Ambulatory Surgery Center Compliance Federal Settlement Raises Issues for Physician Owned Surgery Centers
By Ruder Ware Alumni
September 30, 2014
A Federal Whistleblower that was recently settled in the United States District Court for the Middle District of Tennessee illustrates the difficult issues involved in structuring ambulatory surgery center (“ASC”) investments. Specifically, the case demonstrates how investment terms that are intended to assure compliance with the safe harbor regulations under the Medicare Anti?Kickback Statute (42 U.S.C. 1320a-7b(a)-(b)) can create evidence of non-compliance if the initial terms of the offering relate, in whole or in part, to the volume or value of expected referrals from the investor in the ASC venture.
The crux of the case alleged that Meridian offered referring physicians the opportunity to invest in the local ASC operating entities at less than fair market value. The end result was that the investing physicians were paid an extremely high rate of return on their investment. The complaint alleged that the low acquisition price, together with the high rate of investment return, amounted to remuneration that was intended to induce referrals in violation of the Federal Anti?Kickback Statute.
We have prepared a Blue Paper Summary of this case and an analysis of what it might mean to ambulatory surgery center investment structures. You can access the complete analysis through the following link: ASC Investment Case Analysis
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