Exhibit 10.8
SIERRA HEALTH AND LIFE INSURANCE COMPANY
HCO CONTRACT WITH
CLAIMS ADMINISTRATOR
This Agreement made by and between California Indemnity Insurance
Company, and each of its insurer subsidiaries, (the "Claims
Administrator") Sierra Health and Life Insurance Company (hereinafter
referred to as the "HCO").
WHEREAS, the Claims Administrator provides a plan of Workers'
Compensation benefits to its insured employer clients or qualified self
insured employer or self insured group clients in the State of
California; and
WHEREAS, the Claims Administrator desires to incorporate Health Care
Organizations into some or all of these plans, subject to the laws of
the State of California; and
WHEREAS, the Claims Administrator is willing to make appropriate
arrangements with its insured employer, qualified self insured
employer, and/or self insured group clients;
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, the Claims Administrator and the HCO hereby agree as
follows:
A. Definitions
For the purposes of this Agreement:
|X| "Health Care Organization" or "HCO" means an organization
certified under Section 4600.5 of the Labor Code and
Article 4, Sections 9770 through 9779.2 of the
Administrative Rules of the Division of Workers'
Compensation, Department of Industrial Relations, State of
California, and providing the services defined in Exhibit
A of this Agreement.
|X| "HCO Enrollee" means a person who is eligible to receive
services from an HCO, as defined in Section 4600.5 et seq
of the California Labor Code.
|X| "Claims Administrator" means a self-administered insurer
providing security for the payment of compensation
required by Divisions 4 and 4.5 of the California Labor
Code, a self-administered, self-insured employer, or a
third party claims administrator for a self-insured
employer, self insured group, insurer, legally uninsured
employer, or joint powers authority.
|X| "Employer" means an employer as defined in Section 3300 of
the California Labor Code.
|X| "Emergency" is defined as those health care services
provided to evaluate and treat medical conditions of recent
onset and severity that would lead a prudent layperson to
believe that urgent and/or unscheduled medical care is
required.
|X| Injuries covered by the HCO are those that occur during the
policy year. Medical management will be provided both during
the control period and after the control period ends, if the
customer wishes to have the HCO continue. For injuries that
occur in one policy year, but continue into another policy
year, the HCO will provide medical management during the
control period, regardless of policy year.
|X| "Medical Case Management" means Medical Disability
Management and Utilization Management. "Medical Disability
Management" means the determination of medical necessity,
appropriateness of care, length of stay, intensity of
service related to treatment of HCO Enrollees by Network
Providers. "Utilization Management" means the management,
assessment, improvement or review of patient care and
decision making through case by case assessment of the
medical reasonableness or medical necessity of the
frequency, duration, level and appropriateness of medical
care and services, based upon professionally recognized
standards of care, which may include prospective, concurrent
or retrospective review of a request for authorization of
medical treatment.
B. Obligations of the HCO
1. The HCO shall provide medical and managed care services in
accordance with the terms of this Agreement and applicable
laws and regulations.
2. The HCO's services under this Agreement shall include the services
described in Exhibit A (Services of the HCO) and Exhibit C (Coordination with
Claims Administration, Return to Work, and Health and Safety Functions), which
are attached hereto and incorporated by reference herein. The HCO will provide
the Claims Administrator's clients with the option of the Spectrum HCO or the
Select HCO. Exhibits A and C outline the differences between Spectrum and
Select. Said services shall be performed in accordance with the terms and
conditions set forth in Exhibit B (Confidentiality Policy) and Exhibit D (List
of Charges), which are attached hereto and incorporated by reference herein.
Provided, however, if an HCO enrollee obtains initial treatment from a provider
not part of the HCO Network prior to notifying an employer or the Claims
Administrator, payment for such treatment will be approved by the HCO. However,
any further treatment will not be approved by the HCO for payment. The HCO
Enrollee will be notified by the HCO and the HCO will require the Enrollee to
select treatment from a Provider in the HCO Network.
3. The HCO will provide the Claims Administrator with all
claims information, reimbursement reports, evaluations,
return to work reports, and other data necessary to pay
claims in a timely and accurate manner and to perform other
tasks of coordination with the HCO normally associated with
managing and settling workers' compensation.
4. The HCO will provide enrollment and membership material
required under the Administrative Rules of the Division of
Worker's Compensation section of Article 4. These materials
will be provided to employees of employers that contract
with the Claims Administrator for an HCO plan of workers'
Compensation.
5. The HCO will provide to the Claims Administrator with the
length of medical control and current enrollment
information for each enrollee 15 days after the conclusion
of the enrollment period.
6. The HCO will provide to the Claims Administrator all
reports required under Article 4, including those reports
specifically named for purposes of detecting targeted
workplace hazards, and other reports as may be agreed to
elsewhere in this Agreement.
7. The HCO will provide on the Claims Administrator's behalf,
enrollment, treatment, outcomes, and other related
information to the Division of Workers' Compensation as
required under Article 4.
8. The HCO will adhere insofar as is consistent with the
reporting requirements for HCOs, with the policy of
confidentiality of information as set forth in Exhibit B.
9. Audit:
a. Subject to the following provisions of this subsection (a), the Claims
Administrator or its agent may audit the HCO's compliance with its obligations
under this Agreement and the HCO shall supply the Claims Administrator or its
agent with access to information acquired or maintained by the HCO in performing
services under this Agreement. The HCO shall be required to supply only such
information which is in its possession and which is reasonably necessary for the
Claims Administrator to perform activities related to its workers' compensation
plan, provided that such disclosure is not prohibited by any third party
contracts to which the HCO is a signatory or any requirements of law. The Claims
Administrator or its agent shall give the HCO prior written notice of its intent
to perform such an audit and its need for such information and shall represent
to the HCO that the information which is disclosed therein is reasonably
necessary for the workers' compensation program.
All audits and information disclosures shall occur at
a reasonable time and place and at the Claims
Administrator's expense. The Claims Administrator may
designate a representative to conduct or participate
in the audit, or to receive access to such
information, provided that the Claims Administrator
and the representative enter into a written agreement
with the HCO under which the representative agrees to
use any disclosed information solely for the workers'
compensation program, to keep such information
confidential, and to indemnify the HCO for any losses
related to the disclosure.
b. Any reports, information, or documentation provided,
made available, or learned by either of the parties
to this Agreement which contain personally
identifiable or medical information about any
Enrollee or health care provider or which contain
information which has been designated as proprietary
or confidential by either party shall be held in the
strictest confidence and in accordance with the
requirements of all applicable laws.
10. The HCO maintains Professional Liability insurance
coverage which will cover the HCO for claims arising out
of an alleged act, error, or omission in the performance
of the HCO's professional services and operations. A
certificate of insurance is available upon request.
11. The HCO agrees to defend, indemnify, and hold harmless the
Claims Administrator against any and all suits, claims,
damages, losses, and expenses, including attorney's fees
arising out of the HCO's decisions regarding reimbursements
to providers, medical necessity of procedures or its
disclosure of confidential, personally identifiable and/or
medical record information. Notwithstanding the foregoing,
the HCO shall not be responsible for any suits, claims,
damages, losses, or expenses, including attorney's fees,
arising from a judgment based on a final decision by a court
of competent jurisdiction where liability is based on the
Claims Administrator's negligence or willful misconduct.
C. Claims Administrator's Obligations
1. The Claims Administrator agrees that the decisions made by
the HCO within the scope of its normal duties and applicable
regulations are binding and that the Claims Administrator
will observe the HCO's instructions for payment for medical
services, referral of injured employees to appropriate
medical providers, and determinations of medical necessity
as final. The Claims Administrator agrees to abide by the
requirements (outlined in Exhibit I, Employer's Workers'
Compensation Health Care Organization Enrollment Kit) of the
appropriate HCO, Select or Spectrum, in relation to provider
election and assignment.
2. The Claims Administrator agrees to coordinate Return to Work
(Described in Exhibit A) and Health and Safety programs
(described in Exhibit C), and to instruct the Employer(s)
accordingly. This must include a requirement that the Health
and Safety vendor offered by the employer must allow
monitoring by the HCO.
3. The Claims Administrator agrees to provide the HCO with a
listing of all employees (described in Exhibit F) or one
copy of all employees' enrollment forms, who have selected
the HCO and to update this list no less than monthly as
new employees make their HCO selection and employees are
terminated.
4. The Claims Administrator agrees to work with the
participating employer(s) to distribute and display,
following mutually agreed procedures, informational
materials provided by the HCO for Enrollees (all current
employees and any new employees hired after the initial
enrollment period.) All participating employer(s) will
make reasonable provisions for the HCO to conduct
management and/or employee enrollment meetings as may be
needed to install the HCO correctly. If employee
enrollment meetings are not held, then the employer will
disseminate HCO informational materials via interoffice
mail or US Mail prior to the enrollment start date.
5. The Claims Administrator agrees to pay the HCO in
accordance with the terms of Exhibit D for the HCO service
provided under this Agreement. The HCO will produce a
monthly invoice, as described in Exhibit D, and will
submit the invoice to the Claims Administrator for
payment. Payment is due within thirty (30) calendar days
from the stated due date.
6. The Claims Administrator agrees that the HCO will provide
its services only for those employer(s) and their
employees who have enrolled (enrollees) in the HCO. The
Claims Administrator further agrees that it shall be
responsible for paying the HCO for all services rendered
by the HCO pursuant to the terms of this Agreement on
behalf of employer(s).
The Claims Administrator also agrees that it will have sole
discretion in determining which claims are to be
controverted, investigated, and accepted or denied as
compensable under workers' compensation. Claims
Administrator agrees to use the modified DWC 500-D form
for notice of delay in determining liability for worker's
compensation benefits.
The payor agrees that if an employer directs a worker to an
HCO provider, the employer/insurer is liable for medical
care rendered until a denial of compensability or denial
of authorization for any medical care is stated. Thus, in
cases of delay, the HCO will not condition treatment of an
HCO patient on the employer agreement to pay for it,
unless the employer/insurer has provided
a written statement
that no medical care will be authorized pending
determination of compensability. In the latter case the
employee must be notified of his or her right to
self-procure treatment.
The Claims Administrator is the final judge of
compensability and the role of the HCO and the Primary
Treating Physician has been discussed in other sections.
It is usual and customary for the first evaluation and
treatment session to be paid by the workers' compensation
insurance in non-compensable cases. All other
non-compensable encounters are usually charged to the
patient/Employee Benefits Insurer by the provider of
service. This may be customized per agreement with the
employer or other parties.
The claim payor agrees to notify the HCO, as soon as is
practical, as to any delay in decision or denial (for
non-medical reasons) and to provide the HCO with
verification that the employee has been made aware of
their right to self procure treatment. This information
shall be forwarded to the HCO in a mutually agreeable
electronic format.
7. The Claims Administrator represents and warrants that none
of the activities of the HCO under this Agreement
constitute violation of any agreement of confidentiality
between the Claims Administrator and any individuals or
other parties.
8. The Claims Administrator agrees to defend, indemnify, and hold harmless
the HCO against any and all suits, claims, damages, losses, and expenses,
including attorney's fees arising out of the Claims Administrator's decisions
regarding reimbursements, the management of Return to Work issues and ADA
(Americans with Disabilities Act) exposures or its disclosure of confidential,
personally identifiable and/or medical record information. Notwithstanding the
foregoing, the Claims Administrator shall not be responsible for any suits,
claims, damages, losses, or expenses, including attorney's fees, arising from a
judgment based on a final decision by a court of competent jurisdiction where
liability is based on the HCO's negligence or willful misconduct.
9. The Claims Administrator shall make available to HCO specific claim
information (including but not limited to that specified in Exhibit A, Section
C, Exhibit F and Exhibit H), which is a required reporting task by the Division
of Workers' Compensation. This data will be reported to the HCO for each month
no later than the 15th calendar day of the succeeding month. The HCOs will do a
quality control review of the data and notify the Claims Administrator of any
missing, incomplete or incorrect data. The Claims Administrator will correct and
return the file(s) pertaining to any month no later than the last day of the
succeeding month. If the original data or the corrected data is not provided by
the above specified dates, then the Claims Administrator will be responsible for
any fines or late fees imposed by the State due to the late or improper delivery
of the required data. The HCO and the Claims Administrator will coordinate
access to the Claims Admnistrator's data processing system to make the
information required under this section available to the HCO, all in accordance
with applicable law.
D. Terms of Agreement
1. This Agreement will commence on December 18, 2000 and will
be extended annually unless terminated earlier by the
Claims Administrator or the HCO as outlined in Paragraph 2
of this Section, or written notice of termination is given
by either party by giving the other party at least thirty
(30) days written notice prior to the effective date of
termination.
2. This Agreement may be terminated as follows:
a. The HCO may terminate the Agreement for any Event of
Default immediately upon written notice
to the Claims Administrator.
b. The Claims Administrator may terminate this Agreement
as set forth on Section E, paragraph 6,
Events of Default.
3. Notwithstanding the Termination or Expiration of this
Agreement the Claims Administrator will remain fully
liable to the HCO for all charges and fees due in
accordance with the terms and provisions of this Agreement
with respect to services performed before such
termination.
4. Statutory Span of Control: The services of the HCO
described in Exhibit A will apply to each workers'
compensation claim accepted by the Claims Administrator
for the duration of the statutory span of control
permitted under the Labor Code 4600.3 and under subsequent
regulations adopted by the Department of Workers'
Compensation pursuant to this section. This provision
applies to all claims under management by the HCO at the
cancellation of this Agreement or unless such cancellation
is enforced under the Default or impossibility of
Performance provisions of this Agreement.
E. General Provisions
1. Notices. Any notice required hereunder shall be in writing and shall be
deemed delivered when mailed, postage prepaid, by registered or certified mail,
return receipt requested, to the following addresses:
Addresses for the HCO: Address for the Claims Administrator
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Sierra Health and Life Insurance Company California Indemnity Insurance Company
Attn: President Attn: President
2720 North Tenaya Way 2716 North Tenaya Way
Las Vegas, Nevada 89128 Las Vegas, Nevada 89128
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2. Impossibility of Performance. Neither party shall be deemed
to be in violation of this Agreement if they are prevented
from performing any of their obligations hereunder for any
reason beyond their control, including, without limitation,
acts of God or statutes, regulations, rules or actions of
any federal, state, or local government, or any agency
thereof. Further, the HCO shall not be in violation of this
Agreement if it is precluded from fulfilling its obligations
hereunder as a result of the failure of any employer(s), the
Claims Administrator, or any Enrollee(s) or other service
vendor to the plan of workers' compensation to cooperate
fully with the HCO's reasonable requests for information or
if incorrect or incomplete information is provided to the
HCO by any employer(s), an Enrollee, the Claims
Administrator or any other person or entity.
3. Governing Law. This Agreement shall be governed by the laws of the State
of California and all of the terms and provisions hereof, and the rights and
obligations of the parties hereto shall be construed and enforced in accordance
with the laws thereof.
4. Invalid Provisions. In the event that one or more provisions contained
herein shall be invalid or held unlawful under any applicable state or federal
law, this instrument shall be construed as if such invalid provisions had not
been inserted, and the balance of this Agreement shall remain in full force and
effect. In the event that any portion of the underlying statutes or regulations
which govern the formation of and operation of Health Care Organizations in
California shall be found invalid by final order by a court with competent
jurisdiction, if such determination does not fatally impair the provision of the
services described in Exhibit A or elsewhere in this Agreement, this Agreement
shall be construed as if the invalid statute or regulation had not been included
and the balance of the Agreement shall remain in full force and effect.
5. Limitation of Liability. The HCO makes no representation
that any employer's plan of workers' compensation is
authorized to insure or self-insure its workers'
compensation obligations. It is the responsibility of the
employer(s), the Claims Administrator, and the insurance
carrier, if one is present, to obtain all necessary
authorizations from government authorities. The Claims
Administrator agrees that it is responsible to fund claim
payments or to determine that such funding ability exists.
The HCO is not an insurance company and this Agreement is
not a contract of insurance.
In the event that the HCO should fail to materially
perform its duties hereunder and if such failure is not
corrected within thirty (30) days after written notice by
the Claims Administrator to the HCO of such failure, then
the Claims Administrator may terminate this Agreement
immediately upon written notice to the HCO. The foregoing
is in lieu of all other warranties, expressed or implied
(including warranties of merchantability and fitness for a
particular purpose) and all liability for special,
indirect, or consequential damages, including lost
profits, even if the HCO has been advised of the
possibility of such damages.
6. Events of Default. Each of the following events will
constitute an Event of Default.
a. The failure of the Claims Administrator to make any payment of charges
or fees within five (5) days after the due date or the date of receipt of the
invoice, whichever is later; or
b. The failure of the Claims Administrator to perform or
satisfy the requirements of any condition, obligation
or provision under this Agreement and such failure is
not corrected by the Claims Administrator with thirty
(30) days after written notice by the HCO to the
Claims Administrator of such failure; or
c. The failure of the Claims Administrator to correct repetitive
performance deficiencies; or
d. The Claims Administrator becomes insolvent or is unable to pay its debts
as they become due or the Claims Administrator is declared bankrupt or
insolvent, or if a debtor relief proceeding has been brought by or against it;
or
e. The Claims Administrator loses its authority to act as
a TPA for qualified self-insurers or is placed under
receivership or other legal action by the State of
California.
7. Sole Benefit. This Agreement is for the sole benefit of the parties and
in no event shall this Agreement be construed to be for the benefit of any third
party, and the HCO will not be liable for any loss, liability, damages, or
expense to any person not a party to this Agreement.
8. Assignment. No assignment by either party of this
Agreement will be valid without the written consent of the
other party, which consent will be reasonably given.
Notwithstanding the foregoing, the HCO may at any time
assign its rights and delegate its duties hereunder to any
of its affiliated companies, to the extent that such
assignment is permitted under the laws and regulations
governing the operation of Health Care Organizations.
9. Failure of Enforcement. The HCO's failure to enforce at
any time any of the provisions of this Agreement, or to
exercise any option which is herein provided, or to
require at any time performance by the employer(s) or the
Claims Administrator of any of the provisions hereof, will
in no way be construed to be a waiver of such provisions,
or in any way affect the validity of this Agreement or any
part thereof, the HCO's right to thereafter enforce each
and every provision of this Agreement, or to exercise any
right or remedy available to the HCO under applicable law.
10. Legal Agreement. If any provision of this Agreement is
found to be unenforceable by a final order of a court of
competent jurisdiction, the provision so affected will be
limited only to the extent necessary to permit compliance
with the minimum legal requirement, and all such other
provisions of this Agreement will continue in full force
and effect.
11. Amendments. This Agreement may be amended by the parties at any time so
long as each amendment is in writing and signed by an authorized officer of
both parties.
12. Entire Contract. This Agreement and the Exhibits attached constitute
the entire contract between the parties and shall not be amended except by a
written instrument signed by both parties. This agreement supersedes all other
agreements, whether written or oral, between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate by their respective officers only authorized to do so as of
the day and year noted below.
Sierra Health and Life Insurance Company
By_______________________________ Dated: January 19, 2001
Jonathon W. Bunker
Title: President
California Indemnity Insurance Company
(and its wholly-owned subsidiaries)
By s/Kathleen M. Marlon Dated: January 19, 2001
--------------------
Title: President and
Chief Executive Officer