CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Healthcare & Life Sciences Practice Group 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
INDEPENDENT CONTRACTOR / MEDICAL DIRECTOR AGREEMENT (Template)
TEMPLATE CLASSIFICATION: THIS IS A BLANK FORM. All bracketed fields must be populated with arrangement-specific information before execution. No arrangement may proceed under this template without completion of all bracketed fields, all required Exhibits, and all required approvals as set forth herein and in the Appendix.
DRAFTING NOTES / INSTRUCTIONAL PREFACE
This template replaces all prior independent contractor and medical director agreement forms used by Arbor Health Technologies Inc. ("AHT"), including legacy forms assumed in the acquisition of Lakeview Medical Associates, P.C. All new and renewed medical director and independent contractor physician arrangements must use this template effective upon the date of adoption. Any deviation from this template — whether in substance, structure, or individual provision — requires the prior written approval of both the General Counsel and the Chief Compliance Officer of AHT. Deviations must be documented in a written memorandum explaining the nature of and justification for the deviation and maintained on file with the General Counsel's office. This template was developed as part of the comprehensive Anti-Kickback Statute and Stark Law self-assessment and remediation engagement conducted by Calderwood & Harkness LLP for AHT under Matter Number 1010-00003, and its use is a material component of the remediation roadmap approved by AHT's Board Compliance Committee.
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INDEPENDENT CONTRACTOR / MEDICAL DIRECTOR AGREEMENT
This Independent Contractor / Medical Director Agreement (this "Agreement") is entered into as of [Insert Effective Date] (the "Effective Date"), by and between:
ARBOR HEALTH TECHNOLOGIES INC., a Delaware corporation with its principal place of business at 200 Concord Avenue, Suite 400, Cambridge, MA 02138 (hereinafter referred to as "AHT" or the "Company"),
and
[Insert Full Legal Name of Physician], M.D./D.O., an individual residing at [Insert Address], holding an unrestricted license to practice medicine in the State of [Insert State(s)] (hereinafter referred to as "Contractor" or "Medical Director").
AHT and Contractor are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, AHT operates a network of outpatient clinics across the Commonwealth of Massachusetts, the State of Connecticut, the State of Rhode Island, and the State of New Hampshire, providing primary care, specialty care, and ancillary services to patients in those communities and regions;
WHEREAS, AHT desires to engage Contractor to serve as [Medical Director / Independent Contractor Physician] for [Insert Clinic Name/Region/Department] (the "Designated Facility/Program"), and Contractor desires to accept such engagement, on the terms and conditions set forth herein;
WHEREAS, Contractor possesses the qualifications, training, clinical experience, and professional licensure necessary to perform the services described in this Agreement, including board certification in [Insert Specialty] and [Insert number] years of clinical and administrative experience in the relevant specialty area;
WHEREAS, the Parties intend this Agreement to comply in all respects with all applicable federal and state laws, rules, and regulations governing healthcare arrangements, including without limitation the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and its implementing regulations and safe harbors, the Physician Self-Referral Law (commonly referred to as the "Stark Law") (42 U.S.C. § 1395nn) and its implementing regulations and exceptions, applicable safe harbors under 42 C.F.R. § 1001.952, applicable exceptions under 42 C.F.R. § 411.350 et seq., and applicable state anti-kickback and referral fee statutes, including without limitation Massachusetts General Laws Chapter 175H, Section 3 and Connecticut General Statutes Section 20-7a(d);
WHEREAS, the compensation set forth in this Agreement has been determined to reflect the fair market value of the services to be rendered by Contractor and has been established in a manner consistent with the requirements of the personal services and management contracts safe harbor under 42 C.F.R. § 1001.952(d) and the Stark Law personal services arrangement exception under 42 C.F.R. § 411.357(d), and specifically does not take into account the volume or value of any referrals or other business generated between the Parties;
WHEREAS, AHT has obtained an independent fair market value opinion from a qualified independent valuation firm supporting the compensation terms set forth in this Agreement, which opinion is attached hereto as Exhibit C or maintained on file with the General Counsel; and
WHEREAS, AHT has documented the commercial reasonableness of this arrangement in a written memorandum maintained on file with the General Counsel, which memorandum demonstrates that this arrangement serves a legitimate business purpose independent of any referral relationship between the Parties.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, and warranties contained 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
The following terms shall have the meanings set forth below when used in this Agreement. Capitalized terms used but not defined in this Article shall have the meanings ascribed to them elsewhere in this Agreement.
1.1 "AKS" means the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), as amended from time to time, together with all implementing regulations, safe harbors, and official guidance issued by the U.S. Department of Health and Human Services, Office of Inspector General, or any successor agency.
1.2 "Applicable Laws" means all federal, state, and local laws, rules, regulations, ordinances, orders, guidelines, and official guidance applicable to the Services or the Parties' obligations under this Agreement, including without limitation the AKS, the Stark Law, state anti-kickback statutes (including Massachusetts General Laws Chapter 175H, Section 3 and Connecticut General Statutes Section 20-7a(d)), the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") (as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH")), applicable state medical practice acts, state corporate practice of medicine doctrines, and all regulations promulgated thereunder.
1.3 "Commercial Reasonableness" means an arrangement that would make commercial sense and serve a legitimate business purpose if entered into by similarly situated parties acting in their own economic self-interest, in the absence of any potential referrals between the parties. Commercial reasonableness is evaluated based on documented business need, scope of duties, services actually rendered, and the results or outcomes the arrangement is expected to achieve, without regard to whether the arrangement generates or is expected to generate referrals of designated health services or other federally reimbursable items or services.
1.4 "Compliance Officer" means the Chief Compliance Officer of AHT, currently Derek Huang, or his or her designee as designated in writing from time to time.
1.5 "Designated Facility/Program" means [Insert specific clinic location, department, or program to which Services relate, e.g., "Arbor Health Clinic — [City], [State]"], as more particularly described in Exhibit A attached hereto.
1.6 "Designated Health Services" or "DHS" means the items and services defined as "designated health services" under 42 U.S.C. § 1395nn(h)(6) and 42 C.F.R. § 411.351, as amended from time to time, including but not limited to 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.
1.7 "Fair Market Value" or "FMV" means the value in arm's-length transactions, consistent with the general market value of the subject transaction, as that term is defined under 42 C.F.R. § 411.351, which provides that "general market value" means the price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of the transaction and in the location of the transaction, as applicable. Fair market value shall be as supported by an independent FMV opinion from a qualified valuation firm in accordance with this Agreement.
1.8 "FMV Opinion" means the independent fair market value opinion issued by a qualified valuation firm with recognized expertise in healthcare compensation valuation (e.g., Northbridge Valuation Advisors LLC, or such successor firm as may be approved by the General Counsel), and attached hereto as Exhibit C or maintained on file with the General Counsel. The FMV Opinion must meet the requirements set forth in Exhibit C.
1.9 "General Counsel" means the General Counsel of AHT, currently Patricia Yamamoto, or his or her designee as designated in writing from time to time.
1.10 "Minimum Monthly Hours" means [Insert number] hours per calendar month, as specified in Section 3.3 of this Agreement and as set forth in Exhibit A, representing the minimum number of hours that Contractor is expected to devote to the performance of Services each month.
1.11 "Maximum Monthly Hours" means [Insert number] hours per calendar month, as specified in Section 3.3 of this Agreement, representing the maximum number of hours that Contractor may devote to the performance of Services each month without the prior written approval of AHT.
1.12 "Monthly Compensation" means $[Insert dollar amount] per calendar month, as specified in Section 4.1 of this Agreement, representing the fixed monthly fee payable to Contractor for the Services.
1.13 "Services" means the specific medical director or independent contractor physician services to be performed by Contractor as described in Article III and Exhibit A — Statement of Work, attached hereto and incorporated herein by reference.
1.14 "Stark Law" means the Physician Self-Referral Law, 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 official guidance issued by the Centers for Medicare & Medicaid Services or any successor agency.
1.15 "Term" means the Initial Term and any renewal periods, as defined in Section 2.1 and Section 2.2 of this Agreement.
ARTICLE II — TERM AND TERMINATION
2.1 Initial Term. This Agreement shall commence on the Effective Date and shall continue in effect for a fixed initial term of [Insert: minimum one (1) year] (the "Initial Term"), ending on [Insert Expiration Date], unless earlier terminated in accordance with this Article II.
Instructional Note: The Initial Term must be at least one (1) year in duration to satisfy the requirements of both the AKS personal services and management contracts safe harbor (42 C.F.R. § 1001.952(d)) and the Stark Law personal services arrangement exception (42 C.F.R. § 411.357(d)). A term of less than one (1) year is not permitted under this template without the prior written approval of both the General Counsel and the Compliance Officer, and any such shorter-term arrangement must be separately analyzed to determine whether an alternative safe harbor or exception is available and documented. Use of the part-time arrangement exception under 42 C.F.R. § 411.357(p), if applicable, requires a separate compliance analysis.
2.2 Renewal. This Agreement may be renewed for successive [Insert: one (1)-year] periods (each a "Renewal Term") upon mutual written agreement of the Parties, executed at least [Insert: sixty (60)] days prior to the expiration of the then-current Term (whether the Initial Term or any Renewal Term). Each renewal shall be documented by a written amendment or renewal letter that:
(a) confirms the updated compensation (if any) for the Renewal Term and certifies that such compensation remains consistent with Fair Market Value;
(b) references a current or updated FMV Opinion dated within twelve (12) months of the commencement date of the Renewal Term;
(c) confirms that the arrangement continues to be Commercially Reasonable;
(d) is signed by both Parties; and
(e) includes the written approval of both the General Counsel and the Compliance Officer on the approval blocks provided.
Instructional Note — HOLDOVER PROHIBITION: Holdover periods — that is, any period during which Contractor continues to perform Services after the expiration of the then-current Term without a signed renewal or extension — are strictly prohibited. Holdover situations create a significant risk of non-compliance with the Stark Law, which requires that personal services arrangements be set out in a writing signed by the parties and cover a period of at least one year. In the event that an inadvertent holdover occurs (i.e., Services are performed after term expiration without a signed renewal), the Compliance Officer must be notified immediately. The holdover provisions under 42 C.F.R. § 411.357(c) may provide limited protection for inadvertent holdovers of six (6) months or less under certain conditions, but reliance on those provisions should be a last resort and not a planned compliance strategy. All reasonable efforts shall be made to execute renewals in advance of expiration.
2.3 Termination for Convenience. Either Party may terminate this Agreement without cause upon [Insert: ninety (90)] days' prior written notice to the other Party delivered in accordance with Section 13.6 of this Agreement. During the notice period, Contractor shall continue to perform Services unless otherwise directed by AHT in writing, and AHT shall continue to pay Monthly Compensation for documented Services rendered during such period.
2.4 Termination for Cause. Either Party may terminate this Agreement immediately upon written notice to the other Party in the event of any of the following:
(a) A material breach by the other Party of any term, condition, representation, warranty, or obligation of this Agreement that remains uncured for a period of [Insert: thirty (30)] days after written notice from the non-breaching Party specifying the nature of the breach in reasonable detail; provided, however, that certain breaches described in subsections (b) through (f) below are not subject to any cure period and shall result in immediate termination upon notice;
(b) The loss, suspension, revocation, surrender, or restriction of Contractor's license to practice medicine in any state in which Services are performed under this Agreement, or the imposition of any disciplinary action by any state medical board or licensing authority that, in the reasonable judgment of AHT's General Counsel, materially impairs Contractor's ability to perform the Services;
(c) The exclusion, debarment, or suspension of either Party from participation in any federal or state healthcare program, including without limitation Medicare, Medicaid, TRICARE, or any other program administered by the U.S. Department of Health and Human Services, the U.S. Department of Defense, or any state Medicaid agency;
(d) The debarment, suspension, or declaration of ineligibility of either Party under any federal or state procurement program, or the listing of either Party on the General Services Administration's System for Award Management (SAM) Excluded Parties List or the OIG List of Excluded Individuals and Entities (LEIE);
(e) Contractor's conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving moral turpitude, fraud, dishonesty, breach of trust, or any offense related to the delivery of healthcare items or services or the billing of any federal or state healthcare program;
(f) A determination by AHT's General Counsel or Compliance Officer, in his or her reasonable judgment, that the arrangement as structured or as performed does not comply with Applicable Laws, including without limitation the AKS, the Stark Law, or any applicable state anti-kickback or self-referral statute, and that such non-compliance cannot be cured within a reasonable period through amendment or restructuring of the arrangement.
2.5 Effect of Termination. Upon the effective date of termination or expiration of this Agreement for any reason:
(a) Contractor shall immediately cease performing all Services under this Agreement unless AHT requests continued performance during a transition period not to exceed [Insert: thirty (30)] days;
(b) Contractor shall promptly return to AHT all property, documents, records, materials, equipment, keys, access badges, electronic devices, and copies thereof belonging to or created for AHT, including without limitation all patient records, clinical protocols, policy manuals, and other proprietary materials;
(c) Contractor shall cooperate reasonably with AHT in the orderly transition of duties and responsibilities to a successor contractor, employee, or other designee, including without limitation the transfer of institutional knowledge, pending matters, and open projects;
(d) AHT shall pay Contractor the Monthly Compensation (or prorated compensation, as applicable under Section 4.4) for Services rendered through the effective date of termination or expiration, provided that such Services are properly documented in accordance with Section 3.4 and Section 4.4. No compensation shall be payable for any period after the effective date of termination or expiration;
(e) All rights and obligations of the Parties under this Agreement shall cease as of the effective date of termination or expiration, except as provided in Section 2.6.
2.6 Survival. The following provisions shall survive the termination or expiration of this Agreement and shall continue in full force and effect in accordance with their respective terms: Article I (Definitions), Section 2.5 (Effect of Termination), this Section 2.6 (Survival), Section 3.5 (Independent Contractor Status), Article V (Fair Market Value Certification and Commercial Reasonableness) (to the extent relevant to any post-termination audit, investigation, or dispute), Article VI (Referral Independence and Anti-Kickback / Stark Law Compliance) (to the extent relevant to any post-termination audit, investigation, or dispute), Article VII (Representations and Warranties) (to the extent relevant to any post-termination audit, investigation, or dispute), Section 8.1 (Confidentiality), Section 8.2 (Non-Disclosure), Section 8.3 (Non-Competition) (if applicable), Section 8.4 (Non-Solicitation) (if applicable), Article IX (Insurance and Indemnification), Article X (HIPAA and Privacy), Section 11.4 (Audit and Monitoring), Article XII (Governing Law and Dispute Resolution), and Article XIII (Miscellaneous Provisions).
ARTICLE III — SCOPE OF SERVICES AND TIME COMMITMENT
3.1 Description of Services. Contractor shall perform the services described in detail on Exhibit A — Statement of Work, attached hereto and incorporated herein by reference (the "Services"). The Services shall be performed at the Designated Facility/Program and/or remotely, as specified in Exhibit A, and in accordance with the schedule, deliverables, and performance standards set forth therein.
Instructional Note for Completing Exhibit A: Each duty to be performed by Contractor must be specified with sufficient particularity to demonstrate that the arrangement is Commercially Reasonable and that the Services independently justify the compensation without regard to any referrals the Contractor may make to AHT or AHT-affiliated entities. General, vague, or conclusory descriptions of duties (e.g., "oversight," "advisory services," "general medical direction," or "as needed consultation") without specific deliverables, measurable responsibilities, or defined outcomes are insufficient and will not be approved by the General Counsel or Compliance Officer. Each duty should be described with reference to: the specific activity to be performed, the estimated hours per month allocated to that activity, the expected deliverables or outcomes, and the frequency of performance. The aggregate duties described in Exhibit A must be sufficient to occupy, at a minimum, the Minimum Monthly Hours specified in Section 3.3.
The Services may include, as applicable and as specifically identified in Exhibit A, the following categories of duties (to be selected, tailored, and described with specificity for each arrangement):
(a) Clinical oversight of [Insert department, program, or service line], including supervision of clinical operations, review of clinical outcomes, and monitoring of quality metrics;
(b) Quality assurance and peer review activities, including participation in peer review processes, review of clinical incident reports, and development of quality improvement initiatives;
(c) Development, review, and periodic updating of clinical protocols, policies, standard operating procedures, and clinical practice guidelines applicable to the Designated Facility/Program;
(d) Participation in credentialing and privileging committee activities, including review of provider applications, reappointment reviews, and focused professional practice evaluations;
(e) Regulatory compliance oversight for [Insert clinical area], including monitoring compliance with applicable clinical regulations, accreditation standards (e.g., Joint Commission, NCQA, AAAHC), and evidence-based practice guidelines;
(f) Staff supervision, mentoring, and clinical education, including training of clinical staff, supervision of mid-level providers (e.g., nurse practitioners, physician assistants), and provision of clinical guidance;
(g) Participation in governance and committee meetings, including [Insert specific committees, e.g., Medical Executive Committee, Quality Improvement Committee, Patient Safety Committee, Pharmacy and Therapeutics Committee], with preparation of reports and follow-up on action items;
(h) On-call coverage for clinical questions, urgent patient care issues, or emergency situations, subject to the specific terms and limitations set forth in Exhibit A;
(i) Direct patient care services, if applicable, limited to [Insert scope, e.g., evaluation and management of patients in [Insert clinical setting]], subject to separate credentialing, billing, and compliance requirements as set forth in Exhibit A;
(j) Other duties as specifically described in Exhibit A.
3.2 Exclusivity / Non-Exclusivity. [Select one of the following and delete the other:]
[Option A — Non-Exclusive:] This engagement is non-exclusive. Contractor may provide similar services to other healthcare entities during the Term, subject to the restrictions set forth in Section 8.3 (Non-Competition) and Section 8.4 (Non-Solicitation), and provided that such outside activities do not interfere with Contractor's ability to fulfill the time commitment and service obligations under this Agreement.
[Option B — Exclusive:] This engagement is exclusive within [Insert defined geographic area or scope]. During the Term, Contractor shall not provide medical director services or substantially similar clinical oversight or administrative services to any other healthcare entity within [Insert geographic or programmatic scope of exclusivity], subject to the restrictions set forth in Section 8.3 (Non-Competition) and Section 8.4 (Non-Solicitation).
3.3 Time Commitment — Minimum and Maximum Monthly Hours. Contractor shall devote a minimum of [Insert Minimum Monthly Hours] hours per calendar month (the "Minimum Monthly Hours") and shall not exceed [Insert Maximum Monthly Hours] hours per calendar month (the "Maximum Monthly Hours") to the performance of Services under this Agreement. Any hours in excess of the Maximum Monthly Hours in any calendar month require the prior written approval of AHT's designated administrator and the Compliance Officer, and the compensation for such excess hours shall be addressed in accordance with Section 4.1.
Instructional Note — Critical Compliance Feature: The specification of Minimum Monthly Hours and Maximum Monthly Hours is a critical compliance feature of this template. The Monthly Compensation under Section 4.1 has been established based on the expectation that Contractor will perform at least the Minimum Monthly Hours each month. The Minimum Monthly Hours must be set at a level such that the implied hourly rate (Monthly Compensation ÷ Minimum Monthly Hours) falls within the Fair Market Value range identified in the FMV Opinion for Contractor's specialty, geographic market, and scope of duties.
Arrangements where the effective hourly rate exceeds the applicable benchmark range require heightened scrutiny. Specifically:
• If the implied hourly rate exceeds the 75th percentile for the applicable specialty in the applicable geographic market, the arrangement requires additional review and a written memorandum of justification from the General Counsel and Compliance Officer, which memorandum must document the specific factual basis for the above-median rate (e.g., unusual complexity of duties, scarcity of qualified specialists in the local market, extraordinary time demands, or unique qualifications of the Contractor).
• If the implied hourly rate exceeds the 90th percentile for the applicable specialty in any circumstance, the arrangement may not proceed without the prior written approval of the AHT Board Compliance Committee, and no template-level approval by the General Counsel and Compliance Officer alone is sufficient.
Historical Context: Prior AHT arrangements (including those assumed in the Lakeview Medical Associates, P.C. acquisition) had an average of 8.4 hours per month of documented service across all medical directorships, resulting in effective hourly rates of approximately $501 per hour. This rate is not supportable as Fair Market Value for any medical specialty in any geographic market, based on published benchmark data from MGMA, SullivanCotter, and other recognized sources. This template is specifically designed to prevent recurrence of that issue by requiring (i) realistic Minimum Monthly Hours commensurate with the compensation, (ii) detailed time documentation, (iii) independent FMV validation, and (iv) ongoing monitoring through the annual recertification process.
Schedule. Contractor's schedule for performing Services shall be as set forth in Exhibit A or as otherwise mutually agreed upon in writing by the Parties. Services may be performed on-site at the Designated Facility/Program and/or remotely, as specified in Exhibit A. If Exhibit A provides for remote performance of any Services, it shall specify which Services may be performed remotely and any limitations on remote performance.
3.4 Time Documentation Requirements. Contractor shall maintain and submit to AHT a detailed monthly time log documenting all hours devoted to Services under this Agreement. Each monthly time log shall include the following information for each day on which Services were performed:
(a) The date on which Services were performed;
(b) The start time and end time of the Service period, or the total number of hours devoted to Services on that date;
(c) A description of the specific duties performed, with sufficient detail to permit verification of Commercial Reasonableness and to demonstrate that the Services relate to the duties described in Exhibit A (e.g., "Reviewed and revised clinical protocol for diabetic patient management in primary care setting — 2.5 hours" rather than "Medical director duties — 2.5 hours");
(d) The location at which Services were performed (i.e., on-site at the Designated Facility/Program, remote, or other specified location).
Time logs shall be submitted to the Compliance Officer and/or AHT's designated administrator no later than the [Insert: 10th] day of the calendar month following the month in which Services were performed, using the form attached hereto as Exhibit B — Monthly Time Log Form, or such successor form as may be prescribed by the Compliance Officer from time to time.
Failure to submit a properly completed time log for [Insert: two (2)] consecutive calendar months shall constitute grounds for the immediate suspension of Monthly Compensation payments pending receipt of satisfactory documentation. AHT shall provide written notice to Contractor of any such suspension. Persistent failure to document hours — defined as the failure to submit properly completed time logs for [Insert: three (3)] or more calendar months during any twelve (12)-month period — shall constitute a material breach of this Agreement entitling AHT to terminate this Agreement for cause under Section 2.4(a), with no cure period applicable to such breach.
3.5 Independent Contractor Status. Contractor is an independent contractor and not an employee, agent, partner, or joint venturer of AHT for any purpose. Nothing in this Agreement shall be construed to create an employer-employee relationship, a partnership, a joint venture, or an agency relationship between the Parties. Contractor shall have no authority to bind AHT or to incur any obligation or liability on behalf of AHT, and shall not represent to any third party that Contractor has such authority.
AHT shall not withhold from Contractor's compensation any amounts for federal, state, or local income taxes, Social Security contributions, Medicare contributions, unemployment insurance, workers' compensation, or any other payroll taxes or employment-related withholdings. Contractor is solely responsible for the timely reporting and payment of all federal, state, and local income taxes, self-employment taxes, estimated taxes, and all other tax obligations arising from compensation received under this Agreement. Contractor shall indemnify and hold harmless AHT from and against any liability, penalty, interest, or expense arising from Contractor's failure to comply with any such tax obligations.
AHT shall issue an IRS Form 1099-NEC (or such successor form as may be prescribed by the Internal Revenue Service) to Contractor for all compensation paid under this Agreement during each calendar year, in accordance with applicable IRS reporting requirements.
Notwithstanding Contractor's status as an independent contractor, Contractor acknowledges that in performing Services, Contractor shall comply with the reasonable administrative policies, procedures, and guidelines of AHT that are applicable to the Designated Facility/Program, to the extent such policies, procedures, and guidelines do not alter Contractor's independent contractor status and are consistent with the scope of Services described in Exhibit A.
3.6 Standard of Care and Licensure. Contractor shall perform all Services in accordance with the applicable standard of care for Contractor's medical specialty and in compliance with all Applicable Laws, including without limitation applicable state medical practice acts, accreditation standards, and evidence-based clinical practice guidelines.
Throughout the Term, Contractor shall maintain, at all times, each of the following:
(a) An active, unrestricted license to practice medicine in the State of [Insert State(s)] (and in any other state in which Services are performed under this Agreement);
(b) Board certification in [Insert specialty] issued by the [Insert certifying board, e.g., American Board of Internal Medicine, American Board of Family Medicine], or board eligibility if Contractor is within the applicable initial certification window;
(c) Clinical privileges at [Insert hospital or facility name, if applicable], to the extent required for the performance of Services;
(d) A valid Drug Enforcement Administration (DEA) registration (if applicable to the Services);
(e) Any other permits, certificates, registrations, or credentials required by Applicable Laws for the performance of Services.
Contractor shall promptly notify AHT in writing within five (5) business days of any change in the status of any license, certification, privilege, registration, or credential described in this Section 3.6, including without limitation any investigation, disciplinary proceeding, restriction, suspension, revocation, surrender, or non-renewal thereof.
ARTICLE IV — COMPENSATION
4.1 Fixed Monthly Compensation. As full compensation for the Services rendered under this Agreement, AHT shall pay Contractor a fixed monthly fee of $[Insert Amount] (the "Monthly Compensation"), payable within [Insert: thirty (30)] calendar days following AHT's receipt of Contractor's properly completed monthly time log submitted in accordance with Section 3.4 and demonstrating that Contractor performed at least the Minimum Monthly Hours during the applicable calendar month. Payment shall be made by check or electronic funds transfer to the account designated in writing by Contractor.
Instructional Note — Compensation Structure Requirements: The Monthly Compensation must satisfy each of the following requirements:
(a) Fixed in Amount: The compensation must be a fixed dollar amount, stated with specificity in this Agreement. Compensation structures that are variable, contingent, or otherwise subject to adjustment based on the volume or value of referrals are strictly prohibited under this template.
(b) Set in Advance: The compensation must be set in advance for the entire Term (including each Renewal Term, as adjusted in accordance with Section 4.6). Retroactive adjustments to compensation are not permitted, except as expressly provided in Section 4.4 (proration for shortfall in hours).
(c) Consistent with Fair Market Value: The compensation must be consistent with Fair Market Value as supported by an independent FMV Opinion from a qualified valuation firm, as described in Section 4.2 and Article V.
(d) Commercially Reasonable: The compensation must be Commercially Reasonable in the absence of any referrals between the Parties, as documented in the Commercial Reasonableness Memorandum (Exhibit D).
(e) Not Referral-Based: The compensation must not be determined in a manner that takes into account the volume or value of any referrals or other business generated between the Parties.
Variable compensation, per-referral bonuses, revenue-sharing arrangements, percentage-of-collections arrangements, production-based incentive payments, or any other compensation methodology that fluctuates based on referral volume or value is strictly prohibited under this template. Any proposed arrangement involving such compensation structures must be separately reviewed by the General Counsel and Compliance Officer under a different template and compliance framework, if one is available.
The Monthly Compensation has been established based upon the following factors, each of which is reflected in the FMV Opinion: (i) the medical specialty and clinical qualifications of Contractor; (ii) the geographic market in which Services are performed (New England region); (iii) the nature, complexity, and scope of the duties described in Exhibit A; (iv) the Minimum Monthly Hours; and (v) an independent FMV Opinion from [Insert valuation firm, e.g., Northbridge Valuation Advisors LLC], a copy of which is attached as Exhibit C or maintained on file with the General Counsel.
4.2 Implied Hourly Rate Validation. The implied hourly rate under this Agreement is calculated as follows:
Monthly Compensation ÷ Minimum Monthly Hours = $[Insert] per hour (the "Implied Hourly Rate")
The Implied Hourly Rate has been validated against applicable benchmark data for medical director and physician independent contractor compensation, including but not limited to the following sources:
(a) MGMA Medical Directorship Compensation Survey — [Insert year edition];
(b) SullivanCotter Physician Compensation and Productivity Survey — [Insert year edition];
(c) Independent FMV Opinion from [Insert valuation firm], dated [Insert date], prepared by [Insert appraiser name and credentials].
Based on the foregoing benchmark analysis, the Implied Hourly Rate of $[Insert] per hour falls within the [Insert: e.g., 50th – 75th percentile] range for [Insert Contractor's specialty] medical directors in the [Insert: e.g., Northeast / New England] geographic region.
Instructional Note: If the Implied Hourly Rate exceeds the 75th percentile for the applicable specialty and geographic market, a written memorandum from the General Counsel and Compliance Officer must be prepared and attached to this Agreement documenting the specific factual justification for the above-benchmark rate. Acceptable justifications may include: (i) unusual complexity or breadth of duties beyond those typical for medical director arrangements; (ii) scarcity of qualified specialists in the applicable geographic market; (iii) extraordinary time demands or on-call responsibilities; (iv) unique qualifications, subspecialty expertise, or academic credentials of the Contractor; or (v) other documented factors that explain the deviation from benchmark medians. If the Implied Hourly Rate exceeds the 90th percentile for the applicable specialty in any geographic market, the arrangement may not proceed without the prior written approval of the AHT Board Compliance Committee, in addition to the approval of the General Counsel and Compliance Officer. Under no circumstances shall the Implied Hourly Rate exceed the upper boundary of the FMV range stated in the FMV Opinion.
4.3 Expenses. AHT shall reimburse Contractor for reasonable, pre-approved, and documented out-of-pocket expenses incurred by Contractor in connection with the performance of Services under this Agreement, subject to the following conditions:
(a) Total reimbursable expenses shall not exceed $[Insert annual cap] per twelve (12)-month period during the Term;
(b) Reimbursable expenses are limited to the following categories: [Insert categories, e.g., travel expenses (mileage, parking, tolls) incurred in traveling to AHT clinic locations other than the Designated Facility/Program; required continuing medical education courses or conferences directly related to medical director duties, as pre-approved in writing by AHT; and other expenses specifically pre-approved in writing by AHT's designated administrator];
(c) Contractor shall submit expense reimbursement requests within thirty (30) days of incurring the expense, accompanied by itemized receipts or other reasonable documentation;
(d) Expense reimbursements shall not be structured as, or serve as a substitute for, additional compensation, and shall not take into account the volume or value of referrals or other business generated between the Parties.
4.4 Payment Conditioned on Documentation. Payment of Monthly Compensation is conditioned upon AHT's timely receipt of a properly completed monthly time log, prepared in accordance with Section 3.4, demonstrating that Contractor performed at least the Minimum Monthly Hours of Services during the applicable calendar month.
If Contractor performs fewer than the Minimum Monthly Hours in any given calendar month, the Monthly Compensation payable for that month shall be prorated based on actual documented hours, calculated as follows:
Prorated Compensation = Actual Documented Hours × Implied Hourly Rate (as defined in Section 4.2)
The foregoing proration shall apply automatically unless the shortfall in hours is attributable to: (a) an AHT-caused delay, cancellation, or scheduling change that prevented Contractor from performing the scheduled Services; or (b) an excused absence agreed to in writing in advance by AHT's designated administrator (e.g., Contractor illness, bereavement, or other extraordinary circumstances). In such cases, AHT may, in its discretion, pay the full Monthly Compensation for the affected month, provided that the basis for the exception is documented in writing.
4.5 No Additional Compensation. The Monthly Compensation constitutes the sole and exclusive compensation payable to Contractor for the Services rendered under this Agreement. Except as expressly provided in Section 4.3 (Expenses), Contractor shall not receive, directly or indirectly, any bonus, incentive payment, profit distribution, equity interest, stock option, warrant, gift, gratuity, loan, forgiveness of debt, below-market lease or license, or other thing of value from AHT, any AHT subsidiary, any AHT-affiliated entity, or any entity under common ownership or control with AHT, in connection with this Agreement or in connection with any referral relationship between the Parties. This prohibition applies regardless of the form of the benefit and regardless of whether the benefit is characterized as compensation for services or otherwise.
4.6 Annual Compensation Adjustment. Compensation may be adjusted on an annual basis, effective as of each anniversary of the Effective Date or as of the commencement of each Renewal Term, subject to all of the following conditions:
(a) An updated FMV Opinion (or a written reaffirmation by the valuation firm that the original FMV Opinion remains valid) must be obtained and must support the adjusted compensation as falling within the applicable Fair Market Value range;
(b) The adjustment must be reviewed and approved in writing by both the General Counsel and the Compliance Officer;
(c) The adjustment must be documented in a written amendment to this Agreement, signed by both Parties, prior to the effective date of the adjustment;
(d) Any increase in excess of [Insert: three percent (3%)] of the then-current Monthly Compensation requires a new, full independent FMV Opinion (a reaffirmation letter is not sufficient for increases above this threshold);
(e) No adjustment — whether an increase, decrease, or maintenance of the existing level — shall take into account the volume or value of referrals or other business generated between the Parties.
ARTICLE V — FAIR MARKET VALUE CERTIFICATION AND COMMERCIAL REASONABLENESS
5.1 FMV Certification. The Parties acknowledge and certify that the Monthly Compensation set forth in Section 4.1 of this Agreement:
(a) Has been determined by reference to an independent FMV Opinion from a qualified valuation firm with recognized expertise in healthcare compensation valuation, which opinion is attached as Exhibit C or maintained on file with the General Counsel;
(b) Reflects the Fair Market Value of the Services to be rendered by Contractor and does not reflect, incorporate, or account for the value or volume of any actual or anticipated referrals of patients, items, services, or other business between the Parties or between Contractor and any AHT-affiliated entity;
(c) Is consistent with the compensation that would be paid in an arm's-length transaction between well-informed parties who are not otherwise in a position to generate business for each other, for similar services in the applicable geographic market and medical specialty;
(d) Has been set in advance for the Term and is not subject to adjustment, modification, or recalculation based on the volume or value of referrals or other business generated between the Parties at any time during the Term.
5.2 Commercial Reasonableness Certification. The Parties further acknowledge and certify that:
(a) This Agreement serves a legitimate, documented business purpose of AHT that exists independent of any referral relationship between the Parties, and the arrangement would be entered into by AHT regardless of whether Contractor refers or is expected to refer patients to AHT or any AHT-affiliated entity;
(b) The Services described in Exhibit A are bona fide, necessary for the effective clinical and administrative operation of the Designated Facility/Program, and would be required regardless of any referral relationship between the Parties;
(c) The scope of Services and the Minimum Monthly Hours are commensurate with the legitimate business needs of the Designated Facility/Program and are not inflated to justify compensation that would otherwise exceed Fair Market Value;
(d) The business purpose, scope of need, and justification for this arrangement are documented in the Commercial Reasonableness Memorandum attached as Exhibit D or maintained on file with the General Counsel.
Instructional Note for Exhibit D: The Commercial Reasonableness Memorandum must be completed in full prior to execution of this Agreement and must address each of the following elements with specificity and candor: (i) the specific operational, clinical, or regulatory business need for a medical director or independent contractor in the role described in Exhibit A, including the historical context (e.g., was this position previously filled, and if so, by whom and under what terms); (ii) why the scope of duties and the Minimum Monthly Hours are appropriate and proportionate to the identified business need, with reference to specific operational requirements (e.g., patient volume, number of staff supervised, regulatory obligations, accreditation requirements); (iii) the qualifications sought for the role and why this particular Contractor was selected, including Contractor's specialty, board certification, experience, and any unique qualifications; and (iv) an analysis of what would occur if the role were not filled — i.e., whether the arrangement would exist regardless of any referral considerations, and what operational or clinical deficiency would result from the absence of a medical director or independent contractor in this role.
5.3 Annual Recertification. No less frequently than once per calendar year (and in any event prior to the execution of any renewal of this Agreement under Section 2.2), the General Counsel and/or the Compliance Officer shall perform the following recertification review:
(a) Review the current FMV Opinion to determine whether it remains valid (i.e., dated within twelve (12) months) and whether an updated opinion is required based on changes in market conditions, benchmark data, scope of duties, or other relevant factors;
(b) Confirm that the Monthly Compensation continues to be consistent with Fair Market Value and that the Services continue to be Commercially Reasonable in light of the current operational needs of the Designated Facility/Program;
(c) Review Contractor's monthly time logs for the prior twelve (12) months to verify that documented hours are commensurate with the Monthly Compensation, that the Minimum Monthly Hours have been consistently met, and that the nature of the documented Services corresponds to the duties described in Exhibit A;
(d) Document the results of the recertification review in a written Annual Recertification Form in the form attached as Exhibit E, which shall be signed and dated by the Compliance Officer and maintained on file with the General Counsel.
If the annual recertification review reveals that the arrangement no longer satisfies Fair Market Value or Commercial Reasonableness standards — including but not limited to situations where documented hours have consistently fallen below the Minimum Monthly Hours, where the effective hourly rate has exceeded the FMV range due to decreased hours, or where the operational need for the Services has diminished or changed materially — the Parties shall promptly negotiate in good faith to restructure the arrangement to achieve compliance, which may include adjustments to the Monthly Compensation, the Minimum Monthly Hours, the scope of duties, or any combination thereof. If the Parties are unable to agree upon a restructured arrangement that satisfies Fair Market Value and Commercial Reasonableness standards within sixty (60) days of the Compliance Officer's written notice of the deficiency, either Party may terminate this Agreement upon thirty (30) days' written notice without penalty, and such termination shall not be deemed a termination for cause.
ARTICLE VI — REFERRAL INDEPENDENCE AND ANTI-KICKBACK / STARK LAW COMPLIANCE
6.1 Referral Independence. Nothing in this Agreement requires, is intended to require, or shall be interpreted to require Contractor to refer patients to, order items or services from, or generate business for AHT, any AHT subsidiary, any AHT-affiliated entity, or any entity under common ownership or control with AHT, as a condition of this Agreement or of receiving compensation hereunder. Contractor's compensation under this Agreement is not conditioned upon, and shall not be affected by, the number or value of any referrals or other business that Contractor generates or is expected to generate for AHT or any AHT-affiliated entity.
Contractor shall exercise independent medical judgment in all patient referral decisions and clinical ordering decisions, and shall refer patients to the provider, facility, or entity that Contractor believes, in his or her professional medical judgment, is in the best interest of the patient, taking into account the patient's clinical needs, preferences, insurance coverage, geographic convenience, and other patient-centered factors. AHT acknowledges that Contractor's referral decisions may or may not include referrals to AHT or AHT-affiliated entities, and AHT shall not penalize, reward, or otherwise influence Contractor's referral decisions.
AHT shall not track, monitor, evaluate, report, or analyze Contractor's referral patterns, referral volume, or referral value for purposes of making any compensation, renewal, non-renewal, or termination decisions under this Agreement. This prohibition does not prevent AHT from maintaining referral data for legitimate operational, quality improvement, compliance monitoring, or regulatory reporting purposes, provided that such data is not used as a factor in any decision regarding Contractor's compensation or the continuation or termination of this Agreement.
6.2 Anti-Kickback Statute Safe Harbor Compliance. This Agreement is intended to satisfy all of the requirements of the personal services and management contracts safe harbor under 42 C.F.R. § 1001.952(d), as amended from time to time. Without limiting the generality of the foregoing, the Parties acknowledge and intend that:
(a) This Agreement is set out in writing and is signed by both Parties;
(b) This Agreement covers all of the services to be provided by Contractor to AHT, and no services are provided by Contractor to AHT outside the scope of this Agreement (or any other written agreement between the Parties that independently satisfies applicable safe harbor requirements);
(c) The aggregate services contracted for under this Agreement do not exceed those that are reasonably necessary to accomplish the Commercially Reasonable business purposes of the Services, as documented in the Commercial Reasonableness Memorandum (Exhibit D);
(d) The Term of this Agreement is for not less than one (1) year, as required by the safe harbor;
(e) Compensation under this Agreement 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;
(f) The Services to be performed under this Agreement do not involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law.
6.3 Stark Law Exception Compliance. This Agreement is intended to satisfy all of the requirements of the personal services arrangement exception under 42 C.F.R. § 411.357(d), as amended from time to time. Without limiting the generality of the foregoing, the Parties acknowledge and intend that:
(a) This arrangement is set out in writing, is signed by the Parties, and specifies the services covered by the arrangement;
(b) This arrangement covers all of the services to be provided by Contractor (as a physician) to AHT (as the entity furnishing designated health services);
(c) The aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement;
(d) The term of the arrangement is for at least one (1) year;
(e) The compensation to be paid over the term of the arrangement is set in advance, does not exceed Fair Market Value, and is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the Parties, except as may be permitted under applicable regulatory exceptions;
(f) The services to be performed under the arrangement do not involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law.
6.4 Prohibition on Remuneration Linked to Referrals. Under no circumstances shall any compensation, bonus, incentive payment, gift, benefit, perquisite, or other thing of value be provided to Contractor — whether directly or indirectly, and whether under this Agreement or any other arrangement or understanding between the Parties — that is based on, conditioned upon, proportional to, or otherwise linked to the volume or value of (a) referrals of Designated Health Services, (b) referrals of items or services reimbursable under Medicare, Medicaid, or any other federal or state healthcare program, (c) any other business generated between the Parties, or (d) any other referral or business arrangement that could implicate the AKS or the Stark Law. This prohibition is absolute and is not subject to waiver, exception, or modification.
6.5 Compliance Cooperation. Contractor shall cooperate fully with AHT's compliance program, including without limitation:
(a) Completing all required compliance training, including the AKS/Stark Law compliance training described in Section 11.2, within the timeframes specified;
(b) Responding promptly and completely to compliance audits, investigations, and inquiries conducted by or on behalf of the Compliance Officer;
(c) Reporting any suspected or known violations of the AKS, the Stark Law, or any other Applicable Law to the Compliance Officer or through AHT's compliance hotline in accordance with Section 11.3;
(d) Providing any documentation, information, or records reasonably requested by the Compliance Officer in connection with compliance monitoring, auditing, or investigation activities.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES
7.1 Contractor Representations and Warranties. Contractor represents and warrants to AHT, as of the Effective Date and throughout the Term, as follows:
(a) Contractor holds a valid, active, and unrestricted license to practice medicine in the State of [Insert State(s)], and such license has not been subject to any disciplinary action, restriction, suspension, revocation, or surrender at any time during the preceding ten (10) years, except as disclosed in writing to AHT prior to execution of this Agreement;
(b) Contractor is board-certified in [Insert specialty] by the [Insert certifying board], and such certification is in good standing;
(c) Contractor has not been excluded, debarred, or suspended from participation in any federal or state healthcare program, including without limitation Medicare, Medicaid, TRICARE, or any program administered by the U.S. Department of Health and Human Services, the U.S. Department of Veterans Affairs, or any state Medicaid agency;
(d) Contractor has not been convicted of, and does not have any pending criminal charges for, any healthcare-related criminal offense, any offense related to fraud, theft, embezzlement, breach of fiduciary duty, or financial misconduct, or any felony;
(e) Contractor does not have any ownership or investment interest (including equity interests, stock, partnership interests, loans, or debt instruments) in any entity to which Contractor refers AHT patients or from which Contractor orders items or services for AHT patients that would create a conflict of interest or violate Applicable Laws, or, if such interest exists, it has been fully disclosed to AHT in writing prior to execution of this Agreement on the Conflict of Interest Disclosure Form attached as Exhibit G;
(f) Contractor has disclosed, in writing on Exhibit G, all financial relationships (including employment, consulting, speaking, advisory, and medical director arrangements) with entities that furnish Designated Health Services or other items or services reimbursable by federal healthcare programs;
(g) Contractor has the legal capacity and authority to enter into this Agreement and to perform the Services, and the execution and performance of this Agreement does not and will not violate, breach, or conflict with any other agreement, obligation, or legal requirement to which Contractor is subject;
(h) Contractor shall promptly notify AHT in writing within five (5) business days of any change in any of the foregoing representations or warranties during the Term, including without limitation any investigation, proceeding, charge, claim, action, or event that could reasonably affect the accuracy of any representation or warranty set forth in this Section 7.1.
7.2 AHT Representations and Warranties. AHT represents and warrants to Contractor, as of the Effective Date and throughout the Term, as follows:
(a) AHT is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has full corporate power and authority to enter into this Agreement and to perform its obligations hereunder;
(b) The compensation terms set forth in this Agreement have been reviewed and approved by AHT's General Counsel and Compliance Officer in accordance with AHT's Revised Physician Compensation Policy, as adopted by the Board of Directors;
(c) An independent FMV Opinion from a qualified valuation firm supporting the Monthly Compensation and Implied Hourly Rate has been obtained and is attached as Exhibit C or maintained on file with the General Counsel;