Washington Corporate Practice of Medicine (CPOM) Overview
- Does Washington have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
- Summary of Current Law: Washington has an implied ban on the corporate practice of medicine, even though no statute explicitly bans it. This case law was developed further in 1988's Morelli v. Ehsan case, in which Washington State's Supreme Court reinforced the corporate practice of medicine (CPOM) doctrine. Similarly, in Washington Imaging Services, LLC v. Washington State Dept. of Revenue, 171 Wn.2d 548, 252 P.3d 885 (2011), the court held that an imaging center could not lawfully employ physicians. The CPOM doctrine generally prevents corporations from engaging in medical practice, unless specific laws allow it. The court's judgment in the Morelli case leaned on the medical practice statute, RCW § 18.71.011, to define medical practice, which precluded an unlicensed corporate from practicing medicine. A close reading of case law implies that corporations can't hire healthcare professionals without a legal exemption. Yet, the application of this doctrine lacks some clarity, particularly regarding non-professional corporation employers, due to a lack of specific case law or administrative guidance in Washington. There's particular uncertainty around hospitals: Many Washington hospitals employ medical professionals. While it is not explicitly allowed, there are Washington statutes that seem to acknowledge this fact. (Some defend this by citing their nonprofit status, arguing that it mitigates issues like commercial exploitation, a key concern of the CPOM doctrine. However, Washington lacks clear legal backing for this nonprofit distinction within the doctrine.) The evolution of the CPOM doctrine in Washington may depend on future court considerations. In Washington, medicine may be practiced through PCs (professional corporations), PLLCs (professional limited liability companies), or LLPs (limited liability partnerships). Washington State also has a statute which prohibits fee-splitting: The Washington Anti-Rebate Statute (RCW 19.68.010).
- Sources: Washington Rev. Code § 18.57.005.
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 Washington CPOM laws
If you're looking to start a healthcare business in Washington and need to comply with Washington CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
