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EXHIBIT 10.99
COMMUNITY MENTAL HEALTH CENTER
MANAGEMENT AGREEMENT
THIS AGREEMENT constitutes a modification and amendment agreeable to both
parties which supersedes and replaces the prior Management Agreement executed on
the first day of February 1997 by and between Galaxy Health Care, Inc., (Galaxy)
a Florida Corporation, d/b/a Treatment Resources of California, Inc. (TR-CMHC),
a wholly owned subsidiary of Galaxy Health Care, and OptimumCare Corporation
(Manager), a Delaware Corporation. The Management Contract executed on the first
day of February 1997 is null and void. The present Management Agreement between
Galaxy Health Care, Inc., a Florida Corporation d/b/a Treatment Resources of
California, Inc. (TR-CMHC), and OptimumCare Corporation (Manager), a Delaware
Corporation, is entered into this 27th day of August, 1997.
RECITALS
A. Galaxy owns and operates a Community Mental Health Center in the State
of California called Treatment Resources of California, Inc. (TR-CMHC)
for the treatment of psychiatric disorders, and TR-CMHC desires to
operate a Partial Hospitalization Program (the "Out-Patient Program");
located at 000 Xxxxxxx Xxxxxx, Xxxx Xxxxx, XX 00000; its Medical
Provider number 05-4668.
B. Manager is in the business of providing certain management services for
the treatment of patients with psychiatric disorders as well as creating
and/or managing Partial Hospitalization Programs with TR-CMHCs and;
C. TR-CMHC desires to retain Manager, and Manager desires to be retained,
to provide the services described herein to TR-CMHC.
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, group life,
health, disability and accident insurance, severance and other benefits.
(c) "Out-Patient Program" shall mean the out-patient partial
hospitalization psychiatric program managed by Manager at TR-CMHC.
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2. TERM
(a) This Agreement shall have an initial term of five (5) years
commencing (effective) on August 27, 1997 and termination August 27,
2002; the agreement will continue automatically for a second term of
five (5) years unless the termination provisions set forth in Section
(11) becomes applicable.
(b) Thereafter, each party may exercise the option to continue the
agreement for a succession of one (1) year terms by exercising an
"option for continuation" within sixty (60) days prior to the expiration
date in each succeeding year; the option may be exercised by providing
written notice to the other parties address as set forth herein.
(c) Termination provisions as in Section (11) of this Agreement.
3. RESPONSIBILITIES OF GALAXY D/B/A TR-CMHC
(a) Galaxy will cooperate with manager in locating appropriate program
space for potential capacity of at least twenty-five (25) chairs.
(b) Galaxy will provide all services relating to billing, collection and
bad debt procedures for all Medicare, Medicaid, Private Pay, and other
insurer Out-Patient Program charges due for patient services, and
provide record keeping as customary in the ordinary course of TR-CMHC's
business.
(c) Maintain license from the California Department of Health Services
and pay all related fees associated with this license.
(d) Provide Manager's employees and contracted personnel with copies of
all relevant TR-CMHC Policies and Procedures, as amended from time to
time relating to billing, collection and bad debts and MIS procedures.
(e) 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 TR-CMHC or
its employees or contracted personnel.
(f) 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 certificate 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, deductible, 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 unacceptable deductible or
co-insurance. TR-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.
(g) Staff training for initial operating date as well as continued
oversight and training specifically for staff procedures relating to
billing, collections and MIS procedures.
(h) Supervision of staff hiring relating specifically to billing,
collections and MIS procedures.
(i) Implementation of training on basic Medicare regulation policies as
to operational policies specifically with respect to billing,
collections, bad debt and MIS procedures.
(j) Oversight of MIS software and hardware installation, maintenance,
upgrading and continual training.
(k) Hiring and oversight of QA/TQM personnel and consultant specifically
with respect to claims, billing, collections and bad debt policies and
procedures.
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(l) Implementation of employee policies.
(m) Installation of policies and procedures, intake forms, patient chart
documents and all forms and documents required to commence, maintain and
oversee proper procedures relating to claims filing, billing,
collections and MIS procedures.
(n) Staff training and oversight development through in-services (for
billing or collection procedures).
(o) Continued collaboration and suggestions as to legal and accounting
consultants.
(p) Implementation and continued oversight of Galaxy's corporate
compliance and integrity policies with respect to internal control
mechanisms for fraud and abuse prevention protocols.
(q) Collaboration with preparation for year-end cost audit report with
Accounting and Legal Consultant.
4. COVENANTS OF MANAGER
Manager will do the following at its own cost and expense:
(a) Provide out-patient program consultation, orientation, direction and
training for the program.
(b) Rent facility program space for the duration of this Agreement.
(c) Provide the following staffing: (I) A full-time Partial
Hospitalization Program Director, (ii) Social services, (iii)
Psychological Services; (iv) Therapy/Activities and other services as
appropriate. (v) A Medical Director (who shall be a physician duly
licensed in the State of California (vi) registered nurse services (vii)
professional counseling staff and (viii) qualified unit secretary as
needed to provide for the professional counseling of Out-Patient Program
patients and other personnel as required to adequately supervise and
operate the Out-Patient Program. All such personnel shall be subject to
TR-CMHC approval but TR-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 TR-CMHC. Manager shall have full responsibility for
their wages, compensation and employee benefits and acts or Omissions.
(d) Indemnify, save harmless, and defend TR-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
TR-CMHC negligence if the sole basis for any such negligence consists of
entering into this Agreement with Manger, failing to properly supervise,
monitor or oversee Manager or its employees or agents, or 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.
(e) Oversight of compliance with OSHA regulations and fire inspection.
(f) Oversight of acquisition of equipment leases, furniture lease and
office lease, including interior planning.
(g) Oversight of all employment contract preparation.
(h) Oversight and suggestions as to all necessary contractual
relationships.
(i) All other necessary continued management and regulatory compliance
services as to day to day operations.
(j) Oversight of continued TQM and QA.
(k) Continued oversight of reimbursement/expenditure issues.
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(l) Development of strategic policies regarding surplus funds issues.
(m) Continued development and training of staff as to personnel policies
and procedures, compliance with Federal Labor Laws, and oversight of EAP
Consultant; installation of Employee Manual, patient handbooks, external
EAP and Drug Free work place policies.
(n) Continued training in admissions and in-take protocols.
(o) Consulting computer, technology and communications consulting as to
(p) services, as required for day to day operational management of
Facility.
(q) 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.
(r) 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 TR-CMHC with a certificate from the insurer stating
that such insurance is in effect and which also states that TR-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 shall be subject to TR-CMHC's approval
which shall not be unreasonably withheld. TR-CMHC agrees that $100,000
is an acceptance deductible or co-insurance. Manager 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 o limitation but not to exceed
seven (7) years. Manager shall use reasonable efforts to have TR-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.
(s) Until the expiration of four (4) years after the furnishing of any
services to be provided under this Agreement made 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.
(t) Comply with all applicable laws (including but not limited to
42.U.S.C.1395(nn)(b) or any similar law or regulations, TR-CMHC policies
and procedures, program policies and procedures any applicable standards
of care.
(u) Use reasonable efforts to resolve any issues regarding acceptability
of Out-Patient Program Personnel to TR-CMHC personnel and to Out-Patient
Program patients which may arise with respect to any of Manager's
employees or contracted personnel.
(v) Provide monthly written reports to TR-CMHC regarding all pertinent
aspects of the operation of the Out-Patient Program.
(w) Commit no act or omission which adversely affects the TR-CMHC
license.
(x) Admit patients to the Out-Patient Program (including but not limited
to Medicare, medicaid or Managed Care or private pay patients) only if
the admission is ordered by a physician on the Out-Patient Program staff
with admitting privileges.
(y) Provide appropriate utilization review and quality assessment
services for all out-patient program patients. Utilization and review
extends to filing and pursuing clinical appeals with the TR-CMHC's
fiscal intermediary.
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5. REPRESENTATION AND WARRANTS OF TR-CMHC TR-CMHC hereby represents to
Manager as follows:
(a) Tr-CMHC is a corporation duly organized and validly existing in good
standing under the laws of the State of California with the power and
authority to carry on the business in which it is engaged and to perform
its obligations under this Agreement subject to maintaining the license
described in subpart (d) of Section (3).
(b) The execution of this Agreement and the performance of the
obligations of the TR-CMHC hereunder will not result in any breach of
any of the terms, conditions or provisions of any Agreement or other
instrument to which TR-CMHC is a party or by which it may be bound or
affected, or any governmental license, franchise, permit or other
authorization processed by the TR-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 TR-CMHC (nor is the TR-CMHC subject to any
judgement, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of TR-CMHC's obligations hereunder.
(d) No Certificate of Need is required by TR-CMHC from any state
regulatory agency for the operation of the Out-Patient Program.
6. REPRESENTATIONS OF MANAGER
Manager hereby represents to TR-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.
7. MANAGEMENT FEES AND STAFFING FEES
(a) TR-CMHC shall pay to Manager a monthly staffing fee of 130% composed
of all monthly direct costs of staffing including but not limited to
wages, payroll, taxes, health insurance, benefits (401k) and worker's
compensation insurance.
(b) $20,000.00 per month on an administrative management fee plus
repayment of all direct costs advanced for operation of the program of
110%.
(c) TR-CMHC shall pay Manager within fifteen (15) working days of
receiving Manager's invoice regarding the above.
(d) For all funds (including fees) advanced by OptimumCare including,
without limitation staffing costs and fees and facility location costs,
prior to TR-CMHC (TR) receiving its initial reimbursement check from
Medicare.
1. TR-CMHC will repay to OptimumCare 1/2 of all funds advanced
to be fully paid within fifteen (15) days after TR-CMHC is in receipt of
the first reimbursement check.
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2. Balance payable over succeeding twelve (12) months in
consecutive equal installments including an additional 10% profit on the
unpaid balance.
8. EQUIPMENT LEASING
Upon being presented with the vendor invoices, OptimumCare will purchase
and lease back to TR-CMHC business equipment as needed for operation of
facility including communications, MIS, furniture, copier and a fax.
Such lease will be paid by TR-CMHC over 36 months in equal consecutive
monthly payments including a 10% profit per year over direct costs to
OptimumCare. At the end of 36 months, TR-CMHC shall own the said
equipment.
9. CONFIDENTIAL AND PROPRIETARY INFORMATION
(a) TR-CMHC agrees and acknowledges that Confidential Information is
disclosed to it in confidence with the understanding that it constitutes
business information developed by Manager. TR-CMHC further agrees that
it shall not use such Confidential Information for any purpose other
than in connection with the Out-Patient Program. TR-CMHC further agrees
not to disclose such Confidential Information to any third party except
a required by law or regulation or in order to serve the purposes of the
Out- Patient Program or as permitted by written authorization of Manger.
(b) Manager hereby grants to TR-CMHC for the term of this Agreement, a
non-exclusive license to use the registered service marks of Manger 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 TR-CMHC business or Out-Patient Program patients except as
required by law or regulation or as permitted by written authorization
of TR-CMHC or the respective patient as the case may be.
10. RECRUITMENT OF EMPLOYEES AND AGENTS
(a) TR-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 Manger who will operate the
Out-Patient Program at the TR-CMHC will have access to and possess
Confidential Information of Manager TR-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 Manger if such
individual has been employed or retained by Manager if such individual
has been employed or retained by Manager in the Out-patient Program
unless Manager gives TR-CMHC prior written consent thereto or unless
this Agreement is terminated by TR-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 in any way retain the services of any
employee, former employee, or contracted personnel or former agent of
TR-CMHC without TR-CMHC's prior written consent thereto.
11. TERMINATION
(a) Termination of Manager: (1) By written notice to TR-CMHC, if TR-CMHC
should have a bankruptcy,
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reorganization or similar action filed by or against it, become
insolvent, go liquidation for any purpose.
(2) In the event TR-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 TR-CMHC shall have
thirty (30) days to cure such breach or else the Agreement will
thereupon be terminated upon written notice to TR-CMHC.
(3) By written notice to TR-CMHC if TR-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 TR-CMHC if TR-CMHC fails to maintain
professional and general liability insurance in the minimum amount of
$1,000,000.
(b) Termination by TR-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, TR-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 Manger if Manager fails to provide
professional and general liability insurance in the minimum amount of
$5,000,000.
(c) Termination by either party.
1. In the event that Medicare, Medicaid, a third party payor 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 TR-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 TR-CMHC and Manager, then this Agreement may be
terminated by either party with thirty (30) days written notice.
(d) Governing Law: The validity of this Agreement and 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 government in accordance with the laws of the State of
California.
(e) 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.
(f) 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.
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(g) 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 by the party against whom the waiver is sought
to be enforced.
(h) 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.
(i) Complete Agreement: This Agreement and the Security Agreement dated
July 1, 1997, 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 of contained herein shall be valid or
binding. There shall be no amendment unless in writing signed by both
parties.
(j) No Agency or Partnership: The relationship between Manager and
TR-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.
(k) Notice: All notices hereunder shall be in writing, delivered
personally or by U.S. Certified or Registered post 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.
13. 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) UCC1 Filing: Galaxy agrees to allow OptimumCare to file a UCC1
payment promising against Galaxy's psychiatric out-patient accounts
receivable for the facilities referred to in the staffing and/or
Management Agreements.
(c) Attorney's Fees: If any legal action (including arbitration) is
necessary to enforce the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorney's fees and costs awarded
against the other party in addition to any other relief to which that
party may be entitled.
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TR-CMHC's Address:
Galaxy Health Care Inc./Treatment Resources of California, Inc.
000 X.X. 000xx Xxxxxx, Xxxxx XX-0
Xxxxx, Xxxxxxx 00000
Manager's Address:
OptimumCare Corporation
00000 Xxx Xxxxx Xxxxx, #000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
IN WITNESS WHEREOF, this Agreement has been executed
at Laguna Niguel, California at Miami, Florida
Manager:
OPTIMUMCARE CORPORATION GALAXY HEALTH CARE, INC.
d/b/a TREATMENT RESOURCES
OF CALIFORNIA, INC.
By:________________________________ By:________________________________
Xxxxxx X. Xxxxxxx Xxxx X. Xxxxxxx
President Chief Executive Officer
Date:______________________________ Date:______________________________
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