Why can a lawsuit be filed in court for advertising a private medical practice? How to promote your own company without breaking the law?

• How to define correctly the type of medical institution?
• Requirements of the law for the name of individual entrepreneurs who perform medical practice
• Consequences of incorrect positioning of medical institution

Our clients’ most common question on promotion of medical services is: which are requirements for the name of private practice?

Our lawyers examined the normative basis and the legal precedents, and they also answered the question in which cases it can be called as “clinics” and “medical centers”, and when such a positioning may provoke interest on the part of the controlling authorities.

This material will be useful both for medical institution which function in form of a legal entity (hereinafter referred to as the LE) and for individual entrepreneurs-practitioners (hereinafter referred to as the IE) who mistakenly place the inaccurate information when advertising their services.

Types of medical institutions

According to Article 3 of the Law of Ukraine “The Fundamentals of the Law of Ukraine on health care”, a health care institution is a legal entity of any form of property and any form of incorporation, or its standalone subdivision providing medical service for people based on the corresponding license and engaging the required medical staff.

Consequently, a health care institution can be only a LE (of any form of incorporation) that has a license and the medical staff.

Types of health care institutions that are used mostly in medical business are: a clinic and a medical center. Let us apply to clause 9 of the Order “About approval of the lists of health care institutions, doctor’s and pharmacist’s positions and positions of junior specialists with pharmaceutical education at the health care institutions”. According to this normative act, the clinic is a medical and preventive treatment institution which for not less than 50% is used for placing the structural scientific and academic subdivisions (academic departments, laboratories), higher medical educational institutions of accreditation degree III, IV, postgraduate education institutions, scientific research institutes and the collaborative work in providing the diagnostic and treatment process, training, advanced training and proficiency enhancement of medical staff and conducting and introduction of medical scientific research in practice.   

In turn, under a (medical) center, the Order implies a health care institution or its structural subdivisions (early treatment centers, maternity hospitals etc.) that perform the function of an institution on organizing and providing the medical and medicated assistance for people.

 Thus:

1. The LEs may be called clinics only when they provide 50% (or more) of their base for placing of structural scientific and academic subdivisions of higher medical educational institutions.
2. A medical center (with the identical functionality) is not obliged to place academic and other subdivisions.
3. The IEs perform the economic activity in medical practice; they cannot be called “a clinic” and “a medical center”, since only legal entities may use those names.

Why is it important?

1. Incorrect promotion of services may be interpreted as violation of license provisions, and then it may lead to penalties and even to cancellation of license;
2. Placing the advertising signboards and other forms of advertising with inaccurate information will be a violation of the law.

Violation of advertisement norms according to law

Can the medical business be liable for such a violation? We can find the answer in the Law of Ukraine “On protection against unfair business competition”. It is specified by part one of Article 1 of that Law that an unfair business competition is any actions in business competition which contradict to trading and other honest customs in the economic activity.

That is, when you use incorrectly the names of health care institutions in your name, your actions can be considered as unfair business competition in regard to other legal entities.

Also, pursuant to part 1 of Article 151 of the said Law, the distribution of deceptive information is economic entity’s communicating, directly or through some other person, to one person, several persons or to the public (including in advertising), the incomplete, false, inaccurate information, in particular due to the selected way of stating it, due to concealing single facts or due to vagueness of formulations which influenced or may influence the intentions of those persons in regard to purchase or sale of goods, works, services of that enterprise.

While placing the advertisement with an incorrect name, you might mislead the consumers.

The government authority which may apply sanctions is the Anti-monopoly Committee of Ukraine. Namely it controls the actions of economic entities for them to keep with the corresponding laws.

According to Article 36 of the Law of Ukraine "On protection of economic competition”, the bodies of the Anti-monopoly Committee of Ukraine consider the cases on violation of the law about protection of economic competition on:

• claims of economic entities, citizens, institutions etc.;
• statements of government authorities, local self-government bodies;
• on their own initiative.

In turn, in accordance with Article 48 of the said Law, upon the results of the consideration of a case on violation of the law about protection of economic competition, the authorities of the Anti-monopoly Committee of Ukraine take the following decisions:

• recognition of violation of the law (about protection of economic competition)
• cessation of violation of the law (about protection of economic competition)
• imposition of money penalty;

There are relevant legal precedents in this regard.

What situation can be?

In this connection, the law case No. 13/417/13-г may be interesting, in which the LLC Clinic “New medical technologies” filed a claim at the Lugansk regional territorial department of the Anti-monopoly Committee of Ukraine on the fact that the decision of the administrative board of the Anti-monopoly Committee of Ukraine was ineffective.

In that case, the court took the position of the Company and sustained their claim about violations of the law about protection of economic competition. Their decision was taken based on the assumptions and the probable perception of the word “Clinic”.

The decision of the Anti-monopoly Committee of Ukraine does not contain single evidence which could be the reason for solving the case, either. The judge also took into consideration the expert examination which had been conducted by specialists of the council of science and legal expert examinations at the V.M. Koretsky Institute of State and Law of the National Academy of Science of Ukraine. It was stated in the expert examination that the word “Clinic” in that case as a common word.

Based on such a decision, the owners of the medical business could have a sigh of relief, since there are legal precedents in their favor.

But there is an important detail in this case which may have highly negative consequences.

The decision dated 26.07.2012 taken by the Anti-monopoly Committee of Ukraine was appealed against by the Company as late as 13.02.2013. That is, 7 months passed between the moment the claim was filed and the moment the decision of the Anti-monopoly Committee of Ukraine was handed in. And according to part 3 of Article 56 of the Law of Ukraine “On protection of economic competition”, a person against who a money penalty is imposed by decision of the body of the Anti-monopoly Committee of Ukraine shall pay it within two months from the day the decision about money penalty imposition is received. The Company did not fulfill that condition. Therefore, according to part 5 of Article 5 of the said Law, an overdue fee in amount of 1.5% of the money penalty is charged for each overdue day (amount of the overdue fee cannot exceed amount of the money penalty).

The Anti-monopoly Committee charged the overdue fee in the same amount as the money penalty and filed a claim to the court about recovery of money penalty and overdue fee from the Company. And this time the court took a decision in favor of the Anti-monopoly Committee of Ukraine. That decision was supported both by the appeals instance and by the cassation instance.

Conclusions

• avoid names which correspond not completely with the status of your institution;
• in case you did use the name which did not correspond with your health care institution, then be ready to defend your rights at court (there are positive legal precedents);
• react immediately to the actions on the part of the Anti-monopoly Committee of Ukraine, since winning the case might not help to avoid paying a money penalty, and sometimes even an overdue fee which is not less than amount of the money penalty.