Summary:
- Development: On September 16, 2026, six Democratic lawmakers introduced the Stop Corporate Takeovers of Physicians Act (the “Act”), a proposed federal CPOM framework modeled substantially on Oregon’s recent legislation. The bill would regulate not only formal ownership of medical practices, but also whether MSOs and other non-licensees exercise practical control through management agreements, financing, succession rights, staffing, compensation, billing, contracting, and other operational authority.
- What the bill would do: Subject to specified exceptions, the Act would restrict entities that are not majority owned and controlled by licensed physicians or other qualifying practitioners from owning or controlling medical practices. In addition, the Act would target contractual arrangements that give MSOs or other non-licensees practical control over staffing, compensation, billing, contracting, revenue management, governance, or other operational functions. These restrictions could affect a broad range of physician-employment, ownership, contracting, governance, and management models.
- Enforcement: The proposal does not rely on a single enforcement mechanism. It would authorize Federal Trade Commission (FTC) enforcement, allow state attorneys general to sue on behalf of residents, and create a private right of action for persons injured by violations, with potential treble damages and attorneys’ fees. Courts finding a violation would be required to order cessation of the violation and, where applicable, divestiture and disgorgement. The bill would also amend Social Security Act §1128(b) to make violations a potential basis for exclusion from federal healthcare programs. That combination would turn CPOM from what has historically been largely a state licensure and enforcement issue into a potentially significant federal litigation and program integrity risk.
- Action point: Healthcare organizations do not need to restructure because a group of federal lawmakers introduced a bill. The proposal does not change current law. Its significance is that concepts associated primarily with Oregon and California, particularly scrutiny of “friendly PC” arrangements and de facto MSO control, are now being proposed as a federal standard. This serves as the latest indication of where CPOM scrutiny is moving. Healthcare organizations should evaluate whether their existing arrangements require attention to address emerging issues on professional entity succession, financing, governance, and operating rights.
WHAT IS NEW: A Proposed Federal CPOM Framework
On September 16, 2026, Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), and Jeff Merkley (D-Ore.), and Representatives Val Hoyle (D-Ore.), Alexandria Ocasio-Cortez (D-N.Y.), and Suhas Subramanyam (D-Va.) introduced the Stop Corporate Takeovers of Physicians Act of 2026 (the “Act”). The proposal is notable not because it changes the law today – it does not – but because it would take a regulatory approach that has been gaining traction in Oregon and California and apply it at the federal level: looking beyond formal physician ownership and asking who actually controls the medical practice.
For MSOs, physician organizations and investors, that distinction matters. The bill targets many of the contractual and operational mechanisms historically used to make national PC-MSO platforms work, including ownership transfer restrictions, management authority, staffing and compensation decisions, revenue control, payer contracting, and brand ownership.
WHAT THE ACT AIMS TO DO: Create Federal Restrictions on Corporate Ownership and Control of Medical Practices
The proposed Act would create a federal CPOM framework by prohibiting entities that are not majority owned and controlled by licensed practitioners from owning or controlling medical practices, subject to limited exceptions (such as certain nonprofit entities and hospitals). Although framed as an ownership restriction, the Act is also directed at MSO arrangements and would permit regulators and courts to evaluate whether an MSO exercises practical or “de facto” control over a medical practice.
Some key provisions of the Act include:
- Expanded Restrictions on MSOs Activities: The Act would substantially limit MSO authority over medical practices. Similar to Oregon’s recent CPOM legislation, it identifies activities that may evidence impermissible de facto control, including authority over staffing, compensation, schedules, clinic policies, revenue disbursement, billing and coding, pricing, and payer contracting. Because many of these functions are commonly delegated to MSOs, organizations may need to evaluate both contractual rights and actual operational practices.
- Restrictions on PC-MSO contractual relationships: The Act would require PC-MSO agreements to be negotiated at arm’s length through counsel and advisors selected by the medical practice, with compensation reflecting fair market value. Agreements that violate the Act may be deemed void and unenforceable, creating additional compliance risk beyond traditional CPOM analyses.
- Active Licensee Ownership Requirements: To satisfy the proposed ownership requirements, a “licensee” — including a physician or other advanced practice provider such as physician assistant or nurse practitioner who is authorized under the state law to diagnose and treat patients in a clinical setting — must hold at least a majority of the entity’s ownership interests, constitute a majority of the entity’s governing body, and be substantially engaged in delivering medical care. As a result, nominal physician ownership, or ownership by a physician serving only in an administrative capacity, may be insufficient. These requirements could create challenges for multi-state structures and physician owners whose primary role is governance rather than active clinical practice.
- Branding Restrictions: The Act would prohibit medical practices from advertising services under the name of an entity other than the medical practice itself. As a result, branded PC-MSO models that rely on an MSO-provided trade name may require further evaluation.
- Restrictions on Certain Restrictive Covenants: The Act would invalidate non-compete, non-disclosure, and non-disparagement agreements, subject to a limited exception for certain physician owners holding at least a 25% ownership interest. These provisions could affect physician employment, succession planning, and investment arrangements.
- Significant Federal Enforcement Mechanisms: Unlike many state CPOM laws, the Act would create a federal enforcement framework that includes Federal Trade Commission oversight, private rights of action, potential treble damages, disgorgement remedies, and divestiture orders, potentially increasing both litigation and regulatory exposure.
HOW THIS CONNECTS TO RECENT STATE CPOM DEVELOPMENTS: Continuing Trend Towards Increased CPOM Scrutiny
It is worth noting that the Act does not propose to preempt state CPOM laws that impose equal or more stringent ownership requirements, provider protections, or MSO-control restrictions. As a result, the Act would establish a federal baseline while preserving stricter state regimes, including in states such as Oregon and California. In particular:
- Oregon’s SB 951 and HB 3410. As mentioned, the Act draws heavily from Oregon’s recent CPOM laws, which restrict both direct ownership arrangements and friendly-PC structures by focusing on de facto control, MSO authority, ownership-transfer rights, and succession mechanisms. Many of those same concepts appear throughout the Act.
- California’s Attorney General and Court Actions. California has long prohibited corporations from owning, controlling, or operating medical practices. Our communications earlier this year have highlighted the Attorney General amicus brief in Art Center Holdings v. WCE Art, LLC (April 2026), the A.G. settlements with Aspen Dental Management (May 2026), and Carbon Health Technologies relating to allegations that the MSO exceeded permissible management functions and exercised impermissible control over affiliated medical practices.
While Oregon and California have focused primarily on ownership, governance, and control issues, other states have increased scrutiny through transaction oversight. For example, Illinois recently enacted Public Act 104-0782, which expanded healthcare transaction reporting requirements and expressly captured certain private-equity-related healthcare transactions, reflecting increased state interest in healthcare ownership and investment structures.
Collectively, these developments show increased regulatory focus on practical control, not merely formal ownership. If enacted, the Act could increase diligence burdens, complicate MSO investment structures, and require closer alignment between agreements and day-to-day operations.
TAKEAWAY: Proactive Evaluation of Corporate Structure and Practice
The immediate lesson is not that the friendly-PC/MSO model is disappearing. It is that the compliance standard surrounding the model is becoming more demanding. Organizations should be able to demonstrate that physician control is substantive rather than formal. That means reviewing not only what the MSA and shareholder documents recite, but how decisions are actually made: who selects and removes physician leadership, who controls clinical staffing and compensation methodology, who approves payer arrangements and patient-facing policies, who controls revenues and banking, and whether financing, branding or termination rights make the professional entity effectively captive.
The Stop Corporate Takeovers of Physicians Act may not become the federal framework governing these relationships, but many of the concepts it contains are already appearing in state legislation and enforcement. For organizations using PC-MSO structures, this is an appropriate time to stress test both the documents and the operating model against that emerging standard.
Leech Tishman has extensive experience advising healthcare organizations, MSOs, and investors on regulatory compliance and enforcement risk, and we closely monitor CPOM developments in California, Oregon, and nationally. Our team can help clients evaluate how the Stop Corporate Takeovers of Physicians Act and recent state CPOM developments may affect PC-MSO structures, operational approval processes, and CPOM compliance strategies. For assistance or additional information, please contact T. Nancy Lam at nlam@leechtishman.com, Alex Ji Hoon Jeong at ajeong@leechtishman.com, or Harry J. Nelson at hnelson@leechtishman.com, attorneys in Leech Tishman’s Healthcare Practice Group.