Step 5: Sign the agreement stack

Bluebird’s selected structure uses five coordinated documents: a management services agreement, a stock transfer restriction agreement, dentist employment agreements, a business associate agreement, and an IP/brand license. The required parties and documents can differ by state, entity form, workforce, payer, data flow, and transaction. This step requires a healthcare regulatory attorney licensed in your state who has papered dental structures before. Not a generalist corporate lawyer, and not a template. The MSA is the document that determines whether your structure survives a CPOD challenge, and its correct content differs materially between Texas, California, Kansas, and North Carolina. See Hire healthcare counsel.

​

What Bluebird did

Counsel drafted the stack over five weeks. Dr. Okafor’s own attorney reviewed the transfer restriction and employment agreements on her behalf. The management fee was set flat, with an annual cost-plus review. Both boards adopted written consents authorizing execution. Total legal cost: roughly $$28,000.

​

The five documents

​

1. Management services agreement (MSA)

What it does: Defines what the DSO provides to the PC, what the PC pays for it, and, critically, what the DSO does not control. The MSA is the center of the structure. It should specify the services in real detail (administrative support, non-clinical personnel, premises, equipment, information technology, billing and collection support, marketing, financial and accounting services), state the fee and how it is calculated, and carve out clinical authority explicitly, in dental terms:

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 [PC] or its licensed personnel, including with respect to diagnosis and treatment planning, the selection of dental materials, laboratories, and equipment used in treatment, referrals to specialists, the number of patients seen or the time devoted to any patient, the hiring, supervision, and clinical direction of dentists and dental hygienists, the ownership and content of patient records, the assignment of CDT procedure codes, or decisions on fees, refunds, and warranties.

That carve-out list is not generic. It tracks the functions dental statutes enumerate: Florida’s § 466.0285(2) reaches treatment selection, records, pricing, refunds, warranties, personnel, and hours; Washington’s DSO statute carries ten enumerated clinical-interference prohibitions; Kansas voids contract terms giving a non-dentist control over treatment, patient acceptance, records, and clinical supervision; and California’s SB 351, which names dental practices expressly; adds patient volume, provider schedules, coding and billing decisions, and equipment selection.¹ Where the risk concentrates: the fee. Nevada, New Jersey, New York, and North Carolina expressly restrict specified revenue-dependent dental compensation formulas; percentage terms also appeared in the New York and California Aspen resolutions.² Flat and cost-plus formulas still require lawful services, control allocation, calculation terms, commercial support, and any applicable fee-splitting or referral analysis; they are not automatic safe harbors. See Set the management fee, Fee-splitting rules, explained, and MSA clause anatomy. One state-specific formality with teeth: in North Carolina, a management arrangement executed since 2013 is invalid unless it carries a conspicuous warning recommending that each party obtain independent legal review before signing (N.C. Gen. Stat. § 90-40.2). The 2026 legislation that ended the dental board’s mandatory review of management arrangements left the warning requirement in place.³ If your PC is in North Carolina, this boilerplate is load-bearing.

​

2. Stock transfer restriction agreement

What it does: Pre-wires what happens to the PC’s shares when the dentist-owner dies, becomes disabled, loses their license, is excluded from federal programs, or leaves. Without a workable succession plan, death or disqualification can disrupt governance, payer relationships, records, and operations. Some states impose express transfer or redemption windows; others use different professional-entity rules. The document should address eligible transferees, triggers, approvals, valuation, and closing mechanics under the governing state’s rule. Recent authorities point in different, state-specific directions. The California Aspen settlement restricts specified owner-replacement and forfeiture rights for the settling parties. The unpublished Galkin opinion considered licensee eligibility, a clinical carve-out, and the evidentiary record in affirming summary judgment under New Jersey law; it is not a drafting safe harbor.⁴ See Draft the stock transfer restriction agreement.

​

3. Dentist employment agreements

What they do: Document each dentist’s employer, services, authority, compensation, coverage, and termination terms. Map dentists, hygienists, assistants, and other personnel to the employer and supervisor permitted by the governing state’s rules rather than using a national “PC versus DSO” shortcut. Standard content: compensation model, benefits, malpractice coverage (occurrence vs claims-made, and who pays for tail), duties, term, termination, and restrictive covenants. Two provisions deserve dental-specific attention:

• No production quotas or sales incentives. Wisconsin voids patient and procedure quotas in dentist employment contracts by statute, and quota-and-bonus systems for clinical staff are the recurring finding in dental enforcement, from the Aspen settlements to the Medicaid FCA cases.⁵ Pay associates on their own production or collections if you like; that is standard, but never tie clinical staff pay to selling specific procedures.
• Noncompetes, checked against current law. The FTC’s Non-Compete Rule was vacated in 2024, the FTC dropped its appeals in September 2025, and the rule was formally removed effective February 12, 2026, leaving noncompete regulation to the states.⁶ Note that both Aspen settlements stripped the DSO’s noncompetes over clinical staff as a CPOD remedy; regulators read a DSO-enforced noncompete as evidence of lay control.²

See Draft dentist employment agreements.

​

4. Business associate agreement (BAA)

What it does: Satisfies HIPAA. The PC is a covered entity. The DSO, which handles protected health information on the PC’s behalf for billing, scheduling, and IT, is a business associate. A written BAA between them is required, and its required content is specified at 45 C.F.R. § 164.504(e).⁷ You will also need downstream BAAs with the DSO’s own subcontractors: the PMS vendor, the clearinghouse, the billing service, the hosting provider. See Put a BAA in place between DSO and PC.

​

5. IP and brand license

What it does: Lets the PC operate under the DSO’s brand. The DSO owns the trademark; the PC gets a license to use it in connection with the practice. Often folded into the MSA, but a separate agreement is cleaner, especially when you add PCs in other states that will all license the same brand. Watch the trade-name overlay: several dental boards must approve or register the practice name the license grants. See Step 3.

​

The order they get signed in

The sequence matters because several documents reference each other.

​

The independence test

Here is a useful way to sanity-check the stack before signing. Ask: if the DSO and the PC were genuinely unrelated parties negotiating at arm’s length, would this document look like this?

• Would an unrelated practice agree to pay this fee for these services?
• Would an unrelated practice give up this much control?
• Would an unrelated dentist sign this share transfer at this price?
• Is there a termination right that actually works for both sides?

Where the answer is clearly no, you have found the clause a regulator will find too.

​

Your artifact from this step

• Executed MSA
• Executed stock transfer restriction agreement, with legend on the certificate
• Executed dentist employment agreements
• Executed BAA (and a running BAA inventory)
• Executed IP license
• Board and member consents for both entities, filed in the minute books
• A calendared refresh date, the stack should be reviewed annually, and immediately whenever your state’s law changes

​

Checklist

• Healthcare regulatory counsel engaged, state-specific and dental-experienced
• Dentist-owner represented by independent counsel
• Board and member consents adopted by both entities
• All five agreements executed in order
• Clinical carve-out enumerates the dental functions your state’s statute names
• Fee structure checked against the express formula rules in NV, NJ, NY, NC, and MD, plus every applicable state’s fee-splitting, referral, and control provisions
• North Carolina only: § 90-40.2 conspicuous warning included
• No production quotas or sales incentives anywhere in the clinical employment terms
• Noncompete provisions checked against current state law
• BAA inventory started
• Annual review date calendared

​

Next

​

Sources

1. Fla. Stat. § 466.0285, statute; RCW 18.32.675, statute; K.S.A. 65-1471, statute; Cal. S.B. 351 (2025), effective January 1, 2026, Benesch, California Enacts SB 351.
2. NRS 631.215(2)(i), statute; N.J.A.C. 13:30-8.13; 8 NYCRR 29.1(b)(4); 21 NCAC 16X .0101, rule PDF; NY AG, Aspen Dental settlement (June 18, 2015); California AG, Aspen Dental settlement (May 7, 2026).
3. N.C. Gen. Stat. § 90-40.2, enacted by S.L. 2012-195; NC Board of Dental Examiners, management arrangements page (S.B. 257 statement).
4. California AG Aspen settlement, above; terms detail: DLA Piper, CPOM enforcement: new pressure points (July 2026); Galkin v. SmileDirectClub, LLC, No. A-2867-19 (N.J. App. Div. June 11, 2021), official unpublished opinion.
5. Wis. Stat. § 447.06(1g), ch. 447 PDF; enforcement pattern: DSO enforcement and risk.
6. FTC, Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule (Sept. 5, 2025); removal of 16 C.F.R. pt. 910 effective Feb. 12, 2026, 91 Fed. Reg. (Feb. 12, 2026).
7. 45 C.F.R. § 164.504(e). eCFR.