Mid-Atlantic Health Law TOPICS

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Choice of Entity for Multi-Disciplinary Practices

The Maryland Professional Service Corporation Act permits physicians, chiropractors, dentists, osteopaths, podiatrists and psychologists to practice in corporate form through a "professional service corporation," also commonly known as a "P.C." or a "P.A." However, the Act permits two or more of these professions to be practiced within the same corporate entity only "if the combination of professional purposes is authorized by the licensing law of the State applicable to each profession in the combination." 
At the present time, no statute or regulation of any of the health occupations licensing boards allows such a combination. Therefore, under current Maryland law, a professional service corporation may not render more than one type of professional service. 
The limited liability company (LLC) is another form of business entity that is expressly authorized to render professional services, and is becoming increasingly popular in the health occupations. The Maryland Limited Liability Company Act, unlike the Maryland Professional Service Corporation Act, does not contain a restriction on multi-disciplinary practices. 
Although health occupation licensing boards could impose such a restriction by regulation, to date none have done so. Therefore, unlike P.A.s, current Maryland law permits LLCs to provide more than one type of professional service. This would permit, for example, a physician practice to include a dentist, a psychologist and a chiropractor. 
This flexibility, as well as flexibility in other areas such as governance structures and profit-sharing formulas, makes the LLC an attractive choice of entity for new professional practices and for existing professional practices seeking to update their form of business entity. 
While use of an LLC permits multi-disciplinary practices under current corporate laws, it is also necessary to consider carefully federal and state laws restricting self-referrals, fee-splitting and kickbacks, because certain compensation and profit-sharing arrangements adopted by multi-disciplinary practices could violate such restrictions.

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Date

12.22.01

Type

Publications

Authors

Cowan, Elliott

Teams

Health Care