2020 Colorado Revised Statutes
Title 12 - Professions And Occupations
Article 245. Mental Health
Section 12-245-213. Professional service corporations for the practice of psychology, social work, marriage and family therapy, professional counseling, and addiction counseling definitions.

(1) Licensees, registrants, or certificate holders may, but are not required to, form professional service corporations for the practice of psychology, social work, marriage and family therapy, professional counseling, psychotherapy, or addiction counseling under the "Colorado Business Corporation Act", articles 101 to 117 of title 7, if the corporations are organized and operated in accordance with this section. The articles of incorporation of a professional service corporation formed pursuant to this section must contain provisions complying with the following requirements:

1. The name of the corporation shall contain the words "professional company" or "professional corporation" or abbreviations thereof.

2. The corporation must be organized by licensees, registrants, or certificate holders forthe purpose of conducting the practice of psychology, social work, marriage and family therapy, professional counseling, psychotherapy, or addiction counseling by the respective licensees, registrants, or certificate holders of those practices. The corporation may be organized with any other person, and any person may own shares in the corporation, if the following conditions are met:

1. The practice of psychology, as defined in section 12-245-303, by the professionalservice corporation is performed by or under the supervision of a licensed psychologist, and any psychologist member of the professional service corporation remains individually responsible for his or her professional acts and conduct as provided elsewhere in this article 245;

2. The practice of social work, as defined in section 12-245-403, by the professionalservice corporation is performed by a licensed social worker acting independently or under the supervision of a person licensed pursuant to this article 245 or a licensed social worker. Any licensed social worker member of the professional service corporation remains individually responsible for his or her professional acts and conduct as provided elsewhere in this article 245.

3. The practice of marriage and family therapy, as defined in section 12-245-503, bythe professional service corporation is performed by a licensed marriage and family therapist acting independently or under the supervision of a person licensed pursuant to this article 245 or a licensed marriage and family therapist. Any licensed marriage and family therapist member of the professional service corporation remains individually responsible for his or her professional acts and conduct as provided elsewhere in this article 245.

4. The practice of licensed professional counseling, as defined in section 12-245-603,by the professional service corporation is performed by a licensed professional counselor acting independently or under the supervision of a person licensed pursuant to this article 245 or a licensed professional counselor. Any licensed professional counselor member of the professional service corporation remains individually responsible for his or her professional acts and conduct as provided elsewhere in this article 245.

5. The practice of addiction counseling, as defined in section 12-245-803, by the professional service corporation is performed by a licensed addiction counselor acting independently or under the supervision of a person licensed pursuant to this article 245 or a licensed addiction counselor. Any licensed addiction counselor member of the professional service corporation remains individually responsible for his or her professional acts and conduct as provided in this article 245; or

6. The practice of psychotherapy, as defined in section 12-245-202, by the professional service corporation is performed by an unlicensed psychotherapist acting independently or under the supervision of a person licensed pursuant to this article 245 or an unlicensed psychotherapist. Any unlicensed psychotherapist member of the professional service corporation remains individually responsible for his or her professional acts and conduct as provided in this article 245.

3. The corporation may exercise the powers and privileges conferred upon corporationsby the laws of Colorado only in furtherance of and subject to its corporate purpose.

4. Lay directors and officers shall not exercise any authority whatsoever over professional matters.

5. The articles of incorporation must provide, and all shareholders of the corporationmust agree, that either all shareholders of the corporation are jointly and severally liable for all acts, errors, and omissions of the employees of the corporation or that all shareholders of the corporation are jointly and severally liable for all acts, errors, and omissions of the employees of the corporation except during periods when the corporation maintains professional liability insurance that meets the following minimum standards:

1. The insurance insures the corporation against liability imposed upon the corporationby law for damages resulting from any claim made against the corporation arising out of the performance of professional services for others by those officers and employees of the corporation who are licensed, registered, or certified to practice under this article 245 or by those employees who provide professional services under supervision.

2. The insurance insures the corporation against liability imposed upon it by law fordamages arising out of the acts, errors, and omissions of all nonprofessional employees.

3. The insurance is in an amount for each claim of at least one hundred thousanddollars multiplied by the number of persons licensed, registered, or certified to practice under this article 245 who are employed by the corporation. The policy may provide for an aggregate maximum limit of liability per year for all claims of three hundred thousand dollars also multiplied by the number of licensees, registrants, or certificate holders employed by the corporation, but no corporation is required to carry insurance in excess of three hundred thousand dollars for each claim with an aggregate maximum limit of liability for all claims during the year of nine hundred thousand dollars.

4. The insurance policy may provide that it does not apply to: Any dishonest, fraudulent, criminal, or malicious act or omission of the insured corporation or any stockholder or employee of the corporation; or the conduct of any business enterprise, as distinguished from the practice of licensees, registrants, or certificate holders, in which the insured corporation under this section is not permitted to engage but that nevertheless may be owned by the insured corporation or in which the insured corporation may be a partner or that may be controlled, operated, or managed by the insured corporation in its own or in a fiduciary capacity, including the ownership, maintenance, or use of any property in connection therewith, when not resulting from breach of professional duty of, bodily injury to, or sickness, disease, or death of any person or to injury to or destruction of any tangible property, including the loss of use of tangible property.

5. The insurance policy may contain reasonable provisions with respect to policy periods, territory, claims, conditions, and other usual matters.

2. The corporation shall not act or fail to act in a manner that would violate section 12245-224 (1). Any violation of this section by the corporation is grounds for a board to discipline any licensee, registrant, or certificate holder who is a member of or is employed by the corporation pursuant to section 12-245-226.

3. Nothing in this section diminishes or changes the obligation of each licensee, registrant, or certificate holder employed by the corporation to conduct his or her practice in a manner that does not violate section 12-245-224 (1). Any licensee, registrant, or certificate holder who, by act or omission, causes the corporation to act or fail to act in a way that violates section 12-245-224 (1) or this section is personally responsible for the act or omission and is subject to discipline by the board.

4. A professional service corporation may adopt a pension, cash profit sharing, deferredprofit sharing, health and accident, insurance, or welfare plan for all of its employees, including lay employees, if the plan does not require or result in the sharing of specific or identifiable fees with lay employees and if any payments made to lay employees, or into the plan on behalf of lay employees, are based upon their compensation or length of service, or both, rather than the amount of fees or income received.

5. Nothing in this section shall be deemed to modify the privileges regarding confidential communications specified in sections 12-245-220 and 13-90-107 (1)(g).

6. Nothing in this article 245 limits persons licensed, registered, or certified under thisarticle 245 from forming a corporation with persons licensed, registered, or certified under this article 245.

7. As used in this section, unless the context otherwise requires:

1. "Articles of incorporation" includes operating agreements of limited liability companies and partnership agreements of registered limited liability partnerships.

2. "Corporation" includes a limited liability company organized under the "ColoradoLimited Liability Company Act", article 80 of title 7, and a limited liability partnership registered under section 7-60-144 or 7-64-1002.

3. "Director" and "officer" of a corporation includes a member and a manager of a limited liability company and a partner in a registered limited liability partnership.

4. "Employees" includes employees, members, and managers of a limited liability company and employees and partners of a registered limited liability partnership.

5. "Share" includes a member's rights in a limited liability company and a partner'srights in a registered limited liability partnership.

6. "Shareholder" includes a member of a limited liability company and a partner in aregistered limited liability partnership.

Source: L. 2019: Entire title R&RE with relocations, (HB 19-1172), ch. 136, p. 1229, § 1, effective October 1. L. 2020: IP(1) and (1)(b)(VI) amended, (HB 20-1206), ch. 304, pp. 1527, 1546, §§ 8, 50, effective July 14.

Editor's note: This section is similar to former § 12-43-211 as it existed prior to 2019.