1. TRAPPED IN A ROOM WITH A LAWYER . . .
Nightmare or Opportunity?
Joel Wakefield – The Nelson Law Group
Twitter: @JoelGWakefield
AACHC Annual Meeting
February 7, 2018

2. You may have had contact with the law . . .
You are
a lawyer
You are naturally paranoid or pessimistic
You watched a lot of Law and Order
Your cousin Vinny is a lawyer
You just have good common sense
You took law related classes in school
You have read a lot of contracts

3. You probably weren’t hired for this…
Nonprofit community health center provides $20 grocery cards to eligible Medicaid managed care enrollees – Permitted or not? (OIG No )
Or this…
Contract for
Medical Directorships
Contract for
Services
Medical Group
Hospital
Joint Venture

4. And you certainly weren’t hired for this…
ARTICLE XXII. NOTWITHSTANDING THE EXISTENCE OF ANY INSURANCE OR SELF INSURANCE PROVIDED FOR IN ARTICLE XIII, AND WITHOUT REGARD TO THE POLICY LIMITS OF ANY SUCH INSURANCE OR SELF INSURANCE, IN ADDITION TO ANY OTHER INDEMNIFICATION OBLIGATIONS LESSEE AND GUARANTORS AS PROVIDED IN THIS LEASE, LESSEE WILL PROTECT, INDEMNIFY, SAVE HARMLESS AND DEFEND LESSOR AND REAL ESTATE OWNER FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES, PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES) TO THE EXTENT PERMITTED BY LAW), IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LESSOR AND REAL ESTATE OWNER BY REASON OF: (A) ANY ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF PERSONAL PROPERTY OCCURRING ON OR ABOUT THE LEASED PROPERTY OR ADJOINING SIDEWALKS, INCLUDING WITHOUT LIMITATION ANY CLAIMS OF MALPRACTICE, (B) ANY USE, MISUSE, NO USE, CONDITION, MAINTENANCE OR REPAIR BY LESSEE OF THE LEASED PROPERTY, (C) ANY IMPOSITIONS (WHICH ARE 'THE OBLIGATIONS OF LESSEE 'TO PAY PURSUANT TO THE APPLICABLE PROVISIONS OF THIS LEASE), (D) ANY FAILURE ON THE PART OF LESSEE TO PERFORM OR COMPLY WITH ANY OF THE TERMS OF THIS LEASE, (E) THE NON-PERFORMANCE OF ANY OF THE TERMS AND PROVISIONS OF ANY AND ALL EXISTING AND FUTURE SUBLEASES OF THE LEASED PROPERTY TO BE PERFORMED BY THE LANDLORD (LESSEE) THEREUNDER, (F) ANY FAILURE ON THE PART OF LESSEE TO PERFORM OR COMPLY WITH ANY OF THE TERMS AND CONDITIONS OF ANY ONE OR MORE OF THE GROUND LEASES, (G) ANY REVERSION OF THE APPLICABLE. LEASED IMPROVEMENTS UNDER ANY ONE OR MORE OF THE GROUND LEASES '1'0 THE "LANDLORD" THEREUNDER DURING THE TERM OF THIS LEASE (OTHER THAN A REVERSION AT THE TERMINATION OF A GROUND LEASE, PURSUANT TO ITS TERMS), AND (H) ANY AND ALL LAWFUL ACTION THAT MAY IRE TAKEN BY LESSOR OR MP! REAL ESTATE OWNER IN CONNECTION WITH TIDE ENFORCEMENT OF THE PROVISIONS OF THIS LEASE, WHE'ITIER OR NOT SUIT IS FILED IN CONNECTION WITH SAME, OR IN CONNECTION WITH LESSEE OR A GUARANTOR AND/OR ANY PARTNER, JOINT VENTURER, MEMBER OR SHAREHOLDER "[HEREOF BECOMING A PARTY TO A VOLUNTARY OR INVOLUNTARY FEDERAL OR STATE BANKRUPTCY, INSOLVENCY OR SIMILAR PROCEEDING. ANY AMOUNTS WHICH BECOME PAYABLE BY LESSEE UNDER THIS ARTICLE XXII SHALL BE PAID WITHIN FIFTEEN (15) DAYS AFTER DEMAND BY LESSOR AND, IF NOT 'TIMELY PAID, SHALL BEAR A LATE CHARGE (TO THE EXTENT PERMITTED BY LAW) COMPUTED AT THE OVERDUE RATE FROM THE DATE OF SUCH DEMAND TO TUE DATE OF PAYMENT AND A LATE PAYMENT PENALTY WITH RESPECT TO SUCH UNPAID A MOUNT. LESSEE, AT ITS EXPENSE, SHALL CONTEST, RESIST AND DEFEND ANY SUCH CLAIM, ACTION OR PROCEEDING ASSERTED OR INSTITUTED AGAINST LESSOR AND MAY COMPROMISE OR OTHERWISE DISPOSE OF THE SAME, SUBJECT' TO THE APPROVAL OF LESSOR. NOTHING HEREIN SHALL BE CONSTRUED AS INDEMNIFYING LESSOR AGAINST ITS OWN GROSSLY NEGLIGENT ACTS OR OMISSIONS OR WILLFUL MISCONDUCT.

5. So let’s give you some tools to help…

6. Contracts 101 for Non-Lawyers
Give you an understanding of contractual relationships so you know when you should worry, but also when you shouldn’t.
Let you do what you are already doing, but give you confidence in doing it

7. Contracts 101 - What is a contract?
An agreement between two parties - meeting of the minds on material provisions
Commitment by each to do something
Doesn’t have to be in writing to be binding – but it’s a really good idea
Might need to be for AKS or Stark purposes
Sure is easier later if you want to enforce it

8. Contracts 101 - What is a contract?
Contract vs. Agreement vs. MOU vs. Letter of Intent vs. Term Sheet
There’s no magic in what you call them
The key is what the writing is trying to do
Is it a commitment to continue talking about certain principles?
Does everyone expect to be bound by it?
Does it contain all of the details of the deal?

9. Contracts 101 - What is a contract?
Less Formal
Less Detail
Less Specific
Less Enforceable
More Formal
More Detail
More Specific
More Enforceable
Agreement or
Contract
Letter of Intent
MOU
Term Sheet

10. Contracts 101 – General Words of Wisdom
Remember the purpose – to make the agreement clear
To the parties themselves
To a third party looking at it later (parties after someone leaves, gov’t, judge)
If you read it and don’t understand what is going on then it isn’t a good contract.

11. Contracts 101 – The Anatomy of a Contract
Introductory paragraph - Who are the parties, when did the agreement happen, and when will it go into effect?
Background of the Agreement - Recitals or ”Whereas clauses”
These should give the background on what is going on – the Executive Summary
Who is giving what to whom, what are they getting in exchange, and why?
Anyone unfamiliar with the Agreement should be able to look at these and know the basics of the deal

12. Contracts 101 – The Anatomy of a Contract
5 Key Sections
Obligations of one party
Obligations of second party
Money provisions
Term and Termination
Warranties or promises of either party

13. Contracts 101 – The Anatomy of a Contract
Other Important terms
Insurance
Indemnification
Dispute resolution
Other misc terms
Execution – Signature by an authorized person

14. Contracts 101 – General Words of Wisdom
Understand what the document says, and make sure it says what you want it to say
Make sure you can identify and agree with the key terms
Make sure your successor could understand them
Make sure they make sense – fair market value, commercial reasonableness
Careful for conflicts of interest.
Not rocket science

15. Contracts 101 – Even More General Words of Wisdom
What’s the worst that could happen?
And how likely is it that it will?

16. Contracts 101 – Even More General Words of Wisdom
These are the things that should trigger your spider- sense. Is there a potential for:
Harm to patients?
HIPAA breach?
Stark or Anti-Kickback issues?
Medicare/-caid status or grant conditions?
Licensure issues?
Provider relationship issues?
Patient, community, or political issues?

17. What Now? A few thoughts on contract management
Pre-Signature Review and Approval
Proper Execution
Filing and Storage
Compliance, Tickler and Review

18. What Now? A few thoughts on contract management
Before signature – proper approval process
Be able to summarize the Agreement in a quick paragraph (I love to see a brief description in the file)
Approved by the immediate supervisor of the person negotiating the deal (as an example)
Finance person if there is money involved
Review by a lawyer or your best “look-a-like” if there are key legal issues implicated (Stark, AKS, HIPAA, Billing)
Pre-Signature Review and Approval

19. What Now? A few thoughts on contract maintenance
Execution of Agreement
Make sure it gets signed
Signed by someone with authority
That person should already have approved
Include name and title
Proper Execution

20. What Now? A few thoughts on contract maintenance
Filing and storage
Keep a file for each agreement
Include support documents
Should be with the operations manager and central
Keep a list of all agreements – software or a chart
Keep copy of agreements for X years
Ideally you should be able to find it again
Filing and Storage

21. What Now? A few thoughts on contract maintenance
Managers should see contracts as a resource – check them when there are questions, review from time to time
Accounts Payable process to check for an agreement – Don’t pay a doc without seeing the contract!
Have a system for knowing when contracts come up for renewal or termination.
Compliance, Tickler and Review

22. What Now? A few thoughts on contract management
Pre-Signature Review and Approval
Proper Execution
Filing and Storage
Compliance, Tickler and Review

23. And now, any questions???