Advertising, Fee Splitting, Ownership, and Business Practice Restrictions
What this domain tests
This domain tests the business-side rules that apply to California PTs: how you may advertise, how you may share fees, who may own a physical therapy practice, and what business arrangements are prohibited. Items often present a proposed arrangement and ask whether it is permissible.
Core rules
- Advertising: advertising must be truthful and not misleading. Licensees may not use false, deceptive, or misleading statements, and may not claim superiority or guarantee outcomes. Testimonials and claims must not create a misleading impression. Advertising must not use a title or credential the licensee does not hold.
- Fee splitting: paying or receiving compensation for the referral of patients, or splitting fees in a way that rewards referral rather than services, is prohibited. Payment for actual services rendered is permitted.
- Ownership: a physical therapy corporation must be owned by licensed professionals as required by the Professional Corporation Act, and the practice of physical therapy must be controlled by licensed PTs. Unlicensed persons may not own or control a physical therapy practice in a way that violates the corporate practice doctrine.
- Business arrangements: arrangements that give an unlicensed party control over clinical decisions, or that pay for patient referrals, are prohibited even if structured as management or marketing agreements.
- Records and billing: billing must reflect services actually rendered, and business arrangements must not compromise record accuracy or patient choice.
Worked example
A physician offers to refer patients to a PT clinic in exchange for a monthly payment equal to a share of the clinic's revenue from those patients. Is this permissible?
Reasoning: the payment is tied to referrals, not to services the physician renders. That is fee splitting and a prohibited referral arrangement. The clinic may pay the physician for actual services, but not for sending patients. Answer: no; the arrangement is prohibited regardless of how it is labeled.
Traps that cost marks
- Assuming a "marketing" or "management" label changes the analysis; substance controls.
- Thinking a truthful-sounding superlative ("the best outcomes in the county") is safe; unverifiable superiority claims are misleading.
- Overlooking that ownership restrictions apply to control, not just to the name on the license.
- Confusing payment for services with payment for referrals.
Key points
- Advertising must be truthful and not misleading; no guarantees or unverifiable superiority claims.
- Fee splitting and referral-based payments are prohibited.
- Physical therapy corporations must be owned and controlled by licensed professionals as required by law.
- Unlicensed control over clinical decisions violates the corporate practice doctrine.
- Substance, not the label on an agreement, determines legality.