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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 5, 1998
PHP HEALTHCARE CORPORATION
(Exact Name of Registrant as specified in its charter)
State or other jurisdiction of incorporation: Delaware
Commission File No.: 0-16235
I.R.S. Employer Identification No.: 54-1023168
Address of principal executive offices: 11440 Commerce Park Drive
Reston, VA 20191
Registrant's telephone number, including area code: (703) 758-3600
Former name or former address,
if changed since last report: Not applicable
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ITEM 5. OTHER EVENTS
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On November 5, 1998 and as amended on November 9, 1998, the New Jersey
Superior Court Judge, Jack L. Linter, issued an order whereby PHP Healthcare
Corporation ("PHP") and Pinnacle Health Enterprises, L.L.C. ("PHE"), the New
Jersey Department of Banking and Insurance, the New Jersey Department of Health
and Senior Services and HIP of New Jersey, Inc. ("HIP") have entered into a
standstill agreement under which each of the aforementioned parties have agreed
not to pursue any legal, regulatory, or other actions against each other for a
two-week period which will end on November 18, 1998.
Copies of the Order issued by the Superior Court of New Jersey and the
press release issued by PHP are filed as Exhibits to this report.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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Exhibits. The following exhibits are furnished as part of this report:
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Exhibit Description
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99.1 Order issued by the Superior Court of New Jersey, Chancery
Division Middlesex County, Docket No. C-275-98
99.2 Press Release, dated November 5, 1998, issued by PHP
Healthcare Corporation
FORWARD LOOKING STATEMENTS
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This Report contains forward-looking statements. The words, "believe",
"expect", and "anticipate" and similar expressions identify such forward-looking
statements. These forward-looking statements reflect the Company's views with
respect to future events and financial performance. Such statements are subject
to risks and uncertainties that could cause the Company's actual results and
financial position to differ materially from those projected in the forward-
looking statements. Risks associated with the Company's forward-looking
statements include, but are not limited to, those risk factors described in the
Company's Form 10-K under the caption "Business Risk Factors". Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of their dates. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
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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 undersigned
hereunto duly authorized.
PHP HEALTHCARE CORPORATION
By: /s/ Jack M. Mazur
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Name: Jack M. Mazur
Title: Chief Executive Officer
Dated: November 10, 1998
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EXHIBIT INDEX
Exhibit Description
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99.1 Order issued by the Superior Court of New Jersey, Chancery
Division Middlesex County, Docket No. C-275-98
99.2 Press Release, dated November 5, 1998, issued by PHP
Healthcare Corporation
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EXHIBIT 99.1
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SAIBER SCHLESINGER SATZ & GOLDSTEIN
One Gateway Center - 13th Floor
Newark, New Jersey 07102-5311
(973) 622-3333
Attorneys for Defendants
PHP Healthcare Corporation and
Pinnacle Health Enterprises, L.L.C.
SUPERIOR COURT OF NEW JERSEY
CHANCERY DIVISION: MIDDLESEX COUNTY
DOCKET NO.: C-275-98
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JAYNEE LaVECCHIA, Commissioner of the Department :
of Banking and Insurance and LEN FISHMAN, Civil Action
Commissioner of the Department of Health and :
Senior Services,
:
Plaintiffs, ORDER
:
v.
:
HIP OF NEW JERSEY, INC. d/b/a HIP HEALTH PLAN OF
NEW JERSEY, PHP HEALTHCARE CORPORATION and :
PINNACLE HEALTH ENTERPRISES, L.L.C.
:
Defendants.
:
:
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THIS MATTER having been opened to the Court on the joint application
of plaintiffs Jaynee LaVecchia, Commissioner of the Department of Banking and
Insurance, Len Fishman, Commissioner of the Department of Health and Senior
Services (the "plaintiffs") (Peter G. Verniero, Attorney General of New Jersey,
Josh Lichtblau and Eileen Stokley, appearing), HIP of New Jersey, Inc. ("HIP")
(Gage Andretta of Wolff & Samson, P.C., appearing), PHP Healthcare Corporation
("PHP") and Pinnacle Health Enterprises, L.L.C. ("PHE") (David J. D'Aloia of
Saiber Schlesinger
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Satz & Goldstein, LLC, appearing) (collectively, the "parties"), for an Order
approving a Standstill Agreement between the parties to allow the parties to
develop, in conjunction with their financial advisers and counsel, a plan to
address HIP's current financial condition, and counsel for the parties having
appeared before the Court; and
IT APPEARING to the Court that the parties have reached the following
Standstill Agreement:
1. All parties agree that for a period of two weeks ending on
November 18, 1998, there will be a complete standstill by all parties of any
activity in this action, no other court actions or filings will be made by the
parties, all terms of the temporary restraints entered by the Court on October
27, 1998 that are not inconsistent with the terms set forth herein shall remain
in full force and effect, and PHP/PHE will not file a voluntary petition in
bankruptcy. All claims and defenses of all parties are preserved and the time
periods associated with asserting such claims or defenses are tolled during the
standstill period. PHP/PHE's motion to dissolve restraints will be adjourned to
November 20, 1998 at 1:30 p.m. and the return date of the Order to Show Cause
will be adjourned to December 3, 1998 at 1:30 p.m.
2. During the standstill period, all communications between the
parties, their consultants and counsel, that involve negotiations of a financial
plan or issues involved in the litigation shall be deemed confidential
settlement negotiations and inadmissible as provided by federal and/or New
Jersey Evidence Rule 408; provided, however, that if PHP/PHE develops a recovery
plan that is not accepted by the Departments, the plan itself and any formal
response thereto by either Department may be submitted by any party to the Court
in any litigation.
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3. During the standstill period, PHP/PHE will keep the Health
Centers as currently staffed open and available to HIP members and will use its
best efforts to promptly replace staff who resign, provided it continues to
receive the semi-monthly capitation payments with half of each such payment
being paid into the segregated account maintained by PHP/PHE and used solely to
pay provider claims with a weekly accounting of such payments being provided to
HIP and the Departments commencing on November 9, 1998, and the balance being
paid to PHP/PHE to pay the costs of operating the Health Centers, its own
administrative costs and capitation payments.
4. PHP/PHE will establish a dialogue with the Commissioners,
their staff and HIP to explore a global restructuring of the financial
relationships among the parties. The parties to this dialogue will include
NationsBank, management personnel, as well as professionals retained by PHP/PHE
for this purpose, including attorneys, accountants and financial advisors. The
substance of the negotiations will include (i) a review of the HIP-PHP/PHE
relationship, including HIP's satisfaction of its statutory minimum net worth
requirement; (ii) a plan to deal with outstanding payments due to providers,
including any additional funding from NationsBank and other sources of capital;
(iii) a plan to deal with PHP's convertible debt issue; (iv) a plan to address
concerns relating to any deterioration in the provision of health care services
and supplies; and (v) issues raised by the Commissioners, and any HIP proposed
modifications, relating to the existing relationship and the accountability of
all parties to the regulators. These negotiations will commence as soon as
practicable, with meetings to be held as often during the two-week standstill as
possible.
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IT FURTHER APPEARING that good cause exists for and all parties
consent to the entry of this Order;
IT IS on this 9th day of November, 1998
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ORDERED as follows:
1. The Standstill Agreement between the parties as set forth
above is hereby approved.
2. PHP/PHE shall provide notice to providers of services to HIP
members of the pendency of these proceedings, the relief sought by the
plaintiffs, the temporary restraints entered by the Court by Order dated October
27, 1998 and this Standstill Agreement.
3. PHP/PHE shall designate a communication liaison to whom
inquiries from providers and claimants may be directed. The communication
liaison shall be Michael Starr, Acting President of PHE, who may be reached at
the following number (732)937-7803. Inquiries by providers and/or claimants
concerning the status of these proceedings or payment are not to be directed to
the Court.
4. PHP/PHE shall publish this Order in the next available issue
of the New Jersey Law Journal and New Jersey Lawyer.
5. A copy of this Order shall be served upon all counsel of
record within 3 days of the date on which it is received.
/s/ Jack L. Lintner
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JACK L. LINTNER, J.S.C.
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EXHIBIT 99.2
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CONTACTS:
Roy Winnick or Mark Semer
Kekst and Company
(212) 521-4842 or (212) 521-4802
PHP HEALTHCARE ANNOUNCES STAND-STILL AGREEMENT
Reston, Virginia, November 5, 1998 PHP Healthcare Corporation (NYSE: PPH)
announced today that, pursuant to an order issued today by Judge Jack L. Lintner
of the Superior Court of New Jersey, PHP and its subsidiary, Pinnacle Health
Enterprises, LLC, have entered into a stand-still agreement with the New Jersey
Department of Banking and Insurance, the New Jersey Department of Health and
Senior Services and HIP of New Jersey, Inc., under which all the parties have
agreed not to pursue any legal, regulatory, or other actions against each other
for a two-week period ending on November 18, 1998.
During the two-week period in which this stand-still agreement is in effect, the
parties will work together to identify a definitive and comprehensive solution
to the financial, operational, and other issues affecting HIP and Pinnacle.
Pinnacle and HIP of New Jersey will continue to operate in a business-as-usual
manner and continue to provide access to high-quality medical services to the
194,000 medical plan and health network members that PHE and HIP of New Jersey
currently serve.
Jack M. Mazur, PHP President and Chief Executive Officer, said: "PHP shares the
commitment of the other parties and of the doctors and other medical personnel
who offer services through Pinnacle to all of HIP's members to ensure that all
of those members have continuing access to convenient, high-quality care.
"We are, therefore, pleased to enter into this stand-still agreement, which will
give all the affected parties an opportunity to develop, together, a mutually
acceptable solution that is fair, comprehensive and definitive. Pinnacle will
be keeping open its twenty-three health centers for all of its patients and will
continue to operate in the normal course during this period."
PHP said that it will not make any further public statements on the situation
until the end of the stand-still period or until a solution is identified and
agreed upon, whichever comes first. PHP also said that it is today sending a
letter to its New Jersey-based physicians and hospitals updating them on the
situation. A copy of the letter will be made available shortly on the PHP Web
site at the address www.phphealthcare.com.
A medical management company, PHP Healthcare Corporation manages medical risk
through the acceptance of global capitation arrangements with HMOs and other
health care payors. The Company also offers a full range of management services
to the physician groups and hospitals that participate in provider-based
networks developed by PHP. Because health care is a local service, PHP's
managed delivery systems are tailored to the needs of individual communities and
patient populations. PHP has more than 7,500 physicians employed or under
contract, and responsibility for approximately 300,000 covered lives.
Except for historical information, the statements preceding are forward-looking
statements that involve risks and uncertainties. Investors are cautioned that
such statements are only predictions and the actual events or results may differ
materially. These forward-looking statements speak only as of this date. The
Company undertakes no obligation to publicly release the results of any
revisions to the forward-looking statements made today to reflect events or
circumstances after today, or to reflect the occurrence of unanticipated events.
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