Closing A Physical Therapy Practice

It stands to reason that a physical therapy practice, that takes so much time, energy and legal formality to get off the ground, also takes effort and care to wind down and close. Especially in the cases of a professional corporation – the most often recommended structure of a physical therapy practice – there are legal, licensing, and ethical requirements a physical therapist should consider in closing a practice.

This article briefly highlights the significant issues in closing a practice and recommends that the practice owner(s) involves legal counsel in doing so. The most significant issues include transitioning patients and records, provider status and agreements, and finally, business wrap-up issues.

Transitioning Patients and Records

A physical therapist closing a practice has an obligation to patients which includes notification and potentially referrals for continuing care. But the most significant issue is avoiding patient abandonment.

Avoiding Patient Abandonment Patient abandonment is usually a form of negligence involving breach of a health care provider’s “duty” to the patient. California law defines it as when a health care provider: 1) withdraws from the care of a patient; and 2) fails to provide sufficient notice for the patient to seek the care of another practitioner.¹

California courts have stated:

  • As a general proposition, “a physician who abandons a patient may do so ‘only . . . after due notice, and an ample opportunity afforded to secure the presence of other medical attendance.’”²
  • “A physician cannot just walk away from a patient after accepting the patient for treatment. . . . In the absence of the patient’s consent, the physician must notify the patient he is withdrawing and allow ample opportunity to secure the presence of another physician.”³
  • “When a competent, informed adult directs the withholding or withdrawal of medical treatment, even at the risk of hastening or causing death, medical professionals who respect that determination will not incur criminal or civil liability: the patient’s decision discharges the physician’s duty.”⁴

Patient abandonment can be the basis of a negligence lawsuit or can be grounds for license discipline. In fact, the Physical Therapy Board (“Board”) sets forth “failure to provide medical records to patient” and “patient abandonment” as possible reasons for a complaint on its Consumer Complaint Form.⁵

To avoid patient abandonment claims, the practice owner needs to review and assess the status of current patients, notify them of the closure, and discern whether they require a referral for ongoing care. An interruption or delay in care that impacts patient progress or rehabilitation should be avoided.

Steps to Notify or Transition Patients To professionally and ethically terminate the “agreement” to treat a patient established by the physical therapist-patient relationship, it is recommended that the physical therapist follow five steps to avoid patient abandonment:

  • Written Notice Provide the patient with a written notice (preferably delivered by certified mail, return receipt requested); this addresses one of the major components of abandonment—lack of notice.
  • Brief Explanation Explain that the practice is closing and the date.
  • Continued Treatment Offer continued treatment for a reasonable period of time to allow the patient to arrange for alternative care from an equally qualified provider.
  • Referral/Recommendation – Provide recommendations or resources to help the patient secure an equally qualified provider.
  • Transition – Agree to transfer records to the patient’s new provider if the patient provides signed authorization to do so.

Taking the time and care to perform these steps will help avoid any claim of patient abandonment. In addition, physical therapists should consult their health care law attorneys regarding this issue.

Patient Records – Another complex issue in closing a practice involves the medical records. The Health and Safety Code governs patient access to health records and physical therapists.⁶ Citing the Health and Safety Code, the Board provides guidelines on medical records, including regarding retaining the records for seven years from date of last visit, except for minors (keep for 1 year after they turn 18), the duty to provide records upon request, clinic ownership of records, and charging for copies.⁷

Besides transitioning for patient care, practice owners closing their practice must plan for how patients will access their records. In the case of the sale of the practice, the purchaser often “buys” the records and assumes responsibility for maintaining them. But in the case of a practice closure, the practice owner needs to make every documented attempt to get the records to the patients or subsequent treaters or may have to make them available upon request.

Provider Agreements and Other Contracts

The decision to close is one often resulting from necessity. But a practice owner must consider the impact of his or her legal obligations as a provider for health insurance plans or any other contract obligations with agencies, hospitals, etc. By closing the practice, is the physical therapist unable to fulfill obligations or breaching any contracts? Are there notice requirements for a change in circumstances? It is important to review all contractual obligations in conjunction with closing a practice, and far enough in advance to provide required notice.

Business Wrap-Up Issues

Beyond the health care obligations discussed above, which can impact the practitioner’s license and future, a professional corporation must be properly wrapped up and dissolved. As a separate legal entity, the owner(s) must file a Certificate of Election to Dissolve with the Secretary of State after a 50% vote of the voting shares approve dissolution. In addition, the owners must address the issue of taxes, including filing final tax returns, payment of corporate debts and obligations, and then distributing any assets among the shareholders.

For this process, the practice owner will need the assistance of an accountant and a lawyer familiar with these requirements.


Closing a practice requires the owner(s) to address the issues raised above to protect their license going forward, and to reduce risk of liability for delay in care or lack of patient referral, or tax or corporate liability for improperly dissolving or winding up. Further, dissolving the corporate entity requires the owner(s) to address outstanding liabilities and to distribute assets. It is far from as simple as just closing, and physical therapists need to plan and protect themselves in this process.


¹ See California Civil Jury Instructions, 509.
² Payton v. Weaver (1982) 131 Cal.App.3d 38, 45.
³ Hongsathavij v. Queen of Angels/Hollywood Presbyterian Medical Center (1998) 62 Cal.App.4th 1123, 1138.
⁴ Thor v. Superior Court (1993) 5 Cal.4th 725, 743., page 2.
⁶ Health and Safety Code section 123105(a)(12).
⁷ See


Steven L. Simas, Esq. is the founding attorney of the Government and Administrative Law firm of Simas & Associates, Ltd., in Sacramento, San Diego, San Jose, San Luis Obispo, and Santa Monica, California. Mr. Simas practices in the areas of Healthcare Regulation, Professional Licensing and Regulation, and Workplace and Employment Regulation. The firm has proudly served as legal counsel to the California Physical Therapy Association since 2004 and can be reached at