SEC Filings

10-12G/A
AMSURG CORP filed this Form 10-12G/A on 05/09/1997
Entire Document
 
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     Medicare-Medicaid Illegal Remuneration Provisions.  The anti-kickback
statute makes unlawful knowingly and willfully soliciting, receiving, offering
or paying any remuneration (including any kickback, bribe, or rebate) directly
or indirectly to induce or in return for referring an individual to a person for
the furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part under Medicare or Medicaid. Violation is
a felony punishable by a fine of up to $25,000 or imprisonment for up to five
years, or both. The Medicare and Medicaid Patient Program Protection Act of 1987
(the "1987 Act") provides administrative penalties for healthcare practices
which encourage overutilization or illegal remuneration when the costs of
services are reimbursed under the Medicare program. Loss of Medicare
certification and severe financial penalties are included among the 1987 Act's
sanctions. The 1987 Act, which adds to the criminal penalties under preexisting
law, also directs the Inspector General of the DHHS to investigate practices
which may constitute overutilization, including investments by healthcare
providers in medical diagnostic facilities, and to promulgate regulations
establishing exemptions or "safe harbors" for investments by medical service
providers in legitimate business ventures that will be deemed not to violate the
law even though those providers may also refer patients to such a venture.
Regulations identifying safe harbors were published in final form in July 1991
(the "Regulations").
 
     The Regulations set forth two specific exemptions or "safe harbors" related
to "investment interests": the first concerning investment interests in large
publicly traded companies ($50,000,000 in net tangible assets) and the second
for investments in smaller entities. The partnerships and limited liability
companies that own the AmSurg centers do not meet all of the criteria of either
existing "investment interests" safe harbor as announced in the Regulations.
 
     While several federal court decisions have aggressively applied the
restrictions of the anti-kickback statute, they provide little guidance as to
the application of the anti-kickback statute to AmSurg's partnerships and
limited liability companies. AmSurg believes that it is in compliance with the
current requirements of applicable federal and state law because among other
factors:
 
          i. the partnerships and limited liability companies exist to effect
     legitimate business purposes, including the ownership, operation and
     continued improvement of quality, cost effective and efficient services to
     their patients;
 
   
          ii. the partnerships and limited liability companies function as an
     extension of the group practices of physicians who are affiliated with the
     surgery centers and the surgical procedures are performed personally by
     these physicians without referring the patients outside of their practice;
    
 
          iii. the physician partners have a substantial investment at risk in
     the partnership or limited liability company;
 
          iv. terms of the investment do not take into account volume of the
     physician partner's past or anticipated future services provided to
     patients of the centers;
 
          v. the physician partners are not required or encouraged as a
     condition of the investment to treat Medicare or Medicaid patients at the
     centers or to influence others to refer such patients to the centers for
     treatment;
 
          vi. neither the partnership, limited liability company, the AmSurg
     subsidiary, nor any of their affiliates will loan any funds or guarantee
     any debt on behalf of the physician partners; and
 
          vii. distributions are allocated uniformly by and among all partners
     in proportion to their ownership interests.
 
     Notwithstanding AmSurg's belief that the relationship of physician partners
to the AmSurg surgery centers should not constitute illegal remuneration under
the anti-kickback statute, no assurances can be given that a federal or state
agency charged with enforcement of the anti-kickback statute and similar laws
might not assert a contrary position or that new federal or state laws might not
be enacted that would cause the physician partners' ownership interest in the
AmSurg centers to become illegal, or result in the imposition of penalties on
AmSurg or certain of its facilities. Even the assertion of a violation could
have a material adverse
 
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