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Published 11/1/2016
Manthan Bhatt

South Carolina Supreme Court Overturns Ban on Integrated Care

Decision allows physicians to employ physical therapists
In a major win for the American Association of Orthopaedic Surgeons (AAOS), the South Carolina Supreme Court agreed with two orthopaedic surgeons in their decade-long fight to protect the integration of physical therapy (PT) and physician services. In Joseph v. South Carolina Department of Labor, the court overturned a previous ruling and held that physician practices should be able to employ physical therapists.

This result could have a national impact on the ability of physicians to own ancillary services and is a major victory for patient care. The AAOS and the South Carolina Orthopaedic Association (SCOA) both invested significant time and resources into arguing that integrated PT services are in the best interest of patients.

"Not only did the court overturn the ban on physician-owned physical therapy, the Chief Justice in South Carolina sharply critiqued their prior interpretation as allowing 'anti-competitive protectionist legislation' that 'deprives physicians of their right to practice medicine in the best interests of their patients,'" said AAOS President Gerald R. Williams Jr, MD. "The AAOS has fought the ban on integrated care delivery in South Carolina for the last decade and will continue to fight for orthopaedic patients in order to ensure access to the highest quality care."

The origins of the suit date back to a previous court ruling that prohibited physical therapists from working in a physician's office and providing PT to the physician's patients through what are known as "in-practice referrals." In the 2004 Sloan v. South Carolina Board of Physical Therapy decision, the court interpreted the state's Physical Therapy Practice Act to be a blanket ban on in-practice referrals. There was no evidence of a problem with such referrals, however, and a ban was unnecessary because in-practice referral abuse is already prohibited in South Carolina. The decision caused many problems for patients, physicians, and physical therapists, and changed the way PT was practiced in South Carolina. The decision also made it more difficult for patients to access PT services.

In addition to citing the best interests of patients, the present court noted that the law does not bar doctors from employing speech therapists, occupational therapists, or nurse practitioners. "Neither the Sloan opinion nor Appellants have articulated any plausible reason as to why PTs are so different from other healthcare professionals that they must be singled out and provided disparate treatment for self-referral purposes," wrote Acting Justice Jean Hoefer Toal. "Accordingly, we overrule Sloan as an unconstitutional interpretation of section 40-45-110 (A)(1), and hold that the statute prohibits only referral-for-pay situations rather than prohibiting all employer-employee relationships between physicians and physical therapists."

The SCOA and AAOS worked tirelessly for many years to reverse the Sloan decision. Specifically, the SCOA was able to receive important resources and guidance through the AAOS State Legislative and Regulatory Issues Committee that contributed to the successful result in the current decision.

The South Carolina Department of Labor, Licensing, and Regulation and the state chapter of the American Physical Therapy Association may petition for a rehearing. The AAOS will remain engaged in the issue and keep members posted on any pending action on this decision.

AAOS position statement
This decision is in line with the AAOS arguments that orthopaedic surgeons have worked together with physical therapists for decades to provide high-quality, efficient, and convenient care to patients, and that orthopaedic surgeons are best qualified to prescribe clinical and cost-effective use of this service.

The AAOS, in an official position statement, believes "that current legislative efforts to disassemble integrated models of musculoskeletal care ignore many of the tangible benefits of clinical care coordination" and that "these efforts are antithetical to current healthcare reform efforts to pay for value instead of volume." The tangible benefits of clinical integration go beyond the overall reduction in the cost of treatment; integrated care enables the use of a common set of resources, technology, and space, leading to improvement in overall quality and efficiency.

According to evidence-based research and the AAOS official position statement, integrated PT enhances patient safety in the following ways:

  • ease of access
  • ease of scheduling
  • improved communication
  • patient compliance and satisfaction
  • common care pathways
  • appropriate and accurate orders
  • ability to modify care
  • improved physician oversight
  • improved safety
  • common electronic health record

The AAOS has long worked to protect physician-owned PT services. It has created a toolkit with talking points to help state societies navigate the issue. On the national level, the AAOS is vigilant and active in combating campaigns that would impede integrated PT services. For example, the AAOS is currently opposing a bill in the U.S. House of Representatives (HR 5088) that would ban Medicare reimbursement for integrated PT.

The AAOS has also worked closely with Senate Finance Committee Chairman Orrin Hatch (R-Utah). On July 11, 2016, Sen. Hatch held a committee hearing on Stark Law reform. The AAOS submitted comments to Sen. Hatch regarding the hearing and joined a February 2016 letter suggesting that the Stark Law can be modernized to reflect the evolution of healthcare delivery models.

For more information on this and other state advocacy issues, visit

For information on federal efforts to support PT and other ancillary services issues, visit

Manthan Bhatt is the manager, state government affairs, in the AAOS office of government relations. He can be reached at

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