Tag Archives: Management Services Organizations

Recent California Court Decision Provides Useful Guidance for Management Services Organizations (MSOs)

The California Court of Appeals, Second Appellate District (the “Court”) in Epic Medical Management, LLC v. Paquette rendered an decision that was published earlier this year that is helpful to those who engage in provision of management services to physicians or medical groups (possibly other professionals as well) including, without limitation, hospitals, health systems or private equity backed organizations.  In this case, although not directly ruling on the legality of the arrangement, the Court states that if it had so ruled, it would have determined that a comprehensive management services agreement for management of a physician’s practice, which used a percentage-based compensation structure, does not violate California’s anti-kickback statute under Section 650 of the California Business & Professions Code or related fee-splitting or corporate practice of medicine prohibitions.  This decision is most directly relevant to practice, operations and investments in California, but it may also be of use as a point of reference, for context or for its potential persuasive value in other jurisdictions, particularly where corporate practice of medicine prohibitions still remain on the stronger side of the spectrum. 

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