Overview
On June 9, 2025, the Oregon legislature enacted Senate Bill (SB) 951, which prohibits certain ownership of and actions related to professional medical entities and aims to modernize Oregon’s corporate practice of medicine (CPOM) doctrine. The salient CPOM prohibitions included in SB 951 will become effective on January 1, 2026, for all management services organization-professional corporation (MSO-PC) structures created after June 9, 2025, with a three-year grace period ending on January 1, 2029, for currently existing MSO-PCs.
In Depth
As we reported in a previous On the Subject, SB 951 prohibits professional medical entities from relinquishing control over their “assets, business operations, clinical practices or decisions or the clinical practices or decisions of a physician.” This prohibition does not include:
- Selling, leasing, or assigning the right to possess corporate assets, inclusive of any leased or owned property, to an MSO
- Supporting, advising, and consulting on all matters of the professional medical entity’s business operations, including accounting and budgeting, personnel, real estate and facilities management, and compliance support, for the benefit of the professional medical entity
- Advising and providing direction to the professional medical entity related to its participation in value-based contracts, payer arrangements, or vendor contracting.
Shareholders, directors, and officers of a professional medical entity are prohibited from owning shares of; serving as a director, officer, employee, or independent contractor of; or participating in the management of an MSO under contract with the professional medical entity if they are already employed by such professional medical entity. SB 951 provides an exception for physicians and independent providers below a 10% ownership threshold, whereby such individuals may serve as independent contractors of the MSO, provided that they are reimbursed at market rates for their services. A limited carve out for practices solely providing telemedicine services allows for dual employment of physicians by both the MSO and the PC.
SB 951 also prohibits various restrictive covenant clauses and agreements. Noncompetition agreements, except as applicable to providers with greater than 10% ownership stakes in the professional medical entities, are rendered unenforceable. Nondisclosure and nondisparagement agreements are also rendered void and unenforceable unless they are related to trade secrets and good-faith reports or are contained within termination agreements with whistleblower protections. SB 951 also restricts the use of stock transfer restriction agreements commonly found in MSO-PC structures, except under limited circumstances related to civil and criminal actions against a shareholder or member or the termination of the management agreement by the professional medical entity.
The Oregon legislature is currently considering House Bill 3410, which would amend SB 951 to broaden dual employment exceptions and allowable triggering events under securities transfer restriction agreements. This amendment, if passed, would allow greater structural flexibility for MSO-PC structures but would not amend the central prohibitions on MSOs interfering in the clinical operations of professional medical entities.
For more information or for assistance with SB 951, please contact one of the authors of this article or your regular McDermott lawyer.
