Drawing The Line
Kansas/Missouri State Line Medical Practice Issues
Healthcare providers and especially physician groups must review their corporate structure to make sure they are properly doing business in both Kansas and Missouri. Historically, many medical practices started on the Missouri side of State Line. As Johnson County and other communities in Kansas grew, they applied for foreign corporation status in Kansas. Unfortunately, despite receiving foreign corporation status, the practice of medicine by a Missouri entity is still illegal.
Unfortunately, there is no legal ability for a Missouri professional corporation or limited liability company to perform medical services in Kansas. Kansas law is clear that unless the medical entity originates in the State of Kansas, the entity may not provide services in Kansas.
Early Detection Center, a Kansas Supreme Court decision supported this fact when it stated that if a professional corporation from outside the State of Kansas attempts to practice medicine in the State of Kansas (even if deemed a foreign corporation by the Kansas Secretary of State), not only will no contracts the entity has with Kansas entities be enforceable, but no contracts with Kansas physicians would be enforceable. This means that a Missouri medical practice cannot enforce a non-compete agreement with a physician in Kansas.
This author has spent considerable time converting Missouri medical practices into Kansas medical practices in a way that allows the Missouri medical practice to retain its tax identification number, its provider numbers and all of its contracts. However, if the Missouri entity is not properly qualified to do business in Kansas, a Medicare beneficiary could argue that he or she is receiving medical services in Kansas payable by Medicare from an entity that is not legally authorized to practice medicine in Kansas. Any healthcare provider that reads this article understands the ramifications of that type of situation.
Further, if a plaintiff lawyer claims that his client received medical care in Kansas from an entity that was not legally authorized to practice medicine in Kansas, one can imagine the reaction by a jury to those circumstances. Arguably, the cap on damages set forth by the Kansas legislature would not apply to an entity illegally practicing medicine in Kansas.
Do not assume that your Missouri entity is legally authorized to practice medicine in Kansas unless you can show that your entity is paying premiums into the Kansas Health Care Stabilization Fund. If your Missouri entity is doing business in Kansas and is not paying premiums to the Kansas Health Care Stabilization Fund, your entity is practicing medicine in Kansas illegally and the ramifications of those illegal actions could be substantial.
Please feel free to contact this author to learn how to properly structure your medical practice in Kansas.
Randal L. Schultz, Esq.
Lathrop Gage LLP
10851 Mastin Boulevard, Building 82, Suite 1000, Overland Park, KS 66210-1669
913-451-5192 | firstname.lastname@example.org