NEW JERSEY REGISTER
VOLUME 36, NUMBER 1
MONDAY, JANUARY 5, 2004
RULE PROPOSAL
LAW AND PUBLIC SAFETY
DIVISION OF CONSUMER AFFAIRS
NEW JERSEY STATE BOARD OF OPTOMETRISTS
PERMISSIBLE BUSINESS STRUCTURES; REFERRAL FEES
INDEPENDENT DOCTOR OF OPTOMETRY

Proposed Amendments: N.J.A.C. 13:38-1.3 and 2.13

Authorized By: State Board of Optometrists, Susan Gartland, Executive Director.

Authority: N.J.S.A. 45:12-4.
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
Proposal Number: PRN 2004-4.

Submit written comments by March 5, 2004 to:

Susan Gartland, Executive Director

State Board of Optometrists

124 Halsey Street

PO Box 45012

Newark, New Jersey 07101

The agency proposal follows:

Summary

Pursuant to the rulemaking authority set forth in N.J.S.A. 45:12-4, the State Board of Optometrists (the Board) proposes amendments to N.J.A.C. 13:38-1.3, concerning permissible business structures and referral fees, and N.J.A.C. 13:38-2.13, concerning independent doctors of optometry.

The current provision N.J.A.C. 13:38-1.3(f) prohibits optometrists from participating in any arrangement or agreement, with any person other than an associate, whereby any remuneration received by that person in payment for the provision of space, facilities, equipment, products, drugs, personnel, marketing or management services used by the optometrist is to be determined or calculated as a fixed percentage of, or otherwise dependent upon, the income or receipts derived from the practice of optometry. In In re Adoption of N.J.A.C. 13:38-1.3(f) by the State Board of Optometrists, 341 N.J. Super. 536 (App. Div. 2001), the Appellate Division held that N.J.A.C. 13:38-1.3(f) was inconsistent with the statute, because it was not grounded on sufficient information to conclude that revenue-based rent threatened the independent professional judgment of optometrists. Therefore, the Board proposes to delete subsection (f).

N.J.A.C. 13:38-2.13(a)2 states that in order to perform as an independent doctor of optometry, a licensee must take no instruction from a landlord with regard to any aspect of optometric practice and lease space on the basis of a written lease and only where rent is a fixed fee determined by the fair market value, is for a regular term and not for sporadic use of the space, is not contingent upon patient fees, the number of patients, or the number or type of optometric services. However, because the Appellate Division has invalidated N.J.A.C. 13:38-1.3(f), the Board also proposes to delete the reference to fees not being contingent upon patient fees in N.J.A.C. 13:38- 2.13(a)2 as this phrase is related to revenue-based rent and is contrary to statutory intent.

The Board has determined that the comment period for this proposal shall be 60 days; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is excepted from the rulemaking calendar requirements.

Social Impact

The proposed amendments do not have a social impact on the public or upon licensees.

Economic Impact

The proposed amendments will have an economic impact upon any person, other than an associate, whereby any remuneration received by that person in payment for the provision of space, facilities, equipment, products, drugs, personnel, marketing or management services used by the optometrists is to be determined or calculated as a fixed percentage of, or otherwise dependent upon, the income or receipts derived from the practice of optometry. Since the Board is proposing to delete this provision, such individuals can enter into such agreements or arrangements, thus creating an economic impact.

Federal Standards Statement

A Federal standards analysis is not required because no Federal standards or requirements are applicable to the proposed amendments.

Jobs Impact

The Board does not anticipate that the proposed amendments will result in the creation or loss of any jobs.

Agriculture Industry Impact

The Board does not anticipate that the proposed amendments will have any impact on the agriculture industry in the State.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act (the Act), N.J.S.A. 52:14B-16 et seq., requires the Board to give a description of the types and an estimate of the number of small businesses to which the proposed amendments will apply. If licensed optometrists are considered "small businesses" for the purposes of the Act, then the following analysis applies.

The Act requires the Board to set forth the reporting, recordkeeping and other compliance requirements of the proposed amendments, including the kind of professional services likely to be needed to comply with the requirements. The Act further requires the Board to estimate the initial and annual compliance costs of the proposed amendments, and to provide an indication of the likely variation on small businesses of differing types and sizes. In addition, the Act requires the Board to outline the manner in which it has designed the rules to minimize adverse economic impact upon small businesses.

Since the Appellate Division has decided that N.J.A.C. 13:38-1.3(f) is invalid, the amendments the Board is proposing herein in compliance with the court decision must be applied uniformly to all optometrists and no differing standards may be proposed.

Smart Growth Impact

The Board does not anticipate that the proposed amendments will have an impact on the achievement of smart growth and the implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows :

<< NJ ADC 13:38-1.3 >>

13:38-1.3 Permissible business structures; referral fees

(a)-(e) (No change.)

<<-(f) Optometrists shall not participate in any arrangement or agreement, with any person other than an associate, whereby any remuneration received by that person in payment for the provision of space, facilities, equipment, products, drugs, personnel, marketing or management services used by the optometrists is to be determined or calculated as a fixed percentage of, or otherwise dependent upon, the income or receipts derived from the practice of optometry. Nothing in this subsection shall preclude an optometrist from entering into a bona fide profit sharing plan or retaining the services of a collection agency.->>

<<-(g)->><<+(f)+>> Violations of (b) through <<-(f)->><<+ (e)+>> above shall be deemed professional misconduct pursuant to N.J.S.A. 45:1-21(e).

<< NJ ADC 13:38-2.13 >>

13:38-2.13 Independent doctor of optometry

(a) For the purpose of N.J.S.A. 45:12-9.12 and this chapter, in order to perform as an independent doctor of optometry, a licensee shall:

1. (No change.)

2. Take no instruction from a landlord with regard to any aspect of optometric practice and lease space on the basis of a written lease and only where rent is a fixed fee determined by the fair market value, is for a regular term and not for sporadic use of the space, is not contingent upon <<-patient fees,->> the number of patients, or the number or type of optometric services;

3.-10. (No change.)