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EXHIBIT 10.14
OUTSOURCING AGREEMENT
This Outsourcing Agreement (the "Agreement") is made and entered into
as of January 1, 1998, by and between Xxxxx HealthPlan Services, Inc., a Florida
corporation ("SHPS"), and HealthPlan Services, Inc., a Florida corporation
("HPS").
BACKGROUND
HPS (or one of its affiliates other than SHPS) provides certain
administrative services and Care Management Services (as defined below) to
clients ("Clients") pursuant to the terms of agreements with such Clients (the
"Client Agreements") as of January 1, 1998. HPS desires that SHPS provide, and
SHPS is willing to provide, the Care Management Services to the Clients on
behalf of HPS in accordance with the terms and conditions of this Agreement.
Accordingly, in consideration of the mutual covenants and agreements set forth
below, the parties agree as follows:
TERMS
1. SERVICES PROVIDED; TERM AND TERMINATION
1.1 AGREEMENT TO OUTSOURCE CARE MANAGEMENT SERVICES. HPS
agrees to outsource to SHPS, and hereby appoints SHPS as the exclusive provider
of, Care Management Services to the Clients, subject to the terms and conditions
set forth in this Agreement. SHPS shall provide the Care Management Services
directly to the Clients in accordance with the terms of the Client Agreements.
"Care Management Services" means the business of providing utilization review
(which includes, but is not limited to, pre-admission certification, prior
authorization, prospective length of stay approvals, second opinions, concurrent
review and discharge planning), catastrophic medical case management, disease
management and demand management (24 hours per day, 7 days per week) services to
benefits payors and health providers, in all cases in accordance with the terms
of the applicable Client Agreement.
1.2 TERM. The term of this Agreement will commence on January
1, 1998 (the "Effective Date") and will end on December 31, 1998. Unless either
party gives the other at least ninety days' prior written notice that it has
elected not to extend the term of this Agreement beyond December 31, 1998, the
term of this Agreement will be automatically extended until December 31, 1999.
Thereafter this Agreement will automatically be renewed for successive
additional periods of one year, unless either party gives notice of cancellation
on or before October 1 of any such year.
1.3 TERMINATION FOR CAUSE. In the event that either party
materially or repeatedly defaults in the performance of any of its duties or
obligations hereunder and does not substantially cure such default within thirty
days after being given written notice specifying the default, or, with respect
to those defaults which cannot reasonably be cured within thirty days, if the
defaulting party fails to proceed promptly after being given such notice to
commence curing the default and thereafter to reasonably proceed to cure the
same, then the party not in default
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may, by giving written notice to the defaulting party, terminate this Agreement
as of a date specified in such notice of termination.
2. PAYMENTS
2.1 FEES FOR CURRENT HPS CLIENTS. For each month during the
term of this Agreement, HPS will pay to SHPS an amount equal to (i) eighty-two
and one-half percent (82.5%) of the first $500,000 of Care Management Revenues
(as defined below) during such month plus (ii) eighty percent (80%) of Care
Management Revenues during such month in excess of $500,000. HPS shall pay such
amount to SHPS within fifteen days following the end of the applicable month. At
the time of payment HPS shall submit to SHPS a schedule for the month of payment
setting forth the calculation of fees payable under this Section 2.1 and Care
Management Revenues by Client.
2.2 CALCULATION OF CARE MANAGEMENT REVENUES. "Care Management
Revenues" means, with respect to any month during the term, the revenues
collected by HPS from Clients (or new Clients, as applicable) for the Care
Management Services. Monthly revenues for Care Management Services shall be
calculated based on a per employee per month fee equal to: (i) the amount (as of
the date of this Agreement) set forth in the applicable Client Agreement
(including hourly medical case management fees); or (ii) if the Client Agreement
does not include a per employee per month fee for Care Management Services,
$2.00 (this amount shall apply to all individual and small group business).
Prospectively, for new Clients, SHPS and HPS shall agree to the rate HPS will
offer to such new Clients (including hourly medical case management fees).
2.3 ALLOCATION OF COSTS. SHPS shall pay to HPS its allocable
portion (which portion shall approximate HPS' direct costs chargeable to the
business function) of depreciation, information system services, rent and
utilities for the use by SHPS of HPS facilities in connection with its delivery
of Care Management Services to the Clients. SHPS shall also reimburse HPS for
direct costs for postage and telecommunications incurred by HPS in connection
with such use by SHPS of HPS facilities. For convenience, the parties
acknowledge that HPS will deduct amounts owed by SHPS under this Section 2.3
from the fees described in Section 2.1 and reflect such deductions in the
schedule prepared by HPS.
2.4 NEW CLIENTS. In the event that HPS (or one of its
affiliates other than SHPS) enters into an agreement to provide Care Management
Services with a client which is not a Client as of the date of this Agreement (a
"New Client"), SHPS shall provide such Care Management Services to the New
Client in accordance with the terms of this Agreement. HPS will pay to SHPS all
Care Management Revenues collected from such New Client, and SHPS will pay a
commission to HPS equal to five percent (5%) of such amount received by SHPS
from HPS pursuant to this Section 2.4. HPS shall pay such amount to SHPS within
fifteen days following the end of each month. At the time of payment HPS shall
submit to SHPS a schedule for the month of payment setting forth the calculation
of fees payable under this Section 2.4 and Care
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Management Revenues by New Client. For convenience, the parties acknowledge that
HPS will deduct amounts owed by SHPS under this Section 2.4 from the amounts
owed by HPS under this Section 2.4 and reflect such deductions in the schedule
prepared by HPS.
2.5 REPORTS; AUDIT RIGHTS. For the purpose of determining the
fees payable to SHPS under this Agreement, HPS shall preserve adequate records
of Care Management Revenues by Client. SHPS shall have the right, upon
reasonable prior written notice, to examine, copy and audit such records. Such
audit shall be conducted at the location where such records are maintained and
shall be at the expense of SHPS. Notwithstanding the foregoing, should any audit
reveal that additional payments to SHPS are due which exceed five percent (5%)
of the amount paid to SHPS for the period under audit, HPS shall pay SHPS on
demand for the cost of such audit.
3. INDEMNIFICATION. Each party agrees to defend, save and hold harmless
the other from and against all suits and claims that may be based on any injury
to any person (including death) or to the property of any person or entity
arising out of the operations of the indemnifying party or any willful act,
negligence or omission of any of the indemnifying party's agents, servants or
employees, provided that the indemnified party shall give notice promptly in
writing of any suit or claim to the other party and that the indemnified party
and its agents, servants and employees shall cooperate fully with the
indemnifying party and its counsel. The indemnifying party shall, at its own
cost and expense, pay all charges of attorneys and all costs and other expenses
arising therefrom or incurred in connection therewith, provided that it retains
the right, at its own expense, to handle any action hereunder by employing its
own counsel.
4. MISCELLANEOUS
4.1 CONFIDENTIALITY. SHPS and HPS each agree that all
information communicated to it by the other will be held in strict confidence
and will be used only for purposes of this Agreement, and that no such
information will be disclosed by the recipient party, its agents or employees
without the prior written consent of the other party.
4.2 BINDING NATURE AND ASSIGNMENT. This Agreement shall be
binding on the parties and their respective successors and assigns, but neither
party may, or shall have the power to, assign this Agreement without the prior
written consent of the other, which consent shall not be unreasonably withheld.
4.3 NOTICES. Wherever under this Agreement one party is
required or permitted to give notice to the other, such notice shall be deemed
given when delivered in hand, or when mailed by overnight delivery or United
States mail, registered or certified, return receipt requested, postage prepaid,
and addressed as follows:
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In the case of SHPS:
Xxxxx HealthPlan Services, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, President
In the case of HPS:
HealthPlan Services Corporation
0000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Chief Counsel
4.4 COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which taken together shall constitute the single agreement
between the parties.
4.5 HEADINGS. The section headings used in this Agreement are
for reference and convenience only and shall not enter into the interpretation
of this Agreement.
4.6 RELATIONSHIP OF PARTIES. SHPS shall be and remain an
independent contractor with respect to the performance of its obligations under
this Agreement. Nothing contained in this Agreement shall be deemed to
constitute either of the parties a joint venturer or partner of the other.
4.7 APPROVALS AND SIMILAR ACTIONS. Where agreement, approval,
acceptance, consent, or similar action by either party is required by any
provision of this Agreement, such action shall not be unreasonably delayed or
withheld.
4.8 SEVERABILITY. If any provision of this Agreement is
declared or found to be illegal, unenforceable, or void, then both parties shall
be relieved of all obligations arising under such provision, but only to the
extent that such provision is illegal, unenforceable, or void.
4.9 WAIVER. No delay or omission by either party to exercise
any right or power in this Agreement shall impair such right or power or be
construed to be a waiver of such right or power. A waiver by either of the
parties shall not be construed to be a waiver of any succeeding breach or of any
other covenant contained in this Agreement.
4.10 AMENDMENTS. No amendment, change, waiver, or discharge of
this Agreement shall be valid unless in writing and signed by an authorized
representative of the party against which such amendment, change, waiver, or
discharge is sought to be enforced.
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4.11 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and there are no representations, understandings or agreements
relating to this Agreement which are not fully expressed in this Agreement.
4.12 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws, other than choice of law rules, of the
state of Florida.
IN WITNESS WHEREOF, SHPS and HPS each caused this Agreement to be
signed and delivered by its duly authorized officer, all as of the date first
set forth above.
XXXXX HEALTHPLAN SERVICES, INC. HEALTHPLAN SERVICES, INC.
By: By:
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Name: Name:
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Title: Title:
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