> ## 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.
# Vet and select a friendly dentist-owner
> Sourcing, primary source license verification, disciplinary and exclusion checks, the genuine-practice test, conflict disclosure, and the reliability factors that decide whether the arrangement lasts.
The dentist-owner may hold all of a professional entity's equity, serve in its governance roles, and bear licensure exposure, depending on the state's entity rules. Complete this diligence **before** issuing the ownership interest. Replacing an owner later can require a transfer, governance approvals, payer filings, and sometimes a new tax identifier.
## Prerequisites
* Your launch state and its dental licensure requirements identified
* Counsel engaged
* A written role description covering both compensation streams
## Sourcing
| Source | Durability | Notes |
| -------------------------------------------------- | ---------- | ------------------------------------------------------------------ |
| **Your dentist co-founder or clinical lead** | Highest | Incentives already aligned; the structure describes something real |
| **A practicing dentist recruited into the role** | High | Practices in the office, chairs quality review, owns the PC |
| **A professional nominee / dentist-owner network** | Lowest | Used in multi-state groups; highest regulatory scrutiny |
See [The friendly PC, explained](/concepts/model/the-friendly-pc) for why this ranking matters.
## The genuine-practice test
Assess whether the dentist can explain the practice's locations, clinical team, protocols, patient population, and recent professional decisions to a board investigator. That knowledge may come from practicing in the office or from genuine, documented governance. *Northfield* illustrates the risk of an owner whose authority existed only in the documents.1
The corollary: **the DSO must not hold the power to remove the owner at will.** California's 2026 settlement with Aspen Dental prohibits the DSO from replacing a practice owner with a dentist of its choosing and from requiring forfeiture of ownership when the management relationship ends, and the California AG has argued in pending litigation that a management company's merely *reserved* right to replace owners itself violates the corporate practice doctrine.2 An owner who can be swapped out by the manager is not an owner. Pick someone you would keep.
## Steps
Not a copy they send you. Check the **state dental board's** own verification system. Confirm: active status, no restrictions, expiration date, and the exact name and license number.
For multi-state candidates, verify in every state where they'd own an entity.
Check the dental board's public disciplinary records in every state where the candidate has held a license. Ask in writing about past or pending actions and reconcile the response with the public record.
* [**OIG List of Excluded Individuals/Entities**](https://exclusions.oig.hhs.gov/), with consequences tested against the person's ownership, control, services, and federal healthcare-program payments
* [**SAM.gov**](https://sam.gov/), a separate federal suspension and debarment check
* **State Medicaid exclusion lists**, many states maintain their own
Document each check with a date and a saved result. Set the covered population and cadence from applicable payer, program, state, contract, and risk requirements. Monthly LEIE screening is the lowest-gap practice because OIG updates the list monthly; do not assume that statement creates a universal monthly SAM.gov rule. See [Set up your compliance calendar](/start/first-90-days/compliance-calendar).
If the group will bill Medicaid, confirm the candidate's standing with the state program and relevant dental benefit administrators. Ask about any prior termination or payment suspension. If the dentist will bill Medicare for oral surgery, DMEPOS, or another covered pathway, also verify PECOS and opt-out status. See [Enroll in Medicaid](/guides/enrollment/enroll-in-medicaid).
Request a carrier loss run and, where appropriate, ask the dentist to run an **NPDB self-query** and share the result. Malpractice history affects both insurability and payer credentialing.
Ask which other professional entities the candidate owns or has an interest in. Ownership of a competing practice or agreements with other DSOs may create conflicts and diligence issues.
A candidate who owns many unrelated professional entities may have conflicts, limited capacity, or little operational knowledge of your practice. Investigate the actual governance role rather than relying on a nominal title.
Less formal, equally important:
* Do they intend to practice or genuinely govern, and do they have the time?
* Are they geographically stable?
* Are they financially stable? Their creditors could in principle reach their shares.
* Immigration status where relevant, because visa terms may affect ownership or employment. Ask counsel.
* Would they accept a transfer restriction agreement with dentist-eligible successors?
* Can they name a plausible successor?
The candidate should choose and direct independent counsel. The group may pay the fee if properly documented, but it should not control the advice. An unrepresented owner may not understand the obligations and can make the arrangement look captive.
Every verification, dated, with the source. This file is what you produce in diligence and what demonstrates you exercised care.
## Red flags
| Flag | Why it matters |
| ------------------------------------------------------ | ---------------------------------------------------- |
| Wants compensation as a percentage of practice revenue | Fee-splitting exposure in most states |
| Won't get their own counsel | The arrangement is easier to characterize as coerced |
| Owns many PCs, can't describe any | The *Northfield* pattern |
| Any exclusion, debarment, or Medicaid list hit | Disqualifying |
| Board disciplinary history | May trigger a transfer under your own agreement |
| Uninterested in clinical governance duties | You are building a straw ownership arrangement |
| Won't sign a transfer restriction | No succession mechanism |
| Discrepancy between disclosure and your findings | Judgment problem, independent of the underlying fact |
## Verify it worked
* [ ] Primary source license verification from the state dental board, dated and saved
* [ ] Disciplinary history reviewed in every relevant state
* [ ] OIG LEIE clear, documented
* [ ] SAM.gov clear, documented
* [ ] State Medicaid exclusion lists clear
* [ ] Medicaid enrollment standing confirmed
* [ ] Malpractice history reviewed
* [ ] Other-PC ownership disclosed in writing
* [ ] The candidate could describe the practice to a board investigator
* [ ] Independent counsel engaged by the dentist
* [ ] A named successor candidate identified
* [ ] Monthly re-screening added to the compliance calendar
## Common failure modes
| Failure | Consequence |
| ---------------------------------------------------------------- | -------------------------------------------------------------- |
| Accepting a license copy rather than primary source verification | The license may be restricted or expired |
| Skipping exclusion checks | Civil monetary penalty exposure; tainted Medicaid billing |
| Not re-screening monthly | An exclusion after onboarding goes undetected |
| No written conflict disclosure | Diligence surprise; competing obligations |
| Dentist unrepresented | Weakens the arrangement for both sides |
| At-will removal rights over the owner | The provision regulators now attack directly |
| No successor identified | A single event freezes the entity holding your payer contracts |
## Sources
1. *Allstate Insurance Co. v. Northfield Medical Center, P.C.*, 228 N.J. 596, 159 A.3d 412 (2017). [Opinion](https://www.njcourts.gov/system/files/court-opinions/2017/a_27_15.pdf). A medical case, but the nominal-owner fact pattern is the one dental regulators cite.
2. California AG, [settlement with Aspen Dental Management](https://oag.ca.gov/news/press-releases/attorney-general-bonta-announces-settlement-aspen-dental-over-corporate-practice) (May 7, 2026, subject to court approval); DLA Piper, [Corporate practice of medicine enforcement](https://www.dlapiper.com/en/insights/publications/2026/07/corporate-practice-of-medicine-enforcement) (July 2026), describing the AG's amicus position in *Art Center Holdings v. WCE CA Art, LLC*.