Aue-mn II. TrxM

October 16, 1957

Dr. M. Ii.

Crabb, M.D. Bearetary, Texas State Board of Me&ml Examlners, Fort Worth 2, Texas OpinionNo. W&278.
::e: Corporation

praotlce In medicine,

Dear Dr. Crabb:

You have requestedan opinion on the following questions: “1. Is a physician subject to having

his license forfeitedunder Article 4505, Section 12, If he accepts employment by a corporationon a salary or commission basis, and the corporationcharges for the services that he performs? “2. In a situationsuch as is described above, would the corpora.tion be consideredas being engaged in the unlawfulpractice of medicine?” These questionshave arlsen by virtue of a letter receivedby your office from an indlvldual licensed to practice medicine in this State,lnwhich he states:

prohibits “I would speclflcaliylike to know If

there Is a Texas law und+r which a doctor forfeits hla license if he is cmplcyed, either on a salary.or commlss:lot~, iry an accredited hbspltal In which the hnyplcal collects the fees for the personal service8cf i;hls physician.” Subdivision 12 of Artlcle’4505, Vernon’s Civil Statutes, the “permittingor allowing anothr,r to use Ns license or certificateto practice medlclne in this State for tne purpose of treating or offering to treat sick, lnjtrrcd or afflictedhuman beings”, and such conduct is made a &round 1’or the suspension and revocationor cancellationof hi,s l.lcense

to practicemedlclne by the provisionsof Article 4!506, Vernon’s Civil Statutes.DF. Pl,

X, Crabb, Page 2 (UW-278 ).

I) , . . Bp the pleadings of appellant, N8 tert5mOny,and the 6tipUlatlon6 of the pUrtie6, it Via6 cOnClU65iWl~ e6tsbl56hed mats AppellantY86 Clinic for a 6alary of "s $iiZe&Zy~~ti he received nb Seer; the Cl5nic Was owned by Ralph C, Thom&ll, who wa6 not a medloal doctor and no mediual doctor owned any 5nterest In the clinic) appellantperformed medical services for the clinic and th6 fee6 for such cerviceswere collectedby the clinic. Such conduct on the part 6f appellant was In effect ‘permitting, or allowing,Mother to U6e h56 license or certificateto praotioe medlclne In th58 state, Sor the purpO66 of treating,or offering to treat, sItIt, injured, or affiliated

human beings’ , wh5ch conduat is prohfblfad by the grovfslcrns oi Section 12 of Art. 4505, Vernonld Ann. Div. Stats., and is made a ground for the forfeitureof 6 license to of hrt. 45d racticc mdblne by the prw585ons

, Vernon16 Ann. Clv. Statr. See Section 5, Art, 4505,"

In - Tex. Supreme Court 0 303 S.W. 2d 376, the

8x88 a b?%?e It t&validity of a corpo

### ratepraatice rule adopted by the Board of Examiner6 in Optoactry, which rule state6 "that an optometristwho prcicfioeaopknaetFy On the prem56eb of a tnercant5le establ56~6nt 6hOUld observe 6ertain spacilied conditionsregarding the 6eparatlonof his practice from the business operationsof the uercantileestablirhment,and that proof of noncmplianoe with any of there conditionswill be consideredprima facie e,yldenoe that the optefaetz%st

has placed his license at the disposal or In the 1 serviceof 8.n

Unlicensed person In vlolationof. Article 4563(i)". Subdiv56lon (5) of Article 4563, Vernon’s Civil Statutes,referred to In the aorporatepractice r~lq 6bove quoted, pI’oVide6:

"'(1) That said licensee lends, lea6es, rents or In any manner places his llaehse at the dl6posal or in the service of any per6On not licensed to Qraet5Oe optometry In th56 stats,'"Dr. H. H. Crabb, Page 3 (WW-278).

In sustainingthe corporatepractloe rule, It was held: "The third rule attaoked--'the oorporate praotloe rule'

--has for its stated purpose among other things the safeguardingof the optometrist-patient relatlonshlpand the efieotive Implementation of the Legislature's prohibitionagainst placing an optometrist'8 license 'In the service or at the dlapoaal of unlicensedpersons. . . .I ,I

. . . "The rule does not say that an optometrist cannot lease ofiloe.spacefrom a business or .meroantile 'establishment', but seeks to control the relatIonshIpsbetween the optometrist and his lessor to the extent that confusionon the part of the public will not arise and the optometrist-patient relationships

will not be endangered. This end Is sought to be aocompllshedby means of a presumptionwhich an optometristmay rebut If despite his violation of the rule, he can show that he has not placed his license 'at the disposal or In the service of any person not licensed to practice optometry.' Cr. Rookett v. Texas State Board of Medlcal ExamAnera, Tex. Civ. App., n.r.e. . . .I' 287 S.W. 2d 190, wr. ref.

In United States vs. American Medical Association, 110 F. 2d 703, 714 (D.C.CIr.1940, cert. den.) relied on by the Court In F.W.B. Rockett vs. State Board of Medical Examiners, supra, It was held:

"The practice of medlclne in the District of Columbia Is subject to licensingand regulation and, we think, may not lawfullybe subjected ‘to commerolallzatlon or exploItatlon't As was well said In People v. United Medloal Service, 362 Ill. 442, 200 N.E. 157, 163, 103 A.L.R. 1229, the praotlce of medicine requires somethingmore than the financial ability to hire oompetentpersons to do the actual work. And 80 It has been held under varying condltlons, speaking generally, that where a corporation operates a clinic or hospital, employsDr. M. H. Crabb, Page 4 (~~-278).

;he relationshipof doctor and patient, well recognizedIn the law, would,,be destroyedby such an arrangement. (Emphasisours). In view of the foregoing, you are advised that when- 'ever a corporationemploys a licensedphysician to treat patientsand itself receives the fee, the corporationIs unlawfullyengaged In the practice of medicine and the licensed physician 80 employed la violating the provisionsof Subdlvlsion 12, of Article 4505, Vernon's Civil Statutes,and Is subject to having his license to practicemedicine in this State canceled,revoked, or suspendedby the Texas State Board of Medical Examiners.

SUMMARY

Whenever a corporationemploys a licensedphysician to treat patients and itself receives the fee, the corporationis unlawfully engaged in the practice of medicine and the licensedphyslclan so employed Is violating the provisionsof Subdivlsion 12, of Article 4505, Vernon'sDr. M. Ii. Crabb, Page 5 (WW-278).

Civil Statutes,and Is subject to having his license to practice medicine In this State canceled, revoked,or suspendedby the Texas State Board of Medical Examiners. Yours very truly, WILL WILSON Attorney General of Texas

John Reeves

:' JR:wam:pf

APPROVED: OPINION COMMITTEE Geo. P. Blackburn,Chairman
J. C. Davis, Jr. Ralph R. Rash Morgan Nesbltt Houghton Brownlee, Jr. E. M. DeGeurln REVIEWED FOR THE ATTORNEY GENERAL By: James N. Ludlum.