A new chiropractor’s fledgling business plan to attract patients may sound reasonable at first look, but it’s actually against the law, and the same principle applies to lawyers and doctors, too.
by: H. Dennis Beaver, Esq. with Shawn Steel, Esq
June 30, 2020
“Nick” is a recent graduate Palmer College of Chiropractic in Davenport, Iowa, who returned to his hometown in Southern California, opening an office.
“After I hung out my shingle, it was clear that I needed to attract a patient base — preferably personal injury, auto accident victims as that’s where the money is and why I am calling you. Can we discuss my how-to-get-business plan?”
I have always had a great relationship with chiropractors and was happy to help, as Nick needed my advice more than he could ever realize.
The Pay-to-Play Business Plan
“I have friends — such as ambulance drivers, EMTs, E.R. nurses, police officers and lawyers — who come in contact with auto accident victims. My idea is to give them my business cards and encourage handing them out to these people, telling them that I will help them get better, and a nice insurance settlement.
“Naturally, I will pay very well for these referrals, either per referral or a commission — a percentage of fees I earn on the case. Or, if they did not want to be paid, I could arrange for a great weekend in Las Vegas, a dinner at a nice restaurant, just ways of showing my appreciation for their help.
“Does this make sense?” he asked.
On the Surface it Makes Sense, But ...
“Most people, looking at Nick’s business plan would say, ‘Yeah, that seems reasonable. People refer cases to him, and he gives them a little something by way of showing appreciation,” Southern California-based attorney Shawn Steel told me.
“However, what Nick wants to do is clearly illegal,” Steel points out, and he knows, for in addition to practicing law, he has developed a niche specialty, educating chiropractors in laws that apply to them. He is on the faculty of Palmer West Chiropractic College in San Jose, Calif., Life-West Chiropractic College West and Southern California University of Heath Sciences.
Getting Paid for Referrals Violates State and Federal Rules
You can’t turn on the TV without seeing ads for law firms who want your personal injury case. Millions of dollars are spent on television ads by a handful of lawyers — which is a good indication of how valuable auto accident cases are. Large, personal injury mills have sprung up, taking virtually any case where their client is the innocent party, as the firm will be paid, on average, from 25% to 50% of the settlement.
“Today, insurance companies pay very little with minor auto accidents, so these mills are looking for the million-dollar case out of thousands of small cases. Very often, their clients are financially worse off for hiring them as they could have done better dealing with the claims adjuster by themselves.
“While these ads do not paint a very good picture of the legal profession — typically a couple of nasty looking lawyers saying, ‘We’ll fight for you!’ what they are doing is legal,” Steel observes.
“But when a lawyer, chiropractor or other health care professional pays to obtain a referral, this violates the law. Technically it is called ‘capping.’ Also, lawyers are prohibited from hiring non-lawyers to seek out clients.
“Attorneys sometimes attempt to hire paramedics, police officers, nurses, as ‘runners’ to pass out business cards to people who have recently been in an auto accident. This (illegal) practice often occurs in the lobby of hospitals!”
Not a Victimless Crime
On the surface I think most people will ask, “So what’s the harm in a little kickback to the person who brought you business?”
Steel agrees that it appears harmless, “But this is not a victimless crime. Paying for personal injury cases means that you are providing an incentive to exaggerate a claim against an insurance company.
“Were it not for the referral to the chiropractor, the person might just go to urgent care, once. But if brought in by a capper, now the chiropractor has to make money off of this patient and it is done through over-treatment. And when M.D.s are involved, there have been many cases of unnecessary surgeries performed, just because insurance was available.”
Instead, Be Good at What You Do and Ask Patients to Refer their Friends
“Patients love their chiropractor,” Steel notes. “The surest way to build your business is by being good at your trade and asking patients to refer their friends. You’ve got to be a good doctor and slowly build your own book of business. Avoid ads. “You want referrals from satisfied patients.”
Concluding his advice, Steel underscores the need for chiropractors. “This is an undeserved profession. We need more chiropractors, and as many are retiring, buying an older doctor’s practice can prove to be an excellent way to have a large practice, quickly.”