Opinion ID: 2601888
Heading Depth: 2
Heading Rank: 1

Heading: The Corporate Practice of Medicine Doctrine and the PSCA

Text: ¶ 6 Columbia asserts that BFOA has violated both the corporate practice of medicine doctrine and the PSCA. Though these are independent causes of action, they are closely related and we therefore combine our analysis of the two claims. Because we find that the PSCA authorizes BFOA's employment of physical therapists, there is no violation of either the PSCA or the corporate practice of medicine doctrine. As a result, Columbia's claims under the corporate practice of medicine doctrine and the PSCA both fail as a matter of law and BFOA is entitled to summary judgment. ¶ 7 The corporate practice of medicine doctrine provides that, absent legislative authorization, a business entity may not employ medical professionals to practice their licensed professions. This doctrine is derived of much broader principles addressed by both the statutory and common law of Washington. Morelli v. Ehsan, 110 Wash.2d 555, 558, 756 P.2d 129 (1988). In the abstract, these broader principles are relatively straightforward. The practice of certain professions requires a license. See, e.g., RCW 18.71.021 (medicine); RCW 18.74.150 (physical therapy). A person or entity practices a profession by either directly engaging in statutorily defined conduct or by employing a licensed individual to engage in such conduct. See Morelli, 110 Wash.2d at 561, 756 P.2d 129; State ex rel. Standard Optical Co. v. Superior Court, 17 Wash.2d 323, 328-33, 135 P.2d 839 (1943). The legislature may, of course, authorize exceptions to this general scheme. This interpretation of the corporate practice of medicine doctrine is supported by legislative acquiescence, RCW 18.100.030(1) (stating that prior to the passage of the PSCA certain professional services could not be performed by corporations), and earlier precedent of this court, Deaton v. Lawson, 40 Wash. 486, 489-90, 82 P. 879 (1905); State ex rel. Lundin v. Merchs. Protective Corp., 105 Wash. 12, 17-18, 177 P. 694 (1919). ¶ 8 Two cases are instructive in understanding the application of the corporate practice of medicine doctrine: Standard Optical, which addresses a corporation employing an optometrist, and Morelli, which addresses a partnership employing a physician. In Standard Optical, a corporation employed a licensed optometrist, who engaged in the practice of optometry in the course of business. 17 Wash.2d at 325-26, 135 P.2d 839. The practice of optometry was limited by statute to licensed persons. Id. at 327, 135 P.2d 839. Though noting that the corporation exercised no control over the optometrist's professional judgment, this court nonetheless held that the corporation impermissibly engaged in the practice of optometry by employing the optometrist. Id. at 326, 328-33, 135 P.2d 839. As justification for its holding, this court cited a decision by the South Carolina Supreme Court, which argued that the commercialization of professions would destroy professional standards and that the duties of professionals to their clients are incompatible with the commercial interests of business entities. Id. at 331-32, 135 P.2d 839 (citing Ezell v. Ritholz, 188 S.C. 39, 198 S.E. 419, 424 (1938)). At bottom, the doctrine exists to protect the relationship between the professional and the client. ¶ 9 In Morelli, a physician and a nonphysician entered into a limited partnership agreement and operated a medical clinic together. 110 Wash.2d at 556, 756 P.2d 129. In the course of finding that the partnership was illegal, we noted the common law rule that a corporation cannot engage in the practice of a learned profession through licensed employees unless legislatively authorized. Id. at 561, 756 P.2d 129. We then proceeded to extend that rule to limited partnerships. Id. ¶ 10 BFOA disagrees with this understanding of the corporate practice of medicine doctrine, arguing that the doctrine restricts only who may own a medical practice and does not address whom that practice may employ. In support of this conclusion, BFOA cites language in Morelli indicating that the court was there concerned with lay participation in professional services, see id. at 562, 756 P.2d 129. To be sure, this is one evil the doctrine seeks to avoid, but, as discussed above, this court expressed much broader concerns in Standard Optical. We reject BFOA's argument and adhere to the traditional understanding that the corporate practice of medicine doctrine forbids employment of health care professionals by business entities or nonprofessionals absent legislative authorization. ¶ 11 In the present case, there is no dispute that BFOA is a business entity that employs licensed health care professionals. Applying the principles of the corporate practice of medicine doctrine, this establishes that BFOA is engaged in the practice of medicine and physical therapy. This is impermissible absent legislative authorization. The parties disagree as to whether any statute authorizes BFOA's employment of physical therapists. [2] ¶ 12 In 1969, the legislature enacted the PSCA and thereby carved out a narrow statutory exception to the general rule prohibiting corporations from practicing learned professions. Id. at 561, 756 P.2d 129. The PSCA contains two provisions of potential importance here. [3] First, BFOA argues that RCW 18.100.050(1) authorizes its employment of physical therapists: An individual or group of individuals duly licensed . . . 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. Second, Columbia argues that RCW 18.100.080 prohibits BFOA's employment of physical therapists: No professional service corporation organized under this chapter shall engage in any business other than the rendering of the professional services for which it was incorporated. In deciding between these mutually exclusive readings of the statute, we are guided by familiar principles of statutory interpretation. ¶ 13 Our purpose in interpreting a statute is `to discern and implement the intent of the legislature.' City of Olympia v. Drebick, 156 Wash.2d 289, 295, 126 P.3d 802 (2006) (quoting State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003)). Our first inquiry is whether, looking to the entire statute in which the provision is found and to related statutes, the meaning of the provision in question is plain. Cosmopolitan Eng'g Group, Inc. v. Ondeo Degremont, Inc., 159 Wash.2d 292, 298-99, 149 P.3d 666 (2006). If so, our inquiry is at an end. Estate of Haselwood v. Bremerton Ice Arena, Inc., 166 Wash.2d 489, 498, 210 P.3d 308 (2009). If, however, the statute is susceptible to more than one reasonable interpretation, it is ambiguous, and we `may resort to statutory construction, legislative history, and relevant case law.' Id. (quoting Christensen v. Ellsworth, 162 Wash.2d 365, 373, 173 P.3d 228 (2007)). It is also true that [w]henever possible, statutes must be read in harmony and each must be given effect. Livingston v. Cedeno, 164 Wash.2d 46, 52, 186 P.3d 1055 (2008). With these principles in mind, we turn to the task of interpreting the PSCA as it applies to the present case. ¶ 14 Beginning with the prohibition provided in RCW 18.100.080, the prohibited conduct is engag[ing] in any business other than the rendering of the professional services for which [the professional service corporation] was incorporated. The question that immediately presents itself is what professional services a professional service corporation is incorporated to render. At the outset, we reject the proposition that this is solely determined by a corporation's articles of incorporation. A professional service corporation composed of dentists could not, for instance, state in its articles of incorporation that it is incorporated to render dental and legal advice and thereby be permitted to practice both dentistry and law. In coming to the proper interpretation, we turn to related provisions of the same statute. ¶ 15 Two provisions in chapter 18.100 RCW provide insight as to what professional services a professional service corporation is incorporated to render. In RCW 18.100.010, the legislature declared that its intent in passing the PSCA was to provide for the incorporation of an individual or group of individuals to render the same professional service to the public for which such individuals are required by law to be licensed or to obtain other legal authorization. In RCW 18.100.050(1), the legislature authorizes the formation of a professional service corporation by professionals duly licensed or otherwise legally authorized to render the same professional services . . . for the purpose of rendering professional service. Reading the relevant provisions in harmony, it is clear that the professional services for which a professional service corporation is incorporated, and in which it may therefore engage, are those for which the shareholders (or, in the case of a professional limited liability company, members, RCW 25.15.045(3)) are licensed. Thus, under RCW 18.100.080, BFOA may not engage in any business other than the rendering of the professional service that its members are licensed to practice: medicine. ¶ 16 BFOA argues that the PSCA is concerned with only who may own a professional service corporation, not whom that corporation may employ. The PSCA, however, addresses both. Multiple sections address what services the professional service corporation may render. RCW 18.100.010, .050(2)(5),.060, .065, .080. A corporation renders services through its employees. Thus, the PSCA impacts whom the corporation may employ. ¶ 17 Whether BFOA violates the PSCA therefore comes down to a single question: does it engage in any business other than the practice of medicine? Columbia argues that by employing physical therapists, BFOA is engaged in the practice of physical therapy, which Columbia contends is a different professional service. Columbia's argument relies chiefly on the fact that the practice of medicine and the practice of physical therapy are governed by different chapters of the RCW. Medicine is governed by chapter 18.71 RCW while physical therapy is governed by chapter 18.74 RCW. Columbia argues that this fact establishes that medicine and physical therapy are separate professional services. Columbia misunderstands the statutory interplay of these professions. ¶ 18 Physical therapy is one aspect of the practice of medicine. The practice of medicine is defined by RCW 18.71.011(1) as [o]ffer[ing] or undertak[ing] to diagnose, cure, advise or prescribe for any human disease, ailment, injury, infirmity, deformity, pain or other condition, physical or mental, real or imaginary, by any means or instrumentality. This broad definition readily encompasses all the acts constituting the statutory definition of the practice of physical therapy. RCW 18.74.010(8). The physical therapy licensing statute simply permits nonphysicians to engage in a limited practice of medicine without liability for the unauthorized practice of medicine. Cf. RCW 18.71.030(4) (providing that the prohibition on the unauthorized practice of medicine does not prohibit the practice of any healing art for which the practitioner is licensed). The upshot is that physical therapy is part of the practice of medicine and, by extension, part of the same professional service. . . for which BFOA's members are licensed. RCW 18.100.010. The practice of medicine is the purpose for which BFOA was incorporated and, even when employing physical therapists, BFOA does not engage in any business other than the practice of medicine. As such, BFOA's employment of physical therapists does not violate RCW 18.100.080 but is instead authorized by RCW 18.100.050(1), which allows the creation of a professional service corporation for the purpose of rendering the same professional service for which its organizers are duly licensed. ¶ 19 Our conclusion that the practice of physical therapy is included within the practice of medicine, as those terms are defined by the legislature, is reinforced by other statutory provisions. First, the physical therapy licensing statute expressly provides that [n]othing in this chapter prohibits any person licensed in this state under any other act from engaging in the practice for which he or she is licensed. RCW 18.74.090(1). This contemplates that other professionals are licensed to perform acts overlapping with or including those that physical therapists are licensed to perform. Second, the legislature knew how to create a field of the healing arts that does not fall within the practice of medicine. The legislature specifically provided, within the definition of the practice of medicine, that a person licensed under this chapter shall not engage in the practice of chiropractic as defined in RCW 18.25.005. RCW 18.71.011(4). This resulted in chiropractic being a distinct practice separate from the practice of medicine, not a mere subset of it. The legislature has not created a similar provision with respect to physical therapy. ¶ 20 In an effort to avoid this result, Columbia makes three additional arguments: that the use of the term physical therapy means it is a separate professional service; that professional services are not the same unless they are co-extensive; and that RCW 18.100.050(5) is a legislative determination that the practices of medicine and physical therapy are separate professional services. None of these arguments are availing. ¶ 21 First, Columbia points to RCW 18.74.090(1), which prohibits the use of the term physical therapy in connection with the name of any person not licensed as a physical therapist pursuant to that chapter. Columbia has not asserted a violation of RCW 18.74.090(1) as one of its claims. The question, therefore, is whether, by using the term physical therapy in connection with its business, it is engaged in a separate business from the practice of medicine, notwithstanding the fact the practice of medicine includes the acts constituting physical therapy. We do not read RCW 18.74.090(1) to stand for the proposition that calling an activity physical therapy is a separate professional service while performing the acts constituting physical therapy is not a separate professional service. We avoid such strained readings of statutes. State v. Neher, 112 Wash.2d 347, 351, 771 P.2d 330 (1989). ¶ 22 Second, Columbia argues that physical therapy and medicine cannot be the same professional service because, while medicine includes physical therapy, physical therapy does not include medicine. In other words, Columbia argues that to be the same professional service, two professions must be coextensive. This reasoning misses the point. Nothing in the PSCA requires that the professional services performed by the business be the same professional service. Instead, it requires that the individuals organizing the business entity be licensed to render the same professional service, RCW 18.100.050(1), and prohibits the professional service corporation from engaging in any business other than that for which the business was organized (i.e., any business other than that professional service for which its owners are licensed), RCW 18.100.080. The important fact is not that physical therapy and medicine are the same professional service, but rather that physical therapy falls within the same professional service for which the owners of BFOA are licensed. ¶ 23 Finally, Columbia argues that RCW 18.100.050(5), which places those licensed to practice medicine in a separate list from those licensed to practice physical therapy, amounts to a legislative determination that medicine and physical therapy may not be practiced by a single professional service corporation. RCW 18.100.050(5) [4] creates two lists of licensed professional services and provides that persons licensed pursuant to the listed chapters may own stock in and render their individual professional services through one professional service corporation with others licensed pursuant to statutes in the same list. Importantly, physicians are listed in subsection (a) but not subsection (b); physical therapists are not listed in subsection (a) but are listed in subsection (b). The legislation creating these lists of licensed professionals who may own stock in and render their professional services through a single professional service corporation was first enacted in 1996 [5] and had the effect of broadening the professions that could come together and form a single professional service corporation. See Laws of 1997, ch. 390, § 3. This, in turn, broadened the professional services that a single professional service corporation could provide. That is, these lists do not, as Columbia suggests, limit the services that a single professional service corporation may provide but rather broaden those services. As a result, RCW 18.100.050(5) does not alter our conclusion. ¶ 24 In sum, the PSCA does not prohibit BFOA's employment of physical therapists. In employing physical therapists, BFOA does not go beyond the practice of medicine, the professional service for which it was formed. Moreover, RCW 18.100.050(1) authorizes BFOA's employment of physical therapists, since it permits the formation of a professional limited liability company to render the professional servicemedicinefor which its members are licensed. As there is legislative authorization for BFOA's employment of physical therapists, BFOA does not violate the corporate practice of medicine doctrine. We therefore affirm the trial court's grant of summary judgment to BFOA on Columbia's PSCA claim and direct the trial court to enter summary judgment for BFOA on Columbia's common law corporate practice of medicine claim.