WVBOM

STATEMENT OF PUBLIC POLICY

WEST VIRGINIA BOARD OF MEDICINE

RE: Corporate Practice of Medicine: Is the Employment of a Physician by a Corporation Other Than a Medical Corporation PER SE Violative of the West Virginia Medical Practice Act?

The West Virginia Board of Medicine derives its authority from the provisions of the West Virginia Medical Practice Act, West Virginia Code §30-3-1, et seq. The Board's responsibilities include licensure and professional discipline of physicians, podiatrists, and physician assistants.

Also, the Board has certain responsibilities regarding medical and podiatric corporations. The Medical Practice Act authorizes the Board to provide certificates of authorization to medical or podiatry corporations upon proper application by one or more physicians duly licensed to practice medicine in the state or by one or more podiatrists duly licensed to practice podiatry in the state, and such a corporation may practice medicine and surgery only through licensed physicians, or may practice podiatry only through licensed podiatrists. Further, a medical or podiatric corporation with such a certificate of authorization may employ licensed physicians or podiatrists.

Under the provisions of the Medical Practice Act, it is unlawful for a physician to practice medicine without a license issued by the Board, and it is unlawful for any corporation to practice medicine and surgery, or to practice podiatry, without a certificate of authorization from the Board.

However, since the original enactment of the specific statute regarding the corporate practice of medicine in this State in 1965, (West Virginia Code §30-3-15), the Circuit Court of Kanawha County, West Virginia, has made a ruling which has had the effect of eroding the prohibition on a corporation practicing medicine or podiatry without a certificate of authorization from the Board. In the 1978 case, Dr. J.D. Kugel, et al. v. Herbert J. Thomas Memorial Hospital Association, Civil Action No. CA-77-3124, in the Circuit Court of Kanawha County, the opinion of the Court was that a non profit corporation, such as a non profit hospital, which contracts with licensed physicians for the physicians to provide medical services at the corporation's facilities in return for an annual sum certain, is not practicing medicine without a license in violation of the laws of the State of West Virginia.

Increasingly in this State, new organizational structures for the delivery of health care have been examined and attempted, in an effort to improve the quality of health care and decrease the rising costs of health care, and questions have arisen as to whether such organizational structures, when they hinge upon the employment of a physician by other than a medical corporation formed pursuant to the West Virginia Medical Practice Act, violate the law in the State of West Virginia relating to the unauthorized practice of medicine.

Just as courts interpret statutes, so an administrative agency such as the Board of Medicine regularly interprets the statute governing its functions, duties and powers. It is the opinion of the Board of Medicine that insofar as it is within its authority to interpret the provisions of West Virginia Code §30-3-15, (as a violation of the provisions of West Virginia Code §30-3-15 is a misdemeanor and prosecution for violating the provisions of the section is not within the jurisdiction of the Board) a corporation not a medical corporation which employs physicians may not necessarily be considered as practicing medicine and may not necessarily be in violation of the West Virginia Medical Practice Act.

In each instance, the Board will apply certain criteria to assess whether in its opinion a corporation, not a medical corporation, and employing physicians, is practicing medicine and is thus in its opinion violating the West Virginia Medical Practice Act, as follows:

1. Does the structure of the arrangement provide or attempt to provide a benefit to the public in terms of enhancing the quality and accessibility of care and in decreasing the cost of health care?

2. Is there a corporate structure which permits physician autonomy in medical decision-making?

3. Is there a corporate structure which limits the likelihood that non-physician shareholders may be construed to be making medical judgements and corporate bylaws which provide protections for independent medical judgements by physicians?

5. Do shareholder agreements exist which protect physicians from suits for breach of fiduciary duties where decisions are made by them in the best interests of medicine which may erode the profitability of the corporation?

Without stating that the answers to the above questions all must be answered in the affirmative, it is important that in large measure they be answered affirmatively, and if so, the Board's position is that a physician's employment by a corporation other than a medical corporation is not per se violative of the West Virginia Medical Practice Act.

The Board will examine new organizational structures as they are presented to the Board for its review in conjunction with West Virginia Code §30-3-15.