2020 Colorado Revised Statutes
Title 12 - Professions And Occupations
Article 285. Physical Therapists and Physical Therapist Assistants
Section 12-285-131. Professional service corporations, limited liability companies, and registered limited liability partnerships for the practice of physical therapy - definitions.

(1) Physical therapists may form professional service corporations for the practice of physical therapy 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 the corporations 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 solely for the purposes of conducting the practiceof physical therapy only through persons licensed by the board to practice physical therapy.

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. (I) Except as provided in subsection (1)(d)(II) of this section, all shareholders of thecorporation must be persons licensed by the board to practice physical therapy and who at all times own their shares in their own right. With the exception of illness, accident, or time spent in the armed services, on vacations, or on leaves of absence not to exceed one year, the individuals must be actively engaged in the practice of physical therapy in the offices of the corporation.

(II) If a person licensed to practice physical therapy who was a shareholder of the corporation dies, an unlicensed heir to the deceased shareholder may become a shareholder of the corporation for up to two years. Unless the heir is the only shareholder of the corporation, the heir who becomes a shareholder is a nonvoting shareholder. If the heir of the deceased shareholder ceases to be a shareholder, the owner who received the stocks from the shareholder shall dispose of the shares in accordance with the provisions required by subsection (1)(e) of this section. An heir who is not licensed under this article 285 shall not exercise any authority over professional or clinical matters.

5. Provisions shall be made requiring any shareholder who ceases to be or for any reason is ineligible to be a shareholder to dispose of all such shares forthwith, either to the corporation or to any person having the qualifications described in subsection (1)(d) of this section.

6. The president shall be a shareholder and a director, and, to the extent possible, allother directors and officers shall be persons having the qualifications described in subsection (1)(d) of this section. Lay directors and officers shall not exercise any authority whatsoever over professional matters.

7. The articles of incorporation must provide, and all shareholders of the corporationshall agree, that 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 when the shareholders maintain professional liability insurance that meets the standards of section 12-285-118 or when the corporation maintains professional liability insurance that meets the following minimum standards:

1. The insurer shall insure 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 by the board to practice physical therapy.

2. The policies must insure 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 policy must provide for an amount for each claim of at least onehundred thousand dollars multiplied by the number of persons licensed to practice physical therapy employed by the corporation. The policy must provide for an aggregate top limit of liability per year for all claims of three hundred thousand dollars also multiplied by the number of persons licensed to practice physical therapy employed by the corporation, but no firm is required to carry insurance in excess of three hundred thousand dollars for each claim with an aggregate top limit of liability for all claims during the year of nine hundred thousand dollars.

4. The policy may provide that it does not apply to:

1. A dishonest, fraudulent, criminal, or malicious act or omission of the insured corporation or any stockholder or employee thereof;

2. The conduct of any business enterprise, not including the practice of physical therapy, in which the insured corporation under this section is not permitted to engage but that nevertheless may be owned by the insured corporation, 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, 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 thereof; and

(V) The policy may contain reasonable provisions with respect to policy periods, territory, claims, conditions, and other usual matters.

2. The corporation shall do nothing that, if done by a person licensed to practice physical therapy and employed by the corporation, would constitute any ground for disciplinary action, as set forth in section 12-285-120. Any violation by the corporation of this section is grounds for the board to terminate or suspend its right to practice physical therapy.

3. Nothing in this section diminishes or changes the obligation of each person licensedto practice physical therapy employed by the corporation to practice in accordance with the standards of professional conduct under this article 285 and rules adopted under this article 285. Physical therapists who by act or omission cause the corporation to act or fail to act in a way that violates the standards of professional conduct, including any provision of this section, are personally responsible for the violation and subject to discipline for the violation.

4. A professional service corporation may adopt a pension, cash profit sharing, deferredprofit sharing, health and accident insurance, or welfare plan for all or part 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 any 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. (a) Except as provided in this section, corporations shall not practice physical therapy.

(b) The corporate practice of physical therapy does not include physical therapists employed by a certified or licensed hospital, licensed skilled nursing facility, certified home health agency, licensed hospice, certified comprehensive outpatient rehabilitation facility, certified rehabilitation agency, authorized health maintenance organization, accredited educational entity, organization providing care for the elderly under section 25.5-5-412, or other entity wholly owned and operated by a governmental unit or agency if:

1. The relationship created by the employment does not affect the ability of the physicaltherapist to exercise his or her independent judgment in the practice of the profession;

2. The physical therapist's independent judgment in the practice of the profession is infact unaffected by the relationship;

3. The policies of the entity employing the physical therapist contain a procedure bywhich complaints by a physical therapist alleging a violation of this subsection (5)(b) may be heard and resolved;

4. The physical therapist is not required to exclusively refer any patient to a particularprovider or supplier; except that nothing in this subsection (5)(b)(IV) shall invalidate the policy provisions of a contract between a physical therapist and his or her intermediary or the managed care provisions of a health coverage plan; and

5. The physical therapist is not required to take any other action he or she determinesnot to be in the patient's best interest.

3. The provisions of subsection (5)(b) of this section shall apply to professional servicecorporations, limited liability companies, and registered limited liability partnerships formed for the practice of physical therapy in accordance with this section regardless of the date of formation of the entity.

4. A physical therapist employed by an entity described in subsection (5)(b) of thissection shall be an employee of the entity for purposes of liability for all acts, errors, and omissions of the employee.

(6) 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 alimited 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. "President" includes all managers, if any, of a limited liability company and all partners in a registered limited liability partnership.

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

7. "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. 1526, § 1, effective October 1.

Editor's note: This section is similar to former § 12-41-124 as it existed prior to 2019.