CEBJA Issues Advisory Opinion on Fee Splitting in Marketing Services

The American Dental Associations Council on Ethics, Bylaws and Judicial Affairs (CEBJA) has issued an advisory opinion on fee splitting in advertising and marketing services. This ruling applies to companies like Groupon and LivingSocial which retain a percentage of the cost on the sale of goods and services as payment for the marketing of those goods and services.

These arrangements run contrary to many if not all state laws  on fee splitting and the ADA Principles of Ethics and Code of Professional Conduct which specifically states that “dentists shall not accept or tender ‘rebates’ or ‘split fees.’

Kansas law prohibits the division of fees with any person for bringing or referring a patient without the knowledge of the patient or the patient’s legal representative, except:

(A) The division of fees between dentists practicing in a partnership and sharing professional fees;

(B) the division of fees between one licensed dentist employing another; or

(C) the division of fees between a licensed dentist and a dental franchisor;

According to the American Dental Association, both Groupon and LivingSocial have shown a willingness to revise their business models to help dentists avoid violation of Oregon’s fee splitting laws.

The opinion by CEBJA states as follows:

Split fees in advertising and marketing services: The prohibition against a dentist’s accepting or tendering rebates or split fees applies to business dealings between dentists and any third party, not just other dentists. Thus, a dentist who pays for advertising or marketing services by sharing a specified portion of the professional fees collected from prospective or actual patients with the vendor providing the advertising or marketing services is engaged in fee splitting. The prohibition against fee splitting is also applicable to the marketing of dental treatments or procedures via “social coupons” if the business arrangement between the dentist and the concern providing the marketing services for that treatment or those procedures allows the issuing company to collect the fee from the prospective patient, retain a defined percentage or portion of the revenue collected as payment for the coupon marketing service provided to the dentist and remit to the dentist the remainder of the amount collected.

Dentists should also be aware that the laws or regulations in their jurisdictions may contain provisions that impact the division of revenue collected from prospective patients between a dentist and a third party to pay for advertising or marketing services.

The Kansas Dental Board stated in the March 2012 Newsletter that “Without reviewing each merchant agreement between a social coupon merchant and a dental office, it is difficult to conclude that each agreement violates the fee-splitting prohibition found int K.S.A. 65-1436(a)(7).  For this reason, the Board encourages dental offices across Kansas that intend to use, or are using, the services of a social coupon merchant to ensure that the merchant agreement does not violate the fee-splitting prohibition.”

(Read More from the ADA)