How Are States Addressing Licensing of Out of State Telehealth Providers
ComplianceApril 17, 2020

How Are States Addressing Licensing of Out-of-State Telehealth Providers

Even before COVID-19 made telehealth a household word, states were grappling with how to balance the benefits of allowing out-of-state healthcare providers to treat their citizens remotely with the need to ensure their citizens are receiving the best possible health care — all the while being able to hold out-of-state practitioners accountable.

States basically resolved that dilemma by allowing out-of-state telehealth services to be available to their citizens, but they also required the service providers to obtain a license in their state first.

And one state (so far) has taken a novel approach of allowing an out-of-state health care provider to provide telehealth services without an in-state license — if the provider, among other things, appoints a Registered Agent for service of process.

The telehealth licensure conundrum

Because of the COVID-19 crisis, most people seeking health care have had no choice but to turn to telehealth. Most practitioners have had no choice but to provide their services through remote electronic communication. This is likely to have increased the comfort level of both patients and providers in using telehealth. As a result, we are likely to see more healthcare providers who will want to continue being able to use remote telecommunication to treat patients without regard to state borders.

But once the COVID-19 state of emergency is over, and the waivers and suspensions of licensing requirements that the states are ordering ends, healthcare providers will be faced with deciphering licensing requirements for out-of-state telehealth care that vary significantly from state to state.

Service providers will find, among other things, that some states require out-of-state telehealth providers to apply for a full, unrestricted medical license. Some states have temporary licenses that allow telehealth services to be provided for a short period of time. And some states have reciprocal agreements whereby they will grant licenses to out-of-state providers who have licenses in states that will reciprocate by accepting their state’s licenses.

In addition, some states participate in multi-state healthcare practitioner licensure compacts. For example, more than half the states are part of the Interstate Medical License Compact, which provides a streamlined procedure for physicians to receive a license to practice telehealth in multiple states. There is also a Nurse Licensure Compact. And licensing compacts for certain other healthcare providers either exist or are in the development phase.

Florida’s out-of-state telehealth law

Florida has taken a very interesting approach to out-of-state telehealth care, which is worthy of a closer look.

Last July, a new section of Florida law went into effect (Sec. 456.47), which among other things, creates a registration process for out-of-state healthcare professionals to use telehealth to deliver healthcare services to Florida patients.

“Telehealth” is defined by the law as the use of synchronous or asynchronous telecommunications technology by a telehealth provider to provide healthcare services, including, but not limited to, assessment, diagnosis, consultation, treatment, and monitoring of a patient; transfer of medical data; patient and professional health-related education; public health services; and health administration. Telehealth does not include audio-only telephone calls, e-mail messages, or fax transmissions.

“Telehealth Provider” is defined as an individual who provides a healthcare service using telehealth, which includes a licensed physician, podiatrist, optometrist, nurse, pharmacist, dentist, chiropractor, acupuncturist, occupational therapist, dietician, physical therapist, psychologist, clinical social worker, mental health counselor, and many other providers. (For a full list of approved providers, see Sec. 456.47.)

Florida’s law authorizes out-of-state health care professionals, not licensed in Florida, to use telehealth to deliver health care services to Florida patients if they register with the applicable Board, or with the Department of Health if there is no board, and meet certain other eligibility requirements.

The Board or Department will register a health care professional not licensed in Florida as a telehealth provider if the health care professional:

  1. Completes an application;
  2. Maintains an active, unencumbered license issued by another state that is substantially similar to the corresponding Florida license;
  3. Has not been the subject of disciplinary action relating to his or her license for the last five years;
  4. Designates a duly appointed Registered Agent for service of process in the state; and
  5. Maintains professional liability coverage that includes coverage for telehealth services to patients in Florida, in amounts equal to or greater than what is required for a Florida licensed provider.

What is a Registered Agent?

One of the most interesting features of the Florida law is the requirement that the individual telehealth provider designate a Registered Agent for service of process.

While it is unusual for an individual to need a Registered Agent, the appointment of a Registered Agent is an extremely common compliance requirement for statutory business entities. The state corporation, limited liability company, limited liability partnership, and limited partnership laws require business entities formed under another state’s laws to apply for authority to do business in their state and to appoint and continually maintain a Registered Agent.

And this includes business entities engaged in the providing of a professional service.

The name and address of the Registered Agent is set forth on the application for authority and in its annual reports and is accessible to the public. A failure to comply with the Registered Agent requirement subjects the business entity to penalties, which can include a revocation of its authority to do business in the state. This kind of Registered Agent appointment — one which is required by the state corporation, LLC, LLP or LP law — is sometimes called “regular representation”.

In addition, state agencies or boards that license certain specific types of businesses or service providers often require out-of-state business entities to maintain a Registered Agent in the state as a condition of their receiving and maintaining their license. This appointment is sometimes referred to as a “special agency” or “special representation”.

What is unusual about Florida’s out-of-state telehealth law is that it requires individual health care providers to appoint a Registered Agent. As noted, Registered Agents for individuals is far less common than Registered Agents for business entities. Florida’s requiring this is probably best understood as being intended to further the goals of helping Florida protect its citizens and hold practitioners accountable. This would be consistent with the reason why Registered Agents were first developed a century ago.

The main function of a Registered Agent is to receive service of process on behalf of its principal — whether it be a business entity as in most cases, or an individual in the case of Florida’s telehealth law — and forward it to the principal.

Service of process notifies an entity or individual that they are being sued and provides some details about the lawsuit and instructions on how to respond to avoid a default judgment. The Registered Agent can also receive other court documents and official communications from the state filing office or the licensing agency or board.

Having an in-state Registered Agent makes it much easier for a state’s citizens to serve a company or individual that is physically located in another state. It also makes it easier for the state to serve or communicate with out-of-state parties. It can also be an advantage for the party appointing the Registered Agent. Health care providers may not really want process servers coming into their offices and serving them in front of patients or at their homes.

It will be interesting to see if other states follow Florida’s lead and allow out-of-state practitioners to provide telehealth services without having to obtain a state license if they appoint a Registered Agent and meet other requirements.

Conclusion

Navigating the licensing requirements for out-of-state telehealth providers is no simple task. And adding to the complexity is that the laws change. In fact, several states have pending legislation addressing telehealth. And another possibility is that states will adopt the Florida approach and allow out-of-state health care providers to practice without a license but to require the appointment of a Registered Agent in the state.

Health care providers looking to continue serving out-of-state patients via telecommunication may wish to obtain the assistance of a service company like CT Corporation that can assist them in obtaining and managing their licenses as well as providing the Registered agent for service of process in Florida and any other states that adopt a Registered Agent requirement.

 

Sandra Feldman
Publications Attorney
Sandra (Sandy) Feldman has been the Publications Attorney for CT Corporation since 1988. Sandy stays on top of the most pressing and pertinent business entity law issues that impact CT customers of all sizes and segments.