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Monday, August 31, 2015

Do you have a Death or Disability Clause in your Office Lease?

This past week I negotiated a lease on behalf of an ophthalmologist and I wanted to share an essential but often overlooked lease provision, “Termination upon Death or Disability.”  If a closely-held company is entering into a lease, the company needs to consider whether it can continue to operate if a critical owner or employee dies or becomes disabled and cannot work.  Examples include physicians, dentists, veterinarians, attorneys, architects, chiropractors and other types of unique personal services where another person cannot easily step in and run the company.  The company must have the ability to terminate the lease if it loses its critical person.

Without protective language in the lease, the company will remain bound to the lease despite the absence of the critical person.  The lease is often between the company and the landlord, so the company still legally survives and remains obligated to perform under the lease.  If the company defaults, the landlord can strip the company of its assets.  Even worse, the lease could be personally guaranteed and the guarantors or guarantors’ estate could remain liable for the company’s performance under the lease.

These types of companies must include a “death and disability” clause in their leases to allow lease termination in the event of a death or disability of a critical person.  Following is an example of a “death and disability” clause:

In the event of the death of ____________ (the “Critical Person”), or in the event the Critical Person becomes Disabled (as defined below), Tenant shall have the option of terminating this Lease upon thirty (30) days’ written notice to Landlord. The effective date of such termination shall be the thirtieth (30th) day following delivery of such written notice. On such termination date, Tenant shall surrender the Premises to Landlord in accordance with this Lease, this Lease shall terminate and neither party will have any further obligations with respect to this Lease. For purposes of this section, “Disabled” shall mean the inability of the Critical Person to perform his/her customary duties for Tenant for a period of at least one hundred eighty (180) consecutive days. In the event the Landlord disputes whether the Critical Person is Disabled, the Critical Person shall submit to examinations by two medical doctors, one selected by the Tenant and the other selected by the Landlord. The two medical doctors shall examine the Critical Person and determine whether it is more likely than not that the Critical Person will be unable to perform his/her customary duties for Tenant for a period of one hundred eighty (180) consecutive days from the date of the examination. If the two medical doctors agree, their decision shall be binding and final. If the two medical doctors disagree, they shall select a third medical doctor, whose determination shall be final and binding.

Prior to using any language or concepts from this blog entry, consult with an attorney.

 

The LaMaster Law Firm, PLLC, a boutique style law firm committed to delivering legal services to healthcare professionals and their practices.  Our services include assisting with the purchase and sale of practices, leasing, employment law matters, regulatory compliance, and other legal matters.

For more information about Matt LaMaster, The LaMaster Law Firm, PLLC, and dental specific legal services, visit www.lamasterlaw.com.


Thursday, May 14, 2015

What Is HIPAA – A Brief History Lesson

Are you like a lot of other practices that are trying to figure out what HIPAA really is and how to be compliant? Or, are you just looking to avoid fines for non-compliance?

If you answered yes to one of those questions, you definitely want to continue reading.

What is HIPAA?

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was enacted to address several major healthcare issues, including:

  • Health insurers denying new applicants because of pre-existing conditions and medical histories. This made it difficult for those people that wanted to change jobs and maintain health insurance.
  • Each insurance company used to maintain its own list of treatment billing codes, making it confusing for providers and resulting in denials and payment delays. Could you imagine if each insurance company all had different codes for the exact same procedure?
  • Providers and payers had control of medical records, and patients had no protection against the unauthorized release of their personal information.

In 1996, HIPAA required insurance companies to accept new applicants if they were currently covered by another insurer, with few exceptions. Health Insurance Portability enabled workers to change jobs and be assured that they would be covered by their new employer's health plan. Administrative Simplification established a single national standard for billing codes, reducing confusion and denials, and speeding up payments for patient care.

Privacy Rule

In 2003, the HIPAA Privacy Rule defined Protected Health Information (PHI) as any identifiable record (in any form—written, verbal, or electronic) that included treatment or diagnostic information. Patients were required to receive Notice of Privacy Practices (NPP) from their providers and health plans. Patients were given the right to limit certain access and release of their medical information. Reception areas and pharmacy counters were modified to prevent patients from overhearing confidential information. HIPAA defined 'Covered Entities' as health care providers that bill electronically, payers, and clearinghouses that process data. 'Business Associates' are people or entities that have access to PHI in the course of their work, but are not Covered Entities. Covered Entities were liable for financial penalties for violations. Criminal penalties would be pursued for the unauthorized release of PHI for harm or personal gain.

Security Rule

In 2005, the HIPAA Security Rule provided a framework to protect electronic Protected Health Information (ePHI) stored in computer systems. This rule required written policies and procedures, workforce training, technical systems, and physical barriers to prevent the unauthorized access of patient data. The Security Rule is broken down into Administrative, Physical, and Technical Safeguards; Standards, and Implementation Specifications. The Standards and Implementation Specifications are vague to ensure they are flexible enough for providers and payers of all sizes. Some items are required and others Addressable, meaning a Covered Entity may have the option of providing an alternate means to achieve the same goal. Addressable, however, does not mean optional.

HITECH Act

In 2009, the HITECH Act made significant changes to HIPAA. The data breach law was modified. Business Associates must comply with HIPAA largely as if they are Covered Entities. Enforcement, which had been lacking, was funded and performance incentives were given to the US Department of Health and Human Services and Office for Civil Rights. State attorneys general were given authority to enforce the HIPAA civil penalties. These changes were part of a federal 'stimulus' financial package that included incentivizing doctors and hospitals to adopt Electronic Health Record (EHR) systems with a $36 billion funding program. These changes were introduced in a temporary Interim Rule waiting for the Final Rule to be published.

In 2012, unprecedented penalties were assessed for HIPAA violations. A small medical practice paid $100,000 for using an unsecured online e-mail system for sending patient information, and for using an online calendar to track patient appointments. A hospital was fined $1.5 million when a doctor's laptop that contained unencrypted patient records was stolen. A state health department was fined $1.7 million when an unencrypted hard drive was stolen.

In January, 2013, the HIPAA Omnibus Final Rule was published, providing specific requirements and deadlines to comply with the requirements of the HITECH Act of 2009. The Interim Rule was modified with changes to the data breach reporting requirements; Business Associates were not only made responsible for their own compliance and direct liability for data breaches, but were also required to ensure that any subcontractors also were compliant. The deadline for compliance with most requirements of the Final Rule was September 23, 2013.

 

The author, Matt LaMaster, is the Founder and Principal Attorney of The LaMaster Law Firm, PLLC, a boutique style law firm committed to delivering legal services to dental practices, chiropractors, and healthcare facilities. 

For more information about Matt LaMaster, The LaMaster Law Firm, PLLC, and HIPAA compliance, visit www.lamasterlaw.com.





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