The Corporate Practice of Medicine: a Trap for the Unwary
| Jurisdiction | Colorado,United States |
| Citation | Vol. 12 No. 1991 Pg. 2503 |
| Pages | 2503 |
| Publication year | 1991 |
1991, December, Pg. 2503. The Corporate Practice of Medicine: A Trap for the Unwary
Business lawyers, health law attorneys and general practitioners need to be aware of an archaic legal doctrine when working with health care practitioners and business entities. The doctrine prohibiting the "corporate practice of medicine" is alive and well, thereby restricting the options for business organization available to health care practitioners and enterprises. This article examines the restriction and its application to health care business ventures.
The corporate practice of medicine doctrine generally prohibits physicians from practicing medicine on behalf of, or in concert with, any organization other than a professional corporation for the practice of medicine.(fn1) It also prohibits corporations from employing physicians to perform medical services on the corporation's behalf. Physicians who violate the doctrine are subject to disciplinary action, including the potential loss of their medical license for unprofessional conduct.(fn2) Officers or directors of corporations that violate the prohibition are subject to criminal penalties.(fn3)
The doctrine arose out of the efforts of the American Medical Association to regulate and improve the medical profession. In Colorado, as in most other states, the prohibition originally was stated in the state statutory scheme establishing medical ethics and licensing requirements. These statutes were enacted in an effort to insure standards of character and competence in persons licensed to practice medicine. Historically, several policy concerns have supported the corporate practice restriction, including (1) the desire to avoid lay control over professional medical judgment, (2) the desire to prevent commercial exploitation of medical practice and (3) the need to prevent a conflict between the physician's loyalty to his or her patient and to his or her employer.
Under Colorado law, the corporate practice prohibition is expressed in both statutory and case law. A version of the doctrine is expressed, in one form or another, in the various statutes that regulate physicians,(fn4) optometrists,(fn5) dentists(fn6) and other professionals.(fn7) This article examines the physician-regulating provisions of the state's physician licensing statute, the Colorado Medical Practice Act ("Act"). However, individual statutes should be reviewed closely for the prohibition applicable to each particular "learned profession."
A patchwork of statutes establishes and applies the prohibition to both individual physicians and corporations. Under the Act only persons properly licensed by the State Board of Medical Examiners may "practice medicine."(fn8) Colorado broadly defines the practice of medicine. In general, it is denned as
or prescribing, suggesting or recommending methods to do the same.(fn9) It is important to note that the definition is not limited to natural personsholding out oneself to the public... as being able to diagnose, treat, prescribe for... or prevent any human disease, ailment, pain, injury... or physical or mental condition whether by the use of drugs, surgery, manipulation, electricity, or any physical, mechanical, or other means whatsoever[,]
For purposes of licensure disciplinary action, the Act defines "unprofessional conduct" to include
[practicing medicine as the partner, agent or employee of, or in joint adventure with, any person who does not hold a license to practice medicine, or with any partnership, any of whose partners do not hold [a medical license], ... or practicing medicine as an employee of or in joint adventure with any corporation other than a professional medical corporation for the practice of...
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