> ## Documentation Index > Fetch the complete documentation index at: https://dso.getlemma.com/llms.txt > Use this file to discover all available pages before exploring further. # Step 2: Find your friendly dentist > What the dentist-owner of your professional entity does, why genuine clinical authority matters, how they're paid, and how succession windows work. In Bluebird's selected dentist-owned-PC model, the **friendly dentist** is the licensed dentist who will own the professional entity and exercise the governance and professional authority state law assigns to that role. Ownership percentage, officer and director eligibility, and the selected entity form still come from the launch state's law. ## What Bluebird did Dr. Maya Okafor is not a hired figurehead. She is Bluebird's clinical leader: she practices at the location four days a week, will supervise the hygienists and the associates as they're hired, owns the patient records, and makes every clinical decision. She owns 100% of Maya Okafor, D.D.S., P.C. She signed a stock transfer restriction agreement and an employment agreement, and she has her own attorney. In Bluebird's arrangement, the dentist-owner is an active participant in the practice and its governance. ## The friendly owner's role For Bluebird, the dentist-owner's documented and actual authority covers these domains: * **Owns the equity** of the professional entity, with the economic rights that implies (constrained by the transfer restriction agreement). * **Serves as an officer and director**, and in many states must be, because those roles are limited to licensees. * **Holds ultimate authority over clinical matters**: diagnosis, treatment planning, clinical protocols, materials and lab selection, clinical staffing, peer review, and quality. * **Exercises record ownership, custody, access, and clinical authority** as the state's rules require. * **Signs payer and provider agreements** when authorized by the entity documents and accepted by the counterparty. * **Controls or employs clinical roles** where the state's ownership, employment, and supervision rules require it; hygienist and staff allocation is not uniform. * **Bears fiduciary duties** to the PC and its patients. ## Why genuine authority matters In *In re OCA, Inc.*, the Fifth Circuit voided the management agreements of a national orthodontic company. The manager held the space, staff, and bank account, while the dentists "were essentially only left with control over diagnosing and treating their patients." On that record, retaining chairside decisions alone was insufficient.1 The 2015 New York Attorney General resolution involving Aspen Dental and the May 2026 California settlement imposed party- and state-specific restrictions involving percentage fees, clinical staffing or incentives, accounts, owner replacement, and monitoring.23 In the unpublished, nonprecedential *Galkin v. SmileDirectClub* opinion, a New Jersey panel separately affirmed summary judgment on a record that included licensee-only successor eligibility, a clinical carve-out, and insufficient proof of the asserted sham-control theory.4 Recruit an owner who is willing and able to exercise the authority described in the governing documents. ## Where to find one Bluebird considers three sourcing paths, each of which requires the same eligibility and independence review: 1. **Your own clinical co-founder or lead dentist.** Their existing role may support active participation and aligned incentives, but the legal and compensation analysis still applies. 2. **A practicing dentist recruited into the leadership role.** The dentist may practice part-time, serve as clinical director, and own the PC, with compensation allocated to the services performed. 3. **A professional "nominee" or dentist-owner network.** Some vendors connect groups with licensed owners, particularly for multi-state and teledentistry expansion. Review the proposed owner's time, information, other PC interests, conflicts, independence, and succession plan. A person who owns many unrelated PCs may have limited operational knowledge of each one. ## What to verify before you sign anything Complete this diligence *before* the person owns the professional entity. A later change may require a share transfer, board consents, payer actions, and, depending on the structure, a new EIN. | Check | Where | Why it matters | | ------------------------------------------------ | ----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | | Active, unrestricted dental license in the state | State dental board primary source verification | The entity's right to exist depends on it | | Disciplinary history | State board; multi-state search | Board action can force a share transfer under your agreement | | **OIG exclusion** | [OIG List of Excluded Individuals/Entities (LEIE)](https://exclusions.oig.hhs.gov/) | Excluded-person consequences depend on ownership, control, services, payments, and the applicable federal healthcare-program rule | | **Federal suspension or debarment** | [SAM.gov](https://sam.gov/) | A distinct federal award and responsibility analysis; do not treat it as the LEIE | | State Medicaid enrollment standing | State Medicaid portal and its dental benefit administrator | A terminated or excluded Medicaid enrollment follows the owner to your group | | Malpractice history | NPDB (via the dentist's own self-query), carrier | Affects insurability and payer credentialing | | Other PC ownership | Ask directly, in writing | Competing PCs, conflicting MSAs, and diligence surprises | | Immigration status if applicable | Counsel | Visa-dependent dentists may face ownership constraints | | Personal financial stability | Ask directly | Their creditors could theoretically reach their shares | Analyze LEIE exclusion, SAM.gov status, and state exclusion lists separately. Screen owners, clinicians, employees, contractors, and vendors in the scope and at the cadence required by applicable program, payer, contract, and state rules. OIG recommends routine LEIE checks and notes that monthly screening best minimizes exposure because it updates the LEIE monthly; that is a risk-control recommendation, not a universal SAM.gov cadence.6 ## How they're paid Two distinct income streams, and keeping them distinct matters: 1. **Clinical compensation**, for practicing dentistry. Document it in the employment agreement using a supportable method, such as base pay, per-diem pay, or a percentage of the dentist's own production or collections where permitted. 2. **Clinical director / ownership compensation**, for the governance and oversight duties of owning the PC. Typically a flat stipend or an hourly rate for documented time. Analyze the second stream for **fair market value**, **commercial reasonableness**, and any connection to the volume or value of referrals. Those questions are especially important for a group participating in Medicaid or another federal healthcare program. Also review quotas and procedure-specific sales incentives under state employment, professional-control, and enforcement authorities. Production pressure on clinical staff appears in the Aspen matters and Medicaid fraud cases.2 See [Structure friendly-owner compensation](/guides/formation/structure-friendly-owner-compensation) and [Stark, AKS, and why comp design is constrained](/concepts/compliance/stark-and-anti-kickback). Do not assume the practice must run near break-even or that the owner may never receive distributions. Model owner compensation, practice distributions, and management fees separately under the entity, tax, fiduciary, fee-splitting, referral, and solvency rules. See [Where the profit lives](/concepts/finance/where-the-profit-lives). ## Red flags, in both directions **Red flags in a candidate owner:** * Wants to be paid purely as a percentage of the whole practice's revenue * Won't get their own lawyer, or wants you to pay for and direct theirs * Owns many other PCs and can't articulate what any of them do * Any history of exclusion, board discipline, or insurance fraud allegations * Uninterested in the clinical governance duties * Unwilling to sign a transfer restriction agreement **Red flags *you* might be presenting, from the dentist's side.** If you are the dentist reading this, be wary of a DSO that: * Asks you to sign a share transfer at a nominal price with no explanation of the triggers * Wants to control hiring and firing of clinical staff, patient volume targets, or CDT coding decisions * Won't let you retain your own counsel * Structures your pay so that treatment-plan acceptance and production targets drive your income in ways you can't control * Cannot tell you what happens to your personal liability if the structure is challenged The dentist-owner's professional license, fiduciary duties, contractual exposure, and reputation can be affected by an arrangement they do not govern in practice. *In re OCA* addressed contract enforceability and bankruptcy claims rather than dental-board discipline, while other authorities involve different remedies. That risk allocation is why the dentist needs independent counsel and why the operator should document governance rather than rely on a nominal-owner label. ## Succession: solve it now Death, disability, license loss, exclusion, or departure can disrupt the professional entity's ownership, governance, payer authority, and operations. Address those events before they occur. Dental practice acts make this concrete: some states give a deceased dentist's estate or personal representative a **statutory transition window**, while others use a different rule or provide no express dental window.5 Look up your state's text in the [death and transition table](/reference/legal/dso-laws-by-state#death-and-transition-windows) and draft against it. A **stock transfer restriction or succession agreement** can define eligibility, triggers, valuation, approvals, and transfer mechanics, but those terms must be tested under the state's professional-entity, fiduciary, creditor, tax, and dental-control rules. Maintain a qualified successor bench without giving the support company an at-will replacement right. The California Aspen settlement restricted specified owner-replacement and forfeiture controls; the unpublished *Galkin* opinion is a New Jersey-specific example in which licensee-only succession terms survived the challenge on the record before that panel, not a national safe harbor.3 See [Draft the stock transfer restriction agreement](/guides/agreements/draft-stock-transfer-restriction) and [Plan for friendly-owner succession](/guides/formation/plan-for-succession). ## Your artifact from this step * A named dentist who has agreed in principle, in writing * Completed verification: license, board history, LEIE, SAM.gov, Medicaid standing, malpractice * Agreement on both compensation streams, in ranges * Their own counsel engaged * A named successor candidate ## Checklist * [ ] Primary source dental license verification complete * [ ] OIG LEIE and SAM.gov clear (documented, dated) * [ ] Disciplinary and malpractice history reviewed * [ ] Other PC ownerships disclosed in writing * [ ] Compensation structure agreed and FMV-defensible, with no production quotas or sales incentives * [ ] Dentist has independent counsel * [ ] Successor dentist identified, and the state's transition window looked up ## Next Articles of incorporation for a dental professional entity, with all the parts that differ from a normal company. ## Sources 1. *In re OCA, Inc.*, 552 F.3d 413 (5th Cir. 2008). [Official opinion](https://www.ca5.uscourts.gov/opinions/pub/07/07-30430-CV0.wpd.pdf). Full case treatment: [DSO & dental case law](/reference/legal/dso-case-law). 2. NY AG, [settlement with Aspen Dental Management](https://ag.ny.gov/press-release/2015/ag-schneiderman-announces-settlement-aspen-dental-management-bars-company-making) (June 18, 2015). 3. California AG, [settlement with Aspen Dental over corporate practice](https://oag.ca.gov/news/press-releases/attorney-general-bonta-announces-settlement-aspen-dental-over-corporate-practice) (May 7, 2026); terms detail: DLA Piper, [CPOM enforcement: new pressure points](https://www.dlapiper.com/en/insights/publications/2026/07/corporate-practice-of-medicine-enforcement) (July 2026). 4. *Galkin v. SmileDirectClub, LLC*, No. A-2867-19 (N.J. App. Div. June 11, 2021), [official unpublished opinion](https://www.njcourts.gov/system/files/court-opinions/2021/a2867-19.pdf). 5. E.g., O.C.G.A. § 43-11-47(a)(7)(B) (six months, LLC interests), [text](https://codes.findlaw.com/ga/title-43-professions-and-businesses/ga-code-sect-43-11-47/); W. Va. Code § 30-4-16(g) (24 months), [text](https://code.wvlegislature.gov/30-4-16/). Full table: [DSO laws by state](/reference/legal/dso-laws-by-state#death-and-transition-windows). 6. HHS OIG, [Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs](https://oig.hhs.gov/exclusions/special-advisory-bulletin-and-other-guidance/the-effect-of-exclusion-from-participation-in-federal-health-care-programs/) (May 8, 2013), pp. 15–16.