A professional corporation has as shareholders only "individuals who themselves are licensed or otherwise legally authorized within this state to render the same professional service as the corporation," plus limited exceptions, and "the issuance of any shares in violation of this section is void" (NDCC chapter 10-31).
The nine criteria at a glance
- North Dakota's corporate-practice doctrine
- Is ABA a licensed profession in North Dakota
- Professional-entity rules and the form of the clinical entity
- Who is allowed to own the clinical entity
- Where the strict rules catch you: in-house diagnostics
- What a management services organization actually is
- When an MSO helps in North Dakota
- Transaction notice and private equity review
- How North Dakota would evaluate your arrangement
- Fee-splitting and how to pay an MSO
- Keeping clinical control clean
- Medicaid ownership disclosure and change of ownership
- How this connects to the rest of your compliance stack
- Setting it up in North Dakota: the sequence
- What this guide could not verify
- North Dakota MSO variables at a glance
- Frequently asked questions
- Where professional advice is essential
North Dakota's corporate-practice doctrine
A 1990 Attorney General letter, offered "as a general observation intended only to assist and provide counsel," said North Dakota public policy "prohibits a corporation, other than a professional corporation, from employing physicians to provide medical care" (N.D. Att'y Gen. letter, October 1990). The current statute lets a licensed hospital, nonprofit entity or charitable trust employ a physician under a written contract, and says that entity "is not engaged in the practice of medicine" (NDCC 43-17-42). No source read extends the doctrine to psychology or behavior analysis.
Is ABA a licensed profession in North Dakota
Yes. A licensed behavior analyst is "an individual licensed under North Dakota Century Code chapter 43-64," with rules adopted by the Board of Integrative Health Care, effective January 1, 2021. Holders of a license from the psychologist board on December 31, 2019 were deemed to meet requirements (N.D. Admin. Code ch. 112-05-01). No ownership, control or entity rule appears in the rules chapter. Chapter 43-64 itself was not read in codified form.
Professional-entity rules and the form of the clinical entity
A professional organization "may issue its shares only to persons who are licensed to render the same specific professional services as those for which the" organization was formed, a professional LLC likewise limits membership interests, and no organization "may render professional services except through its executives, employees, and agents who are licensed to render professional services in this state." Minority ownership by non-licensees is allowed only where expressly authorized, the chapter names chapters 43-02.2 and 43-03, and minority owners may not hold a majority. Behavior analysts (43-64) and psychologists (43-32) are not named in the text read (NDCC chapter 10-31). A professional service is one requiring a license and "an undergraduate or advanced college degree in the specific field."
Who is allowed to own the clinical entity
Not verified. If behavior analysis counts as a professional service under chapter 10-31, only licensed behavior analysts could own a professional organization for it. Whether a behavior analyst practice must use that form was not found. Confirm with counsel.
North Dakota's professional organizations law limits owners to licensees of the same service, and it does not name behavior analysts.
Where the strict rules catch you: in-house diagnostics
The archetypes split here. An ABA-only practice depends on the open point above. A practice with an in-house physician or psychologist adds a profession for which the owner rules clearly apply: a professional organization may be created "only for the purpose of rendering one specific type of professional service and services ancillary thereto" (NDCC chapter 10-31). Place each service in its own licensee-owned entity.
What a management services organization actually is
An MSO is a separate company that provides the non-clinical side of a practice to a clinical entity it does not own. The clinical entity employs the clinicians and delivers care. The MSO runs the business. A management services agreement ties them together, and the clinical entity pays the MSO a fee. In many states the MSO exists to solve an ownership problem, because non-licensees cannot own the clinical entity. Whether North Dakota presents that problem for a pure ABA practice depends on the points above, and this guide says which of them could be verified.
ABA practice entity
- Ownership rules as set out above
- Employs clinicians, delivers ABA
- Holds any required credential or facility license
- Bills payors
(fee for services)
MSO
- Owned by founders or investors
- Does not make clinical decisions
- Billing, scheduling, HR, real estate, technology
- Useful for multi-site scale and exits
Business and administrative functions
- Billing and collections
- Scheduling and intake logistics
- Real estate, equipment, and facilities
- Technology and data systems
- Non-clinical HR, marketing, finance
Blur the clinical and fee lines
- Take a fee that functions as a referral payment
- Direct clinical or treatment decisions
- Control clinical hiring and supervision
- Obscure the true owners at Medicaid enrollment
- Override professional judgment
When an MSO helps in North Dakota
If a professional organization is required for ABA, an MSO is the usual route for non-licensee capital. If not, an MSO is optional. See the practice expansion and sale hub.
Transaction notice and private equity review
No general health care transaction notice law was found. The only related source was a 2003 introduced bill (SB 2348) on notice to and consent of the attorney general for certain nonprofit health facility transactions, read as introduced text only, so it is not stated as current law.
How North Dakota would evaluate your arrangement
These are the factors to run, based on what this guide could verify.
Ownership confirmed
Has counsel confirmed whether a behavior analyst practice must use chapter 10-31?
License current
Does every analyst hold a current license under chapter 43-64?
Second profession separated
If a physician or psychologist is in the chain, is each in its own licensee-owned entity?
Minority owner rules
Does any non-licensee interest fit the chapter's express authorizations?
Fee at fair market value
Is any MSO fee a fair-market-value payment for services?
Medicaid owner change
Is the 35 day report calendared for any ownership change?
Fee-splitting and how to pay an MSO
No fee-splitting provision was found in the physician chapter read, and the psychologist and behavior analyst conduct rules were not read. Whatever a state's own rules say, the safe design for a management fee is a fixed or cost-plus amount set to fair market value and traceable to documented services, not a percentage of clinical revenue tied to patient volume. Where the practice bills Medicaid, the federal anti-kickback statute applies to payments that can be linked to referrals or volume (42 U.S.C. § 1320a-7b(b)).
Keeping clinical control clean
The 1990 letter's concern was employment of physicians by corporations; no control rule for behavior analysts was found. Keep clinical decisions with the licensed clinicians and document the management relationship at arm's length. The management company should not hire, supervise, or discipline clinicians on clinical grounds, set treatment hours, or override a treatment plan. That discipline protects the clinical entity in a payor audit or a transaction, and it becomes essential the moment a psychologist or physician joins the clinical chain.
Medicaid ownership disclosure and change of ownership
The Medicaid ownership and controlling interest form (SFN 1168) states that "any change in ownership shall be reported within 35 days after any change" and that "any owner, individual or company, with 5% or more ownership must be listed." It also collects managing employees and persons with a controlling interest (SFN 1168, revision 07-2026).
How this connects to the rest of your compliance stack
Ownership rules are one layer. Three others still bind:
- Payor and Medicaid disclosure. Your real ownership stack, including any MSO, is disclosed at enrollment and revalidation regardless of how it looks on paper (42 C.F.R. Part 455). See the Medicaid and insurance hub.
- Licensing. The credential each analyst must hold is a separate analysis. See North Dakota licensing and credentialing.
- Entity structure. Choosing direct ownership versus an MSO-plus-entity structure is its own analysis. See entity structures in North Dakota, and the facility licensure and HIPAA hub for what a change of ownership does to facility and records obligations.
Setting it up in North Dakota: the sequence
- Confirm who may own the entity. Have counsel confirm whether chapter 10-31 applies to behavior analysts.
- Credential the practitioners. Confirm every analyst holds a current license.
- Separate any second profession. Place physician or psychologist services in a licensee-owned entity.
- Price the management fee at fair market value. Fixed or cost-plus, documented, and compliant with the federal anti-kickback statute.
- Plan the Medicaid disclosure. Prepare the ownership list and the 35 day change report.
What this guide could not verify
- NDCC chapter 43-64 in codified form and any entity rule in it.
- Whether chapter 10-31 applies to behavior analysts; they are not named in the text read.
- Fee-splitting rules for any of the three professions.
- Any current health care transaction notice law.
- The effect of 2023 SB 2148 on section 43-17-42; the amending bill was not read.
- Amendments from the 2025 session; the PDFs show no supplement date.
North Dakota MSO variables at a glance
| Variable | North Dakota value |
|---|---|
| Is ABA licensed? | Yes; NDCC chapter 43-64; Board of Integrative Health Care |
| Professional organization owners | Same-service licensees; minority owners only where expressly authorized |
| Corporate practice source | 1990 AG letter and NDCC 43-17-42; physicians |
| Ownership of a pure ABA entity | Not verified |
| Is an MSO required? | Not verified |
| Transaction-notice law | Not found |
| Medicaid owner change | Within 35 days |
| Key authorities | NDCC 10-31; 43-17-42; 43-64; ch. 112-05-01 |
Frequently asked questions
Does North Dakota license behavior analysts?
Who may own a professional organization?
Does the 1990 letter bind courts?
When must Medicaid be told of an ownership change?
Where professional advice is essential, not optional
North Dakota's owner rules are clear in text and uncertain in reach. Counsel should confirm whether behavior analysts must use a professional organization before the entity is formed.
The authorities to know are NDCC chapter 10-31, NDCC 43-17-42, and NDCC chapter 43-64.
This page describes the North Dakota professional organizations law, a 1990 Attorney General letter, the behavior analyst rules, and a Medicaid disclosure form. The Board of Integrative Health Care, the Department of Health and Human Services, and qualified counsel provide current requirements. Neither this page nor any secondary source should be relied on in place of direct verification.