High-activity state. California sees substantial MSO-PC activity, which means both more precedent to work from and more scrutiny. Budget for state-specific counsel rather than adapting a template from elsewhere.
Checked August 2026. California’s rules come from some combination of statute, licensing board regulation, attorney general opinions, and case law, and they change — check the legislation tracker for pending changes.
1. CPOM status — medicine
Tier: Strict Long-standing doctrine from People v. Pacific Health Corp., 12 Cal. 2d 156, 82 P.2d 429 (1938), and Painless Parker v. Board of Dental Examiners, 216 Cal. 285, 14 P.2d 67 (1932), now substantially codified and extended by SB 351 (2025), effective January 1, 2026.2. Other professions
The medical answer does not determine the answer for other professions. Each has its own doctrine, board, and statute.
See Multi-specialty considerations.
3. Professional entity forms
Permitted forms: PC only — the Moscone-Knox Professional Corporation Act governs. PLLC is not available for medicine. Ownership: Prohibited for non-licensees; Moscone-Knox permits limited ownership by specified other licensed professionals subject to percentage caps — verify for your combination Also confirm before filing:- Naming rules, designator requirements, and whether the name is constrained to licensed owners’ surnames
- Board pre-approval, whether a licensing board certificate is required before the secretary of state will file
- Officer and director licensure: several states restrict these roles to licensees, not just shareholders, which forecloses MSO executives serving on the PC’s board
4. Fee-splitting and percentage management fees
Fee-splitting: Permitted, but read alongside SB 351’s control prohibitions The practical question for your MSA is whether a percentage-of-collections management fee is viable. Flat and cost-plus structures carry materially lower fee-splitting exposure everywhere. See Fee-splitting rules and Set the management fee.5. Physician noncompetes
General prohibition under Bus. & Prof. Code § 16600; SB 351 makes provider noncompete and non-disparagement clauses unenforceable, with narrow exceptions for sale-of-business covenants and confidentiality Noncompete law moved substantially in 2025–2026. The FTC’s Non-Compete Rule was vacated, the FTC dropped its appeals in September 2025, and the rule was removed from 16 C.F.R. pt. 910 effective February 12, 2026, leaving regulation primarily to the states, several of which have since restricted or voided physician noncompetes. Verify current law in this state before including one. See the legislation tracker.6. MSO-specific laws and registration
SB 351 (2025) bars private equity groups and hedge funds from interfering with professional judgment — expressly including determining diagnostic tests, determining referral necessity, responsibility for overall patient care, and setting patient volume or clinician hours — and separately bars management entities from participating in billing, coding, equipment selection, and clinical staff oversight. AG enforcement. AB 1415 expands transaction reporting.7. Transaction review and notice
Check whether California requires notice or approval for healthcare transactions, and whether MSO or private-equity ownership must be disclosed. A growing set of states added these regimes in 2025–2026 — see the legislation tracker for the current list.8. Practical structuring notes
The most consequential state to get right. Your MSA’s clinical carve-out should track SB 351’s enumerated functions verbatim. The Attorney General has separately attacked friendly-PC stock-transfer and MSA-termination provisions in litigation, and announced a CPOM settlement with a dental MSO — meaning the standard structural toolkit is itself under scrutiny. SB 351 covers dental practices as well as medical.The standing checklist for any state
- Confirmed the permitted entity form for your profession
- Confirmed whether board pre-approval is required before filing
- Confirmed whether officers and directors must be licensees
- Confirmed the fee structure is lawful here
- Clinical carve-out drafted against this state’s current statutory language
- Transfer restriction agreement checked against current state law
- Noncompete provisions checked against current state law
- MSO foreign-qualified before it has employees here
- Any MSO registration or transaction notice obligation identified
9. Sources and where to verify
For the cases and statutes referenced above, see CPOM case law. For enacted and pending legislation across all states, see the CPOM & MSO legislation tracker.