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MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement") dated and
effective as of October 1, 2005 (the "Effective Date"), is made by and between
TUSCARAWAS AMBULATORY SURGERY CENTER, LLC, an Ohio limited liability company
("Company"), and ORION HEALTHCORP, INC. (formerly known as SurgiCare, Inc.), a
Delaware corporation ("Manager").
RECITALS
WHEREAS, Company currently operates an ambulatory surgery center
located at 000 Xxxxxx Xxxxxx, Xxxxx 00, Xxxxx, Xxxx (the "Center");
WHEREAS, Manager has expertise in the management of ambulatory
surgery centers; and
WHEREAS, Company and Manager each desire that Company engage Manager as
the exclusive manager to assist with the management of the Center and the
provision of non-medical services to the Center, pursuant to the terms of this
Agreement.
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to become legally bound,
hereby agree as follows:
TERMS AND CONDITIONS
1. MANAGER'S DUTIES. For the period commencing on the Effective Date
and ending on the last day of the Term (as hereinafter defined) of this
Agreement, Company hereby appoints Manager as its exclusive manager to assist
with managing the operations of the Center by providing the services set forth
on EXHIBIT A attached hereto and incorporated by this reference herein
(hereinafter collectively referred to as the "Management Services"), and Manager
hereby accepts such appointment.
2. AUTHORITY AND CONTROL. Manager acknowledges that ultimate control of
the business and operations of Company and the Center shall remain with Company
pursuant to the terms of Company's Amended and Restated Operating Agreement (the
"Operating Agreement"), and that Company, by entering into this Agreement, is
delegating only those powers, duties and responsibilities expressly set forth in
this Agreement.
3. CONDUCT OF CENTER. As between Company and Manager, Company shall be
solely and exclusively in control of all professional aspects of Company and the
Center and the delivery of medical services at the Center. Company shall consult
with Manager as to the fees or charges for the rendition of services at the
Center; however, Manager shall have no authority with respect to the final
establishment of fees or charges for the rendition of services at the Center.
Manager shall have the sole right and authority to hire, employ, train,
supervise, terminate and compensate all non-clinical employees and staff for the
Center, except as otherwise specifically provided below.
4. COMPANY'S DUTIES. During the Term of this Agreement:
(i) Company shall operate the Center on a full-time basis and, in
conjunction with its staff, shall be responsible for the medical care of
patients at the Center. Company shall provide those services that a licensed
ambulatory surgery center is authorized to provide to such patients in a manner
that is in accordance with the prevailing standards and practices in the
community and in compliance with all applicable laws and regulations.
(ii) Company shall engage an appropriately qualified, licensed
physician to supervise the medical services provided at the Center. Such
physician shall maintain: (a) an unrestricted license to practice medicine in
the State of Ohio; (b) good standing with the medical board of the State of
Ohio; (c) a Federal Drug Enforcement Administration certificate; (d) a State of
Ohio controlled dangerous substance certificate without restrictions; (e) such
hospital medical staff memberships and clinical privileges appropriate to his or
her specialty, as determined by Company and sufficient to meet the requirements
of payors; (f) his or her skills through continuing education and training; (g)
professional liability insurance for his or her specialty in such amounts as
agreed upon by Manager and Company from time to time; and (h) compliance with
such other requirements as are reasonably requested by the Company.
(iii) Company shall ensure that at all times during the Term of this
Agreement, all physicians and personnel comply with the rules and regulations of
the Center. The rendition of all medical services and the supervision of all
personnel rendering medical services at the Center shall, as between the Company
and Manager, be the sole and exclusive responsibility of Company.
(iv) Company shall comply with any and all federal, state and local
statutes, regulations, rules, orders or other requirements that affect the
Center and/or its operations, including without limitation the Center's billing,
coding and collection practices and systems. Company shall obtain and maintain
all licenses and accreditations as are necessary for a facility's provision of
items and services in connection with the operation of an ambulatory surgery
center.
(v) With respect to legal compliance issues, Company shall be solely
responsible for complying with, and ensuring its compliance with, all applicable
federal and state laws, rules and regulations, including without limitation, all
Medicare, Medicaid, billing and coding laws, rules and regulations. Although
Company may consult with Manager regarding compliance issues, the parties hereby
explicitly acknowledge and agree that it shall be Company's sole responsibility
to comply with, and to determine whether Company and the Center are in
compliance with, any applicable Medicare or Medicaid laws, rules or regulations
or any other applicable federal or state laws, rules or regulations.
(vi) The professional services provided at the Center shall at all
times be provided in accordance with applicable standards, laws and regulations
applying to the medical profession. The Center and the staff shall comply with
all payor contracts.
5. CONSIDERATION PAYABLE TO MANAGER FOR MANAGEMENT SERVICES. As
compensation for the Management Services that Manager provides pursuant to the
terms of this Agreement, Company shall pay to Manager a monthly management fee
(the "Management Fee") equal to five percent (5%) of Total Collected Payments
(as hereinafter defined) of the Center during the prior calendar month. "Total
Collected Payments" as used herein means all payments, whether such payments are
partial payments or payments in full, Company receives for ambulatory surgery
services and items rendered or provided at the Center, as reduced by refunds and
chargebacks. On or before the fifteenth (15th) day of each calendar month of the
Term, Company shall deliver to Manager the Management Fee owed for the
immediately preceding calendar month. Company and Manager agree that the
Management Fee is based on the fair market value for the services provided.
Manager shall not limit charitable care improperly or engage in inappropriate
collection practices and shall follow the Hospital Care Assurance Program Rules
of the State of Ohio.
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6. EXPENSES. Within ten (10) days of providing Company with a monthly
itemized invoice, Manager shall be reimbursed for all reasonable and direct
expenses incurred in performing the Management Services, including but not
limited to, all costs associated with the Manager's employment of non Clinical
Personnel (as defined in EXHIBIT A) (including without limitation, salaries,
wages, employee benefits, and reimbursement of expenses), legal fees, accounting
fees, and other professional fees. Company shall be solely responsible for and
obligated to pay all expenses associated with its operation including, but not
limited to, all Company employee compensation (including without limitation
salaries, wages, employee benefits, and reimbursement of expenses).
7. TERM AND TERMINATION.
This Agreement shall be in effect for the period which
commences on the Effective Date of this Agreement and ends two (2) years
thereafter, unless sooner terminated as provided herein (such initial term and
any and all renewal terms shall be referred to herein as the "Term"). The Term
shall automatically continue on a year to year basis, unless either the Company
or the Manager gives the other party at least ninety (90) days prior written
notice of its intent not to extend the then current Term. Additionally, should
there be a change in the existing leadership of Manager (i.e., a change in the
representative to the Company), the Company shall have the option to terminate
this Agreement upon sixty (60) days prior written notice. Notwithstanding the
foregoing, either Company or Manager, at its option, may terminate this
Agreement, upon the occurrence of any of the following:
(a) In the event Company and Manager mutually agree in writing
that this Agreement may be terminated and on the date so specified in such
written agreement;
(b) Immediately, if the other party files a petition in
bankruptcy or is adjudicated bankrupt, or any receiver or trustee is appointed
for it or for a substantial portion of its assets, or it shall make an
assignment of substantially all of its assets for the benefit of its creditors;
(c) If the other party materially breaches any of the terms of
this Agreement, the non-breaching party provides the breaching party with
written notice of the breach and a suggested method for curing such breach, and
the breaching party fails to cure such breach, or make a good faith effort to
initiate curative action and diligently prosecute such action within the
applicable cure period. The cure periods for a breach shall be: fifteen (15)
days for the failure to pay any compensation when due; thirty (30) days if the
breach affects a patient's safety or quality of care; and sixty (60) days for
any other breaches;
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(d) Manager shall have the right to terminate this Agreement
by giving written notice to Company if Company is suspended or prohibited from
participating in the Medicare or Medicaid programs or is excluded from entering
into health care provider agreements with any material portion of the managed
care or health care insurance industry and such suspension, prohibition or
exclusion is not rescinded within thirty (30) days following the commencement
thereof; or
(d) In the event the Center is totally or substantially
destroyed by fire, explosion, flood, windstorm, hail, or other casualty or act
of nature, and the owner/landlord of the facility in which the Center is housed
decides not to repair or rebuild such facility, or in the event all or a
substantial portion of such facility is taken or is to be taken by condemnation
or eminent domain proceeding. If the owner/landlord decides to repair or rebuild
such facility to its original size and condition, the Management Fee
attributable to that period during which the Center is not operational and the
duties and obligations of Manager and Company hereunder shall xxxxx until such
time as the Center is suitable for Manager and Company to resume duties and
obligations hereunder.
(iii) Upon termination of this Agreement for any
reason:
(a) Company shall owe to Manager, and shall pay Manager, the
full amount of any Management Fees and Expenses owing pursuant to the terms of
Sections 5 and 6 of this Agreement, up through and including the date of
termination. Company shall owe no further fees to Manager following the date of
termination, except as provided for in Section 5;
(b) Manager's obligations to perform services hereunder shall
completely cease, subject to subparagraph (c) below in this Section; and
(c) Manager shall return to Company, within thirty (30) days
after termination of this Agreement, copies of all data in Manager's possession
relating to Company and existing on the date of termination.
8. INDEPENDENT CONTRACTOR STATUS.
(i) Notwithstanding any provision contained herein to the
contrary, each of Company and Manager understand and agree that the parties
hereto intend to act and perform as independent contractors and that, therefore,
neither Company nor Manager is an employee, partner, joint venturer, or agent of
the other. Nothing in this Agreement shall be construed as placing the parties
in a relationship of employer-employee, partners, joint venturers, or
principal-agent. Neither party shall have the right to make any promises,
warranties or representations, or to assume or create any obligations, on behalf
of the other party.
(ii) Manager agrees to be solely and entirely responsible for
its acts and for the acts of its employees and agents, and for paying all
applicable taxes required by law in connection with Manager's employees and
agents, such as payroll, income, withholding and Social Security taxes, and all
applicable insurance required by law, such as workers' compensation and
unemployment insurance; provided, however, Manager does not assume
responsibility for the acts of its employees and agents if such acts are
performed under the professional direction and supervision of Clinical Personnel
(as hereinafter defined).
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(iii) Company agrees to be solely and entirely responsible for
its acts and for the acts of its employees and agents, and for paying all
applicable taxes required by law in connection with the Company's employees and
agents, such as payroll, income, withholding, and Social Security taxes, and all
applicable insurance required by law, such as workers' compensation and
unemployment insurance.
(iv) In the event any governmental entity, including without
limitation, the Internal Revenue Service, should question or challenge the
independent contractor status of Manager or its employees and agents with
respect to the Company and the Management Services rendered hereunder, such
party shall promptly notify the other party and afford the other party the
opportunity to participate in any discussion or negotiation with the
governmental entity. In the event the governmental entity concludes that an
independent contractor relationship does not exist, either party may terminate
this Agreement immediately upon written notice to the other party.
9. MUTUAL INDEMNIFICATIONS.
(i) INDEMNIFICATION BY MANAGER. Manager shall protect, save
and keep Company harmless and indemnify Company, its Limited Partners, General
Partner, and their officers, agents and employees against any and all claims,
obligations, demands, costs, damages, legal or administrative proceedings,
suits, judgments, expenses, and liabilities of any kind or nature whatsoever,
including reasonable attorneys' fees and costs at all levels of trial and
appeal, to the extent that any of same are not covered by a policy of insurance
and arise directly out of or in connection with the negligence, gross
negligence, willful acts or omissions of Manager's officers, directors,
employees and/or agents in the performance of their obligations hereunder or in
connection with this Agreement in any way, except for acts of its employees and
agents if such acts are performed under the professional direction and
supervision of Clinical Personnel (as defined in EXHIBIT A).
(ii) INDEMNIFICATION BY COMPANY. Company shall protect, save
and keep Manager harmless and indemnify Manager, its officers, directors, agents
and employees against any and all claims, obligations, demands, costs, damages,
legal or administrative proceedings, suits, judgments, expenses, and liabilities
of any kind or nature whatsoever, including reasonable attorneys' fees and costs
at all levels of trial and appeal, to the extent that any of same are not
covered by a policy of insurance and arise directly out of or in connection with
the negligence, gross negligence, willful acts or omissions of Company's Limited
Partners, General Partner, officers, employees and/or agents in the performance
of their obligations hereunder, in connection with this Agreement in any way, or
in the operation of the Center.
(iii) RULES REGARDING INDEMNIFICATION. The indemnified party
shall give prompt written notice to the indemnifying party of any claim which
might give rise to a claim by the indemnified party against the indemnifying
party based on the indemnity agreement contained in Sections 9(i) and 9(ii)
above, stating the nature and basis of said claims and the amounts thereof, to
the extent known. After such notice, if the indemnifying party shall acknowledge
in writing to the indemnified party that the indemnifying party shall be
obligated under the terms of its indemnity hereunder in connection with such
lawsuit, action or claim and the indemnifying party shall have presented
evidence satisfactory to the indemnified party of the indemnifying party's
financial ability to satisfy its obligations under this Section 9 or, in the
indemnified party's sole discretion, the indemnifying party shall have provided
to the indemnified party collateral or security sufficient to satisfy the
indemnifying party's obligations to the indemnified party hereunder, then the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such claim, lawsuit or action and to employ and
engage attorneys of its own choice to handle and contest and defend the same, at
the indemnifying party's cost, risk and expense. If the claim, lawsuit or action
is an insured claim under the indemnifying party's applicable insurance
coverage, the claim shall be submitted to the insurance carrier. The indemnified
party shall cooperate in all reasonable respects, at the cost and expense of the
indemnifying party, with the indemnifying party, the insurance carrier (if
applicable) and such attorneys in the investigation, trial and defense of such
lawsuit or action and any appeal arising therefrom, or in the processing and
resolution of any claim filed with the insurance carrier, and both parties shall
cooperate with each other to insure the diligent and timely resolution of the
matters in this Article 9 and in providing access to relevant books and records
in their possession; provided, however, that the indemnified party may, at its
own cost, select counsel and participate in the investigation, settlement, trial
and defense of such claim, lawsuit or action and any appeal arising therefrom.
No indemnifying party may effect any settlement that could result in any cost,
expense or liability to the indemnified party unless such indemnified party
consents in writing to such settlement and the indemnifying party agrees to
indemnify the indemnified party therefore. No indemnified party may pay any
claim or effect any settlement that could result (i) in any cost, expense or
liability of the indemnifying party under this Agreement or otherwise, or (ii)
in preventing the indemnifying party from recovering under the indemnifying
party's insurance coverage, unless the indemnifying party consents in writing to
such payment or settlement; provided, however, that the indemnified party may
pay any such claim or effect a settlement if the indemnified party relieves the
indemnifying party of any liability therefore. All insurance proceeds collected
pursuant to the indemnified party's insurance coverage shall be paid to satisfy
such claim, lawsuit or enforcement action and the balance, if any, shall be paid
to the indemnified party. Any damages incurred by an indemnified party not
covered by insurance shall be paid to indemnified party by the indemnifying
party.
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10. CONFIDENTIALITY COVENANT.
(i) Each party ("First Party") recognizes and acknowledges
that during the Term hereof it shall have access to certain trade secret,
proprietary and confidential information of the other party ("Other Party") and
that such information constitutes valuable, special and unique property of Other
Party. The parties hereto confirm that it is reasonably necessary to protect
Other Party's goodwill, and First Party does hereby agree to keep secret and
confidential all information heretofore or hereafter acquired by it relating to
the following (all such information being hereinafter referred to as
"Confidential Information"): (a) the financial condition and other information
relating to the business of the Other Party, including without limitation, its
rates for services, its contracts and its managed care contracting payment rates
and information; (b) the systems, products, plans, services, marketing, sales,
administration and management procedures, trade relations or practices,
techniques and practices heretofore or hereafter acquired, developed and/or used
by Other Party; and (c) the suppliers, vendors, lenders, independent contractors
and employees of Other Party and the terms of any contracts with same. First
Party further agrees that it shall at no time during the Term of this Agreement
or thereafter disclose any such Confidential Information to any person, firm,
corporation, association, or other entity (hereinafter referred to as "Third
Parties"), or use the same in any manner other than in connection with the
business and the affairs contemplated by this Agreement. First Party agrees
that, upon the termination of this Agreement for any reason whatsoever, with or
without cause, whether under the terms of this Agreement or otherwise, it shall
forthwith deliver or cause to be delivered to Other Party any and all working
papers, forms, records, account listings, financial statements, notebooks,
manuals, keys, data and other documents and materials in its possession or under
its control relating to or containing any such Confidential Information.
Notwithstanding any other provision of this Agreement, this Section 10 shall not
apply to: (a) any information which is, or will become, public during the Term,
other than by breach of this Agreement by First Party; (b) any information
independently made lawfully available to First Party as a matter of right by a
third party; (c) any information which was independently developed by First
Party without the use of Confidential Information; (d) any information which is
ordered to be released by requirement of a governmental agency or court of law;
(e) any information provided to employees, agents or professional advisors, such
as attorneys and accountants, of First Party; (f) any information received by
Manager in its capacity as an investor in the Company rather than in its
capacity as Manager.
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(ii) First Party also understands that Other Party has
received and in the future shall receive from certain third parties confidential
or proprietary information ("Third-Party Information") subject to a duty on
Other Party's part to maintain the confidentiality of such information and to
use it only for certain limited purposes. During the Term of this Agreement and
thereafter, First Party agrees to hold Third-Party Information in the strictest
confidence and not to disclose (to anyone other than personnel who need to know
such information in connection with their work hereunder) or use, lecture upon
or publish, except in connection with the performance of its obligations
hereunder, such Third-Party Information unless expressly authorized by an
executive officer of Other Party in writing.
(iii) First Party acknowledges that satisfaction of the
covenants and agreements set forth in this Section 10 is necessary to protect
the business, goodwill, and other proprietary interests of Other Party and that
a breach of such covenants or agreements will result in irreparable and
continuing damage to Other Party for which there will be no adequate remedy at
law. First Party acknowledges that a breach of Section 10 would result in
irreparable damage to Other Party and, without limiting other remedies which may
exist for any breach of Section 10, First Party agrees that Section 10 may be
enforced by temporary restraining order, temporary injunction, or permanent
injunction restraining violation thereof, pending or following trial on the
merits. First Party hereby waives the claim or defense that an adequate remedy
at law for such a breach exists. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth herein are unreasonable, then it is the intention of the parties that
such restrictions be enforced to the maximum scope, duration and territory that
the court deems reasonable, and this Agreement shall thereby be reformed. The
parties also agree that the existence of any claim or cause of action by Manager
against Company, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement of the restrictive covenants set forth
herein, but shall be litigated separately. The covenants contained in this
Section 10 shall survive any termination or expiration of this Agreement.
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11. USE OF NAME; PROPRIETARY PROPERTY. Company hereby grants to Manager
the nonexclusive right, license and privilege to use Company's logo, if any, and
the name "Tuscarawas Ambulatory Surgery Center" alone or as a portion of or in
connection with the corporate name of Manager during the Term, and subject to
all of the terms and conditions provided herein. Company agrees to provide
Manager with access, without charge, to the outcomes and other data developed by
Company for use in the operation of the Center. Manager may include its name and
the name of Company on any letterhead, professional announcements, brochures,
promotional materials, private placements, public offerings, and the like
relating to Company or Manager. Manager is and shall be the sole owner and
holder of all right, title and interest to the proprietary property of Manager
consisting of all copyright, service xxxx and trademark rights and interests in
the logo, management information and other systems, forms, form contracts, and
policy manuals relating to the Center, excluding any logos purchased or created
solely by Company. Company agrees that it shall not at any time knowingly harm,
misuse or bring into disrepute the proprietary property of Manager.
12. INSURANCE. During the Term of this Agreement, Manager and Company
shall maintain: professional, casualty, comprehensive general liability
insurance coverage and workers compensation coverage in amounts and as required
by state and federal law.
13. NOTICES. Any notice, demand or communication required, permitted,
or desired to be given hereunder shall be deemed effectively given upon receipt
or refusal to accept receipt when delivered personally, by telegraphic or other
electronic means (including telecopy and telex) or overnight courier, or five
(5) days after being deposited in the United States mail, with postage prepaid
thereon, or certified or registered mail, return receipt requested, addressed as
follows:
IF TO COMPANY:
Tuscarawas Ambulatory Surgery Center, LLC
000 Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000
Attention: Medical Director
IF TO MANAGER:
Orion HealthCorp, Inc.
0000 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: CEO
or to such other address, and to the attention of such other person or officer
as any party may designate, with copies thereof to the respective counsel
thereof as notified by such party.
14. AUTHORITY TO SIGN. By signing this Agreement, each party represents
and warrants to all other parties that its execution of this Agreement is duly
authorized in accordance with applicable laws relating to such parties, that
this Agreement is fully enforceable according to its terms against such
executing party and that the individual executing on any corporation's behalf
has the requisite power and authority to do so.
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15. GOVERNING LAW; CHOICE OF FORUM. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of Ohio, and
without regard to conflict of laws principles. The parties hereto hereby consent
to venue within Tuscarawas County, Ohio and waive the right to any other venue
for all purposes in connection with any action or proceeding commenced between
the parties hereto in connection with or arising from this Agreement.
16. ENTIRE AGREEMENT; NO ORAL MODIFICATION. This Agreement constitutes
the entire final agreement between the parties hereto with respect to the
subject matter hereof, and supersedes any and all prior agreements between the
parties hereto, both oral and written, concerning the subject matter hereof.
This Agreement may not be amended or modified except by a writing signed by all
of the parties hereto.
17. ASSIGNMENT. This Agreement may not be assigned by either Company or
Manager, without the other party's prior written consent; provided, however,
that Manager may, without the prior written consent of Company, assign its
rights and delegate its duties hereunder: (i) to one (1) or more of its
affiliates; (ii) to a third party as part of a sale of substantially all of
Manager's assets; and (iii) to any lending institution, for security purposes or
as collateral, from which Manager obtains financing. A merger, consolidation,
change in shareholders or controlling interest, or stock-for-stock exchange by
Manager shall not be deemed to constitute an assignment of this Agreement.
18. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and shall not in any way affect or render invalid or
unenforceable any other provision of this Agreement, and this Agreement shall be
carried out as if such invalid or unenforceable provision were not contained
herein. It is the intention of the parties that if any such provision is held to
be illegal, invalid or unenforceable, there will be added in lieu thereof a
provision as similar in terms to such provision as possible and be legal, valid
and enforceable.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The parties agree that
execution pages transmitted by facsimile are fully binding upon the parties.
20. WAIVER. A waiver of any breach or violation of any term, provision
or covenant contained herein shall not be deemed a continuing waiver, or a
waiver of any future or past breach or violation, or a waiver of any other term,
provision or covenant of this Agreement.
21. HEADINGS. The section headings contained herein are for reference
purposes only and are not to be deemed a part of this Agreement.
22. RECITALS. The parties agree and represent that the recitals on the
first page of this Agreement are true and correct and are incorporated into this
Agreement.
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23. GENDER AND NUMBER. Whenever the context hereof requires, the gender
of all words shall include the masculine, feminine and neuter, and all words
shall include the singular and plural.
24. PREVAILING PARTY. If any litigation, including arbitration, arises
as a result of the terms, conditions or provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees at all
pre-trial, trial and appellate levels, as well as all costs and expenses. In
addition, the prevailing party shall be entitled to recover reasonable
attorney's fees and costs incurred in enforcing any judgment arising from a suit
under this Agreement. This post-judgment attorney's fees and costs provision
shall be severable from the other provisions of this Agreement and shall survive
any judgment on such suit and is not to be deemed merged into the judgment.
25. SURVIVAL. The provisions of this Agreement that by their nature are
intended to survive the termination or expiration of this Agreement, including,
without limitation, Sections 9, 10 and 11, shall survive the termination or
expiration of this Agreement.
26. TIME OF ESSENCE. Time is of the essence in this Agreement.
27. RULE OF CONSTRUCTION. The terms and conditions set forth in this
Agreement are the product of mutual draftsmanship and review by the parties
hereto, each being represented by counsel. Any ambiguities in this Agreement or
any agreement prepared or to be prepared pursuant to or in connection with this
Agreement shall not be construed against any one party because of the
draftsmanship. This Agreement shall be interpreted in a neutral fashion
consistent with the intent of the parties as stated herein.
28. CONTINUED VALIDITY. The parties hereto have made all reasonable
efforts to ensure that this Agreement represents and memorializes the economic
arrangement between the parties hereto and that it complies with all applicable
laws, including, but not limited to, all applicable health care laws. The
parties are aware that there may be no clear or definitive guidance with respect
to the applicability of various health care laws to the management arrangement
contained herein including, but not limited to, the management fee arrangement.
While the parties have attempted to review and analyze all applicable laws in an
effort to comply with same, the parties acknowledge that the applicable health
care laws, and interpretations thereof, are often vague and are constantly
changing. The parties therefore understand and acknowledge that as applicable
law, and interpretations thereof, become more settled, this Agreement may need
to be amended in order to comply with such law, or interpretations thereof, as
the case may be. If at any time either party reasonably believes in good faith
based upon the written opinion of reputable health care counsel that this
Agreement or the performance by that party of any of its obligations under this
Agreement violates any such law or regulation, state or federal, or
interpretation thereof, or could result in the loss or restriction of that
party's license or that party's right to participate in Medicare or any other
governmental program, then that party may, upon written notice, require the
other party to enter into good faith negotiations to renegotiate the affected
term(s) of this Agreement. If the parties are unable to reach an agreement
concerning the modification of this Agreement within forty-five (45) days after
the date of the notice seeking renegotiation, then either party may immediately
terminate this Agreement by written notice to the other party.
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29. NO THIRD-PARTY BENEFICIARIES. This Agreement is not intended to,
nor shall it be construed to, create any rights in any third parties.
30. NO REFERRAL ARRANGEMENTS. The parties hereby acknowledge and agree
that no benefits to the parties hereunder require or are in any way contingent
upon the admission, recommendation, referral or any other arrangement for the
provision of any item or service offered by Company or any of its affiliates, to
any patients of the Center, or Company's employees or agents. Manager shall
neither have nor exercise any control or direction over the number, type, or
recipient of patient referrals made by physicians, and nothing in this Agreement
shall be construed as directing or influencing such referrals. None of Manager's
activities contemplated under this Agreement or otherwise shall constitute
obligations of Manager to generate patient flow or business to the Center.
Further, there is absolutely no intent for Manager in any manner to be
compensated to generate patients for the Center. Rather, Company has engaged
Manager to manage the business aspects of the Center in order to enable Company
to focus on delivering the highest quality of patient care.
31. ACCESS TO RECORDS. In the event that Manager and Company are
subject to the disclosure provisions contained in the Social Security Act, then
each of the parties agrees to comply with same and agrees to make available upon
request from the Secretary of the Department of Health and Human Services or the
Comptroller General, or any of their duly authorized representatives, this
Agreement and any other documents and records of such party deemed necessary by
the requesting party to verify the nature and the extent of the costs hereof. If
either of the parties carries out any of its obligations hereunder through
subcontractors (subject to the assignment restrictions and other provisions
hereof), pursuant to a contract for a value of Ten Thousand Dollars ($10,000) or
more, said party shall require such subcontract to contain a provision allowing
similar access. The parties' obligations hereunder and the terms to be placed in
any subcontracts shall provide that such contracts, subcontracts, books and
records shall be made available for a period of four (4) years after the
provision of services specified hereunder or under any of the subcontracts.
32. ADDITIONAL INSTRUMENTS. Each party shall, at the reasonable request
of any other party hereto, execute and deliver to such other party all such
further instruments, assignments, assurances and other documents, and take such
actions as such other party may reasonably request in connection with the
carrying out of this Agreement.
33. INSPECTIONS. Company shall at all times during the Term, and at all
times thereafter, make available to Manager for inspection by its authorized
representatives during regular business hours, at the principal place of
business of Company, any records of Company determined by Manager to be
necessary to perform its services and carry out its responsibilities hereunder
or necessary for the defense of any legal or administrative action or claim
relating to said records or necessary for any other reasonable purpose.
34. AFFILIATE. As used herein, "affiliate" means, as to the Person (as
hereinafter defined) in question, any Person that directly or indirectly
controls, is controlled by, or is under control with, the Person in question and
any successors or assigns of such Person; and the term "control" means
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person whether through ownership
of voting securities, by contract or otherwise. "Person" means an association, a
corporation, a limited liability company, an individual, a partnership, a
limited liability partnership, a trust or any other entity or organization.
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35. HIPAA. Both parties acknowledge the existence of and shall comply
in all respects with the Health Insurance Portability and Accountability Act of
1996 and regulations promulgated thereunder by the United States Department of
Health and Human Services ("HIPAA") as amended from time to time. Accordingly,
both parties shall execute the Business Associate Agreement, attached hereto as
EXHIBIT B and incorporated herein by reference, simultaneously with this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.
PARTNERSHIP:
TUSCARAWAS AMBULATORY SURGERY CENTER, L.L.C.,
AN OHIO LIMITED LIABILITY COMPANY
By: /S/ XXXXX XXXXXXX
Print Name: Xxxxx XxXxxxx
Print Title: CEO
MANAGER:
ORION HEALTHCORP, INC., A DELAWARE CORPORATION
By: /S/ XXXXX XXXXXXX
Print Name: Xxxxx XxXxxxx
Print Title: President
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EXHIBIT A
MANAGEMENT SERVICES
Subject to the provisions of this Agreement, Manager shall during the Term
hereof provide the following services and assistance to Company in connection
with the operation of the Center:
(a) Directing the day-to-day non-medical operations of the Center to
ensure the operations are conducted in a businesslike manner;
(b) Performing all non-medical oversight responsibilities for Company;
(c) Hiring and providing certain non-physician personnel to perform
services at the Center as reasonably necessary for the effective operation of
the Center, other than: (i) physicians, and (ii) any and all health
professionals determined by Manager and Company to be most properly employed or
contracted by Company for purposes of payor requirements or applicable
provisions of law. Consistent with applicable laws, Manager shall make all
hiring, retention, and termination decisions, determine compensation and
staffing levels, individual work hours, personnel policies, employee benefit
programs, and the terms, conditions, obligations and privileges of employment or
retention for all personnel who are employed or retained by Manager and who
provide services to Company. With respect to any and all clinical personnel
(meaning the personnel referenced in items (i) and (ii) above) (collectively the
"Clinical Personnel") providing services to, through or on behalf of Company,
Company shall make all hiring, retention, and termination decisions, determine
compensation and staffing levels, individual work hours, personnel policies,
employee benefit programs, and the terms, conditions, obligations and privileges
of employment or retention of such Clinical Personnel. Furthermore, Company
shall have the right and obligation to direct and supervise the delivery of
clinical assistance (if any) by any personnel furnished by Manager. To the
extent (if any) that an employee of Manager assists any Clinical Personnel in
performing clinical functions, such employee of Manager shall be subject to the
professional direction and supervision of such Clinical Personnel with respect
to such assistance only, and in his or her performance of such clinical
functions, shall not be subject to any direction or control by Manager, except
as may be specifically authorized by Manager. However, the preceding sentence
does not in any way create an employment relationship between Company and
Manager's employee and does not in any way modify the employment relationship
between Manager and such employee. Company shall be solely responsible for the
payment of its Clinical Personnel's compensation and benefits (if any), any
applicable payroll taxes and all other taxes and charges now or hereafter
applicable to them;
(d) Assisting in the billing and collection activities of Company for
services provided at the Center in the name, address and under the provider
number(s) of Company, consistent with Company's arrangements with payors and
charity care and courtesy discount policies; provided, however, Company shall be
responsible for billing and collecting for all its services. Manager shall
promptly remit to Company any cash, checks or other receipts that Manager
receives or takes possession of in connection with Manager assisting Company in
its collection activities. Company shall obtain and maintain all provider
numbers necessary to obtain payment or reimbursement for its services;
(e) Providing Company with financial reports as Manager and Company, by
mutual agreement, determine would assist Company in evaluating the performance
of the Center;
(f) Assisting Company in developing an annual business plan to include
an operating budget, cash flow budget, capital budget, utilization goals and
changes in service;
(g) Assisting Company in the development and implementation of written
policies, procedures and protocols to ensure the efficient and legal operation
of the Center;
(h) Assisting Company in the development and implementation of written
policies, procedures and protocols to ensure the efficient and legal formation
and operation of the Center;
(i) Advising and assisting Company with respect to Company's
negotiations with health care service plans, independent practice associations,
health maintenance organizations, Medicare payors, and other state, federal and
third-party purchasers of health care services;
(j) Assisting Company's efforts to ensure that the Center is in
compliance with governmental regulations;
(k) Assisting Company's efforts to ensure that the Center is in
compliance with Medicare and State of Ohio requirements, in addition to other
agencies and insurance companies, as applicable;
(l) Assisting and advising Company with respect to Company procuring
and maintaining in full force and effect, hazard, liability, professional and
other necessary insurance designed to protect Company against risks and losses
associated with the Center's operations, including general liability and
property insurance, professional liability insurance, and such other or
additional insurance as Company deems appropriate;
(m) Assisting in developing and implementing procedures and policies
for the timely filing, maintenance and storage of all patient records generated
by Company. All patient records shall be treated in accordance with all
applicable state and federal laws relating to the confidentiality of patient
records as well as Company's privacy policies. All patient records shall be the
property of, maintained by, and in the custody of Company, but Company expressly
agrees that Manager shall have access to such patient records, to the extent
lawfully permitted, as is necessary for Manager to fulfill its obligations under
this Agreement. Manager shall assist in developing and implementing written
policies and procedures for protecting the confidentiality of the patient
information, which policies and procedures are to be approved by Company; and
(n) Providing any additional services that Company and Manager mutually
agree on.
Notwithstanding any provision herein to the contrary, Manager agrees and
acknowledges that, as between Company and Manager, Company shall have authority
over all decisions regarding the clinical sufficiency, suitability, reliability
and efficiency of a particular product, service, process or activity as it
relates to the delivery of any medical services.
2
EXHIBIT B
BUSINESS ASSOCIATE AGREEMENT
This BUSINESS ASSOCIATE AGREEMENT (this "Agreement") is executed this
____ day of ___________, 2004 (the "Effective Date"), by and between TUSCARAWAS
AMBULATORY SURGERY CENTER, L.L.C., an Ohio limited liability company (the
"Covered Entity"), and ORION HEALTHCORP, INC., a Delaware corporation (the
"Business Associate"), and supplements, modifies, and amends any and all prior
agreements (the "Underlying Relationship") entered into by and between the
Covered Entity and the Business Associate.
R E C I T A L S:
WHEREAS, during the course of the Underlying Relationship, Business
Associate may receive from Covered Entity, or may receive or create on behalf of
Covered Entity, certain Protected Health Information (as defined herein);
WHEREAS, Covered Entity and Business Associate intend to protect the
privacy and provide for the security of Protected Health Information disclosed
to Business Associate pursuant to the Agreement in compliance with the Health
Insurance Portability and Accountability Act of 1996, Public Law 104-191
("HIPAA") and regulations promulgated thereunder by the U.S. Department of
Health and Human Services entitled the "Privacy Standards for Individually
Identifiable Information" which comprise 45 C.F.R. xx.xx. 160.101 (the "HIPAA
Privacy Regulations") and other applicable laws;
WHEREAS, the HIPAA Privacy Regulations compels Covered Entity to enter
into a contract containing specific requirements with Business Associate as set
forth in, but not limited to, Title 45, Sections 164.502(e) and 164.504(e) of
the Code of Federal Regulations ("CFR") and contained in this Addendum requiring
Covered Entity to obtain satisfactory assurance that Business Associate will
appropriately safeguard all Protected Health Information disclosed by, or
created or received by Business Associate on behalf, of Covered Entity; and
WHEREAS, it is the mutual intent of the Covered Entity and Business
Associate to amend the Agreement, as described in this Agreement, in order for
the Covered Entity to comply with the HIPAA Privacy Regulations.
NOW, THEREFORE, in consideration of the agreements, covenants, terms
and conditions herein contained and other consideration, the sufficiency of
which is hereby acknowledged, the Covered Entity and the Business Associate
hereby agree as follows:
I. DEFINITIONS FOR USE IN THIS ADDENDUM
"Data Aggregation" shall mean, with respect to Protected Health
Information created or received by the Business Associate in its capacity as the
Business Associate of the Covered Entity, the combining of such Protected Health
Information by the Business Associate with the Protected Health Information
received by the Business Associate in its capacity as a Business Associate of
another Covered Entity, to permit data analyses that relate to the health care
operations of the respective Covered Entities.
3
"Designated Record Set" shall mean a group of records maintained by or
for the Covered Entity that is (i) the medical records and billing records about
individuals maintained by or for the Covered Entity; (ii) the enrollment,
payment, claims adjudication, and case or medical management record systems
maintained by or for a health plan; or (iii) used, in whole or in part, by or
for the Covered Entity to make decisions about individuals. As used herein the
term "Record" means any item, collection, or grouping of information that
includes Protected Health Information and is maintained, collected, used, or
disseminated by or for the Covered Entity.
"Electronic Media" shall mean the mode of electronic transmissions. It
includes the Internet, extranet (using Internet technology to link a business
with information only accessible to collaborating parties), leased lines,
dial-up lines, private networks, and those transmissions that are physically
moved from one location to another using magnetic tape, disk, or compact disk
media.
"Individually Identifiable Health Information" shall mean information
that is a subset of health information, including demographic information
collected from an individual, and (i) is created or received by a health care
provider, health plan, employer, or health care clearinghouse; and (ii) relates
to the past, present, or future physical or mental health or condition of an
individual; the provision of health care to an individual; or the past, present
or future payment for the provision of health care to an individual; and (a)
identifies the individual, or (b) with respect to which there is a reasonable
basis to believe the information can be used to identify the individual.
"Protected Health Information" shall mean Individually Identifiable
Health Information that is (i) transmitted by electronic media, (ii) maintained
in any medium constituting Electronic Media; or (iii) transmitted or maintained
in any other form or medium. "Protected Health Information" shall not include
(i) education records covered by the Family Educational Right and Privacy Act,
as amended, 20 U.S.C. ss.1232g and (ii) records described in 20
U.S.C.ss.1232g(a)(4)(B)(iv). For instance, Protected Health Information includes
information contained in a patient's medical records and billing records.
"Secretary" shall mean the Secretary of the U.S. Department of Health
and Human Services or any office or person within the U.S. Department of Health
and Human Services to which/whom the Secretary has delegated his or her
authority to administer the Privacy Standards, such as the Director of the
Office for Civil Rights.
II. OBLIGATIONS OF BUSINESS ASSOCIATE
Section 2.1. USE AND DISCLOSURE OF PROTECTED HEALTH INFORMATION. The
Business Associate may use and disclose Protected Health Information only as
required to satisfy its obligations pursuant to the Underlying Relationship, as
permitted herein, or required by law, but shall not otherwise use or disclose
any Protected Health Information. The Business Associate shall not and shall
ensure that its directors, officers, employees, contractors and agents do not
use or disclose Protected Health Information received from the Covered Entity in
any manner that would constitute a violation of the Privacy Standards if used by
the Covered Entity, except that the Business Associate may use Protected Health
Information (i) for the Business Associate's proper management and
administrative services, (ii) to carry out the legal responsibilities of the
Business Associate or (iii) to provide data aggregation services relating to the
health care operations of the Covered Entity if required pursuant to the
Underlying Relationship. The Business Associate acknowledges that, as between
the Business Associate and the Covered Entity, all Protected Health Information
shall be and remain the sole property of the Covered Entity, including any and
all forms thereof developed by the Business Associate in the course of its
fulfillment of its obligations pursuant to the Underlying Relationship. The
Business Associate further represents that, to the extent the Business Associate
requests that the Covered Entity disclose Protected Health Information to the
Business Associate, such a request is only for the minimum necessary Protected
Health Information for the accomplishment of the Business Associate's purpose.
4
Section 2.2. SAFEGUARDS AGAINST MISUSE OF INFORMATION. The Business
Associate shall use all appropriate safeguards to prevent the use or disclosure
of Protected Health Information other than as permitted under this Agreement.
Section 2.3. REPORTING OF DISCLOSURES OF PROTECTED HEALTH INFORMATION.
The Business Associate shall, as soon as practicable, but in no event later than
within five (5) days of becoming aware of any use or disclosure of Protected
Health Information in violation of the Agreement by the Business Associate, its
officers, directors, employees, contractors or agents or by a third party to
which the Business Associate disclosed Protected Health Information pursuant to
SECTION 2.4, report any such disclosure to the Covered Entity. In such event,
the Business Associate shall, in consultation with the Covered Entity, mitigate,
to the extent practicable, any harmful effect that is known to the Business
Associate of such improper use or disclosure.
Section 2.4. AGREEMENTS BY THIRD PARTIES. The Business Associate shall
obtain and maintain an agreement with each agent or subcontractor that has or
will have access to Protected Health Information, which is received from, or
created or received by the Business Associate on behalf of the Covered Entity,
pursuant to which agreement such agent or subcontractor agrees to be bound by
the same restrictions, terms and conditions that apply to the Business Associate
pursuant to the Underlying Relationship with respect to such Protected Health
Information.
Section 2.5. ACCESS TO INFORMATION. Within ten (10) days of a request
by the Covered Entity for access to Protected Health Information about an
individual contained in a Designated Record Set, the Business Associate shall
make available to the Covered Entity such Protected Health Information for so
long as such information is maintained in the Designated Record Set. In the
event any individual requests access to Protected Health Information directly
from the Business Associate, the Business Associate shall within five (5) days
forward such request to the Covered Entity. Any denials of access to the
Protected Health Information requested shall be the responsibility of the
Covered Entity.
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Section 2.6. AVAILABILITY OF PROTECTED HEALTH INFORMATION FOR
AMENDMENT. Within twenty (20) days of receipt of a request from the Covered
Entity for the amendment of an individual's Protected Health Information or a
record regarding an individual contained in a Designated Record Set (for so long
as the Protected Health Information is maintained in the Designated Record Set),
the Business Associate shall provide such information to the Covered Entity for
amendment and incorporate any such amendments in the Protected Health
Information as required by 45 C.F.R. ss.164.526.
Section 2.7. ACCOUNTING OF DISCLOSURES. Within twenty (20) days of
notice by the Covered Entity to the Business Associate that it has received a
request for an accounting of disclosures of Protected Health Information, other
than related to the treatment of the patient, the processing of payments related
to such treatment, or the health care operations of a Covered Entity or its
Business Associate and not relating to disclosures made earlier than six (6)
years prior to the date on which the accounting was requested, the Business
Associate shall make available to the Covered Entity such information as is in
the Business Associate's possession and is required for the Covered Entity to
make the accounting required by 45 C.F.R. ss.164.528. At a minimum, the Business
Associate shall provide the Covered Entity with the following information: (i)
the date of the disclosure, (ii) the name of the entity or person who received
the Protected Health Information, and if known, the address of such entity or
person, (iii) a brief description of the Protected Health Information disclosed,
and (iv) a brief statement of the purpose of such disclosure which includes an
explanation of the basis for such disclosure. In the event the request for an
accounting is delivered directly to the Business Associate, the Business
Associate shall within five (5) days forward such request to the Covered Entity.
The Business Associate shall implement an appropriate recordkeeping process to
enable it to comply with the requirements of this Section.
Section 2.8. AVAILABILITY OF BOOKS AND RECORDS. Beginning on April 14,
2003, the Business Associate shall make its internal practices, books and
records relating to the use and disclosure of Protected Health Information
received from, or created or received by the Business Associate on behalf of,
the Covered Entity available to the Secretary for purposes of determining the
Covered Entity's and the Business Associate's compliance with the Privacy
Standards.
Section 2.9. NOTICE OF REQUEST FOR DATA. The Business Associate agrees
to notify the Covered Entity within ten (10) business days of the Business
Associate's receipt of any request or subpoena for Protected Health Information.
To the extent that the Covered Entity decides to assume responsibility for
challenging the validity of such request, the Business Associate shall cooperate
fully with the Covered Entity in such challenge.
Section 2.10. INJUNCTION. The Business Associate acknowledges and
agrees that the Covered Entity will suffer irreparable damage upon the Business
Associate's breach of this Agreement and that such damages shall be difficult to
quantify. The Business Associate acknowledges and agrees that the Covered Entity
may file an action for an injunction to enforce the terms of this Agreement
against the Business Associate, in addition to any other remedy the Covered
Entity may have.
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III. TERMINATION OF AGREEMENT WITH BUSINESS ASSOCIATE
Section 3.1. TERMINATION UPON BREACH OF PROVISIONS APPLICABLE TO
PROTECTED HEALTH INFORMATION. Any other provision of the Underlying Relationship
notwithstanding, the Underlying Relationship may be terminated by the Covered
Entity upon ten (10) days written notice to the Business Associate in the event
that the Business Associate breaches any provision contained in this Agreement
and such breach is not cured within such ten (10) day period; provided, however,
that in the event that termination of the Underlying Relationship is not
feasible, in the Covered Entity's sole discretion, the Business Associate
acknowledges and agrees that the Covered Entity has the right to report the
breach to the Secretary, notwithstanding any other provision of the Underlying
Agreement to the contrary.
Section 3.2. RETURN OR DESTRUCTION OF PROTECTED HEALTH INFORMATION UPON
TERMINATION. Upon termination of the Underlying Relationship, the Business
Associate shall either return or destroy all Protected Health Information
received from the Covered Entity or created or received by the Business
Associate on behalf of the Covered Entity and which the Business Associate still
maintains in any form. The Business Associate shall not retain any copies of
such Protected Health Information. Notwithstanding the foregoing, to the extent
that the Covered Entity agrees that it is not feasible to return or destroy such
Protected Health Information, the terms and provisions of this Agreement shall
survive termination of the Underlying Relationship and such Protected Health
Information shall be used or disclosed solely for such purpose or purposes which
prevented the return or destruction of such Protected Health Information.
Section 3.3. THE COVERED ENTITY'S RIGHT OF CURE. At the expense of the
Business Associate, the Covered Entity shall have the right to cure any breach
of the Business Associate's obligations under this Agreement. The Covered Entity
shall give the Business Associate notice of its election to cure any such breach
and the Business Associate shall cooperate fully in the efforts by the Covered
Entity to cure the Business Associate's breach. All requests for payment for
such services of the Covered Entity shall be paid within thirty (30) days.
Section 3.4. TRANSITION ASSISTANCE. Following the termination of the
Underlying Relationship for any reason, the Business Associate agrees to provide
transition services for the benefit of the Covered Entity, including the
continued provision of its services required pursuant to the Underlying
Relationship until notified by the Covered Entity that the alternative provider
of services is able to take over the provision of such services and the transfer
of the Protected Health Information and other data held by the Business
Associate related to its services pursuant to the Underlying Relationship.
IV. GENERAL PROVISIONS
Section 4.1. EFFECT. The terms and provisions of this Agreement shall
supercede any other conflicting or inconsistent terms and provisions in the
Underlying Relationship to which this Agreement is attached, including all
exhibits or other attachments thereto and all documents incorporated therein by
reference. Without limitation of the foregoing, any limitation or exclusion of
damages provisions shall not be applicable to this Agreement.
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Section 4.2. AMENDMENT. The Business Associate and the Covered Entity
agree to amend this Agreement to the extent necessary to allow either party to
comply with the Privacy Standards, the Standards for Electronic Transactions (45
C.F.R. Parts 160 and 162) and the Security Standards (45 C.F.R. Part 142)
(collectively, the "Standards") promulgated or to be promulgated by the
Secretary or other regulations or statutes. The Business Associate agrees that
it will fully comply with all such Standards and that it will agree to amend
this Agreement to incorporate any material required by the Standards.
IN WITNESS WHEREOF, the parties have caused this Addendum to be
executed as of the day and year first written above.
COVERED ENTITY: BUSINESS ASSOCIATE:
By: _________________________ By:___________________________
Its: _________________________ Its: _________________________
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