March 18, 2010
In 2005, I obtained a LASIK malpractice verdict against Mark Speaker, M.D., who was Medical Director of TLC in New York. Since that time, I believed that this LASIK super store, which touted Tiger Woods as its celebrity endorser, had a bankrupt business model. It paid optometrists to funnel LASIK candidates onto its surgical conveyor belt, even if the optometrists were unskilled to screen patients competently. Compounding the hazard, sometimes the LASIK surgeons were too busy operating on dozens of patients a day to confirm that the pre-screened patients were truly suitable for eye surgery.
TLC called this dubious design “co-managed care,” whereby the optometrist and ophthalmologist shared responsibility for patient care. However, time and experience teach that co-managed care often translates to no managed care.
Mark Whitten, M.D., Tiger Woods’s personal LASIK surgeon, is currently being sued in one such case, where his 22-year old patient was blinded in one eye, from steroid induced glaucoma, after being bounced among seven different TLC co-managing eye care professionals.
Moreover, by its own admission, TLC confesses in its Annual Statement to its stockholders, which is filed with the United States Securities and Exchange Commission, that its business model may be illegal:
“Many states prohibit a physician from sharing or “splitting” fees with persons or entities not authorized to practice medicine. The Company’s co-management model for refractive procedures presumes that a patient will make a single global payment to the laser center, which is a management entity acting on behalf of the ophthalmologist and optometrist to collect fees on their behalf. In turn, the ophthalmologist and optometrist pay facility and management fees to the laser center out of the patient fees collected. While the Company believes that these arrangements do not violate any of the prohibitions in any material respects, one or more states may interpret this structure as non-compliant with the state fee-splitting prohibition, thereby requiring the Company to change its procedures in connection with billing and collecting for services. Violation of state fee-splitting prohibitions may subject the ophthalmologists and optometrists to sanctions, and may result in the Company incurring legal fees, as well as being subjected to fines or other costs, and this could have a material adverse effect on the Company’s business, financial condition and operations.”
In December 2009, TLC’s bankrupt business model literally became bankrupt. Was it just because of the economy? Is it because patients no longer want LASIK eye surgery? Is it because its doctors are unsophisticated businessmen? Or is it because enough eye doctors, like former TLC Medical Director Stephen Brint, M.D., believe that this business model of entrusting surgical clearance of LASIK patients to persons who are not eye surgeons is a bad idea?
The TLC Vision Corporation, a $300 million eye care services company with offices throughout North America, has announced that it is filing for Chapter 11 Bankruptcy. On December 21, 2009, the vision corporation, and two of its corporate affiliates filed petitions in the United States Bankruptcy Court for the District of Delaware in an effort to reorganize its balance sheet.
The bankruptcy restructuring is part of a prearranged deal that will give total control of the eye-surgery company to lenders, wiping out shareholders. The reorganization plan converts debt to 100% of the new equity of TLC, which will emerge as a privately held company. The plan included a $15 million debtor-in-possession financing facility.
The vision giant claims that operations at its more than 80 refractive centers will somehow remain unaffected. These centers are locations where individuals undergo laser vision surgeries including LASIK, Custom LASIK and Bladeless LASIK, and while the surgeons, patients and affiliates may not notice a marked difference in business dealings with TLC, the original shareholders of the company are not so fortunate. As with all bankruptcy proceedings, only after lenders, vendors and creditors have been paid in full would shareholders be entitled to receive anything in respect of their shares. Often in bankruptcy proceedings, shareholders receive nothing because there are insufficient assets to satisfy all holders in full.
As the LASIK eye center giant moves forward with its reorganized business model, we are left to wonder the wisdom of having an eye care services company that must only consider the bottom line when answering to its investors. Investors who in this instance, have gone from private shareholders to corporate lending entities who are solely concerned with increasing the profit associated with their financial investments.
TLC is not the only publicly traded laser eye surgery giant. LVI, doing business as LASIKPlus, is another. I am no financial analyst. And, I am not in the business of dispensing investment advice. However, I would venture to guess that LVI’s fortunes must be evaporating faster than its patients’ painful dry eyes. My only LASIK regret is not having placed a wager that TLC would topple in 2005, when its stock price was still above $7 per share. As of March 18, 2010, its stock price is quoted at $0.10 per share.
If you had a bad LASIK eye surgery at TLC, LVI or elsewhere, and would like a free, confidential consultation, contact New York LASIK attorney Todd J. Krouner at firstname.lastname@example.org.
Source:http://www.sec.gov/Archives/edgar/data/1010610/000095012309005875/c50319e10vk.htm; United States Securities and Exchange Commission. TLC Vision Corporation Form 10-K for the Year Ending December 31, 2008, at page 17. Commission File No. 0-29302.