Contract analysis

I. Executive Summary This memorandum presents our analysis of all thirty-eight (38) medical director and independent contractor arrangements currently maintained by Arbor Health Technologies Inc. ("AHT" or the "Company") for compliance with the federal Anti-Kickback Statute ("AKS"), 42 U.S.C. § 1320a-7b(b), and the Physician Self-Referral Law ("Stark Law"), 42 U.S.C. § 1395nn. Our analysis focuses in particular on th

II. Background A. AHT's Physician Workforce and Arrangement Structure AHT currently operates twenty-three (23) outpatient clinics under the "Arbor Health Clinics" brand, providing a range of primary care, specialty care, and ancillary services across four New England states. The Company employs one hundred forty-seven (147) physicians as W-2 employees across these clinic sites. The clinical services offered by AHT's

1. All 38 independent contractor and medical director agreements maintained by AHT, including executed agreements, amendments, addenda, side letters, and any renewal letters or extension notices;

2. AHT physician time logs and duty descriptions, where available, for physicians serving under the 38 arrangements (noting that many arrangements lack contemporaneous time documentation);

3. AHT internal compensation schedules for all physician arrangements, including the physician compensation grid maintained by AHT's finance department;

4. The Grayson Whitaker & Associates LLP compliance gap assessment report (Report No. GW-AHT-2022-Final, dated December 12, 2022), including all supporting schedules and appendices;

5. The Halsted Accounting Group LLP FY2022 management letter (engagement partner Ronald Desmond), which flagged certain physician compensation arrangements as requiring FMV substantiation and recommended that AHT obtain independent FMV opinions;

6. Preliminary data and draft analysis provided by Northbridge Valuation Advisors LLC (Managing Director: Sandra Kilpatrick) pursuant to the February 2023 FMV opinion engagement;

7. MGMA Physician Compensation and Production Survey, 2022 edition, including medical director compensation data by specialty, geographic region, and organizational type;

8. SullivanCotter Physician Compensation and Productivity Survey, 2022 edition, including medical director-specific hourly rate data by specialty and region;

9. AHT organizational charts, clinic staffing models, and regional management structure documentation;

10. AHT referral data for fiscal year 2022, including physician-level referral volumes to AHT ancillary services (laboratory, diagnostic imaging, physical therapy);

11. Lakeview Medical Associates, P.C. asset purchase agreement and ancillary transaction documents (prepared by Westbrook Hale LLP);

12. AHT Board minutes and resolutions relevant to the self-assessment engagement, including Board Resolution No. 2023-01-004;

13. Correspondence and communications with Ridgeline Capital Partners regarding compliance risk exposure; and

14. Applicable federal and state statutes, regulations, and guidance documents as cited throughout this memorandum.

III. Detailed Inventory of 38 Medical Director / Independent Contractor Arrangements A. Summary Statistics The following summary statistics describe the aggregate characteristics of the 38 independent contractor and medical director arrangements maintained by AHT as of the date of this memorandum: The effective average hourly rate of $501.28 is calculated by dividing the aggregate annual compensation of $1,920,000 by

IV. Fair Market Value Analysis A. FMV Legal Standard Under both the AKS personal services safe harbor and the Stark Law personal services exception, physician compensation must be consistent with FMV. This requirement is a cornerstone of the regulatory framework governing physician compensation arrangements and reflects the fundamental policy objective of ensuring that payments to physicians are commensurate with the

V. Commercial Reasonableness Analysis A. Commercial Reasonableness Legal Standard As clarified by the CMS Stark Law Modernization Final Rule (85 Fed. Reg. 77492), commercial reasonableness is a separate and distinct requirement from FMV. An arrangement may be priced at FMV and still fail the commercial reasonableness test, or vice versa. The Stark Law personal services exception at 42 C.F.R. § 411.357(d) requires tha

VI. Analysis Under AKS Safe Harbors and Stark Law Exceptions A. AKS Personal Services and Management Contracts Safe Harbor (42 C.F.R. § 1001.952(d)) The personal services and management contracts safe harbor is the primary AKS safe harbor applicable to AHT's medical director and independent contractor arrangements. Protection under this safe harbor requires satisfaction of all statutory elements. We have assessed eac