A senior partner announces she is retiring and wants to be bought out. A management company offers to take over billing and the lease in exchange for a percentage of collections. A departing associate opens an office down the road, and the practice wants to know whether his non-compete is enforceable. A larger group offers to acquire the practice and asks how the patient records, the controlled substance registration, and the payer contracts will move over.

Each of those situations involves ordinary business law, such as contracts, entity governance, and the sale of a business. But in a health care practice, each is also shaped by rules that apply only because the owners hold professional licenses and treat patients. Those rules come from several sources:

This guide covers the business-law side of owning a Maryland physician, dental, or other licensed health care practice. It does not cover clinical standards, coding and billing compliance, or the details of federal health information privacy rules, which deserve their own analysis and often a health care regulatory specialist. Where those areas intersect with an ownership decision or a transaction, we flag them.

Most Maryland practices operate through either a professional corporation or a limited liability company. The choice affects ownership restrictions, buyout mechanics, governance, and tax treatment.

Professional corporations

The Professional Service Corporation Act, in Title 5, Subtitle 1 of the Corporations and Associations Article, covers services that may lawfully be rendered only by a licensed person, including physicians and dentists. Under Section 5-102, a corporation that is eligible to be a professional corporation generally may not organize under any other corporate form, with exceptions for a few professions that do not include medicine or dentistry. In practice, that means a physician or dental practice that chooses the corporate form will generally be a professional corporation, often designated “P.A.” or “P.C.”

The Act controls who may own the corporation:

• Who may hold stock. Under Section 5-109, stock may be issued to an individual authorized by law in Maryland or another state to render the professional service named in the articles, to certain general partnerships of qualified persons, and to a professional corporation organized to perform the same professional service. Stock issued in violation of the section is void.
• Who may receive transferred stock. Under Section 5-111, stock may be transferred or pledged only to a qualified person, and a transfer in violation of that rule, other than a transfer by operation of law or court judgment, is void.
• Who may serve as directors and officers. Under Section 5-117, a majority of the directors and all of the officers other than the secretary and treasurer must be qualified persons.

Limited liability companies

The Maryland LLC Act gives an LLC the power to render professional services (Section 4A-203), while Section 4A-203.1 preserves the authority of the licensing boards over licensees who practice through it. The LLC Act itself does not impose a licensed-ownership requirement, but the licensing statutes can, as the dental ownership statute discussed below does. An LLC offers flexible governance and tax treatment, but it does not come with the Professional Service Corporation Act’s built-in buyout rules, so the operating agreement has to supply them. Our guide on Maryland LLC operating agreements covers what to include.

What the entity does not protect against

Neither a professional corporation nor an LLC protects a provider from liability for the provider’s own professional negligence. Both the Professional Service Corporation Act (Section 5-121) and the LLC Act (Section 4A-301.1) keep an individual liable for professional services the individual renders. Other owners are generally not liable for a colleague’s negligence unless they were negligent in appointing, supervising, or cooperating with that colleague. The entity can also protect owners from the practice’s contract debts that they have not personally guaranteed. That is why professional liability insurance, not the entity, is the primary protection against malpractice claims.

Dental practices: a clear statutory rule

Maryland is explicit about dentistry. Under Health Occupations Section 4-103, only an individual or individuals licensed by the State Board of Dental Examiners, or a dental professional corporation, may own a dental practice. A dental professional corporation is defined as a corporation, or a professional service limited liability company, owned solely by individuals licensed by the Board to practice dentistry. The statute also provides that:

• Only a licensed dentist may direct clinical training or care, hire, supervise, or terminate dentists, dental hygienists, and dental assistants, direct or control patient treatment records, and share in the income, revenues, profits, or fees with licensed dentists within the same dental practice.
• Except within the same dental practice, a licensed dentist may not share in revenues or split fees.
• It is unlawful for a person who is not a licensed dentist to direct, control, or interfere with the independent professional judgment of a dentist or dental hygienist regarding diagnosis, care, or treatment.

The statute expressly permits a dentist or dental professional corporation to enter into agreements under which an unlicensed person provides a list of business services, such as management and administrative support. Compensation under those agreements must be a predetermined fixed fee or fixed compensation negotiated with and approved by the dentist owners, and it may be based on prior revenues or profits over a preceding period of 12 months or longer. The statute also exempts certain public, educational, charitable, and other clinics. A dental support organization arrangement that pays the manager a percentage of current collections, or that gives the manager control over clinical staffing or records, deserves careful review against this statute.

Physician practices: an unsettled doctrine

The corporate practice of medicine doctrine, recognized in some states, bars business entities owned by non-physicians from practicing medicine or employing physicians to do so. Maryland’s position is less clear than many owners assume. In an opinion addressing physical therapy, 85 Op. Att’y Gen. 238 (2000), the Maryland Attorney General observed that Maryland’s highest court had never explicitly embraced the doctrine, much less extended it beyond medicine and dentistry. We are not aware of a Maryland statute or appellate decision that squarely resolves whether a lay-owned entity may employ physicians to practice medicine.

That uncertainty cuts both ways. It does not make lay ownership of a medical practice safe, and it does not make it prohibited. Other rules still apply. Under Health Occupations Section 14-404, practicing medicine with an unauthorized person, or aiding an unauthorized person in the practice of medicine, is a ground for physician discipline, as is paying or accepting any sum for bringing or referring a patient. And the federal and Maryland referral laws discussed below apply regardless of who owns the practice.

Management services organizations and outside investors

Many physician and dental groups now operate through a structure in which licensed providers own the professional entity, while a separate management services organization, sometimes backed by private equity, owns the non-clinical assets and provides administrative services under a long-term agreement. These structures are common, but their legality depends on the details: how the management fee is calculated, who controls clinical decisions and records, what rights the management company holds over the professional entity’s ownership, and whether any payment could be characterized as compensation for referrals. For dental practices, Section 4-103 sets specific limits. For physician practices, the analysis turns on the unsettled doctrine above, the board discipline provisions, and the referral laws.

Health care is one of the few industries in which the law restricts how a business may pay its own owners, how it may share revenue with others, and what it may pay to acquire another business. Those restrictions come from both Maryland and federal law.

The Maryland Self-Referral Law

Under Health Occupations Section 1-302, except as the statute provides, a health care practitioner may not refer a patient, or direct an employee or contractor to refer a patient, to a health care entity in which the practitioner, or the practitioner in combination with immediate family, owns a beneficial interest; in which the practitioner’s immediate family owns a beneficial interest of 3 percent or greater; or with which the practitioner or immediate family has a compensation arrangement. The statute contains a series of exceptions, including:

• Referrals to another practitioner in the same group practice;
• Referrals for services or tests personally performed by or under the direct supervision of the referring practitioner; and
• Referrals for in-office ancillary services or tests that are personally furnished by the referring practitioner, a practitioner in the same group practice, or a supervised employee, provided in the same building, and billed by the practitioner or group practice, subject to the statute’s definitions and limits. Except for radiologist group practices and offices consisting solely of radiologists, the statutory definition of in-office ancillary services excludes MRI, CT, and radiation therapy services, so a non-radiology practice generally cannot use this exception for those services.

The consequences of a violation are significant. Under Section 1-305, a person who collects amounts billed in violation of the law and who knew or should have known of the violation is jointly and severally liable to the payor for the amounts collected, and under Section 1-307 a practitioner who fails to comply is subject to discipline by the appropriate licensing board. Imaging, laboratory, physical therapy, and other ancillary service arrangements, and any investment in a related business, should be reviewed against the statute’s definitions before they begin.

The federal Anti-Kickback Statute and Stark Law

Two federal laws apply alongside the Maryland statute where federal health care programs are involved:

• The Anti-Kickback Statute, 42 U.S.C. Section 1320a-7b(b), makes it a crime to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services payable by a federal health care program. Regulatory safe harbors protect arrangements that meet their conditions, but an arrangement outside a safe harbor is not automatically unlawful; it is judged on its facts.
• The Stark Law, 42 U.S.C. Section 1395nn, generally prohibits a physician from referring Medicare patients for designated health services to an entity with which the physician or an immediate family member has a financial relationship, unless an exception applies, and prohibits the entity from billing for those services. Stark is a strict liability statute in the sense that intent is not required for a violation.

Practical consequences for owners

• Compensation formulas. How a group divides income among physician owners, particularly income from ancillary services, can determine whether the group qualifies for the group practice and in-office ancillary services exceptions. Formulas that reward individual referrals for designated health services are a common source of risk.
• Marketing and referral payments. Paying a person or business for each patient referred can violate Maryland licensing rules as well as federal law.
• Leases and service arrangements with referral sources. Space and equipment leases, medical director agreements, and management agreements with referral sources should be written, at fair market value, and not tied to the volume or value of referrals.
• Dental fee-splitting. As noted above, a Maryland dentist may not share in revenues or split fees except with licensed dentists in the same dental practice.

These are areas where a health care regulatory review is often warranted in addition to business counsel, and we coordinate with regulatory specialists when a structure requires it.

Practice disputes are rarely about clinical medicine. They are about money, control, and departures: an owner who wants to reduce hours but keep the same share of profits, a partner who wants out, a provider who leaves and takes patients and staff, or a family that inherits an interest it cannot hold. A well-drafted shareholder or operating agreement answers those questions before they become disputes.

What the agreement should address

• Buyout triggers and price. Death, disability, loss or suspension of a license, retirement, voluntary withdrawal, and termination for cause should each have a defined price and payment schedule. For a professional corporation, an agreed price controls the statutory buyout under Section 5-113.
• Disability. Define disability, the waiting period before a buyout, and how income is allocated during a period of reduced production.
• Compensation and expense allocation. Spell out how collections, ancillary income, and overhead are allocated, consistent with the referral laws discussed above.
• Governance. Decide which decisions require unanimous or supermajority approval, such as admitting new owners, taking on debt, signing leases, and selling the practice. Our guide on 50/50 deadlocks covers what happens when there is no tiebreaker.
• Restrictive covenants for owners. Owner-level covenants raise different issues from employee non-competes, discussed in the next section, and should be drafted with both in mind.
• Malpractice tail coverage. Many professional liability policies are written on a claims-made basis, so a departing provider may need extended reporting coverage. Decide in advance who pays for it.
• Records and patient communications. Decide who controls the records and how patients will be notified of a provider’s departure, consistent with the records rules discussed below.

When a provider leaves

Departures create a predictable set of issues: notifying patients, continuity of care, access to records, final compensation, tail coverage, non-solicitation of staff and patients, and the return of practice property and information. A provider who leaves a patient without arranging for continuity of care can face licensing consequences, and a practice that interferes with a patient’s access to records creates its own risk. Handling the departure professionally protects the practice as well as the patients.

If the relationship among owners has broken down, our guides on removing a business partner, breach of fiduciary duty, and business partner disputes explain the options.

For years, practices relied on non-competes to protect their patient base when an employed provider left. Maryland changed that landscape for many licensed health care providers through legislation enacted in 2024 (Chapter 378, House Bill 1388), which amended Labor and Employment Section 3-716.

Providers at or below $350,000

Under Section 3-716, a noncompete or conflict of interest provision in an employment contract or similar agreement that restricts an employee from working for a new employer or becoming self-employed in the same or similar business is null and void as against public policy if the employee:

1. Is required to be licensed under the Health Occupations Article;
2. Is employed in a position that provides direct patient care; and
3. Earns equal to or less than $350,000 in total annual compensation.

All three conditions must be met. The statute is not limited to physicians or dentists; it reaches any employee in a position that requires licensure under the Health Occupations Article and meets the other two conditions.

Providers above $350,000

For a licensed health care provider in a direct patient care position who earns more than $350,000 in total annual compensation, a non-compete is not automatically void, but it may not exceed 1 year from the last day of employment, and its geographic restriction may not exceed 10 miles from the provider’s primary place of employment. On a patient’s request, the employer must tell the patient the new location where the former employee will be practicing.

What the statute does not cover

• Patient lists and proprietary information. The statute does not apply to a provision concerning the taking or use of a client or patient list or other proprietary client-related or patient-related information. Practices can still protect that information through confidentiality and non-solicitation terms and trade secret law, discussed in our guide on trade secret misappropriation.
• Sale of a practice or an ownership interest. Section 3-716 addresses employment contracts and similar agreements concerning employment. It does not expressly address a covenant given by a seller in connection with the sale of a practice or an ownership interest, which is generally analyzed under different principles. Because the line between an owner’s sale covenant and an employee’s covenant can blur, particularly when the seller stays on as an employee, those covenants should be drafted with both frameworks in mind.
• Agreements signed outside Maryland. The statute applies whether or not the employment contract was entered into in Maryland.

Our guide on non-compete agreements in Maryland covers the general reasonableness standard.

Other employment issues

Productivity bonuses, ancillary income shares, and deferred compensation can raise questions under the Maryland Wage Payment and Collection Law, which treats many forms of earned incentive compensation as wages and allows enhanced damages when wages are withheld without a bona fide dispute. Draft compensation plans so that it is clear when a bonus is earned and how it is calculated. Practices that use independent contractor providers, such as locum tenens physicians or part-time specialists, should also confirm the classification holds up, a subject covered in our guide on worker misclassification.

Patient records are both a regulated obligation and, in a sale, one of the practice’s most valuable assets. Maryland law governs how long they must be kept, how they may be destroyed, and how they may change hands. Federal health information privacy rules apply separately and are beyond the scope of this guide.

Retention and destruction

Under Health-General Section 4-403, which applies to physicians, dentists, and other listed health care providers:

• Unless the patient is notified, a provider may not destroy a medical record or laboratory or X-ray report about an adult patient for 7 years after the record or report is made.
• For a minor patient, the record may not be destroyed until the patient reaches the age of majority plus 7 years, unless the required notice is given to the parent or guardian, or in certain cases to the minor.
• The notice must be sent either by first-class mail to the patient’s last known address or by e-mail to the last known e-mail address. If an e-mailed notice gets no response or delivery receipt, notice must also be mailed at least 10 days before destruction. The notice must state the date on which the record will be destroyed and that the record or a synopsis, if wanted, must be retrieved at a designated location.
• The record must be available for retrieval within 60 days before the date of destruction at the designated location.

A knowing violation can result in liability for actual damages and administrative fines.

Closing a practice or a provider’s death or retirement

Section 4-403 also addresses what happens after the death, retirement, surrender of the license, or discontinuance of a provider’s practice. The provider, the estate’s administrator, or a designee who agrees to maintain the records and states in writing to the appropriate licensing board that they will be maintained in compliance with the section must send the required notice before the records are destroyed or transferred. A Maryland Department of Health regulation, COMAR 10.01.16.06, also requires a provider who discontinues practice to immediately secure the records and describes options for transferring or disposing of them and notifying patients. Where the regulation’s options, such as newspaper publication, differ from the statute, follow the statute, which requires notice to each patient by mail or e-mail.

Records may be transferred in a sale, but not sold as such

The Maryland Confidentiality of Medical Records Act generally prohibits disclosing a medical record by sale, rental, or barter. Under Health-General Section 4-302, that prohibition does not bar the transfer of medical records relating to the transfer of ownership of a health care practice or facility, if the transfer is in accord with the ethical guidelines of the applicable profession. A practice sale should therefore address records expressly: who becomes the custodian, how patients are notified, how a patient can request that records go elsewhere, and how the seller will retain access to defend later claims.

A practice depends on a collection of licenses, registrations, and certificates beyond the providers’ professional licenses. Several are tied to a specific person, entity, or location, which matters when a practice moves, adds an office, or changes hands.

• Board notice of address changes. Under Health Occupations Section 14-316, a physician must notify the Board of Physicians in writing of a change in name or address within 30 days. Under Section 4-313, a dentist must notify the State Board of Dental Examiners within 60 days of a change of office address.
• Maryland controlled dangerous substances registration. Under COMAR 10.19.03.08, a Maryland registration certificate is not transferable and becomes void when the registrant changes ownership, which the regulation defines to include adding or removing partners, a change in a corporation’s president or chief executive officer, or a change in ownership of 10 percent or more of its shares. The registrant must notify the Secretary of Health in writing at least 30 days before the change and file a change-of-ownership application. Internal buy-ins and partner changes can therefore trigger the rule, not only outside sales. A separate registration is generally required for each separate location where controlled substances are ordered, stored, administered, or dispensed.
• DEA registration. Under 21 C.F.R. Section 1301.52, a DEA registration may not be assigned or transferred except on conditions the DEA specifically designates and with its written consent, and a registrant transferring controlled substances in connection with a business transfer must give advance notice and take a complete inventory.
• CLIA certificates. A practice that performs laboratory testing, even simple waived tests, generally needs an appropriate CLIA certificate, and federal regulations require notice of changes in ownership, name, location, or director within 30 days. Maryland separately licenses medical laboratories. A physician office laboratory or point-of-care laboratory that limits its testing to CLIA-waived tests may qualify for a Maryland letter of exception instead of a laboratory permit.
• Ambulatory surgery. A practitioner office or group practice that has three or more operating rooms, operates primarily to provide outpatient surgical services, and seeks reimbursement as an ambulatory surgical facility is treated as an ambulatory surgical facility for Certificate of Need purposes under Health-General Section 19-114. Smaller surgical settings are subject to a separate Maryland Health Care Commission coverage review, and facility licensure is a separate question with its own exceptions. Owners planning to add surgical capacity should resolve these issues before signing a lease or ordering equipment.

Malpractice defense is typically handled by counsel appointed by the professional liability insurer. But owners should understand the framework, because it affects insurance decisions, owner agreements, and the allocation of risk in a practice sale.

• A separate claims process. Under the Health Care Malpractice Claims Act, Courts and Judicial Proceedings Title 3, Subtitle 2A, a claim against a health care provider for medical injury that seeks damages above the District Court’s concurrent jurisdictional limit must first be filed with the Health Care Alternative Dispute Resolution Office. Either party may waive the arbitration that would otherwise follow, after which the claim proceeds in court.
• The certificate of qualified expert. Under Section 3-2A-04, unless the sole issue in the claim is lack of informed consent, the claim must be dismissed without prejudice if the claimant does not file, within 90 days, a certificate of a qualified expert attesting to a departure from the standard of care that proximately caused the injury, subject to extensions the statute allows.
• Limitations. Under Section 5-109, a medical injury claim must generally be filed within the earlier of five years from the time the injury was committed or three years from the date it was discovered, with special rules for claimants injured as young children.
• A cap on noneconomic damages. Under Section 3-2A-09, noneconomic damages are capped at an amount that increases by $15,000 each January 1. By the statute’s formula, the cap for causes of action arising in 2026 is $920,000, and it applies in the aggregate to all claims arising from the same medical injury, with a separate aggregate limit for wrongful death cases with multiple beneficiaries. The cap does not limit economic damages such as medical expenses and lost earnings.

For owners, the practical issues are coverage limits, whether the policy is claims-made or occurrence, tail coverage when a provider leaves or the practice is sold, entity coverage for the practice itself, and how the owner agreement and purchase agreement allocate responsibility for claims arising from care provided before a departure or closing.

Entity tax treatment and owner compensation

Many practices organized as LLCs or professional corporations elect S corporation status. That election can reduce employment taxes, but only if owners take reasonable compensation for their services. Physicians and dentists are high earners whose services generate most of the practice’s income, which makes the reasonable compensation analysis particularly important. Our guide on S corporation reasonable compensation explains how the IRS approaches it.

Payroll taxes and personal liability

Practices have substantial payrolls, and the individuals who control the practice’s finances can become personally liable when withheld taxes are not paid over. Under Maryland Tax-General Section 10-906, personal liability for unpaid Maryland income tax withholding can extend to a person who exercises direct control over the entity’s fiscal management. At the federal level, the IRS can assess the Trust Fund Recovery Penalty against responsible persons who willfully fail to pay over withheld employment taxes, as explained in our guide on the Trust Fund Recovery Penalty.

Personal goodwill versus practice goodwill

When a practice is sold, much of the value is often goodwill, and who owns that goodwill matters for tax purposes. If goodwill belongs to the practice entity, a sale of the entity’s assets can produce two layers of tax for a C corporation, and proceeds paid to the owner may be characterized differently than the parties intended. If the goodwill is the owner’s personal goodwill, the owner may be able to sell it directly.

Two cases illustrate the line. In Martin Ice Cream Co. v. Commissioner, 110 T.C. 189 (1998), the Tax Court treated customer relationships built on a shareholder’s personal relationships as the shareholder’s own assets, where he had no employment agreement or non-compete with the corporation. In Howard v. United States (9th Cir. 2011), an unpublished decision involving a dentist, the court reached the opposite result because the dentist had an employment agreement and a non-compete with his own professional corporation, so the goodwill belonged to the corporation. The lesson for practice owners is that the employment and non-compete agreements you sign with your own entity can determine the tax treatment of a later sale.

The allocation of the purchase price among goodwill, equipment, non-compete payments, and consulting arrangements also has tax consequences for both sides, as explained in our guide on purchase price allocation, and in a health care sale it also has to be consistent with the fair market value principles discussed below.

Practice transactions range from a retiring dentist selling to an associate, to two physician groups merging, to a sale to a hospital system or a private equity-backed platform. Each raises the same core issues.

Enrollments and payer contracts

Medicare billing privileges cannot be sold. Under 42 C.F.R. Section 424.550, a provider or supplier may not sell its Medicare billing number or privileges or allow another person to use them. Changes in the ownership or control of a physician or group practice must be reported within 30 days, and under the regulation and CMS guidance, a change of ownership that also changes the tax identification number generally requires a new enrollment application by the new owner. Commercial payer contracts and credentialing are governed by the contracts themselves and typically require notice, consent, or new credentialing. The timeline to get a buyer enrolled and credentialed can affect cash flow for months, so it should drive the closing date and any transition services arrangement.

Registrations and records

As discussed above, Maryland controlled substance registrations become void upon specified changes of ownership, which requires advance notice and a change-of-ownership application, DEA registrations require DEA consent and specific procedures for transferring controlled substances, CLIA certificates require notice of ownership changes, and records may be transferred with the practice only in accordance with the profession’s ethical guidelines and the notice rules.

Fair market value and the referral laws

The price paid for a practice must be defensible under the referral laws when the buyer or seller is in a position to refer patients to the other. The Stark Law’s isolated transaction exception, at 42 C.F.R. Section 411.357(f), requires among other things that the price be consistent with fair market value, not determined in a manner that takes into account the volume or value of referrals, and commercially reasonable even if the physician made no referrals. The Anti-Kickback Statute’s safe harbor for the sale of a practice, at 42 C.F.R. Section 1001.952(e), is narrow: for a sale between practitioners, the sale must be completed within one year of the first agreement, and the seller must not be in a professional position to make referrals to or generate business for the buyer after that year. Many legitimate transactions do not fit a safe harbor, which is why an independent valuation and careful structuring of any post-closing employment, earnout, or consulting arrangement are standard practice.

Diligence and allocation of risk

• Billing and overpayment exposure. Review coding and billing practices and any payer audits, because overpayment and billing claims from the seller’s period can be significant. Address them through representations, indemnities, and escrow or holdback.
• Malpractice exposure. Confirm tail coverage for the seller’s providers and address claims arising from pre-closing care.
• The lease. Confirm the landlord’s consent to assignment and review use, exclusivity, and build-out terms. Our guide on commercial lease review covers the key terms.
• Employees and providers. Review provider employment agreements, including whether existing non-competes are enforceable under Section 3-716, and plan for retaining key staff.
• Equipment and liens. Identify leased and financed equipment and search for liens.
• Seller covenants and transition. Address the seller’s non-compete, any post-closing employment or consulting role, and patient notification.

Our guides on letters of intent, selling a business in Maryland, buying a business in Maryland, successor liability, and earnout disputes cover the transaction process in more detail.

These are the situations where early advice usually saves time and money:

• An owner dies, becomes disabled, or loses or has a license suspended, triggering buyout, ownership, and records obligations.
• An owner or provider announces a departure, particularly where patients, staff, or a non-compete are involved.
• A management company, private equity buyer, hospital, or larger group makes an offer, before you sign a letter of intent or exclusivity agreement.
• You plan to add an ancillary service, invest in a related business, or enter a lease or service arrangement with a referral source.
• You plan to close the practice or retire, which triggers records, notice, and registration obligations.
• You receive a payer audit, overpayment demand, licensing board inquiry, or tax notice.
• A dispute among owners about compensation, control, or a buyout begins to affect the practice.

• Operating without a shareholder or operating agreement, leaving the buyout price on death or disqualification to the statutory valuation process.
• Issuing or transferring equity to someone who is not qualified, which can make the issuance or transfer void.
• Signing a dental management agreement with a percentage-of-current-collections fee, or one that gives a non-dentist control over clinical staffing or records.
• Assuming lay ownership of a medical practice is either clearly permitted or clearly prohibited in Maryland.
• Paying for patient referrals, directly or through marketing arrangements tied to the number of patients referred.
• Adding ancillary services without checking the self-referral exceptions.
• Relying on an old provider non-compete form for agreements signed on or after July 1, 2025.
• Destroying records without the required notice, or transferring them in a sale without addressing custody and patient notice.
• Assuming the seller’s Medicare enrollment, controlled substance registrations, and payer contracts come with the practice.
• Pricing a practice purchase by reference to expected referrals rather than fair market value.
• Forgetting tail coverage when a provider leaves or the practice is sold.

Either can work, and the right answer depends on ownership, governance, and tax goals. If the practice uses the corporate form, the Professional Service Corporation Act generally requires it to be a professional corporation, with stock limited to qualified persons and a mandatory buyout at fair value when a stockholder dies or becomes disqualified for 5 months or more, unless the price is set by agreement. An LLC may render professional services and offers more flexible governance, but it relies on the operating agreement for buyout and transfer rules. For dental practices, ownership must also satisfy Health Occupations Section 4-103. Neither form protects a provider from liability for the provider’s own professional negligence.

Generally no. Under Health Occupations Section 4-103, only individuals licensed by the State Board of Dental Examiners, or a dental professional corporation owned solely by such licensed dentists, may own a dental practice, subject to exemptions for certain public, educational, charitable, and other clinics. A non-dentist may provide management and business services under an agreement with the dentist owners, but the compensation must be a predetermined fixed fee or fixed compensation, which may be based on revenues or profits over a preceding period of 12 months or longer, and a non-dentist may not direct, control, or interfere with a dentist’s independent professional judgment.

Maryland law does not give a clear answer. Maryland has no statute that squarely adopts or rejects the corporate practice of medicine doctrine for physicians, and the Maryland Attorney General has observed that Maryland’s highest court has never explicitly embraced it. At the same time, practicing medicine with or aiding an unauthorized person is a ground for physician discipline, and the referral laws apply regardless of ownership. Structures involving non-physician owners or management companies should be reviewed carefully before they are implemented.

It depends on when the agreement was signed and what the provider earns. For employment agreements executed on or after July 1, 2025, Labor and Employment Section 3-716 voids a non-compete for an employee who must be licensed under the Health Occupations Article, works in a direct patient care position, and earns $350,000 or less in total annual compensation. For a provider in a direct patient care position earning more than that amount, a non-compete may not exceed 1 year from the last day of employment or 10 miles from the primary place of employment. The statute does not apply to restrictions on taking or using patient lists or other proprietary patient-related information. Agreements signed before July 1, 2025 are not subject to the health care provisions, and covenants given in the sale of a practice raise separate issues.

Under Health-General Section 4-403, unless the required notice is given, a provider may not destroy an adult patient’s medical record or laboratory or X-ray report for 7 years after it is made, and a minor patient’s record may not be destroyed until the patient reaches the age of majority plus 7 years. The notice must be sent by first-class mail or by e-mail to the last known address, with a mailed follow-up at least 10 days before destruction if an e-mail gets no response or delivery receipt, must give the destruction date, and must explain where the record can be retrieved, and the record must be available for retrieval within 60 days before destruction. Separate obligations apply when a practice closes or a provider dies or retires.

Not as a standalone sale, but they can be transferred with the practice. Health-General Section 4-302 prohibits disclosing a medical record by sale, rental, or barter, but that prohibition does not bar the transfer of records relating to the transfer of ownership of a health care practice or facility if the transfer is in accord with the ethical guidelines of the applicable profession. The purchase agreement should address custody, patient notice, patient requests to send records elsewhere, and the seller’s continued access to defend claims.

Health Occupations Section 1-302 generally prohibits a health care practitioner from referring a patient to a health care entity in which the practitioner, or the practitioner with immediate family, has a beneficial interest, in which immediate family holds a beneficial interest of 3 percent or more, or with which the practitioner or immediate family has a compensation arrangement. Exceptions include referrals within the same group practice, services personally performed or directly supervised by the referring practitioner, and in-office ancillary services that meet the statute’s conditions, although that exception generally does not cover MRI, CT, or radiation therapy services outside radiology practices. A person who collects amounts billed in violation of the law, and knew or should have known of the violation, can be liable to the payor for those amounts, and practitioners can face board discipline.

It depends on the transaction structure. Medicare billing privileges cannot be sold to or used by another person. A physician or group practice must report a change of ownership within 30 days, and a transaction that changes the tax identification number generally requires a new Medicare enrollment application. A DEA registration likewise may not be assigned or transferred to another person except under conditions designated by the DEA and with its written consent. Maryland controlled dangerous substances registrations are subject to separate rules and become void upon specified changes of ownership, including certain changes in partners, corporate leadership, or stock ownership, requiring advance notice and a change-of-ownership application. Commercial payer contracts may also require notice, consent, or new credentialing.

Under Corporations and Associations Section 5-113, the professional corporation must acquire, or cause a qualified person to acquire, a deceased stockholder’s shares at a price representing fair value as of the date of death. If the articles, bylaws, or a private agreement set the price, that price controls. If not, the statute provides an offer and valuation procedure, and the parties can end up in court over fair value. Setting the price and funding mechanism in advance, often through insurance, avoids that process.

Maryland does not generally require it by statute, but under Health Occupations Section 14-508, a physician who does not maintain professional liability insurance, or whose coverage has lapsed, must notify patients in writing, including at the first visit and as part of informed consent before a procedure, and must post the information conspicuously in the place of practice. In practice, hospital privileges, payer contracts, and leases commonly require coverage.