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First, the practice agreement provided for repayment. The
practice agreement provided that petitioner, to the extent his
income during any month of the term of the agreement exceeded
$33,334, had to repay the hospital for guarantee payments
previously made by the 10th day after the close of petitioner’s
books for that month. Additionally, the practice agreement
provided that the parties would agree upon terms for repayment of
any balance due at the termination of the practice agreement.
Furthermore, the practice agreement provided repayment terms in
certain other instances, e.g., if control or ownership of the
hospital was transferred or changed.3
3 In such instances, the practice agreement provided for
repayment “in twenty-four (24) monthly installments of principal
and interest calculated at the prevailing prime rate of interest
published in the Wall Street Journal as of the day of
termination”.
Additionally, the obligation to repay was shown in the
provisions for the early termination of the practice agreement.
If the hospital terminated the practice agreement early in
certain instances, the practice agreement provided that
petitioner “shall not be obligated to repay Hospital any amounts
paid on behalf of or reimbursed to Physician by Hospital”. We
interpret this sentence as not requiring petitioner to repay the
guarantee payments amounts if the hospital terminated the
practice agreement early, and requiring petitioner to repay
otherwise.
This point was emphasized in the next sentence, which
provided that if the hospital terminated the practice agreement
early in other instances (e.g., petitioner was convicted on a
felony or petitioner did not comply with the terms of the
practice agreement), petitioner “will repay to Hospital, upon
demand by Hospital, all sums of monies paid out to Physician to
meet the income guarantee”.
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Last modified: May 25, 2011