Affiliated Service Group

[Madison71]

I am attempting to make an initial determination to ASG for a clinic where we have taken over on the TPA administration. I learned there are 10 individual Drs. practices with separate 401(k) Plans and each of the 10 individual Drs. practices also own a percentage of the clinic. The clinic has employees and also has a 401(k) Plan. Each of the 10 individual Drs. practices uses the clinic for any procedure they do and a significant amount of the revenue is paid to them from services provided to third parties in the clinic. An analysis have never been done nor been raised in the past. They are going to likely turn over to a law firm for analysis, but want an initial opinion from the TPA.

It seems to me to be a pretty straight forward FSO and A-Org situation. However, in reviewing the 1983 proposed regulations and other guidance, I am reading that the FSO needs to be established as a Professional Service Corporation. I am not sure that any of the 11 are set-up as a PSC. Does this get me out of the rules if all are set-up as non-PSC corporations? If set-up as a partnership or something other than a corporation, then it does fall under the FSO rules?

Thank you for your time.

[John Feldt ERPA CPC QPA]

How about the B-Org rules then?

[Madison71]

Thanks. I'm not sure. I'm stuck on the established as a professional services corporation. It is a drs. office with a dr. as partner and practitioner in the industry. I would think that by its very nature makes it a professional services corporation. However, it is set-up as a C-Corporation. Does that throw it out of the rules?

[K2retire]

State law typically prohibits a licensed professional from establishing a C corp because it is seen as a way to avoid liability for professional services. That is why professional service corporations exist. A quick check of your state's corporate laws may answer that question for you.