# Corporate practice of medicine states in 2026: the full list

Source: https://myorbithealth.com/compliance/corporate-practice-of-medicine-states

As of October 2026, our 51-jurisdiction dataset classifies 12 states as having a strong corporate practice of medicine (CPOM) prohibition, 16 as moderate, 9 as limited or unsettled, and 14 as having no general prohibition. The strong states are California, Colorado, Illinois, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, North Dakota, Oregon and Texas. CPOM is the rule that a business owned by non-physicians may not practice medicine or control a physician's clinical judgment. It is enforced unevenly: by statute in some states, by attorney general opinions or old case law in others, and not at all in some. So the market standard for a national telehealth brand is one structure that satisfies the strictest states everywhere: a management services organization (MSO) that owns the brand and operations, contracted to physician-owned professional entities that deliver care. The lists below are computed from the dataset behind our state compliance report, dated October 5, 2026. This is general information, not legal advice.

## What CPOM is and why enforcement differs so much

The doctrine has one idea at its core: a license to practice medicine is personal, so a corporation cannot hold it, and a corporation that employs or directs a physician is practicing medicine without a license. States express that idea in four very different ways.

- **Statute** — Some states wrote the prohibition into the medical practice act or the professional corporation statute. California and Texas are the usual examples. Statutory states are predictable: the text says who may own a professional entity and who may employ a physician. They are also the states most likely to add rules, as Oregon and California did in 2025.
- **Attorney general opinions and board positions** — In other states the statute is silent or vague and the real authority is an attorney general opinion or a medical board position statement. North Carolina, Michigan and New Jersey lean on these. They can be as strict as a statute but are enforced through licensing discipline rather than courts.
- **Case law** — A third group rests on court decisions, sometimes decades old, holding that a lay corporation cannot practice medicine. Illinois and Colorado fall here. These carry the most uncertainty because the rule has never been tested against a modern telehealth MSO, so counsel advises conservatively.
- **Nothing, or almost nothing** — A number of states have no general prohibition. That does not mean anything goes: licensing rules, fee-splitting bans, anti-kickback statutes and, in Florida, the Health Care Clinic Act still apply. It means ownership is not the first thing a regulator looks at.

## The four classifications in the dataset and the mapping rule

Our dataset uses four labels: Strong, Moderate, Limited or unsettled, and None. They reconcile two public 50-state guides, from MedPath Compliance (medpathcompliance.com) and Permit Health (permithealth.com), with the authorities they cite. The mapping rule is conservative: where the guides disagree, the state takes the stricter label; where a prohibition exists only in case law never applied to modern structures, the state is Limited or unsettled rather than None.

- **Strong** — A clear prohibition in statute, binding board rule or well-established case law, with active enforcement or recent legislation. Lay ownership of the professional entity is not an option and management agreements are scrutinized for control.
- **Moderate** — A recognized prohibition with meaningful exceptions, limited enforcement history, or rules that focus on specific arrangements such as fee-splitting rather than ownership as such. A compliant MSO structure is still expected.
- **Limited or unsettled** — Either a narrow rule, or a doctrine whose status is unclear because the authority is old, implied or never enforced. Counsel usually recommends the MSO structure anyway because the downside of guessing wrong is a licensing problem for every provider in the state.
- **None** — No general prohibition identified by either guide. Fee-splitting, kickback and clinic-licensing rules may still apply, and Florida is the clearest case of a state with no CPOM doctrine but a licensing regime that bites non-physician-owned clinics.

## Strong prohibition: 12 states

Alphabetical. These states set the design floor for a national structure. Each row gives a one-line note on the authority involved, plus the state's NP practice environment from the same dataset.

- **California:** Statutory prohibition (Business and Professions Code 2400 and 2052) plus Medical Board guidance; SB 351 (effective January 1, 2026) adds Attorney General enforcement against investor interference in clinical decisions. NP practice: Restricted.
- **Colorado:** Historically strict case-law doctrine with narrow statutory carve-outs for specified employers; lay ownership of a medical practice remains off the table. NP practice: Full.
- **Illinois:** Medical Practice Act prohibition; the Berlin v. Sarah Bush Lincoln decision carved out hospitals, not MSOs or lay investors. NP practice: Reduced.
- **Massachusetts:** Doctrine enforced through professional corporation rules and Board of Registration in Medicine positions; physicians must own the professional entity. NP practice: Full.
- **Michigan:** Professional Service Corporation Act and Attorney General opinions limit ownership to licensed professionals. NP practice: Restricted.
- **Nevada:** Statute and Board of Medical Examiners rules restrict non-physician ownership and control of medical practice. NP practice: Full.
- **New Jersey:** Board of Medical Examiners rule N.J.A.C. 13:35-6.16 governs who may own a practice and how fees may be shared; enforcement is active. NP practice: Reduced.
- **New York:** Education Law and Business Corporation Law require professional entities owned by licensees; fee-splitting is separately prohibited. NP practice: Full.
- **North Carolina:** Medical Board position statements and Attorney General opinions bar lay control; the CSV also flags unlicensed out-of-state practice as a felony. NP practice: Restricted.
- **North Dakota:** Statutory prohibition with narrow exceptions; physician-owned entity required. NP practice: Full.
- **Oregon:** ORS 677 doctrine; SB 951 (2025, Chapter 295, effective on passage) bars MSO owners, officers and employees from owning, controlling or serving as officers of the professional entity they manage. NP practice: Full.
- **Texas:** Occupations Code prohibition enforced by the Texas Medical Board; only certified nonprofit health organizations and a few statutory employers may employ physicians. NP practice: Restricted.

## Moderate prohibition: 16 states

Alphabetical. A recognized doctrine with exceptions or thin enforcement. The practical rule is the same as in the strong states: physician-owned professional entity, arm's-length management agreement, no clinical control by the MSO.

- **Arizona:** Moderate NP practice: Full.
- **Arkansas:** Moderate NP practice: Reduced.
- **Connecticut:** Moderate NP practice: Full.
- **Indiana:** Moderate NP practice: Reduced.
- **Iowa:** Moderate NP practice: Full.
- **Kansas:** Moderate NP practice: Full.
- **Maryland:** Moderate NP practice: Full.
- **Minnesota:** Moderate NP practice: Full.
- **Pennsylvania:** Moderate NP practice: Reduced.
- **Rhode Island:** Moderate NP practice: Full.
- **South Carolina:** Moderate NP practice: Restricted.
- **South Dakota:** Moderate NP practice: Full.
- **Tennessee:** Moderate NP practice: Restricted.
- **Washington:** Moderate NP practice: Full.
- **West Virginia:** Moderate NP practice: Reduced.
- **Wisconsin:** Moderate NP practice: Reduced.

## Limited or unsettled: 9 jurisdictions

Alphabetical. The doctrine is narrow or its current status is unclear. Treat these as moderate for planning; a second corporate structure for a handful of states is never worth the ambiguity.

- **District of Columbia:** Limited or unsettled NP practice: Full.
- **Georgia:** Limited or unsettled NP practice: Restricted.
- **Hawaii:** Limited or unsettled NP practice: Full.
- **Idaho:** Limited or unsettled NP practice: Full.
- **Kentucky:** Limited or unsettled NP practice: Reduced.
- **Louisiana:** Limited or unsettled NP practice: Reduced.
- **Mississippi:** Limited or unsettled NP practice: Reduced.
- **Montana:** Limited or unsettled NP practice: Full.
- **Ohio:** Limited or unsettled NP practice: Reduced.

## No general prohibition: 14 states

Alphabetical. No general CPOM prohibition identified. Note Florida: the dataset records that Health Care Clinic Act licensure applies to clinics that are not wholly physician-owned, so a lay-owned Florida entity that bills for services needs a clinic license or an exemption. Fee-splitting and kickback rules also apply across this group.

- **Alabama:** None NP practice: Reduced.
- **Alaska:** None NP practice: Full.
- **Delaware:** None NP practice: Full.
- **Florida:** None (Health Care Clinic Act licensure applies to non-physician-owned clinics) NP practice: Restricted.
- **Maine:** None NP practice: Full.
- **Missouri:** None NP practice: Restricted.
- **Nebraska:** None NP practice: Full.
- **New Hampshire:** None NP practice: Full.
- **New Mexico:** None NP practice: Full.
- **Oklahoma:** None NP practice: Restricted.
- **Utah:** None NP practice: Full.
- **Vermont:** None NP practice: Full.
- **Virginia:** None NP practice: Restricted.
- **Wyoming:** None NP practice: Full.

## How the MSO plus friendly-PC structure answers CPOM

The structure separates what a business may own from what only a physician may do. A management services organization (the MSO) owns the brand, technology, marketing, payment stack and non-clinical staff. A professional entity (the friendly PC), owned by a licensed physician, employs or contracts the clinicians and makes every clinical decision. A management services agreement sets the MSO's fee, and succession documents keep the PC's ownership with a licensed physician if the owner leaves.

- **What the MSO may do** — Build and run the platform, acquire patients, run the storefront, bill as merchant of record, handle non-clinical HR, hold the software contracts, and charge a management fee. In most states the fee should be fair market value for services rendered rather than a percentage of professional revenue.
- **What the MSO may not do** — Decide who gets prescribed what, set clinical protocols, hire or fire physicians for clinical reasons, own the medical records, or hold a veto over the PC's clinical decisions. Oregon's SB 951 and California's SB 351 turned this list into enforceable statute in 2025.
- **Why one structure for all 50 states** — The 12 strong states include California, Texas, New York, Illinois and New Jersey. Any national brand is in some of them, so the structure has to satisfy them anyway. A looser structure in the 14 no-prohibition states saves little and adds entities to maintain. Our guide to the model is at /blog/telehealth-compliance-mso-model-guide, and a review of MSO providers is at /blog/telehealth-mso-companies.

## Fee-splitting and the 2025 to 2026 legislative turn

Two things happened in 2025 that every telehealth operator should read directly rather than hear about secondhand. Both are verified from the legislatures' own records.

- **Oregon SB 951 (2025, Chapter 295)** — Per the Oregon Legislature's measure record, SB 951 prohibits an MSO, and its shareholders, directors, officers, employees and contractors, from owning or controlling, serving as a director or officer of, working for, or managing a professional medical entity the MSO has a management contract with. It defines ownership and control, voids certain noncompetition, nondisclosure and nondisparagement agreements with medical professionals, treats violations as unlawful trade practices, and gives professional entities and licensees a right to sue. It carried an emergency clause, so it took effect on passage. The friendly-physician-as-MSO-employee pattern is exactly what it targets.
- **California SB 351 (Chapter 409, Statutes of 2025)** — Governor Newsom's October 6, 2025 legislative update lists SB 351 (Cabaldon, Health facilities) among the bills signed; it chaptered the same day and took effect January 1, 2026. The law bars private equity groups and hedge funds from interfering with the clinical decisions of physicians and dentists in practices they invest in, including diagnostic tests, referrals, patient volume and hours, and from controlling hiring and coding and billing. It voids contract terms that permit that conduct or impose noncompete or nondisparagement clauses, and gives the Attorney General authority to seek injunctive relief and fees.
- **Fee-splitting** — Separately from CPOM, many states prohibit a licensee from splitting professional fees with an unlicensed person. New York and California have long-standing statutes, and several strong and moderate states treat a percentage-of-revenue management fee as a fee split. The practical test is whether the MSO's compensation is a fair market value fee for defined services. Flat or cost-plus fees are easier to defend than a revenue percentage.

## How MyOrbitHealth's structure is held in the network

MyOrbitHealth is a Delaware-headquartered technology company. It does not practice medicine. The medical, regulatory and pharmacy layer is delivered through licensed providers under an existing MSO and friendly-PC structure; your brand plugs into it.

- **You own the brand, the customers and the data** — The client is merchant of record and owns its patients, records and data with export at any time. There is no revenue share and no exit or termination fee; the fee is a flat platform fee scoped at onboarding, with 0% medication markup and month-to-month terms after onboarding. That is a services fee, not a share of professional revenue.
- **Clinical decisions stay with licensed providers** — Care is delivered by the Provider Network's 2,400+ board-certified MD, DO, NP and PA providers across all 50 states, credentialed to NCQA standards with monthly OIG and SAM exclusion screening, and covered by occurrence-based malpractice insurance with $1 million per occurrence and $6 million aggregate limits. OrbitOS keeps a full HIPAA audit trail of every encounter and prescription.
- **The compliance stack behind the structure** — HIPAA compliant with a BAA in every contract, SOC 2 Type II, EPCS with two-factor identity proofing, and a LegitScript-certified pharmacy network. 50+ digital clinics run on the platform. Before signing with any vendor, including us, run the questions in /blog/telehealth-vendor-due-diligence-checklist and ask to see the structure documents.

## FAQ

### Which states have the strongest corporate practice of medicine laws?
Our dataset marks 12 states as strong: California, Colorado, Illinois, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, North Dakota, Oregon and Texas. California and Oregon both added statutory enforcement in 2025.

### Which states have no corporate practice of medicine prohibition?
14 states in our dataset: Alabama, Alaska, Delaware, Florida, Maine, Missouri, Nebraska, New Hampshire, New Mexico, Oklahoma, Utah, Vermont, Virginia and Wyoming. Florida still licenses non-physician-owned clinics under the Health Care Clinic Act, and fee-splitting rules apply across the group.

### Does CPOM apply to telehealth companies?
Yes. The doctrine follows the patient's state, so a telehealth brand serving patients in a strong state is subject to that state's rule regardless of where the company is incorporated. That is why national brands adopt one structure that satisfies the strictest states.

### What is the MSO and friendly-PC model?
A management services organization owns the brand, technology and operations and charges a management fee. A physician-owned professional entity employs or contracts the clinicians and makes every clinical decision. A management services agreement and succession documents hold the two together without giving the MSO control over medicine.

### What did Oregon SB 951 change?
SB 951 (2025, Chapter 295) bars MSO owners, officers, employees and contractors from owning, controlling or serving as officers of the professional entity they manage, voids certain noncompete and nondisparagement agreements with medical professionals, and makes violations unlawful trade practices. It took effect on passage.

### What did California SB 351 change?
Signed October 6, 2025 and effective January 1, 2026, SB 351 prohibits private equity groups and hedge funds from interfering with physicians' and dentists' clinical decisions or controlling hiring and billing at practices they invest in, and gives the Attorney General enforcement authority.

### Does MyOrbitHealth set up my MSO and PC?
MyOrbitHealth does not practice medicine or provide legal services. It delivers the medical layer through licensed providers under an existing MSO and friendly-PC structure, so a brand launching on the platform does not need to stand up its own professional entity to go live. Confirm the arrangement with your own counsel.

## Launch on a structure that already satisfies the strict states

MyOrbitHealth delivers the medical layer through licensed providers under an MSO and friendly-PC structure, with SOC 2 Type II and a BAA in every contract. Book a call at https://myorbithealth.com/book or read /compliance first.

Book a call: https://myorbithealth.com/book

Go deeper: [The telehealth MSO model: a compliance guide](https://myorbithealth.com/blog/telehealth-compliance-mso-model-guide), [Telehealth MSO companies compared](https://myorbithealth.com/blog/telehealth-mso-companies), [Telehealth vendor due diligence checklist](https://myorbithealth.com/blog/telehealth-vendor-due-diligence-checklist), [How to start a virtual clinic](https://myorbithealth.com/blog/how-to-start-a-virtual-clinic)

_General information, not legal or medical advice._

_Source: https://myorbithealth.com/compliance/corporate-practice-of-medicine-states_