Abstract: The model of health care offerings via the Internet, generally known as “cybermedicine,” may prove to be a significant advance in the provision of medical services. At present, however, cybermedicine presents many potential hazards to “cyberpatients” because it is virtually unregulated. This Note asserts the need for a revival of the corporate practice of medicine doctrine to address these dangers. The corporate practice of medicine doctrine prohibits corporations and other lay entities from employing physicians. This Note examines the various kinds of cybermedicine, describes the advantages and disadvantages flowing from the practice of medicine over the Internet, and advocates the application of the corporate practice of medicine doctrine to cybermedicine as an intermediate regulatory measure to stem the dangers and abuses that currently abound in cybermedicine.


Soraya Bittencourt is burdened by two health problems: Grave’s disease, a dangerous thyroid condition, and diabetes. Despite these infirmities, she maintains a rigorous work schedule as an executive for a computer software company. One would think that Soraya would be unable to keep her weekly doctor’s appointment, given her time-intensive work commitment. In reality, however, she has no problem in making time to “meet” with her physician. Rather than drive to the doctor’s office, she logs onto the Internet and consults with her doctor in cyberspace. Thanks to the Internet, Soraya can send the results from her daily blood tests and elicit comments from her doctor—all in a matter of seconds.1 In using Internet technology for personal health purposes, Soraya is participating in cybermedicine and taking part in the “quiet revolution” currently under way in the world of medicine.2

[*PG456] With the expansion of telecommunications technology, innovative models of health care delivery have evolved.3 Where patients once needed to visit a physician in person to receive medical treatment, now they can utilize telephonic, video, and computer technology to interact with medical practitioners in new and unique ways.4 The model of health care offerings via the Internet, generally known as “cybermedicine,” may prove to be a significant advance in the provision of medical services.5 At present, however, cybermedicine presents many potential hazards to “cyberpatients.”6 Those seeking medical advice on the Internet may fall victim to bad medical advice proffered by non-physicians, unlicensed physicians, or other assorted quacks operating in cyberspace.7 In addition, due to its sudden and tremendous growth, cybermedicine has become big business, creating a tension for health care providers between delivering proper medical care and making a healthy profit.8

Many of the dangers posed by cybermedicine are exacerbated by the fact that it is virtually unregulated at present.9 On occasion, several states have apprehended persons practicing medicine over the Internet without a valid medical license.10 Sporadic enforcement of state licensing laws, however, does little to stem the potential abuses and rampant commercialism of cybermedicine.11

This Note asserts the need for a revival by states of the corporate practice of medicine prohibition to address the dangers posed by cybermedicine. The corporate practice of medicine doctrine prohibits [*PG457]corporations and other lay entities from employing physicians.12 The doctrine is aimed at preserving physicians’ professional autonomy in the provision of quality healthcare.13 Part I of this Note will detail the various manifestations of cybermedicine and describe the advantages and disadvantages flowing from the practice of medicine over the Internet.14 Part II will describe the context in which the corporate practice of medicine doctrine originated and its current status in the modern health care climate.15 Finally, Part III will advocate the application of the corporate practice of medicine doctrine to cybermedicine as at least an intermediate regulatory measure to stem the dangers and abuses that currently abound in cybermedicine.16

I.  The Background and Current Landscape of Cybermedicine

A.  Cybermedicine: Origin & Description

Advancement in telecommunications technology has had a significant impact on the provision of health care.17 Prior to the invention of the telephone, physicians relied almost exclusively on face-to-face consultations in treating their patients.18 The advent of the telephone opened another avenue for patient/physician interaction and has become a commonplace means for giving and receiving medical assistance, particularly in emergency situations.19 Recent technological innovations have fueled a further expansion of “telemedicine,” the use of telecommunications and video technology to provide health care services to patients at some location distant from the provider.20 For instance, improved satellite communications allow doctors to utilize interactive television systems for real-time examinations, diagnosis and treatment.21

[*PG458] As with telephonic and video technology, the computer technology of the 1980s and 1990s has expanded the possibilities for the provision of health care.22 At present, doctors and patients can, and increasingly do, correspond by e-mail.23 This particular manifestation of cybermedicine, the practice of medicine via computer, is merely an extension of telemedicine in that it serves to patch geographical holes in medical coverage.24 Other manifestations of cybermedicine, however, prove that cybermedicine encompasses much more than telemedicine.25 Computer technology—in particular, the Internet—allows a far greater array of unique interactions among health care providers and consumer-patients, including marketing, creating patient/physician relationships, providing advice, and prescribing and selling drugs—and levels of interactivity as yet unknown.26

The plethora of medically-related websites currently available on the Internet illustrates the breadth and variety of cybermedicine.27 CyberDocs is representative of websites that offer consumer-patients the opportunity to initiate “live” consultations with physicians on the Internet.28 The two co-founders of the website, Dr. Steven Kohler and Dr. Kerry Archer, advertise the service as a “virtual housecall.”29 Upon connecting to CyberDocs, patients input their medical history, reason for consulting the doctor and credit card number.30 After the patient completes these preliminary matters, the “cyberdoctor” logs on and the physician and patient can engage in real-time communication [*PG459]over the Internet.31 During the course of this virtual interaction, the physician may diagnose the patient’s ailment and prescribe medication, without ever meeting the patient face-to-face.32

In addition to “live” medical consultations on the Internet, patients wishing to receive prescription medicine can bypass a visit to the local pharmacy or doctor’s office by accessing online pharmacies such as Pill Box Pharmacy.33 Persons seeking refills of existing prescriptions can purchase drugs over the computer simply by clicking the mouse and providing their credit card number.34 For patient-consumers without prescriptions, many pharmacy websites make available an online questionnaire, which includes questions about physical characteristics and medical history.35 A cyberdoctor then examines the completed questionnaire and decides whether or not to fill the requested order for the patient.36

Medical research firms have joined doctors and pharmacists in creating innovative Internet business models.37 MedOptions and other similar medical research websites assist persons seeking information on specific ailments and diseases.38 For a fee varying from $89 to $500, researchers scour the World Wide Web for information pertinent to the patient’s condition and prepare a report with the latest research and a list of top specialists.39

B.  Advantages of Cybermedicine

In many ways, cybermedicine represents a valuable innovation in the provision of health care.40 The use of computers allows patients to [*PG460]receive specialized and affordable medical assistance anytime and from anywhere in the world, even in the most remote locations.41 The story of Zhu Ling exemplifies this point.42 Ling, a student at Tsinghua University in China, was suffering from an unknown malady and on the brink of death when her friends decided to seek medical help via the Internet.43 Several internationally-renowned medical experts responded to Ling’s friends’ pleas for assistance.44 The doctors, communicating exclusively over the Internet, worked together to correctly diagnose Ling’s condition (thallium poisoning) and suggest a course of treatment.45 The doctors’ diagnosis and suggested treatment ultimately saved Ling’s life.46

The global reach of cybermedicine is only one of its advantages.47 Cybermedicine serves as an alternative for people who are uncomfortable with discussing certain medical problems during face-to-face encounters with physicians.48 One proponent of cybermedicine notes that the Internet is particularly well-suited for the sale of Viagra, a drug treatment for erectile dysfunction in males, for two reasons: (1) a physical examination is typically unnecessary in prescribing the drug, and (2) the relative anonymity of cyberspace saves men the embarrassment of discussing sexual dysfunction with their doctor or pharmacist.49 Thus, cybermedicine promotes health by prompting some people to seek treatments over the Internet that they would not otherwise seek in person.50

In addition to its accessibility and potential for promoting health, advocates of cybermedicine also point out that the Internet can be a valuable educational resource for patients.51 With over 100,000 websites devoted to health and medicine, patients are empowered to take the initiative and become more informed about their own well-being.52 Indeed, many Americans already use the Internet as a health resource; according to one estimation, thirty-three million American [*PG461]citizens—one in six people—used the Internet in 1998 to seek health-related advice.53

C.  Problems with Cybermedicine

Despite the numerous advantages of cybermedicine, many feel that cybermedicine is “bad medicine.”54 One major concern raised by critics is the unreliability inherent in performing medical examinations via computer.55 In an Internet medical consultation, for example, a doctor may treat a patient without ever seeing him/her or knowing with any certainty that he/she is speaking truthfully about his/her symptoms.56 According to Dr. Herbert Ratansky, Chair of the Council on Ethical and Judicial Affairs for the American Medical Association (AMA): “You can’t obtain all the information you need without meeting and examining the patient.”57 Dr. Ratansky joins other critics of cybermedicine worried that online medical care will result in increased misdiagnoses.58

In addition to the difficulty in acquiring adequate information in an online medical consultation, the anonymity shrouding the participants of cybermedicine exchanges also poses problems.59 It is virtually impossible for patients to know for certain whether a given online practitioner is in fact a licensed or qualified physician.60 Dr. James Winn, Executive Vice President of the Federation of State Medical Boards, notes that: “Doctors who have lost their licenses or didn’t complete their training can hide in cyberspace . . . and cause serious [*PG462]harm.”61 The problem of unlicensed cybermedicine practitioners is not merely a hypothetical one, as evidenced by the story of Alvin Chernoff.62 Chernoff was struggling with severe depression and turned to the Internet in the hopes of finding appropriate medication.63 He came across the website of Dr. Peter Hitzig who, unbeknownst to Chernoff, was under investigation by state and federal authorities for charges ranging from illegal prescribing of drugs to having sex with patients.64 Dr. Hitzig advised Chernoff to stop taking the medication recommended by his psychiatrist; instead, he prescribed Chernoff an unorthodox cocktail of drugs.65 Shortly thereafter, Chernoff took his own life; many speculate that Chernoff’s suicide is attributable to the change in medication.66

In addition to the tragic Chernoff incident, a study by two German public-health specialists lends further support to the notion that seeking sound medical advice over the Internet is a risky proposition.67 The researchers contacted seventeen websites offering medical consultations.68 Each researcher posed as a fictitious kidney-transplant patient who is troubled by painful, oozing red blisters on his chest.69 Ten cyberdoctors responded to the researchers’ fictitious inquiry.70 Three cyberdoctors refused to give advice due to their lack of expertise in dermatology.71 Five cyberdoctors gave the proper diagnosis of herpes zoster and appropriately recommended prompt treatment with antiviral drugs.72 The remaining two cyberdoctors, however, gave questionable medical advice.73 The first practitioner, who described [*PG463]himself as a “well-known naturopathic doctor, lecturer, and author,” assured the patient that “the . . . cysts are probably nothing to worry about” and recommended “the homeopathic medicine Apis 30D” and “vitamin C.”74 Another self-described “nutritionist” diagnosed the problem as congestion of the eliminative organs and advised the patient to “breathe deeply (fresh air), drink plenty of rain water” and to “get Red Clover and Dandelion . . . and eat as many as you can.”75 Also disturbing was the fact that seven cyberdoctors did not respond at all, potentially costing the patient the opportunity for recovery.76

The inherent unreliability of practicing medicine on the Internet is not the only problem associated with cybermedicine; many commentators also find that the commercial nature of cybermedicine detracts from the medical profession.77 The majority of the medical services offered on the Internet—whether consultations with cyberdoctors or specialized research portfolios—are offered by cybermedicine practitioners for a price.78 Of concern is the possibility that cyberdoctors’ sense of duty and responsibility to their patients will be eroded by their unfettered desire for financial gain.79 Dr. Nancy Dickey, President of the American Medical Association, is pessimistic about the intentions of cyberdoctors: “Physicians are committed to doing what’s best for patients, and it would appear to me that the motivations in these kind of websites are far more financial than patient well-being.”80 Dr. Robert Filice may exemplify Dr. Dickey’s worst vision of a cyberdoctor.81 A consultant for the Pill Box Pharmacy website, Dr. Filice readily admits that his Internet practice yields great financial reward.82 The quality of his practice was called into question, however, when he prescribed Viagra for a reporter posing as a patient, despite the fact that the reporter’s completed questionnaire noted that he did not suffer from erectile dysfunction.83

[*PG464]D.  The Current Lack of State and Federal Regulation of Cybermedicine

To date, there has been no meaningful state regulation of cybermedicine in the United States.84 States regulate the practice of medicine through unique state licensure laws.85 Current state licensing statutes require physicians to be licensed in the state in which they practice medicine.86 Doctors providing medical advice over the Internet, however, often consult with patients residing in other states; thus, these doctors may be practicing medicine in places where they are not licensed to do so.87 Most states, however, have not explicitly included medical consultations over the Internet within their statutory definition of the “practice of medicine.”88 Thus, at present, state laws lack specific licensing provisions for cybermedicine.89 Consequently, few states have prosecuted individual physicians or websites for the practice of cybermedicine without a license.90

Federal regulation of cybermedicine is similarly non-existent.91 At present, no federal agency oversees cybermedicine.92 Though some members of Congress have initiated legislation proposing a national licensing scheme, Congress as a whole has yet to take any action in this regard.93 In 1996, the House of Delegates of the Federation of State Medical Boards approved the Model Legislation Regarding Licensure (the “Model Act”), which proposes a special-purpose license [*PG465]that would allow physicians to engage in the practice of medicine across state lines.94 Though its language is broad enough to encompass the practice of medicine over state lines via the Internet, the Model Act does not promise to have a significant impact on cybermedicine, considering that only two states have adopted it.95 Commentators generally are not optimistic that federal authorities will be able to wrest control over physician licensing from the states in the near future.96

Since there presently are no state or federal regulations of cybermedicine, cyberdoctors themselves determine the standards of cybermedicine.97 Some cyberdoctors strictly adhere to state licensing laws.98 For example, the Massachusetts-licensed doctors affiliated with CyberDocs choose to restrict their services only to patients logging in from Massachusetts or from outside of the United States.99 Currently, there is a movement towards the adoption by cybermedicine sites of self-regulatory codes of conduct.100 The leading advocate of self-regulation is the Health on the Net Foundation (HON), which has promulgated a Code of Conduct meant to be displayed on participating websites.101 The Code includes provisions containing the following assurances: (1) only medical professionals provide medical advice on the site; (2) the information provided on the site is designed to support, not replace, the relationship that exists between a patient and his or her existing physician; and (3) most information contained on [*PG466]the site is supported by clear references to source data.102 A growing number of cybermedicine websites display the HON logo and purport to comply with its Code.103

II.  An Overview of the Corporate Practice of Medicine Doctrine

A.  Statement of the Doctrine

The corporate practice of medicine doctrine—derived from various sources including ethical rules established by the AMA, common law, and state law—prohibits corporations and other business entities from practicing medicine.104 In practical terms, the doctrine renders unlawful the employment of doctors by unlicensed individuals or by corporations that are not formed and owned by doctors.105 While application of the doctrine has varied over time and from state to state, it remains a viable legal restriction in most states to date.106

The corporate practice of medicine doctrine can be an effective tool in regulating improper medical practices.107 For example, courts [*PG467]have applied the doctrine to nullify improper employment contracts as well as to impose criminal sanctions on employers and physicians participating in the corporate practice of medicine.108 One rationale underlying the prohibition of the corporate practice of medicine is that physicians need to make medical decisions free from the interference of lay persons, particularly lay persons whose allegiance extends more to the bottom line than to the well-being of patients.109

B.  Evolution/Enforcement of the Doctrine

1.  AMA Ethical Provisions

Physician licensure and the corporate practice of medicine doctrine evolved in the 1800s, when doctors struggled to attain professional autonomy and the respect of the general public.110 Doctors’ archaic medical procedures were not very successful, and sometimes even dangerous.111 In addition, doctors competed for business with “irregulars,” quacks and so-called faith healers without any formal medical education.112 Both the quality of doctors and societal respect for the profession increased following the creation of the AMA in 1846.113 The AMA quickly adopted the Code of Ethics, which declared the superiority of regular physicians over “irregulars” and encouraged the development of legal controls to elevate the status of legitimate doctors, thus improving the quality of health care.114 State legislatures responded by adopting statutes prohibiting the practice of medicine without a valid license.115

In the early 1900s, doctors faced another challenge to their autonomy when a growing number of corporations became involved in medicine.116 Businesses began to hire physicians on a salaried basis [*PG468]to treat their employees.117 In addition, a corporate practice of medicine developed whereby for-profit medical service companies maintained a staff of physicians and marketed their services to the public.118

The existence of corporate forms providing health care raised many concerns within the medical community.119 Critics argued that the corporate practice of medicine required physicians to handle an excessive caseload and thus served to diminish the quality of health care.120 Critics also asserted that the corporate practice of medicine would hinder the independent judgment of licensed doctors by permitting lay persons to make policy decisions affecting medical care, such as which patients a doctor could see and the amount of services a doctor could provide.121 In response to these criticisms, the AMA established ethical principles in 1912 declaring it “unprofessional” for physicians to be under corporate control.122 Later, in 1934, the AMA condemned contractual arrangements whereby lay persons and entities directly profited from the services rendered by doctors.123 Though the AMA ethical provisions never attained the force of law, they unquestionably influenced legislative and judicial action upholding the corporate practice of medicine doctrine.124

2.  Judicial Enforcement of the Corporate Practice of Medicine Doctrine

Following the AMA’s declaration of the impropriety of corporate medical practice arrangements, many state courts in the 1930s began to enforce the corporate practice of medicine doctrine, thus giving legal force to the AMA ethical provisions.125 Generally, courts have upheld the doctrine through broad interpretation of licensing stat[*PG469]utes.126 Most state licensing laws, often contained within states’ Medical Practice Acts, do not explicitly ban the corporate practice of medicine.127 Rather, these Acts simply detail the qualifications necessary for obtaining a medical license and prohibit the practice of medicine without one.128 Courts, however, have used such statutory language to enforce the corporate practice of medicine doctrine, reasoning that a corporation—because it lacks human qualities such as moral character and professional competence—cannot qualify for a license and thus is prohibited from practicing medicine.129 In addition, state courts have used agency law principles to reason that corporations cannot indirectly practice medicine by employing physicians.130

In 1936, in People v. United Medical Service, Inc., the Illinois Supreme Court illustrated such aggressive statutory interpretation.131 In United Medical Service, the court held that a for-profit corporation which provided medical services through its clinic was in violation of the corporate practice of medicine doctrine.132 United Medical Service, Inc. was incorporated in 1930 with the purpose of promoting individual and public health through the study, prevention and treatment of disease.133 To accomplish this purpose, United Medical Service, without applying for or obtaining a license to practice medicine, employed physicians to provide low-cost medical services to willing patients.134 The court noted that licensure in the state of Illinois required the applicant to be at least twenty-one years old and of good moral character.135 The court inferred from this statutory language [*PG470]that the legislature intended only for individual persons to qualify for licensure.136 Reasoning that United Medical Service—a business entity—could not qualify for an Illinois medical license as could an individual person, the court held that the corporation’s activities violated the prohibition against the corporate practice of medicine.137

While the type of aggressive statutory interpretation exemplified by the court in United Medical Service has typically provided a basis for enforcing the corporate practice of medicine doctrine, some commentators have found flaws in courts’ deriving the doctrine from the fact that state statutes limit medical licenses to individuals.138 One critic finds the courts’ reasoning analogous to an argument that “a corporation cannot engage in trucking because a corporation cannot obtain a driver’s license.”139 Others have asserted that legislative silence as to whether or not corporations can practice medicine indicates that the corporate practice of medicine is permissible.140

In response to the critiques of the utilization of aggressive statutory interpretation to enforce the corporate practice of medicine ban, courts also refer to public policy considerations in enforcing the doctrine.141 The considerations typically advanced by courts in favor of upholding the doctrine are (1) prevention of lay control over doctors, (2) discouragement of the commercial exploitation of the medical practice, and (3) avoidance of a division of the physician’s loyalty between patient and employer.142 The fear underlying these considerations is the notion that corporate medicine may prioritize financial profitability at the expense of public health and safety.143

In 1974, in Garcia v. Texas State Board of Medical Examiners, the U.S. District Court for the Western District of Texas employed a public policy rationale in order to find that a non-profit health association violated the corporate practice of medicine doctrine.144 At issue in Garcia [*PG471]was whether the Texas Secretary of State was justified in refusing to grant of a corporate charter to the San Antonio Community Health Maintenance Association (SACHMA) due to the fact that one of SACHMA’s stated purposes was “the employment of licensed physicians.”145 The court affirmed the Secretary of State’s decision to deny a charter, including the following statement outlining the court’s policy concerns:

While it is no doubt true that this nation faces a grave shortage of doctors, is the panacea to be found in the formation of non-profit layman corporations? We think not . . . . To whom does the doctor owe his first duty—the patient or corporation? . . . What is to prevent or who is to control a private corporation from engaging in mass media advertising in the exaggerated fashion so familiar to every American? Who is to dictate the medical and administrative procedures to be followed? Where do budget considerations end and patient care begin?146

The court was clearly concerned with the aforementioned three policy considerations—lay control over physicians, commercialization of health care, and the division of a doctor’s loyalties—in holding that SACHMA’s employment practices violated the corporate practice of medicine doctrine.147

C.  A Demise of the Doctrine?

The structure of health care delivery has changed radically since the AMA first established the principles underlying the corporate practice of medicine doctrine in the early 1900s.148 Until recently, solo practice and fee-for-service payment were the norms in health care.149 Supported by the prohibition of the corporate practice of medicine, the health care system was seemingly immune to the “corporatization” gripping industries in the mainstream of the economy.150 Following the marked increase of health costs in the 1970s and 1980s, however, [*PG472]new health care structures bearing corporate characteristics—known collectively as “managed care”—rose to prominence.151

In order to accommodate the managed care model of health care delivery, there have been both federal and state initiatives to carve exceptions to and otherwise diminish the corporate practice of medicine doctrine.152 The Federal Trade Commission (FTC) began to oppose the corporate practice of medicine doctrine in the 1970s, claiming that it constituted anti-competitive conduct by the medical industry.153 In 1975, the FTC initiated an action to enjoin the AMA from publishing and distributing ethical codes limiting physicians’ choices of financial arrangements.154 As previously noted, the AMA’s ethical principles proscribed contractual arrangements where lay persons benefited from services performed by doctors.155 The AMA defended these principles as a means of preserving physician judgment and protecting patients.156 The FTC determined, however, that the principles reduced competition and increased health care costs by restricting the creation of more innovative and economical business structures.157 Thus, the FTC issued a Final Order in 1979 requiring the AMA to eliminate the ethical restrictions.158 Though the AMA ethical codes never had the force of law, they did help to establish the ban on the corporate practice of medicine as accepted doctrine.159 As one commentator noted, the FTC’s abolition of the AMA ethical restrictions greatly weakened the foundation upon which the corporate practice of medicine doctrine was built.160

In addition to the FTC initiative undercutting the doctrine, Congress reduced the strength of the corporate practice of medicine pro[*PG473]hibition with the passage of the Health Maintenance Organization Act of 1973 (the “1973 Act”).161 Health Maintenance Organizations (HMOs) possess many of the characteristics that the ban on the corporate practice of medicine was intended to eliminate.162 HMOs’ fixed-budget structure permits the potential for lay control over physician decisions.163 In addition, the fact that physicians are employees of HMOs raises the concern that physicians’ loyalty will be divided between their employer and their patients.164

Prior to the passage of the 1973 Act, many commentators and physicians perceived the corporate practice of medicine doctrine to be a hindrance to the establishment and development of HMOs.165 With the passage of the 1973 Act, however, Congress effectively eliminated the possibility that the doctrine would be a barrier to HMOs.166 In fact, the very purpose of the 1973 Act was to promote the development of HMOs as a means of controlling skyrocketing health care costs.167 To effectuate this purpose, the 1973 Act preempts state laws requiring that all of the board of directors of an HMO must be physicians, thus permitting a degree of lay influence in the governance and administration of HMOs.168 Although Congress neither expressly preempted nor entirely eliminated the corporate practice of medicine ban in the HMO Act, many commentators point out that the Act severely disabled the doctrine, making a definitive policy statement in favor of a corporate-based, competitive health care market.169

Initiatives to diminish the breadth of the corporate practice of medicine doctrine have not arisen solely at the federal level; many states likewise have created exceptions to the doctrine.170 Every state allows professional service corporations—which by definition are owned exclusively by doctors—to employ other physicians and share in the profits derived from their services.171 In addition, some states [*PG474]refuse to apply the corporate practice of medicine prohibition to nonprofit organizations.172 The rationale that state courts typically give for exempting nonprofit corporations is that the policy concerns underlying the doctrine—commercial exploitation, divided physician loyalty, and lay control over physicians—are not applicable when the profit motive is removed.173 Another exception to the corporate practice of medicine doctrine permits medical schools to hire doctors to treat patients for instructional purposes.174 Finally, corporations are permitted to hire doctors in a consulting capacity, so long as the doctors have no direct responsibilities to patients and thus are not engaged in the practice of medicine.175

In 1997, in Berlin v. Sarah Bush Lincoln Health Center, the Illinois Supreme Court made a decision which is illustrative of state efforts to carve exceptions in the corporate practice of medicine doctrine.176 In Berlin, the court exempted licensed hospitals from the prohibition on the corporate practice of medicine.177 The plaintiff in the case, Dr. Richard Berlin, Jr., signed a five-year employment contract in 1992 with the Sara Bush Lincoln Health Center (“Health Center”).178 The contract contained a restrictive covenant prohibiting him from providing medical services within a fifty-mile radius of the Health Center for two years after the end of the employment agreement.179 Dr. Berlin resigned in 1994 and promptly began working at a medical clinic one mile away from the Health Center.180 The Health Center thereaf[*PG475]ter sought to enforce the restrictive covenant in the contract and enjoin Dr. Berlin from working at the nearby clinic.181 Dr. Berlin argued that the covenant was unenforceable because the employment contract violated the state’s prohibition of the corporate practice of medicine.182 The court first noted that the Illinois Medical Practice Act contains no express prohibition on the corporate employment of physicians.183 The court further recognized that certain other Illinois statutes clearly authorize, and sometimes mandate, licensed hospital corporations to provide medical services.184 The court reasoned that the public policy concerns supporting the corporate practice of medicine doctrine, such as lay control over physicians and commercialization of health care, are “inapplicable to a licensed hospital in the modern health care industry.”185 Thus, the court held that this particular employment contract was not unenforceable by virtue of the corporate practice of medicine ban.186

D.  Current Status of the Doctrine

Despite numerous chinks in its armor, the corporate practice of medicine ban continues to have applicability today.187 In 1996, in Conrad v. Medical Board of California, the Court of Appeals of California recognized the continued legitimacy of the doctrine in the state of California by holding that municipal and county hospital districts were not exempt from the state’s prohibition of the corporate practice of medicine.188 The plaintiff in Conrad, a hospital district, sought to validate its policy of making employment contracts with its physicians.189 Prior to Conrad, hospital districts in California typically [*PG476]treated physicians as independent contractors.190 The court interpreted the applicable state law as requiring that hospital districts treat doctors as independent contractors rather than employees.191 This distinction was important to the court because, while an employer has the right to control the manner and means of accomplishing the desired result, in an independent contractor relationship, control may be exercised only as to the result of the work and not the means by which it is accomplished.192 In other words, the court found that employment relationships between doctors and lay entities raise questions of unlicensed control and divided loyalty, whereas independent contractor relationships preserve a requisite degree of autonomy for physicians.193 Thus, the court held that the district hospital’s employment relationship with doctors violated the ban against the corporate practice of medicine.194

Outside of the judicial enforcement context, commentators note that the public policy considerations supporting the use of the corporate practice of medicine doctrine continue to have an important place in modern health care.195 The “corporatization” of health care has produced some tangible benefits, including increased utilization of preventive medicine and more efficient care of Medicaid patients.196 Yet many commentators have found that the emphasis on cost and time management has both reduced the quality of health care and damaged the doctor-patient relationship.197 Despite the commercial nature of modern medical care, patient well-being, rather than financial gain, ought to be the primary concern for physicians.198 Thus, one of the essential purposes of the corporate practice of medicine doctrine—the protection of the physician’s professional obligation to the patient’s health—is still of paramount importance today.199

[*PG477]III.  Analysis

A.  The Need for Cybermedicine Regulation

In many respects, cybermedicine is both a logical extension of and a positive force in modern health care.200 Cyberpatients appreciate the convenience of being able to obtain medical advice from the comfort of their home or office in only a matter of seconds.201 For some patients, the opportunity to receive a medical diagnosis and treatment via the Internet can mean the difference between life and death.202 For others, cybermedicine offers an opportunity to obtain medical care for embarrassing symptoms they would otherwise leave untreated.203 Furthermore, many doctors believe that cybermedicine offers patients an opportunity to take a more active and constructive role in the physician-patient relationship.204 Given these recognizable advantages, along with the modern prevalence of the Internet and other computer technology, cybermedicine may well represent the future of health care.205

The future of Internet health care would be bleak, however, if cybermedicine were to remain unregulated.206 At present, the quality of medical advice patients receive over the Internet is often hampered not only by the impersonal nature of the examination, but also by unlicensed practitioners taking advantage of the anonymity of the cyberspace medium.207 In addition, the commercial nature of the cybermedicine may detract from doctors’ professional responsibilities, particularly their strict duty of care to patients.208 Clearly, meaningful regulation of cybermedicine is necessary.209 Only after its potential dangers are minimized can cybermedicine be a truly positive innovation in health care delivery.210

[*PG478]B.  Legitimacy of the Corporate Practice of Medicine Doctrine

Until specific cybermedicine regulations are promulgated, states should utilize the corporate practice of medicine doctrine as an intermediate regulatory scheme in order to address the problematic issues posed by cybermedicine.211 Despite the vast changes in health care delivery over the past century, the practice of medicine in cyberspace in many ways resembles the historical context in which the prohibition on the corporate practice of medicine originated.212 Modern-day “quacks” giving medical advice on the Internet pose the same dangers to patients as the “irregulars” of the 1800s who competed with legitimate doctors and tainted the reputation of the medical profession.213 Also, the common cybermedicine business model—where lay persons or legal business entities employ cyberdoctors and profit from their services—is similar to the corporate medical practice in the early 20th century that raised concern within the medical profession.214 Given these similarities, the aim of the corporate practice of medicine doctrine—promoting physician autonomy for the benefit of patients—is well-suited for cybermedicine.215

The application of the corporate practice of medicine doctrine to cybermedicine remains feasible and necessary even when taking into account the many characteristics that distinguish the medical world in the 1800s from today.216 Several state courts, such as those of California and Texas, have enforced the doctrine in recent years, despite the increasingly corporate reality of modern health care.217 In addition, state courts and legislatures, regardless of the extent to which they have created exceptions to the doctrine, maintain that physician autonomy is a high priority in the delivery of health care.218 As evidence, while the Illinois Supreme Court recently exempted licensed hospitals from the corporate practice of medicine doctrine in Berlin, the court nonetheless emphasized the fact that the hospital licensing process ensured both physician independence and patient safety and [*PG479]thus rendered application of the doctrine superfluous.219 The Berlin decision demonstrates that the values represented by the corporate practice of medicine doctrine—patient well-being and physician autonomy—continue to have a place in the increasingly corporate climate of modern medicine.220

The fact that other commentators have advocated the utilization of the corporate practice of medicine doctrine in the modern health care context lends further support for applying the doctrine for the purpose of regulating cybermedicine.221 Andre Hampton, Associate Professor of Law at St. Mary’s University School of Law, favors using the doctrine to eliminate risk-sharing agreements between physicians and insurers.222 Under a risk-sharing system, doctors absorb part of the financial costs of health care.223 The risk-sharing system is problematic because the physician’s financial goals may conflict with needs of the patient.224 Hampton concludes that application of the doctrine to eliminate risk-sharing arrangements would produce two important results: it would separate the respective functions of doctors and insurers, allowing physicians to concentrate on properly treating patients; in addition, it would repair the damage to the fiduciary relationship between physician and patient.225

C.  Application of the Corporate Practice of Medicine Doctrine to Cybermedicine

Similar to the benefits foreseen by Hampton in applying the corporate practice of medicine doctrine to risk-sharing agreements, application of the doctrine to cybermedicine would serve both to reduce the rampant commercialism characterizing cybermedicine and to eliminate a number of unlicensed cyberdoctors practicing medicine over the Internet.226 Proper enforcement of the doctrine would result in the shutting down of cybermedicine websites owned by business entities or non-physicians.227 As a result, cyberpatients would be assured that existing cybermedicine sites were under the authority [*PG480]and control of qualified physicians rather than lay persons.228 As an additional result of the enforcement of the corporate practice of medicine ban, any unlicensed cybermedicine practitioners employed by such websites would be prevented from practicing medicine over the Internet.229 In sum, the application of the doctrine to cybermedicine would help to dispel the current image of an Internet medical practice as an exploitable business opportunity for lay persons, and it would also help to establish cybermedicine as a legitimate and safe way to render and receive medical care.230

The application of the corporate practice of medicine doctrine to cybermedicine can be achieved in a number of ways. Given that the doctrine is derived in part from states’ Medical Practice Acts, the most realistic plan for enforcement of the doctrine would involve state, rather than federal, action.231 Under one possible scheme of enforcement, a state attorney general or medical board could actively enforce the doctrine against corporations and other business entities that operate cybermedicine websites.232 Effective enforcement would hinge upon cooperation from state courts, in the form of aggressive interpretation of the state’s Medical Practice Acts and adherence to the policies underlying the corporate practice of medicine doctrine.233 Another possible scheme of enforcement would require state legislatures to enact—and enforce—laws specifically prohibiting the corporate practice of medicine.234

In addition to establishing a legal framework for applying the corporate practice of medicine doctrine to cybermedicine, it would also be essential for the states—whether through pronouncements by the attorney general, regulations, or laws passed by the legislature—to delineate the types of cyberspace interactions to be regulated.235 The doctrine only pertains to business entities engaged in the “practice of medicine”; thus, states would need to define the precise parameters of [*PG481]cybermedicine.236 Current state Medical Practice Acts typically define “the practice of medicine” broadly.237 More specificity is required, however, in addressing the issue of which of the multitude of medical websites currently in existence provide services constituting the practice of medicine.238 The state might, for example, expressly designate the provision of online diagnoses and prescriptions as the practice of medicine, while exempting other activities such as the compilation of medical information specifically tailored to a particular client’s needs.239 In defining the boundaries of cybermedicine, states would guarantee more efficient and consistent enforcement of the corporate practice of medicine ban.240

D.  The Limitations of Applying the Corporate Practice of Medicine Doctrine to Cybermedicine: Assessing Other Long-Term Alternatives

Despite the feasibility and benefit of applying the corporate practice of medicine doctrine to cybermedicine, the doctrine provides an imperfect solution to the problematic issues raised by cybermedicine.241 First, the prohibition on the corporate practice of medicine would not be particularly effective in removing the threat of unlicensed cyberdoctors practicing medicine over the Internet.242 Enforcement of the doctrine would only reach unlicensed cybermedicine practitioners who happen to be employed by a corporation or other lay entity. Furthermore, any unlicensed cyberdoctor affected by enforcement of the doctrine could later evade its strictures by establishing an independent cybermedicine website without any corporate ties.243 In addition, uneven enforcement of the corporate practice of [*PG482]medicine doctrine among the states could disrupt the efforts to stem the dangers of cybermedicine.244 If, for example, one state declined to apply the doctrine to cybermedicine, lay persons would have a safe haven in which they could incorporate a cybermedicine business.245 Thus, states enforcing the corporate practice of medicine doctrine would need to address not only the cybermedicine websites incorporated within their own state, but also those websites originating elsewhere.246 Finally, the efficacy of applying the corporate practice of medicine doctrine to cybermedicine relies on the assumption that physicians, rather than lay persons, are best suited to minimize the commercialism in cybermedicine.247 As the example of qualified cyberdoctor Dr. Filice shows, however, certain licensed physicians emphasize financial gain at the expense of quality patient care and thus are no less a risk than lay persons in terms of neglecting the values espoused by the medical profession.248

Although applying the corporate practice of medicine doctrine to cybermedicine is an imperfect remedy, it represents a workable intermediate regulatory scheme and is certainly preferable to the status quo of non-regulation in cybermedicine.249 Ultimately, however, either the states or the federal government need to enact laws specifically geared towards regulating cybermedicine.250 One way to regulate cybermedicine would be to revise physician licensure laws so that they explicitly pertain to cyberdoctors.251 Such revised laws would create explicit statutory authority for state medical licensing boards and law enforcement officials to apprehend unlicensed individuals practicing medicine via the Internet.252 Physician licensure has traditionally been a state function; therefore, the revision of licensure laws could easily take place at the state level.253

[*PG483] The creation by the federal government of a national standard for physician licensure would be more effective than any state solution, however, in that it would eliminate any inconsistencies between state laws.254 In addition, a federal scheme might better address the breadth of cybermedicine, which is national—in fact, global—in scope and not restricted by state boundaries. In addition to changes in licensure laws, the federal government could also establish an agency to keep a registry of and otherwise monitor cybermedicine websites.


Cybermedicine offers both the best and worst of Internet technology. Cybermedicine enables interactions between doctor and patient previously thought impossible. As computers become more accessible and increasing numbers of people become familiar with the Internet, more and more patients will have the opportunity to take advantage of the unique health care possibilities offered by cybermedicine. Despite the numerous benefits of cybermedicine, the Internet remains both an essentially anonymous medium and an arena for entrepreneurs with creative ideas for cyberspace businesses. Neither of these qualities—anonymity or commercial opportunity—conforms with the traditional norms of quality health care, which emphasize personalized patient care above all else. The corporate practice of medicine doctrine evolved from AMA ethical standards espousing these patient-centered values. Thus, enforcement of the corporate practice of medicine doctrine in the cybermedicine context would signal an affirmation of professional values in this burgeoning area of medical practice. Furthermore, given the present lack of either state or federal initiatives aimed specifically at improving safety and security in cybermedicine, the corporate practice of medicine ban would provide some measure of stability to cybermedicine for the potentially lengthy period prior to the promulgation of cybermedicine regulations.

Brian Monnich


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