Health Law Highlights

The Corporate Transparency Act: A Reporting Guide for Medical Groups and MSOs

From Sheppard Mullin Richter & Hampton LLP, by John Golembesky, Jordan Grushkin, Leonard Lipsky, Kathleen O’Neill, Richard Rifenbark, and Carolyn Young:

  • The Corporate Transparency Act (CTA) of 2021 mandates that any “reporting company” must submit a Beneficial Ownership Information Report (BOIR) to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This report includes identification details of the entity’s key owners and leaders, or “beneficial owners”. The CTA primarily targets non-publicly traded entities, including medical groups and management services organizations (MSOs).
  • Entities formed or registered on or after January 1, 2024, must also report information about the individual who oversaw the preparation of the certificate of formation and the person who filed the document with the Secretary of State. However, there are several exceptions to the reporting requirement, including larger, active companies, public companies, and entities that already report to the federal government.
  • Reporting companies registered prior to January 1, 2024, must submit their BOIR by January 1, 2025. Companies registered between January 1, 2024 and January 1, 2025, have 90 days post-registration to file, and those registered after January 1, 2025, have 30 days to file.
  • The CTA’s application to common corporate structures in the healthcare industry raises questions about whether individual leaders of an MSO should be reported as “beneficial owners” of an affiliated medical group. Each reporting company should consider the facts and circumstances of its existing relationships and assess its legal duties and degree of risk tolerance.
  • The BOIR must include information about the reporting company and any beneficial owners, and for companies formed after January 1, 2024, information on company applicants. Beneficial owner information includes each individual’s full legal name, date of birth, residential address, ID number and issuing jurisdiction of a non-expired US passport, driver’s license, or other government-issued ID, and an image/photocopy of such ID.