North Dakota is widely reported as having a corporate practice of medicine prohibition at N.D.C.C. § 43-17-31. Read the section and you find it is titled “Grounds for disciplinary action”. It is not a corporate practice ban, and chapter 43-17 contains no express one.
What § 43-17-31 does contain is a fee-splitting ground, and it is directly relevant to how you structure a management fee.
The provision
It is a ground for disciplinary action to engage in “the payment or receipt, directly or indirectly, of any fee, commission, rebate, or other compensation for medical services not actually or personally rendered, or for patient referrals” — and then, in the same breath, “this prohibition does not affect the lawful distributions of professional partnerships, corporations, limited liability companies, or associations.”
Why the carve-out matters
Without it, every distribution from a group practice to a physician who did not personally treat the patient would sit under a fee-splitting cloud. With it, ordinary entity economics are protected and the prohibition is aimed where it belongs: at compensation for referrals and at payment for services nobody rendered.
That gives you a workable test for a management fee. A fee paid for actual administrative services, at fair market value, invoiced and documented, is not compensation for medical services not rendered. A fee calculated as a share of clinical collections, with no service content behind it, starts to look like the thing the section prohibits.
What to document
- The specific services the management entity provides.
- The basis for the fee, ideally supported by an independent valuation.
- Invoices that correspond to services actually delivered.
- A distribution policy for the professional entity that stands on its own footing.
And the CPOM question separately
Because there is no express prohibition in chapter 43-17, the entity question in North Dakota is answered by professional entity law and by the fee-splitting ground, not by a bright-line rule. That is a different posture from South Dakota next door, which sets out an express public policy against corporate practice and then defines the exception in three numbered conditions.
Two neighbouring states, two entirely different analyses. It is the ordinary condition of this field, and it is the reason a national template is a liability rather than a shortcut.
Related reading
Frequently asked questions
Is § 43-17-31 a corporate practice of medicine prohibition?
No. It sets out grounds for disciplinary action. Chapter 43-17 contains no express corporate practice prohibition.
What does the fee-splitting ground prohibit?
Paying or receiving, directly or indirectly, any fee, commission, rebate or other compensation for medical services not actually or personally rendered, or for patient referrals.
Does it prohibit entity distributions?
No. It expressly does not affect the lawful distributions of professional partnerships, corporations, limited liability companies or associations.
How should a management fee be set?
For actual services, at fair market value, invoiced and documented, and not as a bare share of clinical collections.
General information about North Dakota requirements, not legal advice. Confirm your obligations with counsel licensed in North Dakota.