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Forming a Professional Nursing Corporation in CA

Nursing is one of the most important occupations and the workplace environment is changing rapidly. According to data from the California Board of Registered Nursing, there are more than 487,000 active registered nurses (RNs) in the state. If you are considering starting a nursing company in California, it is crucial that your business has the right legal structure. A nursing corporation is a specialized type of business entity designed for firms offering services within the nursing profession. Here, our Fremont business formation lawyer highlights the key things to know about professional nursing corporations in California.

Know the Law: Professional Nursing Corporations in California

In California, a professional corporation (PC) is a specialized type of legal entity through which certain licensed professionals can conduct their business operations. Under California law (Cal. Corporation Code § 13401(b)), PCs are required to register with the state agency that is responsible for regulating the specific profession in question. A professional nursing corporation is required to register with the Board of Registered Nursing. Notably, not just anyone can form a professional nursing corporation in California. There are strict ownership requirements. At least 51 percent of the corporation must be owned by registered nurses in California. The remaining 49 percent can be owned by other specific licensed professionals in the health care field.

What are the Benefits of Forming a Nursing Corporation?

A PC is generally the most efficient and effective way to operate a nursing business in California. Some key advantages of operating a nursing services business as a professional nursing corporation include:

Tax savings—a professional corporation can reduce a nurse’s self-employment taxes
Liability protection—PCs are designed to provide additional legal liability protection

Important Considerations When Forming a Professional Nursing Corporation

Are you a registered nurse who is considering forming a business in California? It is imperative that your business is set up properly. Mistakes could cause you serious problems. Here are some of the most important considerations when setting up a professional nursing corporation in California.

Name: You need to select a name for your professional nursing practice. California law requires you to include the term “nursing” or “registered nursing” in the official name.
Tax implications: Taxes matter. In California, a professional nursing corporation can be taxed as a standard corporation (C Corporation), or it can be taxed as a pass-through business entity (S Corporation).
Ownership structure: The ownership structure of your professional nursing corporation must be set up properly. Make sure you have the right documents in place. You must file articles of incorporation with the state. You can also benefit from a comprehensive bylaws. There are several other documents needed to be a professional nursing corporation.

Forming a new business is complicated—especially when you are in a highly regulated industry such as health care. You do not have to have to navigate the business formation process alone. An experienced California business formation lawyer for nurses can help.

Call Our California Business Formation Attorney Today

Lynnette Ariathurai is a business formation lawyer with the skills, knowledge, and legal expertise to help you form a professional nursing corporation in CA. If you have any questions about your rights, responsibilities, or options, please do not hesitate to contact us for a confidential consultation. From our offices in Fremont, near Newark, we serve clients in Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, Santa Clara, and throughout the entire Bay Area.

Regulatory Compliance for Medical Practices

Health care is a highly regulated industry. It is crucial that all medical practices are in full compliance with applicable federal and state regulations. Any violation could lead to significant problems—potentially even financial sanctions.

Lynnette Ariathurai is an experienced business lawyer for medical practitioners. Attorney Ariathurai helps all types of medical practice with regulatory issues. To set up a confidential consultation with an experienced business attorney, please contact our Fremont law office today.

An Overview of Federal and State Regulations for Medical Practices in California

Moscone-Knox Professional Corporation Act

California has specific rules and regulations in place regarding the formation and ownership of medical practices. Medical practices must be structured as professional corporations (PCs) under the Moscone-Knox Professional Corporation Act. If you have any specific questions about forming or structuring a medical practice in California, an experienced business attorney for doctors, nurses, and medical personnel can help.

Anti-Kickback Laws

There are federal and state laws in place prohibiting “kickbacks” for medical referrals. The federal Anti-Kickback Statute (AKS) and the California Anti-Kickback Statute largely prohibit the offer of anything of value in exchange for a referral for a patient who participates in a federal or state health program.

Stark Law

Also known as the physician self-referral law, the Stark Law is a federal statute that bars physicians from referring patients that receive service paid by Medicare, Medicaid, or another federal health program to an entity with which the physician or their family member has a financial relationship. There are some limited exceptions to the law.

Regulations against Billing Fraud

Both California and the federal government have strict rules and regulations in place for billing fraud. Notably, the Office of Inspector General (OIG) can bring civil charges for health billing fraud even if the conduct is deemed to be accidental. Medical practices need to understand billing regulations, including the California state prohibition on “surprise medical bills.”

Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act (HIPAA) requires medical practices to strictly protect the confidentiality of sensitive patient information. It is imperative that all medical practices operating in California have a well-developed system in place for protecting the privacy of patient records.

Sharing Office Space

It is not uncommon for medical practices—especially smaller medical practices—to share office space. Such an arrangement can be advantageous for all parties involved. Though, in doing so, medical practices must ensure that their conduct is consistent with their lease. A violation of the lease for improper share could lead to problems. Medical practices also need to ensure that patient records are protected as required by HIPAA. In 2019, the Centers for Medicare and Medicaid Services (CMS) released draft guidelines on medical practice share space arrangement. A key principle is that each medical practice should keep its business clearly separate and that proper disclosures should be made to patients.

Get Help from a California Business Lawyer for Medical Practices

Lynnette Ariathurai is a Bay Area business law attorney committed to providing forward-looking legal advice and cost-effective solutions for medical practices in Fremont CA, near Newark, or Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, or Santa Clara. If you have any questions about regulatory compliance for medical practices, please contact our Fremont office for a strictly confidential consultation.

health billing regulations, health care regulations, HIPAA, medical practice regulations, structuring a medical practice

Importance of Having an Attorney Advise During the Formation of an LLC

Making the decision to start up a new business is exciting. You can build something of real value to support yourself, your family, and your community. A limited liability company (LLC) is a flexible, cost effective legal structure for many different types of businesses. As forming any type of new business can be complicated, it is best to seek guidance from an experienced attorney who can help you put the right foundation in place. Here, our Fremont business formation lawyer highlights five considerations that should be addressed during the formation of a limited liability company (LLC).

1. Whether an LLC is the proper form (eligibility, needs, etc.)

A limited liability company is a popular way to set up a business. As explained by the California Secretary of State, an LLC “offers liability protection similar to that of a corporation, but is taxed differently.” It combines some of the core advantages of a corporation and a partnership. That being said, an LLC is not the right form for every type of business. Some companies are better served by a different legal structure. Further, certain types of businesses in California—such as a medical, dental, or nursing practice—cannot be set up as an LLC. An attorney will help you determine whether an LLC is the right form.

2. Selection of State for your limited liability company

When forming an LLC, you also need to decide where you are going to set it up. You may or may not want to make California the home state of your LLC. In some circumstances, setting up an LLC in a different jurisdiction—such as Delaware or Nevada—offers real advantages. In other cases, setting up an LLC outside of California adds complexity with no tangible benefit. A business formation lawyer can help you choose the right state.

3. The applicability of liability protection

One of the central advantages of an LLC is that it offers liability protection. Simply described, an LLC helps to ensure that the members will not be held personally liable for the debts incurred by the business. Of course, the liability protection associated with an LLC is situation-dependent. It may not, by itself, offer adequate liability protection. Additional precautions may be required.

4. Drafting and negotiating an operating agreement

Every LLC should have a written operating agreement. While LLCs doing business in California are regulated by California law, the reality is that many of your personal rights and responsibilities related to the business will be derived from your operating agreement. An operating agreement for an LLC should always be negotiated, drafted, and reviewed by an experienced business formation attorney.

5. Compliance with ongoing requirements for LLCs

Finally, it is important to remember that LLCs must comply with certain ongoing legal requirements in California. In setting up an LLC, an experienced California business attorney can help you understand the ongoing and future requirements so that you are in the best position to comply.

Get Help from Our California Business Formation Attorney Today

Lynnette Ariathurai is an experienced business formation attorney. If you have any specific questions about setting up a limited liability company (LLC), we are here to help. Contact us today to arrange a confidential consultation. We provide business law services throughout the Bay Area.

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Negotiating Managed Care Contracts

The health care industry is one of the largest and most complex in the United States. According to data from the Centers for Medicare and Medicaid Services (CMS), total public and private U.S. health spending exceeds $4.1 trillion. Insurance providers play a huge role in health financing. Here, our Fremont business contract attorney highlights some of the key things to consider when negotiating managed care agreements.

What is a Managed Care Contract?

As a starting point, it is important to understand what a managed care contract is and how it works. A managed care contract is effectively an agreement between a medical provider (doctor, specialist, etc.) and a third-party entity. Through a managed care plan, health plan providers will enter agreements with medical facilities to provide care for members at reduced costs. There are a number of different specific types of managed care arrangements, including:

Health Maintenance Organizations (HMOs);
Preferred Provider Organizations (PPOs); and
Point of Service providers.

A Managed Care Agreement is Not Cast in Stone: You Can Negotiate Key Terms

For doctors and other medical providers, there can be advantages to entering a management care agreement. However, similar to any other type of important commercial contract, the specific terms and conditions always matter. A proposed managed care contract is not set in stone. The terms are subject to negotiation. Negotiating an effective agreement requires understanding your needs and your risks. Some key provisions that are subject to negotiate include:

Rates: Rates matter. As noted previously, managed care agreements generally provided lower cost services to members. When doctors and other medical practices enter these agreements, they need to be sure that the reimbursement rate is in their best interest.
Claims Process: The language surrounding all aspects of the claim process should be carefully reviewed. Some key issues to look for include day-of cutoff, downcoding, no take backs, and withholding,
Dispute Resolution (Arbitration Provisions): Disputes can happen within the context of a managed care agreement. A well-drafted agreement will generally have some sort of dispute resolution clause. For example, it may call for arbitration.
Exit Options (Termination, Expiration): In a managed care agreement, it is also important to look at the exit options of each party. Does either party have the right to terminate the agreement? When will the contract expire? What happens after the date of expiration?
Other Unfavorable Provisions: Finally, medical providers should also carefully look for other provisions that may be unfavorable. As an example, some managed care agreements contain language that gives the payor broad (or even unilateral) authority to amend the terms of the contract. This type of language generally needs to be removed.

If you are preparing to negotiate a managed care agreement, there are major advantages to consulting with an experienced attorney. A business lawyer who works closely with medical practices and health care facilities can negotiate, draft, and review your managed care contract to ensure that it is in your best legal and financial interests.

Contact Our California Business Lawyer for Medical Practices Today

A business law attorney with extensive experience, Lynnette Ariathurai works with companies and medical practices in the health care industry. If you have questions about negotiating a managed care contract, please contact our Fremont law office for a strictly confidential initial consultation.

agreements, Contracts, healthcare, managed care

Who Owns a Patients’ Medical Records When a Physician Leaves a Practice?

Physicians have an ethical and professional duty to manage medical records properly. To start, the HIPAA Privacy Rule requires doctors, health care providers, and other parties to protect the confidentiality of sensitive patient medical records. When a doctor moves on from a practice group, it is crucial that all patient medical records are handled in an appropriate manner.

This raises an important question: How should patient medical records be handled when a physician leaves a group medical practice? The Medical Board of California and the American Medical Association (AMA) provide some important guidance. In this article, our Fremont business lawyer explains the key things to know about who owns a patient’s medical records in California.

Background Ownership of Medical Records in California

Medical record ownership varies by state. In California, medical records belong to a hospital or a doctor. With this ownership comes certain ethical and professional obligations to patients. Patients have the right to access their medical records in certain circumstances. Under California Health & Safety Code 123100, patients have a general right to access their medical records and/or summaries. Further, the AMA Code of Ethics 1.1.3(f) states that patients should have the right “to obtain copies or summaries of their medical records.” To comply with statutory and regulatory obligations, group practices must handle medical records properly.

A Note on Professional Courtesy: California law does not require group practice to transfer records between providers. However, the Medical Board of California considers this a “professional courtesy.” The possible cost of copy and/or clerical fees depend on the specific situation.

Medical Board of California: Patient Records When a Doctor Leaves a Practice

The California Medical Board advises practitioners that patients should be notified regarding certain fundamental changes to the structure of a group medical practice. When a doctor leaves a medical practice in California, their patients should be notified and given a chance to make provisions for their medical records.

The AMA has also issued ethical guidance on this matter. Under AMA Code of Ethics Opinion 7.03, patients should be notified when their doctor is leaving a practice group. Further, they should be given the chance to have their medical records retained or forwarded to the doctor’s new practice group based on their preferences.

Medical Practice Agreements Should Address Patient Medical Records

Medical records should be addressed in agreements between doctors. You are always better off discussing and handling this matter at the beginning of a commercial relationship rather than the end of a commercial relationship. Any contracts that your medical practice relies on should have provisions for who owns patient medical records when a doctor leaves the practice. Agreements should include clear instructions for patient notification, including who is responsible for:

Sending out notices to patients
Bearing the cost of sending out notices to patients

Schedule a Confidential Consultation with a California Business Lawyer

Lynnette Ariathurai is a business lawyer with extensive experience working with doctors and other medical professionals. Contact us today to set up a confidential initial consultation. From our Fremont law office, we work with medical practices throughout the San Francisco Bay Area.

health care providers, medical practice law, medical record ownership, Medical records law

Are LLCs the Right Entity for You?

The current economic environment is highly competitive. It is more important than ever that businesses have the right legal structure in place. An LLC might be the right entity for your California business. Indeed, there are many reasons to select an LLC as a business entity. However, an LLC is not the right business entity for every situation. In California, certain types of businesses cannot lawfully operate as an LLC. Here, our Fremont business formation lawyer highlights the key things to know if you are trying to determine if an LLC is the right entity for your company.

Know the Benefits of Forming a Limited Liability Company (LLC)

As explained by the California Franchise Tax Board, a limited liability company is a type of business entity that “blends partnership and corporate structures.” There are a number of different potential advantages to operating as an LLC, including:

Ease of set up: It is relatively easy and cost-effective to set up an LLC in California. You will have to select a name for your LLC, complete form LLC-1 and submit it to the Secretary of State and pay California’s annual LLC tax. There are minimal other requirements, including annual compliance costs.
Liability protection: Perhaps the primary benefit of an LLC is that it offers strong liability protection. As a member of an LLC in California, your personal assets can be protected from the debts and liabilities of the business. There are limited exceptions, similar to a corporation.
Flexibility: A California LLC is a fundamentally flexible business structure. You can effectively structure your company in the way you feel works best—profits, financial obligations, and voting rights can be split however you and the other members desire.

It is highly recommended that you have a professionally drafted operating agreement for your LLC. A well-crafted agreement will ensure that your rights and interests are properly protected.

California Law: Not All Businesses Can Operate as LLCs

It is important to emphasize that not every type of business can operate as an LLC in California. In fact, most licensed-businesses cannot be structured as an LLC. While there are limited exceptions, you should always consult with an experienced Bay Area business lawyer before moving forward. California law is evolving and certain CSLB, service businesses and home health care businesses can now be structured as LLCs.

For certain types of licensed professionals (lawyers, accountants, architects, etc.), an alternative type of business entity called a limited liability partnership (LLP) is an option. If you have any questions about forming an LLP, our Fremont, CA business formation lawyer can help.

LLCs are Not the Right Entity for Every Business

Even if your specific type of company can operate an LLC in California, it may still not be the best option for your needs. While LLCs offer some strong advantages—low administrative costs, liability protection, flexibility, etc.—there are also some downsides.

Most notably, an LLC operates as a pass-through entity for tax purposes. There will be a self-employment tax for LLC members. For this and other reasons, LLCs are generally not the best option for companies holding significant inventory, leasing expensive commercial space, or that have high overhead costs.

Consult With a Business Lawyer in the Bay Area

Lynnette Ariathurai is an experienced, solutions-driven business formation lawyer. If you have any questions about whether an LLC is the right entity for your business, please contact us today. We serve communities throughout the area, including Fremont, Newark, Union City, East Bay, Milpitas, San Leandro, Santa Clara, Hayward, and San Jose.

business entity, business formation, business planning, business structure, liability protection, limited liability partnership

How to Buy or Sell a Medical Practice

Buying or selling a medical practice is complicated. Beyond the complexities that come with any major commercial transaction, there are also specialized legal considerations for the owners and operators of medical practices in California. In this article, our Fremont business law attorney discusses some of the most important things to know about buying or selling a medical practice in Northern California. If you have any specific questions, please do not hesitate to call our law office.

Due Diligence: Make Sure Your Counterparties are Reliable

You should never buy or sell any business without conducting thorough due diligence. Broadly defined, due diligence is an investigation, inquiry, and general exercise of care that a person should take before entering into an agreement.

Due diligence is essential when buying a medical practice. You must have a full understanding of the financial position of the business, including its assets and potential liabilities. Due diligence is no less important when selling a practice. Make sure your counterparties are reliable.

The Structure and Components of the Deal

The structure and components of a purchase agreement matter. Of course, this starts with determining the appropriate purchase or sale price for the medical practice. Parties should also pay very close attention to the structure of the transaction. You may be best off with a stock sale, whereby the entire medical practice is purchased. Alternatively, the parties may prefer an asset sale in which the buyer purchases specific assets held by the practice. It is always the best practice to have a medical practice purchase agreement reviewed by an experienced business lawyer.

Unique Concerns for Buying or Selling Medical Practices

Doctors and other medical professionals who are buying or selling a practice in California should be aware of some of the unique federal and state regulations that will impact their rights and responsibilities. Among other things, these include:

Restrictions on ownership: Any transfer of ownership of a medical practice in California must conform to the requirements of the state’s Moscone-Knox Professional Corporation Act. Medical practices are generally structured as PCs (professional corporations) — there are restrictions on who can own these business entities.
Patient notice: The Medical Board of California has regulations in place regarding patient notice when a practice is sold to another party or intends to close. Make sure that patients are notified of the transaction as soon as possible.
Medical records: The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires medical professionals (and medical practices) to protect sensitive medical records. HIPAA’s privacy requirements must be followed through all aspects of the sale.
Controlled substances: If the medical practice has access to any controlled substances, it is imperative that these highly-regulated drugs are handled properly in accordance with the applicable federal and state laws.

Finalizing the Sale of a Medical Practice

Before the medical practice sale can be finalized, there are several issues that need to be addressed. Once the final structure of the business purchase agreement is in place, be sure to attend to future-focused issues, such as tail insurance and whether there will be a non-compete agreement in place. An experienced California business lawyer can help you secure, organize, and complete all the legal and commercial documents that you need to finalize the transaction.

Consult With Our Bay Area Business Law Attorney Today

Lynnette Ariathurai is a top business lawyer with the skills and experience to represent medical practitioners with buying or selling a medical practice. Contact us today for your fully confidential initial consultation. We serve communities throughout the Bay Area, including Fremont, Newark, East Bay, Union City, Hayward, Santa Clara, Milpitas, San Jose, San Leandro, and Gilroy.

commercial lease, medical practitioners, navigating medical practice lease, negotiating medical practice lease

Navigating Leases for a Medical Practice

A commercial lease is the legal foundation of a relationship between a business and a landlord. If you own and operate a medical practice in the Bay Area, navigating a lease agreement can be especially complicated. There are some unique issues that should be considered and addressed as part of your commercial lease. In this article, our California contract review attorney highlights some of the key issues to consider when drafting and negotiating a lease for your medical practice.

Key Commercial Leasing Issues for Medical Practitioners

Any successful medical practice needs an appropriate space to operate. The commercial property that you set up shop in should be well-suited for the particular needs of your practice. Additionally, the commercial lease that you operate under should provide an appropriate amount of legal protection. Some of the key issues that should be addressed in a commercial lease for a medical practice in California include:

Cost: You should have a clear definitions of the costs associated with your commercial lease. As a starting point, there must be a clear structure for how rent is calculated—either as a fixed monthly rate or as a percentage of revenue/profits. Additionally, a lease usually specifies responsibility for utilities, taxes, common area expenses, and other costs.
Liability: Liability is an important issue in a commercial lease — particularly for medical practitioners. A commercial landlord may try to include terms that shift liability towards your medical practice. Be sure to carefully review and fully understand liability risks.
Tenant improvements: In many cases, a medical practice needs to make certain improvements and alterations to a commercial space to operate. The lease should clarify two key things:
- Your right to make improvements
- Financial responsibility for any improvements
Weekend/night operations: Medical needs can arise at any moment. Many practices operate outside of normal working hours, including on nights and weekends. Make sure that your lease allows for weekend/night operations and ensure that the property is prepared. For example, the heat/air conditioning should be running.
Privacy (landlord access): Privacy is a major concern for medical practices. There are many state and federal privacy regulations in place to ensure that health care providers protect the sensitive health information of patients. It is a best practice to address landlord access to the property and other privacy concerns in a commercial lease agreement.
ADA compliance: The Americans with Disabilities Act (ADA) is a federal civil rights law that puts certain responsibilities on property owners, as well as businesses and business owners. Leases often include waiver of ADA compliance by landlord, and the burden shifts to the tenant to comply. A commercial space may need to be upgraded to ensure that your practice is in full compliance with the ADA. ADA complaints for non-compliance can be expensive.
Duration (termination and renewal): A commercial lease should always have a well-defined duration. Beyond that, the lease should clarify your rights and responsibilities regarding leaving the property before the lease ends and remaining in the property once the lease expires. Among other things, your lease should address forced moves to substitute premises, subletting rights, early termination options, and renewal rights.

Contact Our Fremont, CA Commercial Lease Lawyer Today

Lynnette Ariathurai has deep experience negotiating, drafting, and reviewing commercial leases. If you have any questions about navigating a lease for a medical practice, we are here to help. Contact us now for a confidential consultation. Our firm serves clients from our offices in Fremont throughout the Bay Area including Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara.

commercial lease, medical practitioners, navigating medical practice lease, negotiating medical practice lease

Best Practices for Navigating Changing COVID Laws for Businesses

The COVID-19 pandemic continues to affect communities around the world. According to data from the California Department of Public Health, there have been more than 4.1 million cases of the virus confirmed in the state as of mid-August of 2021—and with the Delta variant, case rates are rising once again. For businesses, navigating the ever-changing regulatory environment during the pandemic is challenging. Here, our Fremont, CA business lawyer highlights some of the best practices for companies looking to navigate COVID-19 regulations in the Bay Area.

Do Your Research (Local Law Matters)

You need to stay up-to-date on all applicable laws. Indeed, the only truly effective way for businesses to navigate the changing COVID-19 legal landscape is to work with an experienced business lawyer or do frequent independent research into the relevant rules and regulations. Notably, it is imperative that business owners refer not just to federal and state guidelines, but also to local rules and ordinances.

In California, the regulations sometimes vary from city to city or county to county. Here is an example: On August 2nd, 2021, Cal/OSHA released new guidance on masks. Under the statewide public health regulations, facial coverings are required in certain places, such as healthcare settings. For vaccinated people, masks are only “recommended” in most indoor workplace settings. However, some local governments have different requirements. For example, on August 3rd, 2021, the Alameda County Health Care Services Agency reinstated a full indoor mask mandate—regardless of vaccination status. Make sure you know the rules in your area.

Implement a Process for COVID-19 Planning/Rapid Decision-Making

As the COVID-19 outbreak is still a developing public health crisis, it is crucial that businesses in the Bay Area build and implement a process for pandemic planning and rapid decision making. Keep in mind that things can change quickly. Several factors are subject to change, including masking rules, vaccine regulations, social distancing guidelines, and capacity restrictions. A well-developed plan can make navigating the pandemic far easier. Among other things, your business should have:

A plan designed to meet your unique needs/industry
A proactive mindset, always ready to address changing rules
A clear chain of command to ensure swift and decisive decisions when necessary

Be Ready to Seek Professional Guidance on COVID Regulations

Owning and operating a business is difficult enough during normal times. With the COVID-19 pandemic posing a wide range of challenges on businesses in the Bay Area, it has become even more complicated. You should not hesitate to consult with an experienced California business lawyer who can help you and your partners manage the pandemic.

Schedule a Confidential Consultation with a Bay Area Business Lawyer

Attorney Lynnette Ariathurai is a skilled, solutions-focused advocate for business owners. If you have any questions about the best practices for navigating changing COVID-19 laws, our law firm can help. Contact us today for a strictly confidential consultation. From our Fremont law office, we represent businesses throughout the Bay Area, including in Hayward, Union City, Castro Valley, Milpitas, and Newark.

business attorney, California COVID laws, COVID laws, COVID regulations, COVID-19

Business Legal Items Needed to Open a New Medical Practice in California

Are you preparing to open a brand new medical practice in California? If so, there are important business and legal considerations that you should be aware of. State law impacts the structure and ownership requirements of your business. Here, our Fremont business formation attorney provides a brief overview of the business and legal items needed to open a medical practice in California.

Entity Selection and Business Formation

Business startup is complicated—especially in the health care industry. California has specific rules and regulations regarding the formation of a medical practice. In fact, state law generally prohibits doctors and medical professionals from operating their business as a limited liability company (LLC) or traditional corporation.

Instead, medical practices are usually formed as a specialized type of business called a professional medical corporation. Under California’s Moscone-Knox Professional Corporation Act, there are restrictions on who can serve as an officer/director of a medical corporation and restrictions on who can own shares in these corporations.

Commercial Lease

A new medical practice must operate from somewhere. Most likely, this means that your new business will need to enter into a commercial lease agreement. In entering a lease agreement, there are a wide range of different issues that should be considered, including:

The location and convenience for current and future patients
The monthly cost and duration of the lease
Specialized medical issues, including waste removal, potentially hazardous materials on the premises, and storage of sensitive patient information
Common area maintenance (CAM) charges (also known as a triple net lease (NNN))

An experienced California business law attorney can help you negotiate and draft a commercial lease agreement that works effectively for your new medical practice.

Employment Matters

If your medical practice is planning on hiring employees, you need to take the time to put the proper structure in place. Make sure you and your business partners understand the legal requirements of your business. As an example, all employers in California with five or more total employees are subject to the Fair Employment and Housing Act (FEHA). An employment lawyer with experience representing business owners in the healthcare industry can help you create and implement strategies to limit conflict with employees and reduce your liability risk.

Business Contracts

In the modern business world, contracts are at the basis of most commercial agreements. Whether your medical practice is working with partner companies, such as a medical service organization (MSO), or entering into agreements with outside suppliers/vendors, it is essential that you rely on well-drafted business contracts.

Call Our Fremont, CA Medical Practice Formation Attorney for Help

Attorney Lynette Ariathurai is committed to providing forward-looking guidance and cost effective legal representation. If you have any questions about what business and legal items you need to start a medical practice in California, we can help.

Contact us today for a confidential initial consultation with a business lawyer. From our office in Fremont, we serve businesses and startups throughout the region, including in Hayward, Union City, Castro Valley, Milpitas, and Newark.

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