Medical Board of California confirms ban on the corporate practice of medicine

Medical Board of California confirms ban on the corporate practice of medicine

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Medical Board of California:
I have a question about non-profits.
My understanding, is that, in California, it is illegal for a non-physician to hire physicians.

I wrote a piece for O'Shaughnessy's last year reporting on the MBC decision:
(To be published in the upcoming Winter 2008 issue of O’Shaughnessy’s; Prior issues online at:http://www.ccrmg.org/journal.html)

Board Makes Mikuriya Ruling "Precedential"


Entire article posted at end of this email.
In this article, I made the statement that, in California, it is illegal for a non-physician to hire physicians.
and got the following response (also below) from a lay-owner of a chain of clinics.

So what is the rule, and under what circumstances can this lay-ownership ban be ignored?
I am not out to get anyone in trouble, but want a level playing field.

Thanks!
Frank H. Lucido MD
Family Practice since 1979
Medical Cannabis Consultation
Expert Witness
2300 Durant Avenue
Berkeley Ca 94704
510.848.0958 (by appointment only)
www.DrFrankLucido.com
(formerly MedicalBoardWatch.com)
www.AIMLegal.org
www.DrFrankLucido.blogspot.com


State of California
DCA
Department of Consumer Affairs

Division of Legal Affairs
1625 N. Market Blvd. Ste. S-309
Sacramento, Ca, 95834
916-574-8220
Fax 916-574-8823


September 29, 2009

Frank Lucido MD
2300 Durant Avenue
Berkeley, CA 94704

RE: Corporate Practice of Medicine Inquiry

Dear Dr. Lucido:

I write on behalf of the Medical Board of California (Board) and in response to your electronic mail message to the Board regarding the corporate practice of medicine. Specifically, you inquired as to whether California's ban on the prohibition of the corporate practice of medicine ("the prohibition") extends to nonprofit corporations and clinics that may be operated by a nonprofit corporation.

As I am sure you are aware, section 2400 of the Business and Professions Code establishes California's prohibition against the corporate practice of medicine. Section 2401 of the Code sets forth certain exceptions from the prohibition. I have enclosed that section for your review.

We also note that the courts have held that a corporation is not exempt from the prohibition simply because it is organized under the nonprofit corporation law. (See California Physicians Service v. Aoki Diabetes Research Institute [ADRI] (2008) 78 Cal.Rptr,3d 646,653; See also 83 Ops.Cal.Atty.Gen. 170, fn 2 (2000).) The ADRI court noted that previous courts have recognized the danger of lay control, a danger that attends all types of corporations. (Ibid.)

Please be advised that your inquiry does not provide the Board with sufficient facts to offer additional guidance on a specific set of circumstances. Please contact me if you have any questions.

Sincerely,


DOROTHEA JOHNSON
Deputy Director, Legal Affairs



By KURT HEPPLER
Senior Staff Counsel

Enclosure

Cc: Renee Threadgill, Enforcement Chief, Medical Board of California




http://law.onecle.com/california/business/2400.html
California Business and Professions Code Section 2400

Corporations and other artificial legal entities shall have
no professional rights, privileges, or powers. However, the Division
of Licensing may in its discretion, after such investigation and
review of such documentary evidence as it may require, and under
regulations adopted by it, grant approval of the employment of
licensees on a salary basis by licensed charitable institutions,
foundations, or clinics, if no charge for professional services
rendered patients is made by any such institution, foundation, or
clinic.



http://law.onecle.com/california/business/2401.html
California Business and Professions Code Section 2401

(a) Notwithstanding Section 2400, a clinic operated primarily
for the purpose of medical education by a public or private
nonprofit university medical school, which is approved by the
Division of Licensing or the Osteopathic Medical Board of California,
may charge for professional services rendered to teaching patients
by licensees who hold academic appointments on the faculty of the
university, if the charges are approved by the physician and surgeon
in whose name the charges are made.
(b) Notwithstanding Section 2400, a clinic operated under
subdivision (p) of Section 1206 of the Health and Safety Code may
employ licensees and charge for professional services rendered by
those licensees. However, the clinic shall not interfere with,
control, or otherwise direct the professional judgment of a physician
and surgeon in a manner prohibited by Section 2400 or any other
provision of law.
(c) Notwithstanding Section 2400, a narcotic treatment program
operated under Section 11876 of the Health and Safety Code and
regulated by the State Department of Alcohol and Drug Programs, may
employ licensees and charge for professional services rendered by
those licensees. However, the narcotic treatment program shall not
interfere with, control, or otherwise direct the professional
judgment of a physician and surgeon in a manner prohibited by Section
2400 or any other provision of law.
(d) Notwithstanding Section 2400, a hospital owned and operated by
a health care district pursuant to Division 23 (commencing with
Section 32000) of the Health and Safety Code may employ a licensee
pursuant to Section 2401.1, and may charge for professional services
rendered by the licensee, if the physician and surgeon in whose name
the charges are made approves the charges. However, the hospital
shall not interfere with, control, or otherwise direct the physician
and surgeon's professional judgment in a manner prohibited by Section
2400 or any other provision of law.