EXHIBIT 10.21
TRANSITION SERVICES AGREEMENT
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THIS TRANSITION SERVICES AGREEMENT (the "Agreement") is made and entered
into this 30th day of April, 2003 (the "Effective Date") by and between
Community Choice Michigan, Inc., a Michigan corporation ("COMMUNITY"), and
Xxxxxx Healthcare of Michigan, Inc., a Michigan corporation ("XXXXXX
HEALTHCARE").
RECITALS
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A. COMMUNITY is licensed as a health maintenance organization in the State
of Michigan;
X. XXXXXX HEALTHCARE is licensed as a health maintenance organization in
the State of Michigan;
C. COMMUNITY has agreed to provide, and XXXXXX HEALTHCARE desires to
purchase, certain short-term transition services to facilitate the orderly and
expeditious transition of the COMMUNITY enrollees that are assigned to XXXXXX
HEALTHCARE by the Michigan Department of Community Health pursuant to the
Coordination Agreement at Exhibit A.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties do hereby agree as follows:
1. Transition Services. During the term hereof, COMMUNITY shall use its
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best efforts to provide or provide as applicable to XXXXXX HEALTHCARE the
services listed and described in Exhibit A attached hereto and incorporated
herein by this reference (collectively, the "Transition Services"). In addition
to the services listed in Exhibit A, COMMUNITY shall use its best efforts to
procure computer support services necessary to perform the Transition Services.
COMMUNITY shall arrange necessary personnel to perform the Transition Services
as COMMUNITY determines are reasonably necessary to render the Transition
Services in accordance with the terms of this Agreement (collectively, the
"Personnel") and COMMUNITY shall use its best efforts to provide XXXXXX
HEALTHCARE with access to the Personnel as necessary to provide the Transition
Services. COMMUNITY shall exercise reasonable care and business judgment in
procuring the necessary assistance in order to provide the Transition Services
and shall ensure the performance of the Transition Services to the same
standards of timeliness and quality as COMMUNITY would apply to the performance
of similar services for COMMUNITY.
2. Term. This Agreement shall commence on April 30, 2003 and shall continue
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thereafter for ninety (90) days, unless or until terminated pursuant to Section
4 below.
3. Consideration. XXXXXX HEALTHCARE shall pay COMMUNITY an aggregate fee of
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$1,320,900.00 as consideration for the Transition Services set forth in Exhibit
A to this Agreement and for the facilitation of the membership transfer. The fee
shall be payable by XXXXXX HEALTHCARE to COMMUNITY within five (5) business days
after receipt of any necessary regulatory approval and the completion of
services listed in Exhibit A. If XXXXXX HEALTHCARE and COMMUNITY mutually agree
to expand the scope of the Transition
Services, the parties shall agree upon the appropriate fair market value
compensation for any such additional services. XXXXXX HEALTHCARE shall not be
responsible for payment, to COMMUNITY or any third party, of the cost of any
medical/health care services provided to COMMUNITY enrollees authorized by
COMMUNITY for dates of service on or before June 30, 2003 or received while
enrolled in COMMUNITY.
4. Termination. This Agreement shall terminate upon the occurrence of one
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of the following acts or events:
4.1 the mutual written consent of the parties hereto;
4.2 upon twenty (20) days advance written notice in the event a party
hereto breaches a material agreement or covenant contained in
this Agreement and such breach has not been waived by the
nonbreaching party or cured to the reasonable satisfaction of the
nonbreaching party within twenty (20) days of the date of the
written notice of such a breach.
5. Remedies for Breach. No provision of this agreement shall affect, be
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construed as, or operate as a waiver of the right of the party aggrieved by any
breach of this Agreement to be compensated for any injury or damage resulting
therefrom which is incurred either before or after termination of this
Agreement.
6. Proprietary Material. All books, records, data, work product and other
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documents relating to the businesses of each party and their respective
affiliates (the "Owner") including, without limitation, all employee records,
medical records, data, information, software, and manuals (collectively, the
"Proprietary Material"), whether or not prepared by the Personnel or otherwise
coming into the possession or control of the Personnel or of the other party as
a result of or in connection with the performance of the Transition Services,
shall be and remain the exclusive property of the Owner, and the other party
shall not at any time, directly or indirectly, assert any interest or property
rights therein. Such Proprietary Material shall not be used for any purpose
other than in connection with the provision of Transition Services. Each party
shall establish and maintain reasonable precautions against the destruction or
loss of any such Proprietary Materials. Upon the expiration or termination of
this Agreement, and without any further action, each party shall cause all such
materials and all copies of the Proprietary Materials to be returned to the
Owner thereof in such format, electronic or otherwise, as the Owner may
reasonably request as soon as reasonably possible following the effective date
of the expiration or termination.
7. Confidentiality. Each party acknowledges that, in the course of this
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business relationship, it may become aware of or come into possession of certain
confidential or proprietary information of the other party including but not
limited to the Proprietary Material. Each party agrees to maintain the
confidentiality of such confidential and proprietary information and agrees not
to disclose such confidential and proprietary information to third parties, make
copies, or use the information for any purpose other than as necessary to
perform its obligations under this Agreement, without the prior written
permission of the Owner of the information. Each party agrees to return all
copies of any such information when all services to be performed under this
Agreement have been performed. Each party agrees that it will comply with
applicable state and federal privacy law
with respect to the handling of information pursuant to this Agreement. This
section shall survive any termination or expiration of this Agreement.
8. Intellectual Property. XXXXXX HEALTHCARE acknowledges that nothing in
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this Agreement shall be deemed to constitute a transfer or assignment to XXXXXX
HEALTHCARE, or the license or right to use by XXXXXX HEALTHCARE, of any (a)
trademarks, service marks, trade names, logos, business and product names,
slogans, and registrations and applications for registrations thereof; (b) works
in which copyright may be claimed (including software), and registrations and
applications for registrations thereof; (c) inventions, processes, designs,
formulae, trade secrets, know-how, confidential technical information, product
specifications and confidential business information (including all of the
foregoing as they relate to software and hardware); (d) intellectual property
rights similar to any of the foregoing; and (e) copies and tangible embodiments
thereof (in whatever form or medium, including electronic media) owned or
licensed by COMMUNITY that may be used by COMMUNITY or the Personnel in the
provision of the Transition Services hereunder ("Intellectual Property"). XXXXXX
HEALTHCARE further acknowledges and agrees that all books, records, data, work
product, and other documents of COMMUNITY and its affiliates relating to the
Intellectual Property including, without limitation, all software and manuals,
coming into the possession or control of XXXXXX HEALTHCARE and its affiliates
and their employees or agents, as a result of or in connection with the
performance of the Transition Services, shall be and remain the exclusive
property of COMMUNITY, and XXXXXX HEALTHCARE and its affiliates shall not at any
time, directly or indirectly, assert any interest or property rights therein.
The Intellectual Property (or any part of such) shall not be used by XXXXXX
HEALTHCARE or its affiliates for any purpose other than as provided in this
Agreement in connection with the Transition Services. XXXXXX HEALTHCARE shall
establish and maintain reasonable precautions against infringement, destruction
or loss of any such materials or the dissemination of any of such materials
without the prior consent of COMMUNITY. Upon the expiration or termination of
this Agreement, and without any further action by COMMUNITY, XXXXXX HEALTHCARE
shall cause all Intellectual Property and all copies thereof to be returned to
COMMUNITY as soon as reasonably possible following the effective date of the
expiration or termination in such format, electronic or otherwise, as COMMUNITY
may reasonably request. In the event of the termination of a portion of the
Transition Services, XXXXXX HEALTHCARE shall return all such materials and all
copies thereof related to the terminated Transition Services (if possible) to
COMMUNITY as soon as reasonably possible following the effective date of the
termination of such Transition Services in such format, electronic or otherwise,
as the COMMUNITY may reasonably request. XXXXXX HEALTHCARE acknowledges that a
breach of any provision of this Section 7 by XXXXXX HEALTHCARE or its affiliates
would cause irreparable damage and substantial prejudice to COMMUNITY.
Accordingly, notwithstanding any other provision hereof, XXXXXX HEALTHCARE
agrees that, in the event of any such breach, COMMUNITY shall have, in addition
to its legal and any equitable remedies, the right to injunctive relief as
permitted by law, without posting bond.
9. Responsibility for Personnel. Through its Management Services
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Agreement with Evercare, COMMUNITY shall use best efforts to cause the personnel
to cooperate with XXXXXX HEALTHCARE and its affiliates in performing the
Transition Services. COMMUNITY, pursuant to its Management Services Agreement
shall ensure payment by Evercare of any and all wages, salaries and benefits
paid to the personnel and any and all
premiums, contributions and taxes for workers' compensation insurance,
unemployment compensation, disability insurance and all similar obligations or
expenses relating to the personnel now or hereafter imposed by any federal,
state or local governmental authority which are imposed with respect to or
measured by wages, salaries or other compensation paid or to be paid by Evercare
to the personnel pursuant to the Management Services Agreement.
10. Indemnity. COMMUNITY shall indemnify, defend and hold harmless XXXXXX
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HEALTHCARE and its affiliates from and against any and all actual damages,
including reasonable attorney's fees and costs incurred by them that are
proximately caused by any gross negligence or willful misconduct by COMMUNITY
occurring within the course and scope of this Agreement; provided that COMMUNITY
shall not be liable for any consequential damages. XXXXXX HEALTHCARE shall
indemnify, defend and hold harmless COMMUNITY and its affiliates from and
against any and all actual damages, including reasonable attorney's fees and
costs incurred by them that are proximately caused by any gross negligence or
willful misconduct by XXXXXX HEALTHCARE occurring within the course and scope of
this Agreement; provided that XXXXXX HEALTHCARE shall not be liable for any
consequential damages.
11. Arbitration. All claims and controversies arising out of or in
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connection with this Agreement shall be subject to binding arbitration by a
single arbitrator in accordance with the commercial arbitration rules of the
American Arbitration Association, and judgment on the reward rendered by the
arbitrator may be entered in any court having jurisdiction hereof. The
prevailing party in any arbitration proceeding hereunder as determined by the
arbitrator shall be entitled to recover reasonable attorney's fees and costs.
Nothing herein shall prohibit a party from seeking equitable relief in a court
of law to maintain the status quo while an arbitration is pending hereunder. Any
arbitration must be initiated within one year after the controversy or claim
arose and was discovered or should have been discovered with reasonable
diligence or such claim shall be deemed waived. The parties shall not be
entitled to punitive damages. Any arbitration pursuant to this Agreement shall
take place in Michigan. This agreement to arbitrate shall survive any expiration
or termination of this Agreement.
12. Approvals and Consents.
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(a) As applicable, each party shall provide releases from providers
--- authorizing COMMUNITY to share credentialing files with XXXXXX
HEALTHCARE.
(b) Each party shall obtain approvals, authorizations, consents and
--- other actions required to be obtained from, and make any
filings and provide any notices required to be made with or given
to, any person, judicial authority or governmental authority in
connection with the transactions contemplated by this Agreement
that shall be in full force and effect (without any term,
condition or restriction reasonably unacceptable to either
party), and any waiting period required by applicable law or any
governmental authority shall have expired or been earlier
terminated. The parties shall be furnished with appropriate
evidence, reasonably satisfactory to it and its counsel, of the
granting of any such approvals, authorizations, consents and
other actions, the making of any such filings and the giving of
any such notices. Additionally, the transactions contemplated
hereunder will comply with all applicable HIPAA regulations.
13. Notices. Any and all notices, requests, consents, demands and other
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communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given (i) when delivered, if sent by
registered or certified mail (return receipt requested), (ii) when delivered, if
delivered personally, or (iii) on the second following business day, if sent by
United States Express Mail or overnight courier, in each case to the parties at
the following addresses (or at such other addresses as shall be specified by
like notice) with postage or delivery charges prepaid:
If to COMMUNITY: Community Choice Michigan
X.X. Xxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxxxxxxx
With a copy to: Butzel Long
000 Xxxxxxxxxx Xxxxxxx, Xxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
If to XXXXXX HEALTHCARE:
Xxxxxx Healthcare of Michigan, Inc.
000 X. Xxx Xxxxxx, Xxx. 000
Xxxx, XX. 00000
Attn: Xxxxx X. Xxxxxx
With a copy to: Xxxxxx Healthcare, Inc.
Xxx Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxx
Xxxxxx Healthcare, Inc.
0000 Xxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
14. No Third Party Beneficiaries. Nothing herein expressed or implied is
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intended to confer upon any person, other than the parties and their respective
permitted assigns, any rights, obligations or liabilities under or by reason of
this Agreement.
15. Interpretation. No provision of this Agreement is to be interpreted for
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or against any party hereto because that party or that party's legal
representatives drafted such provision. The headings that are used in this
Agreement are for convenience only and shall not affect, in any manner, the
meaning of interpretation of this Agreement.
16. Severability. If any term, provision, condition or covenant of this
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Agreement or the application thereof to any party or circumstance shall be held
to be invalid or unenforceable to any extent, then the remainder of this
Agreement and the application of such term, provision, condition or covenant to
persons or circumstances other than those as to whom or which it is held to be
invalid or unenforceable, shall not be affected thereby, and each term,
provision, condition and covenant of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
17. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement, binding on both of the
parties hereto.
18. Successors and Assigns. All of the terms and provisions of this
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Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto.
Neither party may assign or delegate any rights or obligations set forth in this
Agreement without the prior written consent of the other party; provided, that
XXXXXX HEALTHCARE shall have the right, subject to obtaining appropriate
regulatory approvals, to assign its rights and delegate its obligations, without
relieving itself of its obligations hereunder, to one or more affiliates.
19. Entire Agreement. This Agreement contains the entire understanding
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between the parties hereto with respect to the subject matter of this Agreement
and supersedes any and all prior contemporaneous agreements, understandings, and
statements, oral or written, between the parties concerning or affecting the
subject matter hereof.
20. Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the laws of the State of Michigan.
21. Independent Contractor. The parties hereto understand and agree that
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this Agreement does not make either of them an agent or legal representative of
the other for any purpose whatsoever. No party is granted, by this Agreement or
otherwise, any right or authority to assume or create any obligation or
responsibility, express or implied, on behalf of or in the name of any other
party, or to bind any other party in any manner whatsoever. The parties
expressly acknowledge (i) that COMMUNITY is an independent contractor with
respect to XXXXXX HEALTHCARE and its affiliates in all respects, including,
without limitation, the provision of the Transition Services, and (ii) that the
parties are not partners, joint venturers, employees or agents of or with each
other.
22. Remedies Cumulative. The remedies of the parties hereto shall be
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cumulative to the extent permitted by law, and may be exercised partially,
concurrently or separately. The exercise of one remedy shall not be doomed to
the exercise of any other remedy.
23. Non-waiver. Except as provided in Section 10, no failure on the part of
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a party to exercise any remedy or right under this Agreement and no delay in the
exercise of any such remedy or right shall operate as a waiver.
24. Modifications, Amendments and Waivers. This Agreement may be amended,
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modified, or supplemented only by written agreement of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XXXXXX HEALTHCARE OF MICHIGAN, INC. COMMUNTY CHOICE MICHIGAN, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxxxx X. Xxxxxxxxxxx
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Title: President & CEO Title: President, Board of Directors
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EXHIBIT A
Coordination Agreement
Between
Community Choice Michigan, Inc.
And
Xxxxxx Healthcare of Michigan, Inc.
This Agreement is entered into this 30th day of April, 2003 by and between
Xxxxxx Healthcare of Michigan, Inc. (MOLINA) and Community Choice Michigan, Inc.
(COMMUNITY).
WHEREAS, MOLINA and COMMUNITY desire to minimize disruption of the existing
patient/physician relationship for COMMUNITY assigned members upon COMMUNITY's
withdrawal from the Medicaid program; and
WHEREAS, with the support of the Medical Services Administration of the
Michigan Department of Community Health and in order to minimize disruption of
the patient/physician relationship, COMMUNITY and MOLINA desire to effect a
transfer of COMMUNITY's Medicaid members to MOLINA; and
WHEREAS, the Medical Services Administration office of the Michigan
Department of Community Health has defined a set of responsibilities for the
plan transferring the Medicaid members and a set of responsibilities for the
plan accepting the Medicaid members; and
WHEREAS, COMMUNITY has agreed to transfer the Medicaid members that are
currently in the practices listed on Attachment A to MOLINA, subject to approval
by the Medical Services Administration of the Michigan Department of Community
Health and each Medicaid member's right of choice, effective July 1, 2003.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the adequacy, sufficiency and receipt of which are hereby
acknowledged, the Parties agree as follows:
COMMUNITY Responsibilities:
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1. COMMUNITY shall notify all Medicaid members affected by this transition.
Mailings to Medicaid members will occur by May 12 , 2003.
2. COMMUNITY shall notify physicians or their responsible organizations of
this transition. This notification will occur by May 12 , 2003.
3. COMMUNITY shall provide as of June 27, 2003 to MOLINA a listing of open
authorizations on Medicaid members to be transferred to MOLINA. This
listing will be supplied based upon information from the Medical Service
Administration identifying Medicaid members who have enrolled with MOLINA.
4. COMMUNITY will be financially responsible for an inpatient stay through the
date of discharge for any Medicaid members that were admitted to an acute
care setting prior to 12:00 a.m. on July 1, 2003. Upon discharge, MOLINA
will assume financial responsibility for the Medicaid members.
5. COMMUNITY shall provide the transition services listed on Attachment B.
6. COMMUNITY agrees that it will keep confidential all information disclosed
by MOLINA to COMMUNITY and will use such information only for the purposes
described in this Agreement. COMMUNITY will use at least the same degree of
care in maintaining the confidentiality of XXXXXX'x information as
COMMUNITY uses in maintaining the confidentiality of its own information.
MOLINA Responsibilities:
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1. MOLINA will assume financial responsibility for the provision of COMMUNITY
authorized services for each Medicaid member transferred to MOLINA from
COMMUNITY, effective July 1, 2003, except for Medicaid members who remain
inpatients as noted in COMMUNITY's Responsibilities, item number 4.
2. MOLINA will assure continuity of care for transferred Medicaid members by
allowing patients to continue receiving previously arranged treatment until
treatment is completed or the Medicaid member can be reasonably brought
into the MOLINA network. MOLINA will be financially responsible for
services authorized by COMMUNITY for all claims with dates of service from
July 1, 2003, except as provided in COMMUNITY's Responsibilities, item
number 4.
3. MOLINA will assure that all primary care physicians to which Medicaid
members are assigned are credentialed and contracted by MOLINA. In the
event that primary care physician credentialing/contracting is not final as
of the date of this Agreement, MOLINA will make out of network assignments
to ensure that the Medicaid member can continue to see his or her primary
care physician. Primary care physicians must be credentialed and contracted
by MOLINA no later than ninety (90) days after July 1, 2003. As applicable,
each party shall provide releases from providers authorizing COMMUNITY to
share credentialing files with MOLINA as provided in attachment B.
4. MOLINA will assume financial responsibility on July 1, 2003 for Medicaid
members who are receiving treatment in a skilled nursing facility or
rehabilitative facility.
5. MOLINA will submit a revised provider file to Michigan Enrolls to add
former COMMUNITY providers for Medicaid members by May 13, 2003.
6. MOLINA agrees to abide by any administrative hearing decisions regarding
Medicaid members transferred from COMMUNITY.
7. MOLINA will indemnify and hold harmless COMMUNITY and all of its agents,
directors, officers, employees and contracted providers, against any and
all expenses, losses, liabilities and damages (including, without
limitation, attorney fees, judgements, fines, and amounts paid in
settlement) incurred in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative that directly or indirectly arises out of
alleged wrongful use or disclosure by MOLINA or its agents, directors,
officers, employees, or contracted providers of information regarding
Medicaid members released to MOLINA by COMMUNITY pursuant to this
Agreement.
8. MOLINA agrees that it will keep confidential all information disclosed by
COMMUNITY to MOLINA and will use such information only for the purposes
described in this Agreement. MOLINA will use at least the same degree of
care in maintaining the confidentiality of COMMUNITY's information as
MOLINA uses in maintaining the confidentiality of its own information.
The parties acknowledge that the above-described transition is subject to
approval by the State of Michigan.
Community Choice Xxxxxx Healthcare of Michigan, Inc.
Michigan, Inc.
By: /s/ Xxxxxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxx X. Xxxxxx
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Chairperson Board of Directors President & Chief Executive Officer
Date: 4/30/03 Date: 4/30/03
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Attachment B
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Xxxxxx Healthcare \ Community Choice
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Transition Services
I Membership Services:
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a. Detailed eligibility list with PCP assignment: Molina to supply
format;
b. Coordinate notification to members regarding change;
c. List of outstanding member grievances and appeals.
II Medical Management:
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a. List of outstanding prior authorizations and/or referrals that extend
beyond the transition date;
b. List of members receiving care on an inpatient basis on the transition
date;
c. List of members identified as pregnant and/or receiving prenatal care;
d. List of members in case management;
e. List of members in a Disease Management program (e.g. Asthma,
diabetes, or State flagged as a Child with Special Healthcare Needs);
f. List of newborns delivered in the two previous months prior to
transition.
III Pharmacy:
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a. One month of pharmacy claims data in NCPDP format;
b. List of outstanding prior authorizations (with weekly updates) that
are approved beyond the transition date;
c. Copy of existing formulary and prior authorization requirements;
d. List of the top 50 high cost patients over the last quarter.
IV Provider Network/Service Area:
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a. Coordinate notification to providers regarding change;
b. List of zip codes for Medicaid;
c. List of outstanding provider grievances and appeals.
V Information Services (based upon Xxxxxx'x requested data elements):
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a. Data history including:
i. Member history (6 months)
ii. Claims/encounter history (6 months)
iii. Provider (6 months) including capitation reports iv. UM history
(6 months)
VI Credentialing:
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a. Credentialing Files
