Corporate Practice of Medicine
Congress Proposes Bill Taking Aim at Corporate Control and Investment in Medical Practices
On September 16, 2026, Senators Ron Wyden, Jeff Merkley, and Elizabeth Warren, together with Representatives Val Hoyle, Alexandria Ocasio-Cortez, and Suhas Subramanyam, introduced the Stop Corporate Takeovers of Physicians Act of 2026 (the “Act”) in the House and Senate. The introduced House bill, H.R. 10444, draws from Oregon’s SB 951 and seeks to establish federal prohibitions on the Corporate Practice of Medicine (“CPOM”). These restrictions reflect a broader state-level trend toward increased scrutiny of non-physician investment in medical practices and “friendly physician” arrangements. This blog post provides a general overview of the Act’s key provisions and prohibitions, enforcement mechanisms, and potential impacts. Key Provisions and Prohibitions CPOM Prohibition The Act would make it unlawful for any partnership or corporate entity that is not majority-owned and controlled by one or more licensed physicians (“licensees”) to: (1) own or control, in whole or in part, a medical practice; (2) employ or contract for the professional services of a licensee; or (3) engage in the practice of medicine. To satisfy the majority-ownership requirement under the Act, licensees must both hold a majority of the ownership or membership interests in the medical practice and constitute a majority of the practice’s governing body. The Act provides an exception from this ownership and employment prohibition for nonprofit and public health care providers, hospitals, hospital-affiliated clinics, critical access hospitals, and rural emergency hospitals. Note, these entities would not be exempt from the Act generally and could remain subject to other provisions, including the licensee-autonomy protections and restrictions on certain restrictive covenants. Restrictions on Management Services Organizations The Act also imposes extensive restrictions on management services organizations (“MSOs”). Such restrictions target “friendly physician” arrangements between MSOs and medical practices. Among other restrictions, MSOs would be prohibited from owning or controlling an interest in a medical practice; paying dividends from shares or an ownership interest in a medical practice; financing the acquisition of an interest in a medical practice; controlling the transfer of practice interests or assets; participating in the management of the medical practice; or advertising services of a medical practice under the name of an entity that is not the medical practice. The Act further provides that MSOs would be prohibited from exercising “ultimate decision-making authority” over specified matters, including but not limited to, clinician hiring and termination, compensation, billing and coding, and payer contracting. Any agreement between an MSO and a medical practice must be negotiated at arm’s length, using advisors selected by the medical practice and providing for compensation consistent with fair market value. An agreement that violates these prohibitions would be considered void and unenforceable. Licensee Owner Requirements The Act would also impose two requirements for licensee owners of a medical practice. Licensee owners must be: (1) “licensed and present” in a state where the medical practice furnishes services to patients and (2) “substantially engaged” in delivering medical care. The engagement requirement appears aimed at preventing passive licensee ownership under a “friendly physician” arrangement. The phrase “licensed and present,” however, may raise interpretive questions for multistate and telehealth practice models, including whether and under what circumstances services furnished through telehealth would satisfy the presence requirement. Licensee-Autonomy Protections To protect licensee autonomy, health care providers, including medical practices, would be prohibited from using discipline, punishment, threats, adverse employment actions, coercion, retaliation, or excessive pressure to interfere with, direct, or control a licensee’s clinical decisions. The Act identifies specific prohibited conduct and includes a catch-all covering other conduct that interferes with licensee decision-making. Restrictions on Non-Competition, Non-Disclosure and Non-Disparagement Agreements Under the Act, agreements involving a licensee would be void and unenforceable to the extent they impose a noncompete clause or prohibit the licensee from disclosing or disparaging certain matters. The Act provides a limited exception for a noncompete clause between a medical practice and a licensee who holds an ownership interest of at least 25 percent in the practice; that ownership exception does not extend to the separate nondisclosure and nondisparagement restrictions. Enforcement Mechanisms The Act contemplates multiple avenues for enforcement: The Federal Trade Commission (“FTC”) would have authority to enforce the Act. Violations would be treated as unfair or deceptive acts or practices under the Federal Trade Commission Act and would be subject to the penalties available under that statute. The Act also creates a private right of action for individuals injured by a violation. Relief may include treble damages, attorneys’ fees and litigation costs, and other equitable or declaratory relief deemed appropriate by the court. State attorneys general may bring civil actions on behalf of state residents. In any of the actions described above, a court may grant equitable and injunctive relief, including cease-and-desist relief, divestiture, and disgorgement of revenues attributable to the violation period. Additionally, the Act proposes to amend the Social Security Act to permit exclusion from federal health care programs for entities found to have violated the Act. Preemption Finally, the Act expressly provides that any state law which imposes equal or more stringent requirements on medical practices, licensees, and MSOs would not be preempted or displaced. In effect, the Act would create a new floor for regulating the CPOM. Takeaways & Potential Impacts CPOM regulation historically has been a state-law matter. The Act would depart from that approach by establishing a nationwide federal floor for medical practice ownership and control. Because the legislation has only been introduced and must proceed through the committee and legislative process, enactment is not imminent or assured. Even if the Act does not advance, however, it may influence federal and state policy discussions regarding medical-practice ownership, MSO arrangements, restrictive covenants, and licensee autonomy. Although the Act would not prohibit every form of non-physician investment in health care, it would substantially restrict non-licensee ownership and control of medical practices and could require significant changes to common MSO structures and existing “friendly physician” arrangements. Entities operating in states without existing CPOM restrictions could face particularly significant restructuring. Entities in states that already regulate CPOM would need to assess whether their existing ownership structures and contractual arrangements comply with the new federal statutory requirements. Because the Act would preserve state laws imposing equal or more stringent requirements, CPOM regulation would remain a patchwork of requirements that vary across states. If enacted, entities operating across multiple states would need to evaluate compliance with both the federal requirements and any stricter state-law prohibitions.
October 7, 2026
by Randall Hanson, Jamie McCarty, and Katelyn Tarrolly
Corporate Practice of Medicine
California Attorney General Escalates Corporate Practice Enforcement in Medical and Dental Care
California has long maintained one of the country’s more developed prohibitions on the Corporate Practice of Medicine (“CPOM”) and the Corporate Practice of Dentistry (“CPOD”). Recent activity from California Attorney General Rob Bonta suggests that these doctrines are increasingly used as enforcement tools in arrangements involving management services organizations (“MSOs”), dental service organizations (“DSOs”), professional corporations (“PCs”), and other health care businesses in California. In the span of roughly three months, Attorney General Bonta took three notable actions in this area: he filed an amicus brief in Art Center Holdings, Inc. v. WCE CA Art, LLC; announced a settlement with Aspen Dental Management, Inc. involving California’s ban on the CPOD; and announced a “first-of-its-kind” settlement with Carbon Health Technologies, Inc., affiliated medical groups, and Carbon’s co-founder and former CEO, Eren Bali, involving California’s CPOM doctrine. This blog post provides a general overview of these recent California developments and what they may signal for regulated professional organizations operating in California. Art Center: The Attorney General Targets Captive PC Replacement Rights The Attorney General’s Art Center amicus brief is a forceful restatement of California’s CPOM doctrine as applied to “friendly PC” or “captive PC” structures. The brief identifies the relationship that “poses the greatest risk” as one in which an MSO has the sole authority to select a so-called “friendly” physician to serve as the PC’s nominal owner, while the MSO retains contractual tools that allow it to control the friendly physician-owner and, by extension, the PC. The brief focuses on a common set of provisions often described as continuity agreements, succession agreements, assignable options, or stock transfer agreements. Under the arrangements described by the Attorney General, the physician-owner could not sell the physician’s interest in the PC without first obtaining the MSO’s approval. The MSO also retained the unilateral right to terminate its contract with the physician-owner. If the contract were terminated, the physician-owner’s ownership interest would transfer to another licensed physician selected by the MSO. According to the Attorney General, these provisions run the risk of giving the MSO “near complete control” over the PC. The Attorney General’s core argument is that agreements giving a nonprofessional corporation the right to replace a PC’s physician-owner with a physician of its choosing violate California’s CPOM prohibition by giving the corporation undue control over a medical practice. The brief reasons that the ability to replace the physician-owner gives the nonprofessional corporation direct control over physician hiring and firing, and indirect control over all other aspects of the practice. That concern is heightened where the physician-owner has no corresponding right to replace the MSO without losing ownership of the PC. Importantly, the brief does not state that every MSO-PC relationship is per se unlawful. It expressly notes that not all MSO-PC relationships give the MSO an impermissible degree of control and that, absent the problematic contractual terms at issue in this specific case, the legality of an MSO-PC relationship requires a totality-of-the-circumstances analysis. But the brief leaves little doubt that contractual rights allowing an MSO to replace a physician-owner are, in the Attorney General’s view, among the highest-risk features in a California MSO-PC structure. Aspen Dental: Corporate Practice of Dentistry Enforcement On May 7, 2026, the California Attorney General announced a settlement with Aspen Dental Management, Inc. for alleged violations of California’s ban on the CPOD and alleged false and misleading advertising. The settlement, which remained subject to court approval at the time of announcement, included $2 million in penalties and $300,000 in restitution funds for certain patients. The Attorney General alleged that Aspen Dental, a private equity-owned DSO, exceeded its role as a provider of business management and administrative services by interfering with and unlawfully directing the practice, ownership, and management of dentistry in California. The Attorney General’s press release also noted that Aspen Dental entered California in 2019 and opened 19 offices in the state, and alleged that Aspen selected, purchased, staffed, and advertised offices without clearly identifying independent dentist-owners. The Aspen settlement is not Aspen Dental’s first corporate practice-related enforcement matter. In 2015, the New York Attorney General announced a settlement requiring Aspen Dental Management to overhaul its New York business practices so that it would not dictate care provided by dentists and hygienists, split patient fees with clinics, or hold itself out to consumers as a provider of dental services. The California Aspen Dental settlement includes a broad set of injunctive terms. Among other things, Aspen Dental agreed to restrictions including: Not replacing any practice owner with another dentist of its choosing. Not requiring practice owners to effectively give up ownership of any dental practices if they decide to terminate their contractual relationship with Aspen Dental. Not owning the property for any practice. Not practicing dentistry, including but not limited to owning or managing any dental office. Not basing service fees on revenue, sales, or profits. Not suggesting, directing, or encouraging any licensed clinician, other than a practice owner, to sell or increase revenue for any service or product. Not compensating any of its employees based on the sales or revenue of practices. Not paying any practice employees incentives based on practice sales, revenue, or profit, including the sale of a particular service or product. Discontinuing the use of and not enforcing any existing contractual provision that restricts where any licensed clinician may practice or be employed. Providing a written fee schedule for products and laboratory services. Registering with the Dental Board of California as a Dental Group Advertising and Referral Service. Clearly and conspicuously identifying the practice owner’s name when creating, publishing, or disseminating advertisements. Carbon Health: CPOM Enforcement Applied to the Friendly PC Model On June 26, 2026, Attorney General Bonta announced a “first-of-its-kind” settlement with Carbon Health Technologies, Inc., affiliated medical groups, and Carbon’s co-founder and former CEO, Eren Bali. The settlement, which remains subject to court approval, resolved allegations that Carbon Health violated California’s prohibition on the CPOM, used unlawful consumer contracts, engaged in false advertising, and improperly billed patients and insurers. According to the Attorney General, Carbon Health used a “friendly PC” model in which Carbon Health Technologies, a MSO, controlled clinic operations by contract. The challenged contracts allegedly allowed the MSO to replace the physician-owner with a physician of its choosing, while preventing the physician-owner from replacing the management company without risking loss of ownership. The Attorney General also alleged that the structure allowed unlicensed officers to direct staffing, advertising, and insurance negotiations. The proposed Carbon judgment would permanently enjoin the defendants from engaging in CPOM, including through: A management services agreement granting the MSO complete authority over advertising, payor negotiations, selection of medical equipment, and the hiring, firing, and compensation of licensed medical professionals; Granting an MSO any ownership interest in a professional corporation, including through an assignable option agreement giving the MSO the right to acquire such ownership interests for its own account; and A revolving credit agreement requiring affiliated professional corporations to seek financing exclusively from the MSO at an above-market rate, subject to certain conventional lender restrictions. The judgment also addresses significant billing and consumer-protection issues, including automatic payment disclosures, overcharges to patients with health maintenance organization coverage, collection of amounts not owed, incorrect billing codes, and misrepresentations about clinics’ in-network status. The proposed judgment imposes a $4.4 million civil penalty claim against the Carbon Health entities in their bankruptcy cases and a separate $100,000 civil penalty against Mr. Bali. The proposed judgment does not state that every succession or continuity arrangement is unlawful by itself. Rather, it focuses on the specific combination of ownership, option, financing, and operational-control rights described above. The Big Picture California’s recent activity fits within a broader state-level trend toward increased scrutiny of private investment and lay-entity influence in clinical care, including recent developments in Oregon and Vermont. California’s approach is notable because the Attorney General is using existing professional practice and consumer protection authorities to challenge MSO-PC arrangements, rather than relying only on newly enacted legislation. The takeaway is not that MSOs, DSOs, or private capital are categorically prohibited in California. Rather, California operators should assess whether their arrangements preserve genuine professional ownership and clinical independence, particularly where contract terms allow the management entity to influence who owns the practice, how the practice exits the relationship, or how clinical and patient-facing decisions are made. Please contact the authors or your primary Dorsey attorney with any questions about how these developments could affect your current business model or any contemplated transactions. Summer Associate Shen Wang provided substantial assistance with the drafting of this blog post/article.
July 13, 2026
by Randall Hanson and Jamie McCarty
Corporate Practice of Medicine
Vermont Joins Growing Trend to Oversee Private Equity Investment in Clinical Care
On June 15, 2026, Vermont Governor Phil Scott signed H.583 (“Act 133”) into law, making Vermont the most recent state to reinforce their Corporate Practice of Medicine doctrine by restricting private equity and hedge fund influence over clinical decision-making. The legislation follows a flurry of interest from states inspired by similar legislative action in both Oregon and California. This blog post provides a general overview of Vermont’s new restrictions and places them in the context of the broader national trend toward scrutiny of private investment in health care. Act 133 has three operative sections: § 9772 codifies Vermont’s common-law prohibition on corporate involvement in clinical decision-making as it relates to private equity and hedge fund investments; § 9773 requires disclosure of private equity and hedge fund ownership and control interests in certain health care entities; and § 9774 provides for public transparency and sharing of such ownership information. Restrictions on Private Equity Influence Over Clinical Decision-Making Section 9772 is the substantive heart of Act 133. It establishes that clinical decision-making and other core functions affecting patient care must remain under the control of licensed health care professionals, effectively codifying, at least in part, Vermont’s Corporate Practice of Medicine doctrine. This section specifically prohibits private equity groups or hedge funds from: interfering with providers’ clinical judgment, including by determining appropriate diagnostic tests, referrals to other providers, patient treatment options, work schedules, and patient loads; and exercising control over, or being delegated the power to set: (i) clinical standards or policies; (ii) access to and control of patient medical records; (iii) hiring or firing of medical professionals based on clinical competency or proficiency; (iv) parameters for contracting with third-party payers or other providers; (v) prices or rates for a provider’s services; (vi) coding and billing decisions; and (vii) selection or approval of medical equipment and supplies. Section 9772 does not prohibit private equity firms and hedge funds from investing in health care entities. Nor does it ban unlicensed individuals or entities from providing non‑clinical management, administrative, or business services, so long as a licensed health care professional retains ultimate responsibility for or approval of any decisions affecting patient care. Finally, § 9772 creates a private right of action for health care providers to seek equitable relief, actual damages, costs, and attorney’s fees against a private equity group or hedge fund (or entity controlled directly, in whole or part, by one). New Ownership and Control Disclosure Requirements Section 9773 establishes a mandatory disclosure and data sharing regime to ensure transparency around private equity and hedge fund involvement in health care. It requires defined health care entities and management services organizations (“MSO”), which are owned at least in part by private equity groups or hedge funds (“Applicable Entities”), to report specific ownership and control information (enumerated below) to Vermont’s state health regulatory board, the Green Mountain Care Board (the “State Board”). Certain entities are exempted, including nursing homes, health care staffing companies, organizations whose services are delivered exclusively through telehealth, and federally qualified health centers. Notably, health care entities and MSOs with no private equity or hedge fund ownership or investment must still attest to no such ownership or investment. Under this section, Applicable Entities must report to the State Board: the name, business address, and business identification numbers for each person that has an ownership, investment, or controlling interest, has a significant equity investment, or is an MSO of a health care entity; a current organizational chart showing the business structure of the health care entity or MSO, including affiliates and subsidiaries; and the health care entity’s or MSO’s most recent fiscal year’s profit and loss statement and balance sheet. Additionally, the State Board must work with the Agency of Human Services and relevant stakeholders to develop data reporting processes pursuant to these requirements. Information shared pursuant to this section shall be public information and not considered confidential, proprietary, or a trade secret, except for specified personal identifying information and certain confidential financial information. Lastly, § 9773 institutes financial penalties of up to $10,000 per year for failing to report required information and up to $25,000 for each material misrepresentation reported. Public Reporting and Transparency Requirements Section 9774 promotes transparency by requiring the State Board to report all ownership and control disclosures made under § 9773. It authorizes interagency sharing of that information for oversight and enforcement and provides that, except for specified personal identifiers, the information is public. Lastly, the section permits the State Board to share reported information with the Attorney General, Secretary of State, and other state agencies and officials to prevent duplicative reporting requirements and facilitate oversight and enforcement pursuant to Vermont law. The Big Picture Act 133 is one example of the larger national trend toward increased scrutiny of health care ownership and control. While Vermont’s new law appears to specifically focus on control over clinical decision-making by private equity and hedge funds, numerous other states, including Oregon, Massachusetts, Indiana, New Mexico, and Washington, passed broader ownership transparency-related laws in 2025 and 2026 (with other additional states at least considering such bills). Collectively, these measures reflect a broad national movement toward increased scrutiny of lay-investor influence in the health care sector. Please contact the authors or your regular Dorsey attorney with any questions about how these restrictions could affect your current business model or any contemplated transactions.
June 24, 2026
by Randall Hanson, Jamie McCarty, and Michael Forstein
Corporate Practice of Medicine
Oregon CPOM Law Faces Early Review in Eugene Emergency Physicians v. PeaceHealth
Oregon’s sweeping new corporate practice of medicine (“CPOM”) law, Senate Bill 951 (“SB 951”), has already faced its first major courtroom test. As discussed in our prior post, SB 951 significantly expands Oregon’s restrictions on healthcare management services organization (“MSO”) structures and so-called “friendly PC” models. Among other things, SB 951 limits overlapping MSO/PC ownership, control, or employment and traditional friendly PC governance arrangements between MSOs and physician practices, restricts operational control by non-clinicians, and creates private enforcement rights allowing physicians to challenge allegedly unlawful arrangements. Most provisions applicable to new friendly PC arrangements took effect on January 1, 2026, while certain existing Oregon organizations have until 2029 to comply. This new legal framework is now at the center of Eugene Emergency Physicians, P.C. v. PeaceHealth. The dispute arose after PeaceHealth announced in March 2026 that it would not renew its long-standing emergency department staffing arrangement with Eugene Emergency Physicians (“EEP”), a local physician-owned group. Instead would transition services to ApolloMD, a national emergency medicine management company. EEP filed suit shortly thereafter against PeaceHealth, ApolloMD, ApolloMD Business Services, and Lane Emergency Physicians LLC (the friendly medical practice managed by ApolloMD in Oregon), seeking a preliminary injunction blocking the transition. According to the complaint and preliminary injunction filings, EEP alleged that the proposed structure utilized by ApolloMD violates SB 951 and Oregon’s CPOM doctrine by authorizing impermissible corporate control over a professional medical practice through a friendly PC arrangement. The litigation quickly attracted significant attention in Oregon and nationally, in part because it appears to be the first private enforcement action brought under SB 951, which itself is arguably the strictest CPOM law in the country. During preliminary injunction proceedings held in early May 2026, the federal court expressed skepticism regarding aspects of the defendants’ testimony and operational structure, with the presiding judge stating that certain ApolloMD officials had been “dishonest under oath.” Reportedly, the court called into question ApolloMD’s reference to a “playbook” they had for emergency room staffing, suggesting that ApolloMD was practically functioning as the clinical staffing shot-caller and Lane Emergency Physicians was only established to shield liability. Before the court issued a ruling on the injunction request, however, the parties privately reached a settlement. PeaceHealth subsequently announced plans to renew its relationship with EEP rather than proceed with the ApolloMD transition. Although the case did not produce a merits ruling interpreting SB 951, the litigation underscores several key points for healthcare investors, MSOs, hospitals, and physician groups operating in Oregon: Oregon stakeholders appear willing to aggressively test and enforce SB 951; Traditional friendly PC structures may face increased scrutiny under Oregon law; and Courts and regulators are likely to focus on operational realities, not merely formal ownership documents, when evaluating CPOM compliance. Healthcare organizations with Oregon operations should continue reviewing governance arrangements, management agreements, compensation structures, and operational control provisions in light of SB 951’s broad restrictions and evolving enforcement landscape. Please contact the authors or your regular Dorsey attorney with any questions about how these restrictions could affect your current business model or any contemplated transactions.
May 13, 2026
by Randall Hanson, Jamie McCarty, and Sumner Pitt
Corporate Practice of Medicine
Oregon Expands Prohibition on the Corporate Practice of Medicine, Severely Restricting Management Services Organizations
On June 9, 2025, Oregon Governor, Tina Kotek, signed SB 951[1] into law, making Oregon’s “corporate practice of medicine” doctrine one of the country’s most restrictive. SB 951 places numerous restrictions on the relationships between management services organizations and clinician practices, which will impact many of the written arrangements and techniques that management services organizations and clinician practices currently use. SB 951 also places new and/or clarified restrictions on professional medical corporation structuring and the use of certain restrictive covenants in contracts among health industry parties. This blog post provides a general overview of these new restrictions. Key Definitions Here are key definitions that help clarify the scope of SB 951: “Management services organization” or “MSO” is defined as an entity that provides management services to a professional medical entity in return for monetary compensation under a written agreement. “Management services” is broadly defined and includes payroll, human resources, employment screening, employee relations, and other administrative or business services. “Medical licensee” or “licensee” is defined as an individual who is licensed in Oregon to practice medicine or naturopathic medicine or as a nurse practitioner or physician assistant. “Professional medical entity” is defined as an Oregon professional corporation organized for the purpose of practicing medicine, practicing naturopathic medicine, or allowing physicians, nurse practitioners and physician assistants to jointly render healthcare services, or a limited liability company, partnership limited liability partnership or partnership organized for a medical purpose that is authorized to transact business in Oregon.[2] Restrictions on MSOs MSOs, including their shareholders, directors, members, managers, officers and employees (collectively, “agents”), may not, with certain exceptions: own or control a majority of; be a director, officer, employee or independent contractor of, or receive compensation from the MSO to manage; or exercise a proxy, right or power to vote the shares of; a professional medical entity with which it has a management services agreement (“MSA”). Additionally, MSOs and their agents may not, with certain exceptions: control or enter into agreements to, or otherwise permit a non-licensee to, control or restrict the sale or transfer of a professional medical entity’s ownership interests or assets; issue, or cause a professional medical entity to issue, ownership interests in the professional medical entity or a subsidiary or affiliate of the professional medical entity; pay dividends from a professional medical entity’s ownership interests; acquire, or finance the acquisition of, a majority of a professional medical entity’s ownership interests; or exercise de facto control over a professional medical entity’s administrative, business or clinical operations in a manner that affects the professional medical entity’s clinical decision making or the nature and quality of its medical care, which includes, but is not limited to, hiring or setting compensation for licensees, setting clinical or billing and collection policies, and negotiating agreements with third-party payors and other third parties that are not employees of the professional medical entity. So, what can an MSO still do? SB 951 clarifies that the restrictions still permit an MSO to: enter into agreements to control or restrict the transfer or sale of a professional medical entity’s ownership interests or assets for cause, including, but not limited to, an owner’s loss of their professional license, exclusion from a federal health care program, breach of the MSA or death; provide management services as long as the MSO is not exercising de facto control over a professional medical entity’s operations in a manner that affects the professional medical entity’s clinical decision making or the nature and quality of its medical care; purchase, lease or take assignment of a right to possess a professional medical entity’s assets in an arms’-length transaction with a willing seller, lessor or assignor; provide support and consultation on any business operations matters, such as accounting, facilities management and compliance with applicable laws; advise a professional medical entity’s participation in payor arrangements, value-based arrangements or vendor agreements; collect quality metrics as required by law or one of the professional medical entity’s agreements; and set criteria for reimbursement under an agreement between a professional medical entity and a payor. Any MSA provision that violates any of the above restrictions is void and unenforceable. Additionally, professional medical entities and licensees have a private right of action against MSOs and the MSO’s agents, and damages may include actual damages, an injunction or other equitable relief, punitive damages and attorneys’ fees. Existing MSOs and professional medical entities conducting business in Oregon have until January 1, 2029 to comply with these restrictions. However, new MSOs and professional medical entities planning to conduct business in Oregon, including those involved in a sale or transfer of ownership, must comply with these restrictions by January 1, 2026. Restrictions on Professional Medical Corporations SB 951 also imposes restrictions on professional medical corporations (“PCs”), with certain exceptions. PCs’ articles, bylaws and other organizational arrangements may not allow for the removal of any director or officer without a majority vote of licensee-shareholders or licensee-directors, except for cause. Additionally, PCs may only replenish or transfer control over their operations through a valid shareholder agreement that is solely among and for the benefit of a majority of shareholders who are physicians licensed in Oregon. These restrictions apply to any agreements that are entered into or renewed on or after June 9, 2025. Non-Competition, Non-Disclosure and Non-Disparagement Agreements Lastly, non-competition agreements with professional licensees that restrict the practice of medicine or nursing as well as non-disclosure and non-disparagement agreements between an MSO, hospital or hospital-affiliated clinic and an employed licensee are void and unenforceable, with certain exceptions. These restrictions also apply to any agreements that are entered into or renewed on or after June 9, 2025. The Big Picture Notably, as of 2022, OHA requires notice of and reviews material health care transactions. This, along with the passage of SB 951, indicates Oregon’s strong focus on its regulation and oversight of the “corporate practice of medicine.” And Oregon is not alone. These are recent developments in a long history of state concerns with the separation of corporations and unlicensed individuals and healthcare professional’s medical decision making and patients’ care (i.e., the corporate practice of medicine) and, more recently, private equity involvement in health care. SB 951 materially reinforces and expands Oregon’s “corporate practice of medicine” doctrine and impacts not only MSAs but other MSO-practice relationships, MSO and PC governance and agreements with restrictive covenants. SB 951 raises difficult issues such as the permitted scope of an MSO’s authority if the requirement is to avoid control that affects the professional medical entity’s clinical decision making or the nature and quality of medical care. Given the wide-reaching implications of this new law and to ensure compliance with SB 951 by the applicable compliance dates, existing MSOs and clinician practices conducting business in Oregon will need to review and likely revise their current business models, practices, and written agreements as necessary, and new MSOs and clinician practices planning to conduct business in Oregon will need to closely review their proposed business models and practices. Please contact the authors or your regular Dorsey attorney with any questions about how these restrictions could affect your current business model or any contemplated transactions. [1] https://olis.oregonlegislature.gov/liz/2025R1/Downloads/MeasureDocument/SB951/Enrolled. [2] While this law does not currently apply to other healthcare providers. Oregon House Majority Leader, Ben Bowman, predicts that future legislative sessions will likely address the expansion of this law to other healthcare providers, such as hospitals and dentists.
June 25, 2025
by Ross C. D'Emanuele, Randall Hanson, and Laura C.S. Newberry
