DAN MORALES 

ATTORNEY GENERAL 

@ffice of tfp TZlttornep @eneral 

s%ate of Eexae 

Mr. Ron Allen 

Executive Director 

Texas State Board of Veterinary 

Medical Examiners 

333 Guadalupe, Suite 2-330 

Austin, Texas 78701-3998 

December 22,199s 

Opinion No. DM-498 

Re: Whether business arrangements between 

corporations and practicing veterinarians constitute 

the practice of veterinary medicine, and related 

questions (RQ-1086) 

Dear Mr. Allen: 

On behalf of the Texas State Board of Veterinary Medical Examiners (the “board”), you 

inquire about the 1egalityundertheVeterinaryLicensing Act, article 8890, V.T.C.S., ofcertainnovel 

business arrangements that corporate entities have recently attempted to enter into with practicing 

veterinarians. You describe three kinds of business arrangements between a veterinarian and a 

corporation not owned exclusively by veterinarians, asking in each case whether the corporation is 

practicing veterinary medicine. 

Various provisions of the Veterinary Licensing Act (the “act”) are relevant to your question 

about business arrangements between a veterinarian and a corporation not owned exclusively by 

veterinarians. Section 22(a) of the act bars a sole proprietorship, partnership, or corporation from 

engaging in veterinary medicine unless the owner, partners, or shareholders are all licensees of the 

board.’ Thus, a corporation not owned exclusively by licensed veterinarians may not practice 

veterinary medicine. Section 4 of the act states that “[a] person may not practice, offer or attempt 

to practice veterinary medicine in this State without first having obtained a valid license to do so 

from the Texas Board of Veterinary Medical Examiners.“2 Violation of this provision constitutes 

a class A misdemeanor.’ Pursuant to section 17 of the act “[tlhe Board, through the Attorney 

General or any District or County Attorney, may institute an injunction proceeding . . to enjoin any 

person from the practice of veterinary medicine . without such person having complied with the 

‘A “corporation” within section 22(a) of article 8890, V.T.C.S., does not include a municipal corporation or 

anonprofitcorporationorganizedundertheTexasNon-ProfitCorporation Act, V.T.C.S. arts. 1396-l.Ol- 11.01. Letter 

Opinion No. 95-003 (1995). 

‘A list of exceptions from the licensing requirement is set out in section 3 of article 8890, V.T.C.S 

‘V.T.C.S. art. 8890.5 4(b). 
Mr. Ron Allen - Page 2 @M-498) 

other provisions ofthis act.‘” Another enforcement mechanism against unlicensed persons is found 

in subsection 14(d) of the act: 

A person not licensed under this Act who violates this Act or a rule adopted 

by the Board under this Act is subject to a civil penalty of $1,000 for each 

day of violation. At the request of the Board, the attorney general shall bring 

an action to recover a civil penalty authorized under this subsection. 

A licensed veterinarian who “has permitted or allowed another to use his license, or certificate to 

practice veterinary medicine in this state” is subject to discipline by the Board ofVeterinary Medical 

Examiners.5 

Your first question is as follows: 

1. A corporation, not owned exclusively by veterinarians, buys an 

established veterinary clinic consisting of land, buildings, all the equipment, 

goodwill, trade name, business records, patient records, and drug inventory. 

Regardless of the relationship between the corporation and an unrelated 

veterinarian who will practice at the location, is the corporation’s ownership 

of the clinic the practice of veterinary medicine prohibited by the Veterinary 

Licensing Act whenever animals are treated by a veterinarian at the clinic? 

The “Practice of Veterinary Medicine” is defined as follows: 

(A) the diagnosis, treatment, . relief, or prevention of animal disease, 

deformity, defect, injury, or other physical condition, including the 

prescription or administration of a drug, or other therapeutic or diagnostic 

substance or technique; 

(B) the representation of an ability and willingness to perform an act 

included in Paragraph (A) of this subdivision; 

(C) the use of a title, words, or letters to induce the belief that a person 

is legally authorized and qualified to perform an act included in Paragraph 

(A) of this subdivision; or 

‘Id. $ 17. 

‘Id. 5 14(a)(6). 

p. 2843 
h4r. Ron Allen - Page 3 (DM-498) 

(D) the receipt of compensation for performing an act included in 

Paragraph (A) of this subdivision.6 

Thus, a corporation that performed any of the above acts would engage in the practice of 

veterinary medicine. Texas cases on the corporate practice of medicine have established the 

following rule on a non-physician’s receipt of compensation for medical services performed by a 

physician: “[Wlhen a corporation employs a licensed physician to treat patients and itself receives 

the fee, the corporation is unlawfully engaged in the practice ofmedicine.“’ In Garcia Y. Texas State 

BoardofMedicalExaminers,384F. Supp. 434(W.D. Tex. 1974),afld,421 U.S. 995 (1975)athree 

judge court discussed the policies underlying this rule: 

It appears to the Court that not only is such a corporation fraught with 

practical and ethical considerations, but may well represent a backward step 

in the legislative protections it has taken so long to achieve. Without 

licensed, professional doctors on Boards of Directors, who and what criteria 

govern the selection of medical and paramedical staff members? To whom 

does the doctor owe his first duty--the patient or the corporation? . Who 

is to dictate the medical and administrative procedures to be followed? 

Where do budget considerations end and patient care begin?s 

Where the corporation is engaged in the unlicensed practice of medicine, the physician 

employed by the corporation is in effect “permitting or allowing another to use his license or 

certificate to practice medicine in this state,” in violation ofthe Medical Practices Act, and is subject 

to having his license canceled, revoked, or suspended by the Board of Medical Examiners? This 

rule, in our opinion, also applies to licensed veterinarians, because of the similarities of provisions 

in both licensing statutes and the specific reference to the receipt ofcompensation in V.T.C.S. article 

8890, section 2(2)(D). Accordingly, we conclude as a matter of law that a private, for-profit 

corporation may not employ a licensed veterinarian to provide veterinary medical services and itself 

receive the fee for these services. The corporation would be unlawfully engaged in the practice of 

veterinary medicine, while the licensed veterinarian employed by the corporation would violate the 

prohibition against permitting or allowing another to use his license to practice medicine and would 

Vd. $ 2(2). 

‘Garcia v. Texas State Bd. of Med. Exam’rs, 384 F. Supp. 434,431 (W.D. Tex. 1974), affd, 421 U.S. 995 

(1975); Flynn Bras, Inc. v. First Med. Assocs., 715 S.W.Zd 782, 785 (Tex. Civ. App.--Dallas 1986, wit refd n.r.e.); 

Watt v. Texas State Bd. of Med. Exam ‘rs, 303 S.W.2d 884, 887 (Tex. Civ. App.--Dallas, 1957, wit ref d n.r.e.), cert. 

denied, 356U.S. 912(1958);Rockettv. TexasStateBd. ofMed. Exam is, 287 S.W.Zd 190, 191-92(Tex. Civ. App.--San 

Antonio 1956, writ ref d n.r.e.). 

*Garcia, 384 F. Supp. at 440 

9Rocktt, 287 S.W.2d at 191 (citing former V.T.C.S. art. 4505, 5 12, now codified as V.T.C.S. art. 4495b, 

5 3.08(12);seea[so V.T.C.S. art. 4495b. 5 3.08(15)). 

p. 2844 
Mr. Ron Allen - Page 4 (DM-498) 

be subject to having his license canceled, revoked, or suspended by the Board of Veterinary Medical 

Examiners. 

However, you have asked whether the corporation’s ownership of the clinic constitutes the 

practice of veterinary medicine, regardless of the relationship between the corporation and the 

veterinarian. Whether a corporation is engaging in the practice of veterinary medicine in violation 

of law is a fact question,“’ which cannot be addressed in an attorney general opinion.” You provide 

facts that may be some evidence of unauthorized practice, but we cannot answer your question as 

a matter of law. 

The transaction you describe does implicate other provisions ofthe Veterinary Licensing Act 

as well as other statutes. Pursuant to subsection 23(c) of the act, it is not a violation of the act for 

a veterinarian to lease space. Thus, the mere fact that a corporation owns space leased to a 

veterinarian does not constitute a violation of the act. However, additional limitations apply if a 

veterinarian leases space in a mercantile establishment: “[t]he practice of a veterinarian who leases 

space from and practices veterinary medicine on the premises of a mercantile establishment must 

be owned by a licensed veterinarian” and “must be under the exclusive control of a licensed 

veterinarian.” Physical separation between the veterinarian’s leased space and the rest of the 

commercial space is required. 

Section 23 also provides that “[a]11 patient and business records . . are the sole property of 

the veterinarian and free from the control of . any person not licensed under this Act,” although 

a veterinarian is not prohibited from entering into a management agreement and permitting 

employees or agents of the management company to have access to copies of patient records as 

necessary for management functions. ” A corporation that is not owned exclusively by veterinarians 

may not own the patient records or business records, I3 nor may it own the drug inventory.‘4 Finally, 

subsection 2A(b) of article 8890, V.T.C.S., provides in part that “[tlhe professional services of a 

veterinarian may not be controlled or exploited by any person or entity not licensed under this Act 

that intervenes between the clientI and the veterinarian.” The rest of this subsection makes it very 

clear that a veterinarian may not allow an unlicensed person to interfere with his or her practice of 

‘?Yee generally, Rock&, 287 S.W.2d at 191 

“See, e.g., Attorney General Opinions DM-388 (1996) at 4; DM-98 (1992) at 3; M-187 (1968) at 3; O-291 1 

(1940) at 2. In some cases, a question of fact may be resolved as a matter of law; see Attorney General Opinions 

DM-121 (1992) at 2,4; JM-1216 (1990) at 2; Letter OpinionNo. 92-E (1992) at 2. 

‘2V.T.C.S. at. 8890, $23(b). 

“Health & Safety Code 5 483.041 

‘me “client” is the owner 01 other caretaker of an animal under a veterinarian’s care, while the animal is the 

“patient.” See V.T.C.S. art. 8890, $ 2A(s)(l). 

p. 2845 
Mr. Ron Allen - Page 5 (DM-498) 

veterinary medicine, and that a veterinarian is directly responsible to the client and for the care and 

treatment of the patient. We cannot determine as a matter of law whether the corporation’s 

ownership of equipment, good will, and trade name, either individually or in combination with 

ownership of other elements of a practice, would violate any provision of the act, although such 

ownership might be relevant to violations of it. 

You next ask: 

[2.] Assuming that a corporation not owned exclusively by veterinarians 

owns only that much of a veterinary practice as permitted by law,16 may that 

corporation enter into a “management agreement” with a veterinarian to 

operate the practice without violating the provisions of the Veterinarian 

Licensing Act, where the corporation: 

1) receives a percentage of veterinarian’s gross receipts, 

2) is assigned all accounts of the veterinarian, 

3) determines amount of veterinarian’s time-off, 

4) has approval of relief veterinarian, 

5) requires veterinarian to deliver to it all patient records, 

6) sets fees for all procedures, 

7) requires veterinarian to carry liability insurance naming corporation 

as third party beneficiary, and 

8) employs all office and technical staff. 

Your third question is as follows: 

[3.] Assuming that a corporation not owned exclusively by veterinarians, 

owns only that much of a veterinary practice as permitted by law, may that 

corporation enter into an “independent contractor agreement” with a 

veterinarian to operate the practice, without violating the provisions of the 

Veterinarian Licensing Act, where the corporation: 

‘6You do not identify the elements of a veterinary practice that a corporation may own even if the corporation 

is not owned exclusively by veterinarians. We note that subsection 23(a) of qticle 8890, V.T.C.S., states that “[t]he 

practice of a veterinarian who leases space from and practices veterinary medicine on tbe premises of a mercantile 

establishment must be owned by a licensed veterinarian.” 

p. 2846 
Mr. Ron Allen - Page 6 (W-498) 

1) pays for the veterinarian’s employee benefits (health insurance, 

retirement, etc.), 

2) withholds the veterinarian’s income and social security taxes, 

3) sets the time periods that the veterinarian is at the clinic, 

4) sets the time period allowed for each examination, 

5) has sole authority to determine which patient-client may make an 

appointment and when, and 

6) establishes a drug protocol[.ln 

Subsection 23(b) of the act, as already noted, provides that a veterinarian is not prohibited 

“from entering into a management agreement and permitting employees or agents of the 

management company to have access to or copies of patient records as necessary for management 

functions.” This provision does not define “management agreement,” but certainly the terms of any 

management agreement entered into by a veterinarian must be consistent with the act as a whole. 

The provisions of the “management agreement” and the “independent contractor agreement”‘s are 

more relevant to the validity of each than the name applied to the agreement. 

Your questions about the management agreement and the independent contractor agreement, 

like your first question, involve some underlying fact questions, which cannot be resolved in an 

attorney general opinion. We are able to discuss terms of the agreement that are specifically 

addressed by provisions of the act. 

As we have already pointed out, patient records are owned by the veterinarian and free from 

the control of any person not licensed under the act. I9 While a veterinarian may allow employees 

or agents ofthe management company to have access to or copies ofpatient records as necessary for 

management functions, we do not believe the management company may require the veterinarian 

to deliver patient records to it, either temporarily or for the duration of the agreement. 

Subsection 23(c) of the act states that it is not a violation of the act for a veterinarian “to pay 

for franchise fees or other services on a percentage of receipts basis, or to sell, transfer, or assign 

17A protocol is defmed as a precise and detailed plan for a regimen of drug therapy. STEDMAN’S MEDICAL 

DICTIONARY 1155 (5th ed. 1982). 

‘*The relationship between corporation and veterinarian is described as an “independent contractor agreement,” 

but it appears to involve more control ova the veterinarian’s work than typically found in an independent contractor 

relationship. See Attorney General Opinion MW-129 (1980). 

‘V.T.C.S. art. 8890,s 23(b) 

p. 2847 
Mr. Ron Allen - Page 7 (DM-498) 

accounts receivable.” These arrangements do not per se violate the act, but might, in combination 

with other terms of an agreement, provide evidence that the corporation was actually operating the 

veterinary practice. 

Other terms of the agreements may provide evidence that a veterinarian’s professional 

services are controlled by “any person or entity not licensed under this Act that intervenes between 

the client and the veterinarian,“zO or that the veterinarian is employed by the corporation. We cannot 

make this determination as a matter oflaw, but the corporation’s control over the veterinarian’s work 

schedule, fees, office staff, and more important, over the veterinarian’s appointments with patients 

and use of medications in treatment raise the possibility of such violations. Factors such as payment 

for the veterinarian’s employee benefits and withholding of his or her income and social security 

may also indicate that an employment relationship exists. 

You finally ask: 

[4.] If any of these arrangements violate the provisions of the Veterinary 

Licensing Act, what action may the Board take against the veterinarian and/or 

the corporate entity? 

We have not said that any of these arrangements violate the act as a matter of law, although 

we have identified particular terms of the agreements that are prohibited by provisions of the act. 

The board should determine, in the first instance, whether a particular veterinarian or unlicensed 

person has violated the act. It provides remedies against licensed veterinarians and unlicensed 

persons who engage in the unauthorized practice of veterinary medicine. 

The board may discipline a licensed veterinarian who engages in the conduct stated in section 

14(a) of the act. The following grounds for discipline are particularly relevant to your questions: 

[The veterinarian] has engaged in practices or conduct in connection with 

the practice of veterinary medicine which are violative of the standards of 

professional conduct as duly promulgated by the Board in accordance with 

law; [or] has permitted or allowed another to use his license, or certificate to 

practice veterinary medicine in this state”*l 

While the board has enforcement authority against a licensed veterinarian who violates the 

act or rules promulgated thereunder, it does not have independent authority to enforce the statutory 

remedies against persons who engage in the unauthorized practice of veterinary medicine or 

otherwise violate the act. The local prosecutor has jurisdiction to enforce the criminal penalty for 

“Id. $ 2A(b). 

“Id. 5 14(a)(5), (6) 

p. 2848 
Mr. Ron Allen - Page 8 (DM-498) 

practicing veterinary medicine without a license. ” Although the board may make a complaint to the 

prosecutor about a person that it believes has violated this provision, it is within the prosecutor’s 

authority to decide whether or not to prosecute the alleged violator.23 Under subsection 14(d), the 

board may request the attorney general to bring an action to recover a civil penalty from “[a] person 

not licensed under this act who violates this act or a rule adopted by the board.“24 Section 17 

provides that the board, “through the Attorney General or any District or County Attorney,” may 

institute a proceeding to enjoin a person from practicing veterinsry medicine without having 

complied with the act. 

However, we do not believe that these remedies apply to a corporation that practices 

veterinary medicine without a license. *j Each of the three penalties applies to “a person.” Section 

312.01 l(10) of the Government Code states with respect to the construction of civil statutes, that 

“‘[pIerson’ includes a corporation,” “ unless a different meaning is apparent from the context of the 

statute.” In the context of the three remedy provisions under consideration, we do not believe that 

“person” includes a corporation. 

The act’s provisions on licensing generally refer to a“person” or “persons,“see V.T.C.S. art. 

8890, $3 3(a)(2), (5), 4,7(e), 10, 11, and the only specific reference to a “corporation” appears in 

section 22(a), which provides that “[n]o sole proprietorship, partnership, or corporation shall engage 

in veterinary medicine unless the owner, partners, or shareholders, respectively, are all licensees.” 

Thus, the legislature stated its intent expressly when it wished a provision to apply to a corporation. 

In contrast to the act, various other licensing provisions define “person” as expressly including 

“corporation.” See V.T.C.S. arts. 4512e, 5 l(10) (Board of Physical Therapy Examiners); 4512j, 

5 2(3) (State Committee of Examiners for Speech-Language Pathology and Audiology); 45120, 

5 l(4) (licensed chemical dependency counselors); 4542a-1,s 5(31) (Texas Pharmacy Act); 4566- 

1.01(10) (fitting and dispensing ofhearing instruments); see also V.T.C.S. art. 4495b, 5 1.03(10) 

(Medical Practice Act)F6 

The language of section 17 in particular shows that it does not apply to a corporation. This 

provision authorizes an injunction proceeding “to enjoin any person” from the unlicensed practice 

of veterinary medicine and provides that the “venue for such injunction proceedings shall be in the 

~,Ueshell v. State, 739 S.W.2d 246,254 (Tex. Grim. App. 1987) (en bane) 

*rThe penalty is $1,000 for each day of violation. V.T.C.S. art. 8890, 5 14(d) 

“The legislature may establish civil penalties or fmes for violation of a state agency rule “against any person, 

firm or corporation subject to and violating such rule or regulation.” Hanil v. State, 188 S.W.2d 869, 87 1 (Tex. Civ. 

App.--Austin 1945, writ ref d). 

x“Person” is defmed in the Medical Practice Act to mean an individual, unless otherwise expressly made 

applicable to a partnership, association, orcorporation. V.T.C.S. art. 4495b, 5 l.O3(1O);see id. $9 3,07(c),(e), 3.08(E). 

p. 2849 
Mr. Ron Allen - Page 9 (DM-498) 

county of the residence of the person against whom such injunction proceedings are instituted.“2’ 

The general rule of venue found in section 15.002 of the Civil Practice and Remedies Code provides 

that a lawsuit shall be brought “in the county of [the] defendant’s residence at the time the cause of 

action accrued if defendant is a natural person,” and “in the county of the defendant’s principal office 

in this state, ifthe defendant is not a naturalperson.” Section 17 incorporates the venue provision 

for natural persons, indicating that the legislature contemplated that the injunction remedy would 

apply only to natural persons. 

Section 7.22 of the Penal Code states the rule for determining whether a criminal penalty 

such as section 4 of article 8890, V.T.C.S., applies to corporations .Z9 Section 7.22 provides in part: 

(a) If conduct constituting an offense is performed by an agent acting in 

behalf of a corporation or association and within the scope of his office or 

employment, the corporation or association is criminally responsible for an 

offense defined: 

(1) in this code where corporations and associations are made subject 

thereto; 

(2) by law other than this code in which a legislative purpose to impose 

criminal responsibility on corporations or associations plainly appears; 

or 

(3) by law other than this code for which strict liability is imposed 

[Emphasis added.] 

Section 4 of article 8890, V.T.C.S., the criminal penalty provision, states that “a person may 

not practice, offer or attempt to practice veterinary medicine in the State without first having 

obtained a valid license to do so.” No legislative purpose to impose criminal responsibility on 

corporations or associations plainly appears in section 4. Accordingly, it does not subject 

corporations to criminal prosecution. We conclude, in answer to your fourth question, that none of 

the remedies we have discussed enable the board to take action or to request another officer to take 

action against a corporation engaged in the unauthorized practice of veterinary medicine.30 

“If the person does not reside in the state, venue is in Travis County. V.T.C.S. art. 8890, $ 17 

%iv. Prac. &Rem. Code 5 15.002(a)(2), (3) (emphasis added). 

%eegenerally Vaughan & Sons, Inc. Y. State, 737 S.W.Zd 805 (Tex. Grim. App. 1987) (en bane) 

)OAn action in the nahtre of quo warranto is available if “a corporation exercises power not granted by law.” 

Civ. Prac. & Rem. Code 8 66.001(5). If grounds for the remedy exist, the attorney general or the county or district 

(continued...) 

p. 2850 
Mr. Ron Allen - Page 10 (DM-498) 

SUMMARY 

The Veterinary Licensing Act, article 8890, V.T.C.S., prohibits the 

practice ofveterinary medicineby a private, for-profit corporation not owned 

exclusively by veterinarians. Such a corporation may not employ a licensed 

veterinarian to provide veterinary medical services and itself receive the fee 

for those services nor may it own the patient or business records or drug 

inventory of a veterinary medical practice. The Board of Veterinary Medical 

Examiners may discipline a licensee for permitting or allowing another to use 

his license or certificate to practice veterinary medicine. Remedies and 

penalties in the Veterinary Licensing Act for practicing veterinary medicine 

without a license do not apply to corporations. 

DAN MORALES 

Attorney General of Texas 

JORGE VEGA 

First Assistant Attorney General 

SARAH J. SHIRLEY 

Chair, Opinion Committee 

Prepared by Susan L. Garrison 

Assistant Attorney General 

attorney ofthe proper county may petition the district court for leave to file an information in the nature of quo warranto. 

p. 2851