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EXHIBIT 10.93
THIS AGREEMENT is entered into as of this first day of February 1997, by and
between Galaxy Health Care Inc., a Florida Corporation, d/b/a Treatment
Resources Inc. (CMHC), and OptimumCare(R) Corporation (Manager), a Delaware
Corporation.
RECITALS
A. Galaxy Health Care Inc. intends to develop and operate a Community Mental
Health Center in the State of California called Treatment Resources for the
treatment of psychiatric disorders, and CMHC desires to have a Partial
Hospitalization Program (the "Out-Patient Program"); the city and address to
be determined within thirty (30) days after the date of execution hereof.
B. Manager is in the business of providing management services for the
treatment of patients with psychiatric disorders as well as creating and/or
managing Partial Hospitalization Programs with CMHCs and;
C. CMHC desires to retain Manager, and Manager desires to be retained, to
provide the services described herein.
THEREFORE, it is mutually agreed as follows:
1. DEFINITIONS
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(a) "Confidential Information" of the Manager shall mean all documents and
other materials provided by Manager not available through sources in
the public domain. Manager's documents and other materials may
include, but are not limited to, memoranda, manuals, handbooks,
production books and audio and visual recordings, which contain
information relating to the Out-Patient Program (including written
materials distributed to Out-Patient Program patients or for promotion
of the Out-Patient Program); and all models, techniques, formulations
and procedures used to provide psychiatric services to Program
patients.
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limitation, the employer's contribution under the Federal Insurance
Contributions Act, unemployment compensation and related insurance,
payroll and other employment taxes, pension and retirement plan
contributions, worker's compensation and related insurance, group
life, health, disability and accident insurance, severance and other
benefits.
(c) A "Patient Day" shall be deemed to exist with each out-patient visit
to be the Out-Patient Program. An out-patient visit is defined as a
patient attending at least two (2) therapy sessions a day.
(d) "Out-Patient Program" shall mean the out-patient partial
hospitalization psychiatric program managed by Manager at CMHC.
2. TERM
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(a) This Agreement shall have an initial term of five (5) years commencing
(effective) on _______________ and termination ______________ 20; the
agreement will continue automatically for a second term of five (5)
years unless the termination provisions set forth in Section (11)
becomes applicable.
(b) Thereafter, each party may exercise the option to continue the
agreement for a succession of one (1) year terms by exercising an
"option for continuation" within sixty (60) days prior to the
expiration date in each succeeding year; the option may be exercised
by providing written notice to the other parties address as set forth
herein.
(c) Termination provisions as in Section (11) of this Agreement.
3. COVENANTS OF CMHC
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CMHC will:
(a) CMHC will cooperate with manager in locating appropriate program space
for potential capacity of at least twenty-five (25) chairs.
(b) ▇▇▇▇ and collect all Out-Patient Program changes due for Out-Patient
Program services, and provide record keeping as customary in the
ordinary course of CMHC's business.
(c) Maintain license from the California Department of Health Services and
pay all related fees associated with this license.
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(d) Provide Manager's employees and contracted personnel with copies of
all relevant CMHC Policies and Procedures, as amended from time to
time.
(e) Indemnify, save harmless, and defend Manager from all claims and
liability and expenses (including reasonable attorney's fees) arising
solely from the negligence of or breach of this Agreement by CMHC or
its employees or contracted personnel.
(f) Maintain professional and comprehensive general liability insurance
for itself and its employees and contracted personnel in an amount not
less than $1,000,000 per occurrence or claim and whenever reasonably
requested provide Manager with a certificate from the insurer stating
that such insurance is in effect and which also states that Manager
will be given at least ten (10) days advance written notice of any
cancellation, non-renewal, or changes in policy limits, deductible, or
co-insurance. Any deductible or co-insurance or aggregate limits shall
be subject to Managers approval which shall not be unreasonably
withheld. Manager agrees that $100,000 is an acceptable deductible or
co-insurance. CMHC shall use reasonable efforts to maintain "tail"
coverage if necessary for any terminated "claims made" policy so as to
apply to any of its acts or omissions which occur during the term of
this Agreement until the expiration of any applicable statute of
limitation but not to exceed seven (7) years.
4. COVENANTS OF MANAGER
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Manager will do the following at its own cost and expense:
(a) Provide out-patient program consultation, orientation, direction and
training for the program.
(b) Rent facility program space for the duration of this Agreement.
(c) Provide the following staffing: (i) A full-time Partial
Hospitalization Program Director, (ii) Social services, (iii)
Psychological Services; (iv) Therapy/Activities and other services as
appropriate, (v) A Medical Director (who shall be a physician duly
licensed in the State of California, (vi) registered nurse services,
(vii) professional counseling staff and (viii) qualified unit
secretary as needed to provide for the professional counseling of
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Out-Patient Program patients and other personnel as required to
adequately supervise and operate the Out-Patient Program. All such
personnel shall be subject to CMHC approval but CMHC shall be deemed
to have accepted such personnel unless it informs Manager otherwise in
writing within five (5) business days of receipt of all such required
information. Such personnel shall not be deemed employees or
contracted personnel or borrowed servants of CMHC. Manager shall have
full responsibility for their wages, compensation and employee
benefits and acts or Omissions.
(c) Indemnify, save harmless, and defend CMHC from all claims and
liability and expenses (including reasonable attorney's fees) (1)
arising solely from the negligence of or breach of this Agreement by
Manager or its employees or contracted personnel or (2) arising out of
CMHC negligence if the sole basis for any such negligence consists of
entering into this Agreement with Manager, failing to properly
supervise, monitor or oversee Manager or its employees or agents, or
failing to properly review or act upon its review of the
qualifications of Manager or its employees or contracted personnel.
(d) Staff training for initial operating date.
(e) Supervision of staff hiring.
(f) Implementation of training on basic Medicare regulation policies as to
operational policies.
(g) Oversight of computer software and hardware installation by
consultant.
(h) Hiring and oversight of QA consultant.
(i) Implementation of employee policies.
(j) Installation of policies and procedures, intake forms, patient chart
documents and all forms and documents required to commence operation.
(k) Oversight of compliance with OSHA regulations and fire inspection.
(l) Oversight of acquisition of equipment leases, furniture lease and
office lease, including interior planning.
(m) Oversight of all day to day continued operational and financial
management issues.
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(n) Continued staff training and development through in-services.
(o) Oversight of continued TQM and QA.
(p) Continued oversight of reimbursement/expenditure issues.
(q) Development of strategic policies regarding surplus funds issues.
(r) Continued development and training of staff as to personnel policies
and procedures, compliance with Federal Labor Laws, and oversight of
EAP Consultant; installation of Employee Manual, patient handbooks,
external EAP and Drug Free work place policies.
(s) Continued collaboration and suggestions as to legal and accounting
consultants.
(t) Oversight of all employment contract preparation.
(u) Implementation of corporate compliance policies with respect to
internal control mechanisms for fraud and abuse prevention protocols.
(v) Collaboration with preparation for year-end cost audit report with
Accounting and Legal Consultant.
(w) Continued training in admissions and in-take protocols.
(x) Oversight and suggestions as to all necessary contractual
relationships.
(y) Consulting computer, technology and communications consulting as to
services, as required for day to day operational management of
Facility.
(z) All other necessary continued management and regulatory compliance
services as to day to day operations.
(ai) Consult, manage and support the Out-Patient Program treatment team's
effort to provide quality psychiatric treatment while maintaining
prudent control of patient length of stay.
(bi) Maintain professional and comprehensive general liability insurance
for itself and its employees and contracted personnel in an amount not
less than $5,000,000 per occurrence or claim and whenever reasonably
requested provide CMHC with a certificate from the insurer stating
that such insurance is in effect and which also states that CMHC will
be given at least ten (10) days advance written notice of any
cancellation, non-renewal, changes in policy limits,
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deductible, or co-insurance or aggregate limits shall be subject to
CMHC's approval which shall not be unreasonably withheld. CMHC agrees
that $100,000 is an acceptance deductible or co-insurance. Manager
shall use reasonable efforts to maintain "tail" coverage if necessary
for any terminated "claims made" policy so as to apply to any of its
acts or omissions which occur during the term of this Agreement until
the expiration of any applicable statute of limitation but not to
exceed seven (7) years. Manager shall use reasonable efforts to have
CMHC named as an additional insured on Manager's insurance with
respect to any claim or liability arising solely out of any act of
omission by Manager, its employees, or contracted personnel.
(fi) Until the expiration of four (4) years after the furnishing of any
services to be provided under this Agreement made available, upon
request, to the Secretary of Health and Human Services or to the
Comptroller General of the United States of America, or their duly
authorized representatives, this Agreement and books, documents and
records which are necessary to certify the nature and extent of
reimbursable costs under the Medicare laws.
(gi) Comply with all applicable laws (including but not limited to
42.U.S.C. 1395(nn)(b) or any similar law or regulation, regulations,
CMHC policies and procedures, program policies and procedures any
applicable standards of care.
(hi) Use reasonable efforts to resolve any issues regarding acceptability
of Out-Patient Program Personnel to CMHC personnel and to Out-Patient
Program patients which may arise with respect to any of Manager's
employees or contracted personnel.
(ii) Provide monthly written reports to CMHC regarding all pertinent
aspects of the operation of the Out-Patient Program.
(ji) Commit no act or omission which adversely affects the CMHC license.
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(ki) Admit patients to the Out-Patient Program (including but not limited
to Medicare, Medicaid or Managed Care or private pay patients) only if
the admission is ordered by a physician on the Out-Patient Program
staff with admitting privileges.
(li) Provide appropriate utilization review and quality assessment services
for all out-patient program patients. Utilization and review extends
to filing and pursuing clinical appeals with the CMHC's fiscal
intermediary.
5. REPRESENTATION AND WARRANTS OF CMHC
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CMHC hereby represents to Manager as follows:
(a) CMHC is a corporation duly organized and validly existing in good
standing under the laws of the State of Florida with the power and
authority to carry on the business in which it is engaged and to
perform its obligations under this Agrement subject to maintaining the
license described in subpart (d) of Section (3).
(b) The execution of this Agreement and the performance of the obligations
of the CMHC hereunder will not result in any breach of any of the
terms, conditions or provisions of any Agreement or other instrument
to which CMHC is a party or by which it may be bound or affected, or
any governmental license, franchise, permit or other authorization
possessed by the CMHC, nor will such execution and performance violate
any Federal, State or local law, rule or regulation.
(c) There is no litigation, administrative proceeding or investigation
pending or threatened against CMHC (nor is the CMHC subject to any
judgment, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of CMHC's obligations hereunder.
(d) No Certificate of Need is required by CMHC from any state regulatory
agency for the operation of the Out-Patient Program.
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6. REPRESENTATIONS OF MANAGER
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Manager hereby represents to CMHC as follows:
(a) Manager is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware with the power and
authority to carry on the business in which it is engaged and to
perform its obligations under this Agreement.
(b) The execution of this Agreement and the performance of the obligations
of the Manager hereunder will not result in any breach of any of the
terms, conditions or provisions of any Agreement or other instrument
to which the Manager is a party or by which it may be bound or
affected, or any governmental license, franchise, permit or other
authorization possessed by the Manager, nor will such execution and
performance violate any Federal, State or local law, rule or
regulation.
(c) There is no litigation, administrative proceeding or investigation
pending or threatened against Manager (nor is Manager subject to any
judgment, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of Manager's obligations hereunder.
7. MANAGEMENT FEES AND STAFFING FEES
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(a) CMHC shall pay to Manager a management fee of $200.00 per patient day
for each patient attending the Out-Patient Program.
(b) CMHC shall be entitled to a two hundred dollar ($200.00) per day
credit against the management fee otherwise due with respect to each
Patient Day of any patient for which any payor has finally denied
payment for clinical reasons, if in excess of 10%.
(c) CMHC shall pay Manager within five (5) working days of the date CMHC
receives payment.
(d) For all funds (including fees) advanced by OptimumCare including,
without limitation staffing costs and fees and facility location
costs, prior to CMHC(TR) receiving its initial reimbursement check
from Medicare.
1. CMHC will repay to OptimumCare 1/2 of all funds advanced to be
fully paid within fifteen (15) days after CMHC is in receipt of
the first reimbursement check.
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2. Balance payable over succeeding twelve (12) months in
consecutive equal installments including an additional
10% profit on the unpaid balance.
8. EQUIPMENT LEASING
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Upon being presented with the vendor invoices, OptimumCare will purchase
and lease back to CMHC business equipment as needed for operation of
facility including communications, MIS, furniture, copier and a fax. Such
lease will be paid by CMHC over 36 months in equal consecutive monthly
payments including a 10% profit per year over direct costs to OptimumCare.
At the end of 36 months, CMHC shall own the said equipment.
9. CONFIDENTIAL AND PROPRIETARY INFORMATION
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(a) CMHC agrees and acknowledges that Confidential Information is
disclosed to it in confidence with the understanding that it
constitutes business information developed by Manager. CMHC further
agrees that it shall not use such Confidential Information for any
purpose other than in connection with the Out-Patient Program. CMHC
further agrees not to disclose such Confidential Information to any
third party except as required by law or regulation or in order to
serve the purposes of the Out-Patient Program or as permitted by
written authorization of Manager.
(b) Manager hereby grants to CMHC for the term of this Agreement, a
non-exclusive license to use the registered service marks of Manager
when identifying the Out-Patient Program. These service marks are the
exclusive property of Manager.
(c) Manager agrees not to disclose confidential information pertaining to
the CMHC business or Out-Patient Program patients except as required
by law or regulation or as permitted by written authorization of CMHC
or the respective patient as the case may be.
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10. RECRUITMENT OF EMPLOYEES AND AGENTS
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(a) CMHC acknowledges that Manager has expended and will continue to
expend substantial time, effort, and money to train its employees and
contracted personnel in the operation of the Out-Patient Program. The
employees and contracted personnel of Manager who will operate the
Out-Patient Program at the CMHC will have access to and possess
Confidential Information of Manager. CMHC, therefore, agrees that for
the earlier of two (2) years after the cessation of the employment or
agency relationship between the Manager and the employee or agent or
two (2) years after termination of this Agreement, it will not
knowingly (and it will not induce any of its affiliates to) employ or
solicit the employment of, or in any way retain the services of any
employee, former employee, or contracted personnel or former agent of
Manager if such individual has been employed or retained by Manager in
the Out-Patient Program unless Manager gives CMHC prior written
consent thereto or unless this Agreement is terminated by CMHC
pursuant to paragraph (10) of this Agreement.
(b) Manager agrees that during the same respective period of time, it will
not knowingly (and it will not induce any of its affiliates to) employ
or solicit the employment in any way retain the services of any
employee, former employee, or contracted personnel or former agent of
CMHC without CMHC's prior written consent thereto.
11. TERMINATION
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(a) Termination by Manager:
(1) By written notice to CMHC, if CMHC should have a bankruptcy,
reorganization or similar action filed by or against it, become
insolvent, go liquidation for any purpose.
(2) In the event CMHC has failed to comply with the terms of this
Agreement in any material respect, including substantial
completion of all refurbishing in the identified program space,
Manager shall, in writing, notify all of the nature of the breach
and CMHC shall have thirty (30) days to cure such breach or else
the Agreement will thereupon be terminated upon written notice to
CMHC.
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(3) By written notice to CMHC if CMHC fails to maintain any license
granted to it by a regulatory agency without which the Out-Patient
Program would be materially and adversely affected.
(4) By written notice to CMHC if CMHC fails to maintain professional and
general liability insurance in the minimum amount of $1,000,000.
(b) Termination by CMHC:
1. By written notice to Manager if Manager should have a bankruptcy,
reorganization or similar action filed by or against it, become
insolvent, or go into liquidation for any purpose.
2. In the event Manager has failed to comply with the terms of this
Agreement in any material respect, CMHC shall, in writing, notify
Manager of the nature of the breach, and Manager shall have
thirty (30) days to cure such breach or else the Agreement will
thereupon be terminated upon written notice to Manager.
3. By written notice to Manager if Manager fails to provide
professional and general liability insurance in the minimum
amount of $5,000,000.
(c) Termination by either party.
1. In the event that Medicare, Medicaid, a third party payor or
other Federal, State, Local Laws, rules, regulations, or
interpretations thereof at any time during this Agreement
duration; prohibit, restrict or substantially change the method,
payment or amount of reimbursement or the like for services
provided under this Agreement, then the CMHC and Manager in good
faith shall amend the Agreement to provide for payment of
compensation to each other in a manner consistent with any such
prohibition restriction and/or limitation. If this Agreement is
not or cannot be amended prior to any event as above or to the
mutual satisfaction of the CMHC and Manager, then this Agreement
may be terminated by either party with thirty (30) days written
notice.
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(d) Governing Law: The validity of this Agreement and any of its terms or
provisions, the interpretation of the rights and duties of the parties
hereunder, and the construction of the terms or provisions hereof
shall be government in accordance with the laws of the State of
California.
(e) Force Majeure: If either of the parties hereto is delayed or
prevented from fulfilling any of its obligations under this Agreement
by force majeure, said party shall not be liable for said delay or
failure. "Force Majeure" means any cause beyond the reasonable control
of a party, including but not limited to an act of God, act or
omission of civil military authorities, fire, strike, flood, riot,
war, delay or transportation, or inability due to the aforementioned
causes to obtain necessary labor, materials, or facilities.
(f) Severability: If any part of this Agreement is held to be void or
unenforceable, such part will be treated as severable, leaving valid
the remainder of this Agreement notwithstanding the part found void or
unenforceable.
(g) Waiver: A waiver by either party of a breach or failure to perform
shall not constitute a waiver of any provision hereof or of any other
breach or failure whether or not similar. There shall be no wavier
unless in writing signed by the party against whom the waiver is
sought to be enforced.
(h) Binding Effect: This Agreement shall be binding on the successors,
and assigns of the respective parties, provided, however, neither
party may assign or otherwise transfer this Agreement or delegate
obligations hereunder without the other's written consent.
(i) Complete Agreement: This Agreement constitutes the complete
understanding of the parties and supersedes all other Agreements,
either oral or in writing, between the parties hereto with respect to
the subject matter hereof, and no other Agreement, representation,
statement, or promise relating to the subject matter of this Agreement
which is not contained herein shall be valid or binding. There shall
be no amendment unless in writing signed by both parties.
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(j) No Agency or Partnership: The relationship between Manager and CMHC
is that of independent contractors and nothing in the Agreement shall
be deemed to create an agency, joint venture, partnership or similar
relationship between the parties hereto. Neither party shall have the
right to bid for the other or enter into any contract or commitment in
the name of, or on behalf of the other.
(k) Notice: All notices hereunder shall be in writing, delivered
personally or by U.S. Certified or Registered post mails, postage
prepaid, return receipt requested, and shall be deemed given when
delivered personally or upon the earlier of actual receipt or five (5)
days after deposit in said United States Mail, addressed as below with
proper postage affixed, but each party may change his address by
written notice in accordance with this paragraph.
13. MISCELLANEOUS PROVISIONS
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(a) Compulsory Arbitration: Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
binding arbitration in accordance with the rules of the American
Arbitration Association, and judgment on the award rendered may be
entered in any court having jurisdiction. However, this shall not
apply with respect to any claim for indemnity for bodily injury or
death.
(b) UCC1 Filing: Galaxy agrees to allow OptimumCare to file a UCC1 payment
promising against Galaxy's psychiatric out-patient accounts receivable
for the facilities referred to in the staffing and/or Management
Agreements.
(c) Attorney's Fees: If any legal action (including arbitration) is
necessary to enforce the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorney's fees and costs awarded
against the other party in addition to any other relief to which that
party may be entitled.
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CMHC's Address:
Galaxy Health Care Inc./Treatment Resources, Inc.
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Manager's Address:
OptimumCare Corporation
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IN WITNESS WHEREOF, this Agreement has been executed
at Laguna Niguel, California At Miami, Florida
Manager:
OPTIMUMCARE CORPORATION GALAXY HEALTH CARE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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President Chief Executive Officer
Date: 2/11/97 Date: 2/11/97
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