Bill Summary – FastDemocracy

HB 1153
                      Department of Legislative Services
                             Maryland General Assembly
                                   2021 Session
                           FISCAL AND POLICY NOTE
                                Enrolled - Revised
House Bill 1153                 (Delegate Adams)
Economic Matters                                                     Judicial Proceedings
      Names of Entities With Physician Membership – Approval Requirement –
                                     Exemption
This bill exempts the State Board of Physicians (MBP) from the requirement to approve
the name of a professional entity whose members are licensed physicians. Instead, the State
Department of Assessments and Taxation (SDAT) must notify the Maryland State Medical
Society (MedChi) upon receipt of the application of a specified professional entity. On
receipt of an application from SDAT, MedChi may (1) take no further action or (2) if there
is reason to believe that the name is deceptive or misleading, refer the application to the
Maryland Department of Health (MDH).
                                   Fiscal Summary
State Effect: SDAT can likely send the required notice to MedChi with existing budgeted
resources. The impact on MDH is likely small enough that it can be handled with existing
budgeted resources. Revenues are not affected.
Local Effect: None.
Small Business Effect: None.
                                        Analysis
Current Law: Under the Maryland Professional Service Corporation Act (MPSCA),
“professional corporation” means a corporation organized to render professional services.
“Professional service” means a service that may only be rendered by a person licensed or
otherwise authorized by a State licensing unit to render the service and that may not be
rendered by a corporation. “Professional services” include services provided by a
chiropractor, dentist, osteopath, podiatrist, physician, psychologist, and physical therapist.
The name of a professional corporation must contain the surname of one or more of the
corporation’s stockholders unless (1) the name of the corporation is approved by the
appropriate licensing unit; (2) the licensing unit issues a certificate of authorization for use
of the corporate name to the corporation or its incorporator; and (3) the certificate of
authorization is attached to the articles of incorporation document in which the name is
adopted.
In order to obtain a certificate of authorization, the professional corporation, or its
incorporator, must file an application with the licensing unit and pay the required fee, as
set by the licensing unit.
Upon receipt of the application, the licensing unit must consult with, and obtain approval
from, the professional organization to which a majority of individuals rendering the
professional service in the State belong. The professional organization must consider the
established ethical standards, rules, and regulations of the profession in determining
whether the proposed corporation name is appropriate. Upon approval, the licensing unit
may issue the certificate of authorization
Chapter 335 of 2016 exempts professional corporations in which a majority of the
stockholders are individuals who are licensed, certified, or otherwise authorized to practice
a health occupation under the Health Occupations Article from the requirements that the
corporation name be approved by the appropriate licensing unit and professional
organization, including physicians. The exemption does not apply to a professional
corporation that provides dental services.
Additional Comments: MBP advises that physicians are already exempt from MPSCA’s
corporate name approval requirements if the professional corporation consists of a majority
of stockholders licensed, certified, or otherwise authorized to practice a health occupation
in Maryland. However, a professional corporation of physicians whose majority are not
licensed in Maryland still requires approval from MBP and MedChi. MBP further advises
that the number of requests to approve corporate names is very low; only two applications
were received in fiscal 2020, and only six applications have been received (as of
February 23, 2021) in fiscal 2021.
                                 Additional Information
Prior Introductions: None.
HB 1153/ Page 2
Designated Cross File: None.
Information Source(s): Office of the Attorney General (Consumer Protection Division);
Maryland Department of Health; Department of Legislative Services
Fiscal Note History:    First Reader - February 24, 2021
rh/jc                   Third Reader - March 22, 2021
                        Enrolled - April 19, 2021
                               Revised - Amendment(s) - April 19, 2021
Analysis by: Amber R. Gundlach                     Direct Inquiries to:
                                                   (410) 946-5510
                                                   (301) 970-5510
HB 1153/ Page 3
Statutes affected: 
Text - First - Names of Entities With Physician Membership – Approval Requirement – Exemption: 5-107 Corporations and Associations, 5-108 Corporations and Associations
Text - Third - Names of Entities With Physician Membership – Approval Requirement – Exemption: 5-107 Corporations and Associations, 5-108 Corporations and Associations
Text - Enrolled - Names of Entities With Physician Membership – Approval Requirement – Exemption: 5-107 Corporations and Associations, 5-108 Corporations and Associations, 14-101 Corporations and Associations