Private Membership Associations
One trend with integrative and holistic providers is the use of a private membership association (PMA), which can go by many other names such as an association membership, health association, private membership organization, private association, private health association or private members’ club. Regardless of what the PMA is called, the purpose is the same: To keep business or activities between private members free from government regulation. Health care providers may believe that a PMA can reduce their exposure to investigations from licensing boards, malpractice complaints and other licensing bodies.
There are numerous entities that will assist with establishing a PMA, but before getting too involved with a PMA and the technicalities forming and managing a PMA, providers need to be aware that the main benefit of a PMA–freedom from regulation–may be drastically overstated. Advocates of PMAs say that the Constitution prevents government from interfering in the activities of a PMA’s private members, but that doesn’t appear to be 100% accurate.
In Nevada, for instance, PMAs seem to fall under Chapter 81, Miscellaneous Organizations, Unincorporated Nonprofit Associations. For “Governing Law,” Nevada Revised Statutes states:
NRS 81.750 Governing law.
1. Except as otherwise provided in subsection 2, the law of this State governs the operation in this State of all unincorporated nonprofit associations formed or operating in this State.
2. Unless the governing principles specify a different jurisdiction, the law of the jurisdiction in which an unincorporated nonprofit association has its main place of activities governs the internal affairs of the association.
https://www.leg.state.nv.us/Division/Legal/LawLibrary/NRS/NRS-081.html#NRS081Sec750
While there may be some hair-splitting that the Constitution “otherwise provides” laws that supersede the laws of the state or that the Constitution specifies a different jurisdiction, the very first statute under “General Provisions” states:
NRS 81.0026 Prohibition against formation of entity for certain illegal purposes. A person shall not form an entity pursuant to this chapter for any illegal purpose or with the fraudulent intent to conceal any business activity, or lack thereof, from another person or a governmental agency.
https://www.leg.state.nv.us/Division/Legal/LawLibrary/NRS/NRS-081.html#NRS081Sec750
Nevada law seems to make clear that a PMA in the state of Nevada will still be subject to the laws of Nevada with their business activities under the jurisdiction of governmental agencies. Operating as a PMA will not conceal a provider’s business activities.
For an example of how the protection PMAs claim to offer versus their actual potential protection, providers could look to the case of Amos Miller and Miller’s Organic Farm. In 2016, Miller denied the USDA access to inspect his records and facilities under the premise that Miller’s Organic Farm was a private membership association that operated in the private domain free from government interference. Miller only sold product to members who paid a fee and signed a contract to join the private association.
In an order on July 23, 2021, a judge signed an order with sanctions against Amos Miller and Miller’s Organic Farm (CLICK HERE). The sanctions included:
- A $250,000 fine.
- Reimbursement of $14,436.26 in enforcement costs.
- That Miller cease and desist from operations until he is compliant with state and federal laws.
Miller was subjected to these penalties even though he used a company to assist him in establishing a private association and made the court aware that he relied upon this company’s advice in setting up and operating Miller’s Organic Farm as a private association.
It is hard to see how Miller’s experience would differ from a provider who set up a PMA and then refused to participate with regulatory oversight. Providers who believe that a PMA can shield them from government regulations need to be aware that a PMA may not only provide no additional protection from regulations, a PMA may also expose the provider to additional fines and costs from investigations.