AN
ACT Relating to abrogating the corporate practice of medicine doctrine;
amending RCW 18.100.040, 18.100.050, and 25.04.720; reenacting and amending RCW
25.15.045; creating new sections; and declaring an emergency.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
*NEW
SECTION. Sec. 1.
The legislature finds that the corporate
practice of medicine doctrine, as most recently articulated in the case of
Morelli v. Ehsan, is an impediment to innovative practice arrangements
necessary for the health care reform process to move forward as to physicians
licensed pursuant to chapter 18.71 RCW and osteopathic physicians licensed
pursuant to chapter 18.57 RCW. The doctrine restricts, at a minimum, who can
employ physicians, who can own a physician practice office, and who can derive
profits from physician practice. The legislature intends to abrogate the
doctrine as to all those elements and as to any other elements of the doctrine
as recognized by the courts in the past, currently, or in the future.
*Sec. 1 was vetoed. See message at end of chapter.
*Sec.
2.
RCW 18.100.040 and 1969 c 122 s 4 are each amended to read as follows:
(1)
This chapter shall not apply to any individuals or groups of individuals within
this state who prior to the passage of this chapter were permitted to organize
a corporation and perform personal services to the public by means of a
corporation, and this chapter shall not apply to any corporation organized by
such individual or group of individuals prior to the passage of this chapter:
PROVIDED, That any such individual or group of individuals or any such
corporation may bring themselves and such corporation within the provisions of
this chapter by amending the articles of incorporation in such a manner so as
to be consistent with all the provisions of this chapter and by affirmatively
stating in the amended articles of incorporation that the shareholders have
elected to bring the corporation within the provisions of this chapter.
(2)
The corporate practice of medicine doctrine as it applies to health care
practitioners, other than dentists and veterinarians licensed pursuant to
chapters 18.32 and 18.92 RCW respectively, is hereby abrogated in whole,
although nothing in this section is meant to affect the ethical obligations of
health care practitioners. This abrogation shall not be construed to authorize
anyone to require health care practitioners to violate federal, state, or local
law. In construing this abrogation, courts shall not apply rules of
legislative interpretation that result in narrowly construing this abrogation
because it is in derogation of common law.
(3)
Except for dentists and veterinarians licensed pursuant to chapters 18.32 and
18.92 RCW respectively, any person, including a health care practitioner, may
use any otherwise lawful type of business organization to provide health care
professional services. Health care practitioners may elect to use the
professional form of a business organization to provide professional services
as otherwise permitted by law.
(4)
A professional corporation, professional limited liability company, or
professional limited liability partnership may convert to a business
corporation, limited liability company, or limited liability partnership by so
amending its articles of incorporation, certificate of formation, or other
basic business organization document as the case may be and filing the
amendment with the state.
*Sec. 2 was vetoed. See message at end of chapter.
Sec.
3. RCW
18.100.050 and 1996 c 22 s 1 are each amended to read as follows:
(1)
An individual or group of individuals duly licensed or otherwise legally
authorized to render the same professional services within this state may
organize and become a shareholder or shareholders of a professional corporation
for pecuniary profit under the provisions of Title 23B RCW for the purpose of
rendering professional service. One or more of the legally authorized
individuals shall be the incorporators of the professional corporation.
(2)
Notwithstanding any other provision of this chapter, registered architects and
registered engineers may own stock in and render their individual professional
services through one professional service corporation.
(3)
Licensed health care professionals, providing services to enrolled participants
either directly or through arrangements with a health maintenance organization
registered under chapter 48.46 RCW or federally qualified health maintenance
organization, may own stock in and render their individual professional
services through one professional service corporation.
(4)
Professionals may organize a nonprofit nonstock corporation under this chapter
and chapter 24.03 RCW to provide professional services, and the provisions of
this chapter relating to stock and referring to Title 23B RCW shall not apply
to any such corporation.
(5)(a)
Notwithstanding any other provision of this chapter, health care professionals
who are licensed or certified pursuant to chapters 18.06, 18.19, 18.22, 18.25,
18.29, 18.34, 18.35, 18.36A, 18.50, 18.53, 18.55, 18.57, 18.57A, 18.64, 18.71,
18.71A, 18.79, 18.83, 18.89, 18.108, and 18.138 RCW may own stock in and
render their individual professional services through one professional service
corporation and are to be considered, for the purpose of forming a professional
service corporation, as rendering the "same specific professional
services" or "same professional services" or similar terms.
(b)
((Notwithstanding any other provision of this chapter, health care
professionals who are licensed pursuant to chapters 18.57 and 18.71 RCW may own
stock in and render their individual professional services through one professional
service corporation and are to be considered, for the purpose of forming a
professional service corporation, as rendering the "same specific
professional services" or "same professional services" or
similar terms.
(c)))
Formation of a professional service corporation under this subsection does not
restrict the application of the uniform disciplinary act under chapter 18.130
RCW, or applicable health care professional statutes under Title 18 RCW,
including but not limited to restrictions on persons practicing a health
profession without being appropriately credentialed and persons practicing
beyond the scope of their credential.
Sec.
4. RCW
25.15.045 and 1996 c 231 s 7 and 1996 c 22 s 2 are each reenacted and amended
to read as follows:
(1)
A person or group of persons licensed or otherwise legally authorized to render
professional services within this state may organize and become a member or
members of a professional limited liability company under the provisions of
this chapter for the purposes of rendering professional service. A
"professional limited liability company" is subject to all the
provisions of chapter 18.100 RCW that apply to a professional corporation, and
its managers, members, agents, and employees shall be subject to all the
provisions of chapter 18.100 RCW that apply to the directors, officers,
shareholders, agents, or employees of a professional corporation, except as
provided otherwise in this section. Nothing in this section prohibits a person
duly licensed or otherwise legally authorized to render professional services
in any jurisdiction other than this state from becoming a member of a
professional limited liability company organized for the purpose of rendering
the same professional services. Nothing in this section prohibits a
professional limited liability company from rendering professional services
outside this state through individuals who are not duly licensed or otherwise
legally authorized to render such professional services within this state.
Notwithstanding RCW 18.100.065, persons engaged in a profession and otherwise
meeting the requirements of this chapter may operate under this chapter as a
professional limited liability company so long as each member personally
engaged in the practice of the profession in this state is duly licensed or
otherwise legally authorized to practice the profession in this state and:
(a)
At least one manager of the company is duly licensed or otherwise legally
authorized to practice the profession in this state; or
(b)
Each member in charge of an office of the company in this state is duly
licensed or otherwise legally authorized to practice the profession in this
state.
(2)
If the company's members are required to be licensed to practice such profession,
and the company fails to maintain for itself and for its members practicing in
this state a policy of professional liability insurance, bond, or other
evidence of financial responsibility of a kind designated by rule by the state
insurance commissioner and in the amount of at least one million dollars or a
greater amount as the state insurance commissioner may establish by rule for a
licensed profession or for any specialty within a profession, taking into
account the nature and size of the business, then the company's members are
personally liable to the extent that, had the insurance, bond, or other
evidence of responsibility been maintained, it would have covered the liability
in question.
(3)
For purposes of applying the provisions of chapter 18.100 RCW to a professional
limited liability company, the terms "director" or
"officer" means manager, "shareholder" means member,
"corporation" means professional limited liability company,
"articles of incorporation" means certificate of formation,
"shares" or "capital stock" means a limited liability
company interest, "incorporator" means the person who executes the
certificate of formation, and "bylaws" means the limited liability
company agreement.
(4)
The name of a professional limited liability company must contain either the
words "Professional Limited Liability Company," or the words
"Professional Limited Liability" and the abbreviation
"Co.," or the abbreviation "P.L.L.C." or "PLLC"
provided that the name of a professional limited liability company organized to
render dental services shall contain the full names or surnames of all members
and no other word than "chartered" or the words "professional
services" or the abbreviation "P.L.L.C." or "PLLC."
(5)
Subject to the provisions in article VII of this chapter, the following may be
a member of a professional limited liability company and may be the transferee
of the interest of an ineligible person or deceased member of the professional
limited liability company:
(a)
A professional corporation, if its shareholders, directors, and its officers
other than the secretary and the treasurer, are licensed or otherwise legally
authorized to render the same specific professional services as the
professional limited liability company; and
(b)
Another professional limited liability company, if the managers and members of
both professional limited liability companies are licensed or otherwise legally
authorized to render the same specific professional services.
(6)(a)
Notwithstanding any other provision of this chapter, health care professionals
who are licensed or certified pursuant to chapters 18.06, 18.19, 18.22, 18.25,
18.29, 18.34, 18.35, 18.36A, 18.50, 18.53, 18.55, 18.57, 18.57A, 18.64, 18.71,
18.71A, 18.79, 18.83, 18.89, 18.108, and 18.138 RCW may own membership
interests in and render their individual professional services through one
limited liability company and are to be considered, for the purpose of forming
a limited liability company, as rendering the "same specific professional
services" or "same professional services" or similar terms.
(b)
((Notwithstanding any other provision of this chapter, health care
professionals who are licensed pursuant to chapters 18.57 and 18.71 RCW may own
membership interests in and render their individual professional services
through one limited liability company and are to be considered, for the purpose
of forming a limited liability company, as rendering the "same specific
professional services" or "same professional services" or
similar terms.
(c)))
Formation of a limited liability company under this subsection does not
restrict the application of the uniform disciplinary act under chapter 18.130
RCW, or any applicable health care professional statutes under Title 18 RCW,
including but not limited to restrictions on persons practicing a health
profession without being appropriately credentialed and persons practicing
beyond the scope of their credential.
Sec.
5. RCW
25.04.720 and 1996 c 231 s 4 are each amended to read as follows:
(1)
A person or group of persons licensed or otherwise legally authorized to render
professional services, as defined in RCW 18.100.030, within this state may
organize and become a member or members of a limited liability partnership
under the provisions of this chapter for the purposes of rendering professional
service. Nothing in this section prohibits a person duly licensed or otherwise
legally authorized to render professional services in any jurisdiction other
than this state from becoming a member of a limited liability partnership
organized for the purpose of rendering the same professional services. Nothing
in this section prohibits a limited liability partnership from rendering
professional services outside this state through individuals who are not duly
licensed or otherwise legally authorized to render such professional services
within this state.
(2)(a)
Notwithstanding any other provision of this chapter, health care professionals
who are licensed or certified pursuant to chapters 18.06, 18.19, 18.22, 18.25,
18.29, 18.34, 18.35, 18.36A, 18.50, 18.53, 18.55, 18.57, 18.57A, 18.64, 18.71,
18.71A, 18.79, 18.83, 18.89, 18.108, and 18.138 RCW may join and render
their individual professional services through one limited liability
partnership and are to be considered, for the purpose of forming a limited
liability partnership, as rendering the "same specific professional
services" or "same professional services" or similar terms.
(b)
((Notwithstanding any other provision of this chapter, health care professionals
who are licensed pursuant to chapters 18.57 and 18.71 RCW may join and render
their individual professional services through one limited liability
partnership and are to be considered, for the purpose of forming a limited
liability partnership, as rendering the "same specific professional
services" or "same professional services" or similar terms.
(c)))
Formation of a limited liability partnership under this subsection does not
restrict the application of the uniform disciplinary act under chapter 18.130
RCW, or any applicable health care professional statutes under Title 18 RCW,
including but not limited to restrictions on persons practicing a health
profession without being appropriately credentialed and persons practicing
beyond the scope of their credential.
*NEW
SECTION. Sec. 6.
This act applies retroactively to January 1,
1997.
*Sec. 6 was vetoed. See message at end of chapter.
*NEW
SECTION. Sec. 7.
This act is necessary for the immediate preservation of the public peace,
health, or safety, or support of the state government and its existing public
institutions, and takes effect immediately.
*Sec. 7 was vetoed. See message at end of chapter.
