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The quality assurance agreement recites as one of its
premises that SCA Management “desires to reimburse RHS for
certain services, including without limitation management and the
supervision of quality assurance programs with respect to the
[Surgery] Center.” Under the quality assurance agreement, RHS
was to receive no fee during the first year and thereafter was to
be paid a monthly fee equal to 1 percent of gross revenues. In
addition, SCA Management was to reimburse RHS for its direct out-
of-pocket expenses incurred in managing and supervising the
quality assurance program. The quality assurance agreement
states that RHS' appointees as managing directors shall not
receive any compensation from SCA Management, but that SCA
Management shall reimburse them for all reasonable travel
expenses and out-of-pocket expenses.
On September 30, 1990, RHS transferred its obligations and
rights under the Quality Assurance Agreement to petitioner.
By its terms, the quality assurance agreement was to
continue from year to year unless terminated by either SCA
Management or petitioner. The quality assurance agreement was to
terminate automatically, however, if the number of surgical cases
performed at the Surgery Center was less than 4,225 during any
year. The agreement states that if it is terminated for any
reason, the parties agree to negotiate in good faith an agreement
on substantially the same terms.
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