Cases can be interpreted as limited to its facts, or otherwise legally ambiguous; so much depends on the overall situation and what harms the State perceives in the arrangement and immediate facts, and, there is always enforcement discretion. In this way, the Medical Board of California pulls together the various pieces of legislation. Navigating New York Laws On Corporate Practice Of Medicine. As business opportunities abound for both licensed physicians and non-licensed entrepreneurs and investors, in the ownership and operation of ambulatory care facilities, drug treatment facilities, and diagnostic testing facilities, physicians, licensed practitioners, and businesspersons must ensure that the structure of their business complies with the Corporate Practice of Medicine (CPOM . State of Georgia government websites and email systems use georgia.gov or ga.gov at the end of the address. The SCA binds future transferees of PSCs shares. The "incapacity" of a shareholder means that a determination by a court of competent . Concierge Medical Practices A healthcare attorney can work with individuals interested in opening a medical practice on how to receive their proper licensing, and how to go about the business transaction. All rights reserved. Exclusive Decisions vested in the Professional Medical Corporation/ Practicing Physician Professional Medical Corporation/ Practicing Physician has sole responsibility for the decision. Seek assurance that there is no such requirement. The Corporate Practice of Medicine ICS Staff The general rule in Illinois, as well as in many states, is that physician services may only be provided by physicians, and not by business entities. Legal Intelligencer article by Lamb McErlane PC Health Law Attorneys Vasilios J. Kalogredis and Rachel E. (Lusk) Klebanoff. Professional Medical Corporation/ Practicing Physician has no duty to consult with the MSO, even on an informal basis. WE PROVIDE LEGAL STRATEGY & REGULATORY ADVICE TO BUSINESSES THAT ACCELERATE HEALTH AND WELLNESS, Addiction Treatment Centers Additionally, if you are found guilty of commit-ting a crime, by illegally being involved in the corporate With the rise of private equity investments, medical practices should be mindful of their business structure and the role those without a medical license are playing in it. public policy considerations underlying the cpom include concerns that the corporate employment or control of a licensed professional: (1) commercializes and debases licensed professions; (2) undermines the physician-patient relationship and the physician's exercise of independent medical judgment; and (3) allows unlicensed corporate entities to The management fee must be at fair market value. Gross made a motion, seconded by Dr. Retterbush, to go into closed session. Crafting the right plan takes legal experience as well as knowledge of the corporate practice of medicine, anti-kickback and fee-splitting, and other legal pitfalls that can ensnare the healthcare venture. Please enable javascript. One of the benefits of getting advice from an astute healthcare lawyer is finding the right Goldilocks strategyneither too hot on the enforcement side, nor too cool on the profit side. Specifically, under Pennsylvania law, only licensed physicians may be shareholders of or partners or members in, as the case may be, professional corporations, limited liability partnerships or restricted professional companies which have been formed to provide medical services. Telemedicine Ventures, Healthcare M&A: Dos and Donts of Buying or Selling a Medical Practice, Californias New Scope of Practice Law for Nurse Practitioners - Part Two, FDA Issues Warning Letter to Company that Sells CBD Products Online and Through Social Media, 5 Key Stark and Anti-Kickback Legal Rules Youll Want to Know. Consistent with the premise underlying the CPOM doctrine, the Court reasoned: A corporation as such cannot possess the personal qualities required of a practitioner of a profession. The court concluded that the medical practice was essentially under the control of the management company and the physician was a nominal owner; thus, because the medical practice was not legitimately structured, it was not allowed to submit medical insurance claims. ARTICLE 1 - GENERAL PROVISIONS 43-11-17 - Acts which constitute the practice of dentistry O.C.G.A. In some states (for example, California), it can be a percentage of gross revenues, whereas in other states (for example, New York), the management fee, at least historically, has had to be a flat fee. 422.1 et seq. This and resulted in a $4 million verdict in favor of Allstate. The corporate practice of medicine (CPM) rule or doctrine forbids medical management organizations (MSOs) from meddling with and effectively, directly or indirectly, control or in some way influencing, the affairs of medical practice. There are usually exceptions to the corporate practice of medicine prohibitionnotably, for example, the case of hospitals. The prohibition on the corporate practice of medicine is grounded in public policy concerns based on the principle that when a lay corporation holds a financial interest in a physician's profits, the entity has a direct interest in and ability to control medical decision-making and impact the quality of care provided to patients. For example, the Parent could negotiate the compensation, or an independent compensation committee could set compensation based on objective criteria. Florida Statute 463.014 states that no corporation, lay person, organization or individual other than a licensed practitioner can engage in the practice of optometry by engaging the services, through paying a salary, commission, or . Self-referral, anti-kickback, and fee-splitting rules can create legal enforcement issues and must be [], Weak Corporate Practice of Medicine States & A National Strategy. KFF is an endowed nonprofit organization providing information on health issues to the nation. For instance, not only is the regulation of physician different from state to state, but the regulation of physicians and dentists, for instance, can be very different even within the same state. Section 43-34-39 provides that the state medical board, in addition to any other remedy or criminal prosecution (emphasis added), may file a complaint to the superior court and seeking a restraining order and an injunction against any person, firm, company, partnership, association, or corporation or the agent, officer, or director of such firm, company, partnership, association, or corporation who is or has been violating any state law relating to the practice of medicine. However, court decisions and Attorney General Opinions have The organizational test requires that a PSC include "organizational language" in an organization's articles of incorporation limiting its purposes to one or more exempt purposes, not expressly empowering it to engage in activities which are not in furtherance of one or more exempt purposes (other than as an insubstantial part of its activities), ensuring that its assets are dedicated to one or more exempt purposes on dissolution, etc. The good news is that many states (e.g., Connecticut, Georgia, and Massachusetts) have no such prohibition, while other states (e.g., Florida, Oregon, and California) take a middle-ground approach and do not prohibit the corporate practice of veterinary medicine, but require only that the veterinary clinic designate a licensed veterinarian . Corporate Practice of Medicine Health care investors and health care business companies often look to partner with physicians, dentists, optometrists, therapists, and other licensed professionals. While a physician may consult with unlicensed persons in making the business or management decisions described above, the physician must retain the ultimate responsibility for, or approval of, those decisions. . Because of the CPM doctrine, non-physician in California cannot owna medicalclinic or hire physicians. Terms of Use, Disclaimer, and Privacy Policy, Strong form corporate practice of medicine doctrine. Negotiating, or assisting other counsel in negotiating, with lenders and insurance providers concerned about state law and/or corporate practice of medicine compliance. [Please note: Board Rules are currently being re-written to comply with changes to the Medical Practice Act that were passed by the Georgia General Assembly during the most recent legislative session and will be updated on the website as changes to the rules are passed.]. And in California, there is a relatively new exception for incidental medical services provided by substance abuse treatment centers. What Is the Corporate Practice of Medicine? The legislation, which went into effect July 1, 2012, amends Tennessee Code Annotated Sections 68-11-205 and 63-6-204 by providing an exception to Tennessee's prohibition on the corporate practice . In other words, medical judgment and practice should not by unduly influenced by the MSOs. Law360, New York (December 11, 2015, 10:29 AM EST) --. . Sometimes the medical board website spells it out and pulls it all together. Further to the guiding/non-exhaustive lists provided above, in these cases, there must be a clear distinction between who is providing professional services and who is providing the management services. Reg. ME-P Publishing. The corporate practice of medicine, or CPOM, is a doctrine that's enshrined in many states' laws, either by statute, which is the laws on the books, or by judge-made law case law. Wednesday, June 6, 2012. An official website of the United States Government. Subsequent case law is sparse and other authorities provide limited guidance on the applicability of the CPOM doctrine. 43-11-17 (2010) . In fact, the legislative intent of each of these laws is to authorize only licensed persons to render professional services through these types of entities. Welcome to FindLaw's Cases & Codes, a free source of state and federal court . The team of experienced and proactive healthcare attorneys will work with your practice to make sure it can receive the funding needed without jeopardizing the organization. 3 State law may provide for specific exceptions; for hospitals, for example. Can you get the Priestly Blessing from your Healthcare & FDA Lawyer? M&A (Acquisitions & Sales of Healthcare Businesses), Fraud & Abuse (Anti-Kickback, Fee-Splitting, Stark), Management Services Organizations (MSO) Issues, Medical Device & Mobile Medical App Issues, ANTI-AGING & FUNCTIONAL MEDICINE PRACTICES, BEHAVIORAL & MENTAL HEALTHCARE PROVIDERS AND LIFE COACHES, COMPLEMENTARY & INTEGRATIVE MEDICINE PROVIDERS, CONCIERGE & DIRECT PRIMARY CARE MEDICAL PRACTICES, DIETARY SUPPLEMENT & NUTRACEUTICAL COMPANIES, HEALTHCARE FACILITIES (HOSPITALS, LABS, DME, IMAGING), QUICK SUMMARY OF FEDERAL STARK SELF-REFERRAL & ANTI-KICKBACK LAW AND CALIFORNIA SELF-REFERRAL AND FEE-SPLITTING PROHIBITIONS, HOW SUBSTANCE ABUSE TREATMENT CENTERS NAVIGATE ANTI-KICKBACK RULES. If the MSO is an employer, then the MSO has the right to control its employeesby definition. However, they can own a management entity which can serve as an administrative and non-medical, management services organization (MSO) for the clinic or medical practice, which is frequently organized as a professional medical corporation (Professional Medical Corporation). Guidelines for analyzing professional service corporation cases involving the Corporate Practice of Medicine (CPOM). Even in a weak Corporate Practice of Medicine state, there is some ambiguity in the legal rules. Can a Subscription-Based Healthcare Startup Legally Deploy the RN Profitably? Because of the CPOM doctrine, non-physician investors desiring to offer physician services (alone or with other services) often set up two entitiesa professional corporation that employs physicians through which physician services are furnished (often referred to as a captive PC or friendly PC), and a management services organization (MSO) that, under contract with the professional corporation, furnishes all non-physician services to the business (e.g., space, equipment, non-physician staffing, billing and collection, and other functions). While this innovation certainly has its benefits, businesses offering IV services must still be aware of the potential risks that come along with offering this therapy. 1 This analysis assumes the organization is formed as a corporation, however the organization may be formed as some other type of legal entity allowable under the laws of the state, such as an LLC. Providing regulatory advice and counsel to platform entities, including management companies, seeking to expand into new jurisdictions or comply with complex or difficult state regulations. Biotechnology & Life Sciences 610-701-4416. Tenn. Atty. Our state licensure and corporate practice attorneys have counseled clients on a number of aspects of state law, including matters related to: Representation in Joining a Practice Management Platform, Epstein Becker Green Successfully Advises on Regulatory Issues for Mental Health Platform, Epstein Becker Green Announces 2023 Promotions, Epstein Becker Greens Lasting Support of AHLA Recognized in 2022 Top Honors and New Leadership Positions, Sarah Hall, Elena Quattrone Quoted in Conflicting State Laws and Unpredictable Enforcement Await Providers in Post-, Anjana Patel Quoted in How Group Practices Can Plan for Partial Retirements, Epstein Becker Green Welcomes Glenn Prives, Health Care and Corporate Attorney, Health Care & Corporate Law Attorney Glenn P. Prives Joins Epstein Becker Green. AB 1000 significantly changed the Moscone-Knox Professional Corporations Act regarding: The types of professional corporations that may employ a physical therapist, including medical corporations; The types of professional corporations that may allow a physical therapist to have an ownership interest or serve as an officer or director; and State law prohibitions against corporate practice of medicine come in to flavors: The distinction between the strong and weak versions can be particularly important when designing an MSO (management services organization) structure. The Parent (not the shareholder) initiates all actions regarding the election and removal of the corporations board of directors. For example, the California Medical Board says this in its page on Corporate Practice of Medicine: The Medical Practice Act, Business and Professions Code section 2052, provides: Any person who practices or attempts to practice, or who holds himself or herself out as practicing[medicine] without having at the time of so doing a valid, unrevoked, or unsuspended certificateis guilty of a public offense.. A.S 08.64.170 (prohibiting unlicensed practice of medicine) ARIZONA Statutes A.R.S. The challenge is that the healthcare venture managed by able healthcare entrepreneurs wants to call the shots . 3. These documents should have established adequate control by the exempt parent. Note, however, that this Issue Snapshot will focus on the Corporate Practice of Medicine by organizations formed as corporations. While there can be an overlap in goals, the CPOM doctrine seeks to protect patients from a practices ulterior motives by preventing non-medical practitioners from owning a medical practice. The SCA imposes the provisions of IRC 501(c)(3) on the operation of the PSC. one or more persons licensed pursuant to the medical practice act of 1987, as heretofore or hereafter amended, may form a corporation pursuant to the "business corporation act of 1983", as amended, to own, operate and maintain an establishment for the study, diagnosis and treatment of human ailments and injuries, whether physical or mental, and Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture. 8 hours ago McDermott health lawyers contributed to the second edition of AHLA's Corporate Practice of Medicine: A 50 State Survey.Expanded to cover a broader range of healthcare professionals, this edition contains the latest information on practice restrictions by state as they relate to behavioral health providers, dentists, chiropractors . The decisions described below are examples of some of the types of behaviors and subtle controls that the corporate practice doctrine is intended to prevent. In OCA, Inc. v. Hodges, 615 F. Supp. However, the MSOs services must not interfere with the professionals medical (clinical) judgment or otherwise result in MSO control over the medical aspects of the medical practice. States adopt various modelswith exceptionsand others eliminate the prohibition completely, while some states have CPOM prohibitions that are not enforced. Your healthcare lawyer might be able to design a multi-pronged strategy, adapted by state, or, potentially, adapted to strong vs. weak corporate practice of medicine states. Digital Health Legal Roadblocks: Is the MSO Structure the Answer to Kickback and Corporate Practice of Medicine Concerns? Failing to do so may result in professional misconduct and/or unlicensed practice of the profession. How you know. There must be no inurement to stockholders in the form of dividends or profits on transfers of their stock, distributions in the event of dissolution, or excessive compensation. Ensuring compliance with existing state exceptions to corporate practice of medicine or fee-splitting rules, such as those that exist for nonprofit entities or staffing companies. Then there is often a second set of statutes that talk about the fact that corporations cannot engage in professional practices. University of Maryland Physicians v. Commissioner, T.C. Practice should not by unduly influenced by the exempt Parent of Medicine state, there is a! Hire physicians Dr. Retterbush, to go into closed session managed by able Healthcare entrepreneurs wants to call shots. Cpom doctrine has no duty to consult with the MSO, even on informal. Practice of Medicine prohibitionnotably, for example, the Parent could negotiate the compensation, or assisting other in! 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