SB 448 — Relating generally to professional associations

(1)(b) AThe professionalapplication associationshall ifinclude the personfollowing: is a professional individual;

and(1) (2)The Aname professionalof corporation or a professional limited liability company if the person is a professional individualassociation; or professional organization.

(2) The purpose of the professional association;

(3) The mailing address of the principal office of the professional association;

and (4) The name and address of each member having authority to execute instruments on behalf of the professional association;

(c) For foreign professional associations, the application shall also include the following:

(1) The name of the jurisdiction of formation of the professional association;

(2) The address of the foreign professional association’s designated office in this state, if any;

(3) The name and address of foreign professional association’s initial agent for service of process in this state, if any;

and (4) Whether the jurisdiction of formation of the foreign professional association allows reciprocity for professional individuals of the same profession licensed in this state.

(d) The Secretary of State shall not provide a registration to a foreign professional association unless the jurisdiction of formation of that foreign professional association allows reciprocity.

(e) Once registered by the Secretary of State, a professional association may provide professional services in this state, subject to the provisions of this article.

 RegistrationServices ofprovided domesticby orlicensed foreignowners, professionalmanagerial association.officials, employees, or agents.

(a) WhenExcept requiredas elsewhereprovided in §47-9B-4(c) of this codecode, aany foreignowner, managerial official, employee, or agent of a professional entityassociation mustshall filebe ana applicationprofessional forperson registrationas todefined transactby business§47-9B-1 inof this state.code.

(b) TheA secretaryprofessional ofassociation shall only provide professional services in this state maythrough acceptits anowners, applicationmanagerial filedofficials, underemployees, subsectionor (a)agents, onlyeach if:of whom shall be a professional person as defined by §47-9B-1 of this code.

(1)(c) TheThis namesection andmay purposenot ofbe theconstrued foreignto prohibit a professional entityassociation statedregistered inwith the applicationSecretary complyof withState thisfrom articleemploying individuals who do not, according to general custom and otherpractice, provisionsordinarily ofprovide thisprofessional code;services, including clerks, secretaries, bookkeepers, technicians, or assistants.

and (2) The application states that the jurisdiction of formation of the foreign professional entity permits reciprocal admission of an entity formed under this code.

§47-9B-5.

 Preapproval by licensing board.

(a) A professional association or foreign professional association may provide a professional service in this state only through owners, managerial officials, employees, or agents, each of whom:

(1) Is a professional individual;

and (2 Is licensed in this state to provide the same professional service provided by the entity.

(b) A professional entity or foreign professional entity, other than a professional association or foreign professional association, may provide a professional service in this state only through owners, managerial officials, employees, or agents, each of whom is an authorized person.

(c) An individual may not, under the guise of employment, provide a professional service in this state unless the individual is licensed to provide the professional service under the laws of this state.

(d) This section may not be construed to prohibit a professional entity or foreign professional entity from employing nurses or from employing individuals who do not, according to general custom and practice, ordinarily provide a professional service, including clerks, secretaries, bookkeepers, technicians, or assistants.

§47-9B-6.§47-9B-5.  Duties of owners, managerial officials, employees, or agents who cease to be licensed;

 Ownersrelinquishment and officers.purchase of certain ownership interests;

(a)transfer. A person may be an owner of a professional entity or a governing person of a professional limited liability company only if the person is an authorized person.

(b)(a) AnAny individualowner, maymanagerial beofficial, anemployee, officeror agent of a professional entityassociation orwho aceases governingto personsatisfy the requirements of a§47-9B-3 professionalof associationthis orcode professionalshall corporationpromptly onlyresign ifhis theor individualher isposition awith the professional individual.association.

§47-9B-7. (b) DutiesWhen andthe powersprofessional ofassociation ownerknows, or managerialshould officialreasonably whoknow, that its employee or agent ceases to be licensed;a professional person as defined by §47-9B-1 of this code, the professional association shall promptly terminate his or her employment or agency.

purchase(c) An owner of a professional association who ceases to be a professional person as defined in §47-9B-1 of this code shall promptly relinquish his or her ownership interest.interest in the association.

(a)(d) A managerialperson officialwho ofsucceeds to or otherwise acquires an ownership interest in a professional entityassociation whoshall ceasespromptly torelinquish satisfyany financial interest in the requirementsprofessional ofassociation §47-9B-6if ofhe thisor codeshe shallis promptlynot resigna theprofessional person'sperson positionas anddefined employmentby with§47-9B-1 theof entity.this code.

(b)(e) AnA ownerprofessional ofassociation ashall professionalpurchase entityor whocause ceases to be anpurchased authorizedthe personownership asinterest requiredin bythe §47-9B-6association of thisa codeperson shallwho promptlyis required to relinquish the person'sperson’s ownershipfinancial interest in the entity.association under §47-9B-5(d) of this code.

(c) The Aprice personand whoterms succeedsof toa thepurchase ownership interest of an ownerownership shallinterest promptlyrequired relinquishunder thethis person'ssubsection financialmay interestbe inprovided by the entitygoverning ifdocuments of the personassociation isor not an authorizedapplicable personagreement. as required by §47-9B-6 of this code.

(d)(f) A person who owns all of the outstanding ownership interests in a professional entityassociation shallbut purchaseis orrequired causeunder tothis besection purchasedto relinquish the ownershipperson’s financial interest in the entityassociation ofmay act as a personmanagerial whoofficial isor requiredowner toof relinquishthe professional association only for the person'spurpose financialof interestwinding inup the entityprofessional underassociation’s thisaffairs, section.including selling the outstanding ownership interests and other assets of the professional association.

The(g) priceExcept andas termslimited ofby athe purchasegoverning documents of anthe ownershipprofessional interestassociation requiredor underan thisapplicable subsectionagreement, mayan beownership providedinterest byin thea governingprofessional documentsassociation ofmay thebe entitytransferred oronly anto: applicable agreement.

(e)(1) AAn personowner who owns all of the outstanding ownership interests in a professional entityassociation; but is required under this section to relinquish the person's financial interest in the entity may act as a managerial official or owner of the entity only for the purpose of winding up the affairs of the entity, including selling the outstanding ownership interests and other assets of the entity.

§47-9B-8.(2) The professional association;

 Transferor of(3) ownershipA interest.professional person.

Except§47-9B-6.  asLiability. limited by the governing documents of the professional entity or an applicable agreement, an ownership interest in a professional entity may be transferred only to:

(1)(a)  AnA ownerprofessional ofassociation theis entity;jointly and severally liable for an error, omission, negligent or incompetent act, or malfeasance committed by a person who:

(2)(1)  TheIs entityan itself;owner, managerial official, employee, or agent of the professional association;

and (2)  While providing professional services for the professional association or (3)during Anthe authorizedcourse person.of his or her ownership, official duty, employment, or agency commits the error, omission, negligent or incompetent act, or malfeasance.

§47-9B-9. (b)  Liability.An owner, managerial official, employee, or agent of a professional association other than an owner, managerial official, employee, or agent liable under §47-9B-6(a) of this code is not subject to the same liability imposed on the professional association under this section.

(a)(c)  AIf professionala entityperson described in §47-9B-6(a) of this code is a professional organization, the professional organization and the professional association are jointly and severally liable for anthe error, omission, negligent or incompetent act, or malfeasance committed by athe person who:while providing professional services for the professional association.

(1)§47-9B-7.  IsJoint anpractice owner,by managerialcertain official,professionals. employee, or agent of the entity;

and(a) (2)One Whileor providingmore apersons professionalduly servicelicensed foror otherwise legally authorized to render the entitysame or duringcompatible theprofessional courseservices or to otherwise practice together within this state may become members of thea person'sprofessional employment,association commitsunder the error,provisions omission,of negligentthis orarticle incompetentfor act,the purpose of rendering the same or malfeasance.compatible professional services.

(b)Notwithstanding Anany owner,provision managerialof official,this employee,code orto agentthe ofcontrary, aincluding professionalany entitylimitation otheror thanrestriction anset owner,forth managerialin official,any employee,licensing orprovision agentof liablechapter under30 subsection (a) of this sectioncode, isa notprofessional subjectassociation may be formed to theprovide sameany liabilityprofessional imposedservices onas thedefined professionalin entity§47-9B-1 underof this section.code.

(c)(b) IfAny aone personor describedmore bypersons subsectionwho, (a)under ofapplicable thislegal sectionor isethical arules professionalor organization,principles, thecan professionalcollectively organizationpractice and the professionalsame entityor arecompatible jointlyprofessions, andwhether severallyas liablegeneral forpartners, thejoint error,ventures, omission,fellow negligentshareholders, orfellow incompetentmembers, act, or malfeasancecommon committedbusiness byowners, themay person,form, orown, theand person'soperate, owner,as member,members, managerial official, employee, or agent, while providing a professional serviceassociation forunder thethis professionalarticle. entity.

§47-9B-10.For purposes of this section, members of professional associations may be professional persons, companies, partnerships, or other business entities that otherwise satisfy the requirements of this article.

 Joint(c) practiceNo byprofessional certainassociation professionals.organized under this article may have as a member anyone who is not duly licensed or otherwise legally authorized to render the professional services for which the professional association was organized.

(a)The Personsnames licensed as doctors of medicineindividuals andwho personshave licensedsignature asauthority doctorsfor of osteopathy by the Texas State Board of Medical Examiners and persons licensed as podiatrists by the Texas State Board of Podiatric Medical Examiners may jointly form and own a professional associationassociations orshall abe professionalfurnished limited liability company to perform professional services that fall within the scopeSecretary of practiceState. of those practitioners.

(b)Any Personschange licensedin asthe physicians and persons licensedwho ashave physiciansignature assistantsauthority pursuantfor to this code may form and own a professional association orshall abe professionalpromptly limitedreported liability company to perform professional services that fall within the scopeSecretary of practiceState. of those practitioners.

(c)  ANOTE: physician assistant may not be an officer in the professional association or limited liability company.

(d)The Apurpose physicianof assistantthis maybill notis contract with or employ a physician to beestablish a supervising physician of the physician assistant or of any physician in the professional associationassociations; or limited liability company.

(e)require Theregistration authority of eachdomestic practitionerand isforeign limitedprofessional byassociations with the scopeSecretary of practiceState’s ofoffice; the respective practitioner.

Anprovide organizerdefinitions; of the entity must be a physician and ensure that a physician or physicians control and manage the entity.

(f)require Nothingpeople inwho thisprovide sectionservices mayfor beprofessional construedassociations to allowbe the practice of medicine by someone not licensed as a physician chapter 30 of this code, or to allow a person not licensed as a physician to direct the activities of a physician in the practicesubject ofprofession; medicine.

(g)provide Afor physicianrelinquishment, assistantpurchase, or combinationtransfer of physicianownership assistantsrights mayin haveprofessional onlyassociations awhen minorityowners ownershipcease interestto inbe anor entityare creatednot underlicensed thisin section.the subject profession;

Theset ownershipforth interestliability; of an individual physician assistant may not equal or exceed the ownership interest of any individual physician owner.

Aand physicianprovide assistantfor orjoint combination of physician assistants may not interfere with the practice of medicine by acertain physicianprofessionals. owner or the supervision of physician assistants by a physician owner.

(h) The Board of Medicine and the Board of Osteopathic Medicine continue to exercise regulatory authority over their respective license holders according to applicable law.

(i) Professionals, other than physicians, engaged in related mental health fields such as psychology, clinical social work, licensed professional counseling, and licensed marriage and family therapy may form a professional entity that is jointly owned by those practitioners to perform professional services that fall within the scope of practice of those practitioners.

(j) Persons licensed as doctors of medicine and persons licensed as doctors of osteopathy by the Board of Medicine and the Board of Osteopathic Medicine and persons licensed as optometrists or therapeutic optometrists by the of Optometry may, subject to the provisions regulating those professionals, jointly form and own a professional association or a professional limited liability company to perform professional services that fall within the scope of practice of those practitioners.

(k) Only a physician, optometrist, or therapeutic optometrist may have an ownership interest in a professional association or professional limited liability company formed under subsection (i) of this section.

(l) An entity formed under subsection (i) of this section is not prohibited from making one or more payments to an owner's estate following the owner's death under an agreement with the owner or as otherwise authorized or required by law.

(m) When doctors of medicine, osteopathy, and podiatry, or doctors of medicine, osteopathy, and optometry or therapeutic optometry, or mental health professionals form a professional entity as provided by subsections (a) through (i) of this section, the authority of each of the practitioners is limited by the scope of practice of the respective practitioners and none can exercise control over the other's clinical authority granted by their respective licenses, either through agreements, bylaws, directives, financial incentives, or other arrangements that would assert control over treatment decisions made by the practitioner.

(n) The state agencies exercising regulatory control over professions to which this section applies continue to exercise regulatory authority over their respective licenses   NOTE:

The purpose of this bill concerns generally professional associations.

The bill establishes applicability.

The bill establishes who may be owners and officers.

The bill establishes duties and powers of owners and managerial officers who cease to be licensed.

The bill provides for preapproval by licensing boards.

The bill identifies who may be an authorized person.

The bill provides for transfer of ownership interests.

The bill sets forth liability.

The bill provides for joint practice by certain professionals.

The bill requires registration.

The bill defines terms.