NCMB regularly investigates and takes action in cases that involve aiding the unlicensed practice of medicine in NC due to unlawful practice ownership arrangements. The Board adopted a position statement, Corporate practice of medicine, in March 2016 to clarify its expectations.
As a general rule, the North Carolina Professional Corporations Act (N.C. Gen. Stat. ¶55B, et. seq.) requires corporations that provide certain professional service to be owned entirely by licensees of that profession. Applying this general rule, medical practices must be owned by licensed physicians. Under some circumstances, a medical practice may be jointly owned by a combination of other authorized clinicians as listed in N.C. Gen. Stat. § 55B-14(c).
Often, NCMB will investigate situations where a licensee is employed to work in a practice owned by medical professionals who are not licensed in NC or that is owned by individuals who are not medical professionals. A physician or PA who practices in an arrangement not in compliance with the Professional Corporation Act may be found to have aided the unlicensed practice of medicine. Also, licensees may be held accountable for following clinical protocols established by corporate owners if such protocols result in substandard patient care.
Another common pitfall NCMB sees frequently is the problem of “straw ownership” of medical practices. A straw ownership arrangement is one in which a licensed physician is made the sole shareholder of a practice controlled and operated by a nonphysician. In this arrangement, a physician is made the shareholder of the corporation on paper to disguise the fact that real control and decision-making authority in the practice resides with a nonphysician. In many instances, the physician straw owner signs a management agreement with a non-physician whereby the bulk of the practice’s revenue goes to the non-physician. In these situations, the physician straw owner can still face disciplinary action by NCMB for aiding and abetting the unlicensed practice of medicine, as well as unethical fee-splitting.
NCMB recognizes medical practices owned by hospitals, or health maintenance organizations as exceptions. State law authorizes these licensed and regulated entities to provide direct patient care.
The full Corporate practice of medicine position statement can be found online by clicking here.
