MANAGEMENT AND SERVICES AGREEMENT
This MANAGEMENT AND SERVICES AGREEMENT dated as of April 1, 1998
("Agreement") by and between U.S. PHYSICIANS, Inc., a Pennsylvania corporation
("Manager") and U.S. Rehabilitation Services of Pennsylvania, P.C., a
Pennsylvania professional corporation ("P.C.").
BACKGROUND
A. P.C. intends to provide physical therapy and related services
(collectively, "PT Services") to the general public at various locations in the
Commonwealth of Pennsylvania (the "Sites").
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 physical
therapy and therefor improve the PT Services provided by P.C.
D. P.C. will maintain the sole responsibility of providing PT Services at
the Sites and for matters involving patient care.
E. Manager desires to assume the management of the business operations of
P.C. and to negotiate agreements with insurers, employers and other purchasers
of physical therapy services for the provision of PT Services of P.C.
F. Manager will provide financing to P.C. necessary for the operations of
P.C.
G. Manager has developed facilities and management services designed to
make available to qualified physical therapists the facilities, equipment,
supplies, management services, capital financing, support staff, marketing and
other support services necessary to permit such physical therapists to provide
physical therapy 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 physical therapy services.
H. 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.
I. 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 Technical 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 PT Services provided through
P.C. to purchasers of physical therapy 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 hereof (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 PT
Services at the Sites and shall render such PT 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) Therapists and Other Health Care Providers. P.C. shall hire, engage,
supervise, evaluate and terminate all physical therapists, nurses, technicians
and other health care providers (collectively, "Professionals") at the Sites,
whether they are employees of P.C. or independent contracts of P.C., and,
subject to the prior written consent of Manager, establish compensation and
benefits for such Professionals. P.C. shall not increase or decrease the amount
of such compensation and/or benefits without the prior written consent of
Manager. P.C. shall be responsible for the payment of all compensation payable
to Professionals, except to the extent that physical therapists, nurses,
technicians and other health care providers may become employees of Manager
pursuant to Section 4(a)(iv) of this Agreement.
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(b) PT Directors. P.C. shall designate one or more PT 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 PT Services at the Sites.
(c) Quality and Cost-Effectiveness of PT Services. P.C. shall monitor
the quality of PT 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
physical therapy profession and related fields. P.C. shall adopt a peer
review/quality assessment program to monitor and evaluate the quality and
cost-effectiveness of PT Services provided by Professionals at the Sites, and
shall assure that appropriate PT 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 its option,
assist in the development of policies and procedures for efficient maintenance
and retrieval of medical records, subject to applicable law. Confidentially, and
availability of medical records for inspection by authorized agencies or
individuals, shall be maintained in accordance with applicable state and federal
laws.
(e) Professional Fees. For purposes of establishing budgetary
assumptions for the Sites, P.C. after 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 Manger, or
cause its physical therapists 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 cooperate with Manager to develop utilization
review standards, treatment protocols and
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similar guidelines, as required, to establish measures for the delivery of high
quality and cost-effective physical therapy.
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.
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 OF 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 in negotiating employment agreements or
contracts with therapists, 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 shall be employed by P.C.; except
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),
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office supplies and other supplies necessary in the operation of the Sites to
enable P.C. to deliver quality PT 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 devises 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 Office.
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.
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(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 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, fee schedules, 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 three (3) 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
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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 houses, receptions for new Sites, seminars for
physicians, therapists and office staff, speaking engagements for physical
therapists 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).
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 physical therapists and other
Professionals and their patients. P.C. shall have complete responsibility for
its physical therapy practice and that of Professional employees or independent
contractors. Manager shall not interfere with the exercise of professional
judgment by the physical therapists and other Professionals employed by P.C. nor
shall Manager interfere
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with, control, direct, or supervise P.C., or any physical therapist 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 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 unlawful
practice of physical therapy, 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 contracts with employers,
unions, health care insurers, HMOs, PPOs and other third-party payors to arrange
for the provision of PT Services by P.C.
6. Malpractice Insurance.
(a) Minimum Policy. On its own behalf and on behalf of each physical
therapist or other Professional it employs, and each physical therapist 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 Commonwealth of Pennsylvania, 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 physical therapist 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
Commonwealth of Pennsylvania 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) 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 Site.
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(b) Loss of Malpractice Insurance or Medicare/Medicaid Provider
Status. P.C. hereby agrees that it will immediately suspend any physical
therapist or other Professional for whom malpractice insurance cannot reasonably
be obtained or whose malpractice insurance is canceled, and such physical
therapist 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
physical therapist 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. Manager
shall have the right to cancel this Agreement within three (3) days of learning
that such physical therapist or other Professional has not been suspended by
P.C. Failure to suspend a physical therapist 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. Representations of P.C. P.C. hereby makes the following
representations to Manager, each of which is material and is be relied on by
Manager, and shall be true as of the date hereof and shall survive the date
hereof:
(a) Professional Corporation. P.C. is a professional corporation duly
incorporated under the laws of the Commonwealth of Pennsylvania and has the
power and authority to carry on its business as it is contemplated by this
Agreement.
(b) Physical Therapists and Other Professionals Licenses. Each
physical therapist employed by or under contract with P.C. to provide PT
Services is, and will continue to be, duly licensed to practice physical therapy
in the Commonwealth of Pennsylvania, is properly trained, competent and
experienced in physical therapy, and has in force, and will continue to
maintain, medical malpractice insurance pursuant to the provisions of this
Agreement. P.C. will assure that all other Professionals rendering services
pursuant to this Agreement shall be duly licensed and appropriately supervised
by P.C. in accordance with applicable laws and current community standards. P.C.
shall enter into a written agreement in form and substance satisfactory to
Manager, with each Professional employed by or under contract with P.C. to
render services hereunder (the "Employment Agreements").
(c) Provider Numbers. P.C. shall maintain provider numbers for Blue
Cross, Blue Shield, Medicare and Medicaid (collectively "Provider Numbers"). To
the extent
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practicable, group assignment accounts will be established to facilitate
xxxxxxxx.
(d) Information Accurate. Any and all factual information furnished
by P.C. to Manager including, but not limited to, financial statements and fee
schedules of P.C., are true and accurate in every material respect as of the
date on which such information was furnished.
(e) Professional Conduct. P.C. has and will continue to conduct its
professional activities in accordance and compliance with any and all laws,
regulations and ethical and professional standards applicable thereto. P.C. will
assure that all Professionals employed by or under contract with P.C. maintain
appropriate licenses, credentials, and privileges in good standing, and have not
been terminated or otherwise precluded from rendering services under Medicare or
Medicaid, other federal or state health care programs, or for other third-party
payors with which Manager may negotiate agreements to provide PT Services.
8. Compensation.
(a) Payment of Fees. 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 collection of revenues, 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 the Gross Collected Revenues
less: (i) the amount of the Permitted Expenses of P.C. and (ii) the amount of
advances repaid to Manager pursuant to subparagraph 8(d). The term "Gross
Collected Revenues" shall mean all xxxxxxxx (including, without limitation,
xxxxxxxx for PT Services and for the services of other Professionals, medical
supplies, charges for ancillary services and facility and equipment charges)
collected by P.C. for services rendered at the Sites. The term "Permitted
Expenses" shall mean: (i) all salaries, bonuses and fringe benefits required to
be paid in accordance with the Employment Agreements or pursuant to applicable
law; (ii) insurance costs; (iii) legal and account fees; (iv) taxes; and (v)
other incidental expenses that for purposes of convenience are paid by P.C. but
would
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otherwise be the obligation of Manager. Payment for the services provided
hereunder shall be made through a daily sweep by Manager, of the cash contained
in the bank accounts of P.C., into bank accounts of Manager. Manager shall
reconcile amounts payable hereunder on a quarterly basis.
(b) Application of Revenues. P.C. hereby agrees to the application of
the Gross Collected Revenues to the purposes and priorities specified in this
Agreement. P.C. authorizes Manager to make disbursements from the Bank Accounts
to pay Manager amounts owed to it by P.C.
(c) P.C.'s Expenses. P.C. agrees that its Permitted Expenses shall
not exceed twenty percent (20%) of the Gross Collected Revenues calculated on an
annual basis, without the consent of Manager; provided, however, that P.C. shall
not be subject to any such limit with respect to payment of amounts due under
the Employment Agreements between P.C. and its Professional employees.
(d) 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, cash,
bank accounts, Medical Supplies and proceeds of the foregoing (collective, 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.
(e) Review of Books. Each party 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 Paragraph
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 PT
Services performed at such Site by P.C. during the term hereof as such successor
feels are reasonable necessary in order for such successor to provide continuing
PT Services. Notwithstanding the foregoing, no patient records will be made
available without the written
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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 PT 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 two
(2) years 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 physical therapy or physical
rehabilitation facility within the Restricted Area which is engaged in providing
PT 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.
(c) Non-Disclosure. During the term of this Agreement and at all
times thereafter, neither P.C. nor its shareholders or physical therapists shall
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 information regarding the business methods,
business policies, procedures, protocols, techniques, information systems or
trade secrets, or other
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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., it 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.
(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 violations, 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) Additional Covenants. P.C. shall secure covenants similar to
those specified with respect to P.C. in this Paragraph 10 (subject to geographic
limitations consistent with the Professional's activities for P.C.) from: (i)
each Professional employed by or contracting with P.C., and from (ii) each
shareholder and all future shareholders. Such covenants shall provide that
Manager shall be a third party beneficiary of each such covenant and may enforce
such covenants. P.C. shall provide to Manager proof of compliance with this
subsection upon Manager's request. P.C. agrees that it shall take all actions
necessary to enforce such covenants. P.C. covenants and agrees that it shall
operate in the manner necessary to constitute a "group practice," as such term
is defined in 42 U.S.C. ss. 1395nn(h)(4)(A), and that all referrals within and
among members of the group shall comport with the requirements of 42 U.S.C. ss.
1395 and other applicable laws and implementing regulations.
(f) Survival. The provision of this Paragraph 10 shall survive the
expiration or termination of this Agreement.
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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. 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 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
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professional licenses or participation agreements of all physical therapists
employed by it, or under contract to it, or to dismiss those who do not maintain
their professional 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) 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 360 days, P.C., at its
option, may terminate this Agreement by delivering written notice to Manager at
any time after such 360 day period and prior to the dismissal of such
proceeding.
(d) Effect of Termination. After the termination of this Agreement,
Manager shall continue to collect the accounts receivable which are on the books
of P.C. as of the date of termination and shall be entitled to receive as its
fee for services rendered prior to termination the amount of the Gross Collected
Revenues with respect to such accounts receivable (whenever collected) less the
amount of then unpaid Permitted Expenses incurred prior to termination.
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 performance of PT Services or ancillary
services or any other acts or omissions by 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, shareholders and employees harmless from and against all claims,
demands, costs, expenses, liabilities and losses (including attorneys' and other
professional fees) which may result against P.C. as a consequence of Manager's
gross negligence or willful misconduct in connection with Manager's performance
of this Agreement.
(c) Survival. The provisions of this Paragraph 13 shall survive the
expiration or termination of this Agreement.
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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 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 issues 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
government 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, no 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:
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i) If to Manager:
U.S. PHYSICIANS, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Attention: President
ii) If to P.C.:
U.S. Rehabilitation Services of Pennsylvania, 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 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.
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(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. 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.
(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.
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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. REHABILITATION SERVICES OF
PENNSYLVANIA, P.C.
By: /s/ Xxxxxx X. Xxxxx
------------------------
Xxxxxx X. Xxxxx
President
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