If you run a med spa or aesthetics practice, here’s a development worth two minutes even if you’re nowhere near New York. The state built a multi-agency task force, sent it into med spas, and the results tell you where med spa enforcement is heading everywhere.

And if your reaction is “my structure is fine, my consultant set up the MSO,” that’s the sentence I want to talk you out of.

What happened

In January 2026, the New York Department of State announced the first results of a coordinated med spa task force: 223 inspections and 87 citations. It pulls together the Department of State, NYSED, the Department of Health, the Office of Professional Medical Conduct, the NYC Office of Investigation, and the Attorney General. Inspectors reported expired and suspected counterfeit products and on-site controlled substances, including fentanyl, xylocaine, and propofol. The state said plainly: this is not a one-time sweep. It’s ongoing.

The shift everyone misses

The number that matters isn’t 223 or 87. It’s the word proactive. Med spa oversight used to be complaint-driven: somebody got hurt, somebody filed a complaint, then the state showed up. This task force flips that. Six agencies are now walking into med spas nobody complained about, looking for problems.

The legal read: CPOM and the fee-splitting test

Two doctrines do the work here, and most owners can only name one.

First, corporate practice of medicine (CPOM). New York bars non-physicians from owning a medical practice, so the typical structure splits in two: a physician-owned professional entity (the PC) holds the medicine, and a management company (the MSO) owns the business operations and contracts with the PC. Done right, that’s legitimate.

Second, and this is the one that catches people, the fee-splitting prohibition. New York does not allow a non-licensed entity to split fees with a medical practice. In plain terms: your MSO management fee cannot be a percentage of clinical revenue, a per-patient charge, or a per-procedure markup. Regulators and federal enforcers read those structures as illegal fee-splitting or a kickback. The fee has to be fixed, set at fair market value for the actual services the MSO provides, reasonable, and put in writing before services are rendered, not tied to the volume or value of the medicine.

So the red flags a proactive task force is built to find: a management fee that floats with revenue, an MSO that reaches into clinical decisions, or a “physician owner” who’s really a figurehead. If your structure has any of those, the inspection that finds it isn’t waiting for a complaint anymore.

For what it’s worth, compliant structures generally look like one of three: a flat monthly fee priced to cost-plus-margin, cost reimbursement plus a fixed administrative fee, or a base flat fee with tiered service add-ons. And a defensible fair-market-value opinion belongs in your file.

Now make it about you, even outside New York

“That’s a New York thing” is the wrong read. New York is the model, not the exception. The same proactive, multi-agency posture is showing up across states, and the CPOM and fee-splitting rules exist in some form almost everywhere. If your structure was set up once, years ago, from a template, and never looked at again, you don’t actually know which side of this line you’re on.

What to do with this

• Pull your management fee structure first. If it’s a percentage of revenue, per-patient, or per-procedure, that’s the fee-splitting red flag. Move to a fixed, fair-market-value, cost-plus arrangement, in writing.
• Get a fair-market-value opinion in the file from a healthcare-specialized valuation source.
• Confirm the MSO doesn’t touch clinical decisions, and that your physician owner actually controls the medicine, on paper and in practice.
• Audit your product and controlled-substance handling now, because expired or counterfeit product and on-site controlled substances are literally what inspectors flagged.

The headline is a New York task force. The lesson is that med spa enforcement just went from reactive to proactive, and the structure they’re built to find is a management fee that looks like a cut of the medicine.

Real compliance strategy from a real attorney.

Y’all stay protected out there.

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Want your CPOM/MSO structure and management fee pressure-tested before someone else does it for you? That’s exactly what we do inside The Protected Practice.

Court Approved Council is owned by Court Approved, PLLC and is not a law firm. Nothing here is legal advice and no attorney-client relationship is formed.