7 Legal Issues Impacting Medical Practices

Key takeaways: Medical practices must balance exceptional patient care with strict compliance to federal and Colorado healthcare laws. Key legal issues include privacy and data protection, HIPAA enforcement, telehealth compliance, employment agreements, the Corporate Practice of Medicine doctrine, patient record-keeping, and medical malpractice.

While providing exceptional patient care is the primary responsibility of medical practices, it’s not the only concern they must address. There are many aspects to running a medical practice, and complying with legal regulations governing the healthcare industry must always be a point of emphasis. Doctors and practice managers must navigate a constantly shifting landscape of legal requirements that affect patient privacy, employment agreements, telehealth services, and the structure of the practice itself. In recent years, federal and Colorado laws have introduced new regulations that directly impact the ways medical practices must operate.

There are a wide range of legal issues that can impact your practice, and often these issues come with severe consequences that can potentially derail your business. The high stakes associated with these legal issues mean that it’s critical to work with an experienced business lawyer for medical practices who can help you navigate these issues.

The following overview will help you understand some of the most pressing legal issues impacting medical practices in Colorado. However, the best way to ensure your practice remains compliant with the latest laws and regulations is to consult with a business attorney who has extensive experience working with healthcare practices.

Colorado Privacy and Data Protection Laws

Patient privacy is one of the most pressing legal issues impacting healthcare practices. On the federal level, medical practices must comply with HIPAA’s requirements for safeguarding protected health information. But Colorado has also enacted state-level privacy rules that go beyond the regulations established by HIPAA:

• The Colorado Privacy Act (CPA, effective July 2023) – Grants patients consumer data rights, including recognition of Universal Opt-Out Mechanisms (UOOMs) such as Global Privacy Control (GPC).
  
  
• Breach Notification Law – Colorado requires notification of affected patients, and in some cases the Colorado Attorney General, following a data breach. This law applies to both medical and non-medical identifiers.

Key takeaway: Colorado practices must comply with HIPAA and CPA rules, honor GPC opt-outs, and follow strict breach notification deadlines.

Federal HIPAA Enforcement and Security Updates

HIPAA compliance was briefly mentioned above, but it deserves its own discussion. The Health Insurance Portability and Accountability Act (HIPAA) remains the foundation for protecting patient health data nationwide, and recent trends show stricter enforcement:

• The Office for Civil Rights (OCR) has increased penalties for practices that fail to prevent ransomware or phishing breaches.
  
  
• Proposed updates to HIPAA’s Security Rule would require:
• Multi-factor authentication
• Regular employee phishing training
• Stronger encryption

Key takeaway: Federal regulators are expanding HIPAA enforcement, so practices should adopt multi-factor authentication, employee training, and encryption even before updates become law.

Colorado Telehealth Compliance Laws

Telehealth has become an important tool used by healthcare practices. Medical providers significantly expanded their use of telehealth services during the COVID-19 pandemic, and it has now become an essential component of the services many medical practices offer.

Telehealth services are subject to specific Colorado regulations:

• Patient Consent – Providers must obtain and document patient consent (verbal or written) prior to delivering telehealth services. Written disclosures are required for initial visits, except in emergencies.
  
  
• Standard of Care – Telehealth visits must meet the same standard of care as in-person visits.
  
  
• Billing Compliance – Providers may only bill for services within their scope of practice.
  
  
• HIPAA/Medicaid Rules – All record keeping requirements remain in place.
  
  
• Licensure – Providers must be licensed in Colorado to deliver telehealth services to Colorado patients.

Key takeaway: Colorado telehealth rules require documented patient consent, equal standards of care, compliance with billing limits, and HIPAA-compliant recordkeeping.

Employment Agreements and Non-Compete Restrictions

Hiring and retaining physicians and healthcare staff is challenging, and Colorado law limits restrictive employment clauses:  

• Existing Colorado Law – Non-compete agreements for physicians are enforceable only in narrow situations, such as recovering certain damages.
  
  
• Senate Bill 25-083 (effective August 2025) – Senate Bill 25-083 further limits non-compete clauses for physicians, advanced practice nurses, physician assistants and dentists.

Key takeaway: Colorado medical practices must revise employment contracts to comply with Senate Bill 25-083, which significantly restricts non-compete agreements for healthcare providers.

Colorado’s Corporate Practice of Medicine (CPOM) Doctrine

Colorado’s Corporate Practice of Medicine (CPOM) doctrine prohibits non-physicians from owning or controlling medical practices. This rule exists to ensure that medical judgement remains in the hands of licensed professionals and prevents conflicts of interest where financial or corporate motives might negatively impact patient care.

It’s critical to ensure your medical practice is structured in a way that adheres to the terms of the CPOM doctrine:

• Rule – Only licensed physicians can control medical decisions.
  
  
• Business Model Workaround – Many practices use a physician-owned professional corporation (PC) that partners with a management services organization (MSO) for administrative tasks.
  
  
• Compliance requirement – Contracts must clearly separate clinical decision-making (physicians) from administrative functions (MSO).

Key takeaway: To comply with CPOM laws, Colorado medical practices must keep clinical control in physician hands and avoid agreements that let corporations influence medical decisions.

Colorado Medical Record-Keeping Laws

Colorado law establishes clear retention and custodianship rules for medical records:

• Adult Patients – Records must be kept for at least seven years after the last treatment.
• Minor Patients – Records must be kept until age 21, or seven years after the last treatment (whichever is later).
• Custodianship Plan – Every medical practice must have a written plan for record access if the physician retires, closes, or sells the practice.

Key takeaway: Colorado requires strict medical record retention timelines and written custodianship plans to ensure patients can access records during practice transitions.

Medical Malpractice Liability

Medical malpractice remains a significant risk for healthcare providers. While most doctors are highly skilled and take the proper measures to ensure patients receive the best possible care, there are instances when mistakes are made. Even with malpractice insurance, these lawsuits can be costly, time-consuming and damaging to your practice’s reputation. In the event that you face a malpractice lawsuit, it’s critical to prepare for these claims with strong documentation, compliance and legal support.

Key takeaway: Malpractice lawsuits are costly and reputation-damaging, so Colorado practices must carry proper insurance and work with experienced legal counsel.

Legal Help for Your Medical Practice

Whether you’re currently facing a legal issue or simply want to ensure your practice is in compliance with the complex web of laws governing the healthcare industry in Colorado, working with an experienced business attorney is critical to the ongoing success of your medical practice. At the Law Office of E.C. Lewis, we can ensure your practice is protected from these legal issues.

Elizabeth Lewis is a Denver business lawyer who has helped many medical practices navigate the complex legal environment they face. Her extensive knowledge of the federal and state laws governing medical practices will help you address just about any legal challenge that may arise. Elizabeth believes in building strong relationships with her clients based on trust and transparency. She takes the time to learn about the specifics of your practice in order to provide customized legal recommendations based on your unique needs. This approach ensures your practice’s best interests will be protected at all times.

Contact us today to schedule a consultation. The Law Office of E.C. Lewis serves medical practices and med spas in Denver and throughout Colorado.