Children'S Physician Group PC

“Illinois law requires that all of the stock of cpg be held by an individual licensed to practice medicine in the state of illinois. All of the corporation's stock was held by thomas h. Dunigan, m.d., a physician executive employed by children's hospital and health system, inc. ("chhs") and its wholly owned subsidiary, children's medical group ("cmg"), in trust for the benefit of chhs. The trust agreement, together with the articles of incorporation and bylaws of cpg, set forth the authority of dr. Dunigan as trustee and shareholder, as well as limitations on such authority. The documents provide that chhs, as beneficiary under the agreement, has various other reserve powers and authority in relation to the corporation. In august 2013, dr. Dunigan transferred all stock to michael gutzeit, m.d., chief medical officer of children's hospital of wisconsin, inc., a wholly owned subsidiary of chhs. Dr. Gutzeit assumed all responsibilities of trustee.”

“The sole stockholder of the organization has the authority to elect himself to the board of directors.”

“Cpg has a single shareholder who holds the corporation's stock in trust for chhs. Through the sole shareholder, chhs has certain reserve powers over the decisions made by the board of directors of cpg including amendment of the articles of incorporation and bylaws; and approval of the annual budget and any debt.”

“The form 990 of cpg was reviewed by management, the audit and compliance committee, and other advisors of chhs and prior to filing, a copy was provided to the director of cpg.”

“Annually, all directors, officers and key employees are requested to submit a conflict of interest disclosure to the corporate vice president and general counsel of chhs. A list of potential conflicts is prepared and is available at each board and committee meeting. The compliance department monitors and periodically reviews transactions between the organization and board members or entities with which they are affiliated.”

“The compensation of the organization's president/treasurer was reviewed and approved by the independent compensation committee of chhs. With the assistance of an independent compensation consultant and information from a variety of external sources (as indicated on schedule j), the committee confirmed that total compensation to be paid was reasonable and comparable to amounts paid by similarly situated organizations. The process followed by the committee, including the data relied upon and the committee's decisions, was thoroughly and timely documented. Compensation of the other officer was set by supervisory executives in consultation with chhs human resources leaders. The process included review by independent persons who, using a variety of external sources (as indicated on schedule j), confirmed that total compensation amounts to be paid were reasonable and comparable to amounts paid by similarly situated organizations. The process and data relied on were thoroughly and timely documented.”

“The governing documents, conflict of interest policy and financial information of cpg are available to the public upon request through the chhs marketing and communication department.”

“Children's physician group, p.c. ("cpg") is an illinois professional corporation. Pursuant to a first restated trust agreement dated january 1, 2006 (the "agreement"), cpg is a "captive pc" in relation to children's hospital and health system, inc. ("chhs"), a tax-exempt wisconsin corporation serving as the parent entity of an integrated system of provider organizations addressing the health care needs of children in southeastern wisconsin, northern illinois and surrounding areas. Because illinois law requires that all of the stock of cpg be held by an individual licensed to practice medicine in the state of illinois, all of cpg's stock was held by thomas h. Dunigan, m.d., through august 2013, and michael gutzeit, m.d., after august 2013, both physician executives employed by chhs/cmg, in trust for the benefit of chhs. The agreement, together with cpg's articles of incorporation and bylaws, set forth the authority of the physicians, as trustee and shareholder, in relation to cpg, as well as limitations on such authority. Illinois law further requires that the board of directors of the corporation consist solely of individuals licensed to practice medicine in the state of illinois. The physician executive is the sole director of cpg. Because the physician executive is a compensated employee of chhs/cmg, he may not be considered "independent" for purposes of form 990. However, as acknowledged by the irs in its cpe text for fiscal year 1997, in a multi-entity hospital system, the board of a subsidiary non-profit health care organization is considered to be comprised of independent community members if it is controlled by an exempt organization whose board is comprised of a majority of voting members who are independent community members. Cpg meets this standard because, via the agreement and its articles of incorporation and bylaws, cpg is controlled by chhs, the governing board of which includes independent community members as a majority thereof.”

“By the end of 2013, children's physician group, p.c. Closed all three of its clinic locations, but continues to hold a long-term lease at one site in illinois.”

“The organization did not file any forms 1099 during the taxable year. Although the organization did retain independent contractors, the compensation amounts owed to such contractors were processed and paid by a related entity, children's hospital of wisconsin, inc. ("chw"), with appropriate intercompany arrangements between the organization and chw. The forms 1099 for such payments were issued by chw, as the entity that processed and made the payments to the independent contractors.”