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EXHIBIT 99.5
LABORATORY SERVICES AGREEMENT
This Agreement is made and entered into as of the 3rd day of August, 1998,
by and between Universal Standard Healthcare of Michigan, Inc., a Michigan
corporation, located at 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx
("Universal"), and Laboratory Corporation of America Holdings, a Delaware
corporation, located at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx
("LabCorp").
RECITALS
A. Universal operates a licensed Alternative Healthcare Financing
Delivery System which offers managed care programs to employers, employer
groups and health plans for the delivery of clinical laboratory, home medical
and diagnostic imaging services;
B. LabCorp owns and operates a clinical laboratory business with
operations and facilities across the United States; and
C. Universal wishes to contract with LabCorp to provide clinical
laboratory services to individuals who are eligible for clinical laboratory
services through their benefit plans;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein, Universal and LabCorp agree as follows:
TERMS
1. Definitions.
1.1 "Covered Services" means those clinical laboratory benefits
established by a Group and reviewed by LabCorp prior to execution of the Group
Agreement, including without limitation, any relevant certificates, riders and
other benefit documents.
1.2 "Group" means an employer, group of employers or health plan
which has a contract with Universal to provide clinical laboratory services to
Members, except General Motors Corporation.
1.3 "Group Contract" means the contract between Universal and the
Group.
1.4 "Member" means a person who, on the date the service was
performed, is entitled by the Group Contract to receive Covered Services. Member
shall include subscribers,
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enrollees and covered persons and, where applicable under the Group contract,
spouses and dependents.
1.5 "Non-Covered Services" means all services which are not Covered
Services.
1.6 "STAT" testing means tests performed within four hours from the
time LabCorp or the reference laboratory receives the specimen. STAT tests shall
include, without limitation, Sodium, Potassium, Chloride, CO2, Glucose, BUN,
Creatinine, Calcium, or a combination of these parameters (i.e., Chem 7, Chem
5), CBC, PT, PTT, Urinalysis, Amylase, HCG (Qualitative). and other tests
required for STAT testing by the Group and agreed to by Universal and LabCorp
working in good faith together.
2. Notice of Group Contract. Universal agrees that it will provide
notice to LabCorp of any contract term or condition in a Group Contract that
is materially different than Universal's standard managed care contract terms
prior to submission of a proposal to a Group or execution of a Group Contract
(where no proposal is required). A Group Contract that includes any of the
following shall be considered to be materially different than Universal's
standard contract: a provision for Member co-payments and deductibles, a
provision that prohibits a provider from billing for Non-Covered Services, a
provision permitting the Group to audit for a period longer than two (2) years
following termination of the Group Contract, a contract that does not permit
without cause termination or contains a without cause termination with a notice
period greater than one hundred and eighty (180) days or a provision imposing
service requirements or policies and procedures outside the ordinary course of
clinical laboratory business. Universal also agrees to give LabCorp thirty (30)
days' prior written notice if the Group Contract requires that LabCorp be a
provider for the Group.
In the event that LabCorp does not agree to any materially different
term or condition required by a Group, Universal agrees to work with LabCorp
to negotiate more favorable terms with the Group. If such negotiations do not
result in more favorable terms acceptable to Universal and LabCorp, LabCorp
shall be able to choose not to perform services for that Group or to terminate
its services as set forth in Section 6 of this Agreement with respect to that
Group. LabCorp shall not be able to prevent Universal from executing a Group
Contract with such Group and contracting with another clinical laboratory or
establishing its own laboratory to provide services to that Group. If Universal
is unable to locate another provider that is willing to accept a contract with
the terms rejected by LabCorp, Universal agrees to offer any modified or
amended terms first to LabCorp before offering such modifications or amendments
to another provider.
3. Provision of Services.
LabCorp shall provide Covered Services to Members as reasonably
required by Universal, including without limitation, the following services.
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3.1 LabCorp shall pick-up specimens collected from Members from
physicians' offices, clinics, drawing stations, hospitals, nursing homes and
other locations and transport such specimens to LabCorp facilities for testing.
3.2 LabCorp shall establish and maintain drawing stations with at
least one phlebotomist at a sufficient number of locations to ensure access by
Members to clinical laboratory services within a reasonable time and distance,
which sufficiency shall be determined by Universal and LabCorp working in good
faith to meet Group requirements. The drawing stations shall identify Universal
in a prominent manner as mutually agreed upon from time to time.
3.3 LabCorp shall perform clinical laboratory testing ordered for
Members in a manner consistent with professional standards of care.
3.4 LabCorp will make STAT testing services available as appropriate
based on laboratory industry standards. LabCorp will provide STAT testing
services for Members at LabCorp's facilities, to the extent such service is
currently available, or through reasonably available reference laboratories,
acceptable to Universal. The use of STAT testing will be monitored by LabCorp
and Universal to determine whether STAT tests are being inappropriately ordered
and whether physician education is required.
3.5 LabCorp shall make every reasonable effort to report all test
results to the physician or other health care provider who ordered the test
within a time period consistent with clinical laboratory industry standards
using a report form or methodology acceptable to Universal unless the test
ordered inherently requires a longer time for completion.
3.6 LabCorp agrees to perform Covered Services for Members in the
same manner and with the same quality and level of proficiency as LabCorp
affords its other patients and customers, without regard to Members' or ordering
physicians' age, sex, race, creed, national origin, or income level.
3.7 In providing services pursuant to this Agreement, LabCorp shall
comply with all Universal programs, policies and protocols required by the Group
or applicable law.
4. Qualifications and Performance Standards.
4.1 LabCorp shall at all times during the term of this Agreement
maintain all licenses and certifications required by federal, state or relevant
local law or by any third party payor to conduct a clinical laboratory business
at each laboratory facility, including without limitation, certification under
the Clinical Laboratory Improvement Amendments of 1988, as amended. LabCorp
shall also maintain accreditation by the College of American Pathologists.
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4.2 LabCorp shall comply with all applicable professional and
ethical standards consistent with clinical laboratory industry practice and with
all Universal utilization guidelines and quality assurance standards required by
the Group or applicable law.
4.3 LabCorp shall maintain a level of proficiency on applicable
proficiency tests that is required to maintain licensure applicable to each of
the laboratory specialties for which it is licensed to perform clinical
laboratory tests. LabCorp shall provide Universal with evidence of compliance
with this standard upon Universal's reasonable request.
5. Billing and Payment.
5.1 LabCorp agrees to charge and Universal agrees to pay for all
Covered Services in the manner and at the rates set forth on Exhibit A attached
hereto and incorporated herein.
5.2 LabCorp shall submit claims to Universal in a form acceptable to
Universal which, at a minimum, identifies the ordering physician and LabCorp
location by name and appropriate Universal identifier (as supplied by Universal
in a timely manner) and includes any other information reasonably required by
Universal and other applicable payors.
5.3 Universal shall provide LabCorp with information and data
relating to eligibility of Members upon its receipt of such information and data
from the Group. Universal will use its reasonable efforts to negotiate a
requirement with each Group that the Group provide useable eligibility
information and data at least monthly.
5.4 LabCorp agrees to file claims for Covered Services within one
hundred and eighty (180) days of the date the service was rendered.
5.5 Universal agrees to pay LabCorp within sixty (60) days of
Universal's receipt of a manual claim and within thirty (30) days of Universal's
receipt of an electronic claim.
5.6 Universal shall notify LabCorp in writing of material changes in
Covered Services, in any policies, procedures, programs, protocols, quality
assurance programs, utilization review guidelines or other materials, which
Universal reasonably believes will affect LabCorp, within thirty (30) days of
Universal's knowledge of such change. Universal agrees to work with LabCorp and
with the Group to minimize the effect of such change on both parties. Universal
agrees to review all existing contracts between Universal and LabCorp, notify
LabCorp of any materially different provisions in such contracts (as defined in
Section 2 hereof) and work with LabCorp to make changes in such contracts where
feasible.
5.7 Upon request by Universal, LabCorp shall make reasonable effort
to assist Universal in coordinating benefits by obtaining from Members specific
information regarding third party liability.
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5.8 LabCorp agrees to hold Members harmless from the payment for any
Covered Services provided pursuant to this Agreement, except that LabCorp may
xxxx Members for co-insurance and deductible amounts if permitted by the Group
and may xxxx Members for clinical laboratory services which are not Covered
Services.
6. Preferred Provider.
6.1 Universal shall use LabCorp as its sole provider for its
clinical laboratory managed care business except as provided in Section 6.2.
6.2 LabCorp shall have the right to choose not to be a provider
under any Group Contract, prior to submission by Universal of a proposal to a
Group or prior to execution of the Group Contract (where no proposal is
required), as set forth in Section 2 of this Agreement, or following execution
of the Group Contract as set forth in Section 6 of this Agreement. Universal
shall have the right to arrange to have clinical laboratory services provided by
another clinical laboratory or may establish its own clinical laboratory in any
of the following circumstances:
(i) There is a need for clinical laboratory services to be
provided to a Member in a geographic area in which
LabCorp does not have appropriate facilities or the
ability to perform the services required under this
Agreement. In such areas, Universal agrees that, prior
to contracting with another clinical laboratory or
establishing its own laboratory operation, it shall
first give LabCorp the opportunity to establish an
appropriate clinical laboratory operation in the area.
LabCorp shall have thirty (30) days from its receipt of
written notice by Universal to decide whether it will
initiate clinical laboratory services in the area and
shall have a reasonable period of time, as determined on
a case by case basis, to establish such services;
(ii) During the interim period while LabCorp is establishing
or expanding its operations in a particular area or is
making its determination whether to establish an
operation as described in subparagraph (i) above;
(iii) LabCorp chooses not to establish clinical laboratory
operations in the geographic area;
(iv) The Group requires multiple laboratory providers or a
laboratory provider other than LabCorp;
(v) Universal has a written or oral contract in effect as of
the date hereof with another clinical laboratory;
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(vi) LabCorp chooses not to be a provider for a particular
Group pursuant to Section 2 hereof; or
(vii) If LabCorp elects not to provide services for a Group as
provided in Section 6.4 hereof, Universal will have the
right to contract with other clinical laboratories or
establish its own laboratory to provide services to such
Group.
6.3 Universal agrees to work with existing and new Groups to
encourage selection of LabCorp as the provider of choice for clinical
laboratory services. Universal agrees to use its best efforts to enter into
contracts with LabCorp for those employer groups, including General Motors
Corporation, not subject to this Agreement.
6.4 In the event that LabCorp is unable to collect payment from
Members of a particular Group for Non-Covered Services and co-payments and
deductibles following good faith attempts by LabCorp to collect such amounts
following procedures consistent with clinical laboratory industry standards and
LabCorp's collection practices and such non-payment reaches a level which is
material in relation to the revenues generated by LabCorp for services provided
to Members of that Group pursuant to this Agreement, LabCorp shall provide
evidence to Universal of such impact. Universal shall, in cooperation with
LabCorp, meet with the Group involved to attempt to remedy the non-payment
issue. In the event such negotiations with Group do not result in a remedy
within ninety (90) days or such remedy is not reasonably acceptable to LabCorp,
it may terminate the provision of services to such Group by giving Universal at
least one hundred and eighty (180) days' written notice of its intent to
terminate; provided, however, that LabCorp shall not have the option to
terminate the provision of services to such Group if such termination would
violate the terms of the contract between the Group and Universal. Universal
agrees that if it is unable to negotiate more favorable terms with another
laboratory provider, Universal shall give LabCorp the option to continue
providing services under this Agreement on at least as favorable terms as
Universal can obtain from another provider. Universal further agrees that during
the one hundred and eighty (180) day notice period it shall pay LabCorp an
amount equal to 50% of any co-payments and deductibles and amounts owed for
Non-Covered Services that LabCorp is unable to collect from Members after good
faith effort.
In the event that LabCorp experiences a material loss under a
specific Group Contract, LabCorp shall provide evidence of such material loss to
Universal. Universal agrees to work with LabCorp for a period of ninety (90)
days in an attempt to negotiate terms with the Group to remedy the problems
experienced by LabCorp. In the event such negotiations do not result in a remedy
reasonably acceptable to Universal and LabCorp within such ninety (90) day
period, Universal may approach alternative providers to provide services
required under the Group Contract. In addition, LabCorp may, at any time during
the ninety (90) day negotiation period, inform Universal that Universal should
begin seeking alternative providers for the particular Group Contract. Universal
shall have one hundred and eighty (180) days from the date it receives notice to
seek alternative providers to locate such alternative providers. LabCorp may
assist Universal by locating an
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alternative provider acceptable to Universal. If Universal is unable to contract
with alternative providers by the end of such one hundred and eighty (180) day
period, Universal will exercise its right to terminate the Contract under any
without cause termination provision in the Group Contract unless such
termination would (i) result in an early termination penalty or (ii) be or cause
a breach of the Group Contract. For purposes of this Section 6.4, the term
"material loss" shall mean net loss.
7. Records and Access
7.1 LabCorp shall maintain all records in writing and shall comply
with any governmental standards, generally accepted business and professional
standards, and with standards set forth in this Agreement.
7.2 LabCorp shall permit Universal, Group and representatives of
federal and state government agencies with access to LabCorp's premises to
inspect equipment, supplies, and space used to provide Covered Services and to
audit the records of Members as permitted by law. LabCorp will also allow audit
of LabCorp's financial records relating to the services provided by LabCorp
pursuant to this Agreement. Universal agrees to use its best efforts to conduct
such audits with reasonable notice to LabCorp and during LabCorp's business
hours.
7.3 LabCorp agrees to cooperate with audits required under this
Agreement. Any such audit or inspection by Universal and Group will be conducted
only with reasonable written notice to LabCorp. Universal shall use its best
efforts to notify LabCorp immediately following Universal's receipt of a notice
by a government agency or authority of a pending audit or inspection.
7.4 LabCorp agrees that Universal may conduct audits at any time
during this Agreement and following the termination of this Agreement for a
period of two (2) years (the "Audit Period"). The Audit Period may be extended
beyond the two (2) years if required by a Group and provided that Universal
notifies LabCorp of such Group requirement. The Universal agrees to conduct the
audit utilizing standard business practices, including without limitation, a
statistical sampling methodology and to comply with all laws relating to patient
confidentiality. The audit may include LabCorp's claim payment records and any
related financial records for any Universal programs, review of certification,
accreditation, license, ownership records, claims payment records, referral
records, equipment, requisitions and Member results, quality control records,
and qualifications of personnel. LabCorp agrees that Universal may make copies
of any documents and other materials of LabCorp related to the services provided
pursuant to this Agreement as permitted by law.
7.5 Universal agrees that LabCorp may conduct audits of Universal at
any time during this Agreement and following the termination of this Agreement
for a period of two (2) years (the "Audit Period"). The Audit Period may be
extended beyond the two (2) years if required by a Group. LabCorp agrees that
the audit shall be limited only to information and records directly related to
this Agreement. The Universal agrees to use its best efforts to conduct such
audits with reasonable notice to Universal and during Universal's business hours
and to conduct such audits in
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compliance with laws relating to patient confidentiality. Universal agrees that
LabCorp may make copies of any documents and other materials of Universal
related to the services provided pursuant to this Agreement as permitted by law.
8. Term and Termination.
8.1 Term. The term of this Agreement is August 3, 1998 through
August 3, 2003.
8.2 Termination. This Agreement may be terminated:
8.2.1 At any time by mutual agreement of the parties;
8.2.2 By the non-breaching party upon material breach by the
other party that is not cured within thirty (30) days of written notice of the
breach; or
8.3 Universal may recover amounts wrongfully paid for services
which did not comply with this Agreement, or with Group requirements of which
LabCorp has knowledge at the time of billing, for a period of sixty (60) days
following the Audit Period. Notwithstanding any provision of this Agreement,
Universal's right to recover for any wrongfully paid amounts shall not be
limited by termination of this Agreement for any reason.
8.4 In the event of termination for any reason, LabCorp agrees to
complete any services which are in progress for Members and Universal agrees to
pay for all appropriate claims submitted by LabCorp for laboratory services
provided prior to termination or after termination pursuant to this Section 8.4.
9. Utilization Review. LabCorp agrees to participate in and comply
with all utilization guidelines of Universal required by a Group or applicable
law.
10. Insurance. LabCorp shall maintain professional liability and
comprehensive general liability insurance coverage through a commercial
insurance company or a self-insurance program acceptable to Universal in amounts
which are typical of similar businesses. LabCorp shall provide evidence of such
insurance coverage to Universal upon request and shall notify Universal in
writing at least thirty (30) days prior to any material revocation or
modification in such coverage and immediately in the event of cancellation of
such coverage.
11. Notification.
11.1 LabCorp agrees to notify Universal within thirty (30) days of
receipt by LabCorp of any court opinions, settlements, or changes in LabCorp's
business that may affect its performance or delivery of health care pursuant to
this Agreement, and as soon as possible, of any changes in LabCorp's name,
ownership, corporate structure, tax identification number, address,
certification, accreditation, license(s), specialty/sub-specialty areas, drawing
stations, courier service,
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hours of operation, and information relating to any purchase by LabCorp of
another clinical laboratory.
11.2 LabCorp acknowledges and agrees that Universal may use the
above information for any purpose permitted under this Agreement.
11.3 LabCorp will make reasonable effort to notify Universal at
least thirty (30) days prior to closure of any LabCorp facility or operation,
including drawing stations.
12. Indemnification. Each party hereby agrees to defend, indemnify and
hold harmless the other party against any and all damages, liabilities, actions,
obligations, expenses and costs, including court costs and attorney fees,
arising out of or resulting from the actions or services provided by the
indemnifying party pursuant to this Agreement.
13. Confidentiality. Universal and LabCorp agree to treat any
information provided to the other as confidential and/or proprietary and agree
not to use or disclose such information except as permitted under this
Agreement, as required by law, or upon written consent of the other party.
14. Publicity. Universal agrees that LabCorp may use the Universal name
and the Program name to identify LabCorp as a laboratory provider. LabCorp may
not otherwise use Universal's name, likeness, symbols, and/or trade or service
marks without prior written consent of Universal. LabCorp agrees that Universal
may use LabCorp's identifying information in any directory, advertising, and/or
other promotional materials related to this Agreement. Each party agrees that it
will, upon written notice, immediately cease to use any material referring to
the other party and, upon termination of this Agreement, will cease all
identification with the other party in relation to the Program.
15. Miscellaneous.
15.1 Entire Agreement. This Agreement and any exhibits and
attachments hereto constitute the entire agreement between the parties regarding
the subject matter of this Agreement and supersede any prior agreements between
the parties, whether written or oral.
15.2 Assignment. This Agreement may not be assigned by either party
without prior written consent of the other party.
15.3 Amendment and Waiver. This Agreement may be amended only upon
written consent of both parties. Failure by either party to enforce any
provision of this Agreement shall not be considered a waiver of any other
provision or any subsequent breach.
15.4 Governing Law. This Agreement shall be governed by the laws
of the State of Michigan.
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15.5 Notice. To be considered notice, written communication must be
made to:
LabCorp: Laboratory Corporation of America Holdings
X.X. Xxx 0000
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxx
And: Laboratory Corporation of America Holdings
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Legal Department
And: Xxxx X. Xxxxx, Esq.
Mezzullo & XxXxxxxxxx
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Universal: Xxxxxx Xxxxxxxx
Universal Standard Healthcare of Michigan, Inc.
00000 Xxxxxxxxxxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
15.6 Damages. No party shall be entitled to any damages with respect
to lost profits or other consequential damages or punitive damages with respect
to the breach by any other party under this Agreement provided that, to the
extent recoverable under applicable law, all costs and expenses incurred by
Universal as a result of LabCorp's breach of this Agreement, including any costs
and expenses payable to any Group as a result of such breach, or incurred by
Universal in connection with the termination of the related Group Contract as a
result of such breach, shall constitute direct, not consequential, damages.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
stated above.
UNIVERSAL STANDARD HEALTHCARE LABORATORY CORPORATION OF
OF MICHIGAN, INC. AMERICA HOLDINGS
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxx
------------------------- ------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxxx X. Xxxxx
Title: President Title: E.V. President
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EXHIBIT A
FEE SCHEDULE*
* Exhibit A is being filed separately with the Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 governing requests for
confidential information.
