If you are a non-physician owner of a medical practice, you may wonder what requirements govern the process of closing your small business. Our Georgia-based business and healthcare law firm assists medical practice owners with set up, a variety of business transactions, dissolutions and wind-down of the business. Medical licensing rules do not necessarily govern the non-physician owner, but there are potential obligations all owners should be aware of.
First, Retain Patient Medical Records.
Assuming the medical practice owns at least certain patient medical records, Georgia law requires the medical practice to maintain medical records for ten years from the date of creation and make those records available to patients upon request. O.C.G.A. § 31-33-2(a)(1)(A). There are exceptions to the ten-year rule. For instance, a provider who is retiring or selling his or her practice is excepted if the provider completes certain tasks, including notifying the patients of the impending retirement or sale and offering to provide each patient’s records to another provider of the patient’s choice and, if requested, the patient. O.C.G.A. § 31-33-2(a)(1)(B)(i). There are possible vendors with whom you may contract to assume this responsibility, if desired. And if the medical records are electronic medical records (“EMR”) controlled by a third-party vendor, the vendor’s contract should be carefully reviewed and followed, subject to Georgia law requirements.
Second, Maintain Proper HIPAA Documentation.
Under the Health Insurance Portability and Accountability Act (“HIPAA”), covered entities are required to “implement reasonable and appropriate policies and procedures to comply with the standards, implementation specifications, or other [HIPAA] requirements.” 45 C.F.R. § 164.316(a). For six years after their creation or last effective date, the medical practice must maintain (1) those implemented policies and procedures and (2) documentation of “an action, activity, or assessment” required by HIPAA. 45 C.F.R. § 164.316(b)(1), (2).
Third, Ensure Compliance with Contractual Termination Provisions with Payors and Employees.
Your medical practice likely has contracts with third parties, including payors. Review these contracts to ensure compliance with relevant termination provisions. If your medical practice employs anyone pursuant to a written agreement, each contract should be carefully reviewed to determine how to properly terminate the employment. Note, contractual notice requirements may impact when the practice can close, so assess these agreements early in the process.
Fourth, Review IRS Guidelines.
The IRS has specific duties on record retention for small businesses. Comply with these requirements as applicable. To assist in the closure, the IRS developed a checklist with links to potentially relevant forms.
Fifth, Determine Whether Tail Insurance is Necessary.
If your medical practice insurance coverage is “claims made” (as opposed to “occurrence based”), coverage ends when the practice’s services stop. As such, it is typically advisable to consider purchasing an unlimited reporting endorsement (“tail” coverage) to protect your medical practice from potential liability or the cost of defending a claim following cessation of business. For more information about coverage types and tail insurance, see Malpractice Insurance.
These five points are only intended to flag key obligations likely facing the non-physician medical practice owner preparing to close his or her business. Hamil Little is well versed in winding down medical practices. If you would like assistance in closing your practice or have questions about this post, contact us at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, email@example.com. You may also learn more about our law firm by visiting www.hamillittle.com.
** Disclaimer: Thoughts shared here do not constitute legal advice. Please consult with an attorney to discuss your legal issue.