SURVEY OF STATE LAWS RELATING TO
THE CORPORATE PRACTICE OF MEDICINE*



Introduction

The wide variety of statutes, administrative codes, court decisions, attorneys general opinions, and regulatory interpretations (and want thereof) among the various states on the corporate practice of medicine doctrine renders generalizations impractical if not impossible.  The following is intended as a state by state “nutshell” statement of the law of each state on the issue without any attempt at in-depth analysis.  This survey does not attempt to speculate as to whether regulatory authorities of any state were the doctrine exists would or would not initiate any enforcement or disciplinary proceedings.

Almost every state has some form of professional corporation statute authorizing the practice of medicine and the other learned professions by corporations the ownership and management of which is to a varying extent limited to individuals licensed to practice a particular profession.  By in large those statutes were enacted in the late 1960’s and early 1970’s to permit professionals who had been previously disqualified by application of a corporate practice of medicine (or law, etc.) doctrine from attaining the tax benefits available to a “pure corporation” under §301.7701-2(a)(1) of the Internal Revenue Code to so qualify.  No attempt has been made to cite the professional corporation statutes of every state.

Alabama

Alabama has no prohibition against corporate employment of physicians provided that medical judgment of employed physician is not impaired.

See:  Joint Declaratory Ruling of the Alabama Medical Licensure Commission and the Alabama Board of Medical Examiners, October 21, 1992 (corporate employment of physicians is permitted provided the employment agreement specifically requires the physician to “exercise independent judgment” in all medical decisions).

Alaska

Alaska has typical medical licensing and professional corporation acts, but no court has held there to be a prohibition against the corporate practice of medicine.

Arizona

Arizona has a prohibition against the corporate practice of medicine based on both statute and case law.

See:  A.R.S. §32-1401 (only a “natural person” is entitled to be licensed as a “Doctor of Medicine” or to practice medicine); State ex rel. Board of Optometry v. Sears Roebuck & Co., 102 Ariz. 175, 427 P.2d 126 (1967) (“a corporation does not possess the necessary moral and intellectual qualities demanded by the professional practice of


*These materials, authored by D. Cameron Dobbins of Dobbins, Fraker, Tennant, Joy & Perlstein, are revised from an article appearing in The Health Lawyer published by the ABA Health Law Section.  The author is grateful to Professor W. Eugene Basanta and Elizabeth Foster, research assistant to Professor Basanta, at the Southern Illinois University School of Law for their assistance in preparing the revisions to these materials.
 
© 1997, D. Cameron Dobbins


[Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]
















Arizona  (continued)

their healing art, nor can an unlicensed corporation practice optometry through employing a licensed optometrist” .... because a corporation lacks “necessary moral and intellectual qualities.”)  See also Funk Jewelry Co. v. State, 46 Ariz. 348, 50 P.2d 945 (1935)

Under recent revisions to the Arizona corporate statutes, up to 49 percent of the shares of a professional corporation may be owned by non-licensed persons or entities.  See A.R.S. §§10-2213(c) and 2220.  Additionally, as long as at least 50 percent of the directors and the president are licensed physicians, non-licensed persons may serve on the board or be officers of a professional corporation.  See A.R.S. §10-2230.

Arkansas

Arkansas has typical medical licensing and professional corporation acts.  Case law suggests that the corporate practice of medicine is not permitted.

See:  Arkansas Medical Practice Act, Ark. Code Ann. 17-95-101 et seq.; (restricts the privilege of practicing medicine to individuals).  Missionary Supporters, Inc. v. Arkansas Board of Dental Examiners, 231 Ark. 38, 328 S.W.2d 135 (1959) (corporation enjoined from the unlicensed practice of dentistry); Melton v. Carter, 204 Ark. 595, 164 S.W.2d 453 (1942) (court upholds statute deeming optometry a learned profession and prohibiting corporation from employing licensed optometrists).

California

California has a strong and strictly enforced prohibition against the corporate practice of medicine.  The prohibition is subject to a wide array of exceptions, e.g. various charitable institutions.

See:  California Medical Practice Act (Bus. & Prof. Code §2000 et seq.); People v. Pacific Health Corp., 12 Cal.2d 156, 82 P.2d 429 (1938); Conrad v. Medical Board of the State of California, 55 Cal.Rptr.2d 901 (1996).  (“the corporate practice of medicine doctrine provides that a corporation may not engage in the practice of the profession of medicine” ... “The principal evils” are “the conflict between the professional standards and obligations of the doctors and the profit motive of the corporation employer.”)  See also Bus. & Prof. Code §2400:  People v. Pacific Health Corp., 12 Cal.2d 156, 82 P.2d 429 (1938).

Colorado

Colorado has a straight forward statutory prohibition against the corporate practice of medicine.  There is however a specific hospital exception.

See:  Colorado Medical Practice Act [C.R.S. §12-36-117(m)] (“unprofessional conduct” is defined as including “practicing medicine as employee of ... any corporation other than a professional service corporation for the practice of medicine....”); C.R.S. §25-3-103.7 provides that some licensed hospitals may employ health care professionals subject to the limitations set forth in the statute.

Connecticut

Connecticut has no statute or court decision specifically addressing the issue of the corporate practice of medicine.  Some case law indicates that it may be unprofessional conduct for a physician to be employed by a corporation.
 
 

© 1997, D. Cameron Dobbins
[Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]
















Connecticut (continued)

See:  Lieberman v. Connecticut Bd. of Examiners in Optometry, 130 Conn. 344, 34 A.2d 213 (1943).  But see:  Mack v. Saars, 150 Conn. 290, 188 A.2d 863 (1963).

Delaware

Delaware has no specific statutory or common law prohibition against the corporate practice of medicine; however, its professional corporation law suggests that such a prohibition exists.

See:  Del. Med. Practice Act, 24 Del. C. §§1701 et seq.; Del. Prof. Service Corporations Act, 8 Del. C. §§601 et seq. (“The term `professional service’ shall mean any type of personal service to the public ... which by reason of law, prior to [the effective date of the Act] could not be performed by a corporation ... [including] the personal services rendered by ... doctors of medicine....”).

Florida

In Florida, corporations and investors can freely invest in and own medical practices that employ physicians so long as the physicians supervise and control the actual practice decision making and management.

See:  Florida Statues Chapter 458.

Georgia

In Georgia the status of the corporate practice of medicine doctrine as applied to for-profit corporations is presently unclear.

See:  O.C.G.A. §43-34-37(a)(9) which prohibited a physician from being employed by a corporation other than a professional corporation or a hospital was repealed in 1982.  However, in the same year the Georgia Supreme Court apparently created a common law prohibition against the practice of any “learned profession” by a “business corporation,” Sherrer v. Hale, 248 Ga. 793, 285 S.E.2d 714 (1982).

Hawaii

Hawaii has no specific case law or statute addressing the corporate practice of medicine; however, regulatory agency action suggest that such practice is prohibited.

See:  H.R.S. §453-2 provides that “no person shall practice medicine ... without having a valid unrevoked license....”  The Hawaii Department of Commerce and Consumer Affairs has rejected proposed articles of incorporation submitted by a hospital to incorporate a non-profit subsidiary to employ physicians previously employed by the hospital on the grounds that the articles violated the prohibition against the corporate practice of medicine.

Idaho

Idaho has a strong common law prohibition against the corporate practice of medicine.

See:  Worlton v. Davis, 249 P.2d 810 (Idaho S.Ct. 1952) (“[It is]  well established that no unlicensed person or entity may engage in the practice of medical profession through licensed employees; nor may a licensed physician practice as an employee of an unlicensed person or entity.  Such practices are contrary to public policy.”)
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]















Illinois

Illinois’ long-standing statutory and common prohibition against the corporate practice of medicine are currently under review by the Illinois Supreme Court as to both are extent of the prohibition and its continued viability.

See:  S.H.A. 225 ILCS 60/1 et seq.; Dr. Allison, Dentist, Inc. v. Allison, 360 Ill. 638, 196 N.E. 799 (1935) (“The qualifications [to practice a profession] include personal characteristics, such as honesty, guided by an upright conscience and a sense of loyalty to clients or patients, even to the extent of sacrificing pecuniary profit, if necessary.  * * * No corporation can qualify.”); People v. United Medical Center, Inc., 362 Ill. 442, 200 N.E. 157 (1936); Berlin v. Sarah Bush Lincoln Health Center, 279 Ill.App.3d 447, 664 N.E.2d 337 (1996), app. pending Ill. Sup. Ct. Case No. 81059 (covenant not to compete in employment contract between physician and a not-for-profit hospital was unenforceable because the contract “violated the statutory prohibition on the corporate practice of medicine.”).  Holden v. Rockford Mem. Hosp., No. 2-96-0784 (Ill.App.2d Dist. Mar. 27, 1997).

Indiana

Indiana has a statutory prohibition against the corporate practice of medicine

See:  IC 25-22.5-1-1.1(a)(1)(West 1994).  The prohibition does not apply to hospitals [IC 25-22.5-5-1-(2)(a)(20) & (21)(West 1994)]; however, the statute further provides that a hospital may employ physicians without violating the “corporate practice of medicine” prohibition only so long as the hospital does not “direct or control independent medical acts, decisions, or judgments of the licensed physician” [IC 25-22.5-1-2(c)(West 1994)].

Iowa

Iowa has a long-standing and broad prohibition against the corporate practice of medicine.

See:  Iowa Code §§147.1 et seq. Christensen v. Des Moines Still College of Osteopathy & Surgery, 284 Iowa 810, 82 N.W.2d 74 (1957) (prohibits lay control of licensed professionals); State v. Kindy Optical Co., 216 Iowa 1157, 248 N.W. 332 (1933) (corporation through employed optometrist was unlawfully practicing profession); State v. Bailey Dental Co., 211 Iowa 781, 234 N.W. 260 (1931) (corporation cannot practice dentistry through employed dentists); Op. Atty. Gen. #91-7-1, July 12, 1991 (corporate entity cannot exercise “undue dominion and control” over licensed professional); Op. Atty. Gen. (Riley), Sept. 4, 1974 (If a corporation, including a hospital, employs a physical therapist it is engaged in the unlawful practice of physical therapy and if an employed physical therapist divides fees with their corporate employer without their patient’s consent, their license to practice is subject to revocation or suspension); Op. Atty. Gen. 1954, p. 122 (a hospital corporation, whether for-profit or not-for-profit, because of its inability to obtain a license to practice medicine, cannot employ physicians and its employment of radiologists and pathologists violated the law).

Kansas

Kansas has both a statutory and common law prohibition against the corporate practice of medicine which does not extend to hospitals (whether not for profit, proprietary or governmental)  which by statute, are required to provide “physician services.”
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]














Kansas (continued)

See:  K.S.A. 65-2801 et seq.; Early Detection Center Inc. v. Wilson, 248 Kan. 869, 811 P.2d 860 (1991); St. Francis Regional Medical Center, Inc. v. Weiss, 254 Kan. 278, 869 P.2d 606 (1994)

Kentucky

Kentucky’s medical practice laws and common law prohibit the corporate practice of medicine; however, the current viability of the prohibition as to all forms of physician employment is in doubt.  In an October 1993 private opinion letter the Kentucky Board of Medical Licensure stated that based on Current Opinion 4.06 of the AMA Council on Ethical and Judicial Affairs it is acceptable for physicians to be full-time employees of hospitals.

See:  KRS 311.560; Kendall v. Beiling, 295 KY. 782, 175 S.W.2d 489 (1943); Johnson v. Stumbo, 277 Ky. 301, 126 S.W.2d 165 (1938)

Louisiana

Louisiana’s Medical Practice Act prohibiting the unauthorized practice of medicine is not violated by corporate employment of a physician if the physician’s employment contract does not interfere with the physician-patient relationship.

See:  Louisiana Statutes Annotated, Revised Statues §37:1271; August 20, 1992 Statement of Position by the Louisiana Board of Medical Examiners (“If a corporate employer seeks to impose or substitute its judgment for that of the [independent medical judgment of a] physician ... the Medical Practice Act will have been violated.  But if a physician employment relationship is so established and maintained as to avoid such intrusion, it will not run afoul of the Medical Practice Act.”)

Maine

Maine permits the corporate practice of medicine provided that employed physicians remain individually accountable for their actions.

See: 32 M.R.S.A. §3270; November 2, 1992, Opinion of the Board of Licensure in Medicine (“[T]he Board holds each [physician] individually accountable for his/her conduct without regard to employment relationship.  Whether a salaried employee of a corporate entity ... each licensee of the Board must answer for their exercises of clinical judgment, ethics, and competency.  None may defend themselves against a Board Complaint by asserting that `company policy,’ not his conduct, is at issue.”)

Maryland

Maryland has no specific statutory or common law prohibition against the corporate practice of medicine.  However, its physician licensing agency, the Board of Physicians Quality Assurance, takes the position that no corporation, other than a professional service corporation, a hospital, or an HMO may employ a physician because its Medical Practice Act permits only individuals to be licensed to practice medicine, and, as a corporation cannot meet licensure requirements, it cannot employ physicians unless expressly exempted from the requirements of the licensure act.

See:  Md. Code Ann., Health Occ. §§14-101 through 14-702; §§19-351(a); §§19-704 through 19-735; Dvorine v. Castleberg Jewelry Corp., 185 A. 562 (Md. 1936); Backus v. County Bd. of App. for Montgomery County, 224 Md. 28, 166 A.2d 241 (Md. Ct. App. 1960).
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]














Massachusetts

Massachusetts has a long-standing prohibition against the corporate practice of medicine other than by a physician owned entity or a licensed “clinic.”

See:  M.G.L.C. 112 §6; M.G.L.C. 111 §51; 105 CMR 140.000; M.G.L.c. 176B §7; McMurdo v. Getter, 298 Mass. 363, 10 N.E.2d 139 (1937) (“The Rule is generally recognized that a licensed practitioner of a profession may not lawfully practice his profession among the public as a servant of an unlicensed person or corporation; and that, if he does so, the unlicensed corporation employing him is guilty of practicing that profession without a license.”)  See also Silverman v. Bd. of Registration in Optometry, 344 Mass. 129, 181 N.E.2d 540 (1962).  The Massachusetts Board of Registration in Medicine, in order to ensure that physicians re “free to exercise their professional judgment,” has proposed the adoption of a new rule that would prohibit the employment of physicians by any business not owned by practicing physicians.

Michigan

Michigan’s “learned profession doctrine” prohibits the practice of medicine by for-profit corporations.

See:  MCL §450.1101 et seq.; People v. Carroll, 274 Mich. 451, 264 N.W. 811 (1936); 1993 Op. Atty. Gen. No. 6770 (Sept. 17, 1993) (not for profit hospitals and other not for profit corporations may provide medical services through employed physicians; reviews earlier opinions regarding for profit operations and the “learned professions doctrine”).

Minnesota

Minnesota has a long-standing general prohibition against the corporate practice of medicine by for-profit corporations.

See:  Minn. Stat. §147.081; In Re Disbarment of Otterness, 181 Minn. 254, 232 N.W. 318 (Minn. 1930); Granger v. Adson, 190 Minn. 23, 250 N.W. 722 (Minn. 1933) (“it is improper and contrary to statute and public policy for a corporation or layman to practice medicine” by hiring a licensed physician “for the benefit or profit of such hirer”); Op. Att’y. Gen. No. 92-B-11 (Oct. 5, 1955) (the “corporate practice doctrine” does not extend to not-for-profit corporations).

Mississippi

Mississippi has abandoned the prohibition against the corporate practice of medicine in favor of an administrative policy which sets forth specific criterion for corporate employment of physicians, including, inter alia, the requirement that patient treatment is left to the sole and absolute discretion of a licensed physician.

See:  State Board of Medical Licensure “Policy as to the Corporate Practice of Medicine in Mississippi” May 16, 1996; Sears, Roebuck & Co. v. State Board of Optometry, 57 So.2d 726 (Miss. 1952); Busch Jewelry Co. v. State Board of Optometry, 62 So.2d 770 (Miss. 1953).
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]














Missouri

Missouri has no prohibition against the corporate practice of medicine.

See:  RSMO §334.010; State ex rel. Sager v. Lewin, 128 Mo. App. 149, 106 S.W. 581 (1907).

Montana

Montana has no statute or court decision specifically addressing the corporate practice of medicine.

See:  Mont. Code Ann., §37-3-305 (1995) provides that “unprofessional conduct” includes assisting allowing an organization to practice or offer to practice by use of the physician’s license; however, in 1995, the Montana legislature repealed that provision of the statute which further defined “unprofessional conduct” as the practice of medicine as an employee of any person who does not hold a license to practice, except as an employee of a hospital, medical assistance facility, or other licensed health care provider, if certain requirements were satisfied.  Mont. Code Ann. §37-3-322 (repealed 1995).  See also United States v. Kinter, 216 F.2d 418 (9th Cir. 1954) (court suggests Montana law would prohibit corporate practice of medicine).

Nebraska

Nebraska has no prohibition against the corporate practice of medicine.

See:  Neb. Rev. Stat. §71-102(i); State Electro-Medical Institute v. Platner, 74 Neb. 23, 103 N.W. 1079 (Neb. 1905).

Nevada

Nevada’s corporate practice of medicine doctrine bars any general, for-profit corporation except a regulated HMO from practicing medicine through employed physicians.

See:  Nev. Rev. Stat., Ch. 89; Neb. Rev. Stat. 695 C. 050; 1977 Nev. Op. Atty. Gen. No. 77-219 (Oct. 3, 1977) (“no [general, for-profit] corporation ... may engage in the practice of medicine”).

New Hampshire

New Hampshire has no formal corporate practice of medicine doctrine although most physicians follow the convention that they may only practice as a professional corporation or as an employee, member, or independent contractor to a health care organization.

New Jersey

New Jersey by administrative rule has specifically prescribed “acceptable professional practice forms” for physicians which proscribe corporate employment except in limited situations.

See:  The New Jersey Medical Practice Act, N.J.S.A. 45:9-1 et seq.; N.J.A.C. 13:35-6.16(f) (a physician may offer services as an employee of a corporation only if the corporation is (i) a licensed HMO, hospital, long or short-term care facility,
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]













New Jersey (continued)

(ii) not in the health care business but provides first aid to employees and customers, (iii) a non-profit corporation sponsored by a union, social or religious or fraternal organization providing health care services only to its members, (iv) an educational institution which provides health care to students and faculty, or (v) an insurance company.)

New Mexico

New Mexico has no statutory or common law prohibition against the corporate practice of medicine and its Attorney General has opined that employment of physicians by a corporation controlled by non-physicians generally permitted.

See:  New Mex. Atty. Gen. Opinion 87-39 (July 30, 1987) (a corporation may provide medical services “unless prohibited by statute or it exercises lay control of medical judgment or is engaged in lay exploitation of the medical profession in a manner prohibited by public policy.”)

New York

New York, based on its Education Law, holds that only natural persons may be licensed to practice medicine, and, therefore, with several specific statutory exceptions, including hospital service corporations and not-for-profit hospitals, corporations are prohibited from practicing medicine.

See:  N.Y. Education Law §6521; 8 N.Y. C.R.R. Part 60; People v. Woodbury Dermatological Institute, 192 N.Y. 454, 854 N.E. 697 (1908); Stern v. Flynn 278 N.Y.S. 598 (3d Dept. 1936); Albany Medical College v. McShane, 66 N.Y.2d 982; 489 N.E.2d 1278, 499 N.Y.S.2d 376 (1985)); United Calendar Mfg. Co. v. Huang, 94 A.D.2d 176, 463 N.Y.S.2d 497 (2d Dep’t. 1983).

North Carolina

North Carolina courts have never decided whether its Medical Practice Act prohibits the corporate practice of medicine; however, its Attorney General has opined that the corporate practice of medicine doctrine does exist in North Carolina but that it does not extend to non-profit and public hospitals and, by statute, HMO’s are authorized to employ physicians.

See:  N.C. Gen. Stats. §§90-1 to 90-21:21 NCAC 32B.0001 (1996); 33 N.C. Att’y. Gen. Rep. 43 (1955); N.C. Gen. Stats. §58-67-35(a)(3)(1996); van der Vaart & Bobbit, The Corporate Practice of Medicine in North Carolina, 10 Prognosis 1 (Dec., 1993).

North Dakota

North Dakota has no statute or case law specifically addressing the corporate practice of medicine; however, provisions of its Century Code specifically authorizing employment of physicians by hospitals and HMO’s raise the possibility that the doctrine may exist in some form.

See:  N.D. Cent. Code §43-17-01 et seq.; N.D. Cent. Code §43-17-42 (1993); N.D. Cent. Code §26.1-18.1-04(1)(c) (1993).
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]













Ohio

Ohio’s corporate purpose statute was amended in 1994 to specifically permit “carrying on the practice of any profession”; however, its physician licensure and physician fee-splitting acts, which both had previously been interpreted by its Attorney General as prohibiting the corporate employment of physicians, were not thereafter amended.

See:  Ohio Rev. Code §1701.03 (corporate purposes); Ohio Rev. Code §4731.41 (practice of medicine without a license); Ohio Rev. Code §4731.22(B)(17) (grounds for physician discipline); 1952 Op. Att’y. Cen. Ohio No. 52-1751; 1962 Op. Atty. Gen. Ohio 62-3197.  See also State ex re. Bricker v. Buhl Optical Co., 131 Ohio St. 217, 2 N.E.2d 601 (1936) (a corporation cannot practice medicine, whether directly or through employees).

Oklahoma

Oklahoma has no explicit statutory or common law prohibition against the corporate practice of medicine; however, the prohibition may be implied from licensure statute which limits licensure to natural persons and its Professional Entity Act which provides that a physician practicing through a professional entity does not engage in illegal fee splitting.  Further, support for the existence of the prohibition is found in provisions of the Licensure Act that a not-for-profit hospital may employ physicians “without being regarded as itself practicing medicine,” and that a physician so employed is not engaged in “unprofessional conduct.”

See:  Okla. Stat. tit. 59 §§491, 492, 493 & 494; Okla. Admin. Code §§435:10-7-4(21) and (30).

Oregon

Oregon has a limited common law ban on the corporate practice of medicine.

See:  Or. Rev. Stat. §677.080; State ex rel. Sisemore v. Standard Optical Co., 182 Or. 452, 188 P.2d 309 (1947) (corporate employment of optometrists is unlawful and contrary to public policy because only individuals, not corporations, can be licensed and therefore corporations employing optometrists violated the requirement that a person engaged in the practice of medicine be licensed); Neiss v. Ehlers, 135 Or. App. 218, 899 P.2d 700 (1995) (court limits scope of Sisemore to situations where corporation controls professional services).

Pennsylvania

Pennsylvania, subject to specific statutory exceptions, prohibits the corporate practice of medicine doctrine.

See:  Pa. Medical Practice Act of 1985 (63 P.S. §§422.1 et seq.); Neill v. Gimbel Bros. Inc., 330 Pa. 213, 199 A.178 (1938)  [“The rule is generally recognized that a practitioner of a profession may not lawfully practice his profession among the public as the servant of an unlicensed person or a corporation....” quoting McMurdo v. Getter, 10 N.E.2d 139, (Ma. 1937)].  Exemptions:  professional partnerships (Op. Pa. Atty. Gen. 1961-243 (Sept. 19, 1961)); professional corporations (15 Pa. C.S.A. §§2901 et seq.); HMO’s (40 P.S. §1554); hospital plan corporations (40 Pa. C.S.A. §§6101 et seq.); professional health services plan corporations (40 Pa. C.S.A. §§6301 et seq.); licensed hospitals and health care facilities (35 P.A. §§448.801a et seq.).
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]













Rhode Island

Rhode Island has no statutory or common law prohibition against the corporate practice of medicine.

South Carolina

South Carolina has a common law prohibition against the corporate practice of medicine.  There is a specific exception for health maintenance organizations.

See:  Ezell v. Ritholz, 188 S.C. 39, 198 S.E. 419 (1938); Wadsworth v. McRae Drug Co., 203 S.C. 543, 28 S.E.2d 417 (1943) (“[A] corporation may not engage in the practice of medicine even through licensed employees.”); McMillan v. Durant, 312 S.C. 200, 439 S.E.2d 829 (1993) (“[A] hospital as an entity cannot practice medicine, diagnose an illness, or establish a course of treatment.”).  See also S.C. Code Ann. §38-33-40 (HMO exception).

South Dakota

South Dakota permits the corporate practice of medicine only if specific statutory requirements are met.

See:  SDCL 36-4-8.1 (“[I]t is the public policy of this state that a corporation may not practice medicine or osteopathy.  A corporation is not engaged in the practice of medicine or osteopathy and is not in violation of §36-4-8 (unauthorized practice of medicine) by entering into an employment agreement with a physician ... if the agreement ... does not:  (1) in any manner, directly or indirectly, diminish or regulate the physicians independent judgment concerning the practice of medicine or the diagnosis and treatment of any patient; (2) result in profit to the corporation from the practice of medicine itself....; and (3) remain effective for a period of more than three years....”

Tennessee

Tennessee’s legislature, in response to opinions of its Attorney General that any employment of a physician by a non-physician is prohibited by its licensure act, in 1995 enacted compromise legislation to permit the employment of physicians by non-professional corporations in limited circumstances.

See:  Tenn. Code Ann. §63-6-201(a) (“No person shall practice medicine ... unless and until such person has obtained a license....”); State ex rel. Loser v. Nat’l Optical Stores Co., 189 Tenn. 433, 225 S.W. 2d 263 (1949); 94 Op. Tenn. Att’y Gen. 53 (1994); 94 Op. Tenn. Att’y Gen. 009 (1994); 88 Op. Tenn. Att’y Gen. 152 (1988); Tenn. Code Ann. §§63-6-204-63-11-205 (permitting businesses to employ physicians to treat employees, retirees and their dependents and permitting hospitals and hospital affiliates to employ physicians, but, further providing, that no hospital or affiliate may employ radiologists, anesthesiologists, or emergency physicians.)

Texas

Texas has a strong and strictly enforced prohibition against the corporate practice of medicine.

See:  Tex. Rev. Civ. Stat. Ann. art. 4495b, §§3.07(f), 3.08(12), and 3.08(15) (Vernon Supp. 1996), providing that it is unlawful for a physician to allow another to use his license or to aid or abet the practice of medicine by any unlicensed person,
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]












Texas (continued)

partnership, association, or corporation; Garcia v. Texas Board of Medical Examiners, 384 F.Supp. 434 (W.D. Tex. 1974), aff’d., 421 U.S. 995, 95 S.Ct. 2391, 44 L.Ed.2d 663 (1975); Flynn Bros. Inc. v. First Medical Assoc., 715 S.W.2d 782 (Tex.App. 1986).

Utah

Utah has no statutory or common law prohibition against the corporate practice of medicine.

See:  Utah Code Ann. §58-1-501; Golding v. Schuback Optical Co., 93 Utah 32, 70 P.2d 871 (1937); letter from Utah Department of Commerce, Division of Occupational and Professional Licensing dated September 8, 1993 states medical clinics may be owned by non-physician investors provided there is no lay interference in physician practice.

Vermont

Vermont has no statutory or common law prohibition against the corporate practice of medicine.

Virginia

Virginia has no clearly enunciated prohibition against the corporate practice of medicine.

See:  Va. Code §54.1-2914.2 (defines “unprofessional conduct as including practicing “under a false name or assumed name.”); Va. Code §54.1-2941 (the Medical Practice Act does not prohibit “any institution, hospital, treatment center ... under the management and control of the Commonwealth from employing or contracting with any licensed practitioner to furnish professional services....”) Palumbo v. Bennett, 242 Va. 248, 409 S.E.2d 152 (1991) (prior to the enactment of Virginia’s professional corporation law, professionals could not render professional services as an employee of professional corporations.); Stuart Circle Hosp. Corp. v. Curry, 173 Va. 136, 3 S.E.2d 153 (1939).  See also 1992 Op. Atty. Gen. Va. 147 (Dec. 7, 1992) (Virginia statutes and court decisions allow a hospital to retain physicians as employees so long as the agreement authorizes physicians to exercise control over medical decisions and professional judgment is not subject to improper commercial concerns).

Washington

Washington has a strict statutory and common law prohibition against the corporate practice of medicine with the sole exception being professional service corporations.

See:  RCW 18.71.011; Morelli v. Ehsan, 110 Wn.2d 555, 756 P.2d 129 (1988), (“a corporation cannot engage in the practice of a learned profession through licensed employees.”); State ex rel Standard Optical Co. v. Superior Court, 17 Wn.2d 323, 135 P.2d 839 (1943), (“neither a corporation nor any unlicensed person or entity may engage, through licensed employees, in the practice of learned professions.”); RCW 18.100 et seq.
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page] [Next Page]
[Return to C.  Dobbins Page] [Return to Home Page]












West Virginia

West Virginia has a long-standing and broad prohibition against the corporate practice of medicine.

See:  W. Va. Med. Practice Act, W.Va. Code §§30-3-1 et seq.; Eisensmith v. Buhl Optical Co., 115 W.Va. 776; 178 S.E. 699 (1934) (the right to practice optometry is a personal one confined to real persons and corporations cannot qualify and, thus, employment of licensed optometrist violated the prohibition of the Act against practicing other than his own name); 44 Op. Att’y Gen. 5 (1950) (a hospital which employs a physician, and controls his discretion in the slightest is engaged in the unauthorized practice of medicine); 46 Op. Att’y Gen. 202 (1955) (an unlicensed person, association or corporation cannot under any circumstances employ a licensed physician to practice medicine on its behalf without violating the Act).

Wisconsin

Wisconsin’s corporate practice of medicine doctrine extends only to for-profit corporations.

See:  OAG 39-86 (10-21-86) (states that business corporations may not provide medical services through employed physicians as to do so would violate Wisconsin’s fee splitting statute, Wis. Stat. §448.08(1), and licensure statute, Wisc. Stat. §§448.03(1), 448.08(1), and 448.05).  OAG 31-86 (states that hospitals and medical education and research organizations may employ physicians subject to certain restrictions.)

Wyoming

Wyoming has no statutory or common law prohibition against the corporate practice of medicine.
 
 

© 1997, D. Cameron Dobbins
[Introduction] [Previous Page]
[2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12]
[Return to C.  Dobbins Page] [Return to Home Page]