Onsite corporate wellness programs raise corporate practice of medicine issues

Onsite corporate wellness programs raise corporate practice of medicine issues, requiring separation between the medical, clinical side and the management and marketing operations, in strong corporate practice of medicine states.

Marketing corporate wellness programs

Sidney’s Sensational Slimming Program, Inc. came to our law firm with a plan to partner with Dr. Hu to create onsite corporate wellness programs focused on weight loss.

Sensational Slimming:

  • listed Dr. Hu as “medical director” on its website and marketing materials
  • recruited, interviewed, and supplied to Dr. Hu various clinical staff, such as an RN and PA
  • contracted with a half-dozen corporations to deliver an onsite corporate wellness slimming program
  • paid Dr. Hu as an employee
  • sold add-on, online weight loss coaching services as part of the corporate wellness package

A Doctor’s Wife

Some states, like California, have a “strong” corporate practice of medicine prohibition, which means that they look askance not only at general corporations employing physicians, but also at any venture between physicians and non-physicians where the non-physicians have a significant stake in joint decision-making.

The California medical board has raised enforcement concerns prominently, especially in the medical spa arena.  But the concerns are generalized across healthcare ventures involving MDs.

For instance, in The Accusation Against Joseph F. Basile, M.D., the California Medical Board found that the licensed physician had aided and abetted unlicensed medicalmedical practice, when he permitted his wife (a non-licensee) to provide laser services to patients in a vein and cosmetic enhancement center that she owned, where the physician acted as “Medical Director.”

Among other things,California Medical Board rejected the contention that the physician’s wife was acting as a “medical assistant,” since the physician was not always physically presented when his wife administered intense pulse light (IPL) and laser treatments to patients; further, although it was the physician who “obtained patient histories, performed physical examinations, determined whether patients were appropriate candidates for treatment and who determined appropriate machine settings,” the wife solely owned “The Vein & Cosmetic Enhancement Center.”

California Medical Board noted:

It was her business. Importantly, the treatment was not ancillary to respondent’s [i.e., the physician’s] workup or diagnosis of a patient’s condition. Instead, it was the primary treatment mode sought by patients seeking removal of unsightly varicose veins or other cosmetic blemishes….. When … [the wife] provided IPL/laser treatment to patients, particularly when respondent was absent from the facility, she was not performing adjunctive services for respond. She was engaged in the unlicensed practice of medicine.

California Medical Board went on to differentiate the wife’s legally impermissible activities, from those “technical supportive services” legally permissible to medical assistants.

Legal strategies of interest

When analyzing Slimmer’s business model, corporate practice of medicine issues–and their evil twin, kickbacks and fee-splitting–come to the fore.

Here are some legal strategy considerations:

  • The legally safer arrangement is a MSO model, in which a management agreement between Slimmer and Dr. Hu defines the management and administrative role of Slimmer, as compared with the medical, clinical role of Dr. Hu.
  • As well, it would be more compliant to characterize Dr. Hu’s role as medical director within his own professional medical corporation (D.R. Hu, MD, Inc., a Professional Medical Corporation); and to characterize any role by Dr. Hu in Slimmer, the MSO, as non-clinical and administrative.
  • The MSO could act as a staffing company by separate contractual arrangement with Dr. Hu.  However, the NP and PA would have to appropriately supervised by Dr. Hu according to state law.
  • In states such as California, it would be prudent for Dr. Hu to select the equipment and supplies, and to have control and final say over all physician advertising.  Dr. Hu should also select the mix of diagnostic tests to be offered, and the MSO should not tell Dr.Hu how many patients to see in a given period.
  • Having the MSO sign agreements that commit Dr. Hu to provide clinical services, could be seen as a corporate practice of medicine violation.  The MSO could negotiate arrangements but the signatory for commitment of clinical services should be the physician.
  • Regarding onsite screenings, there are some additional legal issues to consider, relating to legal rules governing clinical laboratories, CLIA waivers, who can hire a phlebotomist, and so on.
  • The health coaching could potentially be a service provided by the MSO, but the activities would have to be strictly defined so as to fall within the legal box of “education and information” as opposed to “medical, clinical.”


Our law firm has seen many different varieties of MD-non-physician collaboration in launching a healthcare venture.

Corporate practice of medicine and fee-splitting rules may seem antiquated, but they do command respect — even if, in our view, these legal rules are constantly being challenged, and even eroded, by marketplace practice.

Book your Legal Strategy Session now
Michael H Cohen Healthcare & FDA Lawyers

Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.

Start typing and press Enter to search