--- title: "New Jersey CPOM Rules 2026: Who Can Own a Practice" description: "New Jersey corporate practice of medicine explained: the Board's practice-structure rule, Allstate v. Northfield, MSO limits, and 2026 APN changes." slug: new-jersey-corporate-practice-of-medicine date: 2026-10-18 updated: 2026-10-18 author: MyOrbitHealth Compliance Team category: Compliance cpom: Strong --- # Corporate Practice of Medicine in New Jersey: What Telehealth and Clinic Founders Need to Know Yes. New Jersey is one of the strictest corporate practice of medicine (CPOM) states, and the rule is written down. The State Board of Medical Examiners' professional practice structure rule, N.J.A.C. 13:35-6.16, lists the only business forms a physician may practice through. A general business corporation owned by lay investors is not one of them, apart from narrow settings such as licensed health care facilities. The rule has teeth. In *Allstate Insurance Co. v. Northfield Medical Center* (2017), the New Jersey Supreme Court allowed insurance fraud liability for people who helped build a practice that a fact-finder could see as a sham to evade the ownership rules. As of October 2026, a non-physician founder needs a physician-owned practice and a separate management company limited to non-clinical services. NP founders gained room in 2026, but a physician practice still has to be owned by licensed professionals. This is general information, not legal advice. Confirm the current rules with a healthcare attorney licensed in New Jersey. *Last reviewed October 2026. State rules change often; statute and case references are summaries, not quotations.* ## Key takeaways - New Jersey's CPOM rule is a Board of Medical Examiners regulation, N.J.A.C. 13:35-6.16, which limits physicians to specific practice structures owned by health care professionals. - A general business corporation may supply purely non-professional services to a practice, such as office management, non-clinical staff, space, equipment and billing, but may not own or control the medical practice. - In *Allstate Insurance Co. v. Northfield Medical Center*, 228 N.J. 596 (2017), the New Jersey Supreme Court held that people who knowingly help set up a sham practice structure can face liability under the Insurance Fraud Prevention Act. - Since a law signed on March 30, 2026 (P.L.2026, c.6), certain experienced advanced practice nurses in primary care and behavioral health no longer need a joint protocol with a collaborating physician. - New Jersey requires a New Jersey license for any clinician who treats a patient located in New Jersey by telehealth, with no general registration shortcut. ## Does New Jersey have a corporate practice of medicine doctrine? Yes, and unlike most states it lives in an agency rule rather than case law alone. [N.J.A.C. 13:35-6.16](https://www.law.cornell.edu/regulations/new-jersey/N-J-A-C-13-35-6-16), the Board of Medical Examiners' professional practice structure rule, allows a physician to practice only as: - a sole proprietor, - a member of a partnership, professional association or limited liability company made up solely of health care professionals licensed to provide the same or a closely allied service, or - an employee or associate of another qualifying practitioner or practice. Employment by a general business corporation is allowed only in listed settings, such as health care facilities licensed by the state, which must have a New Jersey-licensed medical director regularly on site. The same rule bars a physician from being employed by a licensee with a narrower scope, such as a chiropractor or podiatrist. The leading case shows the stakes. In [*Allstate Insurance Co. v. Northfield Medical Center, P.C.*](https://www.njcourts.gov/cases/a-27-15), a chiropractor controlled a multidisciplinary practice that nominally belonged to a physician. Allstate sued the chiropractor, the physician and the lawyer who designed the structure under the Insurance Fraud Prevention Act. The Supreme Court reinstated the fraud finding against the lawyer, holding that knowledge could be inferred and that a fact-finder could see the structure as a sham to evade the ownership rules. Later proceedings sent the case back for further trial, so check its current posture before citing outcomes. The practical lesson: in New Jersey, a CPOM problem is not only a licensing issue. Insurers can use it to deny claims and pursue fraud remedies, as [commentators noted after the decision](https://norrismclaughlin.com/hclb/physicians-and-providers-practice-issues/denial-claims-nj-medical-practices-based-contracts-management-companies-aftermath-allstate/). ## Who can own a medical practice in New Jersey? Physicians and other health care professionals licensed in the same or a closely allied field. The rule's list of closely allied fields includes nursing, chiropractic, dentistry, optometry, physical therapy, podiatry and psychology. Physicians practicing within a multidisciplinary entity must still keep control over medical decisions, and commentators read the rule as requiring physicians to keep majority control where they share ownership with other professionals. Physicians commonly organize as professional corporations under New Jersey's Professional Service Corporation Act, or as professional LLCs. Lay investors cannot hold equity in either. The main exceptions are institutional. Licensed hospitals and other state-licensed health care facilities, HMOs and certain other listed entities may employ physicians under the rule. A lay-owned clinic that is not a licensed facility does not get this treatment. ## Can nurse practitioners and physician assistants own a practice in New Jersey? **Advanced practice nurses.** New Jersey has long required APNs to practice under a joint protocol with a collaborating physician, which is why it is usually labeled reduced practice. That changed in part in 2026. On March 30, 2026, [Governor Sherrill signed P.L.2026, c.6](https://www.nj.gov/governor/news/2026/20260330b.shtml), which amends N.J.S.A. 45:11-49. Per the [Brach Eichler summary](https://www.bracheichler.com/insights/health-law-alert-governor-sherrill-signs-law-granting-independent-practice-authority-for-certain-advanced-practice-nurses/), APNs in listed population foci (including family, adult-gerontology, pediatrics, women's health and behavioral health) who have more than 5,000 hours of practice and provide primary or behavioral health care can practice without a joint protocol. Elective aesthetic and cosmetic services are excluded, so med spas still need physician involvement. The law also adds malpractice coverage and continuing education requirements. Nursing is on the Board rule's closely allied list, so an APN can be a co-owner of a multidisciplinary practice with physicians. An APN-owned entity should not employ physicians, though, because the rule ties physician employment to qualifying practitioners and structures. **Physician assistants.** PAs practice under physician supervision. Since [P.L.2015, c.224](https://pub.njleg.gov/bills/2014/PL15/224_.HTM) took effect in 2016, supervision can be maintained electronically, and a supervising physician may sign a written delegation agreement that expands the PA's duties. The agreement is renewed annually and kept at the practice. Physician assistants are not named on the rule's closely allied list, so whether a PA may hold equity in a medical practice is unsettled. Get counsel's view before issuing PA equity. ## How does the friendly PC-MSO model work in New Jersey? The [friendly PC-MSO model](/blog/friendly-pc-mso-model) works in New Jersey, but the line between management and practice is drawn more tightly than in most states. The Board rule allows a general business corporation to provide purely non-professional services: routine office management, hiring non-clinical staff, office space and equipment, and billing. Anything that drifts into clinical control, physician hiring decisions or treatment protocols belongs to the practice. Three New Jersey points shape the management services agreement: - **Kickback rule.** [N.J.A.C. 13:35-6.17](https://www.law.cornell.edu/regulations/new-jersey/N-J-A-C-13-35-6-17) bars fees or other compensation that a reasonable person would see as payment for referrals or prescribing, and it is to be read broadly. It does not set a safe harbor for management fees. A flat or cost-plus fee at fair market value is easier to defend than a percentage of collections. - **Sham risk.** After *Northfield*, every control term is evidence. Stock transfer restrictions, succession rights and broad MSO approval powers should be drafted so the physician owner keeps real authority over the practice. - **Self-referral.** New Jersey also has its own physician self-referral law. Check it if the MSO or its owners hold interests in labs, imaging or pharmacies the practice uses. Our [management services agreement guide](/blog/management-services-agreement-guide) covers the clauses that matter most. ## What does this mean for a telehealth brand serving New Jersey patients? CPOM follows the patient. If you treat people located in New Jersey, the practice-structure rule applies no matter where your company is. Licensure is strict too. New Jersey's telehealth statute, [N.J.S.A. 45:1-62](https://www.cchpca.org/new-jersey/), requires a provider outside New Jersey who treats a patient in New Jersey by telehealth to hold a New Jersey license. A consultation exception covers an out-of-state clinician advising a New Jersey licensee without directing care. A federal court in New Jersey rejected a constitutional challenge to this rule by out-of-state specialists and said changes are for the Legislature. Separately, the statute requires telehealth organizations operating in the state to register annually with the Department of Health; confirm whether your structure triggers that registration. A practical setup: a New Jersey physician-owned professional practice, New Jersey-licensed APNs and PAs inside it, an MSO limited to non-professional services, and a flat-fee MSA. See our [telehealth compliance guide for the MSO model](/blog/telehealth-compliance-mso-model-guide). Neighboring states take different approaches; compare our [New York guide](/blog/new-york-corporate-practice-of-medicine). ## New Jersey CPOM at a glance | Topic | New Jersey (as of October 2026) | |---|---| | CPOM enforcement | Strong: written Board rule, enforced through discipline and insurance fraud litigation | | Primary legal basis | N.J.A.C. 13:35-6.16; *Allstate Ins. Co. v. Northfield Medical Center* (N.J. 2017) | | Professional entity options | Sole proprietorship, professional corporation, partnership or LLC owned by licensed health care professionals | | Fee-splitting rule | N.J.A.C. 13:35-6.17 bars referral-linked fees; no management-fee safe harbor | | NP practice authority | Reduced (joint protocol), except qualifying experienced primary care and behavioral health APNs under P.L.2026, c.6 | | Out-of-state telehealth licensing | No: New Jersey license required; telehealth organizations register with the Department of Health | | Typical structure for non-physician founders | Physician-owned practice plus MSO providing only non-professional services under a flat-fee MSA | ## Frequently asked questions ### Can a non-physician own a medical practice in New Jersey? No. Under N.J.A.C. 13:35-6.16, a medical practice must be owned by licensed health care professionals in the same or a closely allied field. A non-physician can own a management company that provides non-professional services to a physician-owned practice. ### What happened in Allstate v. Northfield Medical Center? The New Jersey Supreme Court held in 2017 that people who knowingly help create a practice structure designed to evade the ownership rules can be liable under the Insurance Fraud Prevention Act. It made CPOM violations a fraud risk, not only a licensing risk. ### Can nurse practitioners practice independently in New Jersey? Some can. A law signed in March 2026 lets qualifying APNs with more than 5,000 hours of practice in primary or behavioral health care work without a joint protocol. Other APNs, and anyone providing elective aesthetic or cosmetic services, still need a collaborating physician. ### Can out-of-state doctors treat New Jersey patients by telehealth? Only with a New Jersey license. New Jersey's telehealth law requires a provider located elsewhere who treats a patient in New Jersey to be licensed in New Jersey, with an exception for consultations with a New Jersey licensee. ### Are percentage-based management fees allowed in New Jersey? No New Jersey rule sets a safe harbor for them. The Board's kickback rule is read broadly and targets fees tied to referrals or volume, so most structures use a flat or cost-plus fee at fair market value. Have New Jersey counsel review the fee terms. ## Sources - [N.J.A.C. 13:35-6.16, Professional practice structure (Cornell LII)](https://www.law.cornell.edu/regulations/new-jersey/N-J-A-C-13-35-6-16) - [N.J.A.C. 13:35-6.17, Professional fees and investments, prohibition of kickbacks (Cornell LII)](https://www.law.cornell.edu/regulations/new-jersey/N-J-A-C-13-35-6-17) - [New Jersey Courts, Allstate Insurance Co. v. Northfield Medical Center, P.C. (A-27-15)](https://www.njcourts.gov/cases/a-27-15) - [Office of the Governor, Governor Sherrill Signs Legislation Eliminating Practice Restrictions for Most Advanced Practice Nurses (Mar. 30, 2026)](https://www.nj.gov/governor/news/2026/20260330b.shtml) - [Brach Eichler, Governor Sherrill Signs Law Granting Independent Practice Authority for Certain APNs](https://www.bracheichler.com/insights/health-law-alert-governor-sherrill-signs-law-granting-independent-practice-authority-for-certain-advanced-practice-nurses/) - [P.L.2015, c.224 (physician assistant law)](https://pub.njleg.gov/bills/2014/PL15/224_.HTM) - [CCHP, New Jersey State Telehealth Laws](https://www.cchpca.org/new-jersey/) - [Norris McLaughlin, Denial of Claims of NJ Medical Practices in the Aftermath of Allstate](https://norrismclaughlin.com/hclb/physicians-and-providers-practice-issues/denial-claims-nj-medical-practices-based-contracts-management-companies-aftermath-allstate/) For every other state, start with our [corporate practice of medicine 50-state guide](/blog/corporate-practice-of-medicine-50-state-guide). ## Launch in New Jersey on a structure that is already built MyOrbitHealth can form a PC-MSO structure for your brand, supply a physician PC owner or collaborating physician, or let you launch on its existing MSO / friendly-PC structure with 2,400+ licensed providers making every clinical decision. Explore [PC-MSO formation](/pc-mso-formation) and [physician PC owner services](/physician-pc-owner), or [book a call](https://myorbithealth.com/book). ```html ```