Practice Alerts

Laws, rules and regulations, not Alerts, specify the requirements for practice and violating them constitutes professional misconduct. Not adhering to this Alert may be interpreted as professional misconduct only if the conduct also violates pertinent law, rules and regulations, some citations of which are listed at the end of this Alert.

Alert 20: Practice of Physical Therapy by General Business Corporations is Prohibited1

Section 6732 of the Education Law limits the practice of physical therapy and use of the physical therapist title as follows: Only a person licensed or otherwise authorized under this article shall practice physical therapy or use the title "physical therapist", "physiotherapist" or "mechanotherapist" or the abbreviation of "P.T." in connection with his or her name or with any trade name in the conduct of his profession.

Except as noted in footnote 1, there is no exemption for a general business corporation either using the title of "physical therapist" or practicing physical therapy even if all principals or shareholders are licensed physical therapists (PTs). As a general business corporation acts through its employees, no employee of a general business corporation may offer physical therapy services to the public or hold out as practicing physical therapy.

To emphasize this point, under Education Law Section 6512, unauthorized practice of physical therapy is a crime. Further, Education Law Section 6513 provides that the unauthorized use of a professional title, such as "physical therapist" is also a crime. Finally, Regents' Rule 29.1(b)(3) defines professional misconduct as, "directly or indirectly offering, giving, soliciting, or receiving or agreeing to receive, any fee or other consideration to or from a third party for the referral of a patient or client or in connection with the performance of professional services," while Regents' Rule 29.1(b)(4) adds the following as professional misconduct: permitting any person to share in the fees for professional services, other than: a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice the same profession, or a legally authorized trainee practicing under the supervision of a licensed practitioner. This prohibition shall include any arrangement or agreement whereby the amount received in payment for furnishing space, facilities, equipment or personnel services used by a professional licensee constitutes a percentage of, or is otherwise dependent upon, the income or receipts of the licensee from such practice, except as otherwise provided by law with respect to a facility licensed pursuant to Article 28 of the Public Health Law or Article 13 of the Mental Hygiene Law. In other words, a licensee may not ordinarily share profits or split fees with a non-licensee such as a business corporation.

These provisions guarantee that professional services will be provided by licensed professionals without undue influence from unlicensed third parties who are not subject to the professional responsibility requirements enumerated in Education Law. Therefore, licensed PTs would be guilty of professional misconduct if they were to share the profits of their physical therapy practices with shareholders of a general business corporation. The penalties for professional misconduct range from administrative warnings to revocation of license, and include suspensions and fines.

However, a non-licensee, such as a management services company organized as a general business corporation, may provide purely management services such as the rental of realty, furnishings or equipment, bookkeeping services, etc. at a cost to the licensee of the fair market value of those services. An arrangement of this kind describes a general business relationship which would place no constraints upon professional judgment or otherwise unduly limit professional practice. Such a rental or lease arrangement may not be dependent, in whole or in part, upon the gross or net receipts from the professional practice of physical therapy. To do so would constitute unprofessional practice under section 29.1(b)(4) of the Regents' Rules which prohibits profit sharing or fee splitting between licensees and non-licensees.

Physicians may practice physical therapy because they are authorized by law to perform the services which are defined as the practice of physical therapy, but they may not hold themselves out as PTs. Physicians may also employ PT s. This latter situation is not in violation of the statutes or rules prohibiting fee splitting, since a referral to an employee is not a referral to a different principal and since the remuneration of the employee is a term and condition of employment and not a gratuity for the referral or treatment.

Physicians employing licensed PTs should disclose that employment relationship and provide an option for the patient/client to seek physical therapy services elsewhere. Failure to disclose this financial interest could subject the physician to professional misconduct charges related to "exercising undue influence."

1There is a limited exception that allows certain corporations that obtain a waiver under Education Law section 6503-b to employ or contract with licensed professionals to provide preschool special education services or early intervention services, which may include physical therapy services. The services may be provided only by appropriately licensed professionals.

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Citations of Pertinent Law, Rules or Regulations:
Education Law, Section 6509 – definition of professional misconduct
Education Law, Section 6512 – unauthorized practice
Education Law, Section 6513 – unauthorized use of title
Education Law, Section 6732 – practice of physical therapy and use of title
Regents Rules, Part 29.1(b)(3) – impermissible referrals
Regents Rules, Part 29.1(b)(4) – fee splitting
Last Updated: August 11, 2016