Court Opinion

ID: 5886963
Source: CourtListenerOpinion
Date Created: 2022-01-13 02:35:35.532518+00
Date Added: 2024-06-11T08:44:32.121368
License: Public Domain

Kupferman and Asch, JJ.,
concur in a memorandum by Asch, J., as follows: Special Term found that plaintiff did not show that any patient at the facility was placed there by him or that any patient demanded his services. However, as the majority notes, plaintiffs moving papers include at least one letter from a patient desiring treatment by plaintiff. Consequently, there is an issue of fact which mandates denial of defendant’s cross motion for summary judgment.
However, I disagree with the analysis and characterization of the retention of 20% of fees received by the professional corporation for administrative and overhead costs as "indicative of an illegal and unethical fee-splitting arrangement”. Pelham Professional Medical Services, P. C., not a party to this action, is a professional service corporation owned and controlled by physicians at defendant’s premises. While fee-splitting arrangements by physicians are prohibited by Education Law § 6509-a, there has been no showing by plaintiff here that any fees were shared or to be shared by members of this professional group with nonmembers or with defendant. Section 6509-a does not prohibit "persons from practicing as partners, in groups or as a professional corporation nor from pooling fees and moneys received, either by the partnerships, professional corporations or groups by the individual members thereof, for professional services * * * nor shall the professionals constituting the * * * groups be prohibited from sharing, dividing or apportioning the fees and moneys received by them or by the * * * group in accordance with a partnership or other agreement”.
United Calendar Mfg. Corp v Huang (94 AD2d 176), cited by the majority, does not support the position that the 20% fee retention by the professional corporation herein is illegal or unethical. In that case, the Second Department noted that the corporation seeking to uphold such an arrangement was not a medical professional corporation and was operating a medical facility for which it had no license. That corporation simply maintained the building and hired medical professionals to staff it under a true "fee-splitting” arrangement. The situation before us is completely different. Here, there is no sharing of fees with anyone other than physician-members of the professional corporation.
Business Corporation Law § 1503 (b) requires that all of Pelham’s shareholders must be authorized by law to render the professional service for which the corporation is organized. The physicians herein who comprise the officers, directors and shareholders of the corporation pursuant to the statute have *157provided for retention of 20% of the fees collected for overhead, etc. Any surplus remaining from this retained amount would, of course, be the property of the stockholders. If any physician-shareholder feels that this amount is too substantial, he or she can attempt to persuade the other stockholders to reduce it. The shareholder can also bring a derivative action for corporate waste against the officers and directors.