8 NYCRR 29.1 Provides: (a) Unprofessional conduct shall be the conduct prohibited by this section. (b) Unprofessional conduct .... shall include: (4) permitting any person to share in the fees for professional services, other than: a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice the same profession, or a legally authorized trainee practicing under the supervision of a licensed practitioner. This prohibition shall include any arrangement or agreement whereby the amount received in payment for furnishing space, facilities, equipment or personnel services used by a professional licensee constitutes a percentage of, or is otherwise dependent upon, the income or receipts of the licensee from such practice, except as otherwise provided by law with respect to a facility licensed pursuant to article 28 of the Public Health Law or article 13 of the Mental Hygiene Law.
Can illegal fee sharing be used as a defense to a medical provider's claim for no fault benefits?
No, so says the First Department in Supreme Court, Allstate Prop. & Cas. Ins. Co. v. New Way Massage Therapy P.C., 2015 NY Slip Op 09184 (N.Y. App. Div. 1st Dept. December 10, 2015), "Whether or not the fee-sharing arrangement at issue constitutes unprofessional conduct (see 8 NYCRR 29.1[b] ), it does not constitute a defense to a no-fault action (compare State Farm Mut. Auto. Ins. Co. v. Mallela, 4 N.Y.3d 313, 794 N.Y.S.2d 700, 827 N.E.2d 758  ["insurance carriers may withhold payment for medical services provided by fraudulently incorporated enterprises to which patients have assigned their claims"]). It is solely a matter for the appropriate state licensing board (see e.g. Necula v. Glass, 231 A.D.2d 457, 647 N.Y.S.2d 501 [1st Dept.1996]; see also H & H Chiropractic Servs., P.C. v. Metropolitan Prop. & Cas. Ins. Co., 47 Misc.3d 1075, 1078, 6 N.Y.S.3d 469 [Civ.Ct., Queens County 2015] )."