SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 27, 1997
-------------------
MAXICARE HEALTH PLANS, INC.
- --------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-12024 95-3615709
- ---------------------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation or File Number) Identification No.)
organization)
1149 South Broadway Street, Los Angeles, California 90015
- --------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (213) 765-2000
--------------
1 of 7
<PAGE>
Item 5. Other Events.
-------------
Maxicare Health Plans, Inc. (the "Company") reported that
its California HMO has signed a letter of intent with
Molina Medical Centers ("MMC") to assign or transfer MMC's
Medi-Cal contracts for the provision of services in San
Bernardino, Riverside and Sacramento Counties, with the
State of California to Maxicare, effective July 1, 1997.
Under the letter of intent, MMC will become a Maxicare
Medi-Cal provider in those areas. The consummation of the
transactions contemplated by the letter of intent is
subject at this time to negotiation and execution of a
definitive agreement between the parties and receipt of
all necessary regulatory approvals. The Company currently
estimates that the revenue to be generated will
approximate $1 billion over the term of these contracts.
This Form 8-K contains forward-looking information. The
forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements may be
significantly impacted by certain risks and uncertainties
including the number of beneficiaries and the
reimbursement rates paid by the State of California during
the term of the MMC Medi-Cal contracts referred to above.
Item 7. Financial Statements, Pro Forma Financial Information and
---------------------------------------------------------
Exhibits.
-----------
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
Exhibit 10.85 Letter of Intent for the Transfer
of Medi-Cal Members and Provision of Services.
Exhibit No. 99.4 Press release reporting the
Company's California HMO has signed a letter of
intent with Molina Medical Centers.
2 of 7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Maxicare Health Plans, Inc.
------------------------------
(Registrant)
June 3, 1997 /s/ EUGENE L. FROELICH
------------------------------
Eugene L. Froelich
Chief Financial Officer
and Executive Vice President -
Finance and Administration
3 of 7
Exhibit 10.85
LETTER OF INTENT FOR THE TRANSFER OF MEDI-CAL
MEMBERS AND PROVISION OF SERVICES
This Letter of Intent is made as of May 23, 1997, between
MOLINA MEDICAL CENTERS, INC., a California corporation ("MMC"), and
MAXICARE, a California corporation ("Maxicare").
1. BACKGROUND. MMC holds Agreements with the California
Department of Health Services ("DHS") to provide or arrange for
health care services to Medi-Cal beneficiaries in San Bernardino,
Riverside and Sacramento Counties, California (collectively
referred to as the "PHP Contracts"). Maxicare is prepared to
accept an assignment or transfer and assume MMC's obligation under
the PHP Contracts to provide or arrange for healthcare services in
San Bernardino, Riverside and Sacramento Counties.
2. ASSIGNMENT/TRANSFER AND ASSUMPTION. The parties agree to
complete an assignment of MMC's contract rights or a transfer of
enrollees, at the discretion of DHS, to provide that Maxicare will
have full financial and administrative responsibility to provide or
arrange for healthcare services to Medi-Cal beneficiaries presently
enrolled in MMC's plans in San Bernardino, Riverside and Sacramento
counties pursuant to a formal agreement that will contain the
following terms:
2.01 Effective Date. The transfer of Enrollees as
provided herein shall be effective as of June 30, 1997, at 11:59
p.m. (the "Effective Date").
2.02 Consent of DHS. Maxicare and MMC will use their
best efforts to obtain written consent from DHS indicating DHS'
approval of the assignments or the transfer of the Enrollees.
2.03 Financial Responsibility. Commencing July 1, 1997,
Maxicare shall have the primary responsibility, including the
financial responsibility, to provide or arrange for "Covered
Services", as such term is defined in the PHP Contract.
2.04 Oversight Responsibility. Commencing July 1, 1997,
Maxicare will provide all oversight and administrative
responsibilities for providing Covered Services to Enrollees, in
accordance with the Maxicare Contract, Medi-Cal laws, the Knox-
Keene Health Care Services Plan Act and the nobles promulgated
thereunder.
4 of 7
<PAGE>
2.05 Enrollee Disenrollment. Enrollees shall have the
right to disenroll from Maxicare at the time of the
assignment/transfer or at any time thereafter.
2.06 Conduct of Business in Normal Course. MMC will
carry management and activities related to the PHP Contracts
diligently and in substantially the same manner as they previously
have been carried out.
2.07 Representations and Warranties. The definitive
agreement will contain representations and warranties furnished by
MMC customary with a transaction of this nature, including
financial covenants.
2.08 Pretransfer Obligations. It is expressly
understood and agreed that Maxicare shall not be liable for any
obligation or liability of MMC of any kind or nature incurred by
MMC in providing health care services to the Enrollees under the
PHP Contracts prior to the Effective Date.
2.09 Conditions Precedent to Assignment or Transfer.
The transfer of enrollees under this Agreement is subject to the
approval of DHS and any other state or federal agency with
jurisdiction over this transaction.
3. PROVIDER AGREEMENT. Subject to the terms of a definitive
agreement to be entered into by the parties, commencing as of July
1, 1997, MMC, on behalf of Maxicare, shall arrange for the
provision of all "Covered Services" for the Enrollees (whether
provided by participating or nonparticipating providers). The
definitive agreement shall include the following terms:
3.1 Oversight Responsibilities. Maxicare will assume
all responsibilities of oversight and administration of the
responsibilities to be delegated to MMC in accordance with
applicable Medi-Cal laws, the Knox-Keene Health Care Service Plan
Act and rules promulgated thereunder and the Maxicare contracts
with DHS. MMC shall abide by any determination of Maxicare made
pursuant to the PHP Contracts, Medi-Cal laws and the Knox-Keene
Health Care Service Plan Act and the rules promulgated thereunder
that require Maxicare to provide oversight of the responsibilities
delegated to MMC pursuant to this Agreement.
3.2 Financial Responsibility. Maxicare shall have
financial responsibility for any Covered Services provided or
arranged for by MMC that exceed 115 percent of the total
compensation paid to MMC.
5 of 7
<PAGE>
4. INDEMNIFICATION. Neither MMC nor Maxicare (nor any of
their respective agents or employees) shall be liable to the other
for any act or omission of the other party. The parties agree to
defend, indemnify and hold the other harmless from any against any
and all liabilities, losses, damages, claims and expenses of any
kind, including costs and attorney fees, incurred by the
indemnified party, and arising from, or in connection with, the
indemnified party's performance of, or failure to perform, its
duties and obligations under this Agreement.
5. PUBLICITY. All notices to third parties other publicity
concerning the transaction contemplated by this Letter of Intent
shall be jointly planned and coordinated by and between MMC and
Maxicare. No party shall act unilaterally in this regard without
the prior written approval of the others; however, this approval
shall not be unreasonably withheld.
6. LEGALLY BINDING. This Letter of Intent is legally
binding and creates an enforceable obligation of the parties to
consummate the transaction contemplated herein. This Letter of
Intent is free from any and all contingencies.
Dated: May 23, 1997 "MMC"
MOLINA MEDICAL CENTERS, INC.
a California Corporation
/s/ Jim Molina, M.D.
President
Dated: May 23, 1997 "Maxicare"
MAXICARE
a California Corporation
/s/ Warren Foon
Vice President & General Manager
6 of 7
Exhibit 99.4
MAXICARE SIGNS LETTER OF INTENT WITH MOLINA MEDICAL CENTERS
LOS ANGELES, MAY 27, 1997 ---- MAXICARE HEALTH PLANS, INC. (NASDAQ
- - NMS: MAXI) announced today that its California HMO has signed a
letter of intent with Molina Medical Centers ("MMC") to assign or
transfer MMC's Medi-Cal contracts for the provision of services in
San Bernardino, Riverside and Sacramento Counties, with the State
of California to Maxicare, effective July 1, 1997. Under the
letter of intent, MMC will become a Maxicare Medi-Cal provider in
those areas. The consummation of the transactions contemplated by
the letter of intent is subject to Maxicare's completion of its due
diligence review, negotiation and execution of a definitive
agreement between the parties and receipt of all necessary
regulatory approvals. The Company currently estimates that the
revenue to be generated will approximate $1 billion over the term
of these contracts.
Maxicare is a managed health care company that operates in seven
states, serving members in California, Indiana, Illinois,
Louisiana, North Carolina, South Carolina and Wisconsin.
This press release contains forward-looking information. The
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be significantly impacted by certain
risks and uncertainties including the number of beneficiaries and
the reimbursement rates paid by the State of California during the
term of the MMC Medi-Cal contracts referred to above.
7 of 7
