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    Stark Law: Rental of Office Space -- 411.357(a)

    42 CFR 411.357(a)

    (a) Rental of office space. Payments for the use of office space made by a lessee to a lessor if the arrangement meets the following requirements:

    (1) The lease arrangement is set out in writing, is signed by the parties, and specifies the premises it covers.

    (2) The duration of the lease arrangement is at least 1 year. To meet this requirement, if the lease arrangement is terminated with or without cause, the parties may not enter into a new lease arrangement for the same space during the first year of the original lease arrangement.

    (3) The space rented or leased does not exceed that which is reasonable and necessary for the legitimate business purposes of the lease arrangement and is used exclusively by the lessee when being used by the lessee (and is not shared with or used by the lessor or any person or entity related to the lessor), except that the lessee may make payments for the use of space consisting of common areas if the payments do not exceed the lessee's pro rata share of expenses for the space based upon the ratio of the space used exclusively by the lessee to the total amount of space (other than common areas) occupied by all persons using the common areas. For purposes of this paragraph (a), exclusive use means that the lessee (and any other lessees of the same office space) uses the office space to the exclusion of the lessor (or any person or entity related to the lessor). The lessor (or any person or entity related to the lessor) may not be an invitee of the lessee to use the office space.

    (4) The rental charges over the term of the lease arrangement are set in advance and are consistent with fair market value.

    (5) The rental charges over the term of the lease arrangement are not determined -

    (i) In any manner that takes into account the volume or value of referrals or other business generated between the parties; or

    (ii) Using a formula based on -

    (A) A percentage of the revenue raised, earned, billed, collected, or otherwise attributable to the services performed or business generated in the office space; or

    (B) Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.

    (6) The lease arrangement would be commercially reasonable even if no referrals were made between the lessee and the lessor.

    (7) If the lease arrangement expires after a term of at least 1 year, a holdover lease arrangement immediately following the expiration of the lease arrangement satisfies the requirements of paragraph (a) of this section if the following conditions are met:

    (i) The lease arrangement met the conditions of paragraphs (a)(1) through (6) of this section when the arrangement expired;

    (ii) The holdover lease arrangement is on the same terms and conditions as the immediately preceding arrangement; and

    (iii) The holdover lease arrangement continues to satisfy the conditions of paragraphs (a)(1) through (6) of this section.