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Refund Fees to Prevent Malpractice Allegations

Refund Fees to Prevent Malpractice Allegations

If a patient asks for a fee refund, how do you respond? Do you believe that refunding fees is an admission of liability and that returning money will be sending a message that you believe something is wrong with your treatment? Do you feel that you have worked hard for the fee and under no conditions will you refund even a portion of it?

Or, are you so concerned about patients criticizing you that you willingly refund fees even if you believe your treatment was excellent? The propriety of refunding fees is a frequently asked question of the AAO Services claims staff. Is a fee refund appropriate, or not?   

Consider Each Case on its Own Merits
There are patients who will mistake an agreement to refund fees to be an admission of liability and there are treatment facts and situations that do not merit refunds. In these cases, definitely decline. If you are in any doubt, call your professional liability carrier to discuss your situation. We at AAOIC claims are happy to listen to doctors and share our insight into varying situations.

Consider Refunding Fees As a Business Decision
Most businesses want the customer to leave happy, and will refund the price of an unsatisfactory purchase. Orthodontists tell us you prefer satisfied customers. If someone is dissatisfied, refunding some or all of the fees may be an appropriate way to resolve the issue. In other words, use a refund of fees as a business decision and a public relations tool.

In most cases, a fee refund is not an admission of liability.  Clarify to the patient or parent that your treatment was appropriate, within the standard of care. Tell them your goal is to facilitate customer satisfaction and if refunding some or all of the fees will accomplish that, you are willing to do so, if they are willing to sign a release. Have the release signed before disseminating the money (see section below).

A fee refund will often preclude a dental board complaint or a malpractice claim; many patients want their fee back so they can move on.  At AAOIC claims, we have handled lawsuits that began with the refusal of a request for a fee refund.  The handling processes of both regulatory complaints and claims can be lengthy and stressful; refunding fees is often a small price to pay to avoid having to defend yourself in more formal complaint actions.

Another significant advantage is that a fee refund paid by the doctor is not reportable to the National Practitioner Data Bank. The NPDB is a registry for all medical and dental malpractice claim settlements; all professional liability insurers must report all settlements or verdicts. Many of you say you prefer not to have your name in the Data Bank. If you refuse the refund and a claim is made which results in a settlement, the Data Bank report must be filed. In addition to this entity, many states also mandate reporting of malpractice settlements.

If Possible, Obtain a Signed Patient Release When Refunding the Fee
Even if the patient requests a full refund, that does not mean he/she expects to receive a full refund.  Doctors should consider each case.  How long was the treatment?  How much fee has been paid?  How much do you believe is fair?  There is no rule.

It is appropriate to have the patient sign a fee refund release.  There is such a release on the website in the Practice Management/Forms section.  Advise the patient that you are willing to consider a refund of some agreed amount, if the patient is willing to sign a release.

The release will specify:
1) That the agreement is confidential, that the transaction should not be discussed with others;
2) That the agreement to refund is not an admission of liability; and
3) That the patient agrees not bring any civil action against the doctor for the orthodontic treatment. It clarifies that patient will not publicize a complaint in the media including social media, internet communications, blogging, etc.

Negotiate the amount of the refund.  We recommend having some flexibility—start with less than the maximum acceptable amount so that the patient can feel he/she was able to negotiate to receive a little more—to have the last word.  If the request is for the entire fee, you can respond with an offer of any amount you prefer, from a few dollars to the full fee.

Once you and the patient have reached an agreement, have the release signed, pay the money, and place copies of all documents in the patient records.

Occasionally, patients refuse to sign releases. If that occurs, discuss the situation with a claims professional.  In some circumstances, not getting the release signed should not be a “deal breaker.”  Make a copy of the check that designates the money to be a refund of orthodontic fees. If a claim is later filed, the check copy will be evidence of your good will to refund the fees. 

Orthodontists Have Varying Perspectives on Fee Refunds
Some doctors will refuse to honor a request for a fee refund despite problems with the treatment or the patient.  They assert that they have worked hard for their money, that any problems were precipitated by the patient and under no circumstances will they refund the fee.

We agree that often fee refund requests are unfair and unmerited; that does not necessarily mean refunding is a bad idea. Doctors should consider the time involved in handling a formal malpractice complaint made against them in whatever forum; consider the stress claims and regulatory complaints will add to your life; and consider the costs involved in handling the complaints.

To some doctors, refusing a refund is the right thing to do. To other doctors, refunding a fee might be worth it to ensure that a difficult patient will go away quietly.


This article is brought to you by the AAO Insurance Company (AAOIC, a Risk Retention Group).  Elizabeth Franklin, claims manager for AAOIC, prepared this article. The AAOIC provides professional liability insurance to AAO member orthodontists and is endorsed by the AAO. For more information, call 800-622-0344.