Helped Clients Recover Over $25 Billion. Since 1979.
Helped Clients Recover Over $25 Billion. Since 1979.
Running a medical practice in California means navigating some of the most complex business regulations in the country. From entity formation under the Moscone-Knox Professional Corporation Act to federal compliance obligations under Stark Law, Anti-Kickback statutes, and HIPAA, physicians face a regulatory landscape that general business attorneys are not equipped to handle alone.
At The Schenk Law Firm, we provide comprehensive business advisory services built specifically for physicians and medical organizations. Whether you are a solo practitioner incorporating for the first time, a group of physicians forming a new medical practice, or an established practice planning a strategic exit, we guide you through every stage.
Our lead business advisory attorney, David Lizerbram, is the son of a doctor and healthcare entrepreneur. He grew up around the business of medicine and has spent over 19 years advising business owners across California, with more than 700 clients served and 750 USPTO trademark and intellectual property filings. That personal understanding of the healthcare industry, combined with the full resources of our firm, means your practice is in experienced hands.
We serve physician clients throughout the state of California.
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California imposes some of the most restrictive rules in the nation on how physicians can structure and operate their practices. A business attorney who does not understand these rules can expose a physician to licensing risk, regulatory penalties, or deal structures that violate California law.
The Corporate Practice of Medicine (CPOM) doctrine prohibits unlicensed corporations and lay entities from practicing medicine, employing physicians to provide clinical care, or controlling physician clinical decisions. California enforces this doctrine aggressively, and violations can result in license suspension, civil penalties, and criminal prosecution.
California prohibits physicians from forming LLCs. Under Corporations Code Section 13401 and Business and Professions Code Section 2400 et seq., licensed medical professionals may not use a limited liability company to deliver healthcare services. This is one of the most common misconceptions among physicians starting a practice.
The Moscone-Knox Professional Corporation Act (Cal. Corp. Code Sections 13400-13410) creates unique ownership, governance, and naming requirements for physician-owned professional corporations that do not apply to standard business entities.
Beyond state law, physicians must also comply with overlapping federal regulations: the Stark Law governing physician self-referrals, the Anti-Kickback Statute prohibiting inducements for referrals, and HIPAA privacy and security requirements.
And as of January 1, 2026, new California legislation (SB 351 and AB 1415) has added significant restrictions on private equity involvement and new reporting obligations for management services organizations. Physicians need counsel who is current on these changes.
Learn more about our Entity Formation & Structuring Services.
A Personal Understanding of Healthcare
David Lizerbram is the son of a doctor and healthcare entrepreneur. He grew up watching his father build and operate healthcare businesses, and he brings that firsthand understanding to every physician client engagement. With over 19 years of California business law experience, more than 700 clients advised, and 750+ USPTO trademark and intellectual property filings, David provides the depth of experience that physician clients need when forming, operating, and protecting their practices.
Financial Sophistication for Complex Deals
Benjamin Schenk served as a Product Manager at Bridgewater Associates, the world’s largest hedge fund, before founding The Civic Group LLC, a commercial real estate investment and asset management firm. He then graduated magna cum laude from Dartmouth College and earned his J.D. from the University of San Diego School of Law. This financial industry background brings a level of deal analysis and structuring sophistication that is rare in a law firm focused on physician clients, particularly for complex transactions involving partnerships, mergers, acquisitions, and private equity.
Healthcare Policy and Government Experience
Lynn Schenk served as a member of the United States House of Representatives and as California’s Secretary of Business, Transportation, and Housing. She has served on the boards of Biogen (a Fortune 500 biotechnology company), the Scripps Research Institute, the San Diego Consortium for Regenerative Medicine, and Rady Children’s Hospital. This combination of legislative, regulatory, and healthcare governance experience is unmatched among San Diego business law firms and provides our physician clients with access to insight at the intersection of healthcare, policy, and business.
Litigation and Transactional Under One Roof
Many business law firms offer only transactional services. Many litigation firms do not offer business advisory. The Schenk Law Firm provides both. If a partnership dispute, contract breach, regulatory enforcement action, or other conflict arises, the same firm that structured the deal can litigate it. This provides seamless continuity and eliminates the cost and friction of bringing a new firm up to speed.
Medical Practice Entity Formation
A Medical Professional Corporation (PC) is the primary entity structure available to California physicians who wish to incorporate their practice. Governed by the Moscone-Knox Professional Corporation Act (Cal. Corp. Code Sections 13400-13410), a medical PC has specific requirements that distinguish it from a standard corporation: at least 51% of shares must be held by physicians licensed by the Medical Board of California, all directors and officers must be licensed healthcare professionals, and the corporate name must include the last name of at least one shareholder or a fictitious name permit must be obtained from the Medical Board.
Physicians who do not wish to incorporate may operate as a sole proprietorship or a general partnership, though both structures carry the significant drawback of unlimited personal liability. California law does not permit physicians to form LLCs for the delivery of medical services.
We handle the full formation process, from articles of incorporation and bylaws to shareholder agreements.
| Professional Corporation (PC) | Sole Proprietorship | General Partnership | |
|---|---|---|---|
| Liability Protection | Limited (business debts and contracts; does not shield individual malpractice) | None (personal assets at risk) | None (each partner liable for all partnership debts) |
| Tax Treatment | C-Corp or S-Corp election available | Pass-through (Schedule C) | Pass-through (Form 1065) |
| Ownership Requirements | 51%+ must be licensed physicians; remaining may be certain other licensed professionals | Single physician | Two or more physicians |
| Formation Complexity | Moderate (articles, bylaws, Medical Board filings, shareholder agreement) | Minimal (business license only) | Low (partnership agreement recommended but not legally required) |
| Governance Requirements | Annual meetings, corporate minutes, board resolutions | None | Per partnership agreement |
| Transferability | Shares transferable to qualified licensees per shareholder agreement | Not transferable | Per partnership agreement terms |
| Best Suited For | Group practices, practices seeking liability protection, practices planning for growth or eventual sale | Solo physicians with minimal risk exposure | Two-physician practices in early stages |
When multiple physicians form a group practice, the partnership agreement or shareholder agreement is the foundational document governing the relationship. It determines how profits and losses are allocated, how decisions are made, how new partners buy in, how departing partners are bought out, and how disputes are resolved.
Key provisions include: capital contribution requirements, management and voting rights, non-compete and non-solicitation terms (noting that SB 351 now voids non-competes in certain management services agreement contexts), compensation structures, disability and death triggers, and the process for adding or removing partners.
A poorly drafted agreement can lead to expensive litigation. We draft and negotiate these agreements with the specific regulatory requirements of California medical practices in mind.
A Management Services Organization (MSO) is a separate business entity that provides non-clinical administrative support to a physician-owned professional corporation. Services typically include billing and revenue cycle management, human resources, IT infrastructure, marketing, office space and equipment leasing, and supply chain management.
MSOs exist because California’s CPOM doctrine prohibits non-physician entities from owning or operating a medical practice directly. The PC/MSO model allows non-physician investors or operators to participate in the business side of healthcare while keeping clinical control with licensed physicians.
Compliance is critical. The MSO must not control clinical decisions, must not interfere with physician judgment, and must maintain arm’s-length fair market value compensation under the Management Services Agreement (MSA). As of January 1, 2026, SB 351 imposes new restrictions on private equity and hedge fund control through MSOs, including prohibitions on interference with billing, coding, equipment selection, and clinical staffing decisions. AB 1415 requires 90-day advance written notice to the Office of Health Care Affordability (OHCA) for material transactions involving MSOs.
We structure MSO entities and draft management services agreements that comply with these evolving requirements.
Medical office leases involve specialized considerations that go beyond a standard commercial lease. Clinical buildout requirements for exam rooms, procedure suites, and diagnostic equipment, ADA compliance for patient access, medical waste handling and disposal provisions, HIPAA-compliant patient flow and waiting area design, signage rights for patient wayfinding, exclusivity clauses protecting your specialty from competing tenants in the same building, and assignment and sublease rights all require careful review.
We review and negotiate commercial leases to protect the physician’s long-term flexibility and financial exposure, whether you are signing a new lease, renewing an existing one, or negotiating tenant improvement allowances.
California physicians operating under a name other than their own must obtain a fictitious name permit (FNP) from the Medical Board of California. This state requirement is separate from, and in addition to, federal trademark protection.
Federal trademark registration through the United States Patent and Trademark Office (USPTO) protects the practice name, logo, and brand identity from infringement by competitors. A thorough trademark search and clearance review should be conducted before investing in signage, marketing materials, or digital branding.
With 750+ USPTO filings, David Lizerbram brings extensive experience in trademark prosecution and enforcement to physician clients seeking to protect their practice brands.
Physicians rely on a network of third-party vendors for electronic health records (EHR), durable medical equipment (DME), information technology infrastructure, and billing services. Each vendor agreement carries compliance implications, including HIPAA Business Associate Agreement requirements, data security and breach notification obligations, service level commitments, and termination provisions.
We draft and review vendor contracts to protect the physician’s data, patients, and business continuity, with particular attention to the terms that govern what happens when a vendor relationship ends.
California physicians face overlapping federal and state compliance obligations that require ongoing monitoring and policy development.
We provide ongoing compliance monitoring, policy development, and regulatory guidance as part of our outside counsel and risk management services.
Medical professional corporations require annual meetings, proper corporate minutes, and compliant board resolutions. For larger medical groups, governance structures must address committee formation, voting rights, conflicts of interest policies, and credentialing oversight.
We serve as outside general counsel for medical practices that need ongoing governance support, ensuring your corporate formalities are maintained and your decision-making processes are properly documented.
Exit planning is the process of preparing a medical practice for ownership transition, whether through a sale to another physician, a merger with a larger group, or a transaction involving private equity or venture capital.
Effective exit planning begins years before the actual transaction. It includes structuring and maintaining current buy-sell agreements, establishing a defensible practice valuation methodology, ensuring clean corporate records and compliance history, and understanding the tax implications of different deal structures.
For physicians considering private equity involvement, the regulatory landscape has changed significantly. SB 351 (effective January 1, 2026) restricts PE and hedge fund control over clinical decisions, voids non-compete clauses in management services agreements, and prohibits interference with billing, coding, and staffing decisions. AB 1415 requires 90-day advance OHCA notice for material healthcare transactions involving PE, hedge funds, or MSOs. Any physician considering a PE-backed exit must structure the transaction with these California-specific requirements in mind.
Learn more about Mergers, Acquisitions, and Business Sales and Business Succession Planning.
Medical practice mergers and acquisitions involve unique due diligence considerations beyond those of a standard business transaction: payor contracts and credentialing, medical records retention and patient notification requirements, staff employment agreements and non-competes, medical equipment leases, regulatory approvals, and compliance history review.
We handle both buy-side and sell-side representation for physician practice transactions, with careful attention to CPOM compliance and the new SB 351/AB 1415 framework for transactions involving non-physician investors.
Two significant pieces of legislation took effect on January 1, 2026, creating new compliance obligations for California physician practices and the entities that work with them.
SB 351 codifies and strengthens California’s CPOM restrictions. Key provisions include:
AB 1415 expands the oversight authority of the Office of Health Care Affordability (OHCA) to include private equity firms, hedge funds, and management services organizations. Key requirements:
What this means for physicians: Any existing MSO arrangement, PE investment, or planned practice sale should be reviewed for compliance with these new requirements. Physicians entering new partnerships or selling their practices need counsel who understands these specific provisions.
Attorney Advertising. This page is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by reading this content or contacting the firm through this page. Past results do not guarantee future outcomes. The Schenk Law Firm, LLP is based in San Diego, California and serves physician clients throughout the state of California.