hesse & Uditsky, P.C., 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.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Spotlight: Nick Petrovski

sfishbein@ghulaw.com (Samantha Fishbein) — Wed, 05 Jul 2023 15:30:06 GMT

This month’s spotlight features Nick Petrovski, associate and a member of our firm’s corporate and transactional group. Nick provides a variety of services to dentists including those seeking to establish a new dental practice. Nick has assisted dentists with setting up new locations all across the country. Finding the right location for a dental practice – whether as part of a real estate purchase, buildout, or as part of a commercial lease – is among the most important decisions a dentist can make. Since dental practices are often unique when compared to other businesses, Nick draws on his previous municipal and zoning experience to ensure that dental practices are both compliant and protected. When it comes to getting your practice started, Nick will guide you through the complex regulations to ensure you’re on solid footing.

Liquidated Damages Provision

jnuditsky@gmail.com (Jordan Uditsky) — Wed, 21 Jun 2023 15:24:50 GMT

As is the case in every type of lawsuit, those involving breaches of a contract abide by the principle of “no harm, no foul.” That is, if a plaintiff suffered no damages due to the defendant’s alleged failure to follow the agreement’s terms, they simply have no claim. Courts are generally not in the business of vindicating principles, they are in the business of making wronged parties whole.

But proving the amount of actual damages incurred by a plaintiff due to a defendant’s breach of contract can often be harder than proving the breach itself. Demonstrating lost profits, missed opportunities, costs incurred, and other monetary consequences of the breach may require expert witnesses, extensive discovery, and other complicated economic evidence. All of this costs money and may or may not convince a judge or jury that the plaintiff should receive the amounts they claim they lost because of the breach. That is why many contracts, including employment agreements, contain what are called “liquidated damages” provisions.

What Is A Liquidated Damages Provision?

A liquidated damage provision in a contract is an agreement by the parties that a specified sum will constitute damages in the event of a breach, thus alleviating the need for the non-breaching party to prove actual damages.

In a dental employment agreement, for example, a provision may require the associate dentist to provide the practice owner with 90 days' notice of their intention to leave. The agreement may then include a liquidated damages clause in which the associate dentist agrees to pay the practice owner $500 a day for each day less than 90 that the dentist gives notice. It doesn’t matter whether the practice owner actually suffers any damages - that is what the associate agreed to pay for breaching the contract by providing late notice.

Reasonable Estimate Or Punishing Penalty? When Does a Liquidated Damages Provision Cross The Line?

Every state takes its own approach to the validity and enforceability of liquidated damages provisions, but no state prohibits liquidated damages entirely. Instead, judges in most states, including Illinois, analyze such provisions using a seemingly esoteric distinction: damages v. penalty. That is, does the agreed-upon sum constitute a reasonable estimation of hard-to-calculate damages that would arise from the breach, or is the amount a penalty designed to punish the breacher and deter violations? If a judge finds that the clause is the former, it is usually enforceable. But if it is deemed a penalty, it will likely be thrown out.

Illinois cases are generally illustrative of how judges make this critical distinction. In Illinois, courts will generally find a liquidated damages provision to be valid and enforceable so long as three requirements are met:

The parties intended to agree in advance to the settlement of damages that might arise from the breach;
the amount of liquidated damages was reasonable at the time of contracting, bearing some relation to the damages which might be sustained; and
actual damages would be uncertain in amount and difficult to prove.

Whether these criteria are met inherently involves a case-by-case analysis, but most challenges to the enforceability of a liquidated damages provision are based on the second listed factor: reasonableness and relation to what the actual damages caused by the breach might be. If a liquidated damages amount would result in a windfall for the plaintiff or is wildly disproportionate to any conceivable damages that could flow from the breach, it is likely to be considered a penalty and thus invalid.

Going back to the dental employment agreement with its $500 per day in liquidated damages for late notice of resignation, it is questionable whether such a sum bears a sufficient relation to the actual damages the practice owner would sustain for losing a few days’ notice. On the other hand, if the associate left with only one day’s notice, the practice would have to cancel appointments and thus lose revenue as it spent time scrambling to find a new dentist to handle the caseload the departing dentist left behind (and the costs that go with that urgent effort). Could that amount to $44,500 in damages (89 days x $500/day)? Conceivably.

Regardless of whether a proposed liquidated damages clause will ultimately be found valid and what type of breach the provision relates to, both practice owners and dentists should consult with experienced counsel before entering into an employment agreement containing a liquidated damages provision.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

The Bottom Line on Bottom Lines: What New Dental Associates Need To Know About Compensation Structures

Tue, 16 May 2023 18:01:21 GMT

Every spring, thousands of newly minted dentists leave behind their academic pursuits and venture out into the job market, looking for their first position in their chosen profession. There are many things to consider when evaluating potential opportunities – the role and responsibilities, opportunities for advancement, and personal or cultural fit, among other factors. But the bottom line for new dental associates often comes down to the actual bottom line – how and how much they will receive in compensation.

Compensation structures for dental associates come in many forms, most of which are more complicated – and less consistent – than a straight salary. Whether you are venturing out into the real world of dentistry for the first time or are looking for greener pastures, it is essential that you understand the common types of compensation packages in the industry, how they work, and their potential risks and rewards. Only then can you make an informed decision that will significantly impact your career trajectory and bank account.

Here are five associate dentist compensation structures you may encounter as you receive the multiple job offers a talented new professional like you will inevitably receive:

1. Salary-Based Compensation

Simplicity and consistency are the two main benefits of a salary-based compensation structure. You receive a fixed salary at an annual or monthly rate based on a full-time work schedule. Salary increases may be tied to performance metrics or other factors, and the salary may be accompanied by potential bonuses or profit-sharing/equity ownership opportunities. A salary-based structure is a good fit if you value a steady paycheck more than compensation that can fluctuate based on your performance or that of the practice.

2. Production-Based Compensation

If you are the type of person who will happily put in long hours and give maximum effort to your work, tying your compensation to your high-performing nature may be a smart move. Production-based compensation is based on the amount of work the associate dentist produces, such as the number of procedures performed or the billable fees generated from their services. The associate may receive a percentage of the billable fees generated from their work or a fixed amount per procedure. In either case, production-based compensation is adjusted for insurance discounts or other contractual payment arrangements. Compensation based on production is also generally paid at a slightly lower percentage than compensation based on collection, as the dentist has no exposure to collection issues and receives their compensation upon completion of the applicable procedure rather than upon collection from the patient.

3. Collection-Based Compensation

Unlike a production-based compensation structure, a collection-based compensation structure is based on the amount of money actually collected from patients rather than billable fees generated in connection with the applicable treatment. Obviously, the amount of collections for an associate dentist’s work is largely a factor of how hard that dentist works, but it also depends on patients paying their bills. While this structure is attractive for practice owners – the amount of money going out depends on the amount coming in -tying compensation to something beyond your control is not without risk. Nevertheless, if you are willing to wait and bear that risk, the compensation is generally slightly higher than production-based compensation structures. In an insurance based practice, it is important to note that there may be an initial lag in receiving collection based compensation while the practice waits for insurance reimbursements. Many associate compensation structures will, therefore, include some minimum compensation during this ramp-up period to avoid the associate essentially working without being paid.

4. Hourly-Based Compensation

This type of compensation structure is based on the number of hours worked by the associate dentist, and they are paid a fixed hourly rate. This type of compensation can be attractive to new associate dentists who are looking for a steady income while they gain experience and build their patient base. It’s also more common in certain dental specialties where cases tend to be longer term projects and thus compensation based on completion or collection would be impractical. In addition, where an office doesn’t have a full plate of overflow work, but rather is looking for the associate to grow a practice, an hourly arrangement can provide assurance that there is a minimum income available to carry the associate through the early leaner times.

5. Hybrid Compensation

A hybrid compensation structure is just what the name implies: a combination of two or more compensation models, such as a salary plus production-based compensation, or a minimum daily fee plus a percentage of collection. This can be an attractive option if you want the stability of a fixed salary but also want to be rewarded for your productivity and hard work. Many offices hiring new associates offer a minimum daily fee while you get up and running that is reconciled periodically with a percentage of collection. This allows you to receive at least some minimal compensation while you build a practice or while you wait for insurance payments to come in.

Bonuses and Equity-Interest Opportunities

As noted, any base associate dentist compensation structure can be and usually is accompanied by other income-generating opportunities. These include performance-based bonuses, commissions, profit-sharing plans, and equity sharing and ownership. These can be significant sources of income and should be taken into consideration when evaluating compensation structures. But these additional sources of compensation can be complicated, especially those involving potential equity or ownership interest in a practice.

It is therefore important that you consult with an attorney who has experience with dental practice compensation packages before accepting any position or compensation plan. Doing so can help you maximize your income and make your first position in the profession as lucrative and rewarding as possible.

We Focus on You So You Can Focus on Your Patients

At DDS Lawyers, we focus 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.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Illinois Workers Can Soon Take Up To 40 Hours of Paid Leave “For Any Reason.” What Employers Need to Know About The Paid Leave For All Workers Act.

Wed, 12 Apr 2023 15:10:32 GMT

When Gov. JB Pritzker signed the Paid Leave For All Workers Act (the Act) into law on March 13, 2023, he made Illinois one of only three states that require employers to grant workers paid leave that they can use “for any reason,” not just illness. This statewide paid leave requirement comes in the wake of existing paid leave ordinances in Cook County and the City of Chicago. The interaction of those two ordinances with the new state law is one of several nuances Illinois employers must understand as they prepare to comply with the Act.

Those nuances make it advisable for employers to consult with experienced employment counsel as they review, modify, or establish paid leave policies in light of the Act. But here are some fundamental aspects of the law that can help you get ready for this major change in Illinois employment law.

The Act Covers Almost All Private Illinois Employers

Almost all private employers in Illinois, regardless of size, are subject to the Act, as are state and local governments. Notably, those who employ domestic workers will also need to provide paid leave.

However, the following employers are exempt from the Act’s leave requirements:

School districts organized under the School Code or park districts organized under the Park District Code.
Certain railroad employees.
Temporary college or university student employees.
Certain short-term employees of an institution of higher learning.
Employees in the construction industry or who work for a freight, parcel, or document delivery company and are covered by a bona fide collective bargaining agreement (CBA).

Cook County and Chicago Employers Will Not Need To Comply With the Act

Most employers in the City of Chicago and Cook County already have an obligation to provide employees with paid leave under the Chicago Minimum Wage and Paid Sick Leave Ordinance and Cook County Earned Sick Leave Ordinance, respectively.

The Act specifies that it does not apply to employers covered by a “municipal or county ordinance,” such as Chicago’s and Cook County’s, “that requires employers to give any form of paid leave to their employees, including paid sick leave or paid leave.” Accordingly, Cook County and Chicago employers covered by those ordinances will not need to comply with the Act, and such employers do not need to provide employees with an additional 40 hours of paid leave. The Act does apply to employees who are not currently covered by those ordinances.

However, there is a significant chance that both Cook County and Chicago will amend their paid leave ordinances to match the broader “for any reason” rights provided by the Act. Any amendments made after the Act’s effective date “must comply with the requirements of this Act or provide benefits, rights, and remedies that are greater than or equal to the benefits, rights, and remedies” afforded by the Act. Cook County and Chicago employers should prepare for such a possibility.

Amount, Accrual, and Use of Paid Leave

Employees covered under the Act will be entitled to earn and use up to a minimum of 40 hours of paid leave during a 12-month period, which may be any consecutive 12-month period the employer designates in writing at the time of the employee’s hiring.

Employees are eligible to begin taking leave 90 days after their employment begins or 90 days after Jan. 1, 2024, whichever is later. The Act also contains detailed provisions regarding calculating hours, accrual and carry-over, and obligations upon an employee’s termination or departure.

Perhaps the most distinguishing aspect of the Act is that employees can take paid leave “for any reason of the employee's choosing,” not just illness-related reasons. An employee does not have to tell their employer why they are taking leave, and employers cannot require an employee to provide documentation or certification as proof or in support of the leave request.

While an employer can’t ask why an employee is taking paid leave, it can require that an employee provide up to seven calendar days’ notice before taking paid leave if the need for the leave is foreseeable. If an employee’s use of paid leave is not foreseeable, the employee must provide notice as soon as it is practicable. An employer that requires notice of paid leave under this Act when the leave is not foreseeable must provide a written policy that contains procedures for the employee to provide notice.

Notice and Recordkeeping Requirements

The Act requires that employers conspicuously post a notice in the workplace advising employees of their rights under the Act and how to file a complaint alleging non-compliance with its provisions. Employers must also maintain records for at least three years reflecting each employee’s hours worked, the amount of paid leave accrued and taken, and any remaining paid leave balance.

Anti-Retaliation Provisions and Penalties For Violations

As with most employment laws, the Act prohibits retaliation against employees for exercising their rights under the Act or reporting alleged violations.

While the Act does not establish a private cause of action, employers who violate the Act face:

Civil penalties of $500 for an initial posting violation and $1,000 for each subsequent violation;
General civil penalties of $2,500 for each violation (other than a posting violation);
An Illinois Department of Labor complaint initiated by an employee, allowing them to recover for underpayment, compensatory damages, and attorney’s fees and costs, as well as a penalty of $500 to $1,000.

As noted, these are only the broad strokes of the new paid leave law. Employers should consult with an employment law attorney to understand their specific obligations and establish or update their paid leave policies to ensure compliance before the Jan. 1, 2024 effective date.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Is Your Dental Practice Being Badmouthed Online? Proposed FTC Rule Cracking Down On Dishonest Reviews Could Provide Some Help.

Wed, 22 Mar 2023 13:52:16 GMT

Dentistry may be a unique profession with a proud history, but online, a dental practice is no different than a dry cleaner, restaurant, mechanic, or liquor store. That is because dental patients are just as likely to post a review of their experience on Yelp! or other online review sites as are customers of other businesses. And, as is the case for all businesses and professions, many of those reviews – especially the negative ones – may be dishonest, deceptive, and unfair. In fact, some negative online reviews of dental practices may come from individuals who were never patients or had no interaction with the practice at all.

Recently, the Federal Trade Commission (FTC) announced that it was exploring new rules to combat deceptive or unfair online reviews. The FTC’s Advance Notice of Proposed Rulemaking (ANPR) asked for public comment on potential harms stemming from deceptive or unfair review and endorsement practices and whether a rule would help consumers and level the playing field for honest marketers.

In response to the FTC’s request for comment, the American Dental Association (ADA) submitted a letter to the agency supporting a crackdown on such reviews, stating that it was “a critical step towards ensuring that the online reviews of dental practices are fair and honest.” But it also noted the specific challenge faced by dentists and other health care providers in countering bogus reviews:

“A common problem that dental offices face with these deceptive or unfair reviews is that, unlike businesses that can respond specifically to negative reviews, dentists, as health care providers, may be constrained by federal and state privacy laws from disclosing patient information even if the review is deceptive or misleading and even if the reviewer discloses their patient information in the review.”

While a dry cleaner may counter a review that accuses them of ruining a customer’s shirt by setting forth facts to the contrary, a dentist who does the same may inadvertently reveal confidential patient information in their attempts to refute allegations of poor or substandard care. Such HIPAA and related violations can have catastrophic licensing and regulatory consequences.

But a practice’s inability to respond to false or negative reviews can have catastrophic business consequences as well. As the ADA notes:

“The constraints on responding to these reviews cause injury to the business, to competition, and to consumers. Dishonest negative reviews are unfair to the dental practice, which could lose business to a competitor for false or misleading reasons. It can also be very upsetting to the dentist to see incorrect information about their hard work posted online for anyone to find. These types of dishonest and misleading negative reviews can even affect the valuation of a practice that is currently in the process of being sold. Such reviews are also unfair to potential patients of the practice who may decide to go elsewhere (or delay care) due to the review.”

To address this dilemma, the ADA proposed that the FTC:

Create an exception to enforcement and regulations under the FTC Act that would permit health care providers, including dentists, to disclose patient information in response to a review without violating the prohibition against unreasonable and deceptive trade practices, provided the disclosure is limited to the scope of the topics addressed in the review.
Encourage social media review sites to revise their Terms of Use to remove blanket prohibitions on responding to posts with health information, such as where the reviewer has already shared that information.
Include in its rulemaking a requirement that the reviewer self-identify, as well as a requirement for the social media site to verify that identity. If the reviewer does not self-identify in the review, then the dental practice should have an avenue to request that identification from the social media site.

The FTC is in the earliest stages of rulemaking on this issue, and it remains to be seen what further action they take to address this perennial problem. But, as noted, dentists need to tread lightly when a disgruntled patient posts a false, misleading, or negative review online. However, there are ways to blunt the impact of negative reviews without the risks involved in responding directly to a negative review.

Most of your current and former patients undoubtedly have wonderful things to say about you because you are undoubtedly a fantastic dentist. Do not hesitate to ask your patients to share their thoughts with the world by requesting that they share their positive feedback in a brief review. Provide them with the instructions and links to make it as easy for them as possible.

If you have any questions or concerns about how to deal with false or negative reviews of your practice, please give us a call. At Grogan, Hesse & Uditsky, P.C., 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.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Doing Things By The Book: Why Dental Practices Should Have an Employee Handbook

Wed, 22 Feb 2023 16:11:22 GMT

From direct patient care to back-office functions, the team of employees that a practice owner assembles is what keeps the doors open and the wheels from falling off. But like any team, the effectiveness of a practice’s staff depends on everybody being on the same page, pulling in the same direction, and having a clear understanding of their roles, responsibilities, and expectations. In sports, a playbook is what lays all of these things out. For employers, including dental practice owners, an employee handbook can be the foundation upon which they build and retain a top-notch workforce.

Nothing in the law requires an employer to assemble and distribute an employee handbook or office manual. But there are many reasons why practice owners should do so. They provide clarity, promote a spirit of teamwork and collaboration, and critically, help owners reduce the likelihood of employment law violations or misunderstandings that could lead to costly claims and lawsuits.

Here are five reasons you should consider putting together an employee handbook for your dental practice if you have not already done so.

1. Satisfying Legal Obligations

As noted, no law mandates that a dental practice have an employee handbook. But plenty of federal and state laws require employers to provide notice to employees about their rights. From wage and hours laws to health and safety regulations to family leave policies to benefits and rights upon termination, employers expose themselves to liability if they fail to advise employees of their rights as required by law. An employee handbook, regularly reviewed and updated to account for changes in the law, can ensure that any information that must be conveyed to employees is, in fact, in their hands.

2. Protection From Discrimination and Harassment Claims

While an employee handbook’s content regarding workplace discrimination and harassment may not prevent any or all such incidents, robust policies against such conduct and well-defined procedures for reporting, investigating, and disciplining those responsible can go a long way towards insulating an employer from potential liability. Your handbook should make it clear that harassment and discrimination will not be tolerated, that victims can come forward and report such misconduct without fear of retaliation or intimidation, and that those responsible are subject to termination.

But the best-intentioned policies or procedures are only of value if they are vigilantly and uniformly applied. Failure to follow your handbook’s provisions regarding harassment and discrimination can undermine what could have otherwise been a sound defense.

3. Establishing Expectations

For a new employee, the onboarding process involves a lot of learning beyond figuring out how the coffee maker works or where the best spots are for picking up lunch. New employees want to know what is expected of them and what they can expect from their employer. They want to understand their benefits and compensation, time off and leave policies, rules and limitations as to their use of the office’s computer systems and internet, dress code, and everything else that applies to their duties and responsibilities. A well-crafted handbook will lay all of these things out, not only allowing the new hire to have a clear grasp of office policies and practices, but also sparing the employer from having to verbally explain all of these things every time someone new comes on board.

4. Reducing Misunderstandings

There is a simple reason that written contracts are preferable over oral agreements. When something is spelled out on a page, it dramatically reduces the possibility of a dispute about what the parties actually promised or agreed to. The same principle applies to an employee handbook. It is much more difficult for an aggrieved employee to credibly say, “that was not my understanding,” when a policy is clearly set forth in a document they acknowledged they read and understood. A handbook can quickly and definitively shut down any claims based on supposed oral statements that contradict the terms therein.

5. Conveying Your Practice’s Values and Culture

In addition to the nuts and bolts of an employee’s job responsibilities and the practice’s policies and procedures, an employee handbook can convey the owner’s practice philosophy, culture, and core values. These intangible aspects of a practice can create a shared sense of purpose among your employees and make them feel that they are part of something more than just the source of a paycheck.

Grogan Hesse & Uditsky: Lawyers For the Dental Profession

A comprehensive and well-written employee handbook can be as valuable to practice owners as it is to their employees. Every new hire should receive a handbook as part of the onboarding process, and every current employee should be given one any time a new handbook is created or updated. Importantly, each employee should sign their handbook, acknowledging that they have read and understand its terms.

At Grogan Hesse & Uditsky, we help prepare employee handbooks tailored to the needs of dental practices. 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 a deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Death Knell For Non-Competes? FTC Announces New Proposed Rule That Would Ban Them Once and For All.

Wed, 01 Feb 2023 16:22:20 GMT

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. For just as long, courts and state legislatures across the country have struggled to define the acceptable scope of such provisions. They have looked at these contractual arrangements with increasing skepticism insofar as they infringe on foundational principles of fair competition and the right of individuals to make a living in their chosen occupation or profession. Soon, however, the uncertainty and lack of clarity regarding the validity and enforceability of non-competes may be a thing of the past.

On January 5, 2023, the U.S. Federal Trade Commission (FTC) announced a new proposed rule that would effectively ban all future and existing non-competition agreements. The rule would deem non-competes an “unfair method of competition” and thus prohibited under Section 5 of the Federal Trade Commission Act. If finalized in its current form, the proposed rule would generally prohibit all employers from using non-compete clauses. Specifically, the rule would make it illegal for an employer to:

enter into or attempt to enter into a non-competition agreement with a worker;
maintain a non-competition agreement with a worker; or
represent to a worker, under certain circumstances, that the worker is subject to a non-competition agreement.

Rule Would Apply To All Workers, Including Independent Contractors

The proposed all-encompassing ban on non-competes covers all types of workers regardless of their employment classification and whether they are paid or unpaid. The rule “would clarify that the term ‘worker’ includes an employee, individual classified as an independent contractor, extern, intern, volunteer, apprentice, or sole proprietor who provides a service to a client or customer.”

Non-Solicitation and Non-Disclosure Agreements Not Implicated

People often use the term “non-compete” interchangeably for three related but distinct limitations on future business and employment activities. But non-competition provisions are very different from non-solicitation and non-disclosure clauses, and the rule would treat them as such.

The proposed rule defines a “non-compete clause” as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.” The rule clarifies that the definition of a non-compete clause “would generally not include other types of restrictive employment covenants—such as non-disclosure agreements (“NDAs”) and client or customer non-solicitation agreements—because these covenants generally do not prevent a worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker’s employment with the employer.”

However, the rule provides that a provision that purports to be something other than a non-compete could be deemed to be one, and thus prohibited, “where they are so unusually broad in scope that they function as such.” Accordingly, “whether a contractual provision is a non-compete clause would depend not on what the provision is called, but how the provision functions.”

Employer Obligations Regarding Existing Non-Competes

As noted, the proposed rule would render all existing non-competes void and unenforceable and require employers to rescind existing non-competes no later than the rule’s compliance date, which has yet to be determined. Additionally, employers will need to provide each employee subject to an existing non-compete with notice that it has been rescinded and may not be enforced against the worker. Specifically, the employer would need to:

provide the notice to the worker in an individualized communication;
provide the notice on paper or in a digital format such as, for example, an email or text message;
provide the notice to the worker within 45 days of rescinding the non-compete clause; and
provide the notice to workers who currently work for the employer and those who formerly worked for the employer if the employer has the worker’s contact information readily available.

The proposed rule contains model language for the required rescission notice.

Exception for Non-Competes Related to Purchase and Sale of a Business

One notable exception to the proposed ban on non-competes involves those entered into as part of the purchase or sale of a business. Specifically, the rule provides that it shall not apply to:

a non-compete clause that is entered into by a person who is selling a business entity or otherwise disposing of all of the person’s ownership interest in the business entity, or by a person who is selling all or substantially all of a business entity’s operating assets, when the person restricted by the non-compete clause is a substantial owner of, or substantial member or substantial partner in, the business entity at the time the person enters into the non-compete clause.

It is unclear what the rule will look like in its final form and when it will become effective. What is clear is that the end appears to be near for non-competes, and dental practice owners should be prepared for that likelihood.

If you have questions or concerns about the FTC’s proposed rule, please call Grogan Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation.

More Dental Workers Likely to Be Considered Employees Not Independent Contractors Under Proposed Department of Labor Rule

Mon, 21 Nov 2022 14:31:01 GMT

Like owners of other businesses, dental practice owners often hire staff members as independent contractors rather than as employees. They do so to keep expenses down, minimize tax obligations, and reduce time spent worrying about personnel and payroll matters such as overtime pay, sick leave, insurance, and other employment law issues. Ultimately, however, whether an associate dentist, hygienist, or other team member is appropriately classified as an employee or contractor isn’t up to the practice owner. It is up to the law and the rules promulgated by the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS). And under a proposed rule recently issued by the DOL, more dental workers are likely to be considered employees instead of contractors, no matter what label a practice owner uses for them.

Published on October 13, 2022, the proposed rule would revise the DOL’s analysis for determining employee or independent contractor classification under the Fair Labor Standards Act (FLSA). Specifically, the DOL is proposing to rescind a rule promulgated under the previous administration which identified five “economic reality factors” to be used in determining whether a worker was an employee or independent contractor. Under the prior rule, which is still controlling until the new proposed rule becomes final, two of the five factors— “the nature and degree of control over the work and the worker's opportunity for profit or lost” were designated as “core factors” that were to carry more weight in the analysis.

That rule was generally seen as more employer-friendly in that it made it easier to classify a worker as a contractor. Under the new proposed rule, the “core factors” mentioned above would no longer be part of the analysis. Instead, the new rule uses a “totality-of-the-circumstances” approach and an “economic reality test” that looks at the economic reality of the worker’s activities and the nature of the working relationship with the employer.

The new proposed rule sets forth six factors to be used in determining whether the “economic realities of the working relationship” reveal a worker to be economically dependent on the employer – in which case they would be likely considered an employee – or whether the worker is in business for themselves such that they are an independent contractor:

“Opportunity for profit or loss depending on managerial skill”
“Investments by the worker and the employer”
“Degree of permanence of the work relationship”
“Nature and degree of control,” including “whether the employer uses technological means of supervision (such as by means of a device or electronically), reserves the right to supervise or discipline workers, or places demands on workers’ time that do not allow them to work for others or work when they choose”
The “extent to which the work performed is an integral part of the employer’s business”; and
The “skill and initiative” of the worker, meaning whether a worker uses specialized skills brought to the job or is “dependent on training from the employer to perform the work.”

Illinois Law Makes It Even More Likely That a Worker Will Be Considered an Employee

Making matters even more complicated for Illinois dental practice owners, state law establishes its own criteria for determining a worker’s status and presumes that a worker is an employee unless and until it's proven in any proceeding that:

Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and
Such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
Such individual is engaged in an independently established trade, occupation, profession, or business.

It remains to be seen whether the final rule ultimately promulgated by the DOL will be the same or substantially similar to the proposed rule. Regardless, practice owners need to understand that just calling someone an independent contractor does not make them one. Given how much employee misclassification hurts workers who inappropriately wind up treated as contractors (and how much tax revenue is lost when businesses wrongfully classify workers), it’s no surprise that the federal government and individual states are cracking down on the practice. When they do so, they crack down hard. The financial cost to the practice can be substantial, but it can also cost owners personally, as they can be held liable individually for any intentional misclassification.

To avoid such consequences, dental practice owners should discuss any questions or concerns with an experienced employment and dental practice attorney .

Evolving Teledentistry Standards Focus On Consistency With In-Person Care

Wed, 16 Nov 2022 15:28:36 GMT

The expansion of teledentistry services – using technology to connect patients and dentists remotely for consultations, evaluations, and other communications- is the product of a perfect storm. A nationwide shortage of dental staff and the desire to expand access to dental care to rural, remote, or underserved populations were already driving interest in teledentistry when the COVID-19 pandemic hit.

As it did with telemedicine generally, the pandemic accelerated the expansion of virtual dental care. Th e American Dental Association’s (ADA) Policy on Teledentistry reflects the growing consensus that teledentistry provides benefits for patients and practitioners alike: “The ADA believes that examinations performed using teledentistry can be an effective way to extend the reach of dental professionals, increasing access to care by reducing the effect of distance barriers to care.”

And as with the medical profession, the legal, regulatory, and licensure frameworks that govern the dental profession have had to play a bit of catch-up to facilitate and set standards for teledentistry services and methodologies. Dentists who wish to offer and provide teledentistry services must grapple with this evolving and unsettled legal landscape, which varies from state to state. But the ADA’s position, mirrored in proposed regulations in various states throughout the country, generally provides that the standards that govern the use of teledentistry – whether regarding the quality of care provided, supervision of allied dental staff, patient records and data privacy, or licensure issues – should parallel those that apply to in-person services.

What Is Teledentistry?

Teledentistry is not a specific service. Rather, it refers to the means through which dental care is provided. There are two primary modalities for delivering teledentistry services:

Synchronous (live video): Live, two-way interaction between a patient and a provider using audiovisual telecommunications technology.
Asynchronous (store and forward): Transmission of recorded health information (for example, radiographs, photographs, video, digital impressions, and photomicrographs of patients) through a secure electronic communications system to a practitioner, who uses the information to evaluate a patient’s condition or render a service outside of a real-time or live interaction.

Applicable Standards

As noted, the underlying theme as laws and regulations evolve is that, in the ADA’s words, “services delivered via teledentistry must be consistent with how they would be delivered in person.” The ADA’s Policy, last updated in 2020, appears to be the touchpoint for regulators crafting their own standards for the use of teledentistry in their state.

In Illinois for example, proposed pending regulations published by the Illinois Department of Financial and Professional Regulation regarding teledentistry mirror those contained in the ADA’s Policy. If adopted, Section 1220.402 of the regulations promulgated under the Illinois Dental Practice Act would provide that:

Services delivered via teledentistry must be consistent with how they would be delivered in person.
The same standard of care must be met between a treating dentist and a patient in a telehealth relationship.
All records collected and maintained shall be sufficient for the treating dentist to make a diagnosis and treatment plan, including a review of the patient’s most recent x-rays.
Patient treatment via teledentistry must be properly documented and consistent with in-person recordkeeping requirements.
The treating dentist must provide the patient with a summary of services.
A dentist shall refer a patient to an acute care facility or an emergency department when a referral is necessary for the patient's safety or in case of emergency.
Dentists providing services through teledentistry shall provide proof of valid Illinois licensure, the identification of the providers collecting or evaluating their information or providing treatment, and any costs they will be responsible for in advance of the teledentistry service.
Dentists providing services through teledentistry shall only provide teledentistry services to patients of record.
The treating dentist must have examined patients being seen via teledentistry within one year of the teledentistry visit.

As the rules reflect, dentists providing teledentistry services to Illinois patients must be licensed to practice in Illinois. As other states formalize their teledentistry regulations, the converse will also probably be true: if an Illinois dentist wishes to provide teledentistry services to an out-of-state patient, they will likely need to be licensed in the patient’s jurisdiction as well.

Serving The Dental Profession

If you are a dentist looking to offer or expand teledentistry services and have questions about how to do so in a legally compliant manner, please give us a call. At Grogan, Hesse & Uditsky, P.C., 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.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Monthly Spotlight: Find Us On Social Media

sfishbein@ghulaw.com (Samantha Fishbein) — Wed, 24 Aug 2022 16:25:03 GMT

We have recently launched our DDS Lawyers social media channels on Facebook and LinkedIn . We would love you to join us on these platforms, where you can engage with us and other dental professionals. Our hope is that this community will grow to become a valuable resource for all.

Considering Selling Your Dental Practice To a DSO? Consider These Questions.

Wed, 24 Aug 2022 13:24:38 GMT

A few decades ago, a dentist looking to sell their practice had two broad options: sell to another dentist or dentists in their practice or sell to an outside practice. But the advent of dental services organizations (DSOs) and the flood of private equity money into the dental profession has provided another option, one that can be extremely attractive to practice owners who are looking to move to the next – or last – chapter of their careers.

The choice between selling a practice to a DSO rather than another dentist is a consequential one. The financial benefits, ongoing practice obligations, degree of control, and limitations on future activities for the selling dentist can all differ wildly in deals between these two types of purchasers. There is no “right” or “wrong”, but rather only what is best for each individual practitioner. To make an informed decision, dentists need to understand the often-complex compensation structures of DSO purchases and what will be expected of them in the coming years. But sellers must also look beyond the top-line numbers of a proposed transaction and consider all of their goals – financial and otherwise – before deciding which path to take.

As you prepare to put your practice on the market and before a DSO comes knocking at your door with promises of big returns, ask yourself the following questions.

Do You Want All Of The Purchase Price At Closing?

Individual purchasers of dental practices typically pay the full purchase price at closing, cashing out the seller with no contingencies. Many DSO purchase offers, on the other hand, include “hold-back” or “earn-out” provisions in which the DSO retains a portion of the purchase price, typically around 20% until and unless specific targets are met. Receipt of that remainder of the purchase price is usually contingent on either the seller’s future performance or a pre-determined post-closing collection threshold.

In addition to significant tax considerations regarding earn-outs, selling dentists need to understand that these contingent payments may never materialize or that they may need to put significant time and effort to reach whatever revenue or other thresholds must be met to get their money. For dentists looking to retire in the near future or who want to throttle back the hours they put in, the loss or delay of a significant portion of the sale price and the need to continue working may be a deal-breaker, even when that price is substantially higher (in theory) than what a private buyer would offer.

Do You Want To Keep Practicing?

If imminent retirement is your objective, selling your practice to a DSO is likely not the right path for you. Most DSO purchasers expect and require the selling dentist to continue practicing for a minimum of two to three years after closing.

Not only will you be expected to continue working at your practice, but the DSO will also want to ensure that you don’t practice elsewhere. Non-competition and non-solicitation provisions will be part of your employment contract, which may significantly limit your ability to pursue other opportunities. This is especially true for larger DSOs with multiple locations, as such clauses will typically preclude the selling dentist from practicing in a geographic area around any other practices owned by the DSO.

Are You Ready To Give Up Control?

Many dentists sell to a DSO partly because of the management, financial, operational, marketing, and administrative resources they bring to the table. This is an attractive proposition for dental practice owners who want to be relieved of such burdens so they can focus on their patients or put fewer hours in. But you’re not just ceding control over the less enjoyable parts of running a practice; you are handing over control of the practice itself. After years or decades of building a thriving practice and having the final say on every issue big and small, you will be relegated to the role of an employee. For very hands-on owners, this can be an unexpectedly difficult transition. When crunching the numbers of a DSO offer, do not discount the psychological and emotional price involved in relinquishing control of your practice.

What Are You Investing In?

Many DSOs require that a portion of the purchase price be paid in the form of an equity investment in the DSO. But what exactly are you investing in, and when – if ever – will you see returns on your equity investment? Never is the saying “the devil is in the details” more applicable in dental transitions. A selling dentist with a $1M valuation may be required, for example, to “rollover” 20% of the purchase price into DSO equity. In effect, that dentist is making a $200,000 investment in the DSO. But what the valuation is of the DSO and whether that is a “good” investment is the big question. The reality is that you are making something of a leap with very little control over your investment and many times with very limited information on the DSO you are investing in. The DSO can change hands multiple times, and you could be stuck with the company even if your relationship with the organization otherwise goes south.

Do You Really Understand The Numbers?

In the race to expand, some DSOs offer to pay five to nine times practices' earnings before interest, taxes, depreciation, and amortization (EBITDA). These numbers can be extremely attractive compared to the lesser amounts offered by a private purchaser. But they can also be illusory. No matter how impressive the valuation or offering price appears, there will always be caveats, contingencies, and other provisions that you will need to fully understand before you can make an informed decision. That is why working with an experienced attorney, accountant, broker and financial advisor is so critical if you are considering selling your practice in the near future.

If you are a dental professional considering a sale or merger, please contact us at ddslawyers.com at (630) 833-5533 or contact us online to arrange for your complimentary initial consultation.

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.

Spotlight: Timothy Oliver

sfishbein@ghulaw.com (Samantha Fishbein) — Wed, 17 Aug 2022 15:47:02 GMT

This month’s spotlight features Tim Oliver, partner and member of our firm’s corporate and transactional group. As the leader of our firm's trademark practice, Tim helps dentists establish and protect their brand through trademark rights. For startup practices, he provides clearance services to ensure that his clients avoid infringing trademarks of existing businesses. He has prosecuted numerous trademark applications and represented clients in proceedings before the United States Patent & Trademark Office. When it comes to enforcement, Tim draws from his litigation experience to counsel clients through either side of an infringement claim. He also analyzes the validity of trademark rights for his clients in due diligence for purchasing other businesses. In a market crowded with similar names, Tim will help your brand stand apart from the competition.

Look Before You Leap: Why You Need To Conduct a Thorough Trademark Search Before Building Your Practice's Brand

Wed, 27 Jul 2022 14:05:29 GMT

Your dental practice isn’t the only one in town, far from it. In order to start, build, or grow your practice, you need to distinguish it from all of the other options that potential patients may be considering. You can provide the best patient experience, offer the best dental care, and ask existing patients to sing your praises on review sites or elsewhere. All of these are, of course, foundational for any successful practice. But if you truly want to raise your practice’s profile and build awareness among consumers, establishing a distinct, creative, and memorable “brand” is indispensable. And the centerpieces of any brand are a name and/or a logo, both of which constitute trademarks.

For a dental practice, a strong trademarked name or logo can become one of its most valuable assets. But if you aren’t careful when branding your practice, and your brand is substantially similar to an existing trademark held by another practice or even a business in a separate field, that valuable asset can quickly become a costly liability.

Imagine that you’ve invested thousands of dollars and hours building consumer knowledge of your practice’s brand only to discover that your name or logo is substantially similar to a name or logo another practice in your area has been using for years. Not only may you lose your rights to use your name and logo, but you will also have to spend significant sums defending yourself from infringement claims and may even have to pay damages to the aggrieved party. This is why it is so important to first invest in due diligence, such as a complete trademark search, before proceeding with any branding effort.

Conversely, you wouldn’t want another practice infringing upon or diluting the strength of your established trademark by using the same or similar marks for their practice. By conducting a full trademark search before you adopt a brand and then registering your marks with the U.S. Patent and Trademark Office (USPTO), you can both avoid infringing on someone else’s mark and take advantage of the significant legal rights, protections, and remedies provided to owners of registered marks.

Trademark Registration and “Likelihood of Confusion”

Along with patents, copyrights, and trade secrets, trademarks are a form of intellectual property. Trademarks such as company and product names, logos, slogans, and taglines identify and distinguish businesses, goods, and services from others in the marketplace.

Like any valuable asset, a trademark requires protection to preserve its value and prevent others from exploiting, damaging, or diminishing it. That is why federal trademark registration is essential for any practice trying to establish itself and its brand.

But the USPTO won’t accept every proposed trademark in an application for registration. There are numerous bases for denying a trademark application, but the most fundamental and common reason for denial is because the proposed mark creates a “likelihood of confusion” with another registered mark.

When the USPTO receives a trademark application, an attorney at the office will examine the registrability of the proposed mark by, among other things, searching USPTO records to determine whether there is any conflict between the applied-for mark and a mark that is either registered or pending in the USPTO.

Section 2(d) of the Lanham Act (the federal law that governs trademarks) provides that the USPTO may refuse to register a mark "which so resembles” a registered or pending mark "as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive…"

“Likelihood of confusion” sufficient to deny registration exists when marks are so similar and relate to the same or similar goods or services they are used with that consumers would mistakenly conclude they come from the same source. For example, registering “Apple Dental Associates” is unlikely to be problematic vis-a-vis tech behemoth Apple, but it might be if another dental practice in your area was named “Apple Dentistry.”

This is why any practice considering adopting or applying for a new mark should invest in a comprehensive trademark search to look for similar marks before investing the time, money, and effort on a trademark likely to hit the likelihood of confusion wall at the USPTO.

The Value of Trademark Registration

No law requires you to obtain a federal trademark registration before using a name or logo for your practice. The risk of infringing on someone else’s marks aside, you are free to put your unregistered brand out in the world. But registering your mark with the USPTO provides valuable advantages and is strongly recommended for any practice building its brand. These advantages include:

Deterrence of infringement . A federally-registered trademark is listed in the publicly available USPTO database of registered and pending trademarks. Seeing that a mark is registered can deter other parties from adopting a confusingly similar mark and reduce the likelihood of infringement.
Presumption of ownership . A federal registration creates a legal presumption of ownership of the trademark and the right to use it.
Applying before actual use of the mark . You can file a federal trademark application even before publicly using the mark so long as you have a bona fide intent to do so in the future. Filing an application on an "intent to use" basis allows you to get the ball rolling on registering your mark and securing an earlier filing date.
Access to federal court . The owner of a registered mark can pursue infringement and other claims in federal court.
Use of federal trademark symbols . A federal registration allows an owner to use the federal trademark registration symbol, ®, with the mark, which may act as a deterrent to potential infringers.

If you are a dental practice owner and need assistance with trademark searches or registration as part of your efforts to build your brand, please contact Grogan Hesse & Uditsky today at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Spotlight: Amy Grogan

Tue, 05 Jul 2022 19:36:13 GMT

In this month’s spotlight we are featuring one of our firm’s founding partners, Amy Grogan. Amy works with dentists and dental service organizations in a wide range of practice areas with a particular focus on employment matters, dispute resolution, regulatory investigations and compliance. Amy is a skilled litigator and business advisor with extensive experience advising DSOs, group practices and individual dentists in a wide range of corporate and regulatory matters. As the leader of the firm’s employment and litigation practice groups, Amy counsels our health care clients through complex business and employment litigation, contractual disputes, non-compete and non-solicitation issues, fraud and deceptive trade practices, unfair competition, partnership disputes and other business and individual interests in both state and federal court at both trial and in arbitration. You’ve spent your career building your dental practice. Amy has spent hers protecting it.

What happens to a Dental Practice in a Divorce?

Tue, 05 Jul 2022 19:32:59 GMT

Sustaining a successful dental practice requires a lot of hard work and personal investment. The same could be said about sustaining a successful marriage. But the two don’t always go hand in hand. Like their counterparts in every other profession, occupation, or walk of life, dental practice owners get divorced. The end of a marriage affects almost every aspect of a person’s life, and when one of those aspects is a thriving dental practice, the line between business and personal can quickly become blurry.

That’s because the ownership and value of a dental practice are very much in play during divorce proceedings. Unless a valid prenuptial agreement says otherwise or the spouses reach an understanding during their divorce proceedings, an owner’s interest in their practice in Illinois is subject to equitable distribution between the spouses, just like other marital assets.

But unlike other marital assets like a home, retirement accounts, and personal property, valuing a dental practice and determining how that value will be distributed between the spouses can be much more complicated. If the divorcing practice owner is part of a partnership or professional corporation, the treatment of their ownership interest can become even more sticky.

Equitable Distribution of a Dental Practice

As a preliminary matter, it is important to note the distinction between “equitable” and “equal.” If property were divided “equally” in a divorce, it would be a fairly simple exercise; split the assets 50/50, and everybody is on their way. But distributing property “equitably” can be significantly more complicated and contentious and involves numerous factors that a judge will weigh when deciding who gets what.

The first step is determining which assets are “marital property” and which ones are “separate property.” Equitable distribution only applies to the former - property acquired during the marriage. Property that each spouse brought into the marriage or which one spouse obtained by gift or inheritance during the marriage is “separate property” and will not be reallocated, divided, and distributed between the parties - with one crucial caveat.

Accordingly, if a dentist started their practice while married, the dentist’s interest in the practice is unequivocally marital property. But even if the dentist had already launched their practice before getting married, any appreciation in the value of the practice (or the dentist’s interest in the practice) during the marriage can be marital property if that appreciation was caused in part by the efforts or contributions of the other spouse. Those efforts don’t need to be direct, such as working at the practice. If the spouse facilitated the dentist’s career and practice in other ways, or if marital funds were used to open or run the practice, it will be subject to equitable distribution.

Valuation Is The Critical Issue

Determining the value of a dental practice and deciding how to divide this value between spouses during divorce can be a complex undertaking. Spouses and their attorneys usually work with appraisers and other financial professionals when valuing a practice, and much time and effort can be spent sifting through competing valuations. The value of a practice subject to equitable distribution includes the personal goodwill of the dentist, the fair market value of the practice, how much it is expected to appreciate or depreciate, and accounts receivable, among other elements.

Finding Equivalent Value Elsewhere

In many divorces where one spouse owns a business or part of a business, equitable distribution can involve dividing that ownership interest between the spouses. But in Illinois, as in most states, non-dentists cannot hold an ownership interest in a dental practice. As such, in most cases, the dentist spouse will retain ownership of their practice, and the value distributed to the other spouse will be made up for with other marital assets.

Protecting a Dental Practice From Equitable Distribution

The best time to protect a dental practice from equitable distribution in a divorce is before the marriage begins. A valid and well-crafted prenuptial agreement can account for any present or future practice and take it off the table if and when the marriage ends. Once divorce proceedings commence, however, the practice (or its appreciation in value) is very much on the table.

If you are a dental practice owner considering or in the midst of divorce and have questions about how it will impact your practice, please contact Grogan Hesse & Uditsky today at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Unlocking a Deadlock: How to Resolve Dental Partnership Disputes

Tue, 17 May 2022 15:16:37 GMT

In many contexts, a 50/50 split is a sign of fairness and equity. But when equal owners of a dental practice find themselves at loggerheads over significant issues, a 50/50 split can lead to paralysis, tension, and acrimony that threatens the relationship between the owners and the future of the practice itself.

Whether a practice is a partnership, professional corporation (PC), or limited liability company (LLC), deadlocks are always a distinct possibility where equity interests and voting rights are evenly split among partners, shareholders, or members. Unless the practice owners have established a mechanism for resolving deadlocks, they may wind up in court asking for a judicial dissolution of the practice to resolve the stalemate. This is rarely in any party’s best interest. The best way to minimize existential disagreements and avoid such a litigious outcome is to include deadlock resolution provisions in the partners’ operative agreements.

Not Every Disagreement Equals a Deadlock

Rarely an hour goes by without a dental practice owner making some kind of decision involving the practice. But most day-to-day choices don’t require the assent or approval of a majority or all shareholders or members, nor do they implicate the direction or future of the company. Two practice owners with equal voting rights may disagree on what type of cake to order for an office party, but that is hardly the type of deadlock that a clause in a shareholder or operating agreement is there to address.

The kinds of matters that can lead to consequential deadlocks usually involve actions taken outside the ordinary course of business or that affect the fundamental direction of the practice, such as a merger, joining a dental service organization, or the sale of substantially all of the practice assets. That is why a deadlock provision should clearly define the types and scope of issues and disagreements that could trigger its resolution mechanisms.

Deadlock Resolution Mechanisms

The sports world has many different ways of resolving ties – overtime, extra innings, shootouts, and sudden death, to name a few. Similarly, practice owners have many options for deadlock resolution provisions in their governing documents. Three of the most common include:

Shotgun/Russian Roulette

Thankfully, the name of this type of deadlock provision is metaphorical. In reality, it is far less dramatic and simply refers to a “buy-sell” agreement or arrangement that can be triggered in the event of a deadlock.

Such provisions essentially allow one owner to offer to purchase the interest of the other deadlocked owner at a set price and terms. The offeree must then either accept the given price and terms or purchase the offeror’s interest for the same price and terms (assuming equivalent percentage interests).

A shotgun provision is a pretty blunt instrument. Often, the mere possibility that either of the deadlocked practice owners may find themselves out on the street (again, metaphorically) after the clause is triggered is enough motivation to find a way to settle their differences.

Auction

An auction is often a very workable solution when two or more practice owners compete for control amid a deadlock. It is similar to a shotgun approach in that the offering owner may have the chance to pay a price of their own choosing, even to pay a premium. However, it is very different from a shotgun because the auction process does not penalize the owner making a low offer since the other member only has to make a higher offer to avoid an unfair transaction.

Sealed Bid/“Texas Shoot-Out”

In this colorfully named cousin of a shotgun deadlock provision, each owner submits a sealed offer for the others’ shares to an independent third party. That third party opens the bids simultaneously and the highest sealed bid "wins," meaning the owner who had a higher bid will be required to purchase the others’ shares at the stated bid price.

Third-Party Tie-Breakers

When practice owners take their dispute to court, they are essentially putting their fate in the hands of a third party who may know the law but may or may not have adequate knowledge of the practice or the dental industry as a whole. While a tie-breaking deadlock mechanism gives a third party the authority to make the call as to how to resolve the deadlock or value the parties' interests, that third party is usually someone with more industry knowledge. That party can be the board of an affiliated entity, external or internal professional advisors such as dental broker, one or more mediators/arbitrators, or a dental industry expert.

Given the very real likelihood of deadlock among practice owners, and the existential threat that a stalemate can pose to a dental practice’s ongoing viability, owners should ensure that their shareholder or operating agreement contains robust and precise deadlock provisions.

Grogan Hesse & Uditsky: Lawyers For the Dental Profession

At Grogan Hesse & Uditsky, P.C., 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 a deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Spotlight: Bob Haney

Wed, 20 Apr 2022 15:52:56 GMT

Bob Haney understands that if you want to find the right answers, you need to ask the right questions. That is how the Prospect Heights native and experienced transactional and regulatory attorney approaches the array of complex matters he handles for his individual and corporate clients. By taking the time to fully understand each client’s unique concerns, circumstances, and objectives, Bob develops and implements thoughtful approaches and provides clear, actionable guidance that they can rely on with confidence.

With a diverse background that includes working for and with regulatory agencies and facilitating the development of long-term care facilities, Bob advises clients in a wide range of business transactions, commercial real estate, estate planning, and state regulatory matters.

Prior to joining the firm in 2017, Bob served as associate general counsel of the Illinois Department of Financial and Professional Regulation (IDFPR), where he worked on behalf of the Department to ensure compliance with both state and federal laws, including the Bank Secrecy Act, Regulation Z, the Truth in Lending Act, RESPA, and Anti-Money Laundering regulations. He was also involved in guiding both the Department and the State of Illinois’ policy regulating virtual currency and blockchain technology.

As an attorney focused on problem-solving and responsive client service, Bob appreciates how GHU and his like-minded colleagues at the firm facilitate and support his efforts. He is a graduate of Illinois State University, where he received a degree in Finance, and earned his law degree from DePaul University College of Law. A passionate sports fan, Bob lives in Elmhurst with his wife and two young children, and when not serving his clients or spending time with his family, enjoys reading and sports.

Biting or Toothless? What Dentists Need to Know About Non-Competition and Non-Solicitation Agreements in 2022

Wed, 20 Apr 2022 15:49:21 GMT

We live in a free-market economy based on fair competition and the principle that everyone should be able to make a living in their chosen occupation or profession. Accordingly, the law is not a fan of any restrictions that infringe on otherwise legal business activities or limit competition. Nevertheless, that hasn’t stopped business owners in all sectors of the economy, including dentistry, from trying to restrict what employees can do after they part ways by inserting non-competition and non-solicitation provisions in their employment contracts.

But in Illinois, such restrictive covenants are often not worth the paper they’re printed on.

Not only have Illinois courts over the years rejected and refused to enforce non-competition agreements that they deem unreasonably broad and oppressive, but amendments to Illinois law that became effective on January 1, 2022 explicitly prohibit non-competition and non-solicitation agreements for whole classes of employees.

As lawyers for the dental profession, we often get questions about what restrictions dentists can face from or impose on colleagues after they leave a practice. And while narrowly tailored non-competition and non-solicitation provisions can still be enforceable, those that are poorly drafted or violate the new law can give a practice owner a false sense of security, or cause a dentist to needlessly reject job offers or other opportunities.

Therefore, practice owners and dentists alike should understand precisely what Illinois law permits and what it doesn’t when it comes to restrictive covenants

Non-Competition and Non-Solicitation Aren’t The Same Things

People often use the term “non-compete” interchangeably for two related but distinct limitations on future business and employment activities. But non-competition provisions and non-solicitation clauses are very much different, and judges and the law treat them as such.

Typically, a non-competition provision in a dental employment agreement will purport to restrict a dentist’s ability to practice within a specified geographic area for a set time. For many dentists, the effect of such a provision, if enforceable, is that they will not be able to treat any patients in the identified area until the end of that designated period.

Non-solicitation provisions, on the other hand, only limit a dentist’s ability to actively and directly lure or “poach” patients or employees of their former employer over to their new practice, though they are free to set up shop and treat patients. Importantly, practice owners can’t ethically stop a current patient from going to a former dental associate for treatment on their own if the dentist did not actively solicit them.

2021 Changes In The Law

For decades, Illinois judges have not hesitated to hold restrictive covenants in employment agreements unenforceable or modify them to make them more limited, especially if they are overly broad, unsupported by sufficient consideration, or involve lower-wage workers.

Amendments to the Illinois Freedom to Work Act passed on May 31, 2021 place further limits on the validity and enforceability of non-competition and non-solicitation agreements. These new restrictions apply to all contracts and provisions dated on or after January 1, 2022.

Non-Competes and Non-Solicitation Agreements Prohibited For Certain Employees

Perhaps the most straightforward and significant part of the amendments is that they completely prohibit non-competes and non-solicitation agreements for employees whose income is below a specific threshold. Specifically:

Non-competition agreements are invalid and unenforceable as to employees whose expected annual earnings are less than $75,000.
Customer/employee non-solicitation agreements are invalid and unenforceable as to employees who have expected annual earnings of less than $45,000.

These baseline income amounts are set to increase in 2027 and every five years thereafter. Given that the majority of dental employment agreements involve compensation above the foregoing limits, it is the law’s other elements that are more likely relevant to the evaluation of a restrictive covenant’s enforceability

A Restrictive Covenant Must Protect a “Legitimate Business Interest” Considering the “Totality of Circumstances”

One of the fundamental principles Illinois judges have used to evaluate the validity of restrictive covenants is to assess the facts and circumstances surrounding a provision and decide whether the limits on competition or solicitation are narrowly tailored to protect an employer’s “legitimate business interests.”

The changes to the law reflect and codify this fact-specific approach. The statute now explicitly states that ‘the same identical contract and restraint may be reasonable and valid under one set of circumstances and unreasonable and invalid under another set of circumstances.” The amended law establishes several factors that a judge may consider when determining whether the employer has a legitimate business interest, including:

The employee's exposure to the employer's customer relationships or other employees
The near-permanence of customer relationships
The employee's acquisition, use, or knowledge of confidential information through the employee's employment
The time restrictions, the place restrictions, and the scope of the activity restrictions.

Adequate, Independent Consideration Required

An agreement or contract of any kind – including those involving restrictive covenants - must be supported by adequate consideration to be enforceable. Under the amended statute, “adequate consideration” for a restrictive covenant in a dental employment agreement means:

The dentist worked for the practice for at least two years after signing an agreement containing a non-compete or non-solicitation covenant, or
The practice otherwise provided consideration adequate to support a covenant not to compete or solicit, such as a set period of employment and additional compensation or benefits.

Judges Can Still Revise Overly Broad Restrictive Covenants

The new law also codifies the discretion judges have used to reform and rewrite overly broad or otherwise legally deficient covenants – a practice known as “blue penciling” - rather than holding the entire covenant unenforceable.

Proposed or existing dental non-competition agreements can’t be evaluated in a vacuum; they must be drafted carefully and in the context of the specific practice and the market in which its provisions would be enforced. Any dentist wishing to or asked to enter into a non-competition agreement should consult with an experienced attorney who can help them make informed decisions about their rights.

You Focus On Your Patients. We’ll Focus On You.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Spotlight: DDSLawyers.com Our new logo and website is here!

Tue, 15 Mar 2022 15:52:33 GMT

This month's spotlight is on the introduction of our new logo and brand, DDSLAWYERS.COM , which represents our firm's continued focus on the needs of dentists and dental service organizations.

As many of you know, I have centered my practice on the representation of dentists ever since my father sold his dental practice almost ten years ago. It was my privilege and honor to assist him with transitioning his life's work to a local group practice that carried on his tradition of excellence in dentistry and compassion for his patients. As the grandson of a dentist who served in the U.S. Army during World War II, and as the son and brother of two exceptional dental professionals, I am particularly aware of what dentistry means and the opportunities it affords each of you and your families.

Since the sale of my father's practice, our firm has evolved and grown considerably to include almost a dozen lawyers and other legal professionals focused on representing dentists and dental service organizations from startup to sale. Our team has vast experience in many areas, including Practice Startups, Practice Transitions, Employment and Partnerships, Real Estate, Restrictive Covenants, Dispute Resolution, DSO/DMO Organization, and Estate and Tax Planning.

Just as my father’s patients put their trust in him, knowing he would provide them with excellent dental care and treat them with the utmost respect and compassion, we are committed to earning your trust and delivering the same degree of excellence, respect, and compassion as we serve the needs of your practice.

Thank you to everyone that provided feedback as we narrowed down our logo design. We are thrilled with the results! Be sure to check us out as always at www.ddslaywers.com , and don't hesitate to reach out to me or anyone on our team if we can be of assistance in any way.

Preparing to Sell Your Dental Practice in 2022: 4 Things You Can Start Doing Today

Tue, 15 Mar 2022 15:49:24 GMT

Over years or decades, you built a successful, thriving dental practice on a foundation of hard work, personal commitment, and professional excellence. But now, you’ve decided that you’re ready for the next chapter in your life to begin, and that means selling your practice.

It isn’t easy to say goodbye to an endeavor in which you have invested so much. But selling your practice can be even harder if you shortchange yourself and fail to take the steps needed to maximize the return on that investment.

If you are considering selling your dental practice this year, now is the time to prepare yourself and your practice so you can reap the fruits of your labor and provide yourself and your family with the financial benefits and security you so richly deserve.

Here are four things you can start doing today to position yourself for a successful practice sale.

Define Your Goals

Not every dentist puts their practice on the market for the same reason. Some do it because they are ready to move on to a new venture in a new market. Others are ready to retire and fund their golden years from the proceeds from the sale. Whatever the motivation behind your decision, it is important that you identify your goals and priorities. Do you have a target sale price? Do you have a date by which you want or need to close the transaction? Do you want a cash sale or one that may allow you to leverage the ongoing success of your practice through earnouts over time? Does it matter whether the buyer continues to run the practice the way you did?

Figuring out what you want is the first step to getting it.

Understand What Your Practice Worth – and How To Make It Worth More

You can’t sell your practice without a price, and you can’t set a price without a professional and up-to-date practice valuation set that takes into account both tangible and intangible assets. The practice valuation should be conducted by an experienced dental practice advisor or accounting professional who is familiar with the dental industry and understands the current marketplace for practice sales.

Equally important, you want to make sure that you maximize the value of your practice by continuing to do all of the things that have made it successful while addressing any areas that could use some improvement. Maintain or expand your practice count, and take steps to improve your “curb appeal,” such as freshening up your waiting room’s appearance or enhancing your online presence, including patient reviews.

Know Everything There Is To Know About Your Practice and Be Prepared To Share It

Any potential buyer will want to do their due diligence and do a deep dive into the details of your practice, its operations, its finances, and anything else that can impact their decision about whether to proceed with a deal.

You need to be ready to show and tell them everything, such as revenue and cost numbers, the number of active and new patients you have, an equipment inventory, your staff’s salaries, benefits, and the terms of their employment agreements, the terms of your lease, and referral programs you may have in place, just to name a few. The more readily you can answer their questions, the more interested they’ll be in buying the practice.

Put Away The “For Sale By Owner” Sign And Assemble Your A-Team

You may know all there is to know about the practice of dentistry, but the odds are that others know more than you about the legal, financial, and practical considerations and implications involved in selling a dental practice. There are several different ways to structure a deal, each with its own pros and cons, and failing to account for the tax consequences of a particular transaction can significantly reduce the expected financial benefits.

You should assemble a team of professionals – lawyers, appraisal experts, accountants, financial advisors, and others – who can guide you through the process, help you avoid any pitfalls or oversights, protect you from potential exposure, and negotiate a deal on the best possible terms at the highest possible sale price.

If you are a dental professional considering a sale or merger, please contact Grogan Hesse & Uditsky today at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Illinois Dentists With Med Spa Dreams Are In For a Rude Awakening

Tue, 19 Oct 2021 17:00:06 GMT

Developed as a combination of a medical clinic and traditional spa, medical spas are a global phenomenon, attracting a growing, loyal, and upscale clientele. The global med spa industry was valued at $13.82 billion in 2019 and is expected to grow to $47.14 billion by 2030. According to the AmSpa 2019 Medical Spa State of the Industry Report, the average med spa brings in revenue of more than $1 million annually, with top practices bringing in $4 million to $5 million each year.

Given these figures, it’s no surprise that physicians with traditional practices are expanding into the medical spa industry in increasing numbers, either as owners or medical directors. Dentists have taken notice as well, and are also looking at med spas as a growth and investment opportunity. But Illinois dentists with med spa dreams are in for a rude awakening. Simply put, a dentist cannot own or operate a medical spa in the state of Illinois. And dentists also need to be wary about providing services in a med spa environment, as they may be practicing outside the parameters set by the Illinois Dental Practice Act.

The “Med” In Med Spa Requires Physician Ownership

Med spas offer many non-medical, traditional spa treatments, such as massages, hair removal, and facials. But they also include more specialized and invasive medical aesthetic therapies on their menu of services, such as Botox, dermal fillers, liposuction, and platelet-rich plasma skin rejuvenation.

This latter “med” aspect of med spas brings them under the governance of the Illinois Medical Corporation Act. That act prohibits the “corporate practice of medicine,” meaning that only physicians licensed under the Illinois Medical Practice Act can own a facility, like a med spa, that provides “medical or surgical treatment, consultation or advice.”

Licensed though they may be under the Illinois Dental Practice Act, dentists are not licensed under the Illinois Medical Practice Act. As such, they cannot own or possess an ownership interest in a med spa.

Dentists Need to Be Wary Of Providing Med Spa Services Beyond The Allowable Scope of Their Licenses

The scope of treatments and services that Illinois dentists can provide their patients is defined by the Illinois Dental Practice Act . The act defines dentistry as “the healing art which is concerned with the examination, diagnosis, treatment planning and care of conditions within the human oral cavity and its adjacent tissues and structures.” Section 17 of the act sets forth in more detail what does and does not constitute the practice of dentistry in Illinois.

Many dentists administer Botox or other injectables as an adjunct to certain treatments. But dentists should not assume that their use of Botox or similar injectibles in their practices means that they have carte blanche to administer those treatments in a med spa setting. So long as those injections are in “adjacent tissues and structures” to the oral cavity, they are within the allowable scope of dentistry in Illinois. But a dentist who injects Botox into a patient’s forehead would be hard-pressed to claim that such treatment falls within the scope of “dentistry” as defined by Illinois law

For similar reasons, an Illinois dentist cannot serve as “medical director” of a med spa either. Serving as a medical director at a medical spa includes responsibility for all medical treatments administered by the spa —not just the ones that involve the mouth or adjacent areas. This can consist of such services as laser hair removal and laser skin tightening and rejuvenation to other parts of the body. Overseeing medical procedures such as these is beyond the scope of allowable dental practice in Illinois.

Accordingly, Illinois dentists should tread carefully when considering an opportunity to either own or provide services at a medical spa. Consulting with an experienced dental practice attorney is the best way to ensure that you don’t put yourself and your license at risk.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

COVID-19 Vaccination Mandate for Health Care Workers

Mon, 30 Aug 2021 20:00:59 GMT

With COVID-19 infections and hospitalization rates once again on the rise, Governor Pritzker and IDPH Director Dr. Nogozi Ezike announced last Thursday, August 26, 2021 a new COVID-19 vaccination mandate for all Health Care Workers. The Governor’s order places dental practice owners in a difficult position given an already tight labor market. In this legal update we explore what this means for you as a dental practice owner, who is covered by the order, and what if any are the acceptable exceptions.

Health Care Worker Defined

According to the Governor’s mandate, a “Health Care Worker” means any person who (1) is employed by, volunteers for, or is contracted to provide services for a Health Care Facility, or is employed by an entity that is contracted to provide services to a Health Care Facility, and (2) is in close contact (fewer than 6 feet) with other persons in the facility for more than 15 minutes at least once a week on a regular basis as determined by the Health Care Facility.

Health Care Facility

The mandate also defines a Health Care Facility as “any institution, building, or agency, or portion of an institution, building or agency, whether public or private (for-profit or nonprofit), that is used, operated or designed to provide health services, medical treatment or nursing, or rehabilitative or preventive care to any person or persons. This includes, but is not limited to, ambulatory surgical treatment centers, hospices, hospitals, physician offices, dental offices, free-standing emergency centers, urgent care facilities…”

Vaccination Requirements

If you are a Health Care Worker that works for a Health Care Facility as defined above, you are required to be fully vaccinated within 30 days of the mandate or at a minimum receive your first dose of a dual dose COVID-19 vaccine within 10 days of the executive order. The mandate explains that a person is fully vaccinated “two weeks after receiving the second dose in a two-dose series of a COVID-19 vaccine…” or “two weeks after receiving a single-dose COVID-19 vaccine authorized for emergency use, licensed, or otherwise approved by the FDA.”

Testing

Under the mandate, Health Care Facilities are required to exclude employees who are not fully vaccinated against COVID-19 from the premises unless the employee complies with the required testing guidelines. “Beginning 10 days after issuance of this Executive Order, to enter or work at or for a Health Care Facility, Health Care Workers who have not been fully vaccinated against COVID-19 must undergo testing for COVID-19.” This testing for those employees who are not fully vaccinated must occur weekly until the employee is able to establish that she is fully vaccinated.

Exempt Individuals

Two types of individuals are exempt from the requirement to be fully vaccinated against COVID-19. If “(1) vaccination is medically contraindicated, including any individual who is entitled to an accommodation under the Americans with Disabilities Act or any other law applicable to a disability-related reasonable accommodation, or (2) vaccination would require the individual to violate or forgo a sincerely held religious belief, practice, or observance.” However, individuals who are exempt from the vaccination mandate are still required to undergo, at a minimum, weekly testing.

Unfortunately, compliance with the Governor’s executive order requires dental practice owners to exclude unvaccinated dental staff (whether dentists, assistants, hygienists or staff) from the office. The practical realities of such a policy may be devastating for dental offices already stretched thin with minimal staff. We understand that navigating and implementing these ever changing policies may be challenging and are here to help. If you are weighing the burden of compliance with the Governor’s executive order and need guidance, please contact us as soon as possible.

If you have questions or concerns about how to handle vaccinations or other employment issues related to COVID-19, please call us at (630) 833-5533 or contact us online to arrange for a consultation.

Phantom Equity Plans As An Option for Associate Incentives

Mon, 26 Jul 2021 17:59:05 GMT

The success of a dental practice hinges on many factors. But when all is said and done, it isn’t the attractiveness of an office, ample parking, or free dental floss that keeps patients in the fold – it’s the quality and skills of the dentists that treat them.

That’s why attracting and retaining top-notch dental associates is a high priority for any practice owner. Superstar dentists are an invaluable commodity; losing – and replacing – dental talent is disruptive and costly. No one wants to see a promising associate leave for greener pastures after a few short years. One way to encourage loyalty and reduce turnover is by offering a robust and competitive compensation package that makes the associate personally and financially invested in the practice's success. And one way to accomplish that is by granting the associate a type of equity interest called “phantom stock.”

Taking Ownership – Sort Of

In addition to base salary, many dental associates receive incentives such as commissions based on the individual dentist’s production and revenue. But many practice owners have turned to equity sharing and equity bonus plans. Equity sharing has consistently been shown to have the potential to improve not only the performance of the individual dentist but the culture and collegiality of the practice as a whole.

A phantom stock plan, sometimes called a shadow stock or simulated stock plan, is a type of deferred compensation plan that provides an associate dentist with many of the benefits of stock ownership without actually giving them any stock in the practice. Instead, the associate receives the right to cash payments equal to the value of the shares at a specified later date or distribution event. That value can be established through an appraisal or an agreed-upon formula. The specified events that give an associate a right to a payout can include such things as achieving performance goals, termination, or retirement.

There are two types of phantom stock plans. In an "appreciation only” plan, the cash payout upon vesting does not include the value of the underlying shares, only the increase in value of that stock since it was granted. In a “full value” plan, the practice pays both the underlying value of the stock as well as the amount the stock appreciated while held by the associate.

Control and Flexibility

Additionally, in a properly structured phantom stock plan (i.e., one that satisfies the requirements for deferred compensation plans set forth in Internal Revenue Code 409(a)), the practice receives a tax deduction when distributed amounts are included in the associate’s income.

As attractive as a phantom stock plan can be for dental practice owners and associate dentists alike, it needs to be structured and documented properly in order for both sides to reap its benefits. You should consult with an attorney who has experience with dental practice compensation packages before embarking on a phantom equity plan.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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Chart Sales

Tue, 01 Jun 2021 18:09:10 GMT

After a lifetime practicing, when or how to sell your dental practice is a vitally important decision with many factors to weigh. For certain practitioners, selling their patient chart maybe an attractive alternative to selling their practice as a whole. But does the sale of only patient charts from one dentist to another require authorization from or notice to patients, which could be a significant undertaking for both the buyer and seller? And, how does the sale of the practice as a whole trigger these same authorization or notice requirements?

The primary law governing health care information including its transferability is the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). A quick review of HIPAA often leaves health care practitioners with more questions than answers. Generally, the sale of protected health information (“PHI”), such as patient charts, is strictly limited. Where the sale includes a disclosure of PHI under HIPAA, patient authorization or notice may be required. However, a few specific exemptions are available where the disclosure of PHI is made during a sale, transfer, merger, or consolidation of all or part of a covered entity, including a dental practice. The transfer of PHI is further allowed when the sale, transfer, merger or consolidation of the practice is between two dentists, as they are both deemed “covered entities” under HIPAA.

Because the sale of patient charts falls within the above described exception, no patient authorization or notice is necessary for such a transition. This exception allows dentists and their advisors to complete due diligence and actually transfer the patients charts in connection with a sale, transfer, merger or consolidation with another dentist without the need to obtain the patients’ advance written approval.

Of course, each state may also have its own rules and regulations regarding the portability of health information, as well as the sale of dental practices. In the State of Illinois, the Illinois Dental Practice Act and its accompanying administrative rules do not contain any additional requirements concerning the sale of patient charts. If you have any questions or concerns about how to handle a sale of a dental practice, please call us at (630) 833-5533 or contact us online to arrange a complimentary consultation.

Wed, 12 May 2021 18:55:30 GMT

There are many reasons why a dentist may want to sell their practice - retirement, relocation, a desire to step back from the responsibilities of ownership, or an offer too good to refuse. Whatever the motivation, one goal is always the same: maximizing the financial benefits of the transaction. And if you’re considering selling your practice in the near future, a proposal by President Joe Biden to raise the capital gains tax may make you want to consider moving up your timeline.

The president recently proposed increasing the top capital gains tax rate from 20 percent to 39.6 percent for individuals earning an adjusted gross income of over $1 million. Capital gains refer to profits on the sale of assets like homes, stocks, or small businesses, including dental practices.

Needless to say, if your income puts you above that $1 million threshold, the near-doubling of the tax you’ll pay on the profits from selling your dental practice means that you would send a substantially larger amount of money to Uncle Sam if the proposal becomes law. In anticipation of that possibility – and it remains only a possibility – many small business owners are accelerating any plans they had to sell their companies or practices.

How Capital Gains Taxes Work When You Sell A Dental Practice

If you make a profit when you sell an asset, you make a capital gain. But not all such gains are subject to capital gains tax. Sometimes, the IRS taxes profits as ordinary income at the taxpayer’s individual rate. Since the current individual rate is around 37 percent, sellers would rather pay the currently lower capital gains rate to the extent possible. The proposal to raise the capital gains rate to be more in line with the rates imposed on ordinary income means that locking in gains at the present rate has significant advantages.

As a preliminary matter, the capital gains tax only applies to profits on assets held for more than 12 months. Unless a dental practice goes from zero to 60 or acquisition to sale in less than a year, which is rarely the case, the sale will implicate the capital gains tax.

Another major factor in determining the tax liabilities from the sale of your practice is the type of entity you chose when you formed it.

If, however, your practice is a regular partnership (such as a limited liability company or a limited liability partnership), or an S Corporation, you may pay tax on both ordinary and/or capital gains income on your personal income tax return depending on the structure of the sale.

Most sales of dental practices are structured as asset sales, meaning the purchaser is acquiring specific assets of the practice rather than its stock. This is where proper structuring of the transaction and the allocation of particular assets to be sold is critical in minimizing tax liabilities.

Dental practices are comprised of several different kinds of assets—equipment, supplies, real property, goodwill—and separate accounting and tax rules apply to each type of asset. For example, IRS rules provide that the sale of inventory produces ordinary income, but the profits from the sale of capital assets held for more than a year are a long-term capital gain.

All of this is to say that how you sell your dental practice is just as important as when you sell it. And, with the potential loss of a much lower capital gains tax rate under the president’s proposal, that “when” is potentially worth tens of thousands or hundreds of thousands of dollars. You should consult with an experienced dental practice sale and acquisition attorney to discuss and understand your options.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

5 Things Every Dentist Should Know About their Associate Employment Agreement

Fri, 30 Apr 2021 15:53:20 GMT

Many factors play a role in a dentist’s career trajectory. Their skill and professional demeanor, the quality of the patient experience, and effectively distinguishing themselves in a crowded marketplace are certainly among those elements.

But dentists, whether they are seeking their initial placement or moving between practices, need to pay close attention to the document that will profoundly impact their professional future: their associate employment agreement.

Dentists joining an existing practice are almost always asked to sign an employment agreement. This document contains many provisions that will govern a dentist’s career while employed by the practice and in the years that follow. If you hold in your hands a proposed associate agreement, it is critical that you understand its terms and consequences - and that you meet with an attorney who has experience with dental employment contracts – before signing on the dotted line.

While the entire document requires careful review, here are five key elements of a dental associate agreement that you should pay particular attention to:

1. Compensation Formulas

“How much does it pay?” Very few people, in any profession or occupation, will accept a position or sign an employment agreement without knowing the answer to that question. But in many associate agreements, the answer may be much more complicated – and confusing – than a straight annual salary.

A dentist’s total compensation package may consist of several different elements, each of which will impact how much a dentist actually earns. In addition to a base salary, these formulas often include commissions. Commission is a compensation arrangement under which the amount of compensation is based on the employee-dentist’s production. For an associate dentist, the amount of commissions could be calculated using:

a flat percentage of the revenue generated, or the number of patients treated or procedures performed, by the dentist;
the total amount billed for the work that the dentist performs in a pay period; and
the gross amount collected from the dentist’s patients for work they performed in a pay period.

2. Non-Competition Agreement/Restrictive Covenants

If the day comes when a dental associate leaves their current employment, their associate agreement may limit (or at least attempt to limit) their ability to practice elsewhere. Typically, a non-competition agreement, sometimes referred to as a restrictive covenant, will purport to restrict an employee’s ability to engage in their current occupation within a specified geographic area for a set period of time. For dentists, this can mean that they pledge not to treat any patients in the identified area until the end of that period.

Similarly, non-solicitation agreements restrict an employee’s ability to actively seek the business of, or treat, the employer’s current patients/customers/clients/customers for a given period, though they are free to set up shop and do business.

Often, these covenants are so broad that courts will not enforce them. A court will consider the two primary factors when evaluating a non-competition agreement: its reasonableness and whether it is supported by sufficient consideration (such as a promise of continued employment). Specifically, for a non-compete to be enforceable in Illinois:

Its geographic and temporal limitations must be no greater than needed to protect a legitimate business interest;
Its restrictions must not impose an undue hardship on the employee; and
Its restrictions must not be detrimental to the public.

While the specific non-compete in a proposed agreement may ultimately be unenforceable, associate dentists should attempt to address the nature and scope of such provisions at the outset rather than in contentious litigation after they leave the practice.

3. Term of Employment/Termination Provision

In Illinois, an employer can fire an employee for any cause at any time, other than for legally prohibited reasons such as race, gender, religion, and disability. The other exception to the rule of “at-will” employment is where the employer and employee enter into a contract that sets forth the term of employment, the reasons that could justify termination, and the notice required if the employer or employee decides to end the relationship.

Needless to say, an associate dentist and their attorney should ensure that they are fine with the proposed duration of employment, whether the parties can extend it, and why it could end.

4. Liquidated Damages

A “Liquidated Damages” provision in a contract defines or specifies the amount of damages that a party must pay if they breach the terms of their agreement without the non-breaching party needing to prove the actual damages they incurred, if any.

Courts will generally enforce contractual liquidated damages provisions where the damages due to a violation of the agreement are difficult to calculate and the liquidated damages specified bear a reasonable relationship to the foreseeable loss due to a breach. Given their potential liability under such a provision, associate dentists should carefully consider any liquidated damages clause in their agreement.

5. Malpractice Insurance

In a dental employment agreement, a section regarding “insurance” typically concerns dental professional liability insurance (malpractice insurance), and specifies which party is responsible for securing insurance coverage for the employee. Some agreements may require the employee-dentist to purchase his or her own insurance. In others, the employer will provide the insurance (sometimes through a group policy that will cover the employee-dentist). If the employee is responsible for procuring the insurance, this provision will also likely dictate the type and amount of the policy that the employee is responsible for procuring.

Malpractice insurance premiums can be substantial, so knowing who will be writing those checks will impact the financial benefits of any proposed compensation package.

We Focus on You So You Can Focus on Your Patients

As noted, no associate dentist should sign an employment agreement without reviewing the document with experienced counsel. At Grogan Hesse & Uditsky, P.C., 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.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Letters of Intent in Dental Practice Sales and Acquisitions - Are They Worth The Paper They're Written On?

Fri, 19 Mar 2021 16:37:49 GMT

The road to hell is paved with good intentions, as they say. So too is the expressway that leads to failed business transactions, including the acquisition and sale of dental practices. Purchasers and sellers may agree in principle to the broad outlines – or even specific details - of a practice acquisition, and often put the terms of such tentative agreement into a document called a “letter of intent.” But if negotiations then go south, and one party wants out of the putative deal, can the other party enforce such a document?

Also sometimes called a memorandum of understanding or term sheet, a letter of intent is a strange legal animal. It isn’t exactly a contract, but a judge and Illinois law may treat a letter of intent as an enforceable agreement if the parties intended to be bound by it and it contains the material terms of the proposed transaction. Other times, a letter of intent may be held to be simply an “agreement to agree” sometime in the future rather than a legally binding and enforceable contract.

If you are in the early stages of a potential dental practice asset or equity purchase or sale and seem to be on the same page with your counterpart, here is what you need to know about any proposed letter of intent.

Intent to Be Bound

It may sound like circular logic, but determining whether a letter of intent will be enforced like a contract depends on determining the intent of the letter. As the Illinois Supreme Court put it, “although letters of intent may be enforceable, such letters are not necessarily enforceable unless the parties intend them to be contractually binding.”

A judge will decide whether the parties intended the letter to be a binding contract by examining the language of the letter, as well as the circumstances surrounding its negotiation, preparation, and execution.

That is why parties entering into a letter of intent for the purchase of a dental practice should clearly spell out whether they intend for the document to create enforceable obligations. By including clear and concise language that states explicitly whether the letter is to be treated as a binding contract or merely an “agreement to agree,” the parties can spare themselves the time, costs, and risk of having a judge make that decision for them.

That is why it is generally best that a letter of intent contains certain provisions that are explicitly non-binding (though allowing for further negotiation) and certain provisions that are binding and enforceable regardless of the outcome of the proposed deal, such as confidentiality and the removal of the practice from the market during the negotiations.

Material Terms Must Be Included

Even if the purchaser and seller expressly intend for their letter of intent to be binding and enforceable, an Illinois court will not enforce any such letter unless it contains all material terms of the deal. After all, it is hard to enforce the parties’ obligations when the parties themselves have not identified those obligations.

For dental practice sales and acquisitions, the parties to a letter of intent should include essential and material terms such as:

The purchase price.
Whether the purchase is of the practice’s equity or assets.
The assets to be purchased and those to be excluded.
The treatment of accounts receivable (AR), including whether the practice’s AR is part of the purchase and whether any discounts will be applied.
Who is responsible for existing debt, liability, and patient credits.
The terms of any non-compete or non-solicitation agreements to be part of the transaction.
Any existing lease agreements and whether the sale of the practice is contingent upon successful assignment or execution of a new lease for the office space.
Terms for patient retreatments, including who is responsible for retreating patients and how much the purchaser will earn if they perform the work.
The access the prospective purchaser will have to the practice’s books to conduct financial and clinical due diligence.
An exclusivity provision stating that the selling dentist agrees to cease all conversations and negotiations with other potential buyers.
Any employment arrangements with the selling dentist or their staff.
An expiration date for the letter of intent.

If you are considering buying or selling a dental practice in Illinois, a letter of intent can be a useful tool during negotiations. But if not carefully and precisely drafted to reflect both parties' mutual intentions, it may not accomplish either party’s goals.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Your Dental Practice May Be Put On Hold After Your Death or Disability, But Your Lease Obligations May Not

Mon, 08 Mar 2021 15:23:40 GMT

Many smaller dental practices are inseparable from the dentists themselves. The practice may be (and should be) a separate legal entity with its own license, but if the primary dentist ceases to practice, the practice will cease to be. This situation is fine if it is part of a planned and thoughtful transition or retirement. But it can be a catastrophe if the dentist becomes disabled or passes away unexpectedly.

Because even though the practice comes to a grinding halt, any obligations the dentist and practice have under a commercial lease will continue – unless the dentist prepared for such a possibility when negotiating the lease.

Standard Leases Don’t Care About Your Death or Disability

Most standard commercial leases, including those for professional practices, do not release the lessee from their rent or other ongoing obligations if they temporarily or permanently shut their doors due to the primary revenue generator's death or disability. This means that while a dentist is dealing with a life-changing medical crisis, or their family is mourning their loss, they will also face a landlord seeking its rent money for the remainder of the lease term.

The landlord won’t only look to the practice entity for its money. If the dentist signed a personal guarantee for the lease, the lessor could file a claim against the dentist’s estate seeking any remaining rental payments. This is money that the landlord is effectively taking out of the pockets of the dentist’s heirs.

Death and Disability Clauses

That is why many dentists request the inclusion of a death and disability clause when negotiating the terms of their lease. Such a provision allows the practice to be released from its obligations if the primary practitioner passes away or becomes disabled, even if there are months or years remaining on the lease term.

While commercial landlords are generally averse to such clauses, they are not uncommon in leases with professional service providers like dentists, who are the sole reason the practice is able to generate revenue and pay rent.

Often, a negotiated death or disability clause will still include a penalty of several months rent in the event the clause is triggered and the dentist or their estate elects to terminate the lease. This is usually preferable to the alternative if there is a long term left on the lease. Sometimes, the provision may allow a disabled dentist or the dentist’s estate to sell the practice and assign the lease agreement to the purchaser.

What If The Landlord Won’t Budge?

No matter how reasonable the request for a death and disability clause may be, there will always be landlords who won’t entertain the concept. This can be the case in lease arrangements where that landlord provides a significant tenant improvement allowance or performs costly and unique improvements to the leased space, a frequent occurrence in dental leases.

In such circumstances, the dentist should consider obtaining a “key person” or “key man” life insurance policy. The tenant would be the beneficiary under the policy and could use the proceeds to satisfy any outstanding obligations under the lease. Alternatively, the landlord may demand that the dentist add the landlord as an additional insured under the dentist’s death or disability insurance policy in an effort to mitigate its losses.

It is never fun to think about your own death or disability, whether you are engaged in estate planning or negotiating a lease for your dental practice. But in both cases, doing so can spare yourself, your family, and your practice from unnecessary and costly burdens during an already difficult time. Always consult with an experienced dental practice attorney before negotiating or entering into any lease for your practice.

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Employers Can Require COVID-19 Vaccinations For Most Employees

Thu, 14 Jan 2021 18:57:26 GMT

As this relentlessly awful year mercifully draws to a close, a light at the end of our pandemic tunnel is rapidly approaching. COVID-19 vaccines are poised for approval, and it is expected that distribution will begin in earnest shortly. But no matter how much and how confidently the FDA and other health experts proclaim these vaccines to be safe and effective, there are large numbers of Americans who say they won’t get the shot when it becomes available. The most recent Gallup poll found that only 63 percent of Americans say they are willing to be inoculated against the disease.

Many of those who don’t want to get vaccinated will soon find out that they work for an employer who feels differently. Those employers may also tell them that they either need to get the vaccine or need to find a new job. And, in most cases, employers may be well within their rights to terminate employees who refuse to take the COVID-19 vaccine.

Mandatory Vaccinations Are Not New

Companies that have spent the better part of the year – and lots of money - trying to keep their workplaces COVID-free see the vaccine as the apex of those efforts. With a fully vaccinated workforce, business owners can operate without disruption and provide employees, customers, clients, and patients with confidence and peace of mind.

But all of those benefits of the vaccine only accrue to fully vaccinated workforces. So, many companies may mandate that employees get their shot as a condition of continued employment. By doing so, they are following a legally sound path that predates the current pandemic.

Well before anyone had heard of coronavirus, plenty of employers, primarily in the health care sector, required employees to get the flu vaccine and vaccinations against other infectious diseases. Most public school districts also require proof of vaccinations before a student can enroll and attend classes.

Since most employees in Illinois work on an “at-will” basis, they can face termination for almost any reason not expressly prohibited by federal, state, or local laws. Generally, no law stands in the way of an employer requiring the COVID-19 vaccine for its workers.

ADA and Religious Exceptions

However, employers who make vaccines mandatory need to be mindful that employees with legitimate health or religious concerns about the vaccine may be protected from termination and other adverse employment actions if they refuse the shot. But these exceptions don’t necessarily apply just because someone doesn’t believe in vaccines generally (“anti-vaxers”) or thinks that forcing them to get vaccination is an infringement on their liberties.

Employees who have a disability recognized under the Americans with Disabilities Act (ADA) that prevents them from taking the coronavirus vaccine cannot be forced to get the vaccine, so long as their exemption does not impose an “undue hardship” on the employer. Such disabilities in this context may include a compromised immune system or an allergy to an ingredient in the vaccine.

While there has been no definitive guidance on the subject, one could credibly argue that an employee’s refusal to get vaccinated is an “undue hardship” if it places the health and safety of other employees and visitors at increase risk of infection. Even in such cases, however, an employer may need to make a “reasonable accommodation” for the employee, such as allowing them to work from home.

Similarly, the anti-discrimination provisions of Title VII of the Civil Rights Act of 1964 may protect a worker if their “sincerely-held religious beliefs” preclude them from getting a vaccination. Such beliefs do not include political or personal views. The burden is on the employee to demonstrate the legitimacy of their religious objections to the vaccine.

More Than Legal Issues To Consider

Even when an employer is within their legal rights to require employees to get the COVID-19 vaccine, other considerations may weigh against such a mandate. For example, they may need protection against an employee who has an adverse reaction, even if they signed a waiver upon receiving the shot. A vaccination requirement may also get an adverse reaction from employees generally as well as the general public if it seems heavy-handed and overreaching. Of course, those that decide against a mandate face risks if someone does contract the coronavirus in the workplace and sues.

Please Contact Grogan Hesse & Uditsky With All Of Your COVID-Related Employment Questions

If you have questions or concerns about how to handle vaccinations or other employment issues related to COVID-19, please call us at (630) 833-5533 or contact us online to arrange for a consultation.

PPP Issues When Buying or Selling A Dental Practice

Tue, 01 Dec 2020 15:15:35 GMT

As was the case for small businesses in almost every sector of the economy, the Paycheck Protection Program (PPP) provided a desperately needed lifeline for dental practices temporarily shuttered by the COVID-19 pandemic. These funds covered payroll, rent, mortgage payments, and other costs. One of the program’s most important and attractive features is that loans were completely forgivable as long as the borrower used the funds as allowed and satisfied other requirements.

But as critical as PPP loans have been, they present new and novel challenges for those seeking to buy or sell a dental practice that received funds from the program. Parties to a transaction need to consider how to account for the proceeds, ensure that forgiveness has been or will be obtained, and allocate responsibility liability for any unforgiven loans.

Recent SBA Guidance

As the U.S. Small Business Administration (SBA) manages the PPP program, following its guidance on how to treat PPP loans in the context of the sale or purchase of a practice is critical. For months after the program's launch, parties were flying blind as to what they needed to do to avoid problems with obtaining forgiveness on PPP loans and other issues that arise in a practice acquisition.

To clarify many of these issues, the Small Business Administration (SBA) issued guidance on Oct. 2 that outlines the procedures to follow when there is a change in a borrower's ownership.

What Constitutes a "Change In Ownership" for Purposes of PPP Obligations

Not all ownership transactions raise PPP issues. For purposes of the PPP, a "change of ownership" occurs when:

At least 20 percent of the common stock or other ownership interest of a PPP borrower (including a publicly-traded entity) is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity.
The PPP borrower sells or otherwise transfers at least 50 percent of its assets (measured by fair market value), whether in one or more transactions.
A PPP borrower merges with or into another entity.

Continued Obligations of a PPP Borrower

The SBA's guidance clarifies that PPP borrowers remain liable for all repayment, certification, and documentation requirements related to the loan. Specifically, a borrower remains responsible for the following regardless of a change in ownership:

Performance of all obligations under the PPP loan.
The certifications made in connection with the PPP loan application, including the certification of economic necessity.
Obtaining, preparing, and retaining all required PPP forms and supporting documentation and providing those forms and supporting documentation to the PPP lender or lender servicing the PPP loan (referred to as the "PPP Lender" in this Notice) or to SBA upon request.
Compliance with all other applicable PPP requirements.

Notifying Lenders of Change in Ownership

Before closing any transaction that constitutes a change of ownership as described above, the PPP borrower must notify its PPP lender in writing of the contemplated transaction. The borrower must also provide the lender with a copy of the proposed agreements or other documents that would execute the proposed deal.

When SBA Approval Is Needed Before a Change of Ownership

Depending on the loan status or the nature of the transaction, the SBA may need to approve a change of ownership before it is consummated.

If the borrower has satisfied its PPP loan obligations, there are no restrictions on ownership change. This is the case when the borrower has repaid the note in full or has completed the loan forgiveness process and repaid any remaining balance on the loan.

For transactions closing before the borrower has satisfied its PPP loan obligations, a PPP lender may permit the transaction to proceed without prior SBA approval if:

The sales or other transfers involve 50 percent or less of the borrower's common stock or other ownership interest.
The sales or other transfers involve more than 50 percent of the common stock, other ownership interest, or assets of the borrower and the borrower:

Submits a loan forgiveness application to its lender detailing its use of all PPP loan proceeds, together with supporting documentation.
Establishes an interest-bearing escrow account controlled by the lender with funds equal to the PPP loan's outstanding balance.

Prior SBA approval is required for any changes in ownership not listed above. Much of the responsibility for obtaining that approval falls on the PPP lender, as outlined in the SBA's guidance.

For asset sales requiring SBA approval, the purchasing entity must assume all of the borrower's obligations under the PPP loan, including responsibility for compliance with the PPP loan terms.

Considering a Dental Practice Sale or Acquisition Involving a PPP Loan? Call the Dental Practice Lawyers at Grogan, Hesse & Uditsky Today.

The SBA’s guidance does provide clarity on many aspects of PPP loan treatment during the purchase or sale of a dental practice. However, integrating these loans into the transaction and pending forgiveness issues make it even more critical that parties engage in comprehensive due diligence and prepare meticulous documentation for such a consequential transaction.

At Grogan, Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices. 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.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

What Dentists Need To Know About Surcharges For Personal Protective Equipment

Thu, 30 Jul 2020 18:04:52 GMT

When dental practices reopened their doors and resumed seeing patients, they did so in a world that, for all of its familiarity, remains dramatically different than it did before the pandemic consumed American life. Among the myriad new issues that practices needed to confront was the imperative of ensuring the health and safety of their patients and staff. But doing so requires more than modified protocols and procedures. It involves a significant investment in the resources necessary for infection prevention and control, including personal protective equipment (PPE).

While dentists and technicians already incurred significant costs in safety gear pre-pandemic, it is estimated that PPE costs for dental practices are now ten to thirty times higher than they were a few short (or long) months ago. This compounds the challenges faced by practices already reeling from an extended period of lost revenues.

To deal with these additional costs, many dental practices are adopting an approach taken by other businesses such as restaurants and salons by charging surcharges for the costs of PPE. While there is nothing inherently problematic in such charges, which can range from $10 to $40, the way practices notify patients about them and how they seek reimbursement from insurance carriers can raise some tricky issues.

The ADA’s Guidance on Documenting Surcharges

The American Dental Association (ADA) has firmly supported the decisions of practices to impose a surcharge for PPE if they so choose, though it does not provide fee guidance. The ADA recommends that those practices that do impose a surcharge do so transparently and consistently: “It is always best to inform patients of any additional charges to avoid any surprise bills. Providing a documented financial policy and seeking consent is desirable.”

As to how best to document charges related to PPE, the ADA advises dentists to develop a standard office policy to document the specific PPE that will be used across all patients. Alternatively, the ADA recommends that dentists add a note in the patient’s record to document the details of the PPE uniquely necessary for the visit when charging different fees based on the level of PPE used.

Coding, Billing, and Reimbursement

In its April 2020 Statement on Third Party Payer Reimbursement for PPE , the ADA urged third-party benefit programs to either:

• Adjust the maximum allowable fees for all procedures, or

• Allow a standard fee per date of service per patient to accommodate the rising costs of PPE.

Prior to such adjustments taking effect, the ADA suggests that dental offices use CDT code “D1999 - unspecified preventive procedure, by report” to document and report the use and costs for additional PPE.

The ADA has also issued extensive guidance for third-party PPE coding and billing . The guidance includes a regularly updated list and outline of the specific policies that various carriers have announced.

Renegotiating Fee Schedules

The additional costs of practicing during the pandemic era and the need to cover those expenses in ways that minimize the amount passed on to patients may require practices to renegotiate their fee schedules with the dental benefit plans for which they are a participating provider.

Before attempting to renegotiate with a carrier, practice owners should be familiar with and have at the ready a range of facts and figures about their practice they can use to make their case for an adjustment. Regarding coronavirus and PPE-related charges specifically, you should know the added per-patient expense you incur for those expenses. You can break these costs down into added disposable PPE costs per patient, as well as added per-patient estimates to recover engineering controls.

Experienced Dental Practice Counsel During An Unprecedented Time

These are indeed unprecedented times for dentists and dental practices. The challenges of maintaining a viable practice while also bearing the new costs required to ensure patient and staff safety can be overwhelming. That is why it is so critical for dental practice owners to have the business and legal resources they need to help them navigate the uncharted waters of this new era.

At Grogan, Hesse & Uditsky, P.C. , we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as for orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We understand the concerns and complexities faced by owners and practitioners as the pandemic remains a dominating presence in their practices. We welcome the opportunity to assist you during these unique and difficult times.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Amendments to PPP Loan Forgiveness

Fri, 05 Jun 2020 17:02:19 GMT

Many businesses that received Paycheck Protection Program (“PPP”) funds are coming to the end of their respective eight-week time periods (“Expenditure Period”) during which they must use the PPP funds to obtain forgiveness under the CARES Act. Unfortunately, many of these businesses have found it difficult to reopen and remain fully operational throughout the Expenditure Period and consequently to meet spending thresholds necessary to obtain full forgiveness. Luckily for these businesses, some much needed flexibility is on its way.

Paycheck Protection Program Flexibility Act

On June 5th, the Paycheck Protection Program Flexibility Act (“PPPFA”) was signed into law. The PPPFA made the following changes relevant to PPP loan forgiveness:

Extends the Expenditure Period from eight weeks to the earlier of twenty-four weeks from the date of the loan origination or December 31, 2020.
Reduces the required payroll spending amount to a minimum of 60% on payroll instead of the current 75% minimum requirement. This would allow businesses to use the remaining 40% of the PPP funds on rent and other operational items as needed.
Extends the deadline for workers to be able to be rehired to December 31, 2020 instead of the current cutoff of June 30, 2020.
Extends the PPP loan to a five-year term instead of the current two-year term.

As any amendments governing the use and repayment of PPP loans may be vital to a small business’ ability to continue to operate and successfully plan for the future, our team will continue to keep you up to date on the on-going developments. As always, it is important to consult with informed attorneys, financial advisors, bankers and accountants on how best to use your PPP funds. Should you have any questions, don’t hesitate to call or email us.

GHU's Jordan Uditsky and Amy Galvin Grogan Address COVID-19 and Other Issues Before Chicago Dental Society

Fri, 15 May 2020 15:15:21 GMT

In a May 1, 2020 Zoom presentation to the Chicago Dental Society, Grogan Hesse & Uditsky partners Jordan Uditsky and Amy Galvin Grogan addressed the disruptions and challenges to dental practices caused by COVID-19, financial support available through the Paycheck Protection Program, and related human resources issues.

Amy Galvin Grogan discussed how the pandemic and responsive legislation impacts family and medical leave for dental practice employees, contracts with dentists, and CDC guidelines, among other matters. Jordan Uditsky gave an overview of the Paycheck Protection Program (PPP), including guidance on how practices can use PPP loan proceeds for payroll, rent, utility, and mortgage payments, how to maximize loan forgiveness, and changes to recordkeeping requirements.

If you were unable to attend the presentation, you can see it here . If you have any questions or concerns that Jordan or Amy did not address, please do not hesitate to reach out to them . You can also visit ddslawyers.com for more valuable information and updates about COVID-19 and its effects on the dental profession.

PPP Update: Expenses Paid For With Forgiven PPP Loans Are Not Deductible

Fri, 15 May 2020 15:06:30 GMT

In its recently issued guidance , the Internal Revenue Service (IRS) clarified that business owners who pay otherwise deductible business expenses with Paycheck Protection Program (PPP) loan proceeds cannot deduct those expenses for tax purposes if the loan is ultimately forgiven.

Use of PPP Loan Proceeds to Pay Deductible Business Expenses The primary purpose of the Paycheck Protection Program is to help businesses retain employees at their current base pay, providing a desperately needed lifeline to businesses and their employees that were devastated by the COVID-19 pandemic.

The maximum amount any small business or practice may borrow through the program is 250 percent of its average monthly payroll expenses incurred during the one-year period before the date on which the loan is made, up to a total of $10 million. Companies that actually received PPP funds could use those proceeds to pay expenses required to keep them afloat, including the costs of keeping employees on their payroll.

Under section 1106(b) of the CARES Act that established the PPP, a recipient of a covered loan can obtain forgiveness of its indebtedness in an amount equal to the sum of payments made for the following expenses during the 8-week “covered period” that begins on the loan’s origination date:

payroll costs;
any payment of interest on any covered mortgage obligation;
any payment on any covered rent obligation; and
any covered utility payment.

Generally, all of those foregoing expenses qualify for a deduction under Section 162 of the Internal Revenue Code as “ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” Additionally, Section 163(a) of the Code provides a deduction for certain interest paid or accrued during the taxable year on indebtedness, including interest paid or incurred on a mortgage obligation of a trade or business.

Forgiven Loan + Deductions for Business Expenses = Prohibited Double-Dipping

However, nothing in the CARES Act addresses the issue of whether deductions otherwise allowable under the Code are permitted if the loan is subsequently forgiven as a result of the payment of those costs.

Hence, the new IRS guidance on the matter. Specifically, the IRS noted that the Code and applicable regulations provide that a taxpayer cannot take a deduction for any amount otherwise allowable as a deduction if the expense is paid by any amounts allocable to a “class of exempt income.” It then concluded that forgiven PPP loan proceeds constitute just such a class of exempt income. Accordingly:

“Section 265(a)(1) of the Code disallows any otherwise allowable deduction under any provision of the Code, including sections 162 and 163, for the amount of any payment of an eligible section 1106 expense to the extent of the resulting covered loan forgiveness (up to the aggregate amount forgiven) because such payment is allocable to tax-exempt income. Consistent with the purpose of section 265, this treatment prevents a double tax benefit.”

Legislators Seek to Nullify IRS Guidance

As a result of this ruling, small businesses that accept and use PPP loan proceeds face an increase in their taxable income and thus an increase in their tax burden that is directly at odds with the aid PPP loans was designed to provide. In response to the IRS guidance, legislators introduced the Small Business Expense Protection Act . This legislation would nullify the IRS guidance and provide that forgiveness of coronavirus assistance through the PPP would not affect the borrower’s ability to deduct their ordinary business expenses.

We will continue monitoring this and all other developments relating to COVID-19 and its impact on small business owners. If you have any questions related to the IRS guidance or PPP loans generally, please contact the business attorneys at Grogan Hesse & Uditsky .

IDPH's Interim Guidance: Routine Oral and Dental Care

Fri, 15 May 2020 14:53:43 GMT

In anticipation of the expansion of permitted oral and dental health care services, the Illinois Department of Public Health (“IDPH”) issued its Interim Guidance: Routine Oral and Dental Care (the “Guidance”), a summary of which is provided below.

As they reopen, dental offices and their providers should be balancing a patient’s healthcare needs, the benefits of any particular procedure and the risk of exposure to that patient and staff. In addition to appropriate screening for COVID-19, dental professionals should always: (i) include optimized use of administrative controls, engineering controls, and use of PPE as described by CDC Infection Control for Dental Setting, ADA Interim Guidance for Minimizing Risk of COVID-19 Transmission, and ADA’s Return to Work Interim Guidance Toolkit; and (ii) when performing aerosol-generating procedures on patients who have, or are suspected to have COIVD-19, use CDC’s Transmission Based Precautions, OSHA COVID-19 Control and Prevention guidance and airborne isolation rooms. Per the CDC, “when practicing in the absence of Airborne Precautions, the risk of SARS-CoV-2 transmission during aerosol generating dental procedures cannot be eliminated.”

Aerosolization of COVID-19

To minimize the risks of aerosolized COVID-19, dental offices should take the following steps:

Reduce aerosolization through techniques such as high-volume evacuation, etc.
Use portable operated HEPA filters of appropriate size, placement, and maintenance.
Use a properly designed and maintained UV system that takes into account the design of fixtures, lamp type, lamp placement, airflow amount and mixing, etc.

Testing

Dental offices should consider incorporating COVID-19 testing as outlined in the Guidance into its provision of dental services and development of treatment plans while keeping in mind that tests can provide false-negative results, and an individual could begin shedding virus the next day after the negative test result.

Current Guidance

Case Selection and Care Plan . If possible, patients with increased vulnerability to COVID-19 should defer elective oral and dental care. For patients with unknown COVID-19 statuses, procedures treating active diseases and that are minimally invasive should be prioritized, with hand instruments being used whenever possible. As aerosol generating equipment increases the risk of transmission, dental offices should consider the following in determining patient treatment plans:

Risks vs. benefits of each procedure
If possible, 24-48 hours prior to the appointment, administer a symptom screening from the CDC to the patient by telephone.
This screen should be repeated upon the patient’s arrival at your office.
Upon arrival, use a non-contact thermometer to check the patient’s temperature.
Reschedule the appointment if the symptom screening is positive or if the temperature is over 100 degrees.
While screening for COVID-19 through questionnaires and body temperature is helpful, it is not definitive as COVID-19 infection cannot be ruled out by a negative symptom screening and a normal temperature. Patients incubating the virus are usually infectious for 48-72 hours prior to exhibiting symptoms.

Risk Mitigation . Transmission risk can be decreased through treatment selection and consideration of individual steps mitigating the creation and spread of aerosols and droplets (e.g., dry-field isolation, fourhanded dentistry). For a structured risk decreasing process, please refer to the ADA’s Interim Guidance for Minimizing Risk of COVID-19 Transmission, which addresses the risk of exposure and transmission before, during, and after planned oral and dental care.
Protective Equipment . Dental offices should ensure that adequate PPE is available to provide patient care to best reduce the chances of spreading COVID-19 to its patients or staff. This must include appropriate PPE and treatment area safety procedures implemented with the specific type of procedures to be performed by the dental office in mind.
Infection Control . In determining which services to offer and when, dental offices should, from the perspective of aerosol generation, consider a risk-sensitive approach with a limited set of services. Those procedures that involve the patient and staff to be close in contact but do not generate aerosol may be considered lower risk.

For these lower-risk procedures, minimal PPE for protection of the airway includes American Society for Testing Materials Level 3 surgical mask and full-face shield.
For moderate or high-risk procedures, either due to the generation of aerosol or close contact, minimal PPE for the protection of the airway includes a fit-tested N95, or higher-level respirator, with full face shield protection and a gown.

For patients with COVID-19, an airborne infection isolation room should be used for aerosol-generating procedures.
For patients whose COVID-19 status is unknown, dental offices should adhere to standards and practices at least as stringent as those recommended by the CDC, ADA and OSHA when performing aerosol-generating procedures.

Aerosol Risk . For a list of oral and dental procedures by relative risk level, please refer to the Guidance . This list is not exhaustive for oral and dental treatments. While this list should be considered in determining treatment, dental offices should continue to take in as many other factors as possible in order to best determine the most appropriate plan of action for each patient.

As the as the dental services permitted and the guidelines for providing those services is continually changing and involving, it is important to be aware of what your practice may do and should do with regard to treating patients and putting proper safeguards in place. Our team is keeping up to date on these on-going developments and will be sure to advise you accordingly. Should you have any questions, do not hesitate to call or email us.

PPP Loans Less Than $2 Million Deemed Good-Faith Certified

Fri, 15 May 2020 14:34:36 GMT

Yesterday, in an update to its PPP FAQ, the SBA clarified its review of the “good faith” certification required in applying for PPP loans. As PPP applicants are aware, to apply for PPP loans, an applicant must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” For most applicants, COVID-19’s ramifications made this statement a no-brainer. But many left wondering how the SBA would police this clause. After all, borrowers are relying on PPP loan forgiveness if they properly use their loan proceeds. There is concern that the SBA’s review of the good faith certification could thwart borrowers’ forgiveness goal even if they used their loans for payroll and other areas acceptable for forgiveness. The SBA’s announcement gave reason to alleviate that concern for some borrowers.

In Question 46 of its PPP FAQ (found here in its entirety), the SBA states that borrowers with an original principal amount of less than $2 million will be deemed to have made the required good faith certification. In the legal world, statements deemed to be true are facts for all intents and purposes. This clarification likely means that the SBA won’t even spend the time reviewing good faith certifications for loans under $2 million. Keep in mind, however, that the $2 million threshold applies to applicants taken together with their affiliates. If your total loan amount falls under $2 million, then you’ll have the benefit of this safe harbor.

For borrowers with loans greater than $2 million, you won’t have this safe harbor but that doesn’t mean you couldn’t have made a good faith certification. Your cases will be reviewed under their individual circumstances. In effect, today’s announcement changed little in advising how the SBA will review loans over $2 million. There remains uncertainty as to what the audit process for this good faith certification will look like and whether borrowers will have an opportunity to appeal, but if your loan is under $2 million you can breathe a small sigh of relief in knowing the certification you made in your application won’t be scrutinized.

If you have any questions on this latest announcement or just want guidance on the PPP in general, give us a call. We’ll keep you updated as more clarification comes out.

What Businesses Can Expect When It Comes to PPP Loan Forgiveness

Mon, 27 Apr 2020 22:16:43 GMT

The Coronavirus Aid, Relief, and Economic Relief (“CARES”) Act was passed on March 25, 2020 in order to provide, amongst other things, much needed and immediate assistance to businesses impacted by the COVID-19 pandemic. Under the CARES Act, the Small Business Administration (“SBA”) is authorized to temporarily guarantee loans under a new SBA (7(a) loan program, otherwise known as the Paycheck Protection Program (“PPP”).

If used correctly and in accordance with the CARES Act guidelines, these PPP loans are potentially eligible for complete and tax-free forgiveness. PPP loan amounts are forgivable to the extent that such funds are used to pay forgivable expenses as delineated in the CARES Act (“Qualified Expenses”) within eight weeks after the PPP loan is disbursed (“Expenditure Period”). Any of the PPP loan funds that are not used on Qualified Expenses during the Expenditure Period must be paid back within two years.

Please note that the CARES Act provides that PPP funds will be forgiven on a covered loan in an amount equal to the sum of the payroll costs incurred and payments made during the Expenditure Period. At this time it is not known whether the costs and payments eligible for forgiveness include funds paid during the Expenditure Period or funds that were both paid and incurred during the Expenditure Period. Accordingly, until the SBA provides more definitive guidance on this, borrowers should only use PPP funds for the payment of expenses incurred and paid during the Expenditure Period.

Now that the $349 billion in funds from the initial round of the PPP have been exhausted, and businesses await the second round of PPP funding (approximately $310 billion), what can PPP borrowers expect to be forgiven as Qualified Expenses?

Here are some of the most common questions, and our answers, regarding the PPP loans:

Rent Payments

Any rent payments under a lease that is in effect before February 15, 2020 will qualify as a Qualified Expense.
There is currently no guidance whether rent prepayments, past-due rent payments or late fees under a lease are Qualified Expenses.

Utilities

Utility payments are Qualified Expenses and include electricity, gas, and water.
Internet, telephone and transportation utilities are also most likely covered as Qualified Expenses, however, further SBA guidance is needed on these items in order to know for sure.

Mortgage Payments

Principal payments or prepayments are not Qualified Expenses.
Any mortgage interest incurred on or before February 15, 2020 is a Qualified Expense.

How Much of the PPP Funds Need to be Spent on Payroll?

At least 75% of the PPP funds need to be spent on payroll costs.
Payroll costs include the following: (a) salaries, commission, wages or other similar compensation up to an annualized amount of $100,000 per employee; (b) tips; (c) paid vacation, sick, medical and family leave; (d) severance pay; (e) group health insurance expenses; (f) state or local payroll tax; or (g) retirement benefits.
Payroll costs do not include the following: (a) payments for emergency paid sick leave or expanded family and medical leaves; or (b) federal pay roll tax expenses.

Are Employee Bonuses and Raises Included as Qualified Expenses?

It is not entirely clear whether raises or bonuses paid to employees will be considered Qualified Expenses. Any borrower using PPP funds to pay employees bonuses or raises should only do so as the borrower would otherwise do in the ordinary course of its business. Additionally, it is important to keep in mind the $100,000 compensation threshold when giving bonuses and raises.

Are Compensation Payments to Shareholders, Members or Other Owners of Borrowers Covered as Qualified Expenses?

Distributions to shareholders, members or other owners of borrowers that are not payments for work performed by such shareholders, members or other owners would not be considered a Qualified Expense.
Payments to shareholders, members or other owners who perform work for the borrower may be included in payroll costs as a Qualified Expense.

What Will Reduce PPP Loan Forgiveness Amount?

The PPP loan forgiveness amount will be reduced by (a) the reduction in the borrower’s average number of full-time equivalent employees (“Employees”), and (b) reduction in Employees’ salaries.
The PPP will compare the borrower’s average number of Employees during the Expenditure Period against the number of Employees during borrower’s choice of either the period from (i) February 15, 2019 until June 30, 2019; or (ii) January 1, 2020 until February 29, 2020. If there is a decrease in the number of borrower’s Employee’s during the Expenditure Period compared to the applicable base period, the PPP loan forgiveness amount will be reduced in proportion to such decrease.
The PPP loan forgiveness amount will be reduced dollar for dollar for a reduction of more than 25% in the total compensation of any employee during the Expenditure Period as compared to the most recent quarter that the employee was employed prior to the Expenditure Period. Please note that this will not apply to employees who made more than $100,000 in 2019.

Can Rehiring Employees Eliminate Loan Forgiveness Reduction Amounts?

Yes. If a borrower’s reduction in Employees occurred between February 15, 2020 and April 26, 2020 and the borrower eliminates that reduction in Employees by June 30, 2020 (either by rehiring Employees or hiring new Employees), then the Employee reduction will not be used in determining the loan forgiveness amount.

Can I Restore an Employee’s Salary to Eliminate Loan Forgiveness Reduction Amounts?

Yes. If an employee’s total compensation is reduced more than 25% but such employee’s salary reduction is eliminated by June 30, 2020, then the salary reduction will not be used in determining the loan forgiveness amount.

While we await further guidance from the SBA on what will and will not be forgiven under the PPP loans, it is important to be aware of what you are using your PPP loan funds for and why. As the PPP loan forgiveness rules can be complex and vague, it is important to consult with informed attorneys, financial advisors, bankers and accountants on how best to proceed. Our team is keeping up to date on these on-going developments and will be sure to advise you accordingly. Should you have any questions, don’t hesitate to call or email us.

Handling a Tenant Defaulting under a Commercial Lease amidst COVID-19

Mon, 27 Apr 2020 21:57:25 GMT

If my tenant won’t pay, what are my options? Prior to COVID-19 pandemic, landlords understood how to handle a defaulting tenant. But the legal landscape (along with everything else) is now in a constant state of flux, with legislators navigating through issues concerning health, economy and justice. In this article I’ll offer some clarification on landlord-tenant laws in light of the pandemic, focusing on commercial lease agreements.

A theme in the varying messages from our federal and state governments is that creditors need to relax when it comes to debt repayments. That sentiment carried into Illinois’ and other states’ messages addressing rent. Governor Pritzker, for instance, ceased eviction proceedings for residential properties. Tenants of the Chicago Housing Authority are relieved of their rent payments, at least until the end of the month. And Chicago’s mayor, Lori Lightfoot, urged private landlords to offer the same reprieve.

Yet commercial properties are conspicuously absent from the recent press. Does that mean that commercial landlords can evict a defaulting tenant? No, at least not in Cook County. Legal eviction relies on an operational court system. Due to the pandemic, courts are closed apart from emergency motions. And evictions fall short of meeting that “emergency” threshold. The chief judge of Cook County has a moratorium on evictions, and the Cook County sheriff won’t enforce eviction orders. Neither the chief judge nor sheriff distinguished between residential and commercial leases when making their announcements, so the effect is that all evictions must cease for a while.

Note, however, that ceasing evictions does not equate to ceasing rental obligations. Commercial leases are akin to business transactions between sophisticated parties. They are founded in contract law, giving the commercial lease agreement more control over resolving disputes than residential leases which have statutory and other equitable protections for tenants. Therefore, commercial landlords still have the right to enforce the lease obligations despite the pandemic.

Although the courts are closed, the case filing system is not. Commercial landlords can still file suit for breach of lease. Those lawsuits can be served on tenants through special process servers. Once served, tenants must still respond to the complaint within the statutory timelines. Filing and serving a lawsuit can afford the commercial landlord some leverage to negotiate now, or it can be queued for when the courts reopen if negotiations fail.

The decision to sue should never be taken lightly, and should be especially scrutinized given the hardships many are facing with the pandemic. Negotiation between landlord and tenant should be the first option in resolving commercial lease disputes. But if those talks don’t pan out, litigation remains a viable option. Landlords must still follow their contract terms when initiating dispute resolution. If properly handled, commercial landlords can seek monetary damages (which typically include their attorneys’ fees) and, eventually, an eviction.

If you have questions about handling a dispute with a commercial tenant or enforcing obligations under a commercial lease, talk to me or one of the experienced attorneys at GHU.

DSOs Present Challenges for Dental Practices Seeking COVID-19 Loans Under the CARES Act

Fri, 17 Apr 2020 14:09:35 GMT

Like almost every other business and profession, dental practices have been decimated by the COVID-19 pandemic. Stay-at-home orders, social distancing, and the limitation of economic activity to “essential services” means that dentists are deferring most routine, elective, or non-emergency procedures. With doors closed and chairs empty, practices find themselves in untenable positions in terms of paying their workforce, rent, utility, and other obligations.

While the federal government’s response to the current crisis has been lacking in many respects, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed at the end of March does provide for financial assistance to cash-strapped businesses, including dental practices. Among the many aspects of the CARES act, eligible practice owners can obtain low-interest and potentially forgivable loans for coronavirus losses through the Paycheck Protection Program (PPP).

But for practices that are part of a dental services organization (DSO), qualifying for a PPP loan can be a particularly tricky endeavor. Loans are only available to businesses with less than 500 employees, so can or how does a small practice qualify for a PPP loan if they are part of or affiliated with a large DSO with too many employees to participate in the program?

Paycheck Protection Loan Basics

The PPP sets aside almost $350 billion in funds for emergency Small Business Association (SBA) loans to help qualifying businesses cover payroll for their workforce as well as pay for other operational costs such as rent and utilities.

Dental practice owners can apply for a PPP loan at any lender approved to participate through the existing SBA 7(a) lending program, as well as at any other institution approved by the U.S. Department of the Treasury. Participating lenders began accepting applications on April 3, and businesses can apply for a PPP loan until June 30, 2020.

The maximum amount any small business or practice may borrow is 250 percent of its average monthly payroll expenses incurred during the one-year period before the date on which the loan is made, up to a total of $10 million. This amount is intended to cover eight weeks of payroll expenses and any additional amounts needed to make payments towards debt and certain other identified obligations such as covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks following the loan.

The purpose of the Paycheck Protection Program is to help businesses retain employees at their current base pay. If the borrower keeps all of its employees and uses the loan proceeds for the above-described purposes, the entire loan may be forgiven. There is no requirement that the employer have work for the employees in order to pay them.

The Problem For Practices In DSOs: Too Many Employees to Qualify For a PPP Loan

With some exceptions, PPP loans are only available for small businesses that employ 500 or fewer employees. For dental practices that are part of a dental services organization, this limitation may or may not pose an insurmountable barrier to loan eligibility as the SBA may count the total number of employees of the DSO, not the individual practice, in determining whether a practice qualifies.

On April 3, 2020, the SBA issued guidance regarding how it treats practice management companies like DSOs when evaluating employee headcount. For purposes of determining the number of employees of a PPP loan applicant, the SBA considers the applicant together with its “affiliates.” As such, eligibility hangs on whether or not the SBA finds a practice and its DSO to be “affiliates.” And that determination centers on control.

As the SBA states in its guidance:

“Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised, so long as the power to control exists.”

There are four circumstances in which the SBA will find that there is control over the practice such that the practice would be considered an affiliate. The one most applicable to DSO arrangements involves control of management. Specifically:

“Affiliation… arises where a single individual, concern or entity controls the management of the applicant concern through a management agreement.”

Most dental practices that are part of a DSO are also parties to management agreements that give the DSO a substantial say in the management and operation of the practice. As such, practice owners should consult with an experienced dental practice attorney who can review any agreement as well as the overall relationship with the DSO to determine what, if anything, needs to be changed to reduce the chances that the SBA finds the two entities to be affiliates. As noted, the deadline for applications is June 30, so practices should take all necessary steps as soon as possible to position themselves for approval for these vitally needed funds.

CARES Act Summary

Fri, 27 Mar 2020 17:46:40 GMT

On Wednesday, the Senate passed an historic $2 trillion economic stimulus package that is expected to come out of the House this weekend and be signed by the President. While much of the stimulus is providing support to big business and directly to taxpayers, there are also substantial benefits for small businesses. Called the “Paycheck Protection Program” (the “PPP”), it is part of the “The Coronavirus Aid, Relief, and Economic Security Act” (the “CARES Act”), because it’s meant to ensure that businesses have the funds to pay their employees and to prevent layoffs. Loans offered through the program may be forgiven under certain circumstances. However, employers will need to pay back the interest accrued, effectively making the principal a grant.

What is the purpose of PPP?

The PPP provides short-term cash flow assistance to small businesses to assist them and their employees with the economic impact of the COVID-19 pandemic. Funds under PPP will be made available during the period prior to June 30th by lenders certified by the SBA and guaranteed by the federal government.

Who is eligible for PPP?

Benefits under PPP are generally available to small businesses with 500 or fewer employees (full and part-time). Eligible small businesses also include sole-proprietors, independent contractors, and other self- employed individuals, including even “gig economy” workers. Note that the SBA publishes guidelines that may prohibit certain businesses larger than average in their industry, and you should consult your individual counsel to ensure compliance prior to applying.

What are the permitted uses of PPP funds?

Small businesses that receive loans under the PPP must use loan funds to pay payroll costs (i.e., salaries, wages, vacation, parental, family, medical, or sick leave, severance, retirement benefits, and state or local taxes assessed on compensation), costs related to group health care benefits (i.e., insurance premiums), employee commissions, interest on mortgage obligations, rent, utilities or interest on other debt, incurred prior to obtaining the loan. Note that loan funds under PPP may not be used by employers to pay salaries in excess of $100,000.

What are the terms of PPP loans?

Loans under PPP may be as large as 2.5 times a business’s average monthly payroll costs over the last 12 months, not to exceed $10 million. Salaries over $100,000 will not be included purposes of determining payroll costs. PPP loans have a maximum interest rate of 4% and may carry maturity dates up to 10 years. Eligible borrowers under PPP may also defer payment of non-forgivable principal and interest for at least 6 months but not more than a year. No collateral is required to be pledged and the normal personal guarantee requirement for SBA loans appears to be waived. Thus, the loan will be nonrecourse to the employer’s owners.

How will the PPP Loans be forgiven?

If the business uses the loan funds for the approved purposes and maintain the average size of its full-time workforce based on when it received the loan, the principal of the loan will be forgiven, meaning the company will only need to pay back the interest accrued. The loan forgiveness may be reduced pro-rata if the average number of full-time employees during the forgiveness period fails to satisfy the applicable requirements.

How should a business apply for a loan under PPP?

To apply for forgiveness, businesses must submit documentation regarding the eligible uses of loan funds, a certification that such documents are true and correct, as well the amount to be forgiven, and any other documentation the SBA deems necessary. The SBA will purchase any loan forgiveness amounts from its certified lenders and this canceled indebtedness will not result in taxable income to the business.

While further regulations are on the way, it is clear that the government is serious about getting help to small businesses in an expedited manner. Our team is keeping up to date on the developments and will be sure to advise you accordingly. Should you have any questions, don’t hesitate to call or email us.

Covid-19 and Medical Leases: 3 Proactive Steps You Can Take to Avoid Issues Down the Road

Wed, 25 Mar 2020 18:13:21 GMT

The rapid spread of Covid-19 in the United States over the past three weeks has launched dental and medical tenants into “uncharted waters” with respect to their leases.

All dentists and dental specialists, along with a variety of medical providers have been ordered to shut down operations, with no certain timeframe as to when they will be allowed to return to work. While April 7th is the date that has been offered as the possible restart date, the exponential growth of the outbreak at this point casts doubt as to whether that timeframe is realistic.

The mid-month timing of the shutdown was such that many dental tenants had paid or were about to pay their April rent. We recommend that you remit your April rent payments on time, assuming you can do so. This will give you the entire month of April to see how the Pandemic plays out and hopefully, enable you to begin earning patient revenue again without compromising your lease obligations.

What Should You do if the Stop Work Continues Beyond April?

The question is, what actions should you take assuming the “stop work” order drags on and you cannot afford to pay rent? Many landlords with whom we have spoken are already concerned about their tenants’ ability to pay rent and are bracing themselves for what is in store.

Remember, most landlords carry debt on their properties and are obligated to make monthly mortgage payments, which they typically fund with rent proceeds. As such, if you miss your rent payments, your landlord may miss their mortgage payments and the long-term stability of their buildings may ultimately be at risk.

How to Stay on Top of Your Leasing Situation

Here are some steps that you can take to ensure you stay on top of your leasing situation:

1. Be proactive in communicating with your landlord

If you foresee challenges in making future rent payments, you should notify your landlord today. Be honest about your business situation and discuss potential options in the event your financial picture gets worse. Notifying your landlord ahead of time enables them to plan and execute their crisis strategy and adjust it as needed.

2. Review your lease for any language that may help your with this situation

A “Force Majeure” clause, for example, addresses unforeseeable circumstances such as lightning strikes, floods and other “acts of god” which may or may not include pandemics. If your lease has this type of clause, you could potentially be excused from certain lease obligations. Just beware that you may still be required to pay rent, even if your lease has Force Majeure clause. Check with your real estate attorney to get specifics about what rights you have in accordance with your lease.

3. Work with your landlord to negotiate a structured agreement

If your lease does not contain protective language as described above, try working out a deal with your landlord that allows you to defer rent payments in order to get through the pandemic period. Every landlord is different in terms of what they are willing (and able) to do for their tenants.

That said, no landlord wants to go through the costly and time-consuming process of evicting you and re-leasing your space. As a result, they will most likely be open to a constructive, solutions-oriented dialogue to help you out. Seek assistance from a qualified commercial real estate broker to ensure the best results with your landlord.

Your Lease is a Binding Legal Contract

These are challenging and uncertain times for Medical and Dental Practitioners. That said, your lease is a binding legal contract, and your obligation to pay rent and abide by its terms endures, regardless of your ability to operate your business. We are here to help in the event the Covid-19 Pandemic necessitates leasing concessions or modifications to get you through this difficult time.

About Us

Resource Commercial Advisors is a boutique, commercial real estate brokerage based in Northbrook, IL. They focus on assisting Medical and Dental tenants in locating spaces and negotiating fair leases with landlords. Contact Mark Brodson at 773-251-3666 or mark@resourcecommercial.net for more information.

DDS Lawyers is a subsidiary of Grogan Hesse & Uditsky, P.C., a general practice law firm focused on providing legal services to Dentists and Dental Service Organizations. The attorneys at DDS Lawyers support their Dental clients in practice transitions, real estate, employment and partnerships, restrictive covenants and dispute resolution. Contact Jordan Uditsky at 630-833-5533 or juditsky@ghulaw.com .

Coronavirus: Insurance Coverage for your Business

Fri, 20 Mar 2020 21:12:28 GMT

“Am I covered for coronavirus?” Amidst the myriad issues resulting from the coronavirus pandemic, business owners are questioning whether their insurance policies cover their unexpected losses. Like most insurance inquiries, the answer depends on the detail of the underlying policies. Here are some types of insurance that your business may carry, and the factors that go into whether they’ll cover your business for the coronavirus pandemic.

Business Interruption. There’s no doubt that the pandemic has interrupted business operations across just about every industry, but the question of whether it triggers interruption coverage is another matter. Business interruption is most often tied to a commercial property insurance policy, wherein the coverage applies to economic losses resulting from disruptions in business operations. However, most business interruption insurance won’t trigger without a physical loss to the property, such as fire damage. Whether the coronavirus actually persists on inanimate objects is still an issue of current debate, let alone whether the virus damages property. There is some precedent for an unseen substance causing physical damage (such as asbestos), but without a separate endorsement covering virus or bacteria it will likely be hard convincing insurance companies to cover coronavirus interruptions under a typical business interruption policy.

Contingent Business Interruption. Another business interruption insurance, contingent business interruption (or supply chain insurance) covers losses that don’t belong to your property, but rather the property of your customers or suppliers. If a key vendor drops out of your supply chain, it’s reasonable to wonder whether this insurance covers your loss. Like business interruption, the loss to trigger coverage from a contingent business interruption policy must also be physical .

Liability Insurance. Apart from business interruption, the coronavirus may result in claims from your customers. Commercial general liability insurance covers your business for defense and indemnity costs resulting from third party lawsuits. For instance, health care providers may find themselves facing claims that they did not exercise reasonable care in protecting patients from exposure to the coronavirus.

Event cancellation. Sports games, concerts, conventions and many other events are being cancelled around the world due to the coronavirus. Some event cancellation insurance policies may include coverage for cancellation due to infectious diseases. On the other hand, some policies include endorsements that specifically exclude infectious diseases.

If you believe that your business may be covered by any of these policies due to the coronavirus pandemic, you must notify your insurer within the timing requirements of your policy. If you’re unsure whether your losses trigger coverage, we’re here to help you. Contact us at (630) 833-5533 or info@ghulaw.com for a free consultation.

COVID-19: FORCE MAJEURE AND COMMERCIAL LEASE

Fri, 20 Mar 2020 19:12:21 GMT

As the COVID-19 pandemic continues to affect businesses at every level, dentists and dental offices are no exception. With practices suffering from a sharp decline in patients being treated, dental offices may begin to struggle to continue to timely pay all of their business expenses, including rent. As almost all commercial leases will contain an Act of God or Force Majeure clause, dental tenants or dental landlords may be tempted to invoke these provisions.

However, before invoking the Force Majeure clause, you will want to be sure to check the following:

Whether your business insurance will cover events related to the COVID-19 pandemic. While not usually the case, some business insurance policies will cover civil actions by governmental authorities.

All lease requirements in connection with invoking the Force Majeure clause, including timeframe for notice, method of notice and what events can actually trigger the clause.

The terms of your Force Majeure clause to determine whether the COVID-19 pandemic is likely to be covered. This may not be as straightforward as you think. Instead of language like “national pandemic” or “global disease”, your lease may include events that are, by their nature, out of the control of either the tenant or the landlord.

The terms of your Force Majeure clause to determine whether it excuses one party from performance or, much more commonly, just provides additional time for such party to perform its responsibilities under the lease. While rent obligations are not typically covered by this, other obligations may be, such as clauses requiring continuous operations, lease commencement or delivery dates, tenant alterations and repairs.

If rent will be due regardless of whether the Force Majeure clause is invoked. Most commercial leases contain provisions stating that rent shall at all times be payable when due, and no clause in the Lease or any other circumstances will relieve the tenant from such duty to pay.

As the interruptions from the COVID-19 pandemic continue to increase in duration and reach, it is important to consider your options under a commercial lease to best determine the course of action that will expose you to the least amount of liability.

If you are unsure regarding the terms of your commercial lease with respect to what actions you may take, please feel free to contact us at (630) 833-5533 or info@ghulaw.com.

Straight Talk on the New Families First Coronavirus Response Act

Fri, 20 Mar 2020 19:12:19 GMT

The President signed an emergency aid package into law the evening of March 18 after it passed through Congress with bipartisan support. The package, named the Families First Coronavirus Response Act (the “Act”), responds to the growing pandemic and economic impact by providing for paid sick leave, free testing and expanded unemployment benefits. The Act is organized into “Divisions”, two of which relate to employee leave from work. Division C, the Emergency Family and Medical Expansion Act , expands FMLA coverage to allow employees to care for children due to school or daycare closures, and Division E, the Emergency Paid Sick Leave Act , provides additional benefits for paid sick time to certain employees. The following is a breakdown of the new legislation and its impact on small businesses.

Who Qualifies for Paid Leave Under the New Coronavirus Law?

The new Act provides many American workers access to paid leave if they need to take time off work because of the Coronavirus, including not only full time workers but also people who aren’t typically entitled to such benefits, like part-time and gig economy workers. The new legislation is primarily focused on small businesses, excluding companies with more than 500 workers and expanding the scope of FMLA to apply the new mandate to small businesses with fewer than 50 employees. The Labor Department could exempt these small businesses if providing leave would jeopardize their viability. Employers can also decline to provide leave to workers at the forefront of the pandemic, including health care providers and emergency responders.

Who exactly is defined as a “health care worker” and what qualifies for the “viability” test remains to be seen. The FMLA does include a very broad definition of “health care provider” that is very broad, including for example, dentists and chiropractors. It is not clear at this point, however, whether such a broad definition will apply to the new legislation or whether it will cover administrative staff employed by an otherwise qualifying health care provider.

In addition, employees covered by multi-employer collective bargaining agreements whose employers pay into pension plans and self-employed individuals may also have access to paid leave under the new Act.

What type of paid leave does the law offer?

The new law provides qualified workers up to 2 weeks of paid sick leave if they are ill, quarantined or seeking testing or preventive care for coronavirus, or if they are caring for sick family members. In addition to these 2 weeks, the Act also expands FMLA to provide up to 12 weeks of leave to people caring for children whose schools are closed or whose child care provider is unavailable because of coronavirus. Under this portion of the new Act, the first 10 days of leave may be unpaid.

If an employee is sick or seeking care for themselves, they may be entitled to the full amount of their usual compensation, up to a maximum of $511 a day. If caring for a sick family member or a child whose school or day care is closed, they may be entitled to two-thirds of their usual pay, up to a daily limit of $200.

What is the government’s plan for small businesses to afford this new mandate?

Companies providing benefits under the new law will be reimbursed for the full amount paid, including the employer’s contribution to health insurance costs during the period of leave, within three months in the form of a payroll tax credit.

When does this new law go into effect?

The law goes into effect on April 2nd, 15 days following the President’s signature. Once effective, the sick leave is immediately available for use by employees. Employers cannot require employees to use any other available paid leave before using the sick leave under the new legislation. The paid sick time does not carry over from year to year, and the Act itself is set to expire on December 31, 2020.

Grogan Hesse & Uditsky, P.C. is here to assist its clients with any questions they may have regarding the impacts of Coronavirus/COVID-19. Please contact our Coronavirus/COVID-19 Response Team being led by Amy Grogan and Jordan Uditsky, or the attorney with whom you normally work at the firm.

Employee v. Independent Contractors in Dental Practices: It's Not Up To You.

Tue, 03 Mar 2020 21:17:17 GMT

The professionals who own dental practices are like the owners of any other business in many respects. They want to keep expenses down, minimize tax obligations, and reduce the amount of time spent worrying about personnel and payroll matters such as overtime pay, sick leave, insurance, and other employment law issues. Many dental practice owners try to secure these advantages by classifying the associate dentists, hygienists, and others who provide care and services for patients as independent contractors instead of employees. If all it takes is calling them the former instead of the latter, why wouldn’t you choose to do so?

But that’s not how it works. Whether key team members of a practice are contractors or employees isn’t up to the owner. In the end, the Internal Revenue Service (IRS) will decide that issue based on legal criteria that define the distinction between the two. And dental practices found to be misclassifying members of their workforce can face fines, the payment of back taxes for such workers, and other penalties and disruptions.

Who’s In Control?

From the IRS’ perspective, whether a non-owner dentist or hygienist is an employee comes down to a single issue, though one with many components: control. Given the way most dentist-owners run their practices, it is usually the case that the people they see and work with in the office every day are employees, not contractors.

The IRS breaks down its analysis of control into two broad categories: behavioral control and financial control.

Behavioral control refers to the decisions about how, when, and where a worker does their job. In dental practices, the owner almost always exerts behavioral control over associate dentists, dental assistants, and hygienists. That is because it is the owner, not these other folks, who decide:

Hours of operation, including when the worker needs to be on the job;
What dental equipment to purchase and use;
Location and facilities of the practice;
Staffing and personnel matters;
Patient scheduling;
Collection of patient receipts;
Billing protocols;
Restrictions on a worker (e.g., non-compete and non-solicitation agreements)

Whether a practice owner exerts financial control over an individual depends on whether the individual has “skin in the game” or how financially dependent they are on the owner. The IRS will look to see whether the individual:

Has an ownership interest in the practice
Has an investment in the facilities or tools used in delivering services
Has other patients outside of the practice
Can realize a profit or incur a loss
Has any control as to how and when he or she is paid.

Control May Not Mean What You Think It Means

Understandably, many dentist-owners think of “control” over their workforce in the context of the supervisory requirements of their state’s dental practice act. One has nothing to do with the other. The IRS won’t care whether or not you provided sufficient supervision over a hygienist or assistant for purposes of professional licensing or liability. What the IRS does care about are its own definitions and whether a dental practice is using employee misclassification as a transparent tax dodge.

In addition to the IRS criteria that determine a worker’s status, individual states are also establishing similar rules to crack down on attempts by employers to game the system. For example, under Illinois law , a worker will be deemed an employee unless and until it's proven in any proceeding that:

Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and
Such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
Such individual is engaged in an independently established trade, occupation, profession, or business.

An Owner Who Owns Nothing

The rise of dental service organizations (DSOs) has seen a variation on the employee misclassification theme. A DSO may try to avoid its tax and employment obligations by designating a dentist as an “owner” of a specific office or practice group. But such “owners” may, in reality, wield little if any actual control over how the practice is run or have any ownership or financial stake in the DSO. Such illusory ownership may also be part of an effort to skirt state rules prohibiting non-dentists from owning or operating a dental practice.

Some Exceptions To The Rule

There exist a few cases within IRS rules when workers are truly independent contractors. One such example involves dental specialists who work at a dental practice for a limited period and supply their own staff, equipment, and disposable supplies. Such specialists may also generate separate patient billings and collections as well as operate independently without restrictions upon other outside work. Similarly, dentists or hygienists hired on a locum tenens basis will likely not be considered employees of the practice.

Don’t Put Your Practice At Risk By Playing Games With Employment Classification

Given how much employee misclassification hurts workers who inappropriately wind up on the contractor side of the fence, and considering how much tax revenue is lost when businesses wrongfully classify workers, it’s no surprise that the IRS and individual states are cracking down on the practice. When they do so, they crack down hard. The financial cost to the practice can be substantial, but it can also cost owners personally as they can be held liable individually for any intentional misclassification.

To avoid such consequences, dental practice owners should discuss any questions or concerns with an experienced employment and dental practice attorney .

Restraint, Response, or Retaliation: Dentists Need to Think Carefully Before Responding to Negative Online Reviews

Tue, 04 Feb 2020 21:59:09 GMT

Dentistry may be a unique profession with a proud history, but online, a dental practice is no different than a dry cleaner, restaurant, mechanic, or liquor store. That is because dental patients are just as likely to post a review of their experience on Yelp! or other online review sites as are customers of other businesses. And, as is the case for all businesses and professions, customers who have negative opinions tend to share those more often, and more adamantly, than those who have positive things to say. And Mary Alberti recently had a lot to say about her experience with a Buffalo Grove, Illinois endodontist.

As outlined in a defamation lawsuit the endodontist filed against Alberti , his former patient engaged in a concerted internet smear campaign to destroy his good name and reputation by posting “post after post” on Yelp!, Google, and other sites that contained false, defamatory, and anti-Semitic comments. He is seeking more than $4 million in damages, while Alberti has moved to have the case dismissed.

While the allegations in the Alberti case represent an extreme example of an angry, vindictive, and prolific patient using the internet to smear a dentist with an otherwise impeccable record, even one negative review can have a significant impact on a dentist’s practice and reputation.

Can You Sue for Defamation? Sure. Whether You Should Is a Much Harder Question

On more than one occasion, a panicked and indignant dentist or other client of mine has called me to ask whether they could and should sue their former patient for defamation as the doctor in the Alberti case has done. The answer, of course, is that you are well within your rights to sue "IHateYourDentalPractice123” or whoever it is that is trying to take a wrecking ball to your career. You can sue anybody for anything. Whether such a lawsuit will be successful or has any legal basis is another matter entirely.

The fact is that even the most scathing negative online review, if susceptible to the principle of “innocent construction” (meaning the allegedly libelous statement is given a non-defamatory interpretation because it is deemed ambiguous) or is composed of opinions rather than demonstrably false allegations of misconduct, will likely not qualify as actionable defamation in Illinois. Furthermore, such lawsuits can expose the offended dentist or other professional to backlash, ridicule, and bad publicity in the fast-moving and fickle world of social media.

A High Bar to Prove Defamation in Illinois

In order for a dentist to prove defamation under Illinois law, including a claim based on an online review, he or she needs to show that:

the patient made a false statement about the dentist;
there was an unprivileged publication of the false statement to a third party;
fault by the defendant amounting to at least negligence; and
the patient’s publication of the review caused damage to the dentist.

As to that last element, a defamation plaintiff does not need to prove actual damages if the statements are deemed inherently damaging. Defamation per se, as it is called, includes making such false allegations that the plaintiff:

committed a crime;
is infected with a loathsome communicable disease;
is unable to perform or lacks integrity in fulfilling his or her professional responsibilities;
lacks the ability to perform their professional duties, or otherwise harms the plaintiff in their professional reputation
has committed fornication or adultery.

Is It a Subjective Opinion or Factual Allegation?

“She was rude, impatient, and treated me disrespectfully. It was perhaps the worst experience I’ve ever had with a dentist in my entire life. She is horrible.”

“He stole money from my purse and touched me inappropriately while I was under sedation.”

The former is non-actionable opinion, as the dentist will not be able to objectively prove whether or not she was, in fact, rude, disrespectful and the cause of one of the worst experiences in the patient’s life. Contrast that with the latter statement that accuses the dentist of specific actions and misconduct that can be proven or disproven with evidence.

Context Matters

Illinois courts have also focused on the context in which an allegedly defamatory statement was made when determining whether it can be the basis of a defamation claim. Even if one comment in a lengthy online rant is arguably a statement of provable fact, it may not rise to the level of defamation if a reasonable reader would see it merely as hyperbolic invective.

Consider the 2013 case of Brompton Building, LLC v. Yelp, Inc., in which a building management company filed a defamation suit against an anonymous former tenant who had posted an over-the-top, relentlessly negative, and extremely lengthy review online. Even though the rant contained a few objectively disprovable statements, the Illinois Appellate Court found that those comments could not support a defamation claim because they would not be understood to be actual factual allegations in the context of the full review. As the court stated, "The context of the defamatory statements is critical in determining its meaning. In determining the context of the defamatory statements, we must read the writing containing the defamatory statement 'as a whole.'"

Dentists Need to Consider Patient Privacy and Professional Ethics

When faced with negative reviews, dentists need to make sure that their response doesn’t make a bad situation worse or make them appear petty and vindictive. Additionally, dentists who do decide to respond to a patient’s negative review publicly may inadvertently reveal confidential patient information in their attempts to refute allegations of poor or substandard care. Such HIPPA violations can have catastrophic licensing and regulatory consequences for dentists.

As infuriating as negative online reviews can be, it is the rare dentist who can make it through their career without leaving at least one patient dissatisfied or unhappy with their treatment. When a patient shares those feelings with the world, it can be easy to let it get under your skin, especially if the attacks are as relentless, ongoing, and full of unsavory allegations as appear in the Alberti case, which we’ll be monitoring to see if the court protects the endodontist from what seems to be a clear case of defamation. But sometimes, restraint can speak louder than a retort.

Can a Dentist’s Social Media Posts Breach a Non-Solicitation Agreement “IRL”?

Mon, 16 Dec 2019 14:46:08 GMT

I don’t think it’s a stretch to presume that if you are a dentist or member of a dental practice, you have some kind of social media presence. Sure, it may be a Facebook or LinkedIn page that has been gathering dust since you first set it up years ago. For many dentists, however, active social media participation is a vital part of developing their practices, attracting new patients, and promoting awareness of their services and credentials.

But if you have moved on to a different practice or opened your own and are bound by the terms of a non-solicitation agreement, your online posting, friending, and connecting can raise some tricky issues “IRL” (“in real life,” as the kids say).

Non-solicitation agreements limit an employee’s ability to actively seek the business of the employer’s current patients/clients/customers for a given period, though they are free to set up shop and do business. Recently, courts here in Illinois and across the country have started to weigh in on whether and what kind of social media activity can constitute solicitation in violation of a general non-solicitation provision that does not specifically address social media use.

Generic and General vs. Specific and Targeted

The common thread in the developing case law is one which distinguishes between two types of social media activity:

generalized social media engagement, such as LinkedIn or Facebook pages and posts, as well as friend or connection requests that do not substantively encourage recipients to become patient, customers, or employees
posts and friend or connection requests targeted to specific people or groups and/or clearly focusing on attracting patients, clients, and employees to the business or practice

While every case presents specific facts and circumstances that will play a role in a court’s analysis, the former category of social media use is likely to be okay, while the latter may expose dentists to liability for breach of their non-solicitation agreement.

A 2017 decision by the Illinois Appellate Court contains a robust discussion about the topic and how courts in other jurisdictions have ruled.

In Bankers Life & Cas. Co. v. Am. Senior Benefits LLC , a former employee of the plaintiff moved to a new job and sent generic LinkedIn connection requests to three of his former colleagues who were still employed at Bankers Life. While the requests themselves contained nothing of substance, if those colleagues accepted the invitations and looked at the employee’s profile page, they would see a job opening posted by his new employer. The plaintiff claimed that this constituted solicitation of employees in violation of the former employee’s agreement.

The court rejected the plaintiff’s claims and held that a generic connection request to those employees, without more, does not constitute solicitation because “the next steps, whether to click on [plaintiff’s] profile or to access a job posting on [plaintiff’s] LinkedIn page, were all actions for which [plaintiff] could not be held responsible.”

Look at the Substance

In arriving at its decision, the court noted other cases involving similar and distinguishable fact patterns, all of which provide a good idea of where courts will draw the line between acceptable social media use and prohibited solicitation. Though these decisions do not bind Illinois judges, courts in other jurisdictions have found the following to not be violations of non-solicitation covenants:

a web designer updates his LinkedIn page to reflect his new job and adds a post encouraging his contacts to “check out” a recent project he worked on.
becoming friends with former clients on Facebook.
posting a job opportunity on LinkedIn (as opposed to sending it to specific employees).
employee's postings on Facebook touting his new employer's product and which was viewed by former colleagues did not violate agreement to not recruit employees from his former employer.

In contrast to these examples, the court also cited a federal case from Michigan in which a former employee published a blog and other posts on Facebook post urging his former co-workers to leave his former employer by stating, "If you knew what I knew, you would do what I do."

Finding in favor of the employer, that court noted that “it is the substance of the message conveyed, and not the medium through which it is transmitted, that determines whether a communication qualifies as a solicitation… Communications qualifying as solicitations do not lose this character simply by virtue of being posted on the Internet."

For dentists who move on to greener pastures while bound by a non-solicitation agreement, it is the “substance” of their subsequent social media activity that they need to carefully consider before clicking “Enter.”

Though each situation must be evaluated on its own set of facts and circumstances, connection and friend requests to former patients may be acceptable provided such requests do not tout their new practice or otherwise encourage those patients to switch dentists. Similarly, social media posts and pages visible to the general public that promote a dentist’s new practice should avoid being specifically directed to former patients or risk violating a non-solicitation.

Again, every contract and every social media post is different. If you are a dentist or practice that has concerns about whether your social media activity or that of a former colleague may raise issues with existing contractual limitations, you should discuss your concerns with an attorney experienced with dental non-solicitation agreements.

Grogan Hesse & Uditsky: Serving Chicagoland’s Dental Professionals

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

Dentists and Non-Competition Agreements in Illinois: Is Yours Worth the Paper It’s Printed On?

Tue, 15 Oct 2019 16:44:56 GMT

There are over 4,800 dentists currently practicing in Illinois, according to the Bureau of Labor Statistics. Only four states have more dentists than the Land of Lincoln. That number makes for a competitive market, as well as one that provides a rich environment for dental professionals to find and seize new opportunities, either by joining another practice or starting their own.

As attorneys for the dental profession, we often receive questions about what limitations, if any, dentists can face from or impose on colleagues with whom they currently practice. Specifically, many dentists have signed or will be asked to sign non-competition or non-solicitation agreements, either as stand-alone documents or as part of an employment agreement.

But just because something is in writing doesn’t mean its worth the paper it's written on. Illinois courts will not enforce non-competition provisions that are unreasonably and unjustifiably broad or those unsupported by consideration. Poorly drafted – and thus unenforceable - agreements can give an employer a false sense of security, or cause a dentist to unnecessarily reject job offers or other opportunities.

This is not to say that all non-competition agreements in Illinois are invalid – those that meet the law’s requirements can be enforced. Therefore, it is important that dentists understand precisely what the law permits and what it doesn’t, no matter what side of a proposed agreement you may be on.

Non-Competition vs. Non-Solicitation

People often use the term “non-compete” as a catch-all for two related, but distinct,

limitations on future employment. But non-competition clauses and non-solicitation provisions are very much different, and the law treats them as such.

Typically, a non-competition agreement will purport to limit an employee’s ability to engage in their current profession or occupation within a specified geographic area for a set time. For dentists, this can mean that they agree not to treat any patients in the identified area until the end of that period.

Non-solicitation agreements, on the other hand, only limit an employee’s ability to actively seek the business of the employer’s current patients/clients/customers for a given period, though they are free to set up shop and do business.

Typically, courts will look at non-solicitation agreements less skeptically than they will non-competition agreements, as they are more limited in scope and more tailored to protect a business’ legitimate business interest in their existing clients. Dentists and physicians, however, can’t ethically stop a current patient from going to a former dental associate for treatment on their own volition if the dentist did not affirmatively solicit them.

Reasonableness

Every year, employees and employers file scores of lawsuits in Illinois seeking to enforce or strike down non-competition agreements. This has given Illinois courts ample opportunity to opine on these contracts and develop the contours of what is and what is not permitted. These contours have evolved over the years, generally in the direction of limiting the ability of employers to keep their former associates from making a living how, where, and when they choose.

The two primary factors that a court will consider when evaluating a non-competition agreement are its reasonableness and whether it is supported by sufficient consideration. Specifically, for a non-compete to be enforceable:

• Its geographic and temporal limitations must be no greater than needed to protect a legitimate business interest;

• Its restrictions must not impose an undue hardship on the employee; and

• Its restrictions must not be detrimental to the public.

This evaluation is very fact-specific. For a dental practice, what may be considered a reasonable geographic restriction in Arlington Heights, where ample opportunities to practice exist and hundreds of thousands of patients live nearby, may be significantly different than what would be reasonable in the 383 square miles of downstate Bond County, population 16,948.

Consideration

In terms of consideration, a necessary element in any enforceable contract, the promise of continued employment used to be seen as sufficient consideration for a non-competition provision. It still may be, but courts have begun to look at the totality of the circumstances in each individual case to make the determination. A promise of continued employment for an at-will employee has been found to be adequate consideration to render a restrictive covenant enforceable, but only if the employment lasted at least two years after the agreement was signed.

Where there is no additional compensation, such as a raise or special benefits, given to the employee in exchange for signing the non-compete, and the employee leaves less than two years after executing the restrictive covenant, courts have determined that the consideration is insufficient and the restrictive covenant is unenforceable.

You Focus On Your Patients. We’ll Focus On You.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

The Significant Risks and Avoidable Pitfalls of the "Corporate Practice of Dentistry"

Tue, 01 Oct 2019 16:33:10 GMT

The Significant Risks and Avoidable Pitfalls of the “Corporate Practice of Dentistry”

During the 2012 presidential campaign, Mitt Romney famously said that “Corporations are people, my friend.” While that may or may not be true, it is unequivocally the case that corporations are not and cannot be dentists, my friend. The corporate practice of dentistry is prohibited in Illinois. Failing to understand what that means or structuring the ownership, control, and operation of their practices in ways that do not comport with the law can create serious headaches for dentists and threaten their licenses and livelihoods.

What is the Corporate Practice of Dentistry?

Dentists and dental hygienists, like all medical professionals, have a responsibility to exercise their best, independent judgment in the treatment of their patients. Clinical decisions should be based solely on the patient’s best interests – not on the interests of shareholders, board members, or balance sheets.

That is why the Illinois Dental Practice Act (the “Act”) precludes, in most cases, non-dentists from having ownership interests in a dental practice. As the Act states, the reason for this prohibition is “to prevent a non-dentist from influencing or otherwise interfering with the exercise of independent professional judgment by a dentist, dental hygienist, or other entity which can provide dental services under this Act.”

The “corporate practice of dentistry,” as that term is used in connection with the analysis of dental transactions, essentially means that a dentist cannot practice under the direction or control of an entity that is not itself owned by dentists or licensed as is required by the Illinois Department of Financial and Professional Regulation (IDFPR).

Specifically, unless otherwise authorized in the Act, a dentist or dental hygienist is prohibited from providing dental services in Illinois if the dentist or dental hygienist:

• is employed by any person other than a dentist to provide dental services; or

• allows any person other than another dentist to direct, control, or interfere with the dentist's or dental hygienist's clinical judgment.

Unique Corporate Structures for a Unique Profession

The most common mistake dentists make when initially structuring their practice is to form a regular corporation or limited liability company and allow a non-dentist to be listed as a shareholder or member, even if such individual’s actual involvement in the entity extends no further than their capital contribution.

Dentists can easily avoid this error by forming a specialized entity specifically designed for dental and medical professionals. In Illinois, the ban on the corporate practice of medicine explicitly does not prohibit dental corporations as authorized by the Professional Service Corporation Act, dental associations as authorized by the Professional Association Act, or dental limited liability companies as authorized by the Limited Liability Company Act.

In a dental corporation or professional association that provides dental services, only dentists licensed by IDFPR may be shareholders, directors, and officers. Dentists may also practice through a limited liability company so long as the managers and each member are licensed to practice dentistry or a member or manager is a registered Illinois professional corporation, dental corporation, or appropriately structured and licensed limited liability company.

Which entity is most appropriate for your practice depends on several factors and your specific needs and goals, and such decisions should only be made in consultation with an attorney experienced in the corporate and business issues unique to the dental profession.

Your Practice Needs a License Too

Even though individual licensed dentists, not a corporate entity, are the ones doing the diagnosing, treating, and healing, the entity itself, not just the dentists who own and operate it, need a license from IDFPR. This licensing requirement is in addition to all other corporate formalities and obligations.

It is important to note that IDFPR can revoke or suspend a dental entity’s license for numerous reasons relating to the license status of individual dentists who own and operate the practice. Accordingly, dental practice owners need to stay informed about how any particular dentist’s disciplinary issues may impact the entity’s license status.

The operation of a dental practice by an unlicensed entity or person can result in insurance reimbursement denials, regulatory citations based on the unlicensed practice of medicine, and other issues.

Entities which lose their license cannot continue to legally offer dental services. If they continue to do so, it could cause problems for the dentist/owners. Not only may they be subject to disciplinary action, but the failure to follow the law could theoretically contribute to a dentist’s personal exposure for the entity’s obligations or liabilities if a plaintiff attempts to “pierce the corporate veil.”

We Focus on You So You Can Focus on Your Patients

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Why Dentists Should Be P.C.: Without the Protections of a Professional Corporation, Your Dental Practice Can Cost You Everything

Tue, 17 Sep 2019 15:43:54 GMT

No respectable dentist can, should, or would treat patients without carrying professional liability insurance. Legal obligations aside, dentists have such coverage so that if an alleged error leads to a very real claim for damages by an aggrieved patient, their insurer will be the one taking the hit, not them. Covered dentists need not worry so much that a malpractice lawsuit will cost them their home, their bank accounts, or any other hard-earned personal assets.

But malpractice insurance doesn’t cover claims by unpaid service vendors or equipment suppliers. It won’t protect a dentist from a breach of contract judgment or allegations of financial misconduct relating to their practice. There are a plethora of potential liabilities that can arise from the practice of dentistry that have nothing to do with the quality of patient care. And if you are a solo practitioner or own a dental practice and have not availed yourself of the significant protections afforded by forming a professional corporation or other entity, you are leaving yourself and your family exposed to catastrophic financial peril.

Dentists Are Business Owners Too

Illinois, like all other states, allows business owners of all stripes – from restaurateurs and entrepreneurs to manufacturers or mom-and-pop retailers - to form corporate entities through which they operate their businesses. These include corporations, limited liability companies, and limited partnerships.

So long as the owners follow all appropriate legal requirements and formalities and no fraud is involved, these entities offer owners, partners, directors, officers, and shareholders protection from personal liability for the debts, obligations, and liabilities of their business. They also come with significant tax advantages.

For a long time, the law did not allow professionals like dentists, physicians, and lawyers to form the entities available to other business owners; the underlying rationale being that such professionals should not be permitted to insulate themselves from the consequences of their own negligence or the harm they cause patients or clients.

Eventually, however, legislatures across the country finally recognized that medicine, dentistry and the law were as much businesses as they were professions and created new structures specifically for professional practices. While these professional corporate entities share many similarities with non-professional companies, they have substantial differences in terms of who can participate in ownership, professional licensing requirements, and the extent of protection from personal liability.

The Illinois Professional Services Corporation Act

The primary corporate vehicle through which Illinois dentists operate their practices is a professional corporation, an entity created by the Illinois Professional Services Corporation Act (the “Act”). When you see the letters “P.C.” after an entity’s name (as you do with our law firm), that refers to this type of corporate structure.

As set forth in the statute, its purpose is “to provide for the incorporation of an individual or group of individuals to render the same professional service or related professional services” while at the same time “preserving the established professional aspects of the personal relationship between the professional person.”

Only Licensed Dental Professionals Can Own or Manage a Dental Professional Corporation

Balancing the business and practice of dentistry and other professions means that the law imposes limitations on who can participate in the ownership and management of a professional corporation.

For dental practices, only those dental professionals who must be licensed by the Illinois Department of Financial and Professional Regulation (IDFPR) can serve as shareholders, directors, or officers in the corporation. This means that there can be no passive investors or owners who are not licensed dental professionals.

In addition to requiring that owners and officers have valid professional licenses, the law mandates that the professional service corporation itself must be licensed by IDFPR.

Personal Liability Protection – If You Follow The Rules

A duly established professional corporation can insulate its owners and officers from personal liability for the debts of the corporation. That protection is the primary reason that business owners in every industry or profession form corporate entities. But as with all entities, that protection is not absolute.

Forming a professional corporation is not a matter of “set it and forget it.” There are a host of ongoing requirements which owners must follow in order to keep the shield between themselves and their business’ liabilities. Many of these are corporate “formalities” such as filing annual reports, maintaining all professional licenses, and keeping proper corporate records.

But the greater danger for dentists (and all business owners) comes from not treating their business as a separate entity. If a professional corporation is in reality merely an “alter ego” of its owner or owners, determined corporate creditors can seek to “pierce the corporate veil” and hold those owners responsible for the company’s obligations.

Examples of conduct which could lead to veil-piercing include:

inadequate capitalization;
insolvency;
commingling of funds;
diversion of assets from the entity by or to a member to the detriment of creditors;
failure to keep arm’s-length relationships among related entities; and
whether, in fact, the corporation is a mere facade for the operation of the dominant members.

Additionally, a creditor can pierce the professional corporation’s veil if “adherence to the fiction of a separate corporate existence would sanction a fraud, promote injustice, or promote inequitable consequences.”

Given the potential pitfalls and stumbling blocks involved in preserving the benefits that a professional corporation provides, and the potentially devastating consequences of losing those benefits, it is critical that dentists consult consistently with an attorney who understands the nuances and requirements involved in keeping their practice on a solid legal footing.

No Personal Protection For Malpractice Claims

While a properly organized and managed professional corporation can protect a dentist’s personal assets from creditors and business-related claims, it affords no such insulation against dental malpractice lawsuits.

The Illinois Professional Service Corporation Act states that officers, shareholders, or directors “remain personally and fully liable and accountable for any negligent or wrongful acts or misconduct committed by him, or by any ancillary personnel or person under his direct supervision and control, while rendering professional services on behalf of the corporation to the person for whom such professional services were being rendered.”

Protect Yourself and Your Family. Call Us Today To Learn More.

No matter how talented and skilled a dentist you are, no matter how much your patients like and respect you, and no matter your other professional accomplishments, you remain vulnerable to losing everything if you fail to attend to the business and legal issues which are critical to maintaining a successful practice.

Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

HIPPA Security Rule Compliance for Dental Practices: Protecting Your Patients' Data - And Yourself.

Tue, 17 Sep 2019 15:12:36 GMT

The care that dentists need to provide their patients doesn’t end when they get up from the chair. Dental offices, and the computers, networks, servers, and files maintained within (and outside of) their walls contain patient information that must be kept secure and protected from data breaches and unauthorized disclosure. If your practice doesn’t have the systems, protocols, and policies in place to comply with HIPAA’s multitude of patient privacy and security requirements, even inadvertent and seemingly “harmless” violations can lead to significant financial and legal headaches.

HIPAA security compliance simply cannot be an afterthought for dental practices, nor is it a matter of “set it and forget it.” It requires constant vigilance, proactive planning, and regular audits and updates. This is particularly true when it comes to ensuring the security of electronic health records. Dentists need to commit people, time, and resources to the protection of patient information and should regularly consult with attorneys who can assist them in making their HIPAA compliance efforts robust and effective.

HIPAA Application to Dental Practices

After HIPAA became law in 1996, the U.S. Department of Health and Human Services (HHS) issued a set of national standards governing the use and disclosure of patients’ protected health information (PHI). Commonly known as the Privacy Rule , the Standards for Privacy of Individually Identifiable Health Information apply to “covered entities” as defined in HHS regulations.

The odds that your dental practice is a “covered entity” under HIPAA sit pretty close to 100%. If you send claims, eligibility inquiries and requests, pre-determinations, claim status inquiries, or treatment authorization requests to third parties through electronic means, you must comply with HIPAA.

HIPAA obligations don’t end at the Privacy Rule, which limits how and to whom PHI can be disclosed. Dental practices must also comply with the Security Rule ( Security Standards for the Protection of Electronic Protected Health Information ) as well as the Breach Notification Rule.

The HIPAA Security Rule

While the Privacy Rule addresses who may have access to PHI, the Security Rule sets the standards for ensuring that only those authorized individuals can access that information. One important distinction between the Privacy Rule and Security Rule is that while the former applies to PHI in whatever form – paper, oral, electronic - the Security Rule only covers electronic health records (ePHI). Since dental practices increasingly rely on electronic means to create, store, and transmit records, ensuring that your practice satisfies the Security Rule’s mandates is the centerpiece of any HIPAA compliance program.

The safeguards required under the Security Rule are divided into three categories:

· Administrative – As defined in the rules, these are policies and procedures designed “to manage the selection, development, implementation, and maintenance of security measures to protect electronically protected health information and to manage the conduct of the covered entity’s workforce in relation to the protection of that information.”

Practices must sufficiently implement and monitor their “performance of security management process, assignment or delegation of security responsibility, training requirements, and evaluation and documentation of all decisions.”

The essence of administrative compliance is people: people who are in charge of security, people who are trained about security, and people who are responsible for administering, monitoring, and auditing security compliance.

· Physical Access Controls – This involves safeguards established to control physical access to data and information and the systems which store them. This includes such essential elements as:

o Facility Access Controls – policies and procedures that limit physical access to all areas and devices where ePHI is stored, such as locked doors, restricted areas, surveillance systems, security guards, etc.

o Workstation Access and Security – policies and procedures that specify the proper functions to be performed on workstations, how employees should perform those functions, and physical workstation security.

o Device and Media Controls – thumb drives, laptops, phones, tablets, and other devices represent a significant vulnerability for unauthorized access to or distribution of ePHI. Dental practices need to establish policies and procedures that govern how hardware and electronic media containing ePHI can enter or exit dental offices. These controls must include disposal, media reuse, accountability, and data backup and storage.

· Technical controls – this involves “the technology and the policy and procedures for its use that protect electronic protected health information and control access to it.” Firewalls, encryption, data security measures, and other systems put in place to prevent data breaches, cyberattacks, and unauthorized access to ePHI fall into this category.

Your Practice Could Be Held Responsible for Any HIPAA Violations by a “Business Associate”

Many if not most practices contract at least some of their billing, claims management, and other back-office responsibilities to third-party vendors. If a practice fails to obtain “satisfactory assurances” from a “business associate” that it is HIPAA-compliant before retaining their services, and a PHI breach subsequently occurs, the practice entity may be considered liable for any damages that result

That is why every dental practice that shares PHI with outside contractors enter into a written HIPAA-Compliant Business Associate Agreement with such vendors. These agreements should specify:

· the types of PHI that the practice will provide to the business associate;

· the permissible uses and disclosures of PHI by the business associate;

· the measures that the business associate must implement to protect PHI;

· the actions that the business associate will take in the event of a data breach.

HIPAA Compliance Questions? Call Grogan, Hesse & Uditsky Today

If you have questions or concerns about your practice’s compliance with HIPAA, please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation.

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.

Dental Partnership checklist

Tue, 15 Jan 2019 19:41:57 GMT

Like a marriage, the early days of a dental partnership can be exciting and new, with each participating dentist working together to build the foundation of a long term relationship. Unfortunately, like many marriages dental partnerships often end in divorce, and if the partners have failed to adequately plan for the day their “marriage” comes to an end, that divorce can be an ugly, emotionally draining experience that will cost both partners a small fortune and have a negative impact on the value of the practice. A successful dental partnership is one that has been well thought out in advance with concrete, written procedures that act as a “pre-nuptial” agreement as to how the dental partnership will be dissolved in the event the partners can no longer work together.

The following is a “Dental Partnership Checklist” that any dentist should review prior to engaging in discussions with another dentist regarding a dental partnership.

1. Cultural Fit, Practice Philosophy and Partnership Objectives : A dentist once described his partner’s work as “fast food dentistry” while he practiced “fine dining dentistry”. Before entering into any dental partnership, you need to be sure you share the same values as your partner, that you approach practicing dentistry in a similar manner, and that you are on the same page in terms of practice goals, time horizon, and financial needs.

2. Duties, Compensation, and Benefits : One of the most significant areas of tension we encounter in dental partnerships is the failure of one partner to meet expectations regarding the amount of time expected to dedicate to the practice. A dentist recently approached us about exiting a partnership. He had joined another dentist in a practice, only to find out a short time later that the partner dentist opened another office and therefore couldn’t dedicate the amount of time expected to the partner practice. Be sure to put in writing what each partner’s duties, compensation and benefits will be for and from the dental practice. While each partner is an owner, they should also be treated as an employee, with defined duties, compensation, and benefits. Any failure to satisfy those duties and obligations should trigger real consequences, such as a buyout right by the other dental partner.

3. Contributions of Capital and Distributions from the Dental Partnership : Be sure to clearly define who is contributing what to the dental practice, and how each partner will be compensated. Will each partner dentist receive compensation based on a formula? How will the remaining profit be split up? What if there is a loss at the end of the year, who and how will it be made up? These are only a few of the many questions to be answered regarding how the dental practice income will be allocated and distributed. Each unique partnership arrangement requires careful thought and specific planning to ensure the partners intention is carried out in the event of a disagreement or change in circumstances.

4. Management Authority and Dispute Resolution : Who makes the decisions in your dental practice may be driven by economics. If you are a young dentist buying in to an existing dental practice, management control may be something you cede to the elder dentist, but for “50/50” dental partnerships this can be a touchy subject. What happens if you don’t agree on buying a major piece of equipment, remodeling the office, or opening a second location? Providing clear authority for day-to-day management and a concrete written procedure to resolve disputes regarding more significant financial and management issues can save a dental partnership. There are a myriad of methods to resolve disputes so be sure to ask your attorney what is best for your dental partnership.

5. Exiting the Partnership : One of the most challenging circumstances to address legally in most dental practices that are structured as “50/50” partnerships is clearly defining the method and terms of an exit. The easy situations to deal with are death, disability and retirement, where triggers are generally definitive and valuation formulas can be applied in a straightforward manner. The real challenge is the case where the partners just don’t get along anymore and can’t agree on a way for one partner or the other to exit. Most advisors fail to address this most important issue, but it can be the most costly both financially and professionally. With some careful forethought and frank discussions facilitated by your legal, tax and financial advisors you can avoid this pitfall.

While all of the above matters are important to address in any dental partnership, the most important is to get it in writing! All the best planning amounts to nothing years down the road if you fail to get your partnership agreement in writing so you, your advisors, or, in the worst case scenario, a court or arbitrator can refer to it in issuing a decision in your partnership dissolution. You may think you are saving a few bucks by making a handshake deal, but it will cost you thousands down the road if you end up in a dispute with your partner.

Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his expertise as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. This blend of legal and business experience provides Mr. Uditsky with unique insight into his client engagements, which in addition to dentists also includes a variety of corporate and transactional matters, real estate, and commercial finance. Mr. Uditsky grew up in a dental family, with his father, grandfather and sister each owning their own dental practices.

Business Associate Agreement Under HIPPA: Your Clients Are Protected; Are You?

Thu, 27 Sep 2018 00:00:00 GMT

Representing healthcare clients is a very involved and complex task for any attorney to handle. This is especially true from a compliance perspective. The Health Insurance Portability & Accountability Act of 1996 (“ HIPAA ”) provides the requirements for the privacy and security rules regulating protected health information (“ PHI ”) of individuals and entities. Additionally, the HIPAA Privacy Rule and Security Rule (the “ Rule ”) set forth the rules for enforcing HIPAA violations and handling notifications involving any breach involving PHI (a “ Breach ”). Individuals and organizations required to comply with the Rule are called “Covered Entities.” However, the application of HIPAA does not stop at Covered Entities. HIPAA also applies to the business associates of Covered Entities, a role that is occupied by many attorneys representing Covered Entities.

What is a Business Associate?

On January 25, 2013, the final changes to the Rule were published. Under the Rule, a “business associate” of a Covered Entity can be held directly liable under HIPAA for a Breach. The Rule provides for three types of business associates working with or on behalf of Covered Entities: (1) business associate subcontractors; (2) entities routinely transmitting and accessing PHI; and (3) personal health record vendors.

Generally speaking, attorneys representing Covered Entities or business associates are business associate subcontractors if, in representing a Covered Entity or business associate, the attorney requires access to PHI in order to do their work for their client. If an attorney is a business associate, then a written Business Associate Agreement with their client is required.

Why Should I Enter Into A Business Associate Agreement?

The Rule requires business associates to enter into a written Business Associate Agreement that implements reasonable and appropriate policies in order to comply with the Rule and any Breaches thereunder. Failure to implement a written Business Associate Agreement can result in substantial fines and penalties. Amongst other things, Attorneys who are business associates can be held directly liable under the Rule, just as a Covered Entity would, for Breaches and violations of the Rule.

What is Required Under a Business Associate Agreement?

In order to avoid or reduce the chance of incurring liability for a Breach or other violation of the Rule the acts listed above, it is important to have a detailed and effective Business Associate Agreement. The template for a Business Associate Agreement should begin by incorporating the following requirements set forth under the Rule:

1) Establish the business associate’s permitted and required uses of PHI by setting forth how and when the business associate will use the PHI;

2) Provide that the business associate will only disclose PHI other than is set forth in the Business Associate Agreement or is required by law;

3) Implement appropriate safeguards to prevent the unauthorized use or disclosure of PHI;

4) Implement the requirements of the HIPAA Security Rule regarding electronic PHI;

5) Establish the situations and circumstances under which the business associate must disclose PHI to a requesting party;

6) Require the business associate to comply with all applicable requirements to the extent that the business associate is carrying out an obligation under the Rule on behalf of the covered entity;

7) Require the business associate’s internal practices, books and records in relation to the use and disclosure of PHI to be made available to the U.S. Department of Health & Human Services so that determinations regarding compliance with the Rule can be made;

8) To the extent practicable, require the business associate to return or destroy all PHI at the termination of the Business Associate Agreement;

9) Provide that any subcontractors, as defined by the Rule, business associate will engage with require the business associate to ensure that any subcontractors it may engage on its behalf that will have access to protected health information agree to the same restrictions and conditions that apply to the business associate with respect to such information; and

10) Provide for a termination of the Business Associate Agreement if the business associate violates a material term of the Agreement.

How will a Business Associate Agreement Reduce Attorney Liability?

While no Business Associate Agreement can eliminate an attorney’s liability under the Rule, it can greatly assist the attorney in limiting their liability to the extent possible.

First, while a Business Associate Agreement cannot change the statutory timeframes for providing notice or curing a Breach under the Rule, an attorney can give themselves as much leeway as possible with respect to how and when it must provide notice or cure a Breach by allowing themselves as much time as is permitted under the Rule.

Second, the Business Associate Agreement can provide greater clarity to the parties in detailing what a Breach is and when a Breach a occurs. This will help both parties reduce the probability of a Breach, recognize when a Breach occurs, and address either party’s failure to comply with the notice and cure provisions of the Rule.

Third, the Business Associate Agreement can provide essential guidance in handling a Breach by clearly stating each party’s responsibilities in the event of a Breach and the best and most efficient way to cure a Breach. Having definite and delegated plans of action for each party will provide security to each party in handling a Breach.

Finally, in addition to entering in to a Business Associate Agreement, it is also important to remember take a step back, evaluate your practice and determine the best way to become HIPAA and Rule compliant. This can be done by assessing your current level of compliance with HIPAA, projecting potential future compliance needs as your practice changes or grows and a developing plan of action to address any gaps you may discover or anticipate.

Non-Disclosure Agreements in Dental Transactions

Thu, 06 Sep 2018 16:14:39 GMT

In almost every dental practice sale and purchase transaction the buyer and seller need to share certain confidential information to evaluate the merits of and negotiate the terms of the potential deal (such as financial information, material contracts and customer information). The path to providing information safely is making sure the other party is bound to respect the confidential nature of the information and not use such information in a way that causes harm to the disclosing party.

Using a Non-Disclosure Agreement is a common way to protect your company’s sensitive information when it is shared with another party. These agreements are also known as “Confidentiality Agreements” or, as it will be referred to here, an “NDA”. Unfortunately, no document is going to guarantee that an unethical person won’t use shared confidential information in a nefarious manner, however, an NDA will certainly reduce the risk of a potential buyer disclosing sensitive information about your business or using that information in some competitive manner. If they do, then at a minimum you as the seller have a legal cause of action against them and most sophisticated buyers, and even competitors, won’t take that risk.

While there are many details of an NDA that bear scrutiny, our focus in this post is determining exactly what is considered confidential information.

What is Considered Confidential?

The definition of “Confidential Information” in the context of an NDA is generally described in very broad terms and can vary from one NDA to the next. There is of course a natural divergence of interests between buyers and sellers in defining Confidential Information, as sellers want as broad a definition as possible to protect their business and buyers want to narrow the definition. A compromise that most buyers and seller’s reach is a very broad definition of Confidential Information with certain exceptions, typically including: (1) any information that is already known to the public at the time that it is communicated to the potential buyer, (2) information that becomes publicly known after the seller discloses it to the potential buyer (other than through the fault of the potential buyer or its representatives) or (3) information that is required to be disclosed by law or a court of competent jurisdiction.

So what exactly is considered confidential? Here are some practical examples of information and documentation that would typically be protected under an NDA:

· Financial and statistical data

· Computer programs and other software

· Sales, customer and client information

· Business methodologies

· Patentable and unpatentable inventions, discoveries, know-how, works of authorship and trade secrets

· Techniques, strategies, plans and tactics

· Samples, test results and other test data

· Prototypes, drawings, computations, processes and data

· Information related to the current, future and proposed products and services of the company, including any research, experimental work, development, design details, specifications, samples, designs and models

· Employee information

In addition to protecting the confidential information of a business, an NDA should also prohibit a potential buyer from disclosing information about the potential transaction. In particular, the buyer should not be permitted to disclose to third parties any of the terms, conditions or other facts related to the negotiations between the parties. The NDA should also provide that a buyer is only permitted to use the seller’s confidential information for purposes of evaluating the potential transaction and disclosure should be limited only to such buyer’s advisors.

A sophisticated buyer will understand the need to execute an NDA that prevents the buyer from using or disclosing the seller’s confidential information. This confidential information is a very valuable asset of the seller’s business, and, while the buyer needs to evaluate such information, it is critical that this information is not disclosed by the buyer to third parties or used by the buyer for any purpose other than evaluating the seller’s business in connection with a potential transaction.

The following is a sample clause defining “Confidential Information” in an NDA:

As used in this Agreement, the term "Confidential Information" means and includes any and all information, techniques, plans, designs, costs, pricing, finances, research and development activities, Supplier specifications, supplier lists, business opportunities, personnel, and/or data disclosed by a party (the "Disclosing Party") to the other party (the "Receiving Party") before, on, or after the date hereof which relates in any manner, directly or indirectly, to the Disclosing Party and/or its customers, suppliers and Customers, whether such information is disclosed in writing, verbally, electronically, or otherwise, and which information the Disclosing Party maintains as confidential. Notwithstanding the foregoing, information and/or data shall not be considered Confidential Information if such information and/or data is: (i) established by the Receiving Party to have been known by it at the time of receipt, (ii) or becomes a part of the public domain through no direct or indirect act or omission of the Receiving Party, or (iii) received by the Receiving Party from a third party without similar restrictions, (iv) is independently developed by the Receiving Party without using any Confidential Information of the Disclosing Party, or (v) is approved for release by the Disclosing Party in writing and is released consistent with such approval.

If you need assistance preparing an NDA, or have questions about purchasing or selling a business, the attorneys at Grogan Hesse & Uditsky, P.C. are here to help. Visit us at www.ghulaw.com for more information.

Negotiating the Sale of a Dental Practice

jnuditsky@gmail.com (Jordan Uditsky) — Fri, 17 Nov 2017 15:23:07 GMT

You’ve spent a lifetime building your practice and the time has come to put it on the market. You engage a qualified transition specialist who has located a buyer, and are ready to begin negotiating the deal. Most likely, the buyer or the buyer’s representative will submit to you a document setting forth the business terms of the proposed transaction. Called a “term sheet”, “letter of intent”, or “memorandum of understanding”, this document is generally a non-binding outline of the business terms of your sale. For purposes of our discussion, we’ll refer to this document as an “LOI”, the intent of which is to determine if the purchaser and seller can agree on the business terms of the deal before plunging head first into the transaction, which leads to the engagement of lawyers, accountants, bankers, and other advisors, all of which can be costly to both the purchaser and the seller. That being said, and although LOIs are generally non-binding, we always recommend that our clients have the LOI reviewed by counsel prior to execution as it does establish parameters for the deal that can be difficult to renegotiate at a later date.

So how is an LOI structured, what does it look like, and what terms should it address? An LOI can take many forms, but essentially it’s just a letter from the buyer to you, the seller, outlining the essential terms of the deal. What follows is a summary of the sections you should be sure are addressed in your LOI:

Purchase Price and Terms of Payment : For most sellers the most important term in any LOI is going to be the purchase price…how much is the purchaser going to pay you for the practice and how will that purchase price be paid? Will there be a deposit and if so, who will hold it and when does it become non-refundable? Is the full purchase price paid at Closing or will a portion be held back pending some sort of performance review post-Closing? Is the purchase price fixed or will it be adjusted based on pre-Closing metrics? Is the purchase price payable in all cash or is there some sort of seller financing? All the foregoing questions should be answered in this section of the LOI.

Assets to be Acquired : While a detailed list of assets will be included with the definitive purchase agreement for the practice, the LOI should include general categories of practice assets the buyer intends to purchase, including tangible assets like dental equipment, office furnishings, supplies, business equipment and leasehold improvements, as well as other intangible assets such as patient lists, phone numbers, websites and goodwill. Cash is almost always excluded, but should certainly not be overlooked. Any other excluded assets, including personal effects, should be indicated here though will be detailed in the definitive purchase agreement. This section will also include a plan for handling the accounts receivable of the practice. Will the buyer be purchasing them, and if so at what percentage? Will the seller retain them but with assistance in collection from the buyer (usually for a nominal administrative fee)? If a patient owes money to both the seller and the buyer, who gets paid first? Addressing accounts receivable is never as simple as stating that the seller retains all accounts receivable or the buyer will purchase the accounts receivable. Complicated issues about ownership, collection, and administration should be addressed before the parties proceed.

Allocation of Purchase Price : While this may not be definitively known at the LOI stage, you as the seller should be aware and should discuss with your accountant what the tax allocation of the purchase price should be. While even more important for dental practitioners still utilizing a corporate tax as opposed to a pass-through structure, the allocation of the purchase price between tangible assets such as equipment and intangible assets such as goodwill can have significant financial consequences if not planned efficiently.

Post-Sale Transition : Most buyers will be looking for you to continue on in the practice for a period of time to ensure the smooth transition of the patients to a new dentist. While specifics will be detailed in both the definitive purchase agreement and possibly a post-sale employment agreement, it would be wise to set forth in the LOI the agreed upon term of any such engagement, such as how long the buyer expects you to maintain your current schedule and when you can start throttling back your hours, as well as the compensation for your services. If you have associates and key staff, there may also be language addressing the seller’s obligation, if any, to ensure the associates and staff stay with the practice as they may be integral to the profitability and successful transition.

Restrictive Covenant : Almost every practice transition I’ve assisted with has included a restrictive covenant imposed on the seller prohibiting the seller from competing with the practice after the sale. A fairly straightforward and industry standard provision, most restrictive covenants address both the period of time the restrictions will be in place as well as a radius in which the selling dentist is prevented from practicing. Restrictive Covenants may also include non-solicitation provisions preventing the buyer from soliciting patients and staff from the practice after the sale.

Earn-outs : While perhaps a bit less common than a simple all-cash purchase, some transitions will be structured in such a way where the selling dentist is paid a portion of the purchase price up-front with post-closing payments based on performance of the practice. These payments may be made over a period of years following the closing, aligning the future success of the practice with the selling dentist’s performance. While an entire article could be dedicated to the merit and risk of deals structured with earn-out components, needless to say that they should be described in detail in the LOI to ensure the parties are on the same page before they move forward. Earn-outs can provide a seller with an opportunity to receive a higher overall purchase price for their practice, but they can also result in conflict with the buyer and should be fully vetted by the seller’s advisors before they are agreed to.

Exclusive Dealing : While LOIs are non-binding, certain provisions can by agreement be made to be binding in the LOI. Exclusive dealing is one of those provisions that a buyer may request to be binding on the parties and will effectively require the seller to remove the practice from the market while the parties are negotiating the deal. Practice transitions can be expensive. Even at the LOI stage the parties may engage consultants, accounting firms, attorneys, and other advisors to assist in the evaluation of the transaction. Buyers don’t want sellers continuing to market the practice only to find another deal while the buyer has invested substantial financial resources in evaluating and negotiating the transaction. To induce you to remove your practice from the market though, a buyer may be required to put up earnest money as a sign of good faith to show that the buyer is serious about the acquisition. The LOI should indicate the amount of the earnest money, whether it is refundable, who will hold it, and under what conditions.

Confidentiality : Another binding aspect of the LOI, both parties should agree to keep their negotiations and any information or documentation they receive during the negotiations and due diligence period prior to execution of a binding purchase and sale contract confidential.

Lease : While glossed over in many an LOI for the purchase and sale of dental practices, the parties should certainly come to a meeting of the minds to ensure everyone is on the same page regarding the physical plant. Buyers will often have specific requirements driven by their lender as to the terms of the lease for any practice they intend to buy. Questions that should be addressed include whether the lease will be assigned to the buyer, whether the deal is conditioned upon negotiation of an extension or renewal of the lease term, and whether a seller’s guaranty, if a guaranty was provided to the landlord, will be released at closing.

Other Conditions and Contingencies : Other terms and conditions that may be addressed in an LOI include, among others, timing of closing, due diligence, financing, access to information and staff, governing law, responsibility for expenses, and broker’s fees. As LOIs reflect the terms of a particular transaction, each will be a bit different and there is no standard form. The key is to ensure that each LOI sufficiently describes the terms of the business deal between the parties such that they can proceed toward a definitive purchase agreement and eventually a closing. If you need assistance preparing a letter of intent for your practice, or have questions about purchasing or selling a dental practice, the attorneys at Grogan Hesse & Uditsky, P.C. are here to help. Visit us at www.chicagodentalattorney.com for more information.

Jordan Uditsky is an attorney and business advisor serving businesses in the Chicagoland area and throughout the country. Mr. Uditsky advises businesses and entrepreneurs from startup to sale, and strives to be a trusted advisor to his clients by delivering practical and efficient counsel on a wide range of matters. His combination of legal and business experience provides a unique perspective when counseling clients, giving him an understanding of the true value and application of his advice to their organizations. To learn more about Mr. Uditsky, visit www.ghulaw.com .

Dental Corporation Legal Checklist

rhaney@ghulaw.com (Robert Haney) — Mon, 13 Nov 2017 15:47:30 GMT

When preparing to organize your dental practice, choosing the form of business entity may seem daunting. Dentists have many options for organizing their practices. In Illinois, these options include a limited liability partnership, professional association, professional limited liability company or a professional service corporation (“PSC”). Often, the best option for solo practitioner dentists is to form a PSC as it can provide tax advantages, liability protection and other benefits that are beyond the scope of this article. While a PSC operates similarly to a traditional corporation, because of its unique nature the set-up and maintenance of a PSC is a bit more nuanced than that of the traditional corporation. This article will provide you with a general overview and basic legal compliance checklist of the PSC incorporation requirements for dentists, but may also be applicable to other healthcare professionals.

Pre-Incorporation

1) Choose Your Company’s Personnel . Traditional corporations are not generally limited in who can participate in its ownership and operation. However, under the Professional Services Corporation Act (the “PSC Act”), a PSC is limited in who is allowed to participate in the company. All shareholders, directors, officers, agents and employees of the PSC must be duly licensed by the Illinois Department of Financial and Professional Regulation (“IDFPR”) to provide their respective dental services. Only “ancillary personnel” do not require licensure. Ancillary personnel, which typically includes clerks, administrative staff and technicians, are employees who:

a) Are not licensed under the Illinois Dental Practice Act (“Dental Act”);

b) Are supervised by persons licensed under the Dental Act;

c) Do not hold themselves out to be licensed under the Dental Act; and

d) Are not prohibited by the IDFPR from being employed by the PSC.

2) Choose Your Company’s Name . Choosing your company’s name is vital to your PSC as it is often the first impression that people have of your company. The PSC Act has two main requirements when choosing your company’s legal name. The name must:

a) Include the full name or last name of one or more of the shareholders; and

b) End with “chartered”, “Limited”, “Ltd.”, “Professional Corporation”, “Prof. Corp.” or “P.C.”

However, if you would like to operate your company under a different name, your PSC can adopt a fictitious name by making a filing with the county clerk of the county where your company’s principal office is located.

3) Choose Your Company’s Location . The PSC Act and Dental Act require that your company’s principal address be located in Illinois. Additionally, the PSC Act requires you to submit a separate application for licensure from IDFPR for each business location in Illinois.

Incorporation

1) Draft Your Corporate Documents . To ensure that your PSC is in full corporate compliance, you will need to draft articles of incorporation, bylaws and other necessary documents for your company. In having these documents prepared, please note that it is important to use attorneys experienced in setting up PSCs to best protect your company from increased and unnecessary liability.

2) File Articles of Incorporation with the Illinois Secretary of State . Once you have compiled all of the necessary corporate documents, you will need to file the Articles of Incorporation with the Secretary of State. Articles of Incorporation can be filed in-person, via mail or on the Secretary of State website .

3) Obtain Your Federal Employer Identification Number . You can obtain a Federal Employer Identification Number or EIN, from the IRS via telephone or the IRS website .

4) Register with the IDFPR . The final step in setting up your PSC before your company can begin practicing dentistry in Illinois is obtaining a license for your PSC from the IDFPR. The license application can be filled out online via the IDFPR website .

Post-Incorporation

Once you organize a PSC, it is imperative to properly maintain the “corporate veil”, or the invisible wall separating you from your PSC. If the corporate veil is not maintained, the limited liability benefits you are afforded under your PSC can be destroyed and you may be held personally liable for the liabilities of your PSC (note however, that a PSC does not provide insulation from dental malpractice, for which a dentist remains personally liable). In order to maintain your PSC’s corporate veil, you must:

1) Timely file the PSC’s Annual Reports.

2) Timely renew the PSC’s license with IDFPR.

3) Properly maintain separate corporate minutes, records and consents for the PSC.

4) Do not commingle PSC funds and personal funds.

5) Only sign documents in the operation of your PSC in your capacity as an officer, director or shareholder of the company.

Please note that the foregoing list is not necessarily exhaustive but it is the minimum you need to do to maintain your PSC.

That concludes the general overview and basic legal compliance checklist for forming a PSC in Illinois. It is important to remember that while a PSC may be the correct choice for certain dentists, it may not be the best choice for you. Accordingly, regardless of how you choose to organize your dental practice, it is important to consult with an experienced attorney beforehand to determine which type of entity best suits your specific needs. Please feel free to reach out to me with any questions at bhaney@ghulaw.com or visit our website at www.chicagodentalattorney.com .

Robert Haney is an attorney and business advisor serving businesses in the Chicagoland area and throughout the country. Mr. Haney advises businesses and entrepreneurs from startup to sale, and strives to be a trusted advisor to his clients by delivering practical and efficient counsel on a wide range of matters. His combination of legal and business experience provides a unique perspective when counseling clients, giving him an understanding of the true value and application of his advice to their organizations. To learn more about Mr. Haney, visit www.ghulaw.com .

Important information regarding recent overtime litigation in the U.S. District Court of Eastern District of Texas

Mon, 05 Dec 2016 21:29:00 GMT

On November 22, 2016, U.S. District Court Judge Amos Mazzant granted an Emergency Motion for Preliminary Injunction and thereby enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule on December 1, 2016. The case was heard in the United States District Court, Eastern District of Texas, Sherman Division (State of Nevada […] The post Important information regarding recent overtime litigation in the U.S. District Court of Eastern District of Texas appeared first on GGHH Law.

On November 22, 2016, U.S. District Court Judge Amos Mazzant granted an Emergency Motion for Preliminary Injunction and thereby enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule on December 1, 2016. The case was heard in the United States District Court, Eastern District of Texas, Sherman Division (State of Nevada ET AL v. United States Department of Labor ET AL No: 4:16-CV-00731). The rule updated the standard salary level and provided a method to keep the salary level current to better effectuate Congress’s intent to exempt bona fide white collar workers from overtime protections.

On December 1, 2016, the Department of Justice on behalf of the Department of Labor filed a notice to appeal the preliminary injunction to the U.S. Circuit Court of Appeals for the Fifth Circuit.

Since 1940, the Department’s regulations have generally required each of three tests to be met for the FLSA’s executive, administrative, and professional (EAP) exemption to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (“salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (“salary level test”); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”). The Department has always recognized that the salary level test works in tandem with the duties tests to identify bona fide EAP employees. The Department has updated the salary level requirements seven times since 1938.

The Department strongly disagrees with the decision by the court. The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.

Source: US Department of Labor

https://www.dol.gov/whd/overtime/final2016/litigation.htm

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CASH OR CREDIT…LANDLORDS BEWARE!

Fri, 17 May 2013 14:54:00 GMT

INTRODUCTION Though it may seem that the economy is on the mend, a quick discussion with the leaders of many area businesses exposes an underlying unease as to whether the economy as a whole can sustain its recovery given the inability of bureaucrats in Washington to craft long-term solutions to our country’s financial crisis. Many […] The post CASH OR CREDIT…LANDLORDS BEWARE! appeared first on GGHH Law.

INTRODUCTION

Though it may seem that the economy is on the mend, a quick discussion with the leaders of many area businesses exposes an underlying unease as to whether the economy as a whole can sustain its recovery given the inability of bureaucrats in Washington to craft long-term solutions to our country’s financial crisis. Many of these businesses continue to struggle to remain profitable and avoid the financial pitfalls of the recent recession. These same struggles affect more than the businesses themselves, and when a business’ financial struggles involve a bankruptcy they can have devastating results for creditors, particularly commercial landlords. While commercial landlords either holding a cash security deposit or a letter of credit may think themselves isolated from a tenant’s bankruptcy, some have found that neither is actually immune from risk.

CASH PITFALLS

Cash security deposits have long been the traditional form of security for a commercial lease, typically in the amount of one to two month’s rent. However, the recent financial crisis exposed a weakness in what was otherwise thought to be ironclad security against a tenant’s default. When a tenant declares bankruptcy the landlord may find themselves enmeshed in a fight with the bankruptcy trustee to retain that security deposit. A cash security deposit is generally regarded as an asset of the bankruptcy estate under Section 541(a). Courts have held, however, that landlords may offset a portion of the security deposit against their allowable claims but that any surplus must be returned to the debtor ( Oldden v. Tonto Realty Corp. , 143 F.2d 916 (2 ^nd Cir. 1944)). They have gone further to provide that a landlord’s security deposit constitutes a perfected security interest or lien in the landlord’s favor ( In re Johnson , 215 B.R. 381, 384 (Bankr. N.D. Ill. 1997)). It would seem the landlord’s ability to retain the security deposit is an equitable remedy until one examines and understands what an “allowable claim” is under the Bankruptcy Code.

A debtor-tenant has the ability to reject certain leases pursuant to Section 365 of the Bankruptcy Code. Such a lease rejection is tantamount to a default under the terms of most leases giving the landlord a general unsecured claim against the bankruptcy estate for the resulting damages. Unfortunately, the landlord’s claim is limited by Section 502(b)(6) of the Bankruptcy Code to the amount of accrued but unpaid rent plus the amount of rent reserved under the lease for the greater of one year or 15% of the remaining term of the lease. To the extent the cash security deposit exceeds the amount of the Landlord’s claim, it must be returned to the debtor’s bankruptcy estate.

WHY IS A LETTER OF CREDIT BETTER THAN CASH

In order to provide some insulation from the risk of a security deposit being tied up in a tenant’s bankruptcy, many landlords prefer the issuance of a standby letter of credit. A standby letter of credit issued by the tenant’s bank or, preferably, a bank satisfactory to the landlord is an independent obligation of the issuing bank to the landlord. The letter of credit stands apart from the tenant’s obligation to reimburse the issuing bank and is therefore not generally a part of the bankruptcy estate. Less risk? It would seem that way until one considers the long list of bank failures over the past several years and the FDIC’s unwillingness to honor letters of credit issued to commercial landlords by failed banking institutions. With the economic recovery still uncertain, commercial landlords should take proactive measures in their leases requiring tenants to replace letters of credit issued by insolvent banks and permitting the landlord to make a periodic review of the letter of credit issuer. Landlords should also reserve the absolute right to approve the bank issuing the letter of credit or provide a list of acceptable financial institutions from whom they will accept a letter of credit. It should also be noted that the interaction between a landlord’s proposed draw on a letter of credit and the 502(b)(6) cap is unsettled. Landlord’s should anticipate that any drawdown on a letter of credit may have an impact on the amount of the landlord’s claim in a tenant’s bankruptcy.

Jordan Uditsky is a partner in the corporate practice of Garelli, Grogan, Hesse & Hauert. He brings a diverse legal and business background to the firm, with a particular emphasis on the representation of startups and emerging companies, commercial real estate transactions, tax and estate planning. He advises businesses in a broad range of general corporate and corporate transactional matters, including business organizations and choice of entity issues, financing and private equity, mergers, acquisitions and joint ventures as well as business restructurings. Mr. Uditsky also employs his experience as a business owner to advise companies on regulatory issues and compliance matters, employment policies and legal issues related to their general operations and business strategy.

Garelli Grogan Hesse & Hauert offers sophisticated yet cost effective, practical solutions to our clients’ legal challenges. We strive to understand not only the legal issue but our clients’ business goals as well and craft tailored solutions to help them succeed. Our attorneys represent businesses and individuals throughout the Midwest in matters that include commercial litigation, securities, business counseling and transactions, commercial real estate, estate planning and family law. For more information contact Jordan Uditsky at (630)833-5533 x12 or juditsky@gghhlaw.com.

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TO LLC OR NOT TO LLC: THAT, IS THE QUESTION!

Wed, 09 Jan 2013 21:18:00 GMT

Limited Liability Companies, or “LLC” as they are more commonly known, have been the “entity du jour” over the past decade, and I’ve been asked by many a client what the real reasons are to choose an LLC over, for example, an S-Corporation, a Partnership or a traditional C-Corporation. Choosing the most appropriate structure for your business can be confusing even for the most learned legal practitioner, and I find that most attorneys know which entity they should recommend but don’t necessarily know why. In this article we’ll explore the differences between two of the most popular business structures, the LLC and the Subchapter S Corporation, or “S-Corp”.

The LLC and S-Corp are popular business structures for a variety of reasons, some of which the two have in common. Both the LLC and the S-Corp are creatures of statute, meaning they are separate legal entities created by a state filing and subject to state-mandated formalities, such as filing annual reports and paying periodic filing fees. Both entities are taxed like sole proprietorships (in the case of a single owner or shareholder) and partnerships (in the case of multiple owners or shareholders), meaning the company itself doesn’t pay federal taxes, but rather all company profits and losses are “passed through” to the individual owners, who report these tax attributes on their individual federal tax returns. These two business structures also share another key feature in that they have the ability to separate the liabilities of the business from the personal assets of the owners, thereby shielding those assets from business obligations. Despite the similarities, LLCs and S-Corps do differ in several ways, including their operational flexibility, administrative requirements, profit-sharing and employment tax implications, all of which we will explore in this article.

WHAT IS AN LLC ANYWAY?

According to the Internal Revenue Service, an LLC is an entity “designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership”. Although many times you will hear practitioners refer to an LLC as a “limited liability corporation”, you should note that an LLC is not actually a corporation. While both corporations and LLCs are created as a matter of state law, they are separate entities with entirely different governing rules and regulations. Nevertheless, the LLC is a flexible form of business enterprise that combines elements of both the corporate and partnership structures. As a pass-through entity, all profits and losses generated in an LLC are reported by the individual owners, or “members” as they are called, on their individual federal tax returns. What differentiates the LLC from a partnership, however, is the limit of the liability for which a member is responsible, which in most cases will be limited to such member’s investment in the company.

HOW ABOUT AN S-CORP?

Like a C corporation, an S-Corp is a corporation organized pursuant to the laws of the state in which it is formed. As in the case of an LLC, however, S-Corps resemble partnerships in the manner in which they are taxed, meaning all aspects of income, deductions and tax credits flow through to the shareholders, regardless of whether cash distributions or contributions are made. S-Corps must make an affirmative election under Subchapter S of Chapter 1 of the Internal Revenue Code to be taxed as a partnership and the following requirements must be met in order to do so:

– The entity making the election must be a domestic corporation;

– The entity making the election may only have one class of stock;

– The entity making the election may not have more than 100 shareholders;

– Shareholders of the entity making the election must, subject to certain limited exceptions, be U.S. citizens and natural persons; and

– Profits and losses allocated to the entity’s shareholders must be in proportion to each shareholder’s interest in the business.

SO WHICH ONE IS RIGHT FOR MY BUSINESS?

As indicated above, LLCs and S-Corps differ in several ways, including but not necessarily limited to their operational flexibility, administrative requirements, profit-sharing and employment tax implications. Understanding the differences will dictate which of these two popular entities are right for your business.

One of the primary differences between an LLC and an S-Corp is the amount of administrative formality that is required to maintain an S-Corp. Remember, an S-Corp is in fact a corporation and therefore requires compliance with certain administrative formalities such as formation of a board of directors, annual reporting and other mandatory business filings, adopting by-laws, issuing stock, annual shareholder and director meetings with mandatory record keeping and other administrative requirements that a typical small business may not be prepared to deal with, particularly one with a single owner. An LLC on the other hand requires far fewer forms for registration and generally lower start-up costs. Limited Liability Company’s are not generally required to have formal meetings nor maintain minutes of meetings, though record keeping is still highly recommended. With fewer administrative formalities to maintain, LLCs may be more difficult to penetrate by those seeking to challenge its shield of liability protection. Generally, as long as the members of the LLC do not “co-mingle” funds, imposing liability beyond the LLC itself may be very difficult.

Another distinguishing feature between the LLC and the S-Corp is the operational and management flexibility inherent in an LLC versus the rigid structure of an S-Corp. Most matters relating to governance of an LLC can be handled in one document, typically termed an “Operating Agreement” or “Limited Liability Company Agreement”, which is the governing document of the company. Most state codes in fact allow members of an LLC to essentially override the LLC statute by otherwise agreeing in the operating agreement how the LLC will be governed. The owners of an LLC can decide to be self-managed (or, “member-managed” as it is otherwise known) or manager-managed. When member-managed, the LLC is run in the same manner as a partnership where the partners handle the day-to-day operations of the company. When manager-managed, the LLC is run similar to a corporation, where the members may elect one or more people to handle the day-to-day decisions of the company. S-Corps on the other hand, have directors and officers, where the board of directors makes major decisions and officers are elected to manage the company’s daily business. Of course, an LLC also has the flexibility to “elect” officers if they so choose, but many business owners appreciate the simplicity of their businesses being managed by a manager they have the authority to appoint or remove in their sole discretion.

When organizing a new company involving more than one owner, particular attention should be paid to the allocation of the company’s profits and losses as well as the distribution of available capital. S-Corporations, which are restricted to one class of stock, must allocate profits and losses pro-rata to its shareholders based on their relative share of ownership. Thus, a shareholder who owns 25% of the company’s stock reports a distribution of 25% of the company’s year-end taxable profit or loss, as the case may be, on the shareholder’s individual federal tax return. The one class of stock restriction governing S-Corps does not apply to LLCs, thereby allowing flexibility in planning distributions and allocations of profits and losses. A business organized as an LLC may allocate profits and losses disproportionately among its members, taking into account factors such as sweat equity, preferred returns for members contributing more capital and other arrangements forming the basis for so-called “special allocations”. The IRS may scrutinize such special allocations to ensure members are not attempting to evade taxation by allocating larger losses to members in higher income tax brackets, thus it is important to structure the allocations so that they have what the IRS terms “substantial economic effect”. Consider the case of four members who form an LLC where three members put up an equal amount of cash while the fourth member signs a note to contribute his or her share in installments over the first five years of the business. The operating agreement may provide that the first three members receive a larger distributive share of profits and losses for those five years during which the fourth member’s note is outstanding, even though all four members may each have an equal 25% ownership interest in the company. The IRS should respect this arrangement given there is a legitimate financial basis for the special allocation (i.e., it has “substantial economic effect”). It should be noted that an LLC’s structural flexibility would allow an operating agreement governing the foregoing company to provide for other restrictions, such as a limit on the fourth member’s ability to vote on certain issues affecting the company until the note is paid in full. It is this structural flexibility that motivates many entrepreneurs to choose the LLC for their new businesses.

While not generally a significant consideration for most new small business owners, it is important to note that owners of LLCs are considered to be self-employed and must therefore pay the 15.3% self-employment tax contributions towards Medicare and Social Security (note that the rate was effectively reduced in 2012 to 13.3% but is slated to return to 15.3% in 2013). Thus, all the income of an LLC is subject to self-employment tax whereas a corporation may retain some of that income after payment of the owner’s salary and treat it as unearned income not subject to self-employment. Of course, nothing is free in the eyes of the IRS as any such unearned income will be taxed at some point when it is distributed to the company’s shareholders as taxable dividend income.

While LLCs have been the entity of choice in recent years, the flexibility associated with its ownership and management structure in multi-member businesses comes with a price. That price is reflected in what can be complex operating agreements reflecting the practical realities of an agreement among the owners. In such situations it is important to remember that an operating agreement is not an “off-the-shelf” document that a practitioner or formation service can quickly plug names into and deliver without a thorough understanding of the member’s relative expectations. LLC operating agreements may need to combine complex provisions usually found in shareholder agreements, separate buy-sell agreements, partnership agreements and even employment agreements. Such provisions may affect issues such as capital contributions to the business, allocation and distribution of profits and losses as described above, members’ voting rights, admitting new members or removing existing ones, restrictions on transfer of membership interests and many others. Each member should retain their own counsel experienced in business organizations to advise them of their relative rights and obligations before entering into any such agreement.

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DON’T GET TRAPPED IN THE COVERAGE GAP: ADDITIONAL INSUREDS UNDER COMMERCIAL GENERAL LIABILITY POLICIES – RECENT DEVELOPMENTS

Tue, 13 Nov 2012 19:49:00 GMT

As the former owner of a contracting business I am all too familiar with the need to be named as an “additional insured” on a subcontractor’s certificate of insurance. Most business owners and risk managers though don’t fully understand the nuances of this often overlooked but vitally important part of their overall insurance coverage. For […] The post DON’T GET TRAPPED IN THE COVERAGE GAP: ADDITIONAL INSUREDS UNDER COMMERCIAL GENERAL LIABILITY POLICIES – RECENT DEVELOPMENTS appeared first on GGHH Law.

As the former owner of a contracting business I am all too familiar with the need to be named as an “additional insured” on a subcontractor’s certificate of insurance. Most business owners and risk managers though don’t fully understand the nuances of this often overlooked but vitally important part of their overall insurance coverage. For those that fail to read the fine print a trap may be looming and, as evidenced by a recent District Court case in the Northern District of Illinois, falling in could cost your company hundreds of thousands of dollars.

It is standard procedure in most service agreements that the service provider (the “Provider”) name the recipient of those services (the “Recipient”) as an “additional insured” on the Provider’s commercial general liability insurance (“CGL”) policy and evidence the same in a certificate of insurance issued by the Provider’s insurance carrier. The Recipient traditionally relies on this certificate as evidence of insurance in the event that damage to person or property is caused by the Provider, its employees or agents during the performance of the Provider’s duties under the agreement. The Recipient further expects that the Provider’s insurance will be primary in the event of an incident causing such damage. A recent case decided in the U.S. District Court for the Northern District of Illinois, however, exposed a coverage gap in which an additional insured might not be covered by the Provider’s CGL policy for damages incurred by the Provider’s employees.

The Provider in the case, Independent Building Maintenance Company (“IBM”), was engaged by Archer Daniels Midland Company (“ADM”) to perform window cleaning services. The service contract included a provision requiring IBM to obtain insurance and indemnify ADM for liability arising from the work IBM performed. A policy with The Burlington Insurance Company (the “Insurance Company”) was accordingly endorsed to name ADM as an additional insured. Subsequently, an IBM employee was cleaning windows when his ladder slipped causing him to injure his knee. The employee filed suit against ADM asserting negligence and premises liability. ADM tendered the defense of the suit to the Insurance Company, which ultimately disclaimed any duty to provide a defense. ADM settled the suit for $150,000 and alleged that it spent almost $200,000 in attorney’s fees over the course of the suit. The Insurance Company claimed it had no duty to defend ADM in the suit because (1) the policy’s cross liability exclusion barred coverage for bodily injury to an “employee of any insured” and (2) the employer’s liability exclusion barred coverage for bodily injury to an “employee of the insured”.

The court addressed the employer’s liability exclusion first, which is a typical provision in a CGL policy that bars coverage for personal injury claims by employees of the insured as such claims would normally be covered by an employer’s workers compensation insurance. The policy also included a severability clause that ADM relied on to argue that it was entitled to separate coverage under the policy so that a claim of injury by IBM’s employee against ADM would actually be covered. In general, severability clauses are intended to treat each entity covered under the policy as if each were insured separately. The court agreed with ADM, citing an Illinois Supreme Court case that considered the interplay of a severability clause and an employee exclusionary clause barring coverage for bodily injury to employees of “ the insured”. The court noted, however, that drafting a broader exclusion might be effective in barring coverage for employee’s suits against non-employer-insureds despite the existence of a severability clause.

Though the language of the employer’s liability exclusion was not sufficient for the Insurance Company to bar coverage to ADM, the court found the opposite with the cross liability exclusion which barred coverage for bodily injury to an “employee of any insured”. ADM attempted to rely on the same severability argument but the court disagreed, pointing in particular to the language “ any insured”. The court found that the distinction between the terms “ the insured” and “ any insured” in an exclusion is crucial in determining the significance of a severability clause, and even more so where the terms were used in different exclusion provisions of the same policy.

In summary, the court relied on the plain language to conclude that the employer’s liability exclusion did not bar coverage for ADM because the injured employee was not actually ADM’s employee (i.e., not an employee of “ the insured” under the plain language of the exclusion), but did bar coverage for ADM under the cross liability exclusion because, being named as an additional insured on the original endorsement, ADM became “ any insured” under the terms of the exclusion. In practice, business owners and risk managers should be wary to avoid the trap ADM fell into by doing some simple planning. First and foremost, realize that a certificate of insurance is merely evidence that coverage exists and is current but is subject to the exclusions in the original policy. Where possible obtain a waiver of the cross liability exclusion in the certificate of insurance, and be sure your counsel negotiates strong contractual indemnity provisions in the underlying agreement and that the Provider has the balance sheet strength to honor them.

For further information or a free consultation contact Jordan Uditsky at juditsky@gghhlaw.com .

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CITY OF CHICAGO CLARIFIES EXEMPTIONS TO TRANSFER TAX ORDINANCE

Wed, 07 Nov 2012 16:39:00 GMT

With the increase in recent years of real estate transactions involving distressed mortgage loans and investors or developers intent on acquiring fee title to the underlying property, the City of Chicago needed to clarify its position on the interaction of Exemptions C & M of the Chicago Real Property Transfer Tax Ordinance. Exemption C provides […] The post CITY OF CHICAGO CLARIFIES EXEMPTIONS TO TRANSFER TAX ORDINANCE appeared first on GGHH Law.

Exemption C provides that the acquisition of an interest in real property through the granting or purchase of a mortgage is exempt from Transfer Tax. Exemption M provides that the acquisition of a fee interest in real property through the granting of a deed in a foreclosure sale or a deed in lieu of foreclosure is also exempt. The Exemptions were enacted to ensure that a bona fide lender would be excluded from tax liability where the lender was seeking solely to perfect its security interest in the collateral or exercising its rights in that collateral. The City’s recent ruling intends to clarify that the investors and developers acquiring these properties remain subject to Transfer Tax when they take title to the property, but are not subject to taxation on both steps of the transaction; first upon purchase of the mortgage, and second upon acquiring fee title to the underlying property. The City further clarified that the transfer price on which the Transfer Tax would be assessed is the amount of consideration paid by the buyer to the lender for the mortgage, and is payable upon delivery or recording of the deed.

For further information or a free consultation please contact us at juditsky@gghhlaw.com .

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What Employers Need to Know About Discrimination

Tue, 28 Feb 2012 09:00:00 GMT

While you may have the best of intentions as an employer, a single misstep can create ugly employment lawsuits. There are important things that every employer must know to avoid employment litigation. Discrimination, in particular, can be especially tricky. Here’s what you need to know: Discrimination Hiring and promoting the best-qualified candidates isn’t always as easy […] The post What Employers Need to Know About Discrimination appeared first on GGHH Law.

Discrimination

Hiring and promoting the best-qualified candidates isn’t always as easy as it seems. Employers weigh the choices between candidates based on unequal qualifications all the time. You may have seen two resumes and thought, “if only these two people could be one person, I’d have the perfect candidate!”

Deciding between the two resumes like this can also lead to accusations of discrimination against one of several protected statuses, even when there was none. Promotions can be wrought with the same trouble. Worse, firing someone who hasn’t done their share of the work can bring on even more lawsuits.

These are just some of the tricky situations employers can find themselves in. It’s important to consult with an expert in employment law to stay updated on employment issues. In the end, it can save you a lot of time, money and frustration.

Consulting with an experienced employment lawyer can help you avoid this common dilemma.

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What You Need to Know About Legally Organizing a Business

Wed, 22 Feb 2012 09:00:00 GMT

You have an idea. You’ve decided to go for it. You’re ready to start your own business – but there are still a lot of questions need answered. What type of organizational structure fits your business? How many employees should you hire initially? Where do you get the funding if you can’t afford to start it yourself? How can you protect yourself from lawsuits filed by your customers or employees?While starting a business can be exciting, it’s also a time of high stress. But first, you have to legally organize your new company. It’s important to consider how you would like to organize your business. Under the law, you can organize your company as a sole proprietorship, partnership, a limited partnership, a limited liability company (LLC) or corporation. Some businesses even structure themselves as cooperatives, in which ownership is distributed among several people.

The process of business formation can be daunting regardless of how your business is structured. If you’re not sure which option would be best for your business, talk with a business law attorney.

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3 Common Questions Probate Lawyers Are Asked

Wed, 15 Feb 2012 09:05:00 GMT

Protecting our loved ones is a primary concern for most of us. Although it’s unpleasant to think about what happens when we die, it’s essential that we plan ahead. If passing your assets along to your surviving family members, close friends and favorite charities is important to you, there are some things you should know about […] The post 3 Common Questions Probate Lawyers Are Asked appeared first on GGHH Law.

Protecting our loved ones is a primary concern for most of us. Although it’s unpleasant to think about what happens when we die, it’s essential that we plan ahead. If passing your assets along to your surviving family members, close friends and favorite charities is important to you, there are some things you should know about the probate process (and when you should contact a probate lawyer ).

What does “probate” mean?

Probate is the process by which a deceased person’s assets are collected and distributed to the rightful heirs. The court often supervises the process, and the way it is executed can differ from one state to another.

First, the deceased person’s assets are collected and all debts are paid off using those assets. What is left over is distributed according to the person’s most recent will. Where no will exists, state laws take over to determine who gets what.

How long does the process take?

As with most legal processes, it depends on the circumstances. It’s not unusual for the probate process to take a year or more. Obviously, this can be difficult for your family members who could be waiting a long time for the process to be completed. While there are ways to avoid probate, many of them involve additional costs. A good estate planning lawyer can help you determine which methods are best for you and your family.

How do I handle disputes?

Unfortunately, the probate process is often prone to disputes. If you have lost a family member, you may know this all too well. Loved ones may dispute the validity of a will, or object to how the assets are distributed. Settling these disputes can be painful, but a probate lawyer can ensure that you have an objective representative.

The probate process can be extremely complicated. If you have questions, don’t rely on websites or what well-meaning friends may tell you – seek the help of an experienced probate lawyer at Garelli, Grogan, Hesse & Hauert.

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Estate Planning 101

Tue, 07 Feb 2012 18:28:00 GMT

Most of us hope to build wealth that we can pass along to our loved ones when we die. To ensure that your estate is transferred according to your wishes, estate planning is important. You might think that estate planning is just for wealthy people, but you’d be mistaken. Too often, families are torn apart over a dispute over even a modest inheritance. You can settle disputes before they start by preparing ahead of time. The first step to estate planning is developing a will. If you have a larger estate, a will might not be enough. In this case, it may be wise to consult an experience estate planning lawyer to discuss your options.

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A Brief Guide to Securities Law

Thu, 02 Feb 2012 21:29:00 GMT

Securities and financial markets are curious creatures these days. More and more, regulatory agencies are increasing their oversight as a result of corporate scandals, which can often mean that even innocent securities firms and financial professionals are caught up in time-consuming lawsuits. A securities lawyer can be an essential asset. No matter where you stand within […] The post A Brief Guide to Securities Law appeared first on GGHH Law.

No matter where you stand within the financial markets, securities laws can affect you. You may be a broker or financial professional who is being investigated by a regulatory agency. This can be a very cumbersome process, and can often leave you with a hefty financial burden. It’s important that you consult a securities lawyer to ensure that you are fairly defended against false claims. If you act soon enough, you may even be able to prevent litigation.

On the other hand, you may have been a victim of deceptive tactics by investment brokers, and there are several ways that this can happen. For example, “churning,” is a tactic in which the broker trades your account excessively in order to show more favorable returns.

Other times, you might be advised to put your money into an “unsuitable” investment. The investment would be considered unsuitable if you’re risking too much by placing your confidence in the poor investment. Sometimes, brokers will even blatantly misrepresent or omit important facts about the investment in order to convince you to put your money in a particular market. In these cases, you will need a securities lawyer to guide you through the securities arbitration process.

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