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EXHIBIT 10.16
MANAGEMENT AGREEMENT
This Management Agreement ("Agreement") is made and entered into this
1st day of April 2000 by and between Northwest Community Capco Inc., (the
"Company") organized under the laws of the State of Illinois, and North American
Medical Management - Illinois, Inc., a corporation organized under the laws of
the State of Illinois ("NAMM"). This Agreement shall take effect as of April 1,
2000 ("Effective Date").
WITNESSETH:
WHEREAS, NAMM operates in the State of Illinois to provide management
services to physicians and hospitals participating in Medicare-risk management
and other types of services which may be agreed to from time to time, and to
arrange for the provision of efficient and effective health care services;
WHEREAS, the Company requires certain staffing and management expertise
to provide it with administrative services in connection with Company's
obligations relating to Risk Contracts (as defined in this Agreement) entered
into by Northwest Community Hospital d/b/a Northwest Community Health Partners
("PHO"):
WHEREAS, NAMM is an organization with personnel who have expertise in
managed care contracting, with particular expertise in the area of Medicare-risk
management and related claims processing, financial, business and medical
services management and administration; and
WHEREAS, the Company desires to retain NAMM, and NAMM desires to be
retained by the Company, all on terms and provisions mutually desirable to the
respective parties and for compensation to be paid by the Company to NAMM, on
such terms, provisions and compensation arrangements as are described in this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which the parties hereby
acknowledge, the parties agree as follows.
ARTICLE I
RELATIONSHIP OF THE PARTIES
1.01 RELATIONSHIP OF THE PARTIES
Except as otherwise provided in this Agreement, neither this Agreement
nor any of its provisions shall be construed to create any partnership,
joint venture, principal/agent or employer/employee relationship
between the Company and NAMM, or to in any way make one party
responsible for the debts, liabilities or any other legal obligations
of the other party. It is expressly understood and agreed by the
parties that the Company and NAMM shall at all times be acting as
entities
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independently contracting with each other for the performance of
services described in this Agreement. Neither party shall have the
power to bind or obligate the other party except as set forth in this
Agreement. Unless the Parties otherwise agree, this Agreement and all
references to the Company in this Agreement are limited to services
provided by NAMM, solely with respect to Risk Contracts and related
services, rather than all services and contracts entered into by the
Company. The Company does not report to NAMM and retains its separate
autonomy and direct reporting relationship to Northwest Community
Hospital.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.01 NAMM REPRESENTATIONS, WARRANTIES AND AGREEMENTS
As a material inducement for Company to enter into this Agreement, NAMM
hereby represents, warrants and agrees as follows:
(A) NAMM has the legal power, right and authority to consummate
the transactions contemplated hereby.
(B) NAMM has been duly formed and is validly existing under the
laws of Illinois and has made all filings with governmental
authorities required by such laws.
(C) NAMM is a wholly owned subsidiary of North American Medical
Management, Inc. ("NAMM Parent") a Tennessee corporation that
is the parent of a number of comparable corporate subsidiaries
operating in seven states. NAMM Parent is a wholly owned
subsidiary of PhyCor, Inc., a Tennessee corporation that is
publicly traded on the Nasdaq stock exchange.
(D) This Agreement, and all other documents and instruments which
have been executed and delivered pursuant to this Agreement,
or, if not yet executed or delivered will when so executed and
delivered, constitute valid and binding obligations of NAMM
enforceable in accordance with their respective terms, subject
to the provisions of all laws relating to bankruptcy and
insolvency and other laws relating to creditors' rights
generally. Neither the execution and delivery of this
Agreement, nor the incurrence of the obligations herein set
forth, nor the consummation of the transactions herein
contemplated, nor compliance with the terms of this Agreement
will conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under
any, bond, note or other evidence of indebtedness or any
contract, indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which NAMM or NAMM
Parent is a party.
(E) To the best of their knowledge NAMM and NAMM Parent have
complied with all laws, ordinances and regulations applicable
to them. NAMM and NAMM Parent have filed all required tax
returns or other tax notices.
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(F) There is no suit, action or other proceeding pending against
NAMM, NAMM Parent or any NAMM Affiliate (A NAMM Affiliate is
any party controlled by NAMM, under common control with NAMM
or in a joint venture with NAMM or other similar contractual
relationship), of such a magnitude or character as to put NAMM
at risk of being unable to meet fully and in good faith the
obligations imposed on NAMM by this Agreement.
(G) To the best of the knowledge of NAMM, none of the information
contained in the representations and warranties of NAMM set
forth in this Agreement or in any of the certificates,
exhibits and schedules, lists, documents or other instruments
delivered or to be delivered to Company pursuant to this
Agreement contain any untrue statement of a material fact or
omit to state a material fact regarding the operation of NAMM
which would make the statements contained herein or therein
misleading.
ARTICLE III
OBLIGATIONS OF NAMM
3.01 AUTHORITY OF NAMM
The Company has entered into a PHO Management Agreement with PHO,
pursuant to which the Company agrees to manage the affairs and provide
administration services to the PHO for the PHO's commercial HMO and
Medicare HMO contracts which provide for the PHO to accept capitation
for at least the majority of professional services ("Risk Contracts") -
and such other business as the PHO shall specifically authorize in
writing for the Company to perform for it ("Business"). The Company
authorizes NAMM to manage the affairs and provide administration
services to the Company in order to enable the Company to satisfy its
obligations to the PHO with respect to the PHO Management Agreement.
NAMM shall be authorized, without further approval of the Company, to
commit funds of the Company to perform the services and to staff the
Company as described hereunder, and to contract for services for the
Company, provided all such actions are within the operating budgets
previously approved by the Company's Board of Directors and provided
further that NAMM shall require in its agreements with any third
parties who may perform services on behalf of NAMM that such
contractors perform their duties in accordance with this Agreement. The
Company shall cooperate with and shall use its best efforts to cause
its employees, agents and independent contractors to cooperate with
personnel provided by NAMM hereunder so that NAMM may perform its
duties under this Agreement. NAMM shall manage and administer the
Business of the Company in accordance with the terms and conditions of
this Agreement.
Without limiting the need for NAMM to obtain prior written approval of
the Company for other matters, NAMM will not take the following actions
on behalf of the Company, without the approval of the Company:
(A) endorse any note, or act as an accommodation party, or
otherwise become surety with respect to any amount;
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(B) borrow or lend money, or make, deliver or accept any
commercial paper or execute any mortgage, bond, or lease,
purchase or contract to purchase any property, or sell or
contract to sell any property or assets of the Company;
(C) enter into any agreement as a result of which any person shall
obtain an interest in the Company;
(D) assign, transfer, pledge, compromise or release any of the
Company's claims or debts, except upon payment in full of such
claim or debt, or arbitrate or consent to the arbitration of
any of the company's debts or claims;
(E) change the nature of the Company's Business;
(F) distribute surplus amounts other than as agreed upon with the
Company;
(G) enter into any agreement or transaction on behalf of the
Company with NAMM or a NAMM Affiliate
(H) do any other act that would make it impossible to carry on the
ordinary business of the Company; or
(I) enter into any agreement involving the sale, lease, assignment
of use of any real estate, property or other assets owned,
operated, leased, managed by or otherwise related to the
Company or any of its affiliates.
3.02 MANAGEMENT SERVICES
NAMM will work in close cooperation with Company staff to provide those
management services specified in Exhibit A of this Agreement. In
addition, NAMM will perform the following services:
(A) CONTRACT NEGOTIATIONS. NAMM will provide its expertise and
contacts in the managed care industry to facilitate
negotiation of Risk Contracts for the Company.
(B) FINANCIAL SERVICES. NAMM will assist the Company to manage the
funds paid under the Risk Contracts and ensure that any
surplus funds are distributed in accordance with the PHO
Management Agreement between the Company and PHO. As more
particularly described in Exhibit A, NAMM will provide
financial services to Company, including the management of
bank accounts and the distribution of funds to the PHO and PHO
providers. NAMM will also prepare operating budgets for risk
contracts for the PHO in a timely fashion, NAMM will recommend
reasonable working capital requirements for the PHO.
(C) PHYSICIAN SERVICE MANAGEMENT. As more particularly described
in Exhibit A, NAMM, through the auspices of the Company, will
manage the PHO's Business. As part of its duties for Risk
Contracts, NAMM will negotiate and manage agreements with
physicians and other providers ("PHO Providers"), which may
include fee-for-service and capitation agreements. NAMM
acknowledges that the PHO currently has agreements with
various PHO Providers, and that the provisions relating to
Risk Contracts may be implemented as amendments to the PHO's
provider contracts.
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(D) SPECIFIC SERVICES FOR RISK CONTRACTS. As more particularly
described in Exhibit A, NAMM will provide the following
services to the company with respect to Risk Contracts
Performance of these services will be in compliance with
parameters outlined in the HMO agreements between any HMO and
the PHO. The parties agree that certain services are "core"
services which will in all cases be provided by NAMM
(including those set forth in paragraphs (i), (ii), (iii),
(iv), (v), (vi), (vii), (viii), and (ix) below). NAMM will
also look to existing affiliated Physician Organization and
PHO standards when providing any of the services listed below
and will try, to the extent reasonably possible, to coordinate
standards it implements or recommends with such PHO standards.
In addition, any such significant changes and/or additional
standards will be communicated to the PHO and Company prior to
being implemented by NAMM.
(i) Prepare and adopt initial benchmark utilization
review and quality management procedures.
(ii) Perform claims processing for providers.
(iii) Perform provider contracting services.
(iv) Perform utilization management and quality assurance
services, which will include utilization
authorization, concurrent review, case management,
and discharge planning, and establish credentialing
criteria and grievance procedures.
(v) Perform member services relating to claims matters.
(vi) Establish and maintain financial management for the
PHO including risk-sharing administration only with
respect to the Risk contracts and program.
(vii) Administer provider education programs as reasonably
necessary.
(viii) Prepare semi-annual individual and aggregate
physician profiling reports comparing physician
performances to adopted utilization review standards.
(ix) Recommend and administer quality outcome standards
and accompanying reports comparing physician
performance to standards required by the applicable
HMOs.
(E) PROVIDING PHYSICIANS. NAMM will use its best efforts to
encourage physicians, including a sufficient number of primary
care physicians, to provide leadership to the PHO and to
participate in the PHO'S Risk Contracts, where payments on a
capitated basis will be accepted by primary care physicians
(F) PRICING AND SERVICE COVERAGE ISSUES. NAMM will assist the
Company, and provide the Company with guidance, in negotiating
which services should be the financial responsibility of the
Hospital and which should be the financial responsibility of
the PHO physicians, as well as which prices the PHO Providers
will charge. NAMM will provide a suggested allocation of
services and suggested prices based on actuarially determined
market basket pricing figures for the Hospital and PHO
physicians providing medical services under the Risk
Contracts.
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3.03 REPORTING
NAMM shall provide to the Company the reports and compilations
described in Exhibit A which, together with any other reports referred
to in this Agreement, the parties believe are all of the reports
necessary for the management and administration of the Business. NAMM
shall provide additional extraordinary reports and compilations upon
request by the Company, which are reasonably necessary for management
and administration of the Business of the company, consistent with the
Company's then current goals, objectives, financial condition and
business plan.
3.04 NAMM STAFFING
NAMM, will, through its own employees in the Chicago area and
elsewhere, provide management of all aspects of the Risk Contract
business associated with the Company in exchange for its participation
is the Company's profits as described in Article V of this Agreement.
Where such expertise is not provided by full-time personnel of NAMM in
the Chicago area, the expertise of other NAMM personnel or consultants
may be obtained.
NAMM shall make available a sufficient number of its (or its
Affiliates') employees to fulfill its duties under this Agreement, as
such number is determined by NAMM. Such personnel shall be drawn from
such locations as deemed appropriate at the sole discretion of NAMM;
provided, however that the Company shall have the right to interview
and approve (which approval shall not be unreasonably withheld) any
NAMM personnel who will be assigned to Company on a full-time basis.
NAMM shall be solely responsible for performing job evaluations for all
personnel hired by NAMM (or its Affiliate) to carry out the terms of
this Agreement, provided that the Company retains the right to evaluate
NAMM'S overall performance and to provide informal input to NAMM
regarding the Company's evaluation of NAMM personnel. NAMM shall also
have in its sole discretion the authority to hire and fire all NAMM (or
its Affiliates') employees. Notwithstanding the foregoing, the Company
shall have the right to request that NAMM remove or reassign a NAMM
employee who is providing services to the Company, and NAMM shall
replace such employee within sixty (60) days of such request.
3.05 KEY CONTACT
One of NAMM's (or its Affiliates') employees shall serve as the key
contact for the Company. The key contact will be the President of NAMM
Illinois, who will be principally responsible for managing NAMM's
duties under this Agreement. While NAMM shall retain in its sole
discretion the authority to replace the key contact, the Company shall
have the right to provide informal input into NAMM'S selection of a
replacement.
3.06 OWNERSHIP OF AND ACCESS TO RECORDS
All records relating to the Company's and PHO's operations and Business
(including, but not limited to, all book of account and general
administrative records, and all of the following, to the extent such
are non-proprietary to NAMM and relate solely to (or were purchased
solely for) the Company's operations: software programs, MIS data,
utilization management policies, credentialing guidelines, case
management, quality assurance information and all other related
documents and policies), shall be and remain the property of the
Company, except as the parties
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may otherwise agree in writing. All such information, data and records
may be used by NAMM to perform the services hereunder. All property of
this nature which was the proprietary property of the Hospital or PHO
which the Company or NAMM was allowed to utilize in its management of
the Company or the risk business shall remain the proprietary property
of the Hospital or PHO, as the case may be. The Parties understand that
the Company will contract with a variety of health care providers and
that certain financial and medical record information from these
individual provider entities will be kept confidential and may not be
shared with the owners of the Company.
All records relating to NAMM'S operations including, but not limited
to, the following, to the extent such are non-proprietary to the
Company and relate solely to (or were purchased solely for) NAMM'S
operations: IBNR models, software programs, MIS data, utilization
management policies, credentialing guidelines, case management, quality
assurance information and all other related documents and policies),
shall be and remain the property of NAMM, except as the parties may
otherwise agree in writing. All such information, data and records may
be used by the Company with respect to the services hereunder. All
property of this nature which was the proprietary property of NAMM or
which the Company or the PHO was allowed to utilize in the Business
shall remain the proprietary property of NAMM.
Notwithstanding the ownership of any of the records and information
described above, or termination of this Agreement for any reason, the
Company and the PHO may continue to use, in connection with the
operations of the Company and PHO, all records relating to the
Company's and the PHO's operations and business, including all policies
and procedures used by the Company and the PHO, provider files and
other information specific to the Company and the PHO.
3.07 DISCLOSURE OF INFORMATION
NAMM agrees to make available information contained in the records of
the Company to parties to whom the Company has authorized such
disclosure. All non-proprietary records shall be available to the
Company at all times during normal business hours. NAMM agrees to
protect the confidentiality of such records and will only disclose
confidential data upon written consent of the affected parties or when
subpoenaed or otherwise required by law or compelled by legal process.
NAMM agrees to disclose to the Company any subpoena or other legal
request for documents prior to the disclosure of such documents in
order to permit the Company to intervene or file appropriate legal
documents contesting their disclosure. These obligations shall survive
the termination of this Agreement.
3.08 MEDICAL CONFIDENTIALITY
NAMM agrees to comply with applicable federal, state and local laws for
handling confidential medical information and shall take all
appropriate and reasonable action in developing technological and
contractual methods of maintaining confidentiality for any medical or
other confidential information converted to electronic data.
3.09 PERFORMANCE STANDARDS AND GOALS
In performing its obligations under this Agreement, NAMM shall act at
all times in a professional manner, devoting its efforts in good faith
and with reasonable
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diligence to the performance of this Agreement. NAMM shall provide
services in conformity with all applicable standards set forth in the
HMO contract pursuant to which Medical services are being arranged for
the PHO, as managed by the Company.
NAMM's overall performance hereunder will be evaluated by reference to
goals the Parties have established including the following (provided
that except as specifically provided in Section 5.02 or unless
otherwise agreed to by the Parties, the amount of NAMM's compensation
provided for in Article V below is not dependent on meeting such goals
but may lead to termination for Cause under Section 7.02. The Company
understands and accepts that NAMM's ability to comply with these
standards is based, at least in part, on its willingness to accept and
implement NAMM's recommendations made pursuant to this Agreement):
(A) Eligibility processing: (a) Electronic eligibility shall be
loaded within the greater of five (5) days or beginning of the
next capitation cycle and (b) Paper eligibility shall be
loaded within the greater of fourteen (14) days or the
beginning of the next capitation cycle following NAMM's
receipt of eligibility.
(B) Claims processing and turnaround: (a) NAMM shall maintain
processing and financial accuracy of 95%, (b) 90% of clean
claims shall be processed within 21 days, and (c) 100% of
clean claims shall be processed within 30 days of receipt by
NAMM.
(C) Referral processing and turnaround: (a) Routine referrals
shall be turned around within 24 hours of submission of
complete medical information and (b) urgent referrals shall be
turned around on the same day as receipt of complete medical
information.
ARTICLE IV
OBLIGATIONS OF THE COMPANY
4.01 AUTHORITY OF THE COMPANY
The Board of Directors of the Company ("Board") shall be the governing
body of the Company and shall at all times exercise ultimate control
over the financial assets, operations and Business of the Company and
shall have the right under this Agreement to direct NAMM on how to
expend any funds or assets of the Company. The responsibilities of the
Company include, but are not limited to, managing and administering the
Company's operations not delegated to NAMM hereunder, and accepting or
rejecting recommendations by NAMM therefore. The Company shall continue
to exercise general responsibility for the operation and affairs of the
Company. NAMM shall administer the Company's adopted plans and criteria
and perform the services identified in this Agreement and in Exhibit A,
consistent with the directives and approvals of the Company.
4.02 OWNERSHIP OF ASSETS
The Company will own all of its assets purchased specifically for the
Company for purposes of managing the Business, subject to the
limitations thereon set forth in
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Section 3.06 above. Upon termination of this Agreement as described in
Article VII, Company shall retain title and ownership of all said
assets.
4.03 THE COMPANY'S RESPONSIBILITIES
HOSPITAL COOPERATION. The Board of the Company will use its best
efforts to assure that the management personnel of the Hospital
cooperate and give full support to the provisions of this Agreement.
PROVIDING PHYSICIANS. The Board of the Company will use its best
efforts to encourage physicians, including a sufficient number of
primary care physicians, to participate in the PHO and to accept Risk
Contracts where payments are made on a capitated basis to primary care
physicians.
ANCILLARY SERVICES. NAMM shall arrange for the PHO to contract for the
provision of ancillary and non-hospital services through entities
affiliated with the Hospital, or other similarly situated providers
willing to contract. The Company shall cause the entities affiliated
with the Hospital to price those ancillary and other non-hospital
services which they wish to provide through HMO contracts covered by
the PHO's Risk Agreements at prices which are competitive with those
otherwise available to HMOs in the same or similarly situated community
in the Chicago Metropolitan area at the time the Risk Contracts are
executed. Unless otherwise agreed to by the parties, the Company shall
cause the ancillary providers affiliated with a Hospital to provide
such services at prices that are at least equal to the lowest prices
that the affiliated entity offers, at the time the Medicare-risk
contracts are executed, to any other payors (other than reimbursements
received from Medicaid) in the community. To implement this pricing
process, NAMM will actuarially determine a market-competitive price
based on its assessment of the market and will discuss with the
Company, Hospital and affiliated entity the basis for its
recommendations and will obtain input from the Hospital; the Hospital
affiliated entity will then have a right of first refusal to contract
to provide such services at the price so established by NAMM.
HOSPITAL SERVICES. The Company, the PHO, and NAMM shall discuss and
agree on appropriate and fair rates to be paid by the PHO for services
provided by the Hospital. NAMM agrees that the Hospital rates to be
paid by the PHO may provide for adjustments in per diem rates based on
actual Hospital costs, in order to provide incentives for physicians to
control Hospital costs.
DISTRIBUTION OF SURPLUS FUNDS. The distribution of PHO surplus funds
relating to Risk Contracts shall be made as set forth in Exhibit B
hereto. The Company, or at its instruction, NAMM shall be responsible
for making the actual distribution of any such funds.
4.04 THE COMPANY'S FINANCIAL RESPONSIBILITIES
Deficits of the two risk service fund accounts are dealt with as set
forth in Exhibit B.
The other financial responsibilities of the Company shall include, but
not be limited to, directly providing or paying the cost of providing
the following:
(A) Processing all payments to health care providers.
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(B) interest expense for monies borrowed by the Company.
(C) Repayment of principal for monies borrowed by the Company.
(D) Attorneys' fees and expenses incurred by or on behalf of the
Company, relating to litigation by or against the Company or
otherwise directly relating to the Company's operations or
Business.
(E) Fees for accountants or consultants retained to audit the
Company and/or prepare and submit tax forms for the Company.
(F) A program of property, liability and other forms of insurance
coverage, limits and carriers acceptable to NAMM.
(G) All costs associated with investments or loans made by the
Company.
(H) Any dividends or distributions paid to shareholders of the
Company.
(I) Remuneration, if any, of the Company's officers and Board
members.
(J) Any other fees, costs, expenses or taxes paid by NAMM (in all
cases in conformity with the budget approved by the Company)
relating to the Business or operations of the Company.
4.05 BOARD COMMITTEE MEETINGS
The Company Board and the PHO Operating Committee shall schedule and
hold regular, periodic meetings. NAMM shall provide reports, which it
is required to provide by the terms of this Agreement, to the Board and
Operating Committee prior to such meetings. Representatives of NAMM may
be invited to be present at such meetings and shall be given prior
notice of all regular and special meetings of the Board and Operating
Committee, provided that the Board shall have the right to request that
NAMM be excluded from any meeting in which NAMM's performance will be
discussed, or otherwise as determined by the Board. Representatives of
NAMM shall also attend such Company and PHO committee meetings as NAMM
and the Company agree are necessary for a NAMM representative to
attend.
ARTICLE V
COMPENSATION TO NAMM
5.01 BASIS FOR ACCOUNTING
The accounting year for the Company shall be October 1 through
September 30. Revenue and expenses shall be determined on an accrual
basis and be consistent with generally accepted accounting principles.
5.02 NAMM'S PARTICIPATION IN ANY COMPANY PROFITS
NAMM shall be paid a management fee for its services related to risk
contracts hereunder ("Management Fee") as outlined in Exhibit C.
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ARTICLE VI
EXCLUSIVITY
6.01 COMPANY EXCLUSIVITY
For the term of this Agreement, the Company, the Hospital affiliated
with the Company and its affiliated hospital entities will use NAMM to
manage their Risk Contracts unless otherwise agreed to by NAMM. For the
term of this Agreement, the Company, the Hospital affiliated with the
Company and its affiliated hospital entities will not joint venture
with, or otherwise engage, any third party company (other than NAMM)
for the management of their risk business unless otherwise agreed to by
NAMM.
6.02 NAMM EXCLUSIVITY
During the term of this Agreement and for a period of six months
thereafter, NAMM shall not provide capitation management services to
any physician organization that is comprised in whole or in part of PHO
primary care physicians without the express written consent of the
Company. NAMM shall have no other exclusivity restrictions.
6.03 NON-SOLICITATION
During the term of this Agreement and for a one-year period thereafter,
NAMM will not solicit for employment or services any person employed by
Company nor the Hospitals, Physician Organizations and PHOs affiliated
with the Company. During the term of this Agreement and for a one-year
period thereafter, neither the Company nor the Hospitals, Physician
Organizations and PHOs affiliated with the Company will solicit for
employment or services any person employed by NAMM.
ARTICLE VII
TERM AND TERMINATION
7.01 TERM
The term of this Agreement shall be from the Effective Date for a term
of two (2) years and shall automatically renew for another one year
term (and shall continue to automatically renew for additional one year
terms thereafter) unless (1) either party to this Agreement gives at
least one year's prior written notice prior to the expiration of the
term to the other that this Agreement will not be renewed, or (2) this
Agreement is otherwise terminated as provided for herein.
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7.02 TERMINATION FOR CAUSE
A party may terminate this Agreement by giving notice of termination to
the other party, specifying the effective date of such termination, for
the causes and within the time period set forth below:
(A) Thirty days following notice if such other party: (1)
generally does not pay its debts as they become due or admits
in writing its inability to pay its debts, or makes a general
assignment for the benefit of creditors; (ii) commences any
case, proceeding or other action seeking to have an order for
relief entered on its behalf as a debtor or to adjudicate it
as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors,
or seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial
part of its property; or (iii) takes any corporate or other
action to authorize or in contemplation of any of the actions
set forth in this Section 7.02 (B);
(B) Thirty days following notice if any case, proceeding or other
action against such other party hereunder is commenced seeking
to have an order for relief entered against it as debtor or to
adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seeking appointment of a receiver, trustee,
custodian or other similar official for it or for or any
substantial part of its property;
(C) Except with respect to criminal conduct, as to which there is
no cure period, termination of the Agreement may occur under
the following circumstances, provided the non breaching party
provides thirty (30) days' written notice to the breaching
party describing the breach, and at the end of such thirty
(30) day period the breaching party has not corrected the
breach to the reasonable satisfaction of the non breaching
party:
(i) Criminal conduct, violation of law or breach of
fiduciary duty by a party to this Agreement.
(ii) Material breach of a substantive provision of this
Agreement by a party or failure of NAMM to meet two
of the three performance standards set forth in
Section 3.09.
(iii) Continuing failure of NAMM to maintain adequate
experienced staffing sufficient to provide
appropriate oversight to the Company or failure of
NAMM to manage the Company in an appropriate manner.
(iv) Continuing failure of a party to use its best efforts
to enlist sufficient support of enough primary care
physicians to provide adequate levels of physician
services for Risk contracts entered into by the
Company.
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(v) Change in law as described in Article VII, provided
that the attempt to address such change, as also
described in such section, is unsuccessful.
(vi) Breach of a representation or warranty as described
in Article II.
(D) Upon an assignment or change of ownership which is not
authorized pursuant to Article VIII;
7.03 TERMINATION BY MUTUAL AGREEMENT
This Agreement may be terminated upon the mutual agreement of the
Parties, which termination agreement shall specify all of the terms of
such termination.
7.04 CONSEQUENCES OF TERMINATION
In the event of termination of this Agreement, the parties shall
cooperate with one another to prevent a disruption of the Company's
operations. The procedures to govern the conduct of the parties hereto
after termination of this Agreement are as follows:
(A) NAMM shall conduct its affairs prior to the effective date of
the termination of this Agreement in such a manner that it
protects the interests of the Company and allows an orderly
takeover of NAMM's duties.
(B) On the effective date of the termination of this Agreement:
(1) NAMM shall return all property (including, but not limited
to, equipment, manuals and supplies) of the Company in a
manner that is reasonably requested by the Company, that can
be accommodated by NAMM using existing NAMM equipment and that
will allow the Company to continue its operations, and (2) the
Company shall return all property (including, but not limited
to, equipment, manuals, programs of NAMM and supplies) of NAMM
in a manner that is reasonably requested by NAMM, that can be
accommodated by Company using existing Company equipment and
that will allow the Company to continue its operations further
provided, however, that the Company shall not be required to
return any records or documents which, the Company is entitled
to use in connection with its operations, pursuant to Section
3.06. NAMM will consult with the Company after the date of
termination with regard to the above mentioned materials.
(C) Within 180 days following the effective date of the
termination of this Agreement, either party may review any
records or documents of the other party relating to the
Company and the services provided by NAMM hereunder, in order
that an accounting may be conducted to settle all claims that
each party hereto may have against the other party.
(D) Company shall make one surplus payment to NAMM following the
end of the Agreement. This payment will be equal to five
percent (5%) of the surplus earned through the end of the
contract term. This surplus payment will be based on net
income recorded for the period, and shall include income from
the professional services fund, reinsurance recoveries, and
any HMO incentive funds received through the end of the
contract term.
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(E) NAMM shall cooperate with Company or its designee in
transitioning the claims processing, claims payment and
surplus fund management of any other management activity which
obligations shall survive the termination of this Agreement.
Except as specified elsewhere in this Agreement or as required
by law, NAMM shall have no obligations to the Company after
the date of termination of this Agreement.
(F) In the event of termination of this Agreement, either party
hereto shall be entitled to all remedies provided in this
Agreement in addition to any other remedies that are available
to it under law or equity, including the remedies of specific
performance, injunctions or any other measures that either
party hereto shall believe necessary to take to protect its
interests under this Agreement, including but not limited to
its rights to protect the exclusivity provisions hereof.
(G) In the event of termination of this Agreement NAMM will at the
Company's option, continue to pay claims for Dates of Services
prior to the termination date for a fee of $2.00 per
commercial equivalent member per month for every month that
the company desires claims payment RUNOUT services.
ARTICLE VIII
MISCELLANEOUS
8.01 ASSIGNMENT
This Agreement shall not be assigned by either Party hereto without the
prior written consent of the other Party provided, however, that the
Company consents to NAMM assigning or subcontracting any of the
services hereunder to a subsidiary of NAMM, or any or its subsidiaries
or Affiliates, so long as such assignee or subcontractor agrees to be
bound by the terms and conditions of this Agreement, NAMM agrees to
continue to be bound by the terms of this Agreement and the conditions
of the third paragraph of this Section 8.01 continue to be met.
ORGANIZATIONAL CHANGE. It is recognized that NAMM, the Company or its
affiliated Hospitals, Physician Organizations and/or PHOs may undergo
organizational changes during the term of this Agreement for good and
valid reasons that are important to their future success. It is also
recognized that the obligations and relationships established by this
Agreement implement important strategies for the Parties and must,
therefore, be protected from any harmful influence that might be caused
by organizational evolution.
NAMM. If NAMM or NAMM Parent is sold by PhyCor, Inc. to another company
("New Owner) or is spun off as a separate company ("Newco"), except as
provided in the next sentence of this paragraph, the Company may
terminate this Agreement with NAMM for Cause. However, without
providing the Company with a right to terminate this Agreement with
NAMM for Cause, a New Owner or a Newco may result from an organization
change or may assign this Agreement to such a New Owner or a Newco
provided that New owner or Newco is not a hospital network,
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payor, Physician organization or other entity which could be considered
a competitor of Company or its affiliated Hospitals, entities, or PHO.
COMPANY. The Company may assign this Agreement to any new entity
created through merger, acquisition, or other organizational change
without the consent of NAMM unless such third party entity is a
competitor of NAMM providing the same services to third parties that
NAMM is providing to the Company. The Company shall be entitled to
assign this Agreement to any subsidiary or affiliate corporation of the
Company, which is authorized to conduct business, and is duly formed as
a for-profit or not-for-profit corporation in the State of Illinois.
APPROVAL. If there is an assignment that is not approved as described
herein, there shall be a termination of this Agreement as described
above (unless the Parties agree otherwise). Notwithstanding the
foregoing, the Parties agree that such approval will not be
unreasonably withheld without good reason, which shall be based on the
anticipation of harm to the non-assigning Party. These reasons may
include, without limitation, consideration of the reputation of the
party to which the agreement is proposed to be assigned, whether such
party or a related party has sufficient experience in the area, whether
such party or a related party is a competitor or a Hospital or
affiliated Physician Organization or PHO, or is such party's operations
are otherwise incompatible with those of the non-assigning Party.
8.02 BINDING ON SUCCESSORS AND PERMITTED ASSIGNS
The terms, covenants, conditions, provisions and agreements herein
contained shall be binding upon and inure to the benefit of the parties
hereto, and to their permitted successors and assignees.
8.03 NON-ASSUMPTION OF LIABILITIES AND INDEMNIFICATION
The parties agree to indemnify each other as follows:
(A) NAMM does not assume any of the obligations, liabilities or
debts of the Company to third parties (except for the PHO, to
the extent provided in this Agreement) and shall not, by
virtue of its performance hereunder assume or become liable
for any such obligations, liabilities or debts of the Company.
The Company agrees to indemnify and hold NAMM harmless from
and against any and all such obligations, liabilities and
debts of the Company.
(B) The Company does not assume any of the obligations,
liabilities or debts of NAMM and shall not, by virtue of its
performance hereunder, assume or become liable for any such
obligations, liabilities or debts of NAMM. NAMM agrees to
indemnify and hold the Company harmless from and against any
such obligations, liabilities and debts of NAMM.
(C) Company and NAMM are independent contractors. Except as
otherwise provided in this Agreement, neither Company nor NAMM
nor any of their respective agents or employees shall be
liable for any act or omission of the other party; and each
party shall remain responsible for or liable for its own acts
or actions.
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8.04 INSURANCE
(A) Company and PHO shall purchase and maintain, at the sole cost
and expense of Company, policies of comprehensive general
liability insurance and such other insurance in such amounts
as shall be agreed upon between the Company and NAMM as is
necessary to ensure Company and its agents and employees,
acting within the scope of their duties, against any claim or
claims arising by reason of personal injuries or death
occasioned directly or indirectly in connection with their
performance of any services by the Company or by such agents
or employees and in connection with any other coverage in
effect for Company as the date of this Agreement. The Company
shall provide NAMM with prior notification of any
cancellation, termination, or material alteration of any such
insurance policies. Prior to the expiration and/or
cancellation of any such policy Company shall secure
replacement of such insurance coverage upon the same terms and
provisions and furnish NAMM with a certificate of insurance
for such replacement insurance coverage. In the event any
insurance required under this section is maintained and in
claims-made form, subject to applicable provisions of law, the
party required to maintain such insurance shall ensure the
tall period for not less than two years after the expiration
of the application policy.
(B) NAMM shall purchase and maintain, at the sole cost and expense
of NAMM, policies of insurance in such amounts that shall be
necessary to ensure NAMM and its agents and employees acting
within the scope of their duties against any claim or claims
arising by reason of personal injuries or death occasioned
directly or indirectly in connection with the performance of
any services by NAMM or by such agents or employees and in
connection with any other coverage in effect for NAMM as of
the date of this Agreement. NAMM shall provide Company with
prior notification of any cancellation, termination or
material alteration of any such insurance policies. Prior to
the expiration and/or cancellation of any such policy, NAMM
shall secure replacement of such insurance coverage upon the
same terms and provisions and furnish Company with a
certificate of insurance for such replacement insurance
coverage. In the event any insurance required under this
section is maintained and in claims-made form, subject to
applicable provisions of law, the party required to maintain
such insurance shall ensure the tall period for not less than
two years after the expiration of the application policy. NAMM
shall name the Company and the Hospital as an additional
insured under such policies. NAMM will maintain these
coverages (or such additional coverages as the Company and
NAMM shall agree to) for the Company and, to the extent NAMM
manages other Management Companies it will obtain additional
coverage for those purposes.
8.05 LAWS, REGULATIONS, LICENSES
(A) The parties agree that they shall at all times operate in a
lawful manner in accordance with all requirements of
applicable laws, rules and regulations. NAMM shall assist the
Company and the PHO managed by the Company, in accordance with
the terms of this Agreement, in complying with all applicable
federal, state, and local laws, rules, and regulations
relating to the Company or PHO and shall use its best efforts
to manage and provide administrative services to the Company
so that it and the PHO shall maintain any necessary licenses,
permits, consents, and approvals from all
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governmental agencies that have jurisdiction over the
operations of the Company or PHO. NAMM shall not be obligated
to the Company for failure of the Company or PHO to comply
with any such laws, rules, and regulations or for failure of
the Company or PHO to maintain any such licenses, permits,
consents and approvals, if the failure of the Company or PHO
to comply is not solely caused by an act or failure to act by
NAMM or its employees, agents, representatives or contractors.
(B) Neither party shall knowingly, purposely or negligently take
any action that shall cause any government authority having
jurisdiction over the operation of the Company, the PHO, or
NAMM to institute any proceeding for the rescission or
revocation of any necessary license, permit, consent or
approval.
(C) NAMM shall, with the written approval of the Company, have the
right, but not the obligation, to contest by appropriate legal
proceedings, diligently conducted in good faith in the name of
the Company, the validity or application of any law,
ordinance, rule, ruling, regulations, order or requirement of
any government agency having jurisdiction over the operation
of the Company. After having given its written approval, the
Company shall cooperate with NAMM with regard to the contest,
and the Company shall pay the reasonable attorney's fees,
costs or fines incurred with regard to the contest.
8.06 RIGHTS CUMULATIVE
No right or remedy herein conferred upon or reserved to either NAMM or
the Company is intended to be exclusive of any other right or remedy,
and each and every right and remedy shall be cumulative and in addition
to any other right or remedy given hereunder, or now or hereafter
legally existing upon the occurrence of any event of default hereunder.
8.07 WAIVER
The failure of either NAMM or the Company to insist at any time upon
the strict observance or performance of any of the provisions of this
Agreement or to exercise any right or remedy as provided in this
Agreement shall not impair any such right or remedy or be construed as
a waiver or relinquishment thereof. Every right and remedy given by
this Agreement to the parties hereto may be exercised from time to time
and as often as may be deemed expedient by the parties hereto, as the
case may be.
8.08 CAPTIONS AND HEADINGS
The captions and headings throughout this Agreement are for convenience
and reference only, and the words contained therein shall in no way be
held or deemed to define, limit, describe, explain, modify, amplify, or
add to the interpretation, construction or meaning of any provision of
or to the scope or intent of this Agreement nor in any way affect this
Agreement.
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8.09 IMPOSSIBILITY OF PERFORMANCE
Neither the Company nor NAMM shall be deemed to be in violation of this
Agreement if prevented from performing any obligations hereunder for
any reasons beyond its control including, without limitation, acts of
God or of any public enemy, flood, storm, strike, or action or inaction
of any federal, state or local regulatory agency. Nothing in this
Section 8.09 shall be construed to relieve NAMM or the Company, as the
case may be, of its duty to provide the Company or NAMM, as the case
may be, with notices it may receive of any action necessary for
compliance with federal, state or local requirements.
8.10 NOTICE
All notices, demands, and requests required hereunder shall be in
writing and shall be deemed given when mailed, postage prepaid, via
registered or certified mail or via overnight courier service, return
receipt requested, to the following address, and/or to such other
address or to such other person as may be designated by written notice
given from time to time during the term of this Agreement by one party
to the other:
(A) to the Company at: Northwest Community Capco, Inc.
Attention: President
000 X. Xxxxxxx Xx.
Xxxxxxxxx Xxxxxxx, XX 00000
(B) to NAMM at: North American Medical Management -
Illinois, Inc.
Attention: President
High Point Plaza
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
8.11 GOVERNING LAW
This Agreement has been executed and delivered In the State of Illinois
and all of the terms and provisions thereof and the rights and
obligations of the parties hereto shall be interpreted and enforced in
accordance with the laws thereof, without regard to the conflicts of
laws sections thereof. Notwithstanding anything contained in this
Agreement to the contrary, the parties agree to the exclusive
jurisdiction of any local or state court located in Xxxx County,
Illinois, or the United States District Court for the Northern District
of Illinois, and the parties waive any objection which it may have
based on improper venue or forum non convenience to the conduct of any
proceeding in such court; provided, further nothing contained in this
Agreement shall affect the right of the parties to serve legal process
in any manner permitted by law.
8.12 INVALIDITY OF PROVISIONS
The invalidity or unenforceability of any term or condition contained
herein shall in no way affect the validity or enforceability of the
remainder of this Agreement. Any such provision held or declared by a
court of competent jurisdiction to be invalid, illegal or unenforceable
under any law applicable thereto, shall be deemed deleted from this
Agreement without impairing or prejudicing the validity, legality, or
enforceability of the remaining provisions hereof.
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8.13 CHANGE OF LAW
In the event that there shall be a change in applicable state or
federal law or specifically in Medicare or Medicaid statutes,
regulations, or instructions (or in the application thereof), the
adoption of new legislation, judicial interpretations, or a change in
any other third party payor reimbursement system, or any similar matter
which, in a party's opinion materially and adversely affects such
Party's (or a Hospital's or affiliated Physician Organization's or
PHO's) rights or obligations or materially changes the economic or
legal relationships between the Parties as set forth in the Agreement
(a "Change") a Party may request that this Agreement shall terminate
upon at least thirty (30) days prior advance written notice to the
other Parties, provided that (i) the Parties will attempt in good faith
to amend the provisions of this Agreement to comply with such Change so
as to not materially change the economic or legal relationships between
the Parties as set forth in this Agreement, and (ii) any such
termination cannot occur before the effective date of the Change relied
upon to terminate this Agreement under this Section. If the Parties and
their attorneys do not agree that the Change materially adversely
affects their financial operations, and/or whether proposed changes to
this Agreement can be made which address the Change in a way which does
not materially and adversely affects such Party's (or a Hospital's or
affiliated Physician Organization's or PHO's) rights or obligations or
materially change the economic or legal relationships between the
Parties as set forth in this Agreement, an arbitrator, chosen in the
manner described in the ADR, shall decide such undetermined matters;
provided, however, that if the ADR process has not been completed by
the effective date of the Change no Party shall be required to take
actions which it reasonably believes would no longer be legal following
the change, subject to completion of the ADR process.
8.14 DISPUTE RESOLUTION
If during this contract, the parties are unable to resolve a dispute or
controversy among themselves, prior to instituting any court action,
they shall first endeavor to settle such dispute in a non-binding
voluntary manner by referring same to mediation according to the rules
of the American Arbitration Association.
8.15 THIRD PARTY BENEFICIARIES
The parties to this Agreement intend that there be no third party
beneficiaries of this Agreement.
8.16 ENTIRE AGREEMENT: CONFLICTS
This Agreement contains the entire agreement between the parties hereto
with regard to this subject matter, and no representations or
agreements, oral or otherwise, between the parties not embodied herein
or attached hereto shall be of any force and effect. Any additions or
amendments to this Agreement subsequent hereto shall be of no force and
effect unless in writing and signed by the parties hereto.
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8.17 EXHIBITS
All Exhibits to this Agreement are to be considered part of this
Agreement, as if incorporated herein, and all terms, provisions and
conditions stated in such Exhibits shall be binding on the parties to
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and
year set forth above.
NORTHWEST COMMUNITY CAPCO, INC.
BY: /s/
-----------------------------------------------
Its: President
Date: 5/31/2000
---------------------------------------------
NORTH AMERICAN MEDICAL MANAGEMENT - ILLINOIS, INC.
BY: /s/ Xxxxx Xxxxxxx
-----------------------------------------------
Xxxxx Xxxxxxx
Its: President
Date: 5/15/2000
--------------------------------------------
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