January 28, 2016

QUESTION:        Our MEC voted at its last meeting to make a contribution to the political campaign of Ben Carson, from the Medical Staff fund. There was some talk about how great it would be to see a doctor leading the country. The Medical Staff fund is comprised solely of dues paid by Medical Staff members. The Chief of Staff and the Secretary/Treasurer are the only signatories to the account. The money is held in an account associated with the hospital’s Employer Identification Number (“EIN”), but the hospital has never spent any money from the account and does not intend to exercise any control over the money. We consider the money to belong to the Medical Staff. So, is the donation okay?

ANSWER:          As a general rule, physicians can spend their money however they see fit. The same is not necessarily true of a Medical Staff. Because the Medical Staff is an integral part of the Hospital, rather than a separate legal entity, when the Medical Staff controls and spends money, it is the legal equivalent of the hospital controlling and spending that money. So, any use of the Medical Staff fund must be consistent with the way the hospital could and would use the money. That does not mean the hospital has to be involved in each decision to spend from the Medical Staff fund (which is why the leaders are signatories to the account). But, it does mean that the hospital should step in to prevent spending that is inconsistent with the hospital’s mission or legal compliance.

In the case of your Medical Staff, a donation to the campaign of Ben Carson would be prohibited if your hospital is a 501(c)(3) nonprofit since the federal tax code which exempts such organizations from taxation prohibits nonprofits from participating in any campaign activity for or against political candidates.

If the physicians on your Medical Staff feel very strongly about supporting Ben Carson, they are of course welcome to pool their resources and submit a campaign contribution together, as a group. But, that money cannot be pulled from the Medical Staff fund without running afoul of the tax code.

If your hospital is a for-profit hospital, you are not subject to the same prohibitions on spending as nonprofits. Even if a campaign contribution would not put you at risk of violating federal law, however, be aware that it may not be consistent with the goals of the organization. In what way does Ben Carson’s success as a presidential candidate matter for the hospital and its patients’ quality? Or its physicians’ ability to provide quality care to hospital patients? If there are identifiable benefits, then perhaps a contribution makes sense. But, if not, then the contribution is a questionable spending of dues.

To avoid any confusion in the future, we suggest adopting a policy governing Medical Staff dues, which specifies who will be the signatories, the authority of the signatories (for example, “any spending over $500 per transaction requires the signatory to obtain the consent of the MEC or Board”), and the types of spending that are and are not appropriate and authorized.