Court Opinion

ID: 9702741
Source: CourtListenerOpinion
Date Created: 2023-08-25 23:22:29.167553+00
Date Added: 2024-06-11T18:21:41.252189
License: Public Domain

HANSON, Justice
(concurring in part, dissenting in part).
Although I concur with the majority’s conclusions that a general business corpo*525ration may conduct the practices of physical therapy and massage therapy, I respectfully dissent from the majority’s conclusion that a general business corporation may not conduct the practice of chiropractic. I would conclude that the regulation of the ownership of a chiropractic practice is not within the inherent power of the court, but is a matter for the legislature, which has not prohibited a general business corporation from conducting such a practice. Further, I would conclude that the so called “corporate practice of medicine doctrine” is not firmly grounded in Minnesota common law. Finally, if we determine that Minnesota common law does recognize that doctrine by court decision, I would overrule it as having been rendered meaningless and unnecessary by the fundamental changes that have occurred in the practice of medicine over recent decades. Accordingly, I would affirm the decision of the court of appeals.
A. The Role of the Legislature
I agree with the majority’s statement that “[t]he legislature is the appropriate branch of government to debate and evaluate the necessity and desirability of alternative forms of health care delivery in this state.” But I disagree about what should be the default consequence until the legislature does act. The majority uses judicial restraint to decline to permit the corporate ownership of a chiropractic practice. I would use judicial restraint to decline to prohibit corporate ownership of a chiropractic practice.
Proposals to prohibit the corporate practice of medicine have been around since the turn of the 19th century.1 But the Minnesota legislature never enacted any prohibitions against the corporate practice of medicine except for veterinary medicine, Minn.Stat. § 156.11 (2004), first enacted in 1937, see Act of March 31, 1937, ch. 119, § 11, 1937 Minn. Laws 189, 192; and dentistry, Minn.Stat. § 150A.11, subd. 1 (2004), first enacted in 1969, see Act of June 5, 1969, ch. 974, § 11, 1969 Minn. Laws 1924, 1935. The legislature has not enacted any prohibition against the corporate practice of chiropractic. To the contrary, on the one known occasion when a bill was presented that would have given the legislature the opportunity to “debate and evaluate the necessity and desirability” of a prohibition against the corporate practice of chiropractic, it was not even given a hearing in committee, and the proposed prohibition was not enacted. S.F. 3228, 82d Minn. Leg.2002.
I agree that some policy considerations can be cited to support a prohibition against the corporate practice of chiropractic, but I find that other policy considerations weigh against any prohibition. The concern of commercial exploitation seems quaint in light of the enormous role the health care industry plays in our national economy, the consolidation of the major portions of that industry into just a few dominant corporations and the annual reports of executive compensation that place health care executives in the top echelons. *526And, the concerns about commercial exploitation and conflicts of interest compete with the perhaps more pressing concerns about inefficiencies that may increase the already high cost of health care and organizational restrictions that may perpetuate the barriers to better public access to health care providers. Because I see no evidence that the legislature has taken a position on these competing concerns one way or the other, I would decline to impose prohibitions where none has been imposed by the legislature.
B. The State of the Common Law
While I view the inaction of the legislature as evidence that the corporate practice of medicine doctrine does not exist in Minnesota (and should not originate with the court), the majority likely would counter that the legislature’s inaction is a form of acquiescence in, or at least a failure to abrogate, the doctrine that existed at common law. One question, thus, is whether the doctrine is truly part of Minnesota common law.
The majority notes that “many states” have recognized the corporate practice of medicine doctrine, by judicial opinion or statute. But the national history of the doctrine is complex. Many states have also rejected the doctrine, and many states that gave recognition to the doctrine in the early 1900s have abandoned it now. See, e.g., D. Cameron Dobbins, Survey of State Laws Relating to the Corporate Practice of Medicine, 9 No. 5 The Health Law. 18 (1997). In fact, one commentator reports that “the enforcement of the corporate practice doctrine has slackened over the last 20 years, it is commonly believed that the doctrine is dying a quiet death,” and “[ajccording to one account, the doctrine is actively applied in only five states.” Mark A. Hall & Justin G. Vaughn, The Corporate Practice of Medicine, in Health Care Corporate Law: Formation and Regulation § 3.2 (Mark A. Hall ed., 1993 and supp.1999). I conclude that it cannot be said that there ever was or now is a commonly accepted corporate practice of medicine doctrine in this country.
In Minnesota, as discussed above, the doctrine has not been established or codified by statute. Further, Minnesota’s statutes authorizing the formation of business corporations have not expressly excluded the “learned professions” as a lawful business purpose. In my view, the corporate practice of medicine doctrine also has not been recognized or enforced as part of our common law. The only decision that can be cited as possibly recognizing the doctrine as part of Minnesota’s common law is the 1933 decision in Granger v. Adson, 190 Minn. 23, 250 N.W. 722 (1933). But, for several reasons, that decision does not fulfill the role claimed for it.
First, and perhaps most important, the facts in Granger do not include any corporation. The “person” who employed the physician was an individual, not a corporation. Id. at 24, 250 N.W. at 722. Thus, any reference to the corporate practice of medicine in Granger is necessarily dicta. Second, the court determined that the individual was not licensed as a physician and was engaging in the unauthorized practice of medicine. Id. at 26, 250 N.W. at 723. This resolved the case before the court and all other discussion was gratuitous. Third, the Granger opinion does not specifically mention the corporate practice of medicine doctrine or the policies that underlie it. Granger’s very brief reference to a “corporation” appears to be an aside, not a thoughtful or studied conclusion. Our entire discussion of a corporation is as follows:
In Re Disbarment of Otterness, 181 Minn. 254, 232 N.W. 318, 73 A.L.R. 1319 [1930], we said that a corporation or *527layman could not indirectly practice law by hiring a licensed attorney to practice law for others for the benefit or profit of such hirer. We are just as firmly convinced that it is improper and contrary to statute and public policy for a corporation or layman to practice medicine in the same way.
Granger, 190 Minn. at 26-27, 250 N.W. at 723. It is unclear from the opinion whether we even considered the corporate practice of medicine doctrine.
The reference to Ottemess, a 1930 case, was curious because that case involved attorney discipline, a matter clearly within the court’s inherent regulatory power over the practice of law. See, e.g., In re Friedman, 183 Minn. 350, 353, 236 N.W. 703, 704 (1931) (referencing courts’ “inherent authority to admit, discipline, and disbar attorneys”). At issue in Ottemess was an attorney’s employment agreement with a banking corporation to conduct the private practice of law as an employee of and for the benefit of the bank. In re Otterness, 181 Minn. 254, 256, 232 N.W. 318, 319 (1930). Although we acknowledged that an attorney may be hired as an employee of a corporation and provide legal services to that corporation, we held that the corporation could not employ an attorney “to conduct law business generally for others” because it “amounted to the unlawful practice of law by the bank.” Id. at 257, 232 N.W. at 319. But because this court had inherent regulatory power over the practice of law, we had full power to decide, without legislative authorization, whether corporate law practice was compatible with the ethical requirements we imposed on members of the bar. That decision has no application to the corporate practice of the other professions that are not regulated by this court.
Further, Williams v. Mack, 202 Minn. 402, 278 N.W. 585 (1938), provides no support for the doctrine’s existence in Minnesota. Because Williams interpreted the relevant statute to authorize the corporate practice of optometry, it made no holding under the common law. See id. at 407-09, 278 N.W. at 587.
This court has not considered the corporate practice of medicine doctrine in the 70 years that followed Granger. Thus, I would conclude that the doctrine is not recognized in our common law.
C. The Current Situation
If, contrary to my view, we were to conclude that Granger established the doctrine as a part of Minnesota common law, I would not be reluctant to reexamine that doctrine in light of the substantial changes that have occurred since 1933. And, because the doctrine would then be a creature of this court, not the legislature, I would not defer to the legislature, but see it as the court’s responsibility to reexamine our own ruling.2
As early as 1987, one commentator observed these dramatic changes in the health care industry:
One industry expert predicts that by the mid-1990s, ten national firms will provide fifty percent of the nation’s medical care. Nationwide, hospital chains, nonexistent twenty years ago, now own or manage twelve percent of the nation’s hospitals. The proliferation of health maintenance organizations, freestanding emergency centers, and other proprie*528tary health care delivery systems exemplify the increased commercialization of medicine.
Jeffrey F. Chase-Lubitz, Note, The Corporate Practice of Medicine Doctrine: An Anachronism in the Modem Health Care Industry, 40 Vand. L.Rev. 445, 446 (1987) (citations omitted).
These trends have continued, causing these observations in 1998:
The delivery of health care changed tremendously over the eighty years since the AMA first articulated the corporate practice of medicine doctrine. Health care costs in the United States now constitute 14% of the gross national product, translating to over $1 trillion annually. These numbers have been increasing dramatically over the last three decades, from 5.9% of the gross national product and $42 billion each year in 1965 when the Medicare and Medicaid programs were enacted, to 12% of the gross national product and $700 billion annually in 1990, to the current 14% of the gross national product. The causes of these dramatic increases include factors which are inevitable such as the aging of the population, advances in expensive technology and service-cost inflation, and factors which may be susceptible to control, chief among them the longstanding system of third-party payors (insurance carriers) which has kept health care consumers largely insensitive to the price of medical services. It has been estimated that despite the increasing revenues generated by health care generally, as many as half of the acute-care hospitals now in existence will close. Part of this trend has been significant merger and acquisition activity involving hospitals, with one transaction occurring every three days in 1995 and 1996.
Adam M. Freiman, Comment, The Abandonment of the Antiquated Corporate Practice of Medicine Doctrine: Injecting a Dose of Efficiency Into the Modem Health Care Environment, 47 Emory L.J. 697, 733-34 (1998) (citations omitted).
Whether as the cause or an effect of these trends, the AMA has lifted its ethical ban on the corporate practice of medicine. In 1975 the Federal Trade Commission (FTC) charged the AMA with antitrust violations, alleging that its Principles of Medical Ethics, including its prohibitions of corporate practice, were anticompetitive because, in part, they restricted arrangements between physicians and nonphysi-cians and prevented the creation of more economical business structures. See Chase-Lubitz, supra, at 475-77; Freiman, supra, at 708-712.3 As a result, the AMA revised its ethical principles to state that “[a] physician shall * * * be free to choose whom to serve, with whom to associate, and the environment in, which to provide medical services.” American Medical Association, Principles of Medical Ethics § VI (1980), available at http://www.ama-assn.org/amal/pub/ upload/mm/369/1980 — principles.pdf.
These changes have fundamentally altered the public policy considerations relied on 70 years ago to support the judicial creation of the corporate practice of medicine doctrine in some states. To the extent that our decision in Granger is seen as one of them, I would overrule it.

. The idea was first introduced in 1890 by a statement of the newly formed American Medical Association (AMA), and by 1912 the AMA had addressed it as an ethical concern in its Principles of Medical Ethics. Thereafter, the AMA pressed for state licensing laws and advocated for judicial recognition of the corporate practice of medicine doctrine. See Jeffrey F. Chase-Lubitz, Note, The Corporate Practice of Medicine Doctrine: An Anachronism in the Modem Health Care Industry, 40 Vand. L.Rev. 445, 448-52 (1987); Adam M. Freiman, Comment, The Abandonment of the Antiquated Corporate Practice of Medicine Doctrine: Injecting a Dose of Efficiency into the Modem Health Care Environment, 47 Emory L.J. 697, 699-703 (1998).

. We faced a similar question when we were asked to re-examine the common law doctrine of state tort immunity. In rejecting the argument that we should defer to the legislature on that issue, we said: "The doctrine of state tort immunity is a creature of the judiciary and not the legislature, and what we have created, we may abolish.” Nieting v. Blondell, 306 Minn. 122, 127, 235 N.W.2d 597, 600-01 (1975).

. The FTCs findings were approved with minor modification by the United States Court of Appeals in American Medical Assn. v. Federal Trade Commission, 638 F.2d 443, 453 (2d Cir.1980), affd, 455 U.S. 676, 102 S.Ct. 1744, 71 L.Ed.2d 546 (1982).