8: The Legal Environment of the Dental Practice

Chapter 8

The Legal Environment of the Dental Practice

What do I care about the law? Hain’t I got the power?

Cornelius Vanderbilt

At the completion of this chapter, the student will be able to:
1. Describe the sources of laws.
2. Describe the common methods of resolving legal disputes.
3. Define criminal law and give examples of both felonies and misdemeanors.
4. Describe the principle elements of contracts.
5. Describe the common types of contracts seen in dental practices.
6. Define torts and give examples of intentional torts.
7. Differentiate between negligence and liability.
8. Describe the common labor laws and describe how they affect dental practice.
9. Describe the common consumer protection laws and describe how they affect dental practice.
10. Describe elements commonly found in state dental practice acts.

Key Terms
administrative regulation
Americans with Disabilities Act
antitrust laws
    Chapter 7
    Chapter 13
    general (unsecured) creditors
    secured creditors
civil law
common law
consumer protection
    breach of contract
    capacity of the parties
    legality of purpose
court precedent
criminal law
debtor protection laws
    Fair Credit Billing Act
    Fair Credit Reporting Act
    Fair Debt Collection Practices Act
    Truth-In-Lending Act
employment at will
Equal Employment Opportunity Commission (EEOC)
Employee Retirement Income Security Act (ERISA)
Fair Labor Standards Act (FLSA)
    child labor laws
    exempt employees
    minimum wage laws
    minimum wage rate
    overtime laws
Federal Trade Commission (FTC)
lawyer’s inquiry
legislative mandates
legislatively enacted statutes
Occupational and Safety Health Administration (OSHA)
personal inquiry
public accommodation
reasonable accommodation
Social Security
state dental practice acts
summons and complaint
    absolute or strict liability
    attractive nuisance
    comparative negligence
    compensatory damages
    contributory negligence
    intentional torts
    principal–agent relationship
    punitive damages
    respondeat superior
    sole remedy
    strict liability
    vicarious liability
unemployment compensation Insurance
    Federal Unemployment Tax Act (FUTA)
    State Unemployment Tax Act (SUTA)
unjust (or unfair) dismissal
workers’ compensation system
exclusive remedy rule

The goal of this chapter is to familiarize students with the common legal issues faced by dental practitioners.

This chapter gives the new dentist an overview of common legal issues that affect dental practices. It is only intended as an introduction. Any time a dentist faces legal issues, he or she should gain competent legal advice, preferably from a lawyer who is knowledgeable about the specific concern. Laws exist for many aspects of people’s daily lives, from operating motor vehicles to divorce. This chapter is concerned with laws as they relate to the small business owner. Dental malpractice law specifically will be covered in another chapter.

The Source of Laws

Governments make laws to protect the citizens or to help settle disputes between them. The US Constitution is the “supreme law of the land.” Along with state constitutions, it sets the framework for how governments are formed and how they exercise their powers.

The method most people think of in forming laws is a legislatively enacted statute. In this type of law, a legislative body (either local, state, or national) passes a statute or law for the jurisdiction that they cover. There are often additional hurdles to pass before the statute carries the true force of law (e.g., executive branch endorsement), but the basic form of the law originates in the legislative branch. Legislatures often pass legislative mandates, which are not laws, but carry the same force as a law. For example, they require employers, by law, to carry unemployment and workers’ compensation insurance on all of their full-time employees. This mandate results in an added expense to the employer, equivalent to a tax on employees. Although the government does not run it, it has the equivalent force of law as if it were.

Laws may also be enacted by administrative regulation. Legislatures may establish agency boards and ­commissions to oversee and enforce particular ­legislation. For example, Congress has not written specific workplace rules and regulations, but instead established the Occupational Safety and Health Administration (OSHA). Congress then charged that organization with developing and implementing rules and regulations to guide workplace safety. These ­regulations carry the same force and effect as legislative statute.

The final way that laws are formed is through the court system or court precedent. Legislatures cannot pass laws to cover every possible circumstance. The courts may give a judgment as to the legality of a certain action or who should prevail in a certain ­circumstance. Future courts then may use that initial ruling as a precedent and apply that ruling as a basis for making a new ruling. The gradual accumulation of these rulings and precedents becomes part of the common law of the land.

Resolving Disputes

Often people have a differing opinion concerning how to apply the law in a particular case. This may be the result of different views of facts or circumstances or ­differing notions of guilt or innocence, right or wrong. Nevertheless, the dispute must be resolved. Two common methods exist for resolving disputes: litigation and some form of alternative dispute resolution (ADR). Litigation occurs when one person (or government) takes another person to trial in a court of law. The person who initiates the proceeding (sues or takes the other to court) is the plaintiff; the person he or she takes to court to defend against the suit is the defendant. The trial may be decided by a trial judge or by a jury, depending on the type of dispute and desires of the participants. To avoid the cost and time involved in trials, many contracts may call for ADR through mediation or arbitration. Mediation and arbitration happen when both sides agree to present their case to a knowledgeable third party. In mediation, the mediator tries to resolve the problem through discussions and assisted negotiation. Mediation is a voluntary process; either side may still take the other to court if they are not ­satisfied with the results. In arbitration, the arbitrator makes a decision that is binding; the decision of the arbitrator is final.

Criminal Law

Criminal law is concerned with wrongs against society. These wrongs may be violent acts, deceit, concealment, or wrongful use of force. They are prosecuted by an agent of the government, such as the district attorney (DA) on behalf of the state, not the victim. Criminal law is divided into felonies and misdemeanors. This classification is based on the severity of the punishment. Felonies, the more serious crimes, are punishable by death, fine, and imprisonment for more than 1 year. Misdemeanors, the less serious crimes, are punishable by fines and jail sentences of less than 1 year. Some lawyers add the classification of petty offenses, for minor violations of traffic ordinances, building codes, or other municipal ordinances. Punishment for criminal conduct is imposed for two reasons: to punish the guilty person and to deter others from committing similar crimes. Table 8.1 gives some common examples of crimes.

Civil Law

Civil law is concerned with rights, duties, and wrongs against individuals, rather than against society. If another individual wrongs a person, he or she is entitled to a “day in court.” Civil law defines the legal relationship between individuals in three general areas: contracts, torts, and property. This chapter discusses the first two, which contain the bulk of issues important for practicing dentists.

Table 8.1 Criminal Acts

Felonies Misdemeanors
Assault Battery
Arson Gambling
Bribery Petty larceny
Burglary Littering
Embezzlement Prostitution
Forgery Public disturbance
Grand larceny Simple assault
Kidnapping Traffic violations
Manslaughter Trespass


A contract is a legally enforceable agreement involving the mutual promises of two or more parties. Most states require that some contracts (e.g., real estate contracts) be in writing to be enforceable. As a rule, all contracts should be in writing to record the true understanding among or between the parties. People hear what they want to hear and understand what they want to believe. Their perception of an agreement may be entirely different from someone else’s. Oral or verbal contracts are usually enforceable. The problem is to define what either party truly said. Written contracts avoid this problem. A contract does not need to be written by a lawyer to be legally binding, but a person should be careful if he or she tries to negotiate and enter a contract without ­competent legal advice. He or she can be bound to a bad contract as easily as by a good one.

A contract states the rights and responsibilities of the parties. It has five principal elements. They are:

1. Offer The offer is a specific promise to do something in exchange for the other party doing something in return. For example, the buyer will promise to pay the seller $300,000 for the assets of the seller’s dental practice if the seller promises to sell them to the buyer.
2. Acceptance The acceptance says that there is agreement to the terms and conditions of the offer. In the proceeding example, the seller agrees to sell the buyer the seller’s practice assets according to the terms of the buyer’s offer.
3. Consideration Consideration is the value exchanged between the parties for performance of their mutual promises. In the example, the buyer and seller exchange $300,000 as consideration (or value) for the assets.
4. Capacity of the Parties All parties must have the mental and legal capacity to enter a contract. Someone who is underage or who is mentally impaired cannot enter contracts without the consent of the guardian.
5. Legality of Purpose A contract must have a legal purpose to be enforceable. As an example, an employment contract made with an unlicensed person in a regulated profession (dentistry) would be void because a person cannot legally employ another who has no license.

Common contracts in dental practice include the following:

1. Office lease
2. Employment (associate) agreement
3. Insurance (managed care) plan participation contracts
4. Promissory note
5. Partnership agreement
6. Buy-sell agreement
7. Bill of sale
8. Contract for practice purchase

Some contracts may be assigned, which means one party has the right to transfer the promise to a third party who was not part of the original agreement. For example, a person might assign the lease for office space to another person. Most personal contracts cannot be assigned.

As stated previously, a contract is a promise by two or more parties to do something. If one party fails to fulfill the contractual obligations, a breach of the contract has occurred. The nonbreaching party can attempt to receive monetary damages to compensate for his or her loss through the contract not being fulfilled. When someone breaches a contract, there are four common alternatives for reaching a remedy: negotiation, arbitration, ­mediation, or litigation. Some contracts state how any disputes will be handled.


A tort is a civil wrong, other than a breach of a contract, committed against a person or their property for which the law gives the right to recover damages. Torts are different from crimes, which are wrongs against society (Table 8.2). Some acts, such as assault, may be both a wrong against a person (a tort) and a wrong against society (a crime). Intentional torts involve deliberate actions that cause injury. Unintentional torts are not deliberate.

Negligence is a tort that involves injury that results from the failure to use “reasonable care.” Negligence is the most commonly discussed tort in dentistry. The four elements needed to prove negligence are given here. (Professional negligence is a special type of negligence, which is discussed later.) One critical element of this tort is duty. Without a duty (or obligation or relationship) to another person, one does not owe that person reasonable care. Duty arises from a person’s conduct or activity. Someone who is doing something has a duty to use reasonable care so as not to injure others. Whether a person is driving a car or practicing dentistry, he or she has a duty not to injure others through unreasonable conduct. Usually, people do not have a duty to avoid injury by nonconduct. A member of the public has no obligation to warn someone else of a possible problem, even if he or she has seen the problem. (There may be a moral call to warn the other but no legal requirement.) A ­sunbather, then has no legal obligation to warn swimmers of a shark in the area. However, if there is a special ­relationship between the parties, the situation changes. A business that rents surfboards has a special relationship with the renter and probably does have a legal responsibility to warn of sharks in the area. The business is potentially liable if it negligently rents the board without proper warning. Consequently, many profes­sional office buildings are justifiably concerned with security and other protection measures.

Table 8.2 Common Torts

Assault Placing another in apprehension for his or her physical safety
Battery Illegal touching of another person
Libel Written defamation of another to ridicule his or her character
Slander Verbal defamation of another to ridicule his or her character
False arrest Unjustified confinement of a nonconsenting person
Trespass Entering another’s property without consent or refusing to leave

Negligence is the failure to behave as a reasonable and prudent person in a similar situation would behave (Box 8.1). A person a duty not only to recognize a potential problem, but also to do something to prevent the problem (a duty to act). This is not an absolute differentiation. Instead, the individual’s actions (or inactions) must be compared to a norm that changes over time and for which different people may have different values. For example, assume a person has a dental office in a northern state that has steps leading to the front door. If it snows, most people would say that a reasonable and prudent person would sweep the snow from the steps and apply a salt to melt any remaining ice to prevent people from slipping and injuring themselves. If the dentist fails to sweep the snow, he or she has pro­bably not acted as a reasonable and prudent person would have acted in a similar situation. If a patient or anyone else who has a reason for being there slips on the ice or snow and gets injured, he or she would probably sue the dentist for damages (and win) claiming that the dentist was negligent in not sweeping the snow and ice from the steps. This example is obvious. The problem comes when juries are asked to decide cases in which it is not clear whether or not a prudent person would have recognized a danger in a similar circumstance and acted to prevent the accident. Lightning strikes a golfer. Should the golf course superintendent have warned the golfers (by sirens or other devices) that there is lightning in the area and to take cover, or should the golfers have known, without warning, to take cover during a thunderstorm? A doting elderly patient trips on the door threshold while entering a dental office and sustains injuries. Was the threshold loose or in another way hazardous or a potential problem? If so, would a reasonable and prudent person have previously fixed the threshold? Did the person’s impaired condition contribute to the accident? Obviously, juries need to make judgments concerning both the degree of hazard presented by a problem and what is a reasonable and prudent response to a potentially hazardous situation.

Box 8.1 Elements of Negligence
1. Existence of a duty of care owed by one person to another
2. Unreasonable care that breaches the duty
3. The defendant’s behavior caused the plaintiff’s injury
4. There was an actual injury

There are several instances in which negligence is further defined. Contributory negligence says that the failure to use reasonable care by the plaintiff (or injured party) in a negligence suit contributed to the injury. In the past, cases in which the plaintiff’s own actions contributed to the injury “in any degree, however slight,” were dismissed. The trend today, however, is to move from this strict interpretation toward one that compares how much of the fault is the plaintiff’s and how much is the defendant’s. Juries award damages based on the proportionality found. Comparative negligence then allocates the fault (and damages) between plaintiff and defendant.

Vicarious liability is imputed liability. The negligence of one person makes another liable. A common example is the legal doctrine of respondeat superior (“let the master reply”). This doctrine assumes that if an employee is liable for acts committed while on the job, then the employer (or business owner) is also liable. This is as a result of the principal–agent relationship, which says that the employee is advancing the interests of the employer. Once the employee is found negligent, the owner is strictly liable. Warning a staff member to be careful when driving cases to the lab does not prevent the owner from being vicariously liable when the employee runs a red light and has an accident while doing so. Or consider a case in which a hygienist drops an instrument in the eye of a patient, causing significant and permanent visual damage to the patient. The hygienist is personally liable for the patient’s negligence. Similarly, the dentist is personally negligent for failure to supervise the hygienist adequately, and the employer is liable to the full extent of its assets, under the doctrine of respondeat superior. As a rule, the corporate structure does not protect a person from the professional negligence caused by that person or one of his or her employees. The limited liability purportedly given to shareholders of professional service corporations is illusory. Any liability protection is for business liability only, not professional liability.

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Jan 4, 2015 | Posted by in General Dentistry | Comments Off on 8: The Legal Environment of the Dental Practice
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