Huguley Medical Associates

“Effective January 1, 2012, Texas Health Huguley (THH), the sole member of Huguley Medical Associates (the filing organization) entered into a Management Services Agreement with Adventist Health System Sunbelt Healthcare Corporation (AHSSHC). AHSSHC is the parent organization of a system of tax-exempt hospitals and other health care provider organizations that operates 50 hospitals throughout the U.S., primarily in the Southeastern portion of the U.S. AHSSHC is exempt from federal income tax under Internal Revenue Code Section 501(c)(3). Under the Management Services Agreement (the Agreement), AHSSHC must follow the policies of the filing organization's Board of Directors. Managerial services provided by AHSSHC included oversight and day to day management of the filing organization, including the following functions: Personnel administration, including recruitment, hiring, training, promoting, directing and terminating personnel; Procurement, including the acquisition of food and beverage items, supplies, devices, furniture, and medical equipment; Health Information Management; Maintenance and Security; Contracting for services and consulting services; Financial accounting systems; Development of operational and capital budgets; Billing and collection of receivables and remittances of payables; Patient safety and quality systems; Marketing; Regulatory compliance; Administration - Policies and Procedures, including appointment of the CFO, COO, and CNO. The individuals who serve as officers of the filing organization in the roles of CEO and CFO are listed in Part VII, Section A. These individuals were compensated by and on the payroll of AHSSHC for services rendered to the filing organization. The individual who is reported as a former Key Employee of the filing organization is listed in Part VII, Section A and is compensated by AHSSHC. Their compensation has been reported on Part VII and Schedule J in accordance with the instructions for Part VII, Section A, Line 5.”

“Huguley Medical Associates has one member. The sole member of the filing organization is Texas Health Huguley, Inc. Texas Health Huguley, Inc, (THH) is a Florida not-for-profit corporation that is exempt from federal income tax under Internal Revenue Code (IRC) Section 501(c)(3). There are no other classes of membership in the filing organization.”

“The sole member of the filing organization is THH. The Board of Directors of the filing organization are appointed by the sole member, THH, who has the right to elect, appoint or remove any member of the Board of Directors of the filing organization.”

“THH, as the sole member of the filing organization, has certain reserved powers as set forth in the Bylaws of the filing organization. These reserved powers include the following: a) to approve and disapprove the admission of new Members of the Corporation; b) to alter, amend or repeal the Articles of Incorporation; c) to alter, amend or repeal the Bylaws of the Corporation with the approval of a majority of the Board of Directors; d) the authorization of the Corporation to borrow; e) to approve or disapprove the budget of the Corporation and expenditures in excess of the amounts provided in a budget of the Corporation approved by the Members; f) to approve or disapprove of contracts where the Corporation is at financial risk; g) the distributions of any cash or property of the Corporation; h) the engagement or dismissal of a management company or medical service organization to manage the affairs of the Corporation, or the decision of the Corporation to manage its own affairs; i) the engagement and dismissal of the independent auditing firm for the Corporation; j) the engagement and dismissal of legal counsel; k) the engagement or dismissal of the firm performing utilization management for the Corporation; l) the subcontracting of any of the obligations of the Corporation; m) the hiring or termination of employee's or independent contractors; n) the purchase or acquisition of any property, real, personal, or mixed, by the Corporation exceeding Five Thousand Dollars ($5,000.00) in value; and o) the sale, exchange or other disposition of any property, real, personal or mixed, of the Corporation exceeding Five Thousand Dollars ($5,000.00) in value.”

“The filing organization's current year Form 990 was reviewed by the CEO and CFO prior to its filing with the IRS. The review conducted by these individuals did not include the review of any supporting workpapers that were used in preparation of the current year Form 990, but did include a review of the entire Form 990 and all supporting schedules.”

“The Conflict of Interest Policy of the filing organization applies to members of its Board of Directors and its principal officers (to be known as Interested Persons). In connection with any actual or possible conflicts of interest, any member of the Board of Directors of the filing organization or any principal officer of the filing organization (i.e. Interested Persons) must disclose the existence of any financial interest with the filing organization and must be given the opportunity to disclose all material facts concerning the financial interest/arrangement to the Board of Directors of the filing organization or to any members of a committee with board delegated powers that is considering the proposed transaction or arrangement. Subsequent to any disclosure of any financial interest/arrangement and all material facts, and after any discussion with the relevant Board member or principal officer, the remaining members of the Board of Directors or committee with board delegated powers shall discuss, analyze, and vote upon the potential financial interest/arrangement to determine if a conflict of interest exists. According to the filing organization's Conflict of Interest Policy, an Interested Person may make a presentation to the Board of Directors (or committee with board delegated powers), but after such presentation, shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement that results in a conflict of interest. Each Interested Person, as defined under the filing organization's Conflict of Interest Policy, shall annually sign a statement which affirms that such person has received a copy of the Conflict of Interest policy, has read and understands the policy, has agreed to comply with the policy, and understands that the filing organization is a charitable organization that must primarily engage in activities which accomplish one or more of its exempt purposes. The filing organization's Conflict of Interest Policy also requires that periodic reviews shall be conducted to ensure that the filing organization operates in a manner consistent with its charitable purposes.”

“The financial statements of the filing organization, its governing documents and conflict of interest policy are not generally made available to the public as a whole.”

“For those Board of Director members (not including physician members of the board), officer(s) and key employees who devote less than full-time to the filing organization (based upon the average number of hours per week shown in column (B) on page 7 of the return) the compensation amounts shown in columns (E) and (F) on page 7 were provided in conjunction with that person's responsibilities and roles in serving in an executive leadership position within Texas Health Huguley, Inc. Physician members of the Board of Directors received compensation from related organizations as a result of providing various medical services to those related entities. Additionally, the current Vice President, Kristen Lookingbill, is compensated by AHS/Texas, Inc., a related IRC Section 501(c)(3) entity. Compensation for Kristen Lookingbill paid by a related organization has been disclosed in Part VII, Section A. This executive also provides services to AHSSHC affiliates, which are unrelated. Time spent providing services to unrelated entities has not been reported on Part VII, Section A, column (B).”

“The sole member of the filing organization is Texas Health Huguley, Inc. (THH). THH is 49% owned by Adventist Health System/Sunbelt, Inc. (AHSSI). The parent corporation and sole top-tier member of AHSSI is Adventist Health System Sunbelt Healthcare Corporation (AHSSHC). AHSSHC is a Florida, not-for-profit corporation that is exempt from federal income tax under Internal Revenue Code (IRC) Section 501(c)(3). AHSSHC has established a shared service center to centralize the Accounts Payable (A/P) function for all AHSSHC subsidiary organizations. The filing organization has entered "0" in Part V, Line 1a because the filing organization does not issue Form 1099 returns, rather, all such returns are filed by and under the name and EIN of AHSSHC as the payor subject to the information reporting requirements of Section 6041. The facts and circumstances support a position that AHSSHC, as a payor on behalf of its subsidiary organizations in a shared service environment, will have sufficient management and oversight in connection with the subsidiary organizations' payments to meet the standard set forth in Treas. Reg. Section 1.6041-1(e). AHSSHC will not merely be making payments at the direction of its subsidiary organizations. Accordingly, AHSSHC is considered the payor subject to the information reporting requirements of Section 6041.”

“Transfer from tax-exempt affiliate 14,572,860.”