In this live recording of the Legal 123s with ByrdAdatto Podcast hosts Michael Byrd and Brad Adatto bring back the red “ding” button from season seven and discuss three stories with major red flags. Join us in this special episode as we use powerful stories to teach important compliance lessons for MedSpas.
Listen to the full episode using the player below, or by visiting one of the links below. Below is the episode’s transcript which has been edited for readability. If you have any questions or would like to learn more, email us at email@example.com.
Brad: [00:00:00] So this is going to be interactive. If you do not have a ding sign, raise your hand so you can get a ding sign. Let’s pass those out. What’s going to happen is we’re going to teach you something that we learn as lawyers, that when we hear someone talk to us about something in our mind, we hear red flag red flag. So today you’re going to hear how we hear a story and how we will ding each other and as you hear the stories, we want you to, if you think it’s a red flag, raise it. Now because of the way these stories work, we won’t be answering any of your questions while we’re going, but we left plenty of time so afterwards, if in the stories you had questions as to why we dinged it come up to the mic because we are actually recording this and will be releasing it on our podcast. So make sure you come up to the mic and ask the question so we can actually keep it and release it. Last, but certainly not least, let’s see, [00:01:00] red flags, spotting the red flags, ding signs. What did I miss? Michael? Oh, alright, practice. Everyone has a ding sign. Raise your hand, raise your ding. Let’s see it. Get it up there. This is how simple it’s going to be. You raise the ding when you think you hear a red flag, and at the very end when you want to go up to the mic and ask for your friend, not for you, obviously, it’s your friend who had that issue, just ask her question again based on the story or any other red flags you may or may not have heard, but we should have had plenty of time at the end.
Michael: Let’s get Riley to get a picture of us all dinging.
Brad: Stephanie. Got it.
Michael: Okay, perfect.
Brad: Alright. Alright, Riley, cue the music please.
Intro: Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real world experiences, creating simplicity in 3, 2, 1. [00:02:00]
Brad: Alright. Welcome back to Legal 123s with ByrdAdatto. I’m your host Brad Adatto with my co-host Michael Byrd. Now Michael, today we’re live in Vegas with a live crowd and we’re at MSS, the Medical Spa Show 2023 at the Wynn. How awesome is this?
Michael: Pretty amazing. I feel like this is Brad’s dream coming to true right now. You have all these people with eyes on you.
Michael: For one of our shows. Before we get into the show, want to ask some questions to the audience? You can use the ding button. Who here has listened to the Legal 123s with ByrdAdatto podcast?
Brad: Oh, well that’s good. We got a lot of people in here that know I’m better than you, so that’s good to see.
Michael: Your humility is coming out again, Brad.
Michael: Your self-proclaimed, humility.
Brad: My self-proclaimed.
Brad: Yeah. Alright, so we’re here in Vegas, Michael, and you and I have been here a few times, but you’ve come back in your college days and other days, and just between us, we’re not sharing it outside of this, do you have any [00:03:00] crazy Vegas stories?
Michael: I have two.
Michael: SoI’ll tighten it up. They both involve travel to Vegas, so when I was in law school…
Brad: You’re a lawyer?
Brad: Oh, okay. Sorry.
Michael: Yeah. Went to spring training in Arizona and our vision for our trip was to rent a car and drive to Vegas for four days and that did not work out because they would only rent cars to people that were 25 or older, so we befriended our cab driver that was driving us around those first couple of days and actually negotiated to have our cab driver take us to Vegas. We let him stay in our room with us in exchange for that. Yes. Great. Yes. He lost all his money in the first two hours and left and so we were in Vegas without a ride back to Arizona to fly to Texas. Then the second one, there was this one time, there [00:04:00] was an ice storm in Dallas and everything was locked down and we had a speech to give in Vegas and it was an all-day M&A Summit and through some random chain of events, we ended up on a private plane with someone we didn’t know and had a flight to Vegas. You remember that?
Brad: Yeah. That was a couple days ago.
Michael: Oh, okay. Yeah. How about you?
Brad: So, I’ve actually, only time when I came to Vegas was always to give a speech or a conference and so every time I’d come I’d go to The Wynn or the Bellagio and I would never leave the hotel and one of our mutual friends is a plastic surgeon and when she found out that I had never left, well, let me give background on her. She’s maybe 4’10” weighs maybe 80 pounds. She drinks like a fish, curses like a sailor and I swear to you, she knows everyone in Vegas. She comes here all the time. [00:05:00] She’s like the Queen of Vegas, and she’s like, Adatto we’re doing it right. I’m taking you out. So we may have had lots of libations going from bar to bar to bar to bar and the next thing I know we’re at some sushi place where they’re singing, it’s like a rocking sushi place and there’s a competition about drinking sake bombs and I don’t know if you’ve ever had a sake bomb, but I had not. I got really good at getting down the sake bombs, and they volunteered me to be in a contest to win this contest. I’m a little competitive. I’m from New Orleans and no one can out drink, if not someone from New Orleans so I won handily, the sake bomb contest. I’m not sure how much of a winner I was, because that next day at four o’clock when I had to give a speech, I was still green from that, but the rest of the nights blurred. There’s actually a few people here who saw me that night and pulled me aside and still talk about that night.
Michael: Well, you know, interestingly, Brad, I think we have a picture of you winning at the Sake bomb [00:06:00] night. Riley, do you have a picture you can share with the audience? Oh, wow.
Brad: That was a private, how’d you get that again?
Michael: Well, number one, I was in Dallas and I woke up in the morning after a really nice night’s sleep and I had voicemail messages from Alex Thiersch and Brad Adatto and lots of pictures on my phone about the fun time I was missing out on. This is just the tip of the iceberg on what we could share, Brad.
Brad: Yeah. Let’s move on and Riley, you can take down the picture of me winning in Vegas. Alright, you ready to get the show going?
Jay: Hey, hey, hey, hey, hey, guys. I’m ready to join now.
Michael: I think we forgot to invite our partner and series regular Jay Reyero on for today’s show.
Brad: Oh, this is awkward, Michael. Don’t move. I think Jay’s like a t-rex. He’ll jump at sudden [00:07:00] movements.
Michael: Okay. Well, you can stop doing the eighties movie thing, Brad, like Jurassic Park. Second Jay, we will get you back up here later to help the audience with our third story today.
Jay: So, the whole don’t call us, we’ll call you.
Brad: Yeah, yeah, yeah.
Jay: I got it. I’ll be down the front.
Brad: Yeah. Okay. Alright. Let’s keep going.
Michael: Alright. As a business and healthcare law firm, we are sometimes triggered by certain buzzwords our clients will say in conversations. We know that there’s a potential disaster when we hear these words and are immediately on high alert as they are red flags.
Brad: Right and so that’s our first vocabulary word. What do we mean by red flags? I had Siri, my assistant, go look it up and according to vocabulary.com, cause that’s where everyone goes to get their information, a red flag is either a literal warning or of some danger, like a signal flare as your boat’s sinking, or it’s a figurative warning. So for today’s show, we’re going to incorporate some of these spotting the red flags like we [00:08:00] talked about so when you hear a red flag in the story, what will you do?
Brad: Right. Good job, Michael. I’m going to educate the audience and I’m going to raise that ding button. So I’m going to tell a quick story to kind of get everybody warmed up here.
Brad: Alright. No, I hadn’t told the story yet.
Michael: Oh, okay.
Brad: Alright. So, very funny. Let’s keep going on. So, from past red flags, audience members just remember when you hear a ding, if you’ve seen something you’ve already tried it, when Michael was telling his Vegas story. So, here’s the story real quick and let’s warm up here. In Houston, Texas…
Brad: Alright. I didn’t even give them the story.
Michael: Well, Brad, in Houston, there’s usually some bad things that happen and of course we actually have one of those for today’s story.
Brad: Yes, we do. Okay. Alright. Fair enough. So in Houston, Texas, Dr. Jimmy Lee Taylor told his patients that he was treating them with something called stem cell therapy.
Michael: Ding. Well, you said what he called stem cell [00:09:00] therapy.
Brad: Yeah. Well, so Taylor seems to have caused serious injuries…
Brad: … to patients all around the country.
Brad: He was arrested.
Brad: It was then confirmed that he’s not a doctor.
Brad: And he was using some drugs that he found in Mexico.
Michael: Ding, ding.
Brad: Mr. Taylor, cause he’s not a doctor, has now been recently sentenced to 202 years in prison.
Michael: Ding, ding, ding. How was that?
Brad: Yeah, that’s good. Everybody warmed up now?
Michael: That should paint the ding picture. Now, we have three stories today and they’re not quite as intense as that one, but I think we should jump into our first story.
Brad: Alright, so the first story today deals with medical director…
Michael: Ding. Sorry, the term medical director is a red flag in general, but I’ll let you finish your thought.
Brad: Alright so often in corporate practice and medicine states, or as Alex Thiersch likes to say, CPOM, we hear people say, I will have my medical director and because I have a physician, therefore, they’ll help me with the medical service.
Michael: Okay. I’m dinging you on this one for context [00:10:00] failure.
Brad: Oh, sorry.
Michael: You used the word CPOM.
Michael: Let’s talk about that. Who all has heard the corporate practice of medicine? Raise your ding button. Okay, so about 25% of the audience. The corporate practice of medicine is a law that is in most of the states actually. It’s a state law and it governs businesses that provide medical services. So if you have a business that provides medical services and you’re in a corporate practice of medicine state, it will require that business to be owned by a physician. And there’s some states that have some caveats that will allow a physician to co-own it sometimes with another nurse or provider, and sometimes with business people. We know when we’re in a corporate practice of medicine state that you have a structure consideration on how you have to be compliant in owning your business.
Brad: Yeah and every state is going to be a little bit different. And while it’s true that a physician has to be involved in some [00:11:00] level with medical services, again, to stat dependent, we hear the term medical director agreement used all the time, and unfortunately that doesn’t always just solve the corporate practice of medicine issues.
Michael: Yeah. So our client in this story is a young plastic surgeon, fresh out of training. We will call him Dr. Derek Zoolander.
Brad: Ding. Eighties reference movies and nineties references, that’s my thing so you can’t be using that and second, I do love the movie Zoolander. And we’re comparing a doctor to Zoolander. It just seems kind of mean unless it’s like there’s a new cosmetic procedure called Blue Steel. Otherwise it doesn’t make sense.
Michael: Yeah, yeah. Slow down, Brad.
Brad: Okay. Okay.
Michael: You’re embarrassing yourself.
Michael: Okay. For those who do not know the movie Zoolander, it’s a classic and yes, it’s old. It reveals Brad’s age. Derek Zoolander is a male model who naively gets through life based on his good looks. He’s not the sharpest knife in the drawer. There’s some [00:12:00] similarities with Dr. Zoolander today. Dr. Zoolander is a handsome man who has happens to be pretty naive in the business world.
Brad: And it doesn’t make sense and nothing against physicians. My father’s a physician, and we know a lot of times doctors get trained really well about how to be a doctor, but they don’t get as much information on how to run a medical practice so continue please.
Michael: Yes, Dr. Zoolander was asked to become a medical director.
Michael: In Chicago.
Michael: Hey, for a chic medical spa owned by a physician assistant.
Michael: Named Mr. Hansel.
Brad: Okay, I see what you’re doing here. Hansel is the character Owen Wilson played in Zoolander, and he also was pretty naive.
Michael: Now you’re with me, man.
Michael: Okay. Hansel’s been in business for a couple of years and his prior medical director…
Michael: …was no longer willing to be a supervising physician.
Brad: Okay and I did ding that because you said the word medical director several times.
Michael: Okay. Alright. Hold your ding button for a moment.
Brad: Should I close my eyes?
Michael: Okay. [00:13:00] Hansel had a win-win idea for Dr. Zoolander. Dr. Zoolander could help jumpstart his career, his new surgical practice and get some brand awareness by being the medical director, supervising physician for Hansel and the RN that worked for the Derilicte Medical Spa. Dr. Zoolander would also come in once a week to do injectables on the patients, get some face time, and hopefully get some surgical patients out of it and they memorialize this by signing a medical director.
Brad: Okay. I’m just going to keep dinging you. We talked about this earlier, Illinois, corporate practice medicine, surely they did not sign off or you didn’t sign off on the medical director agreement?
Michael: No, we were hired after the investigation.
Brad: Well, ding, wait, after the investigation? Okay. You kind of jumped there. You call me Mr. Context guy. You’re skipping around. What investigation?
Michael: Okay, sorry, sorry. Okay. [00:14:00] It turns out that the medical board investigator, Mr. Mugatu, agreed with your assessment, Brad, that the medical director agreement violated the corporate practice of medicine.
Brad: Alright? This took a turn and those that don’t know, Mr. Mugatu is the main antagonist for Zoolander, and he was trying to take Zoolander down the whole time. So, I guess using that reference, this person from the medical ward trying to take Zoolander, Dr. Zoolander down.
Michael: Well, it turns out that a competitor turned Hansel in when she noticed that there was no supervising physician at the Derilicte Medical Spa. There was apparently a short period of time after the prior supervising physician left where Hansel kept operating the business.
Michael: Yes. Mr. Mugatu started the investigation and then turned his focus on Dr. Zoolander when the medical director agreement was produced in the investigation.
Brad: Yeah and let’s talk about the law and risk associated with the medical director agreements and as it relates to CPOM. Why don’t we dig into it? You know, [00:15:00] I dinged you multiple times for medical director agreements and ownership. Let’s go back to the beginning of the story.
Michael: Yeah. So let’s start with the term medical director and why that’s a red flag.
Brad: In CPOM states.
Michael: In CPOM states. Yes. So the term medical director is extremely generic in the healthcare world. It’s kind of like Kleenex and what that means today. It’s not just a brand. We’d refer to it for any tissue and if you’re from Texas, it’s like Coca-Cola. If you say you want a Coke, it could mean any type of soda. And so it has this general meaning. Well, it also is used often in context with, hey doctor, we want your name behind this, but you’re not going to have to do much with it. And so the boards start to think of it as a lend your license type relationship. And so the minute they [00:16:00] see medical director agreement in a CPOM state especially, they’re going to be thinking that the doctor is not involved and in particular that it’s not a physician owned medical practice.
Brad: Yeah. In this case, I guess Mr. Mugatu had his own ding button because when he saw the medical director agreement in Illinois, he knew something was suspect and that potentially could be violating the court practice medicine. Michael is this common?
Michael: Actually it’s not. We call CPOM violations technical violations. And really what we’re saying by that is they are violations that are structural in nature, but not connected to the actual harm of a patient, typically. And so CPOM investigations typically arise out of an investigation that was started for different reasons because a patient’s gotten hurt, but once Pandora’s Box is open, these technical violations, like corporate practice of medicine, uh, can lead to fines or [00:17:00] actually expand the punishment for bigger violations.
Brad: Yeah and we could go into MSO talk or management service organization talk, but I don’t think for today’s story we really want to get into that and you can always learn more about that. AmSpa has a whole bunch of information on MSOs, but let’s wrap up to this first story. How did it turn out for Dr. Zoolander?
Michael: Dr. Zoolander agreed to a settlement with the medical board. He paid a $5,000 fine.
Brad: Is that bad?
Michael: Dr. Zoolander was fortunate there was not any patient injuries involved or other violations that would have compounded the outcome.
Brad: Alright, so we’re going to move onto our second story, so we’ll see if y’all can catch some of these here. And this is a classic, so we’re going back in time to 2018 in Texas. You might have heard all those Botox arrests that were happening.
Brad: Oh yeah, that’s right.
Michael: You just said Botox and arrest.
Brad: Yeah, that’s probably bad.
Michael: At the same time. So this arrest and a few others around the same time had a [00:18:00] chilling impact on the med spa industry overnight when med spa owners and doctors were all being arrested for violation of state medical laws in Texas. Actually one of ’em, the arrest happened the first day of MSS back in 2018.
Brad: It was, yeah, it was crazy.
Michael: It was crazy.
Brad: Yeah. And I remember quite well cause our phones just started blowing up because all these other people who had relationships with these places that were independent contractors, had worked there, they were freaking out because the Houston police were being extremely aggressive and it was a scary time for those owners there. How did this all start? Yeah. I can’t remember.
Michael: So it started with two nurses who worked together in a medical spa in Houston. There we go. We will call the owner, we’re going to use some pretend names again.
Michael: We’ll call the owner of the medical Spa Nurse Tanya.
Brad: Okay. I’m afraid to ask. Why Nurse Tanya?
Michael: Do you remember the American figure skater, [00:19:00] Tanya Harding?
Brad: Oh yes, of course. And ding. Tanya Harding, for those who know is a decorated figure skater in the early nineties. Had this infamous involvement where her ex-husband attacks her rival Nancy Kerrigan.
Michael: Yeah. Good job, Brad. The other nurse, the one who was employed by Nurse Tanya, we’re going to call Nurse Nancy.
Brad: Oh, yeah, that makes sense, I guess, but ding on the names anyway.
Michael: Yes. So hey Brad, this will all make sense soon. Nurse Nancy decided to leave Nurse Tanya and open her own medical spa across the street.
Brad: Ding, non-compete talk today, or are we just not going to go into that situation when she literally went across the street?
Michael: Yeah. Nice, Brad. It’s not a good situation. Of course, I think the audience might be able to predict, it’s not going to end well when we talk about Botox and arrests and we actually are using the analogy of talking about Tonya Harding and Nancy Kerrigan, [00:20:00] and you’ve already mentioned the bat to the legs incident so let’s keep going.
Brad: Okay. And so did Nurse Tonya hire her husband to attack Nurse Nancy?
Michael: Uh, no. Not literally Brad.
Michael: It’s a story.
Michael: Botox arrest.
Michael: Nurse Nancy did hire a medical director named Dr. Innocent.
Brad: Yeah. And we learned from our last story that medical director is bad. Also why Dr. Anderson?
Michael: Good job again, Brad. Those same medical director issues from the first story are actually present here, but we have way more fun stuff to talk about so this story has a different focus and Dr. Innocent wasn’t actually connected at all to the whole Nurse Tanya, Nurse Nancy drama, and there was drama when they parted ways and went across the street. She had no connection to them at all.
Brad: So what happened?
Michael: A patient came into Nurse Nancy’s med spa across the street. The patient expressed the need to have some cosmetic services.
Michael: And was [00:21:00] interested in Botox injections. The patient received a video consultation from Dr. Innocent through something called telemedicine.
Brad: Wait, I have my ding button ready. Where’s the ding?
Brad: That sounds very normal.
Michael: Yep. Dr. Innocent via the telemedicine exam, determined that the patient was a good candidate for Botox. Nurse Nancy then gave the potential patient treatment recommendations and signed her name as practitioner.
Michael: On the record. Nurse Nancy discussed the next steps with the patient, including where the Botox injections will be performed. The patient’s name was patient Gillooly.
Brad: Ding. For those who don’t know, that was Tonya Harding’s ex, well, I guess ex-husband, but husband at the time, who did hit the Nancy Kerrigan with the bat.
Michael: Yes. And patient Gillooly in our story today, Brad was an undercover Houston police officer.
Michael: And he arrested Nurse Nancy on the spot, on the claim that she was practicing medicine without a [00:22:00] license, which is a felony.
Brad: That’s two dings right there. One, too. So at this point, did he hit her with a police baton?
Michael: No. No Brad.
Michael: No one was hit, in this story, with a bat or a baton.
Brad: Okay. Alright. So, Dr. Innocent was not also hit since you said no one else. What happened to her since she did the video consultation?
Michael: Yeah. Dr. Innocent was arrested as well. She turned herself in after being charged for aiding with these alleged illegal procedures and the allegations hinged in substance on the allegation that Dr. Innocent did not conduct an appropriate good faith exam.
Brad: So I’m going to ding for not appropriate, but for those who don’t know, the good faith exam is that moment in time, and actually, you know what, why don’t we get into that in the second half of the story, but for those who don’t know, the footnote of the story is we learned that Nurse Tanya obviously did turn in Nurse Nancy and started the whole sting operation that then rolled through Houston multiple times at other [00:23:00] operations.
Michael: Yes, and I think that deserves a ding.
Brad: It does. So, we said a good faith exam, for those who are not aware of the good faith exam, that’s that initial medical encounter you have with that patient trying to determine is that patient a good candidate for those services? A lot of times people are like, well, if they come in, I give a consult with them it’s not a good faith exam. I just want to make sure they want to pay me money. Well, that’s fine, but before they’re treated, we want to make sure that good faith exam, you have a doctor, physician, sorry, physician, nurse practitioner, pa, have cleared that patient for that initial consultation, and then they’re good to go. So what can we learn from this Michael in this story?
Michael: Yeah, I mean, it’s kind of confusing because Dr. Innocent actually performed the good faith exam and I’ll first take us back to that time period. The entire industry, and for those of you who were involved at the time probably remember this, it was rocked. I mean, all of us as attorneys had never seen compliance go orange jumpsuit in the aesthetic industry. And [00:24:00] so, ultimately what happened later was the criminal charges were dropped. And so there was no actual sentencing or conviction for a crime. We don’t know what happened with the nursing board and the medical board. We knew that there were investigations pending, but so the lessons that we learned from it are actually different than what we thought they were going to be at the beginning. One lesson that I think we all can know is common is that a competitor is one of the threats to your business if you have a compliance issue and so there’s generally three different ways that a business, a medical spa gets investigated and it’s usually from a patient that turns them in.
Brad: An angry patient.
Michael: An angry patient, true Brad. A competitor, in this situation that had an actual connection to the person and then X employees. [00:25:00] That’s one lesson to be learned. Another is that it actually saved them, that they took the steps to appropriately perform the good faith exam because that undercover officer was there to make an arrest and what’s good is that, not that they just did the telemedicine, but Dr. Innocent in our story actually walked through the full list of things that you’re supposed to do. And we do sometimes find kind of, some situations where there’s just kind of lip service to the good faith exam. We have stories where there’s an investigation and trouble because, you know, the doctor does a fly by and kind of waves and moves on and had that happened here, it would not have ended well.
Brad: Yeah, and going back to Michael’s statement, it was pretty shocking to us cause when we started hearing all the facts we were like, this is how med spas do it. Lucky for I think a lot of [00:26:00] people involved, the district attorney’s office didn’t see anything there and did dismiss, but it was a scary time trying to figure out how to advise med spas in the Houston area because they did four or five arrests at different med spas at that time. Okay. Michael, that’s our first two stories. Now we have the third story and I think before we get going, Jay, you can actually hop up here on stage and kind of help us with this third story since you’re a series regular on our podcast.
Michael: Yes and okay, we want to see some dings this story. Our final story deals with a variation of something we hear all the time across the country. Estheticians and medical assistants performing cool sculpting or m sculpt.
Brad: Ding and sorry, first off, you know the estheticians up there who know me, you know, I love you guys and generally speaking, so I’m going to use the word generally or lawyer talk, it depends, but generally speaking, the scope of practice, of an esthetician is [00:27:00] that they can’t be involved with medical procedures, but we can discuss that a little bit more…
Michael: Hey, you’re just diving right in. Let’s give our audience a little buildup, Brad.
Brad: Okay, sorry.
Michael: Today’s story starts with a physician owned medical spa in Northern California. Our client is named Dr. Dolly.
Brad: I’m just dinging California because they hate doctors. I don’t know why. Who here is in California? I’m so sorry.
Michael: Raise your ding button. Yeah, let’s all.
Brad: That medical board, they don’t like you guys for some reason. Alright. So, you said Dr. Dolly. I’m getting a little tired at this point so why Dr. Dolly?
Michael: We all know the most famous sheep is Dolly the sheep.
Michael: This is the sheep that was famously cloned. And Brad, sheep have a herd mentality and do whatever the rest of the herd is doing.
Brad: Okay. I’m getting a picture of Dr. Dolly. Okay.
Michael: Okay. Well, Dr. Dolly fired his RN, Nurse Wolf [00:28:00]
Brad: Ding. Remember we talked about earlier how you get in trouble? Well, I guess he had an angry former employee, right?
Michael: Good job, Brad. Nurse Wolf was unhappy that she got fired. Surprise, surprise. And decided to retaliate by turning in Dr. Dolly to the California Medical Board.
Brad: And I’ve already dinged them earlier, but I’m going to ding them again. And unfortunately, as we said, this is not the first time we’ve heard this story where a former employee is going to turn you in. So what happens next with Dr. Dolly is typically they get a letter from the board, right?
Michael: Yes, Brad.
Michael: Brad, good job. The letter alleged that Dr. Dolly was aiding and abetting in the unlicensed practice of medicine…
Michael: …by allowing estheticians and medical assistants to perform m sculpt and cool sculpting.
Brad: Ding ding. I’m dinging Dr. Dolly here. I just said earlier that estheticians and medical assistants do not generally have that scope of practice to be involved with medical procedures.
Michael: Okay. I’m dinging you, Brad. [00:29:00]
Michael: You just said that a couple minutes ago. This story happened actually some time ago.
Brad: Oh yeah.
Michael: They’re not actually sitting in here listening to your advice.
Brad: Good point.
Michael: On all of these things. This actually happened in 2022. So this is a current, a real letter that the California Medical Board sent out. And so I think we need a little bit of context. So, let’s explain the logic to conclude that m sculpt, you said that that violates corporate practice of medicine, why is m sculpt and cool sculpting considered a medical procedure?
Brad: Well, that’s a great question, but since the smartest man at ByrdAdatto is on stage, Jay, I’m going to throw this to you. Can you answer, explain m sculpting and cool sculpting?
Jay: Sure. I’ll keep it simple for you, Brad.
Brad: Thank you.
Jay: Cool sculpting freezes fat. M sculpt, rapid contractions. It’s almost like a thousand sit ups. Can’t take your time, can’t relax and you start burning fat. So that’s [00:30:00] the simplest definition.
Michael: Well done Jay. I guarantee Brad is happy that you’re up here to help and explain things.
Brad: Dude, I’m sitting right here. That’s so rude.
Michael: Okay. Well, Brad, do you want to talk about why this would be considered medical?
Brad: Yeah, so every state is going to have a different definition of what is a medical procedure. So I’ll give a high level first, and then I’ll dive into California second. Generally speaking, when you’re doing diagnosis or a treatment plan affecting living tissue, freezing the fat, burning the fat, or piercing the skin, that’s going to fall into a medical procedure, even though, a lot of times people call it non-invasive and they feel it doesn’t really fall. And then again, that’s how medical boards typically start looking at it. Some medical boards have more robust definitions or have done a good job of actually letting us know what they consider medical and in this case, California has issued a letter to their physicians telling them that cool sculpting is the practice [00:31:00] of medicine and only someone who is an RN or hire can be firing off those machines.
Michael: Yeah and it’s important, let’s not skip over the most common problem with estheticians and medical assistants for light medical procedures like cool sculpting and m sculpt.
Brad: Yeah and it must be okay because everyone else is doing it.
Michael and Jay: Ding.
Michael: We hear this on a weekly basis. We really, I bet there’s so many internal dialogues in this room thinking, well, how is so-and-so doing it because that’s the big question. How’s everyone else doing it?
Brad: Yeah and it’s rough as the attorneys cause our job is to tell you this is what the rules are in that particular state and as you kind of dive deeper in, you want to figure out how is that state enforcing those rules? And for us at that point we’re saying, okay, what would your medical board or in case nurses, what would your nursing board do that? And unfortunately some [00:32:00] people think there is safety number and Michael’s been practicing law for like 900 years, I’ve been in this for 25 years and I’ve seen my clients be the example and it’s not fun for them. I had a client in Louisiana that had these, his imaging deals all across the state, and the president of the medical board one day said, these are illegal. No rules, no dictation. Actually, statutorily, they’re fine. But he said, any physicians involved with this, I consider it unethical, nonprofessional, and I’ll revoke your license. So overnight, everything has got to stop. And so that’s what happens when we’re trying to advise people like, yeah, maybe everyone’s doing it, but if the board says otherwise, you’re just risking your license.
Michael: Yeah and I think another way we talk about when we get the question, how’s everyone else doing it? It’s the follow up question was, how do people get caught? I mean, do the med spa police show up and bang down your door? And actually the closest thing to the med spa police showing up is in California, but most states, they don’t go bang down your door. And so an analogy to think [00:33:00] about is if everyone else is doing it, I think it would be impractical not to acknowledge that your risk is probably lower because everybody else is doing it. It’s kind of like the speeding on the highway. If it’s a 55 and the flow of traffic is going 80, what are the odds that you’re going to get caught? Well, they probably are lower than if you’re the only one on the highway going 80 miles an hour, but I’m going to bring it back to something we talked about earlier, which is how do you get caught? And it gets real personal at that point because investigations start by an unhappy patient and it could be unrealistic expectations. It could be a crazy patient. It could’ve got through the door or something that actually went wrong, but when they turn someone in an investigation will start and it can happen from a competitor like one of our stories earlier today or as in this case from an angry ex-employee.
Brad: Alright, well, I’m afraid to ask in this story, you may have left [00:34:00] something out purposefully? Did Dr. Dolly conduct a good faith exam?
Michael: Ironically, yes. Dr. Dolly understood at some level that these were medical procedures enough so that all patients were seen by the nurse practitioner and received a treatment plan.
Brad: That’s good and it was so confusing about the story, and I know when we have conversations with clients, in this case in California, the doctor owned it properly. They conducted the good faith exam properly. The esthetician had been trained to use the machine over and over was really good at it. So, it seems like, you know, again, following the herd mentality, it should be okay, but I think we need to talk, take a step back again, we threw this out earlier, but maybe talk about the scope of practice for an esthetician and in general and then in California.
Michael: Yeah. So, I won’t go too deep into what we lawyers call it. We talk about integrated practices and you hear that term and it’s basically, [00:35:00] how do people that are governed by different licenses work together and estheticians are governed by their own license, a board of cosmetology, and in most states that actually their scope of practice stops and says you cannot provide medical procedures. So there’s a risk that often is not even talked about with that license going outside of that license, but then you have scope of practice for medical procedures and each state is different and California, the way they model who can do what in California is they just kind of hard code in and say if it’s medical, it has to be an RN or higher, period. And there’s some states like that. New York is like that. There are some other states that say, you know what this is on the doctor to maintain standard of care and if the doctor thinks someone’s appropriately trained, then they can delegate that procedure to someone. Now, if it’s an [00:36:00] esthetician, you still have the board of cosmetology scope or practice issue, but from a medical board perspective, that human, if they’re properly trained, can be delegated to perform the cool sculpting.
Brad: Yeah. An example, we’re picking on California, cause it’s easy, but in Texas, anybody, if the physician believes that you have the ability to do it, that physician can delegate it to. And even if it’s the esthetician, we always say, be careful that you’re not putting yourself out there cause we’ve seen again, the nursing board side, some investigations where you start using fun vocabulary words, but ultimately, at the end of the day, every state’s a little bit different. And I think Jay, you know, some states are slowly expanding the scope of what an esthetician can do. Maybe you can kind of give some background on that too.
Jay: Yeah. So there’s a handful of states out there that recognize master esthetician, so Washington being one of ‘em and the key thing to keep in mind about that is that master esthetician is an actual license with an actual scope of practice. [00:37:00] it’s not just an esthetician that put master in front of it and expanded their scope. It’s an actual license. All the scope of practice is defined, and a lot of times that allows the esthetician with that additional training and schooling to go beyond the dead skin cell layer, start touching living tissue and be under the supervision of either a NP or a physician. But again, the key thing is that that state has recognized master esthetician as a licensed type with a defined scope. And so you have to be very careful when you’re in another state to say, oh, I’m a master esthetician. If your state doesn’t recognize that, or medical esthetician, that’s not an actual scope or license type. And so that’s where some people can get tripped up because they believe I just put master in front because I did some extra training. I went to a seminar or whatnot, but it really depends on what the state has said. These are master estheticians. We recognize ’em, we prescribe the scope, and this is what we allow.
Brad: Alright, Michael, we’re wrapping up our third story before we go to [00:38:00] Q&A with the audience, any final thoughts?
Michael: Yeah, this is really confusing and…
Brad: You’re supposed to help them. Don’t confuse them.
Michael: I’m going to explain why it’s confusing, Brad. I’m dinging you. So it is really confusing. I mean, well first, the industry reps often don’t know for the various procedures, whether they’re medical or not, and they will sometimes say not knowing the rules that an esthetician can do this or do that. I’ve had many of those phone calls from clients who are up unhappy. They just bought a really expensive piece of equipment based on that and they’ll even do training for estheticians and so it’s like, you do that in California, it’s of no use in Texas. It does have a use. So that part of it is very confusing and the, I don’t know, do you have any final thoughts?
Brad: No. I think, you know, that’s a [00:39:00] perfect segue I think because we have these mics up here, so we’re going to go, if anyone has a question, go up to the mic, ask your question that your friend had on either this story or a red flag, and we got a monkey with a mic if you need it so either way.
Brad: Hey Sam. How are you?
Sam: Just fine. Thanks guys.
Brad: Good to see you.
Sam: Hey. You know, you talk about these licenses, you have an esthetician, nurse, doctor, massage therapist, laser hair removal, wouldn’t a cosmetic injector license clarify everything? Why don’t we have, or why aren’t we working towards a license that would finally say, oh, these people can do these treatments, here’s your scope because the curriculums for nursing, for med school, they don’t do cosmetic injections, it’s cosmetic, not really medical because it’s a prescription and why won’t we just work on a cosmetic injector or the like type of license?
Michael: Well, first of all, it’s a great question. And so the problem is that [00:40:00] advancements in science, the law can’t keep up. The law moves really slowly. So you’re dealt with the age old question of, okay, well what is this? And back when the first laws were passed on, what is the practice of medicine, it’s very broadly defined. And so if you’re affecting living tissue or you’re piercing the skin, it’s likely to be defined as medical. You are seeing some movement in laws that are specifically designed for this space and so I think it will happen, but I don’t think this is going to be solved in the next five years. It’s going to be evolving.
Brad: Yeah, and I’d say this to your question, we’ve definitely seen states go two different directions, so nothing against state legislators cause my sister is one, but most of them don’t know how to practice medicine cause they’re either lawyers or they’re lawyers. So they just don’t understand that and so they’re making decisions about how you run your medical [00:41:00] practice, scopes, and everything else based on input they’re getting from these different bodies. What we’ve seen in states that have been, and we have a whole speech on NPs being more independent, what we’ve seen in states like that is you have a good lobby that you put together to educate as to why these are safe, why this scope could be built or increase. And I know a while back, the state of Texas tried to flip it and make it almost impossible to do anything unless the doctor was in the room. AmSpa actually fought that and they won, but the point being is some states that went the wrong direction, I think slowly, I do think Covid had a big impact in this because states are realizing telemedicine is more user friendly for all professions. They need more nurse practitioners and PAs to be able to do certain things that they weren’t doing other otherwise. So I definitely think to your question, it’s just going to be pushing the state to do it.
Sam: Right. Thank you guys.
Brad: Yeah. Good to see you, Sam.
Audience member: Hi, I am an NP in Colorado and Alaska and whenever I look over the laws, it looks like I can delegate to unlicensed personnel, but [00:42:00] I can’t delegate to estheticians. If I have estheticians that I’m delegating, like medical micro-needling, can I classify them as an unlicensed personnel or does it still threaten their license as an esthetician?
Brad: So the question, some people couldn’t hear you. You’re a nurse practitioner?
Audience member: Yes, in Alaska and Colorado.
Brad: And your question is, can you delegate to someone who’s not in your, so Michael kind of talked about this. You have the medical board, you have the nursing board, and then you have the cosmetology board. And you’re trying to delegate something as a nurse practitioner to someone who’s not within your boards. And it gets tricky real fast and I’ll give the lawyer answer first. It depends. And then I know you know a lot about Colorado too.
Michael: Yeah, no, I mean so first, if an MA can do it, which is the kind of the premise here, you know, how do you solve for that when someone happens to have a cosmetology license? And the way you would do that is literally that esthetician [00:43:00] has two different hats they wear. I mean maybe down to the fact that they might have two different coats. One that says esthetician and one that says MA on it. So you want to have, I mean, in most states, you have to have a salon license for your esthetician services. You’ll minimize your risk if the medical treatments are performed in a different space from where the cosmetology services are performed. It doesn’t eliminate risk cause if the board of cosmetology finds out and doesn’t like it, they know that that person’s under their purview, but we have a lot of clients that have gone that route to kind of create two different hats for that person.
Brad: And what we have found, generally speaking, the nursing board really watches their peeps and the medical board watches their peep. And rarely do they cross over unless it’s real egregious.
Audience member: Okay. Thank you.
Audience Member: Okay. I’m in Illinois and I’m a day spa [00:44:00] owner. I was here last year and learned all about MSO/MSA. So I’ve been talking to different doctors to find a medical director. So I have a doctor who is working with a dentist and he’s a medical director for the dentist, and produced documents that he said, oh, we can use these and we can circumvent having to go through all of this. It’s not titled MSO/MSA and his medical director agreement, has a flat fee plus commission off of services. And so my question is between doctors, is there a different type of agreement? And number two, I thought that there was no circumstance where you could take a commission?
Michael: Well, first thing I would do if you have that agreement is burn it. And the second thing I would say, I talked about integrated practices, doctors and dentists are licensed by different boards so a [00:45:00] doctor can’t delegate anything to a dentist. A dentist sometimes has a scope of practice to do some things above the neck, but again, a doctor can’t delegate to that. And I can assure you, if you tried to use the same kind of format where the dentist was an MA and also a dentist, the dental board isn’t going to be cool with that.
Michael: If a dentist is doing things they shouldn’t be doing, they’re going to get in trouble.
Brad: We’ve definitely seen, to your question number one, Illinois does have a very aggressive board. They like to go after non-physicians and physicians, so be very careful. Also, if a medical director agreement would not work in Illinois, I mean, the whole reason why AmSpa exists was because of a medical director agreement that an RN had with a doctor. And that launched, if you hadn’t heard the story, it literally launched AmSpa because an RNs like, I have this very successful business, I’m doing 2 million a year, and now they’re trying to shut me down. Why can’t I have a medical director agreement? [00:46:00] I mean, and we know just again, we have an office up there, they’re aggressive up there. So I would say, as Michael said, to throw that out. Start over. If you want to learn more about MSOs, shameless plug, we are speaking for 45 minutes on it tomorrow.
Michael: And commissions are illegal in Illinois so yes, that would also be a problem.
Audience member: Thank you.
Jamie: Hi, I’m Jamie. I’m from California.
Jamie: Yes, our legal system is a freaking beast. Yeah. So my question, you’ve talked a lot about training today and you know, proving that your staff, let’s say an RN is trained to perform the procedures that they are. In addition to making sure they’re licensed by their board, you know, the board of registered nursing, all that, how do you show that your staff has training? Let’s say for injectables.
Michael: Yeah. And so there’s the boards are not going to have like some formal log that you have to have, but what the board’s going to look at is the standard of care maintained. And really, it will come if you’re licensed as a nurse, the [00:47:00] nursing board will hold that person accountable and the medical board will actually hold the supervising physician accountable. Or if a nurse practitioner is supervising, hold them accountable and the certificates actually have some value to show that yes, I went through this course and that course, but ultimately it comes down to does the supervising physician believe or supervisor believe that that person has the appropriate level of training to keep the standard of care? And so the certificates are evidence that, that is something of value. Now, if it’s in office training, which is super common, you know, I don’t know if there’s in the employee file or some other way to document that they received, you know, X amount of training or if part of their onboarding policy of the practice is that there’s x amount of training.
Jamie: Like competency type forms?
Michael: Yeah. Yeah. [00:48:00]
Jamie: Thank you.
Heather: Hi, I’m Heather, a nurse practitioner and owner in Tennessee. So I know in Tennessee we have, it’s all over the board, as a nurse practitioner, it’s just myself and an RN. We talk about the goodwill exams, what are the time periods of having that exam time to the time that my RN say I’m on vacation and I’m not in office? What’s the length of time that those are still good?
Brad: So the good faith exam is that initial time you see the patient and you’re clearing them for whatever suite of services you want to have so you might have two or three things. When do you have to have that follow up good faith exam? One, is there a change in their health? So every single time patient comes in, you should ask that question and they say, yeah, I’m pregnant and you’re like, oh gosh, I’m not sure if I can do this procedure. Let’s double check with the NP. So that’s the first one. Two, you’ve added a new service line that they didn’t get cleared for. So you’re like, oh, we have IVs now and they’re like, oh, I want to do [00:49:00] an IV. We’re like, well, let me get the nurse practitioner or PA back involved so I can clear you that. And then if you read, most of the times when states talk about it, it says consistent with the standard of care. So it’s a very vague statement, but what does that mean? Well, you go see your doctor every 12 months for your checkups and stuff like that so we recommend at least every 12 months, just when they come back in, you’re doing a kind of wellness check on ’em, see how they’re doing. You’re clearing them for the continuation of those services, but every single time they come, you don’t have to clear the patient. Once you clear ’em for that suite of services and you delegate it to the person you believe has a skill set to do it, they’re fine for that timeframe unless one those three things happens.
Heather: Do you need to be on location for the service?
Brad: So every state’s being a little so, twofold. One good faith exam. Most states now accept telemedicine, so a lot of our clients are utilizing that when you’re not on site. Two, the rules of whether or not the nurse practitioner, physician, or PA have to be on site is so [00:50:00] different by state, by state. I don’t remember Tennessee off the top of my head.
Michael: Probably immediately available by phone, but I don’t know that for sure. I would check that. And then two other things I would note is it is really important how you document in their chart what their treatment plan is so are they being cleared for just one thing or is it Botox every three months, you know, per written protocols or are you clearing them for all, all the services? And so mastering how you document the treatment plan will help dictate whether you need to go back in and do another good faith. And then you want to have written protocols for the procedures that the nurse follows. This is, you know, step A through M that we follow to do, you know, this particular procedure.
Heather: Okay. Thank you.
Audience Member: And just kind of playing off her question, what components does the good faith exam have to have [00:51:00] to count for it?
Brad: So what do you need to know to determine whether or not that person is a good candidate for that service? So do you actually do a physical examination on the person to determine whether or not they can handle whatever the prescription you’re going to do? What other things do you have to know about their history to make sure they’re a good candidate and then you build that out to then actually do the treatment. And unfortunately, as an attorney, or probably fortunately as an attorney, I don’t know the actual answer, but it goes back to what information do you need to clear them.
Michael: Normally, I mean, you’re going to have just like any doctor’s office, a patient history they fill out. Again, as he said, that’s up to the supervising physician as to what all information is needed. And then whoever’s performing the good faith exam has to be able to review the patient history. And typically, they’re going to have to be able to visually see the patient to determine that whatever’s needed is [00:52:00] appropriate. There are variations by state and as Brad said, kind of that standard of care thing is an overriding component to it.
Audience Member: So I guess I’m just asking if they come in and they’re about to take you out in handcuffs, if they see that standard history and physical, they’re going to be like, okay, you’re good. You did an exam.
Brad: I’ll say this. I used to work at the DA’s office, so I had some background in criminal. I’ve never heard of anyone ever being arrested in aesthetic space for something like this. My other world, I have orange jumpsuit issues sometimes with federal laws. It’s so out there because generally speaking, when you hear someone’s being arrested, what did they get arrested for? They maimed the person. They didn’t have a license or they killed the person and so you’ll see they got arrested for killing, maiming and the unauthorized practice of medicine. In most states, it is a felony. 99% of the time you’ll never hear that. Going back to the safety part, who do you answer to? The nursing board first [00:53:00] and in most states, again, this was such an odd thing that happened. It was such an outlier, and luckily it didn’t spread to other states at all. And in fact, everything’s been gone. I mean, unfortunately for these individuals arrested, everything else has gone away.
Michael: The risk of that happening is really low as Brad said. And what doing all this does is gives you a defense if you get arrested. I mean, like in the story today. They actually did it right.
Brad: Hey, you can’t tell her to get arrested. I’m dinging you.
Michael: I didn’t say she was going to get arrested.
Brad: Right. Okay.
Audience Member: Can I just ask you my actual question? That should be real quick, I hope. I’m in Texas. Can I call my nurse an aesthetic nurse? Is that legal?
Michael: I think that is okay. I don’t know if you have thoughts on that. I mean…
Brad: Just be careful. We had an issue with the nursing board in Texas when someone was using a name that they weren’t and we got it dismissed. It’s just weird. I don’t know how to answer. I mean, it seems weird to say a nurse injector or aesthetic nurse. [00:54:00] What were they licensed to do? And they’re licensed to be a nurse.
Michael: That’s one of the terms I have less issues with. Especially, if they actually are an aesthetic nurse. I mean, you don’t want to, if there’s something that…
Audience Member: I mean, I trained her to be aesthetic. That what I’m wondering. To let people know, okay, she’s more than just an RN.
Michael: I have less concern with that. I don’t think, I mean if they’re, if it’s misleading on their experience, then the nursing board’s going to have a problem with it.
Audience Member: Okay. For sure. Thanks.
Audience Member: Hi. I am a physician in California and I got approached by some of the nurses that know me to be their medical director for an IV program. What can go wrong with this?
Brad: Alright, we got five minutes left. I’ll give you the summary. Everything. So a lot of people think IV is not the practice of medicine for some reason. What was the definition I said? Piercing skin. And they’re like, well, as an RN, if you read the [00:55:00] scope of practice, I get it, RNs don’t shoot me yet. If you read the scope of practice for an RN, a lot of times it says as an RN you can start an IV line, that’s within your scope. You actually can do the examination on the person, the wellness, everything else like that, but it ends at that moment because RNs do not have independent ability to make judgements. And so it has to be done by a nurse practitioner, physician or a doctor. And so in your case, when I’ve been talking about this for years on IV saying it is a practice of medicine, you have to follow exact same rules. California is batshit crazy. They will go after you for the littlest things. I mean, we have an investigation that’s three years old, no patient harm and they’re still investigating our client. So point being, I would not do that. If you want to do it, there’s a legal way to do it. The MSO model in California that actually can be done correctly, but you have to be involved at some level. State of Alabama is the first state that now come out and say, IV is the practice of medicine and they sent out 20 letters shutting down IV bars across the state [00:56:00] because no doctors were involved, none of the good faith exam, everything we just talked about.
Michael: We just released a podcast episode on IV bars in January. I think with Dr. Hero.
Brad: Are you plugging our podcast while we’re doing a podcast?
Michael: It’s actually, you know…
Brad: Okay so my answer to you is I would not do it unless you set up the MSO model correctly. So I’m being told that we have to wrap up, so we’ll definitely, we’ll stay up here afterwards. That’s all the time we have today. For those who are listening to the podcast, hard conversations, we’ll continue with the “what-if” moments that trigger buyouts for private companies. Thank you guys.
Michael: Thank you.
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