> ## Documentation Index
> Fetch the complete documentation index at: https://mso.getlemma.com/llms.txt
> Use this file to discover all available pages before exploring further.
# California — CPOM & MSO reference
> Corporate practice of medicine status, professional entity forms, fee-splitting, noncompete law, and MSO-specific requirements in California.
California is a **strict** corporate practice of medicine state: lay ownership and control of medical practice is prohibited, enforcement is active, and the MSO-PC structure requires careful drafting to hold up.
**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](/reference/legal/cpom-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.
| Profession | Where to check |
| ----------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Dentistry** | The state dental board and the dental practice act. Dentistry is frequently regulated more explicitly than medicine, and several states impose DSO registration. |
| **Optometry** | The optometry board. Retail-optical carve-outs are common and narrow. |
| **Physical therapy / chiropractic** | The respective boards. POPTS restrictions may apply. |
| **Veterinary** | The veterinary board. CPVM exists in some states and not others, on a different map from medicine. |
| **Behavioral health** | Multiple boards, one per license type. Whether one entity may employ several license types is the key question. |
See [Multi-specialty considerations](/concepts/entities/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
See [PC vs PLLC vs PA](/concepts/entities/pc-vs-pllc-vs-pa) and [Form a professional corporation](/guides/formation/form-a-pc).
## 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](/concepts/model/fee-splitting) and [Set the management fee](/guides/agreements/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](/reference/legal/cpom-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](/reference/legal/cpom-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
| What | Where |
| --------------------------------------- | -------------------------------------------------------------------------------------------- |
| Professional entity statute | California code — professional corporation / professional LLC provisions |
| Medical practice act and board rules | The California medical board |
| Dental, optometry, PT, veterinary rules | The respective California boards |
| Attorney general opinions | The California Attorney General |
| Entity formation and good standing | The California Secretary of State |
| Pending legislation | The California legislature's bill tracker |
| Unclaimed property | The California unclaimed property administrator, via [unclaimed.org](https://unclaimed.org/) |
For the cases and statutes referenced above, see [CPOM case law](/reference/legal/cpom-case-law). For enacted and pending legislation across all states, see the [CPOM & MSO legislation tracker](/reference/legal/cpom-legislation-tracker).
## Related topics
- [The corporate practice of medicine doctrine](/concepts/model/cpom.md)
- [Fee-splitting rules, explained](/concepts/model/fee-splitting.md)
- [Who can own a professional entity](/concepts/entities/who-can-own-what.md)
- [Form a professional corporation](/guides/formation/form-a-pc.md)
- [Draft the management services agreement (MSA)](/guides/agreements/draft-a-management-services-agreement.md)
- [Run a CPOM self-audit](/guides/compliance/run-a-cpom-self-audit.md)
- [CPOM case law](/reference/legal/cpom-case-law.md)
- [CPOM & MSO legislation tracker](/reference/legal/cpom-legislation-tracker.md)
- [MSA clause anatomy](/reference/legal/msa-clause-anatomy.md)