UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________
Commission File Number: 0-15352
US SERVIS, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2467332
(State or other jurisdiction of (I.R.S. Employer or Identification Number)
incorporation of organization)
414 Eagle Rock Avenue, West Orange, NJ 07052
(Address of Principal Executive Office) (Zip Code)
(201) 731-9252
Registrant's telephone number, including area code)
(MICRO Healthsystems, Inc.)
(Registrant's Former Name)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _______ No _______
APPLICABLE ONLY TO CORPORATE ISSUERS
At August 13, 1996, the registrant had outstanding 6,296,137 outstanding shares
of Common Stock, $0.01 par value.
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<CAPTION>
US SERVIS, INC. AND SUBSIDIARIES
INDEX
Page No.
<S> <C>
PART I - FINANCIAL INFORMATION 1
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1996 AND
MARCH 31, 1996 2
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
THREE MONTHS ENDED JUNE 30, 1996 AND 1995 3
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY FOR THE THREE MONTHS ENDED JUNE 30, 1996 4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
MONTHS ENDED JUNE 30, 1996 AND 1995 5,6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7,8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9-11
PART II - OTHER INFORMATION 12
SIGNATURES 13
EXHIBIT INDEX 14-16
</TABLE>
<PAGE>
PART I
FINANCIAL INFORMATION
1. Consolidated Financial Statements as at June 30, 1996
The consolidated balance sheet as of March 31, 1996 has been derived
from the audited Consolidated Balance Sheet contained in the Company's
Form 10-K and is presented for comparative purposes. Certain items have
been reclassified to conform to the current presentation. The
accompanying consolidated financial statements presume that users have
read the audited consolidated financial statements of the preceding
fiscal year. Accordingly, footnotes which would have substantially
duplicated such disclosures have been omitted.
The interim consolidated financial statements reflect all adjustments
which are, in the opinion of management, necessary for a fair statement
of the results for interim periods presented. Such interim adjustments
consist solely of normal recurring adjustments. The results of
operations for interim periods are not necessarily indicative of the
results to be expected for a full year.
-1-
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<CAPTION>
US SERVIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, March 31,
1996 1996
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $4,391,000 $6,546,000
Certificate of deposit 300,000 300,000
Accounts receivable, less allowance for doubtful
accounts of $465,000 and $458,000 4,184,000 2,558,000
Current maturities of notes receivable 100,000 190,000
Inventories 2,000 3,000
Prepaid and refundable income taxes 2,408,000 2,343,000
Deferred income taxes 0 62,000
Prepaid expenses and other current assets 515,000 584,000
---------- ----------
Total Current Assets 11,900,000 12,586,000
---------- ----------
PROPERTY AND EQUIPMENT 1,413,000 1,529,000
OTHER ASSETS:
Software technology:
Purchased, less accumulated amortization of
of $54,000 and $35,000 212,000 173,000
Developed, less accumulated amortization
of $280,000 and $257,000 122,000 146,000
Goodwill, less accumulated amortization of
$347,000 and $323,000 3,597,000 3,621,000
Other 208,000 204,000
---------- ----------
Total Other Assets 4,139,000 4,144,000
---------- ----------
$17,452,000 $18,259,000
=========== ===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $510,000 $634,000
Accrued payroll & benefits 834,000 724,000
Accrued restructuring charges 963,000 963,000
Accrued expenses for use of trade name 293,000 254,000
Other accrued expenses 1,094,000 805,000
Current portion of capital lease obligation 230,000 230,000
Deferred income 229,000 242,000
Customers' deposits 141,000 141,000
Other current liabilities 252,000 269,000
---------- ---------
Total Current Liabilities 4,546,000 4,262,000
---------- ---------
LONG-TERM LIABILITIES:
Accrued restructuring charges - net of current portion 670,000 905,000
Long-term capital lease obligation - net of current portion 287,000 267,000
---------- ---------
Total Long-term Liabilities 957,000 1,172,000
---------- ---------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK:
Convertible redeemable preferred stock,
par value $0.01 per share, 10,000,000 shares
authorized, 1,500,000 issued and outstanding
(liquidation preference $6,353,000) 6,241,000 6,110,000
SHAREHOLDERS' EQUITY:
Common stock $.01 par value; 30,000,000 shares
authorized; 6,312,000 shares issued 63,000 63,000
Capital in excess of par value 14,864,000 14,864,000
Retained earnings (deficit) (7,795,000) (6,788,000)
Subscription receivable (140,000) (140,000)
Note receivable - related party (1,225,000) (1,225,000)
---------- -----------
5,767,000 6,774,000
Less Treasury Stock at cost: 15,700 shares 59,000 59,000
---------- ----------
Total Shareholders' Equity 5,708,000 6,715,000
---------- ----------
$17,452,000 $18,259,000
============ ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
US SERVIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
1996 1995
<S> <C> <C>
REVENUES:
Service fees $4,569,000 $3,706,000
Sales of equipment 98,000 53,000
Software license fees 22,000 99,000
Interest and other 67,000 32,000
---------- -----------
4,756,000 3,890,000
---------- ----------
EXPENSES:
Cost of services 3,361,000 2,510,000
Cost of equipment sales 46,000 26,000
Research and development 493,000 626,000
Selling, general and administrative 1,708,000 1,923,000
Interest expense 31,000 18,000
---------- ----------
5,639,000 5,103,000
---------- ----------
LOSS BEFORE INCOME TAXES (883,000) (1,213,000)
BENEFIT FOR FEDERAL AND STATE INCOME TAXES - (367,000)
------------ ----------
NET LOSS ($883,000) ($846,000)
=========== ==========
NET LOSS PER COMMON SHARE ($0.16) ($0.14)
=========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,296,000 6,241,000
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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<TABLE>
<CAPTION>
US SERVIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
FOR THE THREE MONTHS ENDED JUNE 30, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL IN NOTE
COMMON STOCK EXCESS OF RETAINED SUBSCRIPTION RECEIVABLE - TREASURY
SHARES PAR VALUE PAR VALUE EARNINGS RECEIVABLE RELATED PARTY STOCK
--------- ----------- ----------- -------- ------------ ------------- --------
BALANCE, MARCH 31, 1996 6,312,000 63,000 14,864,000 (6,788,000) (140,000) (1,225,000) 59,000
THREE MONTHS ENDED
JUNE 30, 1996:
Accretion equal to accrued dividends
on redeemable preferred stock (124,000)
Net Loss (883,000)
--------- ------ ---------- ----------- --------- ----------- ------
BALANCE, JUNE 30, 1996 6,312,000 63,000 14,864,000 (7,795,000) (140,000) (1,225,000) 59,000
========= ====== ========== =========== ========= =========== ======
</TABLE>
See accompanying notes to consolidated financial statements.
- 4 -
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<CAPTION>
US SERVIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (883,000) (846,000)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation and amortization of property and equipment 162,000 93,000
Accrued interest on capitalized lease obligation 20,000 -
Amortization of software technology 43,000 33,000
Amortization of goodwill 25,000 23,000
Amortization of convertible preferred issue costs 6,000 -
Gain on sale of equipment (6,000) -
Provision for losses on accounts receivable 24,000 60,000
Amortization of officer stock compensation 163,000
Changes in operating assets and liabilities-
Accounts receivable (1,650,000) (784,000)
Note and installment receivables 90,000 123,000
Inventories 1,000 (20,000)
Prepaid and refundable income taxes (65,000) (476,000)
Deferred income taxes 62,000 250,000
Prepaid expenses and other current assets 69,000 38,000
Other assets (4,000) 3,000
Accounts payable (124,000) 114,000
Accrued payroll & benefits 110,000 149,000
Accrued expenses for use of trade name 39,000 35,000
Other accrued expenses 289,000 (364,000)
Accrued restructuring (235,000) (141,000)
Deferred income (13,000) 47,000
Customer deposits and other current liabilities (17,000) (10,000)
----------- -----------
Net cash flows from operating activities: (2,057,000) (1,510,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in software technology (58,000) (89,000)
Purchase of property and equipment (67,000) (157,000)
Proceeds from sale of equipment 27,000 -
----------- ---------
Net cash flows from investing activities (98,000) (246,000)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt - (7,000)
Loans to officers - (238,000)
----------- -----------
Net cash flows from financing activities - (245,000)
----------- -----------
NET CHANGE IN CASH AND EQUIVALENTS (2,155,000) (2,001,000)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 6,546,000 4,121,000
---------- ----------
CASH AND EQUIVALENTS, END OF PERIOD 4,391,000 2,120,000
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
5
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<CAPTION>
US SERVIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(concluded)
THREE MONTHS ENDED
JUNE 30,
1996 1995
<S> <C> <C>
SUPPLEMENTAL INFORMATION:
Interest paid - 1,000
========== ==========
Income taxes paid (refunded) - (143,000)
========== ==========
Accretion equal to accrued dividends on convertible
preferred stock 124,000 -
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE>
US SERVIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(UNAUDITED)
Note A - Basis of Presentation:
The consolidated financial statements include all the accounts of
US SERVIS, Inc. (f/k/a MICRO Healthsystems, Inc.) and its wholly-owned
subsidiaries (collectively, the "Company"). All significant intercompany
transactions have been eliminated.
Note B - Nature of Business:
The Company is a provider of business management services and information
management systems. The Company's primary markets are physicians, physician
delivery systems, hospital inpatient and outpatient departments, and at risk
networks associated with hospital driven integrated delivery systems. As part of
its business management services, the Company has traditionally provided on-site
and off-site personnel, billing and accounts receivable management services
together with information systems and systems integration services related to
these business activities. The Company is currently strengthening these areas
and expanding its services and information systems to include: financial and
administrative management, clinical information, systems support and management
and consulting services in areas that directly complement its business
management services offerings, such as at risk contracting and contract
management, revenue enhancement and re-engineering of the billing and accounts
receivable management activities. The Company, through strategic alliances, has
expanded its information systems offerings to include managed care and
electronic medical records systems. The Company has also historically been a
provider of clinical information systems products and services for various
hospital inpatient departments. The Company is phasing out of this activity.
(See Note C below)
Note C - Restructuring Charges:
During fiscal 1995, the Company implemented a significant restructuring of its
business operations in an effort to: refocus and redirect resources away from
clinical, inpatient information systems products and towards contract
management, physician practice management, ambulatory care and software
integration business services; consolidate operations; negotiate a termination
of the employment agreement of the former chairman; downsize, and sell
underperforming assets. These actions resulted in a $6.8 million, pre-tax,
restructuring charge in fiscal 1995.
The restructuring program was substantially completed during fiscal 1996,
although the payment of certain items - principally, termination costs related
to the former Chairman and selected severance costs, will continue for several
years.
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Note D - Net Loss Per Common Share:
The computation of fully diluted net loss per share was antidilutive in each of
the applicable periods presented; therefore no separate calculation of fully
diluted loss per share was reported. Net loss per common share was determined by
dividing net loss, as adjusted, by accretions which relate to accrued dividends
on the Company's preferred stock, in the amount of $124,000 for the three months
ended June 30, 1996.
Note E - Subsequent Event:
On July 17, 1996, the Company received a letter from its largest customer,
New York Health and Hospitals Corporation ("MetroPlus"). The letter alleged
that the Company was failing to fulfill its responsibilities under its contract
with MetroPlus, indicated that the letter was intended to serve as a notice of
default and purported to give the Company 90 days to cure the alleged breaches.
While the Company has taken issue with MetroPlus as to the legal effect of the
letter and certain actions taken by MetroPlus, it has mounted a very substantial
effort to improve the level of service it provides to MetroPlus. Company
management is confident that adequate resources are being made available for
this task and that both the Company and MetroPlus are working hard together to
resolve problems and to eliminate any service shortfalls.
The Company recognizes that the MetroPlus implementation has been difficult and
protracted and as a result it has provided adjustments to reported MetroPlus
revenues that it believes to be adequate.
-8-
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
During fiscal 1996 (Fiscal Year Ending March 31, 1996), the Company focused on
recapitalizing and restructuring the business and redirecting resources towards
its primary activities; providing business and information management systems
and services to physicians, physician networks, managed care organizations and
hospitals and ambulatory care providers. The October 1995 closing of the Series
A Convertible Preferred Stock offering provided the Company with capital to
facilitate the restructuring and invest in product development, sales and
marketing. These investments resulted in a stabilization of the client base and
the generation of a significant amount of new business. (See the Company's
Annual Report, Form 10K for the fiscal year ending March 31, 1996, Item 7 for a
more complete discussion of fiscal 1996 sales results).
During the period ended June 30, 1996, the result of fiscal 1996 sales began to
materialize. Revenues increased $866,000 (22%), to nearly $4.8 million from $3.9
million reported during the same period in the prior fiscal year. Expenses
increased $536,000 (10.5%), with the majority of the increase occurring in Cost
of Services. This resulted in a $330,000 decline in the Company's pre-tax loss,
although the Company's net loss increased by $37,000 due to the use of carry
forward tax benefits during fiscal 1996.
The Company's first quarter net loss per share totaled $.16 compared to $.14
reported for the same period in the prior fiscal year. The first quarter net
loss per share includes $.02 per share reflecting accrued dividends on the
Company's Series A preferred stock. The first quarter loss does not include the
favorable impact of tax benefits reflected in the first quarter of fiscal 1996
(nearly $.06 per share). The following table details the period to period net
loss per share.
<TABLE>
<CAPTION>
Three Months Period Ended June 30,
1996 1995
<S> <C> <C>
Pre-Tax Operating Loss Per Share $.14 $.20
Accretion of the Preferred Stock Dividends .02 ----
Tax Benefit ---- (.06)
Net Loss per Share $.16 $.14
</TABLE>
<TABLE>
<CAPTION>
LIQUIDITY AND CAPITAL RESOURCES
June 30, 1996 March 31, 1996
<S> <C> <C>
Total Current Assets $11,900,000 $12,586,000
Total Current Liabilities 4,546,000 4,262,000
Working Capital $7,354,000 $8,324,000
Working Capital Ratio to 1 2.6 3.0
</TABLE>
During the three months ended June 30, 1996, Working Capital decreased $970,000
from $8,324,000 to $7,354,000 primarily as a result of continued operating
losses. Cash and Equivalents decreased $2,155,000, primarily due to the net loss
and an increase in accounts receivable of $1,626,000 which was partially offset
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<PAGE>
by an increase in current liabilities of $284,000. The increase in accounts
receivable relates to seasonal increases in amounts due from continuing hospital
clients and amounts due under the contract with MetroPlus. (See Note E -
Subsequent Event).
The Company expects that its cash position will continue to decrease throughout
the remainder of fiscal 1997 as a result of operating losses but anticipates
that available cash and cash flow from operations will be sufficient to meet the
Company's operating and capital requirements through the end of the current
fiscal year.
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
REVENUES
Three Months Ended June 30,
1996 1995
<S> <C> <C>
Service fees $4,569,000 $3,706,000
Sales of equipment 98,000 53,000
Software license fees 22,000 99,000
Interest and other 67,000 32,000
$4,756,000 $3,890,000
</TABLE>
For the three months ended June 30, 1996, the Company's revenues increased
$866,000 when compared to the same period in the prior fiscal year. Contributing
to this increase were increases in service fees of $863,000, sales of equipment
of $45,000 and interest and other of $35,000. These increases were partially
offset by a decrease in software license fees of $77,000.
Contributing to the increase in revenues from service fees were increases of
$390,000 from physician services and $673,000 from TPA services provided to
MetroPlus. (See Note E - Subsequent Event). These increases were partially
offset by a $113,000 decrease in revenues from clinical services and a $71,000
decrease in revenues from hospital services.
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EXPENSES
Three Months Ended December 31,
1996 1995
<S> <C> <C>
Cost of services $3,361,000 $2,510,000
Cost of equipment sales 46,000 26,000
Research and development 493,000 626,000
Selling, general and administrative 1,708,000 1,923,000
Interest expense 31,000 18,000
$5,639,000 $5,103,000
</TABLE>
For the three months ended June 30, 1996, the Company's expenses increased
$536,000 when compared to the same period in the prior fiscal year. Contributing
to this increase were increases in the cost of services of $851,000, cost of
equipment sales of $20,000, and interest expense of $13,000. These increases
were partially offset by decreases in research and development expenses of
$133,000 and selling, general and administrative expenses of $215,000.
Substantially all of the increase in cost of services related to expenses
associated with new clients for TPA and physician services. The reduction in
research and development expenses results primarily from the Company's decision
to de-emphasize its clinical information systems products. The decrease in
selling, general and administrative expenses resulted from the inclusion of
amortization of the CEO's signing bonus of $163,000 in the first quarter of last
year and a reduction in the provision for allowance for doubtful accounts of
$36,000.
NET LOSS
For the three months ended June 30, 1996, the Company reported a net loss of
$883,000 or $0.16 per common share compared to a net loss of $846,000 or $0.14
per common share during the same period last year. The fiscal 1997 (three months
ended June 30, 1996) loss included approximately $.02 per share for the
accretion of preferred stock dividends and does not include a tax benefit of
nearly $.06 per share recorded in the first quarter of fiscal 1996. Although the
Company has not recorded a tax benefit associated with loss incurred during the
current quarter, these losses will be available to offset future income in
subsequent years.
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PART II -OTHER INFORMATION
Item 1 - Litigation
The Company has no material litigation pending.
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits: the exhibits required by Item 601 of
Regulation S-K and filed herewith are listed in the
Exhibit Index that follows the signature page.
(b) Reports on Form 8-K; No report on Form 8-K was filed
during the first three months of the fiscal year
ending March 31, 1997.
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<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 thereunto duly authorized.
<TABLE>
<S> <C>
US SERVIS, INC.
(Registrant)
/S/ Graham O. King
Date: August 13, 1996 By: __________________________________ (L.S.)
Graham O. King
Chairman of the Board and
Chief Executive Officer
/S/ Michael B. Loscalzo
Date: August 13, 1996 By: ___________________________________ (L.S.)
Michael B. Loscalzo
Principal Accounting Officer and
Chief Financial Officer
</TABLE>
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<TABLE>
<CAPTION>
EXHIBITS INDEX
<S> <C> <C>
Exhibit No. Description Page
3(1) By-Laws. (I) *
3(2) Amended and Restated Certificate of Incorporation of the Registrant. (XVII) *
3(3) Certificate of Designation Relating to the Series A Convertible Preferred Stock of the Registrant.
(XVII) *
4(1) Form of warrant to purchase in the aggregate up to 390,000 shares of the Registrant's Common Stock
at an exercise price of $0.10 per share, such warrants issued October 12, 1995. (XV)
*
4(2) Form of warrant to purchase in the aggregate up to 198,000 shares of the Registrant's Common Stock
at an exercise price of $3.50 per share, such warrants issued October 12, 1995. (XV)
*
10(1) Lease date March 31, 1986, between Skyline Associates, Inc. And Digital Equipment Corporation
relating to the premises located at 414 Eagle Rock Avenue, West Orange, New Jersey. (I)
*
10(2) 1986 Stock Option Agreement. (I) *
10(3) Service Agreement between the Registrant and Digital Equipment Corporation. (I) *
10(4) Non-qualified Stock Option Agreement between the Registrant and S.M. Caravetta, dated February 10,
1990 and expiring February, 1995. (III) *
10(5) License Agreement between the Registrant and North County Computer Services, Inc. (III)
*
10(6) Distribution/Sales Representation Agreement by and between Baxter Healthcare Corporation and
MedTake Corp., dated as of October 1, 1990. (IV) *
10(7) Letter Agreement by and among MedTake Corp., the Registrant, Salvatore M. Caravetta and Baxter
Healthcare Corporation, dated as of October 1, 1990. (IV) *
10(8) Guaranty of the Registrant in favor of Baxter Healthcare Corporation, dated as of October 1, 1990.
(IV) *
10(9) Complimentary Marketing Agreement between International Business Machines Corporation and the
Registrant. (V) *
10(10) Service Agreements between Digital Equipment Corporation and the Registrant. (V) *
10(11) Asset Purchase Agreement and Plan of Reorganization by and among Administrative Information Systems
Corporation, the Registrant and Receivables Management Corp., dated as of June 14, 1991. (VI)
*
10(12) Registration Rights Agreement by and between the Registrant and Administrative Information Systems,
Inc. (Misnamed in said document as "Administrative Information Services Corporation"), dated June
14, 1991. (VI) *
10(13) Employment Agreement among Receivables Management Corp. (Renamed AISCorp.), the Registrant and
Stephen G. Sullivan, dated as of June 14, 1991. (VI) *
10(14) Option Registration Rights Agreement by and Between the Registrant and Stephen G. Sullivan, dated
June 14, 1991. (IV) *
10(15) Employment Contract between the Registrant and S.M. Caravetta. (VII) *
10(16) Employment Contract between the Registrant and James A. Pesce. (VII) *
10(17) Agreement and Plan of Merger with Exhibits by and among the Registrant, Vanco Business Management,
Inc. and David K. Vanco, dated as of December 31, 1992. (VIII) *
10(18) Employment Agreement, dated as of January 1, 1993, between Management-Data Service, Inc., the
</TABLE>
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<TABLE>
<S> <C> <C>
Registrant and David K. Vanco. (VIII) *
10(19) Registration Rights Agreement between David K. Vanco and the Registrant, dated as of December 31,
1992. (VIII) *
10(20) Guaranty dated March 5, 1993, given by the Registrant to Harris Bank Roselle relating to loans to
David K. Vanco. (VIII) *
10(21) Letter agreement between David K. Vanco and the Registrant, dated March 5, 1993, relating to the
guaranty of notes, from David K. Vanco to Harris Bank Roselle. (VIII) *
10(22) Agreement of Merger with ACT/PC, dated September 15, 1993, amended November 12, 1993. (X)
*
10(23) Term Loan Agreement, dated as of December 13, 1993, between Stephen G. Sullivan and Registrant. (X)
*
10(24) Guarantee Modification Agreement, dated as of December 13, 1993, between Stephen G. Sullivan and
the Registrant. (X) *
10(25) Escrow Agreement, dated as of December 13, 1993, between Stephen G. Sullivan, Registrant and Crummy
Del Deo Dolan Griffinger & Vecchione. (X) *
10(26) Termination Agreement relating to the Baxter Distribution/Sales Representation Agreement, dated
December 17, 1993. (X) *
10(27) Amendment to Agreement and Plan of Merger between the Registrant and Management-Data Services,
Inc., dated April 8, 1994. (XI) *
10(28) Amendment to Employment Agreement between David K. Vanco and the Registrant, dated April 8, 1994.
(XI) *
10(29) Employment Agreement, dated as of October 12, 1994, between the Registrant and Graham O. King. (XII)
*
10(30) Option Agreement, dated as of October 12, 1994, between the Registrant and Graham O. King. (XII)
*
10(31) Registration Agreement, dated as of October 12, 1994, between the Registrant and Graham O. King.
(XII) *
10(32) Stockholder Agreement, dated as of October 12, 1994, between the Registrant and Graham O. King.
(XII) *
10(33) S.M. Caravetta Termination Agreement between S.M. Caravetta and the Registrant, dated as of October
12, 1994, as amended. (XII) *
10(34) Letter of Intent, dated June 26, 1995, between the Registrant and Frontenac VI Limited Partnership.
(XIV) *
10(35) Registrant's Amended 1993 Stock Option Plan. (XIV) *
10(36) Registrant's Amended 1994 Stock Option Plan for Non-Employee Directors. (XIV) *
10(37) Series A Convertible Preferred Stock and Warrant Purchase Agreement, dated July 18, 1995, by and
among the Registrant, a trust established for the benefit of descendants of Robert E. King,
Frontenac VI Limited Partnership and Morgan Holland Fund II, L.P. (XV) *
10(38) Promissory Note of Graham O. King, dated June 14, 1995, payable to the Company. (XVI) *
10(39) First and Second Amendments to Series A Convertible Preferred Stock and Warrant Purchase Agreements
dated July 31, 1995 and October 10, 1995, respectively. (XVII) *
10(40) Registration Agreement, dated October 12, 1995, by and among the Registrant, a trust established
for the benefit of the descendants of Robert E. King, Frontenac VI Limited Partnership and Morgan
Holland Fund II, L.P. (XV) *
10(41) Agreement for administrative services, dated December 21, 1995, between New York Health and
Hospitals Corporation and the registrant. 17
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
NOTES TO EXHIBIT INDEX
Note No. Description
<S> <C>
(I) Incorporated by reference from the Form S-18 Registration Statement of the Registrant,
dated June 10, 1986.
(II) Incorporated by reference from Amendment No. 1, dated September 6, 1986, to the Form
S-18 Registration Statement of the Registration.
(III) Incorporated by reference from the Registrant's Form 10-K, dated June 18, 1990.
(IV) Incorporated by reference from the Registrant's Form 8-K, dated October 1, 1990.
(V) Incorporated by reference from the Registrant's Form S-3, Registration No. 33-39062,
dated April 11, 1991.
(VI) Incorporated by reference from the Registrant's Form 8-K, dated June 18, 1991.
(VII) Incorporated by reference from the Registrant's Form 10-K, dated June 28, 1991.
(VIII) Incorporated by reference from the Registrant's Form 8-K, dated March 9, 1993.
(IX) Incorporated by reference from the Registrant's Form 8-K, dated September 15, 1993.
(X) Incorporated by reference from the Registrant's Form 8-K, dated December 28, 1993.
(XI) Incorporated by reference from the Registrant's Form 8-K, dated April 15, 1994.
(XII) Incorporated by reference from the Registrant's Form 8-K, dated November 1, 1994.
(XIII) Incorporated by reference from the Registrant's Form 10-Q, dated November 11, 1994.
(XIV) Incorporated by reference from the Registrant's Form 10-K, dated June 26, 1995.
(XV) Incorporated by reference from the Registrant's Form 10-K/A, dated July 24, 1995.
(XVI) Incorporated by reference from the Registrant's Form 10-Q, dated August 10, 1995.
(XVII) Incorporated by reference from the Registrant's Form 10-Q, dated November 10, 1995.
</TABLE>
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<PAGE>
CONFIDENTIAL
AGREEMENT FOR ADMINISTRATIVE SERVICES TO METROPLUS
This Agreement is made between New York City Health and Hospitals Corporation
through its MetroPlus Health Plan, 11 West 42nd Street, New York, New York 10110
("Client") and US Servis, Inc. (formerly Micro Health Systems, Inc.), 414 Eagle
Rock Road, West Orange, New Jersey 07052, through itself and its subcontractors
("Administrator") to be effective December 21, 1995 ("Effective Date").
RECITALS
A. Administrator provides, itself or through its subcontractors,
healthcare systems and business management services such as reimbursement
management services, administration and management of claims services and
related functions for medical providers, health maintenance organizations
("HMO"), preferred provider organizations ("PPO"), insurance companies, and self
insured plans.
B. Client is New York City Health and Hospitals Corporation through its
MetroPlus Health Plan, a New York State Health Maintenance Organization licensed
pursuant to Article 44 of the PHC ("MetroPlus"). MetroPlus administers a group
health plan to provide certain health and medical benefits for covered
participants ("Plan").
C. Administrator and Client have determined that it is in their
mutual interest for Administrator to provide administrative and claims services
for Client as set forth in this Agreement.
NOW, THEREFORE, in consideration of the Recitals above, and the terms
and conditions below, the parties hereby agree as follows:
1. Responsibilities of Administrator
1.1 Administrator shall meet its responsibilities set forth in
this Agreement and as specified in Exhibit B.
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<PAGE>
CONFIDENTIAL
1.2 Administrator shall provide the administrative and system services
set forth below and in Exhibit B and as mutually agreed upon in writing to
assist Client in furnishing coverage for health and medical benefits.
1.3 Administrator shall electronically process and store Client's data
and allow Client on line system access as defined in Administrator's
documentation and in Exhibit B II.
1.4 Administrator shall process those claims for benefits which have
been delegated to it in writing by Client pertaining to coverage for health and
medical benefits to the participants under the Plan. Administrator shall compute
and pay claims in accordance with Client's provisions and guidelines
communicated to Administrator in writing by Client. The determination of any
claimant's entitlement to benefits shall initially rest with Administrator, who
shall make such determination in accordance with the provisions, guidelines,
instructions, policies, interpretations, rules, practices and procedures
communicated to Administrator in writing by Client. Administrator will use
reasonable precaution to guard against fraudulent or erroneous claims.
1.5 Subject to federal and state restrictions and guidelines,
Administrator will notify claimant and Client in writing of any denied claims,
giving a statement of the reasons for denial. In such event, Administrator shall
also notify claimant of the appeal procedure pursuant to the covered services
and referral and/or authorization process under the Plan. If an authorized
representative of Client determines that Administrator has incorrectly denied a
claim and so informs Administrator in writing, Administrator shall pay such
claim forthwith. If an authorized representative of Client determines that
Administrator has misinterpreted the coverage provided by the Plan and so
informs Administrator in writing, all claims reported after delivery of such
writing to Administrator shall be processed for the next check run in accordance
with Client's interpretation as set forth in such writing within 24 hours of
Administrator's receipt of the writing from Client.
1.6 Administrator will respond to inquiries by Client with respect to
the administrative services furnished hereunder, including eligibility
determinations, Plan benefits, claims procedures, and claims determinations.
Administrator will communicate, at Client's direction, in appropriate instances,
with medical or other providers of services or benefits covered by the Plan in
order to clarify eligibility, claims or coverage.
1.7 Administrator shall not be responsible for funding any amounts
due to providers or beneficiaries under the terms of the Plan.
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<PAGE>
CONFIDENTIAL
1.8 Administrator shall produce financial statements reflecting all
receipts and disbursements pertaining to its activities on behalf of Client
hereunder in a format as specified by Client.
1.9 Administrator shall establish and maintain records pertaining to
services under this Agreement necessary to permit Client's auditor, consultant,
and attorney to prepare and file any reports required by law, including tax
exemption returns, tax returns, annual statements, provider payment reports, and
state and federal reports. Administrator shall also establish and maintain
records necessary to permit Client's actuary to determine contribution levels.
Administrator shall allow Client to begin to audit these records thirty (30)
days following Client's written request and to conduct the audit as described in
Section 17.5(ii).
1.10 Administrator shall retain claim files and other books and records
pertaining to transaction under this Agreement for a period of seven (7) years,
after which they may be destroyed. Records in litigated cases shall be retained
until the litigation, including any appeals, is terminated.
1.11 Administrator may, in its sole discretion and at its expense,
employ the services of outside organizations to perform all or part of the
services as necessary to the performance of this Agreement, including
administrative services and management of claims as long as the annual revenue
to such outside organization does not exceed $100,000 per year. If the services
exceed $100,000 per year, Administrator will require its subcontractors to
comply with the Vendex process of the Client. All such subcontract agreements
shall contain the following language:
i. That the work performed by the subcontractor must be in
accordance with the terms of this Agreement;
ii. That nothing contained in such agreement shall impair
the rights of the Client;
iii. That nothing contained herein, or under the Agreement
between the Client and the Administrator, shall create
any contractual relationship between the subcontractor
and the Client; and
iv. That the subcontractor specifically agrees to be bound
by the confidentiality provisions set forth in the
Agreement between the Client and the Administrator.
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<PAGE>
CONFIDENTIAL
1.12 Administrator shall provide such additional services mutually
agreed upon by the parties in writing. Any additional fee for such services
shall be agreed upon by the parties prior to those services being provided.
1.13 The Administrator and the Client agree that the Administrator is
an independent contractor, and not an employee of the Client or the City of New
York and that in accordance with such status as independent contractor, the
Administrator covenants and agrees that neither it nor its employees or agents
will hold themselves out as, nor claim to be, officers or employees of the
Client or the City of New York, or of any department, agency or unit thereof, by
reason hereof, and that they will not, by reason hereof, make any claim, demand,
or application to or for any right or privilege applicable to an officer or
employee of the Client or the City of New York including, but not limited to,
Workers' Compensation coverage, Unemployment Insurance Benefits, Social Security
coverage or employee retirement membership or credit.
1.14 Administrator shall perform the services called for herein
pursuant to the written instructions of Client, and in accordance with the terms
of the Plan for which Client has agreed to provide medical services.
Administrator shall have no financial responsibility to fund the actual payment
of benefits.
1.15 Except as otherwise expressly set forth in this Agreement or as
otherwise mutually agreed, Administrator shall have no authority or
responsibility to provide consulting, legal, actuarial, audit, tax, or
investment services to Client.
1.16 Administrator shall notify Client in writing about any substantial
dispute involving Client or its members within seven (7) days after
Administrator becomes aware of such dispute. If seven (7) days' notice proves to
be a detriment to Client or Administrator, Administrator and Client shall
renegotiate to shorten said time period.
2. Responsibilities of Client
2.1 Client shall meet its responsibilities set forth in this Agreement
and as specified in Exhibits "B" and "C" herein.
2.2 Client shall advise Administrator in writing of any modification or
amendment to its agreement with the Plan, including the effective date of such
modification or amendment. If such modification or amendment alters or enlarges
the responsibilities of Administrator hereunder, Administrator's implementation
of such modification shall be subject to Section 6 of this Agreement. The Client
agrees to provide the Administrator
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<PAGE>
CONFIDENTIAL
with any information the Administrator requires in order to perform the
administrative services as agreed upon by the parties. The Client agrees to
provide the Administrator with any additional information reasonably deemed
necessary by the Administrator and to cooperate with the Administrator to the
extent necessary to allow the Administrator to properly and efficiently perform
the administrative responsibilities identified herein.
3. Term and Termination
3.1 This Agreement shall commence on the Effective Date, and shall
remain in effect for three years after First Productive Use or until terminated
in accordance with the provisions of this Section 3 Term. "First Productive Use"
shall mean after implementation and training when the Administrator begins claim
processing in a live environment and begins receiving the Monthly Service Fee.
This Agreement will automatically renew for successive one (1) year terms at the
rates set forth in this Agreement plus CPI for the previous twelve (12) months
unless either party provides the other with a written notice of termination or a
written notice of exercise of an option described in Section 3.6 twelve (12)
months prior to the end of the then current term.
3.2 (i) Either party has the right to terminate this Agreement for the
reasons in this Section 3.2(i) ninety (90) days after giving written notice if
the default has not been resolved within that time period:
a. Material breach of this Agreement; or
b. Complete liquidation under Chapter 7 of the
U.S. Bankruptcy Code
(ii) The Client shall have the right to terminate this
Agreement in whole or in part upon ninety (90) days prior written notice to
Administrator:
a. Upon the failure of Administrator to comply with any
of the material terms and conditions of this
Agreement which has not been resolved pursuant to
Section 14 of this Agreement;
b. Without cause, if the Client deems that termination
would be in the best interest of the Client or the
City of New York.
(iii) Administrator shall have the right to terminate this
Agreement in whole or in part upon ninety (90) days prior written notice to
Client:
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<PAGE>
CONFIDENTIAL
a. Upon the failure of Client to comply with any of the
material terms and conditions of this Agreement
which has not been resolved pursuant to Section 14
of this Agreement.
b. As of the date that Client withholds payments for
purpose of set off and if the amount withheld by
Client is 10% or more of the Monthly Service Fees
due and/or 10% or more of the aggregate
of the prior six month's fees provided that if
Client withholds payment due to a difference with
and/or inability to calculate the number of members,
then a reconciliation of the number of new members
and the fees due shall occur within 30 days prior to
the 10% calculation. (This clause shall supersede
any other clause of this Agreement that may
be deemed inconsistent with it.)
c. As of the date that the Client or its permitted
assigns or successors has ceased to maintain the
Plan.
d. At the time any judicial or regulatory body
determines that this Agreement, is invalid or
illegal, or that this arrangement constitutes an
insurance policy or program which is subject to
State and/or Federal Insurance Regulation and/or
taxation.
(iv) Notwithstanding the ninety (90) day notification
requirement in Section 3.2(i) given above, Administrator will continue to
perform its services in the event of termination for an additional one hundred
eighty (180) days if requested by the Client, as applicable, and pays at the fee
schedule in this Agreement.
(v) For purposes of this Section, the "Date of Termination" of
this Agreement shall be the later of the end of the ninety (90) day notice
period provided in this Section or the end of the one hundred eighty (180) day
extension period provided in 3.2 (iv), if requested by Client, as applicable.
3.3 The Client will be liable to the Administrator for the
Administrative fees for all claims adjudication activity by the Administrator,
including any activity taking place after the termination of the Agreement.
3.4 Following completion of all services hereunder, Client shall
remit to Administrator all fees (minus a $50,000 withhold) due for services
rendered through the
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<PAGE>
CONFIDENTIAL
Date of Termination, and Administrator shall deliver to Client in sixty (60)
days following the Date of Termination and the subsequent run-off period in
Section 3.5 all records, accounts, claim files, and other documentation
necessary for the ongoing administration of the claims in an agreed upon format
subject to legal requirements involving confidentiality of medical records, at
which time Client shall pay Administrator the $50,000 withhold.
3.5 Run-off claims. Administrator will retain the files and process
claims for charges incurred prior to the Date of Termination of this Agreement
as defined in 3.2 (v) for a period of 180 days and at the then current fee
schedule. The provisions of this Agreement shall continue in force regarding
claims processed during the run-out period, except as made inapplicable by the
termination of this Agreement.
3.6 Upon written request received 12 months prior to the end of the
Term, Client shall have the option to receive all or part of the services under
this Agreement on a central processing unit installed at Client's,
Administrator's or any mutually agreed to location at Administrator's then
current terms and conditions.
3.7 The Monthly Service Fee is based on a thirty-six (36) month term.
If Client terminates prior to the expiration of the 36 month term for any
reason, except for Administrator's material breach as described in Sections
3.2(i), or 3.2(ii), or if Administrator terminates the Agreement prior to
expiration of the 36 month term due to Client's material breach as described in
Sections 3.2(i) or 3.2(iii), Client shall pay Administrator a termination fee of
$950,000 divided by the 36 month term with the quotient multiplied by the
remaining months of the Term.
An example of the calculation of the termination fee is as
follows:
Assume the Agreement is terminated in the 18th month of the
term.
($950,000 / 36) x 18 = $475,000
4. Project Administration
It is the intention of the parties to work in a cooperative,
businesslike manner and remain committed to maintaining a flexible attitude
toward solving service and business challenges. Administrator and Client each
shall designate a permanent representative ("Account Manager") familiar with the
performance of administrative services under this Agreement to attend formal
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<PAGE>
CONFIDENTIAL
quarterly meetings and informal meetings monthly or more frequently as necessary
and mutually agreed, to assist in the preparation of agendas for such meetings,
and to report on the operations of the Plan and the performance of
administrative services pursuant to this Agreement.
Client and Administrator shall create a Steering Committee to provide
executive oversight of the ongoing relationship and address issues of strategic
significance as they arise. Through the Steering Committee, the parties shall
share the strategies of each organization and maintain ongoing communication
regarding the expectations, goals and objectives of each organization towards
this joint project. The Steering Committee members also shall be empowered to
make decisions and commit their respective organizations to resolve issues, and
disputes regarding this Agreement. The Steering Committee shall meet monthly
during the implementation period as defined in Exhibit G and the following three
(3) months, then quarterly or as mutually agreed.
5. Fees and Schedule of Charges
5.1 In consideration for the services to be rendered by Administrator
hereunder, Client shall pay Administrator the fees as mutually agreed by Client
and Administrator as described in Exhibit A.
5.2 The administrative fees and additional charges shall be payable to
the Administrator within thirty (30) days of written notification to the Client
of the amount owed. In the event the Client fails to pay any undisputed amount
owed in full within said thirty (30) day period, the Client shall pay to the
Administrator, in addition to amount due, a late charge as set forth in Exhibit
"A".
5.3 The Administrator, acknowledging that this Agreement is funded in
whole or in part by funds secured from the Federal, State and City Government,
agrees that should there be a reduction or discontinuance of such funds by
action of the Federal, State or City Government, the Client shall have, in its
sole discretion the right to terminate the services provided for in this
Agreement in whole or in part, or to reduce the funding and continued level of
service of this Agreement to eliminate any adverse impact of such action upon
the Client provided that Client is current in its payment obligations under this
Agreement. Any such termination due to discontinuance of the funds shall take
effect upon 90 days written notice thereof to the Administrator. In the case of
reduction in funds, any such reduction shall be effective as of the date set
forth in a written notice thereof to the Administrator, which shall be not less
than 90 calendar days from the date of such notice. If Client exercises its
right under this Section, it shall not contract with any other vendor for
similar services for 18 months after the Date of Termination.
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<PAGE>
CONFIDENTIAL
6. Changes in Administrative Services and Procedures
6.1 The responsibilities of the parties may be modified by mutual
written Agreement between the parties but shall not exceed the scope of the
Request for Proposal.
6.2 In the event that Administrator and Client agree to revise or
modify the nature of the administrative services performed under this Agreement,
or to alter the procedures or practices by which such services are performed,
Administrator may modify any of the Schedule of Charges in Exhibit "A." In the
event of such modification or change, the effective date of the revised Schedule
of Charges shall be the day the modified Plan begins or the change takes effect,
as determined by the Administrator. This provision applies to changes in the
administrative services rendered hereunder for any reason, including revisions
in the agreement between Client and the Plan, eligibility rule, collective
bargaining agreement, record keeping requirement, or changes required by law.
6.3 Administrator shall implement any amendment or modification to the
Plan on the first of the month following receipt of such notice of such
modification, provided that the notice is received within a reasonable time
prior to the first of the month to allow implementation.
6.4 In the event that Administrator and Client are unable to reach
Agreement regarding the amount to be paid as a result of a change in the
services rendered hereunder, either party may utilize the dispute resolution
procedure in Section 14 hereof.
7. Use of System Services
Client shall limit access to the on line system and documentation to
its employees (and agents) whose responsibilities require such access and who
agree to abide by the provisions of this Agreement. Client shall adopt measures
to assure that its employees (and agents) will make no disclosure concerning the
system or documentation or the information contained therein to other persons or
entities. Client shall limit access to the system and documentation to Client.
Client agrees to treat the documentation furnished to Client as a valuable asset
of Administrator and agrees that such items shall not be used for any purpose
other than to comply with regulatory reporting requirements or to assist in the
normal use of the system as specified in this Agreement. In particular, but
without limiting the generality of the foregoing, Client agrees it will not
decompose, decompile, disassemble, or attempt in any way to reverse engineer the
system or to use the system or the documentation to develop functionally similar
computer software. Client agrees that it will not permit a third party to do any
of the activities described in this Section. Client agrees that it will not
provide access to the system through any method to any non-agent third party.
- 25 -
<PAGE>
CONFIDENTIAL
8. Ownership of Books, Records and Software
8.1 Except as otherwise expressly set forth in this Agreement, all
books, records, lists of names, journals, ledgers, and all other recorded
information regarding Client's agreement to arrange for medical services,
participation therein, and the payment of claims or benefits thereunder shall be
and remain the property of Client. This includes all data stored in any data
processing media pertaining to Client or the Plan. Upon the termination of this
Agreement, any such materials or information in the possession of Administrator
shall be promptly returned to Client, and, except as provided in Section 3
pertaining to runoff claims, Administrator shall have no right to their further
use.
8.2 Administrator's claims processing and payment manuals,
communication manuals, administrative procedure manuals, data processing systems
and designs, and computer programs, system documentation and processes used in
connection with the provision of services hereunder, and any other materials
determined by Administrator to be proprietary, shall be and remain the property
of Administrator, including without limitation, all right, title and interest in
and to any and all copies, modifications, translations and derivative works that
are in any way based on the services, software or processes provided under this
Agreement. In the event this Agreement is terminated, any such materials in the
possession of Client shall be promptly returned to Administrator, and Client
shall have no right to their further use.
8.3 Neither Administrator nor any of its subcontractors or agents may
use Client's data in any other way than as directed by Client's employees or
authorized agents, except as required by law.
8.4 If Administrator and Client jointly design software or
specifications which implement a specific solution or develop any accompanying
literature specifically in connection with this Agreement, Administrator and
Client shall negotiate a fee to take such contributions into account, which fee
may be credited against the Monthly Service Fees.
9. Confidentiality
9.1 Each party acknowledges that any of the other party's business data
or trade secrets (hereinafter collectively referred to as "Trade Secrets") that
a party shall have access to through the performance of obligations specified
hereunder are valuable property owned by that party and are being made available
on a strictly confidential basis. Each party agrees to treat Trade Secrets and
this Agreement with at least the same degree of care and protection that each
party exercises with respect to its own trade secrets and confidential
information, and shall
- 26 -
<PAGE>
CONFIDENTIAL
take necessary precautions to prevent the disclosure of the Trade Secrets to
third parties not involved in carrying out the terms of this Agreement.
9.2 Subject to applicable laws, Administrator will release to Client
certain confidential member information for purposes of monitoring designated
cases, provided that Client is in compliance with all other terms and conditions
of this Agreement.
9.3 Client and Administrator, respectively, shall maintain all health
insurance records and information relating to individually identifiable covered
group members and their covered dependents in strict confidence and shall use
such information only for proper and lawful purposes. Unless, as required by
law, no health insurance records or information, or claims information, shall be
disclosed without the prior written authorization of the individual whose
records or information would be disclosed.
9.4 Client and Administrator, respectively, shall limit access to any
information provided under this Agreement to only those of its employees whose
access to such information is directly related to and necessary for the proper
administration of the Agreement and the obligations imposed by the Agreement.
All employees who are given access to such information must execute a
Confidentiality Agreement.
9.5 The obligations of confidentiality set forth in this Section shall
not apply to information (i) disclosed to the extent required by a court of law
or federal, state or local statutes or regulations; (ii) independently developed
by the party receiving the information; (iii) acquired by a party from a third
party not subject to such obligations, unless Client knew that the information
being revealed is confidential as described in this Agreement; or (iv) which is
or becomes part of the public domain through no breach of this Agreement by the
revealing party.
9.6 Client and Administrator agree not to remove any copyright or
proprietary notice rights included in any manual, documentation, software or
system and shall reproduce all such notices in or on all copies.
10. Representations and Warranties
10.1 Services being performed by Administrator are competent,
workman-like, and will meet the standards as defined in this Agreement or, if
not defined, industry standards.
10.2 Subject to Section 10.3 below, Administrator agrees to meet or
exceed the performance standards as specified in Exhibit D.
- 27 -
<PAGE>
CONFIDENTIAL
10.3 Administrator has performed an operational assessment of Client's
business and has noted Client responsibilities in Exhibits B and C. All
warranties, performance standards, and penalties are conditioned upon and may
change if Client fails to follow these recommendations.
10.4 The Administrator represents and warrants that no person, entity
or selling agency has been employed or retained to solicit or secure this
Agreement upon an agreement or understanding for a commission, percentage,
brokerage fee, contingency fee or any other compensation. The Administrator
further represents and warrants that no payment, gift or thing of value has been
made, given or promised to obtain this or any other agreement between the
parties. The Administrator makes such representations and warranties to induce
the Client to enter into this Agreement and the Client relies upon such
representations and warranties in the execution hereof.
10.5 The Administrator represents and warrants that neither it nor any
of its directors, officers, members, partners or employees, has any interest nor
shall they acquire any interest, directly or indirectly, which would or may
conflict in any manner or degree with the performance or rendering of the
services herein provided. The Administrator further represents and warrants that
in the performance of or the rendering of services under this Agreement no
person having such interest or possible interest shall be employed by it. No
elected official or other officer or employee of the Client or City of New York
(the "City"), nor any person whose salary is payable, in whole or in part, from
the City Treasury, shall participate in any decision relating to this Agreement
which affects such person's personal interest or the interest of any client,
partnership or association in which such person is, directly or indirectly,
interested; nor shall any such person have an interest, direct or indirect, in
this Agreement or in the proceeds thereof.
10.6 The Administrator represents and warrants that it: (a) is not in
arrears to the Client or City upon debt or contract, and is not a defaulter, as
surety or otherwise, upon any obligation to the Client and the City of New York,
and has not been declared not responsible or disqualified, by any agency of the
City or State of New York nor is there any proceeding pending relating to the
responsibility or qualification of the Administrator to enter into any public
contract; and (b) has paid all applicable City income, excise, and other taxes
due from all years it has conducted business activities in the City.
10.7 The Administrator and each person signing on behalf of the
Administrator represents, warrants and certifies, under penalty of perjury, that
to the best of their knowledge and belief:
(i) The prices in this Agreement have been arrived at
independently without collusion, communication or
agreement, with the intent of restricting
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<PAGE>
CONFIDENTIAL
competition, as to any matter relating to such prices
with any other competitor;
(ii) Unless otherwise required by law, the prices which have
been quoted in this Agreement and on the proposed
submitted by the Administrator have not been knowingly
disclosed by the Administrator prior to the proposal
opening, directly or indirectly, to any other bidder or
to any competitor; and
(iii) No attempt has been made or will be made by the
Administrator to induce any other person, partnership,
client or other entity to submit or not to submit a
proposal with the intent of restricting competition.
(iv) The fact that the Administrator has (i) published price
lists, rates, or tariffs covering items being procured;
(ii) informed prospective customers of proposed or
pending publication of new or revised price lists for
such items; or (iii) has sold the same items to other
customers at the same prices being bid, does not
constitute, without more, a disclosure within the
meaning of paragraphs (a) or (b) above.
10.8 The Administrator represents that the appropriate Principal and/or
Business Entity or Not-for Profit Organization Questionnaires (the
"Questionnaires") submitted to Administrator as applicable, have been duly
executed and submitted to the Client. The Administrator understands that the
Client's reliance upon the veracity of the information stated therein is a
material condition to its execution of this Agreement, and that such information
is in no respect misleading.
10.9 The Administrator shall submit the appropriate Questionnaires, or
if applicable, an annual "Affidavit of No Change" upon the extension or renewal
of this Agreement. The Administrator shall submit newly completed Questionnaires
to the Client every three (3) years. This Agreement shall be a nullity until the
Administrator submits fully completed, signed and notarized Questionnaires to
the Client. If, for any reason, final review of the Questionnaires and the
Administrator's background by the Client cannot be obtained prior to mutual
execution of this Agreement, the Client may terminate this Agreement immediately
upon written notice to the Administrator after receipt of information from the
Client's Office of the Inspector General of the kind that would typically be
used as a basis for finding an administrator not responsible to receive a
contract award. Such notice will provide the Administrator with an opportunity
to contest the accuracy of the information at a hearing before a panel of Client
officials, at which the Administrator may be represented by counsel.
- 29 -
<PAGE>
CONFIDENTIAL
ADMINISTRATOR DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS, IMPLIED OR
STATUTORY AND REPRESENTATIONS PERTAINING TO THE PERFORMANCE OF SERVICES
EXCEPT AS STATED IN THIS AGREEMENT.
11. Indemnification
11.1 Administrator does not insure or guarantee Client's provision of
medical services in any respect. Client retains the ultimate responsibility for
honoring claims, and all expenses incidental thereto, except as specifically
assumed by Administrator under the terms of this Agreement. It is understood and
agreed by the parties that the Client retains all final authority and
responsibility for the proper administration of the Plan including but not
limited to, the benefit structure of the Plan, claims adjudication decisions,
cost containment program decisions, utilization benefits management, financial
responsibility for claims payments, compliance with the requirements of COBRA
(Consolidated Omnibus Budget Reconciliation Act of 1985), any compliance with
the requirements of ERISA, compliance with reporting with any other state or
federal law or regulation applicable to the Client or the administration of the
Plan.
11.2 It is understood and agreed by the parties that the Administrator
is only authorized to act on behalf of the Client in connection with the
administration of the Plan to the extent expressly stated herein, and to the
extent necessary to effectuate the intent of this Agreement, and as mutually
agreed upon by the parties in writing. Furthermore, it is understood and agreed
by the parties that the Administrator is only obligated to provide the specific
services described in this Agreement and the exhibits attached hereto. In no
case shall the Administrator act as or be considered a fiduciary for purposes of
ERISA.
11.3 Client hereby represents that it shall be responsible for the acts
or omissions of Client, MetroPlus, agents or its wholly owned or managed
affiliate(s) or their respective employees, in connection with this Agreement
and will defend, indemnify and hold harmless Administrator, its subcontractors,
its officers, employees, and agents for such acts or omissions providing that
such defense is in accordance with Client's agreement with the City as
referenced in the following sentence. The representation is based upon and
limited to the obligation of the City of New York to defend, indemnify and hold
harmless Client, its officers, employees, agents and contracted affiliates from
any and all liability and damages arising from or in connection with the
provision and delivery of health services, as defined in this Agreement or
following the directions and instructions of Client or its agents, including the
furnishing or alleged furnishing of such medical and claims information
concerning any of the covered group members or their covered dependents.
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11.4 The Administrator shall be responsible for all physical injuries
to, or death of, its officers, agents, or employees, or any other person arising
on Client's premises during the period of performance or the rendering of
services under this Agreement and for all damage to any property on Client's
premises sustained during its operations and under this Agreement resulting
solely from any negligence, fault, act or omission or error in judgment of any
of its officers, trustees, employees, agents, or independent contractors,
(except to the extent such claims are due to the sole negligence of Client or
the City), up to the insurance coverages set forth in Section 13. The
Administrator shall hold harmless and indemnify the Client and the City from
liability upon any and all claims for damages on account of such injuries to or
death of any such person or damages to such property on account of any neglect,
fault, act of commission or omission or error in judgment of the Administrator,
its officers, trustees, employees, agents, or independent contractors, (except
to the extent such claims are due to the sole negligence of the Client or City)
up to the insurance coverages set forth in Section 13. Client shall notify
Administrator promptly in the event of any such claims and allow Administrator
to control the defense and settlement and shall cooperate with Administrator in
such defense. The Administrator shall be responsible for the safety and
protection of all of its employees due solely to the negligence, fault or
default of the Administrator. In the event that any claim is made or any action
is brought against the Client or City solely arising out of the negligence or
careless acts of an employee of the Administrator, within the scope of this
employment, or solely arising out of the Administrator's negligent performance
of this Agreement, then the Client or City shall have the right to withhold
further payments hereunder for the purpose of set-off in sufficient sums to
cover the said claim or action up to the amount set forth in Section
3.2(iii)(b).
11.5 The obligations under this paragraph shall be binding upon and
inure to the benefit of the successors and permitted assigns of the parties.
12. Limitation of Remedies
12.1 Administrator shall be liable to Client, including Client's
officers, agents and employees, from all loss, damage or expense with respect to
the subject matter of this Agreement to the extent resulting from or arising out
of acts or omissions under this Agreement, on the part of Administrator, or any
of its officers, agents, subcontractors or employees, acting alone or in
conjunction with others in the aggregate, up to the lesser of (i) the face
amount of the actual damages or (ii) the monetary amount below in the aggregate
for services to which the liability relates.
$500,000 0-100,000 members
$750,000 100,001 - 200,000 members
$1,000,000 200,001 and above
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12.2 Neither party shall be liable for any amounts for indirect,
consequential, special or punitive damages of any party, including without
limitation any third parties, or for damages resulting from loss of use, loss of
data or loss that could have been avoided if Client or Administrator had
complied with whatever procedures are reasonable in the circumstances to verify
the data furnished by Client or Administrator before utilization thereof.
12.3 Client's exclusive remedy for any cause whatsoever, regardless of
the form of action, whether in contract or tort, and Administrator's entire
liability to Client is set forth in this Section or as otherwise expressly
provided in this Agreement.
13. Insurance. Administrator agrees to maintain the following insurance
coverages during the term of this Agreement:
13.1 Errors and omissions - $2,000,000
13.2 Excess liability - $3,000,000
14. Alternative Dispute Resolution
In the event that a dispute arises between Administrator and Client
which cannot be resolved in the normal course, the following dispute resolution
procedures shall be followed:
14.1 Within ten (10) business days of a written request by either
party, (i) the parties' respective Account Managers shall meet to resolve the
issue; if these parties cannot resolve the issue within ten (10) business days
of the meeting, then (ii) the issue shall be submitted to the Steering
Committee, if the Committee cannot resolve the issue within ten (10) business
days, then (iii) the issue shall be submitted to Administrator's President and
Client's President; if these parties cannot resolve the issue within ten (10)
business days, then (iv) the parties hereto shall be entitled to pursue all
available remedies.
14.2 This dispute resolution process must occur prior to the exercise
of other rights and legal remedies available under this Agreement, including
Sections 14.3, 14.4, 14.5 and 14.6. This provision shall not apply to claims for
equitable relief (e.g., injunction to prevent disclosure of confidential
information).
14.3 If, in the sole judgment of the Client, the Administrator's
performance of the work or other performance under this Agreement is improper,
dilatory, or otherwise not in strict compliance with all requirements of this
Agreement, the Client may at its sole option, in addition
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to any other right or remedy of the Client, issue a written warning to the
Administrator that it is a poor performer (the "Warning").
Such Warning may be issued, at any time prior to the
termination of this Agreement. If the Administrator disputes such Warning, the
Administrator shall be given written notice (the "Protect Notice") to the Client
within fifteen (15) business days of receipt of the Warning. The Client shall
review the matter and deliver a written determination to the Administrator
either affirming, modifying or rescinding the Warning. If the Client does not
give the Administrator a determination with forty-five (45) days of receipt of
the Administrator's Protect Notice, the Warning shall be deemed rescinded on the
forty-fifth (45th) day following such receipt. Within ninety (90) days but not
less than thirty (30) days after the termination of this Agreement (unless the
Warning was previously rescinded), the Client shall review the Administrator's
performance and shall either rescind the Warning or shall notify the
Administrator of its right to appear at a hearing on not less than five (5) days
notice to determine if the Administrator shall be classified as a poor
performer. At any such hearing, the Administrator may be represented by counsel
and present or refute evidence and testimony relevant to the issue of the
Administrator's alleged poor performance. The client shall issue a written
decision either classifying the Administrator as a poor performer or rescinding
the Warning, as the case may be, with the reasons therefor.
14.4 If the Administrator disputes the final poor performer
classification by the Client, the Administrator may seek review of the decision
by requesting the Client, in writing, within ten (10) business days of receipt
of the final poor performer classification to convene a review board. The
Client's decision shall be final and binding with respect to the classification
of the Administrator as a poor performer if the Administrator does not request a
review as herein provided.
14.5 If the Administrator does not dispute the final performer
classification by the Client, the Client shall upon five (5) days written notice
to the Administrator and within fifteen (15) days of having delivered such
written notice to the Administrator, convene a board of responsibility to
determine if the Administrator is a responsible administrator.
14.6 The Administrator agrees to forebear from the commencement of any
action or proceeding regarding the Client's classification of the Administrator
as a poor performer, unless the Administrator has requested a review board
pursuant to Section 14.4 above, and such board has issued a final decision.
14.7 Any notice to the Administrator under this section shall be
sufficient if it complies with the notice provision of this Agreement.
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14.8 Termination under this Section shall not be considered a
material breach of this Agreement.
15. Non-Hiring
15.1 During the term of this Agreement and for a one (1) year period
commencing with the termination of this Agreement, each party agrees not to
employ, directly or indirectly, or through any third-party rendering services on
behalf of such party, any employees of the other or its parent, affiliates or
subsidiaries without written consent of the other party which shall not be
unreasonably withheld. Each party agrees that the other party does not have an
adequate remedy at law to protect its rights under this Section and agrees that
the non-defaulting party will have the right to injunctive relief from any
violation or threatened violation of this Section.
15.2 For the term and for one year thereafter, MetroPlus shall not
solicit work directly from Administrator's subcontractors without
Administrator's prior written approval, which shall not be unreasonably
withheld. For purposes of this Section, a request for proposal issued to the
industry shall not qualify as solicitation.
16. Publicity, References and Site Visits
16.1 The prior written approval of the Client is required before the
Administrator or any of its employees, agents, or independent contractors may,
at any time, either during or after termination or cessation of the services
required by this Agreement, make any statement to the press or issue any
material for publication through any media of communication bearing on the work
performed or data collected under this Agreement. Notwithstanding the above,
Administrator may refer to Client as a customer of third party administrator
services in materials describing Administrator and its business.
16.2 If either party or any of its employees publishes an article
dealing with any aspect of performance under this Agreement, or of the results
and accomplishments attained in such performance, the other party shall have a
royalty-free, non-exclusive and irrevocable license to reproduce, publish or
otherwise use and authorize others to use the publication.
16.3 Client agrees that so long as Administrator is performing the
services in a satisfactory manner, Client shall host site visits and provide
references to prospective new clients of Administrator with Client's prior
approval.
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17. General Provisions
17.1 Upon the Effective Date of this Agreement, Administrator shall be
the sole provider to MetroPlus of the features, functions and services
identified in this Agreement for the Term. Client may contract with other
Administrators for any services or lines of business not provided for under this
Agreement.
17.2 Notices. The Administrator and the Client hereby designate the
business addresses hereinbelow specified as the places where all notices,
direction or communications from one such party to the other party shall be
delivered, or to which they shall be mailed. Actual delivery of any such notice,
direction or communication to a party at the aforesaid place, or delivery by
certified mail, return receipt requested or by overnight mail delivery for which
evidence of delivery was obtained by sender shall be conclusive and deemed to be
sufficient service thereof upon such party as of the date such notice, direction
or communication is received by the party. Such address may be changed at any
time by an instrument in writing executed and acknowledged by the party making
such change and delivered to the other party in the manner as specified above.
Nothing in this section shall be deemed to serve as a waiver of any requirements
for the service of notice or process in the institution of an action or
proceeding as provided by law. All notices shall be addressed as follows:
To: MetroPlus Health Plan
11 West 42nd Street
New York, NY 10110
Attention: Executive Director
cc: New York City Health & Hospitals Corporation
President
To: US Servis, Inc.
414 Eagle Rock Avenue
West Orange, NJ 07052
Attention: CEO
17.3 Complete Agreement. This Agreement constitutes the complete
Agreement between the parties, and supersedes all prior or contemporaneous
representations, Agreements, and communication on the subject matter hereof.
This Agreement may be amended or modified only by written document duly executed
by both parties. The invalidity of any portion of this Agreement shall not
affect the validity of the remainder provided the basic purpose of this
Agreement may be achieved through the remaining valid provisions.
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17.4 Assignment. This Agreement shall not be assigned or transferred by
either party hereto without the express written consent of the other party,
which consent shall not be unreasonably withheld, except to a subsidiary, parent
or subsidiary of a common parent. Any attempted assignment in violation of this
section shall be void. Nothing in this Section shall relieve the assignor and/or
the assignee of its obligations under this Agreement.
17.5 Access to Records.
(i) Either party to this Agreement shall, upon reasonable
notice to the other party hereto, be granted access to such other party's books
and records only as they pertain to the performance of this Agreement and the
obligations incurred hereunder. Such access shall not disrupt the conduct of the
other party's business, and shall be subject to the restrictions contained in
this Agreement regarding proprietary rights to such books and records.
(ii) Client reserves the right to perform a two (2) week audit
of Administrator's books and records relating to the services performed pursuant
to this Agreement upon thirty (30) days prior written notice. In the event the
audit is performed, the thirty (30) days prior to the commencement of the audit,
the duration of the audit and thirty (30) days after the audit will be excluded
from the performance standards and measurements as outlined in Exhibit D.
(iii) The Administrator shall not be liable for the
fulfillment of any obligations dependent upon information contained in such
records prior to receipt of that information in a form, acceptable to the
Administrator and Client. Examination of such records will be carried out in a
manner designed to reasonably protect the confidentiality of the information.
(iv) Upon the written request of the Secretary of Health and
Human Services, the Comptroller General of the Government Accounting Office, or
their authorized representatives, Administrator shall make available all
contracts, books, documents and records relating to the nature and extent of the
costs hereunder for a period of four (4) years after the furnishing of services
hereunder. If Administrator carries out any of the duties of this Agreement
through a subcontract with a value of $20,000 or more over a twelve (12) month
period, Administrator agrees to include this requirement in any such
subcontract.
(v) Both parties acknowledge that this Agreement is a
confidential document which contains trade secret business information. Thus,
the Client or MetroPlus shall follow the procedure below should a third party
(other than the City Comptroller) request access to all or part of this
Agreement under applicable federal, state or local public records disclosure
laws:
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(i) The Client or Metroplus shall promptly provide
Administrator with a copy of the written request for
disclosure.
(ii)Upon receipt of the request from Client or MetroPlus,
Administrator shall have 15 days to respond and raise
any objections to such disclosure.
(iii) Within 15 days of receipt of Administrator's
response, the Client or MetroPlus shall decide
whether or not to disclose the Agreement.
(iv) If Client or MetroPlus decides that disclosure is
appropriate, Administrator may appeal the decision
to the appropriate judicial bodies prior to the
actual release of the Agreement or of any part
thereof by Client or MetroPlus.
17.6 Subsidiaries, Subcontractors and Affiliates. Except as
specified in Section 1.11, any of the functions to be performed by the
Administrator under this Agreement may be performed by the Administrator or any
of its subsidiaries, affiliates, subcontractors or designees.
17.7 Force Majeure. Administrator shall not be liable for any delay in
or failure to perform any of the covenants contained herein if such delay or
failure is caused by events beyond the reasonable control of Administrator
("Force Majeure"). Force Majeure shall extend the time for performance as
mutually agreed (such approval shall not be unreasonably withheld) and to such
extent as may be necessary to enable Administrator to complete performance in
the exercise of reasonable diligence after the cause of the delay or failure has
been removed.
17.8 Scope of Agreement. By execution of this Agreement Client is
contracting with Administrator to perform only those services and software
features and functions specifically described herein. Administrator assumes
neither responsibility nor liability for any actions taken or services
performed, or not performed, by any entity prior to the Effective Date of this
Agreement. This Agreement does not, nor is it to be construed as relieving
Client of any obligations which it incurred under its agreements with the Plan.
17.9 Jurisdiction. This Agreement has been executed in, and shall be
governed by the laws of the State of New York. The invalidity or
unenforceability of any terms or conditions thereof shall in no way affect the
validity or enforceability of any other terms or provisions. The waiver by
either party of a breach or violation of any provision of this Agreement shall
not operate as or be construed to be a waiver of any subsequent breach thereof.
The parties agree that any litigation arising from this Agreement will be
brought before the appropriate federal court located in the State of New York.
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17.10 No action at law or proceeding in equity shall lie or be
maintained upon any claims based upon this Agreement or arising out of this
Agreement or in any way connected with this Agreement unless the party bringing
the claim shall have strictly complied with all requirements relating to the
giving of notice and information with respect to such claims, all as herein
provided.
17.11 No action shall lie or be maintained against any party upon any
claims based upon this Agreement unless such action shall be commenced within
six (6) months of the termination or expiration of this Agreement, or within six
(6) months after the accrual of the cause of action, whichever is earliest.
17.12 In the event any claim is made or any action brought in any way
relating to this Agreement, each party shall diligently render to each other any
assistance that they may reasonably require.
17.13 The Administrator shall report to the Client in writing within
five (5) working days of the initiation by or against the Administrator of any
legal action or proceeding in connection with or relating to this Agreement. No
claim whatsoever shall be made by either corporate party against any officer,
agent or employee within the scope of employment or agency of the other
corporate party for, or on account of, anything done or omitted in connection
with this Agreement.
17.14 Survival of Provisions Upon Termination. Any provision of this
Agreement which requires the performance of obligations by either party after
the termination of this Agreement shall survive such termination, unless
otherwise specifically provided therein.
17.15 Execution of Agreement. This Agreement will be effective and
binding on the parties only if the duly authorized signatures of the parties are
affixed hereto where indicated on the signature page below, and not otherwise.
17.16 Compliance with law. Client and Administrator shall obtain all
required approvals and licenses from appropriate Federal, State, and City
authorities and render all services under this Agreement in accordance with
applicable Federal, State and local laws, rules and regulations.
17.17 Minimum wages. Except for those employees whose minimum wage is
required to be fixed pursuant to Section 220 of the Labor Law of the State of
New York, all persons employed by the Administrator in the performance of this
Agreement shall be paid, without subsequent deduction or rebate, unless
expressly authorized by law, not less than the minimum
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wage as prescribed by law. Any breach or violation of the foregoing shall be
deemed a breach or violation of a material provision of this Agreement.
17.18 Federal employment practices. The Administrator and its
subcontractors shall comply with the Civil Rights Act of 1964 and any amendments
thereto, and the rules and regulations thereunder.
17.19 Non-Discrimination against the handicapped. The Administrator
agrees that it will comply with the provisions of the Rehabilitative Act of 1972
and the Americans with Disabilities Act of 1992, and all regulations, guidelines
and interpretations issued pursuant thereto.
17.20 Investigations. The parties agree to cooperate fully and
faithfully with any investigation, audit or inquiry conducted by a State, City
or other governmental agency or authority that is empowered directly or by
designation to compel the attendance of witnesses and to examine witnesses under
oath, or conducted by the Inspector General of a governmental agency that is a
party in interest to the transaction, submitted bid, submitted proposal,
contract, lease, permit, or license that is the subject of the investigation,
audit or inquiry.
17.21 (i)If any person who has been advised that his or her
statement, and any information from such statement, will not
be used against him or her in any subsequent criminal
proceeding refuses to testify before a grand jury or other
governmental agency or authority empowered directly or by
designation to compel the attendance of witnesses and to
examine witnesses under oath concerning the award of or
performance under any transaction, agreement, lease, permit,
contract, or license entered into with the Client, City, the
State, or any political subdivision or public authority
thereof, or the Port Authority of New York and New Jersey, or
any local development corporation within the city, or any
public benefit corporation organized under the laws of the
State of New York; or
(ii) If any person refuses to testify for a reason other
than the assertion of his or her privilege against
self-incrimination in an investigation, audit or
inquiry conducted by the Client, City or State or
other governmental agency or authority empowered
directly or by designation to compel the attendance
of witnesses and to take testimony under oath, or by
the Inspector General of the governmental agency that
is a party in interest in, and seeking
testimony concerning the interest in, and seeking
testimony concerning the award of, or performance
under, any transaction, agreement, lease, permit,
contract, or license entered into with the Client,
City the State, or any
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political subdivision thereof or any local
development client within the City; then:
17.22 (i)The President of Client shall convene a hearing upon not
less than five (5) days' written notice to the parties
involved to determine if penalties should attach for the
failure of a person to testify.
(ii) If any non-governmental party to the hearing requests
an adjournment, the President of the Client may, upon
granting the adjournment, suspend any contract,
lease, permit or license of the party granted the
extension pending the final determination pursuant to
Section 17.24, below, without the Client or City
incurring any penalty or damages for delay or
otherwise.
17.23 The penalties which may attach after a final determination by the
President may include but shall not exceed:
(i) The disqualification for a period not to exceed five
(5) years from the date of an adverse determination
for any person, or any entity of which such person
was a member at the time the testimony was sought,
from submitting bids for, or transacting business
with, or entering into or obtaining any contract,
lease, permit or license with or from the Client or
City; and/or
(ii) The cancellation or termination of the rights or
interest of the person or entity it represents in any
and all such existing Client or city contracts,
leases, permits or licenses that the refusal to
testify concerns and that have not been assigned as
permitted under this Agreement, nor the proceeds
of which have been pledged, to an unaffiliated and
unrelated institutional lender for fair value prior
to the issuance of the notice scheduling the
hearing, without the Client or City incurring any
penalty or damages on account of such cancellation or
termination, monies lawfully due for goods
delivered, work done, rentals, or fees accrued prior
to the cancellation or termination shall be paid by
the City.
17.24 The President shall consider and address in reaching his or her
determination and in assessing an appropriate penalty, the factors in paragraphs
(i) and (ii), below. The President may also consider, if relevant and
appropriate, the criteria established in paragraphs (iii) and (iv), below, in
addition to any other information which may be relevant and appropriate:
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(i) The parties' good faith endeavors or lack thereof to
cooperate fully and faithfully with any governmental
investigation or audit, including but not limited to
the discipline, discharge, or disassociation of any
person failing to testify, the production of accurate
and complete books and records, and the forthcoming
testimony of all other members, agents, assignees or
fiduciaries whose testimony is sought;
(ii) The relationship of the person who refuses to testify
to any entity that is a party to the hearing,
including but not limited to, whether the person
whose testimony is sought has an ownership interest
in the entity and/or the degree of authority and
responsibility the person has within the entity;
(iii) The nexus of the testimony sought to the subject
entity and its contracts, leases, permits or licenses
with the Client or City; and
(iv) The effect a penalty may have on an unaffiliated and
unrelated party or entity that has a significant
interest in an entity subject to penalties under
Section 17.23, above, provided that the party or
entity has given actual notice to the Commissioner or
agency head upon the acquisition of the
interest, or at the hearing called for in Section
17.22(i), above, gives notice and proves that such
interest was previously acquired. Under either
circumstance, the party or entity must present
evidence at the hearing demonstrating the potential
adverse impact a penalty will have on such person or
entity.
17.25 Definitions for purpose of this Section.
(i) License. The term "license" or "permit" as used
herein shall be defined as a license, permit,
franchise or concession not granted as a matter of
right.
(ii) Person. The term "person" as used herein shall be
defined as any natural person doing business alone or
associated with another person or entity as a
partner, director, officer, principal or employee.
(iii) Entity. The term "entity" as used herein shall be
defined as any firm, partnership, corporation,
association, or person that receives monies,
benefits, licenses, leases, or permits from or
through the Client, City or otherwise transacts
business with the City.
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(iv) Member. The term "member" as used herein shall be
defined as any person associated with another person
or entity as a partner, director, officer, principal
or employee.
18. Participation in an International Boycott.
18.1 The Administrator agrees that neither the Administrator nor any
substantially-owned affiliated company is participating or shall participate in
an international boycott in violation of the provisions of the Export
Administration Act of 1979, as amended, and the regulations of the United States
Department of Commerce promulgated thereunder.
18.2 Upon the final determination by the Commerce Department or any
other agency of the United States as to, or conviction of, the Administrator or
a substantially-owned affiliated company thereof, participation in an
international boycott in violation of the revisions of the Export Administration
Act of 1979, as amended, or the regulations promulgated thereunder, the Client
may, at its option, terminate and render forfeit and void this Agreement.
19. Business Dealings with Northern Ireland.
19.1 The Administrator and any individual or legal entity in which the
Administrator holds a ten percent (10%) or greater ownership interest and any
individual or legal entity that holds a ten percent (10%) or greater ownership
interest in the Administrator shall either: (a) have no business operations in
Northern Ireland; or (b) take lawful steps in good faith to conduct any business
operation in Northern Ireland in accordance with the MacBride Principles, as
defined herein, and shall permit independent monitoring of their compliance with
such principles.
19.2 "MacBride Principles" shall mean those principles related to
nondiscrimination in employment and freedom of workplace opportunity which
require employers doing business in Northern Ireland to:
(i)Increase the representation of individuals from under
represented religious groups in the work force, including
managerial, supervisory, administrative, clerical and
technical jobs;
(ii) Take steps to promote adequate security for the
protection of employees for under represented
religious groups both at the workplace and while
traveling to and from work;
(iii) Ban provocative religious or political emblems from
the workplace;
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(iv) Publicly advertise all job openings and make special
recruitment efforts to attract applicants from under
represented religious groups;
(v) Establish layoff, recall and termination procedures
which do not in practice favor a particular religious
group;
(vi) Abolish all job reservations, apprenticeship
restrictions and different employment criteria which
discriminate on the basis of religion;
(vii) Establish procedures to assess, identify and actively
recruit employees from under represented religious
groups with potential for further advancement; and
(viii) Appoint a senior management staff member to oversee
affirmative action efforts and develop a timetable to
ensure their full implementation.
19.3 The Administrator agrees that the representations in Section 19.1
are material conditions to performing services under this Agreement. If the
Client receives information that the Administrator is in violation of Section
19.1, the Client shall review such information and give the relevant party
opportunity to respond. If the Client finds that such a violation has occurred,
the Client may declare the Administrator in default, and/or terminate this
Agreement. In the event of any such termination, the Client may procure the
supplies, services or work from another source in any manner the Client deems
proper. In addition, the Administrator may be declared not to be a responsible
proposer for up to three (3) years, following written notice to the
Administrator, giving the Administrator the opportunity for a hearing at which
the Administrator may be represented by counsel. The rights and remedies of the
Client hereunder shall be in addition to, and not in lieu of, any rights and
remedies the Client has pursuant to this Agreement or by operation of law or in
equity.
19.4 Antitrust. The Administrator hereby assigns, sells, and transfers
to the Client and the City of New York all right, title and interest in and to
any claims and causes of action arising under the anti-trust laws of the State
of New York or of the United States relating to the particular goods or services
purchased or procured by the Client under this Agreement.
19.5 All Legal Provisions Deemed Included. It is the intent and
understanding of the parties to this Agreement that each and every provision of
law required to be inserted in this Agreement shall be and is inserted herein.
Furthermore, it is hereby stipulated that every such provision is to be deemed
to be inserted herein, and if, through mistake or otherwise, any such provision
is not inserted, or is not inserted in correct form, then this Agreement shall
forthwith
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upon the application of either party be amended by such insertion so as to
comply strictly with the law and without prejudice from such omission to the
rights of either party hereunder.
20. Political Activity
20.1 There shall be no partisan political activity or any activity to
further the election or defeat of any candidate for public, political or party
office as part of or in connection with this Agreement, nor shall any of the
funds provided under this Agreement be used for such purposes.
20.2 No funds provided under this Agreement shall be used to pay the
salary or expense of any person to engage in any activity designed to influence
legislation or appropriations pending before the Congress of the United States.
21. Paragraph Headings
21.1 Paragraph headings are inserted only as a matter of convenience
and for reference and in no way define, limit or describe the scope of intent of
this Agreement and in no way affect this Agreement.
22. Inspection of Site
22.2 The Client shall have the right to have representatives of the
Client, the City or the State of New York or the Federal government present at
the site of the engagement to observe the work being performed at reasonable
times during business hours upon prior reasonable notice.
23. Monitoring and Evaluation
23.1 The Client shall monitor and evaluate the performance of the
Administrator under this Agreement at such times and in such manner as the
Client deems appropriate.
23.2 The Client shall provide the Administrator with information
concerning the results of any monitoring.
24. Executive Order 50
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CONFIDENTIAL
24.1 The Administrator agrees that, in consideration of the award to it
of this Agreement, it will comply with the provisions of the Mayor's Executive
Order 50, dated April 25, 1980 (as amended) ("E.O. 50") and the rules and
regulations promulgated thereunder. This Agreement will not be effective unless
the reporting requirements set forth below have been complied with in their
entirety. The Administrator agrees that as it relates to services being
performed under this Agreement it:
(i)Will not engage in any unlawful discrimination as to race,
creed, color, national origin, sex, age, handicap, marital
status, citizenship status, sexual orientation or affectional
preference in all employment decisions including but not
limited to recruitment, hiring, compensation, training and
apprenticeship, promotion, upgrading, demotion, downgrading,
transfer, layoff and termination and all terms and conditions
of employment except as provided by law;
(ii) When it subcontracts it will not engage in any
unlawful discrimination in the selection of
subcontractors on the basis of the owner's race,
color, creed, national origin, sex, age, disability,
marital status, citizenship status, sexual
orientation, or affectional preference;
(iii) Will state in all solicitations or advertisements for
employees placed by or on behalf of the contract that
all qualified applicants will receive consideration
for employment without unlawful discrimination based
on race, creed, color, national origin, sex, age
disability, marital status, citizenship status,
sexual orientation, or affectional preference or that
it is an equal employment opportunity employer;
(iv) Will furnish all information and reports, including
an Employment Report, before the award of the
contract which are required by E.O. 50, the rules and
regulations promulgated thereunder, and rules,
regulations, and order of the Director of the
Client's Office of Equal Employment Opportunity (the
"Director of the EEO Office"), and will permit access
to its books, records and accounts by the EEO Office
for the purposes of investigation to ascertain
compliance with such rules, regulations, and orders.
24.2 The Administrator understands that its non-compliance with the
foregoing shall constitute basis for termination of this Agreement, as well as
non-compliance with E.O. 50 and the rules and regulations promulgated
thereunder. After a hearing held pursuant to the rules of EEO Office, the
Director may impose any or all of the following sanctions:
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CONFIDENTIAL
(i) Disapproval of the Administrator;
(ii) Suspension or termination of the contract;
(iii) Declaring the Administrator in default; or
(iv) An employment program.
24.3 The Director may recommend to the Client that a Board of
Responsibility be convened for purposes of declaring a contractor who has
repeatedly failed to comply with E.O. 50 and the rules and regulations
promulgated thereunder (or promulgated by the EEO Office) to be non-responsible.
24.4 The Administrator agrees to include the provisions of the
foregoing paragraphs in every subcontract or purchase order, in excess of Fifty
Thousand Dollars ($50,000), using funds provided hereunder, to which it becomes
a party unless exempted by E.O. 50 and the rules and regulations promulgated
thereunder, so that such provisions will be binding upon each subcontractor or
vendor. The Administrator will take such action with respect to any subcontract
or purchase order as may be directed by the Director of the EEO Office as a
means of enforcing such provisions, including sanctions for non-compliance.
24.5 The Administrator further agrees that it will refrain from
entering into any contract or contract modifications subject to E.O. 50 and the
rules and regulations promulgated thereunder with a subcontractor who is not in
compliance with the requirements of E.O. 50 and the rules and regulations
promulgated thereunder.
25. New York Labor Law Section 220-e
Section 220-e of the New York Labor Law requires that:
25.1 In the hiring of employees for the performance of work under this
contract or any subcontract hereunder, neither the Administrator,
sub-administrator, nor any person acting on behalf of such Administrator or
sub-administrator shall by reason of race, creed, color or national origin
discriminate against any citizen of the State of New York who is qualified and
available to perform work to which the employment relates;
25.2 Neither the Administrator, sub-administrator, nor any person on
his behalf shall, in any manner discriminate against or intimidate any employee
hired for the performance of work under this contract on account of race, creed,
color, or national origin;
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CONFIDENTIAL
25.3 The aforesaid provisions of this section covering every contract
for or on behalf of the State or a municipality for the manufacture, sale or
distribution of materials, equipment or supplies, shall be limited to operations
performed within the territorial limits of the State of New York.
26. Adherence to the Client's Equal Employment and Affirmative Action Policies
26.1 The Administrator agrees to adhere to all terms, conditions and
provisions of the Client's Equal Employment and Affirmative Action Policies as
set forth by the Client's Board of Directors as it relates to services being
performed under this Agreement.
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CONFIDENTIAL
IN WITNESS WHEREOF, this Agreement has been read, understood and
executed by a duly authorized representatives of the respective parties.
CLIENT
BY: /s/ Luis R. Marcos
-------------------------------------------------------------
Luis R. Marcos, M.D.,
President, New York City Health & Hospitals
Corporation
-------------------------------------------------------------
(Title) (Date)
ADMINISTRATOR
BY: /s/ Graham O. King
-------------------------------------------------------------
Graham O. King
Chairman
-------------------------------------------------------------
(Date)
APPROVED AS TO FINANCE
Chief Financial Officer
New York City Health and Hospitals Corporation
- --------------------------
APPROVED AS TO FORM
This Approval is only required if changes have been made to the pre-printed
contract.
General Counsel
New York City Health and Hospitals Corporation
APPROVED AS TO PROGRAM
- ---------------------------
MetroPlus Health Plan
Executive Director
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CONFIDENTIAL
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss.:
On this day of , 199 , before me personally came
----- ------------- -
___________________________________ , to me known and known to me to be the
President of the New York City Health and Hospitals Corporation, the person
described in the attached agreement and who, as such, President, executed the
attached agreement on behalf of the New York City Health and Hospitals
Corporation for the purposes therein mentioned.
______________
Notary Public
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss.:
On this day of , 199 , before me personally came
----- ------------- -
_____________________________________ , to me known, who being duly sworn,
did depose and say that he/she is the ______________________ of the
___________________________________ described in the attached agreement and
who as such _________________________ executed the attached agreement and duly
acknowledged to me that he/she was duly authorized to and did execute
________________________________ for the purpose therein same on behalf of the
mentioned.
_____________
Notary Public
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<PAGE>
CONFIDENTIAL
EXHIBIT "A" TO AGREEMENT FOR ADMINISTRATIVE SERVICES
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
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<PAGE>
CONFIDENTIAL
EXHIBIT "B" TO AGREEMENT FOR ADMINISTRATIVE SERVICES
I. SCHEDULE OF ADMINISTRATIVE SERVICES
The Administrator will provide the following services to Client as
specified in this Agreement:
A. Eligibility
1. The Administrator shall maintain an eligibility database for those
persons identified by the State of New York as eligible for benefits
under the Client's Plan on the effective date of the Plan, and
subsequently during the continuance of this Agreement. The
Administrator shall be entitled to rely on the information furnished to
it by the State,
and the Client shall hold the Administrator harmless for any inaccuracy
or failure of the
State of New York to provide such information in a timely manner.
Administrator shall
notify Client of any failure of the State of New York to provide
information in a timely
manner and identify a course of action to obtain receipt of the tape.
B. Claims Adjudication
1. The Administrator shall provide claims processing services on behalf of
the Client for all properly submitted claims. Claims will be paid
solely from funds supplied by the Client.
2. The Administrator shall provide utilization and financial reports to
the Client, as agreed by the Administrator and the Client. The Client
will be responsible for reconciling its own bank account, based on
these reports.
3. For purposes of this Agreement, the term "claim(s)" shall be defined as
the amounts paid, denied, or payable by the Administrator on behalf of
Client to providers of services under this Agreement.
C. Claims Administration Services
1. The Administrator's Home Office will be the Control Office from which
claims submitted under the Plan will be stored in electronic format. A
dedicated post office for receipt of claims will be in New York.
Customer service personnel will be available to assist Client in
resolving claims questions and problems. Electronic submission of
claims will be directly made to Administrator's Home Office. Claims may
be
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<PAGE>
CONFIDENTIAL
processed at Administrator's Control Office or at a subcontractor
location at the direction of Administrator.
D. Additional Administrator Responsibilities
Administrator shall provide Annual 1099 processing for each provider
and perform the online services described in Exhibit BII.
E. Account Manager Responsibilities
Account Management, which is included in the base monthly fee, shall be
as follows:
o Insure adequate communications
Conduct and document regular committee meetings as appropriate
Maintain on-going communication between Client and Administrator
regarding open issues and concerns
o Monitor and address training needs of client
o Monitor, report and work with Administrator and subcontractor
operations personnel to ensure Client performance standards are met in
accordance with Exhibit D
II. System Services
A. Description of System Services
1. Administrator shall electronically process and store Client's data
remotely at Administrator's data center and provide Client with on-line system
access to allow Client to view, update, create and inquire about the following
and as described in Exhibit F:
o provider information
o claims information
o member service functions
o medical referrals and authorization
o eligibility information
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CONFIDENTIAL
2. Administrator shall answer questions from the named Client
employees regarding the on-line system by telephone from 8:30 a.m. EST to
6:00 p.m. EST, Monday through Friday, and one Saturday per month as mutually
agreed from 9:00 a.m. EST to 6:00 p.m. EST. After hours, calls are received
from an answering service and are dispatched to the client service
representative on call.
3. Administrator will provide initial reports as scheduled and mutually
agreed upon by the parties. Report regeneration requires notice by Client within
five (5) days of the scheduled report receipt date. If additional report
regeneration is required, it will be billed as incurred on a time and materials
basis.
4. Administrator is responsible for master files, coding the
system, ongoing training on system enhancements or changes as mutually agreed.
5. Administration warrants that the on-line system shall perform
substantially in accordance with its documentation when used with properly
functioning equipment.
6. Administrator will maintain a disaster recovery plan which includes
daily data backup of Client's data files and storage of them in an offsite
secure data-storage facility. Upon Client's written request, Administrator shall
make its disaster recovery plan available to Client and/or its outside auditor
who agrees to hold such plan in strict confidence as described in Section 9 of
this Agreement.
B. Client Responsibilities
1. Client shall be responsible for preparing and maintaining the
location of the equipment and communications facilities in accordance with the
specifications of the appropriate suppliers. Through installation services, as
described in Exhibit E, Administrator shall prepare for Client's use of the
software at the Administrator's data center. Administrator agrees to deliver
such items and perform in accordance with the mutually agreed to installation
work plan, and Client agrees to permit delivery and perform its responsibilities
under the installation work plan and the documentation.
2. Client shall maintain adequate staffing or provide a central
help desk and document procedures for the effective support and operation of the
system.
3. In problem situations Client will complete mutually agreed to
problem determination procedures which will be developed prior to calling
Administrator and perform problem definition activities suggested by
Administrator
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<PAGE>
CONFIDENTIAL
4. Client shall allow Administrator complete access to the system
and Client's Facility to support the system.
5. Client will maintain adequate staffing to provide initial
training and on-going education for all system functions.
C. System Configuration
The equipment configuration for on-site equipment for the Client's facilities
is:
o all users Ethernet connected
o 10-Base T-Ethernet
o Novell Protocol Suite loaded 1PX
The configuration is based on single site access from Client's corporate
headquarters at 11 West 42nd Street, New York, NY.
III. Additional Charges
A. Not included in the fees under the Agreement are all other services not
specifically listed above, and the following:
1. Usage of computer systems (CPU and I/O) and the MG400 software
system not specifically provided for in this Agreement.
2. Report creation over and above the standard package described
in Exhibit H.
3. Interfaces and transfers of information to the MG400 system not
specifically provided for in this Agreement.
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<PAGE>
CONFIDENTIAL
EXHIBIT "C" TO AGREEMENT FOR ADMINISTRATIVE SERVICES
RESPONSIBILITIES OF CLIENT
o Preparation and printing of all Plan documentation, its dissemination
of this Plan participants, and all filings with applicable government
agencies.
o Providing the Administrator billing calculations as provided by the
State, and all information relevant to billing including information
from provider contracts.
o Membership procedures, the collection of contributions from
participants, insurance premiums and insurance commissions connected
with the Plan or Plans governed by this Agreement.
o Furnish for distribution to persons participating in the Plan, a supply
of identification cards, Plan forms necessary for the administration of
the Plan, as determined by the Administrator.
o Creating and maintaining written procedures for provider relations,
member services, Medical Management and QA protocols.
o Responsibility for the resolution of any disputed claims or litigated
claims under the Plan, and Client shall be responsible for all costs in
connection therewith.
o Responsibility for payment of the following administrative costs and
expenses:
a. Printing costs for Plan stationery, booklets, forms,
publications, policies, Plan descriptions, Summary Plan
Descriptions, annual reports, and other Plan documents.
b. All postage, supplies, production pieces (member notices,
provider letters, EOB, NY
State tapes, provider tapes, etc.) that Administrator produces.
c. Costs associated with mail and package delivery incurred by
Administrator.
o Client must advise Administrator in writing of any modifications or
amendments to its Agreement to provide services, including the
effective date of such modifications and amendments.
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<PAGE>
CONFIDENTIAL
o Client shall be responsible for compliance with all local, state and
federal laws in connection with the implementation of its Agreements.
o Client must define a process for paying claims and Client must maintain
sufficient funds in its account.
o Client will maintain adequate staffing to provide a central help desk
and document procedures for the effective support and operation of the
system.
o Client will maintain adequate staffing to provide initial training as
well as on-going education for all system functions.
o Client maintains the following responsibilities:
1. Medical Management protocols will be developed by Client.
2. Ad Hoc reporting requests will be made by Client via on-line
remote access terminals.
3. Provider training will be conducted by Client.
4. Provider contracting will be conducted by Client.
5. Benefits contract and service management will be conducted by
Client personnel.
6. Medical referral and authorization functions will be performed by
Client UR nurses via on-line remote access terminals.
7. Member Services functions will be performed by Client.
8. Member and provider inquiries will be handled by Client.
9. Stop loss reporting will be handled by Client.
10. Developing an Appeals and Grievance policy.
- 56 -
<PAGE>
CONFIDENTIAL
EXHIBIT "D" TO AGREEMENT FOR ADMINISTRATIVE SERVICES
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
- 57 -
<PAGE>
CONFIDENTIAL
EXHIBIT "E" TO AGREEMENT FOR ADMINISTRATIVE SERVICES
Installation and Training
The Interim Use Fee includes coding and loading the system and training. Eight
(8) days of training will be scheduled for each of the following five (5)
departments (total of forty (40) days of training): Medical Management, Member
Services, Provider Relations, Finance, and Management. The first session
consists of five (5) consecutive days of training. The second session, conducted
a few weeks later, consists of three (3) consecutive days of training. A maximum
of ten (10) students per session is permitted. If required, additional training
is billable to the Client at $1,500 per day plus out-of-pocket expenses. If the
parties mutually agree that such training is substandard and inadequate,
Administrator shall provide additional training at no additional professional
service charge.
- 58 -
<PAGE>
CONFIDENTIAL
EXHIBIT "F" TO AGREEMENT FOR ADMINISTRATIVE SERVICES
Usage Matrix
- 59 -
<PAGE>
CONFIDENTIAL
EXHIBIT G
Implementation Work Plan
- 60 -
<PAGE>
CONFIDENTIAL
EXHIBIT H
Standard Reports
AP PRTEOB Explanation of Benefits Print
AP REPRTRA Reprint Medical Remittance Advice
AU PRTAWTRPT Auth Worklist/Tracking Report
AU LSTAUT Auth List
AU LSTAUTI Auth List with Letters
AU PRTAGENDA Authorization Agenda Listing
CP LSTCAPCAT Capitation Rates List
CP LSTCAPSUM Capitation Transaction Summary
CP LSTCAPTRN Capitation Transaction List
CT RPTCUTWKL CUT Worklist Report
CT RPTCUTACT CUT Activity Report
CT RPTCUTSAC CUT Standard Activity Report
EL LSTCVR Coverage Group List
EL LSTELG Eligibility List
EL LSTPRM Premiums List
EL PRTCVRLBL Print Coverage Group Labels
EL PRTMBRLBL Print Member Labels
EL RPTBADPRV Members Bad Provider Assignment Report
EL RPTMBRIPA Member Activity by IPA Report
EL RPTMBRLOG Member Maintenance Audit Log
EL RPTMBRPRV Member Activity by Provider Report
EL RPTTERPLN Report Members in Terminated Plans
ER RPTAGEDST Member Age/Sex Distribution Report
ER RPTGRPENR Group Enrollment Statistics by Month Rpt
ER RPTIPASUM IPA/PCP Member Months by Age/Sex Report
ER RPTMBRCHG Membership Monthly Change Report
ER RPTREQREV Actual vs. Required Revenue Report
ER RPTREVEXP Group Revenue and Medical Expense Report
ER RPTZIPDST Zip Code Distribution Report
FM LSTCAR Carrier File List
FM LSTDIA Diagnosis Code List
FM LSTPRC Procedure Code File List
FM LSTPRV Provider File List
GL LSTCHT Chart of Accounts List
GL LSTJRN Journal Transactions List
PA LSTBENADJ Benefit Adjudication Rules List
- 61 -
<PAGE>
CONFIDENTIAL
PA LSTBENCAT Benefit Category List
PA LSTDIA Diagnosis Code List
PA LSTIPA IPA File List
PA LSTPLN Plan File List
PA LSTPRC Procedure Code List
PA LSTPRV Provider List
PA LSTTYP Provider Type List
PA PRTPRVLBL Print Provider Labels
TM PRTACTFBK Actuarial Feedback Report
TM PRTDIASUM Print Diagnosis Summary
TM PRTLAGII Utilization Tag Report II
TM PRTPATSUM Patient Summary Report
TM PRTPFL Patient Profile Report
TM PRTPNDCLM Aged Pended Claims Report
TM PRTPRVPFL Provider Profile Report
TM PRTPRVSUM Provider Summary Report
TM PRTSTPLOS Member Stopless Report
TM PRTSUMSRV Summary of Services Report
UT RPTPNDGRP Pended Claims by Group Report
- 62 -
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000796965
<NAME> US Servis, Inc.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,391,000
<SECURITIES> 0
<RECEIVABLES> 4,649,000
<ALLOWANCES> 465,000
<INVENTORY> 2,000
<CURRENT-ASSETS> 11,900,000
<PP&E> 3,913,000
<DEPRECIATION> 2,500,000
<TOTAL-ASSETS> 17,452,000
<CURRENT-LIABILITIES> 4,546,000
<BONDS> 0
6,241,000
0
<COMMON> 63,000
<OTHER-SE> 5,645,000
<TOTAL-LIABILITY-AND-EQUITY> 17,452,000
<SALES> 0
<TOTAL-REVENUES> 4,756,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,608,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,000
<INCOME-PRETAX> (883,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (883,000)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
