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NEW JERSEY REGISTER
VOLUME 39, ISSUE 3
ISSUE DATE: FEBRUARY 5, 2007
RULE PROPOSALS
LAW AND PUBLICSAFETY
Division of Consumer Affairs
State Board of Chiropractic Examiners

Proposed New Rule: N.J.A.C. 13:44E-2.15

Permissible Practice Structures

Authorized By: State Board of Chiropractic Examiners, Kevin Earle, Executive Director.

Authority: N.J.S.A. 45:1-15, 45:9-14.5 and 45:9-41.23.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2007-34.

Submit comments by April 6, 2007 to:

Kevin B. Earle
Executive Director
State Board of Chiropractic Examiners
124 Halsey Street
P.O. Box 45004
Newark, NJ 07101

The agency proposal follows:

Summary

Pursuant to its rulemaking authority at N.J.S.A. 45:9-41.23, the State Board of Chiropractic Examiners (the Board) proposes new rule N.J.A.C. 13:44E-2.15, which sets forth the types of business structures in which chiropractic physicians may practice. The Board proposes new rule N.J.A.C. 13:44E-2.15 to establish clear professional practice guidelines that will guide chiropractic physicians in organizing their businesses. First, the proposed rule sets out criteria for sole proprietorships, partnerships and professional service corporations, the already established permissible business structures. Since the Board rules currently do not mention these business structures, they are addressed in this rule. In addition, the proposed new rule allows a chiropractic physician to form a limited liability company (LLC). Recently, the State Board of Medical Examiners (BME) adopted an amendment to its professional practice structure rule, N.J.A.C. 13:35-6.16, that established the LLC as a permissible business structure for BME licensees. In justifying its proposal, the BME stated that it was concerned about insurers and courts, see Selective Insurance Co. v. Medical Alliances, LLC, 362 N.J. Super. 392 (Law Div. 2003), that had challenged the legitimacy of the LLC as a business structure for professional licensees. By proposing the LLC as a permissible business structure for chiropractic physicians, the Board intends to make clear its position as to the legitimacy of the LLC with respect to chiropractic physicians, in the event that challenges arise. Furthermore, the Board proposes to delineate guidelines for professional responsibility and prohibited practices related to the operation of a chiropractic practice. Subsection (a) contains definitions of words and terms used in the rule. Subsection (b) sets forth the permissible business structures that may offer chiropractic services in New Jersey. Subsection (c) details the settings in which a licensee may offer chiropractic services as an employee of a general business corporation. Each setting must have a designated chiropractic or medical director, licensed by the applicable board, who is regularly on the premises and who is responsible for the verification of licensure and credentialing of chiropractic providers and the provision of chiropractic services. Subsection (d) sets forth the Board's determination that a chiropractic physician only can be employed by a permissible business structure or within one of the exceptions and subsection (e) sets forth the requirements that the professional practice employing the chiropractic physician must be supervised by a chiropractic physician, M.D. or D.O. Subsection (f) requires that any document used in connection with the professional practice must designate the field to which a person's practice is limited if the scope of practice differs for each person within a particular practice structure. Subsection (g) bans chiropractic physicians from engaging in the practice of chiropractic in any permissible business structure in which they are shielded from liability for their own breaches of professional duties, fail to retain responsibility for the quality of care and appropriateness of professional judgments or are not assured access to information and involvement in certain areas. Subsection (h) requires a chiropractor who is a member, employee, agent or representative of the LLC to remain personally responsible for his or her own negligence, wrongful acts or misconduct and that of any person under his or her direct supervision and control while rendering professional services on behalf of the LLC. Subsection (i) states that any violation of (b) through (h) will be considered professional misconduct. The Board has determined that the comment period for this proposal shall be 60 days; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is excepted from the rulemaking calendar requirement.

Social Impact

The Board believes that the proposed new rule will have a social impact on chiropractic physicians, closely allied health care professionals and the public. The proposed rule provides chiropractic physicians with several acceptable ways from which to choose when organizing their practices, including sole proprietorships, partnerships, corporations, established pursuant to the Professional Service Corporation Act, and LLCs. In addition, the proposed rule allows chiropractic physicians to be employed by a general business corporation, but only under the circumstances set forth in the rule. The rule will impact any chiropractic physician who is employed in any practice form, with the exception of sole proprietorships, that does not meet the requirements of this rule. Under those circumstances, the chiropractic physician will be required to discontinue his or her employment. There will be a positive social impact on those patients seeking the services of a chiropractic physician. The proposed new rule allows chiropractic physicians to participate in integrated health care practices only with the closely allied health care professionals defined in the rule. As such, there will be no compromise in professional standards and the public will be adequately protected. Similarly, because chiropractic physicians practicing in a general corporation setting allowed by the rule are practicing under a designated chiropractic or medical director, who is regularly on the premises, the public is protected.

Economic Impact

This rule impacts chiropractic physicians by allowing them to choose a business structure that provides them with a maximum economic advantage. Those chiropractic physicians who currently are practicing in an acceptable business structure will not incur any additional expenses. However, chiropractic physicians who are practicing in a business structure that does not conform to the proposed rule may incur the costs of reorganization or restructuring. Any financial impact caused by restructuring or reorganizing either by choice or to conform to this rule cannot be quantified however, since the costs will differ for each business. Likewise, since the Board is unable to quantify the costs mentioned above, it is unable to determine what, if any costs, would be passed on to consumers upon a restructure or reorganization. The proposed new rule may have a positive economic impact upon attorneys, accountants or other professionals whose services may be necessary for consultation and assistance in the organization of these business structures.

Federal Standards Statement

A Federal standards analysis is not required because the proposed new rule does not involve any Federal standards or requirements.

Jobs Impact

The proposed new rule may generate jobs for attorneys, accountants and other similar professionals who may be retained to perform professional services in connection with the formation of an LLC. The Board does not anticipate that the proposed new rule will result in the loss of any jobs.

Agriculture Industry Impact

The proposed new rule will have no impact on the agriculture industry in the State.

Regulatory Flexibility Analysis

Currently, the Board licenses approximately 3,200 chiropractic physicians. If, for the purposes of the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., licensed chiropractic physicians are considered "small businesses," then the following analysis applies. The proposed new rule contains no reporting or recordkeeping requirements but does contain several compliance requirements, which have been more fully described in the Summary above. Subsection (b) imposes compliance requirements on all licensees with regard to the types of business they may form to practice chiropractic. Subsection (c) details the settings in which a licensee may offer chiropractic services as an employee of a general business corporation. Those settings must have a State-licensed medical or chiropractic director. Subsection (d) sets forth the requirement that chiropractic physicians can only be employed by one of the permissible practice structures or within one of the exceptions. Subsection (e) states that a licensee may be employed by a permissible business structure with one or more closely allied licensed health care professionals, including at least one licensed chiropractic physician, M.D. or D.O., so long as the licensed chiropractic physician, M.D. or D.O. holding a plenary license in New Jersey supervises the professional practice. Subsection (f) requires that any document used in connection with professional practice must designate the field to which a person's practice is limited if the scope of practice differs for each person within a particular practice structure. Subsection (g) details the business circumstances in which a licensee may not engage in the practice of chiropractic. Subsection (h) details the personal responsibilities of a chiropractor, who is a member, employee, agent, or representative of an LLC, while rendering services for that LLC. Costs of compliance are discussed in the Economic Impact above. A chiropractor establishing a new business format pursuant to the proposed new rule may require the services of an attorney and accountant to prepare the necessary business organization documents. No other professional services are necessary for compliance. The Board believes that the proposed new rule should be uniformly applied to all licensees, regardless of size, in order to ensure the health, safety and welfare of the general public. Therefore, no differing or lesser requirements are provided for small businesses. The proposed new rule provides the minimum standards necessary to protect the public's interest in having chiropractic physicians practice in accountable and professionally responsible business structures while allowing licensees the freedom to take advantage of statutorily authorized business forms.

Smart Growth Impact

The Board does not anticipate that the proposed new rule will have any impact on the achievement of smart growth or on implementation of the State Development and Redevelopment Plan, otherwise known as the State Plan.

Full text of the proposal follows (additions indicated in boldface thus; deletion indicated in brackets [thus]):

13:44E-2.15 [(Reserved)] Permissible practice structures

(a) As used in this section, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.

"Board" means the New Jersey State Board of Chiropractic Examiners.

"Chiropractic physician" means a chiropractor holding a license issued by the Board.

"Closely allied licensed health care professional" means an individual who provides professional services and is licensed in New Jersey by a professional or occupational licensing board or other State agency, in any of the following fields: medicine or its branches; dentistry; podiatry; physical therapy; occupational therapy; nursing; acupuncture; or psychology.

"D.O." means a Doctor of Osteopathy holding an active plenary license to practice medicine and surgery issued by the New Jersey Board of Medical Examiners.

"Employee" means a chiropractic physician who is employed, for any form of remuneration, by one of the permissible practice structures under (b) below or in a general business corporation as set forth in (c) below, whether the chiropractic physician is denominated as an employee or independent contractor.

"Limited liability company" (LLC) means a limited liability company formed under the laws of this State pursuant to the New Jersey Limited Liability Company Act, N.J.S.A. 42:2B-1 et seq., except where inconsistent with these rules.

"M.D." means a Medical Doctor holding an active plenary license to practice medicine and surgery issued by the New Jersey Board of Medical Examiners.

"Permissible business structure" means a sole proprietorship, partnership, limited liability company or a professional service corporation, all of which are subject to the limitations of (b) and (c) below.

"Professional service" means services rendered by a health care professional within the scope of their practice authorized by their State professional board.

"Professional service corporation" means a business entity established pursuant to N.J.S.A. 14A:17-1 et seq., in which all shareholders are chiropractic physicians or closely allied licensed health care professionals.

(b) The following are permissible business structures that may offer chiropractic professional services in the State of New Jersey:

1. A sole proprietorship consisting of one chiropractic physician or the chiropractic physician may employ or otherwise may remunerate other closely allied health care professionals, except an M.D. or D.O., to render professional services within the scope of practice of each employee's license. The chiropractic physician may employ ancillary non-licensed staff in accordance with applicable Board rules, if any, and accepted standards of practice;

2. A partnership in which all partners are chiropractic physicians or a combination of chiropractic physicians and closely allied licensed health care professionals; however, the partnership may not employ an M.D. or D.O., unless at least one partner is an M.D. or D.O.;

3. A corporation established consistent with the provisions of the Professional Service Corporation Act, N.J.S.A. 14A:17-1 et seq., in which all shareholders are chiropractic physicians or a combination of chiropractic physicians and closely allied licensed health care professionals; however, the professional service corporation may not employ an M.D. or D.O., unless at least one shareholder is an M.D. or D.O.; and

4. An LLC in which all members are chiropractic physicians or a combination of chiropractic physicians and closely allied licensed health care professionals; however, the LLC may not employ an M.D. or D.O., unless at least one member is an M.D. or D.O.

(c) A chiropractic physician may offer chiropractic services as an employee of a general business corporation in this State only in one or more of the settings in (c)1 through 6 below. Any such setting shall have a designated chiropractic or medical director, licensed to practice chiropractic or medicine in this State, who is regularly on the premises and who, alone or with other persons authorized by the State Department of Health and Senior Services, if applicable, is responsible for verification of licensure and credentialing of chiropractic providers and the provision of chiropractic services. The settings are as follows:

1. The corporation or other business entity is licensed by the New Jersey Department of Health and Senior Services as a health maintenance organization, hospital, long- or short-term health care facility, ambulatory care facility or other type of health care facility or health care provider such as a diagnostic imaging facility. This may include a licensed facility which is a component part of a for-profit corporation employing or otherwise remunerating licensed health care professionals;

2. The corporation or other business entity is not in the business of offering treatment services to the public, but maintains a medical or chiropractic clinic for the purposes of providing services directly to employees and/or monitoring the medical or chiropractic health of employees. The provisions of N.J.A.C. 13:44E-2.2 regarding the preparation, maintenance and release of chiropractic patient records shall apply to persons receiving care or evaluation in this setting;

3. The corporation or business entity is a non-profit corporation sponsored by a union, social or religious or fraternal-type organization providing chiropractic services to members only. The provisions of N.J.A.C. 13:44E-2.2 regarding the preparation, maintenance and release of chiropractic patient records shall apply to persons receiving care or evaluation in this setting;

4. The corporation or other business entity is an accredited educational institution that provides medical or chiropractic services to students and/or faculty. The provisions of N.J.A.C. 13:44E-2.2 regarding the preparation, maintenance and release of chiropractic patient monitoring records shall apply to persons receiving care or evaluation in this setting;

5. The corporation or other business entity is licensed by the New Jersey State Department of Banking and Insurance as an insurance carrier offering coverage for chiropractic services and the licensee is employed to perform quality assurance or utilization review services for the insurance carrier; or

6. The corporation or other business entity is employed by, or under contract to, an insurance carrier or managed care plan offering coverage for chiropractic services to provide quality assurance or utilization review services.

(d) Chiropractic physicians shall only be employed in a permissible practice structure as set forth in (b)1 through 4 above or under the exceptions set forth in (c)1 through 6 above.

(e) Chiropractic physicians may be employed by a permissible business structure, which includes one or more closely allied licensed health care professionals, including at least one chiropractic physician, M.D. or D.O., provided that the professional practice is supervised by at least one chiropractic physician, M.D. or D.O.

(f) If the scope of practice authorized by law for each closely allied licensed health care professional differs, any document used in connection with the professional practice including, but not limited to, professional stationery, business cards, advertisements or listings and bills shall designate the field to which each closely allied licensed health care professional's practice is limited.

(g) Notwithstanding (a) through (d) above, chiropractic physicians shall not engage in the practice of chiropractic, as a sole proprietor, partner, shareholder, member, or employee in any permissible business structure in which they are shielded from liability for their own breaches of professional duties, fail to retain responsibility for the quality of care and appropriateness of professional judgments, or are not assured access to information and involvement in issues pertaining to quality of care, professional judgment, recordkeeping, advertising practices, billing for services rendered and, except for employees, the finances of the permissible business structure.

(h) Notwithstanding (a) through (d) above, a chiropractic physician who is a member, employee, agent or representative of an LLC shall remain personally responsible for his or her own negligence, wrongful acts or misconduct and that of any person under his or her direct supervision and control while rendering professional services on behalf of an LLC in this State to the person for whom such professional service was being rendered.

(i) Any violation of (b) through (h) above shall be deemed professional misconduct pursuant to N.J.S.A. 45:1-21(e).




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