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EXHIBIT 10.127
PSYCHIATRIC PARTIAL HOSPITALIZATION
MANAGEMENT AGREEMENT
THIS AGREEMENT entered into as of the 1st of October, 2000, by and
between New Life Guidance Center, herein referred to as "CMHC", and OptimumCare
Corporation, a Delaware corporation, herein referred to as "Manager".
RECITALS
WHEREAS, CMHC is licensed to operate a psychiatric partial
hospitalization program which is located at 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx
00000 ("Facility"); and is currently designated by Medicare as a rural Arizona
Health Care provider; and
WHEREAS, Manager is engaged in the business of providing management
services in the operation of psychiatric programs; and
WHEREAS, the parties desire to cooperate in providing a psychiatric
partial hospitalization program in which physicians provide a consistent level
of high quality treatment of psychiatric patients in the CMHC, so that these
patients may return to a more satisfactory level of functioning in the
community; and
WHEREAS, the parties desire Manager to manage CMHC's adult outpatient
psychiatric program at the Arizona Facility ("Program").
AGREEMENT
SECTION 1. DEFINITIONS.
1.1 "Confidential Information." "Confidential Information" shall mean
all confidential information and trade secrets of Manager, including without
limitation financial statements, internal memoranda, reports, patient lists,
memoranda, manuals, handbooks, pamphlets, production books and audio and visual
recordings, models, techniques, formulations, procedures and other materials or
records of a confidential and/or proprietary nature which relate to the Program
and which are used by Manager in providing psychiatric services to Program
patients.
1.2 "Employee Benefits." "Employee Benefits" shall include, by way of
illustration and not limitation, an employer's contribution under the Federal
Insurance Contributions Act, unemployment compensation and related insurance,
payroll and other employment taxes, pension and retirement plan contributions,
workers' compensation and related insurance, group life, health, disability, and
accident insurance, severance, and other benefits.
1.3 "Patient day." A "Patient Day" shall be deemed to exist with respect
to each outpatient visit to the Program.
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SECTION 2. TERM.
This Agreement shall commence effective October 1, 2000 and shall expire
on October 1, 2003, unless earlier terminated in accordance with the provisions
of Section 10 of this Agreement.
SECTION 3. COVENANTS OF CMHC.
3.1 Ultimate Control.CMHC shall have and maintain throughout the period
hereof ultimate control and authority for the operation and administration of
the Program.
3.2 Space. CMHC shall provide space which consists of approximately One
Thousand Seven Hundred (1,700) square feet of office space, which Manager agrees
is sufficient in size and quality for the proper operation of this Program.
3.3 CMHC's Employees. CMHC shall employ, or shall independently contract
with, and shall be financially responsible for staffing the Program with all
personnel necessary for the proper and efficient administration and clinical
operation of the Program as set forth in Schedule 3.3. All personnel employed or
otherwise contracted for shall be required to comply with the Program policies
and procedures as mutually developed and agreed upon in writing by CMHC and
Manager.
3.4 General Services. CMHC shall provide the following support services
for the efficient and proper operation of the Program:
3.4.1 All utilities for the Facility. Manager acknowledges that
utilities ultimately will be supplied by the Facility's landlord under the terms
of the Lease.
3.4.2 Clerical support, office supplies and general supplies
necessary for the proper operation of the Program.
3.4.3 Record keeping services, in accordance with state and
federal laws and regulations.
Nothing in this Agreement is intended to or shall be construed to limit
or restrict the CMHC's ability to outsource the provision of the goods and
services contemplated in this Section 3.4.
3.5 Policies and Procedures.CMHC shall provide all Program staff
(including employees and independent contractors of Manager) with copies of all
relevant CMHC and Program policies and procedures, as amended from time to time.
3.6 Health Screenings. CMHC shall provide to all Program staff
(including employees and independent contractors of Manager) such appropriate
pre-employment and periodic diagnostic and health screening procedures as are
customarily provided by CMHC for CMHC employees.
3.7 Licensure.CMHC shall maintain licensure by the Arizona Department of
Health
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Services (ADHS), Behavioral Health Services Department (BHS) , and shall be
financially responsible for paying all such fees related to such licensure.
3.8 Quality Improvement Review. CMHC shall provide appropriate
utilization review and quality improvement services with respect to services
provided by the Program.
3.9 Insurance. CMHC shall procure and maintain, at its sole cost and
expense, throughout the term hereof, a policy or policies of comprehensive
general liability insurance covering itself and its employees for patient care
services from an insurance carrier licensed and authorized to sell or approved
to place liability insurance policies of this nature in this State with limits
of not less than Five Million Dollars ($5,000,000.00) per occurrence and shall
name Manager as an additional insured under the policy. CMHC shall cause to be
issued to Manager, by the insurance carriers issuing such coverage, certificates
of insurance evidencing that the foregoing covenants of this Agreement have been
complied with and stating that said insurance carriers shall provide ten (10)
calendar days prior written notice to Manager of any cancellation or material
modification of the policy or coverage described herein, or, if any such carrier
shall not agree to provide such notice, then CMHC shall agree to provide notice
to Manager of any such cancellation or modification immediately upon their
receipt of notice of same from the carrier. Any deductible, co-insurance, or
aggregate limits shall be subject to Manager's approval, which shall not be
unreasonably withheld. Manager agrees that co-insurance or deductible amounts of
$100,000 or less, per occurrence, is an acceptable co-insurance or deductible.
3.9.1 Extended Reporting Period. If any liability insurance policy
procured pursuant to Section 3.9 is on a "claims made" rather than "occurrence"
basis, then such policy shall include an option to purchase a "tail" or an
extended reporting period, which option shall be exercisable upon termination or
cancellation of said policy or upon any material modification of said policy
that has the effect of causing the coverage of said policy to fail, in any
respect, to meet the requirements of Section 3.9, regardless of whether such
termination, cancellation or modification shall occur during the term hereof or
thereafter. The tail or extended reporting period shall provide coverage meeting
all of the requirements set forth in Section 3.9, for a period of at least seven
(7) years after termination, cancellation or modification of the underlying
policy. Such policy shall provide that the carrier shall give CMHC or Manager
thirty (30) calendar days advance written notice of the date upon which the
option may be exercised regardless of whether such date shall occur during the
term hereof or thereafter and shall specifically provide that Manager shall be
permitted to exercise the option upon the failure of CMHC to do so. Upon such
notice, CMHC shall take all steps, including the payment of money, necessary to
exercise such option, and if CMHC shall fail to effectively exercise such
option, then Manager may do so, and CMHC shall fully and immediately reimburse
Manager, within ten (10) calendar days notice thereof by Manager, for all monies
expended by Manager in connection therewith.
3.10 Billing and Collections. CMHC has in effect a schedule of fees and
patient charges for the administrative and technical component of all services
rendered by the Program. Said fees and charges may be modified by CMHC from time
to time in its sole and absolute discretion, but CMHC shall give prior notice of
such modification to Manager. CMHC shall xxxx all patients and third party
payors for CMHC's fees and charges with reference to services provided by the
Program in
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accordance with such schedule.
3.11 Indemnification by CMHC. CMHC shall protect, indemnify, hold
harmless, and defend Manager, its legal representatives, employees, agents,
officers, trustees, affiliates and assigns, and each of them, from and against
any and all claims, actions, demands, proceedings, losses, damages, costs,
expenses and liabilities (including reasonable attorneys' fees) arising out of
or related to the performance or nonperformance by CMHC of any obligations to be
performed or services to be provided hereunder. This indemnification obligation
shall survive the expiration or termination of this Agreement.
SECTION 4. COVENANTS OF MANAGER.
4.0 Operational Management. Manager will provide the following at it's
own expense: (a) office supplies and general supplies necessary for the proper
operation of the Program, (b) dietary and daily transportation of all patients
from their homes to the Facility in the morning, and from the Facility to
patients' homes in the evenings, but only for such patients who reside within
twenty five (25) miles of CMHC, (c) Program management and direction, (d)
Program marketing, community awareness and liaison concerning the care and
treatment of the Program's patients, (e) housekeeping services for the Facility,
(f) janitorial and physical upkeep of the Facility, (g) nursing services as
required by appropriate licensing authority.
4.1 Clinical Management. Subject to CMHC's ultimate retention of control
and authority, CMHC hereby appoints Manager as its sole and exclusive manager of
the clinical operation of the Program and Manager accepts such appointment.
Manager shall have full responsibility for the efficient and proper
administration of the Program and for the care and treatment of Program patients
while at the Facility. Manager shall have overall authority and responsibility
to conduct, supervise, manage, and direct the day-to-day clinical operation of
the Program.
4.2 Manager's Employees. Manager shall employ and/or independently
contract with, and shall be financially responsible for staffing the Program
with the full-time equivalent of, (a) a program director, (b) qualified staff to
perform therapy, (c) a psychiatric nurse, (d) a program secretary, (e) a medical
director ("Medical Director") in accordance with Schedule 4.2, based upon the
anticipated Program census for each day of operation, (f) dietary services for
patients of the Program to include one mid-day meal served to each patient at
the Facility, (g) transportation services for patients from their homes to the
Facility and returning patients from the Facility back to their homes, but only
for such patients who reside within 25 miles of the CMHC and (h) a Community
Liaison. All personnel shall be subject to CMHC approval but CMHC shall have
deemed to have accepted such personnel unless it informs Manager otherwise in
writing within ten (10) business days of receipt of all such required
information. Such personnel shall not be deemed employees or contracted
personnel or borrowed servants of CMHC. Manager shall have full and sole
responsibility for their wages, compensation and employee benefits and acts or
omissions. Manager shall not, without CMHC's prior written consent, which shall
not be unreasonably withheld, deviate from, change, or decrease the agreed
staffing as set forth in Schedule 4.2. In addition, Manager shall be financially
responsible for staffing the Program with all such additional professional
counseling staff and therapists as may be reasonably necessary for the proper
operation
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of the Program and as may be ordered by patients' attending physicians. Manager
shall also provide the necessary furniture and equipment for its staff.
4.2.1 Medical Director Qualifications. Manager represents,
warrants, covenants and agrees that Medical Director shall be a physician duly
licensed to practice medicine in the State of Arizona, shall be a member of the
CMHC's Active Medical Staff with clinical privileges sufficient to permit
Medical Director to perform all services reasonably required of him/her as
Medical Director of the Program, and shall be in legitimate possession of all
customary narcotics and controlled substances numbers and licenses.
4.2.2 Medical Director Duties. Manager shall provide the
professional services of Medical Director as an independent management
consultant and advisor to perform certain administrative functions as hereafter
set forth. The Medical Director shall furnish the following for the operation of
the Program:
4.2.2.1 Medical Director shall serve as Medical
Director of the Program. Medical Director shall, during the entire term of this
Agreement, supervise the clinical, medical and psychiatric operation of the
Program and shall devote such time as necessary to carry out such duties and
ensure efficient and effective medical administration of the Program. The
primary objective is to provide optimal utilization of the Program's facilities,
equipment and staff and to provide quality services to all patients.
4.2.2.2 Manager shall assure that Medical Director
shall be available at reasonable times for consultation with the Board of
Directors, the Chief Operational Officer ("C.O.O.")/Administrator, the Chief of
Staff, individual members of the medical staff, committees of the professional
staff and nursing and administrative employees of CMHC. Medical Director shall
be available by electronic pager for emergency consultation during all hours
that the Program is in operation and Medical Director is offsite, provided,
however, that Medical Director may arrange for coverage of this on-call
obligation, which coverage shall be provided by a physician licensed to practice
medicine in the State of Arizona and shall be at Manager's or Medical Director's
sole cost and expense. Medical Director shall actively participate in the
affairs of the professional staff of the CMHC and shall perform such tasks and
provide such services as the professional staff or any committee may from time
to time appropriately request. Manager acknowledges and agrees that the CMHC's
medical staff committees shall conduct at regular intervals ongoing monitoring
and reviewing of the professional performance of Medical Director and that the
results of these reviews shall be transmitted to CMHC administration.
4.3 Licensure. With the cooperation assistance of the CMHC and its
administration, Manager shall be responsible for and shall undertake all
activities necessary to obtain and maintain all necessary licenses and approvals
from governmental and accrediting agencies, including without limitation the
Arizona Department of Health Services, and shall be responsible for and shall
undertake all activities necessary to obtain and maintain all certifications and
approvals necessary to participate in the Medi-Cal and Medicare programs.
Manager shall prepare, file and supplement all regulatory applications, reports,
and forms required by any local, state or federal regulatory
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agency and shall prepare the Facility for, and monitor, regulatory surveys and
inspections. Manager shall use its best efforts to remedy any deficiencies
identified in such surveys and inspections to the extent such deficiencies are
within Manager's control. Manager shall use its best efforts to ensure that the
Program and the Facility are operated and maintained in compliance with all
applicable federal, state, and local laws, rules, and regulations.
4.4 Policies and Procedures. Manager shall, in conjunction with the
CMHC's administration, develop and implement all policies and procedures
necessary for the safe and efficient operation of the Program and the Facility,
and shall educate Program staff on such policies and procedures. Manager shall
provide orientation and training for all Program staff, irrespective of whether
such staff members are employees or independent contractors of CMHC or of
Manager. Manager shall as reasonably necessary provide program of ongoing
in-service training such as to assure that Program staff have the requisite
knowledge and skill required to deliver quality health care services at the
Facility and through the Program.
4.4.1 CMHC Approval. The implementation of the policies and
procedures required under Section 4.4 shall be subject to prior approval by the
CMHC's administration and, where appropriate, the CMHC's medical staff.
4.5 Indemnification by Manager. Manager shall protect, indemnify, hold
harmless, and defend CMHC, its legal representatives, employees, agents,
officers, trustees, affiliates and assigns, and each of them, from and against
any and all claims, actions, demands, proceedings, losses, damages, costs,
expenses and liabilities (including reasonable attorneys' fees) arising out of
or related to the performance or nonperformance by Manager of any obligations to
be performed or services to be provided hereunder. This indemnification
obligation shall survive the expiration or termination of this Agreement.
4.6 Insurance. Manager shall procure and maintain, at its sole cost and
expense, throughout the term hereof, a policy or policies of comprehensive
general liability insurance covering itself and its employees with limits of not
less than Five Million Dollars ($5,000,000.00) per occurrence and shall name
CMHC as an additional insured under the policy. Manager shall cause to be issued
to CMHC, by the insurance carriers issuing such coverage, certificates of
insurance evidencing that the foregoing covenants of this Agreement have been
complied with and stating that said insurance carriers shall provide ten (10)
calendar days prior written notice to CMHC of any cancellation or material
modification of the policy or coverage described herein, or, if any such carrier
shall not agree to provide such notice, then Manager shall provide notice to
CMHC of any such cancellation or modification immediately upon their receipt of
notice of same from the carrier. Any deductible, co-insurance, or aggregate
limits shall be subject to CMHC's approval, which shall not be unreasonably
withheld. CMHC agrees that co-insurance or deductible amounts of $100,000 or
less, per occurrence, is an acceptable co-insurance or deductible.
4.6.1 Extended Reporting Period. If any liability insurance
policy procured pursuant to Section 4.6 is on a "claims made" rather than
"occurrence" basis, then such policy shall include an option to purchase a
"tail" or an extended reporting period, which option shall be exercisable upon
termination or cancellation of said policy or upon any material modification of
said
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policy that has the effect of causing the coverage of said policy to fail, in
any respect, to meet the requirements of Section 4.6, regardless of whether such
termination, cancellation or modification shall occur during the term hereof or
thereafter. The tail or extended reporting period shall provide coverage meeting
all of the requirements set forth in Section 4.6, for a period of at least seven
(7) years after termination, cancellation or modification of the underlying
policy. Such policy shall provide that the carrier shall give CMHC or Manager
thirty (30) calendar days advance written notice of the date upon which the
option may be exercised regardless of whether such date shall occur during the
term hereof or thereafter and shall specifically provide that CMHC shall be
permitted to exercise the option upon the failure of Manager to do so. Upon such
notice, Manager shall take all steps, including the payment of money, necessary
to exercise such option, and if Manager shall fail to effectively exercise such
option, then CMHC may do so, and Manager shall fully and immediately reimburse
CMHC, within ten (10) calendar days notice thereof by CMHC, for all monies
expended by CMHC in connection therewith.
4.7 Access to Documents. For the purpose of implementing Section 1861
(v) (1) (I) of the Social Security Act, as amended, and any regulations
promulgated pursuant thereto, Manager agrees to comply with the following
statutory requirements governing the maintenance of documentation to verify the
cost of services rendered under this Agreement:
"(i) until the expiration of four years after the furnishing of such
services pursuant to such contract, [Manager] shall make available, upon
written request to the Secretary [of the U.S. Department of Health and
Human Services] or upon request to the Comptroller General, or any of
their duly authorized representatives, the contract and books,
documents, and records of such costs, and"
"(ii) if [Manager] carries out any of the duties of the contract through
a subcontract with a value or cost of $10,000 or more over a
twelve-month period, with a related organization, such subcontract shall
contain a clause to the effect that until the expiration of four years
after the furnishing of such services pursuant to such subcontract, the
related organization shall make available, upon written request to the
Secretary, or upon request to the Comptroller General, or any of their
duly authorized representatives, the subcontract and books, documents,
and records of such organization that are necessary to verify the nature
and extent of such costs."
4.8 Audit Disclosure. If Manager is requested to disclose books,
documents, or records for purpose of an audit, Manager shall notify CMHC of the
nature and scope of such request and Manager shall make available, upon written
request of CMHC, all such books, documents, or records, during regular business
hours of Manager. The provisions of this Section 4.8 shall survive the
expiration or earlier termination hereof.
4.9 Reports. Manager shall provide monthly written reports to CMHC
administration regarding all significant aspects of the operation of the
Program. Such reports shall address, among other things, the therapies provided
to patients, any notable therapeutic successes or failures experienced by
patients of the Program, any changes in Program staff, any complaints received
by Manager regarding the operation and administration of the Program and the
Facility, Program
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census, and any other items or issues significant to the administration of the
Program.
4.10 Admissions. Manager shall admit patients to the Program only where
such admission is ordered by a physician member of the CMHC's medical staff with
admitting privileges.
4.11 General Services. Manager shall provide the following support
services for the efficient and proper operation of the Program:
4.11.1 Housekeeping services for the Facility.
4.11.2 Janitorial and physical upkeep of the Facility.
4.11.3 Record keeping services, in accordance with state and
federal laws and regulations.
4.11.4 Payment of the following expenses: lease of facility
(including utilities of telephone, electric, water and sewer).
4.11.5 Payment of advertising expenses.
4.12 Commit no act or omission which adversely affects the CMHC license.
4.13 Provide utilization review and quality assessment for all Program
patients, including filing and pursuing clinical appeals with the fiscal
intermediary, and if necessary, HCFA.
4.14 Manager shall agree to pay CMHC $12,500 per month during the first
six months of the contract as administrative fees for staffing described in
schedule 3.3.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF CMHC.
5.1 Corporate Status. CMHC is a corporation duly organized and validly
existing in good standing under the laws of the State of Arizona with the power
and authority to carry on the activities in which it is engaged and to perform
its obligations hereunder subject to licensure by the Arizona Department of
Health Services.
5.2 Execution of Agreement. The execution of this Agreement and the
performance of the obligations of the CMHC hereunder will not result in any
breach of any of the terms, conditions, or provisions of any agreement or other
instrument to which CMHC is a party or by which it may be bound or affected, or
any governmental license, franchise, permit or other authorization possessed by
the CMHC, nor will such execution and performance violate any federal, state or
local law, rule, or regulation. The CMHC may be accredited by the Joint
Commission on the Accreditation of Health Care Organizations.
5.3 Litigation. There is no litigation, administrative proceeding or
investigation pending or
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threatened against CMHC, nor is the CMHC subject to any judgment, order, decree
or regulation of any court or other governmental or administrative agency which
would materially adversely affect the performance of CMHC's obligations
hereunder.
5.4 Certificate of Need. No Certificate of Need is required by CMHC from
any state regulatory agency for the operation of the Program.
SECTION 6. REPRESENTATIONS BY MANAGER.
6.1 Corporate Status. Manager is a corporation duly organized and
existing under the laws of the State of Delaware, is authorized and qualified to
conduct business in the State of Arizona, and has the power and authority to
carry on the activities in which it is engaged and to perform its obligations
hereunder.
6.2 Execution of Agreement. The execution of this Agreement and the
performance of the obligations of the Manager hereunder will not result in any
breach of any of the terms, conditions, or provisions of any agreement or other
instrument to which Manager is a party or by which it may be bound or affected,
or any governmental license, franchise, permit or other authorization possessed
by the Manager, nor will such execution and performance violate any federal,
state or local law, rule, or regulation.
6.3 Litigation. There is no litigation, administrative proceeding or
investigation pending or threatened against Manager, nor is the Manager subject
to any judgment, order, decree or regulation of any court or other governmental
or administrative agency, which would materially adversely affect the
performance of CMHC's obligations hereunder.
SECTION 7. MANAGEMENT FEE.
7.1 Invoice. Manager shall prepare and submit to CMHC on a monthly basis
an invoice for its services rendered hereunder. Said invoice shall indicate the
name of each patient of the Program and the dates on which each patient attended
the Program and shall reflect each such patient's social security number,
admitting diagnosis, and patient identification number. Within thirty (30) days
of CMHC's receipt thereof, and upon CMHC's approval thereof, which approval
shall not be unreasonably withheld, and subject to the provisions of Section 4.9
and subject to CMHC receiving payment from its intermediary for services listed
on invoice, CMHC shall make payment to Manager of all sums owing hereunder.
7.2 Per Capita Fee. CMHC shall be obligated to pay to Manager a fee of
Two Hundred Fifty Five Dollars ($255) per patient day for each properly admitted
patient attending the Program.
7.3 Payment Declined. CMHC shall be entitled to a credit of Two Hundred
Fifty Five Dollars ($255.00) per patient day for all patient days for which
payment was denied by its intermediary.
SECTION 8. CONFIDENTIAL AND PROPRIETARY INFORMATION.
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8.1 Acknowledgment. CMHC acknowledges and agrees that Confidential
Information may be disclosed to it in confidence with the understanding that it
constitutes business information developed by Manager. CMHC further agrees that
it shall not use such Confidential Information for any purpose other than in
connection with the Program. CMHC further agrees not to disclose such
Confidential Information to any third party except as required by law or
regulation or in order to serve the purposes of the Program or as permitted by
written authorization of Manager.
8.1.1 Manager Acknowledgment. Manager acknowledges and agrees
that Confidential Information may be disclosed to it in confidence with the
understanding that it constitutes business information developed by CMHC.
Manager further agrees that it shall not use such Confidential Information for
any purpose other than in connection with the Program. Manager further agrees
not to disclose such Confidential Information to any third party except as
required by law or regulation or in order to serve the purposes of the Program
or as permitted by written authorization of CMHC.
8.2 License. Manager hereby grants to CMHC for the term of this
Agreement a non- exclusive license to use the registered service marks of
Manager when identifying the Program. These service marks are to remain the
exclusive property of Manager. Manager reserves the right to restrict the use of
the service marks of Manager in any a manner in which Manager believes in its
reasonable discretion to be detrimental to Manager or the value of the service
marks. CMHC acknowledges Manager's exclusive right, title and interest in the
service marks and agrees that it will not at any time do or cause to be done any
act or thing, directly or indirectly, contesting or in any way impairing or
tending to impair Manager's exclusive right, title or interest in the service
marks and the good will symbolized thereby.
8.2.1 CMHC License. CMHC hereby grants to Manager for the term of
this Agreement a non-exclusive license to use the registered service marks of
CMHC when identifying the Program. These service marks are to remain the
exclusive property of CMHC. CMHC reserves the right to restrict the use of the
service marks of CMHC in any manner in which CMHC believes in its reasonable
discretion to be detrimental to CMHC or the value of the service marks. Manager
acknowledges CMHC's exclusive right, title and interest in the service marks and
agrees that it will not at any time do or cause to be done any act or thing,
directly or indirectly, contesting or in any way impairing or tending to impair
CMHC's exclusive right, title or interest in the service marks and the good will
symbolized thereby.
8.3 Nondisclosure. Manager agrees not to disclose confidential
information pertaining to the CMHC's business or affairs or the Program or
Program patients except as required by law or regulation or as permitted by
written authorization of the CMHC or the respective Program patients, as the
case may be.
8.3.1 CMHC's Nondisclosure. CMHC agrees not to disclose
confidential information pertaining to the Manager's business or affairs or the
Program or Program patients except as required by law or regulation or as
permitted by written authorization of the Manager or the respective Program
patients, as the case may be.
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SECTION 9. RECRUITMENT OF EMPLOYEES AND AGENTS.
9.1 Recruitment by CMHC. CMHC acknowledges that Manager has expended and
will continue to expend substantial time, effort, and money to train its
employees and contracted personnel in the operation of the Program. The
employees and contracted personnel of Manager who will operate the Program will
have access to and possess Confidential Information of Manager. CMHC agrees that
for the earlier of two (2) years after the cessation of the employment or agency
relationship between the Manager and an employee or two (2) years after
termination of this Agreement, it will not knowingly (and it will not induce any
of its affiliates or contractors to) employ or solicit the employment of, or in
any way retain the services of , any employee, former employee, or contracted
personnel or former agent of Manager if such individual has been employed by or
retained by Manager in the Program unless Manager gives CMHC express written
consent thereto or unless this Agreement is terminated by CMHC pursuant to
Section 10 of this Agreement.
9.2 Recruitment by Manager. Manager acknowledges that CMHC has expended
and will continue to expend substantial time, effort, and money to train its
employees and contracted personnel in the operation of the Program and the CMHC.
The employees and contracted personnel of Manager who will operate the Program
will have access to and possess Confidential Information of CMHC. Manager agrees
that for the earlier of two (2) years after the cessation of the employment,
independent contractual or agency relationship between the CMHC and an employee
or two (2) years after termination of this Agreement, it will not knowingly (and
it will not induce any of its affiliates or contractors to) employ or solicit
the employment of, or in any way retain the services of, any employee, former
employee, or contracted personnel or former agent of CMHC if such individual has
been employed by or retained by CMHC in the Program unless CMHC gives Manager
express written consent thereto or unless this Agreement is terminated by
Manager pursuant to Section 10 of this Agreement.
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SECTION 10. TERMINATION.
10.1 Termination by Manager.
10.1.1 Manager may terminate this Agreement by written notice to
CMHC, if CMHC should have a bankruptcy, reorganization, or similar action filed
by or against it, or become insolvent, or sell all or substantially all of its
assets.
10.1.2 In the event CMHC fails to comply with the terms of this
Agreement in any material respect, Manager may notify CMHC of such breach, in
writing, and CMHC shall have thirty (30) days to cure such breach. In the event
CMHC fails to cure such breach with said period, the Agreement may be terminated
by Manager.
10.1.3 Manager may terminate this Agreement by written notice to
CMHC in the event CMHC fails to maintain any license or certification granted to
it by a regulatory agency without which the Program would be materially and
adversely affected, unless the responsibility to maintain such license or
certification is a responsibility of Manager pursuant to Section 4.3.
10.1.4 Manager may terminate this Agreement by written notice to
CMHC in the event CMHC fails to maintain commercial general liability insurance
in accordance with the requirements of Section 3.9.
10.1.5 Termination Without Cause. In the event Manager terminates
this Agreement effective prior to the full term of this Agreement, and as a
condition to the termination of this Agreement, Manager will pay to the CMHC as
liquidated damages and as the CMHC's exclusive remedy for the early termination
of this Agreement by CMHC, an amount equal to (i) Twenty Thousand Dollars
($20,000) multiplied by (ii) the number of months remaining between the
termination date and the full term of this Agreement. The parties agree that in
litigation or arbitration resulting from the early termination of this Agreement
by Manager, the amount of loss which would be incurred by CMHC would be
extremely difficult or impracticable to prove. Accordingly, the parties have
made a commercially reasonable estimate of the damages CMHC would incur in the
event of the early termination of this Agreement by Manager and have established
the foregoing estimate of liquidated damages.
10.2 Termination by CMHC.
10.2.1 CMHC may terminate this Agreement by written notice to
Manager, if Manager should have a bankruptcy, reorganization, or similar action
filed by or against it, or become insolvent, or sell all or substantially all of
its assets.
10.2.2 In the event Manager fails to comply with the terms of
this Agreement in any material respect, CMHC may notify Manager of such breach,
in writing, and CMHC shall have thirty (30) days to cure such breach. In the
event Manager fails to cure such breach with said period, the Agreement may be
terminated by CMHC.
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10.2.3 CMHC may terminate this Agreement by written notice to
Manager in the event CMHC fails to maintain any license or certification
necessary for the operation of the Program or the Facility.
10.2.4 CMHC may terminate this Agreement by written notice to
Manager in the event Manager fails to maintain insurance in accordance with the
requirements of Section 4.6.
10.2.5 Termination Without Cause. In the event CMHC terminates
this Agreement effective prior to the full term of this Agreement, and as a
condition to the termination of this Agreement, CMHC will pay to the Manager as
liquidated damages and as the Manager's exclusive remedy for the early
termination of this Agreement by CMHC, an amount equal to (i) Twenty Thousand
Dollars ($20,000) multiplied by (ii) the number of months remaining between the
termination date and the full term of this Agreement. The parties agree that in
litigation or arbitration resulting from the early termination of this Agreement
by CMHC, the amount of loss which would be incurred by Manager would be
extremely difficult or impracticable to prove. Accordingly, the parties have
made a commercially reasonable estimate of the damages Manager would incur in
the event of the early termination of this Agreement by CMHC and have
established the foregoing estimate of liquidated damages.
10.3 Termination Based on Changes in Program Reimbursement. In the event
that significant changes in program reimbursement occur, both parties agree to
renegotiate the agreement in good faith. Specifically, both parties agree to
amend their fee in proportion to any changes in reimbursement. Should such
change in reimbursement make it economically unreasonable for both parties to
operate at a profit, the contract shall be considered null and void and
subsections 10.1.5 and 10.2.5 shall not apply.
SECTION 11. COMPLIANCE WITH LAW.
11.1 Applicable Laws. In addition to the obligations of the parties to
comply with applicable federal, state and local laws respecting the use of the
Program and the conduct of their respective businesses and professions, CMHC and
Manager each acknowledge that they are subject to certain federal and Arizona
laws governing the referral of patients which are in effect or will become
effective during the term of this Agreement. These laws include prohibitions on:
11.1.1 Payments for referral or to induce the referral of
patients (Social Security Act Section 1128).
11.1.2 The referral of patients by a physician for certain
designated health care services to an entity with which a physician (or his/her
immediate family) has a financial relationship (Section 1877 of the Social
Security Act, applicable to referrals of Medicare and Medi-Cal patients).
11.2 Acknowledgments. As consideration for each party hereto to enter
into this Agreement, the parties:
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11.2.1 Acknowledge that (i) each has had the opportunity to
engage independent counsel of her/its choice for advice as to the requirements
of the anti-referral laws referred to in this Section 11; and (ii) each has had
the opportunity to consult with legal counsel or other experts as each deems
appropriate to assist in the determination by each party that the terms of this
Agreement are commercially reasonable.
11.2.2 Represent to the other that it is the intent that the
terms of this Agreement shall be commercially reasonable.
11.2.3 Represent to the other that it is the intent that
compensation for each of the services which are provided under this Agreement
shall be based on the fair market value of such services, including a fair rate
of return.
11.3 No Referral Requirement. Nothing in this Agreement is intended or
shall require any party to violate the Arizona or federal prohibitions on
payments for referrals, and this Agreement shall not be interpreted to:
11.3.1 Require the Medical Director to make referrals to CMHC, be
in a position to make or influence referrals to CMHC, or otherwise generate
business for CMHC.
11.3.2 Restrict Medical Director from establishing staff
privileges at, referring any service to, or otherwise generating any business
for any other entity of his/her choosing.
11.3.3 To interfere in any way with Medical Director's
professional prerogatives and medical decisions.
11.4 No Gifts to Beneficiaries. As part of its administrative
obligations hereunder, Manager may market the Program to the CMHC's community.
Under no circumstances whatsoever shall Manager offer or make any gift or
payment to any individual as a means of encouraging such person to seek medical
or psychiatric attention from CMHC, Manager, or through the Program, or from any
other provider of health care.
11.5 Audits. CMHC shall have the right, but not the obligation, to
interview patients who receive services through the Program, and to conduct
audits of all types of the Program, for the purpose of determining whether
Manager is in compliance with all applicable federal, state, and local laws,
regulations, and ordinances, as well as CMHC rules, regulations, bylaws,
policies, and procedures and this Agreement.
SECTION 12. MISCELLANEOUS PROVISIONS.
12.1 Compulsory Arbitration. Any controversy, dispute or claim arising
out of or relating to this Agreement, or the breach or alleged breach thereof,
shall be settled by binding arbitration in accordance with the rules of the
American Arbitration Association, and judgment on the award may be entered in
any court having jurisdiction. The provisions of this Section 12.1 shall not
apply with respect to any claim arising out of or relating to bodily injury or
death.
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12.2 Attorneys' Fees. If any legal action, including arbitration, is
necessary to enforce the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and costs awarded against the other party
in addition to any other relief to which the prevailing party may be entitled.
12.3 Governing Law. The validity of this Agreement and of any of its
terms or provisions, the interpretation of the rights and duties of the parties
hereunder, and the construction of the terms or provisions hereof shall be
governed in accordance with the laws of the State of California.
12.4 Force Majeure. If either of the parties hereto is delayed or
prevented from fulfilling any of its obligations hereunder by force majeure,
said party shall not be liable for said delay or failure. "Force Majeure" shall
mean any cause beyond the reasonable control of a party, including but not
limited to an act of God, act or omission of civil or military authorities,
fire, strike, flood, riot, war, delay of transportation, or inability due to the
aforementioned causes to obtain necessary labor, materials or facilities.
12.5 Severability. If any part of this Agreement is held to be void or
unenforceable, such part will be treated as severable, leaving valid the
remainder of this Agreement notwithstanding the part found void or
unenforceable, unless the severed part contains an essential economic term.
12.6 Waiver. A waiver by either party of a breach or failure to perform
shall not constitute a waiver of any provision hereof or of any other breach or
failure whether or not similar. There shall be no waiver unless in writing
signed by the party against whom the waiver is sought to be enforced.
12.7 Binding Effect. This Agreement shall be binding on the successors
and assigns of the respective parties, provided however that neither party may
assign or otherwise transfer this Agreement or delegate obligations hereunder
without the other's written consent.
12.8 Complete Agreement. This Agreement constitutes the complete
understanding of the parties hereto with respect to the subject matter hereof,
and no other agreement, representation, statement, or promise relating to the
subject matter of this Agreement which is not contained herein shall be valid or
binding. There shall be no amendment hereof unless such amendment is in writing
and is signed by both parties.
12.9 No Agency or Partnership. The relationship between Manager and CMHC
is that of independent contractors and nothing in the Agreement shall be deemed
to create an agency, joint venture, partnership or similar relationship between
the parties hereto. Neither party shall have the right to bid for the other or
enter into any contract or commitment in the name of, or on behalf of, the
other.
12.10 Notices. All notices hereunder shall be in writing, delivered
personally or by U.S. Certified or Registered postal mails, postage prepaid,
return receipt requested, and shall be deemed given when delivered personally or
upon the earlier of actual receipt or seven (7) days after postmark date on
mail, addressed as below with proper postage affixed, but each party may change
its address by written notice in accordance with this Section.
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If to CMHC: New Life Guidance Center
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
If to Manager: OptimumCare Corporation
00000 Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xx Xxxxxxx
12.11 Captions. Any captions to or headings of the articles, sections,
subsections, paragraphs, or subparagraphs of this Agreement are solely for the
convenience of the parties, are not a part of this Agreement and shall not be
used for the interpretation or determination of validity of this Agreement or
any provision hereof.
12.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
12.13 Assistance in Litigation. Manager and Medical Director shall, at
no charge, provide information and testimony and otherwise assist CMHC in
defending against litigation brought against CMHC, its directors, officers,
shareholders, members or employees based upon a claim of negligence, malpractice
or any other cause of action, arising under this Agreement, except where Manager
and/or Medical Director is a named adverse party.
12.14 Gender and Number. Whenever the context hereof requires, the
gender of all words shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural.
12.15 Legal Counsel. Each party understands the advisability of seeking
legal counsel and has exercised its own judgment in this regard.
12.16 Interpretation. No provision of this Agreement shall be
interpreted or construed for or against either party because that party's legal
representatives drafted such provision.
12.17 Facilitation. Each party agrees promptly to perform further acts
and to execute, acknowledge and deliver any provisions of this Agreement or
effect its purposes.
12.18 Program Reimbursement. CMHC and Manager acknowledge that program
reimbursement is determined and enforced by both the Intermediary and/or
Medicare, according to applicable laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"CMHC":
NEW LIFE GUIDANCE CENTER, INCORPORATED, an Arizona
Corporation
By:
-----------------------------------------------------
Xxxxxx X. Xxxxxxx
Its: President
----------------------------------------------------
By:
-----------------------------------------------------
Xxxxx X. Xxxxxxxx
Its: Chief Executive Officer
----------------------------------------------------
"MANAGER":
OPTIMUMCARE CORPORATION, a Delaware Corporation
By:
-----------------------------------------------------
Xxxxxx X. Xxxxxxx
Its: Chairman of the Board and Chief Executive Officer
----------------------------------------------------
By:
-----------------------------------------------------
Mulumebet Xxxxx Xxxxxxx
Its: President and Chief Operating Officer
----------------------------------------------------
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SCHEDULE 3.3
STAFFING TO BE PROVIDED BY CMHC
Administrative Managers 2
Administrative Secretary/Billing Specialist 1
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SCHEDULE 4.2
STAFFING TO BE PROVIDED BY MANAGER
CENSUS CENSUS CENSUS
FTE CATEGORY 1-10 11-20 21-25
------------ ---- ----- -----
Program Director 1 1 1
Psychiatric Nurses 1 1.5 2
Licensed Therapists 2 3 4
Community Liaison 1 1 1
Program Secretary 1 1 1
TOTAL FTE/DAY 5 7.5 9
Medical Director Contractual/as needed basis
Transportation Contractual/as needed basis
Meals Contractual/as needed basis
1 Program Coordinator Designated out of existing staff
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