Washington Corporate Practice of Medicine Rules (2026 Guide)

Q: Can a non-physician own a medical practice in Washington?

Not directly. In Morelli v. Ehsan, the Washington Supreme Court held a clinic partnership between a physician and an unlicensed person illegal. Non-physicians typically own an MSO that provides business services to a physician-owned practice.

Q: What happens if a Washington medical practice violates CPOM?

In Morelli, the court refused to order an accounting and left the parties where it found them. That means a non-physician investor in a noncompliant arrangement may have no enforceable right to profits or a buyout, on top of licensing and regulatory exposure.

Yes, Washington enforces the corporate practice of medicine doctrine, and it does so through its highest court rather than a single statute. As of October 2026, the controlling case is Morelli v. Ehsan (Wash. 1988), where the Washington Supreme Court held that a clinic partnership between a physician and an unlicensed person was illegal and refused to help the non-physician recover. The practical rule: a lay founder cannot own or share in the profits of a medical practice directly. Washington's Professional Service Corporation Act is a narrow exception for licensed owners, not a door for investors. Non-physician founders use a management services organization (MSO) paired with a physician-owned entity. NP founders are in a stronger spot than in most states, because Washington is generally classified as granting nurse practitioners full practice authority.

This is general information, not legal advice. Confirm the current rules with a healthcare attorney licensed in Washington.

Last reviewed October 2026. State rules change often; statute and case references are summaries, not quotations.

Key takeaways

Washington's corporate practice of medicine doctrine is judge-made and was applied by the Washington Supreme Court in Morelli v. Ehsan (1988).
In Morelli, the court treated an unlicensed partner's participation in a medical clinic partnership as the unlicensed practice of medicine and declined to order an accounting of profits.
The court described Washington's Professional Service Corporation Act as a narrow statutory exception to the common-law rule.
The biggest commercial risk for a lay investor in Washington is unenforceability: a court may leave the parties where it finds them, with no remedy for the non-physician.
Washington is generally classified as a full practice authority state for nurse practitioners, which gives NP founders more room than physician-dependent models in neighboring restrictive states.

Does Washington have a corporate practice of medicine doctrine?

Yes. In Morelli v. Ehsan, a physician and a nurse organized a clinic in Everett as a limited partnership. When the relationship broke down, the non-physician partner sued for an accounting. The trial court granted summary judgment for the physician, holding that the non-physician's participation in the partnership amounted to the unlicensed practice of medicine. The Washington Supreme Court agreed the partnership agreement was illegal as a matter of law.

Three points from the opinion matter for founders today:

The rule is common law. The court relied on an earlier Washington Supreme Court decision involving Standard Optical, which held that neither a corporation nor any unlicensed person or entity may practice a learned profession through licensed employees.
The statutory exception is narrow. The court read the Professional Service Corporation Act as a limited exception that did not authorize lay participation in a professional partnership.
The remedy is harsh. Because the agreement was illegal, the court left the parties where it found them. For an investor, that means a profit share or buyout right in a noncompliant deal may simply be unenforceable.

The doctrine has also been discussed in Washington legal scholarship, including a 1996 Washington Law Review article, and the legislature has considered bills to abrogate it for physicians, including a 1997-98 House bill. We have not confirmed that any such bill was enacted, so treat Morelli as the governing rule. Also check for recent Washington legislation on corporate practice of health care or private-equity health transactions before you finalize a structure.

Our classification is Moderate: the doctrine is real and backed by the state's highest court, but hospitals and other recognized entities employ physicians widely, and the MSO model is commonly used.

Who can own a medical practice in Washington?

Licensed physicians, through a professional entity. Washington's Professional Service Corporation Act generally allows licensed professionals to incorporate to render their professional services. Confirm the current shareholder and multi-profession rules with Washington counsel. Under Morelli, that statute is an exception for licensed owners, so a non-physician should not expect to hold equity in an entity that practices medicine.

Common ownership models in Washington:

Physician-owned professional service corporation or professional LLC that employs or contracts with clinicians.
Hospital and health-system employment, which is widespread in the state.
MSO plus physician-owned entity, where the lay founder owns the MSO and the physician owns the clinical entity.

Can nurse practitioners and physician assistants own a practice in Washington?

Washington is generally classified as a Full practice authority state for nurse practitioners. Washington NPs can generally evaluate, diagnose, treat, and prescribe without a physician collaboration agreement; confirm the current rules with the nursing commission. That makes an NP-led telehealth or primary care practice viable without a physician partner for the nursing services themselves. The ownership question is separate: an NP-owned entity should be organized to provide nursing services and should not hold itself out as practicing medicine.

Physician assistants in Washington generally practice under an agreement with a physician, so a PA-led model likely still needs a physician relationship; confirm the current PA rules. If your model relies on PAs, plan for a collaborating physician and document the arrangement before launch.

How does the friendly PC-MSO model work in Washington?

The friendly PC-MSO model is the standard answer to Morelli. The physician owns the clinical entity and controls diagnosis, treatment, prescribing, and clinician hiring standards. The founder's MSO provides non-clinical services under a management services agreement: technology, marketing, billing, payer contracting support, staffing, and space.

Because Morelli turned on the non-physician's share of a medical practice's profits, Washington counsel focus hard on economics. Practical guardrails:

Keep the MSO's fee tied to services actually delivered and set at fair market value. A flat or cost-plus fee is easier to defend than a percentage of collections.
Do not give the MSO approval rights over clinical policies, prescribing, or which patients are treated.
Treat stock-transfer restrictions and succession provisions as contract terms that a court must be willing to enforce. After Morelli, an agreement that looks like a disguised partnership is a real enforceability risk.

Washington is also reported to have statutory limits on rebates and referral payments in health care. Review fee terms, including any percentage-based fee, against current law with counsel.

What does this mean for a telehealth brand serving Washington patients?

CPOM follows the patient. If a Washington resident is treated, Washington's licensing and corporate practice rules apply even if your company and clinicians sit elsewhere. Our state data lists Washington's out-of-state telehealth pathway as Limited; confirm the scope of any current pathway, and plan for Washington licenses for clinicians who treat new Washington patients. See our telehealth licensing by state guide.

Structurally, a multistate brand should treat Washington like other doctrine states: an MSO owned by the brand, a physician-owned professional entity holding Washington-licensed clinicians, and an MSA that keeps clinical decisions with those clinicians. NP full practice authority lets you staff many visits with Washington-licensed NPs, but physician-scope services still belong in the physician-owned entity.

Washington CPOM at a glance

Topic	Washington (as of October 2026)
CPOM enforcement	Moderate
Primary legal basis	Common law; Morelli v. Ehsan (Wash. 1988)
Professional entity options	Professional service corporation (licensed owners), professional LLC
Fee-splitting rule	Reported anti-rebating and referral-payment limits (confirm with counsel); avoid profit-sharing with lay owners
NP practice authority	Full
Out-of-state telehealth licensing	Limited
Typical structure for non-physician founders	MSO plus physician-owned professional entity

Frequently asked questions

Can a non-physician own a medical practice in Washington?

Not directly. In Morelli v. Ehsan, the Washington Supreme Court held a clinic partnership between a physician and an unlicensed person illegal. Non-physicians typically own an MSO that provides business services to a physician-owned practice.

What happens if a Washington medical practice violates CPOM?

In Morelli, the court refused to order an accounting and left the parties where it found them. That means a non-physician investor in a noncompliant arrangement may have no enforceable right to profits or a buyout, on top of licensing and regulatory exposure.

Can a nurse practitioner own a practice in Washington?

Washington is generally classified as granting NPs full practice authority, so an NP can generally provide nursing services without a physician collaboration agreement. An NP-owned entity should be organized for nursing services, and physician services should sit in a physician-owned entity.

Is the MSO model legal in Washington?

Yes, when structured correctly. The physician-owned entity must control all clinical decisions, and the MSO's fee should reflect fair market value for non-clinical services rather than a share of medical profits.

Do I need a Washington license to treat Washington patients by telehealth?

Generally yes. We classify Washington's out-of-state telehealth pathway as limited, so clinicians treating new Washington patients should generally hold a Washington license. Confirm the scope of any current pathway.

Sources

For how Washington compares with every other state, see our 50-state corporate practice of medicine guide.

Launch in Washington 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. MyOrbitHealth does not practice medicine, charges a flat platform fee with no revenue share, and works month-to-month. Book a call to map your Washington launch.