What the statutes mean

Until early in 2000, chiropractic businesses were only allowed to be organized as a service corporation. Chiropractors are now allowed to operate their practices as a limited liability organization. Limited liability organizations include limited liability partnerships, service corporations and limited liability companies (LLC).

An LLC has the potential to offer chiropractors significant protection against claims made against them in the course of their business operations. While it offers no additional protection in the malpractice area, an LLC can provide financial protection to the owners of a business by shielding their personal assets from any debt, obligation or liability of the LLC. These protections are not available to chiropractors operating as a “service corporation” (SC).

While chiropractors may organize as an LLC, they may not organize it in a manner that allows someone, other than a chiropractor, to direct or control their professional judgement. This means that regardless of how a chiropractor is organized for business purposes, a medical doctor or other individual may not give the chiropractor orders on how to treat a patient.

A chiropractor may work in a managed care organization, hospital, medical practice, or other business that pays them a fee or a salary, as long as the fee or salary arrangement does not allow another person to be making clinical decisions for the chiropractor.

Operating as an LLC does not relieve a chiropractor from personal liability for any acts, errors or omissions arising out of the performance of their professional services. All chiropractors are still required to maintain malpractice insurance.

The choice of whether to organize as a service corporation or as a limited liability organization depends on many professional and personal factors. A chiropractor should contact their accountant or attorney to obtain additional information about professional liability organizations.

Statute excerpts

Chir. 3.08 Limited liability entities.

Chir 3.08 (1) A chiropractor may practice with or in a business that is organized as a limited liability organization under the laws of this state, including a limited liability partnership, a service corporation, and limited liability company.

(2) A chiropractor may not practice with or in a business organized so that a person other than a chiropractor has the right to direct or control the professional judgement of the chiropractor. This restriction does not prohibit a chiropractor from working with or in a business organized so that someone other than the patient pays the chiropractor’s fee or salary, provided the fee or salary arrangements do not modify the chiropractor’s obligation to his or her patient.

(3) Nothing in this section shall relieve a chiropractor from personal liability for any acts, errors, or omissions of the chiropractor arising out of the performance of professional services.

(4) Nothing in this section shall relieve a chiropractor from the requirement that every practicing chiropractor shall have in effect professional liability insurance in the amounts required by the board in Chir. 3.07.