PHYSICIANS’ RECIPROCAL MANAGERS, INC. (Hereinafter called the “Company”) PROGRAM MANAGER’S AGREEMENT with PROFESSIONAL MEDICAL ADMINISTRATORS, L.L.C. (Hereinafter called the “Manager”)
Exhibit
10(dddd.2)
PHYSICIANS’
RECIPROCAL MANAGERS, INC.
(Hereinafter
called the “Company”)
PROGRAM
MANAGER’S AGREEMENT
with
PROFESSIONAL
MEDICAL ADMINISTRATORS, L.L.C.
(Hereinafter
called the “Manager”)
PROGRAM
MANAGER’S AGREEMENT
TABLE
OF CONTENTS
TERM
OF AGREEMENT |
1 |
APPOINTMENT
OF MANAGER; LINES OF AUTHORITY |
1 |
Lines
of Authority |
1 |
Territory |
1 |
Exclusions |
1 |
Reinsurance
Availability |
1 |
MANAGER’S
DUTIES AND RESPONSIBILITIES |
2 |
Solicitation |
2 |
Binding
of Risks |
2 |
Policy
Issuance |
2 |
Risks
Bound |
2 |
Premium
Rates |
2 |
Compliance
with Manuals |
2 |
Premiums |
3 |
Accounting |
3 |
Fiduciary
Capacity |
3 |
Credit
Extensions |
4 |
Company
Property |
4 |
Manager
Expenses |
4 |
Legal
Compliance |
4 |
Governmental
Contacts |
4 |
Claim
Notification |
4 |
Premium
Financing |
4 |
Competent
Staff |
5 |
Company
Interests |
5 |
Accurate
Records |
5 |
Audit |
5 |
Services |
5 |
Licenses |
5 |
Policy
Cancellation |
6 |
Sub-Producers |
6 |
Manager’s
Data Base |
6 |
Catastrophe
Funds |
7 |
CLAIMS
SETTLEMENT |
7 |
MANAGER’S
COMPENSATION |
7 |
Production
and Administration Commission |
7 |
Unearned
Commissions |
7 |
-ii-
TABLE
OF CONTENTS (continued) | |
ADVERTISING |
8 |
REPRESENTATION
WITH RESPECT TO POLICIES |
8 |
INSURANCE
OF MANAGER |
8 |
Errors
and Omissions |
8 |
Comprehensive
General Liability |
8 |
Employee
Dishonesty |
8 |
INDEMNIFICATION |
8 |
Manager |
8 |
Company |
9 |
FLAT
CANCELLATION |
9 |
OWNERSHIP
OF EXPIRATIONS |
9 |
Underwriting
Records and Files |
9 |
Account
and Payment Delinquency |
9 |
Limited
License |
10 |
Default |
10 |
SUSPENSION
OF MANAGER’S AUTHORITY |
10 |
Administrative
Allegation |
10 |
Criminal
Offense |
10 |
Default |
11 |
TERMINATION
OF AGREEMENT |
11 |
Company
May Terminate |
11 |
Immediately |
11 |
Upon
Thirty (30) Days’ Notice |
11 |
Either
Company or Manager |
12 |
Manager
May Terminate this Agreement Immediately |
12 |
CONTINUING
DUTIES OF MANAGER AFTER TERMINATION |
12 |
WAIVER
OF STATUTORY TERMINATION RIGHTS OF MANAGER |
13 |
DISPUTE
RESOLUTION |
13 |
-iii-
TABLE
OF CONTENTS (continued) | |
OTHER
TERMS AND CONDITIONS |
13 |
Waiver
and Estoppel |
13 |
Notice
and Cure |
13 |
Conflict
with Law |
14 |
Assignment |
14 |
Headings |
14 |
Governing
Law |
14 |
Honorable
Undertaking |
14 |
Promptly |
14 |
Notices |
14 |
Independent
Contractor |
14 |
Negotiated
Agreement |
15 |
Entire
Agreement |
15 |
Third
Party Beneficiary |
15 |
Confidentiality |
15 |
EXHIBIT
A (THE BUSINESS) |
17 |
EXHIBIT
B (CLAIMS AUTHORITY) |
18 |
-iv-
PROGRAM
MANAGER’S AGREEMENT
This
AGREEMENT is made between Professional Medical Administrators, L.L.C., with
offices located at 000 Xxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000, (hereinafter
referred to as “Manager”), and Physicians’ Reciprocal Managers, Inc. with
offices located at 0 Xxxxx Xxxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000 (hereinafter referred to as the
“Company”).
Manager
and the Company agree as follows:
ARTICLE
I
TERM
OF AGREEMENT
This
Agreement shall have an effective date of January 1, 2004. It will continue
until terminated under the provisions of Article XIII.
ARTICLE
II
APPOINTMENT
OF MANAGER; LINES OF AUTHORITY
The
Company appoints Manager for the Company as follows:
A. |
Lines
of Authority:
Manager’s appointment and authority extends to the classes of business,
policies of insurance, including all endorsements (the “Policies”); and
lines and limits of insurance described in Exhibit A attached to this
Agreement (the “Business”). |
B. |
Territory:
Manager’s appointment and authority extends to risks principally located
in the United States. |
C. |
Exclusions:
Manager’s appointment and authority is subject to any exclusions set forth
in Exhibit A. |
D. |
Reinsurance
Availability:
Manager’s appointment and authority for Business written under this
Agreement is subject to the following: |
1. |
That
the Company is able to obtain and maintain in force at all times
reinsurance satisfactory to the Company for the Business, and such
reinsurance shall be satisfactory if consistent with its customary or
usual standards. |
1
2. |
Obtaining
reinsurance is the sole responsibility of the Company. When the Company
obtains satisfactory reinsurance for all or some of the Business, the
Company will notify Manager, in writing, that Manager may write and bind
those classes of business, policies, and lines and limits of insurance for
which reinsurance has been obtained. |
3. |
If
reinsurance is terminated or no longer in full force and effect for all or
any part of the Business, Manager’s authority for the Business affected
shall be suspended, or limited immediately upon notice to Manager from the
Company, and until further notice. |
4. |
The
Company will use its best efforts to maintain satisfactory
reinsurance. |
ARTICLE
III
MANAGER’S
DUTIES AND RESPONSIBILITIES
Manager
will faithfully perform all of its duties consistent with industry standards.
The Manager’s duties include the following:
A. |
Solicitation:
To solicit risks and classes of risk at limits and for lines of insurance
authorized in Exhibit A, that in their pricing and insurability meet or
exceed that underwriting and pricing standards from time to time
established by the Company in writing. |
B. |
Binding
of Risks:
To bind risks only in accordance with Exhibit A and any other underwriting
and pricing standards from time to time established by the Company in
writing, and to forward to the Company for acceptance all other
risks. |
C. |
Policy
Issuance:
To timely and properly issue, deliver and execute or countersign Policies,
certificates, endorsements, and binders on forms approved by the Company
and appropriate regulatory authorities, as required by law, for the
Business described in Exhibit A, and to make, as may be required and in a
timely manner, notice of, certify or provide evidence of coverage of
Policies to the appropriate governmental
agencies. |
D. |
Risks
Bound:
To give the Company written notice for each risk or Policy bound or
written under this Agreement as part of reporting to the Company as
described in Article III (H). |
E. |
Premium
Rates:
To quote accurate and adequate premiums and rates for Policies bound or
written under this Agreement in compliance with the approved and
applicable rating manuals or rating plans of the
Company. |
F. |
Compliance
with Manuals:
To comply fully, timely and promptly with all manuals, rules, regulations,
guidelines, instructions and directions issued in writing by the Company
and provided to Manager relating to the Business covered by this
Agreement. |
2
G. |
Premiums:
To xxxx for and collect all premiums due on all Policies bound or written
under this Agreement, and payments shall be sent to and made payable to
Pennsylvania Physicians’ Reciprocal Insurers and its reinsurer as their
interests appear. |
H. |
Accounting:
To timely account for the Business as
follows: |
1. |
Manager
shall prepare, in a form acceptable to the Company, and forward to the
Company on a monthly basis, within fifteen (15) days of the end of each
calendar month, a detailed bordereau and statement of account for the
period (the “Account”), which Account will include all business written
during the prior month. The Account shall include for each authorized line
of insurance such information as the Company may request, including but
not limited to the following: |
x. |
Xxxxx
Written Premium; |
b. |
Net
Written Premium; |
c. |
Policies
issued or bound; |
d. |
Policies
cancelled; |
e. |
Premium
adjustments due to endorsements or audits; |
f. |
Commissions
payable to Manager, and |
g. |
Net
Balance Due; |
h. |
Losses
Paid; |
i. |
Loss
Adjustment Expenses Paid; |
j. |
Case
Reserves. |
2. |
Manager
shall pay the Company balances due within forty-five (45) days of the end
of each calendar month to correspond to bordereau required in Article III
(H)(1) above. |
3. |
Cumulative
reports from the beginning of each calendar year shall also be made on a
monthly basis, within fifteen (15) days of the end of each such respective
period. |
4. |
The
Company may offset any balance or balances due from the Manager under this
Agreement with any balance the Company holds due the
Manager. |
I. |
Fiduciary
Capacity:
To deposit and hold all premiums and other amounts received by the Manager
on behalf of the Company in a fiduciary capacity in accordance with
applicable statutes and regulations and in a separate bank account or
accounts clearly identifiable by name as for funds so held. The Company
may, at its sole discretion, grant the Manager permission, where allowable
by law, to commingle fiduciary funds held by the Manager for or on behalf
of the Company with funds so held by the Manager on behalf of other
insurers, provided that a separate, accurate and verifiable accounting is
maintained on the books of the Manager. Provided the Manager has, in
accordance with the terms of this Agreement, accounted for and paid to the
Company all premiums and other monies legally due and owing, any
investment income produced from the fiduciary funds held on behalf of the
Company by the Manager shall vest and become the property of the
Manager. |
3
J. |
Credit
Extensions:
To assume the obligation for any extensions of credit to insureds and
policyholders, and to be fully responsible for the full amount of the
premium due the Company on risks or Policies written or bound under this
Agreement whether or not Manager has collected the premium due from
Policyholder and/or its authorized
representative. |
K. |
Company
Property:
To safeguard, maintain and account for all the Company Policies, forms,
manuals, equipment, supplies or anything else furnished to Manager by the
Company, all of which shall remain the property of the Company. Manager
will return all property to the Company promptly upon
demand. |
L. |
Manager
Expenses:
To pay, assume the obligation for and to be fully responsible for costs
and expenses associated with the Manager’s performance of conducting its
business under this Agreement, including: travel expense, employee and
clerical salaries, benefits and expenses, fees, countersignature fees and
expenses, policy printing, postage, advertising, exchanges, license fees,
etc. |
M. |
Legal
Compliance:
Manager shall use all reasonable effort to monitor and enforce full
compliance of such qualified and designated subagents and brokers with all
laws, regulations, rules and requirements applicable to Manager’s
activities, and, in addition, all written instructions provided from time
to time by the Company concerning underwriting requirements and regulatory
compliance in general; provided, however, that such written instructions
shall not unreasonably alter or amend the terms of this
Agreement. |
N. |
Governmental
Contacts:
To promptly notify the Company in writing of all contacts and
correspondence received from insurance regulatory and other governmental
authorities by Manager or its designated subagents or brokers, to forward
promptly upon receipt all summonses, complaints, subpoenas or other court
documents, and to cooperate fully with the Company in making any
responses. |
O. |
Claim
Notification:
To immediately notify the Company in writing of all claims, suits and
losses and to cooperate fully with the Company to facilitate the
investigation, adjustment, settlement and payment of each and all claims
and to assist the Company in the collection of deductible due and salvage
or subrogation. |
P. |
Premium
Financing:
To promptly and appropriately respond to all correspondence and notices
related to financing or proposed financing of premiums on Policies issued
under this Agreement, and forward copies to the Company. The Manager shall
not accept premium financing on policies for which the premium is
provisional, deposit, minimum, or otherwise adjustable. The Manager is not
and shall not hold itself out as the agent of the Company for the purpose
of obtaining premium financing. The Company reserves the right to refund
premiums directly to the premium finance company upon cancellation of a
policy(ies). The Manager shall refund applicable commission to the premium
finance company in the event of a cancellation of a policy(ies). The
Manager is responsible for collecting the gross written premium of any
financed policy(ies) regardless of the financing of the
premium. |
4
Q. |
Competent
Staff:
To maintain sufficient supplies and equipment and a staff of competent and
trained personnel, to produce, develop, underwrite, and supervise the
Business covered by this Agreement. |
R. |
Company
Interests:
To promote and safeguard the best interests and good name of the
Company. |
S. |
Accurate
Records:
To keep and maintain separate, identifiable, orderly, accurate, complete
and timely records and accounts of all business and transactions
pertaining to Policies bound or written under the Agreement, including
complete underwriting and rate files. Such records and files may be copied
by the Manager at the Manager’s expense, but shall at all times remain the
property of the Company. Manager shall also implement a “Disaster Plan” to
ensure that copies of said records and files would be available in the
event of a disaster and shall provide a copy of said Plan to the Company
within thirty (30) days of the execution of this
Agreement. |
T. |
Audit:
To permit the Company during the term of this Agreement and as long as the
Company considers necessary, to visit, inspect, examine, audit and verify,
at Manager’s offices or elsewhere, at such times and as often as the
Company may deem appropriate, with or without prior notice, any of the
properties, accounts, files, documents, books, reports, work papers and
other records belonging to or in the possession or control of Manager or
of any person relating to the Business covered by this Agreement. The
Company shall also be entitled to audit such records and accounts of
manager so as to determine Manager’s financial worth. The Company may make
copies and extracts as may be reasonably necessary. The Company may
conduct any audit through any person or persons it may designate. Manager
shall, at the Company’s request, promptly provide the Company with
statements of Manager’s financial worth prepared by a certified public
accountant. However, if this Agreement has been terminated, forty-eight
(48) hours notice is required by the Company to Manager, and the
information obtained on such audit shall not be used by the Company in
competition with Manager. |
U. |
Services:
To provide for all usual and customary services to Insureds, Policyholders
and sub-producers including, but not limited to, delivery of Policies,
return of premiums due Insureds or Policyholders, if such premiums are in
possession of Manager, and timely, appropriate responses to complaints,
except as specified in Article III (N),
above. |
V. |
Licenses:
To obtain and provide the Company, upon request, with copies of all
licenses and permits required by Manager for the proper conduct of its
duties under this Agreement. In the event the Manager will comply with
licensing laws by utilizing the license of a principal director, officer
or employee, then Manager promises, warrants and guarantees that the
licensee will comply with all requirements of this Agreement and
specifically with this Paragraph. In the event that any license the
Manager utilizes to fulfill the requirements of the Agreement expires,
terminates or is suspended for any reason, this Agreement terminates
automatically and the Company may avail itself of any rights provided
under Article XIII of this Agreement. The Manager shall be responsible to
assure that all business is properly countersigned. The Manager shall be
responsible for and pay any necessary counter-signature expense. The
Company shall not be responsible for payment of any countersignature
expense. |
5
W. |
Policy
Cancellation:
To cancel or otherwise terminate risks or Policies bound or written by or
through Manager as required by applicable underwriting standards and
consistent with applicable regulatory and Policy conditions. The Company
shall always retain the right to direct the termination of Policies by
direct notice to the Insured or Policy holders. Manager shall not make,
permit, or cause general or indiscriminate cancellations, terminations or
replacements of Policies. Manager shall be responsible for notifying
governmental agencies or other persons for whom Manager has certified
coverage or provided evidence of insurance. No cancelled or terminated
policy may be reinstated without the prior written approval of the
Company. |
X. |
Sub-Producers: |
1. |
To
accept proposals for insurance from other duly licensed agents or brokers.
Manager shall determine the compensation payable to such other agents or
brokers on proposals it accepts. The parties agree that any amounts paid
such other agents or brokers will come from the compensation payable to
Manager pursuant to Article V. Manager is responsible for the billing and
collection of premium whether collectible or not, and payment of
compensation for all such insurance placed with the Company by such agents
or brokers. |
2. |
To
use the facilities of properly licensed agents, brokers or solicitors to
conduct business in all jurisdictions in which it intends to solicit or
write the Business. |
Y. |
Manager’s
Data Base: |
1. |
Within
thirty (30) days from the execution of this Agreement, Manager shall
provide to the Company, at the expense of the Manager, copies of the
Manager’s Data Base in form and content satisfactory to the Company. Said
Data Base shall be utilized by the Company only in the event Manager’s
copy is unavailable or inaccessible and/or in performing any services
relating to the Business in the event of termination of this Agreement.
The term “Data Base” for purposes of this Agreement shall consist of a
record or records, of information relating to the Business maintained by
Manager or Manager’s computer containing at a minimum, but without
limitation, the following information: |
a. |
Name
of Insured, address, policy number, effective and expiration
dates. |
b. |
By
policy number, limits and coverages. |
2. |
Manager’s
Data Base so provided shall be updated not less frequently than quarterly,
within twenty-five (25) days after the end of each quarter. Such updates
shall include supplemental Data Base information of transactions relating
to the Business since the last such update of Data Base
information. |
3. |
Manager
shall take the necessary steps to enable the Company to use any computer
software utilized by Manager to monitor the Business, underwriting or
otherwise service the Business or perform any other services under this
Agreement (“the software”), including but not limited to obtaining a
license, pursuant to this provision. |
6
Z. |
Catastrophe
Funds: |
Determine
applicability to the business of the Program of any state-mandated catastrophe
or other special assessment fund, including, but not limited to state guaranty
funds. If applicable, the Manager shall determine premium surcharges, collect
funds from the insureds, and regularly remit all such funds directly to the
catastrophe or other special assessment fund and shall send the Company a report
detailing premium surcharge calculations and indicating amounts payable to the
applicable state(s).
ARTICLE
IV
CLAIMS
SETTLEMENT
Manager
has no authority to adjust, compromise, settle or pay any claim made on the
risks or Policies written or bound under this Agreement. However, the Manager
shall act as a claims consultant without fee to assist the Company.
The
Manager will not be reimbursed by the Company for the salaries, office expenses
or any other expenses incurred in the handling of claims unless otherwise
expressly agreed to in writing by the Company.
ARTICLE
V
MANAGER’S
COMPENSATION
The
Company will pay the Manager as full compensation for all of its duties and
responsibilities under this Agreement as follows:
A. |
Production
and Administration Commission:
Manager shall be entitled to receive a production and administration
commission of 14% of Net Written Premium received by the Company on
Policies bound or written under this Agreement. (Net = Gross less D.D.R.
reserve). |
B. |
Unearned
Commissions:
Manager shall promptly refund pro-rata to the Company Production and
Administration Commissions (including commissions paid to sub-producers)
on cancellations, refunds and return premiums. Alternatively, the Company
and Manager, at the option of the Company, may make premium adjustments by
debits of monies due Manager. |
7
ARTICLE
VI
ADVERTISING
Manager
will not refer to the Company or the Business covered by this Agreement in any
advertisement, letter, circular, pamphlet or other publications or written
statement without the prior written consent of the Company. Whether or not the
Company gives its consent, the Company will not be responsible for any
advertising expense.
ARTICLE
VII
REPRESENTATION
WITH RESPECT TO POLICIES
Manager
will not make, and will make a good faith effort not to allow any other person
to make, any written representation to applicants, Insureds, Policyholders or
claimants as to the existence or extent of coverage either available from the
Company or under a Policy that is not consistent with the terms and conditions
of coverages available from the Company or of a Policy.
ARTICLE
VIII
INSURANCE
OF MANAGER
Manager
will maintain for as long as this Agreement remains in force with insurers and
on forms acceptable to the Company:
A. |
Professional
Errors and Omissions policy in an amount of
$2,000,000; |
B. |
Comprehensive
General Liability policy in an amount of
$1,000,000; |
C. |
Blanket
Employee Dishonesty bond covering all employees of Manager in an amount of
$500,000. |
The
Company may require certificates of insurance or other evidence that the
insurance required by this Article is in force.
ARTICLE
IX
INDEMNIFICATION
A. |
Manager
shall be responsible to the Company and shall indemnify, save, defend and
hold the Company, including its affiliates, and all officers, directors
and employees, harmless against any and all claims, suits, hearings,
actions, damages of any kind, liability, fines, penalties, loss or
expense, including attorney’s fees caused by or resulting from any
allegation of any misconduct, error, omission, or other act; or breach of
this Agreement by Manager, or Manager’s employees, or representatives,
unless the conduct giving rise to the allegation was performed at the
specific direction of the Company, provided Manager has not contributed to
or compounded the act alleged. Manager shall also indemnify the Company
for any surplus lines taxes which may be owed by any insured of the
Company or an appointed surplus lines broker of such insured on Business
which has not been paid in compliance with applicable
law. |
8
B. |
The
Company shall be responsible to Manager and shall indemnify, save, defend
and hold Manager harmless against any and all claims, suits, hearings,
actions, damages of any kind, liability, fines, penalties loss or expense,
including attorney’s fees caused by or resulting from any allegation of
any misconduct, error, omission or other act; or breach of this Agreement
by the Company, or the Company’s employees, or representatives, unless the
conduct giving rise to the allegation was performed at the specific
direction of Manager, provided the Company has not contributed to or
compounded the act alleged. |
ARTICLE
X
FLAT
CANCELLATION
A. |
If
a policy is cancelled flat (back to the date of inception of the Policy),
the originals of the cancelled Policy or a Lost Policy Release shall be
promptly forwarded by Manager to the Company. Manager will not cancel flat
a Policy after it has been in effect for more than thirty (30) days
without the prior written consent of the Company, unless cancellation is
requested by the insured or required by state
law. |
B. |
An
appropriate premium charge shall be made for any Policy in force for a
period in excess of thirty (30) days. |
ARTICLE
XI
OWNERSHIP
OF EXPIRATIONS
A. |
Records
of Insureds, Policyholders and Policies and their use and control for
solicitation of Business written or bound by or through Manager
(“expirations”), as between Manager and the Company, shall be the sole and
exclusive property of Manager except: |
1. |
Underwriting
Records and Files:
As described in Article III (T) above. |
2. |
Account
and Payment Delinquency:
If Manager’s authority under this Agreement is suspended or terminated in
part or in full for a material breach of this Agreement, or Manager fails
to render all accounts due or pay any amounts due to the Company except
minor accounting differences, and Manager fails to cure the breach on five
(5) days notice from the Company to Manager, the Company will be entitled
to solicit, write and to sell insurance to any and all existing Insureds
or Policyholders written by or through Manager. The expirations will vest
in and become the sole and exclusive property of the
Company. |
9
3. |
Limited
License:
If the Manager’s authority is suspended or terminated under this
Agreement, and if any applicable insurance law or regulation prohibits the
Company from terminating any Policies or obligates the Company to continue
or to renew, directly or through another producer of the Company, any
Policies, or Insured or Policyholders previously bound or written under
this Agreement, then the Company shall be permitted and is hereby granted
by Manager a limited license in, and a right to use the expirations of
those Policies, Insured and Policyholders to permit the Company to comply
within its reasonable discretion and in good
faith. |
4. |
Default: If
this Agreement is terminated by the Company for a reason that permits
immediate notice of termination to Manager under Article XIII, the
expiration will vest in and become the sole and exclusive property of the
Company. |
B. |
Upon
the occurrence of any event which gives rise to the vesting of the
ownership of expirations in the Company, the Company make take immediate
possession of all records relating to those expirations and Manager shall
upon request immediately gather such records together at Manager’s
principal place of business and allow the Company access to take
possession of those records. The Company may service those expirations
directly or dispose of them in any commercially reasonable manner. The
Company may collect premiums directly from any Insured or Policyholder who
has not made payment to Manager. |
C. |
If,
in disposing of Manager’s records and expirations, the Company does not
realize sufficient money to discharge in full any and all of Manager’s
indebtedness to the Company (including reasonable costs incurred by the
Company in connection with its recovery and disposal of the records and
expirations), Manager will remain liable to the Company for the balance of
the Manager’s indebtedness to the Company. Manager shall have no right to
or interest in any commissions which may be generated as a result of the
Company’s servicing those expirations. |
D. |
If
there is any excess over the Manager’s indebtedness to the Company
(including any cost incurred by the Company in connection with its
recovery and disposal of records and expirations) realized by the Company,
it shall be remitted to Manager. |
ARTICLE
XII
SUSPENSION
OF MANAGER’S AUTHORITY
The
Company may, by immediate notice to Manager, suspend any part or all of
Manager’s authority under this Agreement for such time as the Company may deem
necessary to protect its interests or reputation if any of the following
occur:
A. |
An
administrative allegation of violation of insurance law or regulation
against Manager or any of Manager’s executive officers by an insurance
regulatory agency; |
10
B. |
The
Manager or any of Manager’s executive officers is indicted for a criminal
offense, the conviction of which would permit termination of Manager under
this Agreement; or |
C. |
The
default of Manager under this Agreement, or delinquency by Manager in
timely remitting accounts and monies to the Company, Insureds or
Policyholders. |
ARTICLE
XIII
TERMINATION
OF AGREEMENT
A. |
The
Company may terminate this Agreement as
follows: |
1.
|
Immediately
upon notice to Manager in the event of: |
a. |
License
Suspension or Revocation:
An order of suspension or revocation of Manager’s license by any insurance
regulatory authority; or |
b. |
Ownership
Change: A
significant change in the ownership or management or in the event of the
execution of an agreement of sale, transfer or merger of Manager without
prior notice and consent of the Company; or |
c. |
Misapplication
of Funds: A
misapplication, misdirection, or misappropriation by Manager of funds or
property of the Company or funds received for it or Policyholders by
Manager, or in the event of failure by Manager to remit to the Company or
Policyholders, funds due promptly after written demand therefore by the
Company; or |
d. |
Default: A
material default under this Agreement by Manager or Manager’s failure to
timely and fully comply with the Company’s directives, rules, regulations
or manuals in connection with this program;
or |
e. |
Conviction: A
charge brought against Manager or any of Manager’s executive officers of
violation of the insurance laws or regulations of any jurisdiction or of
any law constituting a felony in the jurisdiction in which committed, or
of any law whose violation reflects adversely upon the honesty or
integrity of Manager or any of Manager’s executive officers whether or not
classified as a felony; or |
f. |
Bankruptcy:
Bankruptcy, receivership or common law composition of creditors whether by
the Manager voluntarily or involuntarily. |
2. |
Upon
thirty (30) days’ notice to Manager in the event
of: |
a. |
Excessive
Complaints:
The number of complaints received by the Company relating to Manager’s
performance and service to Insureds, Policyholders, sub-producers or
members of the public is excessive, as may be determined by the Company in
its sole discretion; or |
11
b. |
Adverse
Legislation:
Enactment of legislation which in the opinion of the Company would
adversely affect the Company’s rights under this Agreement or liabilities
under the Policies; or |
c. |
Conflict
with Law:
As provided for in Article XVII (c). |
d. |
Breach
of Agreement:
This Agreement may be terminated at any time by either party by written
notice if the other party materially breaches this Agreement (and such
breach is not cured within the time specified below for cure) and provided
the party seeking to terminate this Agreement has given the other party
ten (10) days’ prior written notice of the nature of the claimed breach
and its intent to terminate if the claimed breach is not cured within such
ten (10) day period. |
B. |
Either
the Company or Manager may terminate this Agreement at any time upon one
hundred-eighty (180) days prior written notice to the
other. |
C. |
Manager
may terminate this Agreement immediately in the
event: |
1. |
The
Company is subject to a regulatory order that has a material impact on the
Company’s ability to perform. |
ARTICLE
XIV
CONTINUING
DUTIES OF MANAGER AFTER TERMINATION
A. |
If
the Company elects upon termination of this Agreement, and for as long as
the Company elects, Manager will perform all of the duties necessary for
the proper servicing of all risks or Policies bound or written under this
Agreement until all those Policies shall have expired or been terminated.
These services shall include, but are not limited to, canceling, issuing
mandatory endorsements, and collecting and returning premiums due the
Company. |
B. |
So
long as the Manager continues to perform duties in accordance with this
Article, the Manager shall continue to receive the Production and
Administration Commission set forth in Article V (A), and the Company will
not unreasonably preclude Manager from performing the duties referred to
herein. |
C. |
Should
Manager not continue to perform any duties for any reason the Company
shall discontinue payment of any Production and Administration Commission
set forth in Article V (A). |
D. |
If
this Agreement is terminated by the Company for any reason under Article
XIII for which immediate notice may be given, and the Company is required
to renew any policies under the law of any jurisdiction, the Manager will
not be entitled to any Production and Administration Commission with
respect to that renewal business. |
12
ARTICLE
XV
WAIVER
OF STATUTORY TERMINATION RIGHTS OF MANAGER
Both
Manager and the Company are aware that there are or may be laws or regulations
in the various jurisdictions served by Manager that may be interpreted to
provide Manager with certain rights of notice, “run-off”, continuation of
business written through Manager, prevention of termination and regulatory
review and possible disapproval of the termination of this Agreement. Because
this Agreement has been mutually entered into for a special purpose, and places
responsibilities, duties and obligations upon Manager both beyond those and
different from those of a normal soliciting agent, Manager acknowledges that
this therefore involves and necessitates a different relationship. Manager
hereby specifically waives any and all rights with respect to termination of
this Agreement that may now or hereafter be provided Manager by such statute or
regulation in recognition of that different relationship, and agrees not to
impose upon or require compliance by the Company of any obligations relating to
termination of this Agreement other than those provided for specifically in this
Agreement.
ARTICLE
XVI
DISPUTE
RESOLUTION
If a
dispute between the Company and the Manager should arise concerning a provision
of this Agreement or concerning its interpretation or validity (whether arising
before or after the termination of this Agreement) the parties agree to attempt
in good faith to resolve such dispute by non-binding mediation. The mediation
shall be held in Harrisburg, Pennsylvania and will be completed within ninety
(90) days of the date on which both parties have been notified. However, nothing
in this clause will preclude either party from thereafter pursuing any means of
dispute resolution, including but not limited to litigation, should mediation
fail to result in a mutually acceptable solution to the dispute.
ARTICLE
XVII
OTHER
TERMS AND CONDITIONS
A. |
Waiver
and Estoppel:
The failure of the Company or Manager to insist on strict compliance with
this Agreement, or to exercise any right or remedy shall not constitute a
waiver of any rights provided under this Agreement, nor estop the parties
from thereafter demanding full and complete compliance nor prevent the
parties from exercising such a remedy in the
future. |
B. |
Notice
and Cure:
Whenever there is a default under this Agreement, either party shall be
entitled to written notice of default and have the right to cure such
default within ten (10) days from notice of such
default. |
13
C. |
Conflict
with Law:
If any provision of this Agreement should be declared invalid by a court
of general jurisdiction and superseded by specific law or regulation, such
law or regulation shall control to the extent of such conflict without
affecting the remaining provisions of this
Agreement. |
D. |
Assignment:
Neither this Agreement nor any rights or obligations under this Agreement
may be assigned or delegated by Manager without the prior written consent
of the Company. |
E. |
Headings:
The headings preceding the text of the Articles and paragraphs of the
Agreement are intended and inserted solely for the convenience of
reference and shall not affect the meaning, construction or effect of this
Agreement. |
F. |
Governing
Law:
This Agreement shall be governed as to performance, administration and
interpretation by the laws of the State of
Pennsylvania. |
G. |
Honorable
Undertaking:
This Agreement shall be considered as an honorable undertaking made in
good faith and shall be subject to a liberal construction for the purpose
of giving effect to the good faith and honorable intentions of Manager and
the Company. |
H. |
Promptly:
Unless the context and circumstances require action sooner, the term
“promptly” in this Agreement shall be defined to mean “within five (5)
business days.” |
I. |
Notices:
Wherever notice is required under this Agreement, it shall be in writing,
sent by certified mail, or reputable overnight carrier, and
addressed: |
A. If to the
Company:
Xxxxxxx
Xxxxxx
President
Physicians
Reciprocal Managers, Inc.
0 Xxxxx
Xxxxxx Xxxxxx, 0xx
Xxxxx
Xxxxxxxxxx,
XX 00000-0000
B. If to
Manager:
Xxxxxx
Xxxxxx
President
Professional
Medical Administrators, L.L.C.
000 Xxxx
Xxxxx Xxxx
Xxxxxxxxx,
XX 00000
J. |
Independent
Contractor:
This Agreement is not a contract of employment and nothing contained in
this Agreement shall be construed to create the relationship of joint
venture, partnership, or employer and employee between the Company and
Manager. Manager is an independent contractor and shall be free, subject
to the terms and conditions of this Agreement, to exercise judgment and
discretion with regard to the conduct of
business. |
14
K. |
Negotiated
Agreement:
This Agreement has been negotiated by the parties and the fact that the
initial and final draft shall have been prepared by a particular party
shall not be used in any forum in the construction or interpretation of
this Agreement of any of its provisions. |
L. |
Entire
Agreement:
This Agreement supersedes all previous agreements, whether written or
oral, between the Company and Manager, or their predecessors with respect
to the Business to be written under this
Agreement. |
1. |
This
Agreement may be amended, altered or modified only in writing signed by
both parties. |
2. |
Manuals,
rules, regulations, guidelines, instructions and directions issued in
writing by the Company from time to time as provided in this Agreement,
shall bind the parties as though a part of this
Agreement. |
M. |
Third
Party Beneficiary:
Nothing in this Agreement, except as expressly stated herein, is intended
to create any benefit for any third party not a party
hereto. |
N. |
Confidentiality:
Each party shall treat as confidential any and all information received
from the other party pursuant to this Agreement, and shall not disclose
any such information to any third party without the prior written consent
of the other party. Each party shall not disclose directly or indirectly
to any third party any term or provision of this Agreement without the
prior written consent of the other party. These obligations of
confidentiality shall survive termination of this
Agreement. |
15
The
Manager and the Company, intending to be bound, have executed this Agreement in
duplicate, each of which shall serve as an original:
PHYSICIANS’
RECIPROCAL MANAGERS, INC.
/s/
Xxxxxxx X. Xxxxxx
Xxxxxxx
Xxxxxx
President
Physicians
Reciprocal Managers, Inc.
PROFESSIONAL
MEDICAL ADMINISTRATORS, L.L.C.
/s/
Xxxxxx Xxxxxx
Xxxxxx
Xxxxxx
President
Professional
Medical Administrators, L.L.C.
16
PROGRAM
MANAGER’S AGREEMENT
(The
Business)
EXHIBIT
A
The
Company extends underwriting authority to the Manager as follows:
Professional
Liability for physicians and surgeons, nurse practitioners, nurse anesthetists,
physician assistants, nurse midwives and any other healthcare professionals as
per the Rates, Rules, Underwriting Guidelines and forms filed with the
Pennsylvania Insurance Departments and other state regulatory departments as
agreed from time to time which shall be part of and is hereby incorporated into
this Agreement.
17
PROGRAM
MANAGER’S AGREEMENT
(Claims
Authority)
EXHIBIT
B
____
extends claims authority to the Manager as follows:
All
claims shall be administered by Administrators for the Professions, Inc. (“AFP”)
on behalf of the Manager.
It is
agreed that Manager shall be responsible for and administer claims arising under
the ____ policies which constitute the Business, subject to the requirements and
limitations set forth below:
A.
|
All
subject claims shall be handled by Manager until their final disposition,
except as otherwise indicated in this Agreement, and in compliance with
all applicable laws, regulations and guidelines. The Manager shall
establish and maintain claim files on each claim reported and advise the
insured of procedures to be followed when a claim
arises. |
B.
|
Reporting
Requirements |
1. |
The
Manager must report all claims on monthly bordereaux which reflect the
status and change of status for each claim. Each claim so reported will
reflect an individual ____ claim number assigned by Manager and in a
format acceptable to ____. Such bordereaux will be provided to ____ as
specified in Section F., Monthly Reporting, subsection - Claims
Bordereaux. Additionally, Manager shall prepare detailed written reports
on any particular claim as may be requested by
____. |
2. |
All
claims involving any one of the following criteria outlined below will be
considered a “Catastrophic Occurrence.” |
a. |
Incidents
involving a fatality. |
b. |
Brain
damage injuries (skull fracture, concussion, loss of consciousness,
etc.) |
c. |
Spinal
injury with potential for paraplegia or
quadriplegia. |
d. |
Dismemberment
or other serious disfigurement potential. |
e. |
Injuries
involving nerve damage. |
f. |
Burn
injuries. |
18
g. |
Injuries
involving a fracture or multiple fractures. |
h. |
Serious
vision and/or hearing impairment injuries. |
i. |
Environmental
claims. |
j. |
Any
claim involving extra contractual obligations, excess, or direct claims
against the company or State Insurance Department
inquiries. |
k. |
Any
claims or loss involving class actions. |
l. |
Any
claim alleging sexual abuse or molestation. |
m. |
Any
claim valued in excess of $500,000
indemnity. |
3.
|
All
Catastrophic Occurrences, as defined in Section A(2), will be subject to
the following additional reporting
requirements: |
a. |
The
Manager will report such claims to ____ immediately upon notice or receipt
by Manager and on a monthly basis, as described in Section
F. |
b. |
The
Manager will report these claims, regardless of its opinion as to
likelihood of liability for each such Catastrophic
Occurrence. |
c. |
The
Manager will also provide a written report concerning the development of
these Catastrophic Occurrence Claims on a regular basis, at intervals not
to exceed 90 days or sooner upon notice of material
development. |
C.
|
Manager’s
Authority |
1. |
All
claims shall be autonomously handled by the Manager. AFP shall have
authority to initiate or transact a settlement or compromise, or make full
payment of the indemnity demands for such
claims. |
2. |
Manager
shall provide immediate written notice to ____ of any claim in which
coverage is denied to an Insured without the advice of outside counsel. A
complete copy of the claim file shall accompany such notice and all
subsequent received or produced information shall immediately be forwarded
to ____. |
19
3. |
Manager
shall provide immediate written notice to ____ of any claim immediately
upon Manager reasonably determining that the expected indemnity value will
equal or exceed $500,000. A complete copy of the claim file shall be sent
to ____ upon their request. |
4. |
Manager
is authorized to incur such reasonable expenses allocable to individual
claims as are necessary for the proper administration of this
Agreement. |
D. |
Indemnity
Payments |
Manager
shall arrange for and make indemnity payments, in compliance with Section C.,
above, and in conformance with the following:
1. |
Claim
payments do not require written authority and approval from
____. |
2. |
Indemnity
payments will be made by ____ at the request of Manager within 48 hours of
receipt from the reinsurer of the indemnity amount
requested. |
E. |
Expense
Payments |
Manager
shall arrange for and make payment of expenses reasonably incurred by it,
pursuant to Section C. of this Agreement, and in conformance with the following
restrictions:
1.
|
Expenses
not incurred directly by Manager: |
a. |
Expense
payments do not require written authority and approval from
____. |
b. |
Expenses
directly incurred by Manager. |
c. |
Expense
payments will be made by the Manager from the fiduciary account and such
payments will be deducted from the monthly premium remitted to ____ and
the reinsurer as their interests appear. If, however, expense payments are
more than the premium for the month, ____ will remit to the Manager the
additional amount required within 48 hours of receiving payment from the
reinsurer. |
2.
|
Expenses
Directly Incurred by Manager. |
a. |
Labor
Expenses of Manager: |
$750.00
per claim file per year, or if open for part of a year, prorated from the first
day of the month of opening to the first day of the month following the month of
closing. Payment shall be made monthly and in advance, the first payment to
include the month of opening and the month that follows.
20
b. |
Other
Manager Expenses: |
The
Manager shall be entitled to reimbursement by ____ and its reinsurer as their
interests appear for the cost of the following internal expenses incurred by its
employees:
i. |
Fees
to obtain records, x-rays and study models; |
ii. |
Fees
for copying records, x-rays and study
models; |
iii. |
Fees
for expert review of file; |
iv. |
Fees
for clinical examination of
plaintiff/claimant; |
v. |
Fees
for outside investigator for background investigation, i.e., fraud,
criminal; |
vi. |
Fees
for service of legal papers or subpoenas; |
vii. |
Court
reporter bills for deposition and/or trial
transcripts; |
viii. |
Fees
to obtain prior transcripts for experts, both ours and our
adversary’s; |
ix. |
Fees
to obtain material related to investigation, i.e., legal research and/or
medical research; |
x. |
Fees
to obtain information from governmental agencies related to Insured or
claimants; |
xi. |
Fees
to Insureds for attendance at trial as provided for under the policy,
and |
xii. |
Any
other specific expenses approved, in writing, by
____. |
F.
|
Monthly
Reporting |
1. |
Claims
Bordereau |
a. |
The
Manager shall provide a separate Inception-to-Date and a Month-to-Date
Claims Bordereaux, on a diskette (on a format agreed upon by Manager and
____) as well as a hard copy by the 25th of
every calendar month or the last prior working day. Such Claims Bordereaux
shall include the following information: |
1. |
Inception-to-Date
Claims Bordereau |
a. |
PMA
Claim Number |
b. |
____
Claim Number |
c. |
Policy
Number |
d. |
Named
Insured |
e. |
Policy
Effective Date |
f. |
Policy
Expiration Date |
g. |
Retroactive
Date |
h. |
Status
of Claim (open/closed) |
i. |
Claimant
Name |
j. |
Date
of Loss |
k. |
Report
Date of Loss |
l. |
ITD
Balance of Outstanding Reserves |
21
m. |
ITD
Balance of Losses Paid |
n. |
ITD
Balances of Expenses Paid (Outside) |
o. |
ITD
Balances of Expenses Paid (Inside) |
p. |
ITD
Subrogation Recoveries |
q. |
ITD
Subrogation Expenses |
r. |
ITD
Amount of Claim (sum of l-r) |
2. |
Month-to-Date
Claims Bordereau |
a. |
PMA
Claim Number |
b. |
____
Claim Number |
c. |
Policy
Number |
d. |
Named
Insured |
e. |
Policy
Effective Date |
f. |
Policy
Expiration Date |
g. |
Retroactive
Date |
h. |
Status
of Claim (open/closed/changed) |
i. |
Claimant
Name |
j. |
Date
of Loss |
k. |
Report
Date of Loss |
l. |
MTD
Outstanding Reserves |
m. |
MTD
Losses paid |
n. |
MTD
Expenses Paid (Outside) |
o. |
MTD
Expenses Paid (Inside) |
p. |
MTD
Subrogation Recoveries |
q. |
MTD
Subrogation Expenses |
r. |
MTD
Amount of Claim (sum of l-r) |
G.
|
Recovery |
The
Manager shall diligently pursue all avenues of possible recovery, i.e.,
subrogation or recovery or recoupment of loss or expense paid. All recoveries
must be made payable to ____ and its reinsurer as their interests appear. The
amount of the Recovery paid shall be included in the bordereaux which reflects
activity for the month that the Recovery was received by the Manager. Manager
shall provide any additional details concerning a recovery as may be requested
by ____.
H.
|
Service
of Suit |
____
hereby appoints the Manager agent for service of process on any suit or
proceeding involving a claim or loss arising out of a policy issued by the
Manager on behalf of ____.
22
I.
|
Compensation |
Manager’s
full compensation for rendering claims services for the Business as provided
herein shall be its direct incurred labor expenses detailed in Section E.2.a.,
above.
The
Manager and ____, intending to be bound, have executed this Claims Authority,
Exhibit B, to the Agreement in duplicate, each of which shall serve as an
original:
First
Professionals Insurance Company, Inc.
__________________________________
Xxxxxx X.
Xxxxx
Senior
Vice President - Administration
First
Professionals Insurance Company, Inc.
Professional Medical Administrators, L.L.C. | Administrators for the Professions, Inc. |
__________________________________ | __________________________________ |
Xxxxxxx Xxxxxx | Xxxxxxx Xxxxxx |
President | Chief Executive Officer/President |
Professional Medical Administrators, L.L.C. | Administrators for the Professions, Inc. |
23