PA Requires Medspas to Comply with Corporate Practice Doctrine

Medical Spas (“Medspas”) offer luxurious treatments like massages, salt bursts and seaweed wraps. They also offer clinical procedures such as Botox, laser hair removal, and dermabrasions. In and around Pittsburgh, these services are in high demand, and healthcare professionals and entrepreneurs are eager to break into the industry. But before doing so, or if they have already done so, they should be aware of the Pennsylvania Corporate Medicine Practice Doctrine (the “CPOM”).

The CPOM stems from a 1938 Pennsylvania Supreme Court case in which the Court determined that a department store could not employ optometrists at a store-owned optometry practice. The Court’s decision focused on the principle that “a licensed practitioner of a profession cannot lawfully practice his profession to the public as an attendant of an unauthorized person or corporation”. Following the jurisprudence of other state courts, the Court held that a corporation “cannot possess the personal qualifications required of practitioners of a profession” because licensed professionals “should owe their primary allegiance and obedience to their employer rather than the clients or patients of their employer.”

The light at Gimbel Bros., Pennsylvania’s layered legislative and regulatory regime produces the CPOM which generally requires that all medical services be performed exclusively by (i) licensed healthcare professionals or (ii) business entities wholly owned by healthcare professionals approved. This is not just about ensuring safety, but also about ensuring that healthcare professionals maintain high professional standards and retain autonomy over decisions related to the provision of medical services. Medspas who fail to comply with the CPOM face criminal and civil liability or execution by state licensing boards.

1 Neill et al. against Gimbel Bros.199 A. 178 (Pa. 1938)

2 Identifier. at 219, citing McMurdo vs. Getter10 NE2d 139, 140 (mass 1937).

3 Identifier.

4 63 PS § 422.10; 63 PS § 271.3.

5 15 Pa.CSA § 8105; 15 Pa.CSA § 8996(b); 15 Pa.CSA § 2923(a) (all providing that “all ultimate beneficiaries of interests in” a limited liability company or a company that provides medical services must be persons licensed in the profession practiced by the entity).

©2022 Strassburger McKenna Gutnick & GefskyNational Law Review, Volume XII, Number 91

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