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resolution of any matter brought before the Medical Advisory
Group. Moreover, there is no evidence in the record that the
decisions of the Medical Advisory Committee are subject to
independent review by petitioner or Redlands Hospital.
e. Termination of Quality Assurance Activities
As required by the General Partnership agreement, on April
30, 1990, SCA Management entered into a quality assurance
agreement with RHS. The term of the quality assurance agreement
was conditioned on maintenance of a specified level of surgery
activity in the Surgery Center. Petitioner concedes that the
quality assurance agreement terminated after the first year.16
Although the agreement required the parties to negotiate a new
quality assurance agreement in the event of such a termination,
there is no evidence in the record that such negotiations ever
occurred.17
The termination of the quality assurance agreement vividly
evidences petitioner’s lack of effective control over vital
aspects of the Surgery Center’s operations. Quality assurance
16 The termination of the quality assurance agreement is
disclosed in petitioner's reply brief, filed on May 11, 1998.
Petitioner's counsel represent that the fact of the termination
of the quality assurance agreement was first disclosed to them on
or about Apr. 30, 1998.
17 Under the quality assurance agreement, petitioner was
entitled to a fee equal to 1 percent of gross revenues,
commencing in the second year. Because the agreement terminated
after the first year, it appears that petitioner never received
any fees under the agreement.
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