Question1: Big Medical Device Company (â€œBigcoâ€) has received all regulatory approvals necessary to market a surgical implant used in orthopedic knee replacement procedures. Neither Medicare nor Medicaid pays directly for the implant, but Medicare and Medicaid pay indirectly for the implant as a part of the composite payment to hospitals related to the knee surgery. Therefore, the cost of the implant is included in the payment to the hospital.

Two other medical device companies dominate the market for comparable surgical implants. Therefore, Bigco has decided to form separate limited liability companies (the â€œNew LLCsâ€) in each market it wants to penetrate and offer the orthopedic surgeons who will actually perform services using the surgical implant an ownership interest in the New LLCs by offering a total of 100 membership units at $100 each, but each physician investor may purchase a maximum of 10 membership units. Bigco will retain ownership of 100 membership units, and the profits from each limited liability company will be divided evenly between the physician investors and Bigco. Each physician investor receives distributions from the New LLCs based upon the investorâ€™s membership interest percentage.

The hospitals will purchase the surgical implants directly from the New LLCs, so the New LLCs will receive all of the gross revenue from the sale of the surgical implants to hospitals. The physician-investors have medical staff privileges at the hospitals but do not have any ownership interest in or any other compensation arrangement with the hospital. However, the physician-investors have orally advised hospital management that the physicians will not perform surgery at hospitals that do not order products from the New LLC. Based on this, the hospitals order implants from New LLC for surgeries performed by the physician-investors, but the hospitals purchase all of their implants for surgeries performed by other physicians from other sources because they can purchase comparable products for less cost.

1.1Explain how the Stark Physician Self-Referral Law applies to the investment opportunity. Be sure to apply the relevant analytical tools as described in the syllabus and in the cover message to the examination questions.

1.2 Explain how the federal Anti-Kickback Statute applies to the investment opportunity. Be sure to apply the relevant analytical tools as described in the course materials.

1.3 If you believe that the opportunity as described is problematic under Stark or the federal Anti-Kickback Statute, what changes, if any, would you recommend for transforming the arrangement to a compliant transaction?

1.1.4 Based on what you have learned, what would you recommend to an orthopedic surgeon who asks you whether she should invest in the New LLCs? Please explain the foundation for your advice.

Question 2: Large Community Hospital in Big City wants to improve its gerontology program. The Hospital Administrator approaches Doctor Who, a local physician who owns and is Medical Director for three nursing homes and offers to engage the services of Doctor Who as an independent contractor Medical Director of the Hospital Gerontology Program. Doctor Who is an active member of the Hospital medical staff, and he makes referrals to the Hospital. The Hospital calls Perry Mason, the Hospitalâ€™s attorney, and asks him to prepare the Gerontology Medical Director Agreement for a term of twenty years at $100,000 per year that requires the Medical Director to attend such meetings and provide such advice as Large Community Hospital may from time to time request. Perry Mason prepares the Medical Director Agreement, which contains language stating that the consideration constitutes â€œfair market valueâ€ for services rendered, but Perry Mason makes no further inquiries, and the Hospital does not engage an independent appraisal consultant. Over the course of the next few years, Hospital Administrator and Doctor Who meet for one afternoon in each calendar quarter for an hour or two to discuss the Gerontology Program, sometimes while playing a round of golf at the Happy Valley Country Club, but Doctor Who provides no other services to Large Community Hospital. You are hired as the Hospital Assistant Administrator, and you discover this situation.

1.1.Using the analytical framework described in this lesson; explain how you would advise the Hospital Administrator how the Stark Physician Self-Referral Law applies to the Medical Director Agreement. Be sure to address every element necessary for a complete analysis.

1.2Using the analytical framework described in this lesson; explain how you would advise the Hospital Administrator how the federal Anti-Kickback Statute applies to the Medical Director Agreement.

1.3Assuming that the Medical Director Agreement has never been the subject of an governmental investigation, explain what can and should be done to bring the Medical Director Agreement and performance under it into compliance with applicable law.

1.4If the Medical Director Agreement became the focus of a Department of Justice investigation before corrective action is taken, who will be at risk of criminal indictment and why?

Question 3 Private Equity Company wants to develop ambulatory surgery centers (â€œASCsâ€). To implement its business plan, Private Equity Company will create joint venture limited liability companies with surgeons who can provide services at the ASCs. Private Equity Company will engage an independent accounting firm to calculate the value of the ASC, taking into account the cost of constructing and developing the facility. The physicians will pay fair market value for the investment interest, and the return on investment will be based on the physicianâ€™s capital contribution, not on the volume or value of the physician-ownerâ€™s referrals.1.3.1Explain how the Stark Physician Self-Referral Law applies to the proposed investment interest using the step by step analytical framework.

1.1: Explain how the federal Anti-Kickback Statute applies to the proposed investment interest using the applicable framework of analysis.

1.2: Would your analysis under the Stark Law or the federal Anti-Kickback Statute change if the facility is a general acute care hospital that is under development but not yet licensed and all physicians are offered ownership interests in the joint venture limited liability company that owns the hospital? Explain why or why not and expressly how the Stark Law and the federal Anti-Kickback Statute apply to physician ownership in a hospital.

1.3: Would your analysis in 1.3.3 change if the physicians were offered ownership interests in a hospital that began operations in 2009 and issued ownership interests to physicians at that time? Explain why or why not.

1.4 What state laws might apply to the proposed ASC business plan?

Question1: Big Medical Device Company (â€œBigcoâ€) has received al...

Question1: Big Medical Device Company (â€œBigcoâ€) has received al...