Branch Office Licenses and Prohibition Against Corporate Practice

MEMORANDUM:


To: All North Carolina Licensed Optometrists

From: North Carolina State Board of Examiners in Optometry

Date: August 22, 2019

Subject: Branch Office Licenses and Prohibition Against Corporate Practice of Optometry



Executive Summary


1. If you are providing professional services to patients in a location other than your primary office, and you do so on a scheduled basis and for compensation, you likely need a branch office license for that location.


2. If you are providing professional services to patients through a business that is not owned by you or a physician, or in which you are not a partner, shareholder, or member, you likely are violating the prohibition against the corporate practice of optometry.


3. The Board will implement a three month grace/amnesty period (September 1, 2019 thru November 30, 2019) during which licensees can report any past-year or current-year violations or lack of compliance concerning paragraphs 1. or 2. above and make arrangements to come into compliance. Following this grace/amnesty period, such violations will be dealt with as outlined in this memorandum.


Discussion


Over the past several years the Board has received a number of complaints filed against optometrists who are practicing at locations other than the optometrist’s primary practice location and for which the optometrist had not obtained a branch office license. Some, but not all, of these complaints also have involved optometrists who are providing professional services under contracts to corporations or other entities which are not authorized to practice optometry or medicine in this state. The Board has had to spend considerable time and resources investigating these situations and in some instances dealing with corporations and other entities who have contractual or other arrangements with the optometrists providing professional services. It is difficult for the Board to determine whether licensees simply are not correctly identifying the requirements of the Optometry Act and Board Rules governing branch offices and the prohibition against the corporate practice of optometry in North Carolina, or whether these optometrists are willfully ignoring these requirements.


The purpose of this Memorandum is to provide in clear language the North Carolina statutory and regulatory requirements relating to (i) branch offices and branch office licenses, and (ii) by whom optometrists may be employed and/or for whom they may provide professional services. In addition, this Memorandum will describe the potential actions the Board may take against optometrists who violate these requirements. Additionally, this Memorandum will provide a reasonable period of time for optometrists who—whether through lack of attention or by intent—may be in violation of those requirements.


Finally, you are required to respond that you have received and reviewed the Memorandum by way of selecting ‘yes’ on the ‘Licensee Acknowledgement’ screen after closing this document in the licensee intranet. Thereafter you will be responsible for having read and understood its terms and, most importantly, abiding by those terms.


BRANCH OFFICE REQUIREMENTS


North Carolina General Statutes (“GS”) governing branch offices and branch office licenses include: GS 90-118.2 and GS 90-123; relevant Board Rules are Rules 42J .0101 and 42B .0202.


Synopsis of branch office requirements:


  1. The Board needs to know where you practice: where you see patients and provide optometric services to those patients. This includes not only your primary practice location but also any other locations where you see patients on a regular basis.
  2. Generally speaking, any location other than your primary practice location registered with the Board at which you provide scheduled optometric services requires a branch office license. This includes but is not limited to nursing homes, assisted living facilities, and similar facilities.
  3. The amount of time you spend seeing patients in such a location is not determinative of whether such location constitutes a branch office. Likewise, whether you, your staff, or someone else does the scheduling is not determinative. The determining factors are (i) the providing of professional services (ii) in a location other than your primary practice location (iii) to multiple patients (iv) on a scheduled basis.
  4. The branch office license must be obtained before you open or begin practice in that branch office.
  5. Exceptions and exemptions to the foregoing authority are limited to the following:
    1. Providing relief coverage for benevolent purposes in a registered practice location without being compensated for your services. An example is providing relief coverage for an optometric colleague who is out of the office while on vacation, has been involved in an accident, or is out of practice or due to an illness. However, you must advise the Board in advance of the dates on which you are providing these non-compensated services and the location at which such services will be rendered.
    2. Providing professional service to a single patient in the patient’s single-family residence (home, apartment, etc.) on a one-time basis, whether or not for compensation.
    3. Providing emergency services upon request at a nursing home or similar facility that is 20 or fewer miles from your primary practice location. Multiple scheduled patient visits at that same facility are not exempt and would require a branch office license.
    4. Participating in a screening event at which you provide your services without compensation of any kind. The screening event must be registered with and approved by the Board. Other restrictions also apply: see Board Policy on Screening: https://www.ncoptometry.org/board-policies/screenings.


The Board will consider requests received for exemptions or exceptions other than those listed in subparagraphs a. through d. above. Such requests must be made in writing, addressed to the Board Executive Director, and set forth facts constituting good cause for the exemption.


THE CORPORATE PRACTICE PROHIBITION:


The prohibition against the corporate practice of optometry is found in GS 90-125.


Synopsis of the law:


  1. It is unlawful for any person to practice under a name other than his own [properly registered proprietorships, corporations, and professional limited liability companies all are OK], or to practice other than: (i) as an employee of another licensed optometrist, (ii) in a practice co-owned by an ophthalmologist licensed by the North Carolina Medical Board (GS 55B-14(c)(8)), or (iii) as the employee of a physician licensed by the North Carolina Medical Board.
  2. It also is unlawful for any “corporation, lay body, organization, group, or lay individuals to engage, or undertake to engage in the practice of optometry through means of engaging the services, upon a salary or commission basis, of one licensed to practice optometry….” For example, Wal-Mart cannot hire you, nor can a practice management company hire you.
  3. It is unlawful for an optometrist to engage in the practice of optometry as a salaried or commissioned employee of any corporation, lay body, organization, group, or lay individual. In other words, a non-optometric/medical entity cannot hire you, and you are violating this law if you consent to be hired by such an organization. You are responsible for making sure the manner in which you practice conforms to the Optometry Act and Board Rules.


Bottom line: if you are not practicing in one of the approved business forms identified in paragraph 1 above, you likely are violating the corporate practice ban. If you are providing professional services through some sort of agreement with an entity (corporation, PC, LLC, LP) that is not licensed to practice optometry in this state, you likely are violating the corporate practice ban—no matter whether you are considered to be an employee (W-2) or contractor (1099)—and particularly so if that entity pays you on a salary or commission basis.


These are the exceptions to the foregoing:


  1. Employment by a government facility, federal or state, including but not limited to the Indian Health Service, Veterans Administration Health Service, United States Military, etc.
  2. Employment at an accredited academic institution such as schools of optometry or medicine/ophthalmology.
  3. Employment by an entity (corporation, PC, LLC, LP, etc.) for which you provide no clinical service (e.g., your job duties involve strictly administrative or management responsibilities with no oversight or control over clinical activities).


AMNESTY/GRACE PERIOD TO COME INTO COMPLIANCE


The Board will implement an amnesty or grace period for licensees who currently are not in compliance with the Board’s branch office license requirement or who are in violation of the corporate practice prohibition. During the amnesty/grace period:


If you are in violation of the branch office license requirement: You should apply to the Board for all branch office licenses and pay all licensing fees needed to bring you into compliance for past years and for this current year. The Board will waive any late fees authorized by GS 90-118.10 for past years and this year (2019) during the amnesty period only. You will of course be responsible for renewing branch office licenses as appropriate going forward for years 2020 and beyond. Both branch office licenses and branch office license renewals are $100 per year per location.


If you are in violation of the corporate practice prohibition: You may report such to the Board, and the Board will require (by subpoena if necessary) copies of any and all contracts or agreements, any correspondence or communications between you and the corporate entity, and other related document the Board may desire. If the Board confirms that such contracts or agreements violate the corporate practice prohibition, you will have the balance of the grace period, or such additional time as the Board may grant, to terminate such agreements or contracts or otherwise come into compliance.


Notice: Once the grace period expires, if the Board determines that you were not in compliance with either the branch office license requirement or the corporate practice prohibition and you failed to report such non-compliance and failed to bring yourself into compliance, the Board will presume that such failure was intentional.


Grace Period: The grace period will start September 1, 2019 and end November 30, 2019. Beginning on December 1, 2019 past or present violations of the branch office requirement or the corporate practice requirement will be subject to disciplinary consequences as outlined below:


1st violation – Notice of hearing issued, with minimum recommended consequences being a public letter of concern (this Memo should be considered everyone’s private letter of concern).


2nd and subsequent violations – Notices of hearing issued, with recommended discipline of a type that may require reporting to the National Practitioners Data Bank. See GS 90-121.2. These disciplinary options include requiring the OD to perform free public service, take additional CE, fines, reimburse the Board, public reprimand and public letters of concern, probation, suspension, and revocation. The discipline imposed will depend upon the number and severity of the violations. As indicated above, willful failure to bring yourself into compliance during the Grace Period will be considered in deciding what discipline to impose.


You now should clearly understand what the Optometry Act and the Board’s Rules require you to do regarding branch office licenses and the corporate practice prohibition. Should you not understand or should you need further clarification, contact the Board staff for further clarification (see contact information below).


The Board needs to resolve the two problem areas discussed above, and by providing this Memo and the Grace Period the Board has made its best effort to inform you of these problems and provide you, if needed, with a non-punitive way to come into compliance. Please take this Memo seriously and respond in a timely and appropriate manner.


On behalf of the Board,


Sincerely,

Bill Rafferty



Board Staff Contact Information:


William B. Rafferty, O.D., Executive Director

Phone: 336-816-3459

Email: exdir@ncoptometry.org


Janice K. Peterson, RN, Executive Administrator

Phone: 910-285-3160

Email: exadm@ncoptometry.org


Samantha J. Hardison, Administrative Coordinator

Phone: 910-285-3160

Email: Samantha@ncoptometry.org