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A demand by Columbia University’s medical school that two physicians pay a 10 percent “Dean’s tax” as the price of retaining part-time faculty appointments and privileges at New York-Presbyterian Hospital was “unethical and illegal,” a state supreme court justice has ruled. Justice James A. Yates concluded in Odrich v. Trustees of Columbia University, 116513/01, that the medical school’s demand that the two ophthalmologists, Dr. Marc G. Odrich and Dr. Steven A. Odrich, pay the tax as a condition of leaving a faculty medical practice violated the prohibition against fee splitting by doctors in state Education Law � 6530 (19). In 1998, the Odrich brothers became full-time faculty members in the Ophthalmology Department of Columbia’s College of Physicians and Surgeons. As a part of their duties, they saw patients in a school-sponsored practice plan. Two years later, the Odrich brothers withdrew from the school’s plan and sought to establish their own private practice while maintaining a part-time status on the school’s medical faculty. But the school insisted they could remain as part-time faculty and continue to have privileges at the hospital only if they paid the school a 10 percent tax on all income generated by their private practice. Although he found the tax to be illegal fee splitting, Justice Yates recognized that the New York Court of Appeals had approved of fee sharing between doctors and medical schools as a common law exception to the prohibition against fee splitting. The Court of Appeals had explicitly sanctioned such fee sharing in the context of a school-sponsored faculty medical practice in Albany Medical Center v. McShane, 66 NY2d 982 (1985), Justice Yates noted. Nonetheless, he concluded that there was no principled basis under which McShane could be read so broadly as to apply to income generated by physicians having “no connection to the school or its clinical practice.” “Simply invoking” McShane as a “protective mantle” to impose a 10 percent tax on all income “wherever generated” ignores the policies that undergird the fee-splitting prohibition, Justice Yates reasoned. The purpose behind the prohibition, he wrote, is to “protect patients from inflated billings and clandestine partnerships which have the potential to compromise healthcare decisions.” The imposition of a tax that is “not proportionate, or related in any way, to the patient’s care or the doctors’ access to the facility,” he suggested, creates an incentive for doctors either to withhold required services or to generate unneeded services as a way of coping with the splitting requirement. Either way, he noted, the arrangement is “an illegal and unduly oppressive arrangement which punishes patients as well as the physician.” The Odrich brothers were represented by David A. Zarett of Weiss, Zarett & Hirshfeld in New Hyde Park, N.Y. Columbia University was represented by Roy W. Breitenbach of Garfunkel, Wild & Travis in Great Neck, N.Y.

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