MANAGEMENT AND SERVICES AGREEMENT
This MANAGEMENT AND SERVICES AGREEMENT dated December 1, 1997 (the "Agreement")
by and between U.S. PHYSICIANS, Inc., a Pennsylvania corporation ("Manager") and
U.S. Medical Services of New York, P.C., a Pennsylvania professional corporation
("P.C.").
BACKGROUND
A. P.C. intends to provide specialty and primary medical care and
related medical services (collectively, "Medical Services") to the general
public at various locations in the State of New York (the "Sites") and has filed
an application for authority to do business and conduct a medical practice in
the State of New York.
B. For reasons of quality, efficiency and economy, P.C. has determined
that it should obtain the services of another entity to manage the Sites and to
perform certain administrative, billing and marketing services for P.C.
C. P.C. believes that such delegation of the management aspects of its
practice will enable it to better concentrate on the practice of medicine and
therefore improve the Medical Services provided by P.C.
D. P.C. will maintain the sole responsibility of providing Medical
Services at the Sites and for matters involving patient care.
E. Manager has considerable experience in providing management and
administrative services to medical practices throughout the Mid-Atlantic region.
F. Manager desires to assume the management of the business operations
of P.C. and to negotiate agreements with insurers, employers and other
purchasers of health care services for the provision of Medical Services by P.C.
G. Manager will provide financing to P.C. necessary for the operations
of P.C.
H. Manager has developed facilities and management services designed to
make available to qualified physicians the facilities, equipment, supplies,
management services, capital financing, support staff, marketing and other
support services necessary to permit such physicians to provide medical services
on a cost-efficient basis and to enhance the ability of P.C. to enter into
competitive arrangements with insurers, employers and other purchasers of health
care services.
I. P.C. desires that Manager make available to P.C. such financing,
management services and facilities, and agrees hereby to compensate Manager for
such services as described herein. P.C. anticipates that, in light of the
dynamic changes in health care, particularly in New York, it will be required to
expand the scope of and locations for, the delivery of Medical Services it
provides or makes available to the public. P.C. further anticipates that the
scope of, and cost associated with, the financing and management services to be
rendered and the facilities to be provided by Manager hereunder will change with
the expansion of P.C.'s medical practice and the development of additional
Sites.
J. Manager is willing to make such financing, management services and
facilities available to P.C. on the terms and conditions provided in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the promises
and mutual covenants contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Agreement to Manage and Provide Administrative and Support Services.
P.C. hereby engages Manager, and Manager accepts such engagement, to manage the
Sites on behalf of P.C. and for its account, to market Medical Services provided
through P.C. to purchasers of health care services and to provide the financing,
services and facilities set forth in this Agreement, on the terms and conditions
set forth herein.
2. Term. The term of this Agreement shall begin as of the date the New
York Department of State approves the P.C.'s application of authority to conduct
business in New York (the "Commencement Date") and shall end on the fortieth
(40th) anniversary of such date unless sooner terminated in accordance with the
provisions of Paragraph 12. Unless either party elects to terminate this
Agreement at the end of the initial term or any renewal term, by giving written
notice to the other party ninety (90) days before the expiration of the then
current term, this Agreement shall be deemed to have been automatically renewed
for an additional term of five (5) years.
3. Duties and Responsibilities of P.C. P.C. shall be responsible for
all Medical Services at the Sites and shall render such Medical Services to the
public as will maximize the quality and efficiency of the treatment of patients.
P.C. shall be solely responsible for the following items:
(a) Physicians and Other Health Care Providers. P.C. shall hire,
engage, supervise, evaluate and terminate all physicians, nurses, physical
therapists, and other health care providers (collectively, "Professionals") at
the Sites, whether they are employees of P.C. or independent contractors of
P.C., and, upon sixty (60) days' prior written notice to and prior consultation
with Manager, establish compensation and benefits for such Professionals. P.C.
shall not increase or decrease the amount of such compensation and/or benefits
without providing Manager sixty (60) days' notice of the change and prior
consultation with Manager. P.C. shall be responsible for the payment of all
compensation payable to Professionals, except to the extent that nurses,
physical therapists, and other health care providers may become employees of
Manager pursuant to subparagraph 4(a)(iv) of this Agreement.
(b) Medical Directors. P.C. shall designate one or more Medical
Directors, each of whom is properly qualified to perform the supervisory,
quality assurance and credentialing (collection and verification of information)
functions necessary for the rendering of appropriate Medical Services at the
Sites.
(c) Quality and Cost-Effectiveness of Medical Services. P.C.
shall monitor the quality of Medical Services practiced by all Professionals at
the Sites, to assure that such care meets currently accepted standards of
medical competence and is in accordance with currently approved methods and
practices in the medical profession and related fields. P.C. shall adopt a peer
review/quality assessment program to monitor and evaluate the quality and
cost-effectiveness of Medical Services provided by Professionals at the Sites,
and shall assure that appropriate Medical Services are rendered in a
cost-effective manner.
(d) Medical Records. P.C. shall maintain the medical records of the
patients of P.C. in accordance with applicable law. Manager may, at P.C.'s
request, assist in the development of policies and procedures for efficient
maintenance and retrieval of medical records, subject to applicable law.
Confidentiality, and availability of medical records for inspection by
authorized agencies or individuals, shall be maintained in accordance with
applicable state and federal laws.
(e) Medical Fees. For purposes of establishing budgetary
assumptions for the Sites, P.C., after providing Manager with sixty (60) days
prior notice and prior consultation with Manager, shall:
(i) determine a fee schedule or schedules for each Site prior to
the inception of operations at that Site; and
(ii) determine revisions to such fee schedule or schedules not
less than thirty (30) days prior to the effective date of any proposed amendment
to such fee schedule. Manager shall be authorized to negotiate fees for services
with third-party payors on behalf of P.C.
(f) Daily Statements. P.C. shall prepare and submit to Manager, or
cause its physicians and, if applicable, other Professionals, to prepare and
submit, daily statements of professional services rendered and any prescribed
related matters, on such form, with such detail and in such manner as Manager
shall from time to time provide to P.C., in order to permit Manager to cause
proper billing for such services to be rendered.
(g) Protocols. P.C. shall, following prior consultation with
Manager, develop and implement utilization review standards, treatment protocols
and similar guidelines to establish measures for the delivery of high quality
and cost-effective medical care.
4. Duties and Responsibilities of Manager.
(a) Management Services. Manager shall be solely responsible for the
business operation of the Sites and assumes responsibility for the management of
all non-medical aspects of the Sites, except as otherwise specifically
prohibited by law or limited by this Agreement, and shall provide the following
services:
(i) Manager shall lease, acquire or otherwise procure one or
more Sites in which P.C. shall conduct its practice. The selection of the
location and the addition of new practice sites shall be determined by the P.C.
upon providing Manager sixty (60) days' prior written notice of its intent to
change the location of a Site or add a new Site and following consultation with
and recommendations of Manager regarding any such selection or addition.
(ii) Manager shall provide all reasonable and necessary medical
equipment, furnishings and furniture required in the day-to-day operation of the
Sites. MANAGER SUPPLIES THE EQUIPMENT AS IS. MANAGER IS NOT A MANUFACTURER OF,
AND IS NOT ENGAGED IN THE SALE OR DISTRIBUTION OF, THE EQUIPMENT. MANAGER IS NOT
AN AGENT OF THE MANUFACTURER OR THE SELLER OF THE EQUIPMENT. MANAGER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, REGARDING THE MERCHANTABILITY,
FITNESS, DESIGN OR SUITABILITY FOR ANY PURPOSE OR ANY CONDITION OF, OR THE
QUALITY OR CAPACITY OF, OR THE MATERIAL OR WORKMANSHIP, IN THE EQUIPMENT.
(iii) Manager shall employ all necessary clerical, secretarial
and bookkeeping personnel reasonably necessary for the conduct of P.C.'s
operations at the Sites. Manager shall determine and cause to be paid the
salaries and fringe benefits of all such personnel.
(iv) Manager shall assist P.C. in negotiating employment
agreements or contracts with nursing staff, technicians and other allied and
ancillary health care personnel. All persons whose services are billed to
Medicare, Medicaid or other third-party payors as under the supervision of
physicians shall be employed by P.C.; provided, however, that employment
agreements may be assumed by and assigned to Manager at the request of Manager
if and to the extent applicable law authorizes xxxxxxxx by P.C. for supervised
services rendered by persons not employed by P.C.
(v) Manager shall administer P.C.'s payroll and
personnel-related activities.
(vi) Manager shall supervise all of Manager's employees;
provided, however, that P.C. shall supervise Professionals to the extent
necessary to maintain P.C.'s responsibility for the medical aspects of the
practice and to comply with requirements of applicable law.
(vii) Manager shall, unless prohibited by law, order and procure
all Medical Supplies (as hereinafter defined), office supplies and other
supplies necessary in the operation of the Sites to enable P.C. to deliver
quality Medical Services in a cost-effective manner. The ultimate oversight,
supervision and ownership for all Medical Supplies is and shall remain the sole
responsibility of P.C. "Medical Supplies" shall mean all drugs, pharmaceuticals,
products, substances, items or devices whose purchase, possession, maintenance,
administration, prescription or security require the authorization or order of a
licensed health care provider or require a permit, registration, certification
or other governmental authorization held by a licensed health care provider as
specified under any applicable federal or state law.
(viii) Manager shall cause to be placed and kept in force all
forms of insurance needed to protect adequately P.C. and itself, in connection
with the operation of the Sites, including, but not limited to, where
appropriate, workers' compensation insurance, public liability insurance, fire
and extended coverage insurance, surety bonding, business interruption
insurance, burglary and theft insurance; provided, however, that P.C. shall have
the exclusive responsibility for maintaining malpractice liability insurance for
the Professionals pursuant to Paragraph 6, but which the Manager shall procure
and administer for P.C.
(ix) Manager shall maintain a comprehensive system of office
records, books and accounts reflecting the income and expenses of the Sites,
which books and records may be inspected by P.C. at any reasonable time during
regular business hours. Records shall be maintained for at least four (4) years
from the date of service or from any governmental inquiry related thereto, and
made available upon request to officers, representatives or agents of the
Secretary of Health and Human Services or of the Comptroller General of the
United States General Accounting Officer.
(x) Manager shall prepare and submit to P.C. monthly financial
statements with respect to the operation of the Sites.
(xi) Manager shall provide all janitorial, grounds and
maintenance services for the Sites.
(xii) Manager shall maintain, service and repair all equipment,
or use reasonable efforts to have lessors or contracted service providers
perform such necessary maintenance, service and repair.
(xiii) Manager shall provide printing, stationery, forms,
postage, duplicating, telecopying, photocopying and other support services as
are reasonably necessary and appropriate for the operation of the Sites.
(b) Billing Services. Manager shall provide, or cause to be
provided, the following billing services to P.C.:
(i) a competent management executive for the supervision of the
billing and collection functions of P.C.'s business;
(ii) services with respect to billing of patients, insurance
companies, government entities and third party payors and collecting all charges
made to P.C.'s patients, excluding, however, any obligation to initiate legal
proceedings for collection, although Manager may do so at its sole and absolute
discretion;
(iii) preparation of all necessary medical letters and reports,
insurance forms, governmental agencies' claim forms and workers' compensation
claim forms;
(iv) preparation and mailing of all necessary and required
patient statements and invoices and reasonable follow-up on such preparation and
mailing;
(v) response by telephone or letter with reasonable dispatch and
promptness to any reasonable patient inquiry or request for assistance in the
interpretation of insurance policies or reimbursement programs and handling, to
the best of its ability, of any complaint involving professional services or
fees; and
(vi) operating procedure manuals for clerical staff.
(c) Marketing Services. Manager, at its sole discretion and with due
regard to the economic costs and anticipated benefits, may provide, or cause to
be provided, the following marketing services to P.C.:
(i) promotion of the Sites' services and facilities by marketing
representatives of Manager through contact with referring physicians and
potential referring physicians;
(ii) preparation and distribution of informational and
promotional materials, including descriptions of services, newsletters,
testimonials and other sales promotional pieces, subject to prior approval of
P.C., which shall be deemed to be given unless Manager receives written
disapproval within ten (10) days after P.C. receives the promotional materials;
(iii) subject to the need of certain third party payors to
maintain some form of exclusivity, promotion of the Sites through contact and
continued liaison with administrative directors of area HMO's, PPO's, unions and
self-insured clients and other third-party payors; and
(iv) conducting open house receptions for new Sites, seminars
for physicians and office staff, speaking engagements for physicians who request
Manager to assist them in organizing such engagements, newspaper interviews and
magazine articles when initiated and requested by an interviewer or magazine.
(d) Provision of Funds. Manager shall arrange financing for P.C. or,
if no financing can be reasonably arranged, Manager shall advance funds to P.C.
in the event P.C. does not have sufficient cash on hand to pay its expenses as
and when due. Any such advance by Manager shall be repaid to Manager together
with interest at the rate from time to time charged to Manager by its primary
lender (or in the event there is no such lender, at an annual rate equal to the
prime rate announced from time to time in the Wall Street Journal plus 2%) out
of available cash in subsequent months prior to the payment of fees due Manager
pursuant to subparagraph 8(a).
(e) Deposit of Collections. Manager, in the name of P.C., shall
deposit in the appropriate bank accounts ("Bank Accounts") all receipts arising
from the operation of the Site(s) received by Manager on behalf of P.C. and
shall use reasonable diligence to see that disbursements from such accounts are
made by and on behalf of P.C. in such amounts and at such times as may be
required by this Agreement. P.C. shall provide Manager with all authorizations
necessary to enable Manager to make the deposits and disbursements required by
this subparagraph (e).
(f) Payment of Expenses. The parties agree and acknowledge that
Manager shall be solely responsible for all costs and expenses incurred in
connection with rendering the services Manager has undertaken as described in
Paragraph 4 above, and that Manager's sole compensation for such services shall
be as described in Paragraph 8 below.
(g) Other Services. Any additional services required by P.C. that
are not listed or identified in this Agreement shall be rendered for P.C. only
by an amendment to this Agreement.
5. Relationship of the Parties.
(a) Independent Contractors. P.C. and Manager are independent
contractors and the relationship between them is that of professional
corporation and an independent supplier of non-medical services and facilities.
Nothing in this Agreement shall be construed to create a principal-agent,
employer-employee, master-servant, partnership or joint venture relationship.
(b) P.C. - Patient - Manager Relationships. The professional
relationship between P.C. and its patients shall, at all times during the term
of this Agreement, be solely between P.C., its physicians and other
Professionals and their patients. P.C. shall have complete responsibility for
its medical practice and that of Professional employees or independent
contractors. Manager shall not interfere with the exercise of medical judgment
by the physicians and other Professionals employed by P.C. nor shall Manager
interfere with, control, direct, or supervise P.C., or any physician or other
Professional employee or independent contractor, in connection with the
provision of medical or ancillary services by P.C. In connection with the care
and treatment of its patients, P.C. shall be solely responsible for supervising
all personnel performing medical or ancillary services. To the extent any act or
service set forth in this Agreement required to be performed by Manager is
construed by a court of competent jurisdiction or by the appropriate licensure
bureaus or divisions of the Pennsylvania Department of State or the New York
Department of Health or Education to constitute the practice of medicine, the
requirement to perform that act or service by Manager shall be deemed waived and
unenforceable. In addition, if in the opinion of counsel to Manager, any act or
service set forth in this Agreement required to be performed by Manager is
likely to be considered to constitute the practice of medicine, the requirement
to perform that act or service by Manager shall be deemed waived and
unenforceable. All decisions as to which individuals shall utilize the services
of P.C. shall be the sole responsibility of P.C.; provided, however, that
Manager may negotiate on behalf of P.C. contracts with employers, unions, health
care insurers, HMOs, PPOs and other third-party payors.
6. Malpractice Insurance.
(a) Minimum Policy. On its own behalf and on behalf of each
physician or other Professional its employs, and each physician or other
Professional contracting with P.C. for the provision of professional services,
P.C. shall provide and keep in force a malpractice insurance policy or policies
of standard form in the State of New York, with limits mutually acceptable to
Manager and P.C. The policies shall be obtained by P.C. or, as the case may be,
by each such physician or other Professional employed by P.C., or contracting
with P.C., and certificates thereof shall be delivered to Manager prior to the
inception of operations of any Site, together with evidence of the payment of
the premiums thereon, and shall be placed with insurance companies authorized
and licensed to issue such policies in the State of New York at rates deemed
reasonable and appropriate and having reserves in an amount deemed to be
reasonably adequate by P.C. and Manager. P.C. shall use its best efforts to name
Manager as an additional insured party on all malpractice insurance and Manager
may, at its option, participate in the procurement of cost-effective coverage on
behalf of P.C. P.C. shall provide documentation to Manager that all such
insurance is in full force and effect on each subsequent anniversary of the
Commencement Date and not less than ten (10) business days prior to the earlier
of the dates upon which P.C. employs or enters into a contract with any
Professional to provide services at a Site.
(b) Loss of Malpractice Insurance of Medicare/Medicaid Provider
Services. P.C. hereby agrees that it will immediately suspend any physician or
other Professional for whom malpractice insurance cannot be reasonably obtained
or whose malpractice insurance is canceled, and such physician or other
Professional shall not be reinstated or permitted to practice at any Site until
such time as the malpractice policy is reinstated. P.C. will notify Manager
within 24 hours of receipt of notice or information that any physician or other
Professional is not in compliance with the provisions of this Agreement
pertaining to malpractice insurance, or has been suspended or terminated from
participation in Medicare or Medicaid. Failure to suspend a physician or other
Professional who is not in compliance with the provisions of this Agreement
pertaining to Medicare/Medicaid participation status, malpractice insurance,
failure to replace such insurance should it be canceled, or failure to provide
such timely notice, shall constitute a breach of this Agreement pursuant to
Paragraph 12.
7. Intentionally omitted.
8. Compensation.
(a) Payment of Fees. (i) The parties hereto recognize that Manager's
expenses, and the expenses of the Sites, will vary substantially depending on
the volume and type of patient services. The parties further recognize the
inherent uncertainties and the difficulty of predicting monthly expenses, volume
of services, the extent of obligations and the risks that Manager has taken and
will take with respect to capital expenditures, equipment lease obligations and
other obligations incurred in connection with the establishment and furnishing
of the Sites, and additionally recognize the need to provide Manager with
sufficient revenues to pay all operating expenses and to provide Manager with a
return on its investment commensurate with the risks being assumed by Manager.
Therefore, the parties agree that P.C. shall pay to Manager as compensation for
all the services rendered by Manager pursuant to the terms of this Agreement, an
amount equal to [REDACTED DUE TO REQUEST FOR CONFIDENTIAL TREATMENT] percent
([REDACTED DUE TO REQUEST FOR CONFIDENTIAL TREATMENT] %) of the annual expenses
incurred by Manager in rendering the management and administrative services
described herein (the "Management Fee"). For purposes of this Agreement, such
annual expenses shall include without limitation (i) salaries and benefits and
other costs of providing the administrative and clerical staff necessary for the
operation of the Sites; (ii) salaries and benefits and other costs of any
professional staff engaged or employed by Manager to perform services on behalf
of P.C. in accordance with subparagraph 4(a) above, (iii) cost of leasing office
space for the Site(s); (iv) purchase and maintenance of the management
information systems provided to the P.C., including hardware, software,
installation and maintenance costs; (v) all expenses incurred in maintenance of
the Site(s), including all utilities, security and maintenance; (vi) liability
insurance premiums; (vii) cost of capital to maintain the medical practice of
the P.C. as described in subparagraph 4(d); (viii) cost of Medical Supplies;
(ix) marketing expenses; (x) depreciation expenses; (xi) consultant, legal and
accounting fees incurred in connection with the Site(s) on behalf of the P.C.;
and (xii) all other expenses incurred by Manager in carrying out its obligations
under this Agreement.
(ii) Because of the difficulty of predicting actual monthly
expenses, the parties agree that Manager shall receive a fixed monthly
Management Fee that is intended to approximate the actual expenses incurred by
Manager. The initial monthly Management Fee, subject to mutually and reasonably
agreeable adjustment from time to time in the case of any increase or decrease
in the number of physicians providing Medical Services through P.C., or the
number of locations at which such physicians provide such Medical Services,
shall equal [REDACTED DUE TO REQUEST FOR CONFIDENTIAL TREATMENT]. Manager shall
have the right to reconcile the monthly payments with the amounts actually due
and payable hereunder to Manager on a quarterly basis, and Manager will provide
P.C. with evidence of such reconciliation.
(b) Authorization for Withdrawal from P.C. Bank Account. P.C.
authorizes Manager to make disbursements from the Bank Accounts to pay Manager
amounts owed to it by P.C., including the Management Fee, and amounts owed to
third parties as required hereunder. Payment of the monthly Management Fee (or
any amounts due Manager as a result of any quarterly reconciliation) shall not
be subject to deduction or offset by P.C.
(c) Grant of Security Interest. As security for the payment by P.C.
of the compensation due to Manager pursuant to this Agreement and for any
advances made by Manager to P.C. pursuant to subparagraph 4(d), P.C. hereby
grants Manager a security interest in all of P.C.'s accounts receivable
(including all rights to payment by the Medicare or Medicaid programs, any
governmental body, insurance company, managed care organization or self-insured
health plan to the extent permitted by law), cash, bank accounts, Medical
Supplies and proceeds of the foregoing (collectively, the "Secured Assets"). At
the request of Manager, P.C. shall execute and deliver to Manager any and all
documents requested by Manager to evidence or perfect the security interest
granted hereby, including, but not limited to, UCC-1 Financing Statements. This
Agreement shall constitute a security agreement.
(d) Review of Books. Each party, at its sole expense, shall have the
right at least annually to have a certified public accountant review the other
party's books to determine whether that party has complied with this Agreement.
9. Books, Office Equipment, Etc.
(a) P.C.'s Ownership. All Medical Supplies (as defined in
subparagraph 4(a)(vii)) and patient records shall at all times be and remain
P.C.'s property; provided, however, that, upon termination of this Agreement,
P.C. shall provide any successor entity providing services at any Site, upon
request by such successor within ninety (90) days after termination of this
Agreement and at the successor's expense, access to, and copies of, such records
relating to Medical Services performed at such Site by P.C. during the term
hereof as such successor feels are reasonably necessary in order for such
successor to provide continuing Medical Services. Notwithstanding the foregoing,
no patient records will be made available without the written consent of the
patient if such is required by law. Manager shall reimburse P.C. the reasonable
cost of making such copies as are required to comply with this subparagraph
9(a).
(b) Manager's Ownership. All professional instruments, equipment,
computers, computer software programs and other management information systems,
supplies, samples, forms, charts, logs, brochures, building information,
policies and procedures, protocols, outcome studies, contracts or any other
materials or information furnished to P.C. by Manager are and shall remain the
sole property of Manager; if Manager requests the return of such equipment or
materials at any time after the term of this Agreement, P.C. shall immediately
deliver the same to Manager.
10. Exclusivity, Non-Competition and Non-Disclosure Agreement.
(a) Exclusivity. P.C. agrees that during the term of this Agreement
it shall provide Medical Services exclusively at Sites managed by Manager
pursuant to this Agreement unless the parties hereto otherwise expressly agree
in writing.
(b) Non-Competition. During the term of this Agreement and for
twelve (12) months following termination, P.C. shall not:
(i) employ any individual previously working for Manager as its
employee;
(ii) directly or indirectly induce or attempt to influence any
employee of Manager to terminate employment with Manager; or
(iii) engage in, or have any interest in, directly or indirectly
(as proprietor, partner, stockholder, principal, agent, broker, employee,
consultant, or lender) any business or medical facility within the Restricted
Area which is engaged in providing Medical Services such as those provided at
the Sites or providing management services similar to those provided by Manager.
Restricted Area shall mean the area within a six (6) mile radius of any Site
located outside of the New York City metropolitan area (including Westchester
and Nassau counties) and a three (3) mile radius of any Site located with the
New York City metropolitan area.
(c) Non-disclosure. During the term of this Agreement and at all
times thereafter, P.C. shall not disclose, communicate or divulge, or use for
the direct or indirect benefit of any person, firm, association or company
(except any material referred to in subparagraph 9(a) above) any confidential
information regarding the business methods, business policies, procedures,
protocols, techniques, information systems or trade secrets, or other knowledge
or processes of or developed or used by Manager, or any other confidential
information relating to or dealing with the business operations or activities of
Manager (including, but not limited to financial information), made known to
P.C. or its employees or independent contractors or learned or acquired by P.C.,
its employees or independent contractors during the term of this Agreement. In
furtherance of the foregoing, P.C. agrees not to disclose, communicate or
divulge to any third party the terms of this Agreement unless so ordered by act
of law or other governing body having the authority to compel P.C. to do so.
(d) Reasonableness of Restrictions. The parties acknowledge that the
restrictions contained in subparagraphs 10(a), 10(b) and 10(c) are reasonable
and necessary to protect the legitimate interests and substantial investment of
Manager and that any violation of these restrictions would result in immediate
irreparable injury to Manager. If the period of time or geographical area
specified in subparagraph 10(b) and 10(c) should be adjudged unreasonable in any
proceeding, then the period of time or geographic area shall be reduced by the
elimination or reduction of such portion thereof so that such restrictions may
be enforced for such time or area as is adjudged to be reasonable. P.C. and
Manager acknowledge that, in the event of a violation of any such restrictions,
Manager shall be entitled to preliminary and permanent injunctive relief as well
as an equitable accounting of all earnings, profits and other benefits arising
from such violation, which rights shall be cumulative and in addition to any
other rights or remedies to which Manager may be entitled. In the event of a
violation, the period referred to in subparagraph 10(b) shall be extended by a
period of time equal to that period beginning with the commencement of any such
violation and ending when such violation shall have been finally terminated in
good faith.
(e) Survival. The provision of this Paragraph 10 shall survive the
expiration or termination of this Agreement.
11. Power of Attorney. P.C. hereby appoints Manager, for the term
hereof (including all renewal terms) and thereafter until all amounts due to
Manager have been paid, to be its true and lawful attorney-in-fact, for the
following purposes:
(a) to collect accounts receivable owing to P.C. during the term of
this Agreement in P.C.'s name and on its behalf;
(b) to receive payments from Blue Cross, Blue Shield, insurance
companies, health care plans, Medicare, Medicaid and all other third party
payors in P.C.'s name and on its behalf for deposit in the Bank Accounts;
(c) to take possession of, endorse in the name of P.C. (and/or in
the name of an individual Professional) such payment intended for the payment of
a Professional's bills during the term of this Agreement and deposit in the Bank
Accounts any notes, checks, money orders, cash and other instruments received in
payment of accounts receivable;
(d) to initiate the institution of legal proceedings in P.C.'s name
to collect any account and monies owed to P.C., to enforce the rights of P.C.
under any contract or in connection with the rendering of any service and to
contest adjustments and decisions by government agencies (or fiscal
intermediaries) and third-party payors;
(e) to negotiate payments to P.C. under this Agreement to the extent
otherwise permitted by law;
(f) to perfect a security interest in the Secured Assets of P.C.;
and
(g) to do any other act, make any payment or execute any document on
behalf of P.C. to cure any default by P.C. of this Agreement; provided, such act
by Manager must comply with any applicable law.
12. Termination and Breach.
(a) General Breach by P.C. In the event that P.C. should be in
default in the performance of any material provision of this Agreement, and such
default is not cured within thirty (30) days after receipt of written notice of
such default from Manager, Manager, at its option, may terminate this Agreement
by delivering written notice to P.C. at any time after expiration of such thirty
(30) day period.
(b) Failure to Maintain Malpractice Insurance or Licenses or
Participation Agreements. If P.C. should materially breach any of its
obligations pursuant to Paragraph 6 or its obligation to maintain, or cause to
be maintained, the medical licenses or participation agreements of all
physicians employed by it, or under contract to it, or to dismiss those who do
not maintain their medical licenses and participation agreements under the same
terms and conditions in Paragraph 6 pertaining to the maintenance of malpractice
insurance, and if such breach is not cured within ten (10) business days after
receipt by P.C. of written notification of such breach from Manager, Manager may
either cure the breach itself, where possible, at the expense of P.C., or
terminate this Agreement upon written notice to P.C.
(c) Bankruptcy of Manager. In the event Manager files any voluntary
petition in bankruptcy or any bankruptcy proceeding is filed against Manager
which in either case remains undismissed for a period of 180 days, P.C., at its
option, may terminate this Agreement by delivering written notice to Manager at
any time after such 180 day period and prior to the dismissal of such
proceeding.
(d) Termination by Manager. Manager may, at any time after the first
12 months of the term hereof, terminate this Agreement upon one hundred twenty
(120) days' prior written notice to P.C.
(e) Effect of Termination. Upon the termination of this Agreement,
Manager shall cause a final accounting and reconciliation to be performed no
later than ninety (90) days following the effective termination date hereof, and
P.C. shall pay all amounts remaining due to Manager as the Management Fee for
services rendered prior to the termination of this Agreement within five (5)
days following the completion of the reconciliation. The provisions of this
subparagraph 12(e) shall survive the termination of the Agreement.
13. Indemnification.
(a) P.C. P.C. shall indemnify and hold Manager, its officers,
directors, stockholders, employees, agents, parents and subsidiaries harmless
from and against all claims, demands, costs, expenses, liabilities and losses
(including attorneys' and other professional fees) caused or asserted to have
been caused by or as a result of the negligent performance of Medical Services
or ancillary services or any other negligent acts or omissions by, or willful
misconduct of, P.C. and/or its shareholders, agents, employees or subcontractors
(other than Manager).
(b) Manager. Manager shall indemnify and hold P.C., its officers,
directors, stockholders, employees, agents, parents and subsidiaries harmless
from and against all claims, demands, costs, expenses, liabilities and losses
(including attorneys' and other professional fees) caused or asserted to have
been caused by or as a result of any negligent acts or omissions by, or willful
misconduct of, Manager and/or its shareholders, agents, employees or
subcontractors.
(c) Survival. The provisions of this Paragraph 13 shall
survive the expiration or termination of this Agreement.
14. Legislative Limitations. Notwithstanding any other provisions of
this Agreement, if the governmental agencies (or their representatives) that
administer Medicare or Medicaid, or any other payor, or any other federal, state
or local government or agency, passes, issues or promulgates any law, rule,
regulation, standard or interpretation at any time while this Agreement is in
effect which prohibits, restricts, limits or in any way materially changes the
method or amounts of reimbursement or payment for services rendered under this
Agreement, or which otherwise materially affects either party's rights or
obligations hereunder, either party may give the other party notice of intent to
amend this Agreement to the satisfaction of the noticing party, to reflect the
prohibition, restriction, limitation or change, provided, however, that no such
amendment shall alter the basic economic status of the parties pursuant to this
Agreement. If this Agreement is not so amended in writing within sixty (60) days
after such notice is given, the parties agree to submit the issue of such an
amendment to arbitration in accordance with subparagraph 15(k); provided,
however, that if at the election of either party, a formal appeal is filed with
the relevant governmental agency, or a suit is filed in a court of competent
jurisdiction, so as to stay the implementation of any such law, rule,
regulation, standard or interpretation, during the period of such stay, the
right to amend as set forth above shall also be stayed.
15. Miscellaneous.
(a) Indulgences, Etc. The failure or delay on the part of any party
to exercise any right, remedy, power or privilege under this Agreement shall not
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
(b) Controlling Law. This Agreement and all provisions relating to
its validity, interpretation, performance and enforcement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania.
(c) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received when delivered
(personally, by carrier service such as Federal Express, or by other messenger)
or upon actual receipt of registered or certified mail, postage prepaid, return
receipt requested, addressed as set forth below:
(i) If to Manager:
U.S. PHYSICIANS, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Attention: President
With a copy, given in the manner prescribed above, to:
Xxxxx X. Xxxxx, M.D.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
(ii) If to P.C.:
U.S. Medical Services of New York, P.C.
000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attention: President
In addition, notice by mail should be by air mail if posted outside
of the continental United States.
Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions of this subparagraph 15(c).
(d) Binding Nature of Agreement; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns. Notwithstanding the
foregoing, P.C. may not assign or transfer its rights or obligations under this
Agreement without the prior written consent of Manager. Manager may assign or
transfer all or any portion of its rights or obligations under this Agreement
without the consent of P.C.
(e) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
(f) Severability and Reformation. The provisions of this Agreement
are independent of and severable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other provision may be invalid or unenforceable in whole or in part.
If or to the extent this Agreement is reasonably deemed to violate applicable
law, the parties agree to negotiate in good faith to amend the Agreement to the
extent possible, consistent with its purposes, to conform to law.
(g) Entire Agreement. This Agreement contains the entire
understanding among the parties with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained. This Agreement may not be modified or amended other than by an
agreement in writing.
(h) Paragraph Headings. The paragraph headings in this Agreement are
for convenience only, form no part of this Agreement and shall not affect its
interpretation.
(i) Gender, Etc. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.
(j) Number of Days. Unless otherwise specified herein, in computing
the number of days for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays and holidays; provided, however, that, if the final
day of any time period falls on a Saturday, Sunday or holiday, then the final
day shall be deemed to be the next day which is not a Saturday, Sunday or
holiday.
(k) Arbitration. Any dispute (including a claimed breach of the
terms hereof) arising out of or in connection with this Agreement, other than a
claimed breach of Paragraph 10 of this Agreement to which this subparagraph
15(k) shall not be applicable, shall be resolved by arbitration conducted by the
American Arbitration Association in Philadelphia, Pennsylvania, in accordance
with its rules then in existence. The arbitrators shall not contravene or vary
in any respect any of the terms or provisions of this Agreement except as
provided in Paragraph 14. The award of the arbitrators shall be final and
binding upon the parties hereto, their heirs, administrators, executors,
successors and assigns, and judgment upon such award may be entered in any court
having jurisdiction thereof. Nothing in this provision shall restrict the
ability of either party hereto to seek any equitable remedy, including
injunctive relief or specific performance, for damages caused by the other
party's breach or attempted breach of this Agreement in any court of competent
jurisdiction. The prevailing party in any arbitration proceeding resulting from
this Agreement shall be entitled to recover its reasonable attorneys' fees and
costs from the non-prevailing party.
(l) Force Majeure. Neither party shall be liable or deemed to be in
default for any delay or failure to perform under this Agreement resulting,
directly or indirectly, from acts of God, civil or military authority, acts of
public enemy, war, accidents, fires, explosions, earthquakes, floods, strikes or
other work interruptions by either party's employees or any other similar cause
beyond the reasonable control of the non-performing party.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
U.S. PHYSICIANS, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
President
U.S. MEDICAL SERVICES OF
NEW YORK, P.C.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
President
