Welcome

1. Welcome

2. Legal Aspects Of Optometric Practice Pamela J. Miller, O.D., F.A.A.O., J.D. Highland, California

3. Pamela J. Miller, O.D., J.D. • Became owner: 1974 • Staff size: 3 • Member: AOA, former member CA St. Bd. of Optometry, National Academies of Practice in Optometry, staff O.D. San Bernardino Co. Medical Center • SCCO 1973

4. Dr. Miller and staff Mission statement: To provide premium vision care by a warm, caring and supportive doctor and staff

5. Legal terms you need to know • Plaintiff • Defendant • Doctrine of informed consent • Duty to warn • Duty to mitigate • Document • The average reasonable person standard

6. Legal concepts you need to know • Respondeat superior:Let the master answer • Deep pockets • Joint and severable liability • Res ipsa loquitur:The thing speaks for itself • Rebuttable presumption of negligence:instrument causing injury was in defendant’s exclusive control and the accident was one which ordinarily does not occur in the absence of negligence

7. Documentation • The most important piece of legal advice • Document completely but judiciously • Do not change, erase or alter a writing • Adding to a writing is permissible – sign, date, state why you are adding to the document (ex. new information, research, addendum, etc.)

8. Contract law “A promissory agreement between two or more persons that creates, modifies, or destroys a legal relation.” “An agreement consisting of a promise or mutual promises which the law will enforce or the performance of which the law in some way recognizes as a duty.”

9. Contract basics • Oral or written • Express or implied • UCC – commerce, goods • Statute of frauds

10. Contract statute of frauds • “No action shall be maintained on certain classes of contracts or engagements unless there shall be a note or memorandum thereof in writing signed by the party to be charged or his authorized agent.” • Personal services, sale of land, etc.

11. Contract requirements “Four corners of the document” • Offer • Acceptance (mirror image) • Consideration • Parties with at least limited capacity (duress, fraud, free will, mental capacity) • Mutuality of terms

12. It’s as simple as A Act B Breach C Consequences D Damages

13. Damages • Actual • Compensatory • Unforeseeable: future earnings • Foreseeable: actual expenses, retraining, lost wages, counseling • Nominal • Punitive

14. Real estate - office Purchase rental Lease Rent Construction Practice Purchase Partnership Merger Shared overhead Employment Independent contractor Employee Equipment Purchase Lease Third party provider Panel member Employee health care Contracts you’ll encounter

15. Always read the fine print!

16. Pre-nup • Pre-nuptial agreement • Pros and cons • Spousal involvement in business • Purchase/sale of office and assets • Protection from liability • Tax filing – married, filing separately • Keeping it separate vs. co-mingling

17. Legal entities Solo it’s just you, all the way Partnershipjoint owners (equal?) Group 3 or more Affiliationshare overhead; separate (but equal?) Merger2 or more practices join Franchisepurchase the right to be part of a larger organization in return for specific privileges, expense sharing, etc

18. Hiring: Your responsibilities • Human resources • Educate • Inform • Follow-up • Oversee • Evaluate and re-evaluate

19. Stop litigation before it starts • Review your policies • Keep up on the law • Post required notices • Accept no nonsense • Set an example • Treat everyone equally and fairly • Watch your opinions

20. Contract Office policy manual Verify education, experience, references Background check, criminal or court records Complete all hiring forms; copy of right to work verification; federal forms Introduce to office, duties Continued employment predicated on successful completion of physical and drug test, if applicable Provide training Safety training; passwords, keys, etc. Employee has opportunity to explain or refute information Learning, not probationary period New hires

21. Independent contractor orassociate

22. Independent contractor • New practice owners often are also independent contractors (or employees) in other settings to supplement their income • Clearly defined by the IRS • Not an employee • Responsible for all taxes and contributions • Look to the relationship between the parties

23. Employee contracts • Policy vs. contract • What should I include • What should I exclude • How comprehensive should it be • Court interpretation • Burden of proof

24. Employment at will • Disclaimer • Termination at any time • With or without cause

25. Protect interests by • Confidentiality agreements • Covenant not to solicit patients • Covenant not to solicit employees • Covenant not to compete during employment • Return of property upon leaving the practice • Beware of out-of-state corporations

26. Confidentiality agreementNon-disclosure agreements • Designed to protect the employer, seller or partner from disclosure of trade secrets • i.e. May contain trade secret protections • Separate from non-competition clause • May be severable from a non-compete agreement so not to violate “right to work”

27. Confidentiality agreementNon-disclosure agreements cont. • Covenant not to compete arising from sale of business or partnership dissolution may be valid • Employers may not force an employee to sign a covenant not to compete or a condition of employment – unfair competition • Look to geographic area, time, activity, public’s right to receive care • State court may differ from federal court

28. Covenants • Covenant not to compete • Competition agreement Purpose: To protect practice value and goodwill

29. Covenant not to compete • Restrictive or a restraint of trade • Is it reasonable, consistent with public welfare and bargained for pursuant to lawful contact? • Goal is to prevent patient or record stealing or punish someone who does • Enforceable if reasonable in light of the facts and circumstances

30. Covenant not to compete cont. • Cannot restrain trade – cannot be too restrictive and unfair to the parties involved or public welfare • Generally not honored in CA – check state law • Reasonable time limit only long enough to enable former employer or buyer to protect the practice • Part of an employment contract, purchase agreement, partnership or “pre-existing” relationship

31. Compete clause(Employees, partners, mergers, associates) • Shows greater durability and enforceability • Doctor #2 can leave doctor #1, BUT to practice in the same town, he or she must pay X to #1 • Holds up in court • Must have consideration • Must be reasonable and specific • Designed to mitigate damages – liquidated damages

32. Boilerplate language • Confidentiality • Employment at will • Privacy • Electronic media • Harassment • Discrimination • Zero tolerance

33. Employer

34. Taxes – 2008 • Paid by Employer Employee • FICA – social security 6.20% 6.20% • Medicare 1.45% 1.45% • SDI (CA) 0.08% • Federal schedule • State schedule • SUI 3.4% • ETT 0.10% on 1st $7000 (employer training tax) • Workers’ comp schedule

35. Handbooks – policy manual Handbooks vs. Application Be understanding of personal problems Supervisor Training Evaluations – written warnings; document Communicate, communicate, communicate Don’t stress out Consistency – praise & suggestions for improvement Resignation Post-Termination No surprises No discussion once termination is necessary – end of day, end of pay; stand and escort to door Return keys, change codes Hire to fire documentation

36. Hire defensively • Be specific about rules • Be vague about rights • Progressive discipline policies • Oral warnings • Written warnings • Suspensions • Terminations

37. Employment application • Authorizations • Background check • Reference check • Drug & alcohol testing • Certification that all info provided by applicant is true

38. Successfully enforce policies • Don’t ignore a situation or conflict • Take action to achieve resolution • Document your actions • Employee should sign all performance reviews & keep a copy • Pyramid any disciplinary measures if possible

39. Develop a game plan • Address a complaint or issue immediately • Employee rights • Following through - consistency • Posting • Right of Privacy • Annual review - Do not puff • Review/update office policy manual periodically

40. Boilerplate language • Employment at will • “Employees are forbidden from disclosing, taking, or copying confidential information” • “Zero tolerance” • Right of privacy • ADA - “reasonable accommodation”

41. What is sexual harassment or discrimination? • Unwanted and offensive touching • Objectionable behavior • Unwelcome sexual advances • Requests for sexual favors • Boss has no special right • Hostile environment

42. Protect yourself • Prompt and effective action to end alleged harassment after complaint • Employee must make a complaint • If no action is taken to resolve the complaint, the employee may sue and receive actual damages, court costs, attorney’s fees, and even punitive damages for willful violation

43. RED YELLOW GREEN • RED: Not allowed - always unacceptable • YELLOW: Questionable - Usually unacceptable or inappropriate • GREEN: Allowed - acceptable

44. The golden rule • All employees must be treated with dignity and mutual respect • By everyone, at all times • You set the example and are responsible for the whole office

45. Office illness and injury prevention manual

46. Leases & purchase agreements Equipment Real property Practice

47. Equipment lease • Lease purchase – annual tax paid • $1 buy out or fair market value buy out • May be higher cost; shown as expense • Doesn’t show as an asset or liability • Outright purchase vs. finance • Write-off value: depreciation per year • Lease without option of purchase

48. Office lease considerations • Mistake to pay operating expenses based on leased space rather than on leasable space • Lease rate: rent + operating expenses and how calculated; increases • Maintenance and upkeep; remodeling • Amount of free rent • Length of time space has been available; % occupancy; length of current tenant’s leases, lease incentives to current residents • Any exclusionary businesses (i.e. other optical)

49. Office lease considerations cont. • In event of fire, loss of use, loss of space/contents; remodeling, improvements, change of entrances, relocation; hours of business; square footage, parking • Termination clause – right to sublet • Tax indemnification clause • Ownership change; buy-out clauses and down payments • Insurance specifications • Warranties on premises, equipment, etc. • Included services, signage, hours of operation

50. Is it better to purchase or own? • Real property • Purchase outright • Finance • Lease to own • Equipment • Purchase outright • Finance • Lease to own • Employees