By JESSICA BUSCH
Minimally invasive cosmetic medical services are on the rise and in high demand. With their recent popularity, many licensed cosmetologists and estheticians are looking to offer these cosmetic medical services to their existing customers. Midlevel medical providers, such as registered nurses, advanced practice nurses, or physician assistants often desire to leverage their medical experience to start cosmetic medical businesses of their own. These businesses can yield significant profits and present an enticing investment opportunity for licensed physicians.

However, there are numerous legal pitfalls associated with offering cosmetic medical services that must be considered and avoided. Most significantly, cosmetology and medical spa businesses (collectively referred to herein as “medical spas”) are often unaware that they are illegally engaging in the unauthorized practice of medicine. Without the proper legal structure, partnering physicians also expose themselves to potential civil and criminal liability and put their medical licenses at risk.

What are Cosmetic Medical Services?

The term “cosmetic medical services” is intended to refer to a subset of medical-grade skin care and aesthetic services that constitute the practice of medicine and may only be performed by, or under the supervision of, a licensed physician. Cosmetic medical services generally are not medically necessary and can be minimally invasive, which often leads to confusion as to the qualifications required to perform them.

In some cases, Michigan regulators have directly identified cosmetic services that are considered to be the practice of medicine. For example, the State of Michigan has taken the position that microdermabrasion constitutes the practice of medicine, because it involves the “removal of skin by use of a mechanical device.”(1) Similarly, laser procedures are considered to be the practice of medicine and special patient consent is required for such services.(2)

Just because a Michigan regulator has not opined on the medical nature of a specific service, it does not automatically mean that the procedure or service is not a cosmetic medical service that requires physician involvement. If a business is offering a cosmetic service and is unsure whether it constitutes as the practice of medicine, it should consult with an attorney for additional guidance.

Common Legal Pitfalls for Medical Spas

Michigan Corporate Practice of Medicine: In order for a for-profit business to directly provide cosmetic medical services to customers in Michigan, the business entity generally must be incorporated as a professional entity and may only be owned by licensed physicians.(3) Medical spas and individuals that ignore this requirement are likely engaging in the unauthorized practice of medicine and are subject to potential legal penalties and liability, including criminal charges.

Though physicians and non-physicians usually cannot co-own a medical spa, there are several alternative business structures available to avoid violating Michigan law. Every business is unique, so it is important to consult with an attorney to determine the right structure for your medical spa.

Physician Delegation and Supervision: Cosmetic medical services must be (1) performed by a physician; or (2) delegated by a physician to someone who is otherwise qualified by education, training, and experience to perform the medical cosmetic service.

In the latter case, the cosmetic medical service must be performed under the physician’s supervision. Supervision requires, among other things:

(1) The continuous availability of direct communication in person or by radio, telephone, or telecommunication between the supervised individual and the physician;

(2) The availability of the physician on a regularly scheduled basis to review the practice of the supervised individual, to provide consultation to the supervised individual, to review records, and to further educate the supervised individual in the performance of the individual’s functions;

(3) The provision by the physician of predetermined procedures and drug protocol.(4)

Cosmetic medical services that are performed without any supervision of a physician or without proper physician supervision could result in a violation of Michigan law and increase a physician’s potential medical malpractice liability. Improper supervision can include circumstances where the physician is supervising too many individuals at a given time.

In addition to the supervision requirements above, it is important for certain midlevel providers, such as advanced practice nurses and physicians assistants, to meet the collaboration and practice requirements of their respective professions.

Qualifications: To reduce the risk of medical malpractice liability and ensure compliance with Michigan law, all individuals involved with the performance of the cosmetic medical services, including a performing or supervising physician, should have appropriate certifications, education, experience, and training on a continuing and ongoing basis, with respect to the cosmetic medical services.

Fee-Splitting and Kickbacks: Some physicians and medical spas enter into arrangements where one party receives a percentage of the profits derived from the cosmetic medical services. Percentage fee structures can be problematic because physicians are prohibited from dividing fees or exchanging kickbacks for referrals of patients. Not only does a percentage fee structure potentially violate Michigan’s fee-splitting prohibition, but it may also be considered an unethical business practice. This puts a physician at risk for discipline, loss or suspension of their license, fines, imprisonment, or other legal action.

Board of Cosmetology License: In some cases, the cosmetic services do not rise to the practice of medicine. That does not mean that the services may be performed without any license. Instead, it is important that both the business establishment and its personnel are appropriately licensed by the Michigan Board of Cosmetology. For example, an individual performing non-medical “skin care services” in Michigan must be licensed as an esthetician or cosmetologist.

This is not a comprehensive list of all the legal risks associated with offering cosmetic medical services, but it does outline some of the significant considerations. There is no one size fits all for structuring a medical spa business and it is advisable to consult with an attorney to determine the most compliant and appropriate business structure for your medical spa.

 

1 Department of Licensing and Regulatory Affairs, Cosmetology- Microdermabrasion, available at https://www.michigan.gov/lara/0,4601,7-154-89334_72600_72602_72731_72864-365130–,00.html
2 Department of Licensing and Regulatory Affairs, Use of Laser Equipment by Health Professionals, available at https://www.michigan.gov/lara/0,4601,7-154-89334_61343_35413_35426-182821–,00.html; See also, MCL 333.16276.
3 In certain circumstances, a physician assistant may obtain ownership in a professional entity. MCL 333.17048.
4 MCL 333.16109.