Chapter 20 The Impact of Mergers and Acquisitions on Physician Immigration

• Jurisdiction: United States

While consolidation in the health care industry has been occurring for decades, the pace of merger and acquisition activity in that sector has increased dramatically over the past few years. Hospital systems have been buying up independent hospitals. Physician practices have been bought by hospitals. And, frequently, a doctor will find that the employer that hired him or her initially changes as a result of a corporate transaction.

The consequences for a physician can be significant and severe if immigration issues are ignored during the transaction. Doctors may find themselves rendered illegally present and subject to deportation, and their employers may face significant fines and penalties. Hospitals could find their business licenses threatened, see their access to government contracts threatened, and face lawsuits from employees whose immigration statuses were ignored in the deal. And patients may find that needed health care professionals are no longer available either because their immigration status has been jeopardized or because they have left for another employer that has been proactive in managing the employee’s visa process.

The impact of a corporate change will vary from foreign employee to foreign employee depending on the type of visa or status he or she holds and what stage of the immigration process he or she is in.

Given the risks, one would assume that immigration issues are routinely addressed in the pre-closing stage of a corporate transaction. But the opposite is true, and often the immigration issues are not addressed until it is too late to prevent problems.

What issues need to be considered to determine if a deal impacts an immigrant physician?

The following questions need to be addressed when determining the impact of a transaction on an immigrant physician:

1. What type of deal is happening?

2. When will the deal be closing?

3. What type of visa does the physician have?

4. Is a permanent residency application pending?

What are the types of deals that can affect a physician’s immigration status?

Corporate changes that typically have immigration consequences are stock or asset acquisitions, mergers, consolidations, initial public offerings, spin-offs, corporate name changes, changes in payroll source, and the relocation of an employer or its employees.

The type of deal matters. If the employing entity goes away and there is a new employer identification number, the visas of the acquired company’s employees may be impacted. Some deals involve only acquiring specific assets of the seller and others are purchases of a whole company, including its liabilities. This matters because government agencies will sometimes allow companies who are “successors in interest” to avoid new filings.

How does the timing of the closing affect a physician’s immigration status?

While some deals make the news and take many months to close, other deals are made at a high level and are not made known to the company’s employees and the broader public until much closer to the date the deal closes. That is important because depending on the type of visa, filing documents in advance of the closing may be necessary, and sufficient lead-time may be necessary.

How are H-1B visa holders potentially affected by a transaction?

In an H-1B visa case, the questions to analyze are whether a corporate change results in a new employer, and, if so, to what extent are the interests of the target corporation being assumed?

Prior to December 2000, the U.S. Department of Labor (DOL) considered a change in an employer’s Federal Employer Identification Number (FEIN) enough to trigger a need to file a new Labor Condition Application (LCA). Under the rules adopted on December 22, 2000, a new LCA will not be required merely because a corporate reorganization results in a change of corporate identity, regardless of whether there is a change in FEIN, provided that the successor entity, prior to the continued employment of the H-1B worker, agrees to assume the predecessor’s obligations and liabilities under the LCA with a memorandum to the “public access file” kept for LCA purposes.

Material changes in the employee’s duties and job requirements and the relocation of the employee also may require a new LCA. Therefore, if employees are relocated due to a merger or sale, new LCAs will be required for H-1B workers.

DOL uses the Met-ropolitan Statistical Area (MSA), as criteria in determin-ing the need for a new LCA or labor certifica-tion.

If the em-ployee is relocated outside the MSA, then new filing is required. However, a simple name change will not trigger the need for a new LCA.

The rules governing when a new Form I-129, Petition for a Nonimmigrant Worker, must be filed with U.S. Citizenship and Immigration Services (USCIS) are similar to the LCA, but not identical. The need to file a new I-129 can be a fairly expensive requirement. For each new employment petition, the employer must pay the American Competitiveness and Workforce Improvement Act[1] fee, which is currently $1,500 for companies with more than 25 employees and $750 for smaller companies. Couple this with a $500 fraud fee, a $320 base filing fee and a $1,225 premium processing fee for fast adjudication, and you are looking at as much as $3,500 per worker in addition to attorney’s fees.

The Immigration and Nationality Act contains an exemption from filing a new Form I-129 in cases of corporate restructuring where the new employer is a successor-in-interest that assumes the interests and the obligations of...