Nemours New Jersey Physician Practice PC

“The Nemours Foundation, a Florida nonprofit corporation ("Nemours"), dba Nemours Children's Health System, provides world-class pediatric medical care to children in Florida, Delaware, Pennsylvania, and New Jersey. Because the State of New Jersey has a prohibition on the corporate practice of medicine under New Jersey state statutes and guidelines issued by the New Jersey Board of Medical Examiners (See, for e.g., N.J.S.A. 45:9-5.1), Nemours New Jersey Physician Practice, P.C. ("Nemours NJ"), a separate New Jersey professional corporation wholly controlled by Nemours was incorporated in order to provide pediatric specialty outpatient care to children in New Jersey. The Internal Revenue Service has recognized that professional corporations established in those states with a corporate practice of medicine doctrine, like New Jersey, could qualify as a federal income tax-exempt charitable organization under Section 50l(c)(3) of the Internal Revenue Code. See "Corporate Practice of Medicine" by Charles F. Kaiser III and Marvin Friedlander, Internal Revenue Service TE/GE CPE Manual 2000-F ("Manual"). Nemours NJ has received Section 50l(c)(3) tax-exempt status as a charitable, educational and scientific organization under the "integral part" doctrine as Nemours NJ is performing an essential function for Nemours, i.e., the provision of specialty outpatient medical services to children in New Jersey which services Nemours would otherwise provide directly, if New Jersey did not have the corporate practice of medicine doctrine. The Certificate of Incorporation of Nemours NJ, on page 1, Article 2, expressly states that the Corporation is organized to engage in the business of rendering professional services to the public that a Doctor or Medicine or Osteopathy is authorized to render and will be organized and operated exclusively for charitable, educational and scientific purposes within the meaning of Section 501(c )(3) of the Internal Revenue Code of 1986, as amended (the "Code") and to further the charitable purposes of The Nemours Foundation and its divisions, including but not limited to the Nemours/Alfred I. du Pont Hospital for Children. The Certificate of Incorporation of Nemours NJ on page 2, Article 4, paragraph (d) also provides for distribution of the assets of Nemours NJ upon dissolution to Nemours and not to any shareholder. Nemours NJ has issued all of its shares of stock (100 common shares as authorized in Section 4 of the Certificate of Incorporation of Nemours NJ) to Roy Proujansky, M.D., a physician licensed to practice medicine in New Jersey so as to comply with the corporate practice of medicine doctrine. Dr. Proujansky is also the sole Director and President of Nemours NJ and the Executive Vice President and the Chief Executive in charge of the Delaware and New Jersey operations of Nemours. Under New Jersey's corporate practice of medicine prohibition, only New Jersey licensed physicians can serve as shareholders and directors of the professional corporation which is providing medical services. Accordingly, Nemours NJ only has one Board member and one Voting Board member. However, safeguards have been put in place in the corporate documents and policies of Nemours NJ and in the Stock Succession and Transfer Agreement (described below) and Management Services Agreement (described below) to ensure control of Nemours NJ by Nemours.”

“Dr. Proujansky, Mr. Higginbotham, Ms. Kowal have a shared business relationship. All are employees of The Nemours Foundation (Nemours).”

“The Nemours Foundation ("Nemours") is an IRC section 501(c)(3) charitable organization recognized by the IRS as a hospital under IRC section 170(b)(1)(A)(iii). Nemours provides comprehensive management services, administrative personnel, office space, equipment, supplies and non-professional services to Nemours NJ under the Management Services Agreement between Nemours NJ and Nemours, as manager. Nemours conducts all of the administrative and business functions for the Nemours NJ at all locations operated by Nemours NJ. By the provisions of the Management Services Agreement, Nemours has effective control over the operations of Nemours NJ.”

“Nemours NJ has a close connection with Nemours and Nemours has control over Nemours NJ. The Certificate of Incorporation of Nemours NJ expressly states that the Corporation is organized to engage in the business of rendering professional services to the public that a Doctor or Medicine or Osteopathy is authorized to render and will be organized and operated exclusively for charitable, educational and scientific purposes within the meaning of Section 501 ( c )(3) of the Internal Revenue Code of 1986, as amended (the "Code") and to further the charitable purposes of Nemours and its divisions, including but not limited to the Nemours/Alfred I. duPont Hospital for Children. The inclusion of the Section 501(c)(3) language in the Certificate of lncorporation is not contrary to or incompatible with the language of or the intent of the New Jersey Professional Service Corporation Act, N.J.S.A. §14A-17.1 et seq. The Certificate of lncorporation of Nemours NJ also provides for distribution of the assets of Nemours NJ upon dissolution to Nemours and not to any shareholder. Nemours NJ has issued all of its shares of stock to Roy Proujansky, M.D., a physician licensed to practice medicine in New Jersey so as to comply with the corporate practice of medicine doctrine. Dr. Proujansky is also the sole Director and President of Nemours NJ and the Executive Vice President and the Chief Executive in charge of the Delaware and New Jersey operations of Nemours. Under New Jersey's corporate practice of medicine prohibition, only New Jersey licensed physicians can serve as shareholders and directors of the professional corporation which is providing medical services. However, several safeguards have been put in place in the corporate documents and policies of Nemours NJ and in the Stock Succession and Transfer Agreement and Management Services Agreement to assure control of Nemours NJ by Nemours.”

“See explanation under Form 990, Part VI, Section A, Line 6.”

“See explanation under Form 990, Part VI, Section A, Line 6.”

“Nemours management reviewed a draft of the Form 990 prior to filing. Upon finalization of the return, Management provided a final copy of the return, via email, to Dr. Roy Proujansky, MD prior to filing with the IRS.”

“Nemours NJ has reviewed and adopted the conflict of interest policy established by Nemours. Nemours is committed to the belief that sound business practices start with an absolute commitment from each employee to act ethically in carrying out Nemours business, and to comply with the laws and regulations that impact its business, thus Nemours' employees must avoid participating in activities that create or appear to create a conflict of interest. Nemours has specifically identified the following areas in its policy to be potential conflicts of interest: financial interest, outside employment, paid faculty arrangements, consultant or research contracts, acceptance of gifts, gratuities, business courtesies, travel, lodging and entertainment, misuse of resources or assets, personal gain using undue influence, direct dealings with vendors, use of confidential information, and an individual's support of political causes. Nemours' policy requires certain individuals to disclose participation in activities or circumstances that may present a conflict of interest on an annual basis or if at any time such individual becomes aware of circumstances that may present a conflict of interest. These disclosures are reviewed by the Nemours' Audit and Finance Committee as necessary.”

“Nemours' Board of Directors designated the People, Compensation and Reputation Committee (PCRC) to serve as the committee responsible for establishing compensation practices which are reasonable and do not violate the private inurement prohibition . The practices and processes are designed to avoid any claim for intermediate sanctions and to satisfy the requirements to obtain the rebuttable presumption. The PCRC annually reviews, in consultation with an independent executive compensation consulting firm specializing in healthcare and the not-for-profit industry, independently sourced benchmark market data to establish the compensation of our officers, senior leadership and key employees and to ensure reasonableness in comparison with peer practices. The Board of Directors reviews and sets forth the compensation for the CEO using the same process as the PCRC. Nemours' compensation philosophy across the board targets the market median for base salaries for all Nemours' Associates, including officers, senior leadership and key employees. Total cash compensation is also generally targeted to be at the median of Nemours' peers.”

“Generally, Nemours NJ does not make its governing documents or its conflict of interest policy available to the public.”