Question: I was recently approached by a company manufacturing certain dental appliances. This company also has “therapy programs” it has developed for sale to patients. It was explained to me that the company desired to create a dental practice (a professional corporation) to treat patients in need of its appliances and therapy programs. The company is interested in employing me.
Since Michigan law requires shareholders of a PC providing dental services to be dentists, the company also would like me to own the PC. Now that I have seen the agreements, however, I have some concerns.
I would be listed as the owner of the PC’s stock. However, the company has the right to take it back from me and transfer it to another dentist of its choosing if I die, retire, or become disabled, or if I elect to sell the stock, if I “impair,” “prevent,” or “frustrate” the company’s efforts to administer the PC, or if my employment is terminated. If the stock is taken back, I only receive $500, not the fair market value, book value, or any other measure of the actual value of the stock. this doesn’t seem like ownership of the stock to me. I an being described as the “PC holder” by the company. Am I putting my license at risk by agreeing to do this for the company?
Answer: You are right to be concerned. Michigan law (as has been described in this column many times) requires the owners of dental practices to be dentists. The law reflects a long-held belief that control of dental and medical services provided to the public should rest exclusively with those the state of Michigan has licensed to provide these services.
In recent years non-dentists (management companies, appliance/device manufacturers, private equity companies, other investors, etc.) have become more aggressive in their attempts to control dental practices. Many times, the non-dentist players have made the real estate and equipment investments and served as landlords/lessors, and provided employee staffing services, billing, human resource, and other services. However, only a dentists owned the PC stock, and it was owned free of any interest or restriction in favor of a non-dentist landlord/lessor or service provider.
In the arrangement you describe, the non-dentist has such control of the the incidents of ownership of the stock that you are a shareholder in name only. The term “PC holder” sounds much more accurate when it comes to you. The non-dentist is allowing you to hold the stock in your name only, and he or she may take it from you at will.
Why could this be problematic? Here are some good questions that may be asked:
- What will happen if not enough of the appliances and therapy programs are being sold by you to patients?
- What if, in your professional judgement, you believe that the appliances and therapy programs are not appropriate for some patients, and your non-dentist partner disagrees?
- Will the non-dentist terminate your employment or utilize one of the other triggering events to terminate you, take back the stock, or force you to transfer it to a dentist chosen by the non-dentist?
- Does this sound like you own the PC as required by law — or instead that you have agreed to go along with a scheme that is designed to thwart Michigan law?
These and other questions may be asked by the Michigan Department of Licensing and Regulatory Affairs, the Board of Dentistry, the Michigan attorney general, or others. I cannot predict how this arrangement will be viewed. Or, if it is viewed as a scheme designed to avoid Michigan law what sanctions would be sought or what the other consequences would be. For example, would this be viewed as:
- Demonstrating a lack of good moral character (required by MCL 333.16221 (b)(vi))?
- That you are permitting your license to be used by an unauthorized person (prohibited by MCL 333.16221 (c)(ii))?
- Falsely advertising to or misleading patients that you are the owner (prohibited by MCL 333.16221 (d)(i)), etc.?
These are all good questions that would have to be addressed on a case-by-case basis. The best practice is to remain in absolute control of your stock in a PC, subject to only the usual and customary buy-sell terms with other dentists owning stock in the PC, if any.
This article originally appeared in the January 2026 edition of the Journal of the Michigan Dental Association(goes to new website).
