Code Section Group

Business and Professions Code - BPC

DIVISION 2. HEALING ARTS [500 - 4999.129]

  ( Division 2 enacted by Stats. 1937, Ch. 399. )

CHAPTER 5. Medicine [2000 - 2525.5]

  ( Chapter 5 repealed and added by Stats. 1980, Ch. 1313, Sec. 2. )

ARTICLE 18. Corporations [2400 - 2417.5]
  ( Article 18 added by Stats. 1980, Ch. 1313, Sec. 2. )

2400.
  

Corporations and other artificial legal entities shall have no professional rights, privileges, or powers. However, the Division of Licensing may in its discretion, after such investigation and review of such documentary evidence as it may require, and under regulations adopted by it, grant approval of the employment of licensees on a salary basis by licensed charitable institutions, foundations, or clinics, if no charge for professional services rendered patients is made by any such institution, foundation, or clinic.

(Added by Stats. 1980, Ch. 1313, Sec. 2.)

2401.
  

(a) Notwithstanding Section 2400, a clinic operated primarily for the purpose of medical education by a public or private nonprofit university medical school, which is approved by the board or the Osteopathic Medical Board of California, may charge for professional services rendered to teaching patients by licensees who hold academic appointments on the faculty of the university, if the charges are approved by the physician and surgeon in whose name the charges are made.

(b) Notwithstanding Section 2400, a clinic operated under subdivision (p) of Section 1206 of the Health and Safety Code may employ licensees and charge for professional services rendered by those licensees. However, the clinic shall not interfere with, control, or otherwise direct the professional judgment of a physician and surgeon in a manner prohibited by Section 2400 or any other law.

(c) Notwithstanding Section 2400, a narcotic treatment program operated under Section 11876 of the Health and Safety Code and regulated by the State Department of Health Care Services, may employ licensees and charge for professional services rendered by those licensees. However, the narcotic treatment program shall not interfere with, control, or otherwise direct the professional judgment of a physician and surgeon in a manner prohibited by Section 2400 or any other law.

(d) Notwithstanding Section 2400, a hospital that is owned and operated by a licensed charitable organization, that offers only pediatric subspecialty care, that, prior to January 1, 2013, employed licensees on a salary basis, and that has not charged for professional services rendered to patients may, commencing January 1, 2013, charge for professional services rendered to patients, provided the following conditions are met:

(1) The hospital does not increase the number of salaried licensees by more than five licensees each year.

(2) The hospital does not expand its scope of services beyond pediatric subspecialty care.

(3) The hospital accepts each patient needing its scope of services regardless of his or her ability to pay, including whether the patient has any form of health care coverage.

(4) The medical staff concur by an affirmative vote that the licensee’s employment is in the best interest of the communities served by the hospital.

(5) The hospital does not interfere with, control, or otherwise direct a physician and surgeon’s professional judgment in a manner prohibited by Section 2400 or any other law.

(e) (1) Notwithstanding Section 2400, until January 1, 2024, a federally certified critical access hospital may employ licensees and charge for professional services rendered by those licensees to patients, provided both of the following conditions are met:

(A) The medical staff concur by an affirmative vote that the licensee’s employment is in the best interest of the communities served by the hospital.

(B) The hospital does not interfere with, control, or otherwise direct a physician and surgeon’s professional judgment in a manner prohibited by Section 2400 or any other law.

(2) (A) On or before July 1, 2023, the Office of Statewide Health Planning and Development shall provide a report to the Legislature containing data about the impact of paragraph (1) on federally certified critical access hospitals and their ability to recruit and retain physicians and surgeons between January 1, 2017, and January 1, 2023, inclusive. This report shall be submitted in compliance with Section 9795 of the Government Code. The requirement for submitting a report imposed under this subparagraph is inoperative on July 1, 2027.

(B) The office shall determine the format of the report, as well as the methods and data elements to be utilized in the development of the report.

(C) On and after July 1, 2017, a federally certified critical access hospital that is employing licensees and charging for professional services rendered by those licensees to patients under this section shall submit to the office, on or before July 1 of each year, a report for any year in which that hospital has employed or is employing licensees and charging for professional services rendered by those licensees to patients. The report shall include data elements as required by the office and shall be submitted in a format as required by the office. The requirement for submitting reports imposed under this subparagraph shall be inoperative on July 1, 2023.

(Amended by Stats. 2016, Ch. 496, Sec. 1. (AB 2024) Effective January 1, 2017.)

2402.
  

The provisions of Section 2400 do not apply to a medical or podiatry corporation practicing pursuant to the Moscone-Knox Professional Corporation Act (Part 4 (commencing with Section 13400) of Division 3 of Title 1 of the Corporations Code) and this article, when such corporation is in compliance with the requirements of these statutes and all other statutes and regulations now or hereafter enacted or adopted pertaining to such corporations and the conduct of their affairs.

(Added by Stats. 1980, Ch. 1313, Sec. 2.)

2403.
  

The provisions of Section 2400 do not apply to physicians and surgeons or doctors of podiatric medicine enrolled in approved residency postgraduate training programs or fellowship programs.

(Added by Stats. 2013, Ch. 515, Sec. 16. (SB 304) Effective January 1, 2014.)

2406.
  

A medical corporation or podiatry corporation is a corporation that is authorized to render professional services, as defined in Section 13401 of the Corporations Code, so long as that corporation and its shareholders, officers, directors, and employees rendering professional services who are physicians and surgeons, psychologists, registered nurses, optometrists, podiatrists, chiropractors, acupuncturists, naturopathic doctors, physical therapists, occupational therapists, or, in the case of a medical corporation only, physician assistants, marriage and family therapists, clinical counselors, or clinical social workers, are in compliance with the Moscone-Knox Professional Corporation Act, the provisions of this article, and all other statutes and regulations now or hereafter enacted or adopted pertaining to the corporation and the conduct of its affairs.

With respect to a medical corporation or podiatry corporation, the governmental agency referred to in the Moscone-Knox Professional Corporation Act is the board.

(Amended by Stats. 2013, Ch. 620, Sec. 2. (AB 1000) Effective January 1, 2014.)

2406.5.
  

(a) When a physician and surgeon, podiatrist, or other referring practitioner refers a patient to receive services by a physical therapist employed by a professional corporation as defined in Section 13401 of the Corporations Code, the referring practitioner shall comply with Article 6 (commencing with Section 650) of Chapter 1, and shall provide notice of the following to the patient, orally and in writing, in at least 14-point type and signed by the patient:

(1) That the patient may seek physical therapy treatment services from a physical therapy provider of his or her choice who may not necessarily be employed by the medical or podiatry corporation.

(2) If the patient chooses to be treated by an employed physical therapist, any financial interest the referring practitioner has in the corporation.

(b) This section shall not apply to a physician and surgeon, podiatrist, or other referring practitioner who is in a medical group with which a health care service plan, that is licensed pursuant to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code) and is also exempt from federal taxation pursuant to Section 501(c)(3) of the Internal Revenue Code, exclusively contracts to provide professional medical services for its enrollees.

(Added by Stats. 2013, Ch. 620, Sec. 3. (AB 1000) Effective January 1, 2014.)

2407.
  

A medical or podiatry corporation shall be subject to the provisions of Sections 2285 and 2415.

(Added by Stats. 1980, Ch. 1314, Sec. 4.2.)

2408.
  

Except as provided in Sections 13401.5 and 13403 of the Corporations Code, each shareholder, director and officer of a medical or podiatry corporation, except an assistant secretary or an assistant treasurer, shall be a licensed person as defined in Section 13401 of the Corporations Code.

Notwithstanding the provisions of this section or Sections 13401.5, 13403, 13406, and 13407 of the Corporations Code, a shareholder of a medical corporation which renders professional services may be a medical corporation which has only one shareholder who shall be a licensed person as defined in Section 13401 of the Corporations Code. The shareholder of the latter corporation may be an officer or director of the former corporation.

Nothing in this section shall be construed as prohibiting a nonlicensed person from using the business titles of executive vice president, chief executive officer, executive secretary, or any other title denoting an administrative function within the professional corporation.

(Amended by Stats. 1985, Ch. 505, Sec. 1.)

2409.
  

The income of a medical and podiatry corporation attributable to professional services rendered while a shareholder is a disqualified person, as defined in Section 13401 of the Corporations Code, shall not in any manner accrue to the benefit of such shareholder or his or her shares in such a professional corporation.

(Added by Stats. 1980, Ch. 1314, Sec. 4.4.)

2410.
  

A medical or podiatry corporation shall not do or fail to do any act the doing of which or the failure to do which would constitute unprofessional conduct under any statute or regulation now or hereafter in effect. In the conduct of its practice, it shall observe and be bound by such statutes and regulations to the same extent as a licensee under this chapter.

(Added by Stats. 1980, Ch. 1314, Sec. 4.5.)

2411.
  

Notwithstanding any other provision of law, the offering and operation by a medical corporation of a health care service plan licensed pursuant to the provisions of Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code is hereby authorized. For such purpose a medical corporation may employ, or enter into contracts or other arrangements with, any person or persons authorized to practice any of the healing arts, but no such employment, contract, or arrangement shall provide for the rendering, supervision, or control of professional services other than as authorized by law.

(Added by Stats. 1980, Ch. 1314, Sec. 4.6.)

2412.
  

The Division of Licensing may adopt and enforce regulations to carry out the purposes and objectives of this article and the Moscone-Knox Professional Corporation Act including regulations requiring (a) that the bylaws of a medical or podiatry corporation shall include a provision whereby the capital stock of such corporation owned by a disqualified person (as defined in Section 13401 of the Corporations Code), or a deceased person, shall be sold to the corporation or to the remaining shareholders of such corporation within such time as such regulations may provide, and (b) that a medical or podiatry corporation shall provide adequate security by insurance or otherwise for claims against it by its patients arising out of the rendering of professional services.

(Added by Stats. 1980, Ch. 1314, Sec. 4.7.)

2413.
  

This article shall apply to medical corporations which have physicians and surgeons licensed by the Osteopathic Medical Board of California as shareholders, officers, and directors only to the extent that this article is not in conflict with or inconsistent with Section 2454.

(Amended by Stats. 1991, Ch. 359, Sec. 16.)

2415.
  

(a) Any physician and surgeon or any doctor of podiatric medicine, as the case may be, who as a sole proprietor, or in a partnership, group, or professional corporation, desires to practice under any name that would otherwise be a violation of Section 2285 may practice under that name if the proprietor, partnership, group, or corporation obtains and maintains in current status a fictitious-name permit issued by the Division of Licensing, or, in the case of doctors of podiatric medicine, the California Board of Podiatric Medicine, under the provisions of this section.

(b) The division or the board shall issue a fictitious-name permit authorizing the holder thereof to use the name specified in the permit in connection with his, her, or its practice if the division or the board finds to its satisfaction that:

(1) The applicant or applicants or shareholders of the professional corporation hold valid and current licenses as physicians and surgeons or doctors of podiatric medicine, as the case may be.

(2) The professional practice of the applicant or applicants is wholly owned and entirely controlled by the applicant or applicants.

(3) The name under which the applicant or applicants propose to practice is not deceptive, misleading, or confusing.

(c) Each permit shall be accompanied by a notice that shall be displayed in a location readily visible to patients and staff. The notice shall be displayed at each place of business identified in the permit.

(d) This section shall not apply to licensees who contract with, are employed by, or are on the staff of, any clinic licensed by the State Department of Health Care Services under Chapter 1 (commencing with Section 1200) of Division 2 of the Health and Safety Code or any medical school approved by the division or a faculty practice plan connected with that medical school.

(e) Fictitious-name permits issued under this section shall be subject to Article 19 (commencing with Section 2421) pertaining to renewal of licenses.

(f) The division or the board may revoke or suspend any permit issued if it finds that the holder or holders of the permit are not in compliance with the provisions of this section or any regulations adopted pursuant to this section. A proceeding to revoke or suspend a fictitious-name permit shall be conducted in accordance with Section 2230.

(g) A fictitious-name permit issued to any licensee in a sole practice is automatically revoked in the event the licensee’s certificate to practice medicine or podiatric medicine is revoked.

(h) The division or the board may delegate to the executive director, or to another official of the board, its authority to review and approve applications for fictitious-name permits and to issue those permits.

(i) The California Board of Podiatric Medicine shall administer and enforce this section as to doctors of podiatric medicine and shall adopt and administer regulations specifying appropriate podiatric medical name designations.

(Amended by Stats. 2017, Ch. 775, Sec. 76. (SB 798) Effective January 1, 2018.)

2416.
  

Physicians and surgeons and doctors of podiatric medicine may conduct their professional practices in a partnership or group of physician and surgeons or a partnership or group of doctors of podiatric medicine, respectively. Physician and surgeons and doctors of podiatric medicine may establish a professional partnership that includes both physician and surgeons and doctors of podiatric medicine, if both of the following conditions are satisfied:

(a) A majority of the partners and partnership interests in the professional partnership are physician and surgeons or osteopathic physician and surgeons.

(b) Notwithstanding Chapter 2 (commencing with Section 15001) of Title 1 of the Corporations Code, a partner who is not a physician and surgeon shall not practice in the partnership or vote on partnership matters related to the practice of medicine that are outside his or her scope of practice. All partners may vote on general administrative, management, and business matters.

(Amended by Stats. 2007, Ch. 588, Sec. 31. Effective January 1, 2008.)

2417.
  

(a) If the Department of Insurance has evidence that a business is being operated in violation of this chapter, Part 4 (commencing with Section 13400) of Division 3 of the Corporations Code, or Chapter 1 (commencing with Section 1200) of Division 2 of the Health and Safety Code, and that the business may be in violation of Section 1871.4 of the Insurance Code or Section 549 or 550 of the Penal Code, then the department shall report the business, and any physician and surgeon suspected of knowingly providing medical services for that business relative to a violation of Section 1871.4 of the Insurance Code or Section 549 or 550 of the Penal Code, to the appropriate regulatory agency. Upon receiving a report from the Department of Insurance of a suspected violation, the regulatory agency shall conduct an investigation. The requirement in subdivision (a) of Section 1872.95 of the Insurance Code for investigations to be conducted within existing resources does not apply to investigations required by this section. The Department of Insurance may consult with the appropriate regulatory department or agency prior to making its report to that department or agency, and this consultation shall not be deemed to require the department or agency to conduct an investigation.

(b) A physician and surgeon who practices medicine with a business organization knowing that it is owned or operated in violation of Section 1871.4 of the Insurance Code, Section 14107 or 14107.2 of the Welfare and Institutions Code, or Section 549 or 550 of the Penal Code shall have his or her license to practice permanently revoked.

(Repealed and added by Stats. 2001, Ch. 328, Sec. 2. Effective January 1, 2002.)

2417.5.
  

(a) A business organization that offers to provide, or provides, outpatient elective cosmetic medical procedures or treatments, that is owned or operated in violation of Section 2400, and that contracts with, or otherwise employs, a physician and surgeon to facilitate its offers to provide, or the provision of, outpatient elective cosmetic medical procedures or treatments that may be provided only by the holder of a valid physician’s and surgeon’s certificate is guilty of violating paragraph (6) of subdivision (a) of Section 550 of the Penal Code.

(b) For purposes of this section, “outpatient elective cosmetic medical procedures or treatments” means medical procedures or treatments that are performed to alter or reshape normal structures of the body solely in order to improve appearance.

(c) Nothing in this section shall be construed to alter or apply to arrangements currently authorized by law, including, but not limited to, any entity operating a medical facility or other business authorized to provide medical services under Section 1206 of the Health and Safety Code.

(Added by Stats. 2012, Ch. 140, Sec. 2. (AB 1548) Effective January 1, 2013.)

BPCBusiness and Professions Code - BPC18.