INTERCOMPANY SERVICE AGREEMENT
This Intercompany Service Agreement ("Agreement") is entered into
as of this _____ day of _______________, 1998 ("Effective Date"), by and
among Blue Cross & Blue Shield United of Wisconsin, a service insurance
corporation organized pursuant to Ch. 000, Xxxxxxxxx Xxxxxxxx ("XXXXXX"),
Xxxxxx Xxxxxxxxx Services, Inc., an insurance holding company organized
pursuant to Ch. 180, Wisconsin Statutes ("UWS"), Meridian Managed Care, Inc.,
a corporation organized pursuant to Ch. 180, Wisconsin Statutes ("MMC"), and
Compcare Health Services Insurance Corporation, a stock insurance corporation
organized pursuant to Ch. 611, Wisconsin Statutes ("Compcare") on behalf of
its Pharmacy Services business unit ("Compcare Pharmacy").
RECITALS
WHEREAS, BCBSUW, UWS, MMC, and Compcare are affiliated
corporations, with MMC and Compcare being wholly owned subsidiaries of UWS;
WHEREAS, Compcare Pharmacy is an unincorporated business unit of
Compcare;
WHEREAS, there is an existing service agreement between BCBSUW and
UWS that extends to subsidiaries of UWS (BCBSUW, UWS and its subsidiaries
shall hereinafter be collectively referred to as "BCBSUW/UWS Group"), and
this Agreement is intended to further specify the services, costs, and
allocation methods contemplated by that service agreement;
WHEREAS, Compcare Pharmacy provides pharmacy benefits management
services to various companies in the BCBSUW/UWS Group, and Compcare Pharmacy
also contracts with outside entities to provide pharmacy benefits management
services under the marketing name Right Rx;
WHEREAS, MMC provides the employees and BCBSUW and UWS collectively
provide the other business resources and services necessary for the continued
operation of Compcare Pharmacy's business;
WHEREAS, by entering into this Agreement, the parties hereto wish
to establish clearly (i) an employee leasing arrangement; (ii) the services
and resources that BCBSUW and UWS will continue to provide to Compcare
Pharmacy and that Compcare Pharmacy will continue to provide to various
companies in the BCBSUW/UWS Group, and the compensation and cost allocations
therefor; and (iii) the respective rights and responsibilities of the parties.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, and of
the mutual covenants hereinafter contained, the parties hereto agree as
follows:
-1-
1. LEASE OF EMPLOYEES
a. CLASSIFICATION OF EMPLOYEES.
i. "Direct Employees" are those MMC employees that are assigned to
perform all of their services for Compcare Pharmacy. (Direct Employees may also
be referred to herein as "Employees.")
b. LEASE OF EMPLOYEES.
i. OBLIGATION TO PROVIDE EMPLOYEES. MMC shall provide to
Compcare Pharmacy, to the extent requested by Compcare Pharmacy, the entire
requirement of Direct Employees for use in Compcare Pharmacy's business
according to such job descriptions, qualifications, experience, education, or
skills (collectively "Employee Specifications") as may be specified by
Compcare Pharmacy from time to time.
ii. INDEPENDENT HIRING. Notwithstanding Section 1.b.i. and
Compcare Pharmacy's present intent to lease Direct Employees from MMC,
Compcare Pharmacy shall have the right, subject to Section 6, to obtain and
hire directly any or all employees from any other sources and on any terms to
perform such duties as Compcare Pharmacy may consider appropriate from time
to time. Should Compcare Pharmacy hire employees from other sources, it will
not hire any individual who was an MMC, BCBSUW or UWS Employee leased to
Compcare Pharmacy within three (3) months preceding such hiring, without the
written consent of MMC, BCBSUW and/or UWS.
iii. HUMAN RESOURCES DEPARTMENT. UWS's Human Resources Department
("Human Resources") shall be responsible for the implementation, management,
and operation of MMC's, BCBSUW's and UWS's employee leasing obligations under
this Agreement. Employee Specifications shall be retained in the files of
Human Resources, and Compcare Pharmacy shall notify Human Resources at any
time of its intention to change such Employee Specifications for Direct
Employees, at which time Human Resources shall promptly make the requested
changes to the Employee Specifications.
c. OFFICERS. Employment, termination, and terms of employment of all
officers shall be reserved to the full Boards of Directors of BCBSUW and UWS,
provided, however, that while any such individual is leased to Compcare
Pharmacy to perform services as an officer, Compcare Pharmacy will be
consulted prior to all determinations regarding the employment, or terms
thereof, of such individuals; provided, however, that Compcare Pharmacy's
input shall be of an advisory nature and will not be binding on BCBSUW or UWS
as the common law employers of such individuals.
d. EMPLOYMENT RELATIONSHIPS. Human Resources shall establish
performance criteria or standards, which reflect the Employee Specifications
supplied by Compcare Pharmacy, for leased Direct Employees while performing
services for Compcare Pharmacy. Compcare Pharmacy shall advise Human
Resources on the performance of Direct Employees, and shall have the right to
request investigation, disciplinary action, reassignment, and removal
-2-
of such employees. If at any time Compcare Pharmacy becomes dissatisfied with
the performance of a Direct Employee, Compcare Pharmacy shall have the right
to reject the continued lease of that particular employee and request a
replacement therefor. MMC, BCBSUW and UWS shall have the exclusive right,
however, to direct all MMC, BCBSUW and UWS employees, respectively, as to the
manner in which services are to be rendered and performance goals are to be
achieved. MMC, BCBSUW and UWS shall be, and shall have all the privileges,
rights, and responsibilities of, common law employers of all MMC, BCBSUW and
UWS employees, respectively, including, but not limited to, establishing work
and disciplinary rules, setting compensation levels, and directing each MMC,
BCBSUW or UWS Employee as to the manner in which daily duties are completed,
whether or not the employee actually performs services for MMC, BCBSUW, UWS
or another company in the BCBSUW/UWS Group. Employees leased to Compcare
Pharmacy pursuant to this Agreement shall remain employees of MMC, BCBSUW or
UWS, and shall in no way be treated as or considered employees of Compcare
Pharmacy.
e. NOTIFICATION OF PERSONNEL COST CHANGES. With respect to Direct
Employees performing services for Compcare Pharmacy, if MMC adopts or
implements any change in compensation, employee benefit plans, or any other
fringe benefit that results in higher Total Personnel Costs (as defined at
Section 4.a.i.) than those in existence as of the date of this Agreement, MMC
shall provide Compcare Pharmacy with written notice at least 30 days before
such change becomes effective (unless such change is required by law, in
which case Compcare Pharmacy will be notified as soon as possible),
describing such new benefit and the projected increase in the Total Personnel
Costs.
2. SERVICES AND OTHER RESOURCES PROVIDED TO COMPCARE PHARMACY
a. SERVICES AND RESOURCES PROVIDED BY BCBSUW. BCBSUW shall provide to
Compcare Pharmacy, to the extent requested by Compcare Pharmacy and subject
to Section 6, the following services and resources (together "BCBSUW
Services"). BCBSUW shall supply BCBSUW Services only if Compcare Pharmacy
has determined not to have its own employees or third parties furnish the
BCBSUW Services, subject to Section 6.
i. OFFICE SPACE AND FACILITIES. Office space and facilities,
including, but not limited to, furniture and equipment, as shall be necessary
or appropriate for the conduct of Compcare Pharmacy's operations.
ii. CENTRAL SYSTEMS. Such central systems, including, but not
limited to, management information systems, technology support and central
data base maintenance, as shall be necessary or appropriate for the conduct
of Compcare Pharmacy's business.
iii. EXECUTIVE SERVICES. Such executive services, as shall be
necessary or appropriate for the conduct of Compcare Pharmacy's business.
-3-
b. SERVICES AND RESOURCES PROVIDED BY UWS. UWS shall provide to
Compcare Pharmacy, to the extent requested by Compcare Pharmacy and subject
to Section 6, the following services and resources (together "UWS Services").
UWS shall supply UWS Services only if Compcare Pharmacy has determined not
to have its own employees or third parties furnish the UWS Services, subject
to Section 6.
i. CORPORATE SUPPORT SERVICES. Such corporate support services,
as shall be necessary or appropriate for the conduct of Compcare Pharmacy's
business.
ii. FINANCIAL SERVICES. Such financial services, including, but
not limited to, administration of financial systems, corporate accounting,
and strategic planning/consulting, as shall be necessary or appropriate for
the conduct of Compcare Pharmacy's business.
iii. EXECUTIVE SERVICES. Such executive services as shall be
necessary or appropriate for the conduct of Compcare Pharmacy's business.
iv. OTHER SERVICES. Such other services, including, but not
limited to, those provided by MMC and Meridian Resource Corporation, as shall
be necessary or appropriate for the conduct of Compcare Pharmacy's business.
c. STAFFING. BCBSUW and UWS shall both maintain an adequate source of
qualified employees to ensure the acceptable performance of BCBSUW and UWS
Services.
3. SERVICES PROVIDED BY COMPCARE PHARMACY TO BCBSUW/UWS GROUP
a. SERVICES PROVIDED BY COMPCARE PHARMACY. Compcare Pharmacy shall
provide the following services ("Compcare Pharmacy Services") to companies in
the BCBSUW/UWS Group, to the extent requested by any such individual company:
i. PHARMACY BENEFITS MANAGEMENT. Such pharmacy benefits
administration and management services as shall be necessary or appropriate
for any company in the BCBSUW/UWS Group.
4. COST ALLOCATION METHODS
a. LEASED EMPLOYEES.
i. TOTAL PERSONNEL COSTS. The term "Total Personnel Costs" shall
include all costs or expenses of whatever nature and from whatever origin
arising out of or related to the maintenance of an Employee. Such term shall
include, but shall not be limited to, the following costs, expenses, and
obligations:
-4-
salaries, wages, and bonuses;
profit sharing;
benefit plans;
payroll taxes;
employee insurance.
ii. ALLOCATION OF PERSONNEL COSTS. To the extent that Direct
Employees are leased to Compcare Pharmacy, Total Personnel Costs associated
with a Direct Employee shall be directly charged to Compcare Pharmacy on a
monthly basis. See Schedule 1.
b. BCBSUW AND UWS SERVICES. To the extent that BCBSUW/UWS
Services are rendered on behalf of or for the benefit of Compcare Pharmacy,
costs therefor shall be allocated to Compcare Pharmacy as follows:
i. DIRECT CHARGES. Costs associated with those BCBSUW/UWS
Services identified on Schedule 1 shall be directly charged to Compcare
Pharmacy on a monthly basis.
ii. INDIRECT ALLOCATIONS. Cost allocations for those BCBSUW/UWS
Services identified on Schedule 2 ("Schedule 2 Services") shall be determined
annually for the next succeeding Fiscal Year ("Fiscal Year" shall mean
January 1 through December 31) on the basis of utilization and cost studies
performed by UWS. Through the use of Indirect Allocation Methods, as
described in Schedule 3 attached hereto, utilization of Schedule 2 Services
shall be reduced to an allocation percentage for each company, and various
business units, in the BCBSUW/UWS Group. Each month all costs associated
with the utilization of Schedule 2 Services shall be multiplied by the
allocation percentage of Compcare Pharmacy to determine Compcare Pharmacy's
allocable share of costs for Schedule 2 Services. Notwithstanding the
preceding, (i) allocation percentages are subject to interim Fiscal Year
adjustments to allocate more accurately costs based on actual utilization by
companies/units in the BCBSUW/UWS Group, (ii) costs associated with Schedule
2 Services performed directly for Compcare Pharmacy shall be allocable to
Compcare Pharmacy only, and (iii) subject to approval by the Vice President
of Finance for the BCBSUW/UWS Group, the Indirect Allocation Method used to
allocate costs to Compcare Pharmacy for specific Schedule 2 Services shall be
subject to agreement by the parties on an annual basis.(1) Schedule 2,
attached hereto, sets forth Compcare Pharmacy's annual allocation percentage
for costs and expenses associated with Schedule 2 Services. Schedule 2 shall
be amended annually.
iii. CHARGEBACKS. Costs associated with those BCBSUW/UWS Services
identified on Schedule 4 ("Chargeback Services") either shall be (i)
indirectly allocated to Compcare Pharmacy as discussed in Section 4.b.ii, if
the cost is a general expense
-------------------
(1) Before granting approval of any negotiated change to the method of
allocating costs for a particular service, the following factors should be
considered: (i) compliance with FAS rules; (ii) other federal government
contracting implications; and (iii) feasibility.
-5-
for providing the Chargeback Service to all users; or (ii) directly charged
to a Compcare Pharmacy cost center, if the cost is an expense specific to a
Compcare Pharmacy cost center. Thus, costs associated with Chargeback
Services shall be either directly charged or indirectly allocated to Compcare
Pharmacy on a monthly basis, depending on the nature of the cost.
c. COMPCARE PHARMACY SERVICES. To the extent that Compcare Pharmacy
Services are rendered on behalf of or for the benefit of a company in the
BCBSUW/UWS Group (excluding those companies, if any, that separately enter
into third party contracts with Compcare Pharmacy for the provision of such
services) costs therefor shall be allocated to the respective company as
follows:
i. INDIRECT ALLOCATIONS. Costs allocations for Compcare Pharmacy
Services shall be determined annually for the next succeeding Fiscal Year on
the basis of cost center surveys completed by those companies in the
BCBSUW/UWS Group that utilize Compcare Pharmacy Services ("Internal Users").
Based on the survey results, Internal Users shall be assigned a fixed
percentage. Each month all costs associated with the utilization of Compcare
Pharmacy Services by Internal Users shall be multiplied by the fixed
allocation percentage of each Internal User to determine the Internal User's
respective allocable share of costs for Compcare Pharmacy Services.
Notwithstanding the preceding, (i) allocation percentages are subject to
interim Fiscal Year adjustments to allocate more accurately costs based on
actual utilization by each company in the BCBSUW/UWS Group, and (ii) subject
to approval by the Vice President of Finance for the BCBSUW/UWS Group, the
Indirect Allocation Method used to allocate costs for Compcare Pharmacy
Services shall be subject to agreement by the parties on an annual basis.
d. FEES IN ADDITION TO ALLOCATED COSTS. To the extent that Compcare
Pharmacy leases or utilizes the services of Employees from MMC, BCBSUW and/or
UWS, and to the extent that Compcare Pharmacy utilizes BCBSUW/UWS Services,
MMC, BCBSUW and/or UWS may charge Compcare Pharmacy a reasonable negotiated
fee therefor, as set forth in Schedule 5. To the extent that Compcare
Pharmacy provides Compcare Pharmacy Services to any company in the BCBSUW/UWS
Group pursuant to this Agreement, Compcare Pharmacy may charge a reasonable
negotiated fee therefor, as set forth in Schedule 6.
5. SUBSTANTIATION OF AND REIMBURSEMENT FOR ALLOCATED COSTS
a. SUBSTANTIATION OF ALLOCATED COSTS. All costs and expenses shall be
allocated in a fair and reasonable manner. MMC, BCBSUW, UWS and Compcare
Pharmacy shall maintain reasonable and appropriate operating procedures to
allocate costs and expenses so as to enable each party's independent
certified public accounting firm to audit such costs and the allocation
thereof. At the end of each month, (i) MMC, BCBSUW and/or UWS shall provide
or make available to Compcare Pharmacy appropriate documentation respecting
the costs and expenses that are allocated, either directly or indirectly, to
Compcare Pharmacy for that month in sufficient detail to permit Compcare
Pharmacy to identify the sources of such charges, and (ii) Compcare Pharmacy
shall provide or make available to the BCBSUW/UWS
-6-
Group appropriate documentation respecting the costs and expenses that are
allocated to individual companies in the BCBSUW/UWS Group for that month for
Compcare Pharmacy Services in sufficient detail to permit the identification
of the sources of such charges.
b. REIMBURSEMENT FOR ALLOCATED COSTS. At the end of each month, not
later than the 30th day of the following month, (i) Compcare Pharmacy shall
promptly reimburse MMC, BCBSUW and/or UWS for all costs and expenses incurred
by MMC, BCBSUW and/or UWS in furnishing or obtaining the Employees and
Services provided for under Sections I and II, which amount shall be based on
the total of direct charges and indirect allocations to Compcare Pharmacy for
the preceding month, and (ii) any company in the BCBSUW/UWS Group on whose
behalf Compcare Pharmacy Services have been rendered in the preceding month
shall promptly reimburse Compcare Pharmacy for all costs and expenses
incurred by Compcare Pharmacy in furnishing Compcare Pharmacy Services
thereto. Notwithstanding the preceding, the parties reserve the right to
offset amounts due to each other under this Agreement.
6. MODIFICATIONS TO LEASED EMPLOYEES AND BCBSUW/UWS SERVICES
a. MID-CONTRACT YEAR MODIFICATIONS. Each Contract Year, Compcare
Pharmacy shall be required to utilize Employees and BCBSUW/UWS Services
budgeted to Compcare Pharmacy for that Contract Year, unless otherwise
negotiated by the parties. ("Contract Year" shall mean January 1 through
December 31.) If, at any time during the Contract Year, Compcare Pharmacy
requires employees, services or other resources in addition to those budgeted
to Compcare Pharmacy by MMC, BCBSUW and UWS, Compcare Pharmacy may obtain
such employees, services or resources from a source outside of the BCBSUW/UWS
Group only if Compcare Pharmacy's additional needs cannot be accommodated by
MMC, BCBSUW or UWS.
b. CONTRACT YEAR RENEWAL MODIFICATIONS. Compcare Pharmacy shall
provide MMC, BCBSUW and/or UWS with at least three (3) months' written notice
prior to the next Contract Year (unless the parties mutually agree upon a
shorter period) of its intent to do any of the following:
i. Increase or decrease the number or utilization of Employees or
BCBSUW/UWS Services with respect to the next Contract Year;
ii. Obtain employees, services or other resources, which are
available either from MMC, BCBSUW or UWS, from a party outside the BCBSUW/UWS
Group with respect to the next Contract Year.
c. PROVISION OF SERVICES BY BCBSUW/UWS GROUP. MMC, BCBSUW and UWS
have the right to provide Employees and BCBSUW/UWS Services to Compcare
Pharmacy either directly or indirectly, through any company in the BCBSUW/UWS
Group. MMC, BCBSUW and UWS may provide employees, services and other
resources to Compcare Pharmacy indirectly through purchase from or contract
with a source outside the
-7-
BCBSUW/UWS Group ("Outside Services") only with Compcare Pharmacy's consent.
Costs for Outside Services shall be subject to a cost structure negotiated by
the parties hereto.
7. EXECUTION OF ANCILLARY AGREEMENTS
a. RIGHT TO REQUEST EXECUTION OF ANCILLARY AGREEMENTS. In the event
of the Change of Control (as hereinafter defined in this Section) of any
party hereto and while this Agreement remains in effect, BCBSUW, UWS, MMC or
Compcare Pharmacy may, for the sole purpose of documenting in more detail the
terms and respective rights and obligations of the parties with respect to
Employees and Services provided hereunder, request that any of the following
types of ancillary agreements be executed by any parties hereto and effected
thereby:
i. Employee Lease Agreement;
ii. Office and Equipment Lease;
iii. Management Information Systems Agreement;
iv. Service Agreement(s); or
v. Any other Agreement deemed necessary or expedient by the parties
(together "Ancillary Agreements").
The terms of any executed Ancillary Agreement shall (i) be subject
to negotiation of the respective parties, and (ii) control in case of any
conflict with Sections 1 through 6 of this Agreement. Executed Ancillary
Agreements shall be attached to this Agreement as amendments hereto. "Change
of Control" for purposes of this section shall mean an event whereby a
person, group, or entity that is not affiliated with the BCBSUW/UWS Group
purchases all or substantially all of the assets or acquires the ownership of
50% or more of the voting stock of a party hereto.
b. EFFECT OF A REQUEST TO EXECUTE. If any party hereto requests the
execution of an Ancillary Agreement ("Requesting Party"), the parties shall
have sixty 60 days (unless the parties hereto mutually agree to a different
period) to negotiate and execute the Ancillary Agreement, during which time
the parties hereto shall remain obligated to perform in accordance with the
terms of this Agreement. If after 60 days (unless a different period is
mutually agreed upon by the parties hereto) the requested Ancillary Agreement
has not been executed, the Requesting Party may terminate this Agreement in
accordance with Section 9.b.ii. The parties hereby agree that any
negotiations subject to this Section 7.b shall be
-8-
performed in good faith and every reasonable effort shall be made to effect
the execution of a requested Ancillary Agreement.
8. ADDITIONAL COVENANTS
a. AVAILABILITY OF RECORDS. MMC, BCBSUW, UWS and Compcare Pharmacy
shall make available to each other, for inspection, examination and copying,
all of its books and records pertaining to the Employees, BCBSUW/UWS
Services, and Compcare Pharmacy Services provided under this Agreement each
Contract Year:
i. At all reasonable times at the principal places of business of
MMC, BCBSUW, UWS, and Compcare Pharmacy, or at such other place as the
parties hereto may otherwise agree to and designate;
ii. In a form maintained in accordance with generally accepted
accounting principles and with any other general standards or laws applicable
to such book or record;
iii. For a term of at least five (5) years, from the end of each
Contract Year, irrespective of the termination of this Agreement.
b. CONFIDENTIALITY.
i. The parties acknowledge and agree that they may deliver to
each other information about themselves and their business which is
nonpublic, confidential or proprietary in nature. All such information,
regardless of the manner in which it is delivered, is referred to as
"Proprietary Information." However, Proprietary Information does not include
information which 1. is or becomes generally available to the public other
than as a result of a disclosure by the other party, 2. was available to the
other party on a nonconfidential basis prior to its disclosure by the
disclosing party, or 3. becomes available to the other party on a
nonconfidential basis from a person other than by the disclosing party.
Unless otherwise agreed to in writing by the disclosing party, the other
party shall a. except as required by law, keep all Proprietary Information
confidential and not disclose or reveal any Proprietary Information to any
person other than those employed by the other party, or who is actively and
directly participating in the performance under this Agreement on behalf of
the other party ("Involved Persons"); b. cause each Involved Person to keep
all Proprietary Information confidential and not disclose or reveal any
Proprietary Information to any person other than another Involved Person; and
c. not use the Proprietary Information, and ensure that each Involved Person
does not use the Proprietary Information, for any purpose other than in
connection with the performance under this Agreement.
ii. Upon termination of this Agreement for any reason whatsoever,
each party shall promptly surrender and deliver to each other party all
records, materials, documents, data and any other Proprietary Information of
the other parties and shall not retain any description containing or
pertaining to any Proprietary Information of the other parties,
-9-
unless otherwise consented to in writing by a duly authorized officer of MMC,
BCBSUW, UWS or Compcare Pharmacy as the case may be.
c. COVENANT NOT TO COMPETE. MMC, BCBSUW and UWS agree that no
company in the BCBSUW/UWS Group (excluding Compcare) will directly compete
with the products or markets of Compcare Pharmacy during the term of this
Agreement. MMC, BCBSUW and UWS further agree that for a period of two (2)
years following the termination of this Agreement for any reason, no company
in the BCBSUW/UWS Group (excluding Compcare) will directly compete with
Compcare Pharmacy in any market in which Compcare Pharmacy operates or does
business at the termination of this Agreement.
d. COOPERATION. The parties hereto will fully cooperate with
each other and their respective counsel, if any, agents and accountants in
connection with any action to be taken in the performance of their
obligations under this Agreement. In the conduct of their affairs and the
performance of this Agreement the parties hereto shall, unless otherwise
agreed, maintain the working relationships of the parties on substantially
the same terms as before the execution of this Agreement. Notwithstanding
the preceding, the parties do not intend, nor should this Agreement be
construed, to restrict any party's ability to contract with any other person
or entity to provide services similar to or the same as those which are the
subject of this Agreement.
9. TERM AND TERMINATION
a. TERM. This Agreement shall commence on the Effective Date and
shall automatically renew annually therefrom until such time as otherwise
terminated pursuant to Section B.
b. TERMINATION.
i. This Agreement may be terminated by any party at any time by
giving one (1) years advance written notice to the nonterminating parties of
its intention to terminate.
ii. This Agreement may be terminated pursuant to Section 7.b by
the Requesting Party giving three (3) months advance written notice to the
nonterminating parties of its intention to terminate.
iii. This Agreement shall terminate immediately at the election of
and upon written notice from the non-defaulting party in the event of any of
the following:
(1) A party hereto becomes incapable of fully performing its
duties and obligations according to the terms of this Agreement for the
following reason(s): insolvency, bankruptcy, or substantial cessation or
interruption of its business operations for any reason whatsoever;
-10-
(2) A party hereto commits fraud or gross negligence in
performing its obligations under this Agreement;
HOWEVER, if the defaulting party provides the
non-defaulting parties with prompt notice of the event of default, the
defaulting party shall have 30 days to cure the defect, during which time the
non-defaulting parties may not exercise the termination right under this
Section 9.b.iii.
iv. Liabilities After Termination. The termination of this Agreement
shall not limit the obligation or liabilities of any party hereto incurred but
not discharged prior to termination.
10. INDEMNIFICATION
a. INDEMNIFICATION BY COMPCARE PHARMACY.
i. Notwithstanding anything to the contrary in this Agreement,
neither MMC, BCBSUW, UWS, nor any other company in the BCBSUW/UWS Group
(other than Compcare), nor any person who is or was, at the time of any
action or inaction affecting Compcare Pharmacy, a director, officer, employee
or agent of MMC, BCBSUW, UWS or any other company in the BCBSUW/UWS Group
(other than Compcare) (collectively "Indemnitees") shall be liable to
Compcare Pharmacy for any action or inaction taken or omitted to be taken by
such Indemnitee; PROVIDED, HOWEVER, that such Indemnitee acted (or failed to
act) in good faith and such action or inaction does not constitute actual
fraud, gross negligence or willful or wanton misconduct.
ii. Compcare Pharmacy shall, to the fullest extent not prohibited
by law, indemnify and hold harmless each Indemnitee against any liability,
damage, cost, expense, loss, claim or judgment (including, without
limitation, reasonable attorneys' fees and expenses) resulting to, imposed
upon or incurred by such Indemnitee a. in connection with any action, suit,
arbitration or proceeding to which such Indemnitee was or is a party or is
threatened to be made a party by reason of the Employees and BCBSUW/UWS
Services provided to Compcare Pharmacy hereunder; PROVIDED, HOWEVER, that
such Indemnitee acted (or failed to act) in good faith and such action or
inaction does not constitute actual fraud, gross negligence or willful or
wanton misconduct, or b. by reason of, arising out of or resulting from any
breach or misrepresentation by Compcare Pharmacy under this Agreement.
b. INDEMNIFICATION BY MMC, BCBSUW AND UWS.
i. Notwithstanding anything to the contrary in this Agreement,
neither Compcare (as used in this Section 10.b., Compcare shall include
Compcare Pharmacy), nor any person who is or was, at the time of any action
or inaction affecting the BCBSUW/UWS Group (other than Compcare), a director,
officer, employee or agent of
-11-
Compcare (collectively "Indemnitees") shall be liable to any company in the
BCBSUW/UWS Group for any action or inaction taken or omitted to be taken by
such Indemnitee; PROVIDED, HOWEVER, that such Indemnitee acted (or failed to
act) in good faith and such action or inaction does not constitute actual
fraud, gross negligence or willful or wanton misconduct.
ii. MMC, BCBSUW and UWS, jointly and severally, hereby agree to
indemnify and hold harmless, to the fullest extent not prohibited by law,
each Indemnitee against any liability, damage, cost, expense, loss, claim or
judgment (including, without limitation, reasonable attorneys' fees and
expenses) resulting to, imposed upon or incurred by such Indemnitee a. in
connection with any action, suit, arbitration or proceeding to which such
Indemnitee was or is a party or is threatened to be made a party by reason of
the Compcare Pharmacy Services provided to the BCBSUW/UWS Group hereunder;
PROVIDED, HOWEVER, that such Indemnitee acted (or failed to act) in good
faith and such action or inaction does not constitute actual fraud, gross
negligence or willful or wanton misconduct, or b. by reason of, arising out
of or resulting from any breach or misrepresentation by MMC, BCBSUW or UWS
under this Agreement.
11. MISCELLANEOUS
a. ASSIGNMENT. Neither this Agreement nor any rights or
obligations hereunder may be assigned or transferred by any of the parties
hereto without the prior written consent of the other parties. A Change of
Control shall be deemed an assignment requiring the consent of the other
parties hereto.
b. AMENDMENT. The parties recognize that it may be desirable to
alter the terms of this Agreement in the future to take into account such
events or conditions as may from time to time occur. Any amendments to this
Agreement shall be in writing and shall be executed by all parties; however,
Ancillary Agreements need only be executed by the parties affected thereby.
c. WAIVER; REMEDIES. No failure or delay of a party in
exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. In addition to any rights granted herein, the parties hereto
shall have and may exercise any and all rights and remedies now or hereafter
provided by law except as may be limited by Section 11.d of this Agreement.
d. RESOLUTION OF DISPUTES.
i. INFORMAL RESOLUTION.
(1) Coordinating Committee: Any conflicts or disputes regarding
1. occupancy, utilization or delivery of BCBSUW/UWS Services, or scheduling,
performance and utilization of Employees necessary for the conduct of Compcare
Pharmacy's business, or 2. utilization or delivery of Compcare Pharmacy
Services, shall be submitted to a coordinating
-12-
committee for resolution. The coordinating committee shall consist of four
(4) persons, each of whom shall 1. represent the respective interest of a
party hereto, and 2. be mutually agreed upon by the parties hereto. If the
coordinating committee is unable to unanimously resolve the dispute, then the
parties hereto may resort to the dispute resolution process provided for in
Section 11.d.ii
(2) Audit Committee: Any conflicts or disputes regarding
allocation methods, allocated costs, offsets, fees or any matter related
thereto shall be submitted to an audit committee for resolution. The audit
committee shall consist of four (4) persons, each of whom shall 1. represent
the respective interest of a party hereto, and 2. be mutually agreed upon by
the parties hereto. If the audit committee is unable to unanimously resolve
the dispute, then the parties hereto may resort to the dispute resolution
process provided for in Section 11.d.ii.
ii. FORMAL RESOLUTION.
(1) Any dispute, controversy or claim between or among the
parties hereto that arises out of or relates to this Agreement or any
Ancillary Agreement entered into pursuant hereto, and which otherwise has
been unresolved by a coordinating committee pursuant to Section 11.d.i(1) or
an audit committee pursuant to Section 11.d.i(2) shall be settled by
arbitration. In order to initiate an arbitration, MMC, BCBSUW, UWS or
Compcare Pharmacy (as the case may be) shall deliver a written notice of
demand for arbitration to the other affected party(ies). Within thirty (30)
days of the giving of such written notice, each party involved shall appoint
an individual as arbitrator (the "Party Arbitrators"). Within thirty (30)
days of their appointment, the Party Arbitrators shall collectively select
one (or two if necessary to constitute an odd total number of arbitrators)
additional arbitrator (together the "Panel Arbitrators") and shall give the
parties involved notice of such choice.
(2) The arbitration hearings shall be held in Milwaukee,
Wisconsin. Each party shall submit its case to the Panel Arbitrators within
sixty (60) days of the selection of the Panel Arbitrators or within such longer
period as may be agreed by the Panel Arbitrators. The decision rendered by a
majority of the Panel Arbitrators shall be final and binding on the parties
involved. Such decision shall be a condition precedent to any right of legal
action arising out of the arbitrated dispute. Judgment upon the award rendered
may be entered in any court having jurisdiction thereof.
(3) Each involved party shall a. pay the fees and expenses of
its own Party Arbitrator, and pay its own legal, accounting, and other
professional fees and expenses, b. jointly share in the payment of the fees
and expenses of the other one (or two) arbitrator(s) selected by the Party
Arbitrators, and c. jointly share in the payment of the other expenses
jointly incurred by the involved parties directly related to the arbitration
proceeding.
(4) Except as provided above, the arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
-13-
e. NOTICES. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, or if mailed (by registered or certified
mail, postage prepaid, return receipt requested), or if transmitted by
facsimile or e-mail, as follows:
i. If to BCBSUW:
Xx. Xxxxx Xxxxxxxx
Blue Cross & Blue Shield United of Wisconsin
0000 Xxxxx XxxxxXxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile Telephone Number: (000) 000-0000
With copies to:
Xx. Xxxxx Xxxxxxx
Blue Cross & Blue Shield United of Wisconsin
X00X00000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Facsimile Telephone Number: (000) 000-0000
ii. If to UWS:
Mr. C. Xxxxxx Xxxxx
United Wisconsin Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile Telephone Number: (000) 000-0000
iii. If to MMC:
Xx. Xxxxx Xxxxxxx
Meridian Managed Care, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile Telephone Number: (000) 000-0000
-14-
iv. If to Compcare Pharmacy:
Xx. Xxxxx Xxxxx
Compcare Health Services Insurance Corporation
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile Telephone Number: (000) 000-0000
Any notice or other communication given as provided in
this Section 11.e, shall be deemed given upon the first business day after
actual delivery to the party to whom such notice or other communication is
sent (as evidenced by the return receipt or shipping invoice signed by a
representative of such party or by the facsimile confirmation or e-mail
return receipt). Any party from time to time may change its address for
purpose of notices to that party by giving a similar notice specifying a new
address.
f. RELATIONSHIP OF THE PARTIES. Negotiations relating to this
Agreement have occurred and shall continue to be carried out on an arm's
length basis. Further, the employees, services and other resources
contemplated by this Agreement shall be provided to Compcare Pharmacy on an
independent contractor basis. Nothing in this Agreement shall be construed
to create an employer-employee relationship between Compcare Pharmacy and
Employees or any of the parties hereto.
g. ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits referred to herein constitute the entire understanding and agreement
of the parties hereto and supersede all prior agreements and understandings,
written or oral, between the parties with respect to the transactions
contemplated herein. Provided, however, the foregoing shall not operate or
be construed to prohibit proof of prior understandings and agreements between
or among the parties to the extent necessary to properly construe or
interpret this Agreement. Notwithstanding the preceding, the parties
acknowledge that there are, and/or may be in the future, any number of
independent third party contracts between various companies in the BCBSUW/UWS
Group for various services and/or business arrangements, and any such
contracts, whether written or oral, shall survive the execution of this
Agreement and any renewal hereof.
h. HEADINGS. The headings used in this Agreement have been
inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement.
-15-
i. NO THIRD PARTY BENEFICIARIES. This Agreement is only for the
benefit of the parties hereto and does not confer any right, benefit, or
privilege upon any person or entity not a party to this Agreement.
j. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin (without
giving effect to principles of conflicts of laws) as to all matters,
including, without limitation, matters of validity, construction, effect,
performance and remedies.
k. SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under any present or future law, and if
the rights or obligations of any party under this Agreement will not be
materially and adversely affected thereby, 1. such provision will be fully
severable, 2. this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part
hereof, 3. the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom, and 4. in lieu of such
illegal, invalid, or unenforceable provision, there will be added
automatically as part of this Agreement, a legal, valid, and enforceable
provision as similar terms to such illegal, invalid, or unenforceable
provision as may be possible.
l. COUNTERPARTS. This Agreement may be executed simultaneously
in any number of counterparts, each of which will be deemed an original, but
all of which will constitute one and the same instrument.
-16-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the Effective Date.
BLUE CROSS BLUE SHIELD UNITED OF WISCONSIN
By:
-----------------------------------
Title:
--------------------------------
By:
-----------------------------------
Title:
--------------------------------
UNITED WISCONSIN SERVICES, INC.
By:
-----------------------------------
Title:
--------------------------------
MERIDIAN MANAGED CARE, INC.
By:
-----------------------------------
Title:
--------------------------------
ON BEHALF OF COMPCARE PHARMACY, COMPCARE HEALTH SERVICES INSURANCE CORPORATION
By:
-----------------------------------
Title:
--------------------------------
-17-
