Permit Health - The Corporate Practice of Medicine 50-State Guide

What are Corporate Practice of Medicine (CPOM) Laws?

CPOM laws are regulations that prohibit standard corporations (or other non-physician entities) from practicing medicine or employing practicing physicians. The primary goal of these laws is to ensure that medical decisions are made solely based on patient care and not influenced by corporate interests. These laws vary by state, but they generally aim to protect the physician-patient relationship from commercial influence.

While the focus is often on physicians and medical care, the CPOM family of laws typically apply to a wide range of licensed healthcare providers, including psychologists, speech therapists, physical therapists, occupational therapists, mid-level providers (nurse practitioners and physician assistants), dentists, dietitians, podiatrists, chiropractors, pharmacists, optometrists, and many others. The goal of CPOM laws is shared across these professions: ensure clinical decisions aren’t influenced by corporate pressures.

Who Do These CPOM Laws Apply To?

A state’s CPOM restrictions typically apply to any standard corporate entity that seeks to provide medical or licensed healthcare services. This includes corporations, limited liability companies (LLCs), and other business entities. For an entity to comply with CPOM laws and practice medicine, it typically must be:

100% (or majority, in some states) owned by a physician (or physicians) licensed to practice medicine in that state, and
Formed as a special type of physician-owned legal entity: a Professional Corporation (“PC” for short). In some states, a Professional Limited Liability Company (“PLLC”) is also permitted.

Most states with CPOM laws only permit the corporate practice of medicine through these physician-owned PCs or PLLCs. Below is an overview of the status of CPOM laws in all 50-states and D.C.

CPOM States and Non CPOM States Corporate Practice of Medicine Guide

Alabama

Does Alabama have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: While Alabama doesn't specifically ban businesses from practicing medicine, it does outlaw practicing medicine without a license, as stated in Alabama Code § 34-24-51. In a pivotal decision in October 1992, the Alabama Medical Licensure Commission and the Board of Medical Examiners jointly declared that clinics can hire doctors to treat patients without violating the ban on unlicensed practice, as long as these doctors are contractually bound to make independent decisions in diagnosing and treating patients. This ruling aimed to safeguard patient care, ensuring that only qualified, licensed physicians provide medical services, free from the oversight of non-medically licensed individuals. This stipulation in employment contracts enables doctors to work for a variety of legal entities, including professional, non-profit, and business corporations, as well as partnerships and joint ventures.
Sources: Alabama Att’y Gen. Op. No. 2001-089 (Feb. 1, 2001); Declaratory Ruling of the Ala. Med. Licensure Comm’n, Oct. 21, 1992).

Alaska

Does Alaska have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: In Alaska, there is no specific law that prohibits the corporate practice of medicine or dictates the structure of medical practices. The primary relevant regulation is the Alaska Professional Corporation Act, established in 1968. This act permits the formation of corporations to provide professional services, including medical services. However, a professional corporation can only offer one type of professional service, and all individuals involved in the corporation, such as incorporators, directors, and shareholders, must hold the necessary professional licenses. The corporation is allowed to deliver its professional services through its shareholders, directors, officers, employees, or agents. No exceptions or exemptions apply in this context. In summary, Alaska law does not explicitly restrict corporate medical practice but requires compliance with the Alaska Professional Corporation Act, ensuring that all individuals involved are licensed professionals offering a single type of professional service within the corporation.
Sources: Alaska Stat. § 08.64.170.

Arizona

Does Arizona have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: Arizona lacks explicit statutory or regulatory prohibitions on the corporate practice of medicine (CPOM). Instead, CPOM restrictions stem from two historical Arizona Supreme Court cases involving optometry: Funk Jewelry Co. v. State of Arizona (1935) and State Ex. Rel. Board of Optometry v. Sears Roebuck & Co. (1967). These cases established that corporations lack the "necessary moral and intellectual qualities" for certain healthcare practices. Under Arizona law, only individuals can hold licenses as doctors of medicine and practice medicine. However, Arizona's professional corporation statutes permit non-licensed entities to own up to 49% of shares in a professional corporation, provided it's not prohibited by profession-specific licensing laws. Non-licensed individuals can also hold positions on the corporation's board or as officers, as long as at least 50% of directors and the president are licensed to provide the specified professional services. Despite updates to professional corporation statutes in 1996, no court decisions have explicitly clarified their application to physician licensure. Arizona healthcare attorneys tread carefully, given the lack of explicit direction. The risk of Arizona administrative agencies challenging entities employing physicians may be higher if non-physician owners are perceived as interfering with diagnosis or treatment decisions or other aspects of patient care.

Sources: Arizona Rev. Stat. § 10-3301.

Arkansas

Does Arkansas have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In Arkansas, the corporate practice of medicine is acknowledged through a blend of statutory law and attorney general opinions. The key statutes, Arkansas Code Annotated §§ 17-95-202 and 4-29-309(a), in conjunction with Attorney General Opinion No. 2014-118, highlight the state’s position. These laws confirm that while corporations can engage in healthcare activities, they must not intrude on the independent medical judgment of physicians, emphasizing the autonomy of medical professionals in clinical decision-making. The term 'practice of medicine' encompasses various activities, including but not limited to, proposing or administering treatments, surgeries, or therapeutic interventions aimed at alleviating or curing physical or mental illnesses, injuries, conditions, or defects in individuals. These actions are undertaken with the explicit intent of receiving compensation, whether directly or indirectly, and often involve presenting oneself to the public as a qualified practitioner capable of performing such procedures. The Arkansas Medical Practices Act strictly dictates that individuals engaging in the aforementioned activities must hold a valid license to practice medicine in the state of Arkansas.
Sources: Arkansas Code Ann. §§ 17-95-202; 4-29-309(a); Ark. Att’y Gen. Op. No. 2014-118 (Mar. 10, 2015); Corporate Practice of Medicine: A Fifty State Survey, Vol. 1, Rel. 2E.

California

Does California have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: California has one of the strongest prohibitions on the Corporate Practice of Medicine (CPOM), with more active enforcement than most other states with a CPOM doctrine. Corporations may not practice medicine nor facilitate the practice of medicine (e.g. engage with contractor physicians). The California ban on the corporate practice of medicine extends to other licensed clinical professions, including the work of dentists, chiropractors, psychologists, therapists, optometrists, speech therapists, occupational therapists, speech therapists and others. Corporations may not “indirectly” practice medicine by unduly controlling a physician’s work. Over the years, several attorney general opinions have upheld this CPOM doctrine, which is defined by both case law (developed over the last century) as well as laws on medical licensure. The Medical Practice Act, especially Section 2052, prohibits entities without a valid licensure from practicing, attempting to practice, or advertising medical practice. The term “person” here is restricted to natural individuals, denying corporations the right to practice medicine. It is a criminal violation for an entity to market itself as offering medical care when it is not properly physician-owned and organized to do so. What are the consequences for CPOM violations? In California, these can include criminal sentencing, exposure to lawsuits, and risk of insurance clawbacks or claims denials. However, exceptions exist. California law allows certain entities, like professional medical corporations (PCs), partnerships, HMOs, and nonprofit organizations, to practice medicine.

Sources: California Bus. & Prof. Code § 2400, Medical Practice Act Section 2052.

Colorado

Does Colorado have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In the state of Colorado, engaging in the practice of medicine as an employee, agent, partner, or in collaboration with unlicensed entities is deemed unprofessional conduct under the Medical Practice Act (C.R.S. 12-36-117(m)). This prohibition extends to various forms of partnerships, associations, or corporations, excluding professional service corporations specializing in medicine. Nevertheless, there are exceptions to this regulation. Licensed physicians are permitted to be employed by individuals, partnerships, associations, or corporations to provide medical care to their employees. Additionally, professional service corporations, limited liability companies, and registered limited liability partnerships are authorized to engage in medical practice. These entities may appoint lay directors and officers; however, they are not permitted to hold shares in the corporation. Historically, before 1995, county-owned hospitals were allowed to employ physicians. Subsequently, in 1995, a broader exception was introduced (C.R.S. 25-3-103.7), facilitating most hospital-physician employment arrangements. Furthermore, a significant exemption (C.R.S. 6-18-303(2)) exists, allowing employment within provider networks. These exceptions serve to prevent conflicts of interest arising from referrals and undue influence on a physician's professional judgment.
Sources: Colorado Rev. Stat. § 12-240-138(6)(a).

Connecticut

Does Connecticut have a Corporate Practice of Medicine (CPOM) Prohibition?: Yes.
Summary of Current Law: Connecticut has enacted laws restricting the corporate practice of medicine, dentistry, and optometry. These laws are grounded in the state's licensing requirements for healthcare professionals, opinions from the attorney general's office, and relevant case law. A key component of these laws is the prohibition against corporations practicing medicine, with any agreement violating this rule being deemed null and void. This corporate practice of medicine law was formally established in Connecticut through Public Act 09-212 in 2009. While non-profit medical foundations are generally exempt from the corporate practice restrictions, their membership must be comprised of independent practice associations, providers, professional service corporations, or other entities where at least 60% of the ownership and control rests with such independent associations or licensed professionals. The state's statutes provide licensed healthcare practitioners, including physicians and other providers, with significant latitude in selecting a corporate structure for their practice. They can opt to organize as Professional Services Limited Liability Companies (PLLCs), Professional Service Corporations (PCs), or Limited Liability Partnerships (LLPs). These approved business entities are permitted to deliver professional services to the public through their licensed members.
Sources: Connecticut Gen. Stat. § 33-182bb; State of Connecticut Senate Bill No. 1100, Public Act No. 09-212

District of Columbia (D.C.)

Does Does D.C. have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In Washington DC, a CPOM doctrine exists even though there is no explicit legal prohibition against corporations employing physicians. The determination of whether a corporation has engaged in the unlawful practice of medicine is based on specific criteria evaluated by the courts. These criteria include whether the corporation interferes with physicians' clinical decisions, derives profits from medical services, or commercializes the practice of medicine. For example, in the Group Health Ass'n case, it was ruled that the Healing Arts Practice Act of D.C. was not violated when a nonprofit corporation provided medical care through salaried physicians to its members without exerting control over their clinical decisions. This precedent was upheld in United States v. AMA. Additionally, in Silver v. Lansburgh, it was established that a corporation employing licensed optometrists did not unlawfully practice medicine because optometry was considered to have a different nature of professional-patient relationship compared to traditional medicine. Consequently, corporate employment of optometrists was not prohibited.
Sources: D.C. Code §§ 3-1201.02(7)(A), 29-502, 29-503.

Delaware

Does Does Delaware have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: In Delaware, while the corporate practice of medicine isn't outright banned, state laws place restrictions on how physicians can operate within corporate entities. Physicians are allowed to form professional corporations under specific conditions, including offering only one type of professional service and ensuring all shareholders hold licenses in the relevant profession. Despite operating within a corporate structure, individuals remain personally liable for their professional actions. Additionally, the statute prohibits dentists, dental hygienists, and optometrists from practicing in certain settings or alongside unlicensed entities to uphold professional standards and protect public welfare. Moreover, Delaware explicitly prohibits referral fees and fee splitting among various healthcare professions to maintain integrity and safeguard against conflicts of interest.
Sources: Delaware Code Ann. tit. 24, §§ 1701 et seq.

Florida

Does Florida have a Corporate Practice of Medicine (CPOM) Doctrine?: No. (But a Health Clinic License is required if a medical practice isn't owned by physicians. This can be burdensome, and companies may prefer setting up a MSO-Friendly PC model.)‍
Summary of Current Law: While Florida doesn't have a specific Corporate Practice of Medicine statute, the state passed the Health Care Clinic Act in 2003 to ensure greater physician oversight of medical practices. The Act mandates that medical practices that are 1) not wholly owned by physicians and 2) plan to bill insurance must obtain a Health Care Clinic License. Founding, operating, or owning a health care clinic (or advertising services that require clinic licensure without a license when an exemption does not apply) is a felony under the Act (See Fla. Stat. § 400.9935(4)). Managing a "clinic" (as defined by Florida law) without the proper licensing results in a third-degree felony charge for the first infraction and advances to a second-degree felony for any subsequent infractions. Penalties include up to $5,000 for each day of non-compliance. In Florida, the regulatory framework for healthcare practitioners thus primarily revolves around ensuring physicians' compliance with minimum safety standards, with less focus on specific organizational structures. Optometrists, governed by Section 463.014 of Florida Statutes, are limited to collaborating with licensed healthcare professionals and are prohibited from practicing alongside unlicensed individuals or corporations. Dentists, as outlined in Florida Statutes Section 466.0285, are exclusively permitted to operate dental offices if they hold a valid license. Moreover, Florida Statutes Chapter 621 provides a provision for various professionals, including physicians, to establish professional service corporations. In practice, physician-owned entities typically take the form of professional associations.‍
Sources: Ala. Att’y Gen. Op. No. 2001-089 (Feb. 1, 2001); Declaratory Ruling of the Ala. Med. Licensure Comm’n (Oct. 21, 1992). (Statement published by the Florida Board of Medicine acknowledging Florida has not prohibited the corporate practice of medicine).

Georgia

Does Georgia have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: Before 1982, Georgia's law embodied the corporate practice of medicine (CPM) doctrine under O.C.G.A. § 43-34-37(9), restricting physicians' corporate roles to specific hospital or teaching institution affiliations. This regulation was removed in 1982, simultaneously erasing both its restrictions and explicit permissions for physicians employed by hospitals. In the same year, the Georgia Supreme Court hinted at a common law restriction against corporate involvement in learned professions, as noted in Sherrer v. Hale. However, the impact of this decision remains uncertain due to its timing with the legislative changes. The current O.C.G.A. § 43-34-37, now focused on licensure and disciplinary actions, addresses improper professional relationships, unauthorized practice assistance, and prohibitions on fee-sharing with non-medical entities for patient referrals. Since the 1982 repeal, no higher court has specifically addressed the continuation of this CPM doctrine.
Sources: Sherrer v. Hale 285 S.E.2d 714 (1982); Health Horizons Inc. v State Farm Mutual Auto. Ins. Co. 521 S.E.2d 383 (1999); Ga. Comp. Med. Bd. Monthly Meeting Minutes Executive Director’s Report para. 9 (June 7-8, 2012).

Hawaii

Does Hawaii have a Corporate Practice of Medicine (CPOM) Doctrine?: No
Summary of Current Law: In Hawaii, the legal framework hints at a prohibition against the corporate practice of medicine, emphasizing physician licensing and limiting for-profit corporations from providing professional services outside the Professional Corporations Act. This doctrine, however, hasn't become a significant legal issue in the state and is primarily discussed among a few health care law experts. Typical scenarios triggering legal examination in other states, such as contract disputes involving physicians or regulatory actions against unauthorized medical practice, haven't led to notable decisions or regulatory actions in Hawaii. The doctrine mainly surfaces when forming new corporations, with the Department of Commerce and Consumer Affairs (DCCA) reviewing and sometimes rejecting articles of incorporation based on this prohibition, as seen when a local hospital's attempt to incorporate a subsidiary was denied. As Hawaii's healthcare system evolves with managed care, the doctrine's implications, particularly for non-compete clauses in employment contracts, remain uncertain.
Sources: Hawaii Rev. Stat. § 453-2; Haw. Rev. Stat. § 448-15.

Idaho

Does Idaho have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: Corporate Practice of Medicine (CPM) in Idaho: The state's CPM framework lacks a dedicated statute but relies on legal precedents. The Idaho Supreme Court's decision in Worton v. Davis firmly establishes that unlicensed entities cannot engage in medical practice through licensed employees, while licensed physicians are prohibited from working as employees of unlicensed entities, all in the interest of public welfare. Moreover, an inaccessible 1954 Idaho Attorney General opinion reportedly disallowed hospitals from employing or compensating physicians under the Idaho Medical Practices Act. Significantly, the enforcement of the corporate practice doctrine appears limited in Idaho, as suggested by counsel from Idaho health law experts. This implies a relatively permissive approach, particularly when corporate entities refrain from interfering with the medical judgment of licensed practitioners. Nonetheless, for precise guidance on CPM matters in Idaho, consulting legal professionals is advisable.
Sources: Notes of Idaho State Board. Of Medicine Telephone Conference (Mar. 28, 2016).

Illinois

Does Illinois have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: Illinois has a longstanding Corporate Practice of Medicine restriction. The rule against corporate practice of medicine has gained attention following a significant appellate court ruling. This court upheld a lower court's decision that hospitals are prohibited from directly employing physicians, as seen in the case of Berlin v. Sarah Bush Lincoln Heath Center. This ruling has implications for the structure of hospital-physician employment relationships in Illinois. The core of the issue stemmed from a contract dispute between Dr. Berlin and the Sarah Bush Lincoln Health Center. Dr. Berlin, having resigned to join a competitor, contended that the non-compete clause and the entire employment contract were invalid due to the prohibition against corporate practice of medicine. Analyzing the Illinois Medical Practice Act, which requires a valid license for medical practice, and considering Illinois Supreme Court decisions stating that corporations cannot practice medicine or dentistry, the courts determined that hospitals, especially non-profit ones, do not fit the exemptions allowed for HMOs and professional medical corporations. Therefore, the direct employment of physicians by these hospitals was seen as an unlicensed practice of medicine, rendering such employment contracts unenforceable.
Sources: 225 ILCS 60/22; Carter-Shields v. Alton Health Inst. 777 N.E.2d 948 (Ill. 2002).

Indiana

Does Indiana have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: Indiana's prohibition against the corporate practice of medicine is codified in its statutes, aimed at preventing non-medical entities from influencing the judgment and ethical duties of healthcare professionals. The statute broadly defines "practice of medicine" to encompass various aspects, including diagnosing, treating, or preventing any human health conditions (IC 25-22.5-1-1.1(a)(1), West 1994). Moreover, the statute expands this definition to include maintaining a place for receiving, examining, or treating individuals with various health issues (IC 25-22.5-1-1.1(a)(2), West 1994). While there isn't specific case law interpreting this, the intention appears to ensure that all health facilities, such as clinics, physician offices, and surgery centers, are considered part of the medical practice. From July 1, 1996, the definition of medical practice in Indiana also includes providing diagnostic or treatment services via telemedicine regularly or under an agreement, specifically to residents of Indiana (IN 25-22.5-1-1(4), P.L. 180-1996). This inclusion aims to accommodate the evolving nature of healthcare delivery, especially in telemedicine. The statute also outlines additional requirements related to the practice of medicine.
Sources: Indiana Code §§ 25-22.5-1-2(c); 25-22.5-8-1.

Iowa

Does Iowa have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: Iowa does not have an explicit statutory ban on the corporate practice of medicine. Instead, this prohibition has developed over time through legal precedent, grounded in the principle that corporations lack the individual qualifications necessary to hold medical or healthcare professional licenses. Unlike some other states where the corporate practice of medicine doctrine is primarily used in disputes between private parties to invalidate contracts or restrictions, Iowa actively employs this doctrine to prevent non-individual legal entities from engaging in certain professions.The Office of the Iowa Attorney General consistently upholds these decisions in its opinions. Despite these general restrictions, the Iowa legislature has enacted provisions allowing specific entities to directly employ healthcare professionals. These entities encompass professional corporations, general and limited liability partnerships, limited liability companies, and health maintenance organizations.Additionally, there is no direct statutory prohibition on fee splitting in Iowa; instead, the state relies on the ethical guidelines established by the American Medical Association (AMA) and the American Osteopathic Association (AOA) to govern this aspect of medical practice.
Sources: Iowa Code § 147.2; Iowa Att’y Gen. Op. No. 91-7-1 (1992) (republished by the Iowa Board of Medicine August 1, 2015).

Kansas

Does Kansas have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In Kansas, the legal stance on corporate practice (CP) was clarified in Early Detection Center, Inc. v. Wilson, where the state Supreme Court determined that general corporations, especially those controlled by non-physicians, are prohibited from providing medical services or engaging licensed practitioners for such services. Consequently, the court declined to enforce a restrictive covenant in an employment agreement between a general corporation and a physician. However, this ruling was refined in St. Francis Regional Medical Center, Inc. v. Weiss. In this case, the court specified that licensed hospitals, irrespective of their status as nonprofit, governmental, or proprietary entities, are permitted to employ physicians. This decision creates an exception to the general rule, acknowledging the unique role hospitals play in the healthcare system and their need to employ medical professionals directly.
Sources: Kansas Stat. Ann. §§ 65-2803, 65-2837, 65-2867.

Kentucky

Does Kentucky have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In Kentucky, nonprofit entities that are registered as charitable health care providers are exempt from the prohibitions against the corporate practice of medicine. This exemption allows such entities to provide medical services without violating the doctrine, as long as they maintain their status as charitable providers. Additionally, the Kentucky Medical Board has taken a stance that it will not severely enforce the corporate practice prohibition, provided that the employer (corporate or otherwise) does not interfere with the physician’s independent medical judgment. This stance suggests a more flexible approach towards corporate involvement in medicine, emphasizing the importance of maintaining the independence and integrity of medical decisions made by physicians. The focus is on ensuring that medical practitioners can exercise their professional judgment without undue influence from non-medical corporate entities.
Sources: Kentucky Rev. Stat. § 311.560; Ky. Bd. Of Med. Op. No. 36 (Feb. 10, 1995).

Louisiana

Does Louisiana have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: The state of the corporate practice of medicine is less defined in Louisiana. The Louisiana State Board of Medical Examiners published a Statement of Position in 1992 (reviewed in 2001), proposing specific guidelines for the employment of physicians by corporations other than professional medical corporations, even though there is no clear legal prohibition against corporations practicing medicine. This phrase suggests that although there isn't a clear ban, there are standards and conventions that must be followed in these types of work settings. It appears that the fundamental goal is to make sure that corporate involvement does not compromise the standard or integrity of medical care, and that the practice of medicine stays within the jurisdiction of appropriately qualified and licensed experts. However, the lack of explicit statutory guidance or prohibition leaves some ambiguity in the application and enforcement of these norms.
Sources: Louisiana State Bd. Of Med. Exm’rs Statement of Position Employment of Physician by Corporation Other Than a Professional Medical Corporation (Sept. 24, 1992, reviewed Mar. 21, 2001).

Maine

Does Maine have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: In Maine, there is no specific statute directly addressing the corporate practice of medicine (CPM). Any potential prohibition might be implied within the state's corporations statutes. However, the Board of Licensure in Medicine has clarified its position through an advisory opinion. The Board emphasizes that it holds each physician accountable for their conduct, irrespective of their employment status. This means that physicians in Maine, whether they are salaried employees of a corporate entity, principals in a Professional Association, partners, or self-employed solo practitioners, are individually responsible for their clinical judgment, ethics, and competency. The Board asserts that physicians cannot use the defense of 'company policy' to absolve themselves of responsibility in cases of complaints. Furthermore, other state agencies in Maine have consistently allowed the employment of physicians by various organizations, including both for-profit and non-profit entities, that are not exclusively comprised of physicians. This suggests a more flexible approach towards the corporate employment of medical professionals in the state.
Sources: Maine Bd. of Licensure Opinion (Nov. 2, 1992); 13-B Code Me. R. § 1307.

Maryland

Does Maryland have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: Maryland's stance on the corporate practice of medicine (CPM) lacks explicit statutory or regulatory provisions, making it somewhat ambiguous. The Board of Physician Quality Assurance, the state's licensing agency for physicians, has articulated its position on this matter in response to inquiries. According to the Board, a corporation can employ a physician to practice medicine in Maryland only if it falls into specific categories, such as a professional service corporation, a hospital, or a health maintenance organization. This position is based on the rationale that the Medical Practice Act permits only licensed individuals to practice medicine, and corporations cannot meet the licensing requirements unless expressly exempted. Although the Board's official stance is restrictive, it's noteworthy that enforcement in this area is not a top priority. Enforcement is more likely when the corporate employer interferes with the physician's medical judgment and compromises the standard of care. However, the Board's official position could potentially affect unrelated regulatory processes or be used in disputes involving private parties, such as physicians seeking to challenge restrictive covenants.
Sources: Maryland Board of Physicians Statement Information on Corporate Issues.

Massachusetts

Does Massachusetts have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In Massachusetts, the corporate practice of medicine (CPM) is regulated by the requirement that individual physicians must be licensed by the Board of Registration in Medicine under M.G.L. c. 112 §§ 2–12 to practice medicine. Physicians have two primary options for organizing themselves into corporate entities: they can establish professional corporations in compliance with M.G.L. c. 156A or form limited liability companies under M.G.L. c. 156C. Entities organized or formed under these statutes must obtain a certificate from the Board of Registration in Medicine as specified in M.G.L. c. 156A §7 (for professional corporations) or M.G.L. c. 156C §4(c) (for limited liability companies). Entities seeking to employ physicians but not organized under these statutes must secure a clinic license under M.G.L. c. 111 §51 and 105 CMR 140.000. Alternatively, they can explore exceptions or exemptions to the clinic licensure regulations. This framework ensures that physicians and medical entities adhere to the state's regulatory requirements for the practice of medicine in Massachusetts.
Sources: Massachusetts Gen. Laws Ch. 176B § 7; 243 CMR § 2.07(22)(a).

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Michigan

‍Does Michigan have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: The current legal framework in Michigan clearly outlines guidelines for the corporate practice of medicine (CPM). The Michigan Business Corporation Act, specifically Section 251(1), expressly prohibits the practice of learned professions, including medicine, from being used for lawful corporate purposes. Opinions from the Michigan Attorney General support Michigan's position on this issue, emphasizing that domestic organizations covered by the Michigan Business Corporation Act are not allowed to participate in activities that are limited to licensed professionals. In Michigan, this legal structure is frequently referred to as the "learned professions doctrine" or the "corporate practice of medicine doctrine.” Licensed professionals in the state may form corporations to provide their services as long as they follow certain regulations. These professional organizations, however, are bound by certain legal frameworks: they are required to operate as professional limited liability companies under the Michigan Limited Liability Company Act or as professional corporations under the Michigan Professional Service Corporation Act. These statutes specify exactly which business structures are acceptable in the state of Michigan for providing professional services.
Sources: Michigan Att’y Gen. Op. No. 6592 (Jul. 10, 1989); Mich. St. Att’y Gen. Op. No. 6770 (Sept. 17, 1993).

Minnesota

Does Minnesota have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: Minnesota enforces a strict prohibition against the corporate practice of medicine (CPM), rooted in its case law and statutory regulations. This prohibition is based on the interpretation of laws that forbid practicing medicine without a license. As established in the case Granger v. Adson (1933) and reinforced by subsequent statutes, any corporation that is not licensed to practice medicine but employs a licensed physician for its benefit can be considered as unlawfully practicing medicine. This is seen as a violation of both the law and public policy. However, there are specific legal frameworks under which physicians and healthcare professionals can practice medicine corporately in Minnesota. These are outlined in various statutes: professional corporations (Minn. Stat. Chap. 319A), Integrated Service Networks (Minn. Stat. Chap. 62N), and healthcare cooperatives (Minn. Stat. Chap. 62R). The Minnesota Attorney General further clarifies that nonprofit corporations employing physicians do not necessarily violate CPM concerns, provided they do not control how the physician treats patients. This perspective, detailed in a 1955 opinion, revises an earlier 1939 stance which suggested nonprofit corporations could also fall under the CPM doctrine.
Sources: Minnesota Op. Att’y Gen. No. 92-B-11 (Oct. 5, 1955); Isles Wellness inc. v. Progress N. Ins. Co., 703 N.W.2d 513 (Minn. 2005).

Mississippi

Does Mississippi have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes and no (mixed).
Summary of Current Law: In Mississippi, the approach towards the corporate practice of medicine has evolved over time, particularly evident in the field of optometry as reflected in historic case law such as Sears Roebuck & Co. v. State Bd. of Optometry (1952) and Busch Jewelry Co. v. State Bd. of Optometry (1953). Despite these rulings, recent policies and regulations by the Mississippi State Board of Medical Licensure (BOML) and the Mississippi State Board of Dental Examiners (BODE) indicate a shift. These Boards have stated they are less concerned with the specific business structures physicians and dentists engage in. Instead, they have established a set of conditions focusing on ensuring that licensed professionals retain control over their services and decision-making autonomy, free from external influences. This stance suggests that Mississippi likely does not broadly prohibit corporate practice in medicine. However, this applies variably across different healthcare professions. While many healthcare professionals are now exempt from the most stringent restrictions on corporate practice, optometry remains an exception, adhering to the traditional prohibitions. This indicates a nuanced approach to corporate involvement in various medical fields within the state.
Sources: Mississippi Board of Medicine Licensure Policy 3.02 Corporate Practice of Medicine (revised Sept. 20, 2001).

Missouri

Does Missouri have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: Missouri was a pioneer in departing from the corporate practice of medicine (CPM) doctrine, a move that predated other states' adoption following the Painless Parker cases. The Missouri Court of Appeals, in the landmark case State ex rel. Sager v. Lewin (1907), interpreted its state medical practice act to allow corporations similar rights to individuals in contracting physicians for providing medical care. This interpretation found support in the established practice of hospitals incorporating to offer medical services via licensed physicians. Furthermore, a 1962 opinion by the Missouri Attorney General affirmed that corporations could contract with licensed medical practitioners without engaging in the practice of medicine. By 1967, only Missouri and Nebraska had accepted corporate practice, highlighting their progressive stance. However, by 1987, this perspective had significantly shifted, with most states aligning with Missouri's approach, as noted in others' legal analysis. This evolution marked a substantial change in the national outlook towards the corporate practice of medicine.
Sources: State ex inf. McKittrick v. Gate City Optical Co., 97 S.W.2d 89 (Mo. 1936).

Montana

Does Montana have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In 1995, the Montana legislature made a pivotal change by repealing a crucial section of the Montana Code, a statute which had defined the Corporate Practice of Medicine prohibition in the state. That said, the Montana Board of Medical Examiners regulations still define "unprofessional conduct" as engaging in the practice of medicine while partnered, employed, or in a joint venture with someone lacking a valid medical license, so a CPOM prohibition remains. However, this prohibition had certain exceptions, permitting such arrangements only under the professional services corporation statute and when physicians partnered with hospitals, medical assistance facilities, or licensed healthcare providers, provided specific criteria were met. This alteration ushered in the Corporate Practice of Medicine (CPOM) Doctrine in Montana. The CPOM Doctrine now allows medical professionals to collaborate with non-physician entities, opening doors to various business models within the healthcare industry. Physicians are no longer constrained by the previous restrictions and can explore innovative partnerships and joint ventures, as long as they abide by the regulations outlined in the CPOM Doctrine. This legal shift has fostered a more flexible healthcare environment, encouraging the growth of healthcare businesses while maintaining necessary safeguards to protect the interests of patients and the integrity of medical practice.
Sources: Montana Admin. R. 24.156.625(1)(t).

Nebraska

Does Nebraska have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
‍Summary of Current Law: In Nebraska, the Uniform Licensing Law, as outlined in Neb. Rev. Stat. § 71-102(1) (1994 Cum. Supp.), establishes the requirement that individuals must obtain a license from the Department of Health to engage in various medical and healthcare practices such as medicine and surgery, athletic training, dentistry, and more. Despite this, Nebraska has not encountered the issue of the corporate practice of medicine since 1905 when the Nebraska Supreme Court made significant rulings. The court determined that corporations could lawfully provide medical services through duly qualified and licensed physicians under contractual agreements. It emphasized that the qualifications of a medical practitioner are personal, requiring individual licensure, but permitted licensed practitioners to form corporations and contract with patients under the corporate name. Consequently, Nebraska does not currently recognize a corporate practice of medicine doctrine, although potential future public policy changes might impose restrictions on corporations to prevent undue influence on medical decisions or impose limitations on physicians' practice due to referral requirements or financial incentives.
Sources: State Electro-Med. Inst. v. State, 103 N.W. 1078 (Neb. 1905).

Nevada

Does Nevada have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.‍
Summary of Current Law: Nevada's restriction on the corporate practice of medicine primarily stems from an opinion issued by the Nevada Attorney General. This opinion interprets the Professional Corporations Act, a specific legislative framework that allows medical practice through professional corporations and associations. The Act also states that its regulations take precedence over general corporate laws. Based on this, the Attorney General's opinion concludes that entities other than those defined under the Professional Corporations Act are barred from participating in the practice of medicine in Nevada. Per the Nevada Revised Statute § 89.040, every individual involved in the establishment of the professional entity must possess the requisite authorization to engage in the specific professional service for which the professional entity is being formed. This condition applies, with the exception of situations detailed in subsection 2 of NRS 89.050. It is also worth noting that Nevada has an exception for the CPOM doctrine where medical services corporations are the only nonprofit organizations authorized to offer services delivered by doctors.‍
Sources: Nevada Rev. Stat. § 89.050; Nevada Rev. Stat § 89.040 (2020); Nev. Att’y Gen. Op. No. 2002-10 (Feb. 26, 2002).

New Hampshire

Does New Hampshire have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
‍Summary of Current Law: New Hampshire does not have a formal, codified Corporate Practice of Medicine (CPOM) Doctrine in place. The prevailing practice convention dictates that physicians are permitted to engage in medical practice either by forming a professional corporation or by working as an employee, member, consultant, or independent contractor for a healthcare organization. While there is no specific statutory reference to a CPOM Doctrine, the state does provide a framework for professional corporations through NH Revised Statutes Annotated Chapter 294-A (NH RSA 294-A). Professional corporations in New Hampshire are organized with the primary purpose of delivering professional services. These organizations may take various forms, including non-profit corporations (voluntary corporations) with physicians as members, taxable or tax-exempt, often collecting dues or membership fees. Additionally, physician organizations can collaborate with hospitals or health systems, typically establishing themselves as non-profit tax-exempt entities in alignment with the prevailing healthcare landscape in the state.
‍Sources: New Hampshire Rev. Stat. § 293-A:1

New Jersey

Does New Jersey have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: New Jersey's prohibition against the Corporate Practice of Medicine (Corporate Practice) isn't explicitly codified in one statute but has evolved from various legal sources since the introduction of the Professional Service Corporation Act in 1963. Regulatory agencies, courts, and government bodies have collectively shaped and refined this doctrine over time, with violations leading to fines and penalties. Presently, exceptions to the Corporate Practice exist. Licensed professionals in New Jersey can establish professional corporations (PCs) or operate within specified corporate structures. Moreover, New Jersey permits health maintenance organizations (HMOs) to employ physicians for professional services provided to HMO members. While New Jersey's case law has clarified the Corporate Practice doctrine across licensed professions, specific case law regarding the corporate practice of medicine is limited. The Attorney General provided guidance in 1983 that medical practice isn't permissible within a general business corporation framework. Additionally, in 1996, the Attorney General advised that licensed professionals could form limited liability companies to offer professional services to the public. However, further clarification from New Jersey authorities is awaited on these matters.
Sources: New Jersey Stat. Ann. § 14A:17-2.

New Mexico

Does New Mexico have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: New Mexico does not have a Corporate Practice of Medicine (CPOM) doctrine. In a 1987 opinion, the New Mexico Attorney General explored whether corporations run by non-physicians can legally offer medical services via employed doctors. The conclusion was affirmative, provided there are no legal prohibitions or instances of non-medical personnel exercising undue influence over medical decisions or exploiting the medical field contrary to public policy. This interpretation was influenced by the absence of specific directives in New Mexico's medical licensure laws concerning corporate provision of medical services, especially when contrasted with other professions like dentistry and psychology where such directives exist. The state's Professional Corporation Act also supports the formation of corporations for medical service provision. It allows for incorporation by individuals or groups to provide professional services for which they must be legally licensed. While these corporate entities can employ physicians, they are barred from practicing medicine directly or interfering in the professional autonomy of medical practitioners. They are also restricted to providing only one type of professional service and must ensure their officers and employees rendering these services are properly licensed. This framework ensures that corporations, even those led by non-physicians, can provide medical services through physicians without overstepping legal and ethical boundaries.
Sources: New Mexico Stat. Ann. § 61-6-16.

New York

Does New York have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: New York enforces a strict prohibition against the corporate practice of medicine, barring corporations from engaging in medical practice, except for specific exemptions. Although not explicitly outlined in statute, this doctrine derives from New York's Education Law, which reserves medical practice licensure exclusively for natural persons. The concept of prohibiting corporate practice of medicine in New York dates back to the early 20th century, with cases like People v. Woodbury Dermatological Institute (1908) expressing concerns about commercializing medicine and compromising the moral character of licensed professionals. Subsequent case law, such as Stern v. Flynn (1936), refined these concerns by highlighting the potential erosion of the trust between physicians and patients if physicians' loyalty were divided between corporations and patients. Notably, recent cases involving the corporate practice of medicine have shifted from state prosecutions to business disputes among private parties. Physicians have even used this doctrine as defenses against contract claims filed by corporations, illustrating its role as a firm barrier to market-driven trends in New York. The doctrine prohibits corporations, especially those controlled by non-physicians, from employing physicians for medical practice. In New York, it also limits various organizational structures, such as publicly-owned hospital chains and physician management companies, which are common in other states.
Sources: New York Educ. Law § 6522; N.Y. Pub. Health Law § 2806.

North Carolina

Does North Carolina have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In North Carolina, the law prohibits unlicensed individuals from practicing medicine, as defined in North Carolina General Statutes §§ 90-1 to 90-21 and 21 NCAC 32B.0001. This includes diagnosing, treating, operating, or prescribing for any physical or mental ailment, injury, or deformity. While other states have used similar statutes to limit corporate practice of medicine (CPM), North Carolina has not yet seen a court decision on this matter. A 1955 opinion from the North Carolina Attorney General to the Board of Medical Examiners did acknowledge the CPM doctrine. It stated that nonprofit and public hospitals could set rules and arrange services with licensed physicians without constituting CPM. However, it emphasized that private corporations are banned from practicing medicine for profit. This opinion aligns with concerns about lay control of medical judgment, commercial exploitation, and conflicting loyalties between patients and employers. The doctrine suggests that arrangements where physicians directly provide medical services, like in alliances or integrated delivery systems, may not conflict with these public policy issues. Yet, the role of non-physicians in healthcare is evolving, indicating a potentially changing landscape in healthcare delivery and corporate involvement.
Sources: North Carolina Gen. Stat. §§ 55B-2; 55B-4.

North Dakota

Does North Dakota have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.‍
Summary of Current Law: North Dakota unequivocally enforces a Corporate Practice of Medicine (CPOM) doctrine with no non-profit exceptions as stipulated in N.D. Cent. Code § 43-17-31. Under this legal framework, the state maintains strict regulations and oversight regarding the practice of medicine. To practice medicine in North Dakota, individuals must adhere to a set of stringent requirements, which include obtaining a license, completing necessary educational qualifications, and demonstrating physical, mental, and professional competence for medical practice. This CPOM doctrine is designed to ensure that medical services are delivered by qualified and licensed medical professionals, safeguarding the health and well-being of patients. It prohibits various practices, such as the use of false or assumed names while practicing medicine and knowingly aiding or abetting unlicensed, incompetent, or impaired individuals in medical practice. Additionally, the doctrine prohibits the payment or receipt of fees, commissions, rebates, or other forms of compensation for medical services not genuinely rendered or for patient referrals, except in cases where such arrangements comply with the state's regulations governing professional partnerships, corporations, limited liability companies, or associations. North Dakota's CPOM doctrine underscores its commitment to maintaining the highest standards in healthcare delivery.
Sources: North Dakota Cent. Code § 43-17-31.

Ohio

Does Ohio have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes (historically), but may not be enforced currently.
Summary of Current Law: Ohio's corporate practice of medicine doctrine is primarily rooted in three main categories of statutes: (1) the Professional Associations Law, (2) the General Corporation Act, and (3) regulations overseeing specific professions such as the Medical Practices Act, Dental Practices Act, and Chiropractic Act. Notably, the landscape shifted with the 1994 amendments to the General Corporation Act, Limited Liability Company Act, and Medical Practices Act, departing from Ohio's historical stance against the corporate practice of medicine. Although past Ohio Attorney General opinions have supported the historical prohibition, these opinions remain in effect. Nevertheless, recent indications from the State Medical Board of Ohio suggest a changing perspective, raising the possibility that the prohibition may no longer be applicable. While the Ohio Legislature and Attorney General have yet to provide a definitive resolution, the current landscape suggests that the enforcement of the corporate practice of medicine doctrine in Ohio may be waning.
Sources: Ohio Rev. Code Ann. § 4731.41(A); Ohio Att’y Gen. Op. No. 87-049 (Aug. 6, 1987).

Oklahoma

Does Oklahoma have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: Oklahoma operates without a formal Corporate Practice of Medicine (CPOM) Doctrine. The state does not have specific statutes or case law in place that would impose CPOM restrictions. This means that in Oklahoma, one is not required to hold a medical license or be a licensed healthcare professional to establish or operate a medical or healthcare clinic. Oklahoma's healthcare environment allows for a degree of flexibility, permitting non-medical professionals to be involved in the ownership and management of medical facilities, clinics, or healthcare organizations. This lack of CPOM regulations can provide opportunities for diverse business models and collaborations within the healthcare industry in Oklahoma. However, it is important for individuals and organizations in this field to operate within the broader legal framework and regulatory requirements applicable to healthcare and business practices to ensure the delivery of safe and quality medical services to patients.
Sources: Oklahoma Stat. Ann. tit. 18 § 844; Okla. Att’y Gen. Op. No. 77-168 (Aug. 29, 1977).

Oregon

Does Oregon have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In Oregon, while there isn't a direct statutory prohibition against corporate practice of medicine (CPM), existing case law effectively restricts corporations from hiring physicians. This interpretation stems from the 1947 ruling in Sisemore v. Standard Optical Co., where the Oregon Supreme Court declared it illegal for a corporation to employ an optometrist for fitting eyewear, citing violation of medical licensing requirements. The court in Sisemore emphasized the potential for professional misconduct, lack of expertise, criminal activities, or unethical marketing practices that could lead to an optometrist's license revocation. This rationale underscored the necessity to forbid corporate practice in optometry, aiming to safeguard public welfare. A later case, Neiss v. Ehlers, diverged slightly from this precedent. The Oregon Court of Appeals did not extend the Sisemore ruling to bar an unlicensed individual from owning a minority stake in an optometry business. The court's interpretation was that lay ownership posed a problem only when a corporation exerted dominant control over the practice and its licensed professionals. However, the court did not specify the threshold at which minority ownership would breach the principles established in Sisemore.
Sources: Oregon Rev. Stat. § 677.100.

Pennsylvania

Does Pennsylvania have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In Pennsylvania, there is a well-established principle that a licensed professional cannot practice their profession under the authority of an unlicensed person or corporation. If a licensed professional does so, the employing unlicensed entity is considered to be practicing that profession without a proper license. Corporations, by their nature, lack the personal qualities and qualifications required for professional practice. Even if the employees of such corporations are professionally trained and hold valid licenses, their primary loyalty is owed to the employer rather than to the clients or patients they serve. This principle underscores the importance of a direct and continuous relationship between a professional practitioner and those who seek their services. Unless statutory modifications exist to permit certain exceptions for entities like hospitals, the same rule applies to physicians and dentists. This legal stance in Pennsylvania emphasizes the significance of ensuring that licensed professionals maintain their independence and ethical obligations to the clients or patients they serve, preventing undue corporate influence in professional practice.
Sources: 63 Pennsylvania § 422.3.

Rhode Island

Does Rhode Island have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
‍Summary of Current Law: Rhode Island maintains restrictions on the corporate practice of various healthcare professions, including medicine, dentistry, chiropractic, optometry, podiatry, physical therapy, nursing, physician assistantship, and psychology. These restrictions are outlined in the Rhode Island Business Corporation Act, preventing business corporations from offering professional services. However, the state allows certain entities to provide professional services and employ healthcare professionals, provided specific conditions are met. Professionals subject to this prohibition, such as physicians, dentists, and psychologists, can establish Professional Service Corporations (PSCs) under Rhode Island General Laws § 7-5.1-1, et seq. PSCs permit various combinations of healthcare professions, ensuring that officers, directors, and shareholders are licensed individuals in the relevant fields. Written approval from the regulatory agency is necessary for individuals to serve in multiple professional corporations within the same profession. Furthermore, PSCs can only provide services through authorized Rhode Island practitioners. Additionally, Rhode Island permits Limited Liability Companies (LLCs) to offer professional services listed under the Professional Service Corporations law. These regulations aim to maintain the quality and accountability of healthcare services in the state while allowing flexibility in practice structures.
‍Sources: Corporate Practice of Medicine: A Fifty State Survey, Vol. 1, Rel. 2E.

South Carolina

Does South Carolina have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In South Carolina, the approach to regulating corporate practice of medicine is derived indirectly from case law rather than explicit statutes, primarily based on interpretations of licensing statutes. The pivotal judicial decision in this context is Ezell v. Ritholz, 188 S.C. 39, 198 S.E. 419 (1938), where the South Carolina Supreme Court ruled that an optical shop operated by unlicensed individuals employing licensed optometrists for eye exams was illicitly practicing optometry. The Court's rationale was grounded in the concern that allowing corporations or partnerships to practice professions by hiring licensed individuals would undermine professional ethics and standards. This could lead to the commercialization of professions like law, medicine, or dentistry, eroding personal responsibility and the integrity of these fields (Ezell v. Ritholz, 188 S.C. 39, 198 S.E. 419). This stance was echoed in Wadsworth v. McRae Drug Company, 203 S.C. 543, 28 S.E.2d 417 (1943), affirming that corporations are prohibited from engaging in the practice of medicine, even through licensed employees. The most recent articulation of this principle by the court appeared in McMillan v. Durant, 312 S.C. 200, 439 S.E.2d 829 (1993), where it was noted, albeit in a footnote, that a hospital entity is incapable of practicing medicine.
Sources: South Carolina Code Ann. § 40-47-10. 188 S.C. 39, 198 S.E. 419 (1938). 203 S.C. 543, 28 S.E.2d 417 (1943). 312 S.C. 200, 439 S.E.2d 829 (1993).

South Dakota

Does South Dakota have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.‍
Summary of Current Law: South Dakota enforces a Corporate Practice of Medicine (CPOM) Doctrine, as established by SDCL 36-4-8.1. The state's statute firmly dictates that it is against public policy for a corporation to engage in the practice of medicine or osteopathy. While a corporation can enter into an employment agreement with a physician licensed in accordance with state laws, certain conditions must be met to ensure compliance with this statute. The employment agreement or relationship it establishes must not interfere with the physician's independent judgment regarding medical practice, the diagnosis, and treatment of patients. Additionally, the corporation should not derive direct profit from the practice of medicine itself, meaning it cannot charge higher fees for the physician's services than those reasonable for an independent practitioner, although reasonable additional charges for related services are permissible. Furthermore, such agreements must not have a duration exceeding three years without the option of annual renewal by mutual consent. South Dakota's regulatory landscape reinforces the prohibition against corporate entities directly practicing medicine. Healthcare organizations in the state are structured diversely, including freestanding multispecialty and single-specialty practices, rural health clinics employing physicians, Independent Practice Associations (I.P.A.'s), tax-exempt foundations employing physicians, and hospital clinic divisions, all within the framework of the CPOM Doctrine.
‍Sources: South Dakota Codified Laws § 36-4-24.

Tennessee

Does Tennessee have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: A strong and unambiguous ban on the corporate practice of medicine exists in Tennessee, supported by a mix of statutes, court decisions, and Attorney General opinions. The Tennessee Practice of Medicine Act and the Tennessee Prohibition Against the Corporate Practice of Medicine Act are two important acts that codify this strict prohibition. These legislative provisions define specific exceptions that permit selected organizations to employ physicians in addition to establishing the general prohibition against corporate involvement in medical practice. These approved organizations include those that provide health care to their staff, retirees, and dependents; hospitals and the groups that are associated with them; doctors and physician groups; community mental health centers; federally qualified health centers; nursing homes and the groups that are associated with them. A number of court rulings and official Attorney General views demonstrate how adamantly Tennessee maintains this ban. The regulatory structure in Tennessee forbids not just the corporate practice of medicine but also the corporate practice of chiropractic and dentistry. Moreover, outside of patient referrals, the law forbids fee splitting among doctors; in fact, breaking the Practice of Medicine statute carries a Class B misdemeanor penalty.
Sources: Tennessee Code Ann. § 63-6-204.

Texas

Does Texas have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: The state of Texas maintains a long-standing prohibition against the corporate practice of medicine, originally instituted to safeguard patient welfare by ensuring that corporate interests do not compromise medical care. This prohibition is codified in state statutes, regulations, and case law. While Texas enforces strict limitations on corporate involvement in medical practices, it also recognizes specific exceptions and allows for flexibility in certain agreements between management entities and physician practices. Under Texas law, certain entities are explicitly permitted to directly employ physicians, including nonprofit health organizations and designated hospital districts. Furthermore, Texas laws enable physicians to participate in joint ventures with professionals from various fields, such as podiatry, optometry, and physician assistants. These provisions create a framework that balances the prohibition on corporate interference with the need for flexibility in healthcare delivery.
Sources: Texas Occ. Code Ann. § 164.051; Corporate Practice of Medicine: A Fifty State Survey, Vol. 1, Rel. 2E.

Utah

Does Utah have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
‍Summary of Current Law: Utah neither explicitly permits nor prohibits the corporate practice of medicine. However, state statutes enable licensed physicians, dentists, osteopathic physicians, and chiropractors to establish professional corporations under the Professional Corporation Act. These entities can deliver specific professional services through officers, employees, and agents holding appropriate licenses, including physicians, surgeons, dentists, osteopathic physicians, or chiropractors. Similarly, the Utah Revised Limited Liability Company (LLC) Act allows the creation of professional service LLCs, with members, managers, and employees required to possess the necessary professional licenses. While Utah allows physicians and osteopathic physicians to be employed by other entities, it is illegal for anyone with a financial interest in their practice to significantly interfere with their professional work. Physicians are also barred from entering into contracts that restrict their ability to fully advise patients on treatment options. Regarding health maintenance organizations, Utah's regulations prioritize delivering comprehensive healthcare to enrollees, permitting these organizations to contract with healthcare providers. However, they are generally prohibited from engaging in unrelated businesses. Utah's approach maintains professional healthcare quality and accountability while offering flexibility in practice structures.
Sources: Corporate Practice of Medicine: A Fifty State Survey, Vol. 1, Rel. 2E.

Vermont

Does Vermont have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
‍Summary of Current Law: Vermont does not have an established Corporate Practice of Medicine (CPOM) Doctrine, as there are no specific statutes, regulations, or case law addressing the corporate practice of medicine in the state. Vermont's legal landscape lacks any formal provisions or interpretations that directly regulate the practice of medicine by corporate entities. However, Vermont does maintain a Certificate of Need (CON) law, found in 18 V.S.A. §§9431--9445, which requires certificates of need for various healthcare-related activities, including the establishment of new healthcare facilities, capital expenditures exceeding $300,000, purchases of equipment exceeding $250,000, and the offering of new health services with annual operating expenses surpassing $150,000. Although physicians' offices are typically excluded from CON review, certain circumstances may necessitate a CON, such as if a physician's office intends to acquire diagnostic or therapeutic equipment exceeding specified thresholds or if a physician-owned or operated facility plans to offer particular outpatient diagnostic or therapy programs.
Sources: Vermont Stat. Ann. tit. 26, § 1343.

Virginia

Does Virginia have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: In Virginia, there isn't a specific corporate practice of medicine statute in place. While Virginia Code Section 54.1-2902 and Section 54.1-111(A)(1) establish that practicing medicine without a license is unlawful and extend this prohibition to "person, partnership, corporation, or other entity," there hasn't been a legal examination to determine whether these provisions forbid corporations from employing physicians. Two recent opinions from the Virginia Attorney General shed light on the matter. In a 1992 opinion, it was clarified that Virginia's laws do not prohibit nonprofit corporations, including hospitals, from employing licensed physicians. As long as the physician retains control over medical decisions, maintains professional judgment integrity, and upholds the physician-patient relationship, such employment arrangements are permissible. A more recent 1995 opinion extended this interpretation to for-profit subsidiaries of nonprofit hospital corporations, reaffirming that employing physicians doesn't constitute the unlawful practice of medicine if physicians maintain exclusive control over professional medical judgment. These opinions provide guidance on the permissibility of physician employment by corporations in Virginia.
Sources: Virginia Code § 54.111(D); Va. Bd. of Medicine, Guidance Doc. 85-21

Washington

Does Washington have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In 1988's Morelli v. Ehsan case, Washington State's Supreme Court reinforced the corporate practice of medicine (CPM) doctrine. This doctrine generally prevents corporations from engaging in medical practice, unless specific laws allow it. The court's judgment leaned on RCW § 18.71.011 for defining medical practice, as Washington doesn't explicitly ban corporate medical practice. A close reading of case law implies that corporations can't hire healthcare professionals without a legal exemption. Yet, the application of this doctrine is uncertain, particularly regarding non-professional corporation employers, due to a lack of specific case law or administrative guidance in Washington. Many Washington healthcare entities, notably hospitals, employ medical professionals. Some defend this by citing their nonprofit status, arguing that it mitigates issues like commercial exploitation, a key concern of the CPM doctrine. However, Washington lacks clear legal backing for this nonprofit distinction within the doctrine. The evolution of the CPM doctrine in Washington may depend on future court considerations.
Sources: Washington Rev. Code § 18.57.005.

West Virginia

Does West Virginia have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
‍Summary of Current Law: West Virginia does enforce the Corporate Practice of Medicine (CPOM) Doctrine. West Virginia Board of Medicine's Position Statement on the Corporate Practice of Medicine, released on March 19, 2018, further affirmed Code Section 30-3-15. This doctrine makes it clear that corporations and other business entities cannot practice medicine within the state. To ensure that medical choices are made with the best interests of patients in mind and are not influenced by non-medical corporate interests, this prohibition attempts to protect the independence and professional judgment of doctors and other healthcare workers. The CPOM Doctrine in West Virginia underscores the significance of maintaining the integrity of medical practice, emphasizing that the primary focus of healthcare should be patient well-being. It places paramount importance on preserving the core principles of medical ethics and professionalism, making it clear that the corporate practice of medicine is subject to strict regulation and oversight to protect the public's health and safety.
Sources: West Virginia Code § 30-3-14.

Wisconsin

Does Wisconsin have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
Summary of Current Law: In the Wisconsin Attorney General's legal opinion in OAG 39-86, the legal stance is articulated that business entities are not permitted to engage in the provision of medical services through professionals they employ. This decision is grounded in specific legal statutes of Wisconsin and revolves around several core arguments: Initially, the ruling focuses on the issue of medical practice licensing. According to statute § 448.03(1), any individual or entity, including corporations, must have a valid license to practice medicine or surgery. Corporations inherently fail to meet the licensing criteria outlined in § 448.05, such as graduating from medical school and completing a year of post-graduate training, thereby making their practice of medicine legally untenable. Furthermore, the ruling delves into the ethics of the physician-patient relationship. It suggests that a corporation’s involvement in the medical sector could potentially harm this relationship, steering the focus towards profit generation and the commercialization of medical services, which is counter to traditional public policy and medical ethics. Lastly, the ruling addresses the illegal practice of fee splitting. It points out that when physicians employed by a corporation receive patients through their corporate affiliation, it indirectly leads to the corporation being compensated for referrals. This arrangement contravenes Wisconsin's fee splitting law § 448.08(1), marking it as an unlawful practice.
Sources: Wisconsin Stat. § 448.02, § 448.08(1), § 448.03(1), § 448.05

Wyoming

Does Wyoming have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
Summary of Current Law: Wyoming's approach to the Corporate Practice of Medicine Doctrine is characterized by a permissive and accommodating framework for licensed healthcare professionals. State regulations concerning the licensure and practice of healthcare providers do not impose specific restrictions or guidelines on the practice of healthcare through business entities. Instead, Wyoming's business organization statutes offer several options for licensed professionals to structure their practices while ensuring accountability and compliance with professional standards. Healthcare professionals in Wyoming can establish professional corporations (PCs) under the Wyoming Business Corporation Act or the Wyoming Statutory Close Corporation Supplement. These entities must be exclusively owned by individuals who hold licenses in the respective healthcare profession. Importantly, licensed individuals within PCs retain full responsibility for their professional activities and are subject to all applicable regulations and standards. Additionally, the corporate name must include "A Professional Corporation" or "P.C.," and specific language regarding shareholder licensure and supervision of professional services must be included in the articles of incorporation. Furthermore, the state allows licensed professionals to form registered limited liability partnerships (LLPs) if such formation is not prohibited by the licensing statutes and regulatory requirements. In LLPs, licensed professionals retain their professional licenses and continue to be subject to the relevant licensing regulations and standards.
Sources: Wyoming Stat. § 33-26-101; Wyoming Stat. §§ 17-3-101 through 104; Wyoming Stat. § 17-21-1105

CPOM States: Which states have CPOM laws?

CPOM laws are not uniform across the United States. States like California, Texas, New York, and others have strict CPOM laws, while some states have more relaxed regulations.

As of 2024, the following 33 states do have some form of Corporate Practice of Medicine (CPOM laws):

Arizona
Arkansas
California
Colorado
Connecticut
D.C.
Georgia
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Montana
Nevada
New Jersey
New York
North Carolina
North Dakota
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Washington
West Virginia
Wisconsin

For states with CPOM laws, the laws vary meaningfully per state. It's important for healthcare companies to understand and comply with the laws specific to each state they operate in. Also note that the list above applies only to the practice of medicine. Other disciplines (e.g. speech therapy, psychological services) have different corporate practice laws that may include a different mix of states. Even when a state doesn't have formal CPOM laws, it can still be helpful to have a friendly PC-MSO structure, to minimize regulatory scrutiny and compliance risk.

As of 2024, the following 17 states do not have some form of Corporate Practice of Medicine (CPOM laws):

Alabama
Alaska
Delaware
Florida (but requires a Health Clinic License if non-physician owners)
Hawaii
Idaho
Maine
Mississippi
Missouri
Nebraska
New Hampshire
New Mexico
Ohio
Oklahoma
Utah
Vermont
Virginia
Wyoming

Complying with CPOM laws

If you're looking to start a healthcare business and need to comply with CPOM laws by setting up a MSO-PC structure, Permit can help—affordably and fast. Feel free to reach out.

The Corporate Practice of Medicine 50-State Guide