Bill Introduced To Establish New Federal Corporate Practice of Medicine Restrictions

On September 16, 2026, the Stop Corporate Takeovers of Physicians Act was introduced in the U.S. Senate and the U.S. House of Representatives. Largely modeled after Oregon’s Senate Bill 951, this bill seeks to establish a new framework of significant federal restrictions on the ownership and control of medical practices, as well as the use of “friendly” or “captive” physician models by private equity funds and management service organizations (MSOs). Details on the key provisions of the bill are discussed below.

Corporate Ownership Limitations and an “Active Practice” Requirement for Doctor-Owners

Primarily, the bill seeks to make it illegal in all states for private equity funds, insurance companies, and other for-profit corporations to own a majority of or control medical practices. The bill provides that any partnership or corporate entity that owns a medical practice must be majority-owned and controlled by at least one or more state-licensed physicians.

The proposed bill includes exceptions for certain nonprofit and public healthcare providers, hospitals, hospital-affiliated clinics, and rural emergency hospitals.

Notably, the bill sets forth additional requirements on clinician ownership. A physician owner of a medical practice would be required to be licensed and present in the state where services are provided by the medical practice, and the physician owner must be substantially engaged in delivering medical care. This “active practice” requirement would represent a significant change, as the majority of states currently have no such requirement.

Restrictions on MSOs and the Use of Succession/Business Continuity Agreements

The proposed bill also sets forth significant restrictions regarding MSOs.

As the bill currently reads, an MSO would not be permitted to enter into succession agreements or business continuity agreements that control or restrict the sale or transfer of a medical practice’s shares, interests, or assets.

Further, the bill strengthens the requirement that contractual agreements between MSOs and medical practices be negotiated at arm’s length, meaning with legal counsel and advisors independently selected by the medical practice, and compensation to the MSO must reflect the fair market value.

Another key goal driving this legislation is to prevent “friendly physician” arrangements. To that end, the bill attempts to codify that MSOs are prohibited from exercising “ultimate decision-making authority” over administrative, business, or clinical operations of a medical practice. Items specifically prohibited by MSOs under the bill would include the hiring or firing of employees, determining work schedules, staffing levels, the length of time a physician sees a patient, revenue disbursements and targets, clinical standards or policies, billing policies, service rates or prices, and entering into contractual agreements with third-party payors.

Limitations on Common Restrictive Covenants

Another key aspect of the bill is that it seeks to ensure physician independence by banning common restrictive covenants. Under this bill, physicians, health care providers, and MSOs would be prohibited from entering into non-compete agreements, non-disclosure, or non-disparagement agreements, unless the physician owns or controls at least 25% of the medical practice.

Effect on State Laws

It is important to note that the bill preserves state laws that afford equal or stricter ownership or control requirements on medical practices, equal or stricter restrictions on MSOs, and equal or greater protections for licensed physicians.

Enforcement Mechanisms

The bill provides three enforcement mechanisms that are worth noting.

First, the Federal Trade Commission would have authority to enforce the bill. Second, state attorneys general may bring civil actions to enforce the bill on behalf of residents in the state. Third, the bill sets forth a private right of action for people injured by violations of the bill, which includes the ability to recover treble damages, attorney’s fees, and litigation costs.

If a court determines a violation of the bill, then the court may order a cease and desist of the conduct and a disgorgement of any revenue for the period of the violation.

Lastly, the bill would amend the Social Security Act to provide for the exclusion of violating entities from participating in federal healthcare programs.

What To Watch for Going Forward

Dykema will continue to monitor the progress of this proposed bill. While government policy advisors feel this particular bill is not likely to advance in 2026, the proposed restrictions merit close scrutiny, as they could reemerge in broader healthcare legislation and continued efforts at the state level to regulate corporate practice of medicine and dental issues.

Dykema has extensive experience structuring and executing compliant management arrangements in all 50 states. If you would like legal counsel on your dental or medical management arrangements or M&A transactions, please contact Dykema as soon as possible.