Pennsylvania Corporate Practice of Medicine (CPOM) Overview
- 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. This was established over 85 years ago in the Pennsylvania Supreme Court’s decision in Neill v. Gimbel Brothers, Inc., 199 A. 178 (1938), and it has held as law in Pennsylvania since then. If a licensed professional does practice under an unlicensed corporation, the employing unlicensed entity is considered to be practicing that profession without a proper license. (The reasoning is that 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. They also can't be held accountable by professional licensing boards in the same way as individuals. ) This principle underscores the importance of a direct and continuous relationship between a professional practitioner and those who seek their services. The doctrine established in the Gimbel Brothers case has been referenced by a number of Attorney General opinions and state regulatory agencies since it was issued. 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. Notably, Pennsylvania doesn't have state fee-splitting laws that affect medical practice (the two prohibitions relate to podiatry and optometry).
- Sources: 63 Pennsylvania § 422.3.
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 Pennsylvania CPOM laws
If you're looking to start a healthcare business in Pennsylvania and need to comply with Pennsylvania CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
