EMPLOYMENT AGREEMENT
OF (TITLE)
This Agreement is made and entered into as of December __ , 1996 by and
between Flagship Health, P.A. ("Medical Group"), a Maryland professional
association and (Name) ("Physician"). Reference is made to Appendix A of that
certain Services Agreement between Medical Group and Physicians Quality Care,
Inc. ("PQC") dated as of the date hereof (the "Services Agreement"). Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth therein.
WHEREAS, Medical Group employs qualified physicians to provide medical
services under its auspices to its patients and wishes to engage Physician to
provide medical care to its patients; and
WHEREAS, Physician is a duly licensed medical doctor and desires to
provide such professional services to Medical Group.
NOW, THEREFORE, in consideration of the mutual promises, terms,
provisions and conditions contained in this Agreement, the parties agree as
follows:
1. Employment. Medical Group hereby agrees to employ Physician and
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Physician hereby accepts such employment on a full-time basis upon the terms and
conditions as are hereinafter set forth.
2. Term. This Agreement shall become effective as of the date first
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written above and, subject to earlier termination as hereinafter provided, shall
terminate five (5) years thereafter (the "Anniversary Date"). Thereafter, this
Agreement will automatically be extended on the same terms as set forth herein
for successive one (1) year periods, unless earlier terminated in accordance
with this Agreement.
3. Duties and Responsibilities of Physician.
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3.1. Services. As an employee of Medical Group, Physician shall
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have the following duties and responsibilities under this Agreement and such
other duties and responsibilities as may be designated from time to time by
Medical Group:
(a) To provide direct patient care services to patients of
Medical Group;
(b) To deliver professional services on a full time basis
during the week (and on weekends as appropriate), all in accordance
with Medical Group's 8 schedule of office hours as reasonably
established from time to time and approved by the Joint Policy
Board;
(c) To participate in coverage arrangements in cooperation
with other physicians to provide twenty-four (24) hour availability
and coverage in person or on an on-call basis in accordance with
Medical Group's coverage schedule as reasonably established from
time to time and approved by the Joint Policy Board; and
(d) To arrange in a reasonable and timely manner for follow-
up treatment of patients evaluated or treated by Physician where
such follow-up treatment is medically indicated.
3.2. Physician Qualifications. As a continuing condition of
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Physician's employment, Physician agrees to:
(a) maintain an unrestricted license to practice medicine in
the State of Maryland and maintain good standing with the Maryland
Board of Physician Quality Assurance;
(b) maintain a federal Drug Enforcement Administration
certificate, without restrictions, to the extent necessary for his
practice;
(c) maintain full hospital medical staff memberships and
clinical privileges as are appropriate to his specialty and as are
reasonably determined by the Joint Policy Board to be necessary in
connection with participation in contracts with third-party payors
negotiated by Medical Group or on Medical Group's behalf by an agent
of Medical Group;
(d) perform all professional services through Medical Group
in accordance with all applicable federal, state and local laws and
regulations and with prevailing standards of care and medical ethics
and with practice protocols and policies as adopted from time to
time by the Medical Advisory Board;
(e) maintain his skills through continuing education and
training, including participation in those programs reasonably
designated from time to time by Medical Group's Medical Director;
(f) maintain eligibility for and participate in (at Medical
Group's expense) insurance under the professional liability policy
or policies at a commercially reasonable cost for Physician's
specialty as determined by Medical Group;
(g) be board-certified or board-eligible or have equivalent
training and experience in the area listed on Schedule 3.2(g),
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(h) be and remain a participating provider in the Medicare
programs and other carriers and managed care entities with which
Medical Group contracts; provided, however, that with respect to
managed care plans, Physician shall not be required to accept new
patients for care during such period, if any, as the Joint Policy
Board shall have determined that Physician may reasonably close his
practice to new patients due to capacity constraints;
(i) abide by the Principles of Medical Ethics of the
American Medical Association and the Maryland Medical and
Chirurgical Faculty;
(j) comply with all material federal, state and municipal
laws,
statutes, ordinances, orders and regulations applicable to the
conduct of Physician's activities, as well as with the articles of
incorporation and bylaws of Medical Group and other rules or
regulations adopted from time to time by the Joint Policy Board;
(k) promptly disclose to Medical Group the commencement or
pendency of any legal action, administrative proceeding or
investigation, medical staff or professional disciplinary actions
against Physician;
(l) abide by any reasonable guidelines adopted by the Joint
Policy Board or, subject to the approval of the Joint Policy Board,
any person or entity providing management services to Medical Group
under the Services Agreement designed to encourage the appropriate,
efficient and cost-effective delivery of medical services, subject
always to the clinical judgment of Physician, and cooperate with and
participate in all other Medical Group programs approved by the
Medical Advisory Board regarding quality assurance, utilization
review, risk management and peer review by serving on committees or
otherwise participating in such activities as the Joint Policy Board
may reasonably require;
(m) maintain on a timely basis appropriate and accurate
medical records in accordance with accepted medical standards and
Medical Group policies with respect to all patients evaluated and
treated; and
(n) satisfy such other reasonable requirements as are
established from time to time by Medical Group and approved by the
Joint Policy Board, provided that any requirements involving
clinical matters shall also require the approval of the Medical
Advisory Board.
3.3. Outside Practice: Conflicts of Interest.
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(a) Physician shall not, during the term of this Agreement,
undertake any activity that interferes with, adversely affects, or
represents a conflict of interest with Physician's obligations under
this Agreement or that competes with Medical Group for patients, or
(except as arranged by Medical Group) enter into any managed care
contract or assume any liability under a risk pool or similar
arrangement without Medical Group's consent. Physician shall, during
the term of this Agreement, confine Physician's practice to Medical
Group and its patients, except with respect to teaching and research
activities approved by the Joint Policy Board. It is expressly
understood and agreed that any medical services rendered by
Physician to patients who express a wish to engage Physician
personally shall be rendered by Physician as an employee of Medical
Group.
(b) Physician recognizes and agrees that the successful
operation of Medical Group depends in large part upon the loyalty of
Physician to Medical Group and upon the avoidance of conflicts of
personal time and availability. Accordingly, as used in Section 1
and in other sections of this Agreement, the term "fulltime" shall
mean that Physician shall during the term hereof devote his full
working time, attention, loyalty and best efforts to the affairs of
Medical Group, taking into account any vacation time and Continuing
Medical Education time to which Physician is entitled and also
taking into account any teaching, research, community activities,
activities with professional organizations and care of indigent
patients performed by Physician to the same extent that Physician
historically has engaged in such activities. Upon the advance
written approval of Medical Group, Physician may be relieved of
Physician's obligation to provide services hereunder on a full-time
basis for such professional purposes and such limited time period as
may be so approved. Except to the extent the Joint Policy Board
approves in writing Physician's retention of limited honoraria and
similar amounts, any remuneration earned by Physician in connection
with such approved professional activities shall be assigned to
Medical Group; provided that no such exception shall take effect
absent approval by the Joint Policy Board and PQC.
(c) During the term of this Agreement, Physician shall not,
and shall not undertake any planning (other than after the giving of
notice under Section 8(d)(i)(C)) to, establish, operate or provide
medical services to or practice medicine at any medical office,
clinic or other health care facility other than pursuant to this
Agreement, except as approved by Medical Group.
(d) Physician understands and acknowledges that the
foregoing provisions in this Section 3.3 are designed to preserve
the goodwill of Medical Group and the goodwill of the other
individual physicians of Medical Group. Accordingly, if Physician
breaches any obligation of this Section 3.3, in addition to any
other remedies available under this Agreement, at law or in equity,
Medical Group shall be entitled to enforce this Agreement by
injunctive relief and by specific performance of the Agreement, such
relief to be without the necessity of posting a bond, cash or
otherwise. Additionally, nothing in this paragraph shall limit
Medical Group's right to recover any other damages to which it is
entitled as result of Physician's breach.
3.4. Location of Practice. It is anticipated that Physician's
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services hereunder will be performed at the location listed on Appendix C (the
"Practice Site"). In addition, Medical Group will consult with Physician before
assigning him to provide services at a different practice site, which assignment
may be made only with the approval of the Joint Policy Board and Physician.
3.5. Name. Physician agrees that Medical Group shall be
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entitled to use the name of Physician on a royalty free, non-exclusive basis for
the term of this Agreement, solely in connection with advertising for or
informational documents with respect to Medical Group or PQC.
3.6. Assignment of Intellectual Property. Physician agrees to
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assign to PQC any Intellectual Property rights that Physician acquires during
the term of this Agreement; provided, however, that Physician shall not be
required to assign to PQC Intellectual Property rights that relate to (i)
non-medical studies and inventions, (ii) royalties from medical devices unless
developed as part of Physician's services to Medical Group, (iii) publications
on clinical aspects of a medical practice unless developed as a part of
Physician's services to Medical Group, (iv) medical books and articles designed
primarily for purchase by
non-physicians, (v) any Intellectual Property developed by Physician prior to,
or in progress on, the date of this Agreement as disclosed on Schedule 3.6
hereto, and (vi) any Intellectual Property rights which Physician is, on the
date of this Agreement, obligated to assign to or share with the ▇▇▇▇▇ ▇▇▇▇▇▇▇
Hospital, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ University or any affiliated company or institution.
PQC will review the feasibility of commercializing any Intellectual Property
assigned to it pursuant to this Agreement. If PQC does not elect to
commercialize the Intellectual Property, it will reassign it to Physician. If
PQC elects to commercialize such Intellectual Property, PQC and Physician shall
enter into an agreement on mutually acceptable terms to share the costs and
revenues from such commercialization with Physician. Physician agrees for the
benefit of PQC, to execute, at PQC's expense, such further instruments or
agreements, to make such filing or registration and to take such other actions
as PQC determines to be necessary or desirable to give effect to the assignments
contemplated by this Section 3.6 or to protect, establish or record PQC's rights
to such Intellectual Property. Physician also agrees that PQC, the Joint Policy
Board and the Compensation Committee may consider the time devoted by Physician
to the development or promotion of Intellectual Property rights that are not
assigned to PQC in determining the operating budget of such Physician's
Physician Pod, including Physician Draw, and the allocation of the Compensation
Pool among Physician Pods.
4. Compensation and Benefits. Subject to performance of Physician's
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duties and obligations to Medical Group pursuant to this Agreement or otherwise,
Physician shall be compensated as follows:
4.1. Compensation. As compensation for all services performed under
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and during the term of this Agreement, Medical Group shall pay Physician in
accordance with the terms set forth on Appendix A, attached hereto and made a
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part hereof.
4.2. Fringe Benefits. Physician shall be entitled during the
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term of this Agreement to participate in the employee fringe benefit plans
provided to other physician employees of Medical Group as set forth on
Appendix B, attached hereto and made a part hereof, as amended from time to
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time upon approval by the Joint Policy Board. Such participation shall be
subject to (i) the terms of the applicable plan documents and (ii) generally
applicable Medical Group policies.
4.3. Professional Liability Insurance. During the term of this
---------------------------------
Agreement, the Medical Group shall provide professional liability insurance
covering professional services provided by Physician in accordance with the
provisions of this Agreement with such limits of liability as determined by the
Joint Policy Board, which shall be initially not less than $1,000,000 per
occurrence and $3,000,000 annual aggregate. Medical Group's obligation to
provide such insurance is subject to Physician's compliance with any conditions
of such insurance other than the obligation to pay premiums.
5. Warranties of Physician. Physician represents and warrants that:
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(a) Physician now possesses and will continue to possess
a valid and unlimited license to practice medicine pursuant to the laws
of the State of Maryland;
(b) Physician possesses a valid federal narcotics number
which has never been revoked or suspended other than a temporary
suspension, now cured, resulting solely from the late filing of renewal
papers;
(c) Physician's medical staff privileges at any hospital have
never been (other than for delinquency in the completion of medical
records) and are not in the process of being curtailed, suspended,
revoked or otherwise the subject of any proceedings which can or could
have resulted in the same;
(d) Neither Physician's provider number for or eligibility to
participate in Blue Shield, Medicare or Medicaid programs nor
Physician's eligibility to participate in any other third-party payment
system has ever been or is in the process of being curtailed,
suspended, revoked or otherwise the subject of any proceedings which
can or could have resulted in the same;
(e) Physician has not been convicted of a criminal offense
related to participation in the delivery of medical care services under
Titles XVIII, XIX, or XX of the Social Security Act;
(f) Except as disclosed in writing to Medical Group on
Schedule 5(f), Physician is not now and has not in the past been a
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party to or the subject of any other professional litigation or, to the
best of Physician's knowledge and belief, any investigation or
proceeding, whether civil, criminal or administrative in nature;
(g) To the best of Physician's knowledge and belief,
Physician is not now and never has been the subject of any
investigation related to Physician's medical practice or qualifications
for licensure as a physician other than that routinely conducted by a
state' 8 board or agency with jurisdiction over the licensure of
physicians in the usual course of initial and renewal licensure by the
state; and
(h) Physician's license to practice medicine in any state has
never been revoked (not including revocation solely for non-payment of
filing or renewal fees), suspended, restricted or otherwise curtailed
nor has Physician been placed on probation by any medical licensing
board.
6. Charges. Physician agrees that Medical Group, subject to the
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approval of the Joint Policy Board, shall set any and all charges to patients
for any professional services rendered by Physician during the term of this
Agreement.
7. ▇▇▇▇▇▇▇▇, Assignment and Delivery of Revenues. As the employer of
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Physician, Medical Group has the right to ▇▇▇▇ for and to receive, hold, and
disburse all revenues (whether for professional services or ancillary services
such as laboratory services), generated by Physician. Physician hereby assigns,
and agrees to assign to Medical Group, all of his rights existing in said
revenues due on account of services rendered pursuant to this Agreement.
Physician acknowledges Medical Group's engagement of Physicians Quality Care,
Inc., a Delaware corporation pursuant to the Services Agreement, under which
Medical Group has authorized PQC to take those actions described below in this
Section 7 for and on behalf of and in the name of Medical Group and, as
necessary, for and on behalf of and in the name of Physician.
If for any reason PQC cannot, on behalf of and in the name of Medical
Group, ▇▇▇▇ for and receive fees generated by any clinical services provided by
Physician, Physician hereby grants to PQC an exclusive power of attorney and
appoints PQC its exclusive true and lawful attorney-in-fact to take those
actions described below in this Section 7, including without
limitation to ▇▇▇▇ for such services on behalf of Physician under Physician's
individual provider number or numbers.
Physician acknowledges that, pursuant to the terms of the Services
Agreement, PQC shall:
(a) ▇▇▇▇ in Medical Group's name, under its provider
number(s) when obtained within guidelines approved by the Joint Policy
Board, and on its behalf, and
(b) until such time as Medical Group has obtained its
provider number(s), may ▇▇▇▇ in Physician's name, all claims (including
co-payments due from patients) for reimbursement from Payors, as
defined below, fiscal intermediaries or patients for all covered
medical services provided by Physician or Medical Group to patients;
(c) take possession of and endorse in the name of Physician
or Medical Group all cash, notes, checks, money orders, insurance
payments, and any other instruments received as payment of accounts
receivable (and Physician covenants to transfer and deliver promptly to
PQC all funds received by Physician from patients or Payors for medical
services), all such funds to be deposited directly into a Medical Group
account and to be applied in a manner consistent with the Services
Agreement;
(d) deposit all collections directly into a Medical Group
account with a banking institution selected by PQC and approved by
Medical Group and to make withdrawals from such Medical Group account
for such purposes as are consistent with the Services Agreement;
(e) collect and receive in: (i) Medical Group's name and on
its behalf, and (ii) Physician's name and on his behalf, all accounts
receivable generated by such ▇▇▇▇▇▇▇▇ and claims for reimbursement and
to place such accounts for collection, settle and compromise claims,
and institute legal action for the recovery of accounts; and
(f) sign checks on behalf of the Medical Group and make
withdrawals from Medical Group accounts for payments specified in the
Services Agreement and as requested from time to time by Medical Group.
Physician shall cooperate fully with Medical Group and PQC (1) in
facilitating such collections and (2) in collecting accounts receivable
transferred to PQC by Physician pursuant to this Agreement, including
endorsement of checks and delivery to PQC of all revenues, in whatever form,
received from patients or Payors on their behalf, and completion of all forms
necessary for the collection of said revenue, including, without limitation,
executing and delivering to each financial institution wherein Medical Group or
PQC maintains an account, such additional documents or instruments as may be
necessary to evidence or effect the power of attorney granted hereby to PQC. If
PQC assigns said power of attorney, then Physician shall execute a power of
attorney in favor of the assignee in a form acceptable to PQC.
For purposes of this Section 7, "Payors" shall mean any persons that,
on behalf of a patient or enrollee or employee, pay or reimburse Physician or
Medical Group for providing health care services or for managing the provision
of health care services, such as insurance companies, managed care plans,
employers or the Medicare and Medicaid programs. The
provisions of this Section 7 shall survive the termination of this Agreement.
8. Termination. This Agreement shall terminate or be terminable at the
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end of the Employment Period, as it may be extended, or under any of the
circumstances set forth below. The "Termination Date" shall be the date as of
which all notice and cure periods, if any, have lapsed with respect to the
applicable provision under which either party is seeking to terminate this
Agreement.
(a) Death In the event of Physician's death, this Agreement
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shall immediately and automatically terminate.
(b) Disability. Either Medical Group or Physician may terminate this
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Agreement, upon written notice to the other party, in the event that
Physician becomes disabled through any illness, injury, accident or
condition of either a physical or psychological nature and, as a
result, is unable to perform substantially all of Physician's duties
and responsibilities hereunder for ninety (90) consecutive days during
any period of three hundred sixty-five (365) calendar days and Medical
Group determines that there is no reasonable likelihood that Physician
will be able to return to the performance of substantially all of
Physician's duties and responsibilities on a regular basis within
thirty (30) days thereafter; provided, however that the Joint Policy
Board must approve any decision by the Medical Group to terminate a
Physician pursuant to this Section 8(b), which approval shall not be
unreasonably withheld. If any question arises as to whether Physician
is so disabled, Physician shall, at Physician's election or at the
request of Medical Group, submit to a medical examination by a
physician selected by Medical Group, to whom Physician or Physician's
guardian has no reasonable objection, to determine whether Physician is
so disabled. If Physician (or his guardian) shall disagree with the
determination of such physician, Physician, within thirty (30) days
following the determination by the physician selected by Medical Group,
may submit to a medical examination by a physician selected by
Physician (or his guardian). If the determination of such second
physician differs from that of the first, Medical Group and Physician
(or his guardian), within thirty (30) days following the determination
by such physician, shall agree upon a third physician, who shall
examine Physician and whose determination shall be conclusive of the
issue. If Physician does not request a second opinion, the
determination of the first physician shall be conclusive of the issue.
If this question arises and Physician does not submit to medical
examination, Medical Group's determination of the issue shall be
binding on Physician.
(c) Termination by Medical Group for Cause.
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(i) Medical Group may terminate this Agreement for cause at any
time provided that Medical Group first gives ninety (90) days
written notice to Physician setting forth in reasonable detail the
nature of such cause and provides Physician with an opportunity to
respond to the notice and discuss with the Medical Director of
Medical Group the issues identified in the notice, and to cure the
basis for the notice. If within that ninety (90) day period,
Physician has not cured the problem described in the notice, then
Medical Group may immediately terminate Physician's employment,
without further notice provided, however, that Medical Group shall
not be required to provide ninety (90) days notice or an opportunity
to cure any cause that in the
reasonable judgment of Medical Group is not capable of being cured.
Cause shall be determined by Medical Group in its reasonable
judgment and shall include, but not be limited to:
(A) Physician's fraud or dishonesty with respect to Medical
Group, its employees, patients or visitors;
(B) Physician's suspension or termination from, or failure
to participate as an eligible provider in Medicare, Medicaid
or any third-party reimbursement program approved by the
Joint Policy Board, for cause such as quality of care,
utilization review, or quality assurance reasons; provided,
however, that termination or failure to renew Physician's
participation in a third-party reimbursement program due to
changes in the size or character of provider panels shall not
constitute cause under this Section 8(c)(i)(B);
(C) Revocation, suspension, or failure to renew Physician's
Board Certifications (if any) in his primary area of
practice; provided, however, that such termination shall be
approved by Medical Advisory Board and the Joint Policy
Board;
(D) Physician's material negligence in the performance of
Physician's duties or responsibilities to Medical Group;
(E) Physician's breach of any material term of this
Agreement or any other agreement entered into in connection
with such Physician's affiliation with Medical Group;
(F) the medical staff membership or clinical privileges of
Physician at any hospital in the State of Maryland or any
other jurisdiction: (1) being revoked or terminated, or not
being renewed at the election of the hospital or, without the
approval of the Medical Director, expiring; or (2) or being
reduced to a level which, in the sole judgment of the Medical
Director of Medical Group, would prevent Physician from
rendering the services contemplated by this Agreement in any
material respect. Medical Group may terminate this Agreement,
upon written notice to Physician, if Physician's medical
staff membership or clinical privileges at any hospital in
the State of Maryland or any other jurisdiction are suspended
other than (a) during a period of summary suspension pending
hearing and appeal, provided such hearing and appeal are
timely requested by Physician or (b) a nonrecurring,
temporary suspension arising solely out of failure to
complete medical records. During any period of summary
suspension of Physician's privileges (other than a
nonrecurring, temporary suspension arising solely out of
failure to complete medical records), Physician's employment
shall be suspended pending hearing and appeal as timely
requested by Physician and compensation and benefits shall be
continued to the extent provided by policies in effect at the
time;
(G) Physician ceasing to be licensed to practice medicine
without
restriction under the laws of any state in which
Physician is licensed;
(H) Physician ceasing to maintain a current and valid
Federal Drug Enforcement Agency license;
(I) Physician ceasing to be covered by professional
liability insurance (other than as a result of Medical
Group's act or omission in connection with such insurance);
(J) Physician being convicted of a felony or any crime
involving moral turpitude;
(K) Physician being penalized with civil monetary fines or
assessment under any federal or state law involving Medicare,
Medicaid or any third-party reimbursement program;
(L) Physician (a) engages in any conduct or is formally
accused of conduct for which Physician's license to practice
medicine reasonably would be expected to be subject to
revocation or suspension, whether or not actually revoked or
suspended, or (b) is otherwise disciplined by any licensing,
regulatory or professional entity or institution, the result
of any of which events described in clause (a) or (b) of this
Section 8(c)(i)(L) does, or reasonably would be expected to,
materially adversely affect Medical Group or significantly
impair the ability of Medical Group to perform medical
services in an amount and of a nature consistent with the
medical services performed at the time of such action; or
(M) Medical Group or PQC is prevented by Physician or any
person under Physician's direction or control, from entering
any premises at which Medical Group provides services, and
such inability to enter such premises continues for more than
forty-eight (48) hours after written notice thereof to the
Joint Policy Board.
(ii) Upon the termination of this Agreement pursuant to
Section 8(c)(i) by Medical Group, subject to the provisions set
forth below, Medical Group shall have the option to require
Physician to:
(A) Subject to cooperation from PQC and its Affiliates,
purchase from Medical Group, PQC or its Affiliates at Book
Value (as of the Purchase Closing) (1) all tangible assets of
Medical Group, PQC or their Affiliates that relate primarily
to Physician's practice or that were acquired, directly or
indirectly, from Physician, other than Medical Group's, PQC's
or its Affiliates' medical, accounting and financial records,
and (at a price equal to the unamortized balance of the
payments to Physician for intangibles (including goodwill as
set forth or reflected on the balance sheet of Medical Group,
PQC or its Affiliates) (2) a release from the restrictive
covenant set forth in Section 14 (the assets to be purchased
pursuant to (1) and (2) of this Section 8(c)(ii) referred to
hereinafter as the "Purchased Assets"); and
(B) Assume or pay all of Medical Group's, PQC's and its
Affiliates' liabilities, debts, payables and other
obligations (including lease and other contractual
obligations), or portions thereof, accrued and unpaid through
the Purchase Closing which relate directly or are directly
attributable to Physician or Physician's medical practice
(the "Physician Related Liabilities"). The parties agree that
if Physician is one (1) of a number of physicians practicing
within a Pod, then the parties will cooperate in good faith
to allocate fairly to Physician only those liabilities,
debts, payables and other obligations that relate directly to
Physician and not to other members of the Pod.
(iii) The exercise of the option by Medical Group described
in Section 8(c)(ii) shall be upon written notice thereof in the
termination notice, if applicable, on or prior to ninety (90) days
before the Purchase Closing. In connection with the purchase and
sale of the Purchased Assets pursuant to this Section 8(c), Medical
Group shall use its commercially reasonable efforts to cause such
assets to be conveyed free of any lien, claim or encumbrance.
(iv) Notwithstanding Section 8(c)(ii), this Agreement shall
not constitute an agreement to assign any contract or asset, or any
benefit arising thereunder or resulting therefrom, if any attempted
assignment thereof, without the consent required or necessary for
such assignment, would constitute a breach or violation of any
agreement or restriction applicable to such contract or asset or in
any way adversely affect the rights of Medical Group, Physician, or
PQC thereunder. Medical Group agrees to use its commercially
reasonable efforts to obtain any consent required for such
assignment.
(d) Termination by Physician.
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(i) Physician may terminate this Agreement (A) upon
written notice to Medical Group of the failure of Medical Group to
make any payments of the compensation required under this Agreement
when due and continued failure to pay such compensation after thirty
(30) days notice of such failure to Medical Group unless the amount
of such payment is being contested in good faith, (B) upon ninety
(90) days written notice from Physician to Medical Group of Medical
Group's failure to comply with any other material obligation of
Medical Group under this Agreement, which failure is not cured
within such ninety (90) day period, (C) after the first anniversary
of the execution of this Agreement, upon not less than six (6)
months written notice to Medical Group from Physician, and (D) upon
written notice to Medical Group, in the event of the termination by
Medical Group of the Services Agreement between PQC and Medical
Group pursuant to Sections 5.2(a) [breach] or 5.2(c)(i) [breach for
non-payment] of said Services Agreement by Medical Group or the
termination by either party of the Services Agreement under Section
6 [Negative Gross Margin] of Appendix B thereof.
(ii) Upon the termination of Physician's employment
by Physician pursuant to Section 8(d)(i)(A), (B) or (D), Physician
shall have the option to require Medical Group, subject to
cooperation from PQC and its Affiliates, to
sell all tangible assets of Medical Group, PQC or their
Affiliates that relate primarily to Physician's practice or
that were acquired, directly or indirectly, from Physician,
other than Medical Group's, PQC's or its Affiliates' medical,
accounting and financial records, collectively and not
individually, to Physician (the "Section 8(d)(ii) Assets") at
the lesser of (1) Book Value or (2) Fair Market Value as of
the date of termination. For the purposes of this Agreement,
"Book Value" shall have the meaning set forth in Section 10.3
of Appendix A of the Services Agreement, and "Fair Market
Value" shall mean, as to any asset, the fair market value of
such asset as agreed upon by Medical Group and Physician, or
in the event that Medical Group and Physician cannot agree to
such value by ninety (90) days prior to the Purchase Closing,
the fair market value of such assets as determined by an
entity (the "Independent Financial Expert") regularly engaged
in the business of evaluating assets of medical clinics and
associated businesses and that is mutually acceptable to
Medical Group and Physician. The Independent Financial Expert
may use any customary and generally accepted method of
determining fair market values, and shall take into account
the effect of any liens, claims or encumbrances (other than
those arising out of Physician Related Liabilities that may
reasonably be expected to have an effect on the value of such
assets. The cost of any Independent Financial Expert shall be
paid one-half (1/2) by Medical Group and one-half (1/2) by
Physician.
(iii) In the event that Physician terminates this
Agreement pursuant to Section 8(d)(i)(C), Physician shall have
the right to purchase the following assets (the "Section
8(d)(iii) Assets "):
(A) All, but not less than all, of the physical assets
purchased by Medical Group from Physician as part of the
transaction simultaneous with which Physician became an
employee of Medical Group (an "Affiliation"), provided
that Medical Group, PQC or an Affiliate still owns such
physical assets. Medical Group and Physician may also
agree that Physician shall purchase other physician assets
acquired by Medical Group, PQC or an Affiliate after
Affiliation; provided that Medical Group shall not be
obligated to sell any assets acquired after Affiliation.
The purchase price of the physical assets shall be the
lesser of their Book Value or their Fair Market Value as
of the Purchase Closing.
(B) If Physician requests, then, subject to the consent
of the lessor and release by the lessor of Medical Group
from any obligations under the lease, Medical Group agrees
to use commercially reasonable efforts to transfer to
Physician the lease relating to any premises occupied
solely by Physician prior to Affiliation and that
Physician continues to occupy at the time of termination
of this Agreement. In consideration of such transfer,
Physician shall pay Medical Group an amount equal to the
sum of (i) fifteen percent (15 %) of the total lease
obligations required to be paid during the remaining term
of the lease and (ii) to the extent not covered in (A)
above the Book Value of any leasehold improvements.
(C) Physician (notwithstanding Section 12 of this
Agreement) shall be entitled for a three (3) month period
commencing upon the delivery of Physician's termination
notice to solicit any employee of Medical Group directly
providing support for Physician's medical practice to leave
such employee's employment with Medical Group. Prior to
soliciting such employee, Physician shall notify Medical
Group of Physician's intent to solicit such employee and pay
Medical Group an amount equal to three (3) months salary and
benefits of any employee so solicited.
(D) Medical Group shall not attempt to prevent Physician
from obtaining and using the telephone number that Physician
used prior to Affiliation if such telephone number has been
used by a Pod in which Physician is the sole physician
employee. Medical Group shall have no obligation to cause
such telephone number to be assigned to Physician and
Physician shall be responsible for all costs associated with
reestablishing such phone number.
(E) Medical Group shall retain custody of patient records.
Physician shall be entitled, at Physician's cost and at the
written request or with the written approval of the patient,
to make copies of the patient record for any patient to whom
Physician provided services. If requested by a patient,
Medical Group shall transfer copies of each patient's
medical records as directed by the patient.
(F) Medical Group will not interfere with Physician's
efforts to reactivate any provider numbers under any managed
care contracts that were assigned to Physician prior to the
date of his initial employment hereunder. Medical Group
shall not be obligated to terminate or transfer any provider
number that it possesses and shall not be liable to
Physician if Physician is unable to establish or re-
establish provider status under any managed care contract.
(G) Except as provided in clause (C) of this Section
8(d)(iii), Physician shall continue to be subject to the
restrictive covenants and agreements in Sections 11, 12 and
14 of this Agreement.
(iv) The exercise of the option by Physician described in
Sections 8(d)(ii) and (iii) shall be upon written notice thereof in
the termination notice, if applicable, on or prior to ninety (90)
days before the Purchase Closing. In connection with the purchase
and sale of the Section 8(d)(ii) Assets or the Section 8(d)(iii)
Assets as appropriate, pursuant to Sections 8(d)(ii) or 8(d)(iii) as
appropriate, Medical Group shall use its commercially reasonable
efforts to cause such assets to be conveyed free of any lien, claim
or encumbrance.
(v) Notwithstanding Sections 8(d)(ii) and (iii), this
Agreement shall not constitute an agreement to assign any contract
or asset, or any benefit arising thereunder or resulting therefrom,
if any attempted assignment thereof, without the consent required or
necessary for such assignment, would constitute a breach or
violation of any agreement or restriction applicable to
such contract or asset or m any way adversely affect the rights of
Medical Group or Physician or PQC thereunder. Medical Group agrees
to use its commercially reasonable efforts to obtain any consent
required for such assignment.
(e) Mutual Termination.
-------------------
(i) Either Physician or Medical Group may terminate this
Agreement if (i) a law firm with a nationally recognized expertise
in health care law and acceptable to Medical Group and the Joint
Policy Board renders an opinion to Medical Group with a copy to the
Joint Policy Board and Physician stating that a material provision
of this Agreement is in violation of applicable law; or (ii) any
court or regulatory agency enters an order finding a material
provision of this Agreement is in violation of any applicable law
and in either case (i) or (ii), the parties are unable, after a
period of good faith negotiation not to exceed thirty (30) days
after notice to either party to agree upon such amendments to this
Agreement as are necessary to cause this Agreement to comply with
applicable law and which preserve the underlying economic and
financial arrangements between the parties without substantial
economic detriment to either party.
(ii) In the event of termination under this Section 8(e),
Medical Group shall have the option to require Physician to
purchase, and Physician shall have the option to require Medical
Group to:
(A) Subject to cooperation from PQC and its Affiliates,
purchase from Medical Group, PQC or its Affiliates at Book
Value, all tangible assets of Medical Group, PQC or their
Affiliates that relate primarily to Physician's practice or
that were acquired, directly or indirectly, from Physician,
other than Medical Group's, PQC's or its Affiliates' medical,
accounting and financial records (the "Section 8(e)(ii)
Assets"); and
(B) Assume or pay all of the Physician Related Liabilities as
defined in Section 8(c)(ii)(B). The parties agree that if
Physician is one (I) of a number of physicians practicing
within a Pod, then the parties will cooperate m good faith to
allocate fairly to Physician only those liabilities, debts,
payables and other obligations that relate directly to
Physician and not to other members of the Pod.
(iii) The exercise of the option by a party described in
Section 8(e)(ii) shall be upon written notice thereof in the
termination notice, if applicable, on or prior to ninety (90) days
before the Purchase Closing. In connection with the purchase and
sale of the Section 8(e)(ii) Assets pursuant to this Section 8(e),
Medical Group shall use its commercially reasonable efforts to cause
such assets to be conveyed free of any lien, claim or encumbrance.
(iv) Notwithstanding Section 8(e)(ii), this Agreement shall
not constitute an agreement to assign any contract or asset, or any
benefit arising thereunder or resulting therefrom, if any attempted
assignment thereof, without the consent required or necessary for
such assignment, would
constitute a breach or violation of any agreement or
restriction applicable to such contract or asset or in any way
adversely affect the rights of Medical Group or Physician
thereunder. Medical Group agrees to use its commercially
reasonable efforts to obtain any consent required for such
assignment.
(f) Effect of Termination on Accrued Salary and Benefits. In
-----------------------------------------------------
the event that this Agreement is terminated, Medical Group shall pay to
Physician the compensation and benefits otherwise payable to Physician
under this Agreement through the last day of his actual employment by
Medical Group.
If, but only if, this Agreement is terminated under Section
8(a) [death], 8(b) [disability], 8(d) [termination by Physician] or
8(e) [mutual termination], then in addition to amounts owed to
Physician under the preceding sentence, Medical Group shall pay
(without duplication of any amounts owed hereunder) such portion (if
any) of the available Distribution Pool (if any) accrued on the
financial statements of Medical Group prior to the date of termination
as may be approved by the Compensation Committee in its sole discretion
(the "Discretionary Amount"). No Discretionary Amount shall be payable
in the event of termination under any other section of this Agreement,
including without limitation Section 8(c).
(g) Terms of Purchase. The closing of the transactions
-----------------
contemplated by Sections 8(c)(ii), 8(d)(ii), 8(d)(iii) or 8(e)(ii) (the
"Purchase Closing") shall occur on a date mutually acceptable to
Medical Group and Physician that shall be within one hundred and eighty
(180) days after receipt of a termination notice (or such later date as
is necessary for Medical Group to obtain lessor consents to the
assignment to Physician of leases of real and personal property to be
assumed by Physician). Subject to the conditions set forth below, at
the Purchase Closing, Medical Group shall transfer and assign, or shall
use its reasonable efforts to cause PQC or its Affiliates to transfer
and convey, the Purchase Assets, the Section 8(d)(ii) Assets, the
Section 8(d)(iii) Assets, or the Section 8(e)(ii) Assets, as the case
may be, to Physician and in consideration therefor, Physician shall (a)
pay to Medical Group the purchase price in cash and (b) assume, if
applicable, Physician Related Liabilities. Each of Medical Group and
Physician shall execute such documents or instruments as are reasonably
necessary, in the opinion of Medical Group, Physician and their
respective counsel, to effect the foregoing transaction.
(h) Exception to Purchase. Notwithstanding anything contained
---------------------
herein to the contrary, Medical Group shall not be obligated to sell
the Purchase Assets, the Section 8(d)(ii) Assets, the Section 8(d)(iii)
Assets, or the Section 8(e)(ii) Assets, as the case may be, to
Physician if Physician is not able to pay the purchase price therefor
pursuant to the terms set forth above at the Purchase Closing. In such
event, Physician shall surrender the assets in Physician's possession
or control to Medical Group as of the Purchase Closing. If Physician
fails to so surrender the assets, Medical Group may, without prejudice
to any other remedy which it may have hereunder or otherwise, enter the
premises and take possession of the assets and expel or remove
Physician and any other person who may be occupying the Premises or any
part thereof, by force if necessary, without being liable for
prosecution or any claim for damages therefor.
(i) Waiver of Restrictive Covenants. If Physician's employment
--------------------------------
terminates
pursuant to Sections 8(b) (if but only if Physician, upon any recovery
from disability during the original term hereof sufficient to permit
him to return to medical practice, has first offered Medical Group the
option to rehire him on the terms set forth herein), 8(d)(i)(A),
8(d)(i)(B), 8(d)(i)(D), or 8(e), Physician's obligation to comply with
the restrictions and obligations contained in Sections 11, 12 and 14
hereof shall be waived, and those sections shall be of no force and
effect.
9. Withholding. All payments made by Medical Group under this
-----------
Agreement shall be reduced by any tax or other amounts required to be withheld
by Medical Group under applicable law.
10. Records. Physician and Medical Group agree that, as between
-------
Medical Group and Physician, all patient records and other records are the
property of Medical Group and not the property of Physician.
11. Nonsolicitation of Patients. Physician agrees that, during the term
---------------------------
of this Agreement and for two (2) years thereafter, Physician will not solicit
any patients of Medical Group for whom Physician provides any services during
the term of this Agreement, nor suggest, request or direct that any such
patients change their health plan from one in which Medical Group participates
or plans to participate to a health plan in which Physician, directly or
indirectly, participates or plans to participate, nor, unless the patient asks
to use the services of Physician, suggest, request or direct that any such
patients request that their medical records be copied or otherwise removed or
transferred from Medical Group's office, nor remove or copy any medical records
or patient mailing lists. Medical Group acknowledges that neither advertising in
a "yellow pages" telephone directory nor inclusion of Physician's name in the
directory or similar advertising of a general nature of a medical plan shall be
deemed to be the solicitation of patients.
12. Nonsolicitation of Employees. Physician agrees that, during the
----------------------------
term of this Agreement and for two (2) years thereafter, Physician will not
solicit, directly or indirectly, any physician, nurse or other medical or
administrative employee, any agent or any independent contractor of Medical
Group or induce or seek to induce, or take action which results in the
termination of employment or other arrangements between Medical Group and such
employee, agent or independent contractor or otherwise diminishes or interferes
with such employment or contractual arrangements.
13. Referrals of Patients of Medical Group. Physician agrees that,
--------------------------------------
during the term of this Agreement and for two (2) years thereafter, Physician
will give to all patients of Medical Group, or persons who contact Physician as
a result of Physician's association with Medical Group, who are seeking medical
services within the Practice Area (as defined in Section 14 below) the phone
number and address of Medical Group and any Medical Group physicians identified
by the patient and known to Physician.
14. Noncompetition. Physician agrees that, during the term hereof and
--------------
for a period of one (1) year after the termination of this Agreement, such
Physician shall not establish, operate or provide physician or other medical
services (whether as an employee, shareholder, partner, independent contractor,
manager, consultant or otherwise) at any medical office, clinic or other health
care facility providing services similar to those provided by Medical Group, PQC
or its Affiliates within fifteen (15) miles of the premises at which Physician
practiced at the time of such termination of employment as set forth in Appendix
C (the "Practice Area"); provided, however, that Physician shall not be
prohibited from (i) working at a research or teaching facility if Physician does
not devote more than ten percent (10%) of Physician's time to clinical practice
or (ii) practicing medicine in the Practice Area either as a solo practitioner
or with one (1) other physician or (iii) admitting a patient to a hospital in
the Practice Area where such admission is in the best medical interest of the
patient. In addition, during the term of this Agreement, Physician shall not
directly or directly (whether as a shareholder, employee, individual, partner,
independent contractor, consultant or otherwise) establish, operate or provide
any Integrated Health Services or any medical practice management services
provided by Medical Group, PQC or its Affiliates in the Practice Area. Physician
agrees that, during the term hereof and for a period of two (2) years after the
termination of this Agreement, except as otherwise expressly permitted by this
Agreement, Physician shall not directly or indirectly (whether as a shareholder,
employee, individual, partner, independent contractor, consultant or otherwise)
establish, operate or provide any Integrated Health Services or any other
medical practice management services provided by Medical Group, PQC or its
Affiliates in the Practice Area. For purposes of this Agreement, "Integrated
Health Services" shall mean any business that Medical Group or PQC establishes
after the date of execution of the Services Agreement, whether directly or
through a subsidiary, which provides medical related services that are not
traditionally performed by physicians or physician practices at medical offices
(it being understood that in-office laboratory services are not Integrated
Health Services).
15. Enforcement of Covenants. Physician acknowledges that he has
------------------------
carefully read and considered all the terms and conditions of this Agreement,
including the restraints imposed upon Physician pursuant to Sections 11, 12, 13,
14 and 16 hereof. Physician agrees that said restraints are necessary for the
reasonable and proper protection of Medical Group and its goodwill, confidential
information and relationships, and economic advantage and agrees that each and
every one of the restraints is reasonable in respect to subject matter, length
of time and geographic area. Physician further acknowledges that, were he to
breach any of the covenants contained in Sections 11, 12, 13, 14 or 16 hereof,
Medical Group would be harmed and the damage to Medical Group would be
irreparable. Accordingly, if Physician breaches any obligation of Sections 11,
12, 13, 14 or 16, in addition to any other remedies available under this
Agreement, at law or in equity, Medical Group shall be entitled to enforce this
Agreement by preliminary and permanent injunctive relief and by specific
performance of the Agreement. Additionally, nothing in this Section 15 shall
limit Medical Group's right to recover any other damages to which it is entitled
as result of Physician's breach.
16. Confidentiality. Physician will not, directly or indirectly, use or
---------------
disclose any professional or trade secrets or confidential information with
respect to Medical Group, its medical practice or its patients except as
required by law or legal process. In addition to the restrictions set forth
above, Physician agrees to comply with and be bound by any restrictions on the
use or disclosure of Intellectual Property of PQC set forth in the Services
Agreement, a copy of which has been given to Physician. Physician shall not copy
any documents, tapes or other media containing Intellectual Property
("Documents") or remove any Documents or copies from Medical Group premises.
Physician will return to Medical Group immediately after Physician's employment
terminates, and at such other times as may be specified by Medical Group, all
Documents and copies and all other property of Medical Group then in Physician's
possession or control. "Intellectual Property" means all (i) patents, patent
applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, re-examination, utility model,
certificate of invention and design patents, registrations
and applications for registrations, (ii) trademarks, services marks, trade
dress, logos, trade names and corporate names and registration and applications
for registration thereof, (iii) copyrights and registrations and applications
for registration thereof, (iv) mask works and registrations and applications for
registration thereof, (v) computer software, data and documentation, (vi) trade
secrets and confidential business information, whether patentable or
non-patentable and whether or not reduced to practice, know-how, clinical
product and service processes and techniques, research and development
information, medical protocols, copyrightable works, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, (vii) other proprietary rights
relating to the foregoing (including, without limitation, remedies against
infringement thereof and rights of protection of interest therein under the laws
of all jurisdictions) and (viii) copies and tangible embodiments thereof.
Intellectual Property shall also include such information that Medical Group may
receive or has received belonging to patients, PQC or others who do business
with Medical Group. Intellectual Property does not include any information that
Physician can establish (a) is or becomes generally available to and known by
the public or in the trade (other than as a result of an unpermitted disclosure
directly or indirectly by Physician or another person who was not authorized by
Medical Group to make such disclosure); or (b) is or becomes available to
Physician on a nonconfidential basis from a source other than Medical Group, PQC
or its Affiliates, advisers, or representatives, provided that such source is
not and was not bound by a confidentiality agreement with or other obligation of
secrecy to Medical Group of which Physician has knowledge. Notwithstanding
anything to the contrary in this Section 16, the obligations of Physician not to
use or disclose Intellectual Property set forth in this Section 16 shall be in
effect during the entire duration of Physicians employment with Medical Group
and for three (3) years thereafter, except that Physician's obligations with
respect to any Intellectual Property that constitutes a "trade secret" under
applicable law shall be in effect during the entire duration of Physician's
employment with Medical Group and for as long thereafter as such information
continues to constitute a trade secret.
17. Miscellaneous.
-------------
17.1. Arbitration. Any controversy or claim between Medical
-----------
Group, PQC and Physician arising under or relating to this Agreement or any
breach thereof (including the question of whether any particular matter is
arbitrable hereunder) shall be settled by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association then in
effect; provided, however, that no provision of this Agreement shall be
modified, deleted or added by reason of such arbitration. Medical Group and
Physician agree to abide by all awards rendered in such arbitration proceedings,
and all such awards may be filed by the prevailing party in any federal or state
court having proper jurisdiction, as a basis for judgment in the issuance of
execution thereon. Such arbitration shall be initiated by either Medical Group
or Physician by serving a written demand on the other party and the Joint Policy
Board stating the substance of the controversy and the contention of the party
requesting arbitration. The American Arbitration Association shall appoint or
provide the procedure for the determination of a single neutral arbitrator who
shall be a fit and impartial person. The fees and costs of the arbitrator and
related expenses of arbitration shall be borne by the non- prevailing party. If
the arbitrator determines that neither party has substantially prevailed, the
parties shall bear equally the fees and costs of the arbitrator and the related
expenses of arbitration.
17.2. Contract Modifications for Prospective Legal Events.
---------------------------------------------------
In the event any
state or federal laws or regulations, now existing or enacted or promulgated
after the date of execution of this Agreement are interpreted by judicial
decision, a regulatory agency or legal counsel in such a manner as to indicate
that this Agreement or any provision hereof may be in violation of such laws or
regulations, Medical Group shall propose to the Joint Policy Board for its
approval such amendments to this Agreement as necessary to comply with
applicable law and preserve the underlying economic and financial arrangements
between Physician and Medical Group without substantial economic detriment to
either Medical Group or Physician. Any such amendment approved by the Joint
Policy Board shall be binding upon Physician, and Physician hereby consents to
any such amendment. To the fullest extent permitted by law, each of Physician
and Medical Group waives and agrees not to assert illegality as a defense to the
enforcement of this Agreement or any provision hereof; instead, any such
purported illegality shall be resolved pursuant to the terms of this Section
17.2.
17.3. No Waive, Remedies Cumulative. None of Medical Group,
-----------------------------
PQC or Physician shall by any act, delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
default in or breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising, on the part of either Medical Group, PQC
or Physician, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No remedy set forth in this
Agreement or otherwise conferred upon or reserved to either Medical Group or
Physician shall be considered exclusive of any other remedy available to either
Medical Group or Physician, but the same shall be distinct, separate and
cumulative and may be exercised from time to time as often as occasion may arise
or as may be deemed expedient.
17.4. Availability of Certain Documents. The parties agree, to
---------------------------------
the extent required by law necessary to permit receipt of reimbursement for
services by Medical Group, to make available to the Secretary of Health and
Human Services, the Comptroller General of the General Accounting Office, or
their authorized representatives, any books, documents and records in their
possession relating to the nature and extent of the costs of services hereunder
for a period of four (4) years after the provision of such services.
17.5. Severability. If any provision in this Agreement,
------------
including without limitation any of the covenants set forth in Sections 3.3, 8,
11, 12, 13, 14, 15 or 16, is held by a court of competent jurisdiction to be
invalid or unenforceable for any reason, the parties desire, intend and agree
that it shall not affect any other provision and shall be construed by limiting
it so as to be enforceable to the maximum extent permissible by law.
17.6. Assignment. This Agreement shall be binding upon and
----------
shall inure to the benefit of Medical Group and any successor of Medical Group
by reorganization, merger, consolidation, acquisition, transfer of Medical Group
stock or liquidation and any assignee of all or substantially all of the
business or assets of Medical Group. Medical Group may assign this Agreement to
any of such persons without the consent of Physician. This Agreement shall be
binding upon and shall inure to the benefit of Physician and Physician's
personal and legal representatives. Medical Group requires the personal services
of Physician hereunder, and Physician may not assign this Agreement or delegate
any duties hereunder.
17.7. Notices. Any notices, requests, demands and other
-------
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person or deposited in the United States mail,
postage prepaid, registered or certified, and addressed to Physician at
Physician's last known address on the books of Medical Group or, in the case of
Medical Group, at its main office, attention of President with a copy to
Physicians Quality Care, Inc., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
attention Chief Executive Officer.
17.8. Acknowledgment of Services Agreement. Physician
------------------------------------
understands that, as a physician employed by Medical Group, he will be a member
of a Pod and that certain matters affecting the governance and operation of the
Pod are described in the Services Agreement. Physician acknowledges that certain
terms of the Services Agreement are applicable to him as a Pod Physician,
including but not limited to reasonably cooperating with Medical Group in
credentialing, utilization review, payor contracting and other activities
described in the Services Agreement. Pursuant to the Services Agreement,
Physician agrees that the provisions of the Services Agreement may be enforced
only upon written direction of a majority of the Physician Members of Medical
Group.
17.9. No Obligation to Third Parties. Except as expressly set
------------------------------
forth in this Section, none of the obligations and duties of Physician or
Medical Group under this Agreement shall in any way or in any manner be deemed
to create any obligation of Physician or Medical Group to, or any rights in, any
person or entity not a party to this Agreement. Notwithstanding the foregoing,
in accordance with and subject to the terms of the provisions of the Service
Agreement between Medical Group and PQC, PQC is hereby made a third party
beneficiary of and may enforce the obligations of Medical Group hereunder by any
means, at law or in equity.
17.10. Gender. References herein to the masculine shall be
------
deemed to refer to the feminine or neuter gender as the context may require.
17.11. Table of Cross-References
-------------------------
"Affiliation" Section 8(d)(iii)(A)
"Anniversary Date" Section 2
"Book Value" Section 8(d)(ii)
"Compensation Committee" Appendix A - Section 4
"Compensation Pool" Appendix A - Section 1
"Discretionary Amount" Section 8(f)
"Documents" Section 16
"Fair Market Value" Section 8(d)(ii)
"Full-Time" Section 3.3(b)
"Independent Financial Expert" Section 8(d)(ii)
"Integrated Health Services" Section 14
"Intellectual Property" Section 16
"Medical Group" Recitals
"PQC" Recitals
"Payors" Section 7
"Physician" Recitals
"Physician Related Liabilities" Section 8(c)(ii)(B)
"Pod Distribution" Appendix A - Section 3
"Purchase Closing" Section 8(g)
"Purchased Assets Section 8(c)(ii)(A)
"Practice Area" Section 14
"Practice Site" Section 3.4
"Section 8(d)(ii) Assets" Section 8(d)(ii)
"Section 8(d)(iii) Assets" Section 8(d)(iii)
"Section 8(e)(ii) Assets" Section 8(e)(ii)
"Services Agreement" Recitals
"Termination Date" Section 8
[Rest of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the day and year first written above.
PHYSICIAN: FLAGSHIP HEALTH, P.A.
By:
----------------------- -----------------------
(Name) Name:
Title:
APPENDIX A
COMPENSATION FORMULA
____________________
Reference is made to Appendices A and B to the Services Agreement, the
definitions and provisions of which are incorporated herein by reference.
1. Compensation Pool. As exclusive compensation for the services of
-----------------
Medical Group Physician under this Agreement and all other Medical Group
Physician employees of Medical Group under their respective Employment
Agreements, Medical Group shall establish a compensation pool (the "Compensation
Pool") which, on an annual basis, shall be equal to all amounts distributed to
Medical Group pursuant to Section 2 of Article A of Appendix B of the Services
Agreement. The Compensation Pool shall be allocated among and distributed to
Medical Group Physician and other Medical Group Physician employees of Medical
Group as provided in this Appendix A. Medical Group Physician shall not be
entitled to any compensation for services under this Agreement except as
provided in this Appendix A.
2. Establishment of Budgets for Medical Group Physician Pods. Prior to
---------------------------------------------------------
the beginning of each Fiscal Period, a capital and operating budget for each
Medical Group Physician Pod shall be established pursuant to Section 3.8 of the
Services Agreement. At any point during a Fiscal Period, the Joint Policy Board
may, and if the actual Medical Group Physician Pod Practice Revenues less actual
Medical Group Physician Pod Practice Expenses is below budgeted levels for such
Medical Group Physician Pod or if there is a projected negative Net Margin,
shall, review the budgets for such Medical Group Physician Pod and make such
changes to such budgets, including the aggregate Pod Distributions (as defined
in Section 3 below), as the Joint Policy Board deems to be appropriate. All
capital and operating budgets, and changes thereto, also shall be subject to the
approval of PQC.
3. Allocation of the Compensation Pool among Medical Group Physicians.
------------------------------------------------------------------
(a) On a biweekly basis, Medical Group shall distribute to each Medical Group
Physician Pod from the Compensation Pool an amount equal to one twenty-sixth of
the aggregate Medical Group Physician Draw allocated to such Medical Group
Physician Pod pursuant to the operating budget approved by the Joint Policy
Board (the "Pod Distribution") less the Deductible Expenses allocated to such
Medical Group Physician Pod (which amount shall be distributed to Medical Group
to pay such Deductible Expenses); provided, however, if at any time during a
Fiscal Period: (1) Medical Group determines that the amount allocated to the
Compensation Pool for any Fiscal Period pursuant to Section 1 of this Appendix A
may be less than ninety-five percent (95 %) of the aggregate Medical Group
Physician Draw budgeted for such Fiscal Period, or (2) Medical Group or the
Joint Policy Board determine that: (a) the Medical Group Physician Pod's
Practice Expenses for such Fiscal Period will exceed the budgeted Medical Group
Physician Pod Practice Expenses for such Medical Group Physician Pod, or (b) the
Medical Group Physician Pod's Practice Revenues will be less than the Medical
Group Physician Pod's budgeted Practice Revenues, Medical Group may reduce the
Pod Distributions in such manner as Medical Group determines to be appropriate
in order that the aggregate Pod Distributions to all Medical Group Physician
Pods do not
exceed the amount of the Compensation Pool for such Fiscal Period. The Pod
Distribution shall be allocated among the Medical Group Pod Physicians as
determined by the majority of the Medical Group Pod Physicians.
4. Allocation of Variable Distribution Pool. There shall be a
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Compensation Committee (the "Compensation Committee") consisting of at least
seven (7) Medical Group Physicians elected annually by the Physician Members of
Medical Group, a minimum of three (3) of whom shall be primary care physicians,
two (2) of whom shall be pediatricians and two (2) of whom shall be specialists.
Any action of the Compensation Committee shall require the affirmative vote of
at least one (1) primary care physician, one (1) pediatrician, and one (1)
specialist. Within forty-five (45) days of the end of each three (3) month
period, Medical Group shall advise the Compensation Committee of the amount, if
any, of Variable Distribution. The Compensation Committee, by the approval of a
majority of the members of such committee, shall determine how the Variable
Distribution, if any, shall be allocated among the Medical Group Physician Pods.
The Variable Distribution, if any, to a Medical Group Physician Pod shall be
allocated among the Medical Group Pod Physicians as determined by a majority of
the Medical Group Pod Physicians.
5. Determination of Compensation Committee I Majority of Medical Group
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Pod Physicians Final. The determination of the Compensation Committee (with
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respect to allocating the Variable Distribution, if any, among Medical Group
Physician Pods) and the majority of Medical Group Pod Physicians (with respect
to allocating the Pod Distribution and any Variable Distribution granted to such
Medical Group Physician Pod among the Medical Group Pod Physicians) pursuant to
this Appendix A shall be binding upon Medical Group and Medical Group Physician,
and neither PQC nor Medical Group shall have any liability to Medical Group
Physician as a result of any determination of the Compensation Committee or
majority of Medical Group Pod Physicians; provided, however, that Medical Group
shall not be required to make any distribution in accordance with the
determinations of the Compensation Committee or majority of Medical Group Pod
Physicians that Medical Group reasonably believes to conflict with any federal
or state statute or regulation. In no event shall any Medical Group Physician be
entitled to any compensation in addition to that determined pursuant to this
Appendix A nor shall the aggregate compensation to all Medical Group Physicians
with respect to any Fiscal Period exceed the amount of the Compensation Pool for
such Fiscal Period.
6. Initial Individual Draw. The portion of the aggregate Medical Group
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Physician Draw allocable to the Physician is (Draw) on an annualized basis
(payable on a bi-weekly basis as set forth in this Appendix A), for the one
month period ending December 31, 1996, and the Fiscal Period ending December 31,
1997, subject to adjustment from time to time as provided in the Services
Agreement; which number expressly includes Nine Thousand Six Hundred Eighty
Dollars ($9,680) (being an amount equal to the standard benefit package approved
by the Joint Policy Board); provided that at the direction of the Physician,
some or all of such $9,680 may be applied either to the payment of benefit
premiums (in which case such amount shall be treated as a Practice Expense) or
shall be paid to the Physician as Physician Draw.
7. Threshold for Discretionary Expenses. Expenditures by the
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Physician's Medical Group Physician Pod in any Fiscal Period in excess of the
amount set forth hereinafter shall constitute Discretionary Expenses (as that
term is defined in Section 10.5 of Appendix A to the Services Agreement):
(Discretionary Expenses).
APPENDIX B
BENEFITS
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1. Family coverage for health insurance through a managed care
plan acceptable to the Joint Policy Board
2. Term life insurance - $50,000 coverage
3. Long term disability insurance at 60%, maximum benefit
of $10,000/month, 90-day eligibility
APPENDIX C
EMPLOYMENT AGREEMENT
OF (TITLE)
PRACTICE AREA & PRACTICE SITE
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A. Practice Area.
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"Practice Area" shall mean the area within a fifteen (15) mile radius
of the following clinic location[s] of Medical Group:
(Location)
B. Practice Site.
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"Practice Site" shall mean the clinic of the Medical Group located at
the address(es) set forth above in Section A of this Appendix C.
SCHEDULE 3.2(g) (PHYSICIAN SPECIALTY)
As a continuing condition of Physician's employment, Physician agrees
to be board-certified or board-eligible or have equivalent training and
experience in [Physician Specialty].
SCHEDULE 3.6 (INTELLECTUAL PROPERTY IN DEVELOPMENT)
[Intellectual Property]
SCHEDULE 5(f)
(CIVIL, CRIMINAL OR ADMINISTRATIVE LITIGATION,
INVESTIGATIONS, OR PROCEEDINGS)