On September 16, 2026, Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), and Jeff Merkley (D-Ore.), along with 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 “Federal CPOM Bill”), which would establish the first federal restrictions on the corporate practice of medicine (“CPOM”).[1] The Federal CPOM Bill is supposedly modeled on Oregon’s Senate Bill 951 (“S.B. 951”), as amended by Oregon House Bill 3410 (“H.B. 3410”), which took effect January 1, 2026 (the “Oregon CPOM Law”). As drafted, however, the Federal CPOM Bill is significantly broader in scope and includes fewer exceptions than the Oregon CPOM Law, which could disrupt existing models nationwide and threaten the ability of independent medical practices to access capital and operational support, including for investment in facilities and technology, staffing infrastructure, revenue cycle management, privacy and cybersecurity, and quality reporting.
As discussed in our prior blog post[2], the Oregon CPOM Law strengthened and expanded Oregon’s existing CPOM prohibition, significantly reshaping the state’s regulatory landscape for non-physician investment in medical practices by imposing broad restrictions on how non-professional parties, such as private equity firms and other non-physician investors, participate in the ownership, management, and operation of medical practices in Oregon.[3] More recently, we also discussed actions by the California Attorney General that have strengthened California’s CPOM doctrine and evidenced an increased focus on enforcement, reflecting a trend towards reducing lay entities’ influence over the delivery of clinical care that we expect to see increasing in other states in the near future.[4]
While it appears the Federal CPOM Bill faces significant headwinds in Congress this year, it nonetheless offers a useful window into the considerations regulators across the country are weighing in the CPOM context. Here, we summarize the Federal CPOM Bill’s key provisions.
How CPOM Is Regulated Today
Approximately two-thirds of U.S. states currently prohibit non-licensed individuals or entities from owning, operating, or controlling medical practices, or otherwise employing or engaging physicians for the rendering of medical services. The root of these prohibitions is a concern that, otherwise, the physicians’ medical decisions will be driven or influenced by the desire to generate profit, rather than the care of patients. In such states, a medical practice must typically be organized as a professional practice entity (e.g., a professional corporation (PC) or professional limited liability company (PLLC)) and must be owned by a physician licensed in that state (or in certain states, where local law permits, by a physician licensed in another state). The source of CPOM restrictions varies by state, but often are derived from a combination of professional licensure statutes, case law, attorneys general’s opinions, and regulatory body opinions. The scope and rigor of state CPOM restrictions vary widely. Some states impose stringent limitations, while others relatively few, and enforcement approaches differ significantly as well.
Restrictions On Corporate Ownership and Control
If enacted, the Federal CPOM Bill would establish a clear federal prohibition on certain corporate ownership and control of medical practices, unless an exception applies. A partnership or corporate entity that is not majority-owned and controlled by one or more licensees (i.e., physicians, nurse practitioners, and/or physician assistants) could not own or control a medical practice, employ or contract for a licensee’s professional services, or otherwise engage in the practice of medicine.[5] “Majority ownership and control” requires licensees to hold a majority ownership or membership interest in a medical practice and to constitute a majority of such entity’s governing body.[6]
The Federal CPOM Bill expressly preserves state laws that impose equal or more stringent ownership and control requirements, afford equal or greater protection to licensees, or impose equal or more stringent restrictions on management services organizations (“MSOs”).[7] This bill would establish a federal floor while permitting states to maintain or adopt more restrictive requirements. Approximately one-third of U.S. states do not have CPOM restrictions, but instead protect clinical autonomy through licensure, corporate codes, fee-splitting rules, scope of practice limits, telehealth standards, and consumer protection laws. In those states, the Federal CPOM Bill would require restructuring existing arrangements that relied on the absence of CPOM restrictions to permit the direct employment of licensed physicians by MSOs and other entities not owned by licensed physicians.
The Federal CPOM Bill only exempts non-profit and public health care providers, and hospitals, hospital-affiliated clinics, critical access hospitals, and rural emergency hospitals.[8] This proposed ban is not limited to private equity funds, insurers, and other for-profit corporations.[9] Rather, it applies to any partnership or corporate entity, regardless of the source of its capital. With so few exceptions, the Federal CPOM Bill may leave medical practices and their physicians with few practical alternatives to hospital acquisition or physician employment, possibly accelerating consolidation in a segment of the healthcare industry that is already highly concentrated in many markets.
Broad Restrictions On Management Services Organizations
The Federal CPOM Bill also targets arrangements between medical practices and MSOs, including structures often described as “friendly physician” arrangements. Under this model, a medical practice is owned exclusively by one or more physicians (unless a particular state’s laws permit minority ownership by non-physicians), and all clinical responsibilities and decision-making authority is reserved exclusively to the physician owners, employees, and contractors. At the same time, an investor forms and operates an MSO (which may be owned, in part, by the same physicians that own the medical practice) that contracts with the medical practice for the provision of all of the non-clinical management, administrative, and business support services necessary to run the medical practice, and the MSO receives a fair market value fee from the medical practice in exchange for such services. This arrangement allows the physicians to focus on providing medical services, while outsourcing non-clinical responsibilities to the MSO.
Under the Federal CPOM Bill, an MSO, and its shareholders, directors, members, managers, officers, employees, or contractors, could not: (i) control, or enter into an agreement to control or restrict, the sale or transfer of a practice’s shares, interests, or assets, or otherwise permit a non-licensee to do so; (ii) issue, or cause a practice to issue, shares or other ownership interest in itself, a subsidiary, or an affiliate, including by establishing a practice with which the MSO intends to contract; (iii) pay dividends from shares or an ownership interest in a practice; (iv) own or control shares or other ownership interest in a practice, serve as a director, manager, or officer of a practice, be an employee of or contractor with a practice, or otherwise participate in managing a practice; or (v) acquire, cause the acquisition of, or finance the acquisition of shares or other ownership interest in a practice.[10]
A separate provision of the Federal CPOM Bill bars an MSO from exercising de facto control over a practice’s administrative, business, or clinical operations in a manner affecting the nature or quality of care, and lists the following as examples of items or activities over which the MSO may not have ultimate decision-making authority: hiring and termination of employees of the practice, work schedules and compensation or other terms of employment for licensees of the practice, staffing levels, time allotted per patient, revenue disbursement, credentialing requirements, revenue targets, diagnostic coding decisions, clinical standards, billing policy, pricing, and third-party payor contracting.[11] An MSO is also prohibited from advertising a practice’s services under the name of an entity other than the practice itself, a provision relevant to common MSO arrangements with practices in which the MSO’s brand, rather than the practice’s own name, is used in patient-facing communications and marketing.[12]
In addition, a management services agreement between an MSO and medical practice would be permitted only where the medical practice negotiated the contract at arm’s length through independently selected counsel, negotiators, and financial advisors free of conflicts with the MSO, and where the compensation reflects fair market value as determined by the Federal Trade Commission (“FTC”). Fair market value determinations for individualized management services agreements have traditionally been performed by qualified independent valuation professionals applying transaction-specific facts and methodologies. The Federal CPOM Bill does not, however, specify the standard, process, or timing the FTC would use to make or review such determinations, or how they would interact with valuation opinions the parties independently obtain.[13]
Additional Limits on Health Care Provider Activities That Impact Licensees’ Clinical Decision-Making
The Federal CPOM Bill bars a “health care provider” (not just an MSO, but any entity that delivers health care services, including a medical practice) from interfering with, controlling, or directing a licensee’s professional judgment or clinical decisions through discipline, adverse employment action, coercion, retaliation, or excessive pressure, including by dictating time spent per patient, admission or discharge determinations, treatment-initiation timing, diagnostic coding authority, and configuring medical records to influence clinical decisions.[14]
As drafted, the provision does not expressly distinguish impermissible corporate interference with clinical judgment from a wholly licensee-owned medical practice’s routine clinical governance activities, such as standardized clinical guidelines, documentation protocols, or staffing and scheduling expectations tied to quality or patient-safety programs. As a result, absent a clarifying amendment or implementing guidance, those functions could be interpreted to fall within its scope. The FTC, in consultation with the Department of Health and Human Services, may identify further prohibited conduct by rule.[15]
Physician Ownership and Employment Protections
The Federal CPOM Bill also seeks to ensure that licensee ownership in a medical practice reflects meaningful participation in a practice rather than nominal ownership. Licensee owners would need to be licensed and present in the state where the practice furnishes services, and substantially engaged in delivering medical care.[16] Because both conditions must be satisfied, this requirement would pose significant hurdles for multi-state practice structures (including those that provide telehealth services).[17] This is a notably stringent approach. Only a small number of existing state CPOM regimes impose a comparable “substantially-active” practice requirement on practice owners. In addition, approximately half of states require a physician owner of a medical practice to be licensed in the state where the practice is formed or operates even if the physician does not treat patients in the state, while other states generally require only that the physician owner be licensed and in good standing in any state.
The Federal CPOM Bill would also void non-compete, non-disclosure, and non-disparagement agreements involving a licensee, health care provider, or MSO, subject to a single exception that a non-compete between a licensee and their own medical practice remains valid where the licensee holds an ownership interest equal to or greater than twenty-five percent (25%) of the practice.[18] Such restrictive covenants are widely used across the healthcare industry to protect trade secrets and other confidential information, safeguard investments in physician recruiting and strategic transactions, and support other business arrangements. Whether these restrictive covenants are enforceable, and on what terms, has traditionally been a matter of state law, with rules varying by jurisdiction as to permissible scope, geographic reach, and duration. In 2024, the FTC attempted to impose a nationwide ban on non-compete agreements through rulemaking, but abandoned that effort in 2025 after a federal district court vacated the rule, and has since pivoted to targeted, case-by-case enforcement.[19] If it passes, the Federal CPOM Bill would succeed where the FTC’s rulemaking did not, categorically voiding non-compete, non-disclosure, and non-disparagement agreements involving a licensee, health care provider, or MSO, subject to the ownership interest exception described above.
Significant Enforcement Authorities
The FTC would have authority to enforce the statute, treating a violation as an unfair or deceptive act or practice under the FTC Act, with a new extension of authority to regulate nonprofit entities.[20] The bill creates a private right of action for any person injured by a violation, with a prevailing plaintiff entitled to treble damages, attorneys’ fees and costs, and other equitable or declaratory relief, and authorizes state attorneys general to bring actions on behalf of state residents for equitable relief and monetary damages.[21]
Taken together, the combination of treble damages, a private right of action, and state attorney general authority would create exposure for CPOM and MSO arrangements that resembles, in structure and severity, the penalty regimes associated with the federal False Claims Act and analogous state fraud-prevention statutes, which would be a notable departure from the enforcement mechanisms typically associated with state CPOM laws to date. Courts finding a violation must order cessation, mandatory divestment where applicable, and disgorgement of revenue received during the violation period.[22] A separate provision would amend the Social Security Act to add MSO-restriction violations as a ground for permissive exclusion from federal health care programs.[23]
Looking Ahead
Regardless of its near-term prospects, the introduction of the Federal CPOM Bill is significant. Corporate practice of medicine has historically been regulated exclusively at the state level, and this marks the first serious legislative effort to establish a regulatory framework at the federal level. If it were to be passed, it does not provide for any grandfathering of currently compliant arrangements and would take effect within one year.
Stakeholders should watch whether these developments influence continuing state-level activity, given that several states have adopted or proposed similar measures over the past several years.[24] Even if the bill does not pass, heightened national scrutiny may further shift the policy environment by increasing public attention and prompting additional states to consider Oregon-style restrictions, with potential downstream implications for practice operations and growth.
Health care provider organizations and MSOs with private investors should monitor this legislation and consider using it as an opportunity to review their existing arrangements for compliance with current CPOM and related laws.
FOOTNOTES
[1] Stop Corporate Takeovers of Physicians Act of 2026, S. ___, 119th Cong. (2d Sess. 2026) (as introduced Sept. 16, 2026) (the “Federal CPOM Bill”), https://www.warren.senate.gov/wp-content/uploads/2026/09/Stop-Corporate-Takeovers-of-Physicians-Act-for-circ.-2026.pdf.
[3] Or. S.B. 951, chapter 295, Oregon Laws 2025 (“S.B. 951”), https://olis.oregonlegislature.gov/liz/2025R1/Downloads/MeasureDocument/SB951/Enrolled, as amended by H.B. 3410 (Or. 2025) (“H.B. 3410”), https://olis.oregonlegislature.gov/liz/2025R1/Downloads/MeasureDocument/HB3410/Enrolled.
[4] California Attorney General Secures Corporate Practice of Medicine (CPOM) Settlement Requiring Carbon Health to Restructure Its “Friendly PC” Arrangement | Sheppard; California Attorney General’s Amicus Brief in Art Center Holdings Supports Strict Interpretation in Favor of Corporate Practice of Medicine Restrictions for MSO-PC Arrangements | Sheppard.
[5] Federal CPOM Bill sec. 2(a)(1).
[6] Federal CPOM Bill sec. 2(a)(2).
[7] Federal CPOM Bill sec. 4.
[8] Federal CPOM Bill sec. 2(a)(3), citing 42 U.S.C. sec. 1395x(e), (mm)(1), (kkk)(1).
[9] See, e.g., the press release and one-pager, Warren, Hoyle, Wyden, Merkley, Ocasio-Cortez, Subramanyam Introduce Bill to Ban the Corporate Practice of Medicine (Sept. 16, 2026), https://www.warren.senate.gov/newsroom/press-releases/warren-hoyle-wyden-merkley-ocasio-cortez-subramanyam-introduce-bill-to-ban-the-corporate-practice-of-medicine/; https://www.warren.senate.gov/wp-content/uploads/2026/09/FC-Stop-Corporate-Takeovers-of-Physicians-Act-One-Pager-09.14.2026.pdf.
[10] Federal CPOM Bill sec. 2(b)(2)(A)(i)-(v).
[11] Federal CPOM Bill sec. 2(b)(2)(A)(viii).
[12] Federal CPOM Bill sec. 2(b)(2)(A)(vii).
[13] Federal CPOM Bill sec. 2(b)(2)(A)(vi).
[14] Federal CPOM Bill sec. 2(b)(1)(B).
[15] Federal CPOM Bill sec. 2(b)(1)(B)(vii).
[16] Federal CPOM Bill sec. 2(c).
[17] Federal CPOM Bill sec. 2(c).
[18] Federal CPOM Bill sec. 2(b)(1)(A)(i)-(iii).
[19] See our prior post discussing the FTC’s latest non-compete enforcement approach: FTC Signals Shift to Targeted Enforcement of Non-Competes in the Healthcare Industry | Sheppard.
[20] Federal CPOM Bill sec. 2(e)(1)(A)-(B).
[21] Federal CPOM Bill sec. 2(e)(2)-(3).
[22] Federal CPOM Bill sec. 2(e)(4)-(5).
[23] Federal CPOM Bill sec. 3, amending 42 U.S.C. sec. 1320a-7(b).
[24] See our recent posts on these updates:
- OHCA Releases Revised Emergency Regulations Implementing AB 1415 Reporting Requirements for Private Equity (PE) and Management Services Organizations (MSOs) | Sheppard;
- Vermont Enacts Sweeping Restrictions on Private Equity Involvement in Health Care | Sheppard;
- California Enacts SB 351: New Law Aimed At Limiting Private Equity Influence on Healthcare Businesses | Sheppard;
- Governor Newsom Signs AB 1415 Expanding OHCA Oversight | Sheppard;
- Major Regulatory Updates from the West Coast: New California and Washington Approaches to Healthcare Private Equity and MSO Regulation | Sheppard.