Can a Washington physical therapist or occupational therapist co-own a clinic with a physician, chiropractor, or other health care professional?

Plain-English summary

Washington follows the corporate practice of medicine doctrine: a business entity generally cannot employ medical professionals to practice their licensed professions absent legislative authorization (State ex rel. Standard Optical Co. v. Superior Ct., 17 Wn.2d 323 (1943); Columbia Physical Therapy, Inc., P.S. v. Benton Franklin Orthopedic Assocs., 168 Wn.2d 421 (2010)). The 1969 Professional Service Corporation Act (RCW 18.100, the PSCA) carved out a narrow exception that lets professionals form professional service corporations to render their professional services.

When the PSCA was first enacted, only members of the same single profession could co-own a PSC. In 1996, the legislature broadened the rule to let 17 different health care professions co-own a single PSC. In 1997, physicians and osteopathic physicians were added to that list. In 1999, the legislature took a different path for physical therapists (regulated under RCW 18.74) and occupational therapists (RCW 18.59): rather than adding them to the now-21-profession list in subsection (5)(a), the legislature created subsection (5)(b), which lets PTs and OTs co-own a single PSC together but only "for the sole purpose of providing professional services within their respective scope of practice."

Representative Joe Schmick asked the AG whether RCW 18.100.050(5)(b) prohibits PTs and OTs from co-owning a practice with the 21 professions in (5)(a). The AG concluded that yes, it does. The basis is plain language and statutory structure: subsection (5)(a) groups 21 professions together for purposes of forming a single PSC and treats them as rendering the "same professional services" for that purpose. Subsection (5)(b) addresses PTs and OTs separately, restricts their PSC to "their respective scope of practice," and does not extend cross-ownership with the (5)(a) group. Reading (5)(b) to authorize cross-ownership would effectively rewrite (5)(a) to add two more professions, contrary to the standard rule against adding to unambiguous statutes (State v. Delgado, 148 Wn.2d 723 (2003); State v. Christensen, 153 Wn.2d 186 (2004)).

The legislative history confirms this reading. Final Bill Report on S.B. 5829 (1999) explicitly contrasted the (5)(a) approach (allowing 21 professions to form PSCs together) with the new approach for PTs and OTs (allowing them to "own stock in and perform services for a professional service corporation or professional limited liability corporation within their respective fields"). The legislature could have added PTs and OTs to the (5)(a) list and chose not to.

The AG distinguished Columbia Physical Therapy, which upheld a physician-owned LLC's employment of physical therapists. That case turned on the principle that physical therapy is itself part of the practice of medicine (Columbia Physical Therapy, 168 Wn.2d at 435), which lets physicians employ PTs. The reverse (a PT or OT owning an interest in an entity that practices medicine, optometry, chiropractic, etc.) is not authorized, because the practice of medicine is broader than physical therapy.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Which 21 professions can co-own a single professional service corporation?
A: The chapters listed in RCW 18.100.050(5)(a): RCW 18.06 (acupuncture), 18.22 (podiatric medicine), 18.25 (chiropractic), 18.29 (dental hygiene), 18.34 (dispensing opticians), 18.35 (hearing instrument dispensers), 18.36A (naturopathy), 18.50 (midwifery), 18.53 (optometry), 18.55 (ocularists), 18.57 (osteopathic medicine), 18.57A (osteopathic physician assistants), 18.64 (pharmacy), 18.71 (medicine), 18.71A (physician assistants), 18.79 (nursing), 18.83 (psychology), 18.89 (massage therapy), 18.108 (massage), 18.138 (dietitians and nutritionists), and 18.225 (counselors). (Footnote 2 of the opinion notes that osteopathic physician assistants are scheduled to drop from the list as of July 1, 2022.)

Q: Can a physician hire a physical therapist as an employee?
A: Yes. Columbia Physical Therapy held that a physician-owned LLC can employ physical therapists, because physical therapy falls within the broader practice of medicine. The PT can be an employee of a physician-owned entity. The PT just cannot be a co-owner.

Q: Can a PT and OT co-own a clinic together?
A: Yes, under RCW 18.100.050(5)(b), in a PSC formed for the sole purpose of providing professional services within their respective scopes of practice (RCW 18.74 for PT, RCW 18.59 for OT).

Q: Can a PT and a chiropractor co-own a clinic?
A: No. Chiropractic is in the (5)(a) list; PT is in (5)(b). They cannot co-own a single PSC.

Q: Why did the legislature draw this line?
A: The 1996 statute originally identified 17 health care professions whose services were considered the "same" for PSC purposes. PTs and OTs were not among them. The 1999 amendment created a separate subsection for PTs and OTs rather than adding them to the (5)(a) list. The legislative history says the (5)(a) list was for professions "composed of individuals who are licensed to perform the same professional services" (Final Bill Report on S.B. 5829, 1999), and the legislature treated PT and OT as a separate category with its own narrower rule.

Q: Is this just about ownership, or about employment too?
A: Just ownership of a PSC. Employment relationships are governed by Columbia Physical Therapy and other case law on the corporate practice of medicine.

Q: Could the legislature change this?
A: Yes. Columbia Physical Therapy explicitly noted that "the legislature remains free to adopt another course should it see fit to do so" (168 Wn.2d at 443). Adding PT and OT to the (5)(a) list, or expressly authorizing cross-ownership in (5)(b), would resolve the issue legislatively.

Q: What about professional limited liability companies?
A: The PSCA also applies to PLLCs under RCW 25.15.046 (per Columbia Physical Therapy, 168 Wn.2d at 432 n.3). The same cross-ownership analysis applies.

Background and statutory framework

The corporate practice of medicine doctrine in Washington holds that a business entity may not engage in the practice of medicine by employing medical professionals to practice their licensed professions, absent legislative authorization. The doctrine was articulated in State ex rel. Standard Optical Co. v. Superior Ct., 17 Wn.2d 323 (1943), which quoted Ezell v. Ritholz, 88 S.C. 39, 198 S.E. 419 (1938) on the underlying ethical concern: a professional cannot properly act as the agent of a corporation whose interests are commercial. Columbia Physical Therapy, Inc., P.S. v. Benton Franklin Orthopedic Assocs., P.L.L.C., 168 Wn.2d 421 (2010), restated the doctrine and confirmed that "[a] person or entity practices a profession by either directly engaging in statutorily defined conduct or by employing a licensed individual to engage in such conduct."

The 1969 PSCA carved out a narrow exception. Under RCW 18.100.050(1), an "individual or group of individuals duly licensed... to render the same professional services within this state" may organize a corporation to render those services. The "same professional services" requirement initially limited PSCs to members of a single profession.

The legislature broadened the rule in three steps:

• 1996 (Laws of 1996, ch. 22, § 1): Seventeen different licensed and certified health care professions allowed to associate together in a single PSC. Physical and occupational therapists not included.
• 1997 (Laws of 1997, ch. 390, § 3): Physicians and osteopathic physicians added to the list. (The 1997 bill also tried to abrogate the corporate practice doctrine for all health care practitioners except dentistry and veterinary medicine, but the governor partially vetoed those sections.)
• 1999 (Laws of 1999, ch. 128, § 2): Physical and occupational therapists allowed to form a business entity together, "for the sole purpose of providing professional services within their respective scope of practice." Created RCW 18.100.050(5)(b) as a separate subsection. PTs and OTs not added to the (5)(a) list.

The interpretive question is what to make of the (5)(b)/(5)(a) split. The plain language analysis (State v. Marohl, 170 Wn.2d 691 (2010); Drummond, 187 Wn.2d 157) treats the structure as deliberate: subsection (5)(a) explicitly groups its 21 professions together as rendering the "same professional services," while subsection (5)(b) addresses PTs and OTs separately. Adding PTs and OTs to the (5)(a) group by interpretation would be the kind of judicial rewriting that Delgado and Christensen prohibit.

The legislative history (Final Bill Report on S.B. 5829, 1999) reinforces the reading: the legislature understood it was drawing a clear distinction between the (5)(a) group (professions rendering the same services) and the new (5)(b) group (PTs and OTs allowed to own stock in PSCs "within their respective fields"). The history shows the legislature could have chosen the broader option (adding PTs and OTs to (5)(a)) and instead chose the narrower one.

Columbia Physical Therapy is consistent with this reading. The Court there held that a physician-owned LLC could employ physical therapists because physical therapy is one aspect of the practice of medicine. That asymmetry (medicine includes PT, but PT does not include medicine) means a physician can employ a PT, but a PT cannot own an interest in a medicine practice.

Citations and references

Statutes:
- RCW 18.100 (Professional Service Corporation Act); RCW 18.100.050(1), (5)(a), (5)(b)
- The 21 health care chapters listed in RCW 18.100.050(5)(a) (acupuncture through counselors)
- RCW 18.59 (occupational therapy); RCW 18.74 (physical therapy)
- RCW 25.15.046 (PLLCs)

Cases:
- Columbia Physical Therapy, Inc., P.S. v. Benton Franklin Orthopedic Assocs., P.L.L.C., 168 Wn.2d 421 (2010)
- State ex rel. Standard Optical Co. v. Superior Ct. for Chelan Cnty., 17 Wn.2d 323 (1943)
- Ezell v. Ritholz, 88 S.C. 39, 198 S.E. 419 (1938)
- Dep't of Ecology v. Campbell & Gwinn, L.L.C., 146 Wn.2d 1 (2002)
- State ex rel. Banks v. Drummond, 187 Wn.2d 157 (2016)
- State v. Marohl, 170 Wn.2d 691 (2010)
- Rocha v. King County, 195 Wn.2d 412 (2020)
- Jin Zhu v. N. Cent. Educ. Serv. Dist., 189 Wn.2d 607 (2017)
- State v. Delgado, 148 Wn.2d 723 (2003); State v. Christensen, 153 Wn.2d 186 (2004)

Legislative history:
- Laws of 1969, ch. 122 (original PSCA)
- Laws of 1996, ch. 22, § 1; H.B. Rep. on Substitute H.B. 6150
- Laws of 1997, ch. 390, §§ 1, 2, 3
- Laws of 1999, ch. 128, § 2; Final Bill Report on S.B. 5829

Source

• Landing page: https://www.atg.wa.gov/ago-opinions/whether-physical-therapists-and-occupational-therapists-may-share-ownership-interest

Original opinion text

Attorney General Bob Ferguson

PROFESSIONAL SERVICES—HEALTH CARE SERVICES—PHYSICAL THERAPISTS—OCCUPATIONAL THERAPISTS—Whether Physical Therapists And Occupational Therapists May Share An Ownership Interest In A Health Care Practice

Physical therapists and occupational therapists may not share an ownership interest in a health care practice with health care professionals listed in RCW 18.100.050(5)(a).

November 16, 2020

The Honorable Joe Schmick

State Representative, District 9

PO Box 40600

Olympia, WA 98504-0600

Cite As:

AGO 2020 No. 5

Dear Representative Schmick:

By letter previously acknowledged, you have requested our opinion on the following question:

Does RCW 18.100.050(5)(b) prohibit physical and occupational therapists from having an ownership interest in a health care practice with health care professionals listed in RCW 18.100.050(5)(a)?

BRIEF ANSWER

Yes. Physical and occupational therapists are prohibited from having an ownership interest in a health care practice with health care professionals listed in RCW 18.100.050(5)(a). Physical and occupational therapists may only own stock in and render their services through a professional service corporation within their respective fields. See RCW 18.100.050(5)(b).

FACTUAL BACKGROUND

Washington adheres to the corporate practice of medicine doctrine, which provides that a business entity may not employ medical professionals to practice their licensed professions absent legislative authorization. See Columbia Physical Therapy, Inc., P.S. v. Benton Franklin Orthopedic Assocs., P.L.L.C., 168 Wn.2d 421, 431, 228 P.3d 1260 (2010); State ex rel. Standard Optical Co. v. Superior Ct. for Chelan Cnty., 17 Wn.2d 323, 328, 135 P.2d 839 (1943) (corporation may not engage in practice of learned professions by hiring licensed practitioner). “A person or

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entity practices a profession by either directly engaging in statutorily defined conduct or by employing a licensed individual to engage in such conduct.” Columbia Physical Therapy, 168 Wn.2d at 430. The rationale of this doctrine is that ethical obligations to clients or patients should not be compromised by obligations to shareholders. See Standard Optical, 17 Wn.2d at 332 (“‘One who practices a profession is responsible directly to his patient or his client. Hence he cannot properly act in the practice of his vocation as an agent of a corporation or business partnership whose interests in the very nature of the case are commercial in character.’” (quoting Ezell v. Ritholz, 88 S.C. 39, 198 S.E. 419, 424 (1938))).

In 1969, the legislature enacted the Professional Service Corporation Act (PSCA), and “thereby carved out ‘a narrow statutory exception’ to the general rule prohibiting corporations from practicing learned professions.” Columbia Physical Therapy, 168 Wn.2d at 432; see Laws of 1969, ch. 122 (codified as RCW 18.100). The PSCA allows certain health care professionals to form corporate entities, provided those corporate entities are organized by an “individual or group of individuals duly licensed . . . to render the same professional services within this state[.]” RCW 18.100.050(1). Such groups of individuals may become “shareholders of a professional corporation for pecuniary profit . . . for the purpose of rendering professional service.”[1] RCW 18.100.050(1). The legislature has amended the PSCA several times, and three changes to RCW 18.100.050 are discussed in further detail below.

ANALYSIS

As just discussed, the starting point in our analysis is that the law prohibits a business entity from engaging in the practice of medicine by employing medical professionals to practice their licensed professions absent legislative authorization. Columbia Physical Therapy, 168 Wn.2d at 431. We next determine whether the legislature has authorized physical and occupational therapists to own a practice with other health care professionals, specifically those identified in RCW 18.100.050(5)(a). As explained below, we determine that no exception allowing such ownership exists.

The PSCA permits physical and occupational therapists to co-own a health care practice. See RCW 18.100.050(5)(b). It also permits health care professionals licensed or certified under the chapters listed in RCW 18.100.050(5)(a) to co-own a health care practice. It does not, however, allow physical and occupational therapists to co-own a health care practice with health care professionals listed in RCW 18.100.050(5)(a). This conclusion is supported by the plain language of RCW 18.100.050 and the history of amendments to RCW 18.100.050.

Our objective in construing a statute is to determine the legislature’s intent. See Dep’t of Ecology v. Campbell & Gwinn, L.L.C., 146 Wn.2d 1, 9, 43 P.3d 4 (2002). This analysis begins

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with the plain meaning of the statute, which encompasses “the text of the provision, the context of the statute in which the provision is found, related provisions, amendments to the provision, and the statutory scheme as a whole.” State ex rel. Banks v. Drummond, 187 Wn.2d 157, 170, 385 P.3d 769 (2016). “Where statutory language is unambiguous, we accept that the legislature means exactly what it says.” State v. Marohl, 170 Wn.2d 691, 698, 246 P.3d 177 (2010). But if, after considering this plain language analysis, “the statute remains ambiguous or unclear, it is appropriate to resort to canons of construction and legislative history.” Drummond, 187 Wn.2d at 170.

Plain Language

Turning first to the statute’s text, the PSCA allows certain health care professionals to form corporate entities, provided those corporate entities are organized by an “individual or group of individuals duly licensed . . . to render the same professional services within this state[.]” RCW 18.100.050(1) (emphasis added). Subsection (5)(a) goes on to state:

[H]ealth care professionals who are licensed or certified pursuant to chapters 18.06, 18.225, 18.22, 18.25, 18.29, 18.34, 18.35, 18.36A, 18.50, 18.53, 18.55, 18.57, 18.57A, 18.64, 18.71, 18.71A, 18.79, 18.83, 18.89, 18.108, and 18.138 RCW may own stock in and render their individual professional services through one professional service corporation and are to be considered, for the purpose of forming a professional service corporation, as rendering the “same specific professional services” or “same professional services” or similar terms.[2]

(Emphases added.) Thus, the twenty-one health care professions listed in RCW 18.100.050(5)(a) are permitted to own stock in and render their professional services through a single professional service corporation because for, purposes of forming a professional service corporation, the legislature has determined that these professionals are providing the same professional services.

Subsection (5)(b), which refers to physical and occupational therapists, states:

[H]ealth care professionals who are regulated under chapters 18.59 and 18.74 RCW may own stock in and render their individual professional services through one professional service corporation formed for the sole purpose of providing professional services within their respective scope of practice.

(Emphases added.)

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The structure of the statute, dividing its provisions into two parts, (a) and (b), textually demonstrates that the health care professions listed in RCW 18.100.050(5)(b)—occupational therapists (RCW 18.59) and physical therapists (RCW 18.74)—are not considered to offer the “same professional services” as the professionals grouped in RCW 18.100.050(5)(a). See Rocha v. King County, 195 Wn.2d 412, 428, 460 P.3d 624 (2020) (looking in part to statutory structure in construing a statute); Jin Zhu v. N. Cent. Educ. Serv. Dist., 189 Wn.2d 607, 620, 404 P.3d 504 (2017) (same). While physical and occupational therapists may form a single professional service corporation, the entity may be formed solely to provide services within their “respective scope of practice,” which are statutorily defined by RCW 18.59 and RCW 18.74. See RCW 18.100.050(5)(b).

To read RCW 18.100.050 as allowing physical and occupational therapists to own a practice with other health care professionals identified in RCW 18.100.050(5)(a) would effectively add occupational and physical therapists to the list of health care professions in RCW 18.100.050(5)(a). But doing so “add[s] words or clauses to an unambiguous statute when the legislature has chosen not to include that language.” State v. Delgado, 148 Wn.2d 723, 727, 63 P.3d 792 (2003); State v. Christensen, 153 Wn.2d 186, 194, 102 P.3d 789 (2004) (adding a limitation to a statute would violate a crucial rule of statutory construction). The legislature unambiguously did not include that language and did not group physical and occupational therapists with the professions in subsection (5)(a).

The plain language of RCW 18.100.050 thus compels us to answer yes to your question.

History of the Statutory Amendments

Along with the statute’s unambiguous language, the legislative history further confirms that the legislature chose to restrict the formation of professional service corporations for physical therapists and occupational therapists to those two disciplines.

Before 1996, the PSCA generally permitted a group of individual health care professionals to form a professional service corporation or limited liability company only if all the professionals were members of the same profession. In 1996, the legislature amended the PSCA so that seventeen different licensed and certified health care professionals could associate together in forming a single professional service corporation. See Laws of 1996, ch. 22, § 1. Physical and occupational therapists were not included in this list. See Laws of 1996, ch. 22, § 1; see also H.B. Rep. on Substitute H.B. 6150, at 2, 54th Leg., Reg. Sess. (Wash. 1996) (noting that doctors of medicine and osteopathy, occupational therapists, and physical therapists are not included in the provisions). The legislature also added a separate subsection to clarify that physicians and osteopathic physicians could continue to form a single professional service corporation or limited liability company. See Laws of 1996, ch. 22, § 1; H.B. Rep. on Substitute H.B. 6150, at 2.

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In 1997, the legislature added physicians and osteopathic physicians to the list of regulated health professionals who may associate together in forming a single professional health service corporation or similar business entity. See Laws of 1997, ch. 390, § 3.[3]

Finally, in 1999 the legislature allowed physical and occupational therapists to form a business entity “for the sole purpose of providing professional services within their respective scope of practice.” Laws of 1999, ch. 128, § 2 (adding RCW 18.100.050(5)(b)). Notably, the legislature did not add physical therapists and occupational therapists to the list of regulated health professionals who were already permitted to associate together to form a single corporation. The legislature seems to have understood that it was drawing a clear distinction, allowing the twenty-one already identified health care professions to establish professional service corporations or professional limited liability corporations and these entities were “composed of individuals who are licensed to perform the same professional services.” Final Bill Report on S.B. 5829, at 1, 56th Leg., Reg. Sess. (Wash. 1999). But rather than add occupational and physical therapists to that list, occupational and physical therapists could instead “own stock in and perform services for a professional service corporation or professional limited liability corporation within their respective fields.” Final Bill Report on S.B. 5829, at 1.

Your letter on whether physical and occupational therapists may have an ownership interest in a health care practice with professionals listed in RCW 18.100.050(5)(a) discusses Columbia Physical Therapy. In that decision, the Washington Supreme Court discussed the separate identification of the professions in subsections (5)(a) and (5)(b) in the context of whether a physician-owned limited liability company that employed physical therapists violated the corporate practice of medicine doctrine and the PSCA. See Columbia Physical Therapy, 168 Wn.2d at 437-38. The Court noted that the legislature’s adoption of these lists had “the effect of broadening the professions that could come together and form a single professional services corporation.” Id. at 437-38 (citing Laws of 1997, ch. 390, § 3). This was simply an acknowledgement of the history noted above—that before the legislature adopted these lists, only members of a single profession could own a business together. But the legislature has not added occupational therapists and physical therapists to the list of professions in RCW 18.100.050(5)(a) that can come together to form a professional service corporation. Columbia Physical Therapy also held that a physician-owned limited liability company may employ physical therapists in part because the practice of physical therapy is one aspect of the practice of medicine. Id. at 435. But nothing in the Court’s opinion suggests that a physical or occupational therapist can thereby own an interest in a business of one of the professions listed in RCW 18.100.050(5)(a). Even if the Court’s language about physical therapy falling within the practice of medicine had any bearing on the plain meaning of RCW 18.100.050(5), it would not imply that physical therapists can own

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an interest in the businesses listed in RCW 18.100.050(5)(a), because the Court’s point was only one-sided: while physical therapy falls entirely within the practice of medicine, the practice of medicine does not fall entirely within the practice of physical therapy. Thus, the case does not hold or suggest that a physician and physical therapist may co-own a business enterprise to provide professional services. Id. at 438.

In sum, the plain language and legislative history of RCW 18.100.050 shows that physical and occupational therapists are prohibited from having an ownership interest in a health care practice with health care professionals listed in RCW 18.100.050(5)(a). But “the legislature remains free to adopt another course should it see fit to do so.” Columbia Physical Therapy, 168 Wn.2d at 443.

We trust that the foregoing will be useful to you.

ROBERT W. FERGUSON

Attorney General

s/ Cristina Sepe

CRISTINA SEPE

Assistant Attorney General

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[1] The PSCA also applies to professional limited liability companies under RCW 25.15.046. See Columbia Physical Therapy, 168 Wn.2d at 432 n.3.

[2] Effective July 1, 2022, osteopathic physician assistants will not be listed in RCW 18.100.050(5)(a). See Laws of 2020, ch. 80, § 21.

[3] The legislature also tried to abrogate the corporate practice of medicine doctrine for all health care practitioners except dentistry and veterinary medicine. See Laws of 1997, ch. 390, §§ 1, 2. But the governor partially vetoed the bill, including sections 1 and 2. See Laws of 1997, ch. 390.