EQUIPMENT LEASE / ACCESS AGREEMENT
Template — Arbor Health Technologies Inc.
TEMPLATE — FOR USE WITH ALL EQUIPMENT RENTAL ARRANGEMENTS INVOLVING REFERRAL SOURCES
Regulatory Basis: This template is designed to conform with the Stark Law equipment rental exception (42 C.F.R. § 411.357(b)) and the Anti-Kickback Statute equipment rental safe harbor (42 C.F.R. § 1001.952(c)).
Prepared by: Calderwood & Harkness LLP, One Federal Street, 30th Floor, Boston, MA 02110
Matter Number: 1010-00003
Prepared for: Arbor Health Technologies Inc., 200 Concord Avenue, Suite 400, Cambridge, MA 02138
Date: [Insert Date]
Version: [Insert Version Number]
INSTRUCTION NOTE: This template must be used for all equipment lease and equipment access arrangements between Arbor Health Technologies Inc. (or any subsidiary or affiliate) and any party that is in a position to make or receive referrals for designated health services. All bracketed fields must be completed before execution. This template may not be modified without prior written approval from General Counsel and the Chief Compliance Officer.
DRAFTING INSTRUCTIONS AND COMPLIANCE NOTES
(INTERNAL — REMOVE BEFORE EXECUTION)
THIS SECTION IS INTERNAL GUIDANCE ONLY AND MUST BE DELETED FROM ALL EXECUTED VERSIONS OF THIS AGREEMENT. THIS SECTION IS NOT PART OF THE OPERATIVE AGREEMENT AND IS PROVIDED SOLELY FOR THE USE OF ARBOR HEALTH TECHNOLOGIES INC. ("AHT") PERSONNEL RESPONSIBLE FOR PREPARING, REVIEWING, AND APPROVING EQUIPMENT LEASE AND EQUIPMENT ACCESS ARRANGEMENTS.
1. Background and Authorization. This template was developed as part of the Anti-Kickback Statute ("AKS") and Physician Self-Referral Law ("Stark Law") self-assessment and remediation engagement conducted by Calderwood & Harkness LLP during the period from January 30, 2023 through July 12, 2023, at the direction of AHT General Counsel Patricia Yamamoto and Chief Compliance Officer Derek Huang. The engagement was authorized by AHT Board Resolution No. 2023-01-004, adopted January 24, 2023 (the "Board Resolution"), which authorized a comprehensive compliance self-assessment of AHT's existing referral source arrangements, including equipment leases, office space leases, personal services agreements, and medical director agreements.
2. Scope of Use. This template is designed specifically for diagnostic imaging equipment, mobile equipment access, and similar arrangements involving medical or diagnostic equipment where one party to the arrangement is in a position to make or receive referrals to the other party for designated health services ("DHS") reimbursable under Medicare, Medicaid, or other federal healthcare programs. This includes the type of arrangement currently in place with entities such as Meridian Diagnostics LLC, which is being restructured separately under a standalone agreement pursuant to the terms of the remediation plan approved by the Board on June 15, 2023. This template should also be used for any new equipment lease or equipment access arrangement with physician practices, physician-owned entities, hospital-based groups, or other referral sources.
3. Fair Market Value Requirement. A fair market value ("FMV") opinion from an independent qualified appraiser (e.g., Northbridge Valuation Advisors LLC, or another appraiser meeting the qualifications set forth in AHT's Fair Market Value Determination Procedures) must be obtained prior to execution and attached as Exhibit C. The FMV opinion must address the specific equipment to be leased, the proposed rental rate, the use schedule, and the relevant market for comparable equipment rentals. The appraiser must certify that the valuation was performed without regard to the volume or value of referrals or other business between the parties.
4. Required Approvals. The completed agreement must be reviewed and approved by General Counsel (currently Patricia Yamamoto), the Chief Compliance Officer (currently Derek Huang), and, where applicable, the responsible Regional Medical Director for the market or region in which the equipment will be located. No equipment lease or access agreement may be executed without all required approvals. Approval must be documented on the Compliance Approval Memorandum form (AHT Form CCO-09) and retained in the compliance file for the arrangement.
5. Cross-References to AHT Policies. Users of this template should familiarize themselves with and follow the procedures set forth in the following AHT policies and procedures:
(a) AHT Revised Vendor and Third-Party Arrangement Policy (adopted July 1, 2023);
(b) AHT Fair Market Value Determination Procedures (adopted July 1, 2023);
(c) AHT Non-Monetary Remuneration and Compliance Exception Tracking Protocol (adopted July 1, 2023); and
(d) AHT Compliance Program Manual, Chapter 7 — Referral Source Arrangements (revised July 1, 2023).
6. Prohibition on Volume-Based Rental Fees. Per-use, per-scan, per-procedure, per-patient, or other volume-based or unit-of-service-based rental fees are strictly prohibited. Such fee structures cause the arrangement to fail both the Stark Law equipment rental exception (42 C.F.R. § 411.357(b)) and the AKS equipment rental safe harbor (42 C.F.R. § 1001.952(c)), because the rental charges would necessarily take into account the volume or value of referrals between the parties. Percentage-of-revenue, percentage-of-collections, or other formula-based compensation methodologies tied to utilization are similarly prohibited. All rental charges must be expressed as fixed periodic amounts (e.g., a fixed monthly or quarterly fee), set in advance for the entire term.
7. Gap Assessment Reference. The Grayson Whitaker gap assessment report (Report No. GW-AHT-2022-Final, dated December 12, 2022, prepared by Grayson Whitaker Advisory Group) identified certain existing AHT equipment lease arrangements with volume-based fee structures as high-risk items requiring immediate remediation. This template was developed in direct response to those findings and is intended to replace all prior equipment lease templates and forms used by AHT and its subsidiaries and affiliates. All existing equipment lease arrangements identified in the Grayson Whitaker report must be transitioned to this template or terminated in accordance with the remediation timeline approved by the Board.
8. Referral Source Arrangements. Any arrangement involving a physician (or an immediate family member of a physician, as defined in 42 C.F.R. § 411.351) who is in a position to refer patients to AHT (or any AHT subsidiary or affiliate) for designated health services reimbursable by Medicare or Medicaid must use this template (for equipment leases) or the Revised Office Space Lease Template (for office space leases), as applicable. Failure to use the approved templates may result in non-compliance with the Stark Law and the AKS and may subject AHT to civil monetary penalties, treble damages, and exclusion from federal healthcare programs.
[END OF INTERNAL DRAFTING INSTRUCTIONS — REMOVE EVERYTHING ABOVE THIS LINE BEFORE EXECUTION]
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EQUIPMENT LEASE / ACCESS AGREEMENT
EFFECTIVE DATE: [Insert Effective Date]
PARTIES:
This Equipment Lease / Access Agreement (this "Agreement") is entered into as of the Effective Date set forth above, by and between:
LESSOR: [Insert Full Legal Name of Lessor], a [Insert entity type, e.g., Delaware limited liability company, Massachusetts corporation, etc.] organized and existing under the laws of the [Insert state of organization, e.g., Commonwealth of Massachusetts], with its principal offices located at [Insert street address, city, state, and ZIP code] (hereinafter referred to as "Lessor");
and
LESSEE: [Insert Full Legal Name of Lessee], a [Insert entity type, e.g., Delaware corporation, Massachusetts limited liability company, etc.] organized and existing under the laws of the [Insert state of organization, e.g., Commonwealth of Massachusetts], with its principal offices located at [Insert street address, city, state, and ZIP code] (hereinafter referred to as "Lessee").
Lessor and Lessee are sometimes referred to herein collectively as "the Parties" and each individually as "a Party."
[Internal Instruction — Remove Before Execution]: One party must be Arbor Health Technologies Inc. or a subsidiary or affiliate thereof. Identify which party is the equipment owner/lessor and which is the equipment user/lessee. If AHT or an AHT affiliate is the lessee, indicate this clearly. If AHT or an AHT affiliate is the lessor, indicate this clearly.
RECITALS
WHEREAS, Lessor owns or controls certain medical equipment more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the "Equipment");
WHEREAS, Lessee desires to lease or obtain access to such Equipment for use at the location or locations specified in Exhibit B attached hereto and incorporated herein by this reference;
WHEREAS, the Parties intend for this Agreement to comply in all respects with the requirements of the federal Physician Self-Referral Law, commonly known as the "Stark Law" (42 U.S.C. § 1395nn), and the equipment rental exception set forth at 42 C.F.R. § 411.357(b), the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and the equipment rental safe harbor set forth at 42 C.F.R. § 1001.952(c), and all applicable state healthcare fraud and abuse laws, including without limitation the Massachusetts anti-kickback statute (M.G.L. c. 175H, § 3) and the Connecticut referral fee prohibition (Conn. Gen. Stat. § 20-7a(d)), as applicable based on the jurisdiction in which the Equipment is located;
WHEREAS, the rental charges payable under this Agreement have been established at fair market value as determined by an independent, qualified appraiser, are set in advance for the entire term of this Agreement, and do not take into account the volume or value of referrals or other business generated between the Parties;
WHEREAS, this Agreement covers only the specific items of equipment identified on Exhibit A and does not confer upon Lessee any exclusive right to use equipment not described therein; and
WHEREAS, the Parties desire to set forth the terms and conditions upon which such lease shall be made;
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Section 1.1 shall have the meanings ascribed to them elsewhere in this Agreement.
(a) "AKS" means the federal Anti-Kickback Statute, codified at 42 U.S.C. § 1320a-7b(b), as amended from time to time, together with all implementing regulations, including without limitation the safe harbor regulations at 42 C.F.R. § 1001.952.
(b) "Agreement" means this Equipment Lease / Access Agreement, including the Preamble, Recitals, all Articles, Sections, and all Exhibits attached hereto, each of which is incorporated herein by this reference.
(c) "Applicable Law" means all federal, state, and local laws, statutes, rules, regulations, ordinances, orders, codes, directives, and guidance applicable to the subject matter of this Agreement, including without limitation the AKS, the Stark Law, all regulations promulgated by CMS, all advisory opinions and guidance issued by the OIG, the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH Act"), and all applicable state healthcare fraud and abuse statutes, anti-kickback statutes, self-referral prohibition statutes, and certificate of need laws.
(d) "CMS" means the Centers for Medicare & Medicaid Services, a component of the United States Department of Health and Human Services, and any successor agency.
(e) "Commercially Reasonable" means, with respect to this Agreement, that the arrangement reflects a reasonable relationship between the Rental Payment and the fair market value of the equipment access provided, and that the arrangement serves a legitimate business purpose that would be entered into by parties in the absence of any referrals of patients or other business between them. An arrangement is Commercially Reasonable if it makes sense from the perspective of the parties involved, even if no referrals were made between the parties.
(f) "Designated Health Services" or "DHS" has the meaning set forth in 42 U.S.C. § 1395nn(h)(6) and 42 C.F.R. § 411.351, and includes, without limitation, clinical laboratory services, physical therapy services, occupational therapy services, outpatient speech-language pathology services, radiology and certain other imaging services, radiation therapy services and supplies, durable medical equipment and supplies, parenteral and enteral nutrients, equipment, and supplies, prosthetics, orthotics, and prosthetic devices and supplies, home health services, outpatient prescription drugs, and inpatient and outpatient hospital services.
(g) "Equipment" means the specific items of medical, diagnostic, or other equipment identified and described in detail in Exhibit A attached hereto, including all accessories, ancillary components, and peripherals specifically listed in Exhibit A.
(h) "Equipment Location" means the specific physical address or addresses, and where applicable, the specific rooms, suites, or designated areas within a facility, where the Equipment will be situated, installed, or accessed by Lessee, as specified in Exhibit B.
(i) "Fair Market Value" or "FMV" means the value in arm's length transactions, consistent with the general market value of the subject transaction, as defined in 42 C.F.R. § 411.351. For purposes of equipment rental, Fair Market Value means the rental amount that would be agreed upon by a willing lessor and a willing lessee, neither being under compulsion to enter into the transaction, and each having reasonable knowledge of all relevant facts, in arm's length negotiations in a comparable market for comparable equipment, without taking into account the volume or value of referrals or other business generated between the parties.
(j) "FMV Opinion" means the independent fair market value appraisal or opinion prepared by a qualified, independent appraiser and attached as Exhibit C to this Agreement.
(k) "Lease Term" means the period commencing on the Effective Date and continuing through the expiration of the Initial Term, as may be extended by any Renewal Term(s) or holdover period in accordance with Article III.
(l) "Lessee" means the party identified as such in the Preamble to this Agreement.
(m) "Lessor" means the party identified as such in the Preamble to this Agreement.
(n) "OIG" means the Office of Inspector General of the United States Department of Health and Human Services, and any successor office or agency.
(o) "Permitted Use" means the specific clinical purposes for which Lessee is authorized to use the Equipment, as set forth in Section 2.4 of this Agreement.
(p) "Permitted Use Schedule" means the specific schedule of days and times during which Lessee is authorized to access and use the Equipment, as set forth in Exhibit B, Part 2.
(q) "Referral" has the meaning set forth in 42 U.S.C. § 1395nn(h)(5) and 42 C.F.R. § 411.351, and includes any request by a physician for, or ordering of, or the certifying or recertifying of the need for, any designated health service, including a request for a consultation with another physician and any test or procedure ordered by or to be performed by (or under the supervision of) that other physician, but not including any designated health service personally performed or provided by the referring physician.
(r) "Rental Payments" means the fixed periodic payments specified in Section 4.1 of this Agreement and set forth in the Rental Payment Schedule attached as Exhibit D.
(s) "Stark Law" means the Physician Self-Referral Law, codified at 42 U.S.C. § 1395nn, as amended from time to time, together with all implementing regulations at 42 C.F.R. Part 411, Subpart J, and all CMS guidance, advisory opinions, and interpretive rules relating thereto.
ARTICLE II — LEASE OF EQUIPMENT
Section 2.1 — Grant of Lease
Subject to the terms and conditions of this Agreement, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Equipment described in Exhibit A, for use at the Equipment Location(s) specified in Exhibit B, during the Permitted Use Schedule set forth in Exhibit B, Part 2.
The lease granted hereunder is: [Check one]
Exclusive — Lessee shall have the exclusive right to use the Equipment during the days and times specified in the Permitted Use Schedule.
Non-Exclusive — Lessee shall have the non-exclusive right to use the Equipment during the days and times specified in the Permitted Use Schedule. Lessor retains the right to use or permit others to use the Equipment during times not reserved for Lessee under the Permitted Use Schedule.
[Internal Instruction — Remove Before Execution]: If the Equipment is shared (non-exclusive), the specific and identifiable schedule of use for Lessee must be set forth in Exhibit B, Part 2, with precision. The Permitted Use Schedule may not be modified without a written amendment to this Agreement executed by both Parties and reviewed for compliance by the Chief Compliance Officer. If exclusive use is selected, the FMV Opinion must reflect the rental rate for exclusive access.
Section 2.2 — Equipment Description
A complete and detailed description of each item of Equipment leased under this Agreement is set forth in Exhibit A. The description of each item of Equipment in Exhibit A includes the manufacturer name, model number, serial number, year of manufacture, and a listing of all accessories and ancillary components included in the lease. Only the specific items of Equipment identified in Exhibit A are covered by this Agreement.
[Internal Instruction — Remove Before Execution]: All Equipment must be specifically and individually identified. Blanket or open-ended descriptions are not permitted under the Stark Law equipment rental exception (42 C.F.R. § 411.357(b)) or the AKS equipment rental safe harbor (42 C.F.R. § 1001.952(c)). Do not use generic descriptions such as "all diagnostic imaging equipment at the facility" or "such equipment as may be designated by Lessor from time to time." Each piece of equipment must be individually identified by manufacturer, model, and serial number. If additional items of equipment are to be added to this Agreement after execution, a written amendment must be prepared, a supplemental FMV opinion must be obtained, and the amendment must be approved by the Chief Compliance Officer.
Section 2.3 — Equipment Location and Permitted Use Schedule
(a) Equipment Location. The Equipment shall be located at, and Lessee's access to and use of the Equipment shall occur only at, the specific physical address or addresses and, if applicable, the specific designated rooms or areas within a facility, set forth in Exhibit B, Part 1. The Equipment shall not be moved to, stored at, or used at any location other than the Equipment Location(s) specified in Exhibit B without the prior written consent of Lessor and an amendment to Exhibit B.
(b) Permitted Use Schedule. Lessee's right to access and use the Equipment is limited to the specific days of the week and hours during each day set forth in the Permitted Use Schedule in Exhibit B, Part 2. The Permitted Use Schedule is set in advance as of the Effective Date and is consistent with the Stark Law equipment rental exception requirement that the agreement set out a schedule of reasonable and predictable times for the lessee's use of the Equipment. Lessee shall not access or use the Equipment at any time outside the Permitted Use Schedule without the prior written consent of Lessor and, if such additional access will be recurring, a written amendment to the Permitted Use Schedule in Exhibit B, Part 2.
[Internal Instruction — Remove Before Execution]: Insert specific days and times in Exhibit B, Part 2 (e.g., Monday through Friday, 8:00 a.m. to 5:00 p.m., or specific half-day blocks such as Tuesday and Thursday, 1:00 p.m. to 5:00 p.m.). The schedule must reflect actual anticipated use and may not be a pretext for full-time access at a below-market rate. If the scheduled hours represent a small fraction of available hours but the rental rate approaches the rate for full-time access, the arrangement will be scrutinized for compliance. The Permitted Use Schedule must be reasonable and must be tailored to Lessee's actual clinical needs.
Section 2.4 — Permitted Use
(a) The Equipment shall be used solely for the following clinical purposes: [Insert permitted clinical purposes, e.g., diagnostic imaging services, including magnetic resonance imaging (MRI) scans, computed tomography (CT) scans, ultrasound examinations, and general radiography, in connection with the provision of patient care services by Lessee's qualified clinical personnel].
(b) The Equipment shall be operated only by personnel who are appropriately qualified, licensed, credentialed, and trained to operate such Equipment in accordance with all Applicable Law, manufacturer guidelines, and applicable accreditation standards. Lessee shall ensure that all personnel operating the Equipment maintain current and valid licenses and certifications as required by the jurisdiction in which the Equipment Location is situated.
(c) Lessee shall comply with all applicable federal and state regulatory requirements governing the operation of the Equipment, including without limitation any applicable state certificate of need requirements, radiation safety regulations, equipment registration and reporting requirements, and facility licensure requirements. Lessee shall be solely responsible for obtaining and maintaining all licenses, permits, and approvals necessary for its use of the Equipment at the Equipment Location.
(d) Lessee shall not use the Equipment for any purpose other than the Permitted Use, and shall not sublease, lend, or otherwise make the Equipment available to any third party without the prior written consent of Lessor.
Section 2.5 — Condition of Equipment; Maintenance
(a) Condition. Lessor represents and warrants that the Equipment is in good working order and condition as of the Effective Date and complies with all applicable manufacturer specifications, regulatory requirements, and accreditation standards. Lessor shall deliver the Equipment to the Equipment Location in such condition, or, if the Equipment is already installed at the Equipment Location as of the Effective Date, Lessor confirms that the Equipment is in such condition as of the Effective Date.
(b) Maintenance and Repair. [Insert — select one of the following options or modify as appropriate]:
Option A (Lessor Responsible): Lessor shall be responsible for all routine maintenance, preventive maintenance, repairs, calibration, and regulatory compliance inspections of the Equipment during the Lease Term, at Lessor's sole cost and expense. Lessor shall maintain the Equipment in compliance with manufacturer specifications and applicable accreditation standards throughout the Lease Term.
Option B (Lessee Responsible): Lessee shall be responsible for all routine maintenance, preventive maintenance, repairs, calibration, and regulatory compliance inspections of the Equipment during the Lease Term, at Lessee's sole cost and expense. Lessee shall maintain the Equipment in compliance with manufacturer specifications and applicable accreditation standards throughout the Lease Term.
Option C (Shared Responsibility): The Parties shall share maintenance and repair responsibilities as follows: [Insert specific allocation of responsibilities].
(c) Manufacturer Standards. Regardless of which Party bears responsibility for maintenance and repair, the Equipment shall at all times be maintained in compliance with manufacturer specifications, applicable accreditation standards (including, if applicable, the American College of Radiology accreditation requirements), and all Applicable Law.
(d) Reporting of Malfunctions. Lessee shall promptly notify Lessor of any malfunction, defect, damage, or breakdown of the Equipment. Lessee shall not attempt to repair or modify the Equipment without Lessor's prior written consent, except for routine operational adjustments within the scope of normal use.
[Internal Instruction — Remove Before Execution]: If maintenance costs are borne by Lessee (Option B or Option C), such costs must be accounted for in the FMV analysis. Specifically, if the Lessee is responsible for maintenance, the rental rate should be lower than it would be if the Lessor were responsible for maintenance, and the FMV Opinion should reflect this allocation. Ensure the FMV Opinion attached as Exhibit C addresses the maintenance responsibility allocation selected.
ARTICLE III — TERM AND RENEWAL
Section 3.1 — Initial Term
This Agreement shall commence on the Effective Date and shall continue in full force and effect for an initial term of [Insert: minimum one (1) year] (the "Initial Term"), unless earlier terminated in accordance with Article IX of this Agreement. The Initial Term shall expire at 11:59 p.m. Eastern Time on [Insert expiration date], unless renewed or extended as provided herein.
[Internal Instruction — Remove Before Execution]: Under both the Stark Law equipment rental exception (42 C.F.R. § 411.357(b)) and the AKS equipment rental safe harbor (42 C.F.R. § 1001.952(c)), the agreement must have a term of at least one (1) year. An Initial Term of less than one year is not compliant and will not satisfy the requirements of either the exception or the safe harbor. Ensure the Initial Term is at least twelve (12) full calendar months from the Effective Date.
Section 3.2 — Renewal
(a) This Agreement may be renewed for successive periods of [Insert: one (1) year each / other specified period] (each, a "Renewal Term") upon the mutual written agreement of the Parties. Either Party wishing to renew this Agreement shall deliver written notice of its intent to renew to the other Party not less than [Insert: sixty (60) / ninety (90)] days prior to the expiration of the then-current Initial Term or Renewal Term, as applicable.
(b) Each renewal must be documented in a written renewal amendment or renewal notice executed by both Parties. The renewal amendment or renewal notice shall specify the Rental Payment for the Renewal Term, which must be supported by an updated FMV determination.
(c) The Parties shall obtain an updated FMV Opinion from an independent qualified appraiser in connection with each renewal of this Agreement. The updated FMV Opinion shall be attached to the renewal amendment as a supplement to Exhibit C. If the updated FMV Opinion indicates that the then-current Rental Payment is no longer consistent with Fair Market Value, the Parties shall negotiate in good faith an adjustment to the Rental Payment for the Renewal Term.
[Internal Instruction — Remove Before Execution]: Automatic renewal provisions are permitted if the agreement otherwise satisfies all elements of the Stark exception, but any renewal should include an updated FMV certification to ensure continued compliance. AHT Compliance staff must calendar renewal dates at least 120 days in advance of expiration and initiate the FMV recertification process at that time.
Section 3.3 — Holdover
(a) In the event that Lessee continues to use the Equipment after the expiration of the Initial Term or any Renewal Term without a written renewal or extension, the Agreement shall be deemed to continue on a month-to-month basis on the same terms and conditions (including the same Rental Payment amount) as were in effect during the immediately preceding term, for a holdover period not to exceed six (6) months following the date of such expiration (the "Holdover Period"), during which the Parties shall negotiate in good faith either a renewal of this Agreement or an orderly termination.
(b) The holdover provisions of this Section 3.3 are included to comply with the Stark Law holdover provisions set forth at 42 C.F.R. § 411.357(b)(4). During the Holdover Period, the following conditions must be satisfied: (i) the holdover arrangement must be on the same terms and conditions as the immediately preceding arrangement; (ii) the holdover period must not exceed six (6) months following the expiration of the agreement; and (iii) the holdover arrangement must not have been entered into in contemplation of a new arrangement with different terms.
(c) If the Parties have not entered into a written renewal of this Agreement or a new agreement by the end of the Holdover Period, this Agreement shall terminate automatically upon expiration of the Holdover Period, and Lessee shall immediately cease all use of the Equipment and comply with the provisions of Section 9.4 regarding the effect of termination.
[Internal Instruction — Remove Before Execution]: The Holdover Period should not be relied upon as a substitute for timely renewal. Compliance staff must calendar renewal dates at least 120 days in advance of expiration of each term and must initiate the renewal process (including obtaining an updated FMV Opinion) promptly upon such calendar date. Reliance on holdover should be the exception, not the norm. If a holdover period is invoked, the Chief Compliance Officer must be notified immediately and a compliance memorandum must be prepared documenting the reasons for the holdover and the expected timeline for execution of a renewal or termination.
ARTICLE IV — RENTAL PAYMENTS
Section 4.1 — Rental Amount
(a) Fixed Rental Payment. Lessee shall pay to Lessor a fixed rental payment in the amount of $[Insert amount] per [Insert period: month / quarter] (the "Rental Payment") during the Lease Term. The Rental Payment shall be due and payable in accordance with the terms set forth in Section 4.2 and the Rental Payment Schedule attached as Exhibit D.
(b) Fair Market Value Basis. The Rental Payment has been determined to be consistent with Fair Market Value for the lease of the Equipment described in Exhibit A, for the access schedule described in Exhibit B, and for the Equipment Location described in Exhibit B, as supported by the independent FMV Opinion attached as Exhibit C. The Parties acknowledge that the Rental Payment was established through arm's length negotiations and reflects the fair market rental value of the Equipment in the relevant market.
(c) Set in Advance. The Rental Payment is set in advance for the entire Initial Term and for each Renewal Term. The Rental Payment shall not be modified during any term except pursuant to a written amendment executed by both Parties and supported by an updated FMV Opinion.
(d) No Volume or Value Adjustment. THE RENTAL PAYMENT SHALL NOT BE ADJUSTED, DIRECTLY OR INDIRECTLY, TO REFLECT OR TAKE INTO ACCOUNT THE VOLUME OR VALUE OF ANY REFERRALS OR OTHER BUSINESS GENERATED BETWEEN THE PARTIES, INCLUDING WITHOUT LIMITATION REFERRALS FOR DESIGNATED HEALTH SERVICES REIMBURSABLE UNDER MEDICARE, MEDICAID, OR ANY OTHER FEDERAL OR STATE HEALTHCARE PROGRAM. The Rental Payment is a fixed amount that is independent of, and unrelated to, the volume or value of any referrals, patient volume, utilization rates, scan counts, procedure counts, or other measures of business between the Parties.
[Internal Instruction — Remove Before Execution]: Per-use, per-scan, per-procedure, per-patient, or other unit-of-service-based rental charges are strictly prohibited. The rental must be a fixed periodic amount. Percentage-of-revenue-based fees, percentage-of-collections-based fees, and any other formula that ties the rental amount to utilization or volume are also prohibited. This is the single most critical compliance element of this Agreement. Any deviation from a fixed periodic rental amount will cause the arrangement to fail both the Stark Law equipment rental exception and the AKS equipment rental safe harbor. Under no circumstances may the rental amount be expressed as, or adjusted to reflect, a per-use, per-scan, per-procedure, or per-patient rate.
Section 4.2 — Payment Terms
(a) Rental Payments shall be due and payable on the [Insert: first / fifteenth] day of each [Insert: month / quarter] during the Lease Term, commencing on [Insert date of first payment].
(b) All Rental Payments shall be made by [Insert: wire transfer of immediately available funds / check / automated clearing house (ACH) transfer] to the account or address specified by Lessor in writing. Lessor shall provide Lessee with written payment instructions, including the name and address of the financial institution, the account number, and the routing number (for wire transfers and ACH), or the payee name and mailing address (for checks).
(c) Any Rental Payment not received by Lessor within [Insert: ten (10) / fifteen (15)] days after its due date shall bear interest at a rate of [Insert]% per annum (but in no event exceeding the maximum rate permitted by Applicable Law), calculated from the due date until the date of payment in full. The imposition of interest on late payments shall not constitute a waiver of any other right or remedy of Lessor with respect to such late payment.
(d) All Rental Payments shall be made without setoff, deduction, or counterclaim, except as may be required by Applicable Law.
Section 4.3 — No Additional Payments or Remuneration
(a) Except as expressly set forth in this Agreement, neither Party shall provide or receive, directly or indirectly, any additional payment, fee, consideration, benefit, discount, rebate, gift, gratuity, hospitality, entertainment, or other remuneration of any kind (whether in cash or in kind) in connection with this Agreement, the use of the Equipment, or any referral or other business relationship between the Parties.
(b) Any non-monetary remuneration provided by either Party to the other in connection with this Agreement or the underlying business relationship must comply with the Stark Law non-monetary compensation exception set forth at 42 C.F.R. § 411.357(k) (currently limited to $459 per physician per calendar year for CY2023, as adjusted annually by CMS) and must be reported to the Chief Compliance Officer of Arbor Health Technologies Inc. for tracking under AHT's Non-Monetary Remuneration and Compliance Exception Tracking Protocol.
(c) The prohibitions of this Section 4.3 extend to items and services of value such as free or below-cost supplies, staffing support, technology services, marketing assistance, referral fees, patient volume bonuses, and any other form of consideration not explicitly set forth in this Agreement.
Section 4.4 — Taxes and Assessments
[Insert allocation of responsibility for taxes as follows]:
(a) Property Taxes and Personal Property Taxes. [Insert: Lessor / Lessee] shall be responsible for all property taxes and personal property taxes assessed on the Equipment during the Lease Term.
(b) Sales and Use Taxes. [Insert: Lessor / Lessee] shall be responsible for all sales taxes, use taxes, and similar transactional taxes imposed on the Rental Payments or on the lease of the Equipment.
(c) Other Governmental Assessments. [Insert: Lessor / Lessee] shall be responsible for all other governmental assessments, fees, and charges imposed on the Equipment or its use during the Lease Term.
(d) Each Party shall be responsible for its own income taxes arising from the transactions contemplated by this Agreement.
Section 4.5 — Rental Payment Schedule
The complete Rental Payment Schedule for the Initial Term, setting forth the amount and due date of each Rental Payment, is attached as Exhibit D and incorporated herein by this reference. In the event of any inconsistency between this Article IV and Exhibit D, the terms of this Article IV shall control.
ARTICLE V — FAIR MARKET VALUE CERTIFICATION
Section 5.1 — FMV Determination
(a) The Parties acknowledge and agree that the Rental Payment has been determined to constitute Fair Market Value for the lease of the Equipment, as documented in the independent FMV Opinion prepared by [Insert name of qualified appraiser, e.g., Northbridge Valuation Advisors LLC] and attached to this Agreement as Exhibit C.
(b) The FMV Opinion was prepared in accordance with AHT's Fair Market Value Determination Procedures and reflects a valuation conducted by a qualified, independent appraiser who has no financial relationship with either Party (other than the engagement to prepare the FMV Opinion) that would impair the appraiser's independence or objectivity.
(c) The FMV Opinion was prepared without regard to the volume or value of referrals or other business generated, or anticipated to be generated, between the Parties. The appraiser has certified that the valuation was performed using standard appraisal methodologies and was not influenced by the existence or anticipated volume of referrals between the Parties.
Section 5.2 — FMV Recertification
(a) The FMV Opinion shall be updated or recertified by an independent qualified appraiser not less frequently than [Insert: annually / at each Renewal Term], whichever is more frequent.
(b) If the updated or recertified FMV Opinion indicates that the Rental Payment exceeds, or is materially below, Fair Market Value for the Equipment lease based on then-current market conditions, the Parties shall negotiate in good faith an adjustment to the Rental Payment effective as of the next payment period following the date of the updated FMV Opinion. Any adjustment to the Rental Payment must be documented in a written amendment to this Agreement executed by both Parties, must be consistent with Fair Market Value, and must not take into account the volume or value of referrals or other business between the Parties.
(c) In the event that the Parties are unable to agree on an adjusted Rental Payment within sixty (60) days after receipt of an updated FMV Opinion indicating that an adjustment is warranted, either Party may terminate this Agreement upon ninety (90) days' prior written notice, subject to the provisions of Section 9.4.
[Internal Instruction — Remove Before Execution]: AHT's Fair Market Value Determination Procedures require that FMV opinions for equipment rentals be refreshed at least annually or upon any material change in the Equipment, use schedule, or market conditions, whichever is sooner. A "material change" includes the addition or removal of Equipment from Exhibit A, a change in the Permitted Use Schedule of more than ten percent (10%) of scheduled hours, a change in the Equipment Location, or a significant change in market conditions for comparable equipment rentals. The initial FMV Opinion must be in place before the Agreement is executed.
Section 5.3 — Commercial Reasonableness
(a) The Parties represent and warrant that this Agreement is Commercially Reasonable and serves a legitimate business purpose independent of any referrals between the Parties. The lease of the Equipment under this Agreement would be entered into by reasonable parties acting in their own economic self-interest, even in the absence of any referral relationship between them.
(b) The Equipment is reasonably necessary for the Lessee's clinical operations and patient care activities at the Equipment Location(s). The aggregate amount of Equipment leased under this Agreement does not exceed that which is reasonably necessary to accomplish the Commercially Reasonable business purpose of the rental.
(c) The Parties have each independently determined that the lease of the Equipment on the terms set forth in this Agreement serves their respective legitimate business needs and is justified by the clinical, operational, and logistical requirements of their respective businesses.
[Internal Instruction — Remove Before Execution]: Document the specific clinical and operational rationale for the equipment lease in the compliance file for this arrangement. The arrangement must be justifiable even if no referrals were made between the parties. Examples of documentation include clinical needs assessments, patient volume projections (not tied to referral volumes), facility planning documents, and written statements from the requesting physician or clinical director explaining the clinical necessity for equipment access at the Equipment Location.
ARTICLE VI — REGULATORY COMPLIANCE
Section 6.1 — Stark Law Compliance
(a) This Agreement is intended to comply with the equipment rental exception to the Stark Law set forth at 42 C.F.R. § 411.357(b). The Parties have structured this Agreement to satisfy each element of the equipment rental exception, as follows:
(i) This Agreement is set out in writing, is signed by both Parties, and specifies the Equipment covered by the lease, as set forth in Exhibit A;
(ii) The Equipment covered by this Agreement is identified and described with specificity in Exhibit A, including the manufacturer, model number, serial number, and all accessories and ancillary components;
(iii) The Permitted Use Schedule for the Equipment is set out in advance in Exhibit B, Part 2, specifying the days of the week and hours during which Lessee may access and use the Equipment;
(iv) The term of this Agreement is for a period of at least one (1) year, as set forth in Section 3.1;
(v) The Rental Payment is set in advance for the entire Initial Term and each Renewal Term, is consistent with Fair Market Value as determined by an independent qualified appraiser, and does not take into account the volume or value of referrals or other business generated between the Parties, as set forth in Sections 4.1 and 5.1; and
(vi) This Agreement is Commercially Reasonable even absent any referrals between the Parties, as set forth in Section 5.3.
(b) The Parties shall conduct their activities under this Agreement in a manner consistent with the foregoing elements at all times during the Lease Term. In the event that any Party becomes aware of any fact or circumstance that may cause this Agreement to fail to satisfy any element of the Stark Law equipment rental exception, such Party shall promptly notify the other Party and the Parties shall work together in good faith to remedy the issue.
Section 6.2 — Anti-Kickback Statute Compliance
(a) This Agreement is intended to comply with the equipment rental safe harbor under the AKS set forth at 42 C.F.R. § 1001.952(c). The Parties have structured this Agreement to satisfy each element of the equipment rental safe harbor, as follows:
(i) This Agreement is set out in writing and is signed by both Parties;
(ii) This Agreement covers all of the Equipment leased between the Parties for the term of this Agreement and specifies each item of Equipment with particularity in Exhibit A;
(iii) To the extent this Agreement provides for access to the Equipment on a periodic, part-time, or intermittent basis, the Permitted Use Schedule in Exhibit B, Part 2 specifies exactly the schedule of such intervals, their precise length, and the exact rental charge for such intervals;
(iv) The term of this Agreement is for a period of at least one (1) year;
(v) The aggregate Rental Payment is set in advance, is consistent with Fair Market Value in arm's length transactions, and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the Parties for which payment may be made in whole or in part under Medicare, Medicaid, or any other federal healthcare program; and
(vi) The aggregate Equipment leased under this Agreement does not exceed that which is reasonably necessary to accomplish the Commercially Reasonable business purpose of the rental.
(b) The Parties acknowledge that full compliance with the AKS equipment rental safe harbor provides protection from criminal prosecution under the AKS, and the Parties intend to maintain strict compliance with all elements of the safe harbor throughout the Lease Term.
Section 6.3 — State Law Compliance
The Parties shall comply with all applicable state healthcare fraud and abuse laws in connection with this Agreement and the Equipment lease contemplated herein, including but not limited to:
(a) Massachusetts: The Massachusetts anti-kickback statute, M.G.L. c. 175H, § 3, which prohibits the knowing or willful solicitation or receipt of any remuneration (including kickbacks, bribes, or rebates) directly or indirectly, in return for referring an individual to a person for the furnishing of any item or service for which payment may be made in whole or in part under a state healthcare program;
(b) Connecticut: The Connecticut referral fee prohibition, Conn. Gen. Stat. § 20-7a(d), which prohibits the payment or receipt of any commission, bonus, kickback, or rebate for the referral of patients;
(c) Rhode Island: All applicable Rhode Island anti-kickback, anti-referral, and healthcare fraud and abuse statutes, to the extent the Equipment is located in or services are performed in Rhode Island; and
(d) New Hampshire: All applicable New Hampshire anti-kickback, anti-referral, and healthcare fraud and abuse statutes, to the extent the Equipment is located in or services are performed in New Hampshire.
[Internal Instruction — Remove Before Execution]: Select the applicable state law provisions based on the location of the Equipment. If the Equipment Location is in a state not listed above, consult General Counsel to determine the applicable state healthcare fraud and abuse statutes and add them to this Section 6.3 before execution.
Section 6.4 — No Conditioning of Referrals
(a) Neither Party shall condition or require the other Party to make, or refrain from making, referrals to the other Party or any affiliate of the other Party as a condition of entering into, continuing, or renewing this Agreement.
(b) The availability, continuation, or renewal of this lease arrangement shall not be conditioned, directly or indirectly, on the volume or value of referrals for Designated Health Services or any other services reimbursable under any federal or state healthcare program.
(c) Neither Party shall track, monitor, or evaluate the other Party's referral patterns for purposes of determining whether to continue, modify, or terminate this Agreement. The Parties acknowledge that any such tracking, monitoring, or evaluation could evidence an impermissible nexus between the Rental Payment and referrals and could jeopardize compliance with the Stark Law equipment rental exception and the AKS equipment rental safe harbor.
(d) Neither Party shall impose any minimum referral requirements, referral targets, referral quotas, or referral expectations on the other Party in connection with this Agreement.
Section 6.5 — Compliance Monitoring
(a) Each Party shall designate a compliance contact for purposes of this Agreement who shall serve as the primary point of contact for compliance-related matters arising under this Agreement.
(b) AHT's compliance contact for this Agreement is the Chief Compliance Officer, currently Derek Huang, who may be reached at 200 Concord Avenue, Suite 400, Cambridge, MA 02138, telephone: [Insert], email: [Insert].
(c) The other Party's compliance contact is: [Insert name, title, address, telephone, and email].
(d) The Parties agree to cooperate in periodic compliance reviews of this Agreement conducted by either Party or its designated compliance personnel. Such reviews may include, without limitation, verification of the FMV basis for the Rental Payment, review of the Permitted Use Schedule for consistency with actual use, verification of continued satisfaction of the elements of the Stark Law equipment rental exception and the AKS equipment rental safe harbor, and review of any non-monetary remuneration exchanged between the Parties. Each Party shall provide access to relevant records as reasonably requested by the other Party in connection with such compliance reviews.
(e) Either Party may request a compliance review of this Agreement at any time upon reasonable written notice to the other Party. The Parties shall cooperate in good faith to facilitate and complete any such compliance review within a reasonable time frame.
(f) In the event that any compliance review identifies a potential compliance concern or deficiency, the Parties shall work together in good faith to address and resolve the concern or deficiency promptly. If the concern or deficiency cannot be resolved, either Party may exercise its termination rights under Section 9.2.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES
Section 7.1 — Lessor Representations and Warranties
Lessor hereby represents and warrants to Lessee, as of the Effective Date and throughout the Lease Term, as follows:
(a) Lessor is a [Insert entity type] duly organized, validly existing, and in good standing under the laws of the [Insert jurisdiction of organization], and is qualified to do business in each jurisdiction where the Equipment Location(s) are situated.
(b) Lessor has full power, authority, and legal right to enter into this Agreement, to perform its obligations hereunder, and to lease the Equipment to Lessee as contemplated hereby. The execution, delivery, and performance of this Agreement by Lessor have been duly authorized by all necessary corporate or organizational action.
(c) Lessor is the owner of the Equipment, free and clear of all liens, encumbrances, and security interests (other than those that do not materially impair Lessee's rights under this Agreement), or otherwise has the lawful right to lease the Equipment to Lessee as contemplated by this Agreement.
(d) The Equipment is in good working order and condition as of the Effective Date and complies with all applicable regulatory requirements, manufacturer specifications, and safety standards.
(e) Neither Lessor nor any of its officers, directors, owners, or managing employees (as defined in 42 C.F.R. § 1001.2) has been excluded, debarred, or suspended from participation in any federal healthcare program (including Medicare and Medicaid) or any state healthcare program. Lessor shall promptly notify Lessee in writing if any such exclusion, debarment, or suspension occurs during the Lease Term.
(f) Neither Lessor nor any of its officers, directors, owners, or managing employees has been convicted of a criminal offense related to the delivery of an item or service under Medicare, Medicaid, or any other federal healthcare program, healthcare fraud, patient abuse or neglect, or the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, within the preceding ten (10) years.
(g) The Rental Payment reflects Fair Market Value for the lease of the Equipment and was not negotiated, established, or determined in a manner that takes into account the volume or value of any referrals or other business between the Parties.
Section 7.2 — Lessee Representations and Warranties
Lessee hereby represents and warrants to Lessor, as of the Effective Date and throughout the Lease Term, as follows:
(a) Lessee is a [Insert entity type] duly organized, validly existing, and in good standing under the laws of the [Insert jurisdiction of organization], and is qualified to do business in each jurisdiction where the Equipment Location(s) are situated.
(b) Lessee has full power, authority, and legal right to enter into this Agreement and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement by Lessee have been duly authorized by all necessary corporate or organizational action.
(c) Neither Lessee nor any of its officers, directors, owners, or managing employees (as defined in 42 C.F.R. § 1001.2) has been excluded, debarred, or suspended from participation in any federal healthcare program (including Medicare and Medicaid) or any state healthcare program. Lessee shall promptly notify Lessor in writing if any such exclusion, debarment, or suspension occurs during the Lease Term.