Montana, Indiana, Colorado, Oregon, and Utah Amend Restrictive Covenant Laws for Healthcare Providers
In the wake of the nationwide injunction last year barring the Federal Trade Commission’s (FTC) attempted Noncompete Ban, states have continued to legislate the scope of enforceable restrictive covenants, especially noncompetes.
In particular, many states are legislating specific rules for restrictive covenants for certain providers in the healthcare industry. In addition to the other states we previously reported noted, the latest wave of such states to pass legislation regarding noncompetes for health care providers includes Montana, Indiana, Colorado, Oregon, and Utah.
Montana
Since the beginning of April 2025, Montana has passed two new laws, each limiting the scope of noncompetes and non-solicits for healthcare providers in the state. Previously, Montana had already banned noncompetes and non-solicits as to a variety of healthcare providers, including psychiatrists or addiction medicine physicians, psychologists, social workers, professional counselors, addiction counselors, marriage and family therapists, and behavioral health peer support specialists.
The first new law went into effect in mid-April 2025 and expanded the existing noncompete and non-solicit limits to cover naturopathic physicians, registered professional nurses, advanced practice registered nurses, and physician assistants, but it does not apply in the context of the sale and purchase of a medical practice.
Governor Greg Gianforte signed the second new law on May 19, 2025. It expands the existing noncompete and non-solicit ban to all licensed physicians, not just psychiatrists or addiction medicine physicians, but sets forth certain exceptions. The new law exempts not only contracts for the sale and purchase of a medical practice, but also provisions requiring physicians to repay loans, relocation costs, signing bonuses, educational expenses, and tuition reimbursement expenses. The second new law will go into effect on January 1, 2026.
Indiana
On May 6, 2025, Indiana Governor Mike Braun, signed a new law, effective July 1, 2025, that removes several barriers to mobility for physicians. As of the effective date, hospitals may not use any noncompete, non-solicits exceeding one year, or any non-service agreements with physicians. The new law also restricts hospitals’ use of TRAPs, or training repayment agreements.
The new Indiana law has several notable exceptions. It does not apply to: (a) contracts for the sale of a business entity where the physician owns more than 50% of the business at the time of the sale; (b) nondisclosure agreements (“NDAs”); or non-solicits that last a year or less and do not restrict patient interactions, referrals, clinical collaborations, or physicians’ professional relationships.
Colorado
Colorado Governor Jared Polis signed a bill into law that further restricts noncompetes and non-solicits for certain medical providers in Colorado. The law, Concerning Limitations on Restrictive Employment Agreements, will go into effect on August 6, 2025. It prohibits noncompetes and non-solicits for physicians, physician assistants, advanced practice nurses, certified midwives, and dentists. The law explicitly permits such medical providers to supply patients with certain information before leaving a medical or dental practice, including the provider’s continuing practice of medicine/dentistry, their new professional contact information, and the fact of the patients’ right to choose a healthcare provider.
The new law specifically notes exemptions for NDAs and confidentiality provisions regarding trade secrets, and further qualifies the exemption for the sale of a business. For individuals owning a minority ownership share received as equity compensation or related to services rendered, the amendment includes a unique provision for calculating the maximum duration of an enforceable non-compete. The length of a noncompete in that context cannot exceed the total consideration received by the individual divided by the average annualized cash compensation received by the individual from the business during the preceding two years or the length of affiliation, whichever is shorter.
Oregon
Oregon Governor Tina Kotek signed a new law, effective upon her signature on June 9, 2025, that imposes additional restrictions on noncompetes, NDAs and other types of agreements of “medical licensees”, defined as individuals licensed: (i) to practice medicine; (ii) as a nurse practitioner; (iii) as a physician associate; or (iv) to practice naturopathic medicine.
In certain circumstances, the new law imposes an ownership threshold on medical licensee noncompetes, mandates that the medical entity enforcing the noncompete provide the medical licensee with documentation of the professional medical entity’s protectable interest, and limits the noncompete to the three years after the date on which the medical licensee was hired.
Utah
Utah Governor Spencer Cox signed a new law on March 26, 2025 that went into effect on May 7, 2025 which largely regulates health care services “platforms” (defined as “an electronic program, system, or application through which a health care worker may accept a shift to perform a health care service or role, as an independent contractor, at a health care facility.”). The new law prohibits health care services platforms from requiring health care workers to enter noncompetes, and prohibits them from banning healthcare workers from finding or accepting shifts using another platform or accepting a shift of employment with a healthcare provider or facility.
Stay tuned to this blog in the coming months for more updates on healthcare noncompete legislation. Epstein Becker & Green, P.C. maintains a 50-State Health Care Supplement to its 50-State Noncompete Survey, available as a combined document here. The 50-State Health Care Supplement details health care-specific exclusions and restrictions, including applicable statutes, for the states that have enacted them.
Minnesota Contractors’ Workforce Compliance Requirements, Part III: Workforce Certificate Audits
The Minnesota Department of Human Rights (MDHR) recently made updates to several documents and definitions for Minnesota government contractors. This is the third article in a series focused on the compliance responsibilities of Minnesota contractors holding workforce certificates that the MDHR issued. The first part in the series covered the workforce certificate application, affirmative action program template, annual compliance report (ACR), ACR instructions, and nondiscrimination poster. Part two covers the Minnesota Equal Pay Certificate. In part three, we discuss workforce certificate audits. The Minnesota Department of Human Rights (MDHR) may request information from a workforce certificate holder to evaluate the contractor’s efforts to implement its compliance plan to maintain a workforce free from discrimination under the Minnesota Human Rights Act (MHRA). According to the MDHR, workforce certificate holders can expect to be audited at least once during each four-year certification period. These audits may involve on-site reviews.
Quick Hits
The MDHR conducts audits (including on-site visits) of workforce certificate holders’ efforts to comply with the MHRA and contractors’ compliance plans.
The MDHR is likely to conduct audits of workforce certificate holders at least once during each four-year certification period.
How Does the MDHR Analyze Workforce Certificate Compliance?
In determining a contractor’s workforce certificate compliance, the MDHR may analyze:
the contractor’s compliance with Minnesota’s anti-discrimination laws, MN Rules 5000.3400 to 5000.3600;
the contractor’s compliance with contractual equal opportunity terms;
whether the contractor’s efforts to implement its compliance plan are sincere;
whether the contractor promptly addresses identified deficiencies;
whether the contractor submitted timely annual compliance reports (ACRs); and
whether the contractor permitted the on-site compliance review and readily made records and documents available for review.
What Does a Workforce Certificate Audit Involve?
Minnesota contractors selected for audit will receive a letter from the MDHR requesting data and information to be submitted within thirty days of the audit letter date. Contractors may request additional time to respond by calling the MDHR. Although the MDHR is currently in the process of updating information on its website related to workforce certificate audits, it is reasonable to expect the MDHR to investigate adherence to the MHRA and the contractor’s compliance plan requirements, such as proof that:
the contractor has conducted nondiscrimination training for all personnel involved in recruitment, screening, selection, promotion, and discipline;
the contractor at least annually reviews its job descriptions to ensure their requirements do not screen out qualified individuals with disabilities, that requirements are job-related and consistent with business necessity and safe performance of the job, and changes to job descriptions are distributed to relevant employees, like recruiters and hiring managers;
pre-employment inquiries and application forms satisfy state law requirements concerning not requiring criminal records or criminal history before the interview or conditional offer stage of the hiring process, unless permitted by state or federal law;
pre-employment inquiries and application forms do not ask about past or current pay;
the contractor is maintaining records to complete its ACR, including records concerning applicants, applicants tested, applicants interviewed, hires, promotions, demotions, transfers, employment terminations, and employees trained on MDHR compliance plan requirements;
the contractor regularly distributes its EEO policy to employees and new hires during orientation;
the contractor’s EEO policy and MDHR’s “Our Commitment to a Workplace Free From Discrimination” poster (2025 version) have been posted at all worksites covered by the compliance plan and workforce certificate;
employee performance is evaluated in part for compliance with the contractor’s EEO policy and other anti-discrimination policies;
information obtained in response to medical inquiries and exams is kept confidential;
the contractor is maintaining all job postings and that the postings state that the contractor does not discriminate against applicants on the basis of their race, color, national origin, religion, creed, disability, age, sex, sexual orientation, gender identity, marital status, familial status, status with regard to public assistance, or membership or activity in a local human rights commission;
all positions for which the contractor posts or advertises externally are listed with the State of Minnesota’s Workforce Centers, America’s Job Bank, or similar government agencies, and the contractor maintains documentation of contacts made and responses received, including requests to the Minnesota Department of Employment and Economic Development to refer qualified individuals with disabilities for employment consideration;
the company is reaching out to community organizations and recruiting programs at schools and colleges focused on employment of women, people of color, and individuals with disabilities; and
documentation of requests for accommodations for disabilities and religious observances and practices has been retained.
Conclusion
Minnesota contractors holding an active MDHR workforce certificate can expect to be audited at least once during their four-year certification period. The MDHR has broad discretion in conducting audits, which will focus on what contractors agreed to do in their workforce certification applications and compliance plans. Failure to provide requested materials or allow access to records in an audit may result in suspension or revocation of a contractor’s workforce certificate and possibly termination of a contractor’s state agency contracts.
Employment Law This Week® Episode 394- Workplace ICE Raids Are Surging—Here’s How Employers Can Prepare [Podcast, Video]
This week, we examine the current administration’s intensified workplace immigration enforcement and how employers can prepare.
Workplace ICE Raids Are Surging—Here’s How Employers Can Prepare
U.S. Immigration and Customs Enforcement (ICE) is ramping up worksite inspections and I-9 audits, presenting new challenges for employers nationwide. With no warning before an ICE visit, preparation is critical to minimizing risks and staying compliant.
This week’s key topics include:
maintaining current I-9 forms for employees,
developing a written playbook for ICE raids, and
establishing post-raid protocols to protect and stabilize operations.
Epstein Becker Green attorneys Jungmin Choi and Melissa Jampol join the show to provide practical guidance. From creating a proactive plan to knowing your rights during a raid, they break down the steps employers should take before, during, and after an ICE inspection to safeguard their operations.
Cross Border Catch-Up: Employer Responsibilities in Global Business Travel [Podcast]
In this episode of our Cross-Border Catch-Up podcast series, Patty Shapiro (shareholder, San Diego) and Maya Barba (associate, San Francisco) discuss key considerations for short-term international business travel. Maya and Patty explore the distinction between “business activity” and “productive work”—a difference that can determine whether work authorization is required. They also touch on duty of care and what that means for employers supporting employees on international business travel.
The Supreme Court Issues Decision in Ames v. Ohio Youth Services
On June 5, 2025, the United States Supreme Court issued a unanimous decision regarding a reverse discrimination case. The case involved a heterosexual female alleging she was discriminated against by being denied a promotion, which was given to a lesbian woman and further for later being demoted and her prior position was then filled by a gay man. The Supreme Court held that a claimant in a majority employment class (i.e. heterosexual) does not have a higher burden of proof, just the same burden of proof as a claimant in a protected employment category (i.e. gay or lesbian). The lower court had incorrectly held that those in a majority class had a higher burden to show “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.”
Prior to this decision, court of appeal decisions across the country were split, with some, including the 7th Circuit which covers Wisconsin, holding majority class claimants were required to demonstrate a higher burden. This decision affirms that all claimants have the same burden of proof in discrimination cases.
While standing alone, the decision seems logical and routine, its impact is heightened based upon the current focus and debate on Diversity, Equity and Inclusion (DEI) and Affirmative Action. The Supreme Court previously held in SFFA v. Harvard (2023) that a college’s race-conscious admissions programs were generally unconstitutional, unless they could demonstrate a “compelling interest” achieved only through “narrowly tailored” means. While there are differing opinions regarding the impact of these cases, it appears fairly well accepted that affirmative action is diminished and claims challenging employment based on preference, affirmative action or DEI face a greater chance of challenge.
Employers are best advised to consider the following:
Make employment decisions on qualifications and not on Title VII characteristics.
Establish and outline non-discriminating business needs and reasons when making employment decisions.
Evaluate Employee Resource Groups (ERGs) to assure the establishment/sponsorship of such groups are not discriminatory on their face and are based on business needs and reasons, and not at exclusion of other similar groups.
Evaluate the use of DEI titles, positions and programs to assure the use does not implicate illegal discriminatory aspects based upon the caselaw. Changing terms may not be necessary if still conforming with the law, but at the same time, changing terms alone is not a cure to potential illegal impact.
Continue to follow affirmative action reporting if applicable to your company.
DOL Secretary: Modernize OSHA and MSHA to Do More with Less
On June 5, 2025, Secretary of Labor Lori Chavez-DeRemer testified before the House Committee on Education and the Workforce regarding the Trump administration’s proposed fiscal year 2026 budget. The proposed budget includes significant funding reductions for the U.S. Department of Labor (DOL), specifically targeting the Occupational Safety and Health Administration (OSHA) and the Mine Safety and Health Administration (MSHA).
The proposal seeks to cut OSHA’s funding by approximately $50 million and reduce its full-time workforce by 223 positions, shifting the agency’s focus toward increased compliance assistance rather than direct enforcement. The enforcement budget for OSHA would be reduced by about $23.7 million compared to the previous year. Broader DOL cuts are also proposed, with an emphasis on consolidating workforce programs and reducing regulatory burdens.
Quick Hits
Secretary Chavez-DeRemer testified before the House Committee on Education and the Workforce on June 5, 2025, about the Trump administration’s proposed 2026 budget cuts for the DOL, including significant reductions for OSHA and MSHA.
The proposed budget aims to cut OSHA’s funding by $50 million and reduce its workforce by 223 positions, shifting focus to compliance assistance over direct enforcement.
Despite budget cuts, Secretary Chavez-DeRemer emphasized that the DOL would maintain its enforcement capacity through modernization, technology, and streamlined processes.
Secretary Chavez-DeRemer asserted that, despite these budget and staffing cuts, the DOL could maintain its workplace safety and health enforcement capacity. She emphasized the need to modernize and streamline agency operations, arguing that more funding is not always the solution to enforcement challenges. Secretary Chavez-DeRemer stated that the DOL would continue to meet its statutory obligations and that the department would always investigate complaints and enforce the law as required.
Her approach centers on leveraging technology, data analytics, and improved internal procedures to make OSHA more agile and effective. Secretary Chavez-DeRemer has stated that the DOL, including OSHA, must “modernize and streamline” its processes. She contends that this approach will enable the agency to do more with less, focusing on updating systems, leveraging technology, and improving internal procedures. The goal is to make OSHA more agile and effective, even as resources are trimmed.
Streamlining, in Secretary Chavez-DeRemer’s view, means reducing bureaucratic hurdles and eliminating inefficiencies that slow down enforcement and compliance activities. She has pointed to the need for the agency to focus on its core statutory responsibilities and to prioritize activities that have the greatest impact on worker safety. By cutting unnecessary red tape and consolidating overlapping functions, OSHA can direct its limited resources to the most critical areas.
Examples of modernization and streamlining offered by Secretary Chavez-DeRemer included:
Targeted inspections: Using data analytics to identify and focus on the most hazardous workplaces, rather than spreading resources thinly across all employers.
Digital tools: Implementing new technologies for case management, reporting, and communication to speed up investigations and reduce administrative burdens.
Workforce flexibility: Cross-training inspectors and creating multidisciplinary teams to maximize the expertise and adaptability of the remaining staff.
Regulatory reform: Reviewing and revising existing regulations to eliminate outdated or redundant requirements, making compliance simpler for both OSHA and employers.
Unanswered in her testimony was whether employers can expect OSHA to engage in greater use of technology during inspections, such as the so-called smart glasses that are utilized during some inspections. While it can be argued that these smart glasses can create efficiencies consistent with the secretary’s stated goals, many employers object to the use of these devices, as it is difficult, if not impossible, to limit the inclusion of confidential or proprietary information in the inspection and its corresponding inspection file. This can create challenges for employers facing Freedom of Information Act (FOIA) requests for OSHA’s files.
A key element of the proposed strategy is a shift from enforcement-heavy tactics to a greater emphasis on compliance assistance. Secretary Chavez-DeRemer believes that helping employers understand and meet their obligations through education, outreach, and technical support can be as effective as traditional enforcement in promoting workplace safety. This approach is intended to encourage voluntary compliance, reduce the need for resource-intensive inspections, and foster a more collaborative relationship between OSHA and employers. There is no reason to believe that fatality and catastrophe inspections will not continue at or above the historic rates for those inspections.
The reduction in funding and staffing has raised concerns among lawmakers, particularly regarding OSHA’s already limited resources. It was noted that, with current staffing, OSHA can only inspect every workplace in the United States once every 185 years, though, like most statistics, reasonable minds might argue that that interval is too short by several decades, depending on the statistics used. Critics, especially Democrats on the committee, argued that the cuts would further hinder OSHA’s ability to enforce safety standards and respond to violations, including child labor cases. Secretary Chavez-DeRemer responded that the department would focus on efficiency and compliance assistance, but would not compromise on statutory enforcement responsibilities.
For MSHA, the testimony addressed the potential closure of offices, with Secretary Chavez-DeRemer clarifying that decisions to terminate leases were made prior to her confirmation. She indicated efforts were underway to keep essential MSHA offices open, especially in regions with significant mining activity, to ensure statutory obligations for miner safety are met. Lawmakers expressed concern about the impact of office closures on miner safety and MSHA’s ability to conduct necessary inspections and enforcement.
Secretary Chavez-DeRemer’s testimony and approach emphasize a commitment to maintaining OSHA and MSHA enforcement capabilities through modernization, efficiency, and a shift toward compliance assistance, even as the agencies face significant budget and staffing cuts. While she contends that these strategies will allow the agencies to fulfill their statutory responsibilities, lawmakers and critics remain skeptical, warning that the reductions could undermine the agencies’ ability to protect workers and enforce safety standards effectively. Employers can reasonably expect that the number of inspections they face, other than fatality and catastrophe inspections, could drop if this budget is adopted, but if MSHA and OSHA do develop more modern and streamlined processes, those numbers might not drop dramatically.
Local Politics Makes a Big Splash: Amendments to Minneapolis Civil Rights Ordinance Provide Further Protection
On May 1, 2025, the Minneapolis City Council voted to expand civil rights protections, effective August 1, 2025. Under the updated ordinance (Ordinance No. 2025-022), it will be illegal for employers in Minneapolis to discriminate based on a person’s height, weight, criminal record or history (now referred to as “justice-impacted status”), or housing status. The amendments also redefine “race” and “familial status,” and impose additional requirements on employers when providing religious accommodations.
Quick Hits
Minneapolis employers must not discriminate on the basis of an individual’s height, weight, justice-impacted status, or housing status, unless there is a bona fide occupational qualification or other exception.
Minneapolis employers must provide reasonable accommodations to individuals with known pregnancy-related limitations.
Minneapolis employers must provide religious accommodations for sincerely held religious beliefs, unless doing so would impose an undue hardship on the employer.
New Protected Characteristics
Under Minneapolis’s civil rights ordinance, except when based on a bona fide occupational qualification, it is an unlawful discriminatory practice for an employer to discharge, refuse to hire, or discriminate with respect to “hiring, training, apprenticeship, tenure, promotion, upgrading, compensation, benefits, layoff, discharge or any term or condition of employment” based on a protected class or if the protected class was a “motivating factor.” Effective August 1, 2025, the ordinance will also prohibit discrimination on the basis of height, weight, justice-impacted status, and housing status, defined as:
Height and weight: “A numerical measurement of body height, body weight, or body size. Height encompasses, but is not limited to, an impression of a person as tall or short, regardless of numerical measurement. Weight encompasses, but is not limited to, an impression of a person’s weight (fat, thin, etc.), regardless of numerical measurement. Height and weight include scores, ratios, or metrics that involve measurements of the body in whole or in part.”
Housing status: “The state of having, or not having, a fixed, regular, and adequate nighttime residence.”
Justice-impacted status: “The state of having a criminal record or history, including any arrest, charge, conviction, period of incarceration, or past or current probationary status.”
The amendment also defines “race,” and expands what is included in “familial status.”
Race is defined as: “inclusive of traits historically associated or perceived to be associated with race including, but not limited to, skin color, certain physical features, hair texture, and protective hairstyles. For purposes of this definition, ‘protective hairstyles’ includes, but is not limited to, such hairstyles as afros, braids, locks, and twists.”
Familial status now includes: “residing with and caring for one (1) or more individuals who lack the ability to meet essential requirements for physical health, safety, or self-care because the individual or individuals are unable to receive and evaluate information or make or communicate decisions.”
Exceptions
While the amended Minneapolis civil rights ordinance expands protection to additional individuals, the protection is not unlimited. Employers may consider height and weight, housing status, and justice-impacted status if required by law for an employee’s position. For height and weight, if the individual’s height or weight would prevent the individual from performing the essential functions of the job and no reasonable accommodation would allow the individual to perform the job without placing an undue hardship upon the employer, the employer may avoid liability.
Protections regarding justice-impacted status do not apply if the employment decision is reasonably based on how past criminal conduct relates to the skills and fitness needed for the job, considering the following factors:
whether they were convicted;
length of time since the alleged offense or conviction;
nature and gravity of the crime(s);
age of the employee at the time of the crime(s);
evidence of rehabilitation efforts; and
any unreasonable risk to property or to the safety or welfare of others.
The ordinance also bars an employer from taking adverse action against an individual based on an arrest that did not result in a conviction, unless the arrest is from a pending criminal case and the employer considers the above factors. An employer may make adverse employment decisions based on an individual’s justice-impacted status for positions that involve work with children and positions in law enforcement.
Additional Accommodation Requirements for Minneapolis Employers
Employers will be required to take steps to accommodate known pregnancy-related limitations. If an individual requests an accommodation for a known pregnancy-related limitation, the employer must not take adverse action against the employee because of the accommodation request. The ordinance also requires an employer to engage in an “informal, interactive process” to determine whether a reasonable accommodation can be made. Employers will be required to provide employees with religious accommodations for sincerely held religious beliefs, unless doing so would impose an “undue hardship.”
Oregon Targets Corporate Practice of Medicine with Enacted Bill: What SB 951 Means for MSOs, PE-Backed Physician Groups, and Physicians
Overview of SB 951
Oregon Governor Tina Kotek on Monday, June 9, 2025, signed a first-of-its-kind law that significantly reshapes the state’s regulatory landscape for non-physician investment in medical practices. Senate Bill 951 (“SB 951” or the “Law”) imposes broad restrictions on how non-professional parties, such as private equity firms and other non-physician investors, participate in the ownership, management, and operation of medical practices in Oregon. The Law strengthens and expands Oregon’s existing corporate practice of medicine (“CPOM”) prohibition, directly impacting the way investors, management services organizations (“MSOs”), and professional medical entities structure their relationships. The Law has garnered national attention for its aggressive stance on limiting corporate involvement in healthcare and signals an evolving trend in the state regulation of private equity (and other investor) backed medical practices.
Understanding CPOM Restrictions
A majority of U.S. states (“CPOM States”) recognize some form of CPOM restriction, which generally prohibits unlicensed individuals or non-professional legal entities from owning, operating, or controlling medical practices, or from employing or contracting with physicians to provide medical services to the general public. These CPOM restrictions are intended to prevent non-licensed investors from influencing physicians’ clinical decision-making or from having de facto control over medical practices. The source of CPOM restrictions varies by state, but often are derived from a combination of professional licensure statutes, case law, attorneys general opinions, and regulatory body opinions.
In many CPOM States, a common approach to enable non-physician investment in medical practices, while remaining compliant with applicable CPOM restrictions, is the use of the PC-MSO model. Under this model, a medical practice (i.e., a professional corporation (PC), professional limited liability company (PLLC), or a similar professional entity) is owned exclusively by one or more physicians (unless a particular state’s laws permit minority ownership by non-physicians), and all clinical responsibilities and decision-making authority is reserved exclusively to the physician owners, employees, and contractors. At the same time, an investor forms and operates an MSO (which may be owned, in part, by the same physicians that own the medical practice) that contracts with the medical practice for the provision of all of the non-clinical management, administrative, and business support services necessary to run the medical practice, and the MSO receives a fair market value fee from the medical practice in exchange for such services. This arrangement allows the physicians to focus on providing medical services, while outsourcing non-clinical responsibilities to the MSO.
To promote further alignment between the investor-owned MSO and the medical practice, and to maintain continuity of care and operations of the medical practice, the medical practice physician owners typically enter into a succession agreement (also referred to as a stock transfer restriction agreement, option agreement, or equity transfer agreement) with the MSO and/or the medical practice. Under this agreement the physician owners of the medical practice are restricted from selling or encumbering their equity in the medical practice, or encumbering the assets of the medical practice, without the MSO’s consent. The succession agreement also allows the MSO to require a physician owner of the medical practice to transfer or sell their equity interests in the medical practice to another physician upon the occurrence of certain triggering events, such as the physician’s death, disability, loss of license, or disassociation from the medical practice or the MSO.
Codification of CPOM Restrictions and Narrowing of MSO Control
SB 951 codifies Oregon’s pre-existing CPOM restrictions and takes further aim at private equity-backed PC-MSO arrangements by prohibiting, subject to limited exceptions, MSOs (and their shareholders, directors, members, managers, officers, and employees) from owning or controlling (individually, or in combination with the MSO or any other shareholder, director, member, manager, officer or employee of the MSO) a majority of the shares in a “professional medical entity” (which includes medical, nursing and naturopathic PCs, and LLCs, LPs and partnerships organized for a medical purpose) with which the MSO has a contract for management services, and from serving as directors or officers, being employees of, or working as independent contractors with (or receiving compensation from) the MSO to manage or direct the management of the professional medical entity that has a management agreement with the MSO.
While PC-MSO arrangements are typically structured to delineate the clinical responsibilities and authority of the medical practice from the non-clinical operations and business support services provided by an MSO, SB 951 further restricts the ability of MSOs to exercise “de facto” control over the administrative or business operations of the professional medical entity, including by prohibiting MSOs (and their shareholders, directors, members, managers, officers, and employees) from exercising ultimate decision-making authority over, among other things, setting policies for patient billing and collection, and negotiating, executing, performing, enforcing or terminating contracts with third-party payors or persons that are not employees of the professional medical entity.
SB 951 also significantly impacts the use of succession agreements with physician owners of professional medical entities, permitting only the following triggering events:
Suspension or revocation of a physician’s medical license in any state;
A physician’s disqualification from holding ownership in the professional medical entity;
A physician’s exclusion, debarment, or suspension from a federal healthcare program, or if the physician is under an investigation that could result in such actions;
A physician’s indictment for a felony or other crimes involving fraud or moral turpitude;
The professional medical entity’s breach of a management agreement with an MSO; or
The death, disability or permanent incapacity of a physician.
Consequences of Violating CPOM Restrictions
The Law also expressly provides that a physician or professional medical entity that suffers an ascertainable loss of money or property as a result of a violation of the above prohibitions may bring an action against an MSO with which the medical licensee or professional medical entity has a contract for management services, or a shareholder, director, member, manager, officer or employee of such MSO, in an Oregon circuit court to obtain: (i) actual damages equivalent to the physician’s or professional medical entity’s loss; (ii) an injunction against an act or practice that violates the prohibition; and (iii) other equitable relief the court deems appropriate. A court may also award punitive damages and attorneys’ fees and costs to a plaintiff that prevails in such an action, increasing the potential financial consequences for the defendant.
Additional Restrictions on Non-Competition, Non-Disclosure and Non-Disparagement Agreements
SB 951 also targets the use of nondisclosure, noncompetition and nondisparagement agreements with medical licensees, which could be used by businesses to silence criticism of their operations and management practices. Oregon law already placed restrictions on the use of noncompetition agreements, but with the enactment of SB 951, subject to limited exceptions, noncompetition agreements that restrict the practice of medicine or the practice of nursing are now void and unenforceable between a medical licensee (i.e., a physician, nurse practitioner, physician associate, and practitioner of naturopathic medicine) and an MSO, a hospital (as defined in ORS 442.015) or hospital-affiliated clinic (as defined in ORS 442.612), or any other “person” (as defined in ORS 442.015).
Under the Law, a noncompetition agreement is still valid if the medical licensee is a shareholder or member of the other “person” or otherwise owns or controls an ownership interest and that ownership interest is equal to or exceeds 10% of the entire ownership interest of that person, or the medical licensee owns less than 10% but the medical licensee has not sold or transferred the ownership interest. A noncompetition agreement is also valid, but only for three years after the medical licensee was hired, if it is with a professional medical entity that provides the medical licensee with documentation of the professional medical entity’s protectable interest (i.e., that the costs to the entity – such as for recruiting the employee, sign-on bonus, and education or training in the entity’s procedures – are equal to 20% or more of the annual salary of the medical licensee).
SB 951 also permits a noncompetition agreement if the medical licensee is a shareholder or member of a professional medical entity and has a noncompetition agreement with the professional medical entity, provided the professional medical entity does not have a management agreement with an MSO or if it has a management agreement but the professional medical entity is the MSO or owns a majority of the ownership interests of the MSO. In addition, noncompetition agreements remain valid if the medical licensee does not engage directly in providing medical services, health care services or clinical care.
In addition, the Law specifies that nondisclosure agreements and nondisparagement agreements between a medical licensee and an MSO, or between a medical licensee and a hospital (as defined in ORS 442.015) or hospital-affiliated clinic (as defined in ORS 442.612), if either the hospital or the hospital-affiliated clinic employs a medical licensee, are void and unenforceable, unless the MSO, hospital or hospital-affiliated clinic terminated the medical licensee’s employment or the medical licensee voluntarily left employment with the MSO, hospital or hospital-affiliated clinic, or if the nondisclosure agreement or nondisparagement agreement is part of a negotiated settlement between the medical licensee and an MSO, hospital or hospital-affiliated clinic. Such nondisclosure agreements and nondisparagement agreements cannot, however, be enforced by an MSO, hospital or hospital-affiliated clinic for the medical licensee’s good faith reporting of information to a hospital or hospital-affiliated clinic or a state or federal authority that the medical licensee believes is evidence of a violation of a state or federal law, rule or regulation. Further, the Law prohibits MSOs and professional medical entities from taking an adverse action against a medical licensee as retaliation for, or as a consequence of, the medical licensee’s violation of a nondisclosure agreement or nondisparagement agreement or because the medical licensee in good faith disclosed or reported information to an MSO, hospital, hospital-affiliated clinic, or state or federal authority that the medical licensee believes is evidence of a violation of a federal or state law, rule or regulation.
Market Impact
Oregon’s enactment of SB 951 reflects growing momentum across several states to curtail private-equity and other non-physician investment in medical (and other healthcare) practices.
Notably, over the past two years, legislators in California, Washington, Illinois, Indiana, Massachusetts, New Mexico, and New York have either proposed or passed laws heightening regulatory scrutiny of healthcare transactions or corporate ownership or control of healthcare entities[1]. SB 951 may very well serve as a model for CPOM legislation in other jurisdictions.
While the legislative intent behind the Law is to protect the clinical independence of providers and professional medical entities, its broad scope may have the unintended effect of deterring investment in Oregon’s healthcare market, potentially narrowing the pool of potential buyers for medical (and other healthcare) practices, and subsequently impacting market valuations.
What Comes Next
The CPOM-related restrictions first apply on January 1, 2026 to MSOs and professional medical entities incorporated or organized in Oregon on or after June 9, 2025, and to sales or transfers of ownership in such MSOs or professional medical entities that occur on or after June 9, 2025. The CPOM-related restrictions first apply on January 1, 2029 to MSOs and professional medical entities that existed before June 9, 2025, and to sales or transfers of ownership interests in such MSOs or professional medical entities that occur on or after January 1, 2029. The restrictions on noncompetition, nondisclosure, and nondisparagement agreements apply to contracts that a person enters into or renews on and after June 9, 2025.
Stakeholders with medical operations or investment activity in Oregon should begin preparing now. Key action items for stakeholder consideration may include:
Evaluating whether existing PC-MSO arrangements are compliant with the enacted Law;
Reviewing management and employment agreements for provisions that may soon be unenforceable;
Develop alternative investment and operating models that comply with SB 951’s restrictions; and
Exploring alternatives to succession agreements and restrictive covenant agreements to ensure continued alignment with physician owners of medical practices.
Pending Legislation
On the heels of SB 951, the Oregon legislature is considering a new bill, HB 3410, which seeks to amend the recently enacted SB 951 by tightening and clarifying certain key provisions. Among others, HB 3410 would expand the professional medical entity ownership and control prohibitions to also apply to independent contractors of an MSO, which were previously omitted from SB 951, and slightly relax certain exceptions to the ban on noncompetition agreements with medical licensees. HB 3410 has passed in Oregon’s House of Representatives and is now before Oregon’s Senate Committee on Rules, with many expecting that it will be passed by the Senate and ultimately signed by the Governor.
We continue to monitor developments across the country regarding the potential codification and ongoing enforcement of CPOM restrictions. In light of heightened legislative focus and regulatory scrutiny, we strongly encourage all stakeholders to reassess their healthcare investment strategies and organizational structures to ensure alignment with the evolving legal landscape.
FOOTNOTES
[1] State Healthcare Transaction Laws, https://discover.sheppardmullin.com/state-healthcare-transaction-laws/.
Trump Nominee to Take Reins at OSHA Proposes Strategies for Efficiency and Resource Management
Senate confirmation of David Keeling, President Donald Trump’s nominee to serve as the assistant secretary of labor for occupational safety and health, began on June 6, 2025. The testimony, given during the first week of his nomination process, focused on his qualifications, professional background, and vision for the role to which he was nominated.
He began by outlining his educational credentials and relevant work experience, emphasizing his expertise in his field and his commitment to public service. Keeling addressed key issues pertinent to the position, such as ethical standards, transparency, and the importance of upholding the law or regulations associated with the office.
Quick Hits
Senate confirmation hearings for David Keeling, President Trump’s nominee for assistant secretary of labor for occupational safety and health, began on June 6, 2025, focusing on his qualifications and vision for the role.
Keeling emphasized ethical standards, transparency, and regulatory compliance during his U.S. Senate testimony, proposing strategies to enhance efficiency and stakeholder engagement.
Keeling highlighted the potential of leveraging technology to streamline Occupational Safety and Health Administration (OSHA) operations, improve data management, and enhance service delivery amidst plans to downsize the agency.
Keeling responded to questions from senators regarding his past decisions, his approach to problem-solving, and how he would handle potential conflicts of interest. Keeling assured the committee of his impartiality and dedication to fairness. He also discussed specific policy areas or challenges relevant to the position, offering thoughtful insights and potential strategies for improvement.
Keeling addressed several policy areas and challenges relevant to the position for which he was nominated. These included:
Ethical standards and transparency: Keeling highlighted the ongoing challenge of maintaining high ethical standards within the office. He acknowledged the importance of transparency in decision-making processes and the need to build public trust.
Regulatory compliance: He discussed the complexities of ensuring compliance with existing laws and regulations, particularly in areas where regulations are evolving or subject to interpretation.
Resource allocation and efficiency: Keeling identified the challenge of managing limited resources while striving to maximize efficiency and effectiveness in the office’s operations.
Stakeholder engagement: He recognized the importance of engaging with a diverse range of stakeholders, including the public, industry representatives, and other government agencies, to ensure that policies are well-informed and balanced.
To address these challenges, Keeling proposed several strategies:
Strengthening internal oversight: He suggested implementing more robust internal review processes to ensure ethical standards are upheld and to identify potential conflicts of interest early.
Enhancing training and guidance: Keeling advocated for ongoing training for staff on regulatory requirements and ethical conduct, ensuring that everyone in the office is well-equipped to navigate complex situations.
Improving communication and transparency: He proposed regular public updates and open forums to keep stakeholders informed about the office’s activities and decisions, thereby fostering greater transparency.
Collaborative policy development: He emphasized the value of working collaboratively with the U.S. Congress, other agencies, and external experts to develop policies that are both effective and adaptable to changing circumstances.
Leveraging technology: Keeling mentioned the potential for using new technologies to streamline operations, improve data management, and enhance service delivery.
On this last point, Keeling suggested several ways in which technology could be harnessed to enhance the office’s operations and service delivery:
Streamlining internal processes: Keeling emphasized the adoption of digital tools and automated systems to reduce manual workloads, minimize errors, and accelerate routine administrative tasks. This would allow staff to focus more on complex and value-added activities.
Improving data management: He highlighted the importance of implementing advanced data management systems. These systems would facilitate better collection, storage, and analysis of information, enabling more informed decision-making and efficient tracking of cases or projects.
Enhancing communication: Keeling proposed using technology to improve both internal and external communication. This could include secure messaging platforms for staff collaboration and digital portals for stakeholders to access information, submit inquiries, or provide feedback.
Expanding access to services: By developing online service platforms, the office could make its services more accessible to the public and stakeholders, reducing the need for in-person visits and streamlining application or reporting processes.
Ensuring security and compliance: Keeling also recognized the need for robust cybersecurity measures to protect sensitive data and ensure compliance with privacy regulations as more operations move online.
Through these technological enhancements, Keeling said his aim is to increase efficiency, transparency, and accessibility, ultimately improving the quality and reliability of the office’s services.
Given Keeling’s testimony and the recent testimony of Secretary of Labor Lori Chavez-DeRemer, it is apparent the administration plans to downsize the agency but make up for a reduction in headcount with technology and smarter, more streamlined processes. Some of these efforts are already being seen, such as a recent change in the way area directors are drafting informal settlement agreements with employers that have received citations and the willingness to offer a greater discount off penalty payments if employers pay penalties through Pay.Gov, as opposed to mailing or otherwise submitting the payment for those penalties.
2024 EEO-1 Final Countdown: Key Reporting Tips [Podcast]
In this podcast, Jay Patton (shareholder, Birmingham) and Kiosha Dickey (counsel, Columbia) provide an update on significant changes to EEO-1 filing obligations. Kiosha and Jay discuss the shorter EEO-1 filing window, which opened on May 20, 2025, and which will close on June 24, 2025. They also discuss the removal of the non-binary reporting option in alignment with Executive Order 14168 and discuss its implications for employers. Kiosha and Jay offer practical tips for reporting remote employees, emphasizing the importance of correctly assigning fully remote staff based on their supervisor’s location. They also cover the critical steps for reporting mergers, acquisitions, and spinoffs, highlighting the need for early preparation and accurate data collection.
OIG Green Lights MSO Model Arrangement for Telehealth Platforms in New Advisory Opinion
On June 11, 2025, the Department of Health and Human Services Office of Inspector General (OIG) published Advisory Opinion 25-03 (the Advisory Opinion), in which OIG approved of a proposed arrangement under which a management support organization and a physician-owned professional corporation (the Requestors) would enter into an arrangement involving the leasing of clinical employees and provision of certain administrative services related to payor contracting to support the delivery of telehealth services through online platforms. OIG determined that the proposal was protected by a safe harbor under the federal anti-kickback statute (AKS), and therefore the fees payable between the parties thereunder did not constitute prohibited remuneration under the AKS.
Background
Parties Involved
The Requestors include a management support organization that provides non-clinical support services (Requestor MSO), and a physician-owned professional corporation that maintains provider network participation contracts with commercial, Medicare Advantage, and Medicaid plans (Requestor PC) but does not otherwise employ or engage with clinical staff.
Proposed Telehealth Services Platform Arrangement
Under the proposal (Proposed Arrangement), the Requestors would contract with third-party online telehealth platforms – comprised of management services organizations that furnish management services to telehealth providers (Platform MSOs) and telehealth provider entities (Platform PCs) to lease clinicians from the Platform PCs and obtain certain administrative services from the Platform MSOs. According to the Advisory Opinion, the Proposed Arrangement is intended to expand access to in-network services for patients of the Platform PCs, many of whom are “negatively impacted by limited access to insurance-covered telehealth services furnished by Platform PCs” especially in underserved and rural areas. The Requestor PC would credential the clinicians leased from the Platform PCs, and such leased clinicians would furnish services to their patients under Requestor PC’s contracted plans. In conjunction with this clinical arrangement, the Platform MSOs would provide ancillary administrative services to Requestor PC, including accounting (which OIG characterizes as including the collection of patient cost-sharing amounts for services rendered), marketing, administrative support (e.g., support for scheduling of clinical visits), and IT services (e.g., provision of a HIPAA-compliant online platform for receipt of synchronous telehealth services). Requestor PC would pay hourly fees for the leased clinicians and an administrative fee for the non-clinical administrative services, which would be consistent with fair market value for the services rendered as determined by a third-party valuation consultant.
As part of their request for the Advisory Opinion, Requestor MSO and Requestor PC certified that the Proposed Arrangement would meet all conditions of the AKS safe harbor for personal services and management contracts and outcomes-based payment arrangements, including by noting that the methodology for determining the fees would be set in advance and not take into account volume/value of any referrals or other business generated between the parties. Additionally, the fees would be payable regardless of whether Requestor PC was reimbursed by a payor for the visit.
OIG Analysis
Federal Anti-Kickback Statute
The OIG explained that because the Requestor PC offers and pays remuneration to the Platform PC and/or Platform MSO for services rendered, the AKS is implicated whenever the Platform PC refers a patient to Requestor PC. The OIG therefore evaluated whether the Proposed Arrangement could violate the AKS, which prohibits offering, paying, accepting, or soliciting remuneration in exchange for referrals of items or services paid for by federal programs, or in exchange for the purchasing, leasing, ordering of, or arranging for the order of any good, facility, service, or item reimbursed under a federal health care program. Remuneration under the AKS can include anything of value, and violators of the AKS are subject to criminal and civil sanctions, including imprisonment, fines, civil monetary penalties, and exclusion from federal health care programs.
AKS Safe Harbor Requirements and Further Structural Safeguards
The broad scope of the AKS is subject to certain statutory and regulatory safe harbors, which establish protections from scrutiny thereunder for arrangements that meet all required criteria of a safe harbor. As OIG notes, safe harbor compliance “is voluntary” and “arrangements that do not comply with a safe harbor are evaluated on a case-by-case basis.”
In this Advisory Opinion, OIG affirmed that the Proposed Arrangement satisfies the requirements of the “personal services and management contracts and outcomes-based payment arrangements” safe harbor codified at 42 C.F.R. § 1001.952(d), after reviewing the key elements of the Proposed Arrangement and the criteria necessary to comply with such safe harbor.
OIG described the following structural safeguards of the Proposed Arrangement that are compliant with the safe harbor:
The Proposed Arrangement will be memorialized in a written agreement signed by the parties, will have a term of at least one year, and the agreement will clearly describe the duties of, and services provided by all parties involved;
The payments—both for the services of the leased clinicians from each Platform PC, and for the administrative services provided by Platform MSO—are fixed in advance and in line with fair market value, not determined based on volume or value of any referrals or other business generated between the parties, and are payable regardless of whether the Requestor PC is reimbursed by payors for services rendered; and
The Proposed Arrangement would be commercially reasonable even if no referrals resulted from the Proposed Arrangement, the services contracted for are reasonably necessary to accomplish the purpose of the Proposed Arrangement, and the parties are not involved in counseling or promoting any business activity that would violate federal or state law.
The OIG cautioned that this Advisory Opinion is limited to the Proposed Arrangement only, and does not cover additional arrangements or referrals outside of the Proposed Arrangement that may exist between the Platform PC, Platform MSO, Requestor PC and Requestor MSO. The OIG further cautioned that the Advisory Opinion is binding only on the Department of Health and Human Services and not on other government agencies (e.g., the Department of Justice).
Takeaways
The Advisory Opinion is notable for the complexity of the Proposed Arrangement and potentially broad scope of its impact given the reported scope of Platform PC’s payor contracting activities (exceeding 400 payor contracts that cover 80% of all commercially covered lives and 65% of Medicare Advantage covered lives). The Advisory Opinion also acknowledges the role played by management services and support organizations in connection with care delivery, and particularly telehealth services delivered in connection with the Proposed Arrangement. The Advisory Opinion’s conclusion is also noteworthy because OIG did not determine that the arrangement could result in prohibited remuneration, but OIG would exercise discretion not to pursue it due to safeguards present, as OIG often concludes in Advisory Opinions under the AKS. OIG instead went further and determined that there was no prohibited remuneration because it met the safe harbor. It accordingly may provide a potential model for other management services and care delivery organizations to consider for arrangements. We will continue to monitor any guidance or additional advisory opinions that OIG issues on these topics.
This article was co-authored by Ivy Miller
Loss of NIOSH Team May Jeopardize OSHA’s Effort to Create Heat Injury and Illness Prevention Standard
The hearing on the Occupational Safety and Health Administration’s (OSHA) proposed Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings Standard began on June 16, 2025. The hearing is the third step in what OSHA describes as a seven-step rulemaking process. It takes place against the backdrop of a major change within the National Institute for Occupational Safety and Health (NIOSH).
Quick Hits
NIOSH layoffs, including the entire team of heat experts, are expected to impact OSHA’s rulemaking process.
Without NIOSH’s heat experts, OSHA may struggle to defend the proposed heat safety standard against industry challenges.
The OSHA hearing on the proposed rulemaking on Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings began on June 16, 2025.
This spring, roughly two-thirds of NIOSH staff were laid off, including the entire team of heat experts. The loss of this team is expected to change the dynamics normally present during the rulemaking process. It will also impact enforcement of the heat national emphasis program (NEP) and the rule, depending on how long the layoffs last.
NIOSH, as the federal agency responsible for developing and establishing safety standard recommendations, has historically provided the scientific research, technical expertise, and data that underpin OSHA’s regulatory efforts. Their research related to heat injury and illness has been foundational, with OSHA citing NIOSH’s work more than 250 times in the draft heat rule, including on definitions, physiological impacts, and effective interventions. The NIOSH team of heat experts also provides expert testimony to support OSHA during litigation of General Duty Clause citations related to heat injury and illness under the NEP.
Without NIOSH’s heat experts, OSHA loses a critical, neutral resource for evaluating scientific evidence, responding to public comments, and defending the necessity and feasibility of the proposed standard. NIOSH experts have played a key role in clarifying information from industry and labor groups. It has also helped OSHA justify its rules as effective, practical, and appropriate. Its absence means OSHA may struggle to provide the robust, evidence-based justifications required by law, especially if the rule is challenged in court.
The layoffs have also halted NIOSH’s public communications on heat safety, including social media campaigns and employer presentations that previously raised awareness and educated stakeholders about heat hazards. This reduction in outreach could lead to less compliance and awareness among employers and workers, further hampering OSHA’s enforcement efforts. The reductions at NIOSH are not expected to render OSHA completely impotent as relates to employers that fail to engage in basic measures to protect employees from the dangers of heat.
As OSHA moves forward with public hearings on the proposed heat rule, the lack of NIOSH expert testimony removes a vital source of scientific input. This gap could make it more difficult for OSHA to counter industry arguments against the rule and to demonstrate that the proposed measures are based on the best available evidence.
The absence of NIOSH’s heat experts makes the proposed standard, already expected to face significant opposition from industry groups, more vulnerable to legal and political challenges. The administration may further weaken the proposed rule without NIOSH being able to counter the lack of effectiveness of proposed modifications to the rule. Without NIOSH’s authoritative support, OSHA’s ability to defend the rule’s scientific basis and necessity is diminished.
The termination of NIOSH’s team of heat experts has weakened OSHA’s capacity to enforce existing heat safety measures and to finalize and defend the proposed national heat standard. The loss of scientific expertise, diminished public outreach, and lack of neutral testimony arguably combine to make the rulemaking process more difficult and the proposed standard more susceptible to being delayed, diluted, or abandoned.