Does the corporate practice of medicine bar apply to other allied health professionals, such as physical therapists, and prohibit a layperson or general corporation from directly hiring these health care practitioners?

The answer depends by state and by profession.  Physical therapy is treated differently in California than, for example, Maryland. Careful legal analysis is required, paying attention to all the relevant statutes, board regulations, cases, and Attorney General opinions.

The conclusions are by no means obvious. Here is a lengthy analysis by the Maryland Attorney General.

In it, the AG asked:

1) May a business entity ) such as a limited liability company
or a corporation ) provide physical therapy services by contracting
with a licensed physical therapist to treat customers?

(2) If a corporation may operate such a business, must the
corporation be organized as a professional corporation, in which
ownership is restricted to licensed persons?

The length opinion concluded:

In our opinion, an unlicensed individual or a business entity
that is owned by unlicensed individuals may operate a physical
therapy business by contracting with a licensed physical therapist or
licensed physical therapist assistant to provide services to its
customers. While a business that provides physical therapy services
may be organized as a corporation, it may not be organized as a
professional corporation even if the owners of the entity are licensed.
The Board retains authority to regulate the practice of physical
therapy by the licensed individuals who provide the services offered
by such a business, and to take action against the unlicensed practice
of physical therapy.

Thus, the AG looked to the Board’s authority to enforce disciplinary actions against licensees (physical therapists) and did not read a corporate practice prohibition into the profession of physical therapy.

The AG stated:

We understand that the Board is concerned that an owner of a
physical therapy business who is not a licensed physical therapist
may interfere with the professional judgment of the physical
therapists and physical therapist assistants employed by the business.
However, the licensees who provide services as employees of such
a business remain obligated to comply with the Physical Therapy
Act, as well as the standards of practice and code of ethics
promulgated by the Board. HO §13-206(a)(2); COMAR 10.38.02,
10.38.03. Thus, the Board could prevent lay interference with the
professional judgment of its licensees through its standards of
practice and code of ethics. For example, the Board could adopt a
regulation as part of its code of ethics to prohibit licensees from
entering into an agreement or employment relationship that would
impede the licensee’s exercise of independent judgment in the
treatment of a patient.

In addition, if an unlicensed person engages in activities that
fall within the definition of “practice physical therapy,” the Board
may obtain an injunction against that activity. HO §13-318.1; see
also 81 Opinions of the Attorney General 74, 79 (1996). Such a
person would also be subject to criminal prosecution. HO §13-407.

The legal landscape can be quite different in a state (such as New York) which construes the corporate practice bar more strictly in that state regulators generally insist on strict separation between the delivery of professional services on one hand, and general business activities on the other.

In analyzing any given profession, from physical therapy to psychology, it is important to consult an attorney experienced with the corporate practice of medicine bar across states.  An attorney familiar with the corporate practice prohibition can advise on whether and to what extent the bar applies to a given professional practice in a particular state.


Seek health law advice at the outset, while designing and developing your business, from a skilled health care law attorney who understands online health businesses and legal questions affecting mental health care and other professionals.

Michael H. Cohen is an experienced business law and health care law attorney.  He has taught health care law and policy at Harvard University and counseled many different kinds of health care practitioners and businesses, including:

  • entrepreneurial start-up ventures in many different industries
  • physicians (MD’s and DO’s)
  • physician groups, hospitals, and clinical facilities
  • integrative medicine centers
  • professional health care educational institutions and associations
  • dentists
  • registered nurses and advanced practice nurses
  • clinical psychologists
  • chiropractors
  • acupuncturists
  • massage therapists
  • homeopathic physicians and homeopaths
  • naturopathic doctors and naturopaths
  • energy healers, hypnotists, medical intuitives
  • dietary supplement manufacturers and distributors
  • cosmetics manufacturers
  • entrepreneurs and start-ups
  • publishers
  • wellness clinics
  • herbalists
  • bio-energy companies
  • medical device inventors
  • telemedicine enterprises
  • many different businesses

As an attorney  at the cutting edge of health care law and business law, he represents enterprises whose leaders are conscious and committed to a better world.  He provides legal and regulatory expertise to a multitude of businesses and corporations, as well as to attorneys and law firms involved in various health care legal issues including:

  • fee-splitting issues
  • Stark and anti-kickback legal concerns
  • state prohibitions on self-referral, kickbacks, and patient brokering
  • corporate practice of medicine (including New York, California, Massachusetts, D.C.)
  • legal concerns related to structuring a management services organization (MSO)
  • medical board disciplinary issues and medical board proceedings
  • disciplinary proceedings involving psychologists and other allied health professions
  • negligence, the law of informed consent, and medical malpractice liability
  • HIPAA and patient privacy and confidentiality issues
  • Medicare (including opting out vs. participation vs. non-participation)
  • professional liability insurance
  • insurance (billing and coding) issues
  • telemedicine, tele-psychiatry and telehealth
  • litigation (plaintiff’s counsel and defense) and negotiation
  • other legal and regulatory compliance issues.

To speak with a lawyer about health care law issues pertaining to complementary and alternative medicine, or to consult a business lawyer about laws and legal issues for entrepreneurs and new enterprises that are seeking legal advice, contact attorney Michael H. Cohen today.