Physician vs. MSO Disputes: Navigating the Unwinding of the Friendly PC Relationship in the Midst of the CPOM Crackdown

This session examines the current litigation landscape for Corporate Practice of Medicine (CPOM) claims brought by physicians or whistleblowers through the False Claims Act against Management Services Organizations (MSOs), covering the shift from dormant doctrine to active enforcement across California, Texas, Oregon, and New York. Attorneys will learn the core litigation theories—including void ab initio MSA challenges, billing and coding control claims, captive PC structures, and receivership remedies—alongside the statutory frameworks created by California SB 351, AB 1415,Texas HB 3749 and TMB Rule 169.28, and Oregon HB 3410that now define the boundaries of permissible MSO conduct.Texas HB 3749, together with TMB Rule 169.28, expandedthe Texas Medical Board’s enforcement authority, codified prohibitions on lay control over clinical decisions, and created new civil penalties for violations — providing physicians with additional statutory grounds for challenging noncompliant MSO arrangements. Attendees will leave with a working command of the evidentiary targets in MSO agreements, the collateral consequences of CPOM violations, and the state-by-state tactical considerations that determine how and where to file.

This session equips counsel with a concrete negotiation framework for exiting noncompliant MSO arrangements in the current CPOM enforcement environment. Drawing on California’s SB 351, the Carbon Health AG settlement,Texas HB 3749’senhanced enforcement mechanisms and civil penalty structure, Oregon’s retroactive restrictive covenant nullification under HB 3410, and the pending Art Center Holdings appeal, the session identifies the specific contractual pressure points — continuity agreements, variable management fees, and professional asset ownership — that determine leverage at the negotiating table.The Texas framework, including HB 3749 and TMB Rule 169.28, is particularly significant. HB 3749 providesfor administrative penalties and disciplinary action against both unlicensed entities exercising control over medical practices and physicians who knowingly participate in noncompliant arrangements, creating dual-track pressure that can accelerate exit negotiations. Attorneys leave with a state-specific toolkit for asserting void-contract arguments, reclaiming professional assets, and deploying regulatory complaint threats as genuine negotiating leverage.