When an "Affiliate" is Not an "Affiliate": The Strange Intersection of Immigration and Corporate Law
Immigration law is a strange and complex beast. As Judge Kaufman stated in 1976:
We have occasion to note the striking resemblance between some of the laws we are called upon to interpret and King Minos's labyrinth in ancient Crete. The Tax Laws and the Immigration and Nationality Acts are examples we have cited of Congress's ingenuity in passing statutes certain to accelerate the aging process of judges… Congress, pursuant to its virtually unfettered power…, and apparently confident of the aphorism that human skill, properly applied, can resolve any enigma that human inventiveness can create, has enacted a baffling skein of provisions for the [legacy] I.N.S. and courts to disentangle.The immigration laws are replete with ambiguities in both the statute and implementing regulations. Thus, in March of 2011, when the U.S. Citizenship and Immigration Services (USCIS) (the agency responsible for regulating immigration benefits), abruptly (and without notice), departed from its long-standing interpretation of a critical provision of the law, the beast began to roar. It was at this time, a critical time in the world of medicine, that USCIS unilaterally re-interpreted the term "affiliate", as it pertains to H-1B Petitions filed by non-profit hospitals affiliated with institutions of higher education, which sought to employ foreign medical graduates (FMGs) in their residency and fellowship programs.
In order to understand the significance of such changed interpretation, it is critical to understand the basics: FMGs who come to the U.S. to pursue graduate medical training do so pursuant to two types of non-immigrant visas-either J-1 or H-1B visas . Both are temporary visas that grant the FMG a fixed period of time in which to remain in the U.S., but the similarity ends here. J-1 physicians are sponsored by the Educational Council for Foreign Medical Graduates (ECFMG), at little or no cost and with no limit to the numbers of physicians who may enter the U.S. pursuant to such visa classification each year. Physicians holding J-1 status are subject to the dreaded "two-year foreign residence requirement," requiring them to return to their home countries at the conclusion of their training. H-1B physicians, unlike their J-1 counterparts, are sponsored by the employing medical institution, which is required to pay costly immigration filing and legal fees. Still, despite this added financial cost, H-1B physicians enjoy a great benefit: they are eligible to remain in the U.S. after completion of their medical training, without returning to their home country, provided they maintain their H-1B status or obtain lawful permanent resident status.
In immigration law, nothing is as good as it first looks and this holds true for H-1B physicians who are faced with a different problem: the annual numerical H-1B cap. Specifically, H-1B visas are limited to 65,000 per year, with an additional 20,000 allocated to those who hold U.S. masters degrees. These "cap subject" visas first become available on October 1, the beginning of the USCIS fiscal year , which does not meet the needs of the academic cycle of medical trainees, who must begin their programs in June or July. Problematically, in prior years, due to high demand, H-1B visas were gobbled up as quickly as they were released, ensuring that the annual cap would be reached by the time medical residents needed them.
For this reason and showing rare foresight, in 2000, Congress exempted from the H-1B cap beneficiaries who are employed at an "institution of higher education" or a "related or affiliated nonprofit entity" or a nonprofit or governmental research organization . The legislative history notes: "U.S. universities are on a different hiring cycle than other employers. The H-1B cap has hit them hard because they often do not hire until the numbers have been used up; and because of the academic calendar, they cannot wait until October 1, the new fiscal year, to start a class."
Thus, for more than a decade, non-profit hospitals that held affiliation agreements with institutions of higher education relied on such "cap exemption" to secure H-1B visas for their FMGs. However, in early March 2011, USCIS abruptly changed its long relied upon interpretation of the term "affiliated nonprofit entity" and began denying Petitions filed by such hospitals on the basis that "shared ownership or control" needed to exist in order for two entities to be affiliated. This was quite contrary to the previous position, which tacitly understood that hospital affiliation agreements are not necessarily the same as affiliation agreements in the corporate world.
The timing could not have been worse: reports of such denials surfaced just days before the biggest event in graduate medical education, the annual March "match" of the National Resident Matching Program, the program by which medical residents are matched with the hospitals in which they will be training.
The medical community was in an uproar. With contractual offers extended to thousands of FGMs and U.S. hospitals counting on them to arrive on time, the community sprang into action. The result was a truce of sorts: USCIS issued interim guidance, giving deference to prior H-1B cap exemption determinations, as USCIS conducted an internal review of its overall policy on cap exemption for related or affiliated nonprofit entities. While such guidance has helped those hospitals that have had a "cap exempt" H-1B Petition previously approved, it has not helped similarly-situated hospitals wishing to file an H-1B Petition for the first time. Quite troubling, this interim guidance is merely a band aid approach to an oozing wound that exemplifies the inability of the U.S. immigration laws to reflect the needs of the very same business community they were drafted to assist. Sadly, 35 years after his decision in Lok v. Immigration and Naturalization Service, Judge Kaufman's words still ring true: the immigration laws continue to be similar to King Minos' labyrinth, with a dose of reality still missing.
Lok v. Immigration and Naturalization Service, 548 F.2d 37 (2nd Cir., 1/4/1977).
Wendy Castor Hess has limited her practice to immigration, nationality and consular law since 1980. She has extensive experience representing research institutions, universities, multi-national corporations, health care institutions, information technology firms, and large consulting firms (and, importantly, the foreign nationals they seek to employ) in securing appropriate immigrant and nonimmigrant visas. She also has extensive experience representing employers, both large and small, in employer sanctions matters, as well as representing individuals in all immigration litigation matters.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.