What is Fee-splitting?

In retail, salespeople are often incentivized with commission. The rationale is that when salespeople are given the opportunity to earn more money, they will work harder, which stands to reason. However, a medical spa is not a retail outlet. Despite its resemblance to salons and traditional spas, a medical spa has to play by a different set of rules and answer to different authorities, because its employees administer medical treatments. In most states, if medical spa owners are paying employees commission, they are engaging in an illegal practice known as fee-splitting. It is important for medical spa owners and operators to understand this issue and its consequences to avoid big trouble.
The Controversy
In most states, a patient who receives a medical treatment—such as many of the services provided
at medical spas—is required to provide payment to a physician or a physician-owned corporation. This doctrine is known as the “corporate practice of medicine.” If these physicians or corporations give a percentage of that payment to a non-physician who was responsible for securing the patient’s business, they have engaged in fee-splitting.
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