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EXHIBIT 10.128
AGREEMENT
THIS AGREEMENT is entered into as of this 1st day of January, 1999, by and
between Xxxxxxx Oaks Hospital and Health Center, ("Hospital") and OPTIMUMCARE(R)
CORPORATIon ("Manager"), a Delaware Corporation.
RECITALS
A. Hospital operates an acute care facility in Xxxxxxx Oaks, California
and desires to operate an outpatient Partial Hospitalization Programs
(the PHP) for the treatment of psychiatric disorders, and
B. Manager is in the business of providing management services for the
treatment of patients with psychiatric disorders; and
C. Hospital desires to retain Manager, and Manager desires to be retained,
to provide the services described herein; and
D. Hospital will provide (subject to the provisions of this Agreement)
appropriate program and office space for the use of these Partial
Hospitalization Programs during the term of this Agreement.
THEREFORE, it is mutually agreed as follows:
1. DEFINITIONS
(a) "Confidential Information" of the Manager shall mean all documents and
other materials provided by Manager not available through sources in
the public domain. Manager's documents and other materials may include,
but are not limited to, memoranda, manuals, handbooks, pamphlets,
production books and audio and visual recordings, which contain
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information relating to the Partial Hospitalization Programs (including
written materials distributed to Program patients or for promotion of
the Programs); and all models, techniques, formulations and procedures
used to provide psychiatric services to Program patients.
(b) "Employee Benefits" shall include, by way of illustration and not
limitation, the employer's contribution under the Federal Insurance
Contributions Act, unemployment compensation and related insurance,
payroll and other employment taxes, pension and retirement plan
contributions, worker's compensation and related insurance, group life,
health, disability and accident insurance, severance and other
benefits.
(c) A "Patient Day" shall be deemed to exist with each out-patient visit to
the "Program."
(d) "PHP" shall mean the out-patient partial hospitalization psychiatric
programs managed x by Manager at the Hospital.
2. TERM
(a) This Agreement shall have an initial term commencing on January 1, 1999
and terminating December 31, 2001.
(b) Termination provisions are in Section (11) of this Agreement.
3. COVENANTS OF HOSPITAL
Hospital will:
(a) Furnish necessary and identified program space and provide support,
ancillary, and standard out-patient services to Partial Hospitalization
Program patients, including available diagnostic facilities as directed
by each Program patient's attending physician. Medical treatment shall
be provided as directed only by physicians duly licensed to practice
medicine in the state in which the hospital is located and who are
appointees to
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the Hospital medical staff with appropriate privileges. Hospital will
cooperate with Manager in providing appropriate program space for a
capacity of at least thirty (30) chairs at each facility.
(b) Provide support activities including: i) maintenance of or installation
of carpet and decorating of patient treatment areas as needed; ii) (a)
dietary service for patients, (b) housekeeping services for patients
and Manager's offices at the Hospital, (c) utilities for patient areas
and Manager's offices at the Hospital, (d) staff offices, furniture,
electrical support and office supplies, (e) daily patient
transportation within the normal primary service area, (f) services of
a nutritionist, (g) a psychiatric registered nurse, and (iii) other
services customarily provided in the ordinary course of business for
Hospital's patients (e.g. record keeping, etc.).
(c) Charge and collect all PHP charges due from Partial Hospitalization
Program patients or third party payors.
(d) Staff the Partial Hospitalization Program with qualified personnel in
accordance with the staffing table and be solely liable to those
personnel who are Hospital employees for their wages, compensation and
employee benefits. Nursing staff will be supervised by Hospital's
nursing management system. Hospital personnel shall comply with the
Program policies and procedures as mutually agreed upon in writing by
Hospital and Manager. Hospital shall not, without Manager's prior
written consent (which shall not be unreasonably withheld), deviate,
change or otherwise decrease the agreed staffing table.
(e) Provide to Manager's Program staff such appropriate pre-employment and
periodic diagnostic and health screening procedures as are customarily
provided by Hospital for Hospital employees.
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(f) Maintain accreditation by the Joint Commission on Accreditation of
Healthcare Organizations and pay all related fees.
(g) Provide Manager's employees and contracted personnel with copies of all
relevant Policies and Procedures, as amended from time to time.
(h) Indemnify, save harmless, and defend Manager from all claims and
liability and expenses (including reasonable attorney's fees) arising
solely from the negligence of or breach of this Agreement by Hospital
or its employees or contracted personnel.
(i) Use reasonable efforts to resolve any issues regarding acceptability of
Hospital personnel to Program personnel and patients which may arise
with respect to any of Hospital's employees or contracted personnel.
(j) Provide admissions and billing services. It is further understood that
Hospital may deny admission to a patient who, in its opinion, is not
financially qualified to meet financial obligations.
(k) Provide appropriate Utilization Review and Quality Assessment services
for all Partial Hospitalization Program patients under the supervision
and with the continuous guidance of the partial hospitalization program
administrator. The administrator is responsible for reviewing and
validating by signature the above named services.
(l) Maintain professional and comprehensive general liability insurance for
itself and its employees and contracted personnel in an amount not less
than $5,000,000 per occurrence or claim and whenever reasonably
requested provide Manager with a certificate from the insurer stating
that such insurance is in effect and which also states that Manager
will be given at least ten (10) days advance written notice of any
cancellation, non-renewal, or changes in policy limits, deductible, or
co-insurance. Any deductible or co-insurance or
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aggregate limits shall be subject to Managers approval which shall not
be unreasonably withheld. Manager agrees that $100,000 is an acceptable
deductible or co-insurance. Hospital shall maintain "tail" coverage if
necessary for any terminated "claims made" policy so as to apply to any
of its acts or omissions which occur during the term of this Agreement
until the expiration of any applicable statute of limitation but not to
exceed seven (7) years.
(m) As a condition precedent to this agreement, obtain appropriate
California state license to operate the Program.
4. COVENANTS OF MANAGER
Manager will do the following at its own cost and expense:
(a) Provide the following: (i) Partial Hospitalization Administrator (note:
he/she will educate UR/QI staff and mentor, review and validate these
activities); (ii) Social Services; (iii) Psychological Services;
(iv)Activities Services; (v) Part-time services of Corporate Clinical
Director and Corporate Director of Utilization Review; (vi) Medical
Director, the manager will contract with a physician duly licensed in
the state wherein the Hospital is situated and shall be required to
fulfill the requirements to be admitted as a member of the hospital's
medical staff. The manager is responsible for payment to the medical
director; and other professional counseling staff as needed to provide
for the professional counseling of outpatient program patients and to
adequately supervise and operate the Program. All such personnel shall
be subject to Hospital approval. Such personnel shall not be deemed
employees or contracted personnel or borrowed servants of Hospital.
Manager shall have full responsibility for their wages, payroll taxes
and employee benefits and acts or omissions and shall indemnify, save
harmless and defend Hospital
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from all claims and liability expenses (including reasonable attorneys'
fees) arising from any claims, actions, causes of actions, damages or
settlements with respect to any of the foregoing. Manager will assist
Hospital in its screening, interviewing, and selecting of employees for
the Program staff.
(b) Provide Partial Hospitalization Program orientation and training for
all appropriate personnel and serve as a resource to the Hospitals
Education Department regarding psychiatric topics and M.A.B. training.
(c) Indemnify, save harmless, and defend Hospital from all claims and
liability and expenses (including reasonable attorney's fees) (1)
arising solely from the negligence of or breach of this Agreement by
Manager or its employees or contracted personnel or (2) arising out of
Hospital negligence if the sole basis for any such negligence consists
of entering into this Agreement with Manager, failing to properly
supervise, monitor, or oversee Manager or its employees or agents, or
failing to properly review or act upon its review of the qualifications
of Manager or its employees or contracted personnel.
(d) Consult, manage and support the Partial Hospitalization Program
treatment team's effort to provide quality psychiatric treatment while
maintaining prudent control of patient length of stay in concert with
patient needs and insurance and regulatory requirements.
(e) Require all employees to participate in mandatory Hospital education
and orientation programs.
(f) Administrative Services: Program Administrator will report to Hospital
COO on a regular basis; in conjunction with Hospital Management.
Provide availability of Corporate Clinical Director and Corporate
Director of UR for mock surveys, training of clinical staff, customer
service training, documentation inservicing in conjunction with
Hospital
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staff; plus ongoing, active evaluation of program according to needs of
clients and Hospital. Provide full involvement with JCAHO survey and
preparation for survey in conjunction with Hospital staff. Services of
24 hour/day Intake Office. Maintain communication with County Patient
Rights Office, and provide ongoing an appropriate education/inservice.
Provide Hospital community education regarding Behavioral Health
patients and issues.
(g) Clinical Services: Training of all clinical staff with Program
Administrator and Hospital COO responsible for licensed staff. Medical
Director to be responsible to lead treatment planning, utilizing
concepts of teamwork for quality care, insure admission and discharge
criteria are appropriate. Training and reviews to insure documentation
criteria are met, and treatment team planning and documentation meet
regulatory standards.
(h) Utilization Review Services: Periodic audits by Director of UR to
monitor compliance and report to Hospital UR Department. Attendance at
appropriate county and/or Federal meetings and educational events to
maintain current knowledge related to changes in regulations,
documentation requirements, billing requirements, etc., with
appropriate follow-up for clinical staff, Program Administrator, and
Hospital COO.
(i) Maintain professional and comprehensive general liability insurance for
itself and its employees and contracted personnel in an amount not less
than $5,000,000 per occurrence or claim and whenever reasonably
requested provide Hospital with a certificate from the insurer stating
that such insurance is in effect and which also states that Hospital
will be given at least ten (10) days advance written notice of any
cancellation, non-renewal, changes in policy limits, deductible, or
co-insurance or aggregate limits. Any deductible or co-insurance or
aggregate limits shall be subject to Hospital's approval which shall
not
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be unreasonably withheld. Hospital agrees that $100,000 is an
acceptable deductible or co-insurance. Hospital shall maintain "tail"
coverage if necessary for any terminated "claims made" policy so as to
apply to any of its acts or omissions which occur during the term of
this Agreement until the expiration of any applicable statute of
limitation but not to exceed seven (7) years. Manager shall use
reasonable efforts to have Hospital named as an additional insured on
Manager's insurance with respect to any claim or liability arising
solely out of any act of omission by Manager, its employees, or
contracted personnel.
(j) Until the expiration of four (4) years after the furnishing of any
services to be provided under this Agreement make available, upon
request, to the Secretary of Health and Human Services or to the
Comptroller General of the United States of America, or their duly
authorized representatives, this Agreement and books, documents and
records which are necessary to certify the nature and extent of
reimbursable costs under the Medicare laws.
(k) Comply with all applicable laws (including but not limited to 42 U.S.C.
1395 (nn) (b) or any similar law or regulation), regulations, medical
staff bylaws, Hospital policies and procedures, Partial Hospitalization
Program policies and procedures and any applicable standards of care.
(l) Use reasonable efforts to resolve any issues regarding acceptability of
Program personnel to Hospital personnel and to Program patients which
may arise with respect to any of Manager's employees or contracted
personnel.
(m) Provide monthly written reports to Hospital regarding all aspects of
the operation of the Partial Hospitalization Program.
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(n) Commit no act or omission which adversely affects the Hospital license
with respect to the psychiatric chairs.
(o) Admit patients to the Partial Hospitalization Program (including but
not limited to Medicare and MediCal patients) only if the admission is
ordered by a physician on the Hospital medical staff with admitting
privileges.
5. REPRESENTATION AND WARRANTS OF HOSPITAL
Hospital hereby represents to Manager as follows:
(a) Hospital is owned by Xxxxxxx Oaks Health System, a California, non
profit public benefit corporation duly organized and validly existing
in good standing under the laws of the State in which the Hospital
resides with the power and authority to carry on the business in which
it is engaged and to perform its obligations under this Agreement
subject to obtaining the license described in subpart (m) of Section
(3).
(b) The execution of this Agreement and the performance of the obligations
of the Hospital hereunder will not result in any breach of any of the
terms, conditions or provisions of any agreement or other instrument to
which Hospital is a party or by which it may be bound or affected, or
any governmental license, franchise, permit or other authorization
possessed by the Hospital, nor will such execution and performance
violate any Federal, State or local law, rule or regulation. The
Hospital is accredited by the Joint Commission on Accreditation of
Healthcare Organizations.
(c) There is no litigation, administrative proceeding or investigation
pending or threatened against Hospital (nor is the Hospital subject to
any judgement, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of Hospital's obligations hereunder.
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(d) No Certificate of Need is required by Hospital from any state
regulatory agency for the operation of the PHP.
6. REPRESENTATIONS OF MANAGER
Manager hereby represents to Hospital as follows:
(a) Manager is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware with the power and
authority to carry on the business in which it is engaged and to
perform its obligations under this Agreement.
(b) 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 the 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.
(c) There is no litigation, administrative proceeding or investigation
pending or threatened against Manager (nor is Manager subject to any
judgement, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of Manager's obligations hereunder.
7. MANAGEMENT FEE
(a) Hospital shall pay to manager a monthly fee of $54,000. Manager will be
paid its contractual fee forty five (45) days following the month for
which services were performed. For example, the management fee for
February 1999 will be due on April 15, 1999. As of an effective date of
this agreement, the management fee discussed above replaces any and all
previous arrangement in force.
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8. PAYMENT BY HOSPITAL
(a) On or before the fifth (5th) day of each calendar month, Manager will
forward to Hospital an invoice for the fees payable by Hospital under
this Section 7. If any amount so invoiced is not paid on or prior to
the end of the calendar month in which the invoice is sent, the
outstanding balance shall bear simple interest from the date of said
invoice at a rate of nine percent (9%) per annum until such amount
shall be paid in full, but in no event will this percentage be greater
than the maximum permitted by law. Any payments made thereafter and
received by manager shall be applied first to interest accrued, but
unpaid, and then to the oldest unpaid invoice. In addition, the parties
agree that a failure by Hospital to pay any such invoice by the
twentieth (20th) day of the calendar month in Which the invoice is sent
shall be a material breach of this Agreement by written notice To
Hospital delivered personally or deposited in the United States Mail,
Certified or Registered, with postage prepaid and addressed to Hospital
as indicated in Section 10 hereof. If contract is terminated by
Hospital, all management fees are due and payable prior to the
effective date of termination and any such termination of this
Agreement by Manager shall not affect Hospitals obligation to pay
amounts due Manager under this Agreement, but no such payment shall
affect the effectiveness of such termination.
9. CONFIDENTIAL AND PROPRIETARY INFORMATION
(a) Hospital agrees and acknowledges that Confidential Information is
disclosed to it in confidence with the understanding that it
constitutes business information developed by Manager. Hospital further
agrees that it shall not use such Confidential Information for any
purpose other than in connection with the Partial Hospitalization
Program. Hospital further agrees not to disclose such Confidential
Information to any third party except as
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required by law or regulation or in order to serve the purposes of the
Partial Hospitalization Program or as permitted by written
authorization of Manager.
(b) Manager hereby grants to Hospital for the term of this Agreement, a
non-exclusive license to use the registered service marks of Manager
when identifying the Partial Hospitalization Program. These service
marks are the exclusive property of Manager.
(c) Manager agrees not to disclose confidential information pertaining to
the Hospital business or Partial Hospitalization Program patients
except as required by law or regulation or as permitted by written
authorization of Hospital or the respective patient as the case may be.
10. RECRUITMENT OF EMPLOYEES AND AGENTS
(a) Hospital 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 Partial Hospitalization
Program. The employees and contracted personnel of Manager who will
operate the Partial Hospitalization Program at the Hospital will have
access to and possess Confidential Information of Manager. Hospital,
therefore, agrees that for the earlier of one (1) year after the
cessation of the employment or agency relationship between the Manager
and the employee or agent or one (1) year after termination of this
Agreement, it will not knowingly (and it will not induce any of its
affiliates 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 or retained by Manager in the Partial Hospitalization Program
unless Manager gives Hospital prior written consent therein or unless
this Agreement is terminated by Hospital pursuant to paragraph (11) of
this agreement.
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(b) Manager agrees that during the same respective period of time, it will
not knowingly (and it will not induce any of its affiliates 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
Hospital without Hospital's prior written consent thereto.
11. TERMINATION
(a) Termination by Manager:
(1) By written notice to Hospital, if Hospital should have a
bankruptcy, reorganization or similar action filed by or against
it, become insolvent, go into liquidation for any purpose.
(2) In the event Hospital has failed to comply with the terms of
this Agreement in any material respect, including substantial
completion of all refurbishing in the identified program space,
Manager shall, in writing, notify all of the nature of the
breach, and Hospital shall have thirty (30) days to cure such
breach or else the Agreement will thereupon be terminated upon
written notice to Hospital.
(3) By written notice to Hospital if Hospital fails to maintain its
accreditation by the Joint Commission on Accreditation of
Healthcare Organizations or any license granted to it by a
regulatory agency without which the PHP would be materially and
adversely affected.
(4) By written notice to Hospital if Hospital fails to maintain
professional and general liability insurance in the minimum
amount of $5,000,000.
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(b) Termination by Hospital:
1. By written notice to Manager if Manager should have a
bankruptcy, reorganization or similar action filed by or against
it, become insolvent, or go into liquidation for any purpose.
2. In the event Manager has failed to comply with the terms of this
Agreement in any material respect, Hospital shall, in writing,
notify Manager of the nature of the breach, and Manager shall
have thirty (30) days to cure such breach or else the Agreement
will thereupon be terminated upon written notice to Manager.
3. By written notice to Manager if Manager fails to provide
professional and general liability insurance in the minimum
amount of $5,000,000.
4. In the event Manager is acquired by another entity, Hospital
shall have the option to terminate the contract upon thirty (30)
days written notice to Manager.
5. In the event Medicare changes in reimbursement and/or
regulations make the program financially or operationally
onerous for the Hospital to operate. Such determination shall be
at the sole discretion of the Hospital.
12. MISCELLANEOUS PROVISIONS
(a) Compulsory Arbitration: Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
binding arbitration in accordance with the rules of the American
Arbitration Association, and judgement on the award rendered may be
entered in any court having jurisdiction. However, this shall not apply
with respect to any claim for indemnity for bodily injury or death.
(b) 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
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and costs awarded against the other party in addition to any other
relief to which that party may be entitled.
(c) Liquidated Damages: If Hospital should terminate Manager's services
without cause, for any reason, Hospital agrees to pay Manager in the
amount of $20,000 per month for the remainder of the contractual
period.
(d) UCC1: Hospital agrees to allow Manager, at Manager's expense, to file a
UCC1 or any similar local law or regulation with respect to a "payment
promise" against the Hospital's psychiatric outpatient accounts
receivables referred to in this agreement.
(e) 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.
(f) Force Majeure: If either of the parties hereto is delayed or prevented
from fulfilling any of its obligations under this Agreement by force
majeure, said party shall not be liable for said delay or failure.
"Force Majeure" means any cause beyond the reasonable control of a
party, including but not limited to an act of God, act or omission of
civil military authorities, fire, strike, earthquake, flood, riot, war,
delay of transportation, or inability due to the aforementioned causes
to obtain necessary labor, materials, or facilities.
(g) 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.
(h) 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.
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There shall be no waiver unless in writing signed by the party against
whom the waiver is sought to be enforced.
(i) Binding Effect: This Agreement shall be binding on the successors, and
assigns of the respective parties, provided, however, neither party may
assign or otherwise transfer this Agreement or delegate obligations
hereunder without the other's written consent.
(j) Complete Agreement: This Agreement constitutes the complete
understanding of the parties and supersedes all other agreements,
either oral or in writing, between 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 unless in writing signed by both parties.
(k) No Agency or Partnership: The relationship between Manager and Hospital
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.
(l) Notice: 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 five (5) days after
deposit in said United States Mail, addressed as below with proper
postage affixed, but each party may change his address by written
notice in accordance with this Paragraph.
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(m) Changes in Reimbursement Rules: In the event that Medicare, Medicaid, a
third party payor or other Federal, State, Local laws, rules,
regulations, or interpretations thereof at any time during this
agreement duration; prohibit, restrict or substantially change the
method, payment or amount of reimbursement or the like for services
provided under this agreement, then the Hospital and Manager in good
faith shall amend or cancel the agreement to provide for payment of
compensation to each other in a manner consistent with any such
prohibition restriction and/or limitation.
HOSPITAL'S ADDRESS: XXXXXXX OAKS HOSPITAL AND HEALTH CENTER
0000 XXX XXXX XXXX.
XXXXXXX XXXX, XX. 00000
MANAGER'S ADDRESS: OPTIMUMCARE(R) CORPORATIoN
00000 XXX XXXXX XXXXX, XXXXX 000
XXXXXX XXXXXX, XX. 00000-0000
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IN WITNESS WHEREOF, this Agreement has been executed on _______________, 1999,
at ____________________________, California.
Manager: Hospital:
OPTIMUMCARE(R) CORPORATION XXXXXXX OAKS HOSPITAL
AND HEALTH CENTER
By: By:
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Xxxxxx X. Xxxxxxx Xxxxx Xxxxxxxxx
Chairman of the Board & CEO Chief Executive Officer
By: By:
------------------------------ -------------------------------------
Mulumebet Xxxxx Xxxxxxx Xxxx X'Xxxxxx
President & COO COO
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