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The Debate Over General Partnerships vs. Joint Ventures

Clients often come to my office very excited about a new business that they are hoping to start or purchase from an existing owner. Many times they need financial help, the expertise and knowledge of someone else with experience in the industry, or a combination of both. As a Corporate Attorney, I’ve drafted numerous contracts and agreements throughout the years in an effort to protect my clients while they achieve their company goals. I can appreciate the different types of contracts and the terms contained therein in a way that some of my clients cannot. Sometimes I have to tell them to take step back and really consider all of their options so that they are happy with the arrangement for the duration of the agreement.

For example, a client recently came to me asking to draft corporate documents for them, but also told me that they were looking for an investor to partner up with them for the acquisition of a restaurant. After discussing the pros and cons of having a partner vs. obtaining alternative financing (i.e. bank loan) we discussed the type of relationship they would like to enter into. I asked them if they would like to enter into a General Partnership or a Joint Venture with the prospective partner. This was not something that they considered and they didn’t have a clue about what I was referring to. I thought that it would be useful to highlight the major differences between the two in this post. I will use the word “usually” throughout this post because all facts and circumstances of a General Partnership or Joint Venture are different, but the examples I provide are typical scenarios in my experience.

General Partnerships usually involve two or more individuals, but there can be a mix of individuals and companies in a partnership. Joint Ventures usually involve two or more companies. Joint Ventures are usually defined as “an association of two or more persons (or entities) formed to carry out a single business enterprise for profit in which they combine their property, money, efforts, skill, and knowledge.” This definition is somewhat different from that of General Partnership because it refers to only a “single business enterprise.” In a General Partnership the relationship is perpetual until the business is dissolved by the parties or by the courts. However, a Joint Venture has a clearly stated time duration and scope. Joint venture relationships are generally considered to be a partnership for a single transaction (i.e. only for this location and not other locations).

Business owners usually enter into General Partnership agreements if they need a cash infusion. Business owners enter into a joint venture agreement if they have a specific purpose, product, good, or service that they want to develop, which may require the expertise or capital contribution of the other party. In a General Partnership all partners contribute capital, time, and expertise to the partnership unless otherwise agreed. Joint Venturers may contribute different services to the joint venture, for example, one party may supply the staffing, hardware, and supplies, and the other party may contribute capital, software, and operational support.

Ownership and Control for both relationships can be in proportion to what is agreed upon by the parties. Therefore, there doesn’t have to be a 50/50 split. In a Joint Venture the parties don’t pay taxes as one entity. Each company pays taxes on profits on their individual tax return.

The members of a General Partnership can claim a capital cost allowance as per the relationship rules. Joint Venturers can use as much or as little of the capital cost allowance. The existence of both types of relationships gives rise to a fiduciary or confidential relationship. In General Partnerships members cannot act according to their individual desires they have to act in the best interest of the partnership. Joint Venturers can retain the identity of their own company. General Partnerships share staff, corporate form and name, space, etc. Joint Venturers have their own separate entities, staff, etc. but come together for a common short-term goal.

In a General Partnership, Partners can act as “agents” to the partnership and can sign contracts, enter into agreements, etc. Joint Venturers generally can’t bind the other company to an agreement without consent of the other company, but it is still possible to do so depending on the terms of the agreement. It’s important to note that Partners are liable for the business debts of their partners, while Joint Venturers are not responsible for the other party’s business debts that are not related to their relationship.

General Partners who engage in criminal activity are solely held criminally responsible, rather than the partnership itself. Joint venturers an be held jointly and severally liable for each other’s wrongful acts.

It is important as counsel to inform your client of the various options available to them and to highlight the differences in those options so that they can make an informed decision on how to proceed. At Jones Health Law we strive to provide our clients with as information and advice possible to ensure that our clients make the decision that’s right for their business. If you would like more information regarding General Partnership vs. Joint Venture relationships, or contracting in general please contact us.

I’m HIV Positive and Worried About Employment Discrimination

Discrimination isn’t as overt as it once was during preceding generations, but discrimination is still a rampant problem affecting those residing within the United States. Millions of Americans are discriminated against for various reasons, such as race, country of origin, religion, sexual orientation, gender, etc. Unlike other identifiers, it is difficult to shield your race or gender from the public, and we are not afforded special protections under the law simply because we are African-American or female. However, other identifiers such as an HIV-positive status does not present itself to the public the way that race and gender does.

More than 1.2 million people residing in the United States are living with HIV, and almost 1 in 8 are unaware of their infection. Gay, bisexual, and other men who have sex with men, particularly African-American men, are most seriously affected by HIV. The CDC conducted a study that determined that African-Americans face the most severe burden of HIV. African-Americans account for roughly 12% of the U.S. population, but accounted for an estimated 44% of new HIV infections in 2010.

Many fear that their HIV-positive status, which is very personal in nature, may eventually become public knowledge. However, there are laws that have been enacted that grants certain rights regarding privacy and limitations of access to one’s medical records, and places limits on the amount of information that one has to disclose about their HIV status to their employer and others.

Workplace discrimination based on an HIV-positive status is illegal. Individuals living with disabilities, such as HIV find protection under the Americans with Disabilities Act (ADA). Individuals afflicted with HIV live with physical impairments that significantly limit their day-to-day activities, which is why the ADA protects them.

The ADA guarantees equal opportunity for employment for those living with HIV. Employers may not base their decision to hire or fire an employee out of fear that the individual may become ill in the future as a result of the virus. The decision to hire an individual must be based on the individual’s qualifications as they exist during the interview process. Additionally, employers may not avoid hiring a qualified individual because they are afraid of the potential for higher medical insurance costs or sick leave for that employee. Under the ADA, an employee may not be denied access to health insurance enrollment generally available to other employees in the company due to their HIV positive status.

An employer is prohibited from singling out a prospective employee by requiring them to submit to a medical examination for the purpose of determining one’s HIV status prior to making a job offer. Even so, employers are prohibited from accessing those results without prior written consent from the employee. During the interview process an employer may not inquire about an individual’s disability or the seriousness of the disability. However, an employer may inquire about an individual’s ability to perform job related duties and responsibilities. An employer’s decision to hire someone after conducting a post-offer medical examination must not be based on one’s HIV-positive status alone, without some other complication. This does not mean that an employer cannot make a conditional job offer while awaiting an adequate outcome of a post-offer medical examination so long as this is required of all new employees with the same job title.

Although, an employer may not use an employee’s status against them the ADA does require that an employee’s status be securely kept on file once it has been discovered. AN individual’s status must be kept confidential and separate from general personnel files. Appropriate safeguards must be put in place to protect the employee’s status. Further, this file must only be accessed in limited circumstances.

Under the ADA, employers are required to make “reasonable accommodations” for their disabled employees. A “reasonable accommodation” is any modification or adjustment to a job, application process, or work environment that will enable the qualified applicant or employee with a disability to perform the essential functions of a job, or enjoy the benefits and privileges of employment. The ADA does not impose a requirement that an employer make accommodations that would result in undue hardship for the business.

Reasonable accommodations are only required to be made by an employer for known disabilities. Therefore, if an employee elects not to disclose their status then it is unlikely that the accommodation will be made. In some instances, an employee may only choose to disclose that they have a disability that is protected by the ADA requiring reasonable accommodations without specifying what the disability is. Under this approach, an employer would be well within his right to require medical documentation of the disability prior to making the accommodation.

Employees do have some responsibilities regarding their status. If an HIV-positive employee is a health care worker they must inform their occupational health department of their status.

Many states have enacted laws that address employment discrimination based on an individual’s HIV. Florida Statute §760.50 states that employers are prohibited from requiring a prospective employee from submitted to an HIV test as a condition of hiring, promotion, or continued employment unless an HIV-negative status is a bona fide requirement for the desired position. An employer has the burden of proving that there is a bona fide requirement that the employee be HIV-negative. To show this the employer must prove that: (1) the HIV test is necessary to determine whether the employee can perform the tasks and duties of a particular job in a reasonable manner or whether the employee will pose a significant threat of infecting others during the course of normal work activities; and (2) there is no alternative or reasonable accommodation available.

Under Florida law, an employer may not deprive or tend to deprive a healthcare professional or healthcare worker of employment opportunities due to their status with respect to compensation, conditions, or privileges of employment because they provide treatment to individuals infected with HIV. Additionally, if an employer fails to maintain the confidentiality of an employee’s status after it has been acquired for purposes of health insurance or life insurance benefits enrollment the employer will be liable for liquidated or actual damages, reasonable attorney’s fees, and any other relief that the court deems appropriate.

This is a brief overview of the ADA and other laws that govern an HIV-positive individual’s rights. For more detailed information about your legal rights regarding your HIV/AIDS status about this issue and others please contact a licensed attorney. If you have any questions please feel free to leave them in the comments section and I will respond to as soon as practical.

The Sobering Reality About Substance Abuse Rehab Centers

Prescription drug companies and alcoholic beverage companies spend millions of dollars annually on researching, testing, and marketing their products. Typically, illegal drug dealers don’t spend millions (if any) money on research, testing, and marketing of their drugs. Regardless of the difference in the amounts of money spent by companies and dealers to attract consumers to purchase the products that they sell — these companies generate significant revenue and profits year after year. Despite many warnings, consumers of these products often become addicted to drugs and alcohol.

Alcohol is the most commonly used addictive substance in the United States. Drug use is on the rise in this country and more than 23.5 million Americans are addicted to drugs and/or alcohol. But only 11 percent of those with an addiction receive treatment. This relatively low percentage has not stopped substance abuse rehab centers from becoming big business in the United States. In fact, Florida is one of the most popular destination choices in the country for seeking substance abuse rehab treatment. Thousands of people flock to Florida for treatment, which is ironic given South Florida’s reputation for being a nightlife capital of the world making access to alcohol and drugs very easy to obtain.

Savvy entrepreneurs realize that millions of Americans are seeking treatment but desire exclusivity, privacy, and in many cases luxury. Rehab center owners market their rehab centers and tout their luxury accommodations and private shuttle services to name a few of the amenities. Visitors seeking treatment for substance abuse pay for their treatment: (1) out-of-pocket; (2) through private insurance companies; or (3) federal program payors, such as Medicare. The cost for treatment varies greatly. There are luxury rehab centers but on the other end of the spectrum there are no-frills treatment centers without all of the extras. Opting for inpatient treatment will cost significantly more than outpatient treatment. Additionally, your length of stay will determine the final cost of treatment. Facility fees for inpatient treatment range from $500 per week to $75,000 and up per stay, which can last weeks or months. A recent study found that 10 week intensive outpatient treatment programs average around $7,000. Then there’s medical detox which averages around $1,500 per day. Some addicts may elect to undergo medical detox prior to undergoing weeks of inpatient or outpatient treatment.

If you multiply these fees by the number of people seeking treatment you quickly realize how profitable drug and alcohol treatment can be. However, entrepreneurs looking to break into the big business of substance abuse rehab centers shouldn’t be blinded by the potential pot of gold waiting for them because fines and penalties for improper operation of the facility may put your company out of business.

Owners and operators of these rehab centers must ensure that they are complying with applicable Florida laws or they will face penalties and fines. If you operate any of the following facilities within Florida there are specific criteria that must be met in order to obtain a license: addictions receiving facilities, detoxification, intensive inpatient treatment, residential treatment, day or night treatment with host homes, day or night treatment with community housing, day or night treatment, intensive outpatient treatment, outpatient treatment, continuing care, intervention, prevention, and medication-assisted treatment for opiate addiction.

The Substance Abuse and Mental Health Program Office (“SAMH”) is responsible for oversight of the licensure and regulation of all substance abuse providers in the state. Florida Statutes govern the provision of substance abuse services, including, but, not limited to, residential and community-based services for treatment and prevention. The Florida Administrative Code and Florida Statutes address licensure requirements.

Florida Statute Chapter 397, is commonly referred to as the “Hal S. Marchman Alcohol and Other Drug Services Act” or more simply the “Marchman Act”. This Act addresses clients’ rights, voluntary and involuntary admissions procedures, and service providers requirements. The Marchman Act is divided into ten lengthy parts, which details various regulatory and licensing requirements.

Individuals and entities are prohibited from acting as a substance abuse service provider unless properly licensed to do so under the Marchman Act. If a provider operates without a valid license she may be charged with a misdemeanor of the first degree. If you desire to operate a substance abuse rehab center you must take the following steps:

  • Determine the Licensure Requirements
  • Fill out an application, renewal (non-accredited or accredited), or acquisition form with the Office of Substance Abuse and Mental Health
  • Complete the HIV/AIDS Education Confirmation Form and Treatment Resource Affidavit
  • Pay the Appropriate Licensure Fees
  • Obtain Accreditation from an agency such as JCAHO

This checklist is a guide and is not a complete list of steps that one should take in order to operate a substance abuse rehab center. Rehab centers are highly regulated and it is strongly recommended that you consult with a licensed attorney to ensure that your company is taking the appropriate steps to obtain licensure and does not violate any other section of the Marchman Act or regulatory authority.

Telemedicine and its intersection with Mobile Health Apps and Wearable Tech

There was a time when you could receive a home visit from your primary care physician when you were feeling ill. Well those days are long gone…or are they? Much like many other aspects of our lives, the delivery of medicine has evolved throughout the years and we are now being ushered back to the days when we didn’t have to travel to our physician’s office to receive medical treatment. This time around when the nurse says “The doctor will see you now” the “visit” will be very different.

The proliferation of Telemedicine has made the delivery of medical services more accessible to those who are unable or unwilling to travel to their physician’s office. Our busy schedules or physical disabilities resulting in immobility have increased our demands and usage of Telemedicine. Now more than ever, physicians and their patients are utilizing mobile health applications and wearable technology devices that collect, store, and transmit our protected health information (“PHI”) to our physician or any other health care provider or entity that the patient designates.

When the physician receives the patient’s PHI through the app the physician can interpret that information to provide her with a more accurate examination during the next Telemedicine appointment. In other words, Telemedicine and mobile health apps/devices when used in tandem allow a physician to provide a more precise diagnosis.

Technology is meant to simplify our lives, but at what cost? We’ve all seen and received advertisements that state “Stay focused this holiday season with the latest in wearable tech”, “Get real-time heart rate & calorie burn stats”. To the average consumer, wearing a smart watch or using a health tracker app on your phone seems harmless, but what happens when your PHI gets into the wrong hands? What if there is a data security breach and millions of PHI, including yours is stolen by hackers? What if a provider discloses your PHI to someone that you did not authorize them to disclose it to? The reality is that this occurs more often than we’d like to admit, and with the increase in the usage of Telemedicine and mobile health apps and wearable tech we are more susceptible to our PHI getting into the wrong hands.

The popularity of Telemedicine for health care providers is increasing rapidly because it allows providers to connect with and treat a larger population of patients that it otherwise wouldn’t have access to, and the result is an in increase profits. New laws are being enacted and existing laws are being revised or amended to facilitate the surge of Telemedicine.

Telemedicine

Generally, telemedicine involves the use of interactive telecommunications for the delivery of health care services when a health care provider and patient are not in the same physical location. Engaging in this practice of remote health care allows providers to reach more patients and grow their businesses by providing health care services, such as primary and specialty care and remote patient monitoring, via videoconference rather than requiring patients to travel to an office or hospital. Although the use of telemedicine is utilized sparingly compared to face-to-face treatment by a health care provider its use is on the rise and laws and regulations are being enacted across the nation to govern the provision of telemedicine by health care practitioners.

  1. Telemedicine in Florida

    Telemedicine policies regarding reimbursement, licensure requirements, online prescribing, scope of coverage, and other issues vary greatly from state to state. Several states have or are in the process of enacting legislation that addresses several of these issues. Florida, like many other states has been slow to enact new laws or evolve existing laws and statutes to deal with the proliferation of telemedicine. On March 12, 2014, the Florida Administrative Code established standards for telemedicine practice. This Rule was adopted by the Florida Board of Medicine and the Florida Board of Osteopathic Medicine.

    The Rule defines “telemedicine” as the practice of medicine by a licensed Florida physician or physician assistant where patient care, treatment, or services are provided through the use of medical information exchanged from one site to another via electronic communications. Florida does not have specific language within its statute, nor its administrative regulations, granting out-of-state physicians a limited license to enter the state remotely to practice medicine, but that may change if proposed legislation is passed. For example, an insurer using a provider that’s in-network in another state would also be allowed to treat a Florida patient if passed. The Rule prohibits the use of Telemedicine to administer health care services by using solely an audio only telephone, email messages, text messages, facsimile transmission, U.S. Mail or other parcel service, or any combination thereof. The Rule also states that the standard of care must remain the same regardless of whether a Florida licensed physician or physician assistant provides health care services in person or via telemedicine.

    Florida licensed physicians and physician assistants providing health care services via telemedicine are responsible for the quality of the equipment and technologies employed and are responsible for their safe use. The Rule did not include a list of technologies that it deemed safe for use in telemedicine. This was done on purpose to allow the rule to be broad enough to permit the practitioner to use available technology sufficiently encrypted and compliant with HIPAA.

    Physicians may not prescribe controlled substances through the use of telemedicine unless the patient is in a hospital facility. According to the Rule, prescribing medications based solely on an electronic medical questionnaire constitutes the failure to practice medicine with the level of care, skill, and treatment which is recognized by reasonably prudent physicians as being acceptable under similar conditions and circumstances, as well as prescribing legend drugs other than in the course of a physician’s professional practice.

    Under the Rule, physicians and physician assistants cannot provide treatment recommendations, including issuing a prescription via electronic or other means, unless: (a) a documented patient evaluation, including history and physical examination to establish the diagnosis for which any legend drug is prescribed; (b) there has been a discussion between the physician or the physician assistant and the patient regarding treatment options and the risks and benefits of treatment; and (c) there exists proper maintenance of contemporaneous medical records.

    Patient confidentiality obligations and recordkeeping requirements of physicians and physician assistants are not altered by the provision of health care services via telemedicine. In fact, a physician-patient relationship may be established through telemedicine.

    This rule does not apply to emergency medical services provided by emergency physicians, emergency medical technicians (“EMTs”), paramedics, and emergency dispatchers. Additionally, the rule doesn’t apply where a physician or physician assistant is treating a patient with an emergency medical condition that requires immediate medical care.

  2. Reimbursement

    While this rule accomplished a lot for establishing standards of care, listing licensure requirements, and online prescription prohibitions it did not mandate insurance coverage or reimbursement for telemedicine services provided in Florida. There are many factors that states use to determine the scope of coverage for telemedicine applications, such as the quality of equipment, type of services to be provided, and location of providers (e.g. remote rural sites). The American Telemedicine Association tracks recent changes to State telemedicine legislation, including those states that have enacted legislation mandating private insurance coverage for telemedicine services. While there are several bills before the Senate and House in Florida, there remains some skepticism by various parties in interpreting and expanding upon current telemedicine regulations. In Florida, if passed, there is a Senate bill which would require public and private insurers to reimburse for telemedicine services allowing doctors to negotiate payment rates with insurers. Supporters of this bill and others believe that in the long term, telemedicine will save money by reducing hospital and emergency room admissions.

Medicaid

According to Medicaid’s website, telemedicine includes such technologies as telephones, fax machines, and emails, which are used to collect and transmit patient data for monitoring and interpretation. Even though such technologies are not considered “telemedicine,” they may nevertheless be covered and reimbursed as part of a Medicaid coverable service, such as laboratory service, x-ray service or physician service. For a provider to be reimbursed for the delivery Medicaid covered services via telemedicine those services must meet federal requirements of efficiency, economy, and quality of care. Federal law affords Florida the flexibility to develop novel payment methodologies for telemedicine services. For example, states may reimburse the physician or other licensed practitioner at the distant site and reimburse a facility fee to the originating site. States are permitted to reimburse for technical support, transmission charges, and equipment. These add-on costs can be incorporated into the fee-for-service rates or separately reimbursed as an administrative cost by the state. If they are separately billed and reimbursed, the costs must be linked to a covered Medicaid service.

Medicaid guidelines require all providers to practice within the scope of their state practice requirements. Some states have enacted legislation that requires providers using telemedicine technology across state lines to have a valid state license in the state where the patient is located. A provider must have a Florida license to conduct telemedicine across state lines into Florida. The provision of health care services is generally held to be where the patient is located, so the standard of care in the patient’s community should, but may not always apply. Existing state malpractice case law, tort law and civil procedure will govern telemedicine issues in the absence of telemedicine specific statutes.

Medicare

On July 7, 2015, the House introduced the Medicare Telehealth Parity Act of 2015, which if enacted, would increase the scope of telemedicine services covered by Medicare. Specifically, this bill would (a) lessen the “originating site” requirements for certain services; (b) expand the types of services that are covered to include services like respiratory services, audiology and outpatient therapy services; (c) expand the types of providers whose services are covered; (d) expand the geographic locations in which telemedicine services are covered; and (e) establish coverage for remote patient monitoring for certain chronic conditions. The bill would allow reimbursement under Medicare for certain services provided in a beneficiary’s home, regardless of locale.

As it stands today, Medicare Part B pays for office or other outpatient visits, subsequent hospital care services (with the limitation of one telemedicine visit every 3 days); subsequent nursing facility care services (not including the Federally-mandated periodic visits under §483.40(c) and with the limitation of one telemedicine visit every 30 days); professional consultations, psychiatric diagnostic interview examination, neurobehavioral status exam, individual psychotherapy, pharmacologic management, end-stage renal disease-related services included in the monthly capitation payment (except for one “hands on” visit per month to examine the access site); individual and group medical nutrition therapy services, individual and group kidney disease education services, individual and group diabetes self-management (“DSMT”) training services (except for one hour of in-person services to be furnished in the year following the initial DSMT service to ensure effective injection training); and individual and group health and behavior assessment and intervention services, and smoking cessation services furnished by an interactive telecommunications system if the following conditions are met:

  1. The physician or practitioner at the distant site must be licensed to furnish the service under State law. The physician or practitioner at the distant site who is licensed under State law to furnish a covered telemedicine service described in this section may bill, and receive payment for, the service when it is delivered via a telecommunication system.
    • The practitioner at the distant site is a physician, physician assistant, nurse practitioner, etc. as defined in the appropriate section of the CFR.
    • The services furnished to a beneficiary at an originating site, such as a physician’s or practitioner’s office, critical access hospital, rural health clinic, Federally qualified health center, hospital, skilled nursing facility, community mental health center, or critical access hospital-based renal dialysis center.
    • Originating sites must be located in either a rural health professional shortage area or in a county that is not included in a Metropolitan Statistical Area.
    • The medical examination of the patient is under the control of the physician or practitioner at the distant site.

Private Payors

Many private payor insurance plans do reimburse for telemedicine-delivered services; however, federal law does not require these payors to provide coverage for any type of telemedicine-delivered service. Some states have passed their own private payor laws, affecting private payor plans that operate in those states. Currently, twenty-eight states and D.C. have some private payor-related reimbursement laws. An additional four states have telemedicine private payor laws that have passed, but are not yet effective. Some states mandates some sort of reimbursement, while other mandate reimbursement at the same level as in-person care under certain conditions.

Mobile Health and Fitness Apps and Wearable Tech

Not all mobile health apps and wearable tech are created equally. If the health app or wearable tech electronically collects, stores, and shares PHI with covered entities (i.e. physicians) or business associates in connection with a transaction for which the Department of Health and Human Services (“HHS”) has adopted a standard, it must be HIPAA compliant. HIPAA privacy and security regulations extensively regulate the use and disclosure of individually identifiable health information and require certain covered entities, including most health app developers, and their business associates to implement administrative, physical, and technical safeguards to protect the security of such information. The HITECH Act promotes the adoption of meaningful use of health information technology. HITECH provides HHS with the authority to establish programs to improve health care quality, safety, and efficiency through the promotion of health IT. HITECH addresses the privacy and security concerns associated with the electronic transmission of health information, partly through several provisions that strengthen the civil and criminal enforcement of the HIPAA rules. Additionally, there are several federal agencies, including the Federal Communications Commission (“FCC”) that regulates the use of wearable tech.

PHI is any information in a medical record that can be used to identify an individual, and that was created, used, or disclosed in the course of providing a health care service, such as a diagnosis or treatment. Examples of PHI includes billing information, test results, doctor’s appointment scheduling, etc. HIPAA was drafted in an age when health apps and wearable tech were non-existent and therefore protecting PHI in health apps was not a consideration in drafters’ minds. As a result, it is difficult to determine which apps must be HIPAA compliant and which are exempt based on the current drafting of the law.

Mobile health apps are not required to be HIPAA compliant if they are only used for tracking or informational purposes, such as those that: (i) track daily diets; (ii) allow the user to covertly research various illnesses; (iii) provide access to medical reference materials; and (iv) permit users to record their weight and exercise routines. To determine whether an app falls under HIPAA, the developer should determine whether the user will be covered entity and if it will include PHI. If the app doesn’t involve PHI or involve a covered entity it doesn’t have to be HIPAA compliant.

Implementing the HIPAA Privacy and Security Rules are indispensable to operating these apps because they are highly susceptible to data theft and other security breaches. When we consider the frequency with which wearable tech and cell phones are lost and stolen we understand why it is so important to be HIPAA compliant. App developers who believe that their apps must be HIPAA compliant can protect and secure PHI by incorporating the following safety mechanisms into their apps: (i) require a password or other user authentication; (ii) allow users to enable built-in encryption capabilities; (iii) allow for remote wiping and/or remote disabling; (iv) restrict file sharing applications; (vi) enable security software to protect against viruses, malware, and spyware attacks; and (vii) make sure that security software is up to date. This is not an exhaustive list, but just some of the security measures that an app developer should consider when adopting policies and procedures to protect PHI on wearable tech.

App developers should require that all of their business associates to agree to sign a Business Associate Agreement. A business associate is a person or covered entity that performs certain functions or activities that involve the use or disclosure of PHI on behalf of, or provides services to, a covered entity. This is true even if the app was not intended to be used in a manner that stores and transmits PHI. If an app collects and stores PHI intentionally or unintentionally, it must be HIPAA compliant. Stating that the app was not intended to collect or store PHI is not an adequate defense during a HIPAA audit.

Healthcare providers are increasingly incorporating wearable tech and mobile health apps into their telemedicine practice. They should not access unsecured or unknown Wi-Fi networks when using this tech if it contains PHI. Securing wearable tech that stores and transmits electronic PHI is required by the law.

Medical Drones takes Healthcare to New Heights

Medical drones are not commonplace in the healthcare industry, but we can expect to see their widespread use in years to come. Medical drones are one type of drone, but like other drones the possibility for healthcare entrepreneurs to turn these medical drones into a business is ripe if they can stay within the confines of applicable laws. In fact, the government is drafting various laws to protect the rights of individuals who are weary of their use.

Drones or Unmanned Aerial Vehicles (UAVs) can track emergency mobile communications and use its GPS to navigate to the location where the incident is occurring. Drone pilots can (1) observe via an integrated camera; (2) communicate; and (3)provide medical support to victims and/or those who are rendering aid to the victim. Medical drones may be equipped with certain life-sustaining instruments, and medical supplies attached to it in a “medical toolkit”. These medical drone toolkits can be dispatched to remote ski-locations to aid down skiers, off-shore oil rigs, trapped miners, or an island that is difficult to reach by boat. The goal is to stabilize victims until more advanced medical personnel and support arrives to transition the patient to a hospital.

From an ecomonic standpoint, operating Medical drones can be far more cost effective that other means of delivering medical care that is currently in use. Additionally, the speed with which medical care may be provided to a patient will increase because Medical drones aren’t limited by pedestrian or automobile traffic, bodies of water or other man-made or natural formations, such as Mountains. However, navigating the drone by GPS may be problematic because of the inability to detect these formations.

Currently, the main shortcoming with Medical drones is the type of payload that it is permitted to carry. Due to existing federal and state laws, drones won’t be able to carry prescription drugs for the foreseeable future. That is reasonable given the fact that if a drone carrying prescription drugs (i.e. Medical marijuana, oxycotin, Percocet, etc.) falls – no pun intended – into the wrong hands then the results can be catastrophic to the intended recipient’s health and the unintended beneficiary’s health. For now, medical drones will most likely be limited to carrying a payload with only over-the-counter medical supplies and some durable medical equipment, such as gauze, cold medicine, splints, neck collars, etc. As security safeguards advance for the payloads that are carried by medical drones I expect to see the types of supplies that they carry to expand to include prescription drugs, assuming that amendments to existing healthcare laws are made, which would permit this type of activity.

The FAA requires a special permit to fly a drone for commercial purposes. Anyone wishing to operate a drone for purposes other than recreational purposes must obtain a grant of exemption issued under Section 333. Medical drone operators should obtain one of these Section 333 exemptions so that they can lease their drones out to companies or hospitals that cannot operate their own until they obtain their own Section 333 exemption. The company would have to apply for and obtain a Certificate of Waiver or Authorization (“COA”) to fly in a particular block of airspace.

An online registration system has been created for drones. Every operator with a drone that weighs more than half a pound up to 55 pounds (including any payload) must register their drone with the FAA, pay a $5 fee and affix a tail number to the drone. Registration must be renewed every three years. When registering online, each owner must provide his name, address, and email address. Only after proper registration will an owner receive a Certificate of Aircraft Registration/Proof of Ownership that will generate a unique identifier for the registered drone owner. The FAA prohibits all drones from flying higher than 400 feet or within 5 miles of an airport.

These prohibitions appear to keep medical drones grounded before they’ve even had a chance to take off, but these prohibitions are seen by many an attempt by the government to promote safety and responsibility. For example, registration numbers can be input into a national registry so that in the event of a collision, authorities can trace the wreckage back to the operator. It is likely that the FAA will carve out exceptions for drones used for commercial purposes, such as medical drones.

There’s still a long way to go before medical drones become commonplace, but if you get into the business early you stand to make huge profits.