What is the Corporate Practice of Medicine in California?

In California, the Corporate Practice of Medicine (CPOM) doctrine is a strict legal prohibition that prevents non-physicians, corporations, and other lay entities from owning, controlling, or practicing medicine. Only licensed physicians (or certain professional medical corporations) may employ physicians or make clinical decisions.

The doctrine, rooted in California Business and Professions Code § 2052 (prohibiting unlicensed practice of medicine) and § 2400 (stating that corporations have no professional rights, privileges, or powers), ensures that medical decisions prioritize patient care over corporate profits and prevents lay interference in professional judgment.

Key points in California:

• Non-physician-owned corporations generally cannot directly employ physicians or contract for medical services in a way that influences clinical care.                                                                                                                                                      
• Physicians must typically practice through a professional medical corporation (PC) under the Moscone-Knox.  An MD or OD must own 51% or more of the corporation.                                                                                                                   
• Management Services Organizations (MSOs) can provide administrative support but cannot control clinical decisions, hiring of physicians for medical services, or patient care.  But be aware -  billing decisions may affect medical decision making and if so that is solely within the authority of the doctor.                                                                                              
• California is considered one of the strictest and most actively enforced CPOM states.

Violations can lead to criminal penalties, license issues, contract invalidation, or enforcement actions by the Medical Board of California.

This rule protects the physician-patient relationship by keeping clinical judgment independent of business interests.  Physicians often run into conflicts with hedge fund controlled or non-profit owned (501(c)(3)) corporations as maximizing income can conflict with the best patient care.  

If  you are a physician whose corporate employer (real or tacit) is interfering with your medical judgment, call our lawyers at (925) 283-1863.  We can help.