> ## 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 5: Sign the agreement stack

> The five core documents that bind a DSO and a PC into one business, with the dental overlays: percentage-fee bans, North Carolina's conspicuous-warning rule, and a clinical carve-out that enumerates dental functions.

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.

**Use a healthcare regulatory attorney licensed in the relevant state who has experience with dental structures.** The MSA and related documents need state-specific drafting because ownership, control, fee, and notice rules differ materially among states such as Texas, California, Kansas, and North Carolina. See [Hire healthcare counsel](/guides/agreements/get-agreements-reviewed).

## 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 the DSO's services, the PC's payment obligations, and the authority reserved to the PC and licensed professionals.

The MSA should describe the services with enough detail to administer and test them, including administrative support, non-clinical personnel, premises, equipment, information technology, billing and collection support, marketing, and financial services. It should also state the fee and calculation method and reserve clinical authority 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 state-specific. It tracks functions identified in dental statutes. Florida's § 466.0285(2) reaches treatment selection, records, pricing, refunds, warranties, personnel, and hours. Washington's DSO statute contains ten enumerated clinical-interference prohibitions. Kansas voids contract terms giving a non-dentist control over treatment, patient acceptance, records, and clinical supervision. California's SB 351 expressly covers dental practices and adds patient volume, provider schedules, coding and billing decisions, and equipment selection.<sup>1</sup>

**Review the fee under each applicable state's rules.** 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.<sup>2</sup> Flat and cost-plus formulas still require lawful services, control allocation, calculation terms, commercial support, and any applicable fee-splitting or referral analysis. See [Set the management fee](/guides/agreements/set-the-management-fee), [Fee-splitting rules, explained](/concepts/model/fee-splitting), and [MSA clause anatomy](/reference/legal/msa-clause-anatomy).

**North Carolina requires specific warning language.** A management arrangement executed since 2013 is **invalid** unless it includes 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.<sup>3</sup> Confirm that the required language appears in any covered North Carolina agreement.

### 2. Stock transfer restriction agreement

**What it does:** Defines 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](/reference/legal/dso-laws-by-state#death-and-transition-windows).

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.<sup>4</sup>

See [Draft the stock transfer restriction agreement](/guides/agreements/draft-stock-transfer-restriction).

### 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:

* **Review production metrics and sales incentives carefully.** Wisconsin voids patient and procedure quotas in dentist employment contracts by statute, and quota-and-bonus systems for clinical staff have appeared in dental enforcement matters, from the Aspen settlements to Medicaid FCA cases.<sup>5</sup> Compensation based on a clinician's personally performed services may be permissible, but it still requires state and federal review. Do not tie clinical pay to selling specified 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.<sup>6</sup> 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.<sup>2</sup>

See [Draft dentist employment agreements](/guides/agreements/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).<sup>7</sup>

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](/guides/agreements/draft-a-baa).

### 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.

The brand license may be included in the MSA or documented separately, particularly when several PCs use the same brand. Check the trade-name overlay because some dental boards must approve or register the practice name. See [Step 3](/start/zero-to-paid/form-the-pc).

## The order they get signed in

The sequence matters because several documents reference each other.

<Steps>
  <Step title="Both entities exist and have EINs">
    Complete formation before an entity signs an agreement as a party.
  </Step>

  <Step title="Board and member consents authorizing the transactions">
    The PC's board authorizes entering the MSA; the DSO's members or board do the same. These consents are the evidence that both entities acted independently.
  </Step>

  <Step title="Stock transfer restriction agreement">
    Signed at or immediately after share issuance, so the restrictive legend on the certificate has something to reference.
  </Step>

  <Step title="Management services agreement">
    Align the effective date with the start of services. In a registration state, execution or effectiveness may start a DSO filing clock.
  </Step>

  <Step title="IP and brand license">
    Referenced by the MSA if separate.
  </Step>

  <Step title="Business associate agreement">
    Put it in place before the DSO handles protected health information on the PC's behalf.
  </Step>

  <Step title="Dentist employment agreements">
    Including the friendly owner's. Signed before the first day of clinical work.
  </Step>

  <Step title="Downstream BAAs">
    With the PMS, clearinghouse, and any billing vendor, before go-live.
  </Step>
</Steps>

## The independence test

Before signing, review the stack as if the DSO and PC were unrelated parties negotiating at arm's length:

* 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?
* Does each party have a termination right it can use under realistic conditions?

A no answer identifies a clause for counsel to revisit in the state-specific control and fee analysis.

## 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 annual review date, plus a process to review the stack when applicable 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

<Card title="Step 6: NPIs, taxonomy, and CAQH" icon="arrow-right" href="/start/zero-to-paid/get-npis-and-caqh">
  Obtain the identifiers and maintain the profile used in payer enrollment.
</Card>

## Sources

1. Fla. Stat. § 466.0285, [statute](https://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute\&URL=0400-0499/0466/Sections/0466.0285.html); RCW 18.32.675, [statute](https://app.leg.wa.gov/rcw/default.aspx?cite=18.32.675); K.S.A. 65-1471, [statute](https://ksrevisor.gov/statutes/chapters/ch65/065_014_0071.html); Cal. S.B. 351 (2025), effective January 1, 2026, Benesch, [California Enacts SB 351](https://www.beneschlaw.com/insight/california-enacts-sb-351-new-restrictions-on-private-equity-and-hedge-fund-involvement-in-physician-and-dental-practices/).
2. NRS 631.215(2)(i), [statute](https://nevada.public.law/statutes/nrs_631.215); N.J.A.C. 13:30-8.13; 8 NYCRR 29.1(b)(4); 21 NCAC 16X .0101, [rule PDF](http://ncdentalboard.org/PDF/21%20ncac%2016x%20.0101.pdf); NY AG, [Aspen Dental settlement](https://ag.ny.gov/press-release/2015/ag-schneiderman-announces-settlement-aspen-dental-management-bars-company-making) (June 18, 2015); California AG, [Aspen Dental settlement](https://oag.ca.gov/news/press-releases/attorney-general-bonta-announces-settlement-aspen-dental-over-corporate-practice) (May 7, 2026).
3. N.C. Gen. Stat. § 90-40.2, enacted by [S.L. 2012-195](https://www.ncleg.gov/EnactedLegislation/SessionLaws/HTML/2011-2012/SL2012-195.html); NC Board of Dental Examiners, [management arrangements page](http://www.ncdentalboard.org/management_arrangements.htm) (S.B. 257 statement).
4. California AG Aspen settlement, above; 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); *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. Wis. Stat. § 447.06(1g), [ch. 447 PDF](https://docs.legis.wisconsin.gov/statutes/statutes/447.pdf); enforcement pattern: [DSO enforcement and risk](/concepts/model/dso-enforcement-and-risk).
6. FTC, [Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule](https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-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)](https://www.federalregister.gov/documents/2026/02/12/2026-02866/revision-of-the-negative-option-rule-withdrawal-of-the-cars-rule-removal-of-the-non-compete-rule-to).
7. 45 C.F.R. § 164.504(e). [eCFR](https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-C/part-164/subpart-E/section-164.504).