AGREEMENT
AGREEMENT made as of the 1st of July, 1994, between NATIONAL HEALTH
INDUSTRIES, INC., a Delaware corporation, with its principal office at 9200
Shelbyville Road, Louisville, Kentucky 40222 (hereinafter referred to as
"Management Co."), and GALEN OF KENTUCKY, INC. d/b/a AUDUBON REGIONAL MEDICAL
CENTER, a Kentucky corporation, with its principal office at One Audubon Plaza
Drive, Louisville, Kentucky 40217 (hereinafter referred to as the "Hospital").
W I T N E S S E T H:
WHEREAS, the Hospital maintains a department which operates as a home health
agency known as "Caretenders". (the "Agency");
WHEREAS, Management Co. and it's subsidiaries (collectively, "Management Co.")
provide management services suited to and designed for the operation of home
health agencies; and
WHEREAS, Management Co. desires to provide management services to the
Agency, and the Hospital desires to procure such services from Management
Co. for the Agency, pursuant to the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. RETENTION OF MANAGEMENT CO.: AUTHORITY
Subject to the terms and conditions of this Agreement, the Hospital hereby
retains Management Co. to provide management services for the Agency, and
Management Co. hereby accepts such retention by the Hospital. Pursuant to this
Agreement, Management Co. shall have the authority and responsibility to
manage, supervise and administer the day-to-day operations of the Agency
subject at all times to the Hospital's ultimate responsibility for and
authority over the governance, management and operations of the Agency, and
Management Co.'s compliance with (a) the policies and procedures adopted by
the Hospital and the Agency from time to time, (b) specific and general
directives from the Hospital's and the Agency's governing board(s) and
management and (c) all applicable laws, rules and regulations, including,
without limitation, the Medicare Conditions of Participation for Home Health
Agencies, now set forth at 42 C.F.R. 484.1 et seq., as amended or recodified
from time to time or any substitute or successor regulations (the
"Conditions").
2. OBLIGATIONS OF MANAGEMENT CO.
During the term of this Agreement, subject to the limitations set forth
in Section 1 and subject to the obligations of the Hospital set forth herein,
Management Co. shall, as requested perform the services set forth below:
(a) Supervise the general operations of the Agency, as follows:
(i) Provide on-site consultation for management regarding policy development;
(ii) Provide strategic planning and analysis of the Agency's integration into
the Hospital's mainstream operations;
(iii) Assist in maintaining, renewing and supplementing all local, state
and federal applications, certifications, licenses, forms and permits
necessary or appropriate for the operation of the Agency;
(iv) Assist in maintaining the Agency's compliance with all governmental laws,
rules and regulations, including the Conditions;
(v) Supervise the preparation for and assist in the conduct of
the Agency's regulatory surveys and inspections, as follows:
(1) Assist the Agency in maintaining appropriate state
licensure as a home health agency. Management Co. will use
its best efforts to the Agency in remedying any
deficiencies identified by the state licensing authority.
(2) Assist the Agency in maintaining certification to participate in
Medicare, Medicaid and other reimbursement programs in which the Agency
participates. Management Co. will use its best efforts to assist the
Agency in remedying any deficiencies identified by such programs.
(3) Assist the Agency in maintaining certification by the Joint
Commission the Accreditation of Healthcare Organizations ("JCAHO").
Management Co. will use its best efforts to assist the Agency in
remedying any deficiencies identified by JCAHO;
(vi) Assist in the negotiation and maintenance of the Agency's contractual
arrangements with service providers and lessors;
(vii)Supervise plant and equipment maintenance and
(viii)Assist in the design, implementation and maintenance of operating,
organizational, office and personnel policies and procedures for the Agency;
(ix) Assist and advise the Agency regarding administrative personnel matters;
and
(x) Provide assistance with other daily administrative functions, as
requested;
(xi) Provide on-site training for home care coordinators and on generally
accepted methodologies for conducting the services of the Agency;
(xii)Provide tracking, analysis and reporting for all referrals,
categorized by physician, hospital and hospital department; and
(xiii)Participate in public, marketing and educational, business plan
preparation and the development of the Agency's services by providing formats
for community awareness and other activities.
(b) Assist in the development of the Agency's business, services and
relations, as follows:
(i) Provide on-site training for home care coordinators and
general on accepted methodologies for promoting the
services of the Agency;
(ii) Provide tracking, analysis and reporting for all
referrals, categorized by physician, hospital and hospital
department; and
(iii)Assist in public, marketing and educational, business
plan preparation and the development of the Agency's
services by providing
formats for community awareness and other activities.
(c) Oversee and manage the clinical staff and clinical operations of the
Agency, as follows:
(i) Assist the Agency in the recruiting of clinical personnel
and assist and advise the Agency with respect to other
clinical personnel matters;
(ii) Provide on-site consultation regarding the development and
implementation of clinical policies;
(iii)Design and assist in the implementation of Continuous
Quality Improvement Strategies (CQI) and patient
satisfaction measures for the Agency;
(iv) Assist in the development and implementation of quality
assurance and utilization review policies;
(v) Provide staff to conduct training programs and seminars
for professional and non-professional administrative and
clinical personnel of the Agency, as necessary, and
provide staff development and staff training
modules for clinical staff;
Hold staff development and departmental meetings with applicable Agency and
Management Co. personnel, as necessary;
Provide analyses and evaluations of staffing patterns in relation to patient
mix, scope of services and number of disciplines;
Assist and advise the Agency regarding the maintenance of a medical records
system, and
Perform, directly or under arrangement, medical record/utilization review
audits, as necessary.
(d) Assist the Hospital in managing the financial affairs of the Agency, as
follows:
(i) Perform all billing and collecting activities in a manner consistent with
that utilized by the Management Co. for its other agencies. Management Co.
shall perform those services in accordance with applicable Medicare and
Medicaid guidelines, including, without limitation, requirements for the
timely submission of claims;
(ii) Monitor payments to the Agency and oversee the Agency's collection
system;
(iii)Monitor and review the posting of cash receipts;
(iv) Maintain, review and monitor Medicare/Medicaid logs;
(v) Supervise the follow-up on outstanding receivables;
(vi) Review and monitor transaction logs;
(vii) Consult in the processing and payment of the Agency's accounts payable
and payroll;
(viii) Assist in the preparation of the annual budget of the Agency; and
(ix) Consult with and assist the Hospital's accounting staff and outside
accountants, as necessary.
(x) Provide billing and collecting activities with monthly reconciliations.
(e) Manage the aspects of the operations of the Agency that are affected by
third party reimbursement, as follows. Management Co. agrees to continue to
provide the services described in Subsections (vi) - (ix) below as may be
reasonably requested by the Agency following expiration or termination of this
Agreement by either party, without additional charge to the Hospital, until
all cost reports pertaining to patient visits provided prior to the
expiration or termination of this Agreement have been filed. Management Co.
will also provide reasonable billing, collection and computer services
pertaining to visits performed prior to the expiration or termination of this
Agreement for the period ending six (6) months after expiration or termination
of this Agreement without additional charge to the Hospital. Management Co.
will, after the date of expiration or termination of this Agreement and
upon reasonable request of the Hospital provide other services of the type and
nature specified in this Agreement in return for which Management Co. will be
compensated at a rate of one hundred fifty dollars ($150.00) per hour.
Management Co. shall not be required to provide any services under this
Agreement after the Agency has reached final settlement of all cost reports
pertaining to patient visits provided prior to the expiration or termination
of this agreement:
(i) Review and assist in preparation of monthly cost reports
for purposes of internal management information;
(ii) Review and assist the Hospital's reimbursement staff in
the preparation of all quarterly interim rate computations,
periodic reimbursement reports, annual cost reports and other
required data and reports for the Hospital's submission to the
Agency's Medicare fiscal intermediary, Medicaid and other third
party payors, as may be necessary under the provision of laws,
rules, regulations and general instructions of Medicare,
Medicaid or any other local, state, federal or other program in
which the Agency participates;
(iii)Provide on-site reimbursement consulting, as
necessary and periodic reimbursement reports;
(iv) Assist the Hospital's reimbursement staff in developing
specific reimbursement policies for the Agency;
(v) Monitor all cost cap and therapy 1imitations published by
third party payors in light of applicable requirements;
(vi) Assist in the preparation for and conduct of Medicare and
Medicaid audits, and attend all exit conferences;
(vii)Review initial reimbursement settlements and proposed
audit adjustments and prepare commentary for submission to the
relevant authorities (e.g., the Medicare fiscal intermediary),
as necessary;
(viii)Provide consultation regarding correspondence with
governmental agencies and fiscal intermediaries, and provide
primary advice and research on reimbursement matters affecting
the Agency;
(ix) Provide advice and assistance to the Agency in connection
with the pursuit and prosecution of reimbursement appeals; and
(x) Assist the Agency in maintaining and updating an
appropriate charge structure.
(f) Provide the following standby services:
(i) Provide clinical, administrative or financial consulting
personnel as may be necessary from time to time to assist in
the operation of the Agency;
(ii) Provide data to the Hospital related to local, regional
and national trends in home care as well as market research
data to which Management Co. may have access; and
(iii) Participate with the Hospital in the conducting of feasibility
studies, as necessary.
(g) Throughout the term of this Agreement, Management Co. shall
submit monthly and annual progress reports to the Hospital for the
Agency. Management Co.'s progress reports will address, among other
things, Management Co.'s success in meeting defined goals and
objectives for services and the Agency's operations, as set forth in
this Agreement, the Agency's business plan or as otherwise agreed
upon by the Hospital and Management Co.
(h) Management Co. shall provide Computer Services to the Hospital
and/or Agency according to the following terms and conditions:
(i) The system as defined by this document includes the
hardware supplied by Management Co. and all system and
application software residing on the hardware as supplied;
(ii) Management Co. is responsible for the maintenance of the
system in good operating condition throughout the term of this
Agreement through routine maintenance and repair. Management
Co. will provide twenty-four (24) hour per day, seven (7) day
per week, repair and maintenance services for the Hardware;
(iii) The cost associated with the correction of hardware
malfunctions shall be borne at all times by Management Co.
(iv) Management Co. will furnish the Agency with access to any
and all updates, modifications, improvements, revisions and
enhancements to the system software.
(v) Management Co. will provide assistance with development of
the interfaces between the system and the Hospital's computer
system.
(vi) Management Co. will provide upon reasonable request by the
Hospital, from time to time, and subject to any requirements
imposed on Management Co. by its hardware and software vendors,
routine minor modifications to the system. Services related to
customization and/or major modifications will be paid for by
the Hospital at Management Co.'s standard charges for time and
materials.
(vii) Any and all customized and/or modified software shall
remain the property of Management Co. or its software vendors
as an integral part of the system.
(viii) The components of the system located in the Agency's
offices shall be used for operating the system as described in
this agreement and for no other purpose. No software other than
the software furnished by Management Co. shall be utilized on
the system without prior written consent of Management Co.
(ix) The Hospital and the Agency shall ensure that the
management and data entry personnel working in the Agency's
offices cooperate with Management Co. in the discharge of
Management Co.'s duties under this Agreement and comply with
the reasonable instructions provided by Management Co. from
time to time as to the proper use and functioning of the
system.
(x) Under no circumstances shall the Hospital make any
modifications, customizations or other revisions to the System
or any component of the system without prior written consent of
Management Co.
(xi) The Hospital acknowledges that the system and all of its
component parts (including, without limitation, specifications,
manuals and other documentation) are, and shall remain, the
sole and exclusive property of Management Co. At no time during
the term of this agreement or thereafter shall the Hospital
assign, sell, license, lease, duplicate, transfer, pledge or
encumber the system or any component part of the system. Upon
termination of this agreement, all of the Hospital's rights
with respect to the system shall terminate and Management Co.
shall be entitled to remove the components of the system
located in the Agency's offices.
3. OBLIGATIONS OF THE HOSPITAL
(a) The Hospital agrees that the Agency is and will continue to be,
subject to the obligations of Management Co. to provide the
management services set forth herein, operated and maintained as a
duly certified, licensed and accredited home health agency in
accordance with: (i) the Conditions; (ii) the provisions contained
in the Medicare "Home Health Agency Manual", HIM-ll, and other
applicable Medicare or Medicaid manuals and general instructions;
(iii) any and all other applicable federal, state or local laws,
rules or regulations; and (iv) all supplements, amendments,
substitutions or additions to any of the foregoing..
(b) The Hospital shall employ for the Agency, directly or under
arrangement, adequate clinical and administrative staff who are
capable of providing all of the Agency's clinical services and
performing its administrative duties, all in conformity with the
standards now or hereafter prescribed by any law, rule or regulation
which may be applicable to the operation of the Agency, including
the Conditions. Hospital shall consult with the Management Co., from
time to time, to determine whether there is adequate clinical and
administrative staff, and shall use its best efforts to comply with
Management Co.'s recommendations. Hospital's failure to provide
adequate clinical and administrative staff will preclude the
Management Co. from performing its duties hereunder.
(c) The Hospital shall, at all times, be ultimately responsible for
the direction and control of the Agency, including, but not limited
to, all professional and ethical affairs, all fiscal affairs and all
general operating policies.
(d) The Hospital and the advisory board of the Agency shall request
and receive recommendations from Management Co. and shall duly
consider all such recommendations concerning operations of the
Agency prior to adopting any changes in the policies, procedures,
directives or bylaws applicable to the Agency. A representative of
Management Co. shall be entitled to receive notice of and to attend
all meetings of the Agency's advisory board, other than meetings or
portions thereof devoted to a review of the performance of
Management Co. hereunder. At meetings or portions thereof attended
by Management Co., representatives of Management Co. shall be
permitted to participate in discussions of Agency operations, but
shall not be entitled to vote. The Hospital shall promptly deliver
or communicate to Management Co. a copy of resolutions, directives
and authorizations which in any way affect the services provided by
Management Co. under this Agreement.
4. FEES
(a) In consideration of the services to be provided by Management
Co. pursuant to this Agreement, the Hospital shall pay to Management
Co. fees as set forth in Exhibit A attached hereto.
(b) Management Co. will bill the Hospital monthly by itemized
invoice for services provided during the preceding month. The
Hospital will pay invoices for fees within thirty (30) days of
receipt. All amounts not paid to Management Co. when due should bear
interest at the rate of 1 1/2 % per month until paid in full.
(c) In the event that Hospital or any of its affiliates acquires,
operates or affiliates with another home health agency in the
counties covered by this Agreement, and Hospital or any of its
affiliates do not engage Management Co. to manage said agency(s),
the management fee payable during any contract year to Management
Co. under this Agreement shall be the greater of the fee required by
Paragraph 4(a) or One Million Four Hundred Thousand Dollars
($1,400,000) per year, beginning in the year that this provision is
triggered and for each year thereafter until the expiration or
termination of the Agreement.
(d) Disallowance of Fees. Any fees paid to Management Co. by
Hospital pursuant to this Agreement that are not allowed by the
Medicare Program because they are not comparable with marketplace
prices for similar services, shall be forgiven or repaid by
Management Co. to the Hospital, and Hospital shall have no liability
to Management Co. for such disallowed fees; provided, however, that
such forgiveness or repayment shall not occur until thirty (30) days
after the later of (1) such time as the parties have exhausted such
administrative and legal remedies that they deem appropriate to
pursue to challenge the disallowance of such fees by the Medicare
Program, or (2) the completion of any arbitration as provided
herein.
(e) Challenge of Disallowance of Fees. In any challenge to a
disallowance of Management Co.'s fees, Management Co. shall be
entitled to participate fully in the challenge through counsel of
its own choosing. In the event that one hundred percent (100%) of
the disallowed amount results from the Medicare Program's
determination that the Management Co. fees were not comparable with
marketplace prices for similar services, Management Co. shall be
entitled to assume control of the challenge in the Agency's name. If
the Hospital elects not to pursue the matter or if, in the
reasonable judgment of Management Co., the Hospital is not
vigorously pursuing the challenge, Management Co. shall be entitled
to assume control of the challenge in the Agency's name.
(f) Settlement. The Hospital shall not be entitled, without the
prior written consent of Management Co., to enter into any
settlement or compromise of any such claim, where either (i) fifty
percent (50%) or more of the disallowed amount results from the
Medicare Program's determination that the Management Co. fees were
not comparable with marketplace prices for similar services; or (ii)
where the disallowance results in an indemnification liability of
Management Co. of greater than one hundred thousand dollars
($100,000.00) to Hospital.
(g) Allocation of Settlement. In the event that a global settlement
is reached, the parties will attempt to agree on a reasonable
allocation of the total disallowances, as settled. If the parties
are unable to reach agreement on the allocation within ninety (90)
days of the settlement, either party may submit the dispute to
arbitration as provided in Section 22.
(h) Costs of Appeals. Each party shall be responsible for its own
fees and expenses, including those of its legal counsel, in pursuant
reimbursement appeals hereunder.
(i) Effect of Termination. The rights and obligations of the
parties under Subsections (c) - (g) shall survive the termination of
this Agreement.
(j) Damages. Under section 4(c), Hospital may have to pay
liquidated damages to Management Co. To the extent that liquidated
damages are paid under section 4(c), Hospital will not enforce the
indemnification provision under section 4(d) of the Management
Contrct.
5. PROPRIETARY MATERIALS AND INFORMATION; COVENANT NOT TO HIRE AWAY
EMPLOYEES
(a) The Hospital acknowledges and agrees that the various policy
and procedure manuals developed by Management Co. and used by
Management Co. in the provision of management services to home
health agencies, are proprietary in nature, shall be and remain
(along with any corresponding copyrights, patents or similar rights)
the sole property of Management Co. and shall not at any time be
directly or indirectly used, distributed, disclosed, copied or
otherwise employed by the Hospital, except in the operation of the
Agency under Management Co.'s management during the term of this
Agreement. Upon termination of this Agreement, the Hospital shall
return to Management Co. all such manuals (including all portions
and copies thereof) in the Hospital's possession or within its
control, shall use reasonable efforts to ensure that its employees
have not retained any such manuals or portions or copies thereof
and, upon request by Management Co., shall confirm compliance with
the foregoing in writing.
(b) The Hospital acknowledges that Management Co. has spent a great
deal of time, money and effort to recruit, hire and train qualified
personnel to provide management services to home health agencies
such as the Agency. Accordingly, during the term of this Agreement
and for a period of one (1) year thereafter, the Hospital shall not,
directly or indirectly, alone or with others, solicit, attempt to
solicit or otherwise induce or attempt to induce to leave Management
Co.'s employ, without the prior written consent of Management Co.,
any of the employees of Management Co. who performed services on
behalf of Management Co. for the Agency at any time during the term
of this Agreement.
(c) The Management Co. acknowledges that the Hospital has spent a
great deal of time, money and effort to recruit, hire and train
qualified personnel to work for the Agency. Accordingly, during the
term of this Agreement and for a period of one (1) year thereafter,
Management Co. shall not, directly or indirectly, alone or with
others, solicit, attempt to solicit or otherwise induce or attempt
to induce to leave the Hospital's employ, without the prior written
consent of the Hospital, any of the employees of the Hospital who
worked for the Agency at any time during the term of this Agreement.
(d) In the event of a breach or threatened breach of Subsections
(a) or (b) by the Hospital, the Hospital acknowledges and agrees
that Management Co. will be entitled to injunctive relief in order
to prevent the breach or continuing breach thereof, without having
to post bond, in addition to any and all other rights and remedies
available to Management Co. at law or in equity.
(e) In the event of a breach or threatened breach of Subsection (c)
by Management Co., Management Co. acknowledges and agrees that the
Hospital will be entitled to injunctive relief in order to prevent
the breach or continuing breach thereof, without having to post
bond, in addition to any and all other rights and remedies available
to the Hospital at law or in equity.
(f) The rights and obligations of the. parties under this Section 5
shall survive termination of this Agreement.
(g) Subsection (b) and (c) shall not apply to an employee who is
terminated or voluntarily leaves the employ of the Hospital or
Management Co., as the case may be, and is not employed by the other
party to this Agreement within sixty (60) days after the last day of
employment.
6. OWNERSHIP AND CONFIDENTIALTY OF AGENCY INFORMATION AND DATA
Management Co. acknowledges that it will obtain and/or have access to
various confidential information concerning the business and affairs of
the Agency in connection with the performance of Management Co.'s
obligations hereunder. Such confidential information includes, but is not
limited to, patient information and records, employee and financial
information ("Confidential Information"). Management Co. agrees (1) to
hold the Confidential Information in strict confidence, (2) not to use
the Confidential Information for any purpose other than the performance
of Management Co.'s obligations hereunder, (3) not to disclose any of the
Confidential Information to any third party or any of Management Co.'s
employees, agents or representatives other than those who need to know
and/or have access to such Confidential Information in connection with
the performance of their duties on behalf of Management Co., and (4) to
return to the Hospital or destroy or delete, at the Hospital's election,
all or the relevant portions of any of the documents and other materials
embodying Confidential Information (including all copies thereof) in
Management Co.'s possession upon termination of this Agreement. The
foregoing restrictions shall not, however apply to information which (1)
is generally known to and available for use within the trade or by the
public at the time of disclosure to Management Co., (2) becomes generally
known to and available for use within the trade or by the public other
than as a result of a breach of Management Co. 's duty of confidentiality
hereunder, (3) was in the possession or knowledge of Management Co. free
of Confidentiality restrictions prior to the time of disclosure to
Management Co. by the Hospital, or becomes available to Management Co.
from a third party who or which is not bound by confidentiality
restrictions, (4) is required to be disclosed by law or pursuant to a
court order, subject to prompt prior written notice by Management Co. to
the Hospital of such potential disclosure and the Hospital's right to
prevent or otherwise limit such disclosure with the bounds of the law or
court order, or (5) is authorized to be used and/or disclosed to third
parties by the Hospital in writing, subject to execution of a
confidentiality agreement acceptable to the Hospital by the third party.
Management Co. further agrees to comply with any and all laws and
regulations and procedures relating to patient and all other information
which is disclosed to Management Co. or to which Management Co. has, and
to comply with the Hospital's applicable reasonable security and
confidentiality policies and procedures relative to the Agency's
facilities, communications and information. The Hospital shall have the
right to deny Management Co. access to the Agency's facilities,
communications and information at such times when Management Co. fails to
comply with the Hospital's applicable reasonable policies and procedures.
The provisions of this Section 6 shall survive termination of this
Agreement. Management Co. acknowledges and agrees that any breach or
threatened breach by it of the provisions of this Section would cause the
Hospital irreparable injury for which the Hospital would have no remedy
at law and that, in addition to any other remedies which it may have, the
Hospital shall be entitled to preliminary and permanent injunctive relief
against any such breach or threatened breach.
7. TERM AND TERMINATION
(a) Subject to Subsections (b) through (d) below, this Agreement
shall have a term of five (5) years beginning July 1, 1994 and
terminating on June 30, 1999. Within one hundred eighty (180) days
prior to the expiration of the term of this Agreement, the Hospital
shall notify Management Co. of the Hospital's plans regarding
management of the Agency thereafter in order to allow Management Co.
sufficient time to make appropriate plans and arrangements.
(b) The Hospital shall have the power to terminate this Agreement as follows:
(i) If Management Co. breaches or defaults in the performance
of any material term, condition or undertaking set forth herein
and fails to cure such breach or default within thirty (30)
days of its receipt of written notice from the Hospital
describing in detail the occurrence and nature of the breach or
default, or fails to submit a plan reasonably acceptable to
Hospital for curing the breach or default within such thirty
(30) day period and to thereafter diligently cure the breach or
default pursuant to the plan if the breach or default cannot
reasonably be cured within the thirty (30) day period;
(ii) Immediately upon written notice if Management Co. becomes
insolvent, has a petition in bankruptcy filed with respect to
it which is not dismissed or discharged within thirty (30) days
or makes an assignment for the benefit of creditors;
(iii) Immediately upon written notice if Management Co.
shall commit or be involved in any act involving fraud or shall
misappropriate Agency funds; and
(iv) Immediately upon written notice if Management Co. is
barred or suspended from involvement in the Medicare or
Medicaid Programs.
(c) Management Co. shall have the power to terminate this Agreement as
follows:
(i) If the Hospital breaches or defaults in the performance of
any material term, condition or undertaking set forth herein
and fails to cure such breach or default within thirty (30)
days of its receipt of written notice from Management Co.
describing in detail the occurrence and nature of the breach or
default, or fails to provide a plan reasonably acceptable to
Management Co. for curing the breach or default within such
thirty (30) day period and to thereafter diligently cure the
breach or default pursuant to the plan if the breach or default
cannot reasonably be cured within the thirty (30) day period;
provided, however, that for a breach or default involving the
payment of money, the cure period shall be limited to ten (10)
days;
(ii) Immediately upon written notice if the Hospital has a
petition in bankruptcy filed with respect to it which is not
dismissed or discharged within thirty (30) days or makes an
assignment for the benefit of creditors; and
(iii) Immediately upon written notice in the event of the
actual or threatened revocation, termination or suspension of
any certification (including Medicare and Medicaid
certification), license, permit or accreditation of the
Hospital or the Agency which shall or may materially and
adversely affect the Agency's business, or in the event of the
actual or threatened cancellation or lapsing of the Agency's
professional liability insurance.
(d) Either party shall have the power to terminate the Agreement as follows:
(i) In the event there is a change in Medicare, Medicaid or
other Federal or state statutes or regulations or in the
interpretation thereof, or in the event a claim is threatened,
made or filed by a government agency, which renders any of the
material terms of this Agreement unlawful, or asserts that any
such terms are unlawful, the parties shall promptly and in good
faith renegotiate the affected term to remedy such condition in
such a manner that will preserve, in all material respects, the
underlying economic, financia1 and business relationship of the
parties. In the event the parties cannot renegotiate the
agreement within sixty (60) days following notice of the intent
to renegotiate, either party may terminate this Agreement upon
written notice to the other.
(ii) In the event there is a material change in the methodology
of Medicare or Medicaid reimbursement for home health services,
the parties shall promptly and in good faith renegotiate the
affected term(s) to remedy such condition in such a manner that
will preserve, in all material respects, the underlying
economic, financial and business relationship of the parties.
In the event the parties cannot renegotiate the agreement
within sixty (60) days following notice of the intent to
renegotiate, either party may terminate this Agreement upon
written notice to the other.
(e) (i) Termination of this Agreement shall not release the
Hospital from its obligation to pay any sum, which may be due
and owing to Management Co. for services rendered prior to
termination, and such obligation shall survive termination.
(ii) In the event that the Agreement is terminated by Hospital
pursuant to Paragraph 7(d), Hospital shall make payment to
Management Co. in an amount equal to the fifty percent (50%) of
the management fee remaining to be paid for the term of the
Agreement had it not been terminated. For purposes of this
Subsection, the annual management fee shall be the greater of
the management fee paid pursuant to 4(a) for the year
immediately preceding the termination of the Agreement, or One
Million Four Hundred Thousand Dollars ($1,400,000.00).
(iii) In the event that the Agreement is terminated by
Management Co. pursuant to Paragraphs 7(d), Management Co.
shall make payment to Hospital in an amount of Five Hundred
Thousand Dollars ($500,000.00).
8. INSURANCE AND INDEMNITY
(a) Management Co. shal1 carry and maintain in force insurance to
cover liabilities arising out of the services provided by Management
Co. hereunder, including general liability insurance with limits of
at least $1.0 million per occurrence and $2.0 million in the
aggregate and workers' compensation insurance with the limits
required by law. The Hospital shall carry and maintain in force
insurance to cover liabilities arising out of the operation of the
Agency, including liability, general liability insurance and
workers' insurance, in reasonable amounts given the nature of the
Agency's business.
(b) The Hospital shall indemnify and hold harmless Management Co.
(including its directors, officers, employees and agents,
individually and collectively) from and against any and all claims,
liabilities, damages, fines, penalties, taxes, costs and expenses,
including reasonable attorneys' fees and of settlement, which any
such party may suffer, sustain or become subject to as a result of:
(i) the negligence or other wrongful conduct (including, without
limitation, misrepresentation, fraud, willful misconduct, violations
of law or breach of contract) of the Hospital, the Agency or their
directors, officers, employees or agents in the operation of the
Agency's business or the performance of the Hospital's obligations
hereunder; (ii) any existing or future debts, liabilities or
obligations of the Hospital relative to the Agency; or (iii) any
acts or omissions of Management Co. or any of its officers,
employees or agents taken or not taken pursuant to the directives of
the Hospital or the Agency, their governing board(s), officers or
employees.
(c) Management Co. shall indemnify and hold harmless the Hospital
(including its directors, officers, employees and agents,
individua1ly and collectively) from and against any and all claims,
liabilities, damages, fines, penalties, taxes, costs and expenses,
including reasonable attorneys' fees and costs of settlement, which
any such party may suffer, sustain or become subject to as a result
of the negligence or other wrongful conduct (including, without
limitation, misrepresentation, fraud, willful, violations of law or
breach of contract) of the Management Co. or its directors,
officers, employees or agents in the performance of Management Co.'s
obligations hereunder.
(d) The obligations of the parties under Subsections (b) and (c)
shall survive termination of this Agreement.
9. ASSIGNMENT
Neither party may assign any of its rights or obligations under this
Agreement to any other person, firm or corporation without the express
written consent of the other party; provided, however, that Management
Co. may delegate some or all of its duties described in Section 2 to any
of its subsidiaries and, to that extent, such subsidiaries are third
party beneficiaries of this Agreement; and further provided that the
Hospital may assign all of its rights and obligations under this
Agreement upon written notice to Management Co. (a) to any affiliate of
the Hospital which acquires the Agency pursuant to a corporate
reorganization, or, (b) to a third party purchaser of all or
substantially all of the assets of the Hospital or the Agency or a third
party which acquires control of the Hospital or the Agency pursuant to a
merger, consolidation or other similar transaction, and any such
affiliate, purchaser or other acquirer shall assume and agree to be bound
by the terms of this Agreement. Agreement shall inure to the benefit of
and be binding upon the legal representatives, permitted assigns and
successors of the parties hereto.
10. NOTICES
Notices required hereunder shall be in writing and delivered in person or
sent by Certified Mail, postage prepaid, to the President and Chief
Executive Officer of the Hospital or the President of Management Co. at
the appropriate address set forth in the preamble of this Agreement or
such other addresses as either party may designate in writing to the
other party in accordance with this Section 10. If mailed, such notices
shall be effective as of the date of delivery or the date of attempted
delivery if delivery is refused.
11. ACCESS TO BOOKS AND RECORDS
(a) For a period of four (4) years following the last date
Management Co. furnishes services pursuant to this Agreement,
Management Co. shall make available upon written request of the
Secretary of the United States Department of Health and Human
Services, the United States Comptroller General and their duly
authorized representatives, all contracts, books, documents and
records of Management Co. to the extent required by 42 U.S.C.
1395x(v)(1)(I) (as amended or recodified from time to time or any
substitute or successor statute) and lawful regulations promulgated
thereunder. Management Co. shall notify the Hospital within ten (10)
days of its receipt of such a request and of Management Co.'s
proposed response to the request.
(b) If Management Co. carries out any of its duties under this
Agreement through a subcontract with a value of $10,000.00 or more
over a twelve (12) month period with a related organization, such
subcontract shall contain a clause to the effect that until four (4)
years after the furnishing of such services pursuant to such
subcontract, such related organization shall make available, upon
written request of the Secretary of the United States Department of
Health and Human Services, the United Comptroller General or any of
their duly authorized representatives, the sub-contract and the
books, documents and records of such organization to the extent
required by 42 U.S.C. 1395x(v)(l)(I) (as amended or recodified from
time to time or any substitute or successor statute) and lawful
regulations promulgated thereunder.
12. ENTIRE AGREEMENT
This instrument contains the entire agreement of the parties with respect
to the subject matter hereof. Any and all prior agreements, promises,
inducements, negotiations or representations not expressly set forth in
this Agreement are superseded hereby and are void and of no force and
effect.
13. AMENDMENTS
Agreement cannot be altered or amended except pursuant to an instrument
in writing signed by both of the parties hereto.
14. SEVERABlLlTY
In the event that any provision of this Agreement is rendered illegal,
invalid or unenforceable by a federal or state law, rule or regulation,
or declared illegal, invalid or unenforceable by any court of competent
jurisdiction, the remaining provisions hereof shall remain in full force
and effect.
15. HEADINGS
Headings are used herein solely for the convenience of the parties and
are not part of this Agreement.
16. APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with the
laws of the Commonwealth of Kentucky, notwithstanding its conflict of
laws rules.
17. WAIVER OF BREACH
The waiver by a party of a breach of or default under any term or
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach or default under the same
or any other term or provision of this Agreement by that party.
18. STATUS OF RELATIONSHIP
It is understood and agreed that the parties to this Agreement are
independent contractors, and nothing herein shall be construed to
establish a partnership or joint venture relationship between the
parties. Each party has sole responsibility for the payment of each of
its employee's wages, payroll taxes and benefits. By virtue hereof,
neither party assumes, directly or by implication, the debts,
obligations, taxes or liabilities of the other party.
19. FORCE MAJEURE
If either the Hospital or Management Co. is delayed or prevented from
fulfilling any of its obligations under this Agreement by force majeure,
such party shall not be liable under this Agreement for the delay or
failure. "Force Majeure" means any cause beyond the reasonable control of
a party, including but not limited to an act of God, act or omission of
civil or military authorities of a state or nation, fire, strike, flood,
riot, war, delay of transportation, or inability due to any of these
causes to provide or obtain necessary labor, materials or facilities.
20. EXCLUSIVITY
The relationship between Management Co. and the Hospital with respect to
the Agency shall be exclusive in that neither Management Co. nor any of
its subsidiaries will, directly or indirectly, during the term of this
Agreement, manage, own or affiliate or consult with any home health
agency providing services in any of the counties for which the Agency (or
any additional agency managed by Management Co. pursuant to Section 21)
has a license to provide home health services. Such exclusivity will not,
however, apply (a) after termination or non-renewal of this Agreement,
(b) to management services provided by Management Co. to home health
agencies not doing business inside the identified geographic area, (c) to
management services provided by Management Co. to entities other than
home health agencies, (d) any other business ventures of Management Co.
not encompassed within the foregoing provision, or (e) to Management
Co.'s ownership, operation, or management of, consulting for or
affiliation with House Calls of America, Inc.
21. ADDITIONAL COUNTIES AND HOME HEALTH AGENCIES
The Hospital hereby grants Management Co. the right to manage, pursuant
to the terms set forth herein, the operations of the Agency in any
additional counties added to the Hospital's license and any additional
home health agencies acquired by the Hospital during the term of this
Agreement. The parties will execute such amendments to this Agreement as
may be necessary or appropriate to document Management Co.'s management
of such additional counties or agencies.
22. DISPUTE RESOLUTION
Any material dispute between the parties arising under this Agreement
which is not resolved by good faith negotiation (including, without
limitation, disputes under Subsection 4(d), Section 19 or Exhibit A) may
be submitted by either party to binding arbitration in Louisville,
Kentucky in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award may be
entered in any court with jurisdiction thereof. The costs of arbitration
shall be borne by the parties in proportions decided by the
arbitrator(s).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
NATIONAL HEALTH INDUSTRIES, INC.
By: _________________________________
Title:________________________________
GALEN OF KENTUCKY, INC. d/b/a
AUDUBON REGIONAL MEDICAL CENTER
By:___________________________________
Title:__________________________________
EXHIBIT A
MANAGEMENT FEES
CHARGE/VISIT AND
CHARGE/WAIVER UNIT
Home
Health Waiver
Services (Visits) Services (Units)
GENERAL MANAGEMENT GENERAL MANAGEMENT
0 - l50,000 Visits $2.55 0 - 75,000 Units $1.30
l50,001 + Visits $1.70 75,001 + Units $0.80
CLINICAL CLINICAL
0 - l50,000 Visits $1.35 0 - 75,000 Units $0.70
l50,001 + Visits $0.90 75,001 + Units $0.40
FINANCIAL FINANCIAL
0 - l50,000 Visits $1.05 0 - 75,000 Units $0.50
l50,001 + Visits $0.70 75,001 + Units $0.30
REIMBURSEMENT REIMBURSEMENT
0 - l50,000 Visits $1.05 0 - 75,000 Units $0.50
l50,001 + Visits $0.70 75,001 + Units $0.30
COMPUTER COMPUTER
0 - l50,000 Visits $3.00 0 - 75,000 Units $2.00
l50,001 + Visits $2.00 75,001 + Units $1.20
TOTAL TOTAL
0 - l50,000 Visits $9.00 0 - 75,000 Units $5.00
l50,001 + Visits $6.00 75,001 + Units $3.00
AGREEMENT
AGREEMENT made as of the 1st of April, 1995, between NATIONAL HEALTH
INDUSTRIES, INC., a Delaware corporation, with its principal office at 9200
Shelbyville Road, Louisville, Kentucky 40222 (hereinafter referred to as
"Management Co."), and GALEN OF KENTUCKY, INC. d/b/a AUDUBON REGIONAL MEDICAL
CENTER, a Kentucky corporation, with its principal office at One Audubon Plaza
Drive, Louisville, Kentucky 40217 (hereinafter referred to as the "Hospital").
W I T N E S S E T H:
WHEREAS, the Hospital maintains a department which operates as a home health
agency known as "Caretenders" (the "Agency");
WHEREAS, the Hospital desires to open a new branch in Scottsburg, Indiana to
provide home health services;
WHEREAS, Management Co. and its subsidiaries (collectively, "Management Co.")
provide management services suited to and designed for the operation of home
health agencies; and
WHEREAS, Management Co. desires to provide management services to the
Agency, and the Hospital desires to procure such services from Management
Co. for the Agency, pursuant to the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. RETENTION OF MANAGEMENT CO.: AUTHORITY
Subject to the terms and conditions of this Agreement, the Hospital hereby
retains Management Co. to provide management services for the Agency, and
Management Co. hereby accepts such retention by the Hospital. Pursuant to this
Agreement, Management Co. shall have the authority and responsibility to
manage, supervise and administer the day-to-day operations of the Agency
subject at all times to the Hospital's ultimate responsibility for and
authority over the governance, management and operations of the Agency, and
Management Co.'s compliance with (a) the policies and procedures adopted by
the Hospital and the Agency from time to time, (b) specific and general
directives from the Hospital's and the Agency's governing board(s) and
management and (c) all applicable laws, rules and regulations, including,
without limitation, the Medicare Conditions of Participation for Home Health
Agencies, now set forth at 42 C.F.R. 484.1 et seq., as amended or recodified
from time to time or any substitute or successor regulations (the
"Conditions").
2. OBLIGATIONS OF MANAGEMENT CO.
During the term of this Agreement, subject to the limitations set forth
in Section 1 and subject to the obligations of the Hospital set forth
herein, Management Co. shall, as requested perform the services set forth
below:
(a) Supervise the general operations of the Agency, as follows:
(i) Provide on-site consultation for management regarding policy development;
(ii) Provide strategic planning and analysis of the Agency's integration into
the Hospital's mainstream operations;
(iii) Assist in maintaining, renewing and supplementing all local, state
and federal applications, certifications, licenses, forms and permits
necessary or appropriate for the operation of the Agency;
(iv) Assist in maintaining the Agency's compliance with all governmental laws,
rules and regulations, including the Conditions;
(v) Supervise the preparation for and assist in the conduct of the Agency's
regulatory surveys and inspections, as follows:
(1) Assist the Agency in maintaining appropriate state
licensure as a home health agency. Management Co. will use
its best efforts to the Agency in remedying any
deficiencies identified by the state licensing authority.
(2) Assist the Agency in maintaining certification to
participate in Medicare, Medicaid and other reimbursement
programs in which the Agency participates. Management Co.
will use its best efforts to assist the Agency in
remedying any deficiencies identified by such programs.
(3) Assist the Agency in maintaining certification by the
Joint Commission the Accreditation of Healthcare
Organizations ("JCAHO"). Management Co. will use its best
efforts to assist the Agency in remedying any deficiencies
identified by JCAHO;
(vi) Assist in the negotiation and maintenance of the Agency's contractual
arrangements with service providers and lessors;
(vii) Supervise plant and equipment maintenance and
(viii) Assist in the design, implementation and maintenance of operating,
organizational, office and personnel policies and procedures for the Agency;
(ix) Assist and advise the Agency regarding administrative personnel matters;
and
(x) Provide assistance with other daily administrative functions, as
requested;
(xi) Provide on-site training for home care coordinators and on generally
accepted methodologies for conducting the services of the Agency;
(xii) Provide tracking, analysis and reporting for all referrals,
categorized by physician, hospital and hospital department; and
(xiii) Participate in public, marketing and educational, business plan
preparation and the development of the Agency's services by providing formats
for community awareness and other activities.
(b) Assist in the development of the Agency's business, services and
relations, as follows:
(i) Provide on-site training for home care coordinators and
general on accepted methodologies for promoting the services of
the Agency;
(ii) Provide tracking, analysis and reporting for all
referrals, categorized by physician, hospital and hospital
department; and
(iii) Assist in public, marketing and educational, business
plan preparation and the development of the Agency's services
by providing formats for community awareness and other
activities.
(c) Oversee and manage the clinical staff and clinical operations of the
Agency, as follows:
(i) Assist the Agency in the recruiting of clinical personnel
and assist and advise the Agency with respect to other clinical
personnel matters;
(ii) Provide on-site consultation regarding the development and
implementation of clinical policies;
(iii) Design and assist in the implementation of Continuous
Quality Improvement Strategies (CQI) and patient satisfaction
measures for the Agency;
(iv) Assist in the development and implementation of quality
assurance and utilization review policies;
(v) Provide staff to conduct training programs and seminars
for professional and non-professional administrative and
clinical personnel of the Agency, as necessary, and provide
staff development and staff training modules for clinical
staff;
Hold staff development and departmental meetings with applicable Agency and
Management Co. personnel, as necessary;
Provide analyses and evaluations of staffing patterns in relation to patient
mix, scope of services and number of disciplines;
Assist and advise the Agency regarding the maintenance of a medical records
system, and
Perform, directly or under arrangement, medical record/utilization review
audits, as necessary.
(d) Assist the Hospital in managing the financial affairs of the Agency, as
follows:
(i) Perform all billing and collecting activities in a manner consistent with
that utilized by the Management Co. for its other agencies. Management Co.
shall perform those services in accordance with applicable Medicare and
Medicaid guidelines, including, without limitation, requirements for the
timely submission of claims;
(ii) Monitor payments to the Agency and oversee the Agency's collection
system;
(iii)Monitor and review the posting of cash receipts;
(iv) Maintain, review and monitor Medicare/Medicaid logs;
(v) Supervise the follow-up on outstanding receivables;
(vi) Review and monitor transaction logs;
(vii)Consult in the processing and payment of the Agency's accounts payable
and payroll;
(viii)Assist in the preparation of the annual budget of the Agency; and
(ix) Consult with and assist the Hospital's accounting staff and outside
accountants, as necessary.
(x) Provide billing and collecting activities with monthly reconciliations
(e) Manage the aspects of the operations of the Agency that are affected by
third party reimbursement, as follows. Management Co. agrees to continue to
provide the services described in Subsections (vi) - (ix) below as may be
reasonably requested by the Agency following expiration or termination of this
Agreement by either party, without additional charge to the Hospital, until
all cost reports pertaining to patient visits provided prior to the expiration
or termination of this Agreement have been filed. Management Co. will also
provide reasonable billing, collection and computer services pertaining to
visits performed prior to the expiration or termination of this Agreement for
the period ending six (6) months after expiration or termination of this
Agreement without additional charge to the Hospital. Management Co. will,
after the date of expiration or termination of this Agreement and upon
reasonable request of the Hospital provide other services of the type and
nature specified in this Agreement in return for which Management Co. will be
compensated at a rate of one hundred fifty dollars ($150.00) per hour.
Management Co. shall not be required to provide any services under this
Agreement after the Agency has reached final settlement of all cost reports
pertaining to patient visits provided prior to the expiration or termination
of this agreement:
(i) Review and assist in preparation of monthly cost reports
for purposes of internal management information;
(ii) Review and assist the Hospital's reimbursement staff in
the preparation of all quarterly interim rate computations,
periodic reimbursement reports, annual cost reports and other
required data and reports for the Hospital's submission to the
Agency's Medicare fiscal intermediary, Medicaid and other third
party payors, as may be necessary under the provision of laws,
rules, regulations and general instructions of Medicare,
Medicaid or any other local, state, federal or other program in
which the Agency participates;
(iii) Provide on-site reimbursement consulting, as
necessary and periodic reimbursement reports;
(iv) Assist the Hospital's reimbursement staff in developing
specific reimbursement policies for the Agency;
(v) Monitor all cost cap and therapy 1imitations published by
third party payors in light of applicable requirements;
(vi) Assist in the preparation for and conduct of Medicare and
Medicaid audits, and attend all exit conferences;
(vii) Review initial reimbursement settlements and proposed
audit adjustments and prepare commentary for submission to the
relevant authorities (e.g., the Medicare fiscal intermediary),
as necessary;
(viii) Provide consultation regarding correspondence with
governmental agencies and fiscal intermediaries, and provide
primary advice and research on reimbursement matters affecting
the Agency;
(ix) Provide advice and assistance to the Agency in connection
with the pursuit and prosecution of reimbursement appeals; and
(x) Assist the Agency in maintaining and updating an
appropriate charge structure.
(f) Provide the following standby services:
(i) Provide clinical, administrative or financial consulting
personnel as may be necessary from time to time to assist in
the operation of the Agency;
(ii) Provide data to the Hospital related to local, regional
and national trends in home care as well as market research
data to which Management Co. may have access; and
(iii) Participate with the Hospital in the conducting of
feasibility studies, as necessary.
(g) Throughout the term of this Agreement, Management Co. shall
submit monthly and annual progress reports to the Hospital for the
Agency. Management Co.'s progress reports will address, among other
things, Management Co.'s success in meeting defined goals and
objectives for services and the Agency's operations, as set forth in
this Agreement, the Agency's business plan or as otherwise agreed
upon by the Hospital and Management Co.
(h) Management Co. shall provide Computer Services to the Hospital
and/or Agency according to the following terms and conditions:
(i) The system as defined by this document includes the
hardware supplied by Management Co. and all system and
application software residing on the hardware as supplied;
(ii) Management Co. is responsible for the maintenance of the
system in good operating condition throughout the term of this
Agreement through routine maintenance and repair. Management
Co. will provide twenty-four (24) hour per day, seven (7) day
per week, repair and maintenance services for the Hardware;
(iii) The cost associated with the correction of hardware
malfunctions shall be borne at all times by Management Co.
(iv) Management Co. will furnish the Agency with access to any
and all updates, modifications, improvements, revisions and
enhancements to the system software.
(v) Management Co. will provide assistance with development of
the interfaces between the system and the Hospital's computer
system.
(vi) Management Co. will provide upon reasonable request by the
Hospital, from time to time, and subject to any requirements
imposed on Management Co. by its hardware and software vendors,
routine minor modifications to the system. Services related to
customization and/or major modifications will be paid for by
the Hospital at Management Co.'s standard charges for time and
materials.
(vii) Any and all customized and/or modified software shall
remain the property of Management Co. or its software vendors
as an integral part of the system.
(viii) The components of the system located in the Agency's
offices shall be used for operating the system as described in
this agreement and for no other purpose. No software other than
the software furnished by Management Co. shall be utilized on
the system without prior written consent of Management Co.
(ix) The Hospital and the Agency shall ensure that the
management and data entry personnel working in the Agency's
offices cooperate with Management Co. in the discharge of
Management Co.'s duties under this Agreement and comply with
the reasonable instructions provided by Management Co. from
time to time as to the proper use and functioning of the
system.
(x) Under no circumstances shall the Hospital make any
modifications, customizations or other revisions to the System
or any component of the system without prior written consent of
Management Co.
(xi) The Hospital acknowledges that the system and all of its
component parts (including, without limitation, specifications,
manuals and other documentation) are, and shall remain, the
sole and exclusive property of Management Co. At no time during
the term of this agreement or thereafter shall the Hospital
assign, sell, license, lease, duplicate, transfer, pledge or
encumber the system or any component part of the system. Upon
termination of this agreement, all of the Hospital's rights
with respect to the system shall terminate and Management Co.
shall be entitled to remove the components of the system
located in the Agency's offices.
3. OBLIGATIONS OF THE HOSPITAL
(a) The Hospital agrees that the Agency is and will continue to be,
subject to the obligations of Management Co. to provide the
management services set forth herein, operated and maintained as a
duly certified, licensed and accredited home health agency in
accordance with: (i) the Conditions; (ii) the provisions contained
in the Medicare "Home Health Agency Manual", HIM-ll, and other
applicable Medicare or Medicaid manuals and general instructions;
(iii) any and all other applicable federal, state or local laws,
rules or regulations; and (iv) all supplements, amendments,
substitutions or additions to any of the foregoing..
(b) The Hospital shall employ for the Agency, directly or under
arrangement, adequate clinical and administrative staff who are
capable of providing all of the Agency's clinical services and
performing its administrative duties, all in conformity with the
standards now or hereafter prescribed by any law, rule or regulation
which may be applicable to the operation of the Agency, including
the Conditions. Hospital shall consult with the Management Co., from
time to time, to determine whether there is adequate clinical and
administrative staff, and shall use its best efforts to comply with
Management Co.'s recommendations. Hospital's failure to provide
adequate clinical and administrative staff will preclude the
Management Co. from performing its duties hereunder.
(c) The Hospital shall, at all times, be ultimately responsible for
the direction and control of the Agency, including, but not limited
to, all professional and ethical affairs, all fiscal affairs and all
general operating policies.
(d) The Hospital and the advisory board of the Agency shall request
and receive recommendations from Management Co. and shall duly
consider all such recommendations concerning operations of the
Agency prior to adopting any changes in the policies, procedures,
directives or bylaws applicable to the Agency. A representative of
Management Co. shall be entitled to receive notice of and to attend
all meetings of the Agency's advisory board, other than meetings or
portions thereof devoted to a review of the performance of
Management Co. hereunder. At meetings or portions thereof attended
by Management Co., representatives of Management Co. shall be
permitted to participate in discussions of Agency operations, but
shall not be entitled to vote. The Hospital shall promptly deliver
or communicate to Management Co. a copy of resolutions, directives
and authorizations which in any way affect the services provided by
Management Co. under this Agreement.
4. FEES
(a) In consideration of the services to be provided by Management
Co. pursuant to this Agreement, the Hospital shall pay to Management
Co. fees as set forth in Exhibit A attached hereto.
(b) Management Co. will bill the Hospital monthly by itemized
invoice for services provided during the preceding month. The
Hospital will pay invoices for fees within thirty (30) days of
receipt. All amounts not paid to Management Co. when due should bear
interest at the rate of 1 1/2 % per month until paid in full.
(c) In the event that Hospital or any of its affiliates acquires,
operates or affiliates with another home health agency in the
counties covered by this Agreement, and Hospital or any of its
affiliates do not engage Management Co. to manage said agency(s),
the management fee payable during any contract year to Management
Co. under this Agreement shall be the greater of the fee required by
Paragraph 4(a) or One Million Four Hundred Thousand Dollars
($1,400,000) per year, beginning in the year that this provision is
triggered and for each year thereafter until the expiration or
termination of the Agreement.
(d) Disallowance of Fees. Any fees paid to Management Co. by
Hospital pursuant to this Agreement that are not allowed by the
Medicare Program because they are not comparable with marketplace
prices for similar services, shall be forgiven or repaid by
Management Co. to the Hospital, and Hospital shall have no liability
to Management Co. for such disallowed fees; provided, however, that
such forgiveness or repayment shall not occur until thirty (30) days
after the later of (1) such time as the parties have exhausted such
administrative and legal remedies that they deem appropriate to
pursue to challenge the disallowance of such fees by the Medicare
Program, or (2) the completion of any arbitration as provided
herein.
(e) Challenge of Disallowance of Fees. In any challenge to a
disallowance of Management Co.'s fees, Management Co. shall be
entitled to participate fully in the challenge through counsel of
its own choosing. In the event that one hundred percent (100%) of
the disallowed amount results from the Medicare Program's
determination that the Management Co. fees were not comparable with
marketplace prices for similar services, Management Co. shall be
entitled to assume control of the challenge in the Agency's name. If
the Hospital elects not to pursue the matter or if, in the
reasonable judgment of Management Co., the Hospital is not
vigorously pursuing the challenge, Management Co. shall be entitled
to assume control of the challenge in the Agency's name.
(f) Settlement. The Hospital shall not be entitled, without the
prior written consent of Management Co., to enter into any
settlement or compromise of any such claim, where either (i) fifty
percent (50%) or more of the disallowed amount results from the
Medicare Program's determination that the Management Co. fees were
not comparable with marketplace prices for similar services; or (ii)
where the disallowance results in an indemnification liability of
Management Co. of greater than one hundred thousand dollars
($100,000.00) to Hospital.
(g) Allocation of Settlement. In the event that a global settlement
is reached, the parties will attempt to agree on a reasonable
allocation of the total disallowances, as settled. If the parties
are unable to reach agreement on the allocation within ninety (90)
days of the settlement, either party may submit the dispute to
arbitration as provided in Section 22.
(h) Costs of Appeals. Each party shall be responsible for its own
fees and expenses, including those of its legal counsel, in pursuant
reimbursement appeals hereunder.
Effect of Termination. The rights and obligations of the parties under
Subsections (c) - (g) shall survive the termination of this Agreement.
(i) Damages. Under section 4(c), Hospital may have to pay liquidated
damages to Management Co. To the extent that liquidated damages are paid
under section 4(c), Hospital will not enforce the indemnification provsion
under section 4(d) of the Management Contract.
5. PROPRIETARY MATERIALS AND INFORMATION; COVENANT NOT TO HIRE AWAY
EMPLOYEES
(a) The Hospital acknowledges and agrees that the various policy
and procedure manuals developed by Management Co. and used by
Management Co. in the provision of management services to home
health agencies, are proprietary in nature, shall be and remain
(along with any corresponding copyrights, patents or similar rights)
the sole property of Management Co. and shall not at any time be
directly or indirectly used, distributed, disclosed, copied or
otherwise employed by the Hospital, except in the operation of the
Agency under Management Co.'s management during the term of this
Agreement. Upon termination of this Agreement, the Hospital shall
return to Management Co. all such manuals (including all portions
and copies thereof) in the Hospital's possession or within its
control, shall use reasonable efforts to ensure that its employees
have not retained any such manuals or portions or copies thereof
and, upon request by Management Co., shall confirm compliance with
the foregoing in writing.
(b) The Hospital acknowledges that Management Co. has spent a great
deal of time, money and effort to recruit, hire and train qualified
personnel to provide management services to home health agencies
such as the Agency. Accordingly, during the term of this Agreement
and for a period of one (1) year thereafter, the Hospital shall not,
directly or indirectly, alone or with others, solicit, attempt to
solicit or otherwise induce or attempt to induce to leave Management
Co.'s employ, without the prior written consent of Management Co.,
any of the employees of Management Co. who performed services on
behalf of Management Co. for the Agency at any time during the term
of this Agreement.
(c) The Management Co. acknowledges that the Hospital has spent a
great deal of time, money and effort to recruit, hire and train
qualified personnel to work for the Agency. Accordingly, during the
term of this Agreement and for a period of one (1) year thereafter,
Management Co. shall not, directly or indirectly, alone or with
others, solicit, attempt to solicit or otherwise induce or attempt
to induce to leave the Hospital's employ, without the prior written
consent of the Hospital, any of the employees of the Hospital who
worked for the Agency at any time during the term of this Agreement.
(d) In the event of a breach or threatened breach of Subsections
(a) or (b) by the Hospital, the Hospital acknowledges and agrees
that Management Co. will be entitled to injunctive relief in order
to prevent the breach or continuing breach thereof, without having
to post bond, in addition to any and all other rights and remedies
available to Management Co. at law or in equity.
(e) In the event of a breach or threatened breach of Subsection (c)
by Management Co., Management Co. acknowledges and agrees that the
Hospital will be entitled to injunctive relief in order to prevent
the breach or continuing breach thereof, without having to post
bond, in addition to any and all other rights and remedies available
to the Hospital at law or in equity.
(f) The rights and obligations of the. parties under this Section 5
shall survive termination of this Agreement.
(g) Subsection (b) and (c) shall not apply to an employee who is
terminated or voluntarily leaves the employ of the Hospital or
Management Co., as the case may be, and is not employed by the other
party to this Agreement within sixty (60) days after the last day of
employment.
6. OWNERSHIP AND CONFIDENTIALTY OF AGENCY INFORMATION AND DATA
Management Co. acknowledges that it will obtain and/or have access to
various confidential information concerning the business and affairs of
the Agency in connection with the performance of Management Co.'s
obligations hereunder. Such confidential information includes, but is not
limited to, patient information and records, employee and financial
information ("Confidential Information"). Management Co. agrees (1) to
hold the Confidential Information in strict confidence, (2) not to use
the Confidential Information for any purpose other than the performance
of Management Co.'s obligations hereunder, (3) not to disclose any of the
Confidential Information to any third party or any of Management Co.'s
employees, agents or representatives other than those who need to know
and/or have access to such Confidential Information in connection with
the performance of their duties on behalf of Management Co., and (4) to
return to the Hospital or destroy or delete, at the Hospital's election,
all or the relevant portions of any of the documents and other materials
embodying Confidential Information (including all copies thereof) in
Management Co.'s possession upon termination of this Agreement. The
foregoing restrictions shall not, however apply to information which (1)
is generally known to and available for use within the trade or by the
public at the time of disclosure to Management Co., (2) becomes generally
known to and available for use within the trade or by the public other
than as a result of a breach of Management Co. 's duty of confidentiality
hereunder, (3) was in the possession or knowledge of Management Co. free
of Confidentiality restrictions prior to the time of disclosure to
Management Co. by the Hospital, or becomes available to Management Co.
from a third party who or which is not bound by confidentiality
restrictions, (4) is required to be disclosed by law or pursuant to a
court order, subject to prompt prior written notice by Management Co. to
the Hospital of such potential disclosure and the Hospital's right to
prevent or otherwise limit such disclosure with the bounds of the law or
court order, or (5) is authorized to be used and/or disclosed to third
parties by the Hospital in writing, subject to execution of a
confidentiality agreement acceptable to the Hospital by the third party.
Management Co. further agrees to comply with any and all laws and
regulations and procedures relating to patient and all other information
which is disclosed to Management Co. or to which Management Co. has, and
to comply with the Hospital's applicable reasonable security and
confidentiality policies and procedures relative to the Agency's
facilities, communications and information. The Hospital shall have the
right to deny Management Co. access to the Agency's facilities,
communications and information at such times when Management Co. fails to
comply with the Hospital's applicable reasonable policies and procedures.
The provisions of this Section 6 shall survive termination of this
Agreement. Management Co. acknowledges and agrees that any breach or
threatened breach by it of the provisions of this Section would cause the
Hospital irreparable injury for which the Hospital would have no remedy
at law and that, in addition to any other remedies which it may have, the
Hospital shall be entitled to preliminary and permanent injunctive relief
against any such breach or threatened breach.
7. TERM AND TERMINATION
(a) Subject to Subsections (b) through (d) below, this Agreement
shall have a term of five (5) years beginning July 1, 1994 and
terminating on June 30, 1999. Within one hundred eighty (180) days
prior to the expiration of the term of this Agreement, the Hospital
shall notify Management Co. of the Hospital's plans regarding
management of the Agency thereafter in order to allow Management Co.
sufficient time to make appropriate plans and arrangements.
(b) The Hospital shall have the power to terminate this Agreement
as follows:
(i) If Management Co. breaches or defaults in the performance
of any material term, condition or undertaking set forth herein
and fails to cure such breach or default within thirty (30)
days of its receipt of written notice from the Hospital
describing in detail the occurrence and nature of the breach or
default, or fails to submit a plan reasonably acceptable to
Hospital for curing the breach or default within such thirty
(30) day period and to thereafter diligently cure the breach or
default pursuant to the plan if the breach or default cannot
reasonably be cured within the thirty (30) day period;
(ii) Immediately upon written notice if Management Co. becomes
insolvent, has a petition in bankruptcy filed with respect to
it which is not dismissed or discharged within thirty (30) days
or makes an assignment for the benefit of creditors;
(iii) Immediately upon written notice if Management Co.
shall commit or be involved in any act involving fraud or shall
misappropriate Agency funds; and
(iv) Immediately upon written notice if Management Co. is
barred or suspended from involvement in the Medicare or
Medicaid Programs.
(c) Management Co. shall have the power to terminate this Agreement as
follows:
(i) If the Hospital breaches or defaults in the performance of
any material term, condition or undertaking set forth herein
and fails to cure such breach or default within thirty (30)
days of its receipt of written notice from Management Co.
describing in detail the occurrence and nature of the breach or
default, or fails to provide a plan reasonably acceptable to
Management Co. for curing the breach or default within such
thirty (30) day period and to thereafter diligently cure the
breach or default pursuant to the plan if the breach or default
cannot reasonably be cured within the thirty (30) day period;
provided, however, that for a breach or default involving the
payment of money, the cure period shall be limited to ten (10)
days;
(ii) Immediately upon written notice if the Hospital has a
petition in bankruptcy filed with respect to it which is not
dismissed or discharged within thirty (30) days or makes an
assignment for the benefit of creditors; and
(iii) Immediately upon written notice in the event of the
actual or threatened revocation, termination or suspension of
any certification (including Medicare and Medicaid
certification), license, permit or accreditation of the
Hospital or the Agency which shall or may materially and
adversely affect the Agency's business, or in the event of the
actual or threatened cancellation or lapsing of the Agency's
professional liability insurance.
(d) Either party shall have the power to terminate the Agreement as follows:
(i) In the event there is a change in Medicare, Medicaid or
other Federal or state statutes or regulations or in the
interpretation thereof, or in the event a claim is threatened,
made or filed by a government agency, which renders any of the
material terms of this Agreement unlawful, or asserts that any
such terms are unlawful, the parties shall promptly and in good
faith renegotiate the affected term to remedy such condition in
such a manner that will preserve, in all material respects, the
underlying economic, financia1 and business relationship of the
parties. In the event the parties cannot renegotiate the
agreement within sixty (60) days following notice of the intent
to renegotiate, either party may terminate this Agreement upon
written notice to the other.
(ii) In the event there is a material change in the methodology
of Medicare or Medicaid reimbursement for home health services,
the parties shall promptly and in good faith renegotiate the
affected term(s) to remedy such condition in such a manner that
will preserve, in all material respects, the underlying
economic, financial and business relationship of the parties.
In the event the parties cannot renegotiate the agreement
within sixty (60) days following notice of the intent to
renegotiate, either party may terminate this Agreement upon
written notice to the other.
(e) (i) Termination of this Agreement shall not release the
Hospital from its obligation to pay any sum, which may be due and
owing to Management Co. for services rendered prior to termination,
and such obligation shall survive termination.
(ii) In the event that the Agreement is terminated by Hospital
pursuant to Paragraph 7(d), Hospital shall make payment to
Management Co. in an amount equal to the fifty percent (50%) of
the management fee remaining to be paid for the term of the
Agreement had it not been terminated. For purposes of this
Subsection, the annual management fee shall be the greater of
the management fee paid pursuant to 4(a) for the year
immediately preceding the termination of the Agreement, or One
Million Four Hundred Thousand Dollars ($1,400,000.00).
(iii) In the event that the Agreement is terminated by
Management Co. pursuant to Paragraphs 7(d), Management Co.
shall make payment to Hospital in an amount of Five Hundred
Thousand Dollars ($500,000.00).
8. INSURANCE AND INDEMNITY
(a) Management Co. shal1 carry and maintain in force insurance to
cover liabilities arising out of the services provided by Management
Co. hereunder, including general liability insurance with limits of
at least One Million ($1,000,000) per occurrence and Two Million
($2,000,000) in the aggregate and workers' compensation insurance
with the limits required by law. The Hospital shall carry and
maintain in force insurance to cover liabilities arising out of the
operation of the Agency, including liability, general liability
insurance and workers' insurance, in reasonable amounts given the
nature of the Agency's business.
(b) The Hospital shall indemnify and hold harmless Management Co.
(including its directors, officers, employees and agents,
individually and collectively) from and against any and all claims,
liabilities, damages, fines, penalties, taxes, costs and expenses,
including reasonable attorneys' fees and of settlement, which any
such party may suffer, sustain or become subject to as a result of:
(i) the negligence or other wrongful conduct (including, without
limitation, misrepresentation, fraud, willful misconduct, violations
of law or breach of contract) of the Hospital, the Agency or their
directors, officers, employees or agents in the operation of the
Agency's business or the performance of the Hospital's obligations
hereunder; (ii) any existing or future debts, liabilities or
obligations of the Hospital relative to the Agency; or (iii) any
acts or omissions of Management Co. or any of its officers,
employees or agents taken or not taken pursuant to the directives of
the Hospital or the Agency, their governing board(s), officers or
employees.
(c) Management Co. shall indemnify and hold harmless the Hospital
(including its directors, officers, employees and agents,
individua1ly and collectively) from and against any and all claims,
liabilities, damages, fines, penalties, taxes, costs and expenses,
including reasonable attorneys' fees and costs of settlement, which
any such party may suffer, sustain or become subject to as a result
of the negligence or other wrongful conduct (including, without
limitation, misrepresentation, fraud, willful, violations of law or
breach of contract) of the Management Co. or its directors,
officers, employees or agents in the performance of Management Co.'s
obligations hereunder.
(d) The obligations of the parties under Subsections (b) and (c)
shall survive termination of this Agreement.
9. ASSIGNMENT
Neither party may assign any of its rights or obligations under this
Agreement to any other person, firm or corporation without the express
written consent of the other party; provided, however, that Management
Co. may delegate some or all of its duties described in Section 2 to any
of its subsidiaries and, to that extent, such subsidiaries are third
party beneficiaries of this Agreement; and further provided that the
Hospital may assign all of its rights and obligations under this
Agreement upon written notice to Management Co. (a) to any affiliate of
the Hospital which acquires the Agency pursuant to a corporate
reorganization, or, (b) to a third party purchaser of all or
substantially all of the assets of the Hospital or the Agency or a third
party which acquires control of the Hospital or the Agency pursuant to a
merger, consolidation or other similar transaction, and any such
affiliate, purchaser or other acquirer shall assume and agree to be bound
by the terms of this Agreement. Agreement shall inure to the benefit of
and be binding upon the legal representatives, permitted assigns and
successors of the parties hereto.
10. NOTICES
Notices required hereunder shall be in writing and delivered in person or
sent by Certified Mail, postage prepaid, to the President and Chief
Executive Officer of the Hospital or the President of Management Co. at
the appropriate address set forth in the preamble of this Agreement or
such other addresses as either party may designate in writing to the
other party in accordance with this Section 10. If mailed, such notices
shall be effective as of the date of delivery or the date of attempted
delivery if delivery is refused.
11. ACCESS TO BOOKS AND RECORDS
(a) For a period of four (4) years following the last date
Management Co. furnishes services pursuant to this Agreement,
Management Co. shall make available upon written request of the
Secretary of the United States Department of Health and Human
Services, the United States Comptroller General and their duly
authorized representatives, all contracts, books, documents and
records of Management Co. to the extent required by 42 U.S.C.
1395x(v)(1)(I) (as amended or recodified from time to time or any
substitute or successor statute) and lawful regulations promulgated
thereunder. Management Co. shall notify the Hospital within ten (10)
days of its receipt of such a request and of Management Co.'s
proposed response to the request.
(b) If Management Co. carries out any of its duties under this
Agreement through a subcontract with a value of $10,000.00 or more
over a twelve (12) month period with a related organization, such
subcontract shall contain a clause to the effect that until four (4)
years after the furnishing of such services pursuant to such
subcontract, such related organization shall make available, upon
written request of the Secretary of the United States Department of
Health and Human Services, the United Comptroller General or any of
their duly authorized representatives, the sub-contract and the
books, documents and records of such organization to the extent
required by 42 U.S.C. 1395x(v)(l)(I) (as amended or recodified from
time to time or any substitute or successor statute) and lawful
regulations promulgated thereunder.
12. ENTIRE AGREEMENT
This instrument contains the entire agreement of the parties with respect
to the subject matter hereof. Any and all prior agreements, promises,
inducements, negotiations or representations not expressly set forth in
this Agreement are superseded hereby and are void and of no force and
effect.
13. AMENDMENTS
Agreement cannot be altered or amended except pursuant to an instrument
in writing signed by both of the parties hereto.
14. SEVERABlLlTY
In the event that any provision of this Agreement is rendered illegal,
invalid or unenforceable by a federal or state law, rule or regulation,
or declared illegal, invalid or unenforceable by any court of competent
jurisdiction, the remaining provisions hereof shall remain in full force
and effect.
15. HEADINGS
Headings are used herein solely for the convenience of the parties and
are not part of this Agreement.
16. APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with the
laws of the Commonwealth of Kentucky, notwithstanding its conflict of
laws rules.
17. WAIVER OF BREACH
The waiver by a party of a breach of or default under any term or
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach or default under the same
or any other term or provision of this Agreement by that party.
18. STATUS OF RELATIONSHIP
It is understood and agreed that the parties to this Agreement are
independent contractors, and nothing herein shall be construed to
establish a partnership or joint venture relationship between the
parties. Each party has sole responsibility for the payment of each of
its employee's wages, payroll taxes and benefits. By virtue hereof,
neither party assumes, directly or by implication, the debts,
obligations, taxes or liabilities of the other party.
19. FORCE MAJEURE
If either the Hospital or Management Co. is delayed or prevented from
fulfilling any of its obligations under this Agreement by force majeure,
such party shall not be liable under this Agreement for the delay or
failure. "Force Majeure" means any cause beyond the reasonable control of
a party, including but not limited to an act of God, act or omission of
civil or military authorities of a state or nation, fire, strike, flood,
riot, war, delay of transportation, or inability due to any of these
causes to provide or obtain necessary labor, materials or facilities.
20. EXCLUSIVITY
The relationship between Management Co. and the Hospital with respect to
the Agency shall be exclusive in that neither Management Co. nor any of
its subsidiaries will, directly or indirectly, during the term of this
Agreement, manage, own or affiliate or consult with any home health
agency providing services in any of the counties for which the Agency (or
any additional agency managed by Management Co. pursuant to Section 21)
has a license to provide home health services. Such exclusivity will not,
however, apply (a) after termination or non-renewal of this Agreement,
(b) to management services provided by Management Co. to home health
agencies not doing business inside the identified geographic area, (c) to
management services provided by Management Co. to entities other than
home health agencies, (d) any other business ventures of Management Co.
not encompassed within the foregoing provision, or (e) to Management
Co.'s ownership, operation, or management of, consulting for or
affiliation with House Calls of America, Inc.
21. ADDITIONAL COUNTIES AND HOME HEALTH AGENCIES
The Hospital hereby grants Management Co. the right to manage, pursuant
to the terms set forth herein, the operations of the Agency in any
additional counties added to the Hospital's license and any additional
home health agencies acquired by the Hospital during the term of this
Agreement. The parties will execute such amendments to this Agreement as
may be necessary or appropriate to document Management Co.'s management
of such additional counties or agencies.
22. DISPUTE RESOLUTION
Any material dispute between the parties arising under this Agreement
which is not resolved by good faith negotiation (including, without
limitation, disputes under Subsection 4(d), Section 19 or Exhibit A) may
be submitted by either party to binding arbitration in Louisville,
Kentucky in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award may be
entered in any court with jurisdiction thereof. The costs of arbitration
shall be borne by the parties in proportions decided by the
arbitrator(s).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
NATIONAL HEALTH INDUSTRIES, INC.
By: _________________________________
Title:________________________________
GALEN OF KENTUCKY, INC. d/b/a
AUDUBON REGIONAL MEDICAL CENTER
By:___________________________________
Title:__________________________________
Exhibit A
MANAGEMENT FEES
Development Fee
The Hospital will pay to the Management Company a one-time fee of Twenty Five
Thousand Dollars ($25,000) for the development, administration and initial
management services provided in the establishment of the new agency in
Scottsburg, Indiana.
Management Fee
The Hospital will pay the Management Company a fee per home health visit based
on the following fee schedule:
Home Health Visit
0-10,000 visits $ 11.50 per visit
10,000+ visits $ 6.00 per visit
AGREEMENT
AGREEMENT made as of the 15th of February, 1995, between NATIONAL HEALTH
INDUSTRIES, INC., a Delaware corporation, with its principal office at 9200
Shelbyville Road, Louisville, Kentucky 40222 (hereinafter referred to as
"Management Co."), and GALEN OF KENTUCKY, INC. d/b/a SOUTHWEST HOSPITAL, , a
Kentucky corporation, with its principal office at 9820 Third Street Road,
Louisville, KY 40272 (hereinafter referred to as the "Hospital").
W I T N E S S E T H:
WHEREAS, the Hospital maintains a department which operates as a home health
agency known as "Caretenders". (the "Agency");
WHEREAS, Management Co. and it's subsidiaries (collectively, "Management Co.")
provide management services suited to and designed for the operation of home
health agencies; and
WHEREAS, Management Co. desires to provide management services to the
Agency, and the Hospital desires to procure such services from Management
Co. for the Agency, pursuant to the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. RETENTION OF MANAGEMENT CO.: AUTHORITY
Subject to the terms and conditions of this Agreement, the Hospital hereby
retains Management Co. to provide management services for the Agency, and
Management Co. hereby accepts such retention by the Hospital. Pursuant to this
Agreement, Management Co. shall have the authority and responsibility to
manage, supervise and administer the day-to-day operations of the Agency
subject at all times to the Hospital's ultimate responsibility for and
authority over the governance, management and operations of the Agency, and
Management Co.'s compliance with (a) the policies and procedures adopted by
the Hospital and the Agency from time to time, (b) specific and general
directives from the Hospital's and the Agency's governing board(s) and
management and (c) all applicable laws, rules and regulations, including,
without limitation, the Medicare Conditions of Participation for Home Health
Agencies, now set forth at 42 C.F.R. 484.1 et seq., as amended or recodified
from time to time or any substitute or successor regulations (the
"Conditions").
2. OBLIGATIONS OF MANAGEMENT CO.
During the term of this Agreement, subject to the limitations set forth
in Section 1 and subject to the obligations of the Hospital set forth
herein, Management Co. shall, as requested perform the services set forth
below:
(a) Supervise the general operations of the Agency, as follows:
(i) Provide on-site consultation for management regarding policy development;
(ii) Provide strategic planning and analysis of the Agency's integration into
the Hospital's mainstream operations;
(iii) Assist in maintaining, renewing and supplementing all local, state
and federal applications, certifications, licenses, forms and permits
necessary or appropriate for the operation of the Agency;
(iv) Assist in maintaining the Agency's compliance with all governmental laws,
rules and regulations, including the Conditions;
(v) Supervise the preparation for and assist in the conduct of the Agency's
regulatory surveys and inspections, as follows:
(1) Assist the Agency in maintaining appropriate state licensure as a home
health agency. Management Co. will use its best efforts to the Agency in
remedying any deficiencies identified by the state licensing authority.
(2) Assist the Agency in maintaining certification to participate in
Medicare, Medicaid and other reimbursement programs in which the Agency
participates. Management Co. will use its best efforts to assist the Agency in
remedying any deficiencies identified by such programs.
(3) Assist the Agency in maintaining certification by the Joint Commission
the Accreditation of Healthcare Organizations ("JCAHO"). Management Co. will
use its best efforts to assist the Agency in remedying any deficiencies
identified by JCAHO;
(vi) Assist in the negotiation and maintenance of the Agency's contractual
arrangements with service providers and lessors;
(vii)Supervise plant and equipment maintenance and
(viii)Assist in the design, implementation and maintenance of operating,
organizational, office and personnel policies and procedures for the Agency;
(ix) Assist and advise the Agency regarding administrative personnel
matters;and
(x) Provide assistance with other daily administrative functions, as
requested;
(xi) Provide on-site training for home care coordinators and on generally
accepted methodologies for conducting the services of the Agency;
(xii)Provide tracking, analysis and reporting for all referrals,
categorized by physician, hospital and hospital department; and
(xiii)Participate in public, marketing and educational, business plan
preparation and the development of the Agency's services by providing formats
for community awareness and other activities.
(b) Assist in the development of the Agency's business, services and
relations, as follows:
(i) Provide on-site training for home care coordinators and
general on accepted methodologies for promoting the services of
the Agency;
(ii) Provide tracking, analysis and reporting for all
referrals, categorized by physician, hospital and hospital
department; and
(iii) Assist in public, marketing and educational, business
plan preparation and the development of the Agency's services
by providing formats for community awareness and other
activities.
(c) Oversee and manage the clinical staff and clinical operations of the
Agency, as follows:
(i) Assist the Agency in the recruiting of clinical personnel and assist and
advise the Agency with respect to other clinical personnel matters;
(ii) Provide on-site consultation regarding the development and implementation
of clinical policies;
(iii)Design and assist in the implementation of Continuous Quality
Improvement Strategies (CQI) and patient satisfaction measures for the Agency;
(iv) Assist in the development and implementation of quality assurance and
utilization review policies;
(v) Provide staff to conduct training programs and seminars for professional
and non-professional administrative and clinical personnel of the Agency, as
necessary, and provide staff development and staff training modules for
clinical staff;
Hold staff development and departmental meetings with applicable Agency and
Management Co. personnel, as necessary;
Provide analyses and evaluations of staffing patterns in relation to patient
mix, scope of services and number of disciplines;
Assist and advise the Agency regarding the maintenance of a medical records
system, and
Perform, directly or under arrangement, medical record/utilization review
audits, as necessary.
(d) Assist the Hospital in managing the financial affairs of the Agency, as
follows:
(i) Perform all billing and collecting activities in a manner consistent with
that utilized by the Management Co. for its other agencies. Management Co.
shall perform those services in accordance with applicable Medicare and
Medicaid guidelines, including, without limitation, requirements for the
timely submission of claims;
(ii) Monitor payments to the Agency and oversee the Agency's collection
system;
(iii)Monitor and review the posting of cash receipts;
(iv) Maintain, review and monitor Medicare/Medicaid logs;
(v) Supervise the follow-up on outstanding receivables;
(vi) Review and monitor transaction logs;
(vii)Consult in the processing and payment of the Agency's accounts payable
and payroll;
(viii)Assist in the preparation of the annual budget of the Agency; and
(ix) Consult with and assist the Hospital's accounting staff and outside
accountants, as necessary.
(x) Provide billing and collecting activities with monthly reconciliations.
(e) Manage the aspects of the operations of the Agency that are
affected by third party reimbursement, as follows. Management Co.
agrees to continue to provide the services described in Subsections
(vi) - (ix) below as may be reasonably requested by the Agency
following expiration or termination of this Agreement by either
party, without additional charge to the Hospital, until all cost
reports pertaining to patient visits provided prior to the
expiration or termination of this Agreement have been filed.
Management Co. will also provide reasonable billing, collection and
computer services pertaining to visits performed prior to the
expiration or termination of this Agreement for the period ending
six (6) months after expiration or termination of this Agreement
without additional charge to the Hospital. Management Co. will,
after the date of expiration or termination of this Agreement and
upon reasonable request of the Hospital provide other services of
the type and nature specified in this Agreement in return for which
Management Co. will be compensated at a rate of one hundred fifty
dollars ($150.00) per hour. Management Co. shall not be required to
provide any services under this Agreement after the Agency has
reached final settlement of all cost reports pertaining to patient
visits provided prior to the expiration or termination of this
agreement:
(i) Review and assist in preparation of monthly cost reports
for purposes of internal management information;
(ii) Review and assist the Hospital's reimbursement staff in
the preparation of all quarterly interim rate computations,
periodic reimbursement reports, annual cost reports and other
required data and reports for the Hospital's submission to the
Agency's Medicare fiscal intermediary, Medicaid and other third
party payors, as may be necessary under the provision of laws,
rules, regulations and general instructions of Medicare,
Medicaid or any other local, state, federal or other program in
which the Agency participates;
(iii) Provide on-site reimbursement consulting, as
necessary and periodic reimbursement reports;
(iv) Assist the Hospital's reimbursement staff in developing
specific reimbursement policies for the Agency;
(v) Monitor all cost cap and therapy 1imitations published by
third party payors in light of applicable requirements;
(vi) Assist in the preparation for and conduct of Medicare and
Medicaid audits, and attend all exit conferences;
(vii) Review initial reimbursement settlements and proposed
audit adjustments and prepare commentary for submission to the
relevant authorities (e.g., the Medicare fiscal intermediary),
as necessary;
(viii) Provide consultation regarding correspondence with
governmental agencies and fiscal intermediaries, and provide
primary advice and research on reimbursement matters affecting
the Agency;
(ix) Provide advice and assistance to the Agency in connection
with the pursuit and prosecution of reimbursement appeals; and
(x) Assist the Agency in maintaining and updating an
appropriate charge structure.
(f) Provide the following standby services:
(i) Provide clinical, administrative or financial consulting
personnel as may be necessary from time to time to assist in
the operation of the Agency;
(ii) Provide data to the Hospital related to local, regional
and national trends in home care as well as market research
data to which Management Co. may have access; and
(iii)Participate with the Hospital in the conducting of
feasibility studies, as necessary.
(g) Throughout the term of this Agreement, Management Co. shall
submit monthly and annual progress reports to the Hospital for the
Agency. Management Co.'s progress reports will address, among other
things, Management Co.'s success in meeting defined goals and
objectives for services and the Agency's operations, as set forth in
this Agreement, the Agency's business plan or as otherwise agreed
upon by the Hospital and Management Co.
(h) Management Co. shall provide Computer Services to the Hospital
and/or Agency according to the following terms and conditions:
(i) The system as defined by this document includes the
hardware supplied by Management Co. and all system and
application software residing on the hardware as supplied;
(ii) Management Co. is responsible for the maintenance of the
system in good operating condition throughout the term of this
Agreement through routine maintenance and repair. Management
Co. will provide twenty-four (24) hour per day, seven (7) day
per week, repair and maintenance services for the Hardware;
(iii) The cost associated with the correction of hardware
malfunctions shall be borne at all times by Management Co.
(iv) Management Co. will furnish the Agency with access to any
and all updates, modifications, improvements, revisions and
enhancements to the system software.
(v) Management Co. will provide assistance with development of
the interfaces between the system and the Hospital's computer
system.
(vi) Management Co. will provide upon reasonable request by the
Hospital, from time to time, and subject to any requirements
imposed on Management Co. by its hardware and software vendors,
routine minor modifications to the system. Services related to
customization and/or major modifications will be paid for by
the Hospital at Management Co.'s standard charges for time and
materials.
(vii) Any and all customized and/or modified software shall
remain the property of Management Co. or its software vendors
as an integral part of the system.
(viii) The components of the system located in the Agency's
offices shall be used for operating the system as described in
this agreement and for no other purpose. No software other than
the software furnished by Management Co. shall be utilized on
the system without prior written consent of Management Co.
(ix) The Hospital and the Agency shall ensure that the
management and data entry personnel working in the Agency's
offices cooperate with Management Co. in the discharge of
Management Co.'s duties under this Agreement and comply with
the reasonable instructions provided by Management Co. from
time to time as to the proper use and functioning of the
system.
(x) Under no circumstances shall the Hospital make any
modifications, customizations or other revisions to the System
or any component of the system without prior written consent of
Management Co.
(xi) The Hospital acknowledges that the system and all of its
component parts (including, without limitation, specifications,
manuals and other documentation) are, and shall remain, the
sole and exclusive property of Management Co. At no time during
the term of this agreement or thereafter shall the Hospital
assign, sell, license, lease, duplicate, transfer, pledge or
encumber the system or any component part of the system. Upon
termination of this agreement, all of the Hospital's rights
with respect to the system shall terminate and Management Co.
shall be entitled to remove the components of the system
located in the Agency's offices.
3. OBLIGATIONS OF THE HOSPITAL
(a) The Hospital agrees that the Agency is and will continue to be,
subject to the obligations of Management Co. to provide the
management services set forth herein, operated and maintained as a
duly certified, licensed and accredited home health agency in
accordance with: (i) the Conditions; (ii) the provisions contained
in the Medicare "Home Health Agency Manual", HIM-ll, and other
applicable Medicare or Medicaid manuals and general instructions;
(iii) any and all other applicable federal, state or local laws,
rules or regulations; and (iv) all supplements, amendments,
substitutions or additions to any of the foregoing..
(b) The Hospital shall employ for the Agency, directly or under
arrangement, adequate clinical and administrative staff who are
capable of providing all of the Agency's clinical services and
performing its administrative duties, all in conformity with the
standards now or hereafter prescribed by any law, rule or regulation
which may be applicable to the operation of the Agency, including
the Conditions. Hospital shall consult with the Management Co., from
time to time, to determine whether there is adequate clinical and
administrative staff, and shall use its best efforts to comply with
Management Co.'s recommendations. Hospital's failure to provide
adequate clinical and administrative staff will preclude the
Management Co. from performing its duties hereunder.
(c) The Hospital shall, at all times, be ultimately responsible for
the direction and control of the Agency, including, but not limited
to, all professional and ethical affairs, all fiscal affairs and all
general operating policies.
(d) The Hospital and the advisory board of the Agency shall request
and receive recommendations from Management Co. and shall duly
consider all such recommendations concerning operations of the
Agency prior to adopting any changes in the policies, procedures,
directives or bylaws applicable to the Agency. A representative of
Management Co. shall be entitled to receive notice of and to attend
all meetings of the Agency's advisory board, other than meetings or
portions thereof devoted to a review of the performance of
Management Co. hereunder. At meetings or portions thereof attended
by Management Co., representatives of Management Co. shall be
permitted to participate in discussions of Agency operations, but
shall not be entitled to vote. The Hospital shall promptly deliver
or communicate to Management Co. a copy of resolutions, directives
and authorizations which in any way affect the services provided by
Management Co. under this Agreement.
4. FEES
(a) In consideration of the services to be provided by Management
Co. pursuant to this Agreement, the Hospital shall pay to Management
Co. fees as set forth in Exhibit A attached hereto.
(b) Management Co. will bill the Hospital monthly by itemized
invoice for services provided during the preceding month. The
Hospital will pay invoices for fees within thirty (30) days of
receipt. All amounts not paid to Management Co. when due should bear
interest at the rate of 1 1/2 % per month until paid in full.
(c) In the event that Hospital or any of its affiliates acquires,
operates or affiliates with another home health agency in the
counties covered by this Agreement, and Hospital or any of its
affiliates do not engage Management Co. to manage said agency(s),
the management fee payable during any contract year to Management
Co. under this Agreement shall be the greater of the fee required by
Paragraph 4(a) or One Million Four Hundred Thousand Dollars
($1,400,000) per year, beginning in the year that this provision is
triggered and for each year thereafter until the expiration or
termination of the Agreement.
(d) Disallowance of Fees. Any fees paid to Management Co. by
Hospital pursuant to this Agreement that are not allowed by the
Medicare Program because they are not comparable with marketplace
prices for similar services, shall be forgiven or repaid by
Management Co. to the Hospital, and Hospital shall have no liability
to Management Co. for such disallowed fees; provided, however, that
such forgiveness or repayment shall not occur until thirty (30) days
after the later of (1) such time as the parties have exhausted such
administrative and legal remedies that they deem appropriate to
pursue to challenge the disallowance of such fees by the Medicare
Program, or (2) the completion of any arbitration as provided
herein.
(e) Challenge of Disallowance of Fees. In any challenge to a
disallowance of Management Co.'s fees, Management Co. shall be
entitled to participate fully in the challenge through counsel of
its own choosing. In the event that one hundred percent (100%) of
the disallowed amount results from the Medicare Program's
determination that the Management Co. fees were not comparable with
marketplace prices for similar services, Management Co. shall be
entitled to assume control of the challenge in the Agency's name. If
the Hospital elects not to pursue the matter or if, in the
reasonable judgment of Management Co., the Hospital is not
vigorously pursuing the challenge, Management Co. shall be entitled
to assume control of the challenge in the Agency's name.
(f) Settlement. The Hospital shall not be entitled, without the
prior written consent of Management Co., to enter into any
settlement or compromise of any such claim, where either (i) fifty
percent (50%) or more of the disallowed amount results from the
Medicare Program's determination that the Management Co. fees were
not comparable with marketplace prices for similar services; or (ii)
where the disallowance results in an indemnification liability of
Management Co. of greater than one hundred thousand dollars
($100,000.00) to Hospital.
(g) Allocation of Settlement. In the event that a global settlement
is reached, the parties will attempt to agree on a reasonable
allocation of the total disallowances, as settled. If the parties
are unable to reach agreement on the allocation within ninety (90)
days of the settlement, either party may submit the dispute to
arbitration as provided in Section 22.
(h) Costs of Appeals. Each party shall be responsible for its own
fees and expenses, including those of its legal counsel, in pursuant
reimbursement appeals hereunder.
Effect of Termination. The rights and obligations of the parties under
Subsections (c) - (g) shall survive the termination of this Agreement.
(i) Damages. Hospital and Management Co. entered into a Management
Contract dated July 1, 1994. Under section 4(c), Hospital may have to
pay liquidated damages to Management Co. To the extent that liquidated
damages are paid under section 4(c), Hospital will not enforce the
indemnification provsion under section 4(d) of the Management Contract.
5. PROPRIETARY MATERIALS AND INFORMATION; COVENANT NOT TO HIRE AWAY
EMPLOYEES
(a) The Hospital acknowledges and agrees that the various policy
and procedure manuals developed by Management Co. and used by
Management Co. in the provision of management services to home
health agencies, are proprietary in nature, shall be and remain
(along with any corresponding copyrights, patents or similar rights)
the sole property of Management Co. and shall not at any time be
directly or indirectly used, distributed, disclosed, copied or
otherwise employed by the Hospital, except in the operation of the
Agency under Management Co.'s management during the term of this
Agreement. Upon termination of this Agreement, the Hospital shall
return to Management Co. all such manuals (including all portions
and copies thereof) in the Hospital's possession or within its
control, shall use reasonable efforts to ensure that its employees
have not retained any such manuals or portions or copies thereof
and, upon request by Management Co., shall confirm compliance with
the foregoing in writing.
(b) The Hospital acknowledges that Management Co. has spent a great
deal of time, money and effort to recruit, hire and train qualified
personnel to provide management services to home health agencies
such as the Agency. Accordingly, during the term of this Agreement
and for a period of one (1) year thereafter, the Hospital shall not,
directly or indirectly, alone or with others, solicit, attempt to
solicit or otherwise induce or attempt to induce to leave Management
Co.'s employ, without the prior written consent of Management Co.,
any of the employees of Management Co. who performed services on
behalf of Management Co. for the Agency at any time during the term
of this Agreement.
(c) The Management Co. acknowledges that the Hospital has spent a
great deal of time, money and effort to recruit, hire and train
qualified personnel to work for the Agency. Accordingly, during the
term of this Agreement and for a period of one (1) year thereafter,
Management Co. shall not, directly or indirectly, alone or with
others, solicit, attempt to solicit or otherwise induce or attempt
to induce to leave the Hospital's employ, without the prior written
consent of the Hospital, any of the employees of the Hospital who
worked for the Agency at any time during the term of this Agreement.
(d) In the event of a breach or threatened breach of Subsections
(a) or (b) by the Hospital, the Hospital acknowledges and agrees
that Management Co. will be entitled to injunctive relief in order
to prevent the breach or continuing breach thereof, without having
to post bond, in addition to any and all other rights and remedies
available to Management Co. at law or in equity.
(e) In the event of a breach or threatened breach of Subsection (c)
by Management Co., Management Co. acknowledges and agrees that the
Hospital will be entitled to injunctive relief in order to prevent
the breach or continuing breach thereof, without having to post
bond, in addition to any and all other rights and remedies available
to the Hospital at law or in equity.
(f) The rights and obligations of the. parties under this Section 5
shall survive termination of this Agreement.
(g) Subsection (b) and (c) shall not apply to an employee who is
terminated or voluntarily leaves the employ of the Hospital or
Management Co., as the case may be, and is not employed by the other
party to this Agreement within sixty (60) days after the last day of
employment.
6. OWNERSHIP AND CONFIDENTIALTY OF AGENCY INFORMATION AND DATA
Management Co. acknowledges that it will obtain and/or have access to
various confidential information concerning the business and affairs of
the Agency in connection with the performance of Management Co.'s
obligations hereunder. Such confidential information includes, but is not
limited to, patient information and records, employee and financial
information ("Confidential Information"). Management Co. agrees (1) to
hold the Confidential Information in strict confidence, (2) not to use
the Confidential Information for any purpose other than the performance
of Management Co.'s obligations hereunder, (3) not to disclose any of the
Confidential Information to any third party or any of Management Co.'s
employees, agents or representatives other than those who need to know
and/or have access to such Confidential Information in connection with
the performance of their duties on behalf of Management Co., and (4) to
return to the Hospital or destroy or delete, at the Hospital's election,
all or the relevant portions of any of the documents and other materials
embodying Confidential Information (including all copies thereof) in
Management Co.'s possession upon termination of this Agreement.
The foregoing restrictions shall not, however apply to information which
is generally known to and available for use within the trade or by the
public at the time of disclosure to Management Co., (2) becomes generally
known to and available for use within the trade or by the public other
than as a result of a breach of Management Co. 's duty of confidentiality
hereunder, (3) was in the possession or knowledge of Management Co. free
of Confidentiality restrictions prior to the time of disclosure to
Management Co. by the Hospital, or becomes available to Management Co.
from a third party who or which is not bound by confidentiality
restrictions, (4) is required to be disclosed by law or pursuant to a
court order, subject to prompt prior written notice by Management Co. to
the Hospital of such potential disclosure and the Hospital's right to
prevent or otherwise limit such disclosure with the bounds of the law or
court order, or (5) is authorized to be used and/or disclosed to third
parties by the Hospital in writing, subject to execution of a
confidentiality agreement acceptable to the Hospital by the third party.
Management Co. further agrees to comply with any and all laws and
regulations and procedures relating to patient and all other information
which is disclosed to Management Co. or to which Management Co. has, and
to comply with the Hospital's applicable reasonable security and
confidentiality policies and procedures relative to the Agency's
facilities, communications and information. The Hospital shall have the
right to deny Management Co. access to the Agency's facilities,
communications and information at such times when Management Co. fails to
comply with the Hospital's applicable reasonable policies and procedures.
The provisions of this Section 6 shall survive termination of this
Agreement. Management Co. acknowledges and agrees that any breach or
threatened breach by it of the provisions of this Section would cause the
Hospital irreparable injury for which the Hospital would have no remedy
at law and that, in addition to any other remedies which it may have, the
Hospital shall be entitled to preliminary and permanent injunctive relief
against any such breach or threatened breach.
7. TERM AND TERMINATION
(a) Subject to Subsections (b) through (d) below, this Agreement
shall have a term of five (5) years beginning July 1, 1994 and
terminating on June 30, 1999. Within one hundred eighty (180) days
prior to the expiration of the term of this Agreement, the Hospital
shall notify Management Co. of the Hospital's plans regarding
management of the Agency thereafter in order to allow Management Co.
sufficient time to make appropriate plans and arrangements.
(b) The Hospital shall have the power to terminate this Agreement as follows:
(i) If Management Co. breaches or defaults in the performance
of any material term, condition or undertaking set forth herein
and fails to cure such breach or default within thirty (30)
days of its receipt of written notice from the Hospital
describing in detail the occurrence and nature of the breach or
default, or fails to submit a plan reasonably acceptable to
Hospital for curing the breach or default within such thirty
(30) day period and to thereafter diligently cure the breach or
default pursuant to the plan if the breach or default cannot
reasonably be cured within the thirty (30) day period;
(ii) Immediately upon written notice if Management Co. becomes
insolvent, has a petition in bankruptcy filed with respect to
it which is not dismissed or discharged within thirty (30) days
or makes an assignment for the benefit of creditors;
(iii) Immediately upon written notice if Management Co.
shall commit or be involved in any act involving fraud or shall
misappropriate Agency funds; and
(iv) Immediately upon written notice if Management Co. is
barred or suspended from involvement in the Medicare or
Medicaid Programs.
(c) Management Co. shall have the power to terminate this Agreement as
follows:
(i) If the Hospital breaches or defaults in the performance of
any material term, condition or undertaking set forth herein
and fails to cure such breach or default within thirty (30)
days of its receipt of written notice from Management Co.
describing in detail the occurrence and nature of the breach or
default, or fails to provide a plan reasonably acceptable to
Management Co. for curing the breach or default within such
thirty (30) day period and to thereafter diligently cure the
breach or default pursuant to the plan if the breach or default
cannot reasonably be cured within the thirty (30) day period;
provided, however, that for a breach or default involving the
payment of money, the cure period shall be limited to ten (10)
days;
(ii) Immediately upon written notice if the Hospital has a
petition in bankruptcy filed with respect to it which is not
dismissed or discharged within thirty (30) days or makes an
assignment for the benefit of creditors; and
(iii) Immediately upon written notice in the event of the
actual or threatened revocation, termination or suspension of
any certification (including Medicare and Medicaid
certification), license, permit or accreditation of the
Hospital or the Agency which shall or may materially and
adversely affect the Agency's business, or in the event of the
actual or threatened cancellation or lapsing of the Agency's
professional liability insurance.
(d) Either party shall have the power to terminate the Agreement as
follows:
(i) In the event there is a change in Medicare, Medicaid or
other Federal or state statutes or regulations or in the
interpretation thereof, or in the event a claim is threatened,
made or filed by a government agency, which renders any of the
material terms of this Agreement unlawful, or asserts that any
such terms are unlawful, the parties shall promptly and in good
faith renegotiate the affected term to remedy such condition in
such a manner that will preserve, in all material respects, the
underlying economic, financia1 and business relationship of the
parties. In the event the parties cannot renegotiate the
agreement within sixty (60) days following notice of the intent
to renegotiate, either party may terminate this Agreement upon
written notice to the other.
(ii) In the event there is a material change in the methodology
of Medicare or Medicaid reimbursement for home health services,
the parties shall promptly and in good faith renegotiate the
affected term(s) to remedy such condition in such a manner that
will preserve, in all material respects, the underlying
economic, financial and business relationship of the parties.
In the event the parties cannot renegotiate the agreement
within sixty (60) days following notice of the intent to
renegotiate, either party may terminate this Agreement upon
written notice to the other.
(e) (i) Termination of this Agreement shall not release the
Hospital from its obligation to pay any sum, which may be due and
owing to Management Co. for services rendered prior to termination,
and such obligation shall survive termination.
(ii) In the event that the Agreement is terminated by Hospital
pursuant to Paragraph 7(d), Hospital shall make payment to
Management Co. in an amount equal to the fifty percent (50%) of
the management fee remaining to be paid for the term of the
Agreement had it not been terminated. For purposes of this
Subsection, the annual management fee shall be the greater of
the management fee paid pursuant to 4(a) for the year
immediately preceding the termination of the Agreement, or One
Million Four Hundred Thousand Dollars ($1,400,000.00).
(iii) In the event that the Agreement is terminated by
Management Co. pursuant to Paragraphs 7(d), Management Co.
shall make payment to Hospital in an amount of Five Hundred
Thousand Dollars ($500,000.00).
8. INSURANCE AND INDEMNITY
(a) Management Co. shal1 carry and maintain in force insurance to
cover liabilities arising out of the services provided by Management
Co. hereunder, including general liability insurance with limits of
at least One Million ($1,000,000) per occurrence and Two Million
($2,000,000) in the aggregate and workers' compensation insurance
with the limits required by law. The Hospital shall carry and
maintain in force insurance to cover liabilities arising out of the
operation of the Agency, including liability, general liability
insurance and workers' insurance, in reasonable amounts given the
nature of the Agency's business.
(b) The Hospital shall indemnify and hold harmless Management Co.
(including its directors, officers, employees and agents,
individually and collectively) from and against any and all claims,
liabilities, damages, fines, penalties, taxes, costs and expenses,
including reasonable attorneys' fees and of settlement, which any
such party may suffer, sustain or become subject to as a result of:
(i) the negligence or other wrongful conduct (including, without
limitation, misrepresentation, fraud, willful misconduct, violations
of law or breach of contract) of the Hospital, the Agency or their
directors, officers, employees or agents in the operation of the
Agency's business or the performance of the Hospital's obligations
hereunder; (ii) any existing or future debts, liabilities or
obligations of the Hospital relative to the Agency; or (iii) any
acts or omissions of Management Co. or any of its officers,
employees or agents taken or not taken pursuant to the directives of
the Hospital or the Agency, their governing board(s), officers or
employees.
(c) Management Co. shall indemnify and hold harmless the Hospital
(including its directors, officers, employees and agents,
individua1ly and collectively) from and against any and all claims,
liabilities, damages, fines, penalties, taxes, costs and expenses,
including reasonable attorneys' fees and costs of settlement, which
any such party may suffer, sustain or become subject to as a result
of the negligence or other wrongful conduct (including, without
limitation, misrepresentation, fraud, willful, violations of law or
breach of contract) of the Management Co. or its directors,
officers, employees or agents in the performance of Management Co.'s
obligations hereunder.
(d) The obligations of the parties under Subsections (b) and (c)
shall survive termination of this Agreement.
9. ASSIGNMENT
Neither party may assign any of its rights or obligations under this
Agreement to any other person, firm or corporation without the express
written consent of the other party; provided, however, that Management
Co. may delegate some or all of its duties described in Section 2 to any
of its subsidiaries and, to that extent, such subsidiaries are third
party beneficiaries of this Agreement; and further provided that the
Hospital may assign all of its rights and obligations under this
Agreement upon written notice to Management Co. (a) to any affiliate of
the Hospital which acquires the Agency pursuant to a corporate
reorganization, or, (b) to a third party purchaser of all or
substantially all of the assets of the Hospital or the Agency or a third
party which acquires control of the Hospital or the Agency pursuant to a
merger, consolidation or other similar transaction, and any such
affiliate, purchaser or other acquirer shall assume and agree to be bound
by the terms of this Agreement. Agreement shall inure to the benefit of
and be binding upon the legal representatives, permitted assigns and
successors of the parties hereto.
10. NOTICES
Notices required hereunder shall be in writing and delivered in person or
sent by Certified Mail, postage prepaid, to the President and Chief
Executive Officer of the Hospital or the President of Management Co. at
the appropriate address set forth in the preamble of this Agreement or
such other addresses as either party may designate in writing to the
other party in accordance with this Section 10. If mailed, such notices
shall be effective as of the date of delivery or the date of attempted
delivery if delivery is refused.
11. ACCESS TO BOOKS AND RECORDS
(a) For a period of four (4) years following the last date
Management Co. furnishes services pursuant to this Agreement,
Management Co. shall make available upon written request of the
Secretary of the United States Department of Health and Human
Services, the United States Comptroller General and their duly
authorized representatives, all contracts, books, documents and
records of Management Co. to the extent required by 42 U.S.C.
1395x(v)(1)(I) (as amended or recodified from time to time or any
substitute or successor statute) and lawful regulations promulgated
thereunder. Management Co. shall notify the Hospital within ten (10)
days of its receipt of such a request and of Management Co.'s
proposed response to the request.
(b) If Management Co. carries out any of its duties under this
Agreement through a subcontract with a value of $10,000.00 or more
over a twelve (12) month period with a related organization, such
subcontract shall contain a clause to the effect that until four (4)
years after the furnishing of such services pursuant to such
subcontract, such related organization shall make available, upon
written request of the Secretary of the United States Department of
Health and Human Services, the United Comptroller General or any of
their duly authorized representatives, the sub-contract and the
books, documents and records of such organization to the extent
required by 42 U.S.C. 1395x(v)(l)(I) (as amended or recodified from
time to time or any substitute or successor statute) and lawful
regulations promulgated thereunder.
12. ENTIRE AGREEMENT
This instrument contains the entire agreement of the parties with respect
to the subject matter hereof. Any and all prior agreements, promises,
inducements, negotiations or representations not expressly set forth in
this Agreement are superseded hereby and are void and of no force and
effect.
13. AMENDMENTS
Agreement cannot be altered or amended except pursuant to an instrument
in writing signed by both of the parties hereto.
14. SEVERABlLlTY
In the event that any provision of this Agreement is rendered illegal,
invalid or unenforceable by a federal or state law, rule or regulation,
or declared illegal, invalid or unenforceable by any court of competent
jurisdiction, the remaining provisions hereof shall remain in full force
and effect.
15. HEADINGS
Headings are used herein solely for the convenience of the parties and
are not part of this Agreement.
16. APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with the
laws of the Commonwealth of Kentucky, notwithstanding its conflict of
laws rules.
17. WAIVER OF BREACH
The waiver by a party of a breach of or default under any term or
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach or default under the same
or any other term or provision of this Agreement by that party.
18. STATUS OF RELATIONSHIP
It is understood and agreed that the parties to this Agreement are
independent contractors, and nothing herein shall be construed to
establish a partnership or joint venture relationship between the
parties. Each party has sole responsibility for the payment of each of
its employee's wages, payroll taxes and benefits. By virtue hereof,
neither party assumes, directly or by implication, the debts,
obligations, taxes or liabilities of the other party.
19. FORCE MAJEURE
If either the Hospital or Management Co. is delayed or prevented from
fulfilling any of its obligations under this Agreement by force majeure,
such party shall not be liable under this Agreement for the delay or
failure. "Force Majeure" means any cause beyond the reasonable control of
a party, including but not limited to an act of God, act or omission of
civil or military authorities of a state or nation, fire, strike, flood,
riot, war, delay of transportation, or inability due to any of these
causes to provide or obtain necessary labor, materials or facilities.
20. EXCLUSIVITY
The relationship between Management Co. and the Hospital with respect to
the Agency shall be exclusive in that neither Management Co. nor any of
its subsidiaries will, directly or indirectly, during the term of this
Agreement, manage, own or affiliate or consult with any home health
agency providing services in any of the counties for which the Agency (or
any additional agency managed by Management Co. pursuant to Section 21)
has a license to provide home health services. Such exclusivity will not,
however, apply (a) after termination or non-renewal of this Agreement,
(b) to management services provided by Management Co. to home health
agencies not doing business inside the identified geographic area, (c) to
management services provided by Management Co. to entities other than
home health agencies, (d) any other business ventures of Management Co.
not encompassed within the foregoing provision, or (e) to Management
Co.'s ownership, operation, or management of, consulting for or
affiliation with House Calls of America, Inc.
21. ADDITIONAL COUNTIES AND HOME HEALTH AGENCIES
The Hospital hereby grants Management Co. the right to manage, pursuant
to the terms set forth herein, the operations of the Agency in any
additional counties added to the Hospital's license and any additional
home health agencies acquired by the Hospital during the term of this
Agreement. The parties will execute such amendments to this Agreement as
may be necessary or appropriate to document Management Co.'s management
of such additional counties or agencies.
22. DISPUTE RESOLUTION
Any material dispute between the parties arising under this Agreement
which is not resolved by good faith negotiation (including, without
limitation, disputes under Subsection 4(d), Section 19 or Exhibit A) may
be submitted by either party to binding arbitration in Louisville,
Kentucky in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award may be
entered in any court with jurisdiction thereof. The costs of arbitration
shall be borne by the parties in proportions decided by the
arbitrator(s).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
NATIONAL HEALTH INDUSTRIES, INC.
By: _________________________________
Title:________________________________
GALEN OF KENTUCKY, INC. d/b/a
SOUTHWEST HOSPITAL
By:___________________________________
Title:__________________________________
MANAGEMENT FEES
CHARGE/VISIT AND
CHARGE/WAIVER UNIT
Home Health
Services (Visits) Services Waiver Units
GENERAL MANAGEMENT GENERAL MANAGEMENT
0 - 30,000 Visits $8.00 0 - 5,000 Units $1.30
30,001 + Visits $5.33 5,000 + Units $2.67
COMPUTER COMPUTER
0 - 30,000 $1.00 0 - 5,000 Units $0.50
30,001 + Visits $0.67 5,000 + $0.33
TOTAL TOTAL
0 - 30,000 Visits $9.00 0 - 5,000 Units $5.00
30,001 + Visits $6.00 5,001 + Units $3.00