Delaware: CPOM & MSO reference

Delaware has no meaningful corporate practice of medicine doctrine, though professional entity ownership may still be restricted to licensees.

​

1. CPOM status: medicine

Tier: Permissive / none No statute, reported decision, Board regulation, or Attorney General opinion squarely addresses whether a lay entity may employ physicians in Delaware; the permissive classification rests on the absence of a prohibition.¹ The Medical Practice Act, 24 Del. C. ch. 17, defines the practice of medicine broadly (§ 1702) and makes it unprofessional conduct to perform an act “which, unless authorized by this chapter, assists an unauthorized person to practice medicine” (§ 1731(b)(9)), but says nothing about corporate employment.² The operative constraint on a corporation is the Professional Service Corporation Act, 8 Del. C. ch. 6 (section 3).

​

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: A professional corporation under 8 Del. C. ch. 6, or, because the Delaware LLC Act contains no professional-services restriction and no PLLC form, an ordinary LLC, which “may carry on any lawful business, purpose or activity” (6 Del. C. § 18-106(a)).³ A Delaware general corporation may not render medicine: “professional service” is defined as a service that “by reason of law, prior to June 7, 1969, could not be performed by a corporation,” expressly including “doctors of medicine” and “doctors of osteopathy” (8 Del. C. § 603(1)), and a corporation rendering one must be organized under chapter 6. Ownership of a PC: Restricted to licensed individuals. “No professional corporation may issue any of its capital stock to anyone other than an individual who is duly licensed or otherwise legally authorized to render the same specific professional service” (§ 610); voting trusts and proxies in favour of non-licensees are prohibited; a PC may render services “except through its officers, employees and agents who are duly licensed” (§ 607); a disqualified shareholder must “forthwith sever all employment with, and financial interests in” the PC (§ 611), with transfer within 375 days of death or 30 days of disqualification (§ 616).⁴ Physicians and podiatrists may combine in one PC as “qualified related professional services” (§ 603(3)). A one-shareholder PC needs one director, who is president; other officers “need not be licensed” (§ 606). Ownership of an LLC: the LLC Act imposes no restriction, so a lay-owned Delaware LLC delivering medical services is not barred by entity law: only by whatever the Medical Practice Act’s unlicensed-practice provisions are read to require, which no Delaware authority has decided.¹ Counsel treat this as an open question, not a permission. 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 and Form a professional corporation.

​

4. Fee-splitting and percentage management fees

Fee-splitting: Physician-to-physician referral fees prohibited by Board regulation; no rule reaches management fees. The Board of Medical Licensure and Discipline’s unethical-conduct regulation, 24 Del. Admin. Code 1700-8.1.9, treats as dishonorable “payment of a fee by a physician to another physician who has referred the patient” unless proportional to work actually performed, and 8.1.10 requires disclosure of a referring physician’s financial interest in an ancillary facility.⁵ Neither the Act nor the regulations address percentage-based fees to a non-physician management company. The federal Anti-Kickback Statute and fair-market-value principles still apply. 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

Void by statute between physicians. 6 Del. C. § 2707: any covenant not to compete “of an employment, partnership or corporate agreement between and/or among physicians which restricts the right of a physician to practice medicine in a particular locale and/or for a defined period of time … shall be void,” although provisions requiring “the payment of damages in an amount that is reasonably related to the injury suffered” (including “damages related to competition”) remain enforceable.⁶ The statute is written for agreements among physicians; whether it reaches a covenant with a lay-owned employer or MSO is unsettled. Draft on the assumption that a Delaware physician noncompete is unenforceable and rely on liquidated damages, non-solicitation, and notice periods. 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

None specific

​

7. Transaction review and notice

None for physician practices or MSOs as of August 2026. S.B. 313 (signed July 20, 2026) imposes a moratorium through July 1, 2028 on for-profit acquisition of control of nonprofit acute-care hospitals and adds Attorney General review of hospital real-estate transfers; it does not reach practices.⁷ See the legislation tracker.

​

8. Practical structuring notes

No CPOM doctrine does not mean lay ownership of the PC. Delaware is the standard example: 8 Del. C. § 610 limits PC shareholders to licensees regardless of what the Medical Practice Act says about control. Delaware is also the most common MSO domicile: a Delaware C-corporation may be owned by anyone, and that is a separate question with no professional-entity constraint. The question founders actually ask, “can our Delaware C-corp be owned by non-clinicians?”, has a one-word answer (yes) that says nothing about whether that corporation may own or operate the medical practice in the state where patients are treated. See Digital health and telehealth.

​

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.

​

Sources

1. Negative finding checked August 2026. See MacElree Harvey, Telehealth, Limited Liability Companies, and Independent Practice (“Delaware has no clear position … The conclusion rests substantially on the absence of a prohibition rather than on affirmative authority.”); MedPath, CPOM 50-State Guide.
2. 24 Del. C. § 1702; § 1731(b).
3. 6 Del. C. § 18-106.
4. 8 Del. C. §§ 603, 605–607, 609–612, 615–618.
5. 24 Del. Admin. Code 1700-8.0.
6. 6 Del. C. § 2707 (64 Del. Laws c. 175 (1983)).
7. Del. S.B. 313, 153rd General Assembly (signed July 20, 2026). Bill detail.