Oregon Passes Strictest Corporate Practice of Medicine Law in the Nation

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Concerned with business entities attempting to circumvent the ban on the corporate practice of medicine (CPOM) “through complex ownership structures,” and its impact on patient care and physician autonomy, Oregon Governor Tina Kotek signed SB 951 into law on June 9, 2025. SB 951—the nation’s strictest CPOM law—strengthens and expands Oregon’s existing legislation by imposing additional restrictions on management services organizations (MSOs) that provide back-office administrative support and services to medical practices.

What is the Corporate Practice of Medicine (“CPOM”)?

Generally, CPOM is a legal doctrine that seeks to preserve the independent medical judgment of licensed physicians by ensuring that clinical expertise—and not profit-driven motives—forms the basis for medical decisions. Although CPOM laws vary by state, most, if not all share the following common principles to prevent corporate interference and the monetization of health care by prohibiting non-physicians and/or corporations from:

• Providing medical care/services.
• Owning or controlling a medical practice.
• Interfering with clinical decisions, including, but not limited to influencing medical diagnoses, treatment decisions, or how patient care is delivered.
• Employing physicians directly.
• Sharing medical fees.

What Does Oregon’s Existing CPOM Law Require?

Oregon’s existing CPOM law was enacted in 1947 and requires that a licensed medical provider own at least 51% of a medical clinic.

How Does SB 951 Revise Oregon’s Existing CPOM Law?

SB 951 places further limitations on the level of involvement MSOs may have in a medical practice. The chart below summarizes these restrictions and any exceptions to those restrictions:

Are There Any Exceptions?

Yes. In addition to those identified above, SB 951 contemplates several broad exceptions with regard to certain entities and/or organizations and ownership and control restrictions:

• Certain Entities/Organizations that are exempted include, but are not limited to hospitals, long-term care facilities, residential care facilities, licensed medical providers who primarily provide office-based or medication assisted treatment services, medical groups that themselves act as an MSO or own a majority interest in an MSO, or licensed opioid treatment programs, or MSOs that contract to provide management services to a PACE organization as defined in 42 C.F.R. 460.6.

• Ownership and Control Restrictions also do not apply in the following circumstances:
  • A licensed individual who: (1) provides healthcare services for or on behalf of a professional medical entity, (2) does not own more than 10 percent of the professional medical entity, (3) is not an owner, officer, or employee of the MSO, and (4) is compensated at fair market value.
  • A licensed individual who owns shares or an interest in both a professional medical entity and an MSO if the licensed individual’s ownership of shares or an interest in the MSO is incidental and without relation to the licensed individual’s compensation as a shareholder, director, member, manager, officer or employee of, or contractor with, the MSO.
  • A professional medical entity and the shareholders, directors, members, managers, officers, or employees of the professional medical entity if the professional medical entity functions as an MSO or owns a majority of the shares of or interest in the MSO.
  • A licensed physician who is a shareholder, director, or officer of a professional medical entity and who also serves as a director or officer of an MSO if:
    • The licensed physician does not receive compensation for serving as a director or officer of the MSO;
    • An action of the MSO that materially affects the professional, ownership or governance interests of minority owners in the MSO requires a vote of more than a majority of the shares of the MSO that are entitled to vote, including the shares held by the professional medical entity with voting rights in the MSO; and
    • the MSO and all of the professional medical entities that have voting rights in the MSO were incorporated or organized and entered into agreements for the provision of management services before January 1, 2026

Liability and Exposure for Violating Oregon’s New CPOM:

MSOs that violate SB 951 are at risk of being a party to a civil suit. Indeed, SB 951 allows physicians and professional medical entities to file a civil action against an MSO that violates the restrictions set forth in the new law. Remedies available include an injunction, actual and punitive damages, attorneys’ fees and other equitable relief that the court deems appropriate.  

Implementation Timeline:

Because SB 951 was passed under an emergency declaration, certain provisions under the law went into effect immediately, while the remaining provisions take effect in two stages for new and existing entities. Specifically, the limitations on the restrictive covenants went into effect on June 9, 2025, while the provisions restricting MSO ownership and control goes into effect on January 1, 2026 for newly formed entities, and January 1, 2029 for existing entities.

What Corporations and Medical Practices Should Consider:

• Determine whether SB 951 applies to the company or medical practices’ operations.
• If so, review current ownership and management structures to determine whether any arrangements violate SB 951.
• Review organizational documents to remove any MSO authority to pay dividends, issue stock, or exercise proxy control.
• Review MSO authority and involvement in clinical operations and administrative and business tasks to ensure that the MSO is not exercising de facto control in a manner that affects clinical decision making or the nature or quality of medical care delivered.
• Review physician agreements to ensure non-compete, non-solicitation, and non-disparagement provisions comply with the parameters set forth in the new law. If renegotiation of those provisions is not feasible, then maintaining a list of agreements that may be considered void for future reference when making potential decisions regarding separations and/or settlements.
• Review the MSO Agreement to allow MSOs to perform nonclinical tasks that SB 951 does not prohibit.