Do you need an MSO for your ABA practice in Washington?

Washington's corporate-practice doctrine

Washington has no corporate-practice statute. The doctrine is common law, and its scope is what the Supreme Court has said it is. In Standard Optical a corporation employed a licensed optometrist, exercised no control over his professional judgment, and was still held to be practicing optometry unlawfully (17 Wn.2d 323 (1943)). In Morelli the court restated "the common law rule that a corporation cannot engage in the practice of a learned profession through licensed employees unless legislatively authorized" (110 Wn.2d 555, 561 (1988)). In Columbia Physical Therapy the court was asked to confine the rule to ownership of medical practices and declined, adhering "to the traditional understanding that the corporate practice of medicine doctrine forbids employment of health care professionals by business entities or nonprofessionals absent legislative authorization," and it located the authorization for the physician-owned PLLC to employ physical therapists in the Professional Service Corporation Act (168 Wn.2d 421, 431, 435 to 436 (2010)). The test the court stated is about licensure, not specialty: "The practice of certain professions requires a license... A person or entity practices a profession by either directly engaging in statutorily defined conduct or by employing a licensed individual to engage in such conduct." The Attorney General applies that formulation as the starting point of its own opinions, and Senate Bill 5387 and House Bill 1675 in the 2025 to 2026 session would codify it as a prohibition on unlicensed entities owning practices or employing licensed providers. The doctrine is not "the corporate practice of medicine" in Washington; it is the corporate practice of any licensed profession the legislature has not exempted.

ABA is a licensed profession in Washington

Washington licenses behavior analysts through the Department of Health, with three credentials, the Licensed Behavior Analyst, the Licensed Assistant Behavior Analyst, and the Certified Behavior Technician, under chapter 18.380 RCW, enacted in 2015 (RCW 18.380; WAC 246-805). The practice restriction is unconditional: "no person may engage in the practice of applied behavior analysis unless he or she holds a license or a temporary license under this chapter" (RCW 18.380.020(1)(a)). The exemptions cover other credentialed professionals within scope, federal employees, school employees, students, trainees, family members, animal work, and organizational consulting; none exempts a licensee's private employer (RCW 18.380.030). That is the trigger. A profession that requires a license is one the doctrine reaches, and chapter 18.380 supplies the license requirement without supplying the entity authorization that would take an ordinary employer out of the doctrine. The licensure mechanics are on the Washington licensing and credentialing page.

Washington's health care transaction-notice law

Washington also has a health care transaction-notice law that requires parties to certain material transactions to give the Attorney General advance notice before closing, written broadly enough to reach management services organizations and provider organizations, not only physician groups. That matters because the MSO is where an operator builds enterprise value for a sale. Any larger Washington transaction, especially one involving an MSO or outside capital, should be screened against the notice requirement and its timing built into the deal. Confirm the current thresholds and mechanics with counsel.

Who is allowed to own the clinical entity

On the conservative reading this page adopts, licensed behavior analysts. A PLLC or professional service corporation may be owned only by persons licensed to render the same professional service, and a member who loses the license must sever all employment with and financial interest in the entity (RCW 18.100.050(1), 18.100.100; RCW 25.15.046(1), (2)). Those statutes are elective on their face, and that is where the earlier version of this page stopped. The doctrine is what makes them the only lawful home for the practice: an entity practices a licensed profession by employing licensees, it may do so only with legislative authorization, and the professional entities are the authorization. A non-licensee-owned LLC that employs licensed behavior analysts is, on the Supreme Court's stated test, engaged in the practice of applied behavior analysis without a license. No Washington court has said so about ABA, no Department of Health enforcement action has tested it, and many Washington practices are structured that way. That describes unlitigated exposure, not permission; physical therapy practices were structured the same way until a competitor sued in Columbia. The entity-form analysis is on the Washington entity decision page.

Where the two archetypes split

In most states the diagnostics archetype is the strict one and ABA-only is open. In Washington the ABA-only practice is already inside the doctrine, so the split is about whether the two professions can share one entity, and the answer is no. The Professional Service Corporation Act lets health care professionals licensed under a listed set of chapters own and render services through one professional entity; the list includes psychology (chapter 18.83) and does not include behavior analysis (chapter 18.380) (RCW 18.100.050(5)(a)). A practice that adds an in-house psychologist for diagnostic evaluations needs two professional entities, an ABA PLLC owned by behavior analysts and a psychology PLLC or PS owned by the psychologist, with a management company serving both. A physician adding psychiatry or medication management brings the practice of medicine, the profession the doctrine was named for, with the same two-entity result.

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 licensed clinicians and holds the professional standing. The MSO employs everyone else and runs the business. A management services agreement ties them together, and the clinical entity pays the MSO a fee. In Washington the line the MSO must not cross is drawn by the doctrine itself: employment of the licensees is the act the law forbids to an unlicensed entity, so the MSO may provide space, systems, billing, non-clinical staff, and administration, and may not employ the behavior analysts, hold the PLLC's equity, or exercise its votes.

Why the MSO is the route for outside capital here

Because the conservative reading puts the clinical entity in licensed hands, a non-licensee cannot safely take equity in it or employ its clinicians. The compliant path for a non-licensee founder or investor is to own a management company that contracts with the licensee-owned PLLC for a fixed fair-market-value fee and does not employ the behavior analysts. The licensed members hold and control the practice, and enterprise value accumulates in the MSO. Two Washington-specific points follow. The management fee is a gross receipt in the MSO's hands for business and occupation tax purposes, so the two-entity structure should be modeled before the fee is set. And because the transaction-notice law reaches MSOs, the MSO's eventual sale is the transaction the Attorney General will see. See the practice expansion and sale page for the transaction view.

How Washington would evaluate your arrangement

Washington's doctrine looks at who employs the licensees and who holds the authorization to practice. These are the factors that decide whether a structure holds up.

Fee-splitting and how to pay an MSO

Washington's anti-rebate statute prohibits health care providers from paying or receiving rebates or other consideration for referrals, and it reaches arrangements in which a fee moves with the volume of clinical business (chapter 19.68 RCW). The Uniform Disciplinary Act's unprofessional-conduct standard applies to licensees across the health professions the Department of Health regulates. The safe MSO fee is therefore fixed or cost-plus, set to fair market value, and traceable to documented administrative services, not a percentage of clinical revenue. For Apple Health clients, the federal anti-kickback statute applies on top (42 U.S.C. § 1320a-7b(b)). Because Washington taxes gross receipts through the business and occupation tax, the fee is also a taxable receipt in the MSO's hands; price it with that in view.

Keeping clinical control on the right side of the line

The structure holds only while the PLLC employs the clinicians, the licensed members own and vote the PLLC, and the MSO stays on the business side. Washington's doctrine is about employment as much as ownership, so a management company that hires the behavior analysts and leases them to the PLLC has recreated the arrangement the doctrine forbids. Write the management services agreement so that the PLLC employs and supervises every licensee, the MSO's authority is administrative, and no provision gives the MSO a vote, a veto, or a proxy over the members.

How this connects to the rest of your compliance stack

Ownership is one layer. Three others interact with it directly, and getting the MSO right does not resolve them:

• 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 Medicaid and insurance mandates.
• Facility licensure. A change in the ownership or service model can affect facility and records obligations. See facility licensure and HIPAA.
• Entity structure. Composing the licensee-owned PLLC, and the separate psychology entity if diagnostics are in-house, is its own analysis. See entity structures for ABA practices.

Setting it up in Washington: the sequence

1. License the practitioners. Behavior analysts and assistants licensed, and technicians certified, by the Department of Health under chapter 18.380 RCW.
2. Form a licensee-owned PLLC or PS. Owned only by licensed behavior analysts under RCW 25.15.046 or 18.100.050; PLLC designator and Secretary of State filing.
3. Separate any second profession. A psychologist or physician practices through a separate licensee-owned professional entity.
4. Move non-licensee capital to an MSO. A standard LLC or corporation that contracts with the PLLC for a fixed fair-market-value fee, holds no equity or votes, and does not employ the clinicians.
5. Screen transactions. Build the Attorney General notice timing into any sale or investment involving the MSO.
6. Watch the legislature. SB 5387 and HB 1675 would codify the doctrine; enactment would settle the question this page treats as untested.

Washington MSO variables at a glance

Frequently asked questions