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Texas’ Corporate Practice of Medicine Prohibition: 8 Things You Need to Know

Texas’ Corporate Practice of Medicine Prohibition: 8 Things You Need to Know
Hendershot, Cannon & Hisey, P.C.

Physicians, medical providers, and business professionals who operate in the Texas health care industry must do so in accordance to numerous laws and regulations. In addition to federal laws such as the Anti-Kickback Statute (AKS) and False Claims Act (FCA), there are also a number of health care laws enforced by the state of Texas – including the Corporation Practice of Medicine (CPOM) doctrine.

To help you better understand Texas’ CPOM prohibition and its far-reaching implications on health care services, our health and medical law team at Hendershot, Cannon & Hisey, P.C. has broken down some of the doctrine’s most important elements.

  1. CPOM prohibitions – Texas’ Corporate Practice of Medicine (CPOM) prohibition is a legal doctrine which places limitations on who can practice medicine, and who can provide medical services. Per the doctrine, corporations and business entities are prohibited from practicing medicine in Texas. Corporations and non-physicians are also prohibited from employing a physician to provide health care services in the state.
  2. Why the CPOM exists – The CPOM doctrine exists primarily as a means to protect the public. By barring corporations and non-physicians from practicing medicine or employing those who do, the state of Texas protects the doctor-patient relationship, and ensures patients are provided ethically sounds medical care with reduced risks of that care being influenced or controlled by non-practitioners; particularly non-practitioners who may lack necessary medical knowledge, or who may prioritize profits.
  3. How the CPOM affects physician relationships – Physicians today engage in a number of complex relationships and arrangements with fellow practitioners, business professionals, employees, and other individuals and entities that supplement the industry, or provide essential services. Depending on the circumstances, Texas’ CPOM may very well be implicated in such agreements and transactions, including partnerships, fee-splitting arrangements, and various employee relationships. Physicians evaluating such relationships need to be mindful that the doctrine prohibits them from entering into any situation where fees are shared with non-physicians, or their practice is directed or controlled by a non-physician in any way.
  4. Independent contractors – Physicians with a Texas Medical Board (TMB) license can enter into independent contractor arrangements with non-physicians. However, whether or not an arrangement actually constitutes an independent contractor relationship, as opposed to the traditional employer / employee relationship, depends on the particular circumstances and facts involved. Labeling a work relationship as such simply to avoid CPOM repercussions doesn’t mean it actually constitutes a permitted arrangement.
  5. Exceptions – The CPOM does have statutory exceptions which permits certain relationships between physicians and non-physicians, including physician employment by a non-profit or health-related corporation, physician employment by certain rural hospitals, hospital districts, and counties for the purpose of providing care to incarcerated inmates, and physician employment involving specific entities such as non-profit private medical schools, federally qualified medical care centers, and the Texas Professional Association. Exceptions only apply when arrangements meet all requirements outlined in the statute.
  6. Violations – Violating CPOM prohibitions can create exposure significant penalties. The Medical Practice Act authorizes the Texas Medical Board to impose disciplinary action that can include fines and medical license suspensions that may jeopardize your reputation, career, and future.
  7. CPOM-related complaint defense – Complaints involving the CPOM demand the immediate attention of attorneys well-versed in Texas health care laws, the Texas Medical Board complaint process, and medical license defense. Our team provides step-by-step guidance through all aspects of administrative medical license, nursing license, and hospital licensure matters.
  8. Preventing CPOM problems – The best defense is prevention. As such, it becomes vitally important that any physician or business professional engaged in the health care industry carefully evaluate any and all transactions, medical contracts, relationships, and work arrangements so as to ensure regulatory compliance in matters which implicate CPOM prohibitions, and other state and federal health care laws.

Houston-Based Health Care & Business Attorneys with 130+ Years’ Experience

Hendershot, Cannon & Hisey, P.C. is comprised of award-winning trial attorneys who leverage over a century of collective experience in a range of matters involving health care and business law. Our versatility allows us to position clients for success when starting a medical practice or navigating a merger and acquisition, ensure compliance with applicable laws, and initiate immediate defense and dispute resolution strategies for matters involving partnership break-ups, audits, TMB complaints, and fraud and abuse allegations. With a thriving family law practice, we also counsel physicians who have additional concerns when it comes to the fate of a professional practice during divorce.

Speak with a Houston attorney about your legal needs. Call (713) 909-7323 or contact us online to request an initial consultation.

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