IS ABIM'S TRANSFER OF ASSETS TO OFF-SHORE ACCOUNTS A PROPER OR IMPROPER USE OF TAX AVOIDANCE?

On 26 May 16 we asked why the ABIM Foundation would ship financial assets overseas into off shore non-taxable accounts. We assumed that the purpose was to protect money from IRS scrutiny. We suggested that IRS needed to take a look at ABIM and its Foundation to see if the organizations were sufficiently compliant with 501(c)(3) to continue function with tax exempt privileges. After further consideration we've concluded that ABIM's move was in conformity with likely recommendations of its lawyers and tax consultants and that it can reasonably be alleged that at least $6.5 million dollars in assets if submitted to IRS scrutiny might not meet the standards of 501(c)(3) compliance and is consequently at risk not only for taxation but also for penalties and interest. The ABIM lawyers were not asleep at the switch although the ABIM's BOD, beguiled by years of success, may have been. It also appears that boarded physicians have lost standing and professional privileges enough to warrant FTC investigation for restraint of trade. It was pointed out that ABIM's Dr. Richard Baron was rewarded with $812,000 remuneration last year (no night call required although it's our opinion that there was plenty of night-worry). Likewise, we've pointed out how other board presidents and CEOs have been super-amply rewarded, e.g., IRS Form 990 says that $843,000 was paid in 2012 to the president and CEO of ABPN (American Board of Psychiatry and Neurology). These levels of remuneration may be legal but seem inconsistent with the tax exempt status of the named organizations' stated goals. That is why it's felt by Change Board Recertification et al that IRS and FTC scrutiny are indicated.

WHY DOES THE AMERICAN BOARD OF INTERNAL MEDICINE FOUNDATION SHIFT ASSETS OVERSEAS?

More and more, healthcare is joining the industrial complex, read industrial-medical complex, similar to military-industrial complex, or, by way of abbreviation, MFF (Money First and Foremost).  Here's part of the inside story about ABIM: 

1) The ABIM founded the ABIM Foundation;
2) The ABIM Foundation shares its home address in Philadelphia with ABIM;
3) The ABIM Foundation's assets are recently reported to be $81,831,953;
4) The ABIM Foundation was initially funded by $55 million reportedly derived from examination and testing fees -- the $55 million came from the original ABIM which touted re-certification as though it were a public service or an effort to promote the public good by upgrading medical practice.
5) In effect, however, much of the money has been diverted into the waiting pockets of CEOs, board presidents, and other key officers and employees. By way of example, last year Dr. Richard Baron's remuneration was $812,000.  Meanwhile, countless physicians around the country were struggling to come up with enough money to "re-certify." To this extent, physicians with bona fide credentials were being squeezed out of practice in a form of trade restraint evidently not appreciated by the Federal Trade Commission (FTC). Organizations operating under the 501(c)(3) banner such as ABIM now appear to be working for goals not distinguishable from for-profit entities.

That's not all: A CONDO HERE, AN OFFSHORE ACCOUNT THERE ... 

6) The ABIM Foundation owns and/or operates a $2,356,267 condominium in downtown Philadelphia. The money to buy same was derived entirely or in part from the fees charged to hapless physicians who believed they had to recertify to stay in practice.

7) Now as the heat gets hotter, we're advised that the ABIM Foundation has transferred about $6.5 million into offshore accounts in the Cayman Islands and Dublin.

8) At a symposium in California about one year ago a document was distributed showing how one former ABIM physician officer was awarded stock options.

What's needed? HAS FTC AND IRS GIVEN PASSES TO ABMS ORGANIZATIONS? 

The Federal Trade Commission (FTC) should determine whether or not trade is being restricted; IRS, meanwhile, should examine whether or not the ABIM Foundation meets IRS 501(c)(3) requirements. Are its earnings lining the pockets of private shareholders or individuals?

For many observers the answer is yes. The amount of money paid out in personal remuneration appears exorbitant if the ABIM Foundation is a non-profit or charitable organization. It appears to many observers, this one among them, that IRS needs to review the tax classification of the ABMS boards and their associated organizations. At the same time, FTC needs to assess to what extent the covenants of MOC (Maintenance of Certification) are trade restrictive. 

References

Dr. Wes: "Standing up for the practicing physician"

ABIM Foundation Moves Assets Offshore, 5/20/16 

Change Board Recertification

Anti-MOC

Op-eds, The Weinmann Report, since 2012

MEDICAL STAFF VOTES AGAINST MANDATORY MOC (MAINTENANCE OF CERTIFICATION REQUIREMENTS)

BOARD CERTIFICATION: SHOULD THE GENERAL PUBLIC HAVE AN INTEREST IN THIS ARCANE SUBJECT? IN THE OPINION OF THIS WRITER, THE ANSWER IS YES. The extravgant remuneration of American Board of Medical Specialty (ABMS) CEOs and presidents has been disclosed to be as high as $1.3 million at the American Board of Pediatrics (ABP), $681,000 at the American Board of Internal Medicine (ABIM), and over $800,000 at the American Board of Psychiatry and Neurology (ABPN). This level of remuneration requires high costs for Maintenance of Certification (MOC) and for study programs acceptable to each of the boards. These requirements in turn cut down on the amount of time practicing physicians can spend with patients and their own families. MOC requirements unnecessarily increase physicians' administrative costs, in turn helping to drive medical costs ever upwards. To date there is no evidence-based science showing that these requirements improve medical care. Here is how one medical staff recently dealt with this matter (the following is verbatim reproduction of the resolution passed by the hospital's medical  staff). 

ARGUMENTS AGAINST

THE BYLAW AMENDMENT REQUIRING BOARD CERTIFICATION 

Several concerns have been raised as to the way this amendment to the medical staff bylaws has been written

#1  Requirement for board certification is NOT the community standard.

#2  New physician members who subsequently allow their board certification to lapse or marginally fail to pass recertification will immediately lose their medical staff privileges.

#3  The logistics of maintaining continuous active certifications in multiple boards (as required by certain subspecialties) carries with it the very real risk of a possible time gap in active certification (with a resultant loss of privileges)

#4  Physicians at the mid-point of their careers, who are otherwise well qualified in their specialty and who have previously passed their boards (but did not recertify) would not be eligible to apply for medical staff privileges.

#5  Current physicians who fail to complete the re-application process or pay their medical staff dues in a timely fashion automatically lose their medical staff membership and are REQUIRED TO FILE A NEW APPLICATION.  These long-standing members may well be subject to the new requirements.

#6  It is not unthinkable that the new medical staff members (who are subject to these strict requirements) will quite reasonably feel that ALL medical staff members should be bound by the same mandate. These new members may ultimately be represented in such numbers that they tip the balance and there is a resulting Bylaw change to that effect. 

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Editor's comment:  Our recommendation is that physicians opposed to mandatory MOC adopt this amendment or one similar to it at their own hospitals. The physician who led this charge against mandatory MOC was James B. Weidner, MD, specialist in cardiovascular disease and internal medicine. The hospital is Regional Medical Center in San Jose, previously known as Alexian Brothers.

Meanwhile, at the Union of American Physicians and Dentists (UAPD) Triennial, the UAPD passed two resolves of interest concerning MOC. Resolution # 5 states that "Medical Staff Bylaws allow medical staff membership for physicians who meet the minimum state requirements for the position (board certificate or eligibility is not a hiring requirement)." Resolution # 10  states that "UAPD negotiate for reimbursement of the Maintenance of Certification/Fees Programs by the state in our contract." 
   

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References:

Change Board Recertification, http://www.changeboardrecert.com

Open Letter to the American Board of Pediatrics, http://rebel.md/open-letter-the-american-board-of-pediatrics/

"Maintenance of Certification (MOC) and the IRS: where money and power meet," 7/29/15

"Maintenance of Certification, a rising business opportunity," 5/15/2015

"When does a $681,000 salary require additional incentive compensation?,"  4/17/15

"Resolutions passed at the UAPD 2015 Triennial," December 8, 2015



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