The case involves Art Center Holdings, Inc., a professional medical corporation, against WCE CA Art, LLC, an MSO, and related entities. The California Medical Association filed a competing amicus brief urging a fact-specific analysis of corporate practice of medicine violations rather than categorical bans on succession rights. The underlying dispute centers on whether the MSO used continuity provisions to influence physician decisions in breach of prohibitions on lay control of medical practices. Two recent statutes—S.B. 351 (effective October 6, 2025) and A.B. 1415—have expanded the Attorney General's enforcement authority against private equity and hedge fund involvement in physician practices, intensifying scrutiny of these arrangements.
Attorneys managing MSO-PC relationships should review succession agreements, equity transfer restrictions, termination rights, and governance structures for compliance exposure. The Attorney General's position signals aggressive enforcement ahead, particularly against private equity-backed platforms that rely on succession safeguards as investment protection. The appeal remains pending, and S.B. 351's new injunctive powers create additional enforcement risk. The California Medical Association's narrower approach may not prevail, making this a critical moment to audit existing arrangements before the appellate decision.