Exhibit 6(j)
CONVERSION COVERAGE AGREEMENT
This Conversion Coverage Agreement is made and entered into this the 18th
day of December, 1998, by and among Advantage Health Plan, Inc. ("AHP") and
Patient's Choice, Inc. ("PCI").
Recitals
WHEREAS, AHP has determined it is in AHP's best interests to wind-down
AHP's operations and have commenced such wind-down in accordance with a plan
(the "Wind-Down Plan") approved by the Louisiana Department of Insurance ("DOI")
and
WHEREAS, in accordance with the Wind-Down Plan, on or before December 1,
1998, AHP notified the individuals, small groups and large groups receiving
health benefits coverage under AHP health maintenance organization programs
(such individuals, small groups and large groups of which PCI has been
specifically notified, excluding individuals or groups covered through the State
Employees Group Benefits Program, Medicare beneficiaries and AHP's preferred
provider organization programs, being referred to as the "Conversion Business"),
that their AHP coverage would terminate effective May 31, 1999, and that AHP
will not be responsible for any claims for health benefits incurred after that
date; and
WHEREAS, the obligation to provide health benefits coverage to the
Conversion Business through May 31, 1999, may result in financial losses for
AHP; and
WHEREAS, DOI has represented that it will permit AHP to amend the Wind-Down
Plan to provide, in lieu of terminating coverage of the Conversion Business, to
arrange for the conversion of the Conversion Business to new coverage by another
licensed health benefits carrier ("Conversion Coverage"), and thereby limit
AHP's potential financial loss attributable to the Conversion Business, prior to
May 31, 1999; and
WHEREAS, PCI, a Louisiana corporation licensed as a health maintenance
organization, has agreed to provide Conversion Coverage to the Conversion
Business in accordance with the terms and conditions of this Agreement (the
"Transaction").
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, AHP and PCI agree as follows:
1. Conversion Coverage. Subject to the terms and conditions of this
Agreement, PCI will provide Conversion Coverage on a guaranteed basis, without
medical underwriting, at applicable PCI premium rates to each individual, small
group and large group policyholder comprising the Conversion Business. The
effective date of the Conversion Coverage will be February 1, 1999 (the
"Effective Date").
2. DOI Approval. Immediately following its execution, AHP and PCI shall
jointly submit this Agreement to the DOI for approval. Upon receipt of written
DOI approval ("DOI
Approval"). AHP and PCI shall immediately begin the process necessary for PCI to
provide Conversion Coverage to the Conversion Business commencing on the
Effective Date, and AHP's coverage of the Conversion Business to terminate
effective January 31, 1999 (the "Termination Date"), including, without
limitation, specific identification of all individuals, small groups and large
groups comprising the Conversion Business.
3. AHP Payment. Not later than one (1) business day following receipt of
DOI Approval, including approval of the payment, AHP shall pay PCI, in cash, the
sum of One Million Seven Hundred and Fifty Thousand Dollars ($1,750,000) (the
date on which sum is paid hereinafter referred to as the "Closing Date").
4. Notice of Transaction. As soon after the Closing Date as possible, AHP
and PCI will distribute a joint press release, hold a joint press conference
and send out a joint notice to all AHP subscribers, employer groups, agents and
brokers associated with the Conversion Business announcing the Transaction. PCI
will draft such announcements and notices, subject to AHP and, if required,
DOI approval. AHP will provide the mailing list, mailing labels and AHP
letterhead and shall bear any costs for attorneys, consultants or other advisors
AHP may engage to review such notices and announcements. PCI shall bear other
direct costs of the mailing, including postage and other administrative
expenses. Such announcements and notices shall provide, in substance, as
follows:
(a) All then-current AHP policyholders under the Conversion Business will
be notified that in lieu of termination of their health benefits
coverage, they will be provided Conversion Coverage at the applicable
PCI premium rates as of the Effective Date. Such AHP policyholders will
be notified of the applicable PCI premium rates not later than January
1, 1999, and may elect not to accept Conversion Coverage by providing
PCI written notice of such election by January 22, 1999.
(b) AHP's responsibility for any claims arising under the Conversion
Business will terminate on the Termination Date. AHP will not be
responsible for any claims incurred under the Conversion Business after
the Termination Date, but shall remain liable for any claims incurred
on or before that date. Subject to the provisions of Section 13, AHP
and PCI acknowledge and agree that neither party shall be responsible
for any benefit claims incurred after the Termination Date by any AHP
member who elects, directly or indirectly through an AHP group
policyholder, not to accept Conversion Coverage.
5. Premium Rate Adjustment. AHP acknowledges that adjustment of the premium
rates currently being paid by the Conversion Business is a critical component of
the Transaction. Following execution of this Agreement, AHP shall cooperate
fully in making all data and other information relevant to the Conversion
Business (the "Data") in their possession or to which it has reasonable access
available to PCI. PCI shall notify each individual, small group and large group
comprising the Conversion Business of the premium rate at which they will
provided Conversion Coverage by mailing notice of such rates, at PCI's expense,
not later than January 1, 1999. Notwithstanding anything herein to the contrary,
PCI shall have sole discretion over, and shall be solely responsible for, the
premium rates for the Conversion Coverage provided by PCI.
6. Representations. AHP represent and warrants that (i) it has all
requisite corporate authority to enter into the Transaction and that the party
executing this Agreement is duly
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authorized to enter into the Agreement and carry out the Transaction, (ii) this
Agreement constitutes a valid and binding obligation of AHP, and (iii) all Data
disclosed or to be disclosed to PCI in connection with the Transaction has been
and will be disclosed in good faith and fairly reflects AHP's understanding of
the status of the Conversion Business. AHP makes no other representation or
warranty as to the accuracy or quality of the Data or otherwise with respect to
the Conversion Business except as expressly provided herein, including, but not
limited to, any representation or warranty that any individual, small group or
large group included in the Conversion Business will accept Conversion Coverage.
7. Provider Network. PCI will allow AHP to access PCI's existing provider
network at applicable PCI reimbursement rates, subject to any restrictions on
such access as contained in existing PCI provider contracts.
8. Public Disclosure. On and after the Closing Date, AHP will not release
any information regarding or relating to the Transaction to the public,
including agents and brokers, unless approved in advance, in writing, by PCI.
9. Confidentiality. The Confidentiality Agreement entered into between AHP
and PCI effective November 10, 1998, shall remain in effect and enforceable in
accordance with its terms, except to the extent necessary for the parties to
effect the Transaction. After the Closing Date, all information deemed
confidential or proprietary by PCI with respect to the Conversion Business shall
be kept confidential and neither AHP nor any of its agents, employees or
representatives, shall disclose any such information except as may be agreed to
in writing by PCI or except as requested by a regulatory agency or otherwise
required by law.
10. Employees. As soon after the Closing Date as practicable, AHP will
conduct a meeting for all AHP employees and advise them of the Transaction. PCI
will not offer employment to any AHP employee without prior notice to and
consent of AHP. At the employee meeting AHP will advise its employees of PCI's
notice obligation and AHP's reasons for requesting prior notice.
11. Fees and Expenses. Each party will bear its own costs and expenses for
attorneys and other consultants retained in connection with the Transaction.
Neither AHP, PCI nor any shareholder of AHP shall have any liability for the
payment of any broker's or finder's fee as a result of the Transaction or
otherwise.
12. Transition. The Parties acknowledge and agree that AHP's financial
obligations under the Conversion Business will terminate as of the Termination
Date and AHP will not be obligated for claims for health services rendered after
the Termination Date, and PCI's financial obligations with respect to those
individuals, small groups and large groups included in the Conversion Business
will commence on the Effective Date. AHP and PCI agree that the scheduling of
all covered health care services will be handled in the ordinary course and AHP
will not deny coverage or delay the ability of AHP members to access covered
health care services beyond the Termination Date unless justified in accordance
with AHP's utilization management standards in effect on the date of this
Agreement. On and after the Effective Date, AHP will provide PCI with full
access to AHP's claims payment information to enable PCI to evaluate claims for
reimbursement for services provided on a global fee or other prepaid basis. AHP
and PCI will at all times conduct their business in accordance with industry
standards with respect to the transition of the Conversion Business from AHP
coverage to Conversion Coverage.
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13. Indemnification. PCI agrees to indemnify and hold AHP harmless from and
against any claim, demand, action, cause of action, cost, expense, debt,
obligation, loss, damage or other liability, of any kind or nature whatsoever,
(including, without limitation, reasonable attorneys' fees), known or unknown,
now existing or arising in the future, arising out of or in connection with: (i)
the amount of notice given by PCI to AHP policyholders under the Conversion
Business of the applicable PCI premium rate for Conversion Coverage; (ii) any
change in benefits experienced by AHP policyholders who elect Conversion
Coverage; (iii) the difference between the premium rates to which policyholders
under the Conversion Business will be subject on the Effective Date for
Conversion Coverage, and the AHP premium rate which would or may have been in
effect for such policyholders during the period from the Effective Date through
May 31, 1999; and (iv) any claims made by or on behalf of an AHP policyholder
arising out of or as a result of AHP entering into this Agreement. AHP and PCI
will use their best efforts to assure that all claims subject to the provisions
of this Section 13 be first addressed by DOI, provided DOI action shall not be a
precondition to enforcement of these indemnity provisions.
14. Notices. All notices and other communications required under this
Agreement shall be in writing and shall be mailed by first class registered or
certified mail, postage prepaid, addressed as follows:
(a) If to PCI: Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
Patient's Choice, Inc.
00000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
(b) If to AHP: Advantage Health Plan, Inc.
c/o Xx Xxxxxxx Xxxxxxx
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
1.5 Miscellaneous. The heading sand captions in this Agreement are for
convenience of reference only and shall in no way restrict or modify any of the
terms hereof. This Agreement may be executed in any number of counterparts, each
of which shall constitute an original, but all of which together shall
constitute one and the same instrument. This Agreement is to be delivered and
performed in the State of Louisiana and shall be construed in accordance with
and governed by the laws of the State of Louisiana. This Agreement constitutes
the entire agreement between the parties. Each party acknowledges that no
representation, inducement, promise or agreement has been made, orally or
otherwise, by any other party, or anyone acting on behalf of any other party,
unless such representation, inducement, promise or agreement is embodied in this
Agreement, expressly or by incorporation. Except as otherwise provided in this
Agreement, no amendment to this Agreement shall be valid unless it is in writing
and signed by an authorized officer of each party. Each of the parties hereto
hereby agrees to execute and deliver such further instruments and do such
further acts and things as may be necessary or desirable to carry out the
purposes of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Conversion Coverage
Agreement to be executed in their names and on their behalf by their duly
authorized representatives.
PATIENT'S CHOICE, INC.
Date: 12-17-98 By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
ADVANTAGE HEALTH PLAN, INC.
Date: 12-18-98 By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
Authorized Representative
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