In re First American Health Care of Georgia, Inc. and
its wholly owned subsidiaries, Case No. 96-20188
through Case No. 96-20218 (Bankruptcy Court, ▇.▇.▇▇.)
OMNIBUS SETTLEMENT AGREEMENT
----------------------------
(US/First American/IHS)
I. PARTIES
-------
This Omnibus Settlement Agreement ("Agreement") is entered into as of
September 9, 1996, by and among First American Health Care of Georgia, Inc.
("First American"), all of the subsidiaries and affiliates of First American,
defined as those entities listed on the attached Exhibit A ("Subsidiaries")
(collectively the "Company"), the United States Department of Health and Human
Services through the Office of Inspector General ("OIG") and the Health Care
Financing Administration ("HCFA"), the United States of America through the
United States Department of Justice ("DOJ"), and Integrated Health Services,
Inc. ("IHS").
II. RECITALS
--------
A. Company. The Company participates in both the Medicare and certain
Medicaid programs by providing home health care and other services to Medicare
beneficiaries and to Medicaid recipients through many agencies located in many
states.
B. Principal Shareholders. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Principal Shareholders") and their children own all of the common stock of
First American, and certain of
these individuals, served as directors, officers, and employees of the Company
prior to February 22, 1996.
C. Submission of Medicare Claims by Company. The Company submitted
claims for payment to the Medicare Program ("Medicare"), 42 U.S.C. ss. 1395 et
seq. and will continue to do so following consummation of this Settlement
Agreement.
D. Conviction of First American and Principal Shareholders. On
February 4, 1996, First American and the Principal Shareholders were convicted
of Medicare fraud and other federal crimes. The Principal Shareholders are
appealing their convictions. First American has filed a notice of appeal, is
evaluating its position, and has preserved the right to appeal its conviction.
E. Bankruptcy Cases. On February 21, 1996, the Company filed petitions
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of Georgia, Brunswick Division (the "Chapter 11
Bankruptcy Cases"), which are currently pending.
F. Merger Agreement. Immediately prior to filing of the Chapter 11
Bankruptcy Cases, First American and its Principal Shareholders entered into a
Merger Agreement dated February 21, 1996 with IHS. Such Merger Agreement was
amended pursuant to an amendment dated as of September 9, 1996 (such Merger
Agreement, as so amended, is hereinafter referred to as the "Merger Agreement").
The Merger Agreement provides for the merger of an
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IHS subsidiary, IHS Acquisition XIV, Inc., a Delaware corporation, with and into
First American (the "Merger"), after which Merger First American will be
liquidated and the separate existence of First American will cease and the
assets of First American shall be transferred to an IHS affiliate, IHS of
Brunswick, Inc., a Delaware corporation ("IHS-Sub"), which affiliate shall
succeed to and assume all liabilities of First American arising under this
Settlement Agreement.
G. Independent Management. Effective upon the filing of the Chapter 11
Bankruptcy Cases, the Principal Shareholders resigned as officers and directors
of the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, of the firm of
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc., became, respectively, President and Chief Executive
Officer and Chief Financial Officer. On February 22, 1996, the Bankruptcy Court
entered an interim order that approved ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc., and Messrs.
▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ as independent managers for the Company. The interim
order further designated them as the persons with the fiduciary responsibilities
and authority to exercise and perform, as the independent, exclusive, and
fiduciary management of the Company, and ordered that they shall exercise the
powers and authority of, and shall have the exclusive authority to act on behalf
of, the Company in all matters involving administration of the Chapter 11
Bankruptcy Cases, without the necessity of any approval of the Board of
Directors or shareholders of the Company, said authority
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having been expressly relinquished by the Directors and shareholders of the
Company.
H. Alleged Claims and Causes of Action Against Company by the United
States. The United States contends that it has civil and administrative monetary
claims and causes of action against the Company under the False Claims Act, 31
U.S.C. ▇▇.▇▇. 3729 et seq., as amended, under the exclusion provisions of 42
U.S.C. ss. 1320a-7(b), under the Civil Monetary Penalties Law, 42 U.S.C. ▇▇.▇▇.
1320a-7a, under the Program Fraud Civil Remedies Act, 31 U.S.C. ▇▇.▇▇.
3801-3812, under 42 U.S.C. ss. 1395g, under common law, and under all statutory
and/or regulatory provisions over which HHS (including HCFA and/or OIG) and the
Civil Division of DOJ has authority: (1) for allegedly, submitting false and
fraudulent claims to the Medicare Program for unallowable costs or unallowable
claims relating to: (a) personal expenses (unrelated to the provision of patient
care) for Jack and ▇▇▇▇▇▇ ▇▇▇▇▇ and other Company officers, employees, and
family members; (b) excessive and unnecessary home health care visits; (c)
expenses for lobbying, recruiting, public relations/promotion, contributions,
and consulting; (d) fuel rebates; (e) marketing, meetings, education,
entertainment, and travel expenses; (f) legal accounting, and audit expenses;
(g) case management field directors, patient care coordinators, and intake
coordinators; (h) medical and office supply charges; (i) pension plans; (j)
phones, beepers, and communication expenses; (k) computer
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hardware, software, and data processing; (l) media, video, and publishing; (m)
taxes, licenses, penalties, insurance, interest, and dues; (n) officer,
director, shareholder, and employee salaries and remuneration; (o) related
organization costs and expense allocation; (p) depreciation and amortization;
(q) home health care agency acquisitions; (r) agency and branch certification;
(s) equipment purchase and equipment expenses; and (t) lease expenses;(2) in
addition, the United States allegedly has monetary claims for overpayments
arising from Medicare cost reports filed by the Company in cost years 1989
through and including 1996, and/or arising from Medicare payments received by
the Company in cost years 1989 through and including 1996, and/or Medicare costs
reported or Medicare payments made for non-reimbursable costs to the Company
during those years; and (3) from 1990 through 1996, the OIG conducted audits and
investigations of the Company and its Principal Shareholders, with respect to
the above matters, including the submission of claims for non-patient related
expenses. A criminal investigation was conducted by the United States Attorney's
Office for the Southern District of Georgia during the same time period, the
alleged conduct of which is more fully described in the indictment, which
resulted in the conviction of First American and its Principal Shareholders as
described in Paragraph D above. HCFA, directly and through its Medicare fiscal
intermediaries, conducted audits of the Company's Medicare cost
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reports and payments as described above, its certification status, the provision
of services through branch and/or sub-unit offices, and the coverage and payment
for services furnished to Medicare beneficiaries for Medicare cost report years
1989 through and including 1996. As part of the above described HCFA audits, a
civil fraud investigation was conducted by the Special Attorney to the United
States Attorney General to the United States Attorney General during 1995 and
1996.
I. Purpose and Intent. This Settlement Agreement is being entered into
for the purpose and intent of implementing the terms and conditions in the Term
Sheet for Omnibus Settlement Agreement among the Company, HCFA, DOJ, and as
agreed to by IHS, dated August 13, 1996 (the "Term Sheet"). The United States,
the Company, and IHS desire to reach this Settlement Agreement to fully and
finally settle, compromise, and resolve all criminal, civil and administrative
monetary claims, causes of action and issues between the United States and the
Company, and the discharge, as of the date of the Merger, of all civil
penalties, fines and assessments against the Company, except as expressly
provided herein.
J. Disclosures. First American has provided a report to HCFA
disclosing all matters of which it possesses any knowledge, after reasonable
investigation, relating to any direct or indirect interests of the Principal
Shareholders, jointly or individually, in any property leased by First American
and its
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Subsidiaries, and any direct or indirect interest in any vendor doing business
with such parties.
NOW, THEREFORE, for and in consideration of the mutual premises, mutual
promises, covenants, and obligations set forth below, and for other good and
valuable consideration as stated herein, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
III. AGREEMENTS
----------
1. Payments Due. Subject to the Closing of the Merger, First American
and its successors shall pay the following amounts with funds provided to it by
IHS and/or funds generated from operations, in accordance with the terms of this
Agreement:
Payee/Character
Payment Date Amount of Payment
------------ ------ ----------
Payable on the day $20,000,000.00 Department of Justice
following the Merger $92,085,470.90 HCFA
of First American and $2,914,529.10 (restitution) US Attorney S.D. Ga.
IHS Acquisition XIV, Inc.
1999 - payable on or $10,000,000.00 HCFA/Contingent
before February 14, Payment
2000 as provided below
2000 - payable on or $35,000,000.00 HCFA/Contingent
before February 14, Payment
2001 as provided below
2001 - payable on or $45,000,000.00 HCFA/Contingent
before February 14, Payment
2002 as provided below
2002 - payable on or $35,000,000.00 HCFA/Contingent
before February 14, Payment
2003 as provided below
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2003 - payable on or $15,000,000.00 HCFA/Contingent
before February 14, Payment
2004 as provided below
TOTAL $255,000,000.00
Contingent Payments set forth above shall be subject to the following
conditions: For each year for which a Contingent Payment is payable as provided
above (i.e., calendar years 1999 to 2003, referred to as a "Payment Year"), the
entireContingent Payment will become due and payable for the year then ended
subject to the following condition: the year-to-year percentage increase from
December of the second prior year to December of the year then ended in the
seasonally unadjusted Consumer Price Index for all urban consumers (CPI-U) for
the Medical Care expenditure category (as reported in Table 1 of the CPI
Detailed Report, prepared by the Bureau of Labor Statistics in the U.S.
Department of Labor) ("CPI") does not exceed 8%. Notwithstanding the foregoing,
if legislation is enacted which changes the Medicare reimbursement methodology
for home health services to a prospectively determined rate methodology, in
whole or in part, the contingent payments will become due and payable for the
year then ended and each year thereafter, as provided above without regard to
the CPI factor. The foregoing tests are referred to as the "Payment Condition."
The Contingent Payments, to the extent not paid, will accumulate and
be payable in subsequent years, as follows:
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If the Payment Condition is not satisfied for any one (1) or more Payment Years,
then in each case, the entire Contingent Payment which is not paid will roll
forward and be added to the Contingent Payment scheduled for the next Payment
Year; thus when the Payment Condition is satisfied in a subsequent year, the
Contingent Payment scheduled for that year, plus all ContingentPayments for
prior years which have not been paid, will be paid in full. Following the end of
the last Payment Year (i.e., calendar year 2003), if any Contingent Payments
have not been paid in full, then the Payment Condition will apply for one (1)
final calendar year, so that all unpaid Contingent Payments will be paid
following the end of the 2004 calendar year if the Payment Condition can be
satisfied for the 2004 calendar year. Payment will be made as soon as
practicable following the end of each year for which the Payment Condition is
satisfied, but in any case no later than forty-five (45) days after the last day
of that year.
Thus, for example, if the CPI determined for the period of December
1999 to December 2000 exceeds eight percent (8%), the Contingent Payment of
Thirty-Five Million Dollars ($35,000,000) otherwise accruing in the year 2000
and due to be paid on or before February 14, 2001, would not be paid; then, if
the CPI determined for the period of December 2000 to December 2001 does not
exceed eight percent (8%), the Contingent Payment of Forty-Five Million Dollars
($45,000,000) otherwise accruing in
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the year 2001, plus the Contingent Payment of Thirty-Five Million Dollars
($35,000,000) in respect of the year 2000 would be due and payable on or before
February 14, 2002.
Indemnification and offset rights which Buyer may have against
Contingent Payments under the terms of the Merger Agreement shall be exercised
only against the Contingent Payments to be received by the shareholders and
optionholders, as provided in the Merger Agreement.
Except for the amount of $20,000,000 paid to DOJ in settlement of all
civil false claims liabilities, civil damages and penalties, all amounts paid to
HCFA shall be treated as repayments of disputed amounts for Medicare services
rendered to Medicare beneficiaries.
All amounts paid in satisfaction and/or settlement of any civil fines
or assessments, or criminal penalties, will be deemed to have been paid by the
Company or its successors or assigns, as indicated herein.
2. Guaranty. Subject to the Closing of the Merger, IHS shall guaranty,
subject to applicable contingencies, the collection of payments to HCFA, DOJ,
shareholders and Option- holders. Simultaneously with the Closing of the Merger,
IHS shall execute and deliver to the United States its Guaranty of the
collection of the obligations of the Company and IHS-Sub pursuant to this
Settlement Agreement, in the form of Exhibit B hereto.
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3. Default. In the event of payment default by IHS- Sub, its
successors or assigns, the United States may exercise, at its sole option, one
or more of the following rights after giving thirty (30) days prior written
notice to IHS-Sub and IHS, or their successors and assigns: (1) declare this
Agreement breached, and avail itself of any and all claims arising from such
breach against the Company or its successor after the merger, recovering any
Settlement Amount in default under this Agreement, and recovering any reasonable
expenses, interest and legal fees incurred in collecting the amount due and
payable under this Agreement; (2) file an action for specific performance of the
terms of this Agreement; and (3) exercise any other right granted by law, or
under the terms of this Agreement, or recognizable at common law or in equity,
other than the right of recision, if any. This Agreement does not waive or limit
any right that the Company or its successor or assigns after the Merger
otherwise has to dispute the existence or extent of any default alleged by the
United States.
4. No Admission of Liability. This Settlement Agreement settles and
resolves all disputed claims and other matters, except as otherwise provided
herein. This Agreement and any proceedings taken pursuant to this Agreement, are
not, and shall not in any event be construed as or deemed evidence of, oroffered
or received as evidence of, a presumption, concession or admission by the
parties of the truth of any fact alleged or the
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validity of the claim or deficiency of any defense, in each case which has or
could have been asserted in any litigation, or of any liability of any parties
of any kind whatsoever, or in any way referred to for any other reason by any
party in any civil, criminal or administrative action or proceeding other than
such proceedings as may be necessary to effectuate the provisions of this
Agreement.
5. Civil and Administrative Releases. Subject only to the exceptions
in Section 13 below, the United States, for itself and on behalf of its
officials, employees, agents, departments, and assigns, hereby releases and
forever discharges First American, the Company (defined to include the entities
set forth on Exhibit A), IHS and IHS-Sub, their respective employees, officers,
directors and agents, and the successors and assigns of any of them, and
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc., its successor and assigns, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, individually, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇ (collectively
the "Released Parties"), from any and all civil or administrative monetary
claims, actions, demands, proceedings, and causes of action (collectively
"Causes of Action") under the False Claims Act, the Civil Monetary Penalties
Act, the Program Fraud Civil Remedies Act, the exclusion provisions of 42 U.S.C.
ss. 1320a-7(b), (all as previously defined), common law, or under any statutory
or regulatory provisions over which HHS (including HCFA
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and/or OIG) and/or the Civil Division of DOJ has authority, that the United
States has or may have, which relate to acts or omissions occurring prior to the
date of Merger, arising with respect to the conduct and/or Causes of Action
alleged in Section H, above. (collectively "Released Acts").
The general releases included herein are intended to settle all prior
claims up to the date of Merger with respect to the Company conducting business
through branch offices that may not qualify as branch offices, that may not have
been separately certified as sub-units, that may be at locations beyond those
authorized by CON, and/or that may have been operated without ever having
obtained CON approval. Any HCFA post-closing requirements that branch offices be
transitioned to agency/sub-unit locations or obtain CONs required by applicable
law, if any, shall be subject to implementation over a reasonable period of time
(including consideration of HCFA's certification priorities), and any services
otherwise reimbursable, rendered during the transition period by branch offices
shall be reimbursable, regardless of whether the branch status was proper.
6. Criminal Releases. First American and all of the entities listed on
Exhibit A and their successors and assigns are hereby released from all claims,
proceedings and causes of action based upon violations of federal criminal
statutes and from criminal prosecution for any acts or omissions occurring
before
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the Closing date of the Merger, except for First American's criminal conviction
in Case No. ▇▇▇-▇▇▇-▇▇ on February 4, 1996.
7. Dismissal of Criminal Appeal by First American. First American
shall seek dismissal of the appeal of its criminal conviction under the Federal
Rules of Appellate Procedure on or about the Closing date of the Merger.
8. Dismissal of Pending Litigation and Releases. The Company, and its
subsidiaries and their successors and assigns shall take such actions as to
cause the dismissal, with prejudice, as of the date of the Merger, of all
alleged monetary and/or other pending claims of the Company, and its
subsidiaries, relating to amounts of Medicare reimbursement due before the
Provider Reimbursement Review Board in respect of periods ending on or prior to
the Merger date, and such other claims against the United States and/or its
agents acting as Medicare fiscal intermediaries, including the pending qui tam
action against Aetna (United States ex rel. ABC Home Health Services, Inc. v.
Aetna, No. CV294-167, United States District Court, SDGA), provided that the qui
tam action shall be dismissed without prejudice as to the United States. The
Company, its subsidiaries, successors, and assigns release and forever discharge
the United States, its agents, officers, and employees, from any and all claims
or causes of action which the Company, its successors, and assigns may have
against them arising from or relating in any way to the Company's participation
in the
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Medicare program, and from any and all liability based upon those claims or
causes of action, including but not limited to, releasing the Company's Medicare
fiscal intermediaries, their agents, officers, and employees, from any and all
claims or causes of action, and from liability arising from or related in any
way to their functions, duties, responsibilities, and service as fiscal
intermediaries with respect to periods ending on or before the Closing date of
the Merger.
9. 1996 Medicare Payments. Periodic interim payments for services
rendered by First American or its subsidiaries and their respective successors
and assigns (collectively the "Companies") from August 27, 1996 through and
including December 31, 1996 (including any PIP lag, i.e., payments due after
December 31, 1996 for services rendered through and including December 31, 1996)
shall be maintained at a bi-weekly amount of $18,587,032 notwithstanding actual
costs incurred in such period and without adjustment for any liability,
overpayment or underpayment. Such payments reflect the approximate costs of the
Companies' operations and the parties acknowledge that documentation of such
costs would be extremely difficult due to the documentary gaps and transition of
ownership. The parties, however, acknowledge that the cost reports for the
period from the Merger date through and including December 31, 1996 shall be
filed for purposes other than determining any liability, overpayment or
underpayment applicable to such period.
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The Companies shall during the remaining months of calendar year 1996
use reasonable efforts to maintain the level of operations without any material
decline in visits.
The United States, for itself and on behalf of its officials,
employees, agents, departments, and assigns, hereby releases and forever
discharges the Released Parties from, and irrevocably agrees that it shall not,
and waives any right it may have to bring or join against any Released Party,
any and all civil or administrative monetary claims, actions, demands,
proceedings or causes of action, that the United States has or may have, whether
known or unknown, for Medicare overpayments under 42 U.S.C. ss. 1395g, received
by the Company or any of its direct or indirect subsidiaries or any of their
respective successors or assigns for all cost reports through and including
December 31, 1996.
10. Reimbursement Audit Policies. Subject to the provisions of Section
9 above, the parties further acknowledge that Medicare reimbursement following
the Merger will be determined based solely upon the facts and circumstances, and
applicable statutory, regulatory, and program policies, that may apply to the
operations of IHS and the Company's successors and assigns at the time, and that
IHS shall be audited in accordance with usual and customary Medicare audit
policies and procedures. Settlement of all pre-closing Medicare cost report
issues by the Company and its subsidiaries and their successors and assigns
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shall be without prejudice to and shall not be binding upon or establish
precedent with respect to IHS or the Company or its successors or assigns
post-Closing cost reporting periods.
11. Term Sheet for Omnibus Settlement Agreement. The terms and
conditions of that certain Term Sheet for Omnibus Settlement Agreement among the
Company, HCFA, DOJ and as agreed by IHS, dated August 13, 1996 is hereby
incorporated herein by reference as if said Term Sheet were fully set forth
herein, provided, however, that the parties shall use their best efforts to
complete the Merger prior to November 15, 1996.
12. Further Documents. Each party to this Settlement Agreement agrees
to execute and deliver any further documents that may be reasonably necessary to
carry out the provisions of this Agreement.
13. Exceptions. Notwithstanding Section 5, above, the United States
does not release the Company or any individual associated with the Company from:
(1) any civil claims arising under Title 26 of the United States Code (Internal
Revenue Code); (2) any claims based upon such obligations as are expressly
created by this Settlement Agreement; (3) respecting individuals only, from
prosecution for violations of federal criminal statutes; or (4) civil claims
made by federal agencies other than the Department of Health and Human Services,
including HCFA, or (5) any claims by an individual Medicare beneficiary for
defective or deficient services by the Company.
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14. Third Parties. The terms of this Settlement Agreement are not
intended to, nor are they to be construed to, work a release of liability or in
any way create a benefit in favor of any person or entity (including physicians
or other individuals or entities that referred patients to the Company or used
the Company's services) other than for persons and/or entities specifically
identified, the Company and IHS, together with each of their direct and indirect
subsidiaries, affiliates and divisions, including, without limitation, the
entities listed on Exhibit A hereto and the successors and assigns of any of
them.
15. Binding Effect. The provisions of this Settlement Agreement shall
be binding upon the parties to it, their affiliates, entities and their
collective successors and assigns.
16. Costs. Each party to this Settlement Agreement agrees to bear its
own legal and other costs.
17. Governing Law. This Settlement Agreement shall be governed by the
laws of the United States. The parties agree that the exclusive jurisdiction and
venue for any dispute arising under this Agreement shall be the United States
District Court for the Southern District of Georgia.
18. Entire Agreement. This Settlement Agreement and the Terms for
Omnibus Settlement Agreement constitutes the complete agreement between the
parties, and cannot be amended,
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except in writing and signed by all signatories to this Settlement Agreement.
19. Authorized Representatives. The persons signing this Settlement
Agreement represent that they are duly authorized to execute the Settlement
Agreement on behalf of the parties listed.
20. Counterparts. This Settlement Agreement may be executed in
counterparts, each of which shall constitute an original and all of which shall
constitute one and the same agreement.
21. Notices. All notices, requests, waivers, consents, and other
communications hereunder shall be in writing and shall be mailed first class
certified mail or by nationally recognized overnight courier service or by
personal delivery, with postage or other applicable delivery fees prepaid and
addressed as follows:
The Company: ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, MD 21117
Attn: President
With copy to: ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, MD 21117
Attn: General Counsel
With copy to: ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, MD 21117
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
IHS: ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, MD 21117
Attn: President
With copy to: ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, MD 21117
Attn: General Counsel
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With copy to: ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, MD 21117
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
IHS-Sub: ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, MD 21117
Attn: President
DOJ: U.S. Attorney for the Northern
District of Georgia
U.S. Court House
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Atlanta, GA 30335
Attn: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
HCFA: Associate General Counsel
Office of General Counsel
HCFA, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Room 5309
Washington, DC 20201
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
OIG: Assistant Inspector General
for Litigation Coordination
Office of Inspector General
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Room 330
Washington, D.C. 20201
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
or to such other address as any party may request by notice given as aforesaid.
Notices sent as provided herein shall be deemed given on the date received by
the recipient or, if sooner three (3) days after mailing and one (1) business
day after shipment by overnight courier. Rejection or other refusal to accept or
the inability to deliver because of a changed address of which no notice was
given in accordance with the provisions hereof, shall be deemed to be received
three (3) days after such notice was mailed in accordance with the terms hereof.
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22. Effective Date. This Settlement Agreement is effective as of the
Closing of the Merger.
UNITED STATES OF AMERICA
DATED:_____________________ BY:______________________________
▇▇▇▇ ▇. ▇▇▇▇
Special Attorney to the
United States Attorney General
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OFFICE OF THE INSPECTOR GENERAL
DATED:_____________________ BY:______________________________
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Assistant Inspector General
for Litigation Coordinator
HCFA-HHS
DATED:_____________________ BY:______________________________
▇▇▇▇▇▇ ▇▇▇▇▇
Health Care Financing
Administration
DATED:_____________________ THE COMPANY
BY:______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
President and Chief
Executive Officer
DATED:_____________________ INTEGRATED HEALTH SERVICES
BY:_______________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President and
General Counsel
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Exhibit A
FIRST AMERICAN HEALTH CARE OF GEORGIA, INC.
09-Aug-96
Name of Corporation
ABC GP, Inc.
ABC Home Health and Hospice of Albany, Inc.
ABC Home Health and Hospice of Athens, Inc.
ABC Home Health and Hospice of Brunswick, Inc.
ABC Home Health and Hospice of Dublin, Inc.
ABC Home Health and Hospice of Macon, Inc.
ABC Home Health and Hospice of Savannah, Inc.
ABC Home Health and Hospice of ▇▇▇▇▇, Inc.
ABC Home Health and Hospice of Vidalia, Inc.
ABC Home Health and Hospice of Waycross, Inc.
ABC Home Health Care de Latino America, S.A. deCV
ABC Home Nursing, Inc.
ABC Newco, Inc.
ABC Pharmaceuticals, Inc.
First American Health Care of Georgia, Inc.
First American Home Care of Alabama, Inc.
First American Home Care of Arkansas, Inc.
First American Home Care of California, Inc.
First American Home Care of Colorado, Inc.
First American Home Care of Florida, Inc.
First American Home Care of Ft. Lauderdale, Inc.
First American Home Care of Georgia, Inc.
First American Home Care of Illinois, Inc.
First American Home Care of Indiana, Inc.
First American Home Care of Louisiana, Inc.
First American Home Care of Michigan, Inc.
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Name of Corporation
First American Home Care of Mississippi, Inc.
First American Home Care of Missouri, Inc.
First American Home Care of Naples, Inc.
First American Home Care of Nebraska, Inc.
First American Home Care of New Mexico, Inc.
First American Home Care of North Carolina, Inc.
First American Home Care of Ohio, Inc.
First American Home Care of Oklahoma, Inc.
First American Home Care of Pennsylvania, Inc.
First American Home Care of South Carolina, Inc.
First American Home Care of Tennessee, Inc.
First American Home Care of Texas, Inc.
First American Home Care of Valdosta, Inc.
First American Home Care of Virginia, Inc.
First American Home Care of West Virginia, Inc.
First American International, Inc.
Professionals in Health Care de Mexico, S.A. de CV
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Exhibit B
GUARANTY
THIS GUARANTY ("Guaranty"), dated as of September___, 1996, is made by
Integrated Health Services, Inc., a Delaware corporation (the "Guarantor"), in
favor of the United States of America ("Obligee"), acting through the U.S.
Department of Justice and the Health Care Financing Administration of the United
States Department of Health and Human Services.
Recitals:
▇. ▇▇▇▇▇▇▇▇▇, Obligee and First American Health Care of Georgia, Inc.,
a Georgia corporation (the "Company") are each party to a certain settlement
agreement bearing even date herewith (the "Settlement Agreement").
B. Pursuant to a merger agreement dated as of February 21, 1996, as
amended September _, 1996, (the "Merger Agreement"), among Guarantor, IHS
Acquisition XIV, Inc., a Delaware corporation ("Newco", ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇ and the Company, the Company has agreed, subject to the terms and
conditions set forth therein, to merge with Newco (the "Merger"), after which
Merger the Company shall be liquidated into a new corporation, IHS of Brunswick,
Inc., a Delaware corporation ("IHS Sub") which will be a wholly-owned subsidiary
of Guarantor.
C. Pursuant to the Settlement Agreement, the Company (and, after the
Merger, IHS Sub) is obligated to pay certain amounts to the United States, and
to perform certain obligations, as set forth therein.
▇. ▇▇▇▇▇▇▇▇▇ agreed in the Settlement Agreement to execute and deliver
this Guaranty to Obligee. Guarantor acknowledges that ▇▇▇▇▇▇▇ has relied and
will rely upon this Guaranty in entering into the Settlement Agreement, and
executes and delivers this Guaranty to induce Obligee to enter into the
Settlement Agreement.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound, Guarantor hereby agrees as follows:
1. Definitions of Certain Terms.
In addition to the other terms defined elsewhere in this Guaranty, as
used herein the following terms shall have the following meanings:
"Guaranteed Obligations" shall mean all obligations from time
to time of the Company, Newco, IHS Sub or any of their respective
successors (collectively, "Obligors") to Obligee under the Settlement
Agreement, including all obligations to pay amounts pursuant to
Paragraph I thereof, in each case whether such obligations are direct
or indirect, joint or several, absolute or contingent, due or to
become due, now existing or hereafter arising (including interest and
other obligations arising or accruing after the commencement of any
bankruptcy, insolvency, reorganization, dissolution or similar
proceeding with respect to Obligors or any other Person, or which
would have arisen or accrued but for the commencement of such
proceeding, even if such obligation or the claim therefor is not
enforceable or allowable in such proceeding).
"Person" shall mean an individual, corporation, partnership,
limited liability company, trust, unincorporated association, joint
venture, joint-stock company, government (including political
subdivisions), governmental authority or regulatory body, or any other
legal entity whatsoever.
2. Guaranty. The Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the collection of the Guaranteed Obligations in
accordance with the terms of the Settlement Agreement, subject only to the
provisions of Section 3 below. This Guaranty is a guarantee of collectibility
and is conditioned upon an attempt to collect from or proceed against the
Obligor.
3. Requirement of Written Notice of Non-Payment. Notwithstanding any
other provision of this Guaranty to the contrary, Guarantor shall not be
obligated to pay or perform any of the Guaranteed Obligations unless and until
(i) Obligors shall have failed to pay or perform such Guaranteed Obligation when
and as due pursuant to the Settlement Agreement, (ii) Obligee shall have given
written notice of such failure to Obligors and Guarantor in accordance with
Section 10 below, and (iii) Obligors' failure to pay or perform the Guaranteed
Obligations shall have continued for a period of [thirty (30)] days after the
giving of such notice. The requirements of the preceding sentence shall be the
only conditions to Guarantor's obligations pursuant to this Guaranty;
accordingly, upon the expiration of such [thirty (30)] day period, Guarantor
shall be absolutely and unconditionally obligated to pay and perform the
Guaranteed Obligations in accordance with the terms hereof without any
obligation of Obligee to pursue or exhaust remedies of any nature whatsoever
available against any or all Obligors.
4. Obligations Absolute. Except as otherwise expressly set forth in
Section 3 above, the obligations of the Guarantor under this Guaranty shall be
absolute, unconditional and irrevocable, irrespective of any of the following:
(a) any lack of legality, validity, enforceability or
allowability (in a bankruptcy, insolvency, reorganization, dissolution
or similar proceeding, or otherwise), or any avoidance or
subordination, in whole or in part, of any of the Guaranteed
Obligations;
(b) any impairment by the Obligee or any other Person of any
recourse of the Guarantor against any Obligor or any other Person; any
failure to assert any breach of or default under the Settlement
Agreement or any of the Guaranteed Obligations; or any exercise or
non-exercise, or any failure, omission, breach, default, delay or
wrongful action in connection with any exercise or non-exercise, of
any right or remedy against any Obligor or any other Person or in
connection with the Settlement Agreement or any of the Guaranteed
Obligations;
(c) any merger, consolidation, liquidation, dissolution,
winding-up, charter revocation or forfeiture, or other change in,
restructuring or termination of the corporate structure or existence
of, any Obligor, the Guarantor or any other Person; any bankruptcy,
insolvency, reorganization, dissolution or similar proceeding with
respect to any Obligor, the Guarantor or any other Person; or any
action taken or election made by the Obligee (including any election
under Section 1111(b)(2) of the United States Bankruptcy Code), any
Obligor, the Guarantor or any other Person in connection with any such
proceeding;
(d) any defense, setoff or counterclaim (excluding only the
defense of full, strict and indefeasible payment and performance)
which may at any time be available to any Obligor, the Guarantor or
any other Person with respect to the Settlement Agreement or any of
the Guaranteed
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Obligations; or any discharge by operation of law of any Obligor or
any other Person from the performance or observance of the Settlement
Agreement or any of the Guaranteed Obligations; or
(e) any other event or circumstance, whether similar or
dissimilar to the foregoing, and whether known or unknown, which might
otherwise constitute a defense available to, or limit the obligations
of, the Obligors, the Guarantor, a guarantor or a surety, excepting
only full, strict and indefeasible payment and performance of the
Guaranteed Obligations.
5. Waivers, etc. The Guarantor hereby irrevocably waives any defense
to or limitation on its obligations under this Guaranty arising out of or based
on any matter referred to in Section 4. Without limiting the generality of the
foregoing, the Guarantor hereby irrevocably waives each of the following:
(a) all notices (other than any notice required by Section 3
above), disclosures and demands of any nature which otherwise might be
required from time to time to preserve intact any rights against the
Guarantor, including (i) any notice of any event or circumstance
described in Section 4, (ii) any notice required by any law,
regulation or order now or hereafter in effect in any jurisdiction,
(iii) any notice of nonpayment, nonperformance, dishonor, or protest
under the Settlement Agreement or any of the Guaranteed Obligations,
(iv) any notice of any default or any failure on the part of any
Obligor or any other Person to comply with the Settlement Agreement or
any of the Guaranteed Obligations, and (v) any notice of any
information pertaining to the business, opertions, condition
(financial or other) or prospects of any Obligor or any other Person;
(b) any requirement of promptness or diligence on the part of
the Obligee or any other Person; and
(c) any defense or other right arising by reason of any law
now or hereafter in effect in any jurisdiction pertaining to election
of remedies(including anti-deficiency laws, "one action" laws or
similar laws), or by reason of any election of remedies or other
action or inaction by any Obligee which otherwise discharges or
impairs any of the Guaranteed Obligations or any recourse of the
Guarantor against any Obligor or any other person.
6. Payments. All payments to be made by the Guarantor pursuant to
this Guaranty shall be made as provided herein.
7. Continuing Agreement. This Guaranty is a continuing agreement and
shall continue in full force and effect until all Guaranteed Obligations and all
other amounts payable under this Guaranty have been paid in cash performed in
full.
8. Amendments, etc. No amendment to or waiver of any provision of this
Guaranty, and no consent to any departure by the Guarantor herefrom, shall in
any event be effective unless in a writing manually signed by or on behalf of
the Obligee. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
9. No Implied Waiver; Remedies Cumulative. No delay or failure of the
Obligee in exercising any right or remedy under this Guaranty shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right or
remedy preclude any other or further exercise thereof or the exercise of any
other right or remedy. The rights and remedies of the Obligee under this
Guaranty are cumulative and
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not exclusive of any other rights or remedies available hereunder, under any
other agreement, at law, or otherwise.
10. Notices. Except to the extent, if any, otherwise expressly
provided herein, all notices and other communications (collectively, "notices")
under this Guaranty shall be in writing (including facsimile transmission) and
shall be sent by first-class certified mail, by nationally-recognized overnight
courier, by personal delivery, or by facsimile transmission, in all cases with
charges prepaid. All notices shall be sent to the following addresses, or, in
any case, to such other address as shall have been designated by the applicable
party by notice to the other party hereto:
If to Guarantor:
Integrated Health Services, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, Maryland 21117
Attention: President
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Integrated Health Services, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, Maryland 21117
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Obligor:
IHS of Brunswick, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
Owings Mills, Maryland 21117
Attention: President
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
If to Obligee:
Attention:
Facsimile:
Any properly given notice shall be effective when received, except that properly
given notices to the Guarantor or Obligors shall be effective at the following
time, if earlier: if by first-class mail, three business days after deposit in
the mail; if by overnight courier, one business day after pickup by such
courier; and if by facsimile transmission, upon transmission.
11. Expenses. The Guarantor agrees to pay upon demand all reasonable
expenses (including reasonable fees and expenses of counsel) which the Obligee
may incur from time to time in connection with the any actions or proceedings to
enforce this Guaranty.
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12. Entire Agreement. This Guaranty constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
all prior and contemporaneous understandings and agreements.
13. Successors; Delegation of Obligations Prohibited. This Guaranty
shall be binding upon the Guarantor and its successors. Guarantor may not
delegate its obligations hereunder to any other Person.
14. Time of the Essence. Time is of the essence with regard to the
payment and performance by Guarantor of its obligations hereunder.
IN WITNESS WHEREOF, the Guarantor has executed and delivered this
Guaranty as of the date first above written.
INTEGRATED HEALTH SERVICES, INC.
By______________________________
Name:___________________________
Title:__________________________
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In re First American Health Care of Georgia, Inc. and
its wholly owned subsidiaries, Case No. 96-20188
through Case No. 96-20218 (Bankruptcy Court, ▇.▇.▇▇.)
SETTLEMENT AGREEMENT
--------------------
(US/First American/▇▇▇▇▇)
I. PARTIES
This Settlement Agreement is entered into as of September 9, 1996, by
and among the United States of America, acting through the Department of Justice
("DOJ"), First American Health Care of Georgia, Inc. ("First American"), its
subsidiaries and related entities (hereinafter collectively described as the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Principal
Shareholders").
II. RECITALS
1. Company. The Company participates in both the Medicare and Medicaid
programs by providing home health care services to Medicare beneficiaries and to
Medicaid recipients through many agencies located in many states. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ were formerly officers and directors in the Company,
and are also the Principal Shareholders in the Company.
2. Submission of Medicare Claims by Company. The Company submitted
claims for payment to the Medicare Program ("Medicare"), 42 U.S.C. ss. 1395 et
seq., and will continue to do so following consummation of this Settlement
Agreement.
3. Conviction of First American and Principal Shareholders. On
February 4, 1996, First American and the Principal Shareholders were convicted
of Medicare fraud and other federal crimes. The Principal Shareholders are
appealing their convictions. First American has filed a notice of appeal, is
evaluating its position, and has preserved the right to appeal its conviction.
4. Bankruptcy Cases. On February 21, 1996, the Company filed petitions
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of Georgia, Brunswick Division (the "Chapter 11
Bankruptcy Cases"), which are currently pending.
5. Merger Agreement. Immediately prior to filing of the Chapter 11
Bankruptcy Cases, First American and its Principal Shareholders entered into a
Merger Agreement dated February 21, 1996 with IHS. Such Merger Agreement was
amended pursuant to an amendment dated as of September 9, 1996 (such Merger
Agreement, as so amended, is hereinafter referred to as the "Merger Agreement").
The Merger Agreement provides for the merger of an IHS subsidiary, IHS
Acquisition XIV, Inc., a Delaware corporation, with and into First American (the
"Merger"), after which Merger First American will be liquidated and the separate
existence of First American will cease and the assets of First American shall be
transferred to an IHS affiliate, IHS of Brunswick, Inc., a Delaware corporation,
("IHS-Sub") which
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affiliate shall succeed to and assume all liabilities of First American arising
under this Settlement Agreement.
6. Independent Management. Effective upon the filing of the Chapter 11
Bankruptcy Cases, the Principal Shareholders resigned as officers and directors
of the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, of the firm of
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc., became, respectively, President and Chief Executive
Officer and Chief Financial Officer. On February 22, 1996, the Bankruptcy Court
entered an interim order that approved ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc., and Messrs.
▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ as independent managers for the Company. The interim
order further designated them as the persons with the fiduciary responsibilities
and authority to exercise and perform, as the independent, exclusive, and
fiduciary management of the Company, and ordered that they shall exercise the
powers and authority of, and shall have the exclusive authority to act on behalf
of, the Company in all matters involving administration of the Bankruptcy Cases,
without the necessity of any approval of the Board of Directors or shareholders
of the Company, said authority having been expressly relinquished by the
Directors and shareholders of the Company.
7. Alleged Claims and Causes of Action Against Company by the United
States. The United States contends that it has civil and administrative monetary
claims and causes of action against the Company under the False Claims Act, 31
U.S.C. ▇▇.▇▇. 3729
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et seq., as amended, under the exclusion provisions of 42 U.S.C. ss. 1320a-7(b),
under the Civil Monetary Penalties Law, 42 U.S.C. ▇▇.▇▇. 1320a-7a, under the
Program Fraud Civil Remedies Act, 31 U.S.C. ▇▇.▇▇. 3801-3812, and under common
law, for allegedly, submitting false and fraudulent claims to the Medicare
Program for unallowable costs or unallowable claims relating to: (a) personal
expenses (unrelated to the provision of patient care) for ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇
and other Company officers, employees, and family members; (b) excessive and
unnecessary home health care visits; (c) expenses for lobbying, recruiting,
public relations/promotion, contributions, and consulting; (d) fuel rebates; (e)
marketing, meetings, education, entertainment, and travel expenses; (f) legal
accounting, and audit expenses; (g) case management field directors, patient
care coordinators, and intake coordinators; (h) medical and office supply
charges; (i) pension plans; (j) phones, beepers, and communication expenses; (k)
computer hardware, software, and data processing; (l) media, video, and
publishing; (m) taxes, licenses, penalties, insurance, interest, and dues; (n)
officer, director, shareholder, and employee salaries and remuneration; (o)
related organization costs and expense allocation; (p) depreciation and
amortization; (q) home health care agency acquisitions; (r) agency and branch
certification; (s) equipment purchase and equipment expenses; and (t) lease
expenses. In addition, the United States has monetary claims for overpayments
under 42 U.S.C. ss. 1395g all arising from
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Medicare costs reports filed by the Company in cost years 1989 through and
including 1996, and/or arising from Medicare payments received by the Company in
cost years 1989 through and including 1996, and/or Medicare costs reported or
Medicare payments made for non-reimbursable costs to the Company during those
years. From 1990 through 1996, the OIG conducted audits and investigations of
the Company and its Principal Shareholders, with respect to the above matters,
including the submission of claims for non-patient related expenses. A criminal
investigation was conducted by the United States Attorney's Office for the
Southern District of Georgia during the same time period, the alleged conduct of
which is more fully described in the indictment, which resulted in the
conviction of First American and its Principal Shareholders as described in
Paragraph D above. HCFA, directly and through its Medicare fiscal
intermediaries, conducted audits of the Company's Medicare cost reports and
payments as described above, its certification status, the provision of services
through branch and/or sub-unit offices, and the coverage and payment for
services furnished to Medicare beneficiaries for Medicare cost report years 1989
through and including 1996. As part of the above described HCFA audits, a civil
fraud investigation was conducted by the Special Attorney to the United States
Attorney General during 1995 and 1996.
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8. Purpose and Intent. This Settlement Agreement is being entered into
for the purpose and intent of implementing the Term Sheet for Omnibus Settlement
Agreement among the Company, HCFA-HHS, DOJ, and as agreed to by IHS, dated
August 13, 1996 (the "Term Sheet"), as it applies to the Principal Shareholders.
The United States, the Company, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ desire
to reach this Settlement Agreement to fully and finally settle, compromise, and
resolve the civil and administrative monetary claims set forth below.
9. No Admission of Liability. This Settlement Agreement settles and
resolves disputed claims. This Settlement Agreement does not constitute an
admission by any party of any liability or wrongful conduct or an admission by
any party of any disputed claim or fact.
III. TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual promises, covenants,
and obligations set forth below, and for good and valuable consideration as
stated herein, the parties have agreed as follows:
10. Payment of the Criminal Fine of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ from Merger
Payments. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ agrees that at the closing, IHS shall convert
$10,167,170.50 of the proceeds payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ from the Merger
payments into a cashier's check payable to the United States District Court,
Southern
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District of Georgia, bearing a memorandum indicating that this amount is in
payment of the criminal fine and costs of imprisonment and supervision of ▇▇▇▇▇▇
▇. ▇▇▇▇▇, referencing case number CR-295-42 and requesting that it be held in an
interest bearing account with the highest rate of interest prudent with the
amount of the fine. IHS shall deliver this cashier's check to a representative
of the United States Attorney for the Southern District of Georgia who shall
deposit the cashier's check into the registry of the United States District
Court for the Southern District of Georgia to be held in an interest bearing
account, and at a rate of interest to be set by the District Court, pending
modification of such fine by the District Court or the conclusion of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇'▇ appeal, and pursuant to further order of the District Court.
11. Civil and Administrative Releases. Subject only to the exceptions
in Paragraph 14 below, the United States, for itself and on behalf of its
officials, employees, agents, departments, and assigns, hereby releases and
forever discharges ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇ (collectively the "Released
Parties"), from any and all civil or administrative monetary claims, actions,
demands, proceedings, and causes of action under the False Claims Act, the Civil
Monetary Penalties Act, the Program Fraud Civil Remedies Act, the exclusion
provisions of 42 U.S.C. ss. 1320a-7(b), (all as previously defined), common law,
or
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under any statutory or regulatory provisions over which HHS (including HCFA
and/or OIG) has authority, that the United States has or may have, which relate
to acts or omissions occurring prior to the date of Merger, for claim, arising
with respect to the conduct alleged in Paragraph 7, above. (collectively
"Released Acts").
12. Dismissal of Pending Litigation and Releases. In consideration for
the releases to be provided in Paragraph 11 above, the Principal Shareholders
shall consent to such actions as to cause the dismissal, with prejudice, as of
the date of the Merger, of all alleged monetary and/or other pending claims of
the Company, and its subsidiaries, relating to amounts of Medicare reimbursement
due before the Provider Reimbursement Review Board in respect to periods ending
on or prior to the Merger date, and such other claims against the United States
and/or its agents acting as Medicare fiscal intermediaries, including the
pending qui tam action against Aetna (United States ex rel. ABC Home Health
Services, Inc. v. Aetna, No. CV294-167, United States District Court, SDGA,
provided that the qui tam action shall be dismissed without prejudice as to the
United States. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, in their individual
capacities and in their representative capacities as Principal Shareholders and
as former officers and directors of the Company, release and forever discharge
the United States, its agents, officers, and employees, from any and all claims
or causes of action which they may have against them arising from or relating in
any way to the Company's participation in the Medicare program, and from any and
all liability based upon those claims or causes of action, including, but not
limited to, releasing the Company's Medicare fiscal intermediaries, their
agents, officers, and employees, from any and all claims or causes of
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action, and from liability arising from or related in any way to their
functions, duties, responsibilities, and service as fiscal intermediaries with
respect to periods ending before the Closing date of the Merger.
13. Further Documents. Each party to this Settlement Agreement agrees
to execute and deliver any further documents that may be reasonably necessary to
carry out the provisions of this Settlement Agreement.
14. Exceptions. Notwithstanding Paragraph 11, above, the United States
does not release the Released Parties from: (1) any civil claims arising under
Title 26 of the United States Code (Internal Revenue Code); (2) any claims based
upon such obligations as are created by this Settlement Agreement; (3)
respecting the Released Parties, from prosecution for violations of federal
criminal statutes; or (4) civil claims made by federal agencies other than
HCFA-HHS.
15. Binding Effect. The provisions of this Settlement Agreement shall
be binding upon the parties to it, their affiliates, entities and their
collective successors and assigns.
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16. Costs. Each party to this Settlement Agreement agrees to bear its
own legal and other costs.
17. Governing Law. This Settlement Agreement shall be governed by the
laws of the United States. The parties agree that the exclusive jurisdiction and
venue for any dispute arising under this Agreement shall be the United States
District Court for the Southern District of Georgia.
18. Complete Agreement. This Settlement Agreement constitutes the
complete agreement between the parties, and cannot be amended, except in writing
and signed by all signatories to this Settlement Agreement.
19. Authorized Representative. The persons signing this Settlement
Agreement represent that they are duly authorized to execute the Settlement
Agreement on behalf of the parties listed.
20. Counterparts. This Settlement Agreement may be executed in
counterparts, each of which shall constitute an original and all of which shall
constitute one and the same agreement.
21. Effective Date. This Settlement Agreement is effective as of the
Closing of the Merger.
UNITED STATES OF AMERICA
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DATED:_____________________ BY:______________________________
▇▇▇▇ ▇. ▇▇▇▇
Special Attorney to the
United States Attorney General
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DATED:_____________________ THE COMPANY
BY:______________________________
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President and Chief
Executive Officer
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______________________________
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