Healthcare

Introduction EmCare, a publicly traded company on the New York Stock Exchange, was the nation’s largest physician management company, hiring almost 16,000 clinicians to staff over 4,600 hospitals and healthcare facilities, including Overland Park Regional Medical Center.[footnote]Brovont v. KS-I Med. Servs., P.A., 622 S.W.3d 671, 678–79 (Mo. Ct. App. 2020).[/footnote] When physicians at Overland Park grew concerned with dangerously low staffing levels in the emergency room, they organized under their director, Dr. Raymond Brovont, to communicate their concerns to management.[footnote]See id. at 680 (describing how increased demands on physicians led to periods when the emergency room was unstaffed by a physician, leading the physicians to approach Dr. Brovont with their concerns).[/footnote] Dr. Brovont held a meeting articulating the doctors’ concerns with the staffing policy, which required a single doctor to work in the emergency room while on call for emergencies in other units of the 343-bed hospital.[footnote]See id. at 680–81 (“[Dr. Brovont] specifically brought up the physicians’ concerns about being responsible for responding to Code Blue patients throughout the hospital, requiring them to be in potentially three places at once . . . .”).[/footnote] An EmCare executive responded by circulating an email with links to EmCare’s stock and financial information, stating: “[S]taffing decisions are financially motivated. . . . Profits are in everyone’s best interest.”[footnote]Id. at 681 (internal quotation marks omitted) (quoting email from Dr. Patrick McHugh, Exec. Vice President, EmCare, to EmCare Emergency Department Physicians).[/footnote] Dr. Brovont was subsequently fired and reprimanded by the EmCare executive, who told him: “[Y]ou cash the check every month to be a corporate representative, and there is a responsibility as the corporate representative to support the corporation’s objectives.”[footnote]Id. at 682 (internal quotation marks omitted) (quoting Dr. McHugh).[/footnote]

The EmCare episode highlights the danger of corporate influence in healthcare: Decisionmaking prioritizes profit over the concerns and expertise of licensed professionals.

In theory, however, a corporation like EmCare should have been prohibited from staffing physicians in the first place. In Kansas, where Overland Park is located, “[a] general corporation is prohibited from providing medical services or acting through licensed practitioners.”[footnote]Early Detection Ctr., Inc. v. Wilson, 811 P.2d 860, 868 (Kan. 1991).[/footnote] To provide medical services in Kansas, a corporation must be specially registered, and only licensed physicians and other qualified persons can hold equity interests in it.[footnote]See Kan. Stat. Ann. § 17-2712(a) (West 2025) (“No shares may be . . . issued by the professional corporation until there is . . . a certificate by the regulating board stating that the person . . . is duly licensed to render the same type of professional services as that for which the corporation was organized.”).[/footnote] These rules combine to prevent for-profit, publicly traded corporations like EmCare from controlling healthcare services.

Every state has its own regulations and court decisions prohibiting corporations from practicing medicine or employing physicians, which collectively form the corporate practice of medicine doctrine (CPOM).[footnote]See AMA, Issue Brief: Corporate Practice of Medicine 1 (2015), https://www.ama-assn.org/media/7661/download (on file with the Columbia Law Review ) (“The corporate practice of medicine doctrine prohibits corporations from practicing medicine or employing a physician to provide professional medical services.”).[/footnote] The public policy underlying CPOM is rooted in the dual fears that, first, “a corporation’s obligation to its shareholders may not align with a physician’s obligation to [their] patients,” and, second, that corporate management may interfere with a physician’s medical judgment.[footnote]Id.[/footnote]

Over the last three decades, corporate investors have found ways to bypass CPOM by forming corporate structures through which they can control healthcare groups indirectly.[footnote]See infra notes 63–76 and accompanying text (describing how corporate managers circumvent CPOM).[/footnote] For example, EmCare created separate subsidiary corporations in each state in which it employed physicians and then made physicians the owners of those subsidiaries.[footnote]Brovont v. KS-I Med. Servs., P.A., 622 S.W.3d 671, 678 (Mo. Ct. App. 2020).[/footnote] Under this structure, the subsidiaries could facially comply with CPOM while the parent company retained control.

This model of corporate ownership has grown increasingly popular, opening the floodgates to corporatization in healthcare, especially through large, publicly traded companies and private equity firms. For instance, in July 2022, Amazon announced a deal to purchase One Medical, a primary care organization.[footnote]Press Release, Amazon, Amazon and One Medical Sign an Agreement for Amazon to Acquire One Medical (July 21, 2022), https://press.aboutamazon.com/2022/7/amazon-and-one-medical-sign-an-agreement-for-amazon-to-acquire-one-medical [https://perma.cc/5NGB-UDE6].[/footnote] A year later, CVS closed on its acquisitions of Oak Street and Signify Health, a primary care provider and a home healthcare company.[footnote]See Press Release, CVS Health, CVS Health Completes Acquisition of Oak Street Health (May 2, 2023), https://www.cvshealth.com/news/company-news/cvs-health-completes-acquisition-of-oak-street-health.html [https://perma.cc/3DXP-X4AZ] (announcing CVS’s 2023 acquisition of Oak Street Health); Press Release, Signify Health, CVS Health Completes Acquisition of Signify Health (Mar. 29, 2023), https://www.signifyhealth.com/news/cvs-health-completes-acquisition-of-signify-health [https:// perma.cc/ 5L5E-AXGV] (announcing CVS’s 2023 acquisition of Signify Health).[/footnote] Today, four of the Fortune 10 companies have acquired physician groups.[footnote]The other two companies are UnitedHealth Group and Walmart. UnitedHealth Group has been acquiring physician groups for years. See, e.g., Bob Herman, UnitedHealth’s Physician Buying Spree Continues With Takeover of Crystal Run, STAT (Apr. 10, 2023), https://www.statnews.com/2023/04/10/unitedhealth-crystal-run-physician-acquisition/ (on file with the Columbia Law Review ) (discussing UnitedHealth Group’s 2023 acquisition of Crystal Run Healthcare). Walmart has opened nearly two dozen health centers across Florida. See Press Release, Walmart, Walmart Health Grows in Florida With 16 New Health Centers Opening in 2023 (Oct. 26, 2022), https://corporate.walmart.com/news/2022/10/26/walmart-health-grows-in-florida-with-16-new-health-centers-opening-in-2023 [https://perma.cc/3XTE-3ABV] (announcing plans to bring Walmart Health’s presence in Florida up to twenty-two locations).[/footnote] One report showed that in 2021, a single private equity firm owned more than 30% of specialty medical practices in over a quarter of local markets.[footnote]Richard M. Scheffler, Laura Alexander, Brent D. Fulton, Daniel R. Arnold & Ola A. Abdelhadi, Am. Antitrust Inst., Petris Ctr. & Wash. Ctr. for Equitable Growth, Monetizing Medicine: Private Equity and Competition in Physician Practice Markets 20 (2023), https://www.antitrustinstitute.org/wp-content/uploads/2023/07/AAI-UCB-EG_Private-Equity-I-Physician-Practice-Report_FINAL.pdf [https://perma.cc/BJL3-X6UN].[/footnote] This trend is especially concerning as more studies indicate that corporate ownership of healthcare groups correlates with problems such as understaffing and poor patient outcomes.[footnote]See, e.g., Physicians Advoc. Inst., The Impact of Practice Acquisitions and Employment on Physician Experience and Care Delivery 5 (2023), https://www.physiciansadvocacy institute.org/Portals/0/assets/docs/PAI-Research/NORC-Employed-Physician-Survey-Re-port-Final.pdf [https://perma.cc/2BK3-Q5P4] (finding that physicians reported that ownership changes led to reduced autonomy and strained patient relationships); Alexander Borsa, Geronimo Bejarano, Moriah Ellen & Joseph Dov Bruch, Evaluating Trends in Private Equity Ownership and Impacts on Health Outcomes, Costs, and Quality: Systematic Review, BMJ, July 19, 2023, at 1, 7–10 (finding that private equity ownership of healthcare facilities is often associated with increased costs, mixed-to-harmful impacts on quality, and reduced nurse staffing levels); Sneha Kannan, Joseph Dov Bruch & Zirui Song, Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition, 330 JAMA 2365, 2366 (2023) (finding that, on average, private equity acquisition of hospitals led to increased hospital-acquired adverse events).[/footnote]

One study found that rates of hospital-acquired complications, like infections and falls, increased by an average of 25% at hospitals that were purchased by private equity firms.[footnote]See Kannan et al., supra note 16, at 2368 (finding that private equity hospitals experienced an additional 4.6 hospital-acquired conditions per ten thousand hospitalizations, equaling a 25.4% increase from the private equity hospitals’ mean preacquisition levels).[/footnote] In a survey of a thousand physicians across the country, more than half stated that changes to corporate ownership resulted in reduced quality of patient care, due to “an erosion in clinical autonomy and a greater focus on financial incentives.”[footnote]Physicians Advoc. Inst., supra note 16, at 2.[/footnote]

CPOM was designed to prevent these problems and protect patients by giving their physicians, rather than profit-motivated laymen, agency to make appropriate clinical decisions.[footnote]See Allegra Kim, Cal. Rsch. Bureau, CRB 07-011, The Corporate Practice of Medicine Doctrine 4 (2007), https://www.compcom.co.za/wp-content/uploads/2015/05/Mediclinic-Annexure-20-CRB-Paper-dated-October-2007.pdf [https://perma.cc/5FEP-Y3ER] (“The policy rational for the CPM Doctrine can be summarized as follows: A profit motive will lead to commercial exploitation of physicians and lower professional standards.”).[/footnote] But in the 1970s, CPOM became increasingly underenforced as corporate entities began to take control of the healthcare sector.[footnote]See infra notes 50–52 and accompanying text (discussing the effects of the 1973 Health Maintenance Organization Act).[/footnote] Today, corporate actors dominate the healthcare market, and many states choose not to enforce CPOM without expressly rejecting it.[footnote]See Michele Gustavson & Nick Taylor, At Death’s Door—Idaho’s Corporate Practice of Medicine Doctrine, 47 Idaho L. Rev. 479, 481 (2011) (“Many states, although not always expressly rejecting the corporate practice of medicine doctrine, have adopted, or otherwise chosen not to enforce the doctrine . . . .”).[/footnote]

Fortunately, CPOM laws still exist, despite the preponderance of corporate arrangements that blatantly violate their spirit. Penalties for CPOM violations vary by state but generally involve fines, revocation of licenses, and even criminal penalties.[footnote]Michael F. Schaff & Glenn P. Prives, The Corporate Practice of Medicine Doctrine: Still Alive and Kicking, Bloomberg L. (Oct. 6. 2011), https://www. bloomberglaw.com/ bloomberglawnews/health-law-and-business/XFOQUIKS000000?bna_news_filter=health-law-and-business#jcite (on file with the Columbia Law Review ).[/footnote] There is an area of active litigation challenging the legality of corporate control of healthcare groups;[footnote]See infra section II.C.[/footnote] however, in some states, private citizens lack a cause of action to enforce CPOM.[footnote]See, e.g., Treiber v. Aspen Dental Mgmt., Inc., 94 F. Supp. 3d 352, 363 (N.D.N.Y. 2015) (“[I]t is undisputed that New York’s licensing and business laws which prevent corporations from practicing dentistry do not confer a private right of action.”).[/footnote] Furthermore, it is not typical for courts to award monetary damages to plaintiffs in CPOM cases.[footnote]See Christopher Anderson & Loreli Wright, BLOG: Corporate Practice of Medicine Prohibitions, Healio (July 11, 2023), https://www.healio.com/news/ophthalmology/ 20230711/blog-corporate-practice-of-medicine-prohibitions [https://perma.cc/7WYH-APMW] (noting that rescission of the contract is a more common remedy).[/footnote] These limitations exacerbate the underenforcement of CPOM.

This Note proposes that false claim liability should attach to corporations that bill government health plans while violating CPOM. The Centers for Medicare and Medicaid Services (CMS) coordinates government health plans, and its conditions for participation include compliance with “all applicable Federal, State, and local laws and regulations related to the health and safety of patients,”[footnote]42 C.F.R. § 418.116 (2025).[/footnote] which presumably include CPOM laws. Therefore, to participate in CMS programs, a healthcare practice must comply with CPOM regulations.

Under the “implied false certification” doctrine, submitting a reimbursement claim to a government program without complying with the underlying preconditions to payment constitutes a false claim.[footnote]See Universal Health Servs., Inc. v. United States, 579 U.S. 176, 180 (2016) (internal quotation marks omitted) (“This case concerns a theory of False Claims Act liability commonly referred to as ‘implied false certification.’ According to this theory, when a defendant submits a claim, it impliedly certifies compliance with all conditions of payment.”).[/footnote] Under this theory, a corporation that bills a government health plan while violating CPOM would be submitting false claims and therefore subject to hefty fines. Because most healthcare groups rely on government reimbursement,[footnote]Ctrs. for Medicare & Medicaid Servs., CMS Roadmaps Overview 1, https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ QualityInitiativesGenInfo/Downloads/RoadmapOverview_OEA_1-16.pdf [https://perma. cc/7BVD-A3RQ] (“Nearly 90 million Americans rely on health care benefits through Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP).”).[/footnote] this approach would implicate virtually any healthcare group in violation of CPOM.

Furthermore, through its qui tam/whistleblower provisions, the False Claims Act enables private citizens with evidence of fraud to file suit on behalf of the government.[footnote]31 U.S.C. § 3730(b)(1) (2018).[/footnote] These provisions provide private citizens a cause of action to enforce CPOM in states where they would otherwise lack standing to sue.

States also have their own false claims and insurance fraud acts that CPOM plaintiffs can invoke.[footnote]See State and Local False Claims Acts, Constantine Cannon, https://constantinecannon.com/practice/whistleblower/whistleblower-types/whistleblower-reward-laws/state-local-false-claims-acts/ [https://perma.cc/EDD9-U25T] (last visited Jan. 25, 2025) (listing thirty states whose False Claims Acts contain qui tam provisions, though seven states limit qui tam suits to health care fraud cases).[/footnote] Based on their legislative and judicial constructions, these laws may be more permissive to certain CPOM complaints than the Federal False Claims Act.[footnote]See infra section IV.E.[/footnote]

Attaching false claim liability to CPOM violations would incentivize plaintiffs to enforce CPOM through litigation and encourage whistleblowers to expose corporate arrangements that give laymen undue influence over physicians.

Healthcare

ENFORCING THE CORPORATE PRACTICE OF MEDICINE DOCTRINE THROUGH FALSE CLAIM LIABILITY

COUNTERING A PHOBIC FRAME: UNDERSTANDING AND ADDRESSING GENDER-AFFIRMING CARE BANS