South Carolina Corporate Practice of Medicine (CPOM) Overview
- 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).
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 South Carolina CPOM laws
If you're looking to start a healthcare business in South Carolina and need to comply with South Carolina CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
