Exhibit 10.83
MANAGEMENT AGREEMENT
BETWEEN
COMPREHENSIVE HEALTH MANAGEMENT, INC.
AND
WELLCARE OF CONNECTICUT, INC.
The Agreement is made and entered into as of this 11th day of June, 1999,
by and between WellCare of Connecticut, Inc., a for-profit corporation organized
under the laws of the State of Connecticut (hereinafter referred to as "HMO" or
"WCCT") and Comprehensive Health Management, Inc., a for-profit corporation
organized under the laws of the State of Florida (hereinafter referred to as
"CHM").
WHEREAS, WCCT is a Connecticut certified health maintenance organization;
and
WHEREAS, WCCT hereby engages CHM to perform the functions and to provide
the services described in the Agreement and CHM hereby accepts such engagement
under the terms and conditions stated in this Agreement;
NOW, THEREFORE, WCCT hereby agrees to contract with CHM to supervise and
manage the day-to-day operations of the HMO and to perform the specific
functions and contract services set out to this Agreement. The Board of
Directors of WCCT has duly authorized the execution and performance of this
Agreement and the Agreement is a valid and binding agreement subject to the
approval of the Connecticut Insurance Department.
1. As compensation for services rendered, as set forth below and in
paragraph 2.19, WCCT shall pay CHM the following:
A. A fixed fee on a monthly basis in accordance to the following
schedule:
Number of Lives % of Premium
--------------- ------------
(i) 80,000 and up member lives 7.5%
(ii) 60,000 to 79,999 member lives 8%
(iii) 40,000 to 59,999 member lives 8.5%
(iv) Less than 40,000 member lives 9.5%
The fixed fee will specifically cover services for claims, customer
service, utilization review, data processing/MIS, credentialing,
postage and supplies as related to the covered services,
communication, provider relations and provider contracting. The fixed
fee will not cover any other costs, fees or expenses including, but
not limited to costs for marketing functions or related marketing
costs, legal costs, accounting costs, director and officer liability
coverage and other insurance coverage as well as any extraordinary
items. This Agreement shall be the sole agreement between WCCT and CHM
in connection with the provisions of the management services by CHM
and WCCT and the payment by WCCT to CHM for such services.
B. The cost for all employees responsible for the day-to-day
operations of WCCT shall be the responsibility of WCCT, except for
those employees required by CHM to provide the services listed in
Section 1.A above. WCCT shall be responsible for the cost for all
employees relating to claims processing.
CHM shall retain full authority to recruit, hire, train, promote,
assign, set the compensation level and discharge all employees
assigned to WCCT. WCCT specifically retains the right to reasonably
request the removal of the Medical Director/Plan Administrator at any
time. Upon receiving such request in writing, CHM shall, without
delay, remove such Medical Director and replace him/her within six (6)
months with another nominee by the WCCT Board.
All management fees shall be due and payable on the first of each and
every month of the term of this Agreement. CHM will xxxx WCCT for the
monthly fee set forth above. Any monthly fees in arrears of ten (10)
days will begin accruing finance charges of one percent (1%) per
month.
2. The term of this Agreement shall commence on _________________ with the
approval of the Connecticut Insurance Department. This Agreement is for the term
of five (5) years from said date of commencement, or as otherwise herein
provided, unless renewed by agreement of the parties.
3. In the event of termination for cause, as defined in Section 3.1 of this
Agreement, by either party, the sole obligation of WCCT to CHM shall be to pay
any and all amounts due to CHM up to the time of said termination, including,
without limitation, fees, costs, expenses, loans, and accounts payable due to
CHM.
SECTION ONE:
ALLOCATION OF AUTHORITY AND RESPONSIBILITY
1.1 Control Retained in Board
WCCT, acting through its Board of Directors, shall at all times exercise
sole control over the assets and operation of the HMO, and CHM shall perform the
functions described in this Agreement to be performed by it in accordance with
policies, directives and bylaws adopted by WCCT. WCCT retains the ultimate
authority and responsibility regarding the powers, duties and responsibilities
vested in WCCT by law and regulations.
1.2 Medical and Professional Matters.
All medical and professional policy matters shall be the responsibility of
WCCT. Policy recommendations shall be formulated by a Medical Advisory Committee
(MAC). Committee membership will include the WCCT medical director,
participating physicians and others as specifically appointed to serve by
resolution of the WCCT Board of Directors.
1.3 Reports.
CHM shall present to the WCCT Board of Directors reports on the financial
status of the HMO at each meeting, financial reports required in Section 2.9,
periodic written progress reports summarizing CHM management actions and
results, such other reports as CHM may deem appropriate to keep WCCT informed as
to the status and conditions of the HMO, and such other reports that WCCT may
reasonably request. CHM shall also provide such reports as may be required by
any regulatory agency having jurisdiction over WCCT. CHM shall notify WCCT of
any and all correspondence and/or determinations of any regulatory agency
immediately upon receipt thereof by CHM.
SECTION TWO:
MANAGEMENT OF THE HMO
2.1 Standards of Health Care
CHM shall meet the standards set by WCCT for the operation of the HMO and
shall manage and operate the HMO in accordance with the policies adopted by
WCCT.
2.2 Planning
CHM will assist WCCT in reviewing short, medium and long-range objectives
of the HMO and in formulating recommendations with respect thereto. 2.3
Government Regulations On behalf of WCCT, CHM shall comply with the requirements
of any applicable statute, ordinance, law, rule, regulation, or order of any
governmental or regulatory body having jurisdiction.
CHM shall notify WCCT of any and all correspondences or communication from
any such regulatory agency, and shall make such presentations to the Board of
WCCT with regard to communications from regulatory agencies as WCCT shall
request.
2.4 State Certification
CHM shall supervise and manage the day-to-day operations of the HMO in
accordance with the standards as set forth by the State Connecticut and in
accordance with the policies adopted by WCCT.
2.5 Licenses and Permits
CHM shall apply for, and exert its best effort to obtain and maintain, it
in the name of WCCT, and at WCCT's expense, all certificates, licenses and
permits required in connection with the management and operation of the HMO.
WCCT shall cooperate with CHM in applying for, obtaining and maintaining such
certificates, licences and permits. 2.6 Confidentiality and Ownership of Records
CHM shall protect the confidentiality of the records of the HMO and shall
comply with all applicable federal, state and local laws and regulations, and
medical ethical standards, relating to the records of the HMO. CHM hereby
acknowledges that any and all records maintained by or on behalf of WCCT, no
matter where such records are housed, shall be deemed to be in the possession of
WCCT, and to be the property of WCCT.
Ownership of all records made by or on behalf of WCCT shall be in WCCT, and
physical custody of all records shall be transferred immediately to WCCT in the
event this Agreement expires or is terminated for any reason.
2.7 Subscriber Services.
CHM shall prepare and present to WCCT an annual report containing
recommendations as to the scope of services offered by the HMO, as well as
procedures and policies and such other matters as CHM deems appropriate or as
shall be requested by WCCT, including a management summary of complaints and
grievances, disposition thereof and recommendations for improved plan
management.
2.8 Preparation and Adoption of Annual Budget
WCCT's fiscal year shall commence on January 1st and end on December 31st
of each year. CHM shall prepare an annual line item budget setting out major
operation objectives, anticipated revenue, expenses, cash flow, and capital
expenditures and shall cause the budget to be presented to WCCT sixty (60) days
prior to the commencement of each fiscal year for its acceptance, rejection or
modification. Upon adoption of the budget by WCCT, it shall serve as the
operating budget of the HMO during the ensuing year. WCCT shall review and
either accept or reject such budget within thirty (30) days of receipt thereof.
If WCCT shall disapprove such budget, such disapproval shall specify those items
which are disapproved and CHM shall resubmit an altered budget to WCCT within
fifteen (15) days incorporating such changes as may be directed by the Board,
following such notice of disapproval. In the event of such disapproval and
resubmission, the previous year's budget shall continue in effect until approval
of the new budget.
If at any time during the fiscal year there shall be a projected or actual
deviation of more than ten percent (10%) in any other line item in the approved
budget, same shall be brought to the attention of the WCCT Board of Directors
immediately by CHM.
If CHM deems it necessary to expend additional monies above ten percent
(10%) of the Board approved budgetary allocation for any line item, it must
first receive the approval of the WCCT Board.
CHM will not be held liable for budget items outside of its control
including revenue and medical expense line items that are a function of outside
market conditions, etc.
2.9 Accounting Records
CHM shall direct and maintain the operation of a suitable accounting system
and shall cause to be delivered to WCCT financial statements, as follows:
(a) within forty-five (45) days after the close of each quarter, CHM
will provide WCCT with a balance sheet and a related statement of
revenue and expenses showing the results of the HMO's operations
for the preceding quarter and for the fiscal year-to-date.
(b) within ninety (90) days after the close of the fiscal year ending
December 31st, CHM shall provide to WCCT a balance sheet and
related statement of revenue and expenses and statement of
changes in financial positions showing the results of the HMO's
operation during the fiscal year all audited by an independent
certified public accounting firm retained by WCCT. If retained
CPA firm fails to provide audited statements within ninety (90)
days after the close of the fiscal year and failure is not a
fault of CHM, CHM shall not be held in default as a result
thereof.
Notwithstanding anything contained herein to the contrary, CHM and WCCT
shall fully comply with Connecticut statutory deadlines for the filing of WCCT's
statutory financial statements.
2.10 Deposit and Disbursement of Funds
Signatories and approvals as to the amounts on all checks shall be in
accordance with the duly adopted written policy of WCCT, and WCCT shall reserve
the right of selecting and approving all financial institutions utilized by CHM
for business transactions of WCCT.
2.11 Collection of Accounts
Pursuant to collection policies established from time to time by WCCT, CHM
shall supervise and direct the collection of all accounts due WCCT and shall
take all reasonable steps necessary to minimize the number and amount of bad
debts.
2.12 Legal Actions
CHM shall, under the overall direction and with prior approval of WCCT,
initiate and pursue in the name of WCCT any and all legal actions or proceedings
necessary to operate the HMO and protect the assets of WCCT. Any and all legal
costs shall be solely borne by WCCT.
2.13 Rates
CHM and WCCT recognize the importance of maintaining rates which enable the
HMO to meet its obligations, but contain the cost of health care. CHM will
recommend rate structures to WCCT for approval which take into account the
financial obligations of the HMO and the importance of providing quality health
care at competitive cost.
2.14 Insurance
CHM shall maintain, on WCCT's behalf, at WCCT's sole expense, and in WCCT's
name, general liability, insurance and professional liability insurance with
coverage of at least One Million Dollars ($1,000,000.00) per occurrence and
Three Million Dollars ($3,000,000.00) in annual aggregate. In addition, CHM
shall maintain, on WCCT's behalf, at WCCT's expense, and in WCCT's name,
directors and officers insurance in the amount of at least One Million Dollars
($1,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in
total. CHM shall not be responsible for WCCT's inability to obtain such
insurance because of market conditions.
2.15 Marketing and Corporate Plan Strategy
CHM shall direct the development and implementation of a marketing program
for the HMO. Annually, this program shall be presented to the Board of Directors
for approval. The scope for the marketing plan shall include development of new
sales and maintenance of existing membership as well as recommending changes to
the HMO benefit plans. Within the marketing plan shall be quantifiable goals for
membership and penetration, periodic updates shall be presented to the Board of
Directors to advise the status of goals and any necessary modifications to
planned strategy to adapt to marketing conditions. Any and all marketing cost
shall be solely borne by WCCT.
2.16 Ancillary and Other Agreements
CHM shall, in the name of and on account of WCCT, and at WCCT's sole
expense, negotiate and enter into such term agreements as it may deem necessary
or advisable for the furnishing of utilities, services, concessions, and
supplies for the maintenance and operation of the HMO including the rendering of
professional services, except as set forth in Section 2.19. All such agreements
shall be approved by WCCT in accordance with Board policies. All such agreements
in excess of Fifty Thousand Dollars ($50,000.00) that have not received approval
within the annual operating budget must receive prior approval of the WCCT Board
of Directors.
2.17 Office Equipment, Furniture, Fixtures and Capital Improvements
CHM shall review and make recommendations to WCCT concerning proposed
acquisitions of office equipment and/or furniture or capital improvements in
excess of Fifty Thousand Dollars ($50,000.00) to the HMO. For expenditures under
Fifty Thousand Dollars ($50,000.00), CHM will follow the approved capital budget
allocations. Upon approval for such expenditures, CHM shall, in the name of and
at WCCT's sole expense, negotiate, contract for, and supervise the satisfactory
delivery and/or installation of such property.
2.18 Information Services
CHM will assist WCCT in developing a plan for continuous improvement of the
HMO's information system. Proprietary software developed under the direction of
CHM will remain property of CHM, but will be made available to WCCT throughout
the term of this contract and for one (1) year after termination.
2.19 CHM Management Services and Expenses
CHM, at WCCT's sole expense, except for those employees specifically stated
in 1.B. of this Agreement, shall provide all necessary personnel to operate the
HMO under the terms of this Agreement and the directives of the Board of
Directors of WCCT. CHM will retain the ultimate responsibility to recruit, hire,
train, promote, assign, set the compensation level and discharge all such
employees except as noted in Section 1.B. of this Agreement.
As detailed under Section 1.A, of this Agreement, CHM at its expense, shall
provide WCCT with necessary executive and administrative services from its
corporate headquarters in Tampa, Florida, to assist with the day-to-day
management of the HMO.
CHM shall not be responsible for the cost of personnel expenses (except as
set forth above); expenses relating to marketing and information system
literature, advertising, insurance, travel, rent, utilities, telephone, office
supplies, equipment (excluding information system hardware) and; professional
services (actuarial, legal, accounting, etc.).
2.20 Other Service Agreements
This contract does not preclude WCCT from entering into specific agreements
with CHM and/or WCCT affiliated companies for engagements outside the scope of
this contract. However, CHM will disclose any such relationship to the Board of
Directors and support will be provided that services rendered are not part of
executive management services and are of a standard and cost available in the
general market. The WCCT Board will approve each agreement and will monitor its
progress on a regular basis.
SECTION THREE:
INTENTIONALLY OMITTED
SECTION FOUR:
MISCELLANEOUS
4.1 Termination for Cause
Either party may terminate this Agreement for cause as defined herein below
upon written notice to the other party and the Insurance Commissioner of the
State of Connecticut within the designated time periods. This Agreement shall
terminate and be deemed canceled, without financial penalty to either WCCT's
board of directors or to WCCT, not more than sixty (60) days after notification
to the governing authority of WCCT and CHM by the Connecticut Insurance
Department that WCCT is not providing adequate care or otherwise assuring the
health, safety and welfare of WCCT's enrollees.
WCCT or the Insurance Commissioner of the State of Connecticut shall have
cause for termination if:
4.1.1 CHM shall fail to observe or perform any material covenant, duty, or term
of this Agreement, and such default shall continue for a period of thirty (30)
days after written notice thereof by WCCT to CHM and the Insurance Commissioner
of the State of Connecticut provided subsequent to the aforementioned thirty
(30) days, WCCT gives fifteen (15) days written notice to CHM and the Insurance
Commissioner of the State of Connecticut of intent of such termination, or
4.1.2 CHM shall apply for or consent to the appointment of a receiver, trustee,
or liquidator of CHM or of all or a substantial part of its assets, file a
voluntary petition in bankruptcy, or admit in writing its inability to pay its
debts as they become due, make a general assignment for the benefit of
creditors, file a petition or an answer seeking reorganization or arrangement
with creditors or to take advantage of any insolvency law, or if an order,
judgment, or decree shall be entered by a court of competent jurisdiction, or on
the application of a creditor, adjudicating CHM bankrupt or insolvent or
approving a petition seeking reorganization of CHM or appointment of a receiver,
trustee, or liquidator of CHM of all or a substantial part of its assets;
provided WCCT gives thirty (30) days written notice to CHM and the Insurance
Commissioner of the State of Connecticut of such termination, or
4.1.3 CHM is managing WCCT in violation of any statute or administrative
regulation, including but not limited to statutory rules and regulations for the
State of Connecticut and all regulations promulgated pursuant thereto, subject
to thirty (30) days notice by WCCT to CHM and the Insurance Commissioner of the
State of Connecticut. If CHM fails to cure the violation within the thirty (30)
day period, or a longer period set by WCCT, then WCCT may terminate this
Agreement upon fifteen (15) days written notice to CHM and the Insurance
Commissioner of the State of Connecticut. Written notice from the Insurance
Commissioner of the State of Connecticut that the HMO is being operated so as to
endanger WCCT's HMO certification shall be final for purposes of permitting the
termination of this Agreement with CHM by WCCT subject to thirty (30) days
notice by WCCT to CHM and the Insurance Commissioner of the State of
Connecticut.
CHM or the Insurance Commissioner of the State of Connecticut shall have
cause for termination if:
4.1.4 WCCT shall default in the performance of any material covenant, agreement,
term, or provision of this Agreement and such default shall continue for a
period of sixty (60) days after written notice to the Insurance Commissioner of
the State of Connecticut from CHM stating the specific default; provided
subsequent to the aforementioned sixty (60) days, CHM gives fifteen (15) days
written notice to WCCT and the Insurance Commissioner of the State of
Connecticut of such termination, or
4.1.5 WCCT shall apply for or consent to the appointment of a receiver, trustee,
or liquidator of WCCT or of all or a substantial part of its assets, file a
voluntary petition in bankruptcy, or admit in writing its inability to pay its
debts as they come due, make a general assignment for the benefit of creditors,
file a petition or an answer seeking reorganization or arrangement with
creditors or to take advantage of any insolvency law, or if an order, judgment
or decree shall be entered by any court of competent jurisdiction, on the
application of a creditor, adjudicating WCCT as bankrupt or insolvent or
approving a petition seeking reorganization of WCCT or appointment of a
receiver, trustee or liquidator of WCCT or of all or a substantial part of the
assets of WCCT; provided CHM gives thirty (30) days written notice to WCCT and
the Insurance Commissioner of the State of Connecticut of such termination, or
4.1.6 WCCT shall fail to make payment to CHM or to any assignee of CHM pursuant
to any agreement between WCCT and such assignee and does not make such payment
within sixty (60) days after written notice to WCCT and Insurance Commissioner
of the State of Connecticut; provided subsequent to the aforementioned sixty
(60) days, CHM gives fifteen (15) days written notice to WCCT, Insurance
Commissioner of the State of Connecticut of such termination.
4.2 Termination Without Cause
WCCT shall have the right to terminate this Agreement without cause at the
end of the five- year-term. Six (6) months written notice shall be given to CHM
and Insurance Commissioner of the State of Connecticut of such termination.
4.3 Indemnification
WCCT shall indemnify and save CHM harmless from and against any and all
claims or causes of action arising from injuries or damages to persons or
property in connection with the operation of the HMO, unless such injuries or
damages resulted from (1) CHM acting outside the scope of its authority under
this Agreement or (2) the willful misconduct or negligence of CHM in the
management of the HMO.
CHM shall indemnify and save WCCT harmless from and against any liability
resulting from (1) CHM acting outside the scope of its authority under this
Agreement or (2) the willful misconduct or negligence or CHM in the management
of the Plan. Nothing herein shall preclude WCCT from asserting any claims or
suits against CHM which may arise out of CHM's management under this Agreement.
4.4 Arbitration
In the event that any dispute shall arise with regard to the Agreement,
both parties agree to submit the matter(s) in controversy to a Board of
Arbitrators consisting of three (3) members (one shall be selected by each party
to this Agreement and these members in turn shall select a third member). The
Board of Arbitrators so constituted shall proceed under the rules and
regulations of the American Arbitration Association. Both parties expressly
covenant and agree to be bound by the decision of the arbitrators and accept any
decision by a majority of the arbitrators as a final determination of the
matter(s) in dispute. The parties of this Agreement shall share the cost of
arbitration equally. CHM shall provide notice to the Insurance Commissioner of
the State of Connecticut of all issues preceding to arbitration and copies of
all decisions pursuant to this Paragraph 4.4. Additionally, the Insurance
Commissioner of the State of Connecticut shall in no way be bound by any
arbitration decisions pursuant to this Paragraph 4.4.
4.5 Assignment
CHM shall have the right to assign this Agreement to a corporation which is
a successor in interest of CHM upon the prior written approval of WCCT, and the
Insurance Commissioner of the State of Connecticut. 4.6 Hold Harmless It is
understood and agreed that CHM shall look solely to WCCT for compensation for
management services provided to WCCT and at no time shall CHM seek compensation
for such services from members, members' family members, or any other person
acting on a member's behalf. 4.7 Membership Responsibilities for WCCT
Obligations The membership or Board of WCCT shall not be personally or
individually liable for the payment of obligations of WCCT to CHM.
4.8 Notices
Any notice of other communication by either party to the other shall be in
writing and shall be delivered personally or mailed, postage prepaid, by
registered or certified mail, addressed as follows:
To WCCT: WellCare of Connecticut, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Vice President
To CHM: Comprehensive Health Management, Inc.
c/x Xxxxx, Xxxxx & X'Xxxxxx, P.A.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx, 000000
Attn: Xxxxxx X. Xxxxx, Esquire
or such other address, and to the attention of such other person or officer as
either party may designate in writing from time to time.
4.9 Modification and Changes
CHM and WCCT mutually recognize that it may be desirable to alter terms of
this Agreement in the future to take into account such events or conditions as
may from time to time occur. Any changes to this Agreement must be in writing
and executed by both parties with the same formality as the within Agreement and
shall be effective only with the prior written consent of the Insurance
Commissioner of the State of Connecticut.
4.10 Headings
The headings contained herein are for the convenience of reference only and
are not intended to define, limit or describe the scope or intent of any
provision of the Agreement.
4.11 Confidentiality
CHM and WCCT agree that the terms and conditions of this Agreement shall
remain confidential. Neither CHM nor WCCT shall distribute this Agreement, or
any part thereof, to any other party unless required by law or regulation.
4.12 Understanding and Agreements
This Agreement constitutes all of the understandings and agreements of
whatsoever nature or kind existing between the parties with respect to the HMO.
4.13 Governing Law
This Agreement shall be deemed to have been made and shall be construed and
interpreted in accordance with the laws of the State of Connecticut.
4.14 Governing Rules and Regulations
This Agreement, to the maximum extent possible, shall be interpreted so as
to be consistent with all rules and regulations of the State of Connecticut.
4.15 The parties hereto acknowledge that the responsibilities of WCCT's
governing authority are in no way obviated by entering into this Agreement. Any
powers not specifically delegated to CHM herein remain with WCCT's board of
directors.
WellCare of Connecticut, Inc. Comprehensive Health Management, Inc.
(WCCT) (CHM)
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxx, M.D.
-------------------------- ----------------------------
Xxxxx Xxxxxx Xxxxx X. Xxxxx, M.D.
President President
Date: June 11, 1999 Date: June 11, 1999
Attest: /s/ Xxxx Xxx Xxxxxxxx-Xxxxxx Attest: /s/ X. Xxxxx
