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objective, but are simply required to “apply the substantive law
of California”.
Petitioner asserts that since 1990, neither co-general
partner has invoked the arbitration clause. The administrative
record is inconclusive on this point. Even assuming arguendo
that petitioner’s assertion is correct, it merely tends to show
that petitioner and SCA Centers have avoided conflict with regard
to those operating decisions that are subject to arbitration.
Whether such conflicts have been avoided because petitioner’s
purposes and the purposes of its for-profit partner are so
closely aligned, or for some other reason, the administrative
record does not reveal. Clearly, however, the arbitration
process does not significantly mitigate petitioner’s lack of
majority control to provide any assurance that the General
Partnership will operate to put charitable objectives ahead of
economic objectives.
c. The Management Contract
The management contract between the Operating Partnership
and SCA Management confers broad powers on SCA Management to
enter into contracts, to negotiate with third-party payers and
State and Federal agencies, and to set patient charges for all
services provided, with the exception of charges for physicians’
services. In short, SCA Management is authorized to manage as it
sees fit many of the day-to-day operations of the Surgery Center,
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