Contract analysis

I. EXECUTIVE SUMMARY This memorandum presents the results of Calderwood & Harkness LLP's ("Calderwood & Harkness" or "we") comprehensive assessment of the physician compensation arrangements, in-office ancillary services, and referral relationships of Arbor Health Technologies Inc. ("AHT" or the "Company") under the federal Physician Self-Referral Law, 42 U.S.C. § 1395nn (the "Stark Law"), and its implementing regula

II. BACKGROUND A. Arbor Health Technologies Inc. — Corporate and Operational Overview Arbor Health Technologies Inc. is a Delaware corporation headquartered at 200 Concord Avenue, Suite 400, Cambridge, Massachusetts 02138. The Company's Employer Identification Number is 84-3291057, its organizational National Provider Identifier is 1497253810, and its lead CMS Provider Transaction Access Number is 27MA4891. AHT opera

III. APPLICABLE LEGAL FRAMEWORK A. The Stark Law — Overview (42 U.S.C. § 1395nn) The federal Physician Self-Referral Law, commonly known as the "Stark Law" after its original sponsor, former Congressman Fortney "Pete" Stark, is codified at 42 U.S.C. § 1395nn and implemented through detailed regulations at 42 C.F.R. § 411.350 et seq. The Stark Law is a strict liability statute — unlike the federal Anti-Kickback Statut

1. Clinical laboratory services;

2. Physical therapy services;

3. Occupational therapy services;

4. Radiology services, including magnetic resonance imaging ("MRI"), computerized axial tomography ("CT") scans, and ultrasound services;

5. Radiation therapy services and supplies;

6. Durable medical equipment and supplies;

7. Parenteral and enteral nutrients, equipment, and supplies;

8. Prosthetics, orthotics, and prosthetic devices and supplies;

10. Outpatient prescription drugs; and

11. Inpatient and outpatient hospital services. AHT directly provides several categories of DHS through its 23 outpatient clinic locations, specifically: (i) clinical laboratory services (in-house laboratory testing capabilities); (ii) diagnostic imaging and radiology services (X-ray and ultrasound); and (iii) physical therapy services. In addition, AHT's employed and contracted physicians refer patients to external

IV. ANALYSIS OF PHYSICIAN EMPLOYMENT ARRANGEMENTS A. Overview of AHT Employed Physician Population AHT currently employs 147 physicians as W-2 employees across its 23 outpatient clinic locations. This employed physician population spans multiple clinical specialties, including primary care (internal medicine and family medicine), cardiology, orthopedics, gastroenterology, and several other medical and surgical subspe

1. Revise All Employment Agreements. AHT should adopt the revised physician employment agreement template prepared by Calderwood & Harkness (Exhibit 1 to this memorandum) and use it to amend or restate all existing employment agreements. The revised template includes: (i) productivity bonus formulas based exclusively on wRVUs for services personally performed by the physician, with explicit exclusion of referral-gene

2. Obtain Northbridge FMV Opinions. For all 29 employment agreements currently lacking contemporaneous FMV substantiation, AHT should obtain Northbridge FMV opinions confirming that compensation is consistent with FMV as of the current date. Going forward, FMV substantiation should be obtained at the time of each new agreement, material amendment, or annual recertification.

3. Implement Annual Recertification Process. AHT should adopt the Revised Physician Compensation Policy prepared by Calderwood & Harkness (Exhibit 2) and implement an annual recertification process requiring each physician's compensation to be reviewed against current FMV benchmarks and documented in writing at least annually.

4. Priority. The RVU formula issues should be addressed immediately given that claims for DHS are currently being submitted on the basis of referrals from physicians whose compensation may take into account the volume or value of those referrals. Each day that these formulas remain in effect extends the period during which AHT may be submitting claims pursuant to prohibited referrals.

V. ANALYSIS OF INDEPENDENT CONTRACTOR AND MEDICAL DIRECTOR ARRANGEMENTS A. Overview AHT currently maintains 38 independent contractor and medical director arrangements (exclusive of the Lakeview legacy IC and medical director agreements analyzed in Section X). These arrangements span the Company's 23 clinic locations and encompass a range of clinical specialties. Under these arrangements, physicians provide medical d