2010-07-09 - WRITTEN OPINIONS

2010-07-09. WRITTEN OPINIONS

3737 GLENWOOD AVENUE, SUITE 260

RALEIGH, NORTH CAROLINA 27612

JOHN R. WALLACE

RICHARD P. NORDAN

JOSEPH A. NEWSOME

February 25, 2010

The Honorable Gary Bartlett, Executive Director

North Carolina State Board of Elections

VIA HAND DELIVERY

506 North Harrington Street

Raleigh, North Carolina 27602

Re: Advisory Request Pursuant to N.C.G.S. § 163-278.23

Dear Mr. Bartlett:

This firm has been retained to represent the interests of American Anesthesiology, Inc., a subsidiary and an affiliate of MEDNAX, Inc. On behalf of American Anesthesiology, Inc. ("American Anesthesiology"), we are requesting an advisory opinion with respect to the application of the provisions of N.C.G.S. § 163-278.19 and certain related provisions of Article 22A to our client and its affiliates and their separate segregated funds.

Over the course of the last eighteen months, American Anesthesiology, a Florida corporation, has entered into comprehensive management agreements with two North Carolina anesthesiology practices, each of which, pursuant to N.C.G.S. § 163-278.19, had previously established and maintained a separate segregated fund for the use of its employees. The two practices were formally known as Critical Health Systems of North Carolina, PC, (now American Anesthesiology of North Carolina, PC) and Wilmington Anesthesiologists, LLP, (now American Anesthesiology of the Carolinas, PC). American Anesthesiology and the practices are in long term management agreements that provide for oversight and management of all business related functions of the practices. Under its management agreements with these two practices, American Anesthesiology provides accounting and legal compliance services to the practices' separate segregated funds.

We note several facts with respect to these two separate segregated funds and their relationship with American Anesthesiology. First, the two practice groups that have the separate segregated funds do not compete with one another in the same market and are geographically separate. Second, the two practice groups and the separate segregated funds have no common physician employees. They do share certain common officers. Those officers do not participate in the funds' contribution decisions. The physician employees of each practice group, and only the physician employees of each practice group, make decisions regarding contributions to be made by the funds. American Anesthesiology will not exercise control over those decisions. However, American Anesthesiology, through its management agreements with both practices, will provide administrative support to both of these separate segregated funds.

From a review of the text of N.C.G.S. § 163-278.19(b) and (e), there does not appear to be a prohibition on a corporate entity providing administrative support to more than one separate segregated fund. In this case, American Anesthesiology wishes to assist its affiliated practices (American Anesthesiology of North Carolina, PC and American Anesthesiology of the Carolinas, PC) with maintaining two separate segregated funds for their individual groups of employees and to provide administrative support, pursuant to N.C.G.S. § 163-278.19(e), to those separate segregated funds.

American Anesthesiology is seeking an advisory opinion with respect to three separate questions:

1. May the two now existing committees continue to exist as separate segregated funds?

2. If tire two separate segregated funds may be maintained going forward, must the contributions from the two separate segregated funds be aggregated for purposes of determining whether contribution limits have been met?

3. May American Anesthesiology provide administrative support, pursuant to N.C.G.S. § 163-278.19(e), to both separate segregated funds?

We appreciate your assistance in providing an advisory opinion with respect to these issues. Should you have need of further information or facts with respect to the situation faced by our client, please do not hesitate to contact this office.

With best regards, I remain

Sincerely,

WALLACE & NORDAN, LLP

John R. Wallace

JRW/map

cc: Kim Westbrook Strach, Deputy Director

GARY O. BARTLETT

Executive Director

MAILING ADDRESS:

P.O. BOX 27255

RALEIGH, NC 27611-7255

My 9,2010

Mr. John Wallace

3737 Glenwood Avenue, Suite 260

Raleigh, North Carolina 27612

Re: Advisory Request Pursuant to N.C.G.S. § 163-278.23

Dear Mr. Wallace:

I am in receipt of your letter dated February 25, 2010, in which you seek an advisory opinion on behalf of your client American Anesthesiology, Inc. Specifically, you pose three questions for response. Pursuant to N.C.G.S § 163-278.23,1 will provide responses to each of your questions.

To summarize the facts as provided, American Anesthesiology, Inc. has entered into comprehensive management agreements with two anesthesiology practices in North Carolina. Prior to the management agreements, the two practices had separately established separate segregated funds pursuant to N.C. G.S § 163-278.19(b). According to our records, Critical Health Systems of North Carolina PAC organized on May 14, 2002, and Wilmington Anesthesiologists PAC organized on September 18, 2001. Both of these separate segregated funds have been filing reports with our office since their organization.

As part of the management agreement, American Anesthesiology, Inc. will provide administrative support to both separate segregated funds. The physician employees of each practice group will be the only decision makers regarding contributions made from the separate segregated funds. Even though the two practice groups share some common officers, those officers do not participate in the contribution decisions of either separate segregated fund.

Based on these facts, the following responses are provided to your questions:

1. May the two existing committees continue to exist as separate segregated funds?

Answer: Yes. Both Critical Health Systems of North Carolina PAC and Wilmington Anesthesiologists PAC were established pursuant to N.C. G.S. § 163-278.19(b). N.C.G.S § 163-278.19(b) and (e) provide for corporations establishing a separate segregated fund and receiving reasonable administrative support from the parent entity designated on the committee's organizational report (Statement of Organization CRO 2100D). Currently, both separate segregated funds are eligible to receive reasonable administrative support from the parent entities designated on their Statement of Organizations, which are the practice groups of each separate segregated fund.

2. If the two separate segregated funds may be maintained going forward, must the contributions from the two separate segregated funds be aggregated for purposes of determining whether contribution limits have been met?

Answer: No. The separate practice groups are the parent entities of the two political committees. You explain that they have no common physician employees, and only the physician employees of each practice group make decisions regarding contributions to be made by the political committee for that group. Under these facts, contributions to each separate segregated fund will not be aggregated for purposes of determining whether contribution limits have been met.

3. May American Anesthesiology provide administrative support, pursuant to N.C. G.S. § 163-278.19(e), to both separate segregated funds?

Answer: Yes. Since American Anesthesiology, Inc. has a management contract with both practices to provide administrative support, those services are services to the parent entities that will then be provided to the separate segregated funds. American Anesthesiology's contracts are with the two parent entities. N.C.G.S. § 163-278.19(e) does not preclude a parent entity from contracting with an outside vendor to provide administrative support or the same vendor from contracting with multiple parent entities.

This opinion is based upon the information provided in your February 25, 2010, letter. If any information in that letter should change, you should consult with our office to ensure that this opinion would still be binding. Finally, this opinion will be filed with the Codifier of Rules to be published unedited in the North Carolina Register and the North Carolina Administrative Code.

Sincerely,

@#18#@

Gary O. Bartlett

Executive Director

cc: Julian Mann, Codifier of Rules

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