168 Wash. 2d 421 | Wash. | 2010
¶1 Columbia Physical Therapy Inc. (Columbia), a professional service corporation owned by a group of physical therapists, brought this action against Benton Franklin Orthopedic Associates (BFOA), a professional limited liability company owned by physicians and employing physical therapists. Columbia asserts that BFOA and its doctors and physical therapists are violating (1) the corporate practice of medicine doctrine; (2) The Professional Service Corporation Act (PSCA), chapter 18.100 RCW; (3) the antirebate statute, chapter 19.68 RCW; and (4) the Consumer Protection Act (CPA), chapter 19.86 RCW. The statutory law has developed and evolved around the existing common law and carefully balances the competing interests at stake in the delivery of health care services. For the reasons discussed below, BFOA is entitled to summary judgment on Columbia’s claims under the corporate practice of medicine doctrine, the PSCA, and the antirebate statute. We also affirm the trial court’s denial of BFOA’s summary judgment motion with respect to Columbia’s CPA claim.
FACTS
¶2 BFOA is a professional limited liability company owned by five members, all of whom are licensed to practice
¶3 BFOA currently employs three physical therapists at BFPT who work in a separate facility from the physicians. In 2006, BFOA referred approximately 33 percent of its patients to physical therapists at BFPT. This constituted around 86 percent of BFPT’s clients. When referring patients to physical therapy, BFOA claims to advise patients, both verbally and in writing, of their ownership interest in BFPT and to provide patients with a list of other physical therapy providers. Columbia has produced some evidence that, when a patient told his BFOA physician that he wanted a referral to a physical therapist at Columbia, the physician said he could not provide a referral anywhere other than BFPT. Columbia also produced evidence that another patient asked a BFOA physician where to go with his physical therapy referral and the physician pointed to BFPT.
¶4 Columbia sued BFOA and its physician-members and physical therapists. Columbia’s lawsuit consisted of four claims: (1) violation of the corporate practice of medicine doctrine, (2) violation of the PSCA, (3) violation of the antirebate statute, and (4) violation of the CPA. Columbia and BFOA both moved for summary judgment on each of the claims, except for the CPA claim, on which only BFOA moved for summary judgment. The trial court granted BFOA’s motion for summary judgment on the PSCA claim and denied BFOA’s motions for summary judgment on the CPA and antirebate statute claims. The trial court denied Columbia’s motion for summary judgment with respect to the PSCA and the antirebate statute claims. The court
ISSUES
¶5 1. Does BFOA violate the corporate practice of medicine doctrine?
¶6 2. Does BFOA violate the PSCA?
¶7 3. Do BFOA’s employees violate the antirebate statute?
¶8 4. Did BFOA violate the CPA?
STANDARD OF REVIEW
¶9 We review summary judgment orders and the meaning of statutes de novo. Wright v. Jeckle, 158 Wn.2d 375, 379, 144 P.3d 301 (2006) (meaning of statutes); Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 853, 860, 93 P.3d 108 (2004) (summary judgment orders). Summary judgment is appropriate if “there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law.” CR 56(c). All facts and reasonable inferences therefrom must be viewed in the light most favorable to the nonmoving party. Hisle, 151 Wn.2d at 860-61.
ANALYSIS
I. The Corporate Practice of Medicine Doctrine and the PSCA
¶10 Columbia asserts that BFOA has violated both the corporate practice of medicine doctrine and the PSCA.
¶11 The corporate practice of medicine doctrine provides that, absent legislative authorization, a business entity may not employ medical professionals to practice their licensed professions. This doctrine is derived of much broader principles “addressed by both the statutory and common law of Washington.” Morelli v. Ehsan, 110 Wn.2d 555, 558, 756 P.2d 129 (1988). In the abstract, these broader principles are relatively straightforward. The practice of certain professions requires a license. See, e.g., RCW 18.71.021 (medicine); RCW 18.74.150 (physical therapy). A person or entity practices a profession by either directly engaging in statutorily defined conduct or by employing a licensed individual to engage in such conduct. See Morelli, 110 Wn.2d at 561; State ex rel. Standard Optical Co. v. Superior Court, 17 Wn.2d 323, 328-33, 135 P.2d 839 (1943). The legislature may, of course, authorize exceptions to this general scheme. This interpretation of the corporate practice of medicine doctrine is supported by legislative acquiescence, RCW 18.100.030(1) (stating that prior to the passage of the PSCA, certain professional services could not be performed by corporations), and earlier precedent of this court, Deaton v. Lawson, 40 Wash. 486, 489-90, 82 P. 879 (1905); State ex rel. Lundin v. Merchs. Protective Corp., 105 Wash. 12, 17-18, 177 P. 694 (1919).
¶12 Two cases are instructive in understanding the application of the corporate practice of medicine doctrine: Standard Optical, which addresses a corporation employing an optometrist, and Morelli, which addresses a partnership employing a physician. In Standard Optical, a corporation
¶13 In Morelli, a physician and a nonphysician entered into a limited partnership agreement and operated a medical clinic together. 110 Wn.2d at 556. In the course of finding that the partnership was illegal, we noted that “the common law rule that a corporation cannot engage in the practice of a learned profession through licensed employees unless legislatively authorized.” Id. at 561. We then proceeded to extend that rule to limited partnerships. Id.
¶14 BFOA disagrees with this understanding of the corporate practice of medicine doctrine, arguing that the doctrine restricts only who may own a medical practice and does not address whom that practice may employ. In support of this conclusion, BFOA cites language in Morelli indicating that the court was there concerned with lay participation in professional services, see id. at 562. To be sure, this is one evil the doctrine seeks to avoid, but, as discussed above, this court expressed much broader concerns in Standard Optical. We reject BFOA’s argument and adhere to the traditional understanding that the corporate practice of medicine doctrine forbids employment of health care professionals by business entities or nonprofessionals absent legislative authorization.
¶16 In 1969, the legislature enacted the PSCA and thereby carved out “a narrow statutory exception” to the general rule prohibiting corporations from practicing learned professions. Id. at 561. The PSCA contains two provisions of potential importance here.
An individual or group of individuals duly licensed ... to render the same professional services within this state may organize and become a shareholder or shareholders of a professional corporation for pecuniary profit under the provisions of Title 23B RCW for the purpose of rendering professional service.
Second, Columbia argues that RCW 18.100.080 prohibits BFOA’s employment of physical therapists:
No professional service corporation organized under this chapter shall engage in any business other than the rendering of the professional services for which it was incorporated.
In deciding between these mutually exclusive readings of the statute, we are guided by familiar principles of statutory interpretation.
¶17 Our purpose in interpreting a statute is “ ‘to discern and implement the intent of the legislature.’ ” City of Olympia v. Drebick, 156 Wn.2d 289, 295, 126 P.3d 802
¶18 Beginning with the prohibition provided in RCW 18.100.080, the prohibited conduct is “engag[ing] in any business other than the rendering of the professional services for which [the professional service corporation] was incorporated.” The question that immediately presents itself is what professional services a professional service corporation is incorporated to render. At the outset, we reject the proposition that this is solely determined by a corporation’s articles of incorporation. A professional service corporation composed of dentists could not, for instance, state in its articles of incorporation that it is incorporated to render dental and legal advice and thereby be permitted to practice both dentistry and law. In coming to the proper interpretation, we turn to related provisions of the same statute.
¶19 Two provisions in chapter 18.100 RCW provide insight as to what professional services a professional service corporation is incorporated to render. In RCW 18.100.010, the legislature declared that its intent in passing the PSCA was “to provide for the incorporation of an individual or
¶20 BFOA argues that the PSCA is concerned with only who may own a professional service corporation, not whom that corporation may employ. The PSCA, however, addresses both. Multiple sections address what services the professional service corporation may render. RCW 18.100.010, .050(2)-(5), .060, .065, .080. A corporation renders services through its employees. Thus, the PSCA impacts whom the corporation may employ.
¶21 Whether BFOA violates the PSCA therefore comes down to a single question: does it engage in any business other than the practice of medicine? Columbia argues that by employing physical therapists, BFOA is engaged in the practice of physical therapy, which Columbia contends is a different professional service. Columbia’s argument relies chiefly on the fact that the practice of medicine and the practice of physical therapy are governed by different chapters of the RCW. Medicine is governed by chapter 18.71 RCW, while physical therapy is governed by chapter 18.74 RCW. Columbia argues that this fact establishes that medicine and physical therapy are separate professional services. Columbia misunderstands the statutory interplay of these professions.
¶23 Our conclusion that the practice of physical therapy is included within the practice of medicine, as those terms are defined by the legislature, is reinforced by other statutory provisions. First, the physical therapy licensing statute expressly provides that “[n]othing in this chapter prohibits any person licensed in this state under any other act from engaging in the practice for which he or she is licensed.” RCW 18.74.090(1). This contemplates that other professionals are licensed to perform acts overlapping with or including those that physical therapists are licensed to perform. Second, the legislature knew how to create a field
¶24 In an effort to avoid this result, Columbia makes three additional arguments: that the use of the term “physical therapy” means it is a separate professional service, that professional services are not the “same” unless they are coextensive, and that RCW 18.100.050(5) is a legislative determination that the practices of medicine and physical therapy are separate professional services. None of these arguments are availing.
¶25 First, Columbia points to RCW 18.74.090(1), which prohibits the use of the term “physical therapy” in connection with the name of any person not licensed as a physical therapist pursuant to that chapter. Columbia has not asserted a violation of RCW 18.74.090(1) as one of its claims. The question, therefore, is whether, by using the term “physical therapy” in connection with its business, it is engaged in a separate business from the practice of medicine, notwithstanding the fact the practice of medicine includes the acts constituting physical therapy. We do not read RCW 18.74.090(1) to stand for the proposition that calling an activity “physical therapy” is a separate professional service while performing the acts constituting physical therapy is not a separate professional service. We avoid such strained readings of statutes. State v. Neher, 112 Wn.2d 347, 351, 771 P.2d 330 (1989).
¶26 Second, Columbia argues that physical therapy and medicine cannot be the same professional service because, while medicine includes physical therapy, physical therapy does not include medicine. In other words, Columbia argues that to be the same professional service, two
¶27 Finally, Columbia argues that RCW 18.100-.050(5), which places those licensed to practice medicine in a separate list from those licensed to practice physical therapy, amounts to a legislative determination that medicine and physical therapy may not be practiced by a single professional service corporation. RCW 18.100.050(5)
¶28 In sum, the PSCA does not prohibit BFOA’s employment of physical therapists. In employing physical therapists, BFOA does not go beyond the practice of medicine, the professional service for which it was formed. Moreover, RCW 18.100.050(1) authorizes BFOA’s employment of physical therapists, since it permits the formation of a professional limited liability company to render the professional service — medicine—for which its members are licensed. As there is legislative authorization for BFOA’s employment of physical therapists, BFOA does not violate the corporate practice of medicine doctrine. We therefore affirm the trial court’s grant of summary judgment to BFOA on Columbia’s PSCA claim and direct the trial court to enter summary judgment for BFOA on Columbia’s common law corporate practice of medicine claim.
II. The Antirebate Statute
¶29 Columbia’s third claim is that the physician-members and the physical therapists of BFOA violate the antirebate statute, chapter 19.68 RCW, by receiving and paying unearned profits. Though the antirebate statute applies to a referring physician with an ownership interest in the business to which patients are referred, Day v. Inland Empire Optical, Inc., 76 Wn.2d 407, 456 P.2d 1011 (1969), the statute exempts from its coverage profits earned by an employee of a firm and flowing to the firm’s owners, provided the owners practice in the firm, RCW 19.68.040.
¶30 Though we have previously noted that the anti-rebate statute is “not a model of clarity by any means,” we have nonetheless determined that it prohibits both paying and receiving anything of value, including unearned profits, in return for a referral of patients. Wright, 158 Wn.2d at 381. The benefit of such a law is that it discourages unnecessary referrals, thereby lowering health care costs. Our most extensive and on-point discussion of the statute came in Day. In Day, a group of ophthalmologists practiced together in the Spokane Eye Clinic, a medical partnership. 76 Wn.2d at 410. Those ophthalmologists also owned all the capital stock of the Inland Empire Optical Company, which was located on the lower floor of the same building and operated an optical dispensing business, employing four licensed dispensing opticians. Id. In the eye clinic, the ophthalmologists advertised on a sign that they owned an optical shop downstairs but that patients were free to take their prescriptions to other opticians. Id. at 412. The court in Day found that this arrangement violated the antirebate statute, reasoning that the sign constituted a referral by the ophthalmologists and that any benefit to Inland Empire Optical ultimately benefited its owners. Id. at 418-19.
¶31 The present case largely parallels Day. The physician-owners of BFOA refer patients to physical therapists employed by a business entity owned by the referring physicians, and the owners thereby benefit from the referral. Without more, this would violate the antirebate statute since any profit from the work by the physical therapists would, absent the exception contained in RCW 19.68.040, be unearned as to the referring physicians. A physician may receive compensation only for services rendered by that particular physician. RCW 19.68.040.
¶33 The trial court declined to grant BFOA’s summary judgment motion on the antirebate statute claim because it believed that there remained a question of fact as to whether BFOA physicians adequately supervised the physical therapists employed by BFOA, and Columbia advances that argument here. The antirebate statute, how
¶34 In sum, even construing all material facts in the light most favorable to Columbia, BFOA physicians and physical therapists have not violated the antirebate statute. On remand, the trial court is directed to enter summary judgment for BFOA physicians and physical therapists on Columbia’s antirebate statute claim.
III. The CPA
¶35 The final issue we consider in this case is whether BFOA has violated the CPA. On this issue, only BFOA has moved for summary judgment. Columbia argues that BFOA violated the CPA both by engaging in particular acts that were unfair or deceptive and by violating the corporate practice of medicine doctrine, the PSCA, and the antirebate statute. Having already determined that BFOA has not violated these statutes and this doctrine, we confine our analysis to whether, taking the facts in the light most favorable to Columbia, BFOA committed unfair or decep
¶36 To establish a violation of the CPA, a private plaintiff must prove five elements: (1) an unfair or deceptive act or practice occurred, (2) the act or practice occurred in the conduct of trade or commerce, (3) the act or practice impacted the public interest, (4) the plaintiff suffered an injury to business or property, and (5) the plaintiff can demonstrate a causal link between the unfair or deceptive act or practice and the injury. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 784-93, 719 P.2d 531 (1986). The only element challenged by BFOA before this court is the first one. Whether an action constitutes an unfair or deceptive practice is a question of law. Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133, 150, 930 P.2d 288 (1997). An act is deceptive if it has “the capacity to deceive a substantial portion of the public.” Hangman Ridge, 105 Wn.2d at 785. Even accurate information may be deceptive “ ‘if there is a representation, omission or practice that is likely to mislead’ a reasonable consumer.” Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27, 50, 204 P.3d 885 (2009) (quoting Sw. Sunsites, Inc. v. Fed. Trade Comm’n, 785 F.2d 1431, 1435 (9th Cir. 1986)).
¶37 There is evidence in the record of two acts that Columbia claims are unfair or deceptive. The material facts of both are disputed, so we must view them in the light most favorable to Columbia. The first involves a BFOA physician telling a patient who had requested a referral to Columbia that the patient had to receive treatment from BFOA’s physical therapists. This undoubtedly has “the capacity to deceive a substantial portion of the public,” Hangman
¶38 In sum, BFOA has failed to show that Columbia’s CPA claim fails on the basis alleged since some of the alleged conduct could amount to an unfair or deceptive trade practice. We therefore affirm the trial court’s refusal to grant summary judgment to BFOA on Columbia’s CPA claim. In order to prevail on remand, Columbia must still demonstrate that the facts it alleges are true and that the remaining Hangman Ridge factors apply.
CONCLUSION
¶39 This case presents numerous issues relating to the important issue of delivery of health care services in the state of Washington. In resolving the matters before us, we have relied upon the intent of the legislature. The legislature remains free to adopt another course should it see fit to do so. With respect to the case before us, we affirm the trial court’s grant of summary judgment to BFOA on Columbia’s PSCA claim and direct the trial court to enter summary judgment for BFOA on Columbia’s corporate practice of medicine doctrine and antirebate statute claims. We affirm the trial court’s denial of the remaining summary judgment
These five will be collectively referred to as the “physician-members” of BFOA.
Because we find the PSCA argument dispositive, we do not address BPOA’s argument that RCW 74.09.240(3)(a) is an independent legislative authorization for its employment of physical therapists.
The provisions of the PSCA apply to professional limited liability companies under the express terms of RCW 25.15.045(1).
Identical lists appear in the Washington Limited Liability Company Act, RCW 25.15.045(6), hut this opinion discusses them in the context of the PSCA for consistency and to read the PSCA provisions in pari materia.
Physical therapists are included as a result of a 1999 amendment to the statute. Laws or 1999, ch. 128, § 1.
As we determine that the antirebate statute does not prohibit the BFOA referrals based on RCW 19.68.040, we decline to address whether the exception for diagnostic services in RCW 19.68.010(2) applies.
In the joint motion for discretionary review, the parties also requested that this court interpret the phrase “specifically permitted” in RCW 19.86.170 and determine whether Columbia has standing to raise its CPA claim. These issues were not addressed in briefs to this court by either party nor at oral argument and we therefore decline to address them.