2011-10-13T16:04:08-05:00 2010-12-31 DELOITTE TAX LLP 201 E KENNEDY BLVD SUITE 1200 TAMPA FL 33602 990 2010-01-01 592742907 AVMED INC AVME 3523728400 SANTAFE HEALTHCAREINC PO BOX 749 GAINESVILLE FL 326270749 RANDALL L STUART 3523378730 2011-10-11 1 STEVEN EROVNER 8132738300 2010 2016-03-07 17:11:31Z X AVMED HEALTH PLANS MICHAEL P GALLAGHER SANTAFE HEALTHCAREINC PO BOX 749 GAINESVILLE FL 326270749 1550412928 0 X WWW.AVMED.ORG X 1986 FL TO IMPROVE THE HEALTH & WELLNESS OF OUR MEMBERS BY PROVIDING HIGH QUALITY HEALTH CARE PLANS.TO IMPROVE THE HEALTH AND WELLNESS OF OUR ENROLLEES BY PROVIDING HIGH QUALITY, COST-EFFECTIVE HEALTH CARE PLANS AND SERVICES TO THE EMPLOYERS AND MEMBERS WE SERVE. SEE PART III, LINE 1 FOR MORE INFORMATION. 12 11 1004 0 6297 0 0 0 1078829809 1267790283 14840259 18732654 70984 524583 1093741052 1287047520 19500000 4300000 0 0 75859375 74969552 0 0 0 1020270339 1202281767 1115629714 1281551319 -21888662 5496201 387161967 387395553 190876352 183253103 196285615 204142450 X THE MISSION OF AVMED, INC. IS TO IMPROVE THE HEALTH AND WELLNESS OF ITS ENROLLEES BY PROVIDING ACCESS TO HIGH QUALITY, AFFORDABLE HEALTH CARE SERVICES THROUGH A NETWORK OF CREDENTIALED HEALTH CARE PROVIDERS LOCATED THROUGHOUT AVMED INC.'S SERVICE AREAS. AVMED PROVIDES AFFORDABLE, NON-COMMERCIAL-TYPE HEALTH BENEFITS CONTRACTS, EDUCATES ITS ENROLLEES ABOUT HEALTH ISSUES, PROVIDES WELLNESS AND DISEASE PREVENTION PROGRAMS, CONDUCTS HEALTH FAIRS, PROVIDES DISEASE AND CHRONIC CARE MANAGEMENT PROGRAMS, MANAGES COMPLEX CASES, AND PROVIDES PRESCRIPTION DRUGS AND CERTAIN MEDICAL RESEARCH PROGRAMS. AVMED OFFERS ITS PROGRAM OF SERVICES AT AFFORDABLE FIXED PRICES TO FLORIDA EMPLOYERS AND VULNERABLE POPULATIONS INCLUDING INDIVIDUALS, SMALL EMPLOYER GROUPS AND SENIOR CITIZENS THROUGH THE MEDICARE ADVANTAGE PROGRAM (INCLUDING PRESCRIPTION DRUGS). 0 0 1173094684 1222698503 AVMED INC. (AVMED OR DBA AVMED HEALTH PLANS) PROVIDED HEALTH MAINTENANCE ORGANIZATION SERVICES TO EMPLOYERS AND INDIVIDUALS, INCLUDING SMALL EMPLOYER GROUPS AND SENIOR CITIZENS, REPRESENTING 2,862,112 MEMBER MONTHS OF NETWORK ACCESS, 2,949,864 DRUG PRESCRIPTIONS, AND 89,921 DAYS OF INPATIENT CARE. 45283754 45283754 AVMED PROVIDED EDUCATION, WELLNESS AND DISEASE PREVENTION, HEALTH FAIRS, DISEASE AND CHRONIC CARE MANAGEMENT, MANAGEMENT OF COMPLEX CASES, CLINICAL EDUCATION AND COORDINATION, AND OTHER HEALTH IMPROVEMENT SERVICES. AVMED MAINTAINED ITS EXCELLENT ACCREDITATION STATUS, THE HIGHEST RANKING STATUS, FROM THE NATIONAL COMMITTEE FOR QUALITY ASSURANCE (NCQA) FOR ITS PROGRAMS OF HEALTH CARE. AVMED ANNUALLY MEASURES THE HEALTH CARE PERFORMANCE OF ITS NETWORK OF PROVIDERS THROUGH THE HEALTHCARE EFFECTIVENESS DATA AND INFORMATION SET (HEDIS) PROCESS. HEDIS INCLUDES 75 MEASURES ACROSS 8 DOMAINS OF CARE.FOR 2010, AVMED'S RESULTS WERE RANKED AT THE 75TH PERCENTILE OR HIGHER NATIONALLY FOR 15 OF THE 28 HEALTH CARE MEASURES USED IN THE NCQA ACCREDITATION SCORING FOR BOTH ITS COMMERCIAL AND MEDICARE PRODUCTS, AND AT THE 50TH PERCENTILE OR HIGHER FOR 22 OF THE 28 HEALTH CARE MEASURES. AVMED ALSO ANNUALLY MEASURES THE SATISFACTION OF ITS MEMBERS THROUGH THE CONSUMER ASSESSMENT OF HEALTHCARE PROVIDERS AND SYSTEMS (CAHPS) SURVEY. THE SURVEY PROVIDES INFORMATION ON THE EXPERIENCES OF AVMED MEMBERS WITH THE HEALTH PLAN AND HOW WELL THE HEALTH PLAN MEETS MEMBERS' EXPECTATIONS. 80% OF AVMED'S MEMBERS WHO RESPONDED TO THE 2010 ANNUAL SURVEY RATED AVMED OVERALL AS A HEALTH PLAN AT 8, 9, OR 10 ON A SCALE OF 0 TO 10, WHERE 10 IS THE HIGHEST RATING. 4300000 4300000 AVMED MADE GRANTS TOTALING $4,300,000 TO SANTAFE HEALTHCARE, INC., ITS NOT-FOR-PROFIT SUPPORTING ORGANIZATION, IN SUPPORT OF SANTAFE HEALTHCARE'S EXEMPT PURPOSES. 1222678438 0 0 1 0 0 0 0 1 0 1 1 0 0 1 1 1 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 1 19994 0 1 1004 1 1 1 0 0 0 0 0 X 12 11 0 0 0 0 0 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 X RANDALL L STUART SR VP & CFO 3523378730 4300 NW 89TH BLVD GAINESVILLE FL 326065688 X JOE G DUNLAP 3.00 X X 52300 16600 0 ROBERT L EPLING 1.00 X X 35100 0 0 GEORGE E WILLIAMSON II 1.00 X X 35600 0 0 HARRIS A BERMAN MD 1.00 X 3600 0 0 JOSEPH W DAVIS 1.00 X 33800 0 0 JOHN M LUDDEN MD 1.00 X 33900 0 0 PAMELA J MOONEY PHD 1.00 X 31700 0 0 PAUL R PHILIP 1.00 X 33600 0 0 HUGH J FLOYD 1.00 X 31700 0 0 ANTONIO L ARGIZ 1.00 X 29600 0 0 JUDITH L SQUILLANTE 1.00 X 16100 0 0 GORDON L JOHNSON 1.00 X 31700 0 0 ROBERT C HUDSON 1.00 X 31700 0 0 MICHAEL P GALLAGHER 44.00 X X 0 2382570 245651 EDWIN W HANNUM 60.00 X 1040705 0 47203 STEPHEN J DEMONTMOLLIN 46.00 X 574723 0 63105 RANDALL L STUART 58.00 X 0 546816 127608 CATHERINE E AYERS 40.00 X 576433 0 131218 GREGORY W FISCHER 50.00 X 329557 0 72220 KIRK D CIANCIOLO DO 50.00 X 548245 0 126377 SUSAN K PINNAS 50.00 X 390689 0 61279 FRANCIS JANTZEN 40.00 X 366237 0 55392 EDWIN RODRIGUEZ MD 40.00 X 360158 0 82732 JEFFREY KALISH 40.00 X 372868 0 30703 CARLOS DORREGO 40.00 X 340884 0 39579 ROBERT BONNNELL MD 40.00 X 343185 0 69044 KENNIE M STILL 40.00 X 504220 0 50474 DOUGLAS G CUENY 0.00 X 175155 0 0 6323459 2945986 1202585 83 1 1 0 BAPTIST HOSPITAL OF MIAMI INC 8900 N KENDALL DRIVE MIAMI FL 33176 MEDICAL 102091287 SOUTH BROWARD HOSPITAL DISTRICT 3501 JOHNSON ST HOLLYWOOD FL 33021 MEDICAL 93002606 SOUTH MIAMI HOSPITAL INC 6200 SW 73RD ST MIAMI FL 33143 MEDICAL 51721230 MOUNT SINAI MEDICAL CENTER OF FLORIDA I 4300 ALTON RD MIAMI FL 33102 MEDICAL 23970251 NORTH FLORIDA MEDICAL CENTER INC PO BOX 147014 GAINESVILLE FL 32614 MEDICAL 23617433 1031 MEDICAL REVENUE 524114 898126838 898126838 MEDICARE REVENUE 524114 332885646 332885646 SELF-FUNDED ADMIN FEE 524292 20264182 20264182 FEDERAL REVENUE 524114 16513617 16513617 1267790283 9946041 120798 9825243 4483738 5739516 -1255778 -1255778 -1255778 264285700 2126805 257623802 2090 6661898 2124715 8786613 6297 8780316 MISCELLANEOUS 900099 921397 71176 850221 MANAGEMENT FEES 561000 858964 858964 1780361 1287047520 1267982257 6297 19058966 4300000 4300000 4129706 1442838 2686868 54656249 34996409 19659840 7167505 4334972 2832533 4849149 3030617 1818532 4166943 2696462 1470481 2432200 2432200 3061627 4787 3056840 340398 340398 950254 950254 1164690221 1154158800 10531421 7965359 7959634 5725 8109184 3413839 4695345 3727146 3727146 2258503 1853913 404590 1219364 816712 402652 507828 157792 350036 9232 9232 3409226 2371929 1037297 -1653661 -1653661 LICENSES AND FEES 4530649 1015561 3515088 COMMUNITY SUPPORT 505625 11100 494525 DUES AND ASSESSMENTS 218612 113073 105539 1281551319 1222678438 58872881 0 10899 10901 17335471 13533483 25376399 36677672 723678 1617477 74854573 48803537 24868302 26051036 285689627 274143034 21950389 24994413 11207202 10367537 387161967 387395553 171364768 158387257 9179625 11612209 1649161 2010043 8682798 11243594 190876352 183253103 X 196285615 204142450 196285615 204142450 387161967 387395553 X 5496201 2360634 X X 0 1 1 X 0 22500 0 0 ORGANIZATIONS DIRECT AND INDIRECT POLITICAL CAMPAIGN ACTIVITIES: PART I-A, LINE 1: AVMED MADE DIRECT CONTRIBUTIONS TO GENERAL CAMPAIGN FUNDS OF STATE AND LOCAL POLITICAL CANDIDATES AND TO THE FLORIDA REPUBLICAN AND DEMOCRATIC PARTIES IN 2010. 0 1 384250 4395800 4780050 1392246 34007011 23484633 11914624 438089 359946 78143 31682517 24857033 6825484 2554660 101925 2452735 26051036 INTECH ENHANCED PLUS FUND 24778456 F PRIVATE INVESTMENTS 215957 C 24994413 CAPITAL LEASE OBLIGATION 1022028 BENEFITS PAYABLE 5587384 OTHER LIABILITIES 4262956 DUE TO AFFILIATES 371226 11243594 1287047520 1281551319 5496201 3998783 -1638149 2360634 7856835 1286100803 800636 800636 1285300167 1747353 1747353 1287047520 1278128961 877642 877642 1277251319 4300000 4300000 1281551319 PART IV, LINE 2B: INCLUDED IN THIS LINE ARE OBLIGATIONS TO PAY BENEFITS FROM ESCROWED FUNDS ON BEHALF OF SELF-FUNDED HEALTH PLANS. DESCRIPTION OF UNCERTAIN TAX POSITIONS UNDER FIN 48: PART X: AVMED HAD NO UNCERTAIN TAX POSITIONS AS OF DECEMBER 31, 2010. AVMED INCURRED NO INTEREST EXPENSE OR PENALTIES RELATED TO UNCERTAIN INCOME TAX PROVISIONS IN 2010 OR 2009. TAX YEARS 2007 THROUGH 2010 ARE SUBJECT TO EXAMINATION BY FEDERAL AND STATE TAXING AUTHORITIES AND THERE ARE NO INCOME TAX EXAMINATIONS IN PROCESS AS OF THE DATE OF THIS REPORT. PART XI, LINE 8 - OTHER ADJUSTMENTS: CHANGE IN NET ASSETS FOR NONQUALIFIED PENSION PLAN 186,210. INVESTMENT PARTNERSHIP REVENUE REALIZED FOR TAX AND NOT FOR BOOK -1,747,353. INVESTMENT IMPAIRMENT REALIZED FOR BOOK AND NOT FOR TAX -77,006. PART XII, LINE 2D - OTHER ADJUSTMENTS: RENTAL EXPENSE RECLASS FOR TAX 877,642. INVESTMENT IMPAIRMENT REALIZED FOR BOOK AND NOT FOR TAX -77,006. PART XII, LINE 4B - OTHER ADJUSTMENTS: INVESTMENT PARTNERSHIP REVENUE REALIZED FOR TAX AND NOT FOR BOOK 1,747,353. PART XIII, LINE 2D - OTHER ADJUSTMENTS: RENTAL EXPENSE RECLASS 877,642. PART XIII, LINE 4B - OTHER ADJUSTMENTS: DISTRIBUTION TO SANTAFE HEALTHCARE 4,300,000. 1 SANTAFE HEALTHCARE INC PO BOX 749 GAINESVILLE FL 326270749 592317607 501(C)(3) 4300000 AVMED HEALTH PLANS PROVIDED ITS SUPPORTING ORGANIZATION (SANTAFE HEALTHCARE, INC.) A GRANT IN THE AMOUNT OF $4,300,000 TO SUPPORT AND FURTHER THE MISSION AND TAX EXEMPT PURPOSES OF SANTAFE HEALTHCARE, INC. 1 PROCEDURE FOR MONITORING GRANTS IN THE U.S.: PART I, LINE 2: SCHEDULE I, PART I, LINE 2: AVMED HEALTH PLANS AND SANTAFE HEALTHCARE, INC. SHARE COMMON MANAGEMENT. AS A RESULT, MANAGEMENT ENSURES THE USE OF GRANT FUNDS BY SANTAFE HEALTHCARE IS CONSISTENT WITH THEIR INTENDED PURPOSE. X X X 1 1 1 1 0 0 0 0 0 0 0 MICHAEL P GALLAGHER 0 801182 0 697001 0 884387 0 223059 0 22592 0 2628221 0 132300 EDWIN W HANNUM 442068 0 326055 0 272582 0 34300 0 12903 0 1087908 0 0 0 STEPHEN J DEMONTMOLLIN 300994 0 159291 0 114438 0 47125 0 15980 0 637828 0 0 0 RANDALL L STUART 0 341728 0 160964 0 44124 0 107796 0 19812 0 674424 0 19038 CATHERINE E AYERS 293770 0 163480 0 119183 0 103109 0 28109 0 707651 0 55810 0 GREGORY W FISCHER 305000 0 0 0 24557 0 63494 0 8726 0 401777 0 0 0 KIRK D CIANCIOLO DO 350606 0 144899 0 52740 0 107843 0 18534 0 674622 0 33617 0 SUSAN K PINNAS 274754 0 49500 0 66435 0 41063 0 20216 0 451968 0 0 0 FRANCIS JANTZEN 254954 0 62132 0 49151 0 34300 0 21092 0 421629 0 0 0 EDWIN RODRIGUEZ MD 269437 0 49373 0 41348 0 56602 0 26130 0 442890 0 0 0 JEFFREY KALISH 96402 0 270208 0 6258 0 19599 0 11104 0 403571 0 0 0 CARLOS DORREGO 75739 0 260278 0 4867 0 19599 0 19980 0 380463 0 0 0 ROBERT BONNNELL MD 250616 0 45031 0 47538 0 45475 0 23569 0 412229 0 0 0 KENNIE M STILL 134062 0 61689 0 308469 0 36160 0 14314 0 554694 0 0 0 DOUGLAS G CUENY 0 0 175155 0 0 0 0 0 0 0 175155 0 0 0 PART I, LINE 1A DURING MOST OF 2010, THERE WAS NO COMMERCIAL AIRLINE SERVICE BETWEEN GAINESVILLE, FLORIDA AND MIAMI, FLORIDA, THE LOCATIONS OF THE TWO PRINCIPAL OFFICES OF AVMED, INC. CHARTER FLIGHTS ARE SCHEDULED AS NEEDED TO COINCIDE WITH BOARD OF DIRECTORS AND OTHER CRITICAL MEETINGS. OPEN SEATS ON SUCH FLIGHTS ARE AVAILABLE TO ANY EMPLOYEE NEEDING TO CONDUCT BUSINESS IN THE MIAMI OR GAINESVILLE OFFICE. CERTAIN DIRECTORS AND THEIR COMPANIONS ATTENDED COMPANY PAID INDUSTRY SEMINARS AND TRADE CONVENTIONS AT THE REQUEST OF AVMED, INC. ALL BUSINESS COSTS, INCLUDING TRAVEL COSTS, PAID DIRECTLY BY THE ORGANIZATION OR REIMBURSED TO THE LISTED PERSON, WERE ACCOUNTED FOR UNDER AN ACCOUNTABLE PLAN UTILIZED BY THE ORGANIZATION. NO PART OF ANY TRAVEL COST WAS DEEMED A BENEFIT FOR ANY PERSON LISTED IN FORM 990, PART VII. INCIDENTAL EXPENSES ARE NOT REIMBURSED BY THE ORGANIZATION. TAX GROSS-UP PAYMENTS OCCUR FOR GROUP VARIABLE LIFE INSURANCE PREMIUMS PAID ON BEHALF OF THE LISTED AND OTHER EMPLOYEES. EMPLOYER PAID PREMIUMS ARE DEEMED TO BE TAXABLE COMPENSATION AND ARE GROSSED-UP FOR THE TAX IMPACT PRIOR TO BEING ADDED AS IMPUTED INCOME TO AN EMPLOYEE'S YEAR-END FORM W-2. TAX GROSS-UP PAYMENTS ARE PROVIDED FOR VESTED DISTRIBUTIONS FROM THE DEFINED CONTRIBUTION AND (NOW FROZEN) DEFINED BENEFIT PENSION RESTORATION PLANS. PART I, LINES 4A-B LISTED PERSONS RECEIVING A SEVERANCE PAYMENT OR CHANGE OF CONTROL PAYMENT IN THE YEAR: DOUGLAS G. CUENY RECEIVED $175,155 IN COMPENSATION PAYMENTS DUE TO HIS RESIGNATION AND RETIREMENT FROM EMPLOYMENT IN ACCORDANCE WITH THE BOARD-APPROVED EMPLOYMENT AND RETENTION AGREEMENTS. SCHEDULE J, PART I, LINE 4B: LISTED PERSONS PARTICIPATING IN A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN THE YEAR: AVMED, INC. MAINTAINS TWO ACTIVE NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS FOR A CERTAIN GROUP OF EXECUTIVES TO INCLUDE THOSE LISTED EMPLOYEES OF THE ORGANIZATION OR RELATED ORGANIZATIONS. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF THE INTERNAL REVENUE SERVICE CODE SECTION 401(A)(17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN.)VESTING FOR THIS PLAN IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MR. GALLAGHER VESTED AND RECEIVED PAYMENTS FROM A FROZEN NONQUALIFIED DEFINED BENEFIT RESTORATION PLAN IN 2010. MR. GALLAGHER ALSO VESTED AND RECEIVED PAYMENTS FROM THE NONQUALIFIED DEFINED CONTRIBUTION RESTORATION AND THE SUPPLEMENTAL RETIREMENT PLANS IN 2010. THE TOTAL AMOUNT OF THESE PAYMENTS WAS $831,870. LISTED PERSONS RECEIVING PAYMENTS FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN THE YEAR: CATHERINE E AYERS RECEIVED $113,337 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2010. STEPHEN J DEMONTMOLLIN RECEIVED $101,761 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2010. EDWIN W HANNUM RECEIVED $208,100 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2010. FRANCIS T JANTZEN III RECEIVED $32,962 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2010. KIRK CIANCIOLO RECEIVED $39,962 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2010. SUSAN PINNAS RECEIVED $57,090 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2010. EDWIN RODRIGUEZ RECEIVED $30,514 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2010. ROBERT BONNELL RECEIVED $29,043 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2010. KENNIE STILL VESTED AND RECEIVED $272,138 FROM THE DEFINED CONTRIBUTION RESTORATION AND FROZEN DEFINED BENEFIT RESTORATION PLANS IN 2010. SUPPLEMENTAL INFORMATION PART III PART I, LINE 3: MICHAEL P. GALLAGHER IS THE CHIEF EXECUTIVE OFFICER (CEO) OF AVMED, INC. MR. GALLAGHER IS COMPENSATED BY SANTAFE HEALTHCARE, INC. (SANTAFE), A RELATED SUPPORTING ORGANIZATION. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: ANNUALLY, THE SANTAFE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE CONSULTING FIRM. THE CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE CEO'S FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. G ED WILLIAMSON II BOARD DIRECTOR G. ED WILLIAMSON, II OWNS MORE THAN 35% OF A CORPORATION THAT PURCHASES HEALTH INSURANCE COVERAGE AT MARKET RATES FROM AVMED. THE AMOUNTS PAID FOR THIS HEALTH INSURANCE COVERAGE VARY FROM MONTH TO MONTH BASED ON THE ENROLLMENT OF THE COMPANY'S EMPLOYEES. 0 GORDON L JOHNSON BOARD DIRECTOR GORDON L. JOHNSON OWNS MORE THAN 35% OF A CORPORATION THAT PURCHASES HEALTH INSURANCE COVERAGE AT MARKET RATES FROM AVMED. THE AMOUNTS PAID FOR THIS HEALTH INSURANCE COVERAGE VARY FROM MONTH TO MONTH BASED ON THE ENROLLMENT OF THE COMPANY'S EMPLOYEES. 0 FORM 990, PART VI, SECTION A, LINE 7A SANTAFE HEALTHCARE, INC., A 501(C)(3) SUPPORTING ORGANIZATION TO AVMED, INC., HAS RESERVED POWERS AS DELINEATED IN THE ARTICLES OF INCORPORATION AND BYLAWS THAT PERMITS IT TO ELECT ONE OR MORE MEMBERS OF THE GOVERNING BODY OF AVMED, INC. FORM 990, PART VI, SECTION A, LINE 7B THE RESERVED POWERS OF SANTAFE HEALTHCARE, INC., AS DELINEATED IN THE ARTICLES OF INCORPORATION AND BYLAWS, PERMIT IT TO APPROVE OR RATIFY THE GOVERNING BODY'S DECISIONS RELATED TO BOARD MEMBER ELECTIONS OR REMOVALS, THE DECISION TO DISSOLVE THE ORGANIZATION AND OTHER MATTERS THAT MAY COME BEFORE THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 11 THE ORGANIZATION'S PROCESS FOR ENSURING THE ACCURATE PREPARATION, REVIEW AND APPROVAL OF THE 2010 FORM 990 BEGAN WITH PROFESSIONAL DEVELOPMENT OF STAFF (SEVERAL OF WHICH ARE CPAS) WHICH WERE INVOLVED IN THE PREPARATION OF THE 2010 FORM 990. IN ADDITION TO STAFF DEVELOPMENT, WHICH INCLUDED ATTENDING TAX SEMINARS AND CLASSES, MANAGEMENT ALSO CONSULTED WITH INDEPENDENT ACCOUNTING FIRMS AND TAX LEGAL COUNSEL REGARDING THE IRS FORM 990 CODE AND FILING REQUIREMENTS. THE ORGANIZATION ALSO PREVIOUSLY EDUCATED ITS MANAGEMENT TEAM, OFFICERS AND DIRECTORS, WITH THE ASSISTANCE OF DELOITTE TAX LLP, REGARDING THE FORM 990 AND THEIR INVOLVEMENT IN REVIEWING THE RETURN. FOLLOWING MANAGEMENT'S PREPARATION OF THE 2010 FORM 990, DELOITTE TAX LLP PERFORMED A DETAILED REVIEW OF THE 2010 FORM 990. A COPY OF THE 2010 FORM 990 AND ATTACHMENTS WERE PROVIDED TO THE ORGANIZATION'S CURRENT BOARD OF DIRECTORS FOR THEIR REVIEW AND COMMENT. EXECUTIVE MANAGEMENT ADDRESSED ANY QUESTIONS RAISED BY THE BOARD MEMBERS PRIOR TO FILING THE 2010 FORM 990 AND ATTACHMENTS WITH THE IRS. FORM 990, PART VI, SECTION B, LINE 12C AVMED HAS A POLICY FOR MONITORING AND ENFORCING COMPLIANCE WITH ITS CONFLICT OF INTEREST POLICY. THE POLICY DETAILS THAT THE CORPORATE SECRETARY HAS RESPONSIBILITY FOR DELIVERY AND RECEIPT OF DIRECTOR AND OFFICER CONFLICT OF INTEREST STATEMENTS. THE HUMAN RESOURCES DEPARTMENT OBTAINS AN ACKNOWLEDGMENT OF UNDERSTANDING OF THE CONFLICT OF INTEREST POLICY FROM EVERY NEW EMPLOYEE AT THE DATE OF HIRE AND FROM ALL EMPLOYEES ANNUALLY. ANNUAL CONFLICT OF INTEREST STATEMENTS ARE REVIEWED BY INTERNAL STAFF TO ENSURE RECORDS ARE COMPLETE. AS PART OF THE CORPORATE CONTRACT REVIEW PROCESS, CONSIDERATION IS GIVEN TO ANY POTENTIAL CONFLICTS OF INTEREST INVOLVING OPERATIONAL OR FINANCIAL TRANSACTIONS. ALL EMPLOYEES AND BOARD MEMBERS ARE EXPECTED TO NOTIFY THE CORPORATE COMPLIANCE OFFICER IF A POTENTIAL CONFLICT EXISTS. IF A CASE IS DISCOVERED OR REPORTED, THE CORPORATE COMPLIANCE OFFICER MAKES A REPORT TO THE LEGAL DEPARTMENT AND THE CHAIRMAN OF THE BOARD AS TO THE FACTS AND CIRCUMSTANCES SURROUNDING THE INCIDENT. MEMORANDUMS (OR MINUTES) ARE MADE OF EVERY FINAL DECISION, INCLUDING THE REASONS THEREFORE AND THE ACTION TAKEN, WHETHER THE QUESTION IS DETERMINED TO BE SUBSTANTIAL OR NOT; AND A COPY OF SUCH MEMORANDUM (OR MINUTES) IS FILED WITH THE CORPORATE SECRETARY FOR EXAMINATION BY THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 15 LINE 15A: MICHAEL P. GALLAGHER IS THE CHIEF EXECUTIVE OFFICER (CEO) OF AVMED, INC. MR. GALLAGHER IS COMPENSATED BY SANTAFE HEALTHCARE, INC. (SANTAFE), A RELATED SUPPORTING ORGANIZATION. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: THE SANTAFE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE CONSULTING FIRM. THE CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. FORM 990, PART VI, SECTION B, LINE 15B: PROCESS FOR DETERMINING COMPENSATION FOR ALL EMPLOYEE OFFICERS AND KEY EMPLOYEES OF AVMED, INC. IS AS FOLLOWS: THE SANTAFE HEALTHCARE, INC. (SANTAFE) BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS FIRM (FIRM) TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF ALL AVMED, INC. (AVMED) OFFICERS' AND KEY EMPLOYEES' TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG-TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISONS TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. AFTER COMPLETION OF ITS REVIEW, THE FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE SANTAFE BOARD OF DIRECTORS. THE FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF TOTAL DIRECT COMPENSATION AND EXECUTIVE BENEFITS. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETINGS. THE SANTAFE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY CONSULTANT TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF AVMED BOARD OF DIRECTORS' (INCLUDING OFFICER POSITIONS) COMPENSATION EVERY TWO TO THREE YEARS. THE COMPETITIVENESS ANALYSIS INCLUDES COMPARISONS TO BOTH NOT-FOR-PROFIT AND PUBLIC COMPANY (EXCLUDING EQUITY COMPONENT) DATA FOR COMPANIES WITHIN THE SAME OR SIMILAR INDUSTRY. ANY COMPENSATION CHANGES ARE APPROVED BY THE SANTAFE BOARD OF DIRECTORS BASED ON THE MARKET COMPETITIVENESS STUDY. A MARKET COMPETITIVENESS STUDY WAS CONDUCTED IN NOVEMBER 2010 FOR CHANGES MADE EFFECTIVE JANUARY 1, 2011. FORM 990, PART VI, SECTION C, LINE 19 AVMED'S PROCESS FOR MAKING ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND FINANCIAL STATEMENTS AVAILABLE TO THE PUBLIC ARE AS FOLLOWS: AVMED, INC.'S CONFLICT OF INTEREST POLICY STATEMENT IS INCLUDED IN ITS CODE OF ETHICAL BUSINESS CONDUCT AND IS AVAILABLE TO THE GENERAL PUBLIC AT HTTP://WWW.AVMED.ORG. THE ARTICLES OF INCORPORATION ARE AVAILABLE FOR PUBLIC INSPECTION ONLINE AT THE STATE OF FLORIDA, DIVISION OF CORPORATIONS WEBSITE WWW.SUNBIZ.ORG. THE FLORIDA OFFICE OF INSURANCE REGULATION SERVES AS THE OVERSIGHT AND LICENSING ENTITY FOR FLORIDA HEALTH MAINTENANCE ORGANIZATIONS AND CONDUCTS ROUTINE AND REGULAR EXAMINATIONS OF THE FINANCIAL AND OPERATING CONDITIONS OF LICENSED ENTITIES. THE EXAMINATION REPORTS INCLUDE FINANCIAL STATEMENT DETAILS AND ANALYSIS, AS WELL AS EVALUATION AND OPINIONS ON THE ENTITY'S GOVERNING DOCUMENTS AND GOVERNING BODY OPERATIONS AND MEETINGS. THE GENERAL PUBLIC HAS ACCESS TO THE FULL EXAMINATION REPORTS AT HTTP://WWW.FLOIR.COM/MC/IS_MC_FINANCIAL_EXAMS.ASPX. COMPENSATION PAID BY RELATED ORGANIZATIONS: FORM 990, PART VII, SECTION A, LINE 1A: THE TOP MANAGEMENT OFFICIAL OF AVMED, INC. (AVMED), MICHAEL P. GALLAGHER, IS EMPLOYED BY SANTAFE HEALTHCARE, INC. (SANTAFE), WHICH IS THE PRINCIPAL SUPPORTING ORGANIZATION FOR AVMED. MR. GALLAGHER'S COMPENSATION IS PAID DIRECTLY BY SANTAFE. SANTAFE CHARGES AVMED A MANAGEMENT FEE WHICH IS INCLUSIVE OF AN ALLOCABLE PORTION OF MR. GALLAGHER'S SALARY. ONE OF AVMED'S OFFICERS, RANDALL L. STUART, IS EMPLOYED BY SANTAFE, THE PRINCIPAL SUPPORTING ORGANIZATION OF AVMED. MR. STUART'S COMPENSATION IS PAID DIRECTLY BY SANTAFE. SANTAFE CHARGES AVMED A MANAGEMENT FEE FOR SERVICES PROVIDED BY MR. STUART. CHANGES IN NET ASSETS OR FUND BALANCES: FORM 990, PART XI, LINE 5: NET UNREALIZED GAINS ON INVESTMENTS: 3,998,783. CHANGE IN NET ASSETS FOR NONQUALIFIED PENSION PLAN 186,210. INVESTMENT PARTNERSHIP REVENUE REALIZED FOR TAX AND NOT FOR BOOK -1,747,353. INVESTMENT IMPAIRMENT REALIZED FOR BOOK AND NOT FOR TAX -77,006. TOTAL TO FORM 990, PART XI, LINE 5: 2,360,634. AUDIT COMMITTEE OVERSIGHT OF THE FINANCIAL STATEMENT AUDIT: FORM 990, PART XII, LINE 2C: THERE HAS BEEN NO CHANGE FROM THE PRIOR YEAR TO THE PROCESS RELATED TO AUDIT OVERSIGHT AND SELECTION OF THE INDEPENDENT ACCOUNTANT FOR THE ORGANIZATION. AVERAGE HOURS PER WEEK DEVOTED TO RELATED ORGANIZATIONS: FORM 990, PART VII, SECTION A, COLUMN B: MICHAEL P GALLAGHER DEVOTED AN AVERAGE OF 16 HOURS PER WEEK TO RELATED ORGANIZATIONS. STEPHEN J DEMONTMOLLIN DEVOTED AN AVERAGE OF 14 HOURS PER WEEK TO RELATED ORGANIZATIONS. RANDALL L STUART DEVOTED AN AVERAGE OF 12 HOURS PER WEEK TO RELATED ORGANIZATIONS. CATHERINE E AYERS DEVOTED AN AVERAGE OF 20 HOURS PER WEEK TO RELATED ORGANIZATIONS. KENNIE M STILL DEVOTED AN AVERAGE OF 10 HOURS PER WEEK TO RELATED ORGANIZATIONS. JOE G DUNLAP DEVOTED AN AVERAGE OF 1 HOUR PER WEEK TO RELATED ORGANIZATIONS. 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