Form 5871-S, Disclosure of Ownership and Control Statement – Short Form

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Documents

Effective Date: 6/2017

Instructions

Updated: 6/2017

Purpose

Form 5871-S may only be used by a disclosing entity (applicant/provider) that meets the following requirements.

  1. No business entity of any type has a direct, indirect or a combination of direct and indirect ownership interest equal to 5% or more in the disclosing entity.

Direct ownership interest is defined as the possession of stock, equity in capital or any interest in the profits of the disclosing entity. Indirect ownership interest is defined as ownership interest in an entity that has direct or indirect ownership interest in the disclosing entity. The amount of indirect ownership in the disclosing entity that is held by any other entity is determined by multiplying the percentage of ownership interest at each level. An indirect ownership must be reported if it equates to an ownership interest of 5% or more of the disclosing entity.

Example: If A owns 10% of the stock in a corporation that owns 80% of the stock of the disclosing entity, A's interest equates to an 8% indirect ownership and must be reported. Conversely, if B owns 80% of the stock of a corporation that owns 5% of the stock of the disclosing entity, B's interest equates to 4% indirect ownership in the disclosing entity and does not need to be reported.

  1. The disclosing entity does not contract or propose to contract with a management company to provide any services related to the disclosing entity's participation in Health and Human Services Commission (HHSC) programs.

The disclosing entity must meet both of these requirements in order use Form 5871-S. Disclosing entities that do not meet both of these requirements must use Form 5871.

Form 5871-S is completed and submitted as a condition of approval or renewal of a Texas Medicaid enrollment application or a contract agreement between the disclosing entity (applicant/provider) and HHSC for any services program. A full and accurate disclosure of ownership and control interest is required. Failure to submit requested information may result in denial of the disclosing entity's application to enroll in Texas Medicaid, to participate in HHSC programs, or where the disclosing entity already participates, termination of the disclosing entity's Texas Medicaid enrollment and contract with HHSC.

Instructions for HHSC Staff

When to Prepare

Obtain a completed and signed Form 5871-S for:

  • a new enrollment in Texas Medicaid;
  • a new contract;
  • a re-enrollment in Texas Medicaid; and
  • a change in ownership or control interest.

Form Retention

Retain Form 5871-S and attachments in accordance with the records retention requirements in the Health and Human Services System Contract Management Handbook.

DISCLOSING ENTITY'S INSTRUCTIONS FOR COMPLETING FORM 5871-S

Section 1. Disclosing Entity Information

Legal Name of Disclosing Entity (applicant/provider) – Enter the full legal name of the disclosing entity, exactly as it was chartered, filed, registered or otherwise legally declared. If an individual, enter the individual’s full legal name.

Doing Business As (d/b/a), if applicable – If applicable, enter the d/b/a relevant to this contract. Note: A d/b/a is an assumed business name; it is not the name of the legal entity that owns the business. Do not use a d/b/a to disclose the ownership interest of a legal entity.

Name of Contact Person – Enter the name of the person who can answer questions about the information furnished on the form.

Title or Relationship to Disclosing Entity – Enter the contact person's title or relationship to the disclosing entity. Examples of title or relationship are president, partner, manager, administrator, authorized representative, spouse, etc.

Area Code and Telephone No. – Self-explanatory.

Area Code and Fax No. – Self-explanatory.

Email Address – Self-explanatory.

Business Entity Type – Check the disclosing entity's applicable business entity type. If a for-profit corporation, check "Publicly Traded" if the corporation's shares are traded on an open market, such as a stock exchange.

Governmental – Check the appropriate box: Federal, State, County, City, Hospital District/Authority, or Local Intellectual and Developmental Disability Authority (LIDDA).

Taxpayer Identification No. (EIN or SSN) – Enter the nine-digit federal employer identification number (EIN) assigned to the disclosing entity by the Internal Revenue Service. Temporary taxpayer identification numbers are not acceptable. If the disclosing entity is a sole proprietorship or individual who does not have an EIN, enter the owner's or individual's Social Security number (SSN).

Provider Identifier No. (NPI or API) – Enter the ten-digit National Provider Identifier (NPI) number assigned to the disclosing entity by the Centers for Medicare and Medicaid Services (CMS) or the Atypical Provider Identifier (API) number assigned by HHSC, whichever is applicable.

Section 2. Disclosing Entity's Ownership and Control Interest Information

The disclosing entity is required to fully disclose all individuals who have an ownership interest of 5% or more.

The disclosing entity is also required to fully disclose all individuals who have a control interest and all managing employees.

Control interest is defined as the operational direction or management of a disclosing entity which may be maintained by any or all of the following devices: the ability or authority, expressed or reserved to amend or change the corporate identity (i.e., joint venture agreement, unincorporated business status) of the disclosing entity; the ability or authority to nominate or name members of the Board of Directors or trustees of the disclosing entity; the ability or authority, expressed or reserved to amend or change the by-laws, constitution or other operating or management direction of the disclosing entity; the right to control any or all of the assets or other property of the disclosing entity upon the sale or dissolution of that entity; the ability or authority, expressed or reserved to control the sale of any or all of the assets to encumber such assets by way of mortgage or other indebtedness, to dissolve the entity or to arrange for the sale or transfer of the disclosing entity to new ownership or control.

A managing employee is defined as a general manager, business manager, administrator, executive director or other individual who exercises operational or management control over, or who directly or indirectly conducts the day-to-day operation of an institution, organization or agency.

First, list individuals with a 5% or more ownership interest, followed by all individuals with a control interest and managing employees. If additional entries are required for full disclosure, copy this section and include as an attachment.

See Exhibit A of the instructions when completing this section.

Name of Individual – Self-explanatory.

Social Security Number – Self-explanatory.

Date of Birth – Self-explanatory.

Title or Position Held with Disclosing Entity – Enter individual's title or position with the disclosing entity, if applicable. For example, director, president, general counsel, member, general partner, limited partner, trustee, etc.

Percent of Ownership – Enter the percentage of shares, membership shares, equity, etc., that is owned by the individual, if applicable.

Physical Address – Self-explanatory.

Driver License No. (DLN) – Self-explanatory

State – Enter the abbreviation for the DLN state of issue.

For for-profit corporations only

Check Yes or No to indicate whether or not 100% ownership interest has been disclosed in this section. If No, check Yes or No to indicate whether or not each of the remaining shareholders owns less than 5%. If No, disclose remaining shareholders that have a 5% or more ownership interest or attach an explanation why these shareholders are not disclosed.

Section 3. Other Ownership and Control Interest Information

If additional entries are required for full disclosure, copy this page and include as an attachment.

A.

Check Yes or No to answer the two questions. If both questions are answered Yes, provide the requested information. Note: A secured obligation with a business entity that is a financial institution regulated by a federal or state governmental agency does not have to be disclosed.

To determine ownership interest in a mortgage, deed of trust, note, or other obligation, the percentage of interest owned in the obligation is multiplied by the percentage of the disclosing entity's assets used to secure the obligation.

Example: If A owns 10% of a note secured by 60% of the disclosing entity's assets, A's interest equates to 6% and must be reported. Conversely, if B owns 40% of a note secured by 10% of the disclosing entity's assets, B's interest equates to 4% and does not need to be reported.

Legal Name of Business Entity – Enter the legal name of the business entity with a 5% or more ownership interest in an obligation secured by the disclosing entity's assets.

Employer Identification No. (EIN) – Enter the business entity's employer identification number (EIN) assigned by the IRS.

Physical Address (Street, City, State, ZIP Code) – Self-explanatory.

Name of individual – Self-explanatory.

Social Security No. – Self-explanatory.

Date of Birth – Self-explanatory.

Physical Address (Street, City, State, ZIP Code) – Self-explanatory.

Driver License No. – Self-explanatory

State – Enter the abbreviation of the DLN state of issue.

B.

Check Yes or No to answer the two questions. If both questions are answered Yes, provide the requested information.

Legal Name of Business Entity (Subcontractor) – Enter the legal name of the subcontractor's business entity.

Business Entity Type – Enter the applicable business entity type. For example, for-profit corporation, limited partnership, limited liability company, etc.

Employer Identification No. (EIN) – Enter the business entity's federal employer identification number (EIN) assigned by the IRS.

Physical Address (Street, City, State, ZIP Code) – Self-explanatory.

Disclosing Entity's Percentage of Ownership in Subcontractor – Enter the disclosing entity's percentage of ownership interest in the subcontractor's business entity.

Provide the name, federal taxpayer ID number and address of all other individuals ...:

Name of Individual or Business Entity– Enter the name of the individual or business entity.

SSN or EIN – Enter Social Security number (SSN) for individuals and employer identification number (EIN) for business entities.

Physical Address (Street, City, State, ZIP Code) – Self-explanatory.

C.

Check Yes or No to answer the question. If answered Yes, provide the requested information.

Note: A step-relationship or adoptive relationship is considered the same as a natural relationship.

Name of First Individual – Enter the name of the individual who is related to another individual.

Identified in Section – Check the applicable box to indicate the section the first individual is listed. More than one box may be checked, if applicable.

Name of Second Individual – Enter the name of the individual who is related to the first individual named above.

Identified in Section – Check the applicable box to indicate the section the second individual is listed. More than one box may be checked, if applicable.

Relationship of First Individual to Second Individual – Check the applicable box to indicate the relationship of the first individual to the second individual.

D.

Check Yes or No to answer the question. If answered Yes, provide the requested information.

Other disclosing entity is any other Medicaid entity and any entity that does not participate in Medicaid but is required to disclose certain ownership and control information because of participation in any of the programs established under Title V, XVIII, XX or XXI of the Social Security Act.

Name of Individual/Business Entity – Enter the name of the individual or business entity.

Identified in Section – Check the applicable box to indicate the section the individual or business entity is identified. More than one box may be checked, if applicable.

Name of Other Disclosing Entity – Enter the name of the other disclosing entity in which the individual or business entity named above has an ownership or control interest.

Section 4. General Disclosure Questions

Complete this section for all individuals and business entities listed in Sections 2 or 3 A or 3 B. If any question is answered Yes, provide the information requested.

For questions A and E, “convicted” means that:

  • A judgment of conviction has been entered against an individual or entity by a federal, state or local court, regardless of whether:
    • there is a post-trial motion or an appeal pending, or
    • the judgment of conviction or other record relating to the criminal conduct has been expunged or otherwise removed;
  • A federal, state or local court has made a finding of guilt against an individual or entity;
  • A federal, state or local court has accepted a plea of guilty or nolo contendere by an individual or entity; or
  • An individual or entity has entered into participation in a first offender, deferred adjudication or other program or arrangement where judgment of conviction has been withheld.

For question B, “sanction” is defined as recoupment, payment hold, imposition of penalties or damages, contract cancelation, exclusion, debarment, suspension, revocation or any other synonymous action.

A.

Name of Individual/Business Entity — Enter the name of the individual or business entity.

Identified in Section — Check the applicable box to indicate the section the individual or business entity is identified. More than one box may be checked, if applicable.

Details — Fully explain the details, including the state and county the conviction occurred, the cause number(s), the program affected, and specifically what the individual or business entity was convicted of.

B.

Name of Individual/Business Entity — Enter the name of the individual or business entity.

Identified in Section — Check the applicable box to indicate the section the individual or business entity is identified. More than one box may be checked, if applicable.

Details — Fully explain the details, including the date, the state the incident occurred, the agency taking the action and the program affected.

C.

Name of Individual/Business Entity — Enter the name of the individual or business entity.

Identified in Section — Check the applicable box to indicate the section the individual or business entity is identified. More than one box may be checked, if applicable.

Details — Fully explain the details, including date, term, the state where the incident occurred, program affected and the name of the board or agency.

D.

Name of Individual/Business Entity — Enter the name of the individual or business entity.

Identified in Section — Check the applicable box to indicate the section the individual or business entity is identified. More than one box may be checked, if applicable.

Details — Fully explain the details, including amount, payment status (current or delinquent), the state where the incident occurred and the name of the board or agency.

E.

Name of Individual/Business Entity — Enter the name of the individual or business entity.

Identified in Section — Check the applicable box to indicate the section the individual or business entity is identified. More than one box may be checked, if applicable.

Details — Fully explain the details, including date, the state and county the conviction occurred, the cause number(s), and specifically what the individual or business entity was convicted of. Do not include any conviction disclosed in question A.

F.

Name of Individual — Enter the name of the individual.

Identified in Section — Check the applicable box to indicate the section the individual is identified. More than one box may be checked, if applicable.

Details — Fully explain the details, including date, state in which the incident occurred, name of the board or agency, and any adverse action taken against your license.

G.

Name of Individual — Enter the name of the individual.

Identified in Section — Check the applicable box to indicate the section the individual is identified. More than one box may be checked, if applicable.

Details — Provide details on how these past-due obligations will be met.

H.

Name of Individual — Enter the name of the individual.

Identified in Section — Check the applicable box to indicate the section the individual is identified. More than one box may be checked, if applicable.

Name of Country — Enter the name of the country the individual is a citizen in.

I.

For each individual who has a legal right to work in the United States, attach a copy of the individual’s green card, visa, or other documentation demonstrating the individual’s right to work and reside in the United States.

Section 5. Disclosing Entity's Certification

The owner or an authorized representative of the disclosing entity must certify the information provided on the form and all attachments, if any, is true and complete. If the legal entity is not a sole proprietorship, the authorized representative must be named on a current Form 2031, Governing Authority Resolution — Business Organization, or Form 2031-G, Governing Authority Resolution – Governmental Entity, that is on file with HHSC.

Exhibit A – Required Ownership and Control Interest Disclosures by Business Entity Type

Business Entity Type Ownership and Control Interest Disclosure
Sole Proprietorship
  • The sole proprietor
For-profit Corporation
  • All shareholders (entities and individuals) that have 5% or more ownership interest.
  • President
  • Secretary
  • Treasurer
  • All officers and directors
  • All executive trustees
  • All managing employees
Nonprofit Organization
  • President
  • Secretary
  • Treasurer
  • All officers and directors
  • All board members and/or board trustees
  • All managing employees
Limited Liability Company
  • All members and managers (percentages must total 100%). If there are membership units that are unassigned, include a note in the block following the last disclosed member that indicates the remaining membership units are unassigned.
  • All officers
  • All managing employees
General Partnership
  • All partners (percentages must total 100%)
  • All managing employees
Limited Partnership
  • The general partner(s)
  • All limited partners
    (percentages for general and limited partners must total 100%)
  • All managing employees
Limited Liability Partnership
  • The general partner(s)
  • All limited partners
    (percentages for general and limited partners must total 100%)
  • All managing employees
Trust, Living Trust
  • All trustees
Estate
  • Executor
Federal, State, County or City Governmental Authority or Hospital District/Authority
  • All commissioners or equivalent
  • All associate or deputy commissioners or equivalent