In this episode, hosts Brad and Michael, along with series regular Jay Reyero, dive into the story of an orthopedic surgeon who agreed to serve as the medical director for a friend’s medical spa. What began as a temporary, low-effort role turned into a long-term liability when a demand letter from a patient’s attorney uncovered hidden risks. Tune in to learn how to structure a compliant medical director arrangement and the key steps you can take to limit your liability.
Listen to the full episode using the player below, or by visiting one of the links below. Contact ByrdAdatto if you have any questions or would like to learn more.
Transcript
*The below transcript has been edited for readability.
Intro: [00:00:00] Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real world experiences, creating simplicity in 3, 2, 1.
Brad: Welcome back to another episode of Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, with my co-host, Michael Byrd.
Michael: As a business and healthcare law firm. We meet a lot of interesting people and learn their amazing stories. This season’s theme is Unintended Consequences. We sometimes find ourselves in a situation that can be traced back to a seemingly inconsequential or unrelated decision.
Brad: Michael, once again, this season we welcome back our series regular and partner, Jay Reyero.
Jay: Hey guys. Glad to be back. Seems like I was just here yesterday. But before we get into our story, I have to run something by you.
Michael: Yes, Jay, I think Brad is hiding something with his goatee.
Jay: Some would say not enough.
Brad: No, no, it hurts because it’s true. [00:01:00]
Jay: So, Katie and I were discussing this before the three of us went to Vegas for the Med Spa Show earlier this year. And so I wanted to get your guys’ opinion. How much do you look at the menu at a restaurant before you’re scheduled to go there?
Brad: I’ll just jump in first, Michael. It’s pretty rare because I pretty much, as you know, will eat anything. However, if I’m traveling with my kids and AKA Michael, I always make sure there’s something on the menu that they will eat before selecting the restaurant.
Michael: We have such a healthy relationship. I don’t always remember, but I may pull it up online to make sure there’s a viable non-mayo option, and I kind of pre-think of a few things that I might order. Jay, what about you?
Jay: All right, so this is why Katie was giving me such a hard time because the moment that I know we’re going to a restaurant, I’ll pull up the menu and I’m not [00:02:00] just checking it out to see if there’s non-mayo options. I’m actually thinking, what am I going to get? And I’ll pre-select what I’m going to get ahead of time.
Brad: Well, as the resident hobbit of this podcast who always just needs food, I really like your expedited process of knowing what you want to get when you get there. So I’m a fan of that part though.
Michael: Yeah. I mean, there is a part of me that can appreciate this intentionality, but I have to ask what’s the strategy behind this.
Jay: Okay, well first, let’s all be clear. We’re talking about a business meal. Because when I’m with the kids, we are going to the same Tex-Mex restaurant. We’re going to the same burger joint. We’re going to Jason’s Deli. I’ve got those things memorized backwards and forwards.
Brad: I completely understand that. Our family has a little regular run of restaurants that we hit in Dallas and I do, I guess, sometimes have those memorized, but every once in a while they’ll throw something new on the menu. Keeping it real.
Michael: Yeah. And for Jay, of course, by memorized you’ve identified all the healthy choices at those kid places.
Jay: [00:03:00] Exactly, yes. The non-chicken tenders and mac and cheese. Yeah. No, but with the business meal. So the strategy behind it on that one is, I want to select what I’m going to get ahead of time so I can focus on the conversation at the table because I don’t want to find myself hunkered down studying the menu with my flashlight out because it’s super dark in there trying to find that grilled octopus. And then the waiter comes up and is like: “Are you ready to order?” And I have to make that snap decision of, oh, I don’t know, I’ll just take this. So it’s a lot more relaxing, knowing ahead of time, plus I get to get excited about that grilled octopus.
Brad: There you go. Well, and Michael, this is again, another reason why we always say Jay is the smartest man at ByrdAdatto. And you’re right Jay, there always is that weird awkward moment where you’re having a conversation and the waiter shows up and says, “Hey, are y’all ready to order?” No one’s really looked at it, and so it kind of kills the mood, so a good way to try to think ahead.
Michael: It actually reminds me of my tendency to figure out the night before what I’m going to wear the next day. I don’t want to have to make that decision first [00:04:00] thing in the morning. So I’ve got it all figured out and I’m just executing in the morning.
Brad: You actually picked that outfit ahead of time?
Michael: Yes, Brad, I did. I was really tired. So Jay is your decision set or do you change your mind?
Jay: Come on, Michael. I’m not a monster here. I’d usually have a couple of backup options and I’ve been known to switch things up and go with something different, especially if the waiter says something off the menu or they’re special that I can actually hear when he is talking. I can be flexible.
Brad: This is starting to sound like a grumpy old man episode.
Jay: Get off my lawn.
Brad: Well, I like it. You’re flexible, Jay, but you still have a backup plan, that’s smart.
Michael: Rigidly flexible. I think other than identifying that we all are a little anal and maybe not that spontaneous, I’m not sure this has anything to do with unintended consequences.
Jay: No, it doesn’t. I wanted to know who my real friends [00:05:00] are and that I wasn’t crazy, and we can all tell Katie that what I do is not crazy. But no, I would say the unintended consequences are when you have to select something in advance, you think about a wedding or like, when we do something with the firm, because present me is like, yeah, you really need a salad, it sounds great. And then future me sits down and is like, I want a burger and fries, and yet here’s a bowl of grass. Like, screw you past self.
Michael: Well, I’m not sure what we learned, but it was kind of fun. Are y’all ready to jump in?
Jay: Well, let’s start. Today we’re going to start off with our main character, and it’s going to be an orthopedic surgeon out in North Carolina. And we’re going to call her Dr. Kendrick.
Michael: Okay, Jay, I am not sensing a connection with that name to a restaurant or a menu, so I’m kind of curious where this is going.
Jay: Yeah, so we met Dr. Kendrick when she reached out for a potential issue, wanted some guidance. You see, [00:06:00] what happened is, she had just received a demand letter from an attorney on behalf of her patient.
Brad: Ooh. On behalf of her patient.
Jay: It was a patient treated by our second character, PA Lively. PA Lively was a physician assistant that had worked in primary care for a few years before deciding to get more involved in aesthetics. She eventually started her own med spa focusing on injectables. And Dr. Kendrick was the current medical director for PA Lively at the med spa, so it was actually a med spa patient.
Michael: Okay, a little curious. What was the name of the Med spa?
Jay: A Simple Favor Med Spa.
Brad: Ooh, Jay! Jay, I’m so proud of you. We have a movie reference from now. We’re getting modern – 2018 with Anna Kendrick and Blake Lively from the movie, A Simple Favor. Michael, we have officially left the Eighties.
Jay: We’ll return.
Michael: I feel oddly at peace knowing for certain that you’re leaning into movie characters again instead [00:07:00] of waiting, wondering with a little anxiety. Okay, so back to the story. This sounds like a malpractice case, which of course we don’t do. Or it could sound like something that might be handled by our partner Jeff Siegel at Medical Justice. So, how could we have helped Dr. Kendrick here?
Jay: Well, so the letter actually wasn’t specifically addressed to Dr. Kendrick. It was addressed to A Simple Favor Med Spa and PA Lively. But what Dr. Kendrick was concerned about, and the reason she reached out was how serious was this? And how serious could this be? And more importantly, what was her exposure if this escalated? And so she was looking to kind of get our help in evaluating the compliance relationship and just kind of understand what the risk was.
Brad: And for those who don’t know, the risk generally speaking is going to come from an angry person, right? That risk is going to be an angry patient, an angry former or current employee, and generally an angry competitor. Somebody from [00:08:00] there is going to – there’s where your risk comes from. And in this case, I guess we need to learn more, right, Michael?
Michael: Yeah. So talk about how did you go about this conversation?
Jay: Yeah, so this was the first time that we had worked with her, so we had to start by unpacking exactly what the relationship was, figuring out what they had in place, kind of how they conducted themselves, just in general, but also with respect to this patient. This would allow us to then identify the red flags or potential compliance issues, and then begin to assess what the risk was and take steps to mitigate that risk. One of the things about situations like these is that they can easily open up Pandora’s Box. And Brad, I know you talk a lot about Pandora’s Box.
Brad: Yeah. And it’s one of those things, you know, best way to describe it is once the investigation starts, if there is one, so you have an angry patient, it can lead to all these different situations. So situation number one is the angry patient starts posting something, or situation number two, they actually reach out to the boards, [00:09:00] situation three, they might file a lawsuit and you just don’t know. And the worst part is, especially what we see typically is, when an investigation does start, even though maybe you did nothing wrong with this particular patient, it may expose you to other issues that you weren’t even thinking about that may have happened.
Michael: Yeah. And I mean, with this Pandora’s Box issue, it’s important to realize with stuff like this, with compliance, that your strategy is playing chess, not checkers. Checkers is, I’m going to respond to this letter and deal in a linear way with what’s in front of me in this letter. And the chess is, okay, well let’s look deeper and see how this could play out three steps down the line. And if you’re able to identify either immediate compliance issues that deal directly with the complaint, or oftentimes just things that are there that could get exposed with the whole Pandora’s Box concept, it really plays [00:10:00] a role in how you develop the strategy to deal with the situation. So Jay, what was A Simple Favor story?
Brad: Jay, let me take this for you. You see, it’s a mystery that follows a small town vlogger who tries to solve the disappearance of her best friend.
Michael: Okay, Brad, we’re not going into the movie highlights.
Brad: I thought that’s what your question is about.
Michael: I want to know about PA Lively and A Simple Favor Med Spa.
Brad: Oh, sorry. My bad, man.
Jay: You can’t take him anywhere.
Brad: Yeah. You should take this one. I don’t really know the answer.
Jay: I knew what you meant. I knew what you meant, Michael. So PA Lively started A Simple Favor Med Spa as a small solo med spa, so it was just her. Her initial medical director was a plastic surgeon that she had worked with for a couple of years, and they had decided to part ways. And so, PA Lively approached Dr. Kendrick about becoming her new medical director.
Brad: I don’t know if you said it, I was trying to listen. I really was, but how did they know each other?
Jay: [00:11:00] They were actually friends. They had been friends for a long time. Never worked together professionally though, and PA Lively had tried to find a new medical director through a variety of different avenues and services and talking with people. But nothing was working out, couldn’t really find the right match, and it was getting up to the time that the plastic surgeon needed to bolt. And so, that’s why she eventually turned to Dr. Kendrick and asked for, wait for it – a favor.
Michael: Oh, wow. You didn’t leave much to the imagination there, Jay. Much like your dinner orders. So Jay, what was the pitch to Dr. Kendrick?
Jay: The favor was simple. See what I did there? I’m on a roll here. So Dr. Kendrick had a busy, very successful orthopedic practice and really had no desire or even time to be part of a med spa. But PA Lively didn’t need that. PA Lively would run everything, felt comfortable running everything. She had been doing this for a while, right? So Dr. Kendrick wouldn’t need to do anything [00:12:00] or even come into the practice, the location. Best of all, PA Lively was willing to pay Dr. Kendrick $700 per month to act as that medical director. Plus, they only really planned on this being temporary because PA Lively wanted to find someone for a more long-term fit. And Dr. Kendrick was fine with that.
Michael: So a PA, they can do a lot in most states, including North Carolina, so I can see how there would not be a huge demand on Dr. Kendrick’s time with this favor. I will say $700 a month is a flag, kind of relative to the risk she’s taking.
Brad: I totally agree. While, Jay was talking. I had it like – I was going, “Red flag, red flag, red flag, red flag.” I had so many ding, ding, dings going through my head and I was like, wait, I can’t do that. He’s on a roll. And so I agree, Michael, just hearing the background of the physician, and then the amount they’re paying per month. What are they actually doing for the price? So I guess we can jump – a spoiler [00:13:00] here because they did agree to it, Jay. So, what do we know that Dr. Kendrick agreed to?
Jay: You’re right. She agreed because it was just a small single provider med spa. She trusted PA Lively, they were friends. She knew kind of her professional background and experience, and it was also just until PA Lively could find that long-term replacement. So it was just going to be short term. There’s nothing wrong with that. And they had been friends for a long time. And Brad, isn’t there a saying that business with friends never fails?
Brad: Yeah, I’m going to have to double check you on that one. Jay, I believe that I’ve never heard that statement ever said that way. It actually might be the complete opposite of that statement.
Jay: Oh, okay. That makes a lot more sense. Well, regardless, it didn’t disrupt Dr. Kendrick’s practice, wouldn’t take any attention away from the successful orthopedic practice that she was focused on. And plus, mailbox money would be nice.
Michael: So I have to ask, was this the decision that later had unintended consequences?
Jay: Yes. So because the decision was made [00:14:00] more than two years ago before Dr. Kendrick’s call came to us and before that patient demand, because it seems that PA Lively and A Simple Favor Med Spa started to take off and she got pretty busy.
Brad: Having a busy practice, that does sound like a good thing. And I’m using a big “right?” question mark. I’m not sure.
Jay: Yes. For PA Lively, absolutely. That’s a fantastic thing. But what this meant was that PA Lively didn’t have time to look for that replacement, and so it became a little bit more permanent two years later.
Brad: And based on your discussion earlier, we’re assuming at this point that Dr. Kendrick was still not that involved, so probably didn’t really affect her much either.
Jay: Brad, is that a trick question?
Brad: What?
Jay: Yes. Nice softball there. Not only was it becoming more permanent, but it was growing too. And so PA Lively had become so busy at that point that she decided, you know what? I need to bring on more people to do this stuff. I can’t do it all. So she [00:15:00] eventually hired a CRNA, registered nurse, aesthetician, a front desk person with experience in aesthetics, and she had also taken on new space to accommodate all that growth.
Michael: Yeah, I mean, there’s a compounding effect. I mean, I think there’s some question on how compliant they were from the beginning based on the red flags. But you start talking about you’re just temporarily doing this. So the reality is, we have to agree that the risk was probably on the low end, just a PA there, really big scope of practice. But things didn’t fit. But if it was a short term thing, maybe they could be okay with that risk. Well, as you go into two years and scaling and multiple employees, the risk profile looks completely different at that point.
Jay: And so here was the problem. Dr. Kendrick never had the conversation on the front end to understand the risk, the [00:16:00] potential issues with becoming a medical director, even if they were small, and it was just temporarily an arrangement. But what she was finding out during our conversation as we started to unpack all this, was not just the specific risk that she accepted when she became that medical director, but also how much it had continued to grow. To your point, Michael, with the growth of A Simple Favor Med Spa.
Brad: Yeah. And we’ve kind of been hinting at, around this episode, but it really does sound like Dr. Kendrick has become that absentee physician, really not paying attention to a medical practice, in this case, the PA’s medical practice that she was supervising.
Michael: Alright, well, let’s take a break and after the break, talk about the risk to Dr. Kendrick and find out what happened.
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Brad: Welcome back to Legal 123s with ByrdAdatto. I’m your host Brad Adatto, with my co-host, Michael Byrd, and series regular, Jay Reyero is still in the house. Woo-hoo. Now, Jay and Michael, for those who aren’t paying attention, this season’s theme is Unintended Consequences.
Michael: Yeah. And so, just the quick recap, our client, Dr. Kendrick, orthopedic surgeon, did a favor for a longtime friend, A Simple Favor for PA Lively. And she was stepping in, in the short term to be a medical director in North Carolina. And we identified some compliance issues or concerns. But what really [00:18:00] kind of happened after that is that A Simple Favor Med Spa did really well, it grew in volume and numbers of employees. And so, kind of where we started the story and where we can pick back up is, the Med Spa got a letter from a patient, and Dr. Kendrick wanted to understand what her risk was.
Jay: And so Michael, when we started talking to Dr. Kendrick about some of the risks, and we talk about it so often, I hate to sound like a broken record, really, but becoming a medical director is not just the acquisition of a title and that’s it. There’s a level of responsibility that comes with it, particularly as the one in charge of the medical practice and the risk and the responsibility depends on the situation and the setup and the people involved. Now, you mentioned a PA being [00:19:00] able to do a lot of stuff without the heavy involvement, and that’s absolutely correct. But one of the things people forget is that a lot of times with physician and PAs, there’s a supervision requirement and certain obligations, whether it’s patient chart reviews, whether it’s periodic site visits, whether it’s some level of oversight. And same thing with collaborative NPs. Yes, it’s a collaborative relationship and they can be what we say, autonomous, meaning they can be on their own, but there’s still a level of obligations and responsibilities that the physician has to have. And if a board medical or nursing starts asking questions, they’re going to ask for the information regarding how did you fulfill those roles in that relationship? And so, medical director is a lot more to it than just taking a name and getting some mailbox money to it.
Brad: And it’s not that anyone doesn’t love mailbox money, because it sounds like an amazing way of having money to show up in your mailbox. But you have to understand, I used that word earlier, absentee physician right before break, and [00:20:00] those who don’t know, an absentee physician really generally refers to a doctor that’s not physically present, in this case, or actually involved in the assigned duties to oversee their practice. And so in the context of our store right now, we have a supervising physician, Dr. Kendrick, who’s not even actively engaged in guiding the medical staff, much less PA Lively at all. And Michael, that opens up to some exposure there.
Michael: Yeah. And so kind of going back on this compliance risk compounding that we talked about, where you got a problem and then you just kind of add to it and it can spread and become an even bigger problem. Even though she didn’t need a ton of oversight, there was these issues that you just mentioned, Jay, that are absolutely problematic. And as I said, you start adding employees and that compounds it. The reason it compounds it is because if you’re the supervising physician, you, your [00:21:00] license is involved in the chain of care. And so you have to have some level of vetting and decision making on hiring on who’s going to be touching patients. And there are different rules on how much you can allow a PA or an NP to supervise other employees. And so you have to be mindful – that can vary by state. But there’s still some, no matter what, there’s some level of oversight by the physician. So now, instead of no oversight for someone that has this autonomy that you mentioned, you have that, and no oversight on a lot of people that need some real oversight.
Jay: Yeah. And if you go back to Dr. Kendrick’s arrangement with PA Lively; had she had the conversation on the front end, she would’ve understood what the risks are and then made the informed decision to accept it. Because again, it was temporary, it’s a [00:22:00] PA, it was just PA Lively. But more importantly is that we would’ve been able to have the conversation of how that risk changes. And for her to be able to be alert and aware of, oh, I see PA Lively wants to hire someone, my ears perked up, my ding button went off, whatever, my red flag went up, I need to have a conversation to understand what does that mean. And so it could have been acceptable in the short run, but in the long run, there would’ve been probably a point where she would’ve said, “Hold on, like, I’m not comfortable with this. This was supposed to be short term. We’re a year in, now you’re putting more people underneath. We haven’t talked to healthcare counsel or someone who can tell us what to do and how to do it correctly.” And so, it’s about having that conversation on the front end. And we haven’t even touched on just the regulatory environment in the state itself, and especially in a state with North Carolina where they’re a little bit more aggressive and they tend to view these things in a much more strict light.
Brad: Yeah. I mean, [00:23:00] first off, your point is, depending on your state really will drive some of these conversations. In certain states, North Carolina, Illinois, California, they’re very black and white. It’s either correct or incorrect. That kind of reminds me of an actual medical board opinion that we saw coming out of North Carolina where a PA was reprimanded for inadequate supervision. In that particular case, get an anonymous complaint that the PA was practicing without physician supervision, period. So when the medical board really opened up that investigation, it was kind of like the Pandora’s box moment we were talking about earlier. What did they start finding out? Well, they found out that the PA did not meet monthly with her supervising physician. In fact, the PA only had one documentation that they actually had met if she was doing things correctly over an entire 13 months of their relationship – which audience members, that’s bad. But worse, [00:24:00] or in like a TV commercial. But wait, there’s more. After interviewing the supervising physician, the medical board learned that the supervising physician was not even trained on the procedures that the PA was providing, which was Botox and dermal fillers. In fact, had never even treated a single patient with one of those types of treatments. And therefore, they said this doctor should not have been supervising this PA.
Michael: Oh, wow. That’s pretty insightful as to painting the story of the risk what you have going on there. So I’m curious, Jay, what ended up happening to Dr. Kendrick?
Jay: Well, once we had the conversation and the risk conversation that we would’ve had at the beginning, but after unpacking everything, she understood the risks and she made it a point to really push PA Lively to deescalate this patient conflict, get it resolved without it going any further, which they [00:25:00] fortunately were able to do through a refund agreement and everybody, everybody was happy. But more importantly, she had a really frank conversation with PA Lively that she wasn’t really willing to stay on as a medical director. It had been too long. The risk was getting too great for her. And so, since she didn’t really have the desire or capacity to do it anymore, she really wanted to get a replacement in there as quick as possible. So PA Lively being her friends, did agree and they looked to find that transition as quickly as possible and get Dr. Kendrick out of it.
Brad: Yeah. I’m just thinking about this, especially just based on what’s going on in North Carolina in general, just the reaction I have to this is, you hope that both professionals evolve, really understands that going back to the title, a simple plan doesn’t always mean it’s simple. And in this particular case, they need to find a way to resolve it quickly to really protect both their licenses here. Because I know in that medical board investigation, it was really the PA that got in trouble – that was the one that reprimanded, but that doesn’t mean that the physician couldn’t get in trouble also.
Michael: Yeah. We talked earlier about dealing with something like this is chest not checkers, and the main thing out of that thematically is, if you look kind of underneath, you open Pandora’s box and take a peek and see what the compliance problems are, is that you lean in and start fixing it. Whether you have a complaint actively and you’re defending yourself or a situation like this where it just informs your strategy maybe to do a refund agreement and then start fixing it; you’re going to be better off than trying to close the box and pretending like it’s not there. Jay, final thoughts?
Jay: Yeah. In healthcare, there are always risks to every situation, so it’s really important to understand what that risk is and just [00:27:00] making informed decision for it. But also, more importantly, as we saw in the story, to understand how changes in facts and circumstances can alter that risk, so that at the end of the day, you’re well informed as to what level of risk you’re accepting and what level of risk you’re playing under. And so had Dr. Kendrick done the beginning, she probably would’ve been more equipped to get out of the arrangement much earlier than she did.
Brad: Hey, Michael, can I ask you a quick question before I give my final thoughts? Is Connect 4 any way involved in compliance too? We’ve got chess and checkers, is Connect 4 a different type of compliance?
Michael: Brad, for you, it probably is.
Brad: Okay, I was thinking if I got Connect 4, I’m good.
Michael: Yes. Yeah, you probably would be okay.
Jay: How many do you have to get in a row to win that Brad?
Brad: Seven. We can jump back to, we noted this earlier, North Carolina has made it very clear…
Michael: For Brad, it’s Go Fish.
Brad: Yeah, I won Go Fish. We’re playing Checkers. Again, back to the story here, North Carolina’s been very clear as to what they expect [00:28:00] from your supervising relationship between that physician and the PA. And in some cases, obviously nurse practitioner, so we’re talking about PAs, but they can go both ways. And what we see in all states is the relationship needs to be based on skills and supervision, that both the supervisee and the supervisor understand. And it’s really difficult if you can claim that you’re being properly supervised or have a good relationship when the physician rarely meets with you, never seen you in action. And more importantly, the supervisor doesn’t even know how to do the treatment. We know that in some states, when you talk about red flags, there’s no way to be for it to be acceptable to those states that you know what you’re doing if you can’t supervise someone that you don’t know how to do it. But Michael, I think we’re almost out of time. So, what is your final thoughts?
Michael: Yeah, I mean, for anyone thinking about being a medical director, take a page out of Jay. I mean, he’s engaged, he looks in the menu. He doesn’t just walk in and find out what’s going on.
Jay: He does that.
Brad: And so, you want to be engaged. You want to open that menu and know what services are being offered at the med spa, who the people are that are providing them and be connected to the overall process.
Brad: Well, nice wrap up there, gentlemen. Jay, thanks for being here again. Well, next Wednesday, we will continue down this journey of unintended consequences when we bring on Dr. Patel who will be joining us. Thanks again for joining us today, and remember, if you like this episode, please subscribe, make sure to give us a five star rating and share with your friends.
Michael: You can also sign up for the ByrdAdatto newsletter by going to our website at byrdadatto.com.
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