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Groupon, Living Social work with Oregon dentists

Portland, Ore.—Social coupon companies Groupon and Living Social have shown willingness to revise their business models to help dentists avoid violating state fee-splitting laws, at least in Oregon.

Like many state dental boards, the Oregon Board of Dentistry was getting questions about whether dentists were violating the board’s fee-splitting rule by offering deals for dental services through social couponing websites. Under the traditional business model, social coupon companies generally keep a percentage of the revenue from patients, remitting the remainder to the dentist, which could be deemed illegal fee-splitting under state law.

Upon receiving these inquiries, the Oregon board notified dentists that entering into an agreement with these websites could subject them to disciplinary action, said Patrick Braatz, OBD executive director. In 2011, the OBD issued a statement on its website, alerting dentists to this risk.

In response, representatives from Living Social and Groupon contacted the board asking if there was a way for dentists to use social coupons without violating the board’s fee-splitting laws, Mr. Braatz said. Living Social and Groupon ultimately proposed using a new contract with dentists, under which all fees paid by the patient would be passed through to the practitioner and the practitioner would then pay an advertising fee directly to Groupon or Living Social.

The OBD issued letters to Groupon and Living Social stating that the proposed contract “does not violate the prohibition of splitting fees” set forth in the Oregon board rules. The Oregon dental board doesn’t approve each contract a dentist signs but did approve the model for which the contracts are based.

“Groupon worked collaboratively with the Oregon Board of Dentistry to develop options for Oregon dentists to continue to use one of the most effective marketing services in the business and avoid allegations of illegal ‘fee-splitting,’ ” said Groupon spokeswoman Julie Mossler. “We continue to believe the marketing suite we’ve pioneered is fundamentally different both ethically and in intent than the types of historical fees-for-patient referral schemes or ‘kick-backs’ fee-splitting laws are designed to prevent. We’re sensitive to the needs of all our merchants, offering many different ways to partner together that comply with their ethical/legal obligations, regardless of their profession or where they practice.”

A spokesperson from Living Social also confirmed the company uses a flat fee agreement with the dentists with whom it works. So far, this model has only been proposed by Living Social and Groupon, and the board has not been contacted by any other social couponing companies, Mr. Braatz said.

The American Dental Association legal department cautions that, even under the new fee arrangement, there are other legal and ethical issues that a dentist must consider before using social coupons to promote his or her dental practice. A dentist is advised to consult with an attorney familiar with such issues in the state where the dentist is located before moving forward with social coupons.

To learn more about these issues, visit www.ada.org/members/6502.aspx.