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Notable Experience
- Negotiated on behalf of the Catholic Health Association with the IRS on the form and content of the new IRS Form 990. This included revising the draft Schedules on Governance, Compensation, Charity Care, and Related Organizations to reduce the burden on Catholic healthcare systems and nonprofit systems generally.
- Counseling executive teams, boards and board committees on Form 990 preparation, advised clients of the risks of disclosing certain activities on the 990 that have legal consequences, and educated organizations as to the importance of the Form 990, which is the nonprofit equivalent of an SEC disclosure statement—in light of the numerous 990s filed by CHI entities, a coordinated approach for legal review of 990 disclosures before filing with the IRS should be developed
- Coordinated with the Senate Finance Committee Tax Staff regarding the American Recovery and Reinvestment Act of 2009, specifically utilizing the team’s contacts with Theresa Pattara (chief tax counsel to Senator Grassley) and Tiffany Smith (chief tax counsel to Senator Baucus) on drafting legislative history language for inclusion in the committee report encouraging the IRS to grant 501(c)(3) status to healthcare organizations engaged in health information exchange, thus breaking the three-year logjam and ruling moratorium at the IRS on RHIO applications and resulting in the granting of numerous RHIO exemption letters since February of 2009
- Guided a nonprofit 13-hospital healthcare system through one of the largest hospital sale transactions in US history (the $1.3 billion sale of Health Midwest to HCA), a transaction that entailed a nonprofit to for-profit conversion, Hart Scott Rodino filings, successful litigation against two States Attorneys General who attempted to block the transaction and/or take control of the proceeds, and creation of two nonprofit conversion foundations to receive the proceeds from the sale and continue the historic healthcare mission of the nonprofit healthcare system
- Spun off The University of Kansas Hospital Authority from The University of Kansas, drafted the legislation creating the hospital as a nonprofit instrumentality of the State, secured a private letter ruling from the IRS recognizing the hospital as tax-exempt instrumentality of the state, and negotiated and drafted a comprehensive affiliation agreement between the hospital and the state university
- Created several medical research organizations and foundations, including the Stowers Institute for Medical Research, operated in conjunction with hospitals to conduct medical research, as well as obtained recognition of tax-exempt status for the medical research organizations and structured the hospital affiliation agreements
- Structured research consortium of nonprofits and governmental organizations utilizing a supporting organization structure and a for-profit technology transfer and commercialization subsidiary, incorporating flexible governance rights of members, complex support allocation and intellectual property sharing rights, and successfully obtained the IRS blessing of the structure in Private Letter Ruling 200326035 dealing with 501(c)(3) status and UBI issues
- Regularly advise hospital and health system clients on unrelated business income consequences of clinical trials and clinical research, establish protocols for documenting files, and develop strategies for successfully arguing that such activities are not UBI despite long-standing IRS positions to the contrary
- Structured a joint operating agreement between Mountain States Health Alliance in Johnson City Tennessee and an unrelated nonprofit community hospital and obtained one of the early IRS private letter rulings approving the joint operating agreement and granting 501(c)(3) status to the joint operating company
- Created numerous hospital-physician joint ventures to preserve hospital tax-exempt status, minimize unrelated business income risks to hospital, ensure charity care and community benefit commitments from the joint venture, and accommodate physician business and entrepreneurial objectives (e.g., created a syndicated specialty hospital for Mountain States Health Alliance in Johnson City Tennessee that included ownership by nonprofit hospital and numerous physicians)
- Regularly assists hospitals and health systems with creation of template or form documents that comply with IRS rules and regulations, including physician recruitment agreements, physician employment agreements, template joint venture operating agreements, articles of incorporation and bylaws
- Obtained several of the early IRS determination letters issued to RHIOs and HIEs regarding exempt status and counseled such organizations on governance structure, obtaining ARRA funding, negotiating vendor contracts and HIPAA privacy and security compliance
- Utilized for-profit subsidiaries to effectively achieve strategic goals and minimize attribution of the for-profit activities to the nonprofit parent, e.g., establishing a for-profit subsidiary (i) for a private university to own and operate a direct-mail/long-distance learning enterprise, and (ii) to manage private equity and/or venture capital funds; and in the healthcare context structuring numerous for-profit subsidiaries for group purchasing, DME sales, and physician clinic acquisitions
- Counsel hospitals and health systems with MOB development and private activity use, unrelated business income, and acquisition indebtedness rules related to ownership and leasing of MOB space
- Represented Rockhurst University, a Catholic Jesuit University, in the creation of a tax-exempt corporation, followed by the acquisition of substantially all of the assets of the nation’s second largest seminar company
- Successfully incorporated supporting organizations into nonprofit operations, e.g., established a medical technology institution that supports the operations of Yale; established a research institution that supports the operations of Duke and the University of North Carolina; established a supporting organization for Kansas State University that would own and operate certain recreational facilities on behalf of the university; and created a charitable remainder trust to support the recruitment of medical faculty at the University of Texas School of Health Sciences at San Antonio
- Defended numerous hospitals, health systems and nonprofit organizations with respect to IRS audits, preparing responses to IRS compliance checks and inquiries, disclosure of excess benefit transactions and the defense of the imposition of intermediate sanctions excise taxes, responding to Senate Finance Committee inquiries, and State Attorney General investigations and Civil Investigative Demands regarding nonprofit activities
- Negotiated with various States Attorneys General regarding healthcare systems and other non-profit tax exempt organizations selling assets in one state and using the proceeds in another state
- Restructured and reorganized large, multi-entity health systems to create new entities and dissolve or merge existing entities to obtain tax objectives, risk mitigation strategies, state charitable trust compliance, and corporate governance needs (e.g., spun off Catholic Health Partners from Ascension Health and subsequently reorganized Catholic Health Partners to create a new parent, foundation, and subsidiary holding companies)
- Counseled hospital, health system and other nonprofit boards on evolving corporate governance best practices, including creation and structure of effective board committees, adoption and implementation of policies and procedures to comply with SOX, prevailing views of best practices and corporate responsibility, and the planning for reporting and disclosure under the new IRS Form 990 reporting
- Counsel hospitals and health systems with offshore insurance captives how to properly report insurance operations on Form 990, Schedule F
- Created a joint venture limited liability company between two nonprofit research institutions (Midwest Research Institute and Batelle Corporation) to co-operate the United States Department of Energy’s National Renewable Energy Laboratory and obtained 501(c)(3) status and state sales and property tax exemption for the LLC
- Capitalized on synergies between competing nonprofit community hospitals to create special purpose “hospitals within hospitals”; creating the LLCs; obtaining sales and property tax exemptions; and obtaining 501(c)(3) status so that the joint ventures could, independent from their sponsoring hospitals, accept donations and issue tax-exempt bonds. Your team has successfully used this structure to create both cancer and cardiology joint ventures among community hospitals to efficiently allocate scarce healthcare resources in smaller markets where multiple providers cannot offer the same service and in mid-size markets where collaboration makes more sense then competition. Examples include creating a cancer hospital co-owned by Health Midwest and St. Luke’s Hospital and a heart hospital to be co-owned by The University of Kansas Hospital and Olathe Medical Center, in each case the joint venture operated a hospital within a hospital on the member’s campuses.
- Successfully accommodated the divergent needs of two university research programs and a real estate developer to create a for-profit, nonprofit, and government entity joint venture for the creation and operation of a biotechnology park to preserve tax-exempt status and minimize unrelated business income exposure (specifically, the joint venture included a for-profit real estate development company, The University of Kansas, Kansas State University, the City of Olathe, the City of DeSoto, and the JV entity called the University of Kansas Research Park)
- Represented a 501(c)(3) “accommodation party” that provides senior housing, healthcare facilities and other facility operation, ownership and financing services so the party can provide off-book financing to healthcare systems, e.g., the party will issue tax-exempt bonds under its own name; build, construct, and own an assisted living center on a hospital campus; allow the hospital to manage the facility; and permit the hospital to keep the financing debt off its books, not exceed debt limits on bond covenants, and keep scarce capital and lending capacity available for other capital projects
- Served as counsel to a tax-exempt church and its spiritual leader, an internationally known televangelist; successfully preserved the church status and exempt status of the church
- Served as counsel in conjunction with other church audits, including a Catholic diocese, and other examinations of tax-exempt organizations
- Structured $1.5 billion gift annuity to charitable entity to support the Stowers Institute for Medical Research
- Structured multiple public/private joint ventures to facilitate development projects
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