This matter comes before the Court without a hearing on the Motion for Partial Summary Judgment filed by the United States of America, the response in opposition filed by the Defendants, and the reply filed by the Government.

I. Background Halifax Hospital Medical Center (“Halifax Hospital”) is a special taxing district that operates a community hospital of the same name in Volusia County, Florida. Halifax Staffing, Inc. is an instrumentality of Halifax Hospital.

Halifax Staffing employs the individuals who work for Halifax Hospital. Halifax Hospital pays all of the expenses and obligations of Halifax Staffing, including payroll, either directly or by transfer of funds into Halifax Staffing’s payroll account. Halifax Staffing entered into employment agreements with six medical oncologists. . . .

The employment agreements provided that the Medical Oncologists would receive a salary and bonuses.

The Medical Oncologists treated patients at Halifax Hospital on both an inpatient and outpatient basis and, inter alia, ordered or requested outpatient prescription drugs for their patients. Whenever one of the Medical Oncologists personally performed a Medicare-reimbursable procedure, Halifax Hospital would submit two claims for payment to Medicare—one for the physician’s services and a second for the facility fee, which would include items such as providing space and equipment. . . . In fiscal year 2005, the Medical Oncologists became eligible to receive a bonus (henceforth, the “Incentive Bonus” pursuant to the following provision of their employment agreements:

Compensation [Halifax Staffing] shall pay to Employee as compensation for services the following. . . c. Beginning with the fiscal year ending September 30, 2005, an equitable portion of an Incentive Compensation pool which is equal to 15% of the operating margin for the Medical Oncology program as defined by the financial statements produced by the Finance Department on a quarterly basis. The amount of the incentive compensation distributed to the Employee shall be determined by the Medical Oncology Practice Management Group. This compensation shall be paid annually according to the operating margin for the fiscal year.. . . In response to an interrogatory from the Government, the Defendants stated that the operating margin for the Medical Oncology program was made up of “revenue and direct expenses from outpatient medical oncology services” and that “[r]evenue consisted of outpatient medical oncology services, physician services, and related outpatient oncology pharmacy charges.” personally performed by the Medical Oncologists, such as fees for services related to the administration of chemotherapy.....

Discussion Questions 

1). What does the judge mean by the “instant motion”?
2). Can you explain the terms of the compensation agreement between Halifax and the oncologists?
3). Why does the incentive bonus fail to meet the “bona fide employment relationship” exception?
4). What changes to the agreement should Halifax have made to avoid Stark law liability?