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Archive for Saturday, December 7, 2002

Stovall reviewing Menninger partnership

AG to determine whether charitable assets for Kansans are threatened by clinic’s move

December 7, 2002

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— Atty. Gen. Carla Stovall is reviewing a partnership Menninger has formed with two Texas institutions to determine whether the psychiatric clinic will owe money to Kansas.

Menninger plans to move its operations to Houston by June under its agreement with the Baylor College of Medicine and The Methodist Hospital. Officials announced the agreement this week.

Menninger's operation as a charitable, nonprofit organization in Kansas gives Stovall the right to review the partnership and the organization's charitable assets, said spokesman Mark Ohlemeier.

Under Kansas law, charitable assets belong to the people, and the attorney general has the authority to protect them.

A similar issue arose in 1997, when Blue Cross-Blue Shield of Kansas went to court to clarify whether it was a charity before it changed its tax status in 1969. Stovall and the company settled the case three years later, and Blue Cross put $75 million into the Sunflower Foundation, which Stovall created to provide health care grants.

Past cases involved sales of Kansas entities to for-profit companies. Ohlemeier said Stovall will consider that Baylor and Methodist Hospital also are nonprofits.

"Until the A.G.'s Office has had time to review the documents, we won't know the whole scope of the charitable assets," Ohlemeier said. "It's really too early to say what will happen."

John McKelvey, president and chief executive officer of the Menninger Foundation, said the deal isn't a sale.

"This is a partnership agreement. It bears no relationship to what happened with Blue Cross and Blue Shield," McKelvey said. "We are still a nonprofit."

In May, Menninger reported its endowment was worth more than $80 million. Under its partnership, Menninger plans to contribute money toward a new foundation in Houston.

McKelvey said Menninger already has repaid a significant amount to the state by transferring assets and programs to other, local organizations.

Dr. C.F. Menninger and sons Karl and Will founded the psychiatric clinic in 1925.

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