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EXHIBIT 10.105 AGREEMENT
THIS AGREEMENT is entered into as of this 25th day of June, 1997, by and between
FRIENDSHIP COMMUNITY MENTAL HEALTH CENTER (CMHC), and OptimumCare(R) Corporation
(Manager), a Delaware Corporation.
RECITALS
A. CMHC operates a Community Mental Health Center in Phoenix, Arizona,
including a Partial Hospitalization Program (the "Out-Patient
Program") for the treatment of psychiatric disorders, and
B. Manager is in the business of providing management services for the
treatment of patients with psychiatric disorders; and
C. CMHC desires to retain Manager, and Manager desires to be retained,
to provide the services described herein; and
D. CMHC will provide (subject to the provisions of this Agreement)
appropriate program and office space for the use of this Out-Patient
Program during the term of this Agreement.
THEREFORE, it is mutually agreed as follows:
1. DEFINITIONS
(a) "Confidential Information" of the Manager shall mean all documents
and other materials provided by Manager not available through
sources in the public domain. Manager's documents and other
materials may include, but are not limited to, memoranda, manuals,
handbooks, production books and audio and visual recordings, which
contain information relating to the Out-Patient Program (including
written materials distributed to Out-Patient Program patients or for
promotion of the Out-Patient Program); and all models, techniques,
formulations and procedures used to provide psychiatric services to
Program patients.
(b) "Employee Benefits" shall include, by way of illustration and not
limitation, the employer's contribution under the Federal Insurance
Contributions Act, unemployment compensation and related insurance,
payroll and other employment taxes, pension and retirement plan
contributions, worker's compensation and related insurance,
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group life, health, disability and accident insurance, severance and
other benefits.
(c) A "Patient Day" shall be deemed to exist with each out-patient visit
to the Out-Patient Program. An outpatient visit is defined as a
patient attending at least two (2) therapy sessions a day.
(d) "Out-Patient Program" shall mean the out-patient partial
hospitalization psychiatric program managed by Manager at CMHC.
2. TERM
(a) This Agreement shall have an initial term of twenty-one (21) months
commencing (effective) on July 1, 1997 and terminating April 30,
1999.
(b) Termination provisions are in Section (10) of this Agreement.
3. COVENANTS OF CMHC
CMHC will:
(a) Furnish necessary and identified program space as per Exhibit A and
rent said space to the Manager for the duration of this agreement as
described in Addendum 1.
CMHC will cooperate with Manager in providing appropriate program
space for a potential capacity of at least twenty-five (25) chairs.
(b) Provide support activities including: i) maintenance of or
installation of carpet and decorating of patient treatment areas as
needed; (ii) furniture, (iii) clerical support and (iv) all
telephone expenses at CMHC. (For illustration see Addendum 3)
(c) Xxxx and collect all Out-Patient Program charges due for Out-Patient
Program services, and (i) provide record keeping as customary in the
ordinary course of CMHC's business, and (II) furnish OptimumCare
with all Information necessary to xxxx Management fee.
(d) Staff the Out-Patient Program with qualified Administrator,
Assistant Administrator and Unit Secretary and be solely liable to
those personnel who are CMHC employees for their wages, compensation
and employee benefits. CMHC personnel shall comply with the
Out-Patient Program policies and procedures as mutually agreed upon
in writing by CMHC and Manager. CMHC shall not, without Manager's
prior written consent (which shall not be unreasonably withheld),
deviate, change or otherwise decrease the agreed staffing.
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(e) Maintain license from the Arizona Department of Health Services and
pay all related fees associated with this license.
(f) Provide Manager's employees and contracted personnel with copies of
all relevant CMHC Policies and Procedures, as amended from time to
time.
(g) Indemnify, save harmless, and defend Manager from all claims and
liability and expenses (including reasonable attorney's fees)
arising solely from the negligence of or breach of this Agreement by
CMHC or its employees or contracted personnel.
(h) Maintain professional and comprehensive general liability insurance
for itself and its employees and contracted personnel in an amount
not less than $1,000,000 per occurrence or claim and whenever
reasonably requested provide Manager with a certification from the
insurer stating that such insurance is in effect and which also
states that Manager will be given at least ten (10) days advance
written notice of any cancellation, non-renewal, or changes in
policy limits, deductibles, or co-insurance. Any deductible or
co-insurance or aggregate limits shall be subject to Managers
approval which shall not be unreasonably withheld. Manager agrees
that $100,000 is an acceptable deductible or co-insurance. CMHC
shall use reasonable efforts to maintain "tail" coverage if
necessary for any terminated "claims made" policy so as to apply to
any of its acts or omissions which occur during the term of this
Agreement until the expiration of any applicable statute of
limitation but not to exceed seven (7) years.
4. COVENANTS OF MANAGER
Manager will do the following at its own cost and expense: (For
illustration see Exhibits and Addendums).
(a) Rent facility as described on Exhibit A from CMHC for the duration
of this agreement.
(b) Pay for all supplies and materials necessary for operating CMHC's
partial hospitalization program.
(c) Pay for the dietary and transportation services for all patients.
(d) Provide for Out-Patient Program management and direction.
(e) Provide for Out-Patient Program marketing including community
awareness and liaison concerning the care and treatment of the
Out-Patient Program's patients.
(f) Provide housekeeping services for patients and manager's offices at
CMHC.
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(g) Provide the following: (i) A full-time Partial Hospitalization
Program Director; (ii) Social Services; (iii) Psychological
Services; (iv) Therapy/Activities and other services as appropriate.
(v)A registered nurse services (vi) and professional counseling
staff as needed to provide for the professional counseling of
Out-Patient Program patients and to adequately supervise and operate
the Out-Patient Program. All such personnel shall be subject to CMHC
approval but CMHC shall be deemed to have accepted such personnel
unless it informs Manager otherwise in writing within five (5)
business days of receipt of all such required information. Such
personnel shall not be deemed employees or contracted personnel or
borrowed servants of CMHC. Manager shall have full responsibility
for their wages, compensation and employee benefits and acts or
omissions.
(h) Provide to CMHC an accounting of Manager's expenses in operating
program.
(i) Provide Out-Patient Program orientation and training for all
appropriate personnel.
(j) Indemnify, save harmless, and defend CMHC from all claims and
liability and expenses (including reasonable attorney's fees) (1)
arising solely from the negligence of or breach of this Agreement by
Manager or its employees or contracted personnel or (2) arising out
of CMHC negligence if the sole basis for any such negligence
consists of entering into this Agreement with Manager, failing to
properly supervise, monitor, or oversee Manager or its employees or
agents, or failing to properly review or act upon its review of the
qualifications of Manager or its employees or contracted personnel.
(k) Consult, manage and support the Out-Patient Program treatment team's
effort to provide quality psychiatric treatment while maintaining
prudent control of patient length of stay.
(l) Maintain professional and comprehensive general liability insurance
for itself and its employees and contracted personnel in an amount
not less than $5,000,000 per occurrence or claim and whenever
reasonably requested provide CMHC with a certificate from the
insurer stating that such insurance is in effect and which also
states that CMHC will be given at least ten (10) days advance
written notice of any cancellation, non-renewal, changes in policy
limits, deductible, or co-insurance or aggregate limits. Any
deductible or co-insurance or aggregate limits shall be subject to
CMHC's approval which shall not be unreasonably withheld. CMHC
agrees that $100,000 is an acceptance deductible or co-insurance.
Manager shall use reasonable efforts to maintain "tail"
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coverage if necessary for any terminated "claims made" policy so as
to apply to any of its acts or omissions which occur during the term
of this Agreement until the expiration of any applicable statute of
limitation but not to exceed seven (7) years. Manager shall use
reasonable efforts to have CMHC named as an additional insured on
Manager's insurance with respect to any claim or liability arising
solely out of any act of omission by Manager, its employees, or
contracted personnel.
(m) Until the expiration of four (4) years after the furnishing of any
services to be provided under this Agreement make available, upon
request, to the Secretary of Health and Human Services or to the
Comptroller General of the United States of America, or their duly
authorized representatives, this Agreement and books, documents and
records which are necessary to certify the nature and extent of
reimbursable costs under the Medicare laws.
(n) Comply with all applicable laws (including but not limited to 42
U.S.C. 1395 (nn) (b) or any similar law or regulation), regulations,
CMHC policies and procedures, Program policies and procedures and
any applicable standards of care.
(o) Use reasonable efforts to resolve any issues regarding acceptability
of Out-Patient Program personnel to CMHC personnel and to
Out-Patient Program patients which may arise with respect to any of
Manager's employees or contracted personnel.
(p) Provide monthly written reports to CMHC regarding all aspects of the
operation of the Out-Patient Program.
(q) Commit no act or omission which adversely affects the CMHC license.
(r) Admit patients to the Out-Patient Program (including but not limited
to Medicare and Medicaid patients) only if the admission is ordered
by a physician on the Out-patient Program staff with admitting
privileges.
(s) Provide appropriate utilization review and quality assessment
services for all outpatient program patients. Utilization and review
extends to filing and pursuing clinical appeals with the fiscal
intermediary, Blue Cross & Blue Shield of Phoenix, Arizona.
5. REPRESENTATION AND WARRANTS OF CMHC
CMHC hereby represents to Manager as follows:
(a) CMHC is a corporation duly organized and validly existing in good
standing under the laws of the State of Arizona with the power and
authority to carry on the business in which it is engaged and to
perform its
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obligations under this Agreement subject to maintaining the license
described in subpart (e) of the Section (3).
(b) The execution of this Agreement and the performance of the
obligations of the CMHC hereunder will not result in any breach of
any of the terms, conditions or provisions of any agreement or other
instrument to which CMHC is a party or by which it may be bound or
affected, or any governmental license, franchise, permit or other
authorization possessed by the CMHC, nor will such execution and
performance violate any Federal, State or local law, rule or
regulation.
(c) There is no litigation, administrative proceeding or investigation
pending or threatened against CMHC (nor is the CMHC subject to any
judgment, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of CMHC's obligations hereunder.
(d) No Certificate of Need is required by CMHC from any state regulatory
agency for the operation of the Out- Patient Program.
6. REPRESENTATIONS OF MANAGER
Manager hereby represents to CMHC as follows:
(a) Manager is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware with the power and
authority to carry on the business in which it is engaged and to
perform its obligations under this Agreement.
(b) The execution of this Agreement and the performance of the
obligations of the Manager hereunder will not result in any breach
of any of the terms, conditions or provisions of any agreement or
other instrument to which the Manager is a party or by which it may
be bound or affected, or any governmental license, franchise, permit
or other authorization possessed by the Manager, nor will such
execution and performance violate any Federal, State or local law,
rule or regulation.
(c) There is no litigation, administrative proceeding or investigation
pending or threatened against Manager (nor is Manager subject to any
judgement, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of Manager's obligations hereunder.
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7. MANAGEMENT FEE
Group Therapy $45.00 per unit
Individual Therapy $90.00 per unit
Nursing Assessments $150.00 per unit
8. MEALS AND TRANSPORTATION
A) CMHC and OptimumCare agree that the management fee does not include
Meals and Transportation. However, Meals and Transportation may be
provided by OptimumCare as a cost of doing business where necessary
to comply with State Certification Requirements or out of
OptimumCare's profits or as an increase of its loss and not as a
component of OptimumCare's management fee.
B) OptimumCare agrees to indemnify CMHC for Medicare reimbursement of
OptimumCare's fees as a result of OptimumCare providing or paying
for meals and transportation costs for patients of the program. The
indemnification shall be applied by CMHC to the disallowed portion
of OptimumCare's fees. In no event shall the indemnity payment be
deemed to be reduction in OptimumCare's fees to the extent that such
fees are allowable by Medicare.
C) Any indemnity payments made by OptimumCare are contingent and shall
be returned to OptimumCare to the extent that any disallowance are
subsequently reversed. The indemnity payments are also contingent
upon CMHC designating OptimumCare or OptimumCare's nominee as CMHC
representative in an appeal of disallowance of OptimumCare's fees,
and CMHC otherwise cooperating fully in such appeal through
furnishing relevant documentation and information, making available
one or more witnesses to testify in the appeal, and as otherwise may
be reasonably requested by OptimumCare. If CMHC designates
OptimumCare or OptimumCare's designee as CMHC's representative in
such appeal, OptimumCare may pursue such appeal, and the costs of
any such appeal, if pursued by OptimumCare, shall be borne
exclusively by OptimumCare. If OptimumCare is successful in such
appeal, OptimumCare shall be reimbursed its costs by CMHC to the
extent that such costs are reimbursable to CMHC by the intermediary.
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9. CONFIDENTIAL AND PROPRIETARY INFORMATION
(a) CMHC agrees and acknowledges that Confidential Information is
disclosed to it in confidence with the understanding that it
constitutes business information developed by Manager. CMHC further
agrees that it shall not use such Confidential Information for any
purpose other than in connection with the Out-Patient Program. CMHC
further agrees not to disclose such Confidential Information to any
third party except as required by law or regulation or in order to
serve the purposes of the Out-Patient Program or as permitted by
written authorization of Manager.
(b) Manager hereby grants to CMHC for the term of this Agreement, a
non-exclusive license to use the registered service marks of Manager
when identifying the Out-Patient Program. These service marks are
the exclusive property of Manager.
(c) Manager agrees not to disclose confidential information pertaining
to the CMHC business or Out-Patient Program patients except as
required by law or regulation or as permitted by written
authorization of CMHC or the respective patient as the case may be.
10. RECRUITMENT OF EMPLOYEES AND AGENTS
(a) CMHC acknowledges that Manager has expended and will continue to
expend substantial time, effort, and money to train its employees
and contracted personnel in the operation of the Out-Patient
Program. The employees and contracted personnel of Manager who will
operate the Out-Patient Program at the CMHC will have access to and
possess Confidential Information of Manager. CMHC, therefore, agrees
that for the earlier of two (2) years after the cessation of the
employment or agency relationship between the Manager and the
employee or agent or two (2) years after termination of this
Agreement, it will not knowingly (and it will not induce any of its
affiliates to) employ or solicit the employment of, or in any way
retain the services of any employee, former employee, or contracted
personnel or former agent of Manager if such individual has been
employed or retained by Manager in the Out-Patient Program unless
Manager gives CMHC prior written consent thereto or unless this
Agreement is terminated by CMHC pursuant to paragraph (10) of this
Agreement.
(b) Manager agrees that during the same respective period of time, it
will not knowingly (and it will not induce any of its affiliates to)
employ or solicit the employment of or in any way retain the
services of any employee, former
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employee, or contracted personnel or former agent of CMHC without
CMHC's prior written consent.
11. TERMINATION
(a) Termination by Manager:
(1) By written notice to CMHC, if CMHC should have a bankruptcy,
reorganization or similar action filed by or against it,
become insolvent, go into liquidation for any purpose.
(2) In the event CMHC has failed to comply with the terms of this
Agreement in any material respect, including substantial
completion of all refurbishing in the identified program
space, Manager shall, in writing, notify all of the nature of
the breach, and CMHC shall have thirty (30) days to cure such
breach or else the Agreement will thereupon be terminated upon
written notice to CMHC.
(3) By written notice to CMHC if CMHC fails to maintain any
license granted to it by a regulatory agency without which the
Out-Patient Program would be materially and adversely
affected.
(4) By written notice to CMHC if CMHC fails to maintain
professional and general liability insurance in the minimum
amount of $1,000,000.
(b) Termination by CMHC:
1. By written notice to Manager if Manager should have a
bankruptcy, reorganization or similar action filed by or
against it, become insolvent, or go into liquidation for any
purpose.
2. In the event Manager has failed to comply with the terms of
this Agreement in any material respect, CMHC shall, in
writing, notify Manager of the nature of the breach, and
Manager shall have thirty (30) days to cure such breach or
else the Agreement will thereupon be terminated upon written
notice to Manager.
3. By written notice to Manager if Manager fails to provide
professional and general liability insurance in the minimum
amount of $5,000,000.
(c) Termination by either party:
1. Within six months of the date of this agreement, if Manager
does not maintain an average daily census of 10 patients over
a three (3) consecutive month period.
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2. In the event that Medicare, Medicaid, a third party payer or
other Federal, State, Local laws, rules, regulations, or
interpretations thereof at any time during this agreement
duration; prohibit, restrict or substantially change the
method, payment or amount of reimbursement or the like for
services provided under this agreement, then the CMHC and
Manager in good faith shall amend the agreement to provide for
payment of compensation to each other in a manner consistent
with any such prohibition restriction and/or limitation. If
this agreement is not or cannot be amended prior to any event
as above or to the mutual satisfaction of the CMHC and
Manager, then this agreement may be terminated by either party
with thirty (30) days written notice.
(d) Manager agrees not to affiliate with other providers of partial
hospitalization services within a ten (10) mile radius of CMHC.
(e) Prior to Managing another partial hospitalization outpatient program
in Maricopa or Pinal County, Manager will give CMHC three (3) months
in which to make reasonable progress towards opening a facility in
that area, therein providing CMHC first right of refusal and a time
frame. Any future agreement for another partial hospitalization
outpatient program will be identical to this agreement unless
mutually agreed otherwise.
(f) Governing Law: The validity of this Agreement and of any of its
terms or provisions, the interpretation of the rights and duties of
the parties hereunder, and the construction of the terms or
provisions hereof shall be governed in accordance with the laws of
the State of California.
(g) Force Majeure: If either of the parties hereto is delayed or
prevented from fulfilling any of its obligations under this
Agreement by force majeure, said party shall not be liable for said
delay or failure. "Force Majeure" means any cause beyond the
reasonable control of a party, including but not limited to an act
of God, act or omission of civil military authorities, fire, strike,
flood, riot, war, delay of transportation, or inability due to the
aforementioned causes to obtain necessary labor, materials, or
facilities.
(h) Severability: If any part of this Agreement is held to be void or
unenforceable, such part will be treated as severable, leaving valid
the remainder of this Agreement notwithstanding the part found void
or unenforceable.
(i) Waiver: A waiver by either party of a breach or failure to perform
shall not constitute a waiver of any provision hereof or of any
other breach or failure whether or not similar. There shall be no
waiver unless in writing signed
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by the party against whom the waiver is sought to be enforced.
(j) Binding Effect: This Agreement shall be binding on the successors,
and assigns of the respective parties, provided, however, neither
party may assign or otherwise transfer this Agreement or delegate
obligations hereunder without the other's written consent.
(k) Complete Agreement: This Agreement constitutes the complete
understanding of the parties and supersedes all other agreements,
either oral or in writing, between the parties hereto with respect
to the subject matter hereof, and no other agreement,
representation, statement, or promise relating to the subject matter
of this Agreement which is not contained herein shall be valid or
binding. There shall be no amendment unless in writing signed by
both parties.
(l) No Agency or Partnership: The relationship between Manager and CMHC
is that of independent contractors and nothing in the Agreement
shall be deemed to create an agency, joint venture, partnership or
similar relationship between the parties hereto. Neither party shall
have the right to bid for the other or enter into any contract or
commitment in the name of, or on behalf of the other.
(m) Notice: All notices hereunder shall be in writing, delivered
personally or by U.S. Certified or Registered postal mails, postage
prepaid, return receipt requested, and shall be deemed given when
delivered personally or upon the earlier of actual receipt or five
(5) days after deposit in said United States Mail, addressed as
below with proper postage affixed, but each party may change his
address by written notice in accordance with this Paragraph.
12. MISCELLANEOUS PROVISIONS
(a) Compulsory Arbitration: Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled
by binding arbitration in accordance with the rules of the American
Arbitration Association, and judgement on the award rendered may be
entered in any court having jurisdiction. However, this shall not
apply with respect to any claim for indemnity for bodily injury or
death.
(b) Attorneys' Fees: If any legal action (including arbitration) is
necessary to enforce the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees and costs
awarded against the other party in addition to any other relief to
which that party may be entitled.
(c) UCC1: CMHC agrees to allow Manager, at Manager's expense, file a
UCC1 payment promise against the CMHC's psychiatric outpatient
accounts receivables referred to in this agreement.
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CMHC's Address: Friendship Community Mental Health Center
0000 Xxxxx 00xx Xxxxxx #0
Xxxxxxx, XX 00000-0000
Manager's Address: OptimumCare Corporation
00000 Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000-0000
IN WITNESS WHEREOF, this Agreement has been executed
at Laguna Niguel, California at Phoenix, Arizona
Manager:
OPTIMUMCARE CORPORATION CMHC
FRIENDSHIP COMMUNITY
MENTAL HEALTH CENTER
By: By: Xxxxx Xxxxxx
----------------------------- --------------------------------
Xxxxxx X. Xxxxxxx Xxxxx Xxxxxx
President Administrator
Date: Date: June 25, 1997
--------------------------- ------------------------------
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EXHIBIT A
Approximately 3300 Sq. Ft. of office space in commercial building located at
0000 Xxxxx 00xx Xxxxxx, Xxxxxxx, XX 00000.
Described further as follows:
Cheery Xxxx Executive Office Building
Approx.
Sq. Ft.
-------
Suite 6 1,452
Suite 14 & 15 1,920
Suite 11 200
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ADDENDUM 1
1. Manager will rent from CMHC the program space described in Exhibit A for
the duration of this agreement. Said rent shall be paid monthly from the
effective date of this agreement. Payment will be made to the building
owner or as requested by CMHC. The figures below will include local and
State sales tax additions.
APPROX.
MONTHLY RENT SQUARE FT.
------------ ----------
Suite 6 $1,089.00/month 1,452
Suite 14 & 15 $1,477.50/month 1,920
Xxxxx 00 $ 200.00/month 200
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ADDENDUM 2
ILLUSTRATION
1. CMHC pays for the following:
A. Telephone
B. Office Supplies
C. Postage
D. Clerical Support
E. Furniture
F. Copy Machine/Fax
G. Two Computers
H. Billing Services
I. Stationary
J. Admin. Business Cards
K. Accounting Fees
L. Annual Audit
M. Preparation of Cost Reports
N. General Liability Insurance
O. Educational Costs for Admin. Employees
2. Manager pays for following expenses as Manager deems necessary or
appropriate for program management.
A. Yellow Page Advertising
B. Therapy Supplies
C. Housekeeping Services
D. Clinical Business Cards
E. Printing of Brochures
F. Beverages - Soft Drinks and Coffee
G. Meals for Clients
H. Nursing Supplies
I. Transcription Services
J. Toilet Paper, Paper Towels and Kleenexes
K. Salaries and Benefits of all Clinical Staff
L. All costs associated with transporting patients
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ADDENDUM 3
CMHC will not pay Manager for initial clinical denials until such denials (if
any) have been paid for by intermediary.
CMHC will receive credit for retroactive clinical denials (if any) which will be
adjusted off credit once such denials have been paid for by intermediary.
A. EXAMPLE:
1. Claim paid by Medicare
2. CMHC pays management fee
3. Medicare retroactively denies claim
4. CMHC adjusts management fee accordingly during the next month
5. Medicare approves claim
6. Management fee is paid accordingly during the next month
