Senate Bill 951 (2026)

09/28/2026

Oregon

Corporate Practice of Medicine

Section 1.

(1) As used in this section:

(a) “Affiliate” means a person that controls, is controlled by or is under common control with another person.

(b) “Management services” means services for or on behalf of a professional medical entity that include:

(A) Payroll;

(B) Human resources;

(D) Employee relations; or

(E) Any other administrative or business services that support or enable a professional medical entity’s medical purpose but that do not constitute:

(i) Practicing medicine, as described in ORS 677.085;

(ii) Enabling physicians, physician associates and nurse practitioners to jointly render professional health care services; or

(iii) Practicing naturopathic medicine.

(c) “Management services organization” means an entity that under a written agreement, and in return for monetary compensation, provides management services to a professional medical entity.

(d) “Medical licensee” means an individual who is licensed in this state:

(A) To practice medicine under ORS 677.110;

(B) As a nurse practitioner under ORS 678.375;

(D) To practice naturopathic medicine under ORS 685.100.

(e) “Medical purpose” means, as appropriate:

(A) The purpose of practicing medicine, as described in ORS 677.085;

(B) The purpose of enabling physicians, physician associates and nurse practitioners to jointly render professional health care services; or

(f) “Professional medical entity” means:

(A) A professional corporation, as defined in ORS 58.375;

(B) A professional corporation, as defined in ORS 58.376;

(D) A limited liability company or foreign limited liability company with authority to transact business in this state that is organized for a medical purpose;

(E) A partnership or foreign partnership with authority to transact business in this state, or a limited liability partnership or foreign limited liability partnership with authority to transact business in this state, that is organized for a medical purpose; or

(F) A limited partnership or foreign limited partnership with authority to transact business in this state that is organized for a medical purpose.

(2)(a) Except as provided in subsection (3) of this section, a management services organization or a shareholder, director, member, manager, officer or employee of a management services organization may not:

(A) Own or control individually, or in combination with the management services organization or any other shareholder, director, member, manager, officer or employee of the management services organization, a majority of shares in a professional medical entity with which the management services organization has a contract for management services;

(B) Serve as a director or officer of, be an employee of, work as an independent contractor with or receive compensation from the management services organization to manage or direct the management of a professional medical entity with which the management services organization has a contract for management services;

(C) Exercise a proxy or take or exercise on behalf of another person a right or power to vote the shares of a professional medical entity with which the management services organization has a contract for management services;

(D) Control or enter into an agreement to control or restrict the sale or transfer of a professional medical entity’s shares, interest or assets, or otherwise permit a person other than a medical licensee to control or restrict the sale or transfer of the professional medical entity’s shares, interest or assets;

(E) Issue shares of stock, or cause a professional medical entity to issue shares of stock, in the professional medical entity, in a subsidiary of the professional medical entity or in an affiliate of the professional medical entity;

(F) Pay dividends from shares or an ownership interest in a professional medical entity;

(G) Acquire or finance the acquisition of the majority of the shares of a professional medical entity; or

(H) Exercise de facto control over administrative, business or clinical operations of a professional medical entity in a manner that affects the professional medical entity’s clinical decision making or the nature or quality of medical care that the professional medical entity delivers, which de facto control includes, but is not limited to, exercising ultimate decision-making authority over:

(i) Hiring or terminating, setting work schedules or compensation for, or otherwise specifying terms of employment of medical licensees;

(ii) Setting clinical staffing levels, or specifying the period of time a medical licensee may see a patient, for any location that serves patients;

(iii) Making diagnostic coding decisions;

(iv) Setting clinical standards or policies;

(v) Setting policies for patient, client or customer billing and collection;

(vi) Advertising a professional medical entity’s services under the name of an entity that is not a professional medical entity;

(vii) Setting the prices, rates or amounts the professional medical entity charges for a medical licensee’s services; or

(viii) Negotiating, executing, performing, enforcing or terminating contracts with third-party payors or persons that are not employees of the professional medical entity.

(b) Conditions under which a professional medical entity may enter into an agreement to control or restrict a transfer or sale of the professional medical entity’s stock, interest or assets include:

(A) The suspension or revocation of a shareholder’s or member’s professional license in this or another state if the shareholder or member is a medical licensee;

(B) A shareholder’s or member’s disqualification from holding stock or an interest in the professional medical entity;

(C) A shareholder’s or member’s exclusion, debarment or suspension from a federal health care program or an investigation that could result in the shareholder’s or member’s exclusion, debarment or suspension if the shareholder or member is a medical licensee;

(D) A shareholder’s or member’s indictment for a felony or another crime that involves fraud or moral turpitude;

(E) The professional medical entity’s breach of a contract for management services with a management services organization; or

(F) The death, disability or permanent incapacity of a shareholder or member who is a medical licensee.

(A) A management services organization from:

(i) Providing services to assist in carrying out the activities described in paragraph (a) of this subsection if the services the management services organization provides do not constitute an exercise of de facto control over the administrative, business or clinical operations of a professional medical entity in a manner that affects the professional medical entity’s clinical decision making or the nature or quality of medical care that the professional medical entity delivers;

(ii) Purchasing, leasing or taking an assignment of a right to possess the assets of a professional medical entity in an arms-length transaction with a willing seller, lessor or assignor;

(iii) Providing support, advice and consultation on all matters related to a professional medical entity’s business operations, such as accounting, budgeting, personnel management, real estate and facilities management and compliance with applicable laws, rules and regulations; or

(iv) Advising and providing direction concerning a professional medical entity’s participation in value-based contracts, payor arrangements or contracts with suppliers and vendors;

(B) Collection of quality metrics as required by law or in accordance with an agreement to which a professional medical entity is a party; or

(3) Subsection (2) of this section does not apply to:

(a) An individual who provides medical services or health care services for or on behalf of a professional medical entity if the individual:

(A) Does not own or control more than 10 percent of the total shares of or interest in the professional medical entity;

(B) Is not a shareholder in or a director, member, manager, officer or employee of a management services organization; and

(C) Is compensated at the market rate for the medical services or health care services and the individual’s employment and services that the individual provides to the management services organization are entirely consistent with the individual’s professional obligations, ethics and duties to the professional medical entity and the individual’s patients;

(b) An individual who owns shares or an interest in a professional medical entity and a management services organization with which the professional medical entity has a contract for management services if the individual’s ownership of shares or an interest in the management services organization is incidental and without relation to the individual’s compensation as a shareholder, director, member, manager, officer or employee of, or contractor with, the management services organization;

(c) A professional medical entity and the shareholders, directors, members, managers, officers or employees of the professional medical entity if the professional medical entity functions as a management services organization or owns a majority of the shares of or interest in the management services organization;

(d) A physician who is a shareholder, director or officer of a professional medical entity and who also serves as a director or officer of a management services organization with which the professional medical entity has a contract for management services if:

(A) The physician does not receive compensation from the management services organization for serving as a director or officer of the management services organization;

(B) An action of the management services organization that materially affects the professional, ownership or governance interests of minority owners in the management services organization requires a vote of more than a majority of the shares of the management services organization that are entitled to vote, including the shares held by professional medical entities with voting rights in the management services organization; and

(C) The management services organization and all of the professional medical entities that have voting rights in the management services organization were incorporated or organized, and entered into agreements for the provision of management services, before January 1, 2026; or

(e) A management services organization that has a contract for management services with a professional medical entity if the professional medical entity is solely and exclusively:

(A) A PACE organization or engaged in providing professional health care services to a PACE organization, as defined in 42 C.F.R. 460.6, as in effect on the effective date of this 2025 Act, and authorized in this state as a PACE organization;

(B) A mental health or substance use disorder crisis line provider;

(C) An urban Indian health program in this state that is funded under 25 U.S.C. 1601 et seq., as in effect on the effective date of this 2025 Act;

(D) A recipient of a Tribal Behavioral Health or Native Connections program grant from the federal Substance Abuse and Mental Health Services Administration;

(E) An entity that:

(i) Provides behavioral health care, other than a hospital, that the Oregon Health Authority has certified to provide behavioral health care;

(ii) Has a contract for management services with an entity described in sub-subparagraph (i) of this subparagraph that is a nonprofit entity; or

(iii) Is a licensed opioid treatment program, a licensed medical provider that primarily provides office-based or medication-assisted treatment services, a provider of withdrawal management services or a sobering center;

(F) A hospital, as defined in ORS 442.015, or a hospital-affiliated clinic, as defined in ORS 442.612;

(G) A long term care facility, as defined in ORS 442.015, or an affiliate of a long term care facility; or

(H) A residential care facility, as defined in ORS 443.400, or an affiliate of a residential care facility.

(4) Subsection (2)(a)(A), (B) and (C) of this section does not apply to:

(a) An entity that is engaged in the practice of telemedicine, as defined in ORS 677.494, and does not have a physical location where patients receive clinical services in this state other than a physical location that would be necessary to comply with 21 U.S.C. 829(e), as in effect on the effective date of this 2025 Act; and

(b) A coordinated care organization, as defined in ORS 414.025, that before January 1, 2026, owned or controlled shares or an interest in a professional medical entity or had the power to manage or direct the management of the professional medical entity by contract or otherwise.

(5)(a) In any contract or other agreement between a management services organization and a professional medical entity or a medical licensee, a provision that authorizes or implements, or purports to authorize or implement, an act or practice that violates a prohibition set forth in subsection (2)(a) of this section is void and unenforceable.

(b) A medical licensee or professional medical entity that suffers an ascertainable loss of money or property as a result of a violation of a prohibition set forth in subsection (2)(a) of this section may bring an action against a management services organization with which the medical licensee or professional medical entity has a contract for management services, or a shareholder, director, member, manager, officer or employee of the management services organization, in a circuit court of this state to obtain:

(A) Actual damages equivalent to the medical licensee’s or professional medical entity’s loss;

(B) An injunction against an act or practice that violates the prohibition; and

(d) A court may award attorney fees and costs to a plaintiff that prevails in an action under paragraph (b) of this subsection.

Section 2. (This section amends ORS section 58.500 Requirements for professional corporations organized to practice medicine; application to various entities).

Section 58.500. Requirements for professional corporations organized to practice medicine; application to various entities

(1) As used in this section, “professional corporation” means a professional corporation organized for the purpose of practicing medicine.

(2) In a professional corporation:

(a) Physicians who are licensed in this state to practice medicine must hold the majority of each class of shares that are entitled to vote.

(b) Physicians who are licensed in this state to practice medicine must be a majority of the directors.

(c) All officers except the secretary and treasurer, if any, must be physicians who are licensed in this state to practice medicine. The same person may hold any two or more offices.

(d) Except as otherwise provided by law, the Oregon Medical Board may expressly require that physicians who are licensed in this state to practice medicine hold more than a majority of each class of shares that is entitled to vote.

(e) Except as otherwise provided by law, the Oregon Medical Board may expressly require that physicians who are licensed in this state to practice medicine be more than a majority of the directors.

(3) A corporation that is not organized for the purpose of practicing medicine may be a shareholder of a professional corporation solely for the purpose of effecting a reorganization as defined in the Internal Revenue Code.

(4)(a) Except as provided in paragraph (b) of this subsection, a professional corporation may not provide in the professional corporation’s articles of incorporation or bylaws, or by means of a contract or other agreement or arrangement, for removing a director described in subsection (2)(b) of this section from the professional corporation’s board of directors, or an officer described in subsection (2)(c) of this section from an office of the professional corporation, except by a majority vote of the shareholders described in subsection (2)(a) of this section or, as appropriate, a majority vote of the directors described in subsection (2)(b) of this section.

(b) A professional corporation may remove a director or officer by means other than a majority vote of the shareholders described in subsection (2)(a) of this section or a majority vote of the directors described in subsection (2)(b) of this section if the director or officer that is subject to removal:

(A) Violated a duty of care, a duty of loyalty or another fiduciary duty to the professional corporation;

(B) Was the subject of a disciplinary proceeding by the Oregon Medical Board in which the board suspended or revoked the director’s or officer’s license to practice medicine in this state;

(C) Engaged in fraud, misfeasance or malfeasance with respect to the director’s or officer’s performance of duties for or on behalf of the professional corporation;

(D) Resigned, separated or was terminated from employment with the professional corporation; or

(E) Failed to meet standards or criteria the professional corporation established for a position as a director or officer.

(5) A professional corporation may relinquish or transfer control over the professional corporation’s administrative, business or clinical operations only if the professional corporation executes a shareholder agreement exclusively between or among and for the benefit of a majority of shareholders who are physicians licensed in this state to practice medicine and the shareholder agreement complies with the provisions of ORS 60.265.

(6)(a) The provisions of this section do not apply to:

(A) A nonprofit corporation that is organized under the laws of this state to provide medical services to migrant, rural, homeless or other medically underserved populations under 42 U.S.C. 254b or 254c, as in effect on June 9, 2025;

(B) A health center that is qualified under 42 U.S.C. 1396d(1)(2)(B), as in effect on June 9, 2025, that operates in compliance with other applicable state or federal law; or

(C) Except as provided in paragraph (b) of this subsection, a for-profit or nonprofit business entity that is incorporated or organized under the laws of this state, that provides the entirety of the business entity’s medical services through one or more rural health clinics, as defined in 42 U.S.C. 1395x, as in effect on June 9, 2025, and that operates in compliance with state and federal laws that apply to rural health clinics.

(b) A business entity is exempt under this subsection for a period of up to one year after the business entity establishes a rural health clinic, even though the rural health clinic that the business entity establishes does not meet all of the elements of the definition set forth in 42 U.S.C. 1395x, as in effect on June 9, 2025, if during the one-year period an applicable certification for the rural health clinic is pending. [Formerly 58.375]

Section 3. (This section amends ORS section 58.503 Requirements for professional corporations organized to render professional health care services).

(1) As used in this section:

(a) "Licensee" means an individual who has a license as a physician or a license as a physician associate from the Oregon Medical Board or who has a license as a nurse practitioner from the Oregon State Board of Nursing.

(b) "Professional corporation" means a professional corporation that is organized for the purpose of enabling physicians, physician associates and nurse practitioners to jointly render professional health care services.

(2) In a professional corporation, licensees must:

(a) Hold a majority of each class of shares of the professional corporation that is entitled to vote; and

(b) Be a majority of the directors of the professional corporation.

(3) An individual whom the professional corporation employs, or an individual who owns an interest in the professional corporation, may not direct or control the professional judgment of a licensee who is practicing within the professional corporation and within the scope of practice permitted under the licensee’s license.

(4) A licensee whom the professional corporation employs, or a licensee who owns an interest in the professional corporation, may not direct or control the services of another licensee who is practicing within the professional corporation unless the other licensee is also practicing within the scope of practice permitted under the licensee’s license.

(5)(a) Except as provided in paragraph (b) of this subsection, a professional corporation may not provide in the professional corporation’s articles of incorporation or bylaws, or by means of a contract or other agreement or arrangement, for removing a director described in subsection (2)(b) of this section from the professional corporation’s board of directors, except by a majority vote of the shareholders described in subsection (2)(a) of this section or, as appropriate, a majority vote of the directors described in subsection (2)(b) of this section.

(b) A professional corporation may remove a director by means other than a majority vote of the shareholders described in subsection (2)(a) of this section or a majority vote of the directors described in subsection (2)(b) of this section if the director that is subject to removal:

(A) Violated a duty of care, a duty of loyalty or another fiduciary duty to the professional corporation;

(B) Was the subject of a disciplinary proceeding by the regulatory board that governs the director’s practice as a licensee in which the board suspended or revoked the director’s license;

(C) Engaged in fraud, misfeasance or malfeasance with respect to the director’s performance of duties for or on behalf of the professional corporation;

(D) Resigned, separated or was terminated from employment with the professional corporation; or

(E) Failed to meet standards or criteria the professional corporation established for a position as a director.

(6) A professional corporation may relinquish or transfer control over the professional corporation’s administrative, business or clinical operations only if the professional corporation executes a shareholder agreement exclusively between or among and for the benefit of a majority of shareholders described in subsection (2)(a) of this section and the shareholder agreement complies with the provisions of ORS 60.265.

(7) A professional corporation that is subject to ORS 58.500 may elect to become subject to this section by amending the professional corporation’s articles of incorporation or bylaws. [Formerly 58.376]

Section 4. Section 5 of this 2025 Act is added to and made a part of ORS chapter 58.

Section 5.

(1) As used in this section:

(a) “Naturopathic medicine” has the meaning given that term in ORS 685.010.

(b) “Naturopathic physician” has the meaning given that term in ORS 685.010.

(c) “Professional corporation” means a professional corporation organized for the purpose of practicing naturopathic medicine or a foreign professional corporation with authority to transact business in this state that is organized for the purpose of practicing naturopathic medicine.

(2)(a) In a professional corporation, naturopathic physicians must:

(A) Hold a majority of each class of shares of the professional corporation that is entitled to vote; and (B) Be a majority of the directors of the professional corporation.

(b) All officers of a professional corporation, except the secretary and treasurer, if any, must be naturopathic physicians. The same person may hold any two or more offices.

(3) An individual whom the professional corporation employs, or an individual who owns an interest in the professional corporation, may not direct or control the professional judgment of a naturopathic physician who is practicing within the professional corporation and within the scope of practice permitted under the naturopathic physician’s license.

(4)(a) Except as provided in paragraph (b) of this subsection, a professional corporation may not provide in the professional corporation’s articles of incorporation or bylaws, or by means of a contract or other agreement or arrangement, for removing a director described in subsection (2)(a)(B) of this section from the professional corporation’s board of directors, or an officer described in subsection (2)(b) of this section from an office of the professional corporation, except by a majority vote of the shareholders described in subsection (2)(a)(A) of this section or, as appropriate, a majority vote of the directors described in subsection (2)(a)(B) of this section.

(b) A professional corporation may remove a director or officer by means other than a majority vote of the shareholders described in subsection (2)(a)(A) of this section or a majority vote of the directors described in subsection (2)(a)(B) of this section if the director or officer that is subject to removal:

(A) Violated a duty of care, a duty of loyalty or another fiduciary duty to the professional corporation;

(B) Was the subject of a disciplinary proceeding by the Oregon Board of Naturopathic Medicine in which the board suspended or revoked the director’s or officer’s license; or

(C) Engaged in fraud, misfeasance or malfeasance with respect to the director’s or officer’s performance of duties for or on behalf of the professional corporation.

(5) A professional corporation may relinquish or transfer control over the professional corporation’s administrative, business or clinical operations only if the professional corporation executes a shareholder agreement exclusively between or among and for the benefit of a majority of shareholders who are naturopathic physicians licensed in this state to practice naturopathic medicine and the shareholder agreement complies with the provisions of ORS 60.265.

See https://olis.oregonlegislature.gov/liz/2025r1/Downloads/MeasureDocument/SB951