California Ketamine Clinics: Implications From Epic Medical Management, LLC v. Paquette

The corporate practice of medicine doctrine (“CPOM”) and state anti-kickback prohibitions vary from state to state. While some states have statutory prohibitions, other states rely upon case law for CPOM. These issues are typically not heavily litigated. When there is case law covering these subjects, it is imperative to review and understand these decisions. They will impact how you structure the ownership of a ketamine clinic, and likewise, how you structure Management Services Agreements (“MSA”) in strict CPOM states.

Background

One such case is Epic Medical Management, LLC v. Paquette, 244 Cal.App.4th 504 (2015). This case involved a dispute between the doctor, appellant Justin Dominic Paquette, M.D., and a medical management company, Epic Medical Management, LLC (“Epic Medical”), with which Dr. Paquette contracted to supply non-medical management services to his practice. The parties had a falling out and agreed to terminate the MSA. Epic Medical believed it was due additional fees under the MSA. But Dr. Paquette believed the management company had underperformed its duties under the contract and owed him money. The matter proceeded to arbitration, and the arbitrator ruled in favor of Epic Medical. On cross-petitions to confirm and vacate the award, the trial court ruled in favor

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