The Liability Issues of Medispa Treatment

This was originally printed in our First Quarter 2022 issue of The Scope: Medical Edition.

While medispa services may present an exciting opportunity to expand service offerings, caution is necessary. Physicians and professional practices face claims for liability arising out of the injuries that can occur from cosmetic treatments gone wrong, even when no physician is directly involved in the treatment. In addition, improperly structured arrangements between a nonmedical entity providing management services to the medispa and a professional corporation providing the medical services may subject physicians to regulatory action.

Before establishing or entering a contractual relationship to provide medical services to a medispa, physicians should consider the professional and financial risks they may face. Liability could be imposed for regulatory violations, false advertising, fraudulent misrepresentation, negligence and malpractice. In addition, the actions of the spa may bear on the physician’s medical license and reputation.

It is important to remember that many services provided by a medispa, such as Botox and chemical peels, constitute the practice of medicine, which is highly regulated in New York. Under the New York State Corporate Practice of Medicine doctrine, only a physician can own a medical practice, and a physician must make clinically related decisions such as the hiring of clinical staff. As a result, plaintiffs claiming injury from a medispa service will likely name the professional practice as a defendant, even if the service at issue was not medical in nature and even if a physician shareholder was not directly involved in the treatment.

A consulting or supervising physician should be aware that they may bear the burden of liability for any medical malpractice or negligence claims related to the administration of the treatment. While physicians in medispas often delegate procedures to nonphysicians, such as nurses, physician assistants, aestheticians, cosmetologists and unlicensed technicians, the fact that the physician is not involved in the treatment may be an insufficient basis for dismissal from a legal action.

In addition to malpractice, a cause of action for failure to supervise and inadequate training may stand against a medical director. Even consulting physicians with more tenuous relationships to a medispa may have difficulty obtaining early dismissal, particularly if they are held out to the public as providing medical supervision to the medispa. Such consulting and supervising physicians should be wary of marketing materials that mischaracterize the relationship between the physician and the medispa. Contracting physicians having little control over the medispa’s marketing practices may want to discuss with healthcare counsel the suitability of including in their contracts a “use of name” provision backed by a solid indemnification obligation on the part of the medispa.

Supervision, Communication and Training
It is imperative that the physician owners of medispas establish and communicate objective standards of care and conduct to be followed for all treatments, both medical and nonmedical. Such standards should be consistent with prevailing standards even if the treatments are not medical in nature (e.g., laser hair removal).

Who Is Providing the Services?

Significant integration between the professional practice and the nonprofessional entity raises the risk of liability to the professional practice. Physicians and professional practices wishing to avoid the liabilities of medispas should consider using separate websites and other marketing materials and avoid using documents bearing the name of the medispa. Documents such as informed consents and billing statements should list only the name of the providing entity: either the professional practice or the medispa. Providers should review public-facing materials, such as websites and social media sites, to determine how the relationship between the entities appears to the public. Would it be reasonable for a person looking for medispa services online to believe that the provider or the professional corporation provides medical supervision of the medispa? If the answer is yes, providers should understand that this appearance leaves them open to liability for the actions of the medispa if a patient or client relies on this appearance when choosing the services of the medispa.

If the public-facing information inaccurately represents the amount of supervision and control the physician or the professional practice provides to the medispa, physicians should ensure that the information is corrected. Otherwise, defending a claim of fraudulent misrepresentation could prove challenging. Providers should also consider the wisdom of sharing office space or equipment with the medispa, renting space in the same building and sharing staff. A defense of non-association will barely pass the red-face test, let alone support a motion to dismiss, if the provider has the same address as the medispa and the ostensibly separate entities share staff, equipment, marketing materials, documents, electronic medical records systems and administrative and operational documents.

Considerations of Professional Standards

While providing medical director services to a medispa may be an exciting way to expand the scope of practice, there should be no appearance that a physician is “selling” their license or providing supervision to a medispa in name only. Physicians should not lend their names to a medispa if they have no intention of providing sufficient supervision of services. In addition, physicians who contract to provide medical director or consulting services to a medispa should have sufficient training in the treatments provided by the spa. While physicians may practice outside their specialty areas, they should consider the risk of providing supervision or consultation services to a medispa if the services performed, including the equipment and products used to administer treatment, are outside their training. The consulting or supervising physician has a professional responsibility to ensure that he or she is competent to provide counsel and supervision of the treatments being provided. In addition to the risk of litigation, failure in this area could compromise a physician’s license, professional standing and reputation.

Regulatory Uncertainty

The practice of medicine is highly regulated, and the law has not kept up with the rapid emergence of medispas. Due to ambiguities in the law, physicians involved with medispas contend with regulatory compliance and enforcement uncertainty. It is critical that providers stay abreast of legal developments. Medispa owners must determine which of the services they offer would constitute “medical treatment,” who can perform those services and under what conditions. If supervision is required, providers must determine the appropriate oversight. For example, at present, anyone can provide laser hair removal treatment. The law requires no license, training or supervision to provide such treatment. Providers should be aware, however, that bills are presently pending in both houses of the New York State legislature that, if passed, would require the adoption of rules and standards for the licensure and practice of laser hair removal technicians and the facilities where they practice. Among other requirements, the practice of laser hair removal would require some level of supervision by a licensed professional, and the facility would need to maintain a minimum of $1 million in liability insurance. In addition to staying abreast of legal developments, prudent providers will retain experienced healthcare counsel to properly structure medispa businesses and ensure that financial arrangements, such as medical director and consulting physician agreements, are not viewed as illegal inducements for referrals. In sum, as the following cases illustrate, providers entering the world of the medispa should be aware that the venture is not without risk and should proceed with caution.

Case Study #1: Negligent Treatment by Aesthetician Results in Burn

A 61-year-old married female was treated in the MLMIC-insured’s dermatology office by a licensed aesthetician who was trained in chemical peels. The patient had been treated by the aesthetician for 11 years for a variety of procedures, including chemical peels of her hands. On the date in question, the patient came to the office for a facial and subsequently requested laser treatments for the age spots on her hands. Since this was a procedure that had to be scheduled in advance, the patient requested a chemical peel instead. The aesthetician looked for a bottle of Jessner’s Peel, and, when she was unable to find it, she went to the nurse’s closet and retrieved a bottle of trichloroacetic acid. The aesthetician poured this acid into a container and then applied it with a gauze pad. The patient complained of tingling and was advised to wash her hands. The aesthetician noted a frosted appearance on the patient’s hands and realized she had used the wrong solution. She applied ice and other soothing gels and creams to both hands. There was no physician in the office to see the patient at that time.

The following day, the aesthetician went to the patient’s home, and the patient advised her that she had seen another dermatologist, who confirmed that she had been burned by the acid peel. The aesthetician did not inform the MLMIC-insured dermatologist of this incident; however, the patient and her husband came to the office the following week and informed him of what had transpired. This dermatologist treated the patient and referred her to the burn unit of a local medical center. The patient remained under the care of another dermatologist for the next six months. The patient subsequently filed a lawsuit alleging negligent treatment that resulted in skin, muscle, bone, connective tissue and nerve necrosis, as well as blistering, chronic wound opening and drainage, pain, numbness, neuropathy, cellulitis and inflammation. These injuries were confirmed during an independent medical exam conducted by a cosmetic dermatologist, who noted permanent scarring, discoloration and disfigurement. MLMIC’s consultant dermatologist felt that despite the aesthetician being trained, she did not read the label and, thus, the patient was treated with the wrong solution. In addition, the aesthetician had no supervision, and our insured dermatologist was not in the practice of reviewing her notes. As this matter could not be defended, and because the aesthetician had no insurance, our insured dermatologist agreed that the matter should be settled, and the case was eventually settled for $450,000.

Case Study #2: Medical Office With Related Spa May Not Be as It Appears

A 45-year-old single female had searched for a laser hair removal facility and found the website for the MLMIC-insured dermatologist’s office, which featured the services of the spa. The patient made an appointment and originally arrived at our insured’s office but was directed to another floor, where laser hair removal was performed. The client questioned whether she needed to see a physician prior to the laser hair removal and was told she did not. The employee of the spa had received a certificate from the Aesthetics Science Institute, as well as training by the spa and the laser manufacturer. Prior to the procedure, the employee explained the risks and benefits, including the possibility of hyperpigmentation and burns. She then performed laser hair removal on the patient’s chin. The patient returned one month later and was informed that there was a new, improved machine, which was used at this time. This treatment took approximately 15 minutes. The patient complained of the intensity during the procedure but was told this was normal. The patient noted tingling after the treatment and used an ice pack on the skin for the rest of the day. The next morning, she noted blistering and went to the emergency room, where she was diagnosed with a burn and prescribed a cream. She continued to experience discomfort and made an appointment with a burn center, where she underwent multiple skin debridements and was diagnosed with a second-degree burn. She was provided with home nursing care to assist with dressing changes.

The patient subsequently brought an action against the MLMIC-insured dermatologist, her professional corporation and the non-MLMIC-insured spa, alleging negligent laser hair removal that resulted in facial burns. The spa was not overseen by the dermatologist or her professional entity, and its employees performed nonmedical services. The professional entity provided management services to the spa by contract, for which the spa paid a monthly fee for payroll, use of electronic medical records and administrative services. Each entity maintained its own office space, staff and phone numbers and had separate billing and tax ID numbers. They shared some staff and their website and were in the same building. Our insured and her professional entity did not provide care to this patient and maintained no records on her behalf. Counsel for the dermatologist and her professional entity took the position that they were not involved in this matter, as they never rendered treatment to this patient. They examined the financial contract and informed consent documents that were provided to the patient and noted that the professional entity was listed at the top of the page along with the address and website of the spa. In addition, the papers indicated that the entities were a partnership.

The defense counsel argued that the spa and the dermatology group were actually separate legal entities. The medical supervision referenced in the spa’s advertisements referred to the non-party owner of the spa and did not indicate that the medical group ever provided supervision. The laser equipment used during the procedure at issue was not owned or operated by the dermatology group. Therefore, they did not maintain or supervise the use of the equipment, either. As such, the plaintiff’s theory would have to resort to vicarious liability to establish culpability for the medical group. The patient claimed total damages of $350,000. MLMIC’s defense counsel continued to pursue a Stipulation of Discontinuance on behalf of our insureds and were ultimately successful in extricating them from this case.

Providers and Practices Should:

• Establish mechanisms to monitor the ongoing performance of delivering treatment, including compliance with pertinent policies and procedures, such as record keeping, consultation and communication.
• Ensure that the medispa has written protocols governing safety procedures for the use of equipment and products used by the medispa and maintain documentation of staff training.
• Establish protocols for the physician review of records on a specified and reasonable periodic basis and require staff to check in regularly with supervisors to discuss any potential risk issues or complications.
• Consider documenting record reviews and significant communications.
• Establish written policies and procedures covering treatment errors.
• Document, investigate and implement corrective action plans for any reported incidents.
• Train staff to take seriously, address, report and document all patient or client complaints related to treatment.
• Consider establishing follow-up protocols for any patients or clients who express concerns during treatment.
• Ensure that all staff, licensed and unlicensed, remain mindful that even the nonmedical services affect the integrity of a physical body and a person’s physical appearance even though treatments performed in a medispa are marketed as “pampering.” In addition to causing medical issues, such as burns, scars and infections, errors in the provision of aesthetic services can also cause significant emotional distress.