## Facts

- A for-profit corporation, Bartron Clinic, Inc., operated a hospital/clinic and later a general medical and surgical practice in Watertown, South Dakota.
- The corporation did not hold a license to practice medicine or operate a pharmacy, but it employed duly licensed physicians and surgeons on fixed salaries.
- Codington County and the corporation entered written contracts (first executed January 3, 1933, and renewed annually) under which the clinic would provide hospitalization, medical and surgical services, and medicines to the county’s indigent residents.
- Professional services were performed by licensed physicians; the trial court found the corporation did not interfere with or control their professional judgment.
- The corporation owned the equipment used in treatment and maintained and dispensed drugs furnished to patients.
- After years of performance and payment, the county disputed an unpaid bill for medicines and, in a companion action, sought restitution of sums previously paid, claiming the contracts were illegal and against public policy because an unlicensed corporation was furnishing medical services and drugs.
- The circuit court treated the arrangements as unlawful on public-policy grounds, denied recovery on the disputed claim, and permitted the county to pursue recovery of prior payments.

## Issues

1. Whether contracts under which a for-profit corporation furnishes medical and surgical services to county indigents through employed licensed physicians are illegal and unenforceable under the medical-practice laws or public policy.
2. Whether a contract requiring an unlicensed corporation to furnish and dispense medicines is illegal under pharmacy regulation and related public-policy limits.
3. Whether a county that received the benefits of such contracts may avoid payment and recover amounts already paid on the ground of illegality.

## Decision

- The Supreme Court of South Dakota affirmed in part and reversed in part.
- It rejected the view that a corporation’s employment of licensed physicians to render services for compensation was automatically unlawful under the medical-practice statutes where professional judgment remained with the physicians.
- It accepted that the unlicensed corporate furnishing of drugs raised illegality/public-policy concerns distinct from the employment-of-physicians arrangement.
- It held the county was not entitled to restitution of sums already paid and could not wholly avoid obligations after receiving the benefits of medical services and medicines.

## Legal Principles

- A medical-practice statute prohibiting unlicensed persons from practicing medicine does not, without more, bar a corporation from employing duly licensed physicians to provide medical services for pay when the corporation does not control professional judgment.
- The unlicensed corporate supply/dispensing of medicines may violate pharmacy regulation and may render that aspect of an agreement unlawful or contrary to public policy.
- Even when illegality is asserted, a public entity with authority to contract for indigent care that has received and retained the benefits of performance cannot use the alleged illegality to recover voluntary payments already made for executed portions of the arrangement.
- The legality of the underlying contracts is a judicial question; prior administrative allowance and payment of claims by county officials does not conclusively resolve legality.

## Conclusion

The court drew a distinction between a corporation employing licensed physicians (not per se forbidden on these facts) and an unlicensed corporation furnishing medicines (legality concerns), but it refused to let the county reclaim payments or avoid responsibility for benefits it had accepted under the executed performance of the indigent-care contracts.


Bartron v. Codington County, 2 N.W.2d 337 (S.D. 1942)