Baltimore, MD asked in Employment Law and Medical Malpractice for Illinois

Q: Paying MDs as 1099s - Is this Corporate Practice of Medicine?

Hi There,

We are a Not For Profit Corporation, and we pay for patient medical expenses when they require financial assistance. We do not advise them on treatment, provide facilities to MDs, direct / employ MDs, or share profits with MDs. We simply pay patient Invoices when they are unable to cover the costs of their care (This is our 'Mission', 'Purpose', and 'Business', so to speak). We are *not* tax exempt, so we treat this as a 'business expense'.

The IRS appears to require that we report payments to Doctors on a 1099 (Box 6) at the end of the year.

Therefore, we are concerned that this could appear to the IRS that we are 'retaining' MDs to provide medical services (We are not).

Does reporting this information on a 1099 as a 'Contractor Expense' cause us to appear that we are engaged in the Corporate Practice of Medicine?

Or . . . Will they understand that we just cover patient bills?


1 Lawyer Answer
James G. Ahlberg
James G. Ahlberg
  • Rochelle, IL
  • Licensed in Illinois

A: I'm not sure which 1099 form you're looking at, but it's probably the wrong one. This shouldn't be a contractor expense for you since the medical professionals do not contract with you -- rather, they contract with your patients.

With no more information than you provided, my hunch is you should be completing Form 1099-MISC for each provider. If so, your payments go in Box 7 of the form, "Nonemployee Compensation." I strongly encourage you to run this by your tax advisor, a CPA, or whoever does your taxes. If you send paper forms to the IRS you'll also need Form 1096, the transmittal form for the Forms 1099-MISC

1 user found this answer helpful

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.