Legal Update
LU
2 8 • O U T PA T I E N T S U R G E R Y M A G A Z I N E • A P R I L 2 0 1 7
What makes the ambulatory surgery center (ASC) safe harbor
unique (it's the only safe harbor that includes a volume-of-
referral requirement) also makes it risky to base your ASC's
exclusion process solely on failing to meet its requirements.
Requiring an ASC investor to come closer to meeting the one-
third safe harbor requirements inherently includes an inference
that referrals should be increased. Some will argue we should
apply a normal safe harbor analysis (closer to compliance) to an
ASC investment structure for compliance with the Anti-Kickback
Statute (AKS). This approach is inherently risky.
Most investor exclusion cases never reach the point of produc-
ing a published legal opinion. These cases usually settle short of
complete adjudication and without reaching the ultimate issue of
whether coming closer to complying with the ASC safe harbor
reduces risk. Viewed from this perspective, facts that imply an
investor should increase referrals to meet safe harbor require-
ments are not helpful to the ASC when going through mediation
or settlement discussions. Who wants to come out on the wrong
side of this argument if the case ever goes to court, is subject to a
whistleblower claim, or catches the eye of a government enforce-
ment agency? Cases that include pressure to increase volume
almost always result in the ASC paying the excluded investor —
sometimes a very large amount of money.
ASCs can prevent this situation by establishing appropriate cri-
teria and procedures for analyzing the risk of an investment
interest. The usual provisions in an operating agreement that
parrot the safe harbor requirements are not adequate to mitigate
INVESTOR EXCLUSION
In ASC Safe Harbor Compliance, Close Doesn't Count
