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Reference companion to Draft the MSA: use it to identify what each clause is trying to accomplish, collect the operational facts behind it, and isolate the state-law questions that justify paid legal review. Dental statutes and board rules sometimes answer ownership, control, fee, records, asset, or filing questions directly; other provisions turn on entity form, payer contracts, and the agreement stack as a whole. Sample language is illustrative, not a template or a conclusion that the described allocation is lawful. Before signing or materially amending an MSA, test the selected language against the current law and actual operating model in every state where the agreement will be used.

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Clause index

Three state-specific issues sit outside the clause list and are covered at the end: North Carolina’s conspicuous warning block, severability’s limits, and the asset and lease clauses that proprietor statutes reach.

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1. Recitals and purpose

Purpose: Frames the relationship. Courts and regulators may use recitals when interpreting the agreement. Pattern: Identify the exact practice entity, the licensed professionals through whom it practices, the support company, and the permitted support relationship. State which party retains each category of professional authority under the governing state rather than assuming every dentist, hygienist, assistant, record, or payer function follows one national allocation. Negotiation note: Make the recitals match the actual parties and allocation of responsibilities. An inaccurate description can complicate interpretation later.

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2. Services scope

Purpose: Defines what the DSO provides. The service description also informs the fair market value analysis because the valuation must address the services actually provided. Pattern: A schedule may list candidate services by category: administrative and management support; personnel the DSO may lawfully employ; premises, furniture, and equipment the DSO may lawfully own or lease; information technology including PMS administration; billing and collection support; payer-contracting support; financial and accounting services; marketing; purchasing; compliance-program support; and data analytics. The verbs should identify who advises, proposes, administers, approves, decides, signs, owns, accesses, and pays. For each service, record the source of authority, responsible personnel, approval right, data role, contracting party, cost-allocation method, and termination handoff. A label such as “support” will not cure a clause that gives the DSO a right the state reserves to a dentist or practice owner. Negotiation note: A service exhibit can make amendments, valuation support, and responsibility mapping easier. In Texas, compare it with the chapter 73 registration, which requires disclosure of the business support services provided to each dentist; inconsistent descriptions are a diligence issue.1

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3. Clinical carve-out

Purpose: States what the DSO may not control. Regulators focus closely on this clause, and several states have written parts of it into dental law. Illustrative broad carve-out: conform the nouns, verbs, and reserved functions to the governing state and entity form.
Notwithstanding any other provision of this Agreement, [DSO] shall not, and shall have no authority to, control, direct, or interfere with the professional judgment of [Practice Entity] or its licensed personnel, including with respect to: (a) diagnosis, treatment, or treatment planning; (b) whether care is necessary or advisable; (c) patient acceptance where reserved by law; (d) patient time, volume, or procedure quotas; (e) clinical-personnel hiring, supervision, evaluation, discipline, or termination to the extent reserved by law; (f) patient-record ownership, custody, control, access, or content to the extent reserved by law; (g) procedure-code selection or claim content; (h) clinical materials, equipment, supplies, or laboratories; (i) referrals; (j) clinical protocols and standards of care; and (k) treatment and refund communications with patients.
Where the list comes from: state statutes.2 An enumerated clause can make decision rights auditable, but copying the union of several states’ lists does not answer which entity may employ a role, own an asset, hold records, submit a claim, or approve a refund in the actual state. Wisconsin, for example, permits lay operational control within professional standards while separately banning patient and procedure quotas in dentist employment contracts.3 Negotiation note: Do not trade away authority the governing law reserves to licensees. Separately negotiate who may recommend, administer, measure, escalate, and access information so the operational boundary works in practice.

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4. Management fee

Purpose: Sets what the PC pays and how the fee is calculated. Patterns: Questions to specify include who invoices, who owes the fee, the payment account and signatories, timing, priority relative to practice obligations, deferral and true-up mechanics, disputed amounts, allocation across locations or entities, and when valuation support is refreshed. Monthly DSO invoicing, a particular account, deferral, and annual review are drafting choices, not universal legal requirements. Current-period percentage fees are expressly restricted in at least five jurisdictions. Nevada bans support fees “based on a percentage or share of revenues or profits of the dental practice” by statute (NRS 631.215(2)(i)); New Jersey bans percentage-of-income fees for space, equipment, personnel, marketing, or management services by rule (N.J.A.C. 13:30-8.13); New York bans percentage-of-receipts fees for space, facilities, equipment, or personnel (8 NYCRR 29.1(b)(4)); North Carolina’s Management Arrangements Rule bars compensation that foreseeably rises or falls with profitability or revenues (21 NCAC 16X .0101); and Maryland requires permitted support-services compensation to be predetermined and fixed, although it may be based on revenues or profits over a prior period of at least 12 months (Md. Code, Health Occ. § 4-103(E)(14)). The New York and California Aspen Dental settlements also addressed revenue-based fees.4 Flat and cost-plus structures remain the conservative multi-state starting point, but each formula must be tested against the applicable state text. Negotiation note: Cost-plus arrangements should state what the cost base includes, what it excludes, and how costs are allocated across PCs. These definitions are a common source of disputes. The agreement should also address fee deferral because annual maximums and hygiene-recall seasonality can materially affect PC cash flow. See Set the management fee.

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5. Records ownership

Purpose: Allocates lawful ownership, custody, control, access, retention, and delivery of patient records. Illustrative state-neutral pattern:
[Records Holder] shall retain the ownership, custody, control, access, and patient-response authority required by applicable dental law. [DSO] may administer records systems and access records only for the support functions authorized by this Agreement, the parties’ privacy terms, and applicable law. On termination, the party controlling the system shall provide the records and associated images, attachments, metadata, and audit information in the required usable format and time. Each party may retain copies only as law requires or permits.
The exact legal vocabulary varies by state. Washington excludes dental records from the assets a lay entity may own (RCW 18.32.675); Kansas voids a term giving a non-dentist ownership of dental charts or patient records (K.S.A. 65-1471); Kentucky bars unlicensed control over patient records (KRS 313.075(2)); and Nevada excludes ownership of clinical records from its support-services safe harbor (NRS 631.3455).2 Arizona instead requires a registered business entity to designate a records custodian and report changes.5 Allocate the relationship under the governing state’s ownership, custody, control, retention, transfer, closure, and patient-notice rules. DSO access must also be limited to lawful support functions under the MSA and business associate agreement. Negotiation note: Specify the lawful holder or custodian, system administrator, patient-request workflow, amendment authority, retention period, closure notice, breach responsibilities, post-termination access, export format, timeframe, cost, and permitted retained copies. Test whether the receiving party can actually use the PMS export.

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6. Compliance allocation

Purpose: Allocates responsibility for regulatory compliance. Pattern: Allocate responsibility by act. The enrolled billing entity and rendering professionals retain the authority and accountability that payer, program, licensure, and claims law place on them. The DSO is responsible for its own people, systems, edits, submissions, access, and contracted support work. Identify who selects codes, prepares claims, approves changes, transmits, posts remittances, handles denials, refunds overpayments, answers audits, and preserves records; cross-reference the privacy agreement and payer matrix. Negotiation note: State coding and claim authority explicitly without using the contract to disclaim a party’s nondelegable legal responsibility. Compare the clause with actual permissions, work queues, audit logs, escalation paths, and payer enrollment. See Run a CPOD self-audit and the enforcement tracker.

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7. Term

Pattern: A stated initial term, any renewal mechanics, notice dates, and the consequences of expiration. Test the term together with the exit rights. The OCA/OrthAlliance business-services agreements ran for terms of up to forty years. Applying Texas law to the agreements before it, the Fifth Circuit treated duration as one of several interlocking provisions that transferred too much operational control and held the agreements void.6 A long term is not automatically unlawful, but duration, renewal, termination, account control, asset rights, debt, and transition restrictions should be evaluated together. Select a term and renewal process the services, investment, governing law, and practical exit can support.

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8. Termination

Pattern: Termination for cause by either party with cure periods; termination for convenience on stated notice; and detailed consequences for records delivery, systems access, transition services, and final fee reconciliation. Test whether the practice has a meaningful exit. A right that cannot be exercised because of account control, systems dependence, records access, debt, penalties, or transition restrictions can add to a control case. California’s 2026 Aspen settlement restricts specified owner-replacement and ownership-forfeiture provisions in that matter.7 Negotiation note: Transition services on termination protect both sides. A PC suddenly without billing, scheduling, or PMS access cannot treat patients.

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9. Exclusivity

Pattern: Define whether the practice must obtain covered services from the DSO, whether the DSO may serve other practices, the exceptions, performance standards, and the relationship between exclusivity and termination. Negotiation note: Test exclusivity with term, exit rights, system access, records delivery, fees, and remedies. The combined effect matters more than the clause label.

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10. Audit and inspection

Pattern: Each party may inspect the other’s records relevant to the agreement, on reasonable notice. Negotiation note: Decide what each party needs to verify, then set reciprocal or role-specific access, confidentiality, notice, frequency, cost, and dispute rules. The practice ordinarily needs enough information to verify charges and compliance; the DSO may need evidence tied to the services it performs. In Kansas, the board itself holds inspection rights over registered administrative-services contracts, so the executed contract and supporting records should be inspection-ready.1

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11. Indemnification and insurance

Pattern: Map each historic and prospective risk to an insured party and policy: individual and entity professional liability, general liability, cyber, employment, crime, fiduciary, and errors and omissions as relevant. Allocate indemnity for each party’s acts, legal responsibilities, and contractual breaches; specify limits, retentions, tail coverage, additional-insured status, notice, defense control, and settlement consent. Kansas imposes a specific limit: K.S.A. 65-1471(e) bans indemnification clauses covering acts that violate the dental practices act.2

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12. Security interest, include with care

Purpose: Grants the DSO a security interest in the PC’s assets or receivables to secure the fee.
Do not include reflexively. When the Fifth Circuit voided the OCA agreements, it emphasized that the orthodontists could not withdraw their own funds from the practice revenue account. A blanket security interest over receivables can create a similar concern.6 If a lender requires it, structure it with healthcare finance counsel. See Working capital and AR lending.

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13. Transfer restriction and succession cross-reference

Pattern: If the selected structure lawfully uses a separate transfer-restriction or succession agreement, identify it precisely and state how amendment, assignment, termination, and conflicts between documents work. Another structure may place permitted mechanics in the professional entity’s governing documents or may use no such agreement. Document placement does not cure an impermissible transfer or control right. Three dental-specific issues for the referenced document:
  • Classify the deadline before drafting to it. A dental-practice estate exception, professional-corporation redemption period, PLLC transfer rule, name-use period, and agency closure guidance answer different questions. The form-specific periods are mapped on DSO laws by state.
  • Test successor eligibility and retained authority. Galkin v. SmileDirectClub is an unpublished, nonprecedential New Jersey appellate decision affirming judgment on its record. Licensee-only successor eligibility and the dentist’s retained safeguards supported the result, but the opinion did not approve every DSO succession agreement or bind other jurisdictions.8
  • Test who selects and removes the owner. The 2026 California Aspen settlement restricts specified DSO replacement and forfeiture powers, and the California AG has argued in an amicus brief that even reserved replacement control can violate California’s rule.7 Use objective triggers only if they fit the governing state’s owner-eligibility, control, valuation, notice, fiduciary, and transfer law; do not assume a closed trigger list alone makes the arrangement valid.

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14. Assignment

Pattern: Whether the DSO may assign the agreement, and on what conditions. Negotiation note: Assignment terms are especially important in a sale. An MSA that cannot be assigned, or that requires the PC’s consent, gives the dentist-owner leverage over the DSO’s exit. Address the issue when drafting the agreement instead of leaving it for the LOI.

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15. Governing law and dispute resolution

Pattern: Identify governing law, forum, arbitration or court process, interim relief, confidentiality, fee shifting, and how disputes affecting patient care, records, systems, or payer operations are handled. A choice-of-law clause cannot displace the dental and regulatory law that applies where services are delivered.

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The North Carolina warning block

In North Carolina, the warning affects whether the agreement is valid. Under the current official text, a management arrangement executed on or after January 1, 2013 is invalid unless it carries, more conspicuously than anything else on the document, the warning:
WARNING – YOU HAVE THE RIGHT AND ARE ENCOURAGED TO HAVE THIS CONTRACT REVIEWED BY YOUR OWN LEGAL COUNSEL PRIOR TO SIGNING
(N.C. Gen. Stat. § 90-40.2(b).) The current official statute retains the warning and invalidity consequence. The 2026 elimination of mandatory Board review (S.B. 257) removed the submission requirement; it did not remove this statutory warning.9 Confirm the exact text, typography, and placement against the statute in effect on the execution date. The Board’s published example can be a useful comparison, but it does not replace review of the executed arrangement and current law.

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Severability’s limits

Many MSAs contain a severability clause. Do not assume it will save a structurally unlawful arrangement. In In re OCA, the Fifth Circuit refused severance because the obligations it found illegal were interlocking and central rather than incidental; Packard addressed resulting recovery claims.6 Draft severability with the agreement’s economics and transition consequences in view, but evaluate the fee, term, account control, assets, and exit rights together. The annotated cases are on DSO & dental case law.

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Asset and lease clauses vs. proprietor statutes

MSAs commonly recite that the DSO owns or leases the premises and equipment the PC uses. In proprietor-clause states, those arrangements may be regulated conduct. Owning, maintaining, or operating a dental office, and in some states leasing equipment to one for compensation, is statutorily defined as practicing dentistry: The drafting consequence: premises, dental equipment, nonclinical equipment, supplies, inventory, records, and financing should be separate line items. A combined Colorado realty-and-dental-equipment arrangement cannot rely on Rule 1.7(F)‘s real-property-only lessor exclusion when the provisions become operative January 1, 2027. Check every operating state’s row on DSO laws by state before reusing an asset schedule.

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State-specific verification matrix

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Sources

  1. Tex. Bus. & Com. Code ch. 73 (registration contents, including services provided to each dentist), official statute PDF; K.S.A. 65-1470 (registration and board inspection of contracts).
  2. K.S.A. 65-1471; RCW 18.32.677 and RCW 18.32.675; KRS 313.075; Cal. S.B. 351 (2025), H&S §§ 1190–1191, official bill text; NRS 631.3455, official NRS ch. 631. Effective dates and detail: dental legislation tracker.
  3. Wis. Stat. § 447.06(1g), ch. 447.
  4. NRS 631.215(2)(i); N.J.A.C. 13:30-8.13; 8 NYCRR 29.1(b)(4); 21 NCAC 16X .0101; Md. Code, Health Occ. § 4-103(E) (rule pinpoints per DSO laws by state); NY AG, Aspen Dental settlement (June 2015); California AG, Aspen Dental settlement (May 2026).
  5. A.R.S. § 32-1213, as amended by S.B. 1226, Laws 2023, ch. 118.
  6. In re OCA, Inc., 552 F.3d 413 (5th Cir. 2008), opinion; Packard v. OCA, Inc., 624 F.3d 726 (5th Cir. 2010), opinion.
  7. California AG, Aspen Dental settlement (May 7, 2026); DLA Piper, Corporate practice of medicine enforcement: new pressure points (July 2026) (reserved-replacement-right amicus position).
  8. Galkin v. SmileDirectClub, LLC, No. A-2867-19 (N.J. App. Div. June 11, 2021), official unpublished opinion.
  9. N.C. Gen. Stat. § 90-40.2; NC State Board of Dental Examiners, Management Arrangements (S.B. 257 statement and example MSA).
  10. Colorado Dental Board, Rule 1.7 official eDocket and adopted text; Colo. S.B. 25-194.
  11. N.J.A.C. 13:30 official Board compilation (includes the statutory proprietor text in its appendix); ORC 4715.01; Mo. Rev. Stat. § 332.071.
Last modified on August 21, 2026