If you own a Minnesota medical, dental, or chiropractic practice, or plan to start one, most of your legal work is ordinary business law with licensing rules added. Those rules decide who may own the practice, what your associate agreements may restrict, how patient records move when the practice changes hands, and what you may say in public about a patient. I have represented dentists, doctors, chiropractors, and their practices.
Who may own a medical or dental practice in Minnesota?
Minnesota limits practice ownership mainly to licensed professionals. A corporation may not practice dentistry or furnish dental services, though dentists may incorporate under a corporate practice act. A practice organized as a professional firm may be owned only by licensed professionals and the few other holders the Minnesota Professional Firms Act lists, such as other professional firms.
For dentistry, Minn. Stat. § 150A.11, subd. 1, provides that “No corporation shall practice dentistry or engage in it, or hold itself out as being entitled to practice dentistry, or furnish dental services or dentists.” The same subdivision “Does not prohibit dentists from incorporating their practice of dentistry for business purposes under the special provisions of a corporate practice act for dentistry.” The dental rules are collected in Minnesota dental practice ownership regulations.
A licensed practice that uses a corporation or LLC can elect professional-firm status under the Professional Firms Act, chapter 319B. Once a firm elects professional-firm status, Minn. Stat. § 319B.07, subd. 1, provides that its ownership interests “may not be owned or held, either directly or indirectly, except by” the persons it lists, chiefly “professionals who, with respect to at least one category of the pertinent professional services, are licensed and not disqualified.” Subdivision 4 makes a transfer to anyone else “void.” In plain terms, an unlicensed investor or a management company cannot hold equity in the firm, and a transfer to one is void. The professions the Act reaches are listed in Minnesota’s licensed professional business types.
Physicians and chiropractors face a limit from case law as well. In Isles Wellness, Inc. v. Progressive Northern Insurance Co., 703 N.W.2d 513 (Minn. 2005), the Minnesota Supreme Court recognized “that, with limited exceptions, the corporate practice of medicine doctrine exists in Minnesota” and held “that the corporate employment of chiropractors is prohibited except as expressly permitted by statute,” naming chapter 319B as one such statute. The same question for another licensed health profession is answered in psychology clinic ownership.
What should an associate agreement for a licensed provider cover?
An associate agreement should settle how the associate is paid and how pay is computed, who carries malpractice coverage, whether there is a path to buy in, how either side ends the relationship, and what the associate may do after leaving. For most agreements signed since mid-2023, Minnesota’s noncompete statute limits that last item to terms such as confidentiality and nonsolicitation.
Under Minn. Stat. § 181.988, subd. 2(a), “Any covenant not to compete contained in a contract or agreement is void and unenforceable.” The section “applies to contracts and agreements entered into on or after” July 1, 2023 (2023 Minn. Laws ch. 53, art. 6, § 1). Its definition of employee includes independent contractors (subd. 1(c)), so calling an associate a contractor does not bring a noncompete back. The statute’s definition of a covenant not to compete excludes “a nondisclosure agreement, or agreement designed to protect trade secrets or confidential information” and “a nonsolicitation agreement, or agreement restricting the ability to use client or contact lists, or solicit customers of the employer” (subd. 1(a)). Those terms remain available to protect your patient relationships and confidential information.
For an associate who primarily resides and works in Minnesota, subdivision 3 bars an employer from requiring, as a condition of employment, a clause that sends a Minnesota claim under the noncompete statute to be decided outside Minnesota or deprives the associate of the substantive protection of Minnesota law for that claim. The other terms are covered in the dentist associate agreement checklist.
What changes when you sell or buy a licensed practice?
A practice sale works like any business sale with a few additions: the buyer must be someone Minnesota allows to own the practice, patient records need a lawful path to the buyer, the buyer needs its own licensed providers, and the noncompete statute lets a buyer restrict the seller as part of the sale.
The ownership limits above decide who may buy. For records, Minn. Stat. § 144.293, subd. 2, provides that a provider “may not release a patient’s health records to a person without” one of three things: “a signed and dated consent from the patient or the patient’s legally authorized representative authorizing the release,” “specific authorization in Minnesota law,” or “a representation from a provider that holds a signed and dated consent from the patient authorizing the release.” The patient letter and the consent process therefore belong in the closing plan.
On the restriction, Minn. Stat. § 181.988, subd. 2(b)(1), lets the seller and the buyer “agree on a temporary and geographically restricted covenant not to compete that will prohibit the seller of the business from carrying on a similar business within a reasonable geographic area and for a reasonable length of time.” Each addition, including asset versus equity sales and what happens to payor contracts and billing enrollments, is covered in selling a medical, dental, or accounting practice.
How should a practice respond to patient reviews online?
If a practice replies to a patient review, good or bad, the reply should thank the reviewer and invite them to contact the office, without confirming that the reviewer is a patient or mentioning a visit, treatment, or bill. A reply that ties the reviewer to their care can be a release of a health record under the Minnesota Health Records Act, which gives the patient a claim for damages.
Minn. Stat. § 144.291, subd. 2(c), defines “Health record” as “any information, whether oral or recorded in any form or medium, that relates to the past, present, or future physical or mental health or condition of a patient; the provision of health care to a patient; or the past, present, or future payment for the provision of health care to a patient.” Under Minn. Stat. § 144.298, subd. 2, a person who “negligently or intentionally requests or releases a health record in violation of sections 144.291 to 144.297” is “liable to the patient for compensatory damages caused by an unauthorized release or an intentional, unauthorized access, plus costs and reasonable attorney fees.”
Safe reply wording, a written review policy, and the federal HIPAA rules are covered in responding to patient reviews under HIPAA and Minnesota law. When a review is fake or false, the options for a fake patient review, from platform removal to a demand letter or a lawsuit, are matched to the kind of post, with the risks of each.
What other business questions come up for a licensed practice?
Beyond ownership, associates, sales, and reviews, practice owners bring a business attorney the questions any company has: choosing the entity and its tax elections, leasing or buying the office, hiring and terminating staff, and asset protection and estate planning for the owner. Tax questions particular to health care businesses are covered in Minnesota tax on durable medical equipment and health care facilities taxes in Minnesota.
Can my spouse own part of my professional firm if my spouse is not licensed?
No, while you are alive. Minn. Stat. § 319B.07, subd. 1, limits who may own a professional firm, directly or indirectly, chiefly to licensed professionals and firms authorized to furnish the firm’s services, and subdivision 4 makes a transfer to anyone else void. The one spousal exception is sole ownership by the surviving spouse of a professional who was the sole owner at death, and only for the period the statute sets. Subdivision 3 lets the firm, subject to its licensing law and unless its governing law or documents prohibit it, undertake death-benefit payments on account of a deceased owner, which is one way to provide for a surviving spouse.
Can I require an associate who works as an independent contractor to sign a noncompete?
Not in an agreement entered into on or after July 1, 2023, outside the statute’s exceptions for the sale or dissolution of a business. Minn. Stat. § 181.988 makes a covenant not to compete void and unenforceable, and its definition of employee includes independent contractors, including an entity an employer requires the individual to form in order to contract for services. A nondisclosure or nonsolicitation agreement falls outside the statute’s definition of a covenant not to compete, so those terms remain available.
Legal Help for a Minnesota Practice
These questions are part of my Minnesota healthcare law practice, and the dental-specific pages are collected under legal help for Minnesota dental professionals. If you would like a second set of eyes on an associate agreement, an ownership plan, or a sale, email aaron@aaronhall.com with a brief description. I will run a conflict check before you send any agreement or patient information.