IRS General Counsel Memorandum threatens some hospital-physician joint ventures

To defend against the heightened scrutiny of hospital-physician relations expected from the IRS, hospital management should closely examine any activities now conducted with physicians to determine whether each activity, as organized and operated, furthers the hospital's charitable mission of promoting the health of its community, rather than merely enhancing the financial health of the institution itself. Any arrangements that do not appear to satisfy the principles enunciated in GCM 39862 should be examined to see if they should be restructured or dissolved. In structuring new transactions and examining existing arrangements, the following principles should be kept in mind: 1. Transactions should not be premised upon increased utilization or physician referrals. Enhancing or protecting market share, even for the purpose of preserving an institution's presence in the community, will likely no longer be accepted as a justification for pursuing joint venture arrangements. In justifying such ventures, management must distinguish between benefit to the community and benefit to the institution. 2. Transactions whereby existing services or equipment are "spun off" to a hospital-physician joint venture run a serious risk of enhanced IRS scrutiny. 3. Transactions creating or providing new facilities or services should be more favorably perceived, particularly where participants other than the hospital take an active role in managing the venture. Where the hospital is the sole general partner and merely manages what it would have managed had there been no physician investors, the question of why physicians are involved will likely be of greater concern than it has been in the past.(ABSTRACT TRUNCATED AT 250 WORDS)     

Applying antitrust law to nonprofit healthcare entities: arguments for a greater attention to detail

This Article begins with an antitrust primer, then analyzes the appropriate application of antitrust principles to nonprofit healthcare providers. In light of the inherent charitable character of nonprofit healthcare providers, the author contends that the government and the courts should accord some deference to nonprofit hospitals when they are seeking approval of mergers. To date, this has not generally been the case, although a few recent court decisions have rested their approval of mergers, in part, upon the nonprofit character of the merging entities. The author, in particular, believes the paradigmatic local nonprofit hospital with a community board is less likely than a for-profit hospital to abuse any market power that it may obtain through a merger; consequently, any such merger should not be analyzed solely under the traditional presumptions of antitrust jurisprudence. Rather, the premerger analysis should involve meaningful consideration of the hospital's charitable character.     

再论我国慈善组织公信力的法律重塑

公信力是慈善组织生存之基,公益性是慈善组织公信力之源。影响慈善组织公信力的因素既包括法治因素,也包括文化因素、体制因素等。我国慈善法律体系已经形成,内容较为全面完善,关于慈善组织的法律定位也较为明确,法律实施不到位以及官民二重性是制约我国慈善组织公信力提升的主要原因。官民二重性有悖于慈善组织的民间本性,导致慈善组织的独立性、公益性、运作效率降低,导致对慈善组织监管不力,并进而阻碍慈善事业的健康发展。要以理顺政府和慈善组织的关系为核心,进一步加强慈善法治建设,推动我国慈善的现代转型。在慈善法治建设中,信息公开是前提,创新管理是保障,强化监督是抓手,责任落实是关键。     

A cure for the Blues: resolving nonprofit Blue Cross conversions

This Article analyzes the issues involved in converting nonprofit Blue Cross organizations to for-profit status. These issues have arisen in the context of litigation regarding the "reorganization" of Blue Cross and Blue Shield of Missouri ("BCBSMo"). BCBSMo had reorganized by creating and transferring a majority of its business to a new for-profit subsidiary. Missouri consumer groups and state regulators characterized the "reorganization" as a conversion requiring BCBSMo to transfer its assets to a foundation dedicated to charitable health purposes. BCBSMo, however, denied that it had any obligation to leave behind its assets in the nonprofit sector. The BCBSMo litigation raises issues common to most conversions of nonprofit healthcare organizations, particularly conversions of nonprofit Blue Cross plans. This Article provides a road map for state regulators and the public to follow in ensuring that the public interest is fully protected in such conversions.     

TBOR2 compliance plans: from rebuttable presumption to enforcement

This Article analyzes the implications and strategies of incorporating the Taxpayer Bill of Rights 2 ("TBOR2") into tax-exempt healthcare organizations' compliance plans. Beginning with a brief overview of TBOR2, the author examines the presumption of fair market value, how such organizations establish safe harbors, the current Internal Revenue Service (IRS or Service) position regarding enforcement of TBOR2, and the lurking potential for "whistleblowers" to start auditory procedures with an eye toward IRS bounties. Mr. Griffith concludes that the best advice for exempt organizations is to follow the rebuttable presumption procedure for all transactions involving potential disqualified persons, including staff and employed physicians, and seek to fit within the safe harbors for the less routine and larger of those transactions.     

我国慈善组织法治监管创新机制研究——基于香港地区的经验

目前我国內地慈善组织监管错位、监管缺位、监管模式扭曲、监管法治化程度较低等弊端暴露明显,严重挫伤了公民的慈善热情和慈善信心。香港地区的慈善组织法治监管机制在保持慈善界独立自主的同时,确保其受到高效、公平、适度的监管。內地慈善监管问题的解决,可尝试借鉴香港经验,降低监管门槛,设立权威的专门监管机构,明确监管重点,建立科学的监管模式,强化行业自律,完善立法,提高监管的法治化程度,重塑慈善组织的公信力。     

Disease management: legal strategies for the next generation of managed care

The provision of proper and cost-effective healthcare to chronically ill patients is a crucial aspect of succeeding at managing care. An increasing number of managed care organizations are relying upon specialized outside providers to manage patients with such diseases. In such circumstances, this type of care is "carved out" and given to a specialized disease management organization. The authors discuss the strategies behind such arrangements, provide case studies of many of the specialized organizations providing such disease management, and analyze the legal issues that are likely to arise from such contractual relationships.     

The fiduciary duties of healthcare directors in the "zone of insolvency"

Directors of healthcare organizations normally owe fiduciary duties to their shareholders or, in the case of nonprofits, to the charitable mission of the organization. As an organization descends to bankruptcy, however, the board's duties may shift. At some point, the board may be imposed with different and often conflicting obligations to the corporate enterprise as a whole, with a primary criterion being the interests of creditors. In this article, the authors analyze the murky areas of the Zone and give guidance as to when the board's duty may shift-and as to how directors should proceed both in determining their duties and in working to fulfill them.     

HIPAA privacy: the compliance challenges ahead

This Article reviews the HIPAA Privacy Standards' impact on healthcare organizations. It discusses whether a healthcare organization is a "Covered Entity" under the regulations, what information the Privacy Standards protect, what restrictions the regulations place on the use and disclosure of protected health information, what individual rights the Privacy Standards create, and what agreements they require between healthcare organizations and their business associates. The author provides relatively extensive guidance to organizations that are embarking upon their voyage of compliance with these broadly applicable regulations, but notes that the full extent of necessary compliance remains unclear, pending DHHS issuance of the next iteration of the rulemaking in this area. The Article was finalized in January 2002, before HHS issued any modifications to the Privacy Standards.     

我国慈善组织公信力之法律规制

慈善组织公信力关涉到慈善事业运行的正当性基础。我国慈善事业公信力缺失的主要原因在于慈善运营中的信息失灵,根本原因在于我国立法存在弊误,有必要借鉴域外立法有益经验,构建我国慈善组织公信力之法制。     

Special report on taxation. New IRS revenue procedure clarifies tax classification of limited liability companies

Although its rules are complex, the publication of Revenue Procedure 95-10 will substantially facilitate the use of LLCs in those states with statutes that permit significant flexibility in the structuring of LLCs. Previously, the only way to assure that LLCs in those states would be classified as partnerships for income tax purposes was to obtain a private letter ruling from the IRS, often resulting in lengthy delays. The new revenue procedure should provide sufficient guidance in the vast majority of cases to allow tax counsel to determine the appropriate treatment for tax purposes without having to seek an IRS private letter ruling.     

IRS focuses on employment status of hospital-based physicians

In view of these serious consequences and the IRS' renewed interest in hospital-based physicians, it is imperative that all hospitals examine their contractual relationships with physicians under the foregoing standards to ascertain whether any physicians are improperly being characterized as independent contractors. Of particular concern are arrangements with aspects similar to those in TAM 9443002. Hospitals operating in states that still prohibit the employment of physicians are not necessarily protected, as the IRS does not accept the corporate practice of medicine doctrine as a defense to characterization of physicians as employees for tax purposes. In those states, it is probably best to handle problematic situations through the use of professional corporations, as discussed above.     

Managerial influence and CEO performance incentives

We study whether CEO influence is evident in CEO incentive arrangements by examining how the imposition of state anti-takeover laws (ATLs) in the 1980s affected CEO compensation and retention. On balance, we find that CEOs have higher compensation and more job security, and their compensation and retention are less sensitive to stock-based performance after the enactment of ATLs. We also find that CEO compensation and retention are more sensitive to accounting-based performance after ATLs, but the increased sensitivity is attributable to the accruals component of accounting-based performance. Based on prior evidence that CEOs often exercise discretion in measuring accounting-based performance, we interpret our results as evidence that CEOs have strong negotiation power vis-à-vis their corporate boards.     

Federal tax-exemption requirements for joint ventures between nonprofit hospital providers and for-profit entities: form over substance?

This article discusses the IRS rule on hospital joint ventures and related legal developments. The central thesis is that the IRS's emphasis on operational control is misplaced from both a legal and a policy perspective, and reflects a decidedly strong preference for the form of a joint venture's governance over the substance of its charitable and community service activities. More specifically, the article challenges the IRS position that the rule is a corollary of existing tax law principles. Additionally, social science research is presented to demonstrate that the rule is not likely to promote, and may in fact undermine, United States health policy objectives.     

Special report on health care delivery systems. Hospitals should consider taking an active role in initiating the formation of medical groups for managed care contracting

Hospital promotion of physician organizations as described in this article is a relatively new phenomenon. Approaches that have worked at one institution and time might not be appropriate elsewhere, and in any case will be unlikely to work every time. Nevertheless, the rapid pace of change in the health care industry demands a fresh look at existing modes of operation. Hospitals in immediate need of incremental revenue cannot afford to sit idly by, hoping their physicians will organize themselves sufficiently to bring additional payor contracts and patients to the institution. Taking an active role in helping physicians to develop contracting organizations that also benefit the hospital may well be worth the time and expense involved.     

Medicare program; home health agency physician certification regulations--HCFA. Decision to reexamine interpretations, with comment

This document with comment period announces our decision to reexamine our recent interpretations of the Medicare regulations pertaining to indirect compensation arrangements between home health agencies (HHAs) and physicians who certify or recertify the need for home health services or establish or review the home health plan of care. We are withdrawing recent interpretations regarding indirect compensation arrangements where the physicians are salaried employees of, or have a contractual arrangement to provide services for, an entity that also owns the HHA. This will enable us to evaluate our recent interpretations of these regulations and related provisions of section 1877 of the Social Security Act to ensure consistent application of Medicare policy among providers of services.     

To share is fair: The changing face of China's fair use doctrine in the sharing economy and beyond

Copyrighted works are greatly entwined with the concept of the sharing economy because of their status as informational public goods. Unlike commercial sharing models that address tangible goods such as bikes and houses, the sharing of which is limited by their physical nature, sharing models for intangible copyrighted works such as Google Books and live game webcasting must account for the comparatively unfettered ability for these to be shared. Accordingly, these models are more focused on exploiting such works to their full commercial potential. However, these sharing models are to a large extent based on the unauthorised exploitation of copyrighted works and will be unworkable if the related copyright issues cannot be solved. The interest that copyright owners have in exclusivity must thus be balanced with the public's interest in further exploitation of copyrighted works. Article 22 of the Copyright Law of China outlines an exhaustive list of copyright exceptions; such a restrictive list is incompatible with the sharing economy. The Chinese courts have realised this problem and have gone beyond the law in their judgments, taking a cue from their US counterparts. However, many of these decisions appear to be inconsistent with one another.To address the aforementioned problems, this paper examines the latest proposed amendment to the Copyright Law of China and proposes several legislative and judicial actions that could help promote the sharing economy. At the legislative level, enacting legislation based on a refined open-ended fair use model is necessary to promote the development of the sharing economy. At the judicial level, Chinese courts should employ the concept of transformative use to correctly interpret legislation based on the proposed open-ended model. With transformative use as the cornerstone of copyright policy, the public gains the freedom to share others’ works, participate in the innovation process, and create works with new value. Moreover, authors would retain an incentive to create works under such a legal regime because market substitution will not occur if a work is used for a different expressive purpose than that for which the work was originally created. Thus, a balance can be achieved between promoting the sharing economy and protecting the exclusivity of copyright in China.     

域外医疗损害无过失补偿制度研究

如何实现医疗损害的合理分担和对医疗损害被害人的充分救济,是世界各国普遍面临的难题。新西兰、瑞典、美国和法国等国家都较为重视对医疗损害被害人的补偿,先后建立了契合本国实际的、各具特色的医疗损害无过失补偿制度,并以立法和修法的形式实现制度的确立与变革。     

Screening technology transfers: Lessons from invention managers

Innovative ideas will not be transferred between organizations unless they pass the screening tests managers use to choose innovations for transfer. This paper suggests that most screening methods have been developed for analyzing incremental improvements in existing businesses. As such, these methods militate against the transfer of new technologies. The paper describes screening methods in use at invention-management organizations as an alternative. These methods stress the development of business concepts for innovations, i.e., the integration of product specifications with the targeted market's characteristics, the user's capability, and convergent technologies that use and/or are used by the innovation. His recent work includes an OECD study of the innovation policies of the western provinces of Canada and a study of the commercialization of agricultural biotechnology for the US Department of Agriculture.     

Like bringing a knife to a gunfight: Why IRC Section 2036 is not the right weapon to combat abusive family limited partnerships

Family Limited Partnerships (“FLPs”), which were once a great estate planning technique, have now become victim to Section 2036 assertions made by the IRS. Over the years, the IRS has struggled to find a means to combat abusive FLPs until the courts began to embrace Section 2036 as a weapon for them to use. Different courts, however, have maintained different rules and have now subjected both abusive and non-abusive FLPs to inclusion of their assets into their gross estates. This has shed light onto the main issue, that is, that Section 2036 is not the appropriate tool to combat abusive FLPs.