SANDLER REIFF 1090 Vermont Ave NW, Suite 750

Washington, DC 20005

www.sandlerreiff.com

T: 202-479-1111

F: 202-479-1115

SANDLER REIFF LAMB

ROSENSTEIN & BIRKENSTOCK, P.C.

February 17, 2023

Lisa J. Stevenson

Acting General Counsel

Office of General Counsel

Federal Election Commission

1050 First Street NE

Washington, D.C. 20463

Re: Advisory Opinion Request

Dear Ms. Stevenson:

On behalf of Humana Inc. (“Humana”), this letter requests an advisory opinion regarding the 

impact of Humana’s spinoff of its hospice subsidiary on the affiliation status of its connected PAC, 

Humana Inc. PAC, and the PAC associated with the hospice business, KAH Hospice Company, Inc. PAC 

f/k/a Gentiva Health Services Inc. PAC. As reflected on their statements of organization, the two PACs 

have been “per se” affiliated while Gentiva Health Services Inc. (“Gentiva”), as the connected 

organization of Gentiva PAC, has been a wholly owned subsidiary of Humana Inc.

In a transaction that closed on August 11, 2022, Humana Inc. has divested majority ownership 

and control of Gentiva’s hospice subsidiary, namely KAH Hospice Company, Inc. (“KAH Hospice”), 

along with other hospice-related business entities (the “Transaction”). Gentiva PAC recently changed its 

connected organization to KAH Hospice Company, Inc., so that the PAC and its underlying funds remain 

associated with the hospice business. A conforming amendment to that PAC’s Form 1 has been timely 

filed. Accordingly, that PAC will be described as either Gentiva PAC or KAH Hospice PAC for purposes 

of this Advisory Opinion Request.

At a minimum, the Transaction ends the per se affiliation between the two PACs. Furthermore, in 

our judgment, the change in ownership and control resulting from the Transaction create a sufficient 

segregation between the ownership, management, personnel, and governance of Humana and that of

spun-off hospice business such that the two PACs are no longer affiliated. This letter requests the 

Commission’s conclusion on that result.

Background

In August 2021, Humana acquired Kindred at Home (“KAH”), a combined home health & 

hospice company. At the time of the acquisition, Gentiva Health Services, Inc. (“Gentiva”) was the 

principal holding company within Humana for both the home health business and the hospice business,

operating through a number of operating subsidiaries and serving as the connected organization for what 

was then Gentiva Health Services Inc. PAC. The statements of organization for Humana PAC and 

Gentiva PAC were each amended accordingly to list each other as affiliates.

AOR001

Received by OGC 

on 02/17/23 
SANDLER REIFF LAMB ROSENSTEIN & BIRKENSTOCK, P.C.

2

At the time of its acquisition of KAH, Humana announced its intention ultimately to maintain 

only a minority interest in KAH’s hospice business while retaining in full KAH’s home health business. 

Following the acquisition, Humana completed a reorganization of KAH’s hospice business, forming 

KAH Hospice and transferring to KAH Hospice both the entities and assets comprising the hospice 

business. Following this reorganization, on August 11, 2022, as part of the above-referenced Transaction, 

Humana sold a 60% interest in KAH Hospice (via Falcon Hospice L.P.) to Clayton, Dubilier & Rice1

(“CD&R”), retaining only a minority equity interest (40%) for itself. Following the Transaction Humana 

has the right to appoint only two of seven directors of the LLC that will serve as the general partner of the 

limited partnership that in turn will exercise control over all of the LP’s subsidiaries, including KAH 

Hospice Co. Inc. Similarly, Humana now holds only typical ancillary approval rights in the governance of 

that L.P. designed to provide basic protection of its minority ownership interest, while not allowing 

Humana to exercise actual control over either KAH Hospice or KAH Hospice PAC. Humana also holds 

an interest in less than 15% of the debt incurred by KAH Hospice at closing,

The CD&R and Humana ownership interests in KAH Hospice are illustrated below2:

The general partner of Falcon Hospice L.P. is Falcon Hospice GP LLC, which has plenary 

authority over Falcon Hospice L.P. Humana and CD&R (through respective subsidiaries and investment 

vehicles) are the members of Falcon Hospice GP LLC, which is governed by a seven-member board. 

CD&R appoints four members of that board, Humana appoints two, and the CEO of KAH Hospice (who 

is not a Humana employee) is the seventh. As further detailed below, Humana maintains rights of 

1 Founded over forty years ago, CD&R is one of the oldest private equity firms in the world and has invested in 

dozens of divestitures at least loosely analogous to this one. It has no management or significant ownership overlap 

with Humana Inc., and is engaging in the KAH transaction at issue here solely as an arm’s length investor and 

business partner.

2 Percentages disregard equity interests to be held by management, which as early 2023 equals approximately 8.63% 

of the LP and approximately 1.12% of the GP.

AOR002
SANDLER REIFF LAMB ROSENSTEIN & BIRKENSTOCK, P.C.

3

approval over certain narrow categories of KAH Hospice decisions in order to protect its minority 

investment interest. 

In sum, the Transaction ended Humana’s relationship with KAH Hospice as a wholly-owned 

subsidiary, and vested management control over that business with a board of directors under majority 

control of KAH Hospice’s new owners at CD&R.

Question Presented

In light of the spinoff transaction, are the two relevant PACs, Humana PAC and KAH Hospice 

Company, Inc. PAC, now disaffiliated for purposes of the Federal Election Campaign Act?

Analysis

In several prior Advisory Opinions, the Commission has evaluated similar corporate spin-offs or 

divestitures in light of the “ten factor test” established by regulation for determining affiliation in 

circumstances that fall short of establishing per se affiliation. Per 11 C.F.R 100.5(g)(4)(ii), those factors 

include but are not limited to:

(A) Whether a sponsoring organization owns controlling interest in the voting stock or 

securities of the sponsoring organization of another committee; 

(B) Whether a sponsoring organization or committee has the authority or ability to direct 

or participate in the governance of another sponsoring organization or committee 

through provisions of constitutions, bylaws, contracts, or other rules, or through 

formal or informal practices or procedures; 

(C) Whether a sponsoring organization or committee has the authority or ability to hire, 

appoint, demote or otherwise control the officers, or other decisionmaking employees 

or members of another sponsoring organization or committee; 

(D) Whether a sponsoring organization or committee has a common or overlapping 

membership with another sponsoring organization or committee which indicates a 

formal or ongoing relationship between the sponsoring organizations or committees; 

(E) Whether a sponsoring organization or committee has common or overlapping officers 

or employees with another sponsoring organization or committee which indicates a 

formal or ongoing relationship between the sponsoring organizations or committees; 

(F) Whether a sponsoring organization or committee has any members, officers or 

employees who were members, officers or employees of another sponsoring 

organization or committee which indicates a formal or ongoing relationship between 

the sponsoring organizations or committees, or which indicates the creation of a 

successor entity; 

(G) Whether a sponsoring organization or committee provides funds or goods in a 

significant amount or on an ongoing basis to another sponsoring organization or 

committee, such as through direct or indirect payments for administrative, 

fundraising, or other costs, but not including the transfer to a committee of its 

allocated share of proceeds jointly raised pursuant to 11 CFR 102.17; 

(H) Whether a sponsoring organization or committee causes or arranges for funds in a 

significant amount or on an ongoing basis to be provided to another sponsoring 

organization or committee, but not including the transfer to a committee of its 

allocated share of proceeds jointly raised pursuant to 11 CFR 102.17; 

AOR003
SANDLER REIFF LAMB ROSENSTEIN & BIRKENSTOCK, P.C.

4

(I) Whether a sponsoring organization or committee or its agent had an active or 

significant role in the formation of another sponsoring organization or committee; 

and 

(J) Whether the sponsoring organizations or committees have similar patterns of 

contributions or contributors which indicates a formal or ongoing relationship 

between the sponsoring organizations or committees.

Applying those factors here leads to clear results under factors (A), (D), (E), (F), (I), and (J). 

Namely:

(A) Neither Humana nor KAH Hospice owns a controlling interest in the voting stock or 

securities of the other.

(D) Humana’s shareholder base will not overlap with that of KAH Hospice other than to 

the extent Humana itself is a minority owner of KAH Hospice, which has only two 

owners (namely CD&R and Humana).

(E) Humana & KAH Hospice will share no officers or employees, other than two 

Humana executives who will serve as Humana’s only appointees as Directors on the 

seven-member Board of KAH Hospice.

(F) Upon Humana’s acquisition of KAH in August 2021, KAH continued standalone 

operations as a wholly-owned subsidiary of Humana Inc., and KAH personnel 

continued to be employed by KAH entities. In connection with the Transaction, 

certain members of the KAH management team and personnel aligned with hospice 

operations were realigned to KAH Hospice. Following the closing of the Transaction 

these personnel continued to be employed by KAH Hospice. As a result, while 

certain KAH Hospice personnel were technically under the Humana Inc. umbrella 

from August 2021 to August 2022, they did not have a direct employment 

relationship with Humana Inc. and continued to be employed by KAH. No KAH 

Hospice personnel have a employment relationship with KAH (or Humana) postspinoff and therefore none of these prior relationships suggests any formal or 

ongoing relationship between the two entities.

(I) Humana had a role in forming KAH Hospice Company Inc. as it now exists, as is 

true by definition in any corporate spin off.

(J) KAH Hospice and its PAC will make their own decisions, through their own separate 

personnel, about contributions and expenditures, so any similar pattern of 

contributions between the two would result only from their common participation in 

the health care industry.

i. KAH Hospice PAC is managed and operated by its duly appointed Treasurer 

in cooperation with key business leaders from within the restricted class of 

the committee’s connected organization. 

ii. Humana PAC is run by a PAC board elected by the company’s restricted 

class.

iii. Neither PAC’s operations (either overall or on a day-to-day basis) include 

any involvement by the other corporation or the other PAC.

As noted above, the two corporations will share only the two Humana executives

who will serve as Humana’s appointees as Directors on the seven-member Board of

the LLC that controls the L.P. that owns KAH Hospice. That leaves the vast majority 

AOR004
SANDLER REIFF LAMB ROSENSTEIN & BIRKENSTOCK, P.C.

5

of their restricted classes completely separate, all but categorically eliminating the 

prospect of any similar pattern of contributors.

Other factors of the “ten factor” test merit greater review and discussion, namely to analyze 

Humana’s minority ownership interest itself, the minority portion of KAH Hospice’s debt that Humana 

holds, the limited governance rights it holds in KAH Hospice, and the post-spin off business relationship 

between the two companies under factors (B), (C), (G), and (H).

The terms of the Transaction3 provide that so long as Humana’s equity interest in KAH Hospice 

remains at least 50% of the amount it owned at closing, and amounts to at least 15% of the thenoutstanding stock in KAH Hospice, it will retain a right of approval over the following actions:

• Any waiver or amendment to the Stockholders Agreement, charter or by-laws or similar 

constituent documents that (i) adversely and disproportionately affects Humana relative to CD&R

or (ii) amends special rights expressly granted to Humana; 

• Non-pro rata distributions, dividends, redemptions or repurchases (other than ordinary course 

employee stock repurchases in connection with a termination of employment); 

• Transactions with CD&R (or its affiliates) other than:

o ordinary course transactions between portfolio companies of CD&R and KAH Hospice 

on arm’s-length terms4, or

o issuances of equity or equity-like securities of KAH with respect to which Humana has 

received an opportunity to participate pursuant to its preemptive rights; 

• Approval of annual budget, provided that in the absence of approval, the budget will be 107.5% 

of the annual budget for the immediately preceding year; 

• Hiring and firing or material changes in compensation (including equity compensation) of the 

CEO of KAH Hospice; 

• Incurrence of indebtedness if such debt would result in the Company’s debt being greater than 

7.5x Last Twelve Months EBITDA5; 

• Settling litigation for over $35 million; or 

• Authorizing or entering into any transaction with respect to any of the foregoing.

As shown in Attachment A, those rights are imposed by provisions in the LLC agreement for the general 

partner of Falcon Hospice LP that disallow the general partner from taking the listed actions without 

obtaining the “Required Consents” of the Humana Member of the partnership.6

That said, nothing in the Transaction or elsewhere provides Humana with any ability to initiate any of 

those actions. Likewise, it has no ability to “hire, appoint, demote or otherwise control the officers, or 

other decisionmaking employees or members” of KAH Hospice. In fact, its only authority over 

“decisionmaking employees or members” is the right to approve a change of the CEO, or of the CEO’s 

compensation, but it has no authority to fire, demote, remove, or otherwise exercise control over the CEO 

or any other KAH Hospice personnel. Accordingly, while on their face these various rights of approval 

3 At Section 3.8 of the Falcon Hospice GP LLC Agreement, the text of which is attached as Attachment A.

4 Simply for purposes of illustration, this could include a business arrangement between KAH and a commercial real 

estate company leasing space to KAH.

5 EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization,” and is a common measure 

of corporate profitability.

6 Section 3.9 of the LLC agreement for the GP is also included in Attachment A, and generally allows CD&R to 

initiate an Initial Public Offering of Falcon Hospice, regardless of Humana’s consent, so long as other specified 

conditions are met.

AOR005
SANDLER REIFF LAMB ROSENSTEIN & BIRKENSTOCK, P.C.

6

could indicate some level of influence over KAH in limited circumstances, none of these rights rises to a 

level that would allow Humana to control KAH or its management decisions (over KAH PAC or 

otherwise). Consequently, reviewing the facts and circumstances of this transaction in light of factors (B) 

& (C) likewise supports a conclusion that the two PACs are not affiliated.

We similarly conclude that factors (G) & (H) also support that result, in that while Humana does 

hold a minority proportion (approximately 15%) in the overall debt syndicate resulting from the 

Transaction (meaning Humana has no ability to control that syndicate), there are no plans for it to provide 

additional debt or other capital funding to KAH Hospice, and no plans to provide direct or indirect 

administrative, fundraising, or other support to either KAH Hospice itself or to KAH Hospice PAC.7

Lastly, any actual ongoing business relationship between the two companies will be minimal. 

Any continued business between Humana and KAH will flow from the two companies conducting their 

various business operations in the normal course. For example, when the home health business identifies 

a patient who may be appropriate for transition to hospice, the home health clinician will consult with the 

patient’s independent primary care physician (PCP). If the patient is subsequently referred to hospice, the 

independent PCP together with the patient will determine the hospice agency to which the patient should 

be referred. If neither the independent PCP nor patient have a preference, the home health business will 

assist with identifying a hospice agency (with the ultimate decision belonging to the independent PCP and 

patient).

The selection of a hospice agency is based on a multitude of factors, including the hospice 

agency’s licensed coverage area and capacity, is made on a case-by-case at the patient level, and is not 

tracked by the home health business at the corporate level. While this process may result in a home health 

patient receiving services from a KAH hospice agency in the ordinary course, the home health business 

does not ultimately control the selection of the hospice agency.

Conclusion

At bottom, we respectfully suggest that the circumstances of the post-spin off relationship 

between Humana and KAH Hospice, and between their PACs, indicates at least the level of segregation 

and independence that supported prior Commission disaffiliation opinions on similar corporate spin offs. 

Nevertheless, please contact me by email at birkenstock@sandlerreiff.com or by phone at (202) 479-1111

if anyone needs further information or if it would be helpful to discuss any of these aspects in closer 

detail.

Sincerely, 

Joseph M. Birkenstock

Counsel to Humana Inc.

7 Nothing in the Transaction precludes Humana from providing addition debt funding, capital investment, or 

administrative support to KAH, and the companies would revisit the question of affiliation in the event Humana’s 

involvement with KAH increased. 

AOR006
SANDLER REIFF LAMB ROSENSTEIN & BIRKENSTOCK, P.C.

7

Attachment A

Relevant provisions from the Limited Liability Company Agreement of Falcon Hospice GP, LLC

3.8 Member Consent Rights.

(a) General. In addition to any vote of the Board, and notwithstanding anything to the contrary in this 

Agreement (but subject to Section 3.9), for so long as (x) the Humana Holders (together with their 

Permitted Transferees) own (A) at least fifteen percent (15%) of the total number of Outstanding 

Investment Units (determined using the Threshold Calculation) and (B) at least fifty percent (50%) of the 

LP Units held by the Humana Holders as of the date hereof or (y) the CD&R Holders own (X) at least 

fifteen percent (15%) of the total number of Outstanding Investment Units (determined using the 

Threshold Calculation) and (Y) at least thirty three and one third percent (33.3%) of the LP Units held by 

the CD&R Holders as of the date hereof, the following actions by the Company, the Partnership or their 

respective Subsidiaries will require the approval of the Humana Member and/or the CD&R Member, as 

the case may be (such consents, collectively, the “Required Consents”):

(i) except as set forth herein, non-pro rata distributions, dividends, or redemptions or repurchases of 

equity or equity-like securities (other than ordinary course repurchases of equity or equity-like securities, 

including the Common Units, from employees or other service providers in connection with a termination 

of employment or service with the Company, the Partnership or their respective Subsidiaries);

(ii) (A) transactions with the CD&R Holders (or their affiliates) shall require the approval of the 

Humana Member other than (x) ordinary course transactions between portfolio companies (as such term 

is commonly used in the private equity industry) of CD&R and the Company, the Partnership or their 

respective Subsidiaries on arm’s-length terms, and (y) issuances of equity or equity-like securities of the 

Partnership (or its Subsidiaries) with respect to which the Humana Holders shall receive an opportunity to 

participate pursuant to Section 5.5 of the LPA, and (B) transactions with the Humana Holders (or their 

affiliates) shall require the approval of the CD&R Member other than (x) ordinary course transactions 

between Affiliates of Humana and the Company, the Partnership or their respective Subsidiaries on 

arm’s-length terms, and (y) issuances of equity or equity-like securities of the Partnership (or its 

Subsidiaries) with respect to which the CD&R Holders shall receive an opportunity to participate 

pursuant to Section 5.5 of the LPA;

(iii) approving the annual budget of the Company, the Partnership and their respective Subsidiaries, 

provided that, in the absence of approval, the budget will be 107.5% of the annual budget for the 

immediately preceding year;

(iv) hiring and firing or material changes in compensation (including equity compensation) of the 

Chief Executive Officer of KAH;

(v) except as would not result in an Excessive Leverage Event, increasing the aggregate indebtedness 

of KAH and its Subsidiaries (of the type described in clause (i) of Consolidated Total Indebtedness in the 

Debt Financing Documents as in effect on the date hereof);

(vi) settling any litigation for an amount in excess of $35,000,000 individually; 

(vii) entering into or consummating any Sale Event prior to the second anniversary of the date hereof, 

if the proceeds from such Sale Event would be based on an implied enterprise value of KAH of less than 

$3,490,000,000; or

(viii) authorizing or entering into any transaction with respect to any of the foregoing.

3.9 IPO Right. The CD&R Member has the right to cause an IPO of the Partnership or any of its 

Subsidiaries, including KAH (“CD&R IPO”), and in the event the CD&R Member elects to proceed with 

a CD&R IPO, the Board shall authorize the CD&R IPO and shall initiate an IPO process, provided that a 

CD&R IPO prior to the second anniversary of the date hereof may only be completed subject to the 

CD&R Member’s compliance with Section 5.6 of the LPA. The CD&R Member shall direct and control 

all decisions in connection with a CD&R IPO, subject to reasonable consultation in good faith with the 

Board on such matters, and no Member shall have any right to vote on or otherwise consent to the CD&R 

AOR007
SANDLER REIFF LAMB ROSENSTEIN & BIRKENSTOCK, P.C.

8

IPO but each shall be deemed to consent to and shall raise no objections against the CD&R IPO or the 

process associated therewith. Each Member shall, and shall cause its Affiliates that are Holders of LP 

Units to, take all actions in connection with the consummation of the CD&R IPO as reasonably requested 

by the Company or the CD&R Member, including the execution and delivery of all agreements, 

instruments and documents as may be reasonably necessary to effect the CD&R IPO, provided, however, 

that in such case: (a) the Humana Holders and the CD&R Holders shall receive the same class of shares, 

(b) the Humana Member’s director designation rights (pursuant to Section 3.1(a)(ii) and Section 3.1(b)) 

would continue and (c) the Humana Holders would be able to sell proportionately in any sale of shares by 

the CD&R Holders in the CD&R IPO.

AOR008
AOR009