Can Physician Assistant Start Their Own Professional Corporation in California?

Are you a physician assistant in California dreaming of owning your practice? Are you aspiring for autonomy, increased profits, and flexible hours? You’re not alone.

Many PAs share this vision, yet navigating the legal intricacies can be daunting.

Can Physician Assistant Start Their Own Professional Corporation in California?

Our firm has assisted clients like you, addressing the pivotal question: “Can physician assistants establish their professional corporation in California?”

Looking into the nuances between physician assistant professional corporations and medical corporations, we illuminate the legal landscape, clarifying the avenues through which PAs can own and operate their practices, including the employment of licensed healthcare professionals.

Let’s explore your possibilities together!

Can Professional Physician Assistant Start Their Own Professional Physician Assistant Corporation in California? 2 Things to Consider

When considering whether a physician assistant can establish a professional corporation in California, the first step is understanding the client’s objectives. Asking crucial questions like “What are you trying to accomplish?” allows us to delve into the intricacies of California law.

Central to this inquiry is whether a physician assistant can serve as a supervising physician and employ licensed physicians as staff. To unravel these complexities, we must examine the nature of the corporation involved.

By discerning whether a physician assistant can own a medical corporation and enlist licensed healthcare professionals such as doctors and surgeons, we navigate the legal landscape, guiding clients toward informed decisions.

A. Physician Assistant Corporation operates under Corporations Code 13401.5.

To establish a professional medical corporation, you must have a minimum of 51% ownership by physicians. Conversely, for a physician assistant corporation, at least 51% of ownership must be held by physician assistants.

While the physician assistant can possess at least 51% of the shares, co-shareholders can own up to 49%. Permissible co-shareholders within the physician assistant corporation include:

  • Licensed physicians and surgeons
  • Registered nurses
  • Licensed acupuncturists
  • Naturopathic doctors
  • Licensed midwives

B. Physicians are duly licensed under Division 2 of the Business Professions Code (BPC)

This information can be found in the 2011 California Code under Division 2 (Healing Arts [500 – 4999.122]), Chapter 7.7, Article 8. This section also grants authorization for physician assistant corporations to provide professional services.

For further details, you can refer to the following codes:

  • DIVISION 2. HEALING ARTS [500 – 4999.129]
  • CHAPTER 5. Medicine [2000 – 2529.6]
  • ARTICLE 1. Administration [2000 – 2028.5]

Chapter 2000 is identified as the Medical Practice Act and can be cited accordingly. Any statute mentioning the Medical Practice Act pertains to the provisions outlined in this chapter.

Medical professionals eligible for ownership in a medical professional corporation under Division 2 of the Business and Professions Code encompass:

  • Doctors of podiatric medicine
  • Licensed optometrists
  • Registered nurses and licensed psychologists
  • Licensed marriage and family therapists and clinical social workers
  • Licensed physician assistants
  • Licensed chiropractors and acupuncturists
  • Naturopathic doctors
  • Licensed professional clinical counselors and physical therapists
  • Licensed pharmacists
  • Licensed midwives

FAQ – Form a Physician Assistant Professional Corporation

Can A Physician Assistant Hire a Licensed Healthcare Professional as per he state law?

According to California Corporations Code 13401.5, a professional corporation has the authority to employ any individual who holds a valid license under Division 2 of the Business and Professions Code (BPC).

Physicians fall within this category, so a professional physician assistant corporation can hire licensed physicians to provide professional services.

To recap, California physician assistant can hire licensed healthcare professionals, provided the physician assistant corporation adheres to its legal framework, and the prospective hire holds a license under Division 2 of the BPC.

Are There Namestyle Formalities That Need to Be Followed When Forming Physician Assistants Corporation in California?

When forming a California Professional Physician Assistants Corporation, it’s essential to adhere to specific namestyle formalities outlined in California Business and Professions Code 3543.

This entails ensuring that the corporation’s business name and any other names it operates under for rendering professional services include the term “physician assistant.” Additionally, these names should incorporate wording or abbreviations indicating the corporation’s corporate existence.

Are Physician Assistants Corporations in California Allowed to Use Fictitious Business Names?

Physician Assistants Corporations in California are permitted to utilize fictitious business names, commonly called “Doing Business As” (DBA) names. The Physician Assistant Board does not impose any restrictions on the use of fictitious business names by these corporations.

Do I need a certificate of registration as a physician assistant at a corporation?

Professional corporations or foreign professional corporations that provide professional services through individuals duly licensed by the Board of Registered Physician Assistants are exempt from the requirement to obtain a certificate of registration to render their professional services.

Summing Up – Starting a Professional Physician Assistants Incorporation

Physician Assistants can establish their professional corporation in California, governed by specific regulations outlined in the state’s Business and Professions Code.

These regulations encompass name style formalities, permitting the use of fictitious business names and exempting the corporation from obtaining a certificate of registration.

By adhering to these guidelines, Physician Assistants can navigate the process of forming their corporation, providing them with opportunities for autonomy and professional growth within the healthcare industry in California.


Why Do I Need a Professional Medical Corporation in California?

Are you a healthcare practitioner wondering if a Professional Medical Corporation (PMC) suits you? You’re not alone. Many doctors, dentists, nurse practitioners, and other healthcare professionals ask us the same question.

Why Do I Need a Professional Medical Corporation in California?

You may be curious if you can mix different types of practitioners in one Corporation, like a naturopathic medical doctor and a chiropractor. This blog will explore why a PMC might be essential for your practice, addressing common questions and concerns.

Let’s dive in to why do i need a professional Medical corporation in California.

What is a Professional Medical Corporation in California?

In California, a medical corporation is a business that doctors create to run their medical practices. When doctors incorporate, they form a “Medical Professional Corporation” or “MPC.” This setup helps keep their stuff, like money and belongings, separate from their medical business.

Once doctors incorporate, they operate their practice under a different name, and all the money they make and spend goes through that name.

Setting up a medical corporation involves a few steps, like picking a business name, registering the Corporation, and ensuring everything is set up correctly.

Doctors usually get help from an accountant and a lawyer to ensure everything goes smoothly. This makes the whole process easier and less stressful.

So, a Medical Corporation in California helps doctors manage their medical practices in a smart and organized way.

Why Do I Need a Professional Medical Corporation?

A Professional Medical Corporation (PMC) can be a smart move for healthcare professionals for several reasons.

Firstly, it helps protect you legally. If you plan to have employees or other clinicians working with you, a PMC shields you from personal liability.

Your assets, like your house or savings, are safe if something goes wrong. For example, if you hire a nurse or physician assistant, they become employees of the Corporation, not you personally.

Secondly, knowing the difference between a general corporation and a professional one is important. While other types of corporations focus on taxes and investors, a professional corporation specifically delivers professional services like medical care.

So, if you’re providing healthcare services, a PMC is what you need, not a regular corporation.

Lastly, setting up a PMC is smart if you’re running a clinic or healthcare enterprise offering a range of integrative or functional medicine services. It helps organize your practice, manage legal risks, and ensure everyone involved is on the same page.

In summary, a Professional Medical Corporation can help healthcare professionals like doctors, dentists, and psychologists manage their practices effectively while providing legal protection and clarity on their services.

What are the Pros & Cons of Professional California Medical Corporation?

Are you considering setting up a Professional Medical Corporation (PMC)? It’s important to understand both the advantages and potential drawbacks before deciding. Let’s break down the pros and cons in easy-to-understand terms.


Tax Deferral and Savings

One significant advantage of a PMC is the opportunity to save on taxes. By keeping money in the Corporation, doctors can benefit from lower corporate tax rates, often much lower than personal tax rates. This means more money stays in your pocket, helping you save for the future or invest for even greater financial growth.

Limited Liability to Creditors

While incorporating doesn’t protect doctors from liability related to patient complaints or malpractice, it does offer some liability protection against creditors. If creditors come knocking, they can only go after assets held within the Corporation, keeping your assets safe.


PMCs allow limited income-splitting advantages, particularly if a doctor’s spouse works for the practice.

By paying wages to a lower-income spouse, doctors can save on taxes and keep more money in the household. This strategy can be especially beneficial when income splitting becomes even easier during retirement.

Lifetime Capital Gains Exemption

For some physicians, the Lifetime Capital Gains Exemption can be a significant benefit. This exemption allows for a portion of capital gains from selling the practice to be tax-free, providing a substantial financial advantage upon retirement.


Costs of Incorporation

Setting up and maintaining a PMC can be costly. From accounting expenses to legal fees to obtaining necessary authorizations, the initial and ongoing costs can add up.

However, the benefits often outweigh the costs for doctors who can keep a reasonable income in the Corporation.


Running a PMC requires more administrative work compared to a sole proprietorship. Doctors will have additional bookkeeping obligations and paperwork requirements, which can initially be overwhelming. However, most of this burden can be managed with the help of professionals like accountants and lawyers.

Must Keep Money in the Corporation

To fully benefit from incorporation, doctors must keep a portion of their money in the PMC. This can be challenging for doctors with higher spending needs since the money is not readily accessible. Incorporating may not be the best option for those who require may be a better option than a more flexible

When Should I Incorporate Practice of Medicine?

Deciding when to incorporate your medical practice is a big decision. It’s best to do it when you’re earning enough to keep a good amount of money in the Corporation each year. But consider your debts, financial goals, and lifestyle before taking the plunge.

For most doctors, incorporating becomes beneficial as they advance in their careers. Incorporating makes sense when you can keep a good amount of money in the Corporation each year, usually around $60,000 to $100,000.

But before you make any decisions, it’s crucial to sit down with an experienced accountant who knows about Medical Professional Corporations (MPCs). They can help you look at your spending, debts, liabilities, and financial goals to see if incorporation is right for you.

Reasons to Delay Incorporation

Sometimes, it’s better to hold off on incorporation, especially if:

  1. You Have a Lot of Debt: If you’re still paying off big debts like student loans from medical school, it might be wise to wait before incorporating. You want to get those debts under control first.
  2. You’re Saving for a Big Purchase: If you plan to buy a house or make another significant purchase soon, it might be better to delay incorporation until after you’ve saved up enough.
  3. You Need Most of Your Income: If you’re using most of your income to cover your current lifestyle expenses, there may be better choices than incorporating. It would help if you had enough left over to keep in the Corporation to make it worthwhile.
  4. You Work Part-Time: If you’re only working part-time as a doctor and your income isn’t very high, incorporation might need to offer more benefits to make it worthwhile.

Important Note

Incorporation is only available for self-employed physicians, not those on a salary. So, if you’re working for a hospital or clinic as an employee, you need more than incorporation.

Summing Up

A Medical Corporation in California, or “Medical Professional Corporation” (MPC), is a specialized business structure for doctors. It separates personal and professional finances, with all practice-related transactions occurring under the Corporation’s name.

While incorporating involves steps like name selection and registration, professionals like accountants and lawyers ease the process.

Timing for incorporation is crucial, typically advisable when earning enough to maintain substantial funds within the Corporation, around $60,000 to $100,000 yearly.

If you have questions about forming professional medical corporation in California,  I am here to help. Simply email me about setting up a consultation at today. Arrange an appointment so we can meet face-to-face and work out a feasible schedule for establishing your business entity.

California Medical Corporation Pitfalls: A Professional Medical Corporation in California Guide to Avoiding Legal Trouble

“California Medical Corporation Pitfalls: A Physician’s Guide to Avoiding Legal Trouble” is a comprehensive resource for physicians navigating the intricacies of forming and operating a professional medical corporation (PC) in California.

California Medical Corporation Pitfalls: A Physician’s Guide to Avoiding Legal Trouble

Despite the benefits of liability limitation and tax optimization, the journey through corporate formalities can be fraught with legal risks if not managed diligently.

This guide offers invaluable insights into 14 common pitfalls, equipping practitioners with the knowledge to establish and sustain a successful medical corporation while sidestepping potential legal entanglements.

By understanding and circumventing these challenges, physicians can safeguard their practices and ensure compliance with California’s regulatory landscape.

California Medical Corporation Pitfalls: A Physician’s Guide to Avoiding Legal Trouble when Starting a Medical Corporation

1.      Insufficient Adherence to Corporate Formalities in Professional Medical Corporation in California

Annual Obligations: Submission of a statement of information, conducting yearly meetings, and record-keeping, among other duties.

Corporate Veil Penetration: Neglecting formalities exposes professionals to personal liability.

Thorough Documentation: Rigorous upkeep of meeting minutes, corporate documentation, filings, and ensuring valid insurance coverage.


Dr. Adams encountered personal liability in a patient’s lawsuit due to his medical corporation’s failure to adhere to formalities.

Preventive Measures

Maintain meticulous records of meetings, policies, stock allocations, and other formal procedures. Maintain a clear demarcation between personal and corporate finances. Collaborate closely with legal advisors to ensure comprehensive adherence.

Common Queries

What constitutes essential corporate formalities?

Essential formalities include:

  • Conducting valid meetings.
  • Issuing stock certificates (with requisite medical corporation-specific language).
  • Submitting annual reports.
  • Documenting policies.

What are the repercussions of piercing the corporate veil?

The professional forfeits liability protection, potentially leading to personal accountability for lawsuits or debts.

2.      Inappropriate Business Formation in California Professional Medical Corporation

Understanding the Choices: Evaluation of C corporations and S corporations, weighing the advantages and drawbacks of each structure.

Expert Consultation: Business medical boards of California attorneys guide selecting the most suitable structure, considering liability, tax implications, operational dynamics, and other pertinent factors.

Tailored Approach: The ideal business structure is contingent upon the nature of professional medical services rendered.


Dr. Lee’s C corporation should have included potential tax advantages achievable with an S corporation.

Preventive Measures

Engage with business attorneys and financial advisors to determine the most advantageous structure. Factor in long-term objectives and operational requisites beyond immediate tax considerations. Remain open to transitioning to a more fitting entity type if necessary.

Common Queries

What criteria influence the selection of the optimal professional corporation structure?

Key considerations include liability mitigation, continuity of business operations, tax optimization, professional classification, and additional factors.

Is it feasible to alter tax status at a later stage?

Yes, conversion is possible, albeit it may entail complexities.

3.      Insufficient Licensing Compliance

Adherence to Regulations: Neglecting to acquire essential professional licenses may result in regulatory sanctions as per California law.

Safety Concerns: Providing services or private practice in California by healthcare professional without license jeopardizes client well-being and amplifies liability exposure.

Insurance Implications: Many insurance policies mandate the maintenance of valid professional credentials.


Dr. Patel’s medical corporation faced fines due to the engagement of unlicensed personnel in patient care.

Preventive Measures

Thoroughly validate all requisite licenses and certifications before initiating services. Institute stringent protocols for verifying staff qualifications. Seek guidance from legal experts regarding adherence to professional regulatory standards.

Common Queries

Can my corporation face operational restrictions if licenses expire?

Yes, uphold valid professional credentials to ensure legal authorization is maintained.

How frequently must I renew professional licenses?

Renewal intervals vary between California secretary of state law, other states and profession—verify renewal stipulations to ensure ongoing compliance.

4.      Inadequate Financial Management

Risk of Fraud: Without proper financial oversight, the risk of fund misappropriation increases.

Taxation Challenges: Inadequate documentation can lead to rejected deductions and penalties during IRS audits.

Financial Vigilance: Inaccurate tracking can obscure operational difficulties and cash flow problems.


Dr. Andrews was unaware that his CFO had embezzled over $100,000 due to a lack of financial oversight.

Preventive Measures

Implement comprehensive internal controls with built-in checks and balances. Conduct routine financial audits performed by independent Certified Public Accountants (CPAs).

Regularly monitor bank statements to identify unauthorized transactions promptly.

Common Queries

Is it advisable to mandate multiple signatures for significant financial transactions?

Yes, requiring dual authorization is a deterrent against fraud and errors involving substantial sums.

What are some other adequate financial controls?

Examples include

  • Protocols for securing physical assets.
  • Electronic access restrictions.
  • Pre-approval processes for transactions.
  • Verification procedures for invoices.

5.      Insufficient Record-Keeping Practices

Taxation Concerns: Poor documentation increases the risk of rejected filings and IRS audit penalties.

Legal Vulnerabilities: Inadequate records hamper defense against lawsuits.

Regulatory Compliance: Failure to produce necessary paperwork can result in fines or license revocations upon regulatory inspection.


Dr. Thompson encountered difficulties disputing a malpractice claim due to the need for detailed patient records.

Preventive Measures

Deploy document management systems featuring version controls for enhanced organization. Digitize records while maintaining secure backup solutions. Establish retention policies by regulatory statutes of limitation.

Common Queries

Which corporate records necessitate permanent retention?

Essential documents include articles of incorporation, bylaws, tax filings, contracts, insurance policies, board minutes, and resolutions.

Which records can be discarded after a specific period?

Examples include employment applications, accounting source documents, expired licenses, and non-binding correspondence.

6.      Insufficient Insurance Protection

Asset Protection: Inadequate coverage jeopardizes both corporate and personal assets in the event of claims.

Operational Continuity: Coverage gaps may disrupt business operations and revenue streams following accidents or natural disasters.

Regulatory Compliance: Certain professions services mandate specific policy types and coverage limits to maintain licensure according to California state law.


Dr. Wilson suffered significant losses when his corporation’s property insurance did not fully cover a fire incident.

Preventive Measures

Utilize brokers to conduct risk assessments and procure comprehensive coverage tailored to specific needs. Regularly review policies to ensure alignment with business growth and adjust coverage limits accordingly. Ensure adherence to updated regulatory mandates to maintain compliance.

Common Queries

What are the primary policy types a professional corporation should possess?

Essential policies include general liability, medical/professional malpractice, Directors & Officers (D&O), Cyber and Data Privacy, and Workers Compensation.

Should corporate records and data assets be insured?

It’s advisable to consult with brokers regarding Cyber and Data Privacy policies to cover digitized materials and intellectual property adequately.

7.      Incorrect Billing and Reimbursement Practices

Risk of Fraud: Inaccurate claims or coding mistakes increase the likelihood of false billing allegations.

Revenue Retrieval: Improper documentation heightens the risk of claim rejection and disrupts cash flow.

Compliance Imperatives: Robust protocols are essential to safeguard billing practices and mitigate regulatory fines.


Dr. Patel’s clinic lost its Medicare eligibility due to a high volume of denied claims.

Preventive Measures

Deploy billing systems equipped with stringent internal controls and provide comprehensive staff training. Conduct regular external audits to ensure full compliance with regulatory standards. Stay abreast of regulatory updates and adapt protocols accordingly to maintain compliance.

Common Queries

Can minor billing errors lead to significant repercussions?

Yes, regulatory bodies and insurance plans prioritize compliance, and even minor infractions can trigger investigations.

What are the high-risk areas for non-compliance?

Common areas include billing for services not rendered, duplicate claims, overcharging, manipulation of codes, and eligibility fraud.

8.      Inadequate Vendor Oversight

Financial Vulnerability: Insufficiently vetted vendors heighten fraud risks, errors, bankruptcies, and service interruptions.

Compliance Evasion: The absence of vendor supervision facilitates protocol circumvention, potentially leading to systemic issues.

Patient Endangerment: Engaging subpar quality or negligent external service providers amplifies liability risks.


Dr. Roberts’ clinic faced legal action due to employing unqualified technicians contracted from a third-party lab vendor.

Preventive Measures

Thoroughly vet all vendors at the outset and establish performance benchmarks. Enforce compliance with established policies and procedures. Conduct periodic reviews of vendors and reassess relationships regularly.

Common Queries

What level of due diligence is advisable for vendors?

Recommended measures include background checks, reference verifications, financial scrutiny, license validations, principal interviews, and policy and procedure assessments.

Should vendors maintain their insurance policies?

Yes, validating that insurance coverage and adding your entity as an additional insured is recommended to transfer risks effectively.

9.      Insufficient Data Protection

Damage to Reputation: Data breaches diminish patient confidence and referral rates.

Legal Consequences: Failure to comply with evolving privacy regulations poses substantial financial liabilities.

Operational Disruption: Successful cyberattacks targeting systems and data can severely disrupt business operations.


Dr. Taylor’s clinic experienced a breach due to lax security measures, resulting in lawsuits over the compromise of thousands of patient records.

Preventive Measures

Conducted comprehensive exposure assessments and implemented multi-layered cyber defenses. Employ data encryption and enforce stringent access controls.

Provide regular security training to end-users to enhance awareness and vigilance.

Common Queries

Is it advisable to enlist external experts for risk evaluation?

Yes, engaging independent cybersecurity firms facilitates objective vulnerability assessments.

How frequently should risk assessments be conducted?

At least annually, though continuous monitoring is optimal to effectively mitigate the ongoing threat landscape.

10.  Inadequate Estate and Succession Planning

Operational Disruption: Without continuity protocols, the risk of destabilization, value erosion, and patient attrition increases.

Conflicts and Legal Intervention: Unclear succession plans can lead to contentious disputes over control and equity ownership, potentially necessitating court intervention.

Tax Implications: Failure to implement effective estate strategies results in the loss of wealth transfers to heirs.


Without estate planning, Dr. Miller’s unexpected passing triggered significant disputes among his children over medical practice ownership.

Preventive Measures

Establish Buy-Sell Agreements to govern future control transfers. Procure life insurance to fund obligations outlined in such agreements. Regularly review estate documents to ensure updated executors and beneficiary designations.

Common Queries

Which assets require specialized estate planning guidance?

Assets include closely held corporate stock, alternative investments, intellectual property rights, and specialty licenses.

What are the implications of gifting partial ownership before death?

Considerations include basis step-up, gift taxes, continuity planning, buy-sell triggers, and more.

11.  Mismanagement of Government Inquiries

Legal Exposure: How a corporation handles government inquiries can significantly influence outcomes, including potential criminal implications.

Penalty Mitigation: Mishandling audits or investigations can exacerbate financial and legal consequences.

Damage to Reputation: An aggressive approach with regulators can breed suspicion and erode public trust.


Dr. Anderson’s aggressive response to initial Medicare audit inquiries triggered an expanded investigation and potential charges.

Preventive Measures

Promptly involve legal counsel upon receiving notification of an investigation. Conduct internal reviews to assess relevant risks and formulate appropriate responses.

Collaborate closely with legal advisors before disclosing documents or engaging in communications.

Common Queries

What typically triggers external investigations?

Whistleblower complaints, referrals from other agencies, tips from paid informants, or routine audit findings can prompt external investigations.

Which agencies commonly investigate medical corporations?

Investigating agencies may include the Department of Justice (DOJ), Office of Inspector General (OIG), Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA), Internal Revenue Service (IRS), Financial Crimes Enforcement Network (FinCEN), Medicare, Medicaid, Food and Drug Administration (FDA), and professional licensing boards.

12.  Insufficient Dispute Resolution Practices

Exposure to Legal Proceedings: Mishandling disputes can lead to unfavorable rulings, set detrimental precedents, and tarnish reputation.

Settlement Risks: Hastily resolving cases without fully grasping long-term obligations can result in unforeseen consequences.

Operational Distraction: Prolonged conflicts divert leadership attention and drain resources, impeding productivity.


Dr. Martin’s choice not to contest a disputed licensing board sanction had enduring repercussions on her reputation and professional practice.

Preventive Measures

Engage legal counsel early to evaluate risks associated with disputes thoroughly. Explore negotiation and mediation avenues before resorting to litigation. Assess potential long-term impacts of settlements meticulously.

Common Queries

Which types of agreements typically necessitate legal review?

These include settlements, equity/asset sales, partnership agreements, transactions involving affiliated parties, and leases.

When should litigation be considered for resolving a dispute?

Exhaust alternative resolution methods, then strategically pursue litigation, understanding the associated time and cost commitments.

13.  Inadequate Operational Scaling

Missed Growth Opportunities: Insufficient planning for expansion can result in missed chances for growth.

Quality Deterioration: Overextending resources in patient volumes, staffing, or facilities can strain quality.

Reactive Crisis Management: Reactive scaling without proactive planning often leads to suboptimal decisions regarding financing and operations.


Dr. Davis faced challenges meeting patient demand and maintaining quality due to rapid expansion and inadequate staff and resources.

Preventive Measures

Develop a long-term strategic growth plan supported by financial modeling—secure access to sufficient capital to sustain growth initiatives. Regularly assess the need to enhance management, operations, and governance.

Common Queries

What indicators suggest the need for additional infrastructure?

Key indicators include patient cycle times, medical error rates, customer satisfaction surveys, and staff workload scores.

What are the financing options for growth plans?

Financing options may include retained earnings, bank debt, private equity investment, joint ventures, and sale-leaseback arrangements.

14.  Leadership Shortcomings

Misaligned Priorities: Conflicts between clinical and administrative objectives often hinder the development of a cohesive strategy.

Compliance Deficiencies: Physician detachment from operational matters can lead to systemic non-compliance with administrative protocols.

Lack of Accountability: The absence of oversight and performance evaluation compromises continuity planning efforts.


Dr. Jones’ inadequate leadership as CEO resulted in significant discord between physicians and the administration.

Preventive Measures

Appoint knowledgeable and engaged directors to provide adequate oversight. Implement incentives that encourage alignment of strategy among all stakeholders. Regularly assess the skills and direction of senior management.

Common Queries

What are indicators of leadership deficiencies?

Signs may include:

  • Declining productivity.
  • High turnover rates among employees/partners.
  • Increased patient dissatisfaction.
  • A rise in errors.

How can physicians enhance their engagement in governance?

Allocate dedicated time for involvement in strategic planning, provide transparency in operational matters, and conduct educational sessions for the board.

Wrapping Up

In navigating the complexities of forming and managing a medical corporation in California, vigilance against potential pitfalls is paramount.

From inadequate record-keeping to insufficient insurance coverage, each challenge poses risks to the integrity and success of the practice.

By heeding the guidance provided in this physician’s guide, practitioners can fortify their understanding of legal obligations and mitigate the threat of legal entanglements.

Through diligent adherence to regulatory requirements, strategic planning for operational scalability, and fostering effective leadership, medical professionals can safeguard their practices, uphold patient trust, and navigate the intricate landscape of California’s healthcare industry with confidence and resilience.

What Physicians and Investors Must Know About California Medical Corporations? Corporate Practice of Medicine

Doctors can run their practice alone or team up with other doctors. Both ways have good points, but doctors should consider making a medical corporation.

This can reduce risks, save on taxes, make running the practice smoother, and open up more chances for success and managing risks.

What Physicians and Investors Must Know About California Medical Corporations? Corporate Practice of Medicine

In California, doctors can’t choose to make a regular C-Corporation or other usual professional corporations like S-Corporations or LLCs. Instead, they must make a particular type called a California professional medical corporation.

This corporation has to follow the rules in the Moscone-Knox Professional Corporation Act.

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What Physicians and Investors Must Know About California Medical Corporations? Corporate Practice in Medicine

Physicians and investors must know a few rules, state laws about corporate practice of medicine in California. Here I shared the information thoroughly.

Benefits of Professional Medical Corporation

Here are the benefits of a professional medical corporation, explained in simpler terms:

  1. Limiting Liability: When doctors form a medical corporation, it helps protect them from debts the business might owe. If the corporation can’t pay its bills and has to close, creditors can’t go after the doctors’ money as long as they didn’t personally guarantee any contracts. However, this protection doesn’t apply to medical malpractice lawsuits in California. But, if one doctor in a partnership messes up, the others might not be held responsible.
  2. Tax Savings: Medical corporations can help doctors save on taxes. They can be taxed like S-Corporations, which means they avoid double taxation. Also, they may allow for higher contributions to retirement plans than doctors could do alone. But, corporations usually pay higher tax rates, so it’s essential to manage income properly with help from tax professionals.
  3. Continuity: If a doctor dies while practicing alone, the practice ends. If they have a partner, the partner must find a new one. However, with a medical corporation, the practice keeps going according to the corporation’s rules, even if something happens to a doctor. This also helps with health insurance, life insurance, disability insurance, and retirement plans for doctors.

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Key State Laws in Professional Medical Practice Act

Here’s a simpler explanation of the key terms and rules in the Professional Corporation Act:

  1. Professional Services: These services need a special license, like those from the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act.
  2. Ownership of Shares: Doctors must own most of the shares in California medical corporations. Non-doctors can own some shares, but doctors have to own the most. The law also says that non-doctors like podiatrists, psychologists, nurses, and others can own shares. Each type of medical corporation has its own rules for non-doctor ownership.

Permissible non-physicians in a medical corporation (provided they don’t have a majority interest) include:

  • Licensed doctors of podiatric medicine.
  • Licensed psychologists
  • Registered nurses
  • Licensed optometrists
  • Licensed marriage and family therapists
  • Licensed clinical social workers
  • Licensed physician assistants
  • Licensed chiropractors
  • Licensed acupuncturists
  • Naturopathic doctors
  • Licensed professional clinical counselors
  • Licensed physical therapists
  • Licensed pharmacists
  • Licensed midwives
  1. Non-Doctor Ownership: Non-doctors who own shares must have a license to practice their job in California.

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Concerns and California Law

Before making a professional medical corporation, there are important things to think about:

  1. Corporate Practice of Medicine: When doctors deal with non-doctors or let them invest in their practice, it’s a problem. This could include contracts or investments with non-doctors. In California, the Medical Board of California says it’s against the law for corporations to practice medicine directly.

California doesn’t let corporations do medical work because it wants to keep medical decisions separate from business decisions. This rule applies to non-doctors, regular corporations, and limited liability companies.

In simple terms, in California, non-doctors can’t own most of a medical corporation and can’t hire doctors as employees or contractors.

Other Options to Avoid California State Legal Issues

Instead of risking complaints about corporate medicine, one solution is for non-doctors to own a management service organization (MSO). This organization is meant to handle the business side of a medical practice, like administration.

  1. Selling Shares: When a shareholder wants to sell their part of the business, there are rules to follow. The sale can’t break the ownership rules, and it can’t lead to corporate medicine issues. Usually, shares can only be sold to another shareholder or someone licensed to do the same job in California.
  2. Unlicensed Professionals: If a healthcare provider loses their license or can’t practice, the medical corporation must buy back their shares. A lawyer can explain when this needs to happen and why it’s important to have clear rules in advance.
  3. Deceased Professionals: When a provider dies, the medical corporation must buy back their shares according to any agreements.
  4. Following Laws: Medical corporations and their doctors must obey federal and state laws about billing and patient privacy. The corporation’s leaders also need to follow the law.
  5. Using a Fictitious Name: Before using a fake name for the practice, the medical corporation should check if it needs approval.

A lawyer who knows about corporate medicine laws in California can explain how an MSO can also help follow Stark Law, avoid the Anti-Kickback Statute, and deal with state laws about sharing fees. They’ll explain how the MSO has to work to follow these laws, like charging fair prices for its services.

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More Things to Think About Corporation in California

Usually, doctors hire a specialized lawyer to help set up their medical corporation. The documents they create must follow California laws and rules from professional boards. The lawyer also rules how the corporation works, deals with problems, and closes if needed.

Talk to a healthcare lawyer who knows about forming a California medical corporation. They’ll explain why and how to do it right. They’ll also go over:

  1. Who Can Own and Control: Doctors need to know the rules about who can own and run the corporation.
  2. Benefits of a Medical Corporation: Lawyers will talk about how a medical corporation can help with things like liability, taxes, retirement, and controlling the business.
  3. Avoiding Legal Problems: They’ll also help doctors prevent issues like corporate medicine charges, splitting fees, transferring ownership, and registering a fake name.

Conclusion – California Corporate Practice in Medicine

Before starting a medical practice, doctors in California and beyond should think about the good and bad aspects of making a professional medical corporation.

Contact MollaeiLaw to learn when to create one and how it can help you and your practice. Know your professional and legal duties, and understand that money matters, too.

Can a Professional Medical Corporation Stop Corporate Practice of Medicine?

If you’re a doctor, having a professional medical corporation can provide a legal structure for your nurses, physician assistants, and other clinical staff.

Since a professional medical corporation can practice medicine, you’re not breaking the law by having a regular business run by non-doctors who practice medicine.

Can a Professional Medical Corporation Stop Corporate Practice of Medicine?

We’re discussing whether forming a professional medical corporation can help you avoid getting in trouble for illegally practicing medicine.

Can a Professional Medical Corporation Stop Corporate Practice of Medicine?

Many healthcare businesses wonder about the corporate practice of medicine and whether having a professional corporation is the best solution to avoid legal issues.

Here’s the thing: a professional corporation works well for healthcare professionals. But suppose you’re starting a medical spa, a telemedicine company, or any other healthcare-related business, and you’re not a doctor.

In that case, the important thing legally is how your business relates to the professional medical corporation.

We often call this arrangement an MSO, a management services organization. The MSO handles all the business stuff like administration, operation, management, and marketing to support the medical side.

For example, it might deal with billing, customer service, payroll, accounting, finance, and advertising.

To lower the risk of legal trouble with the corporate practice of medicine, you need a contract between the professional medical corporation and the MSO.

This document, called an MSO Agreement or sometimes an MSA (Medical Services Agreement), clearly defines what the MSO does regarding business functions, keeping it separate from the medical side.

The agreement spells out:

  • What the professional medical corporation does (providing medical services) and hiring the MSO to manage and market the operation.
  • What does the MSO do (management and marketing services), and how does it get paid?
  • The fees for management and marketing and when they’re paid.

This setup helps reduce the risk of breaking the corporate practice of medicine laws. It shows investigators that you’ve taken steps to separate the medical and business sides of your venture, just like Rudyard Kipling said, “East is East and West is West, and never the same shall meet.”

Can PMCs effectively navigate CPOM regulations?

Yes, Professional Medical Corporations (PMCs) have the potential to effectively navigate Corporate Practice of Medicine (CPOM) regulations by implementing various strategies and ensuring compliance with legal requirements.

PMCs can leverage their structured framework and legal expertise to understand the intricacies of CPOM laws and develop tailored approaches to navigate them.

Firstly, PMCs can prioritize legal compliance by conducting thorough research into CPOM regulations at both federal and state levels. This involves engaging legal counsel with healthcare law expertise to guide PMC operations within the bounds of CPOM restrictions.

Additionally, PMCs can establish robust compliance programs, including regular audits and staff training, to ensure adherence to legal standards.

Furthermore, PMCs can engage in advocacy efforts to reform CPOM laws to accommodate evolving healthcare delivery models better.

By collaborating with industry associations, lobbying policymakers, and participating in legislative initiatives, PMCs can advocate for regulatory reforms that promote innovation while safeguarding patient welfare.

Overall, PMCs possess the resources and capabilities to navigate CPOM regulations effectively.

Through proactive legal compliance, advocacy efforts, and collaboration with regulatory bodies, PMCs can navigate CPOM regulations and continue to provide quality healthcare services within the bounds of legal and ethical standards.

How do PMCs interact with state medical boards and regulatory agencies?

PMCs interact with state medical boards and regulatory agencies through various channels to ensure compliance with legal and ethical standards, uphold professional integrity, and navigate the complexities of healthcare regulations

  1. Compliance and Regulation: PMCs prioritize adherence to state-specific medical regulations and licensing requirements established by state medical boards. They work closely with legal counsel to interpret and implement these regulations effectively. This involves regular monitoring of regulatory updates and changes to ensure ongoing compliance.
  2. Licensing and Credentialing: PMCs facilitate the licensing and credentialing process for healthcare professionals within their organization. This may include assisting with license applications, verifying credentials, and ensuring that all practitioners meet the qualifications required by state medical boards.
  3. Reporting and Accountability: PMCs maintain transparent communication with state medical boards and regulatory agencies by promptly reporting any issues or incidents that may impact patient safety or violate regulatory standards. This includes disclosing disciplinary actions against healthcare professionals and cooperating with investigations as necessary.
  4. Collaborative Initiatives: PMCs engage with state medical boards and regulatory agencies to address emerging healthcare challenges, share best practices, and develop industry standards. This may involve participating in advisory committees, task forces, or regulatory working groups focused on specific healthcare issues.

Last Words

Professional Medical Corporations (PMCs) offer doctors a legal structure to practice medicine without violating Corporate Practice of Medicine (CPOM) laws.

Through Management Services Organizations (MSOs), PMCs separate medical services from business functions, reducing legal risks.

PMCs navigate CPOM regulations effectively by prioritizing compliance, advocacy, and collaboration with regulatory bodies. Their efforts uphold ethical standards and contribute to the integrity of healthcare regulation.

Thus, PMCs play a crucial role in shaping the future of healthcare delivery and regulatory compliance.

Understanding Fictitious Business Names for Professional Medical Corporation – A Comprehensive Guide on Fictitious Name Permit 

Choosing the right name for a medical corporation is crucial. Incorporation Attorney often guides medical professionals in this process.

Recently, a client wanted to use a different name for their medical corporation but wanted to know if it was allowed in California.

Understanding Fictitious Business Names for Professional Medical Corporation - A Comprehensive Guide on Fictitious Name Permit 

Similar to how restaurants might have names distinct from their legal owners, medical corporations can use fictitious business names.

This article explains the legal definition and requirements for obtaining and safeguarding these names, ensuring clarity for medical professionals navigating this aspect of their practice.

What are Fictitious Business Names in California Medical Professional Corporation?

A fictitious business name is just a name a business uses. It’s often called a “DBA,” meaning “doing business as.” So, if legal papers are filed, they describe the business like this: “Axiom Corporation, Inc., a California corporation doing business as Uncle Joe’s Pancakes.”

It’s important to understand that a fictitious business name doesn’t create a new business—it’s just another name for the original business.

 When John Doe or Company X does business as “ABC Corporation,” they’re using a Fictitious Business Name (FBN) or trade name.

Any business name that’s not the person’s full legal name, the legal name of the company, or a name suggesting additional owners (“John Doe and Company”) is considered a Fictitious Business Name. “Doing business as” (also known as DBA) means the same thing as a Fictitious Business Name.

The laws about Fictitious Business Names are in California Business and Professions Code (B&P Code) §§ 17900 – 17930.

To use a fictitious name for business, the person or company (the “Registrant”) must fill out a Fictitious Business Name Statement (FBNS) and file it with the Clerk of the county where their main office is. If the Registrant doesn’t have an office in California, they can file the FBNS with the Clerk of Sacramento County.

When Does a Medical Corporation Need a Fictitious Business Name Permit?

If a licensed medical professional wants to use a name other than what’s on their license, they need a fictitious business name permit. This is also true if a medical professional owns a company under a different name.

Suppose a group of medical professionals forms a partnership and wants to use a name not on their licenses in any public communication, ad, sign, or announcement. In that case, they also need a permit to use a Doing Business As name.

 For example, Dr. John Smith can practice under his name without a permit. However, if Dr. John Smith wants to be known as “Light Giver Medical Group,” he needs a permit.

Another example is if Dr. Joe, Dr. June, and Dr. Jay want to practice together as a “Joe, June, and Jay Physician Partnership.” All the doctors in this group need a permit to use that name. They don’t require permits if they practice under their names only.

What are the Laws and Regulations for the Use of Fictitious Business Names?

The State of California has required medical corporations to have a fictitious business name permit since January 1, 1980. People planning to use fake business names for their medical corporation should check these laws:

  • Business and Professions Code (BPC)
  • Corporations Code (CORP)
  • Insurance Code (INS)
  • Penal Code (PEN)
  • Welfare and Institution Code (WIC)
  • California Code of Regulations

Some essential parts of these laws related to getting and using fictitious name permits are:

  • BPC Sections: 2285 to 2286, 2415 to 2417.5
  • CORP Sections: 13400 to 131410
  • INS Section: 1871.4
  • PEN Sections: 549 to 550
  • WIC Sections: 14107 or 14107.2
  • CCR Section: 1350

How to Apply Fictitious Business Names for Professional Medical Corporations in California

The Licensing Program of the Medical Board of California will only give you a permit for a fake business name if you meet these rules:

  1. You have to be a licensed doctor or podiatrist.
  2. You have to own and control the business according to the Corporations Code.
  3. The fake name you want to use can’t trick or confuse people.
  4. When you get the permit, you must clearly notice that your patients and staff can see it at all your business places.
  5. If your medical business breaks the law or rules, the Licensing Program can take away your permit.
  6. If your medical license is taken away, your fake business name permit also becomes invalid.

Common Reasons for Rejection of Fictitious Name Permits at the State of California

The Medical Board of California gets about 1,225 applications for Fictitious Name Permits (FNPs) every year. It takes a long time to process them because there are so many, and sometimes, people need to follow the instructions on the application.

The Medical Board wants doctors and their lawyers to speed things up so they can fill out the application carefully. Here are some common mistakes people make

  1. They need to fill out the signature part properly. Every part of the signature section must be filled out, requiring a real signature. Make sure to write the full date when signing. They only accept original and complete applications.
  2. The name they want is already taken or too similar to other names. You can check if a name is available by clicking the Fictitious Name Permit Search link. They don’t deserve names.
  3. The name they want needs to follow the rules. It can’t trick or confuse people or be too similar to names used before.
  4. If someone is applying alone (as a sole proprietor), they must include their Social Security Number or Individual Taxpayer Identification Number. They need to include the Federal Employee Identification Number if it’s a partnership.
  5. They need to include the full name and number of their California Corporation.
  6. They must include copies of the Articles of Incorporation showing the company is a California professional corporation. The Medical Board needs to ensure the company is active and a professional medical corporation.
  7. They don’t list all the shareholders; if there are non-doctor shareholders, they don’t say how much of the company they own.
  8. They must include the $70.00 application fee for the Medical Board of California.

Do I need to renew the Fictitious Name Permit?

In California, you must renew your Fictitious Name Permit every two years. It’s against the law to use a fake name with an expired permit under the Medical Practice Act. The permit ends at midnight on the date it expires.

When renewing by mail, you must use the Board’s renewal form and include the right renewal fee and any late fees. It takes about 6-8 weeks to process. Even if you don’t get a renewal notice, you still have to renew the permit before it expires.

You can get forms, details about current renewal fees, and what you need to do by contacting: 

Medical Board of California

2005 Evergreen Street, Suite 1200

Sacramento, CA 95815

(916) 263-2382 or (800) 633-2322

What If I Fail to Renew?

If any doctor or foot doctor practices under a fake name without a valid permit, they could face punishment.

There’s no extra time; if a permit isn’t renewed within 30 days of expiring, the Licensing Program will send a letter to the permit holder. If the renewal form and fees aren’t received by expiration, the permit status is marked as “late.”

If a permit is renewed more than 30 days after it expires, the holder has to pay extra fees.

After a permit is marked as “late” for five years, it’s canceled automatically. Once it’s canceled, it can’t be used again. The holder must apply for a new permit and meet the current requirements.


Are there specific style requirements for fictitious name permits?

Indeed, the name you suggest can’t trick, cheat, confuse, or be too much like a name already used. If you’re a foot doctor, you have to include words like “podiatric,” “podiatry,” “podiatrist,” “foot,” or “ankle” in your name. This rule comes from Title 16, Division 13.9, Section 1399.688(b) of the California Code of Regulations.

Are acronyms, abbreviations, foreign words, or names other than yours allowed? 

Sure. Remember, the same rules about naming still apply, as mentioned earlier. Explain any acronyms or abbreviations you use on page 2, section 3 of the application form.

Can you have more than one location for each FNP?

Yes. If the fictitious name is the same at all places and the owners tell the Medical Board in writing about each address, it’s okay. Only the main address shows up on the Board’s website. You can get more addresses if you ask.

Is there a limit on how many FNPs a physician may be issued?

No, as long as each Fictitious Name Permits (FNP) has a different name. You need to fill out a different application for each fake name. Doctors working together as a company can apply for several permits under the same company.

How can the fictitious name be changed?

You can’t change or fix an FNP. You have to cancel the current permit and apply again for the new name. Fill out the “Application for Cancellation of a Fictitious Name Permit” and the “Fictitious Name Permit Application” forms. Mail both forms together to make sure the name will be available.

How long will it take to get a fictitious name permit?

Once we get your application, it usually takes about four to six weeks. We check applications in the order we receive them, based on the date.

For clear guidance on applying for a fictitious business name, it’s smart to speak with a lawyer who knows about forming medical corporations in California. MollaeiLaw is known for helping medical pros start their own companies in California. Email at


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