Exhibit 10.82
MANAGEMENT AGREEMENT
BETWEEN
COMPREHENSIVE HEALTH MANAGEMENT, INC.
AND
WELLCARE OF NEW YORK, INC.
The Agreement is made and entered into as of this 11th day of June ,
1999, by and between WellCare of New York, Inc., a for-profit corporation
organized under the laws of the State of New York (hereinafter referred to as
"WCNY") and Comprehensive Health Management, Inc., a for-profit corporation
organized under the laws of the State of Florida (hereinafter referred to as
"CHM").
WHEREAS, WCNY is a New York certified health maintenance organization;
and
WHEREAS, WCNY hereby engages CHM to perform the functions and to
provide the services described in the Agreement and CHM hereby accepts such
engagement under the terms and conditions stated in this Agreement;
NOW, THEREFORE, WCNY hereby agrees to contract with CHM to supervise
and manage the day-to-day operations of the HMO and to perform the specific
functions and contract services set out in this Agreement. This Agreement shall
not be applicable to WCNY's Commercial business until June 1, 2000. The Board of
Directors of WCNY has duly authorized the execution and performance of this
Agreement and the Agreement is a valid and binding agreement subject to the
approval of the New York State Commissioner of Health.
1. As compensation for services rendered, as set forth below and in
paragraph 2.19, WCNY shall pay CHM the following:
A. A fee which shall be a percentage of the total collected premiums
on a monthly basis for Medicaid, Medicare and Child Health Plus lines
of business through June 1, 2000 and thereafter for those lines of
business and such other lines of business as WCNY may offer in
accordance to the following schedule:
Number of Lives % of Premium
--------------- ------------
(i) 80,000 and up member lives 7.5%
(ii) 60,000 to 79,999 member lives 8%
(iii) 40,000 to 59,999 member lives 8.5%
(iv) Less than 40,000 member lives 9.5%
The fee will specifically cover services for claims, customer service,
utilization review, data processing/MIS, credentialing, postage and
supplies as related to the covered services, communication, provider
relations and provider contracting. The fee will not cover any other
costs, fees or expenses including, but not limited to costs for
marketing functions or related marketing costs, legal costs,
accounting costs, director and officer liability coverage and other
insurance coverage as well as any extraordinary items. This Agreement
shall be the agreement between WCNY and CHM in connection with the
provision of the management services by CHM and WCNY and the payment
by WCNY to CHM for such services. B. The cost for all employees
responsible for the day-to-day operations of WCNY shall be the
responsibility of WCNY, except for those employees required by CHM to
provide the services listed in Section 1.A above. WCNY shall be
responsible for the cost for all employees relating to claims
processing.
CHM shall retain full authority to recruit, hire, train, promote,
assign, set the compensation level and discharge all employees
assigned to WCNY. The employees that will be at the New York locations
will be listed in a subsequent attachment to the Agreement. WCNY
specifically retains the right to reasonably request the removal of
the Medical Director/Plan Administrator at any time. Upon receiving
such request in writing, CHM shall, without delay, remove such Medical
Director and replace him/her within six (6) months with another
nominee approved by the WCNY Board. The cost for all necessary
computer and information system usage, including Year 2K compliance
expenses and major equipment required, in order to perform the
services listed in Section 1.A. above, as well as maintenance of all
such equipment, shall be the sole responsibility of CHM. All
management fees shall be due and payable on the first of each and
every month of the term of this Agreement. CHM will xxxx WCNY for the
monthly fee set forth above. Any monthly fees in arrears of ten (10)
days will begin accruing finance charges of one percent (1%) per
month.
2. The term of this Agreement shall commence on approval of the NYS Health
Department. This Agreement is for the term of five (5) years from said date of
commencement, or as otherwise herein provided, unless renewed by agreement of
the parties. Any renewal of this Agreement requires prior approval of the NYS
Commissioner of Health.
3. In the event of termination for cause, as defined in Section 3.1 of this
Agreement, by either party, the sole obligation of WCNY to CHM shall be to pay
any and all amounts due to CHM up to the time of said termination, including,
without limitation, fees, costs, expenses, loans, and accounts payable due to
CHM.
SECTION ONE:
ALLOCATION OF AUTHORITY AND RESPONSIBILITY
1.1 Control Retained in Board
WCNY, acting through its Board of Directors, shall at all times exercise
sole control over the assets and operation of the HMO, and CHM shall perform the
functions described in this Agreement to be performed by it in accordance with
policies, directives and bylaws adopted by WCNY. WCNY retains the ultimate
authority and responsibility regarding the powers, duties and responsibilities
vested in WCNY by law and regulations.
1.2 Medical and Professional Matters.
All medical and professional policy matters shall be the responsibility of
WCNY. Policy recommendations shall be formulated by a Medical Advisory Committee
(MAC). Committee membership will include the WCNY medical director,
participating physicians and others as specifically appointed to serve by
resolution of the WCNY Board of Directors.
1.3 Reports.
CHM shall present to the WCNY Board of Directors reports on the financial
status of the HMO at each meeting, financial reports required in Section 2.9,
periodic written progress reports summarizing CHM management actions and
results, such other reports as CHM may deem appropriate to keep WCNY informed as
to the status and conditions of the HMO, and such other reports that WCNY may
reasonably request. CHM shall also provide such reports as may be required by
any regulatory agency having jurisdiction over WCNY. CHM shall provide to the
NYS Commissioner of Health and Superintendent of Insurance annual reports on
financial operations and any other operational data requested. CHM shall notify
WCNY of any and all correspondence and/or determinations of any regulatory
agency immediately upon receipt thereof by CHM.
SECTION TWO:
MANAGEMENT OF THE HMO
2.1 Standards of Health Care
CHM shall meet the standards set by WCNY for the operation of the HMO and
shall manage and operate the HMO in accordance with the policies adopted by
WCNY.
2.2 Planning
CHM will assist WCNY in reviewing short, medium and long-range objectives
of the HMO and in formulating recommendations with respect thereto.
2.3 Government Regulations
On behalf of WCNY, CHM shall comply with the requirements of any applicable
statute, ordinance, law, rule, regulation, or order of any governmental or
regulatory body having jurisdiction.
CHM shall notify WCNY of any and all correspondences or communication from
any such regulatory agency, and shall make such presentations to the Board of
WCNY with regard to communications from regulatory agencies as WCNY shall
request. 2.4 State Certification CHM shall supervise and manage the day-to-day
operations of the HMO in accordance with the standards for State Certification
as determined by Article 44 of the New York Public Health Law and in accordance
with the policies adopted by WCNY. 2.5 Licenses and Permits CHM shall apply for,
and exert its best effort to obtain and maintain, it in the name of WCNY, and at
WCNY's expense, all certificates, licenses and permits required in connection
with the management and operation of the HMO. WCNY shall cooperate with CHM in
applying for, obtaining and maintaining such certificates, licences and permits.
2.6 Confidentiality and Ownership of Records CHM shall protect the
confidentiality of the records of the HMO and shall comply with all applicable
federal, state and local laws and regulations, and medical ethical standards,
relating to the records of the HMO. CHM hereby acknowledges that any and all
records maintained by or on behalf of WCNY, no matter where such records are
housed, shall be deemed to be in the possession of WCNY, and to be the property
of WCNY.
Ownership of all records made by or on behalf of WCNY shall be in WCNY, and
physical custody of all records shall be transferred immediately to WCNY in the
event this Agreement expires or is terminated for any reason.
2.7 Subscriber Services.
CHM shall prepare and present to WCNY an annual report containing
recommendations as to the scope of services offered by the HMO, as well as
procedures and policies and such other matters as CHM deems appropriate or as
shall be requested by WCNY, including a management summary of complaints and
grievances, disposition thereof and recommendations for improved plan
management.
2.8 Preparation and Adoption of Annual Budget
WCNY's fiscal year shall commence on January 1st and end on December 31st
of each year. CHM shall prepare an annual line item budget setting out major
operation objectives, anticipated revenue, expenses, cash flow, and capital
expenditures and shall cause the budget to be presented to WCNY sixty (60) days
prior to the commencement of each fiscal year for its acceptance, rejection or
modification. Upon adoption of the budget by WCNY, it shall serve as the
operating budget of the HMO during the ensuing year. WCNY shall review and
either accept or reject such budget within thirty (30) days of receipt thereof.
If WCNY shall disapprove such budget, such disapproval shall specify those items
which are disapproved and CHM shall resubmit an altered budget to WCNY within
fifteen (15) days incorporating such changes as may be directed by the Board,
following such notice of disapproval. In the event of such disapproval and
resubmission, the previous year's budget shall continue in effect until approval
of the new budget.
If at any time during the fiscal year there shall be a projected or actual
deviation of more than ten percent (10%) in any other line item in the approved
budget, same shall be brought to the attention of the WCNY Board of Directors
immediately by CHM. If CHM deems it necessary to expend additional monies above
ten percent (10%) of the Board approved budgetary allocation for any line item,
it must first receive the approval of the WCNY Board. CHM will not be held
liable for budget items outside of its control including revenue and medical
expense line items that are a function of outside market conditions, etc.
2.9 Accounting Records
CHM shall direct and maintain the operation of a suitable accounting system
and shall cause to be delivered to WCNY financial statements, as follows:
(a) within forty-five (45) days after the close of each month, CHM
will provide WCNY with a balance sheet and a related statement of
revenue and expenses showing the results of the HMO's operations
for the preceding quarter and for the fiscal year-to-date.
(b) within ninety (90) days after the close of the fiscal year ending
December 31st, CHM shall provide to WCNY a balance sheet and
related statement of revenue and expenses and statement of
changes in financial positions showing the results of the HMO's
operation during the fiscal year all audited by an independent
certified public accounting firm retained by WCNY. If retained
CPA firm fails to provide audited statements within ninety (90)
days after the close of the fiscal year and failure is not a
fault of CHM, CHM shall not be held in default as a result
thereof. 2.10 Deposit and Disbursement of Funds Signatories and
approvals as to the amounts on all checks shall be in accordance
with the duly adopted written policy of WCNY, and WCNY shall
reserve the right of selecting and approving all financial
institutions utilized by CHM for business transactions of WCNY.
2.11 Collection of Accounts Pursuant to collection policies
established from time to time by WCNY, CHM shall supervise and
direct the collection of all accounts due WCNY and shall take all
reasonable steps necessary to minimize the number and amount of
bad debts. 2.12 Legal Actions CHM shall, under the overall
direction and with prior approval of WCNY, initiate and pursue in
the name of WCNY any and all legal actions or proceedings
necessary to operate the HMO and protect the assets of WCNY. Any
and all legal costs shall be solely borne by WCNY. 2.13 Rates CHM
and WCNY recognize the importance of maintaining rates which
enable the HMO to meet its obligations, but contain the cost of
health care. CHM will recommend rate structures to WCNY for
approval which take into account the financial obligations of the
HMO and the importance of providing quality health care at
competitive cost.
2.14 Insurance
CHM shall maintain, on WCNY's behalf, at WCNY's sole expense, and in WCNY's
name, general liability, insurance and professional liability insurance with
coverage of at least One Million Dollars ($1,000,000.00) per occurrence and
Three Million Dollars ($3,000,000.00) in annual aggregate. In addition, CHM
shall maintain, on WCNY's behalf, at WCNY's expense, and in WCNY's name,
directors and officers insurance in the amount of at least One Million Dollars
($1,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in
total. CHM shall not be responsible for WCNY's inability to obtain such
insurance because of market conditions.
2.15 Marketing and Corporate Plan Strategy
CHM shall direct the development and implementation of a marketing program
for the HMO. Annually, this program shall be presented to the Board of Directors
for approval. The scope for the marketing plan shall include development of new
sales and maintenance of existing membership as well as recommending changes to
the HMO benefit plans. Within the marketing plan shall be quantifiable goals for
membership and penetration, periodic updates shall be presented to the Board of
Directors to advise the status of goals and any necessary modifications to
planned strategy to adapt to marketing conditions. Any and all marketing cost
shall be solely borne by WCNY.
2.16 Ancillary and Other Agreements
CHM shall, in the name of and on account of WCNY, and at WCNY's sole
expense, negotiate and enter into such term agreements as it may deem necessary
or advisable for the furnishing of utilities, services, concessions, and
supplies for the maintenance and operation of the HMO including the rendering of
professional services, except as set forth in Section 2.19. All such agreements
shall be approved by WCNY in accordance with Board policies. All such agreements
in excess of Fifty Thousand Dollars ($50,000.00) that have not received approval
within the annual operating budget must receive prior approval of the WCNY Board
of Directors.
2.17 Office Equipment, Furniture, Fixtures and Capital Improvements
CHM shall review and make recommendations to WCNY concerning proposed
acquisitions of office equipment and/or furniture or capital improvements in
excess of Fifty Thousand Dollars ($50,000.00) to the HMO. For expenditures under
Fifty Thousand Dollars ($50,000.00), CHM will follow the approved capital budget
allocations. Upon approval for such expenditures, CHM shall, in the name of and
at WCNY's sole expense, negotiate, contract for, and supervise the satisfactory
delivery and/or installation of such property.
2.18 Information Services
CHM will assist WCNY in developing a plan for continuous improvement of the
HMO's information system.
Proprietary software developed under the direction of CHM will remain
property of CHM, but will be made available to WCNY throughout the term of this
contract and for one (1) year after termination. 2.19 CHM Management Services
and Expenses
CHM, at WCNY's sole expense, except for those employees specifically stated
in 1.B. of this Agreement, shall provide all necessary personnel to operate the
HMO under the terms of this Agreement and the directives of the Board of
Directors of WCNY. CHM will retain the ultimate responsibility to recruit, hire,
train, promote, assign, set the compensation level and discharge all such
employees except as noted in Section 1.B of this Agreement.
As detailed under Section 1.A, of this Agreement, CHM at its expense, shall
provide WCNY with necessary executive and administrative services from its
corporate headquarters in Tampa, Florida, to assist with the day-to-day
management of the HMO.
CHM shall not be responsible for the cost of personnel expenses (except as
set forth above); expenses relating to marketing and information system
literature, advertising, insurance, travel, rent, utilities, telephone, office
supplies, equipment (excluding information system hardware) and; professional
services (actuarial, legal, accounting, etc.).
2.20 Other Service Agreements
This contract does not preclude WCNY from entering into specific agreements
with CHM and/or WCNY affiliated companies for engagements outside the scope of
this contract. However, CHM will disclose any such relationship to the Board of
Directors and support will be provided that services rendered are not part of
executive management services and are of a standard and cost available in the
general market. The WCNY Board will approve each agreement and will monitor its
progress on a regular basis.
SECTION THREE:
3.1 Termination for Cause
Either party may terminate this Agreement for cause as defined herein below
upon written notice to the other party, the NYS Superintendent of Insurance, and
the NYS Commissioner of Health within the designated time periods. This
Agreement shall terminate and be deemed canceled, without financial penalty to
either WCNY's board of directors or to WCNY, not more than sixty (60) days after
notification to the governing authority of WCNY and CHM by the New York
Department of Health of a determination that WCNY is not providing adequate care
or otherwise assuring the health, safety and welfare of WCNY's enrollees.
WCNY or the NYS Commissioner of Health shall have cause for termination if:
3.1.1 CHM shall fail to observe or perform any material covenant, duty, or term
of this Agreement, and such default shall continue for a period of thirty (30)
days after written notice thereof by WCNY to CHM, the NYS Superintendent of
Insurance, and the NYS Commissioner of Health provided subsequent to the
aforementioned thirty (30) days, WCNY gives fifteen (15) days written notice to
CHM, the NYS Superintendent of Insurance, and the NYS Commissioner of Health of
intent of such termination, or
3.1.2 CHM shall apply for or consent to the appointment of a receiver, trustee,
or liquidator of CHM or of all or a substantial part of its assets, file a
voluntary petition in bankruptcy, or admit in writing its inability to pay its
debts as they become due, make a general assignment for the benefit of
creditors, file a petition or an answer seeking reorganization or arrangement
with creditors or to take advantage of any insolvency law, or if an order,
judgment, or decree shall be entered by a court of competent jurisdiction, or on
the application of a creditor, adjudicating CHM bankrupt or insolvent or
approving a petition seeking reorganization of CHM or appointment of a receiver,
trustee, or liquidator of CHM of all or a substantial part of its assets;
provided WCNY gives thirty (30) days written notice to CHM, the NYS
Superintendent of Insurance, and the NYS Commissioner of Health such
termination, or
3.1.3 CHM is managing WCNY in violation of any statute or administrative
regulation, including but not limited to Article 44 of the NYS Public Health Law
and all regulations promulgated pursuant thereto, subject to thirty (30) days
notice by WCNY to CHM, the NYS Superintendent of Insurance, and the NYS
Commissioner of Health. If CHM fails to cure the violation within the thirty
(30) day period, or a longer period set by WCNY, then WCNY may terminate this
Agreement upon fifteen (15) days written notice to CHM, the NYS Superintendent
of Insurance, and the NYS Superintendent of Insurance, and the NYS Commissioner
of Health. Written notice from the NYS Superintendent of Insurance or the NYS
Commissioner of Health that the HMO is being operated so as to endanger WCNY's
HMO certification shall be final for purposes of permitting the termination of
this Agreement with CHM by WCNY subject to thirty (30) days notice by WCNY to
CHM, the NYS Superintendent of Insurance, and the NYS Commissioner of Health.
CHM or the NYS Commissioner of Health shall have cause for termination if:
3.1.4 WCNY shall default in the performance of any material covenant, agreement,
term, or provision of this Agreement and such default shall continue for a
period of sixty (60) days after written notice to the NYS Superintendent of
Insurance, and the NYS Commissioner of Health from CHM stating the specific
default; provided subsequent to the aforementioned sixty (60) days, CHM gives
fifteen (15) days written notice to WCNY, the NYS Superintendent of Insurance,
and the NYS Commissioner of Health of such termination, or
3.1.5 WCNY shall apply for or consent to the appointment of a receiver, trustee,
or liquidator of WCNY or of all or a substantial part of its assets, file a
voluntary petition in bankruptcy, or admit in writing its inability to pay its
debts as they come due, make a general assignment for the benefit of creditors,
file a petition or an answer seeking reorganization or arrangement with
creditors or to take advantage of any insolvency law, or if an order, judgment
or decree shall be entered by any court of competent jurisdiction, on the
application of a creditor, adjudicating WCNY as bankrupt or insolvent or
approving a petition seeking reorganization of WCNY or appointment of a
receiver, trustee or liquidator of WCNY or of all or a substantial part of the
assets of WCNY; provided CHM gives thirty (30) days written notice to WCNY, the
NYS Superintendent of Insurance, and the NYS Commissioner of Health of such
termination, or
3.1.6 WCNY shall fail to make payment to CHM or to any assignee of CHM pursuant
to any agreement between WCNY and such assignee and does not make such payment
within sixty (60) days after written notice to WCNY and NYS Superintendent of
Insurance and the NYS Commissioner of Health; provided subsequent to the
aforementioned sixty (60) days, CHM gives fifteen (15) days written notice to
WCNY, the NYS Superintendent of Insurance, and the NYS Commissioner of Health of
such termination.
3.1.7 The prior approval of the Commissioner of Health is required for any
termination for cause pursuant to Sections 4.1- 4.16 herein, or should the
parties mutually agree to terminate this Agreement at anytime. Further,
concurrent with WCNY's notification to the NYS Commissioner of Health of WCNY's
decision to discharge the manager, WCNY shall provide to the NYS Commissioner of
Health a plan for the management of WCNY following termination.
3.2 Termination Without Cause
WCNY shall have the right to terminate this Agreement without cause at the
end of the five- year-term. Six (6) months written notice shall be given to CHM,
the NYS Superintendent of Insurance, and the NYS Commissioner of Health of such
termination.
3.3 Indemnification
WCNY shall indemnify and save CHM harmless from and against any and all
claims or causes of action arising from injuries or damages to persons or
property in connection with the operation of the HMO, unless such injuries or
damages resulted from (1) CHM acting outside the scope of its authority under
this Agreement or (2) the willful misconduct or negligence of CHM in the
management of the HMO.
CHM shall indemnify and save WCNY harmless from and against any liability
resulting from (1) CHM acting outside the scope of its authority under this
Agreement or (2) the willful misconduct or negligence or CHM in the management
of the Plan. Nothing herein shall preclude WCNY from asserting any claims or
suits against CHM which may arise out of CHM's management under this Agreement.
3.4 Arbitration
In the event that any dispute shall arise with regard to the Agreement,
both parties agree to submit the matter(s) in controversy to a Board of
Arbitrators consisting of three (3) members (one shall be selected by each party
to this Agreement and these members in turn shall select a third member). The
Board of Arbitrators so constituted shall proceed under the rules and
regulations of the American Arbitration Association. Both parties expressly
covenant and agree to be bound by the decision of the arbitrators and accept any
decision by a majority of the arbitrators as a final determination of the
matter(s) in dispute. The parties of this Agreement shall share the cost of
arbitration equally. CHM shall provide notice to the New York State Commissioner
of Health (the "Commissioner") of all issues preceding to arbitration and copies
of all decisions pursuant to this Paragraph 4.4. Additionally, the Commissioner
shall in no way be bound by any arbitration decisions pursuant to this Paragraph
4.4.
3.5 Assignment
CHM shall have the right to assign this Agreement to a corporation which is
a successor in interest of CHM upon the prior written approval of WCNY, and the
NYS Department of Health.
3.6 Hold Harmless
It is understood and agreed that CHM shall look solely to WCNY for
compensation for management services provided to WCNY and at no time shall CHM
seek compensation for such services from members, members' family members, or
any other person acting on a member's behalf.
3.7 Membership Responsibilities for WCNY Obligations
The membership or Board of WCNY shall not be personally or individually
liable for the payment of obligations of WCNY to CHM.
3.8 Notices
Any notice of other communication by either party to the other shall be in
writing and shall be delivered personally or mailed, postage prepaid, by
registered or certified mail, addressed as follows:
To WCNY: WellCare of New York, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Vice President
To CHM: Comprehensive Health Management, Inc.
c/x Xxxxx, Xxxxx & X'Xxxxxx, P.A.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx, 000000
Attn: Xxxxxx X. Xxxxx, Esquire
or such other address, and to the attention of such other person or officer as
either party may designate in writing from time to time.
3.9 Modification and Changes
CHM and WCNY mutually recognize that it may be desirable to alter terms of
this Agreement in the future to take into account such events or conditions as
may from time to time occur. Any changes to this Agreement must be in writing
and executed by both parties with the same formality as the within Agreement and
shall be effective only with the prior written consent of the NYS Commissioner
of Health.
3.10 Headings
The headings contained herein are for the convenience of reference only and
are not intended to define, limit or describe the scope or intent of any
provision of the Agreement. 3.11 Confidentiality CHM and WCNY agree that the
terms and conditions of this Agreement shall remain confidential. Neither CHM
nor WCNY shall distribute this Agreement, or any part thereof, to any other
party unless required by law or regulation.
3.12 Understanding and Agreements
This Agreement constitutes all of the understandings and agreements of
whatsoever nature or kind existing between the parties with respect to the HMO.
3.13 Governing Law
This Agreement shall be deemed to have been made and shall be construed and
interpreted in accordance with the laws of the State of New York.
3.14 Governing Rules and Regulations
This Agreement, to the maximum extent possible, shall be interpreted so as
to be consistent with all rules and regulations of the State of New York.
3.15 The parties hereto acknowledge that the responsibilities of WCNY's
governing authority are in no way obviated by entering into this Agreement. Any
powers not specifically delegated to CHM herein remain with WCNY's board of
directors.
WellCare of New York, Inc. (WCNY) Comprehensive Health Management, Inc.
(CHM)
By: /s/ Xxxx Xxx Xxxxxxxx-Xxxxxx By: /s/ Xxxxx X. Xxxxx, M.D.
-------------------------------- -------------------------------------
Xxxx Xxx Xxxxxxxx-Xxxxxx Xxxxx X. Xxxxx, M.D.
President/CEO President
Date: June 11, 1999 Date: June 11, 1999
Attest: /s/ Xxxxx Xxxxxx Attest: /s/ X. Xxxxx
