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)	Excluded-person consequences depend on ownership, control, services, payments, and the applicable federal healthcare-program rule
Federal suspension or debarment	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 and Stark, AKS, and why comp design is constrained.

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.

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 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 and Plan for friendly-owner 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

Step 3: Form the PC

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. Full case treatment: DSO & dental case law.
2. NY AG, settlement with Aspen Dental Management (June 18, 2015).
3. California AG, settlement with Aspen Dental over corporate practice (May 7, 2026); terms detail: DLA Piper, CPOM enforcement: new pressure points (July 2026).
4. Galkin v. SmileDirectClub, LLC, No. A-2867-19 (N.J. App. Div. June 11, 2021), official unpublished opinion.
5. E.g., O.C.G.A. § 43-11-47(a)(7)(B) (six months, LLC interests), text; W. Va. Code § 30-4-16(g) (24 months), text. Full table: DSO laws by state.
6. HHS OIG, Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (May 8, 2013), pp. 15–16.