As we have written about before, the corporate practice of medicine doctrine (“CPOM”) is a creature of state law (click here to review a prior post on CPOM). While some states do not have a CPOM doctrine (like Florida), other states have very strict CPOM doctrines (like New York and California). At its core, CPOM prevents lay individuals and lay entities from directly venturing with healthcare providers, and it likewise prevents a lay entity from employing healthcare providers. The reason is clear – no one wants their healthcare providers answering to lay individuals who are not versed in clinical care. So, in those instances where CPOM prevents these activities, lay individuals and lay entities form Management Services Companies to assist providers with non-clinical activities (e.g., billing, employing non-clinicians, providing clinic space and supplies, etc.).
The Origins of CPOM in Arizona
In Arizona, the CPOM doctrine is based on old case law. In Funk Jewelry Co. v. State ex rel. La Prade, 46 Ariz. 348, 50 P.2d 945 (1935), the Arizona Supreme Court reasoned that the inability of a corporation to obtain a license to operate a store that employed an optometrist made such a practice illegal. 46 Ariz. at 351,