Albany Medical College v. Lobel, 107 N.Y.2d 983 (1986)
A medical college’s faculty practice plan, allowing it to share in fees generated by faculty physicians, is a valid exercise of its corporate powers and does not constitute illegal corporate practice of medicine or fee-splitting.
Summary
Albany Medical College sued Dr. Lobel, a former faculty member, seeking to recover patient records, office equipment, and patient care revenues he allegedly diverted after starting his own practice. The College argued that its faculty practice plan entitled it to a share of the fees generated by Dr. Lobel. The New York Court of Appeals held that the College’s claim was valid, as its corporate charter empowered it to promote medical science, and its faculty practice plan did not constitute illegal corporate practice of medicine or fee-splitting. The Court also affirmed the College’s ownership of patient records, subject to the defendant’s right to obtain copies.
Facts
Albany Medical College employed Dr. Lobel as a teacher, researcher, and supervisor in its plastic surgery division.
Dr. Lobel left Albany Medical College and started his private plastic surgery practice.
Albany Medical College sued Dr. Lobel to recover office equipment, patient records, and fees and revenues from patient care allegedly diverted by Dr. Lobel.
Procedural History
Special Term granted summary judgment, dismissing the complaint.
The Appellate Division, Third Department, reversed the Special Term’s decision.
The Appellate Division granted leave to appeal to the Court of Appeals and certified a question of law.
The Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
Whether a medical college’s faculty practice plan, which allows it to share in fees generated by faculty physicians, constitutes an illegal corporate practice of medicine or illegal fee-splitting.
Whether patient records generated by a faculty physician are the property of the medical college.
Holding
1. No, because the medical college’s corporate charter empowers it to promote medical science and instruction, and its treatment of patients does not constitute an illegal corporate practice of medicine or illegal fee splitting.
2. Yes, because the financial and patient records generated are clearly the property of the plaintiff (Albany Medical College), subject to the defendant’s (Dr. Lobel’s) right to obtain copies.
Court’s Reasoning
The Court of Appeals relied on the Albany Medical College’s corporate charter, which empowers it to promote medical science and instruction. This power allows the college to operate a faculty practice plan where it shares in the fees generated by faculty physicians.
The court reasoned that such arrangements do not constitute an illegal corporate practice of medicine under Public Health Law § 2801-a or illegal fee splitting under Education Law § 6509-a and 8 NYCRR 29.1(b)(4). Citing People v. Woodbury Dermatological Inst., 192 NY 454, 457, the Court stated that the treatment of patients by the college does not violate prohibitions against corporate practice if the corporation is empowered to promote medical science.
The Court found support in prior cases, such as Adamsons v Wharton, 771 F2d 41, 43, which characterized similar claims as “farfetched at best.” Other cases cited in support of this view included Gross v University of Tenn., 620 F2d 109, 110 and Kountz v State Univ., 87 AD2d 605.
Regarding the patient records, the Court held that these are the property of Albany Medical College, referencing Public Health Law § 17, and citing Matter of Hernandez v Lutheran Med. Center, 104 AD2d 368 and Damsker v Haque, 93 AD2d 729. However, the Court clarified that Dr. Lobel retains the right to obtain copies of these records.