HIM Law Chap6

Sole proprietorship

A legal business entity in which a single owner elects NOT TO INSULATE his/hers personal assets through the use of a corporation or other legal form

Due diligence

A legally acceptable level of care required of members of corporate boards of directors

Contract

A legally enforceable oral or written agreement

Duty of loyalty

A requirement of members of corporate boards of directors, placing the interests of the corporation ahead of ONE's OWN personal interests

Elements of a contract include:

A valid offer(promise to do/not do something if the other party agrees to do/not do something Acceptance of the OFFER CONSIDERATION(what each party will receive from the other in return for performinmg

Adhesion contract

An agreement that may be unenforceable because unequal bargaining power between the parties forces the weaker party to agree to UNFAVORABLE terms

Consideration

An element necessary for a valid contract: what each party will receive from the other party in return for performing the obligations described in the contract

"piercing the corporate veil"

An exception to corporate immunity in which the owners of a corporation MAY BE LIABLE for particular bad acts such as fraud or crime

Per se violations

Are actions that are automatically considered to be violations of antitrust laws( for example, price fixing)

Duty of responsibility

Board members must act with due care in exercising their duties(due diligence-a legally acceptable level of care)

Consolidation

Creation of a new corporation made up of two or more organizations that previously existed but dissolved

Antitrust: The Clayton Act

Exempted union activities from antitrust law Prohibited discriminatory pricing practices, exclusive dealing contracts where seller prohibits buyer from dealing with a competitor; and prohibits mergers and acquisitions that reduce competition

Clayton Law

Federal antitrust statute that exempts union activities from antitrust laws and prohibits discriminatory pricing practices, tying arrangements, and mergers and acquisitions that reduce competition

ULTRA VIRES ACT

Governing board or corporate executive decision-making that goes beyond the express or implied powers of the corporation

Antitrust: The Sherman Act

In effect since 1890 Sec 1: Prevents restraint of trade(among two or more parties) Sec 2: Prevents monopolies( can apply to a single organization) Applies to Civil and Criminal penalties

Antitrust: The Federal Trade Commission Act

In effect since 1914 Gives the Federal Trade Commission (FTC) broad powers to act against organizations that engage to act against organizations that engage in unfair methods of competitions, or unfair deceptive acts affecting commerce (Including advertising)

For-profit corporation

Income may be distributed to shareholders, directors, officers or other individuals for their PRIVATE GAIN

Bylaws

Internal rules of an organization or company

2. Which of the following characterizes a corporation?

It is separate from its owners or incorporators. It can sue or be sued. It can continue to exist despite an owner's death. (All of the above)

Fiduciary duty

Obligation to act in the best interest of another party bases on a special relationship of trust, confidence, or responsibility in in certain obligations

Merger

One corporation ABSORBS another corporation SIMILAR SIZE and agree to the merger

Acquisitions

One corporation is subsumed by another- Often involves the takeover of a smaller organization BY A LARGER ORGANIZATION

Acquisition

One corporation is subsumed by another. Involves the TAKEOVER of a smaller organization by a LARGER organization

Publicly held corporation

Ownership share sold to the general public Thousands of shareholders-owners

Joint ventures

Partnerships created for a specific purpose and designed to have a limited lifespan

Termination of a physician-patient relationship can occur by action of either party:

Patient CEASES treatment OR dies. Parties mutually agree to end relationship Patient dismisses or "FIRES" physician Physician dismisses patient from his/her care

Not-FOR-PROFIT corporation

Profit is permitted, but is NOT THE PRIMARY PURPOSE. (Income may NOT be distributed for individuals' private gain)

Governing board member and corporate executives can be personally liable for an ULTRA VIRES ACT that causes the corporation to suffer financial loss IF the act was:

Taken with knowledge that it was beyond their power. Made in bad faith

Breach of contract

Violation of one of more terms of a contract that can result in a lawsuit

14. Which of the following is not a federal antitrust law

a. HIPAA!!! b. Sherman Act c. Clayton Act d. Federal Trade Commission Act

16. Which of the following offers both civil and criminal penalties?

a. Sherman Act

25. Challenges to tax-exempt corporations operating with a charitable purpose include:

a. aggressive billing practices, b. insufficient charity care provided and c. inflated billing practices toward the uninsured

5. Bylaws:

a. are the internal rules of an organization

11. A physician has been found to have breached his contract with a patient through abandonment. As a remedy, the court may order the following:

a. compensatory damages

24. Which of the following is required element for piercing the corporate veil?

a. complete domination of the corporation by its owners b. control by owners was used to perpetrate a wrongful act c. corporate control was the proximate cause of injury

21. Which of the following characterizes a joint venture?

a. created for a specific purpose and b. designed to have a limited lifespan

7. Fiduciary duty includes

a. duty of loyalty and b. duty of responsibility

8. Ultra vires acts are those that

a. exceed a corporation's powers

9. General Hospital is a 1,000-bed facility. Mercy Hospital is a 100-bed hospital. They join to form one corporation, which is named General Hospital. The restructuring that has most likely occurred is a:

a. merger

19. Noncompete agreements

a. might violate antitrust law

1. Which of the following is an artificial being created per state statutory authority?

b. corporation

3. "Piercing the corporate veil" refers to:

b. holding corporation owners liable for bad acts

23. Which of the following describes a responsibility of corporation's governing board members?

b. operating the corporation on a day-to-day basis

13. In the "learned intermediary" defense used by HIT vendors, who is the learned intermediary

b. physician

22. A publicly held corporation

c. generally has thousands of shareholders

6. A not-for-profit corporation that is formed for a charitable purpose

c. must meet IRS-established criteria to be tax-exempt

12. A term used to describe standard contract terms is:

d. boilerplate

24. Which of the following is NOT a required element for piercing the corporate veil?

d. corporation is a not-for-profit entity

4. A not-for-profit corporation may

d. distribute its income for individuals' private gain

17. Which of the following actions related to the medical staff might raise antitrust issues?

d. investigating all applicable qualifications to grant medical staff privileges

20. Which of the following is NOT a defense for nonperformance of a contract?

d. specific performance

15. When two or more entities at different levels in a distribution chain act together to restrain trade, this is:

d. vertical restraint of trade

18. Economic credentialing

may be associated with physicians who have an ownership in competing hospitals may be based on a perceived loss of loyalty by a physician may be associated with a review of a physician's volume of cases (all of the above)

10. Contracts:

must be in writing must be express must contain an offer and acceptance (all of the above)