<PAGE> 1
EXHIBIT 10.124
PSYCHIATRIC UNIT MANAGEMENT SERVICES AGREEMENT
THIS PSYCHIATRIC UNIT MANAGEMENT SERVICES AGREEMENT ("Agreement") is
made and entered into by and between CATHOLIC HEALTHCARE WEST SOUTHERN
CALIFORNIA, a California nonprofit public corporation doing business as St.
Francis Medical Center ("Medical Center"), and OPTIMUMCARE CORPORATION, a
Delaware corporation ("Manager").
RECITALS
A. Medical Center operates a general acute care hospital in which is
located a mental health unit which provides adult inpatient psychiatric services
("Inpatient Program").
B. Manager is in the business of providing management and other
services for the treatment of inpatient psychiatric patients in compliance with
industry, regulatory, and governmental standards and requirements through its
OPTIMUMCARE PSYCH UNIT PROGRAM.
C. Medical Center and Manager desire to enter into this Agreement in
order to set forth the terms and conditions upon which Manager will provide
Inpatient Program management and other services to or for the benefit of Medical
Center.
NOW, THEREFORE, in consideration of the mutual covenants, conditions,
and promises set forth herein, and for such other good and valuable
consideration, receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Term and Termination.
1.1 Term: Unless sooner terminated in accordance with the
provisions of Sections 10 hereof, this agreement shall commence at 12:01 a.m. on
September 01, 1999 and shall remain in full force and effect for a term of two
(2) years, expiring at 11:59 p.m. on August 31, 2001.
1.2 Termination: In addition to any other events causing
termination under this Agreement, this Agreement may be terminated on the first
to occur of any of the following:
1.2.1 Either party shall have the right to terminate
this Agreement on thirty (30) days' prior written notice to the other party if
the party to whom such notice is given is in breach of any material provision of
this Agreement. The party claiming the right to terminate hereunder shall set
forth, in the notice of intended termination required hereby, the facts
underlying its claim that the other party is in breach of this Agreement.
Notwithstanding the foregoing, this Agreement shall not terminate in the event
that the breaching party cures the breach within ten (10) days of the receipt of
such notice, or if such breach is not reasonably capable of
<PAGE> 2
cure within such period, diligently prosecutes such cure to completion within
the thirty (30) day notice period.
1.2.2 In the event there are any changes effected in
the California Medical Assistance Program ("Medi-Cal"), Title XVIII of the
Federal Social Security Act ("Medicare"), and/or substantial changes under other
public or private health and/or hospital care insurance programs or policies
which may have a material effect on the operations of Medical Center, Medical
Center may elect to renegotiate this Agreement upon written notice of Manager.
Medical Center shall indicate the basis upon which it has determined that such a
material impact on its operations may result. In any case where such notice is
provided, both parties shall negotiate a revised agreement, which, to the extent
reasonably practicable, under the circumstances, each party will adequately
protect its interests and fulfill its objectives in light of the governmental
program or private insurance policy changes which constituted the basis for the
exercise of this provision. In the event the parties are unable to negotiate a
revised agreement within said period, Medical Center may thereupon elect to
terminate this Agreement upon thirty (30) days' prior written notice.
1.3 Subject to the provisions of the sections above, Manager
shall immediately cause the removal of any Inpatient Program Director, Medical
Director or any physician or licensed professional providing professional
services for the Inpatient Program under Manager's employment or contract, who
is subject to or under disciplinary action by licensing or other authorities, or
whose performance results in disciplinary action by the Medical Staff, and/or
whose performance results in a final judgement awarding damages of $100,000 or
more against the Medical Center and/or if any such physician(s) loses (or has
suspended or modified or placed on probation) his or her Medical Staff
membership and/or clinical privileges to practice psychiatry or his or her
profession at the Medical Center. If Manager fails to immediately terminate any
such professional, then Medical Center may immediately terminate this Agreement.
1.4 If either party to this Agreement should be declared
bankrupt or become insolvent or liquidate for any reason, the other party may
transmit to the former party written notice of its intention to immediately
terminate this Agreement, specifying with particularity the event justifying
such notice; provided, that the delay or failure of a party so to transmit
written notice shall not constitute a waiver by said party of any default
hereunder or of any other or further default under this Agreement by the former
party. If the event justifying such notice is the bankruptcy, insolvency or
liquidation of the party receiving such notice, this Agreement shall terminate
forthwith.
1.5 This Agreement may be terminated by Medical Center
immediately on written notice if:
1.5.1 Medical Center gives written notice to Manager
(specifying in reasonable detail the reasons and events giving rise to the
delivery of such notice) that the Inpatient Program operated by manager has
failed to meet licensing, payor certification, or JCAHO standards of patient
care or requirements, or Medical Center's or its Medical Staff's standards, and
Manager fails to remedy such deficiencies to Medical Center's absolute
satisfaction
<PAGE> 3
within thirty (30) days of receipt of such notice.
1.5.2 Manager initiates or undergoes, without Medical
Center's prior written approval, (a) any sale or transfer of all or
substantially all of its assets other than in the ordinary course of business;
(b) any dissolution, merger or reorganization; or (c) any change, individually
or through a series of transactions, in a 20% or greater ownership, voting or
control interest in Manager or any change in Manager's management with
responsibility over the Inpatient Program.
2. Covenants of the Medical Center.
Medical Center shall:
2.1 Subject to availability and budgetary constraints, shall
provide space that shall accommodate a minimum of forty (40) inpatient beds in a
discrete contiguous wing of the Medical Center facility for Program inpatients
("Unit"). Medical Center shall also provide the services, facilities and support
of other Medical Center departments, including without limitation, available
diagnostic facilities, as Medical Center determines is reasonably necessary for
Program patients and as ordered by said patients' attending physicians. Medical
Center shall also provide office space for Manager's Program Director within the
Unit as Medical Center reasonably determines is necessary for the operation of
the Program, subject to space and budgetary constraints. Manager shall accept
such space, facilities, etc. of Medical Center in "as is" condition, and title
to such space, facilities, etc. shall remain at all times in Medical Center.
Said Unit space shall be used solely for the operation of the Program and for no
other purposes.
2.2 Provide the Inpatient Program with qualified nursing
personnel, at staffing levels sufficient to meet Inpatient Program needs as
determined by Medical Center in its sole discretion, who are trained and
experienced in psychiatric nursing and provide other non-physician personnel,
such personnel collectively referred to herein as "Medical Center Personnel".
Medical Center shall be responsible for employing or engaging such Medical
Center Personnel and are solely liable to such personnel for payment of their
wages, compensation and employee benefits. Said personnel shall comply with the
Inpatient Program policies and procedures as developed by Medical Center.
2.3 Assist Manager in maintaining accreditation of the
Inpatient Program by the Joint Commission on Accreditation of Healthcare
Organizations ("JCAHO"), Accreditation Council for Psychiatric Facilities, and
pay all related application fees, and assist Manager in the preparation of any
and all information, data and materials required in connection with application
or renewal for such accreditation. Medical Center shall also obtain, with
Manager's full cooperation and assistance, any and all certifications or
approvals from the Medicare and Medi-Cal Programs and from any other
governmental or private payment or reimbursement programs. Medical Center shall
also obtain, with Manager's full assistance and cooperation, any consents or
approvals to maintain the Program as an inpatient service under Medical Center's
general acute care hospital license. Manager shall be solely liable for any
costs or expenses that it incurs in connection with providing assistance to, and
cooperating with, Medical Center in obtaining the
<PAGE> 4
consents and approvals described in this Section 2.4.
2.4 Acknowledges that the selection, continued employment and
termination of employment and overall supervision and direction of Medical
Center Personnel for the Inpatient Program shall be at the sole discretion of
Medical Center's Administration. However, Medical Center agrees that it shall
consult with Manager in the event Manager desires the removal from the Program
of any Medical Center Personnel, provided that such request is made in writing
specifying with particularity the cause for such request and such request shall
not be made unreasonably.
2.5 Provide: (1) maintenance of the patient care areas used
for the Inpatient Program as Medical Center determines is necessary upon
consultation with Manager; (2) dietary service for Program patients as is
normally available to other Medical Center patients; (3) housekeeping services
for patients and Manager's offices at the Medical Center as is normally
available to other Medical Center patients; (4) telephone and utilities for
patient areas and Manager's offices at the Medical Center as is normally
available for Medical Center facilities; and (5) other services of Medical
Center departments customarily provided in the ordinary course of business to
Medical Center patients (e.g. record keeping); all of which as reasonably
determined by Medical Center to be necessary for the efficient operation of the
Program.
2.6 Provide oversight and supervision for appropriate
utilization review ("UR") and quality improvement ("QI") programs and procedures
developed and implemented by Manager in cooperation with Medical Center for the
Inpatient Program, and integrate such programs and procedures with Medical
Center's other such programs and procedures.
2.7 Review and, if acceptable, approve Manager's publicity and
marketing plans and advertising, publicity and marketing materials for the
Program, from time to time.
2.8 Maintain its general and professional liability insurance,
or self-insurance, coverage for Medical Center and Medical Center employees or
agents.
3. Covenants of Manager.
Manager shall:
3.1 Provide professional and general liability insurance
coverage of at least Three Million Dollars ($3,000,000) per occurrence with an
aggregate limitation of Five Million Dollars ($5,000,000) with respect to
Manager and Manager's employees, agents, and contractors that Manager retains to
provide services to the Program. If Manager provides a claims-made policy,
Manager shall either maintain such insurance coverage in force following the
termination of this Agreement, or provide evidence of adequate "tail" coverage,
with such terms and conditions approved in advance by Medical Center. Manager
shall also ensure that each physician providing professional services on behalf
of the Inpatient Program maintains professional liability insurance in the
minimum coverage amounts and subject to the terms specified herein. All
insurance policies providing coverage as described above shall provide for at
least thirty (30) days'
<PAGE> 5
prior written notice to Medical Center prior to any modification, amendment or
cancellation of such coverage taking effect. Manager shall provide Medical
Center with certificates evidencing the insurance coverage required above
immediately upon the execution of this Agreement.
3.2 Subject to Medical Center's approval, Manager shall
develop, implement and supervise the Inpatient Program. The Inpatient Program
shall include intensive, specialized inpatient services for the care and
treatment of adult psychiatric patients. Manager shall, in general, develop
clinical treatment programs that meet the clinical needs and community
standards, and are in compliance with the licensure and accreditation
requirements for governmental and regulatory agencies and payors. Manager shall
provide ongoing management and support services for the Inpatient Program.
3.3 Provide the following personnel for the Inpatient Program:
(1) a Medical Director assigned exclusively full-time to the Program (who shall
be a psychiatrist duly licensed in good standing by the State of California,
shall be certified by the Board of Psychiatry, and shall be a member in good
standing of the Medical Center's Medical Staff with clinical privileges in
Psychiatry); (2) a Program Director to manage the Inpatient Program and who
shall have day-to- day management responsibility for the Program and Program
personnel, (3) clinical psychologist(s) in a number acceptable to Medical
Center, one of whom shall be designated as chief therapist; (4) A Program
Coordinator, with such licensure and background as shall be approved in advance
by Medical Center; and (5) occupational/recreational therapist(s) in numbers
sufficient to meet Inpatient Program needs, additional licensed counselors in
numbers sufficient to meet Inpatient Program needs, and any other non-physician
personnel required for the Inpatient Program who are not provided by Medical
Center hereunder. Any and all non-Medical Center personnel employed or
contracted for by Manager to render services in the Inpatient Program shall be
subject to prior approval by Medical Center and, as applicable, its Medical
Staff and shall be compatible with Medical Center's employment standards, and
Medical Center shall be furnished a job description and resume of qualifications
and work experience with respect to such personnel as well as any completed
applications as may be required by Medical Center or its Medical Staff. Such
personnel shall not be deemed employees or agents of Medical Center, and Manager
shall have full responsibility for wages, vacation pay, sick leave, payroll and
other employment taxes, pension and retirement plan contributions, worker's
compensation and unemployment insurance, social security, or any other benefits,
or other pay or compensation whatsoever (collectively, "employee benefits") for
any of Manager's employees or contractors provided hereunder, or providing
services under this Agreement, as defined below.
3.4 Consult with the Medical Center for the development of
clinical needs for the selection of Program nursing staff.
3.5 Provide, at its sole cost and expense, qualified personnel
of Manager to conduct on-site orientation programs, to enable Medical Center to
train the Program nursing staff and selective nursing personnel from other units
of the Medical Center to act as back-up for the Program nursing staff.
3.6 Consult, manage and support the Inpatient Program
treatment team's effort
<PAGE> 6
to provide quality psychiatric treatment working collaboratively with Medical
Center's Medical Staff, and care management, UR and Discharge Planning
personnel.
3.7 Any employee or contractor of Manager who, Medical Center,
in its sole discretion, determines is incompatible with the goals, bylaws,
rules, regulations, policies or procedures of Medical Center and/or its Medical
Staff shall be removed by Manager upon thirty (30) days' prior written notice.
Medical Center shall have the right, in its sole discretion, to approve or
disapprove in advance in writing any proposed replacement or substitute for any
of Manager's personnel hereunder. Any employee or contractor of Manager shall be
immediately removed if Medical Center, in its sole discretion, determines that
the individual's presence is a threat to patient care or the Medical Center's
operations. Professionals provided by Manager shall apply for and maintain in
good standing appropriate membership as an allied health professional or
physician (as applicable) on Medical Center's Medical Staff with appropriate
clinical privileges, as required by the Medical Staff bylaws, rules and
regulations and shall not cause any suspension, reduction or termination of such
membership or privileges or be placed on probation by the Medical Staff.
3.8 Submit monthly status reports for the Program to Medical
Center's Administration in a form acceptable to Medical Center that will review
Program operations during the previous month and outline planned activities for
the coming month.
3.9 Initiate a comprehensive public information, education,
marketing and referral development program, which shall be reviewed and approved
periodically in coordination with other Medical Center public relations and
marketing plans. Within thirty (30) days following the commencement date hereof,
Manager shall present Medical Center for its review and approval with a detailed
publicity and marketing plan, and Manager shall implement such plan within no
later than thirty (30) days following Medical Center's approval thereof. Such
publicity and marketing activities shall be conducted at Manager's sole cost and
expense, which costs and expenses may include, without limitation, development
of patient handbooks or brochures; printing of articles, business cards,
stationery, and the like; development of public service announcements,
advertising campaigns, press releases and radio commercials; preparation of
invitations and announcements for educational programs; preparation of referral
letters; and hosting seminars and workshops. Medical Center shall have the right
and must approve or disapprove in advance all marketing programs, which approval
shall not be unreasonably withheld. Manager shall not be permitted to use
Medical Center's or Medical Center's name, logo or likeness without Medical
Center's prior written approval.
3.10 Develop and implement operational policies and procedures
for the Inpatient Program, including, without limitation, UR/QI procedures, in
collaboration with Medical Center. Any and all Inpatient Program policies,
procedures, programs and activities are subject to prior review and approval by
Medical Center's administration and its Medical Staff.
3.11 Use its best efforts to assist Medical Center in working
with governmental agencies, third-party payors and others to secure necessary
licenses, permits, approvals, accreditation and certifications for the Program.
<PAGE> 7
3.12 Follow admission policies and procedures developed by
Medical Center in respect to patients of Inpatient Program, as well as other
authorizations for admission of patients to the Program and the provision of
services to such patients on behalf of Medical Center as are required by
governmental agencies or any other third-payor prior to the patient's admission.
Utilize its best efforts to obtain additional Treatment Authorization Record's
("TAR's") and approvals for continued hospitalization and/or services as
necessary to promote timely payment.
3.13 Obtain and maintain worker's compensation insurance for
its employees and agents as required by California law. If permitted, Medical
Center shall be added as an additional insured on such policy.
3.14 Commit no act or omission which adversely affects Medical
Center's licensure reimbursement or certification or accreditation in connection
with the management and operation of the Inpatient Program.
3.15 Cause patients to be admitted to the Inpatient Program
(including but not limited to Medicare and Medi-Cal patients) only if the
admission is ordered by a physician who is a member in good standing of the
Medical Center Medical Staff with admitting privileges, and strictly in
compliance with Medical Center's admission policies and procedures (as described
above).
4. Representation and Warranties of Manager.
Manager hereby represents and warrants to Medical Center as
follows, which representations and warranties shall be true, accurate and
complete on the date of this Agreement (as defined herein) and at all other
times during the term hereof:
4.1 Manager is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with the power
and authority to carry on the business in which it is engaged and to perform its
obligations under this Agreement.
4.2 The execution of this Agreement and the performance of the
obligations of the Manager hereunder will not result in any breach of any of the
terms, conditions or provisions of any agreement or other instrument to which
the Manager is a party or by which it may be bound or affected, or contravene
any governmental license, franchise, permit or other authorization possessed by
either party, nor will such execution and performance violate any federal, state
or local law, rule or regulation. This Agreement is a legal and binding
obligation of Manager, and all corporate actions and approvals have been taken
and obtained in order for Manager to enter into this Agreement. No approval,
authorization or other action by, or filing with, any governmental authority or
any other third party is required in connection with either party performing its
duties and obligations hereunder.
4.3 There is no litigation, administrative proceedings or
investigation pending or threatened against Manager (nor is it subject to any
judgement, order, decree or regulations of any court or other governmental
administrative agency) pending or affect Manager which would
<PAGE> 8
materially adversely affect the performance of Manager's obligations hereunder.
Without limiting the foregoing, Manager represents and warrants that it has
strictly complied, is currently in compliance and shall strictly comply with any
and all statutes, rules, regulations, decisions and guidelines applicable to the
operation, management, reimbursement and/or payment of services provided by
inpatient psychiatry programs which Manager is, has or shall be operating and/or
managing, under the Medicare and Medi-Cal Programs and any other public or
private third party reimbursement or payment program, and that Manager is not,
has not been and shall not be under investigation, audit or challenge by any
federal or state agency or authority in connection with any of its operations,
policies or procedures.
4.4 Any and all personnel and professionals provided by
Manager to the Inpatient Program shall be duly licensed and qualified, as
applicable, and shall fulfill each of their terms, duties, obligations
covenants, representations, warranties, responsibilities and indemnities
applicable to them hereunder at all times while performing services for the
Program.
5. Compensation.
5.1 Compensation payable to Manager by Medical Center shall be
on a fixed fee basis and shall be the sum of Forty Seven Thousand Dollars
($47,000) per month for each month of service provided hereunder. On or before
the fifth (5th) day of each calendar month Manager will forward to Medical
Center an invoice from the previous month for the fees due and payable by
Medical Center under this Section 5. Medical Center shall have ten (10) days
following receipt of any such invoice to dispute Manager's days of service or
claim for reimbursement in writing, which shall set forth the reasons for such
dispute. If Medical Center does not dispute an invoice, the payment of the
Management Fee is expressly conditioned upon Manager: (1) preparing and
submitting to Medical Center on a periodic basis, as determined by Medical
Center, complete and accurate time records on such forms specified by Medical
Center, and complying with all requirements and supplying all documents
necessary to otherwise substantiate claims by Medical Center to third party
payors for services of Manager, Medical Director, Inpatient Program Director and
Manager's other personnel; and (2) otherwise at all times being in compliance
with the terms and conditions of this Agreement. Except as otherwise provided
herein, a failure by Medical Center to pay the submitted invoice by the
thirtieth (30th) day following receipt of the invoice shall be a material breach
of this Agreement by Medical Center, which shall give Manager the right to
terminate this Agreement for cause, unless such failure is due to Manager's
default under this or any other provision of this Agreement. Any such
termination of this Agreement by Manager shall not affect Medical Center's
obligation to pay undisputed amounts due Manager under this Agreement, less any
applicable credits, withholds or deductions. Should this Agreement terminate for
any reason as provided for under this Agreement prior to the end of a calendar
month, Manager shall be paid a pro-rata amount for services rendered prior to
the termination as payment in full for services provided under this Agreement.
5.2 Medical Center or its duly authorized agents shall have
the exclusive and sole right to bill and collect all charges for services
rendered by Manager to patients in the Inpatient Program. All amounts collected
by Medical Center or its duly authorized agents pursuant to such invoices shall
belong to Medical Center, and Manager shall have no right or
<PAGE> 9
interest in the same; provided however, this in no way restricts the Medical
Director or other members of the Medical Center Medical Staff from billing and
collecting fees for professional services rendered to patients in the Inpatient
Program.
5.3 Both parties agree to evaluate the impact which HMO,
Managed Care, PPO, and other group business opportunities may have on Inpatient
Program operations, and to work collaboratively in the strategic planning and
marketing processes.
5.4 If Medical Center is denied reimbursement for ten percent
(10%) or more of the patient days billed under the Inpatient Program,
compensation payable to Manager under Section 5.1 shall be decreased at the rate
of Two Hundred and Fifty Dollars ($250.) per day denied in excess of that ten
percent (10%). A denied day is defined as reimbursement that is denied by any
third party payor, including MediCal, which denial has been appealed through the
appropriate appeals process in accordance with Medical Center's regular billing
and collection standards and practices.
5.4.1 The percentage of denied days shall be
determined as follows:
5.4.1.1 The number of patient days billed
under the Inpatient Program shall be identified for each six (6) month period of
services ("billing period") provided hereunder. At the end of that billing
period, the percentage of denied days for that billing period shall equal the
sum of the number of denied days for that billing period divided by the total
number of patient days billed.
6. Confidential Information.
6.1 For purposes of this Agreement, the term "Confidential
Information" shall include the following: (1) all documents and other materials
including but not limited to the Proposal, memoranda, manuals, handbooks,
pamphlets, production books and audio or visual recordings, which contain
written information relating to the Inpatient Program (excluding written
materials distributed to patients in the Inpatient Program or as promotion for
the Inpatient Program), (2) all methods, techniques and procedures utilized in
providing psychiatric treatment services to patients in the Inpatient Program at
the Medical Center not readily available through sources in the public domain;
and (3) all trademarks, trade names and service marks of Manager.
6.2 Medical Center agrees and acknowledges that Confidential
Information is disclosed to it in confidence with the understanding that it
constitutes valuable business information developed by Manager at great
expenditure of time, effort and money. Medical Center agrees it shall not,
without the express prior written consent of Manager, use Confidential
Information for any purpose other than the performance of this Agreement.
Medical Center further agrees to keep strictly confidential and hold in trust
all Confidential Information and not disclose or reveal such information to any
third party without the express prior written consent of Manager. It is
expressly understood that Medical Center will continue to disclose patient
information to insurers and governmental agencies as mandated.
<PAGE> 10
6.3 Medical Center acknowledges that the disclosure of
Confidential Information to it by Manager is done in reliance upon the Medical
Center's representation and covenants in this Agreement. Upon termination of
this Agreement by either party for any reason whatsoever, Medical Center shall
forthwith return all material constituting or containing Confidential
Information and Medical Center will not thereafter use, appropriate, or
reproduce such information or disclose such information to any third party,
except as mandated by law.
6.4 Non-Disclosure. Manager acknowledges that during the term
of this Agreement she may be given access to certain proprietary information and
trade secrets of Medical Center ("Trade Secrets"). The Trade Secrets will
include information relative to Medical Center and may also include information
encompassed in business plans, proposals, marketing and development plans,
financial information, costs and other concepts, ideas or know-how related to
the business or developments of CHWSC which have not been publicly released by
Medical Center or its duly authorized representatives. Manager shall preserve
and maintain as confidential all Trade Secrets that have been or may be obtained
by her in the courses of her performance of services under this Agreement.
Manager also shall not, without the prior written consent of Medical Center, use
for her own benefit or purposes, or disclosure to others, either during the term
of this Agreement hereunder or thereafter, any Trade Secret. All Trade Secrets
shall constitute "trade secrets" under the Uniform Trade Secrets Act contained
in California Civil Code Sections 3426 et seq., and Medical Center shall be
entitled to all protection and be afforded all remedies available under such
Act.
7. Recruitment of Employees and Independent Contractors.
7.1 Medical Center acknowledges that Manager has and will
continue to expend substantial time, effort, and money training its employees
and independent contractors in the operation of the Program. The employees and
independent contractors of manager who will operate the program at the Medical
Center will have access to and possess Confidential Information of Manager.
Medical Center acknowledges that to employ or contract with former employees or
independent contractors of Manager would likely result in the use of Manager's
Confidential Information in violation of Section 6 hereof. Medical Center,
therefore, agrees that during the term of this Agreement and for one (1) year
thereafter, it will not, and it will cause Medical Center, not to employ,
solicit the employment of, or in any way retain the services of any employee,
former employee, or independent contractor of Manager if such individual has
been employed or retained by Manager and has provided services under this
Agreement as Medical Center at any time during the immediate preceding one (1)
year unless Manager gives Medical Center prior written consent thereto.
7.2 Manager agrees that during the same respective period of
time, it will not employ or solicit the employment of or in any way retain the
services of any employee, former employee, or contracted personnel or former
agent of Medical Center without Medical Center's prior written consent thereto.
<PAGE> 11
8. Service Mark License.
Medical Center acknowledges that "OptimumCare" and
"OptimumCare Unit" are registered service marks belonging exclusively to
OptimumCare, and that during the term of this Agreement only, Medical Center is
licensed to utilize these service marks in the marketing of professional
services for the treatment of adult psychiatric patients in the Program. Medical
Center's use of these service marks shall inure to the benefit of OptimumCare,
and shall not give Medical Center any right or title therein, and any common law
service marks rights acquired as a consequence of Medical Center's use thereof
are hereby assigned exclusively to OptimumCare. At the termination of this
Agreement, Medical Center shall immediately terminate the use of these service
marks unless a separate written service mark license agreement, specifically
authorizing continued use of such service marks, is entered into by the parties
hereto at that time. Medical Center will not cause any documents to be printed
bearing such service marks without an accompanying mark indicating that such
service marks are registered service marks. Manager likewise agrees that all
publication and information pieces developed or utilized for any purpose
involving the Medical Center must first have specific authorization of the
Medical Center.
9. Compliance with Regulations.
Manager will conduct its activities and operations in strict
compliance with all rules and regulations of the Medical Center, its medical
staff and applicable state and other government authorities and agencies.
Manager's employees and representatives shall comply with and observe such rules
and regulations.
10. Jeopardy.
Notwithstanding anything to the contrary hereinabove
contained, in the event the performance by either party hereto of any term,
covenant, condition or provision of this Agreement should jeopardize the
licensure of Medical Center, its participation in, or its certification or
reimbursement from, Medicare, Medi-Cal, Blue Cross or any other reimbursement or
payment program, or its full accreditation by JCAHO or any other state or
nationally recognized accreditation, organization, or if for any reason said
performance should be in violation or be deemed unethical by any recognized
body, agency or association in the Medical or hospital fields, Medical Center
may at its option terminate this Agreement forthwith.
11. Miscellaneous.
Compulsory Arbitration: Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be settled by
binding arbitration in accordance with the rules of the American Arbitration
Association, and judgement on the award rendered may be entered in any court
having jurisdiction. However, this shall not apply with respect to any claim for
indemnity for bodily injury or death.
<PAGE> 12
12. Attorney Fees.
If any legal action (including arbitration) is necessary to
enforce the term of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees and costs awarded against the other party in addition
to any other relief to which that party may be entitled.
13. Governing Law.
The validity of this Agreement, the interpretation of the
rights and duties of the parties hereunder and the construction of the terms
hereof shall be governed in accordance with the internal laws of the State of
California.
14. Federal Government Access.
Until the expiration of four (4) years after the furnishing of
services pursuant to this Agreement, Manger shall make available, upon request
to the Secretary of Health and Human Services, or upon request to the Controller
General, or any of their duly authorized representatives, this Agreement, books,
documents and records of manager that are necessary to certify the nature and
extent of the cost claimed to Medicare with respect to the services provided
under this Agreement.
15. Notice.
All notices hereunder shall be in writing, delivered
personally or by Certified or Registered postal mails, postage prepaid, return
receipt requested, and shall be deemed given when delivered personally or when
deposited in the United States mail, addressed as below with proper postage
affixed, but each may change his address by written notice in accordance with
this Paragraph.
Medical Center's Address: St. Francis Medical Center
3630 East Imperial Highway
Lynwood, CA 90262
Attention: Administrator
Copy to: CHW Southern California
790 E. Colorado Blvd., Suite 600
Pasadena, CA 91101
Attention: Corporate Counsel
Manager's Address: OptimumCare Corporation
5850 Hannum Avenue
Culver City, CA 90230
<PAGE> 13
16. Severability.
If for any reason any clause or provision of this Agreement,
or the application of any such clause or provision in a particular context or to
a particular situation, circumstance or person, should be held unenforceable,
invalid or in violation of law by any court or other tribunal, then the
application of such clause or provision in contexts or to situations,
circumstances or persons other than that in or to which it is held
unenforceable, invalid or in violation of law shall not be affected thereby, and
the remaining clauses and provisions hereof shall nevertheless remain in full
force and effect.
17. Captions.
Any captions to or headings of the Articles, Paragraphs or
subparagraphs of this Agreement are solely for the convenience of the parties,
and shall not be interpreted to affect the validity of this Agreement or to
limit or affect any rights, obligations, or responsibilities of the parties
arising hereunder.
18. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.
19. Entire Agreement; Amendment.
This Agreement constitutes the full and complete agreement and
understanding between the parties hereto and shall supersede all prior written
and oral agreements concerning the subject matter contained herein. Unless
otherwise provided herein, this Agreement may be modified, amended or waived
only by a written instrument executed by all of the parties hereto.
20. Force Majeure.
Neither party shall be liable nor deemed to breach this
Agreement for any delay or failure in performance or other interruption of
service resulting, directly or indirectly, from Acts of God, civil or military
authority, acts of the public enemy, riots or civil disobedience, war,
accidents, fires, explosions, earthquakes, floods, failure of transportation,
machinery or supplies, vandalism, strikes or other work interruptions by the
employees of any party, or any other cause beyond the reasonable control of the
party affected thereby. However, each party shall utilize its best good faith
efforts to perform under this Agreement in the event of any such occurrence or
circumstance.
21. Gender and Number.
Whenever the context hereof requires, the gender of all terms
shall include the masculine, feminine, and neuter, and the number shall include
the singular and plural.
<PAGE> 14
22. Ambiguities.
The general rule that ambiguities are to be construed against
the drafter shall not apply to this Agreement. In the event that any provision
of this Agreement is found to be ambiguous, each party shall have an opportunity
to present evidence as to the actual intent of the parties with respect to such
ambiguous provision.
23. Waiver.
No failure or delay by a party to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement, or
to exercise any right, power or remedy hereunder or under law or consequent upon
a breach hereof or thereof shall constitute a waiver of any such term,
condition, covenant, agreement, right, power or remedy or of any such breach or
preclude such party from exercising any such right, power or remedy at any later
time or times.
24. Indemnification.
Manager and Medical Center shall each indemnify, defend and
hold the other harmless against all claims and liabilities (including reasonable
attorney's fees and costs of suit) that may arise as a result of the negligent,
intentional or wrongful acts or omissions of the indemnifying party.
25. Independent Contractors.
25.1 In the performance of Manager's duties and obligations
arising under this Agreement, Manager is at all times acting and performing as
an independent contractor. Nothing in this Agreement is intended nor shall be
construed to create between Manager and Medical Center, with respect to their
relationship under this Agreement, either an employer/employee, joint venture,
partnership, or landlord/tenant (lease) relationship. In the event that a
determination is made for any reason that an independent contractor relationship
does not exist between Manager and Medical Center, Medical Center may terminate
this Agreement immediately upon written notice to Manager.
25.2 Manager shall reimburse Medical Center for the employee
portion of all employee-related taxes, charges or levies which may be collected
from Medical Center in the event that Manager is determined to be an employee of
Medical Center and not an independent contractor.
<PAGE> 15
SIGNATURE PAGE TO THE
PSYCHIATRIC UNIT MANAGEMENT SERVICES AGREEMENT
IN WITNESS WHEREOF, this Agreement has been executed on ______________,
______________________, at ______________________, California.
Manager Medical Center
OPTIMUMCARE CORPORATION CHW SOUTHERN CALIFORNIA
doing business as
ST. FRANCIS MEDICAL CENTER
By: Edward A. Johnson By: Zippy Frankel, Asst. Administrator
--------------------------------- ----------------------------------
Edward A. Johnson Print name and title
Chairman of the Board and
Chief Executive Officer
By: Mulu G. Michael
---------------------------------
Mulu G. Michael
President & Chief Operating Officer
<PAGE> 16
SUPPORT ACTIVITIES
OptimumCare Corporation Responsibilities:
Patient Handbooks
Brochure
Reprints of Selected Articles
Printing of Business Cards for OptimumCare Program Team
Printing of Personalized OptimumCare Program Stationery, is desired
Public Service Announcement Campaign - Including Materials Prepared
for Television/Radio/Print
Public Relations Campaigns
Typing of Press Releases
Typing of Radio and Television Spots of Medical Center Stationery,
Addressing and Mailing of Invitations, Announcements and
General Program Correspondence
Marketing Expertise
Medical Center Responsibilities:
Typing of Public Relations and Referral Letters
Providing Telephone System for the OptimumCare Program
<PAGE> 17
ADDENDUM TO AGREEMENT
Medical Center agrees to pay Manager $40 per hour, up to one full time employee
per month, for Utilization Review Appeals performed by Manager.
MULUMEBET GEBRE MICHAEL EDWARD A. JOHNSON ZIPPY FRANKEL
<PAGE> 18
OUTPATIENT PSYCHIATRIC UNIT MANAGEMENT SERVICES AGREEMENT
THIS OUTPATIENT PSYCHIATRIC UNIT MANAGEMENT SERVICES AGREEMENT
("Agreement") is made and entered into by and between CATHOLIC HEALTHCARE WEST
SOUTHERN CALIFORNIA, a California nonprofit public corporation doing business as
St. Francis Medical Center ("Medical Center"), and OPTIMUMCARE CORPORATION, a
Delaware corporation ("Manager").
RECITALS
A. Medical Center operates a general acute care hospital in which is
located a mental health unit which provides an adult partial hospitalization
program for outpatient psychiatric services ("Outpatient Program").
B. Manager is in the business of providing management and other
services for the treatment of inpatient psychiatric patients in compliance with
industry, regulatory, and governmental standards and requirements through its
OPTIMUMCARE PSYCH UNIT PROGRAM.
C. Medical Center and Manager desire to enter into this Agreement in
order to set forth the terms and conditions upon which Manager will provide
Outpatient Program management and other services to or for the benefit of
Medical Center.
NOW, THEREFORE, in consideration of the mutual covenants, conditions,
and promises set forth herein, and for such other good and valuable
consideration, receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Term and Termination.
1.1 Term: Unless sooner terminated in accordance with the
provisions of Sections 10 hereof, this agreement shall commence at 12:01 a.m. on
September 01, 1999 and shall remain in full force and effect for a term of two
(2) years, expiring at 11:59 p.m. on August 31, 2001.
1.2 Termination: In addition to any other events causing
termination under this Agreement, this Agreement may be terminated on the first
to occur of any of the following:
1.2.1 Either party shall have the right to terminate
this Agreement on thirty (30) days' prior written notice to the other party if
the party to whom such notice is given is in breach of any material provision of
this Agreement. The party claiming the right to terminate hereunder shall set
forth, in the notice of intended termination required hereby, the facts
underlying its claim that the other party is in breach of this Agreement.
Notwithstanding the foregoing, this Agreement shall not terminate in the event
that the breaching party cures the breach within ten (10) days of the receipt of
such notice, or if such breach is not reasonably capable of
<PAGE> 19
cure within such period, diligently prosecutes such cure to completion within
the thirty (30) day notice period.
1.2.2 In the event there are any changes effected in
the California Medical Assistance Program ("Medi-Cal"), Title XVIII of the
Federal Social Security Act ("Medicare"), and/or substantial changes under other
public or private health and/or hospital care insurance programs or policies
which may have a material effect on the operations of Medical Center, Medical
Center may elect to renegotiate this Agreement upon written notice of Manager.
Medical Center shall indicate the basis upon which it has determined that such a
material impact on its operations may result. In any case where such notice is
provided, both parties shall negotiate a revised agreement, which, to the extent
reasonably practicable, under the circumstances, each party will adequately
protect its interests and fulfill its objectives in light of the governmental
program or private insurance policy changes which constituted the basis for the
exercise of this provision. In the event the parties are unable to negotiate a
revised agreement within said period, Medical Center may thereupon elect to
terminate this Agreement upon thirty (30) days' prior written notice.
1.3 Subject to the provisions of the sections above, Manager
shall immediately cause the removal of any Outpatient Program Director, Medical
Director or any physician or licensed professional providing professional
services for the Outpatient Program under Manager's employment or contract, who
is subject to or under disciplinary action by licensing or other authorities, or
whose performance results in disciplinary action by the Medical Staff, and/or
whose performance results in a final judgement awarding damages of $100,000 or
more against the Medical Center and/or if any such physician(s) loses (or has
suspended or modified or placed on probation) his or her Medical Staff
membership and/or clinical privileges to practice psychiatry or his or her
profession at the Medical Center. If Manager fails to immediately terminate any
such professional, then Medical Center may immediately terminate this Agreement.
1.4 If either party to this Agreement should be declared
bankrupt or become insolvent or liquidate for any reason, the other party may
transmit to the former party written notice of its intention to immediately
terminate this Agreement, specifying with particularity the event justifying
such notice; provided, that the delay or failure of a party so to transmit
written notice shall not constitute a waiver by said party of any default
hereunder or of any other or further default under this Agreement by the former
party. If the event justifying such notice is the bankruptcy, insolvency or
liquidation of the party receiving such notice, this Agreement shall terminate
forthwith.
1.5 This Agreement may be terminated by Medical Center
immediately on written notice if:
1.5.1 Medical Center gives written notice to Manager
(specifying in reasonable detail the reasons and events giving rise to the
delivery of such notice) that the Outpatient Program operated by Manager has
failed to meet licensing, payor certification, or JCAHO standards of patient
care or requirements, or Medical Center's or its Medical Staff's standards, and
Manager fails to remedy such deficiencies to Medical Center's absolute
satisfaction
<PAGE> 20
within thirty (30) days of receipt of such notice.
1.5.2 Manager initiates or undergoes, without Medical
Center's prior written approval, (a) any sale or transfer of all or
substantially all of its assets other than in the ordinary course of business;
(b) any dissolution, merger or reorganization; or (c) any change, individually
or through a series of transactions, in a 20% or greater ownership, voting or
control interest in Manager or any change in Manager's management with
responsibility over the Outpatient Program.
2. Covenants of the Medical Center.
Medical Center shall:
2.1 Subject to availability and budgetary constraints, furnish
space in Medical Center's outpatient department to the Outpatient program so as
to enable the participation of at least forty (40) outpatients per day, as
determined by Medical Center to be reasonably necessary for said program.
Medical Center shall also provide the services, facilities and support of other
Medical Center departments, including without limitation, available diagnostic
facilities, as Medical Center determines is reasonably necessary for Program
patients and as ordered by said patients' attending physicians. Medical Center
shall also provide office space for Manager's Program Director within the Unit
as Medical Center reasonably determines is necessary for the operation of the
Program, subject to space and budgetary constraints. Manager shall accept such
space, facilities, etc. of Medical Center in "as is" condition, and title to
such space, facilities, etc. shall remain at all times in Medical Center. Said
Unit space shall be used solely for the operation of the Program and for no
other purposes.
2.2 Provide the Outpatient Program with qualified nursing
personnel, at staffing levels sufficient to meet Outpatient Program needs as
determined by Medical Center in its sole discretion, who are trained and
experienced in psychiatric nursing and provide other non-physician personnel,
such personnel collectively referred to herein as "Medical Center Personnel".
Medical Center shall be responsible for employing or engaging such Medical
Center Personnel and are solely liable to such personnel for payment of their
wages, compensation and employee benefits. Said personnel shall comply with the
Outpatient Program policies and procedures as developed by Medical Center.
2.3 Assist Manager in maintaining accreditation of the
Outpatient Program by the Joint Commission on Accreditation of Healthcare
Organizations ("JCAHO"), Accreditation Council for Psychiatric Facilities, and
pay all related application fees, and assist Manager in the preparation of any
and all information, data and materials required in connection with application
or renewal for such accreditation. Medical Center shall also obtain, with
Manager's full cooperation and assistance, any and all certifications or
approvals from the Medicare and Medi-Cal Programs and from any other
governmental or private payment or reimbursement programs. Medical Center shall
also obtain, with Manager's full assistance and cooperation, any consents or
approvals to maintain the Program as an Outpatient service under Medical
Center's general acute care hospital license. Manager shall be solely liable for
any costs or expenses that it incurs in
<PAGE> 21
connection with providing assistance to, and cooperating with, Medical Center in
obtaining the consents and approvals described in this Section 2.3.
2.4 Acknowledges that the selection, continued employment and
termination of employment and overall supervision and direction of Medical
Center Personnel for the Outpatient Program shall be at the sole discretion of
Medical Center's Administration. However, Medical Center agrees that it shall
consult with Manager in the event Manager desires the removal from the Program
of any Medical Center Personnel, provided that such request is made in writing
specifying with particularity the cause for such request and such request shall
not be made unreasonably.
2.5 Provide: (1) maintenance of the patient care areas used
for the Outpatient Program as Medical Center determines is necessary upon
consultation with Manager; (2) dietary service for Program patients as is
normally available to other Medical Center patients; (3) housekeeping services
for patients and Manager's offices at the Medical Center as is normally
available to other Medical Center patients; (4) telephone and utilities for
patient areas and Manager's offices at the Medical Center as is normally
available for Medical Center facilities; and (5) other services of Medical
Center departments customarily provided in the ordinary course of business to
Medical Center patients (e.g. record keeping); all of which as reasonably
determined by Medical Center to be necessary for the efficient operation of the
Program.
2.6 Provide oversight and supervision for appropriate
utilization review ("UR") and quality improvement ("QI") programs and procedures
developed and implemented by Manager in cooperation with Medical Center for the
Outpatient Program, and integrate such programs and procedures with Medical
Center's other such programs and procedures.
2.7 Review and, if acceptable, approve Manager's publicity and
marketing plans and advertising, publicity and marketing materials for the
Program, from time to time.
2.8 Maintain its general and professional liability insurance,
or self-insurance, coverage for Medical Center and Medical Center employees or
agents.
3. Covenants of Manager.
Manager shall:
3.1 Provide professional and general liability insurance
coverage of at least Three Million Dollars ($3,000,000) per occurrence with an
aggregate limitation of Five Million Dollars ($5,000,000) with respect to
Manager and Manager's employees, agents, and contractors that Manager retains to
provide services to the Program. If Manager provides a claims-made policy,
Manager shall either maintain such insurance coverage in force following the
termination of this Agreement, or provide evidence of adequate "tail" coverage,
with such terms and conditions approved in advance by Medical Center. Manager
shall also ensure that each physician providing professional services on behalf
of the Outpatient Program maintains professional liability insurance in the
minimum coverage amounts and subject to the terms specified herein. All
<PAGE> 22
insurance policies providing coverage as described above shall provide for at
least thirty (30) days' prior written notice to Medical Center prior to any
modification, amendment or cancellation of such coverage taking effect. Manager
shall provide Medical Center with certificates evidencing the insurance coverage
required above immediately upon the execution of this Agreement.
3.2 Subject to Medical Center's approval, Manager shall
develop, implement and supervise the Outpatient Program. The Outpatient Program
shall include intensive, specialized Outpatient services for the care and
treatment of adult psychiatric patients. Manager shall, in general, develop
clinical treatment programs that meet the clinical needs and community
standards, and are in compliance with the licensure and accreditation
requirements for governmental and regulatory agencies and payors. Manager shall
provide ongoing management and support services for the Outpatient Program.
3.3 Provide the following personnel for the Outpatient
Program: (1) a Medical Director assigned exclusively full-time to the Outpatient
Program (who shall be a psychiatrist duly licensed in good standing by the State
of California, shall be certified by the Board of Psychiatry, and shall be a
member in good standing of the Medical Center's Medical Staff with clinical
privileges in Psychiatry); (2) an Outpatient Program Director assigned
exclusively full-tine to manage the Outpatient Program and who shall have
day-to-day management responsibility for the Outpatient Program and Outpatient
Program personnel, (3) clinical psychologist(s) in a number acceptable to
Medical Center, one of whom shall be designated as chief therapist; (4) A
Partial Hospitalization Program Coordinator, with such licensure and background
as shall be approved in advance by Medical Center; and (5)
occupational/recreational therapist(s) in numbers sufficient to meet Outpatient
Program needs, additional licensed counselors in numbers sufficient to meet
Outpatient Program needs, and any other non-physician personnel required for the
Outpatient Program who are not provided by Medical Center hereunder. Any and all
non-Medical Center personnel employed or contracted for by Manager to render
services in the Outpatient Program shall be subject to prior approval by Medical
Center and, as applicable, its Medical Staff and shall be compatible with
Medical Center's employment standards, and Medical Center shall be furnished a
job description and resume of qualifications and work experience with respect to
such personnel as well as any completed applications as may be required by
Medical Center or its Medical Staff. Such personnel shall not be deemed
employees or agents of Medical Center, and Manager shall have full
responsibility for wages, vacation pay, sick leave, payroll and other employment
taxes, pension and retirement plan contributions, worker's compensation and
unemployment insurance, social security, or any other benefits, or other pay or
compensation whatsoever (collectively, "employee benefits") for any of Manager's
employees or contractors provided hereunder, or providing services under this
Agreement, as defined below.
3.4 Consult with the Medical Center for the development of
clinical needs for the selection of Program nursing staff.
3.5 Provide, at its sole cost and expense, qualified personnel
of Manager to conduct on-site orientation programs, to enable Medical Center to
train the Program nursing staff and selective nursing personnel from other units
of the Medical Center to act as back-up for the Program nursing staff.
<PAGE> 23
3.6 Consult, manage and support the Outpatient Program
treatment team's effort to provide quality psychiatric treatment working
collaboratively with Medical Center's Medical Staff, and care management, UR and
Discharge Planning personnel.
3.7 Any employee or contractor of Manager who, Medical Center,
in its sole discretion, determines is incompatible with the goals, bylaws,
rules, regulations, policies or procedures of Medical Center and/or its Medical
Staff shall be removed by Manager upon thirty (30) days' prior written notice.
Medical Center shall have the right, in its sole discretion, to approve or
disapprove in advance in writing any proposed replacement or substitute for any
of Manager's personnel hereunder. Any employee or contractor of Manager shall be
immediately removed if Medical Center, in its sole discretion, determines that
the individual's presence is a threat to patient care or the Medical Center's
operations. Professionals provided by Manager shall apply for and maintain in
good standing appropriate membership as an allied health professional or
physician (as applicable) on Medical Center's Medical Staff with appropriate
clinical privileges, as required by the Medical Staff bylaws, rules and
regulations and shall not cause any suspension, reduction or termination of such
membership or privileges or be placed on probation by the Medical Staff.
3.8 Submit monthly status reports for the Outpatient Program
to Medical Center's Administration in a form acceptable to Medical Center that
will review Outpatient Program operations during the previous month and outline
planned activities for the coming month.
3.9 Initiate a comprehensive public information, education,
marketing and referral development program, which shall be reviewed and approved
periodically in coordination with other Medical Center public relations and
marketing plans. Within thirty (30) days following the commencement date hereof,
Manager shall present Medical Center for its review and approval with a detailed
publicity and marketing plan, and Manager shall implement such plan within no
later than thirty (30) days following Medical Center's approval thereof. Such
publicity and marketing activities shall be conducted at Manager's sole cost and
expense, which costs and expenses may include, without limitation, development
of patient handbooks or brochures; printing of articles, business cards,
stationery, and the like; development of public service announcements,
advertising campaigns, press releases and radio commercials; preparation of
invitations and announcements for educational programs; preparation of referral
letters; and hosting seminars and workshops. Medical Center shall have the right
and must approve or disapprove in advance all marketing programs, which approval
shall not be unreasonably withheld. Manager shall not be permitted to use
Medical Center's or Medical Center's name, logo or likeness without Medical
Center's prior written approval.
3.10 Develop and implement operational policies and procedures
for the Outpatient Program, including, without limitation, UR/QI procedures, in
collaboration with Medical Center. Any and all Outpatient Program policies,
procedures, programs and activities are subject to prior review and approval by
Medical Center's administration and its Medical Staff.
<PAGE> 24
3.11 Use its best efforts to assist Medical Center in working
with governmental agencies, third-party payors and others to secure necessary
licenses, permits, approvals, accreditation and certifications for the Program.
3.12 Follow admission policies and procedures developed by
Medical Center in respect to patients of Outpatient Program, as well as other
authorizations for admission of patients to the Program and the provision of
services to such patients on behalf of Medical Center as are required by
governmental agencies or any other third-payor prior to the patient's admission.
Utilize its best efforts to obtain additional Treatment Authorization Record's
("TAR's") and approvals for continued participation in the Outpatient Program
and/or services as necessary to promote timely payment.
3.13 Obtain and maintain worker's compensation insurance for
its employees and agents as required by California law. If permitted, Medical
Center shall be added as an additional insured on such policy.
3.14 Commit no act or omission which adversely affects Medical
Center's licensure reimbursement or certification or accreditation in connection
with the management and operation of the Outpatient Program.
3.15 Cause patients to be admitted to the Outpatient Program
(including but not limited to Medicare and Medi-Cal patients) only if the
admission is ordered by a physician who is a member in good standing of the
Medical Center Medical Staff with admitting privileges, and strictly in
compliance with Medical Center's admission policies and procedures (as described
above).
4. Representation and Warranties of Manager.
Manager hereby represents and warrants to Medical Center as
follows, which representations and warranties shall be true, accurate and
complete on the date of this Agreement (as defined herein) and at all other
times during the term hereof:
4.1 Manager is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with the power
and authority to carry on the business in which it is engaged and to perform its
obligations under this Agreement.
4.2 The execution of this Agreement and the performance of the
obligations of the Manager hereunder will not result in any breach of any of the
terms, conditions or provisions of any agreement or other instrument to which
the Manager is a party or by which it may be bound or affected, or contravene
any governmental license, franchise, permit or other authorization possessed by
either party, nor will such execution and performance violate any federal, state
or local law, rule or regulation. This Agreement is a legal and binding
obligation of Manager, and all corporate actions and approvals have been taken
and obtained in order for Manager to enter into this Agreement. No approval,
authorization or other action by, or filing with, any governmental authority or
any other third party is required in connection with either party
<PAGE> 25
performing its duties and obligations hereunder.
4.3 There is no litigation, administrative proceedings or
investigation pending or threatened against Manager (nor is it subject to any
judgement, order, decree or regulations of any court or other governmental
administrative agency) pending or affect Manager which would materially
adversely affect the performance of Manager's obligations hereunder. Without
limiting the foregoing, Manager represents and warrants that it has strictly
complied, is currently in compliance and shall strictly comply with any and all
statutes, rules, regulations, decisions and guidelines applicable to the
operation, management, reimbursement and/or payment of services provided by
Outpatient psychiatry programs which Manager is, has or shall be operating
and/or managing, under the Medicare and Medi-Cal Programs and any other public
or private third party reimbursement or payment program, and that Manager is
not, has not been and shall not be under investigation, audit or challenge by
any federal or state agency or authority in connection with any of its
operations, policies or procedures.
4.4 Any and all personnel and professionals provided by
Manager to the Outpatient Program shall be duly licensed and qualified, as
applicable, and shall fulfill each of their terms, duties, obligations
covenants, representations, warranties, responsibilities and indemnities
applicable to them hereunder at all times while performing services for the
Program.
5. Compensation.
5.1 Compensation payable to Manager by Medical Center shall be
on a fixed fee basis and shall be the sum of Twenty Three Thousand Three Hundred
Thirty Three Dollars ($23,333) per month for each month of service provided
hereunder. On or before the fifth (5th) day of each calendar month Manager will
forward to Medical Center an invoice from the previous month for the fees due
and payable by Medical Center under this Section 5. Medical Center shall have
ten (10) days following receipt of any such invoice to dispute Manager's days of
service or claim for reimbursement in writing, which shall set forth the reasons
for such dispute. If Medical Center does not dispute an invoice, the payment of
the Management Fee is expressly conditioned upon Manager: (1) preparing and
submitting to Medical Center on a periodic basis, as determined by Medical
Center, complete and accurate time records on such forms specified by Medical
Center, and complying with all requirements and supplying all documents
necessary to otherwise substantiate claims by Medical Center to third party
payors for services of Manager, Medical Director, Outpatient Program Director
and Manager's other personnel; and (2) otherwise at all times being in
compliance with the terms and conditions of this Agreement. Except as otherwise
provided herein, a failure by Medical Center to pay the submitted invoice by the
thirtieth (30th) day following receipt of the invoice shall be a material breach
of this Agreement by Medical Center, which shall give Manager the right to
terminate this Agreement for cause, unless such failure is due to Manager's
default under this or any other provision of this Agreement. Any such
termination of this Agreement by Manager shall not affect Medical Center's
obligation to pay undisputed amounts due Manager under this Agreement, less any
applicable credits, withholds or deductions. Should this Agreement terminate for
any reason as provided for under this Agreement prior to the end of a calendar
month, Manager shall be paid a pro-rata amount for services rendered prior to
the termination as payment in full for services provided under this Agreement.
<PAGE> 26
5.2 Medical Center or its duly authorized agents shall have
the exclusive and sole right to bill and collect all charges for services
rendered by Manager to patients in the Outpatient Program. All amounts collected
by Medical Center or its duly authorized agents pursuant to such invoices shall
belong to Medical Center, and Manager shall have no right or interest in the
same; provided however, this in no way restricts the Medical Director or other
members of the Medical Center Medical Staff from billing and collecting fees for
professional services rendered to patients in the Outpatient Program.
5.3 Both parties agree to evaluate the impact which HMO,
Managed Care, PPO, and other group business opportunities may have on Outpatient
Program operations, and to work collaboratively in the strategic planning and
marketing processes.
5.4 If Medical Center is denied reimbursement for ten percent
(10%) or more of the patient days billed under the Outpatient Program,
compensation payable to Manager under Section 5.1 shall be decreased at the rate
of One Hundred Dollars ($100.) per day denied in excess of that ten percent
(10%). A denied day is defined as reimbursement that is denied by any third
party payor, including MediCal, which denial has been appealed through the
appropriate appeals process in accordance with Medical Center's regular billing
and collection standards and practices.
5.4.1 The percentage of denied days shall be
determined as follows:
5.4.1.1 The number of outpatient days billed
under the Outpatient Program shall be identified for each six (6) month period
of services ("billing period") provided hereunder. At the end of that billing
period, the percentage of denied days for that billing period shall equal the
sum of the number of denied days for that billing period divided by the total
number of patient days billed.
6. Confidential Information.
6.1 For purposes of this Agreement, the term "Confidential
Information" shall include the following: (1) all documents and other materials
including but not limited to the Proposal, memoranda, manuals, handbooks,
pamphlets, production books and audio or visual recordings, which contain
written information relating to the Outpatient Program (excluding written
materials distributed to patients in the Outpatient Program or as promotion for
the Outpatient Program), (2) all methods, techniques and procedures utilized in
providing psychiatric treatment services to patients in the Outpatient Program
at the Medical Center not readily available through sources in the public
domain; and (3) all trademarks, tradenames and service marks of Manager.
6.2 Medical Center agrees and acknowledges that Confidential
Information is disclosed to it in confidence with the understanding that it
constitutes valuable business information developed by Manager at great
expenditure of time, effort and money. Medical Center agrees it shall not,
without the express prior written consent of Manager, use Confidential
Information for any purpose other than the performance of this Agreement.
Medical Center further agrees to keep strictly confidential and hold in trust
all Confidential Information and not disclose or reveal such
<PAGE> 27
information to any third party without the express prior written consent of
Manager. It is expressly understood that Medical Center will continue to
disclose patient information to insurers and governmental agencies as mandated.
6.3 Medical Center acknowledges that the disclosure of
Confidential Information to it by Manager is done in reliance upon the Medical
Center's representation and covenants in this Agreement. Upon termination of
this Agreement by either party for any reason whatsoever, Medical Center shall
forthwith return all material constituting or containing Confidential
Information and Medical Center will not thereafter use, appropriate, or
reproduce such information or disclose such information to any third party,
except as mandated by law.
6.4 Non-Disclosure. Manager acknowledges that during the term
of this Agreement she may be given access to certain proprietary information and
trade secrets of Medical Center ("Trade Secrets"). The Trade Secrets will
include information relative to Medical Center and may also include information
encompassed in business plans, proposals, marketing and development plans,
financial information, costs and other concepts, ideas or know-how related to
the business or developments of CHWSC which have not been publicly released by
Medical Center or its duly authorized representatives. Manager shall preserve
and maintain as confidential all Trade Secrets that have been or may be obtained
by her in the courses of her performance of services under this Agreement.
Manager also shall not, without the prior written consent of Medical Center, use
for her own benefit or purposes, or disclosure to others, either during the term
of this Agreement hereunder or thereafter, any Trade Secret. All Trade Secrets
shall constitute "trade secrets" under the Uniform Trade Secrets Act contained
in California Civil Code Sections 3426 et seq., and Medical Center shall be
entitled to all protection and be afforded all remedies available under such
Act.
7. Recruitment of Employees and Independent Contractors.
7.1 Medical Center acknowledges that Manager has and will
continue to expend substantial time, effort, and money training its employees
and independent contractors in the operation of the Program. The employees and
independent contractors of manager who will operate the program at the Medical
Center will have access to and possess Confidential Information of Manager.
Medical Center acknowledges that to employ or contract with former employees or
independent contractors of Manager would likely result in the use of Manager's
Confidential Information in violation of Section 6 hereof. Medical Center,
therefore, agrees that during the term of this Agreement and for one (1) year
thereafter, it will not, and it will cause Medical Center, not to employ,
solicit the employment of, or in any way retain the services of any employee,
former employee, or independent contractor of Manager if such individual has
been employed or retained by Manager and has provided services under this
Agreement as Medical Center at any time during the immediate preceding one (1)
year unless Manager gives Medical Center prior written consent thereto.
7.2 Manager agrees that during the same respective period of
time, it will not employ or solicit the employment of or in any way retain the
services of any employee, former employee, or contracted personnel or former
agent of Medical Center without Medical Center's
<PAGE> 28
prior written consent thereto.
8. Service Mark License.
Medical Center acknowledges that "OptimumCare" and
"OptimumCare Unit" are registered service marks belonging exclusively to
OptimumCare, and that during the term of this Agreement only, Medical Center is
licensed to utilize these service marks in the marketing of professional
services for the treatment of adult psychiatric patients in the Program. Medical
Center's use of these service marks shall inure to the benefit of OptimumCare,
and shall not give Medical Center any right or title therein, and any common law
service marks rights acquired as a consequence of Medical Center's use thereof
are hereby assigned exclusively to OptimumCare. At the termination of this
Agreement, Medical Center shall immediately terminate the use of these service
marks unless a separate written service mark license agreement, specifically
authorizing continued use of such service marks, is entered into by the parties
hereto at that time. Medical Center will not cause any documents to be printed
bearing such service marks without an accompanying mark indicating that such
service marks are registered service marks. Manager likewise agrees that all
publication and information pieces developed or utilized for any purpose
involving the Medical Center must first have specific authorization of the
Medical Center.
9. Compliance with Regulations.
Manager will conduct its activities and operations in strict
compliance with all rules and regulations of the Medical Center, its medical
staff and applicable state and other government authorities and agencies.
Manager's employees and representatives shall comply with and observe such rules
and regulations.
10. Jeopardy.
Notwithstanding anything to the contrary hereinabove
contained, in the event the performance by either party hereto of any term,
covenant, condition or provision of this Agreement should jeopardize the
licensure of Medical Center, its participation in, or its certification or
reimbursement from, Medicare, Medi-Cal, Blue Cross or any other reimbursement or
payment program, or its full accreditation by JCAHO or any other state or
nationally recognized accreditation, organization, or if for any reason said
performance should be in violation or be deemed unethical by any recognized
body, agency or association in the Medical or hospital fields, Medical Center
may at its option terminate this Agreement forthwith.
11. Miscellaneous.
Compulsory Arbitration: Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be settled by
binding arbitration in accordance with the rules of the American Arbitration
Association, and judgement on the award rendered may be entered in any court
having jurisdiction. However, this shall not apply with respect to any claim for
indemnity for bodily injury or death.
<PAGE> 29
12. Attorney Fees.
If any legal action (including arbitration) is necessary to
enforce the term of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees and costs awarded against the other party in addition
to any other relief to which that party may be entitled.
13. Governing Law.
The validity of this Agreement, the interpretation of the
rights and duties of the parties hereunder and the construction of the terms
hereof shall be governed in accordance with the internal laws of the State of
California.
14. Federal Government Access.
Until the expiration of four (4) years after the furnishing of
services pursuant to this Agreement, Manager shall make available, upon request
to the Secretary of Health and Human Services, or upon request to the Controller
General, or any of their duly authorized representatives, this Agreement, books,
documents and records of Manager that are necessary to certify the nature and
extent of the cost claimed to Medicare with respect to the services provided
under this Agreement.
15. Notice.
All notices hereunder shall be in writing, delivered
personally or by Certified or Registered postal mails, postage prepaid, return
receipt requested, and shall be deemed given when delivered personally or when
deposited in the United States mail, addressed as below with proper postage
affixed, but each may change his address by written notice in accordance with
this Paragraph.
Medical Center's Address: St. Francis Medical Center
3630 East Imperial Highway
Lynwood, CA 90262
Attention: Administrator
Copy to: CHW Southern California
790 E. Colorado Blvd., Suite 600
Pasadena, CA 91101
Attention: Corporate Counsel
Manager's Address: OptimumCare Corporation
5850 Hannum Avenue
Culver City, CA 90230
<PAGE> 30
16. Severability.
If for any reason any clause or provision of this Agreement,
or the application of any such clause or provision in a particular context or to
a particular situation, circumstance or person, should be held unenforceable,
invalid or in violation of law by any court or other tribunal, then the
application of such clause or provision in contexts or to situations,
circumstances or persons other than that in or to which it is held
unenforceable, invalid or in violation of law shall not be affected thereby, and
the remaining clauses and provisions hereof shall nevertheless remain in full
force and effect.
17. Captions.
Any captions to or headings of the Articles, Paragraphs or
subparagraphs of this Agreement are solely for the convenience of the parties,
and shall not be interpreted to affect the validity of this Agreement or to
limit or affect any rights, obligations, or responsibilities of the parties
arising hereunder.
18. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.
19. Entire Agreement; Amendment.
This Agreement constitutes the full and complete agreement and
understanding between the parties hereto and shall supersede all prior written
and oral agreements concerning the subject matter contained herein. Unless
otherwise provided herein, this Agreement may be modified, amended or waived
only by a written instrument executed by all of the parties hereto.
20. Force Majeure.
Neither party shall be liable nor deemed to breach this
Agreement for any delay or failure in performance or other interruption of
service resulting, directly or indirectly, from Acts of God, civil or military
authority, acts of the public enemy, riots or civil disobedience, war,
accidents, fires, explosions, earthquakes, floods, failure of transportation,
machinery or supplies, vandalism, strikes or other work interruptions by the
employees of any party, or any other cause beyond the reasonable control of the
party affected thereby. However, each party shall utilize its best good faith
efforts to perform under this Agreement in the event of any such occurrence or
circumstance.
21. Gender and Number.
Whenever the context hereof requires, the gender of all terms
shall include the masculine, feminine, and neuter, and the number shall include
the singular and plural.
<PAGE> 31
22. Ambiguities.
The general rule that ambiguities are to be construed against
the drafter shall not apply to this Agreement. In the event that any provision
of this Agreement is found to be ambiguous, each party shall have an opportunity
to present evidence as to the actual intent of the parties with respect to such
ambiguous provision.
23. Waiver.
No failure or delay by a party to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement, or
to exercise any right, power or remedy hereunder or under law or consequent upon
a breach hereof or thereof shall constitute a waiver of any such term,
condition, covenant, agreement, right, power or remedy or of any such breach or
preclude such party from exercising any such right, power or remedy at any later
time or times.
24. Indemnification.
Manager and Medical Center shall each indemnify, defend and
hold the other harmless against all claims and liabilities (including reasonable
attorney's fees and costs of suit) that may arise as a result of the negligent,
intentional or wrongful acts or omissions of the indemnifying party.
25. Independent Contractors.
25.1 In the performance of Manager's duties and obligations
arising under this Agreement, Manager is at all times acting and performing as
an independent contractor. Nothing in this Agreement is intended nor shall be
construed to create between Manager and Medical Center, with respect to their
relationship under this Agreement, either an employer/employee, joint venture,
partnership, or landlord/tenant (lease) relationship. In the event that a
determination is made for any reason that an independent contractor relationship
does not exist between Manager and Medical Center, Medical Center may terminate
this Agreement immediately upon written notice to Manager.
25.2 Manager shall reimburse Medical Center for the employee
portion of all employee-related taxes, charges or levies which may be collected
from Medical Center in the event that Manager is determined to be an employee of
Medical Center and not an independent contractor.
<PAGE> 32
SIGNATURE PAGE TO THE
OUTPATIENT PSYCHIATRIC UNIT MANAGEMENT SERVICES AGREEMENT
IN WITNESS WHEREOF, this Agreement has been executed on ___________,
_________________, at ______________________, California.
Manager Medical Center
OPTIMUMCARE CORPORATION CHW SOUTHERN CALIFORNIA
doing business as
ST. FRANCIS MEDICAL CENTER
By: Edward A. Johnson By: Zippy Frankel, Asst. Administrator
---------------------------------- ----------------------------------
Edward A. Johnson Print Name and Title
Chairman of the Board and
Chief Executive Officer
By: Mulu G. Michael
----------------------------------
Mulu G. Michael
President & Chief Operating Officer
<PAGE> 33
SUPPORT ACTIVITIES
OptimumCare Corporation Responsibilities:
Patient Handbooks
Brochure
Reprints of Selected Articles
Printing of Business Cards for OptimumCare Program Team
Printing of Personalized OptimumCare Program Stationery, is desired
Public Service Announcement Campaign - Including Materials Prepared
for Television/Radio/Print
Public Relations Campaigns
Typing of Press Releases
Typing of Radio and Television Spots of Medical Center Stationery,
Addressing and Mailing of Invitations, Announcements and
General Program Correspondence
Marketing Expertise
Medical Center Responsibilities:
Typing of Public Relations and Referral Letters
Providing Telephone System for the OptimumCare Program
