Selling, buying, or expanding an ABA practice in New York: the license, the records, and the deal

Change of ownership: equity versus asset in New York

New York's equity-versus-asset decision is made for the buyer by the professional entity rules, and the material transaction law sits on top of whichever structure results.

• Equity sale to a licensed buyer. A buyer that is itself a licensed behavior analyst, psychologist, or qualifying professional entity may acquire the PLLC's membership interests, and the entity keeps its Medicaid enrollment subject to ownership disclosure and its payor contracts. This is the only equity sale of the clinical entity New York permits.
• Equity sale to a lay or investor buyer. The buyer cannot hold the PLLC. The transaction is an acquisition of the management services organization, with the PLLC remaining owned by licensees who enter or continue a management services agreement at a fixed, fair-market fee; the PLLC's enrollment and contracts continue because the PLLC does not change hands.
• Asset sale. The buyer's own New York PLLC, owned by licensees, takes the assets, must hold its own Medicaid enrollment and payor contracts before billing, and employs the clinicians afresh; the buyer's MSO takes the non-clinical assets.
• The material transaction overlay. Whichever structure is used, if it results in a health care entity, including the MSO, increasing its gross in-state revenue by $25 million or more in a rolling twelve months, the parties give the Department of Health thirty days' written notice before closing.

The first question in a New York deal is whether the buyer is a licensee, because that decides whether the clinical entity is bought or managed.

The PLLC wall and the material transaction notice

New York licenses behavior analysts under Education Law Article 167 and requires the practice, as a provider of a licensed profession, to be a professional entity owned by licensees, as the New York entity page explains. The license follows the clinician; the PLLC wall is what strands a lay buyer. The material transaction law adds a state-level notice that reaches the practice and its management company by definition.

Two features of the definition matter for ABA. The closing clause reaches any organization providing health care services in the state, which includes an ABA PLLC, and the Department of Health's March 2025 guidance treated the list as non-exhaustive. And New York is the one state that names management services organizations in the statute, so the MSO that a lay buyer actually acquires is a health care entity in its own right. A material transaction is a merger, an acquisition including a transfer of control, an affiliation agreement, or the formation of a partnership, joint venture, or MSO, in a single transaction or a series of related transactions in a rolling twelve-month period, that results in a health care entity increasing its total gross in-state revenues by $25 million or more; portions already reviewed under the certificate of need or insurance articles are excluded, and the non-reviewed portion is tested against the threshold on its own. Control is presumed at ten percent of voting securities (N.Y. Pub. Health Law 4550(1), (2), (4); DOH FAQs, Mar. 2025).

Section 4552 requires written notice to the Department at least thirty days before the closing date, with the parties, the transaction terms, the locations and services affected, and a good-faith assessment of the impact on cost, quality, access, health equity, and competition; the Department posts a summary for public comment. Failure to notify is subject to civil penalties under Public Health Law 12, with each day a separate violation. The 2025 and 2026 executive budgets proposed a pre-closing review with a waiting period; those amendments were not confirmed enacted at the last check and should be verified before any 2026 closing (N.Y. Pub. Health Law 4552(1), (4); Pub. Health Law 12).

Expanding into New York: the PLLC, the MSO, and the notice

For an out-of-state operator, New York entry is an entity and notice exercise:

• A New York PLLC with licensed owners. The operator cannot foreign-qualify a lay-owned entity to practice; it forms a New York PLLC owned by licensed behavior analysts, psychologists, or qualifying professionals, files with the State Education Department, and enters a management services agreement with the operator's MSO at a fixed fee.
• Licenses and enrollment. Clinicians hold Article 167 licenses; the PLLC enrolls with Medicaid and credentials with the managed care plans; a buyer that is a licensed OPWDD, OCFS, or OMH agency may use the 8807 agency exemption, extended to July 1, 2030.
• The notice. Entering by acquiring a New York practice or forming an MSO to administer its contracts is a material transaction if the $25 million revenue test is met; a platform that crosses the threshold through a series of New York acquisitions in twelve months is within the statute even if no single deal is.

The practical rule for entry is that New York is a two-entity state with a revenue-triggered notice: the PLLC and the MSO are formed before the first clinician is hired, and the Department of Health calendar is checked before the closing date is set.

Ownership restructuring on entry

New York's professional entity rules require the practice to be owned by licensees, and its fee-splitting rules require the management fee to be fixed rather than a share of revenue, as the New York ownership page and the New York entity page explain. The transaction point is that a lay buyer's investment is placed in the MSO, the PLLC's licensed owners are chosen and documented before closing, and the management agreement, the PLLC operating agreement, and any succession or transfer restrictions on the licensed owners' interests are drafted to keep the PLLC licensed-owned through every future exit. The Article 45-A notice, where triggered, describes both entities.

Medicaid re-enrollment and the agency pathway

Medicaid enrollment is personal to the enrolled provider under 18 NYCRR Part 504; an equity change in the PLLC is disclosed to the Department and the Office of the Medicaid Inspector General, and an asset buyer's PLLC enrolls in its own right before billing; the change-of-ownership regulation text was not re-read for this page and its notice period should be confirmed. Records supporting claims are kept six years from service, and an OMIG notice tolls the period (18 NYCRR 504.3(a)).

• The practice with in-house diagnostics. A licensed psychologist on staff diagnoses in-house and, if the psychologist is a PLLC owner, is both the diagnostic credential and part of the licensed ownership the buyer must keep.
• The ABA-only practice. Its diagnoses come from outside physicians and psychologists, and its licensed owners are behavior analysts; the buyer inherits referral relationships and must keep or replace the licensed owners.
• The agency pathway. A buyer that is a licensed OPWDD, OCFS, or OMH agency may deliver ABA under the 8807 exemption through July 1, 2030 without every practitioner holding an Article 167 license, which changes the staffing diligence but not the enrollment rebuild.

The New York Medicaid page covers the managed care carve-in and the credentialing standards.

Records custody on a transfer

Client records must remain with a custodian bound by the Regents rules for every Education Law licensee, which require records to be retained six years, and for a minor until one year after the patient reaches 21, and by Medicaid's six-year rule; a psychologist's file is also within Public Health Law 18's patient access rules, which do not name licensed behavior analysts (8 NYCRR 29.2(a)(3); 18 NYCRR 504.3(a); Pub. Health Law 18). In an equity sale the records stay with the PLLC; in an MSO acquisition the PLLC and its records do not move at all; in an asset sale, custody must be specifically addressed so a licensed PLLC remains responsible for the age-22 tail and the buyer's MSO holds the systems only as a business associate. The New York facility page covers the thirty-day breach clock under General Business Law 899-aa and the 2025 amendments.

Non-compete enforceability in New York

New York has no non-compete statute; a 2023 bill to ban them was vetoed, and covenants are tested under common law reasonableness.

• The common law standard. A covenant is enforced only to the extent it is reasonable in time and area, necessary to protect a legitimate interest such as trade secrets, confidential information, or the goodwill of a professional whose services are unique, not harmful to the public, and not unreasonably burdensome to the employee; New York courts may partially enforce an overbroad covenant where the employer acted in good faith.
• The sale-of-business context. A selling owner's covenant tied to the goodwill conveyed is the most reliably enforced category and is where a buyer's protection is placed.
• The two-entity consequence. Because clinicians are employed by the PLLC and the buyer owns the MSO, covenant structure has to account for who the counterparty is; a covenant running to the MSO alone may lack the legitimate interest a clinical employer holds. Counsel should confirm the 2025 and 2026 legislative status, since ban and threshold bills have been reintroduced each session.

The practical rule is to draft to common law reasonableness, to place the selling owners' covenants in the sale-of-business context, and to structure clinician covenants with the PLLC as employer, with counsel confirming current law.

Diligence flags specific to New York

The state-neutral diligence workstreams are covered in the ABA due diligence playbook. The items that change specifically in New York are:

• Revenue test. Compute the gross in-state revenue increase over a rolling twelve months for every health care entity in the deal, including the MSO and any prior New York acquisitions; above $25 million, calendar the thirty-day Department of Health notice.
• PLLC ownership. Confirm every PLLC owner is a qualifying licensee, the SED filing is current, and the management agreement fee is fixed; identify the post-closing licensed owners.
• Enrollment and OMIG. Confirm a clean Medicaid enrollment, any open OMIG matters that toll the records period, and the plan credentialing files.
• Agency exemption. If the seller or buyer delivers through an OPWDD, OCFS, or OMH agency, confirm the 8807 pathway and its July 1, 2030 sunset.
• Records tail. Confirm the six-year and age-22 rules are honored and settle the PLLC custodian.
• Covenants. Sort clinician covenants by employer entity and reasonableness; place seller covenants in the sale-of-business context.

Reading the New York transaction friction

Putting the pieces together, New York is a high-friction state whose friction is structural rather than administrative. The PLLC wall means a lay buyer never owns the clinical entity and every investor deal is a management company deal with licensed owners who must be chosen, documented, and kept. The material transaction law reaches the practice and the MSO by definition and turns on a revenue threshold that platforms cross by accumulation. Medicaid enrollment is personal, the records tail runs to age 22, and non-competes are common law. The archetype decision shows up in who the licensed owners are: a psychologist-owned practice and a behavior-analyst-owned practice are both PLLCs, and the buyer's question is which licensees hold the entity after closing. None of this is legal, tax, or financial advice; it is the structure you would plan around with counsel and advisors.

How this connects to the rest of your compliance stack

This transaction page pulls together threads from across the guide:

• Facility and Medicaid. The physician-keyed Article 28 definition, the Regents records rule, and the thirty-day breach clock are on the facility page; the managed care carve-in and credentialing standards are on the Medicaid page. See the New York facility-licensure page and the New York Medicaid page.
• Licensing and credentialing. The Article 167 license and the 8807 agency exemption extended to July 1, 2030 are on the licensing page. See the New York licensing page.
• Ownership and entity. The mandatory PLLC, the licensed-owner requirement, and the fixed management fee are on the ownership and entity pages. See the New York ownership page and the New York entity page.
• The state-neutral deal mechanics. Diligence, deal structures, private equity, expansion, and wind-down are covered on the spoke's concept pages, linked below.

Sequencing a New York deal or expansion

1. Decide the post-closing licensed owners. Identify the behavior analysts, psychologists, or qualifying professionals who will own the PLLC after closing, and draft the operating agreement and management agreement around them.
2. Run the Article 45-A test. Compute the rolling twelve-month gross in-state revenue increase for each health care entity including the MSO; if $25 million or more, file the Department of Health notice at least thirty days before closing and confirm whether any enacted review stage adds time.
3. Choose the structure. Licensed buyer: acquire PLLC interests. Lay buyer: acquire the MSO and leave the PLLC with licensees. Asset deal: the buyer's own licensed PLLC enrolls before closing.
4. Confirm enrollment and OMIG status. Disclose the ownership change or complete the new enrollment, and clear any open OMIG matters that toll the records period.
5. Settle records custody. Keep a licensed PLLC as custodian for the six-year and age-22 tail, and hold the MSO to a business-associate role.
6. Draft covenants to common law. Place seller covenants in the sale-of-business context, structure clinician covenants with the PLLC as employer, and re-check the legislative status each session.

New York transaction variables at a glance

Frequently asked questions