When Does Managing a Medical Practice Cross the Line in Florida?

Florida does not have a single law that spells out a “corporate practice of medicine” doctrine the way many other states do, but that does not mean non-physicians can freely own, control, or profit from a medical practice. Our West Palm Beach physician practice litigation attorneys see this misunderstanding trip up management companies, investors, and even well-meaning physicians on a regular basis. The dispute rarely starts with a lawsuit. It starts with an ownership structure, a management agreement, or a compensation formula that looked reasonable on paper.

Who Actually Has to Own the Practice?

Florida law generally requires that a medical practice be owned by licensed physicians. When a practice is not wholly owned by physicians and it bills insurance for services, it typically needs a Health Care Clinic License from the state. Skipping that license is not a minor paperwork issue. Under section 400.9935 of the Florida Statutes, operating an unlicensed clinic can be charged as a felony, with penalties that include thousands of dollars in fines for every day the clinic operates without proper licensure.

Does that mean every management services organization is illegal? Not necessarily. Many MSO arrangements are structured carefully so that the physician entity retains control over clinical decisions while the MSO handles billing, staffing, marketing, and other business functions. Problems arise when the lines blur, when a non-physician manager starts influencing treatment protocols, clinical staffing, or patient care decisions.

Fee Splitting Is Its Own Trap

Even in a properly licensed clinic, Florida restricts how physicians can split fees with non-physicians. Arrangements that tie a management company’s compensation to a percentage of collections, rather than a flat fee for defined services, can raise red flags under the state’s fee splitting rules. Regulators and courts look closely at whether a contract effectively gives a non-physician a financial stake in referrals or treatment volume.

What Typically Triggers Litigation?

Most corporate practice of medicine disputes we handle grow out of one of a few patterns. A physician leaves a practice and challenges the enforceability of a management agreement. A management company sues to enforce payment terms the physician now claims were unlawful from the start. Or a competing interest questions whether a clinic was ever properly licensed in the first place. Once a contract is challenged as violating these rules, an entire compensation structure, and sometimes years of payments, can end up in dispute.

If you are structuring a new practice, buying into an existing one, or negotiating a management agreement, ask yourself who actually controls clinical decisions and how compensation is calculated. Those two questions tend to predict whether an arrangement will hold up.

Talk to Our Firm Before You Sign

Physician practice structures are not something to improvise. At Pike & Lustig, we help physicians, investors, and management companies build arrangements that hold up under scrutiny, and we step in when a dispute over ownership, control, or compensation has already turned into litigation. Reach out to us today to discuss your situation before a contract dispute becomes a courtroom battle.

Source:

flsenate.gov/Laws/Statutes/2023/400.9935