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Is it legal for an integrative care center, medical spa, or clinical practitioner to make a profit by selling dietary supplements?

By Michael H. Cohen, Esq.

The question of selling dietary supplements in the clinical care setting arises with many clients in the holistic health care field who care about legal and regulatory issues.

In a nutshell, there are significant legal risks.

Sales of dietary supplements can raise several legal risks:

...         Scope of practice violations, and risk of unlicensed medical practice.

...         Increased risk of malpractice and discipline.

                In at least one New York case (Charell v. Gonzales), a jury concluded that a physician practicing CAM was 'reckless and greedy' as well as negligent because he recommended supplements and had a financial interest in those recommendations. Further, across states, some medical boards have taken dietary supplement sales into account when disciplining physicians practicing CAM therapies. As well, the American Medical Association (AMA) has expressed concern about physician sales of dietary supplements, and has issued guidance accordingly. See When Integrative Medicine Physicians Sell Dietary Supplements: Legal Issues.

                Many states have laws generally prohibiting exploitation of patients for financial gain. Often there will be a provision in the disciplinary provisions of the medical licensing law prohibiting conflicts of interest or profiting from the patient. Some states (such as New Jersey) will limit the markup a physician can add to in-office dietary supplement sales. Such sales can also raise anti-kickback concerns under state law as well.^[1]

                For clients who are psychiatrists and psychologists, Section III.B.2 of the Psychology Rules contains a general prohibition on 'dual relationships' which states that:

a. The psychologist shall not undertake or continue a professional relationship with a client when the objectivity or competency of the psychologist is, or could reasonably be expected by the Board to be, impaired because of the psychologist's present or previous familial, social, sexual, emotional, financial, supervisory, political, administrative, or legal relationship with the client or a relevant person associated with or related to the client.

b. The psychologist, in interacting with a client or former client to whom the psychologist has at anytime within the previous 24 months rendered counseling, psychotherapeutic, or other professional psychological services for the treatment or amelioration of emotional distress or behavioral inadequacy, shall not: … 3) enter into a financial or other potentially exploitative relationship to him/her.

                One can attempt to defend the practice of having the Center (as opposed to individual practitioners) sell supplements as not violating conflict of interest rules, and as simply facilitating patient convenience. However, the Center is ultimately a pass-through to its owners, and one cannot predict how aggressive a board or plaintiff might be.

                What we typically recommend (and would recommend here) is to provide language in the consent form which discloses the physician's financial interest in the supplements (including the markup) and the fact that the patient can obtain similar products elsewhere. We also recommend limiting the markup to the usual and customary markup on such products necessary for inventory restocking charges. As to the risks of heightened malpractice liability or Board scrutiny, it is up to the client to make an informed business judgment as to whether the additional risk is worth the benefit.

In short: 

• Some clients are more comfortable selling supplements for commission, if there is appropriate disclosure of the financial interest and other language in the consent form (which our law office can draft).
• However, the caveat to this is that courts do not always honor all the language in consent forms, and in any event these forms at best address malpractice (civil) liability and not risks involving professional discipline (which involves a charge from the state medical board), or unlicensed medical practice (which is criminal and not civil).

Full post as published by Complementary And Alternative Medicine Law Blog on April 15, 2010 (boomark / email).