Exhibit 10.28
CONTRACT MODIFICATION AGREEMENT NO. 1 TO
MEDICAL SERVICES AGREEMENT
BETWEEN COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF CORRECTIONS
AND PRISON HEALTH SERVICES, INC.
This Modification No. 1 ("Modification") to the Medical Services Agreement
Between Commonwealth of Pennsylvania, Department of Corrections and Prison
Health Services, Inc. ("Contract") is made this 12th day of August, 2004, by and
between the Commonwealth of Pennsylvania, Department of Corrections
("Department") and Prison Health Services, Inc. ("PHS").
WHEREAS, the Department and PHS are parties to the Contract; and
WHEREAS, under the Contract PHS delivers general health care and
specialized medical services to inmates in the custody of the Department; and
WHEREAS, the Request for Proposal for Health Care Services, RFP #101-100
("RFP") is part of the Contract; and
WHEREAS, Section II-39.B.1 of the RFP has a provision concerning Hourly
Penalties if PHS fails to furnish adequate staffing hours, and
WHEREAS, Section II-39.B.1 of the RFP provides in pertinent part that:
"Hourly Penalties First, if the vendor fails to furnish 90% to 100% of the
number of Physician (including Psychiatrist), Physician Assistant, Dentist or
Nurse staffing hours required in the Pricing Proposal, the DOC may impose a
penalty equal to one hundred percent (100%) of the hourly rate provided for that
position respectively, for each hour which the vendor fails to provide. Should
these hours drop below 90%, the penalty shall increase to 150% for those hours
less than 90%. For instance, if nursing hours are provided at 85% of the monthly
requirement, the DOC may impose a penalty of 150% for the 5% of hours below 90%
and 100% for those between 90 and 100%."; and
WHEREAS, the Contract also includes Attachment Four Supplemental Provisions
("Attachment Four") that was agreed to by the Department and PHS after the
issuance of the RFP; and
WHEREAS, the Attachment Four contains language in Article 15 that revises
the hourly Penalties provision in Section II-39.B.1 of the RFP; and
WHEREAS, Article 15 of Attachment Four provides in pertinent part that:
"Hourly Penalties for Staff. Penalties for staffing may be assessed as follows:
-Staffing 100-95% of staffing plan - no penalties -Staffing less than 95% to 90%
of staffing plan - 100% -Clinical staffing at less than 90% of staffing plan -
150%."; and
WHEREAS, the rates for these Hourly Penalties for Staff are, under the
Contract, assessed using an institutional basis; and
WHEREAS, the Contract between the Department and PHS went into effect on
September 1, 2003; and
WHEREAS, the Department and PHS believe, based upon their experience under
the contract, that Hourly Penalties for Staff are more appropriately assessed
using a consolidated basis; and
WHEREAS, since the Contract took effect a dispute has arisen between the
Department and PHS over the meaning of the Hourly Penalties provisions of the
RFP and Attachment Four referred to above; and
WHEREAS, the Department and PHS recognize that there are ambiguities int eh
meaning of the Hourly Penalties provisions of the RFP and Attachment Four
referred to above; and
WHEREAS, the Department and PHS have different interpretations of the
application of the terms of Article 15 of Attachment Four concerning Hourly
Penalties; and
WHEREAS, this dispute could result in litigation between the Department and
PHS over the meaning of the Hourly Penalties provisions of the RFP and
Attachment Four referred to above and whether penalties should be imposed; and
WHEREAS, the Department and PHS prefer and intend to resolve their dispute
over the meaning of the Hourly Penalties provisions of the RFP and Attachment
Four referred to above through an agreement rather than litigation; and
WHEREAS, the Department and PHS through a modification of the Contract seek
an interpretation of the RFP and Attachment Four that is acceptable to both
parties and provides a clarification of the ambiguities.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and the considerations identified herein, and intending to be legally bound, the
Department and PHS agree as follows:
2
1. This Modification serves as a clarification of the Hourly Penalties
provisions of the contract, in particular Section II-39.B.1 of the RFP and
Article 15 of Attachment Four.
2. The assessment of penalties will be based on statewide aggregate totals
per position type. No penalties shall be assessed should the total number of
on-site hours provided for each position category (e.g. MD, PA, RN, LPN, etc.)
be at or above 95% of the total PHS statewide hours of each position category
hours as reflected in the current staffing plan across all sites.
3. For unfilled hours in the 90%-95% range, a penalty of 100% of the hourly
rate by position category may be assessed by the Department. For any unfilled
hours that fall below 90% in the MD, PA, or nursing categories, a penalty of
150% of the hourly rate by position may be assessed by the Department.
4. For purposes of calculating the 95%, PHS shall receive 'credit' for up
to a maximum of 110% of hours provided by position at each site unless a request
for additional hours (e.g., to provide additional services or address special
needs) has been submitted to and approved by the Department.
5. Should PHS provide more than 100% of the hours for a specific position
on a statewide aggregate basis, the additional hours can be used to offset a
shortage of another position hours provided the work of the first position can
be considered equal to greater to the specific work of the latter position. For
instance, additional hours of the RN classification could be used to offset a
shortage of LPN or nursing assistant hours.
6. The Department and PHS will use the consolidated position penalty rates
set forth in Attachment Five, that is attached to this Modification and is made
part of it, for hourly Penalties for Staff assessed pursuant to the Contract.
During the life of the Contract, these rates will be increased in accordance
with the annual increase provisions of Section I or Attachment Three of the
Contract.
7. On an individual site basis, PHS shall provide at least 80% of the
staffing plan hours by position category or be subject to the following
progressive penalty structure for each successive period where hours provided
are less than the 80% by positions:
- 1st - 150%
- 2cd - 175%
- 3rd - 200%
8. Except as specifically modified herein, all other terms and conditions
of the Contract shall remain unchanged and in full force and effect.
3
IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto
subscribe their names to this instrument.
PRISON HEALTH SERVICES, INC. COMMONWEALTH OF PENNSYLVANIA DEPARTMENT
OF CORRECTIONS
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxx
------------------------------------- ----------------------------------------
By: Xxxxxxx X. Xxxxxx By: Xxxxxxx X. Xxxxx, PhD.
President/Vice President Secretary
Date: June 28, 2004 Date: June 30, 2004
/s/ Xxxx X. Xxxxxxx
-------------------------------------
By: Xxxx L/ Xxxxxxx
Secretary/ Treasurer
Date: June 28, 2004
4
