New York’s Prohibition on For-Profit Medical Referral Services

As we have pointed out in many of these columns, the laws and regulations that apply to health care operations in New York are comprehensive and quite complex. Attorneys representing providers, insurers, patients and other participants in the health care industry must be familiar with the many rules that are applicable to their clients. Even experienced attorneys are sometimes not aware of obscure statutes or regulations that, while seldom invoked, are very much in effect. These rules and prohibitions lie buried in the landscape like land mines from a previous war, and ignorance of their detonation potential can have significant adverse effects.

One of these lesser-known healthcare laws is Article 45 of the New York Public Health Law (PHL), which generally prohibits the operation of for-profit medical referral services. The wording of this statute is fairly broad, and violations of the statute carry serious penalties. Moreover, we can find only one reported case involving this statute, an unsuccessful challenge to its constitutionality shortly after it was enacted.

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