🏥 Medical Co-Working & Aesthetic Suites Compliance
California corporate practice of medicine, subleasing risks, insurance compliance, OSHA/HIPAA violations, and demand letter strategies for landlords
Medical Co-Working & Aesthetic Suites in California
The rise of medical co-working spaces—where multiple med-spas, aesthetic injectors, IV therapy providers, and wellness practitioners share facilities—creates complex regulatory and liability issues for landlords and facility operators. Unlike traditional commercial leasing, medical co-working involves patient care, medical waste, bloodborne pathogens, controlled substances, and strict licensing requirements.
When tenants misrepresent their credentials, operate without proper supervision, allow insurance to lapse, or violate OSHA/HIPAA rules, landlords face premises liability, regulatory investigations, and facility shutdowns. This hub provides the legal framework for enforcing compliance and removing non-compliant tenants.
Why Medical Co-Working Is High-Risk for Landlords
Unique Liability Exposures in Medical Co-Working:
Premises liability for patient injuries: If tenant's unlicensed practice or negligence harms patients in your facility, you may be liable under Civ. Code § 1714
OSHA violations: Cal/OSHA holds facility owners responsible for bloodborne pathogen compliance (8 CCR § 5193), sharps disposal, and hazardous waste
HIPAA/CMIA breaches: Tenant's mishandling of patient records creates liability under California Confidentiality of Medical Information Act (Civ. Code §§ 56-56.37)
Corporate Practice of Medicine (CPOM): If facility owners receive percentage rent based on medical revenue or control clinical decisions, they risk CPOM violations
Insurance gaps: Tenants misrepresent malpractice coverage; when claims arise, landlords discover they're not named as additional insured
Regulatory investigations: Medical Board subpoenas, OSHA inspections, and DEA audits (if controlled substances on-site) disrupt operations and damage reputation
Types of Medical Co-Working Tenants
Tenant Type
Common Services
Key Compliance Issues
Med-Spa / Aesthetic Clinic
Botox, dermal fillers, laser hair removal, microneedling, chemical peels
HIPAA/CMIA compliance: Tenant's written privacy policies, secure patient record storage, Business Associate Agreements (BAAs) if applicable
Regulatory compliance clause: Tenant must comply with all federal, state, and local healthcare regulations; violations are material breach
Inspection rights: Landlord may inspect for compliance upon reasonable notice; tenant must produce documentation upon request
⚠ "Esthetician Suite" Loophole: Some tenants lease space as "esthetician suites" (non-medical) but perform medical procedures (Botox, lasers). This is unlicensed practice. Lease must prohibit medical procedures unless tenant provides proof of physician supervision. Regular inspections are critical—estheticians gradually add "medical services" after move-in.
Compliance Requirements for Medical Co-Working Tenants
Corporate Practice of Medicine (CPOM)
California's CPOM doctrine (B&P § 2400) prohibits non-physicians from owning or controlling medical practices. This doctrine creates unique risks for landlords who:
Charge percentage rent based on tenant's medical revenue
Provide "practice management" services that involve clinical decisions
Employ physicians and lease them to med-spa tenants
Exercise control over which procedures tenants offer or how they're priced
CPOM-Compliant Medical Co-Working Structure:
Fixed rent only: Do not charge percentage rent based on patient revenue or procedure volume
No clinical control: Landlord does not dictate treatment protocols, patient selection, or procedure offerings
Arms-length services: If providing shared staffing (front desk, medical assistants), use service agreements with clear boundaries—no clinical supervision
Tenant is physician-owned: Medical services provided by physician-owned entities or properly supervised RN/NP/PA practices
No fee-splitting: Do not receive fees for patient referrals or "finder's fees" for procedures
Red Flags for CPOM Violations:
Landlord advertises "turnkey med-spa" with included physician supervision
Landlord hires/fires clinical staff on behalf of tenant
Landlord reviews patient charts or treatment outcomes
Lease prohibits tenant from terminating physician relationship without landlord approval
Professional Liability Insurance
Medical co-working tenants must carry professional liability (malpractice) insurance. Landlords must verify:
Insurance Element
Requirement
Why It Matters
Policy Type
Occurrence-based (not claims-made) preferred; if claims-made, require tail coverage upon lease termination
Claims-made policies don't cover incidents after policy ends; tail coverage fills the gap
Coverage Limits
Minimum $1M per occurrence / $3M aggregate for med-spa/aesthetic; higher for surgical or interventional procedures
Adequate limits protect landlord from excess liability exposure
Additional Insured
Landlord entity named as additional insured on policy; confirmed via endorsement
Allows landlord to access policy proceeds if sued for tenant's malpractice
Supervising Physician Covered
If tenant uses supervising MD, verify MD is named insured or covered under tenant's policy
If MD not covered, liability falls to landlord if patient injured
Notice of Cancellation
Insurer must notify landlord 30 days before cancellation or non-renewal
Prevents tenant from operating without coverage
OSHA / Cal-OSHA Compliance
Medical co-working spaces where tenants perform injections, blood draws, or any procedure involving potential blood exposure must comply with Cal/OSHA's Bloodborne Pathogen Standard (8 CCR § 5193):
Exposure Control Plan: Written plan identifying employees at risk, procedures to reduce exposure, post-exposure protocols
Sharps disposal: FDA-approved sharps containers in all treatment rooms; contracted medical waste disposal service
Personal protective equipment (PPE): Gloves, face shields, gowns available and used
Hepatitis B vaccination: Offered to all at-risk employees within 10 days of hire
Training: Annual bloodborne pathogen training for all clinical staff
Recordkeeping: Exposure incidents documented; training records maintained 3+ years
⚠ Landlord Liability for OSHA Violations: Cal-OSHA can cite both the tenant and the landlord for violations if the landlord has control over the premises or knowledge of violations. If you observe improper sharps disposal, lack of PPE, or bloodborne pathogen risks, you have an obligation to require correction. Failure to act = potential OSHA citation and fine (up to $25,000 per serious violation).
HIPAA & CMIA Compliance
HIPAA (Federal): If tenant transmits patient information electronically (insurance billing, EHRs), they're a "covered entity" and must comply with HIPAA Privacy and Security Rules. Landlords are generally not liable for tenant HIPAA violations UNLESS landlord has access to patient records (e.g., shared EHR system).
CMIA (California Confidentiality of Medical Information Act, Civ. Code §§ 56-56.37): Stricter than HIPAA. Applies to all patient medical information, regardless of electronic transmission. Tenants must:
Obtain written patient authorization before disclosing medical information
Store patient records securely (locked cabinets, password-protected systems)
Notify patients within 5 days of data breaches
Destroy records per retention schedules (typically 7 years)
Landlord Exposure: If tenant leaves patient records in common areas, fails to secure files, or abandons records upon move-out, landlord may face CMIA liability for improper handling. Lease must require tenant to remove all patient records upon termination and provide written certification.
Common Compliance Violations in Medical Co-Working
Violation 1: Insurance Misrepresentation
Scenario: Tenant provides certificate of insurance showing $1M malpractice coverage and naming you as additional insured. Six months later, a patient sues both tenant and your facility for alleged Botox injury. When you tender the claim to tenant's insurer, you discover the policy lapsed 3 months ago—tenant stopped paying premiums.
Legal Issues:
Material breach of lease: Maintaining insurance is typically a covenant, not a condition precedent—breach gives you right to terminate
Fraud: If tenant affirmatively represented that insurance was current when it had lapsed, that's fraud under Civ. Code § 1572
Premises liability exposure: You're now a defendant with no insurance coverage from tenant's policy
Prevention: Require tenant to provide updated certificates of insurance quarterly; lease provision allowing you to purchase insurance at tenant's expense if tenant fails to maintain coverage.
Violation 2: OSHA Non-Compliance
Scenario: During a routine walk-through, you observe tenant's treatment room has:
Overflowing sharps container (needles visible at top)
Used syringes in regular trash can (not sharps container)
No gloves or PPE visible
Blood-stained gauze on counter (not biohazard bag)
Legal Issues:
Cal-OSHA violation (8 CCR § 5193): Tenant is violating Bloodborne Pathogen Standard
Landlord liability: If you have knowledge and do nothing, Cal-OSHA may cite you as the "controlling employer"
Premises liability: If employee or patient exposed to bloodborne pathogens, you may be liable for failing to correct known hazards
Immediate Actions:
Document violations with photos (date/time stamped)
Send written notice to tenant requiring immediate correction
If tenant fails to correct within 24-48 hours, consider emergency lease termination or calling Cal-OSHA
Consult attorney before calling Cal-OSHA—inspections often expand beyond initial complaint
Violation 3: Abandoned Patient Records
Scenario: Tenant vacates premises (voluntary or evicted) and leaves behind filing cabinets with hundreds of patient charts, consent forms, and medical records. You discover them during move-out inspection.
Legal Issues:
CMIA violation: You're now in possession of confidential medical information without patient authorization (Civ. Code § 56.10)
Improper disclosure risk: If records are stolen, accessed by other tenants, or improperly destroyed, you face CMIA penalties (up to $250,000) and private civil liability ($1,000 per violation)
Record retention obligations: Medical records must be retained 7 years from last patient encounter; you cannot simply destroy them
Proper Handling:
Do not open, read, or access patient files
Secure files in locked storage immediately
Send written notice to tenant requiring them to retrieve records within 30 days
If tenant does not respond, consult healthcare attorney—may need to petition Medical Board or court for guidance on transfer or destruction
Consider hiring HIPAA-compliant document destruction service (not regular shredding)
Violation 4: Subleasing to Unlicensed Practitioners
Scenario: Tenant (licensed RN with physician supervision) subleases one treatment room to an "esthetician" without your knowledge or consent. The esthetician performs microneedling, chemical peels, and "cosmetic injections" (later discovered to be Botox). You receive a notice from the Medical Board that they're investigating unlicensed practice at your facility.
Legal Issues:
Lease violation: Most leases prohibit subleasing without landlord consent
Unlicensed practice (B&P § 2052): Estheticians cannot perform Botox injections or medical procedures
Premises liability: If patients injured by unlicensed practitioner, you may be liable for failing to prevent unlicensed activity
Medical Board investigation: You'll receive subpoenas for lease documents, tenant records, and may be interviewed
Defense Strategy:
Provide Medical Board with documentation showing sublease was unauthorized
Demonstrate you required proof of licensing from tenant but had no knowledge of subtenant
Immediately evict both tenant and subtenant for material breach
Sample Demand Letters for Medical Co-Working Violations
Sample 1: Insurance Lapse & Material Breach
Date: [Current Date]
To: [Tenant Business Name]
[Tenant Address]
Attn: [Principal/Owner]
From: [Landlord Name / Facility]
[Address]
RE: NOTICE OF MATERIAL BREACH – LAPSE OF REQUIRED MALPRACTICE INSURANCE
Dear [Tenant]:
This letter constitutes formal notice of material breach of the Lease Agreement dated [Lease Date] for premises located at [Address], Suite [#].
Breach Discovered: On [Date], we were notified by [Insurance Carrier] that your professional liability insurance policy (Policy No. [XXXXX]) was cancelled effective [Cancellation Date] due to non-payment of premiums. This is the same policy you certified as current and active in your most recent quarterly insurance compliance submission dated [Submission Date].
Lease Violations: Your insurance lapse violates the following lease provisions:
Section [X] – Insurance Requirements: "Tenant shall maintain professional liability insurance with minimum limits of $1,000,000 per occurrence and $3,000,000 aggregate, with Landlord named as additional insured, at all times during the lease term."
Section [Y] – Compliance with Laws: Operating a med-spa without malpractice insurance violates California Business & Professions Code § 2052 and standard-of-care requirements.
Section [Z] – Misrepresentation: Your quarterly certification that insurance was "current and active" when you knew or should have known it had lapsed constitutes fraud under Civil Code § 1572.
Landlord Liability Exposure: During the period your insurance was lapsed ([Cancellation Date] through present), you performed Botox injections, dermal filler treatments, and laser procedures on patients. If any of those patients were injured and file claims, our facility faces liability exposure with no insurance coverage from your policy. This creates immediate and substantial financial harm to us.
REQUIRED ACTIONS (within 5 business days):
Immediately cease all patient treatments until insurance is reinstated.
Reinstate malpractice insurance with minimum required limits and provide proof via updated certificate of insurance and policy declarations page.
Provide tail coverage for the lapse period ([Cancellation Date] through reinstatement date) to cover any claims arising from that period.
Submit written explanation of how the lapse occurred and your plan to prevent future lapses.
Pay liquidated damages of $[amount] per day for each day insurance was lapsed, as provided in Lease Section [X].
Consequences of Non-Compliance: If you fail to cure this breach within 5 business days, we will:
Serve a Three-Day Notice to Cure or Quit pursuant to California Code of Civil Procedure § 1161
Notify the Medical Board of California of uninsured medical practice at our facility (not a threat—a statement of our legal obligation to report patient-safety risks)
Pursue fraud claims under Civil Code § 1572 for damages caused by your misrepresentation
We do not take these actions lightly, but patient safety and our facility's liability protection are paramount. Contact me immediately at [phone/email] to discuss your corrective action plan.
This letter documents serious health and safety violations observed at your IV therapy lounge during a facility inspection on [Date] and demands immediate corrective action.
Violations Observed: During a routine walk-through of common areas and your suite (conducted pursuant to Lease Section [X], which reserves our right to inspect for safety compliance), I observed the following:
Overfilled sharps container: Sharps container in Treatment Room 1 was filled beyond the "full" line, with used needles protruding from the top—a needlestick hazard.
Improper waste disposal: Used syringes and IV catheters found in regular trash can (not biohazard-labeled sharps container), in violation of 8 CCR § 5193.
Lack of PPE: No gloves, face shields, or protective equipment visible in treatment area; RN staff observed performing IV insertion without gloves.
Blood-contaminated materials: Gauze with visible blood stains left on counter (not disposed in biohazard bag), creating exposure risk.
No Exposure Control Plan: When asked, your staff could not produce a Bloodborne Pathogen Exposure Control Plan as required by 8 CCR § 5193(c).
I documented these violations with photographs (attached, with patient faces redacted).
Legal Violations:
8 CCR § 5193 (Cal-OSHA Bloodborne Pathogen Standard): All items above violate the standard, exposing employees and patients to Hepatitis B, Hepatitis C, and HIV transmission risk.
Premises Liability (Civ. Code § 1714): As facility owner, I may be liable if employees or patients contract bloodborne diseases due to your non-compliance.
Lease Breach (Section [X]): "Tenant shall comply with all OSHA and Cal-OSHA regulations applicable to Tenant's operations."
Replace all overfilled sharps containers and implement a schedule for regular sharps disposal service pickup.
Remove all biohazard waste from regular trash and place in proper biohazard bags/containers.
Provide PPE (gloves, face shields, gowns) in all treatment areas and mandate use by all clinical staff.
Develop Exposure Control Plan compliant with 8 CCR § 5193(c) and provide copy to me for review.
Train all staff on bloodborne pathogen protocols and provide documentation of training completion.
Hire OSHA compliance consultant to audit your operations and certify compliance within 30 days.
Consequences of Non-Compliance: If these violations are not corrected within 48 hours, I will:
Report the violations to Cal-OSHA for investigation (I have a legal duty to report workplace safety hazards)
Prohibit you from operating until Cal-OSHA inspection is completed and violations are cleared
Serve Three-Day Notice to Cure or Quit for material breach of lease
Pursue damages for our facility's liability exposure and any Cal-OSHA fines assessed against us
I take no pleasure in escalating this matter, but bloodborne pathogen risks are life-threatening and non-negotiable. Contact me immediately to confirm compliance.
Sincerely,
[Your Name]
Enclosures: Photos of violations (dated [Date]); 8 CCR § 5193 Bloodborne Pathogen Standard summary
Eviction & Remedies for Non-Compliant Medical Tenants
Three-Day Notice to Cure or Quit
When a medical co-working tenant breaches compliance requirements (insurance lapse, OSHA violations, unlicensed practice), landlords typically serve a Three-Day Notice to Perform Covenant or Quit pursuant to California Code of Civil Procedure § 1161.
Three-Day Notice Requirements:
Specify the breach: Identify exact lease provision violated and facts constituting breach
State what must be cured: E.g., "Tenant must reinstate malpractice insurance with landlord named as additional insured and provide proof within 3 days"
Provide 3 days to cure: Excludes weekends and holidays (if third day falls on weekend, tenant has until next business day)
Properly serve: Personal service preferred; if tenant unavailable, substitute service (adult at premises + mail) or post-and-mail
Do not accept rent: Accepting rent after serving notice may waive your termination right
Unlawful Detainer Action
If tenant fails to cure within 3 days, landlord may file unlawful detainer (eviction) lawsuit. Medical co-working evictions often involve unique defenses:
Tenant Defense
Landlord Response
"Insurance lapse was accidental; we've since reinstated."
Breach occurred; reinstatement after notice doesn't cure harm. Lease permits termination for any lapse, regardless of duration or intent.
"Landlord waived compliance by not enforcing in the past."
Waiver requires clear and unequivocal relinquishment of rights. Our demand letters show we did not waive; we actively enforced upon discovery.
"Evicting us will harm patients who have appointments."
Patient care concerns do not excuse lease breaches. Tenant had opportunity to cure; chose not to. Patients can be referred to compliant providers.
"Landlord is retaliating because we complained about facility maintenance."
Retaliation defense (Civ. Code § 1942.5) requires proof landlord's action was motivated by tenant's protected activity. Our eviction is based solely on documented compliance breaches predating any complaints.
Preliminary Injunction to Halt Operations
In cases of unlicensed practice, OSHA violations, or imminent patient harm, landlords may seek a preliminary injunction prohibiting tenant from operating pending trial. To obtain an injunction, you must prove:
Likelihood of success on the merits: Clear lease breach; strong evidence of violations
Irreparable harm: Continued operations expose you to premises liability, regulatory fines, reputational damage that cannot be compensated by money damages
Balance of harms: Harm to you (liability exposure, patient safety) outweighs harm to tenant (lost revenue)
Public interest: Preventing unlicensed practice and patient injuries serves public interest
Damages & Setoff
Beyond possession, landlords may recover damages:
Unpaid rent: Through date of judgment
Holdover damages: Fair rental value if tenant remains after lease termination
Liquidated damages: If lease includes liquidated damages clause for insurance lapse or compliance violations
Indemnity costs: Legal fees defending patient injury claims caused by tenant's negligence (if lease includes indemnity clause)
Reputational harm: Difficult to prove but may be recoverable if you can show lost prospective tenants or property value decline due to tenant's violations
Security Deposit Setoff (Civ. Code § 1950.7): Commercial landlords may apply security deposit to unpaid rent, damages, and cure costs. Unlike residential deposits, no itemized accounting required within 21 days—but good practice to provide detailed statement to avoid disputes.
⚠ Medical Waste Abandonment: If tenant leaves behind medical waste (used sharps, biohazard bags, blood-contaminated materials), DO NOT handle it yourself. Hire a licensed medical waste disposal company (costs typically $500-$2,000 depending on volume). Document with photos before disposal. Bill tenant for disposal costs; if unpaid, apply to security deposit or pursue in judgment.
Attorney Services for Medical Co-Working Disputes
Medical co-working compliance failures create high-stakes disputes involving healthcare regulation, premises liability, and commercial eviction—areas requiring specialized legal knowledge. Landlords who attempt to self-enforce face extortion claims, wrongful eviction counterclaims, and regulatory exposure.
How I Can Help
I represent California commercial landlords, medical facility operators, and property owners in medical co-working disputes. My practice focuses on compliance enforcement, unlawful detainer, premises liability defense, and regulatory risk mitigation.
Services for Medical Co-Working Landlords:
Lease drafting & review: I draft medical co-working lease provisions with enforceable compliance requirements, insurance standards, and inspection rights
Compliance audits: I audit tenant documentation (licenses, insurance, supervision agreements, OSHA plans) to identify violations and liability gaps
Demand letter strategy: I draft demands that assert enforcement rights without triggering extortion or retaliation defenses
Unlawful detainer: I prosecute evictions for insurance lapses, OSHA violations, unlicensed practice, and other compliance breaches
Injunctive relief: I obtain court orders halting tenant operations when patient safety or premises liability risks are imminent
Regulatory defense: I defend landlords in Medical Board investigations, OSHA inspections, and HIPAA audits arising from tenant violations
Premises liability defense: I defend landlords against patient injury claims, arguing tenant's independent contractor status and compliance breach
Why Medical Co-Working Disputes Require Specialized Counsel
General commercial landlord-tenant attorneys often lack healthcare regulatory knowledge, leading to missteps:
Extortion risk: Phrasing demands as "pay or we report" = Penal Code § 518 violation; requires careful drafting
CPOM complexity: Determining whether landlord's management services cross into CPOM territory requires analysis of Medical Board precedent
OSHA liability: Understanding when landlord is "controlling employer" vs. tenant is solely liable requires Cal-OSHA regulatory knowledge
Premises liability doctrines: Applying "independent contractor" exception to avoid liability for tenant malpractice requires healthcare case law expertise
Regulatory reporting: Knowing when to report to Medical Board, when to stay silent, and how to frame reports to avoid defamation claims
Premises liability exposure; no insurance coverage; lease breach
Immediate eviction → tender defense to tenant's insurer (if reinstated) → pursue indemnity from tenant
IV therapy tenant violating OSHA; Cal-OSHA inspection notice received
Landlord may be cited as "controlling employer"; fines up to $25K per violation
Defend OSHA inspection → demonstrate tenant is independent contractor → evict tenant → pursue tenant for fines
Tenant subleased to unlicensed injector; Medical Board investigating
Unlicensed practice; potential "aiding and abetting" liability for landlord
Respond to Medical Board subpoena → demonstrate unauthorized sublease → evict both tenant and subtenant
Tenant abandoned patient records; 500+ charts left in suite
CMIA liability for improper handling; cannot destroy without protocol
Secure records → legal notice to tenant → petition Medical Board for transfer authority → HIPAA-compliant destruction
Submit Your Case for Review
Medical co-working compliance failures expose you to liability that far exceeds typical commercial lease disputes. I have successfully resolved dozens of medical tenant disputes, achieving rapid evictions, regulatory protection, and damages recovery while avoiding landlord liability.
Send me your lease agreement, tenant's insurance certificates (or lack thereof), and documentation of violations. I'll assess your liability exposure and outline an enforcement strategy.
Flat-fee compliance audits ($2,500-$5,000). Unlawful detainer on hourly or flat-fee basis. Contingency representation available for indemnity/damages claims. Attorney's fees often recoverable under lease or fraud statutes.