> ## 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.
# Run a CPOD self-audit
> Audit a DSO-PC structure across employment, records, clinical authority, bank control, fees, compensation, assets, ownership, state filings, and Medicaid utilization.
A **CPOD self-audit** compares a dental support organization (DSO) structure's actual operations with the documents and applicable corporate-practice-of-dentistry rules. Run it on a regular schedule and after a material state-law or operational change. The first pass can often be completed in a day, with counsel handling the state-specific conclusions and remediation.
Several states define owning or operating a dental office as the practice of dentistry, and some attach criminal penalties. Texas, for example, treats unauthorized practice as a third-degree felony and each day as a separate offense.3 Courts may also evaluate the agreement stack as a whole. In *In re OCA*, the Fifth Circuit voided interlocking service agreements because the orthodontists "were essentially only left with control over diagnosing and treating their patients."1 In the related *Packard v. OCA* decision, the management company could not recover nearly \$\$5 million it had paid under the unlawful arrangement.2 Apply those cases only within their governing law and facts.
Involve healthcare counsel in the scoring and remediation. Before starting, ask counsel whether the review should be directed and documented in a way that preserves any available privilege.
## Prerequisites
* The management services agreement (MSA) and full agreement stack
* Board minutes for both entities
* Bank account signer and access lists for every entity
* Actual compensation plans for every dentist and hygienist, rather than only a policy summary
* Org chart showing who employs whom
* Marketing materials, signage photos, and the website
* Your state's page in [DSO laws by state](/reference/legal/dso-laws-by-state)
## The audit
Score each item **Pass / Concern / Fail**. Any Fail is a remediation item with an owner and a date.
### 1. Employment
| Question | Pass looks like |
| -------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Who employs the dentists? | The **PC**, on PC-issued W-2s, paid from the PC's account |
| Who employs hygienists and dental assistants? | Document the result of the state's analysis. Several states restrict non-dentist supervision of clinical staff, and Kansas addresses it expressly.4 |
| Who employs front-desk, billing, operations, and other non-clinical staff? | The entity permitted by state law and identified in the agreement stack |
| Do employees know which entity employs them? | Yes. Offer letters, W-2s, payroll records, and the organization chart should agree. |
| Who signs dentist employment agreements? | The PC's officer. See [Draft dentist employment agreements](/guides/agreements/draft-dentist-employment-agreements) |
### 2. Dental records
| Question | Pass looks like |
| -------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Who owns or controls patient records, including radiographs, charts, and models? | Follow the applicable state rule and state the allocation in the MSA. Kansas, among other states, expressly restricts non-dentist ownership of patient records.4 |
| Who controls access and release? | The PC |
| What happens to records on MSA termination? | The PC retains them; the MSA says so |
| Do the PMS and imaging vendor contracts acknowledge PC ownership? | Yes |
| Can the practice's dentists access all patient records without DSO involvement? | Yes, immediately |
### 3. Clinical authority
| Question | Pass looks like |
| --------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Who diagnoses and sets treatment plans? | The **dentist**, with no DSO review, ranking, or "same-day treatment" targets layered on top |
| Who decides whether to accept or dismiss a patient? | The dentist or professional entity where state law requires. Kansas expressly restricts transfer of patient-acceptance authority.4 |
| Who selects materials, dental labs, and implant systems? | The PC specifies; the DSO procures |
| Who sets scheduling templates, visit lengths, and hygiene recall intervals? | Allocate these decisions under the applicable state's clinical-control rules. Recent laws address scheduling and patient volume specifically; check the [legislation tracker](/reference/legal/dental-legislation-tracker). |
| Who assigns CDT codes, and can the dentist reject a coding change? | The PC; yes, documented |
| Who conducts clinical peer review and quality review? | The PC, with a dentist reviewer |
### 4. Money
*In re OCA* treated bank-account authority as one important part of the overall control analysis. OCA controlled the operating account, and the orthodontists could not withdraw their own funds.1 Review account authority alongside the other agreements and operating practices.
| Question | Pass looks like |
| -------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- |
| Where do payer EFTs land? | The **PC's** operating account |
| Where do patient card payments settle? | The PC's account |
| Who is the signer on the PC's accounts? | The PC's licensed officer |
| Does the DSO have withdrawal authority over PC accounts? | **No.** No standing sweep, no ACH debit authorization, no DSO signer |
| How does the management fee move? | On an **invoice**, paid by the PC, after clinical payroll. See [Move money between PC and DSO](/guides/banking/move-money-dso-pc) |
| Is the fee paid in cash, or accrued indefinitely? | Paid in cash |
| Are there any shared accounts? | No |
| Are there transfers with no invoice or note? | No |
### 5. The fee
| Question | Pass looks like |
| ------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Is the structure lawful in each professional entity's state? | Confirm with local counsel and document the analysis. Percentage-of-revenue fees face express restrictions in Nevada, North Carolina, New York, and New Jersey and were addressed in the 2015 New York and 2026 California Aspen settlements. Check each state's page.5 |
| Is there current fair-market-value documentation? | Yes, within 12 months. See [Set the management fee](/guides/agreements/set-the-management-fee) |
| Does the fee leave the PC able to pay its obligations? | Fee-coverage ratio above 1.0, not just during the ramp |
| Has the fee ever been repriced retroactively? | No |
| Is there a documented fee review or negotiation where required by the governing law or agreement? | Document it. The 2026 California Aspen settlement requires an annual negotiation in that settlement's covered arrangements.6 |
### 6. Compensation and production management
Compensation and performance-management records receive close attention in dental enforcement. Kool Smiles clinics "pressured and incentivized dentists to meet production goals" through discipline and cash bonuses,7 and Samson Dental Partners settled an allegation that it violated Indiana's corporate-practice law "by rewarding production, disciplining employees for not meeting production objectives, and directing personnel in a manner which compromised clinical judgment."8
| Question | Pass looks like |
| --------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Does any dentist or hygienist have production quotas or targets set by the DSO? | **No** |
| Are bonuses tied to production, revenue, or specific procedure counts? | Review under the state's law and the facts. The 2026 California Aspen settlement bars specified sales incentives to clinical staff after hygienists received $50–$100 per aligner sale.6 |
| Is anyone on the clinical team disciplined, ranked, or terminated for "under-production"? | **No** |
| Do daily huddles, dashboards, or scorecards use per-provider production to pressure clinical decisions? | No. Distinguish operational capacity reporting from metrics that influence treatment judgment. |
| Is there a documented channel for the clinical team to raise overutilization concerns, with responses recorded? | **Yes.** DOJ cited ignored dentist complaints as evidence of knowledge in the Kool Smiles matter.7 |
### 7. Assets, premises, and the statutory definition
Some states define owning or operating a dental office as the practice of dentistry. Texas reaches a person who "owns, maintains, or operates an office or place of business" that engages another to practice dentistry. North Carolina uses the terms "owns, manages, supervises, controls or conducts."3 Test the full arrangement against the text in each state.
| Question | Pass looks like |
| --------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Who owns the operatory equipment? | Follow the state's rule. Colorado's Rule 1.7 provisions, scheduled to become operative January 1, 2027, limit a real-property-only lessor path when the same person also supplies dental material or equipment. Kansas restricts non-dentist ownership of dental equipment outside permitted leases and financing.4, 9 |
| Who holds the office lease? | Follow the state's rule. Colorado's scheduled Rule 1.7 permits a real-property-only lessor path only when the same person does not also furnish dental material or equipment.9 |
| Do the asset purchase, MSA, leases, employment agreements, and actual operations give the DSO the attributes of owning or operating the office under state law? | Review the documents together. The OCA court evaluated the interlocking agreements as a whole and did not preserve them through severability.1 |
| Are the term and exit provisions defensible? | No decades-long lock-ins; the 40-year OCA terms were part of the totaled-up control1 |
### 8. Governance and formalities
| Question | Pass looks like |
| ----------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- |
| Does the PC have a minute book with current-year consents? | Yes |
| Do the minutes document clinical governance by the dentist-owner? | Yes, including protocols, staffing, quality, laboratory, and materials decisions where those matters require professional control |
| Are all entities in good standing in every state? | Yes. See [Maintain corporate formalities](/guides/formation/maintain-corporate-formalities) |
| Are officers and directors licensed dentists where required? | Yes |
| Has the agreement stack been reviewed in the last 12 months? | Yes. See [Get agreements reviewed](/guides/agreements/get-agreements-reviewed) |
### 9. The friendly dentist
| Question | Pass looks like |
| ---------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Does the owner actually practice or perform documented duties? | Yes, with time records for the governance role. See [Vet a friendly dentist](/guides/formation/vet-a-friendly-dentist) |
| Could they describe the practice's operations to a board investigator? | Yes |
| Do they have their own counsel? | Yes |
| Can the DSO remove or replace them unilaterally, at will? | **No.** The 2026 California Aspen settlement bars replacing practice owners, and the California AG has argued in an amicus brief that even a **reserved** right to replace owners violates the corporate-practice bar6 |
| Is the transfer restriction drafted against current state law? | Yes. See [Draft a stock transfer restriction](/guides/agreements/draft-stock-transfer-restriction) |
| Is there a screened, willing successor? | Yes |
### 10. Trade name and public presentation
Dentistry's corporate-practice doctrine grew out of storefront advertising dentistry, which is why trade names and holding out are regulated alongside ownership.
| Question | Pass looks like |
| ------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Whose name is on the door, the website, and the advertising? | The practice's legal or registered trade name; ownership identified where state law requires |
| Do ads imply the DSO provides the care? | Review this under state law. The 2015 New York Aspen settlement requires specified disclosures that offices are independently owned and operated.10 |
| Does the state require dental trade-name registration or pre-approval? | Confirm and file where required. Mississippi requires board pre-approval, and Oklahoma registers dental trade names with the board.11 |
| Do patient-facing materials, statements, and card descriptors identify the practice, not the DSO? | Yes |
| Does anything public imply the DSO employs the dentists? | No |
### 11. State filings and new laws
| Question |
| ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| Does the state regulate the actor in your facts, such as a Texas or Kansas support entity, Nevada dental business manager, Arizona entity offering care, or New Mexico non-dentist owner? Is the correct filing current and calendared? See [Register a DSO](/guides/compliance/register-a-dso). |
| Does the state enumerate **permissible management services**, and is the MSA's service list inside the enumeration? |
| Does a 2025–2026 development change the analysis, including California SB 351, Colorado's proprietorship rules, or North Carolina's 2026 revision? Check the [state table](/reference/legal/dso-laws-by-state) and [legislation tracker](/reference/legal/dental-legislation-tracker). |
| Does the state void or restrict dentist noncompetes? |
| Is percentage-based fee compensation permitted? |
### 12. Medicaid utilization, if you take it
Include program-integrity controls in the review even though they are not strictly part of a corporate-practice test. Dental False Claims Act matters have combined management-control allegations with Medicaid utilization issues, and a 2013 Senate report asked HHS to consider corporate-practice evasion as a program-integrity concern.12
| Question | Pass looks like |
| -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Do you monitor per-provider rates for flagged procedure families such as pulpotomies, stainless-steel crowns, surgical-coded extractions, scaling and root planing, and behavior management? | Yes. Compare against appropriate peer benchmarks and have clinical outliers reviewed by qualified dental personnel. OIG uses similar comparisons in questionable-billing analyses.13 |
| Are treatment-consent practices for pediatric patients documented and audited? | Yes |
| If a payer or state has flagged utilization, was the response clinical review rather than production defense? | Yes, documented |
## Scoring and remediation
| Severity | Examples | Timeline |
| ------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- |
| **Critical** | Actual operations violate an identified state ownership, employment, record, account-control, or clinical-independence rule; unsupported treatment pressure or claims; commingled funds without a lawful, documented architecture | Immediately |
| **High** | Percentage fee in a state that bans it; missing DSO registration in a registration state; no invoice for the fee; DSO directs coding; unilateral owner-removal right; owner cannot describe the practice | 30 days |
| **Medium** | Stale FMV documentation; missing minutes; ads implying the DSO provides care; no utilization monitoring on a Medicaid book | 90 days |
| **Low** | Naming inconsistencies; documentation gaps | Next cycle |
A finding with no recorded fix is worse than no audit.
## The one-question version
If you do nothing else:
> **If your state's dental board reviewed the full agreement stack and actual operations, what evidence would show that the dentists retain the authority state law requires?**
The second answer is the losing fact pattern, per *In re OCA*.1 If the honest answer is "the board would say the DSO runs everything," you have a structure that exists until someone looks at it.
## Verify it worked
* [ ] All twelve sections scored, counsel involved in scoring and remediation
* [ ] Privilege question addressed before starting
* [ ] Clinical compensation and performance measures reviewed under current state and federal law, using the actual plans rather than only policy summaries
* [ ] Bank answers verified against the signer lists, not the MSA's recitals
* [ ] Asset, lease, and records answers checked against the state's statutory definition of practicing dentistry
* [ ] Trade name and advertising reviewed against state disclosure and registration rules
* [ ] DSO registration filed where required, renewal calendared
* [ ] Medicaid utilization monitoring running, with clinical review of outliers documented
* [ ] Every Fail has an owner and a date; remediation documented
* [ ] Next audit calendared
## Sources
1. *In re OCA, Inc.*, 552 F.3d 413 (5th Cir. 2008). [Opinion](https://caselaw.findlaw.com/court/us-5th-circuit/1452605.html); [CourtListener](https://www.courtlistener.com/opinion/1248059/in-re-oca-inc/).
2. *Packard v. OCA, Inc.*, 624 F.3d 726 (5th Cir. 2010). [Opinion](https://caselaw.findlaw.com/court/us-5th-circuit/1542656.html).
3. Tex. Occ. Code § 251.003(a)(4) (definition) and § 256.001 (third-degree felony), applied in *In re OCA* (n.1); N.C. Gen. Stat. [§ 90-29(b)(11)](https://www.ncleg.gov/enactedlegislation/statutes/html/bysection/chapter_90/gs_90-29.html).
4. [K.S.A. 65-1471](https://ksrevisor.gov/statutes/chapters/ch65/065_014_0071.html) (contract limits: treatment, patient acceptance, records, equipment, clinical-staff supervision).
5. [NRS 631.215](https://nevada.public.law/statutes/nrs_631.215) (Nevada percentage-fee ban); [21 NCAC 16X .0101 (PDF)](http://ncdentalboard.org/PDF/21%20ncac%2016x%20.0101.pdf) (North Carolina). New York and New Jersey treatment per the state pages in [DSO laws by state](/reference/legal/dso-laws-by-state); verify with counsel.
6. 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); term detail per DLA Piper, [CPOM enforcement alert](https://www.dlapiper.com/en/insights/publications/2026/07/corporate-practice-of-medicine-enforcement) (July 2026), which also covers the AG's *Art Center Holdings* amicus on reserved owner-replacement rights.
7. DOJ, [Benevis and Kool Smiles clinics pay \$\$23.9 million](https://www.justice.gov/opa/pr/dental-management-company-benevis-and-its-affiliated-kool-smiles-dental-clinics-pay-239) (Jan. 10, 2018).
8. USAO W\.D. Ky., [\$\$5.1 million settlement with Indiana dental firm](https://www.justice.gov/usao-wdky/pr/51-million-dollar-settlement-reached-indiana-dental-firm-resolve-false-claims) (Nov. 6, 2018).
9. Colo. Dental Board Rule 1.7 under S.B. 25-194 (2025). Dykema, [Colorado Dental Board promulgates DSO regulations](https://www.dykema.com/news-insights/colorado-dental-board-promulgates-regulations-on-dsos-effective-january-1-2027.html).
10. 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).
11. Mississippi Board of Dental Examiners, [Regulation 55](https://www.dentalboard.ms.gov/sites/dentalboard/files/regulation55.pdf); [59 O.S. § 328.31](https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=95493).
12. Senate Committee on Finance & Sen. Grassley, [Joint Staff Report on the Corporate Practice of Dentistry in the Medicaid Program](https://www.finance.senate.gov/download/joint-staff-report-on-the-corporate-practice-of-dentistry-in-the-medicaid-program-print-113-16), S. Prt. 113-16 (June 2013).
13. HHS OIG, Questionable Billing for Medicaid Pediatric Dental Services: [California, OEI-02-14-00480](https://oig.hhs.gov/oei/reports/oei-02-14-00480.asp) (May 2015), and companion reports for New York, Louisiana, and Indiana. The full settlement record is collected on the [DSO enforcement tracker](/reference/legal/dso-enforcement-tracker).