Opinion ID: 2543369
Heading Depth: 2
Heading Rank: 3

Heading: Professional Medical Corporation Statute Section 12-36-134

Text: We must determine whether section 12-36-134 statutorily abolished the common law corporate practice of medicine doctrine. This is a question of statutory interpretation. The task of the court in interpreting a statute is to determine and give effect to the intent of the legislature. Colo. Office of Consumer Counsel v. PUC, 42 P.3d 23, 26 (Colo.2002). If the plain language of the statute clearly expresses the legislative intent, then the court must give effect to the ordinary meaning of the statutory language. Likewise, the court should avoid interpreting a statute in a way that defeats the obvious intent of the legislature. Id. Further, a statute must be read and considered as a whole. Each part of the statute must be given consistent and harmonious effect. Id. The plaintiffs contend, and the court of appeals agreed, that the statute at issue, section 12-36-134, [2] allows corporations to practice medicine in a limited manner by allowing doctors to incorporate. We agree. The statute plainly provides, Persons licensed to practice medicine ... may form professional service corporations for the practice of medicine. § 12-36-134(1), 4 C.R.S. (2001). The statute includes restrictions on how a professional medical corporation may be established. For example, all shareholders of such a corporation must be licensed to practice medicine, all directors and officers should be physicians, and any lay directors and officers may not exercise any authority over professional matters. § 12-36-134(1)(d), (1)(f). The language of the statute demonstrates that the legislature contemplated professional corporations may practice medicine, have control over medical matters, and be vicariously liable for the negligent acts of its employees. Several parts of the statute reveal this intent: subsection (1)(b) demonstrates that the legislature intended for professional corporations to practice medicine. That subsection requires the corporation to be organized solely for the purposes of conducting the practice of medicine only through persons licensed by the board to practice medicine. Additionally, subsection (7) indicates the same intent by providing, Except as provided in this section, corporations shall not practice medicine, indicating that section 12-36-134 permits professional corporations to practice medicine. Furthermore, subsection (1)(f), evidences that the legislature intended that professional corporations may exercise control over physician employees. That section forbids lay directors from exercising authority over professional matters and thereby implies that a corporation's physician directors and officers do have such authority. Finally, the statute demonstrates that the legislature intended for a professional medical corporation to be vicariously liable for acts of physician employees. Subsection (1)(g)(I), a section dealing with insurance for the corporation, states that insurance shall insure the corporation against liability imposed upon the corporation by law for damages resulting from any claim made against the corporation arising out of performance of professional services .... § 12-36-134(1)(g)(I) (emphasis added). Pediatric Neurosurgery argues that the language in subsection (3) indicates that the general assembly did not intend for professional medical corporations to practice medicine. That section states, The corporation shall do nothing which, if done by a person licensed to practice medicine ... employed by it, would violate the standards of professional conduct.... We disagree. We read this language to mean that the corporation may practice medicine but, as with the doctors themselves, may not do anything that violates medical standards of conduct. Section 12-36-134 expressly does not affect the corporate practice of medicine doctrine as it applies to hospitals. In fact, subsection (7) provides that employment of a physician under section 25-3-103.7 (pertaining to employment of physicians by hospitals) shall not be considered the corporate practice of medicine. § 12-36-134(7), 4 C.R.S. (2001). Although we agree that section 12-34-136 did not abolish the corporate practice of medicine doctrine in Colorado, we hold that it creates an exception to the common-law rule that corporations may not practice medicine. As further support for our holding that section 12-36-134 creates an exception to the corporate practice of medicine doctrine, we have found references to the exception in various law journal articles regarding the doctrine in Colorado. These references reveal that it is well-accepted within the field of health care law that section 12-36-134 creates an exception to the corporate practice of medicine doctrine. [P]rofessional corporations... for the practice of medicine are exempted [from the prohibition on the corporate practice of medicine]. Johnson, supra, at 2504. Corporations other than hospitals are not authorized to employ physicians or otherwise engage in the practice of medicine, and physicians may not practice medicine as the partner, agent, employee of or in joint venture with such corporations, other than professional service corporations. Earnest, supra, at 2347. Additionally, the legislature has incorporated this exception into other sections of the Colorado code. In section 12-36-117, 4 C.R.S. (2001), the legislature defines unprofessional medical conduct. Paragraph (1)(m) of that statute prohibits a doctor from practicing medicine with others, including corporations, who are not licensed physicians, other than a professional services corporation for the practice of medicine as defined in section 12-36-134. § 12-36-117(1)(m), 4 C.R.S. (2001). Likewise, a portion of the Health Care Availability Act that deals with tort reform defines a health care professional as any person licensed to practice medicine, nursing, dentistry, or other health profession, and [t]he term includes any professional corporation ... permitted by the laws of this state. § 13-64-202(4)(a), 5 C.R.S. (2001); see also § 13-64-403(12)(a), 5 C.R.S. (2001); § 25-4-2003(3), 8 C.R.S. (2001). The plain language of section 12-36-134 and the references to professional medical corporations in articles regarding the practice of health law and in various sections of the Colorado code convince this court that section 12-36-134 permits professional corporations to practice medicine.