Michigan Corporate Practice of Medicine (CPOM) Overview
- 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 (CPOM). 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 (e.g. normal corporations or LLCs that are not PCs or PLLCs) 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 (CPOM) doctrine.” The Attorney General and Michigan administrative agencies have consistently argued that this restriction applies to employing a licensed professional to perform licensed professional services. 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 (PLLCs) under the Michigan Limited Liability Company Act or as professional corporations (PCs) 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. That said, non-profit organizations have generally not had enforcement of the state's CPOM ban.
- Sources: Michigan Att’y Gen. Op. No. 6592 (Jul. 10, 1989); Mich. St. Att’y Gen. Op. No. 6770 (Sept. 17, 1993).
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% 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.
Complying with Michigan CPOM laws
If you're looking to start a healthcare business in Michigan and need to comply with Michigan CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
