A Dentist’s Guide to the Law. American Dental Association

(click on “Enforcement and Penalties for Noncompliance”).

      Chapter 4.

      The ADA Legal Division

      12. What Do the ADA’s Lawyers Do for Me?

      The lawyers in the ADA Division of Legal Affairs provide legal guidance to support the ADA’s dedication to protecting you, your patients, and the dentist-patient relationship. In addition to supporting this valuable work on behalf of organized dentistry, the Division’s lawyers provide useful legal information to members such as explaining provider contract terms through the ADA’s Contract Analysis Service, reporting on legal developments, and publishing answers to members’ frequently asked legal questions.

      In the legal arena, the ADA from time to time files lawsuits to protect the legal rights of dentists and advance the interests of the dental profession generally. For example, the ADA Legal Division spearheaded the filing of three class action suits on behalf of dentists to help stop what we believe to be unlawful practices by insurance companies. The first two suits, against insurance giants Aetna and WellPoint, fought for the rights of non-participating dentists to be fairly treated by the carriers and charge those carriers with breach of contract, unlawful interference with the dentist-patient relationship, and trade libel. The third, against Cigna and other insurers, fought for the rights of participating dentists to fair compensation for services they provide and alleged the carriers violated the federal racketeering statute and other laws. We’re proud to report that we obtained an excellent result in the Aetna case. The ADA was extremely pleased with the settlement agreement it reached with Aetna, which brought changes to Aetna’s billing practices and reimbursement procedures in a manner unparalleled in the insurance industry. The ADA Legal Division recently filed an amicus curiae brief, and solicited filings of amici curiae briefs by various state attorneys general, in the North Carolina Board of Dental Examiners v. Federal Trade Commission case before the US Supreme Court (the Court’s decision in that case is summarized in Appendix 12).

      The ADA’s Division of Legal Affairs also provides guidance to protect the ADA from lawsuits and defends the ADA if sued. Recent examples include the successful defense of numerous lawsuits against the ADA about its position on dental amalgam, which helps free dentists to continue to offer this treatment option to patients. Our lawyers also advocate on behalf of dentistry by filing “friend of the court” briefs with the U.S. Supreme Court and other appeals courts in appropriate cases involving issues potentially affecting dentists and patients. In addition, the ADA’s lawyers often partner with other divisions to work proactively on your behalf. Some great examples include urging the federal government to limit the scope of HIPAA privacy regulations, developing user-friendly seminars and publications to facilitate your understanding of important legal issues and enhance your practice’s compliance efforts, and assisting with the ADA’s efforts to limit the applicability to dental practices of the federal Red Flags Rule and to promote repeal of the McCarran-Ferguson Act, which exempts insurance companies from certain federal antitrust restrictions.

      So in addition to providing you with valuable legal information, protecting the ADA from lawsuits, and defending the ADA when sued, ADA’s lawyers are powerful advocates for you and the patients you serve.

       Practice Formats: the Business/Legal Structure

       Chapter 5: Practice Formats: The Business/Legal Structure

       Chapter 6: Dental Office Design

       Chapter 7: Practice Marketing

       Chapter 8: Practice Websites

      Chapter 5.

      Practice Formats: the Business/Legal Structure

      When establishing a dental practice, one of the first issues you need to consider is which business structure to use. The choice of practice entity has business, legal, tax, and personal consequences.

      As your practice evolves over the years, it may be wise to ask from time to time whether the business organization you chose when you began your practice remains the best format for you now. Your attorney and tax advisor can help you make business and tax planning decisions and can help you file the forms and keep the records that are appropriate to the business arrangement you choose.

      Let’s look at some of the key considerations in choosing among the various types of legal organizations for conducting a dental practice.

      13. What Business Structure Options Do I Have?

       Virtually all practices will be conducted in one of the following business formats:

      • Sole proprietorship

      • General partnership

      • Limited partnership or a variation on the partnership format called a limited liability partnership (LLP)

      • Corporation, which will be either a “C” corporation or an “S” corporation, and will be a professional corporation or a standard business corporation

      • Limited liability company (LLC), which in a few jurisdictions might be a professional LLC

      There are positives and negatives connected with each business format, as discussed below. In addition, a given format may simply not be appropriate because of the way you intend to conduct your practice.

      14. What Are the Advantages and Disadvantages of a Sole Proprietorship?

      A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by the dentist with no distinction between the business and the owner-dentist. The dentist is entitled to all profits and is responsible for all business’s debts, losses and liabilities. This low maintenance business structure costs almost nothing to create and is relatively easy to establish.

      Because the dentist and the dentist’s business are one and the same, the business itself is not taxed separately — the sole proprietorship income is your income. The dentist reports income or losses and expenses with a Schedule C and the standard Form 1040. Because the dentist is the sole owner of the business, the dentist has complete control over all decisions — he or she isn’t required to consult with anyone else when the dentist needs to make decisions or wants to make changes.

      Because there is no legal separation between the dentist and the dentist’s business, the dentist can be held personally liable for the debts and obligations of the business. This risk extends to any liabilities incurred as a result of employee actions. Note, however, that the dentist will remain liable for professional malpractice individually regardless of business structure.

      Furthermore, a prudent dentist will purchase a reasonable amount of professional liability insurance to afford protection (covering legal defense costs as well as any settlement or judgment amounts) from malpractice lawsuits. A sole proprietorship will not afford protection against non-professional liabilities, such as the patient who slips and is injured in the waiting room. A business format such as a corporation will help protect the dentist’s personal assets from these non-professional liabilities, but will not protect assets that are part of the practice.