By Yisroel Szpigiel, Esq. | Managing Partner, LumaLex Law
On September 17, 2026, Senators Elizabeth Warren, Ron Wyden, and Jeff Merkley — joined in the House by Representatives Val Hoyle, Alexandria Ocasio-Cortez, and Suhas Subramanyam — introduced the Stop Corporate Takeovers of Physicians Act of 2026, the first serious attempt to write a federal corporate-practice-of-medicine (CPOM) statute. As of this writing, the bill has been read twice in the Senate and referred to committee. It has not been enacted, has not moved to a floor vote, and its near-term prospects are genuinely uncertain: every sponsor is a Democrat, and the bill would need to clear a Republican-controlled Congress. We want to be plain about that up front, because a lot of client questions about new legislation start with “do I need to act on this now,” and the honest answer here is: not yet, and maybe not at all in this form.
That said, this is not a stray proposal worth ignoring. The bill draws substantially from Oregon’s Senate Bill 951 — the strictest state-level CPOM law in the country, and one we’ve written about before on this blog — and its sponsors are leading with a statistic worth sitting with: over 80 percent of U.S. physicians are now employed by corporate entities, up from 62 percent in 2019. Whether or not this particular bill becomes law, it tells us where federal policy attention is headed, and it lands squarely on the MSO/PC structures we build and review for clients every week. It’s also, in our view, a useful stress test: if a client’s MSO arrangement is already built the way we recommend, this bill would mostly formalize obligations they already meet.
The Federal CPOM Prohibition
Section 2(a) makes it unlawful for a partnership or corporate entity — a professional corporation, LLC, or LLP — that is not majority-owned and controlled by one or more licensees to own or control a medical practice, employ or contract for a licensee’s professional services, or otherwise engage in the practice of medicine. “Majority-owned and controlled” has two prongs, and a structure has to satisfy both: licensees must hold a majority of the ownership or membership interest, and licensees must constitute a majority of the entity’s governing body. Ownership alone, without governance control, doesn’t clear the bar.
The exceptions are narrow: nonprofit and public health care providers, hospitals, hospital-affiliated clinics, critical access hospitals, and rural emergency hospitals. There is no carve-out for telehealth-only entities — the prohibition applies regardless of delivery channel, which is a meaningfully broader sweep than some of the state statutes we’ve tracked.
License-Holder Protections
Section 2(b)(1)(A) voids two categories of agreement outright: non-compete clauses and non-disclosure or non-disparagement agreements between a licensee, health care provider, or MSO. The one exception is narrow — a non-compete between a licensee and their own medical practice is enforceable only if that licensee owns 25 percent or more of the practice. Below that threshold, it’s void. The bill preserves separate tort claims (libel, slander, tortious interference) that don’t depend on the voided agreement, so this isn’t a blanket immunity for licensees who make defamatory statements — it just strips the contractual gag.
Section 2(b)(1)(B) separately bars health care providers from interfering with a licensee’s clinical judgment through discipline, coercion, or retaliation — including dictating time-per-patient, admission or discharge decisions, referral destinations, or diagnostic coding. This section is aimed at employers generally, not MSOs specifically, but it overlaps meaningfully with the MSO restrictions below.
The New Rules for MSOs
This is the section with the most direct bearing on how MSO/PC structures actually get built, and it’s worth walking through in full. Section 2(b)(2)(A) prohibits an MSO — or any shareholder, director, member, manager, officer, employee, or contractor of one — from seven categories of conduct: controlling the sale or transfer of a practice’s shares or assets; issuing (or causing the issuance of) ownership interests in a practice; paying dividends from a practice’s ownership interest; owning, directing, or otherwise participating in managing a practice; acquiring or financing the acquisition of ownership interest in a practice; contracting for management services except on the arm’s-length, fair-market-value terms discussed below; and advertising a practice’s services under any name other than the practice’s own.
The eighth and broadest prohibition bars an MSO from exercising or holding de facto control over a practice’s administrative, business, or clinical operations “in a manner that affects the nature or quality of medical care.” The bill doesn’t leave that standard abstract — it lists twelve specific categories of decision-making authority an MSO cannot hold:
Category of Control | What an MSO Could No Longer Do |
|---|---|
Hiring & firing | Terminating or hiring the medical practice’s employees |
Compensation & schedules | Setting licensees’ work schedules, pay, or other employment terms |
Staffing levels | Determining how many clinical staff the practice runs with |
Time with patients | Dictating how long a licensee may spend with a patient |
Revenue disbursement | Controlling how licensee-fee and other practice revenue is distributed |
Credentialing requirements | Setting the degrees or credentials a licensee needs to see a patient |
Revenue targets & incentives | Establishing revenue quotas or incentive structures for licensees |
Diagnostic coding | Making the practice’s diagnostic-coding decisions |
Clinical standards | Setting the practice’s clinical standards or policies |
Billing policy | Controlling the practice’s billing policies |
Pricing | Setting the price, rates, or amounts charged for services |
Payor contracts | Negotiating, executing, enforcing, or terminating third-party payor contracts |
This list tracks closely with what regulators in California, Oregon, and Vermont have already been examining under a “de facto control” standard — the same functional test, not a formal-ownership test, that we flagged in our earlier post on the state-by-state MSO crackdown.
The Arm’s-Length, Fair-Market-Value Contracting Requirement
Of everything in this bill, Section 2(b)(2)(A)(vi) is the provision most likely to force an actual rewrite of existing management agreements, and it deserves its own attention. An MSO may only contract with (or amend, renew, or terminate a contract with) a medical practice for management services if two conditions are both met. First, the medical practice must have negotiated the contract at arm’s length, through legal counsel, negotiators, and financial advisors that the practice itself selected — without MSO involvement in that selection, and free from any financial conflict of interest with the MSO. Second, the compensation under the contract must reflect fair market value, as determined by the FTC.
In practice, that first condition is the harder one to satisfy retroactively. A lot of MSO/PC structures we see coming from other counsel were built with the MSO’s own attorneys drafting the management services agreement for both sides, or with the physician-owner’s “independent” counsel selected and effectively paid for through the MSO relationship. Under this bill, that setup wouldn’t just be a soft compliance risk — the resulting agreement would be void by its own terms. Genuine independence in how the PC side is represented, documented contemporaneously, is what this provision is actually testing for.
The FMV requirement is the second half of the same coin, and it’s where fee structure becomes a legal question rather than just a business one. A revenue-based or percentage-of-collections MSA fee is difficult to defend as fair market value precisely because it ties the MSO’s compensation to clinical volume — which is the incentive structure the whole bill (and the CPOM doctrine generally) is designed to eliminate.
Enforcement
The bill gives this real teeth. A violation is treated as an unfair or deceptive act or practice under Section 18(a)(1)(B) of the FTC Act, and the FTC is granted full enforcement authority — including, notably, authority over nonprofit organizations that would ordinarily fall outside its jurisdiction. Beyond agency enforcement, the bill creates a private right of action: anyone injured by a violation can sue directly, and a prevailing plaintiff may recover treble damages, attorneys’ fees and litigation costs, plus equitable or declaratory relief. State attorneys general can also bring parens patriae actions on behalf of residents. Courts finding a violation must order the violating party to cease and desist and, where applicable, divest the offending entity and disgorge revenue earned during the violation period. Either side can demand a jury trial. Section 2’s requirements would take effect one year after enactment, and a separate provision would make a violation grounds for federal health program exclusion under Section 1128(b) of the Social Security Act.
Preemption: A Floor, Not a Ceiling
Section 4 makes clear this bill would set a federal floor, not displace the state patchwork. It expressly does not preempt state laws that impose equal or more stringent ownership and control requirements, afford equal or greater licensee protections, or impose equal or more stringent MSO restrictions. For multi-state clients, that means California’s, Oregon’s, and Vermont’s statutes — all stricter in at least some respects — would continue to govern in full. This bill wouldn’t simplify multi-state compliance; it would add a federal minimum underneath the existing state-by-state analysis.
Why This Doesn’t Change Our Playbook
We’ve been tracking the state-level version of this trend closely — California’s and Oregon’s 2026 CPOM restrictions, Vermont’s Act 133, and the growing list of states relying on a functional “de facto control” standard rather than formal ownership. This federal bill is built on the same foundation, and largely on the same Oregon statute we’ve already been benchmarking client structures against.
That’s not a coincidence, and it’s also why this bill doesn’t change how we build MSO/PC structures for clients. Our standing guidance on management fees has never recommended revenue-based or percentage-of-collections models — we advise a cost-plus and flat-fee mixture instead, precisely because that structure holds up under the same fair-market-value and arm’s-length scrutiny this bill would impose by statute. Our management services agreements are negotiated with genuinely separate counsel and financial advisors on each side, with that independence documented as it happens, not reconstructed after the fact. And our governance documents are built so that licensees hold real, exercised authority over hiring, staffing, clinical standards, and coding — not authority that’s reserved on paper but never actually used, which is exactly the structure both state and federal regulators are now scrutinizing.
For clients whose MSO/PC structure was built this way from day one, this bill — if it or something like it is ever enacted — would mostly formalize obligations they already meet. For clients coming to us with structures built elsewhere, this is usually the moment we find the gaps: revenue-tied fees, counsel that wasn’t actually independent, or management agreements that reserve more operational authority to the MSO than the documents let on. If you’re standing up a new MSO/PC structure from scratch, our companion guide walks through the formation process step by step — entity selection, governance design, and fee structuring — the same way our RUO peptide company guide walks founders through that formation process.
Why LumaLex
This is exactly the kind of problem LumaLex was built around. We’re a boutique firm, but our practice is deliberately concentrated at the intersection of transactional structuring and regulatory fluency in telehealth and corporate-practice-of-medicine work — which means we’re not translating a generalist’s read of a new bill after the fact. We track legislation like this as it moves through committee, compare it against the CPOM, MSO, and telehealth licensure frameworks already in place across all 50 states, and build that comparison directly into the governance documents, management agreements, and entity structures our clients actually operate under.
Whether you’re standing up a new MSO/PC structure, auditing an existing management agreement for arm’s-length and fair-market-value defensibility, or trying to understand how a federal bill like this would interact with the state law you’re already navigating, LumaLex can help you see the whole board — not just this one bill, but how it fits into everywhere else you already operate.
This post is provided for general informational purposes and does not constitute legal advice. If you have questions about how this legislation, or existing state CPOM and MSO laws, affect your telehealth platform, MSO structure, or practice arrangement, please contact the LumaLex Law team.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Health, licensing, and corporate-practice-of-medicine rules vary by state and change frequently. Consult qualified counsel about your specific facts.
