IDFPR Says Voucher Advertising Is Not Fee-Splitting If Advertising Fee Is Reasonable and Required Disclosures Are Made
On April 10th, the Illinois Department of Financial and Professional Regulation (the “IDFPR”) issued a position statement concluding that, under Illinois law, voucher advertising (also known as social coupon advertising), like that provided by Groupon and Living Social, does not constitute unethical fee-splitting or a prohibited solicitation or referral fee, as long as two conditions are satisfied:
1. The negotiated fee paid for the voucher advertising constitutes reasonable compensation for the cost of that advertising; and
2. The following terms and conditions are included in the advertisement in a clear and conspicuous manner:
- A description of the discounted price compared to the actual cost of services.
- A disclosure that all patients may not be eligible for the advertised health care service and that decisions about health care should not be made in haste, together with a statement that determinations regarding the medical indications for individual patients will be made on an individual basis by applying accepted and prevailing standards of medical practice.
- A disclosure to prospective patients that: (i) if it is later decided that a patient is not a candidate for the previously purchased health care service, the patient’s purchase price will be refunded in its entirety; (ii) if the patient does not claim the service, then the patient’s purchase price must still be refunded in its entirety; and (iii) in the event that the voucher advertising company does not refund the purchase price in its entirety, it will be the sole obligation of the dentist to refund the entire purchase price.
This final requirement — that a dentist must refund a patient’s full purchase price, even if the voucher advertising company is not obligated to do so — may, ultimately, prove to be the most problematic to dentists, from an economic perspective, since, in some circumstances, it may leave dentists with an obligation to refund a patient’s entire purchase price although the dentist has only received a portion of that price from the voucher advertising company. In addition, although the IDFPR position statement provides some guidance to Illinois dentists, with respect to voucher advertising, it also leaves some important questions unanswered. For example, the IDFPR states that the fee for voucher advertising must be reasonable but the IDFPR does not define what a reasonable fee would be.
It should also be noted that the IDFPR’s position statement only addresses the question of whether dentists and physicians may use voucher advertising without violating Illinois law. The IDFPR does not address the question of whether the use of voucher advertising by dentists violates federal law, any contracts dentists may have with companies insuring their patients or the American Dental Association Code of Professional Conduct. Since Illinois law, federal law, insurance contracts and the ADA Code all use different language to describe the circumstances in which the use of voucher advertising by dentists may be prohibited, a dentist who complies with all of the voucher advertising requirements imposed by Illinois law could still, for example, be paying an illegal kick-back, as defined by federal law, or engaging in unethical fee-splitting, as defined by the ADA Code. Consequently, even after the IDFPR’s issuance of this position statement, the question of whether, and how, an Illinois dentist may use voucher advertising is still a complicated one, and any dentist who would like to use this form of advertising should proceed with caution and should consult an attorney before beginning any voucher advertising campaign.
To learn more about how the use of voucher advertising might violate federal law, insurance contracts and/ or the ADA Code, please see my earlier article entitled, “Legal and Ethical Pitfalls Await Dentists Who Use Groupon.”
This article was written by Janice L. Gauthier, Esq. Ms. Gauthier has an A.B. from Harvard University and a J.D. from Harvard Law School. She is the owner of The Gauthier Law Group, LLC, a boutique law firm that represents dentists, physicians, health care providers, professional service practices and other businesses and business owners in Wisconsin and Illinois. You can contact Ms. Gauthier at 414-270-3857 or by email. To learn more about Ms. Gauthier’s background and experience, visit her Google or LinkedIn profiles.
© 2013 The Gauthier Law Group, LLC