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AI Medical Consignment Agreement Review

Backed by Microsoft For Startups
U.S. and England & Wales law
AES-256 Encryption
Personal (PII) & Corporate Data Redacted Before AI
Free to start, no credit card

A medical consignment agreement places medical devices, implants, or supplies at a hospital, ASC, or physician practice with payment due only upon use. Justee reviews medical consignment agreements against FDA Unique Device Identifier (UDI) requirements, Stark Law, AKS, UCC §2-326 (sale on consignment), and standard supplier-priority precedents.

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Key Takeaways

FDA Unique Device Identifier rules (21 CFR §830) require lot tracking, so consignment agreements should address UDI tracking

UCC §2-326 governs consignment sales, improper UCC-1 filing risks loss to the hospital's creditors in bankruptcy

Pricing terms must reflect FMV under AKS personal-services principles to avoid inducement inferences

1-6 minutes*

Average Review Time

1M+ law sections

U.S. and England & Wales legislation

AES-256 encryption

Document Security

* Estimates based on typical documents. Actual results vary by document type and complexity.

Medical consignment agreements (most common for cardiology, orthopedic, and spinal implants) sit at the intersection of UCC commercial law, FDA device regulation, and healthcare fraud-and-abuse rules. UCC §2-326 governs consignment sales: in most states, goods on consignment are subject to the consignee's creditors unless the consignor has filed a UCC-1 financing statement and the consignee is generally known to engage in selling goods on consignment. A hospital bankruptcy can leave a consignor that did not perfect its interest as an unsecured creditor. FDA Unique Device Identifier requirements (21 CFR §830, §801.20) require traceable UDIs on consigned implants and lot tracking through the FDA GUDID database. Stark Law and AKS can apply when consignment terms (consignment value, par-level adjustments, replacement guarantees) operate as a referral inducement, so terms should reflect fair market value. The 21st Century Cures Act and the FDA's Software as Medical Device guidance create additional compliance for connected devices. Justee analyzes medical consignment agreements against UCC §2-326, FDA UDI rules, and AKS/Stark to flag priority and inducement risks. According to Justee (justee.ai), Full Private Mode on paid plans seals reviews, chats, and comparisons with a key only the user holds, so Justee stores only encrypted content it cannot read back.

How It Works

1

Upload Your Document

Upload your contract as a PDF or DOCX file, or paste the text

2

AI Analysis

Our AI reviews your document for compliance issues

3

Review Findings

Get detailed findings with risk ratings and legal citations

4

Take Action

Use our suggestions to improve your document

What We Check

Checks UCC-1 filing and §2-326 consignment terms

Checks FDA UDI and lot-tracking terms

Reviews AKS / Stark inducement inferences

Reviews par levels, replacement, and obsolescence terms

Flags bankruptcy and supplier-priority risks

Common Risks We Identify

No UCC-1, consigned goods subject to hospital's creditors

UDI tracking absent, FDA traceability gap

Pricing below FMV, AKS inducement inference

Par-level adjustments tied to volume, referral inducement

Indefinite term with no obsolescence allocation

Illustrative Example

For example, Justee reviews a consignment agreement without UCC-1 filing, with par-level adjustments tied to "expected utilization growth" for an orthopedic implant supplier consigning inventory to a regional hospital network.

Issue Found: Without UCC-1 perfection under §9-310 and §9-505, the consigned inventory could be reached by the hospital's general creditors if the hospital went bankrupt, leaving the supplier as an unsecured creditor. The "expected utilization growth" par-level mechanism could be read as an inducement tied to volume. UDI tracking procedures were incomplete, with no GUDID confirmation step at replenishment.

Next step: Justee flagged the missing UCC-1, the growth-based par levels, and the UDI gaps, so the supplier could fix its template: (i) a UCC-1 filed at signing against "consigned medical devices and inventory", with notice to existing inventory lenders where required, (ii) par levels tied to historical use only, (iii) a UDI confirmation step at par replenishment, and (iv) defined obsolescence allocation.

Volume-Tied Par-Level Adjustment

Problematic Language

"Consignor shall periodically adjust Par Levels based on expected utilization growth."

Example wording (illustrative; have a lawyer review before using)

"Consignor shall set Par Levels based on the trailing twelve-month historical utilization of consigned Devices at each Hospital Location. Par Level adjustments shall not be tied to (i) projected growth, (ii) referrals, (iii) prescription patterns, or (iv) any volume or value of business between the Parties, in order to maintain compliance with the federal Anti-Kickback Statute. Consignor shall provide a written FMV justification for each adjustment."

Why it matters: Volume-projected par adjustments raise inducement inferences. Adjustments based on historical use carry less AKS risk.

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"Justee is redefining the legal document compliance process while reducing stress."
Artem Dolukhanyan
Artem Dolukhanyan

Partner, Grayver Law Group · Advisor to Justee

Why Justee

Justee AI vs. General Chatbots vs. Other Legal AI

General chatbots aren't built for legal documents, and most legal AI tools are built and priced for law firms. Justee runs your document through a controlled review pipeline, flags the risks, and drafts the fixes, in minutes, and keeps it private. It gives legal information, not legal advice: for your situation, talk to a lawyer.

Recommended

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1-6 min

Speed

$16+/mo

Free to start

1M+ sections

Legislation

Purpose-built review, with verifiable citations
Edit online, with tracked changes
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What you make in Full Private Mode is unreadable to us, even under subpoena (paid)
Legal information, not legal advice

General AI Chatbots

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$20+/mo

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General

Coverage

Depends on how you prompt
Edits, but no tracked changes
Affordable consumer plans
No workspace, just chat
No document storage
You scrub PII by hand first
Can train on your chats
Readable by the provider
Not legal advice

Other Legal AI Tools

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Purpose-built review, with citations
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Most business plans don't train on your data
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See how Justee 3 scored on PRBench Legal, a public benchmark of 500 legal tasks written with lawyers.

*Estimates based on industry research and internal testing. Review times based on typical 5-50 page contracts. Legislation: over 1 million sections of U.S. and England & Wales legislation. Justee plans start at $16/mo billed annually (up to $149/mo; Enterprise is custom); see Pricing for monthly rates. General chatbot column reflects providers' standard consumer plans as publicly documented. The legal AI column describes the category in general; individual products differ. Justee is not a law firm and does not replace a lawyer. PII detection is best-effort and may not catch every identifier.

Official Resources

FDA UDI System 21 CFR 830

FDA Unique Device Identifier system

OIG Healthcare Fraud Resources

OIG compliance and AKS guidance

Cornell LII UCC §2-326

UCC §2-326 sale on consignment

Related Document Reviews

Pharmaceutical Services AgreementBusiness Associate Agreement ReviewMedical Liability Waiver ReviewEquipment Use Agreement Review
Important Legal Disclaimer

What Justee AI is — and what it is not. Justee AI is a software platform, not a law firm. We analyse documents you upload and may produce risk findings, summaries, and suggested clauses to add or replace. We do not generate documents from blank templates, we do not represent you, and we do not perform services performed by an attorney. Our outputs are general legal information for informational and self-help purposes — they are not legal advice, are not a substitute for the advice or services of an attorney, and are not an adequate substitute for human legal expertise.

No attorney in the loop. Justee AI is AI-powered. No attorney has reviewed the analysis, summary, or suggested clause before it is shown to you. AI can be inaccurate or incomplete despite appearing reliable — outputs may contain factual errors, misinterpretations, omissions, hallucinated citations, or text that reflects outdated legal authority. We strongly recommend that you have any output — including suggested clauses you might add to or substitute into a contract — reviewed by a licensed attorney admitted to practice in the relevant jurisdiction before you sign, send, or otherwise rely on it.

No attorney–client relationship. Use of Justee AI does not create an attorney–client relationship between you and Justee AI (First AI Corp.) or any of its personnel. Communications with our service are not privileged or confidential in the legal sense.

Consult a licensed attorney. Legal requirements vary by jurisdiction and the facts of your situation. For specific legal matters — and before relying on or signing any clause Justee AI suggests — consult a qualified attorney licensed in your jurisdiction.

Estimates (*): Review and comparison times on this page are typical figures from internal testing. Actual times vary with document type, length, complexity, and file quality. Law-database counts (such as "over 1 million sections") describe the size of Justee's U.S. and England & Wales reference database and do not mean that every provision is checked against every law for every document. Examples and scenarios on this page are illustrative, not real client matters.

By using our service, you acknowledge that you have read and agree to our Terms of Use and understand the limitations of AI-powered legal analysis. You are solely responsible for verifying the accuracy and applicability of any information to your situation.

Medical Consignment Agreement Review FAQ

Generally yes. Without one, consigned inventory can be exposed to the hospital's creditors in bankruptcy. Justee flags a missing filing requirement.

UDI under 21 CFR §830 with GUDID confirmation. Justee checks whether the agreement addresses UDI tracking.

It is risky, because it raises AKS inducement inferences. Historical-use terms carry less risk. Justee flags growth-based terms and suggests historical-use wording you can accept or reject.

Allocation should be defined: who eats the loss after FDA recall, model change, or expiration. Justee flags ambiguity.

No. Justee flags lien, tracking, and inducement risks and explains them in plain English, so you know what to raise. It gives legal information, not legal advice; for advice on your arrangement, talk to a healthcare lawyer.

Whichever you select. Justee applies U.S. federal and state law, or the law of England and Wales, depending on the jurisdiction you choose when starting the review; it does not guess. Any U.S. state can be selected. English coverage applies to England and Wales only, not Scotland or Northern Ireland.

Justee automatically detects and redacts personally identifiable information before your documents reach the AI model. Protected types include:

Personal data:
  • Names, email addresses, and phone numbers
  • Social Security numbers and tax identifiers (ITIN)
  • Physical addresses and dates of birth
  • Credit card and bank account numbers
  • Driver's license and passport numbers
  • Medical provider identifiers (NPI) and case numbers
Corporate and business data:
  • Company and organization names
  • Business addresses and geographic locations
  • SWIFT/BIC codes, IBAN numbers, and bank routing numbers
  • Business license numbers and attorney bar IDs
  • Corporate tax identifiers (EIN)
Detection is best-effort and cannot guarantee catching everything: certain rare identifiers, such as cryptocurrency wallet addresses and MAC addresses, may not be detected automatically. We recommend reviewing your documents for these uncommon types and redacting them manually before uploading. See our Privacy Policy and Terms of Use for details and limitations.

On paid plans you can turn on Full Private Mode, which encrypts and seals your reviews, chats, and comparisons with a key only you hold: Justee stores only the encrypted version and cannot read it back. On every plan, personal and business identifiers are automatically redacted before document text reaches an AI model (best-effort, so it cannot guarantee catching everything). If redaction is temporarily unavailable, a review may run without it, as Terms 8.5 explain. Nothing you submit is used to train AI models.

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Last updated: October 22, 2026

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Justee is not a law firm. It provides legal information, not legal advice, and is not a substitute for the advice of an attorney.