Healthcare: Faculty Practice Plans

As the legal, regulatory and financial environments for healthcare providers continue to evolve, faculty practice plans (FPPs) face increasingly complex legal, strategic and operational challenges. FPPs are multimillion-dollar businesses and integral components of academic medical centers. They often seek separate legal representation from their academic medical center partners for assistance with critical operational issues such as organizational structure and governance, strategic and business planning, financial arrangements with affiliated academic medical centers and compensation plans. FPPs may also find that their interests diverge at times from their academic medical center partners, necessitating separate counsel.

Organizational Structure and Governance Design/Strategic and Business Planning

The structure and governance of each FPP is unique and influenced by a myriad of factors, including the relationship with the associated medical center and school. From comprehensive organizational restructuring to updating existing models, the attorneys of Duane Morris have assisted FPPs at all levels to achieve their goals and objectives. Our deep experience and familiarity with the distinctions between an FPP and a non-academic physician practice enables us to effectively improve both internal governance and the FPP's relationships with the senior leadership of its academic medical center. We also assist FPPs to structure mutually beneficial arrangements with the many non-academic providers such as community hospitals, clinics and pharmaceutical and medical device manufacturers who are eager to capitalize on the cutting-edge clinical services, as well as the teaching and research missions, of the FPP.

Financial Arrangements


The interests of the FFPs and their affiliated academic medical centers often diverge in negotiations of their complex financial arrangements. FFP physicians and staff are tasked with providing clinical services to patients, teaching students and participating in research. Funding arrangements must align with economic incentives and the center's mission while complying with a numerous legal requirements. Traditional or historical arrangements may no longer meet these needs or be compliant with current laws and regulations. Our considerable experience representing both FFPs and academic medical centers enables us to understand the business and legal issues from all perspectives and to design financial arrangements that serve the goals of both the FFP and the academic medical center. We also have extensive experience representing physician groups in managed care contract negotiations and can work with FFPs to ensure the best possible managed care contracts.

Compensation and Benefits Design


Individual physicians and their FPP often have differing compensation and benefits objectives. These are attributable to numerous factors, including a physician's position, age and remuneration level. We know that meeting competing objectives requires incentives to attract and retain the individuals within the FPP and a flexible compensation and benefits package. We counsel FPPs on all aspects of (1) compensation matters, including fixed and variable compensation, (2) retirement plan matters, including design of appropriate retirement benefit levels, and (3) welfare and fringe benefit programs (including group health). We prepare the relevant employment agreements and plans to document these arrangements.

Fraud and Abuse/STARK


FPPs typically involve relationships with hospitals and medical schools that include the transfer of funds to and from the plans. The referral of patients to the hospitals raises issues under the federal Stark and anti-kickback laws and similar state laws. These issues are addressed primarily by reference to the academic medical center exception to the Stark law, as well as more fact-specific analyses under the applicable anti-kickback statutes. Duane Morris attorneys are experienced in setting up and evaluating FPPs against the complex regulatory exceptions and safe harbors necessary for the prevention of violations and whistleblower lawsuits. Our attorneys know the sensitivities involved with these inherently competing interests and if necessary can facilitate a smooth and safe transition to a new or modified structure that properly aligns financial incentives with institutional goals. We also provide knowledgeable and vigorous defense in support of the FPP's relationships in the event of an investigation or lawsuit challenging its arrangement.

Tax Planning

Duane Morris attorneys are highly skilled in the identification, development and usage of tax-efficient structures designed to maximize our clients' after tax compensation, ensure taxes are not over-paid, and create solutions to tax-related issues that result from dealings with tax-exempt organizations. Our attorneys help protect favorable tax treatments, such as the use of the cash basis accounting method. Our attorneys are deeply familiar with the federal, state and local tax needs of FPPs.

Immigration


FPPs are often confronted with immigration issues relating to the hiring of foreign personnel. For example, it is critical for foreign personnel to have appropriate visas and that the employer files the applications. The lines that define the employee's and employer's respective responsibilities are often blurred. Non-immigrant visas include the J exchange visitor visa, the H-1B specialty occupation visa and the O extraordinary ability visa. A crucial component of the green card process includes labor certifications, employment-based petitions and applications for permanent residence or immigrant visas.

Immigration applications are scrutinized by Citizenship and Immigration Services, Department of Labor and Department of State. Duane Morris attorneys are experienced in all phases of the immigration process, and in particular with representing physician groups, hospitals, doctors, nurses, occupational and physical therapists, biomedical engineers, and all personnel associated with FPPs. Our attorneys are also sensitive to competing employee-employer interests and can facilitate a smooth working relationship. We have extensive experience vigorously defending visa applications, I-9 investigation and public access files in the event of an investigation.

Intellectual Property

We understand the myriad of complex issues that arise from the ownership of a FPP's research and development. We have experience negotiating intellectual property licensing agreements between FPPs and major academic medical centers and other third-party joint venture partners, including provisions related to joint ownership rights, IP enforcement and royalties. Our patent prosecution team's technical capability is among the most diverse within the top tier of large law firms in the United States. Our Ph.D.-patent attorneys and patent agents include several postdoctoral fellows, a medical school graduate, and scientists formerly with leading biotechnology companies and research institutes. Duane Morris has been repeatedly ranked among the top 10 trademark filing law firms by Managing IP and IP Law360. Our firm currently manages worldwide trademark application and registration portfolios for various companies headquartered in the United States, Asia and Europe.

Colleges and Universities

We have had the privilege of performing legal services for dozens of colleges and universities and their research affiliates. We currently have active matters for many university clients, and some of our relationships span more than 20 years. Several of the firm's attorneys have chaired and served on the boards of various academic institutions, and one partner in the firm is a member of the National Association of College and University Attorneys (NACUA).

Representative Matters

  • Represented a faculty practice plan of a major Boston-area research hospital in a negotiating and drafting a license agreement, services agreement and escrow agreement for software that the plan was licensing to a joint-venture partner.
  • Provide ongoing advice to a faculty practice plan associated with a national research university regarding maintaining the legal separation, for liability purposes, between the practice plan entity and the university itself.
  • Represented faculty practice plan in negotiation of a master affiliation agreement with the Dubai Health Authority, and related agreements for provision of physician credentialing and information technology services by our client.
  • Represented faculty practice plan of major academic medical center in negotiation of a new exclusive affiliation and services contract with another large faculty practice plan.
  • Represented faculty practice plan of major academic medical center in structuring and forming a new outpatient vascular access center, as a joint venture between the practice plan and an individual physician investor.
  • Represented the 700-physician faculty practice plan of a major academic medical center in structuring and negotiating a comprehensive affiliation agreement between the practice plan and the medical center, including agreements for clinical services, teaching and teaching administrative services, medical director services, space rental, research services and employee leasing.
  • Represented 900-physician faculty practice plan in negotiation and implementation of master affiliation agreement with leading academic medical center.
  • Represented nonprofit faculty practice plans in formation, restructuring and joint-venture transactions.

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Diversity

"In my discussions with Duane Morris leaders, they frequently speak about how diversity within their firm has enabled them to better serve their diverse clients. They understand that investing in diversity is a wise business decision that positions them for the marketplace of the future."

Don Liu
Senior VP, General Counsel & Corporate Secretary
Xerox Corporation

At Duane Morris, achieving diversity is paradoxical. By supporting and celebrating the differences of our attorneys - and the individual strengths that they bring - our firm culture expands, fostering creative solutions for our clients. But diversity at Duane Morris does not mean that we have a certain number of diverse attorneys; true diversity means that it is no longer noteworthy to see diverse lawyers leading our practice groups or managing client relationships. Ascending to positions of leadership and greater responsibility and providing the highest levels of client service is simply what is expected of all our lawyers. Diversity is another strong asset that adds to our collective abilities to meet the needs of our clients.

Our vision of diversity at Duane Morris is to realize an environment in which our lawyers' outstanding qualities are not just measured by ethnicity, race, gender and sexual orientation, but more importantly, that our lawyers are remarkable as excellent attorneys above all else. Only then can we celebrate our differences while focusing on the common pursuit of legal excellence which everyone shares at Duane Morris.

To reach this goal, Duane Morris understands that the familiar diversity strategies and policies that most law firms have are needed. Without demanding results from such policies, most law firms are bound to fail in even achieving numerical hiring and retention goals. Duane Morris has been proactive and ambitious in its efforts to improve diversity at the firm, and has set deadlines for reaching the milestones which mark our progress. To create a more diverse law firm, Duane Morris is:

  • Committed to strategically increasing our diversity levels, which is currently at 10 percent.
  • Bringing together our Diversity Committee and our Hiring and Retention Committee to raise diversity as an important factor in our hiring decisions.
  • Dedicated to improving retention by building upon our monitoring and mentoring program for all diverse associates.

Combining new initiatives with our longstanding diversity efforts, Duane Morris has seen increasingly positive results. In the Minority Law Journal's annual diversity survey of the nation's largest 260 firms, Duane Morris continued to improve its regional and national ranking, rising to number 136 of all firms surveyed. Our strides in Philadelphia are encouraging; in a city known for both the racial diversity of its population and the lack thereof in its law firms, Duane Morris is one of only two law firms to exceed the national average of minority partners at all law firms. Additionally, Duane Morris leads all national law firms based in Philadelphia in the number of Latino partners. Nearly 30 percent of all of our attorneys are women, and more than 20 percent of our partners are women.

In our approach to diversity, progress in racial, gender and cultural diversity cannot be measured in numbers alone. Duane Morris has focused our diversity initiatives on both increasing the number of diverse associates and addressing the challenges diverse attorneys face in building lasting careers and rising to senior and leadership positions. While several of our key practice groups are led by diverse partners and female partners, Duane Morris endeavors to create a culture which will foster a deep pool of such attorneys who can then develop into the firm's future leaders. Duane Morris understands that simply hiring diverse associates will not change the diversity of the firm; Duane Morris is working to mentor and retain diverse associates so that our progress in racial, gender and cultural diversity is also reflected at the highest levels of leadership within the firm.

Our progress on gender diversity has been profound. We have no glass ceilings: women hold positions of leadership at all levels of management at the firm. Women lead a number of our key practice groups, including our Energy, Immigration and International practices, and serve on the firm's Executive Committee. The success of our female attorneys at Duane Morris has not gone unnoticed. Barbara Adams was chair of the firm's Finance Practice until her appointment by Pennsylvania Governor Edward Rendell to serve as General Counsel of the Commonwealth. In 2004, our longtime General Counsel, Gene E.K. Pratter, was approved by the United States Senate and is now a judge for the U.S. District Court for the Eastern District of Pennsylvania.

Our efforts to improve diversity extend beyond our firm's walls. The chair of our Diversity Committee, Nolan N. Atkinson, Jr., recognized the lack of diversity in Philadelphia's legal community and formed the Philadelphia Diversity Law Group. Nolan now serves as the chair of the organization, a consortium of 25 law firms and corporations that commits to employing at least one diverse first-year law student each as a summer associate. From this program, law students of diverse backgrounds gain access to what was once an exclusive legal community, and now have the opportunity to learn and develop their legal careers with experience at Philadelphia's top law firms.

In addition to our involvement in the Philadelphia area, Duane Morris has increased our presence at national conferences and events focused on diversity. We sponsor the Hispanic National Bar Association and its job fair. Duane Morris is also a longtime supporter and sponsor of the Equality Forum, a national gay and lesbian rights organization. Duane Morris continues to sponsor the Minority Corporate Counsel Association, and is active in other associations of diverse attorneys including: the Asian American Bar Association of the Delaware Valley; the Charles Houston Bar Association; Cuban Bar Association; Korean American Lawyers Association; National American Indian Housing Counsel and the National Bar Association.

The challenge of improving gender, ethnic and cultural diversity at Duane Morris is an ongoing effort that has the support of the entire firm. Duane Morris has been at the vanguard in supporting gender diversity throughout the firm beginning a generation ago. Our diversity programs are leading to similar success in improving racial and national origin diversity at Duane Morris. But even as we share these examples of Duane Morris attorneys and our involvement in numerous legal events, associations and programs for diversity, our hope is that such examples will no longer be necessary to mention in the future. We hope that through our efforts, and the efforts of other law firms, these stories become so common that they are no longer the remarkable accomplishments they are today, but simply routine aspects of the legal world tomorrow.