EXHIBIT 10.3
SETTLEMENT AGREEMENT AND RELEASE
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I. PARTIES
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This Settlement Agreement ("Agreement") is entered into by and among:
A. The United States of America, acting through the United States
Department of Justice and the United States Attorney's Offices for the Districts
of Massachusetts and the Southern District of Florida("DOJ") and on behalf of
(1)the Department of Health and Human Services ("HHS") through its Office of
Inspector General ("OIG-HHS") (2) the United States Department of Defense
through its TRICARE Support Office ("TSO") (formerly the Office of Civilian
Health and Medical Program of the Uniformed Services ("OCHAMPUS")), a field
activity of the Office of the Secretary of Defense, through counsel, (3) the
Office of Personnel Management ("OPM"), acting through the Director of Programs,
and (4) the United States Department of Veteran Affairs ("VA"), through counsel
(collectively the "United States");
B. Fresenius Medical Care Holdings, Inc. (d/b/a Fresenius Medical Care
North America) ("FMCH"), NMC Homecare, Inc., formerly known as National Medical
Care Home Care Division, Inc. ("NMC Homecare"), and National Medical Care, Inc.
("NMC"); and
C. Ven-A-Care of the Florida Keys, Inc., of Key West, Florida, by and
through its principal directors and officers Zachary T. Bentley, Luis E. Cobo,
and T. Mark Jones,
(collectively "Ven-A-Care"), and Dana R. Austin ("Austin") (collectively the
"Relator" or the "Relators").
Collectively all of the above will be referred to as "the Parties."
II. PREAMBLE
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A. WHEREAS, at all relevant times, NMC was in the business of providing
dialysis and related services to patients with End-Stage Renal Disease ("ESRD")
throughout the United States. Medicare coverage was available to certain persons
without regard to their age, who had ESRD, an irreversible and permanent
impairment of kidney function requiring dialysis or kidney transplantation to
sustain life. NMC, through NMC Homecare, provided, among other services,
infusion therapies to patients of dialysis facilities owned or operated by NMC
(hereafter "BMAs") and patients of independent dialysis facilities not owned or
operated by NMC (hereafter "non BMAs"). Among the infusion therapies provided
were parenteral and enteral nutrition ("PEN"), including: (i) intradialytic
parenteral nutrition ("IDPN"), a form of parenteral nutrition administered to
dialysis patients during their hemodialysis sessions, i.e., typically three
times per week as part of the dialysis process without the need for insertion of
an additional catheter; and (ii) intraperitoneal parenteral nutrition ("IPN"), a
form of parenteral nutrition administered to patients during peritoneal
dialysis. IDPN and IPN will be referred to collectively herein as IDPN.
B. WHEREAS, the United States contends that NMC and NMC Homecare submitted
or caused to be submitted claims for payment for IDPN solutions, equipment and
supplies to:
(1) the Medicare Program ("Medicare"), Title XVIII of the Social
Security Act, 42 U.S.C. (S)(S) 1395-1395ddd (1997), which is administered by
HHS;
(2) the TRICARE Program (also known as the Civilian Health and Medical
Program of the Uniformed Services ("CHAMPUS")), 10 U.S.C. (S)(S) 1071-1106,
which is administered by the Department of Defense through TSO;
(3) the Federal Employees Health Benefits Program ("FEHBP"), 5 U.S.C.
(S)(S) 8901-8914, which is administered by OPM;
(4) the VA Program, 38 U.S.C. (S)(S) 1701-1743, which is administered
by the VA;
(5) the Railroad Retirement Medicare Program ("Railroad Medicare"),
established under the Railroad Retirement Act of 1974, 45 U.S.C. (S)(S) 231-
231v, which is paid from the Medicare Trust Fund and administered by the United
States Railroad Retirement Board ("RRB"); and
(6) the Medicaid programs, 42 U.S.C. (S)(S) 1396-1396v (1997), of all
50 States and of the District of Columbia ("the Participating States") and of
the Territory of Puerto Rico ("the Participating Territory").
C. WHEREAS, the United States alleges that:
(1) Medicare (and Railroad Medicare) covered IDPN under certain
conditions as part of Medicare's PEN program under the prosthetic device benefit
of the Social Security Act by virtue of
and pursuant to a 1984 National Coverage Determination by HCFA, known as Section
65-10;
(2) IDPN was a covered service only if the patient suffered from a
severe pathology of the alimentary tract which did not allow absorption of
sufficient nutrients to maintain weight and strength commensurate with the
patient's general condition;
(3) for IDPN to be a covered service, Medicare required that a
physician order or prescribe the IDPN in writing and that the claim be supported
by sufficient medical documentation to permit an independent conclusion that the
requirements of Medicare's prosthetic device benefit were met;
(4) Coverage of IDPN had to be approved on an individual case-by-case
basis initially and at periodic intervals by the designated Medicare carrier's
medical consultant or specially trained staff relying on such medical or other
documentation as the carrier may require;
(5) Medicare did not provide coverage for IDPN prescribed by a
physician to treat malnutrition unless such malnutrition resulted from a severe
and permanent pathology of the alimentary tract satisfying the standards of the
Medicare prosthetic device benefit. Medicare also did not permit coverage if
IDPN was a nutritional "supplement;"
(6) if these coverage criteria were met, then the related supplies and
equipment to administer the parenteral nutrition solutions were also covered so
long as they were reasonable and medically necessary;
(7) NMC Homecare usually submitted a claim for reimbursement to the
designated Medicare carrier each month for each Medicare beneficiary on IDPN and
on the claim NMC Homecare sought separate reimbursement for the IDPN solutions,
and for some but not necessarily all times in the period May, 1988 through
December 31, 1998, also sought reimbursement for: (a) rental of a pole from
which to hang the bag containing the solution; (b) rental of an infusion pump;
and (c) an administration kit, which was to cover the disposable supplies used
to administer IDPN; and
(8) NMC Homecare provided IDPN to patients both in BMAs and in non
BMAs.
D. WHEREAS, the United States alleges that when Medicare (or Railroad
Medicare) covered IDPN claims for ESRD patients, Medicare in general paid 80% of
the Medicare allowed amount on a given patient. Where a patient was also
entitled to secondary coverage under FEHBP or the Medicaid programs, those
programs typically paid amounts in addition to the amounts paid by Medicare.
E. WHEREAS, the United States alleges that for ESRD patients covered by
CHAMPUS using the Medicare coverage criteria for IDPN, CHAMPUS typically paid
80% of the CHAMPUS allowed amount for IDPN, and for ESRD patients covered by the
VA, the VA typically paid the VA allowed amount for IDPN.
F. WHEREAS, NMC Homecare has entered into an agreement (the "Homecare Plea
Agreement") to plead guilty on or before January 19, 2000, or such other date as
may be determined by the Court,
to Count One of an Information in United States of America v. NMC Homecare,
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Inc., LIFECHEM, INC., and NMC Medical Products Division, Inc., Criminal Action
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No. [to be assigned] (District of Massachusetts) (the "Criminal Action"). That
Count alleges a violation of Title 18, United States Code, Section 371, namely a
conspiracy to defraud the United States by impeding, impairing, obstructing and
defeating the lawful governmental function of various departments and agencies
of the United States in the execution and administration of various federal
health care and health insurance programs, including Medicare's PEN benefit
program.
G. WHEREAS, the United States contends that it has certain civil claims
against NMC Homecare and NMC, and against FMCH as parent, for violating the
federal statutes and/or common law doctrines specified in Paragraph 11 below, in
connection with the following conduct with respect to their IDPN program for
dates of service beginning as early as May, 1988 and continuing through December
31, 1998 (hereinafter referred to as the "Covered Conduct").
(1) For dates of service beginning as early as May, 1988, NMC Homecare
submitted claims for IDPN under Medicare. Of these submitted claims, and varying
in proportion by time period, some for dates of service through December 31,
1998 were paid for by Medicare through its designated carrier(s) (the "Paid
Claims"), and some were denied and not paid by Medicare through such carrier(s).
(2) A substantial portion of these submitted claims contained or were based
on false, fraudulent, and misleading statements, and/or material omissions,
relating to the patient's medical condition and history, eligibility for
coverage by Medicare and other federal and state payers, appropriate billing
codes, place of service designations, and charges. A substantial portion of the
patients on whose behalf these claims were submitted did not, in fact, meet
Medicare or other applicable coverage or billing criteria for IDPN.
(3) NMC Homecare typically pursued administrative appeals of initial claim
denials at the carrier, the Office of Hearings and Appeals of the Social
Security Administration ("OHA"), and/or the Departmental Appeals Board of HHS
("Appeals Board or Council"). In connection with those appeals, NMC Homecare
made false, fictitious and fraudulent statements, and/or material omissions both
in the claim forms and in supporting documents, forms and otherwise. On many
occasions, NMC Homecare was successful in its appeal and was paid for the claim.
On many other occasions NMC Homecare withdrew claims from appeal because it had
concluded the patient did not meet Medicare coverage criteria. When it did so,
however, NMC Homecare failed to repay to Medicare or other federal or state
payers funds it had received relating to that patient, on other earlier IDPN
claims which had been paid.
(4) For IDPN dates of service beginning as early as May 1988 and continuing
through December 31, 1999, NMC has performed IDPN services and provided supplies
and equipment to Medicare
beneficiaries and has claims for such services, supplies and equipment, for
which it has not been paid by HCFA ("the Unpaid Claims").
(5) The United States contends that a substantial portion of the Paid
Claims and the Unpaid Claims contain false or fraudulent statements and/or
material omissions. The United States further contends that a substantial
portion of the patients at issue in those claims do not in fact meet the
Medicare coverage and billing criteria for IDPN.
(6) For dates of service beginning as early as May, 1988 and continuing
through December 31, 1998, NMC Homecare submitted or caused to be submitted IDPN
claims to other federal and state payers (besides Medicare). The United States
contends that a substantial portion of those claims contained false or
fraudulent statements. The United States further contends that a substantial
portion of the patients at issue did not in fact qualify for IDPN coverage under
the conditions and criteria required under those respective programs.
(7) In addition, from at least May, 1988 through approximately July, 1992,
NMC Homecare submitted to Medicare and other federal and state payers, claim
forms that were false or fraudulent because they: (a) billed for 30 or 31
administration kits per month for each IDPN patient on service despite the fact
that NMC Homecare only used at most 12 to 13 administration kits for each IDPN
patient on service throughout the month, and used even fewer kits for patients
who were on service only part of the month; and (b) billed using HCPCS codes
which were inapplicable
to the kits supplied by NMC Homecare and provided higher reimbursement than the
applicable HCPCS code.
(8) From at least May, 1988 through approximately July, 1992, NMC Homecare
submitted to Medicare and other federal and state payers, claims that were false
or fraudulent because they billed for an IV pole for each IDPN patient each
month in a dialysis facility when such poles were not reasonable and medically
necessary to the administration of IDPN since poles adequate for the
administration of IDPN were available without additional cost to NMC and the
dialysis facilities, and when such poles were not, in fact, always delivered to
the facility.
(9) From at least May, 1988 through approximately June, 1996, NMC Homecare
submitted to Medicare and other federal and state payers, claims that were false
or fraudulent because they billed for an infusion pump for each IDPN patient on
service each month at the dialysis facility when such pumps were not reasonable
and medically necessary to the administration of IDPN since pumps adequate for
the administration of IDPN were available without additional cost to NMC and the
dialysis facilities, and when such pumps were not, in fact, delivered to the
facility.
(10) At various times from at least May, 1988 through December 31, 1998,
NMC Homecare offered and paid BMAs and nonBMAs an administration fee, bag fee,
or hang fee ("hang fee"), which hang fee purported to compensate the dialysis
facility for the services and resources it devoted to administering and managing
each administration of IDPN. NMC Homecare also offered and paid
to facilities or the professional employees, medical directors, officers, and
directors, other forms of remuneration, including but not limited to educational
grants, in return for the referral of IDPN business. Some or all of these hang
fees and/or other forms of remuneration were paid for the purpose of inducing
referrals for IDPN services to be paid by Medicare and others within the meaning
of the Medicare Anti-Kickback Act, 42 U.S.C. (S) 1320a-7b(b)(1)(A). NMC Homecare
and NMC submitted or caused to be submitted claims to the Medicare program and
to other federal and state payers for patients at facilities receiving hang fees
and/or other forms of remuneration. The United States contends these claim were
false or fraudulent because, regardless of whether the patient met Medicare or
other applicable coverage criteria for IDPN, the services were unlawfully
induced by kickbacks.
H. WHEREAS, the United States contends that the practices described in
Preamble Paragraph G above resulted in the submission of false and/or fraudulent
claims actionable under the False Claims Act, 31 U.S.C. (S)(S) 3729-3733, to the
Medicare, Railroad Medicare, TRICARE, FEHBP and VA programs and the Medicaid
programs of the Participating States and the Participating Territory.
I. WHEREAS, the United States also contends that it has certain
administrative claims against NMC Homecare and NMC, and against FMCH as parent,
under the provisions for permissive exclusion from the Medicare, Medicaid and
other federal health care programs, 42 U.S.C. (S) 1320a-7(b), and the provisions
for
civil monetary penalties, 42 U.S.C. (S) 1320a-7a, for the Covered Conduct
described in Preamble Paragraph G.
J. WHEREAS, with the sole exception of the guilty plea entered by NMC
Homecare in the Criminal Action, and the statements regarding the Unpaid Claims
contained in the Preamble Paragraph G(4) above, NMC Homecare, NMC and FMCH
specifically deny and affirmatively contest the allegations of the United States
in Preamble Paragraphs G and H and the allegations of the Relators in the Civil
Actions referenced in Paragraphs K and L below, and specifically deny any
wrongdoing in connection with those claims; and further contend that NMC
Homecare's practices referenced in Preamble Paragraph G(10), were appropriate
and lawful and did not result in any violations of federal law, state law, or
common law doctrines; and further contend that the allegations of the United
States in Preamble Paragraph G(10) do not constitute violations of the False
Claims Act, 31 U.S.C. (S)(S) 3729-33, as a matter of law, and do not give rise
to any civil or administrative cause of action; and further contend that
Medicare is required to pay NMC Homecare virtually all of the amount identified
with respect to the Unpaid Claims because such services were performed, the
supplies and equipment were provided, and the patients at issue in those claims
met the Medicare coverage criteria for IDPN.
K. WHEREAS, Relator Ven-A-Care has filed under seal two qui tam complaints
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on behalf of the United States: United States of America ex rel. Ven-A-Care of
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the Florida Keys, Inc. v. National Medical Care, Inc., National Medical Care
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Inc. Homecare Division,
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Inc., W.R. Grace and Company (a New York corporation), and W.R. Grace and
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Company-Conn. (a Connecticut corporation), Civil Action No. 97-10962-NG (D.
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Mass.), originally filed as Civil Action No. 94-1234 (S.D. Fla.) in June, 1994
and transferred to D. Mass. in April - May, 1997; and United States of America
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ex rel. Ven-A- Care of the Florida Keys, Inc. v. Fresenius Medical Care
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Holdings, Inc. (f/k/a W.R. Grace and Company), National Medical Care, Inc., and
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National Medical Care Homecare Division, Inc., Civil Action No. 97-11033-NG (D.
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Mass.), originally filed as Civil Action No. 94-1897 (S.D. Fla.) in September
1994 and transferred to D. Mass. in April - May 1997. These shall be referred to
as the "Ven-A-Care Civil Actions." NMC Homecare, NMC and FMCH specifically deny
any and all allegations contained in those qui tam Complaints and/or Amended
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Complaints.
L. WHEREAS, Relator Austin filed under seal a qui tam action on behalf of
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the United States on or about November 1, 1994: United States of America ex rel.
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Dana R. Austin and Dana R. Austin v. National Medical Care, Inc., Civil Action
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No. 94-12164- NG (D. Mass.). This shall be referred to as the "Austin Civil
Action." NMC Homecare, NMC, and FMCH specifically deny any and all allegations
contained in Austin's qui tam Complaint and Amended Complaint.
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M. WHEREAS, in order to avoid the delay, uncertainty, inconvenience and
expense of protracted litigation of these claims, and the contentions of NMC
regarding the Unpaid Claims, the Parties reach a full and final compromise for
the Covered Conduct pursuant to the Terms and Conditions set forth below.
III. TERMS AND CONDITIONS
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NOW, THEREFORE, in reliance on the representations contained herein and in
consideration of the mutual promises, covenants, and obligations in this
Agreement, and for good and valuable consideration, receipt of which is hereby
acknowledged, the Parties agree as follows:
1. NMC and FMCH, collectively, agree to pay to the United States and the
Participating States, collectively, to resolve civil liabilities, the sum of two
hundred fifty three million three hundred thirty four thousand five hundred
ninety four dollars ($253,334,594)(the "Settlement Amount"), and this sum shall
constitute a debt immediately due and owing to the United States on the "First
Payment Date," which is the later of the dates on which (a) the four civil
Settlement Agreements are fully executed by the Parties, (b) all notices of
dismissal described in the civil Settlement Agreements are docketed by the
Court, or (c) the Court accepts LIFECHEM, INC.'s, NMC Medical Products, Inc.'s,
and NMC Homecare's guilty pleas and imposes the sentences set forth in their
respective Plea Agreements. NMC and FMCH, collectively, shall pay the Settlement
Amount to the United States according to the schedule terms, and instructions
contained in the Promissory Note executed contemporaneous with this Agreement,
attached as Exhibit A, and incorporated herein by reference. Within a reasonable
time after receipt of the first payment from NMC and FMCH on the First Payment
Date, the United States shall pay to the Participating States, collectively,
according to written payment instructions from the Participating
States, an amount of four million eighty one thousand nine hundred fifty-one
dollars ($4,081,951) as their share of the Settlement Amount, and to the
Participating Territory, according to written payment instructions from that
Territory, an amount of one hundred ninety-four thousand two hundred twenty
eight dollars ($194,228) as its share of the Settlement Amount.
2. As an express condition of the Settlement Agreement, to secure NMC's
and FMCH's payment obligations under Paragraph 1 of this Agreement (and the
other civil Settlement Agreements and criminal Plea Agreements being executed
contemporaneously):
a. NMC and FMCH shall procure from the Bank of Nova Scotia and deliver or
cause to be delivered to the United States Attorney's Office for the District of
Massachusetts, on or before January 19, 2000, an amendment to the unconditional,
irrevocable Letter of Credit No. S020/43695/96 issued to the United States of
America on September 27, 1996 (the "Letter of Credit") to increase the amount of
the Letter of Credit to $189,634,446.00. Such amendment shall be in the form
attached as Exhibit B. Within 10 days of receipt by the U.S. Attorney's Office
of written confirmation from the transferring bank that a quarterly payment, as
described in Paragraphs 1.B. through 1.E. of the Promissory Note, or prepayment
of such quarterly payments, has been made to the United States, the United
States shall provide written permission to the Bank of Nova Scotia to reduce the
amount available for drawing under Letter of Credit No. S020/43695/96 by the
amount of the principal payment received. In the event that the entire
outstanding payment obligation
secured by the Letter of Credit is prepaid, then the United States shall provide
written permission to reduce the amount available for drawing to zero. The
United States shall return this Letter of Credit for cancellation when all
obligations are paid in full or it is determined, by the United States, or
pursuant to a final and non-appealable order of a court of competent
jurisdiction, that NMC and FMCH have fulfilled all payment obligations pursuant
to this Agreement.
b. On January 19, 2000, NMC and FMCH shall establish an escrow account in
an initial amount of $236,401,919.00 to be held by an independent third party
agreeable to the United States, and NMC and FMCH shall increase the escrow
amount each day in an amount of $48,546.00 (through accrued interest and/or
deposits), beginning on January 20, 2000 and continuing through April 15, 2000,
when NMC and FMCH shall increase the escrow amount by an additional amount each
day of $7,271.00 (through accrued interest and/or deposits), for each quarterly
payment due before the first payment is due on the First Payment Date. On the
First Payment Date, all funds in the escrow account shall be paid to the United
States to satisfy the payment obligation in Paragraph 1. The terms and
conditions of this escrow account shall in no way limit NMC's and FMCH's payment
obligations to the United States secured by the Letter of Credit.
3. NMC and FMCH are in default of this Agreement on the date of occurrence
of any of the following events ("Events of Default"):
a. Failure by NMC and FMCH to procure, deliver or maintain the
Letter of Credit;
b. Failure by NMC and FMCH to pay any amount provided for in the
Promissory Note attached as Exhibit A within two days of when such payment is
due and payable;
c. If prior to making the full payment of the amount due under the
Promissory Note (i) NMC and/or FMCH commences any case, proceeding, or other
action (A) under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have any order for relief of debtors, or seeking
to adjudicate NMC and/or FMCH as bankrupt or insolvent, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for NMC
and/or FMCH or for all or any substantial part of NMC and/or FMCH's assets; or
(ii) there shall be commenced against NMC and/or FMCH any such case, proceeding
or other action referred to in clause (i) which results in the entry of an order
for relief and any such order remains undismissed, or undischarged or unbonded
for a period of thirty (30) days; or (iii) NMC and/or FMCH takes any action
authorizing, or in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth above in this sub-paragraph;
d. NMC and FMCH fail to comply with their obligations under
Paragraph 9 below; or
e. NMC and FMCH fail to establish, maintain, or make the required
payments to the escrow account described in Paragraph 2.b.
4. If payments due under Paragraph 1 are received late, but within the
two day grace period provided in Paragraph 5.b. of the Promissory Note, interest
incurred during such grace period will be assessed at two times the daily amount
in effect on the date the payment was due.
5. NMC and FMCH shall provide the United States with written notice of
any such Event of Default, within two (2) business days of such event by
providing written notice by overnight mail or facsimile followed by overnight
delivery, to the United States Attorney's Office, District of Massachusetts, One
Courthouse Way, Suite 9200, Boston, MA 02210, Attention: Suzanne E. Durrell,
Assistant U.S. Attorney (or to the attention of such other person as may be
designated in writing by the United States Attorney's Office).
6. Immediately upon the occurrence of an Event of Default, without
further notice or presentment and demand by the United States:
a. The Settlement Amount plus accrued interest through the end of
the applicable quarter as set forth in Paragraph 1 of the Promissory Note (minus
any payments to date of principal and accrued interest) shall become immediately
due and payable ("Settlement Default Amount"). Interest shall be calculated on
the Settlement Default Amount at the Prime Rate as published in the Wall Street
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Journal on the Effective Date of this Agreement (as defined in Paragraph 38),
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plus 5% from the date of the Event of Default.
b. In addition, NMC and FMCH will pay the United States all
reasonable costs of collection and enforcement of this Agreement, including
attorneys' fees and expenses, plus interest as described in subparagraph 6.a.
above. The Settlement Default Amount, plus interest, described in subparagraph
6.a. above, together with the costs of collection and enforcement described in
this subparagraph, will be referred to as the "Default Obligation".
7. Upon the occurrence of an Event of Default, the United States may
exercise, at its sole option, one or more of the following rights:
a. The United States may draw the full amount available for drawing
under the Letter of Credit and retain all proceeds thereof.
b. The United States may enforce the terms of the Guarantee
Agreement between the United States of America, Fresenius Medical Care GMBH, a
German corporation, and the predecessor of Fresenius Medical Care AG, W.R. Grace
& Co., a New York corporation, and National Medical Care, Inc., dated July 31,
1996, attached as Exhibit C.
c. The United States may withhold any payment due to NMC and FMCH on
the Unpaid Claims and credit such payment to the payment obligations of NMC and
FMCH in Paragraph l;
d. The United States retains any and all other rights and remedies
it has or may have under law and equity.
e. No failure or delay on the part of the United States to exercise
any right or remedy shall operate as a waiver
of the United States' rights. No single or partial exercise by the United States
of any right or remedy shall operate as a waiver of the United States' rights.
8. In an Event of Default under Paragraph 3.c.(Commencement of Bankruptcy
or Reorganization Proceeding):
a. NMC and FMCH agree not to contest or oppose any motion filed by
the United States seeking relief from or modification of the automatic stay of
11 U.S.C. (S) 362(a); not to seek relief under 11 U.S.C. (S) 105 to enjoin or
restrain the United States from recovering monies owed by NMC and FMCH arising
out of this Agreement or the attached Promissory Note, or from recovering monies
through presentment against the Letter of Credit. NMC and FMCH recognize that
this express waiver is in consideration for the settlement of claims by the
United States described in Paragraph H above, under the terms and conditions
contained in this Settlement Agreement.
b. By expressly waiving the automatic stay provision, NMC and FMCH
agree not to oppose or interfere with any motion made in federal court
(including bankruptcy courts) by the United States to exclude NMC Homecare from
participation in the Title XVIII (Medicare), Title XIX (Medicaid) programs, and
other federal health care programs;
c. This Agreement shall be voidable at the sole option of the United
States;
d. If any term(s) of this Agreement are set aside for any reason,
including as a result of a preference action brought pursuant to 11 U.S.C. (S)
547, the United States, at its sole
option and in its discretion, may rescind all terms of this Agreement and seek
recovery of the full amount of claims and allegations identified herein and in
the Civil Actions, or, in the alternative, enforce the remaining terms of this
Agreement. In the event of rescission of this Agreement, all Parties reserve all
rights, claims, and defenses that are available under law and equity as of the
Effective Date of this Agreement; and
e. In addition to the rights enumerated in Paragraph 7.a. through
7.e. above, the United States and all other Parties shall retain all rights and
claims they have or may have under law and equity.
9. Within 30 days after the First Payment Date, NMC Homecare, NMC, FMCH,
and the NMC Companies shall take all reasonable steps that the United States
Attorney's Office for the District of Massachusetts, acting on behalf of OHA,
the Appeals Council, HCFA, the DMERCs and HHS-OIG, may deem necessary, to
dismiss with prejudice or withdraw with prejudice, or effect the dismissal with
prejudice or withdrawal with prejudice, of any of the Unpaid Claims, and any and
all other IDPN claims or appeals in which NMC Homecare, NMC, FMCH, or the NMC
Companies have an interest, for dates of service through December 31, 1999,
including without limitation all claims pending before Administrative Law Judge
Stewart.
NMC Homecare, NMC, FMCH and the NMC Companies further agree that they shall
release and disclaim any further right, interest, or remedy with respect to
these Unpaid Claims and to any other unpaid IDPN claims with dates of service
through December 31, 1999; that they will use their best efforts to promptly
refund to the DMERCs, and notify the United States Attorney's Office for the
District of Massachusetts, HCFA, and HHS-OIG of any payments received after
December 31,
1999 from HCFA pertaining to the Unpaid Claims; and that they will notify the
United States Attorney's Office for the District of Massachusetts, HCFA and HHS-
OIG, of any notice or action by the DMERCs, OHA and/or the Medicare Appeals
Council concerning any review or consideration of any Unpaid Claims.
NMC Homecare, NMC, FMCH, and the NMC Companies further agree to terminate
the proceedings currently pending before ALJ Stewart captioned "In the Matter of
NMC Homecare, Inc.", and agree not to use the record, evidence and/or testimony
from that proceeding in any future appeals or reviews of IDPN Medicare claims or
in any judicial or administrative proceeding involving IDPN to which HCFA is a
party or in which it has an interest.
10. In consideration for NMC Homecare, NMC, the NMC Companies, and FMCH's
obligations under this Agreement, and in compromise of NMC's contentions that
HCFA is required to pay to NMC Homecare virtually all of the Unpaid Claims, the
United States shall pay to NMC and FMCH collectively the principal sum of
$59,150,766 (the "Unpaid Claims Settlement Amount") plus annual interest of 7.5%
compounded quarterly from the First Payment Date of this Agreement. The United
States' obligation to pay the Unpaid Claims Settlement Amount to NMC and FMCH is
contingent upon the United States receiving the Settlement Amount as required by
this Agreement and the Promissory Note attached
hereto as Exhibit A, and upon NMC Homecare, NMC, FMCH, and the NMC Companies
complying with the obligations set forth in Paragraph 9 above. Provided these
contingencies are satisfied, the United States will pay the Unpaid Claims
Settlement Amount plus interest to NMC and FMCH on the following schedule:
$38,394,894 of the principal 30 days after the First Payment Date, plus
interest; and four equal principal payments of $5,188,968, plus interest, 30
days after receipt each of the quarterly payments made by NMC and FMCH under the
Promissory Note. Any such payments by the United States shall be made upon
written payment instructions to be provided to the United States by NMC and
FMCH. NMC intends to deem the resolution of the Unpaid Claims to be a pro rata
denial by HCFA/Medicare.
11. Subject to the exceptions and limitations in Paragraph 12 below, in
consideration of the obligations of NMC Homecare, NMC, FMCH, and the NMC
Companies set forth in this Agreement, conditioned upon payment in full of the
Settlement Amount, subject to Paragraph 33 below (concerning bankruptcy
proceedings commenced within 91 days of any payment under this Agreement), and
subject to the acceptance by the United States District Court for the District
of Massachusetts of NMC Homecare's guilty plea as described in Preamble
Paragraph F, the United States, on behalf of itself, and its officers, agents,
agencies, and departments, will release and will be deemed to have released NMC
Homecare, its parents, including NMC and FMCH, and the subsidiaries of NMC
Homecare, NMC and FMCH listed on the attached Exhibit D (collectively, the
parents and subsidiaries of NMC and
FMCH listed on Exhibit D will be referred to as the "NMC Companies," and the
corporate entities listed on Exhibit D comprise the only entities which
constitute the "NMC Companies" within the meaning of this Agreement), and the
current directors, officers, employees, and agents of the NMC Companies who were
not employed by or in any way affiliated with NMC Homecare, NMC, or NMC's
parents, subsidiaries, divisions, or affiliates at any time prior to September
30, 1996, from any civil or administrative monetary claim (including recoupment
claims) that the United States has or may have under the False Claims Act, 31
U.S.C. (S)(S) 3729-3733; the Program Fraud Civil Remedies Act, 31 U.S.C. (S)(S)
3801-3812; the Civil Monetary Penalties Law, 42 U.S.C. (S) 1320a-7a; or common
law claims for fraud, payment by mistake of fact, breach of contract or unjust
enrichment for the Covered Conduct described in Preamble Paragraph G above with
respect to IDPN claims submitted or caused to be submitted to Medicare, Railroad
Retirement Medicare, TRICARE, FEHBP, the VA, and/or the Medicaid programs of the
Participating States.
12. Notwithstanding any term of this Agreement, the United States
specifically does not release NMC Homecare, the NMC Companies, or any individual
from any and all of the following: (a) any potential criminal, civil or
administrative claims arising under Title 26, U.S. Code (Internal Revenue Code);
(b) any criminal liability; (c) any potential liability to the United States (or
any agencies thereof) for any conduct other than that identified in Preamble
Paragraph G above, including but not limited to any allegations in the Civil
Actions not encompassed
by Preamble Paragraph G; (d) any entities not specifically included on the list
of NMC Companies set forth in Exhibit D, such omitted entities specifically
including, but not limited to, SRC Holdings Company, Inc. (also known as Spectra
Renal Management); (e) any claims based upon such obligations as are created by
this Agreement; (f) except as explicitly stated in this Agreement, any
administrative liability, including mandatory exclusion from Federal health care
programs; (g) any express or implied warranty claims or other claims for
defective or deficient products and services provided by NMC Homecare or
including quality of testing or product claims; (h) any claims for personal
injury or property damage or for other consequential damages arising from the
conduct described in Preamble Paragraph G above; (i) any claims based upon
failure to deliver items or services; (j) any civil or administrative claims
against any individual who was an officer, director, trustee, agent, employee,
or was in any way affiliated with NMC Homecare, NMC, or NMC's parents,
subsidiaries, divisions, or affiliates at any time prior to September 30, 1996;
or (k) any civil or administrative claims against any individual, including
current directors, officers, employees and agents, who is criminally indicted or
convicted of an offense, or who enters a criminal plea related to the conduct
alleged in Preamble Paragraph G above.
13. In compromise and settlement of the rights of OIG-HHS to exclude NMC
Homecare and pursuant to 42 U.S.C. (S) 1320a-7(a)(1), NMC Homecare agrees to be
permanently excluded under this statutory provision from participation in
Medicare,
Medicaid, and all other federal health care programs as defined in 42 U.S.C. (S)
1320a-7b(f). Such exclusion will have national effect and will also apply to all
other Federal procurement and non-procurement programs. Federal health care
programs will not reimburse NMC Homecare and/or any one else for items or
services, including administrative and management services, furnished, ordered
or prescribed by NMC Homecare and in any capacity. NMC Homecare waive any
further notice of this exclusion and agree not to contest such exclusion either
administratively or in any State or Federal court. If NMC Homecare submits or
causes claims to be submitted for services provided while excluded, Homecare is
subject to the imposition of additional civil monetary penalties and
assessments. NMC Homecare further agrees to hold the federal programs, and all
the federal programs' beneficiaries and/or sponsors, harmless from any financial
responsibility for services furnished, ordered or prescribed to such
beneficiaries or sponsors after the effective date of this exclusion. NMC
Homecare specifically waives its rights under any statute or regulation to
payment from the Medicare, Railroad Retirement Medicare, TRICARE, VA, FEHBP or
Medicaid programs for services rendered after the effective date of this
exclusion. This exclusion will be effective upon the date NMC Homecare receives
from the OIG the notice of exclusion.
14. FMCH, on behalf of itself and its affiliates, subsidiaries, and
divisions, including but not limited to NMC, has entered into a Corporate
Integrity Agreement with HHS, which Agreement is incorporated herein by
reference. FMCH will
immediately upon execution of this Agreement implement its obligations under the
Corporate Integrity Agreement.
15. In consideration of the obligations of NMC Homecare, NMC and FMCH set
forth in this Agreement, conditioned upon payment in full of the Settlement
Amount, subject to Paragraph 33 below (concerning bankruptcy proceedings
commenced within 91 days of any payment under this Agreement), and conditioned
upon FMCH's entering into the Corporate Integrity Agreement, the OIG-HHS agrees
to release and refrain from instituting, directing, or maintaining any
administrative claim or any action seeking exclusion from the Medicare, Medicaid
or other Federal health care programs (as defined in 42 U.S.C. (S) 1320a-7b(f))
against the NMC Companies and the current directors, officers, employees, and
agents of the NMC Companies who were not employed by or in any way affiliated
with NMC Homecare, NMC, or any of NMC's parents, subsidiaries, divisions, or
affiliates at any time prior to September 30, 1996, under 42 U.S.C. (S) 1320a-7a
(Civil Monetary Penalties Law) or 42 U.S.C. (S) 1320a-7(b) (permissive
exclusion) for the conduct described in Preamble Paragraph G, except as reserved
in Paragraph 12 above and as reserved in this Paragraph. The OIG-HHS expressly
reserves all rights to comply with any statutory obligations to exclude the NMC
Companies from the Medicare, Medicaid, or other Federal health care programs
under 42 U.S.C. (S) 1320a-7(a)(mandatory exclusion). Nothing in this Paragraph
precludes the OIG-HHS from taking action against entities or individuals for
conduct and practices for which civil claims have been reserved in Paragraph 12
above.
16. In consideration of the obligations of NMC Homecare, NMC and FMCH set
forth in this Agreement, conditioned upon payment in full of the Settlement
Amount, and subject to Paragraph 33 below (concerning bankruptcy proceedings
commenced within 91 days of any payment under this Agreement), TSO agrees to
release and refrain from instituting, directing, or maintaining any
administrative claim or any action seeking exclusion from the TRICARE program
against the NMC Companies and the current directors, officers, employees, and
agents of the NMC Companies who were not employed by or in any way affiliated
with NMC Homecare, NMC or NMC's subsidiaries, divisions, and affiliates at any
time prior to September 30, 1996, under 32 C.F.R. (S) 199.9 for the conduct
described in Preamble Paragraph G, except as reserved in Paragraph 12 above and
as reserved in this Paragraph. The TSO expressly reserves all rights to comply
with any statutory obligations to exclude the NMC Companies from the TRICARE
program under 32 C.F.R. (S)(S) 199.9(f)(1)(i)(A), (f)(1)(i)(B), (f)(1)(i)(D),
and (f)(1)(iii). Nothing in this Paragraph precludes the TSO from taking action
against entities or persons, or for conduct or practices, for which civil claims
have been reserved in Paragraph 12 above.
17. In consideration of the obligations of NMC Homecare, NMC and FMCH as
set forth in this Agreement, conditioned upon payment in full of the Settlement
Amount, and subject to Paragraph 33 below (concerning bankruptcy proceedings
commenced within 91 days of any payment under this Agreement), OPM agrees to
release and refrain from instituting, directing, or
maintaining any administrative claim or any action seeking exclusion from FEHBP
against the NMC Companies and the current directors, officers, employees, and
agents of the NMC Companies who were not employed by or in any way affiliated
with NMC Homecare, NMC or NMC's subsidiaries, divisions, or affiliates at any
time prior to September 30, 1996, under 5 U.S.C. (S) 8902a or 5 C.F.R. Part 970
for the conduct described in Preamble Paragraph G including that in the Civil
Actions, except as reserved in Paragraph 12 above, and except if the NMC
Companies or any individuals are excluded by the Office of Inspector General of
HHS pursuant to 42 U.S.C. (S) 1320a-7(a). Nothing in this paragraph precludes
OPM from taking action against entities or persons, or for conduct and practice
for which civil claims have been reserved in Paragraph 12 above.
18. a. Relator Ven-A-Care agrees that the settlement of the Ven-A-Care
Civil Actions is fair, adequate and reasonable under all the circumstances,
pursuant to 31 U.S.C. (S) 3730(c)(2)(B). On the United States' receipt of the
first payment required by Paragraph 1, Relator Ven-A-Care, for itself, its
current and former directors and officers (including, without limitation,
Zachary T. Bentley, Luis E. Cobo, and T. Mark Jones), and its heirs, successors
and assigns, will release and will be deemed to have released the NMC Companies,
NMC Homecare, NMC, and FMCH and Spectra Laboratories, Inc., SRC Holdings
Company, Inc., Qix, Inc., Spectra Medical Products, Inc., and Spectra
Laboratories Information Services, Inc., and their present and former officers,
directors, employees, counsel, agents, representatives,
heirs, and assigns, from any and all claims that Relator Ven-A-Care has or may
have related to or arising from any and all of the allegations in its Civil
Actions, and the conduct described in Preamble Paragraph G, except claims by
Relator Ven-A-Care for expenses necessarily incurred and attorney's fees and
costs pursuant to 31 U.S.C. (S) 3730(d)(1). If NMC and FMCH default on their
payment obligations under Paragraph 1 above, the release given by Relator Ven-A-
Care shall, at the sole option and discretion of Ven-A-Care upon written notice
to NMC and FMCH, be rescinded.
b. On the United States' receipt of the first payment required by
Paragraph 1, Zachary T. Bentley ("Bentley"), Luis E. Cobo ("Cobo"), and T. Mark
Jones ("Jones"), individually, for themselves, their heirs, successors and
assigns, will release and will be deemed to have released the NMC Companies, NMC
Homecare, NMC and FMCH and Spectra Laboratories, Inc., SRC Holdings Company,
Inc., Qix, Inc., Spectra Medical Products, Inc., and Spectra Laboratories
Information Services, Inc., and their present and former officers, directors,
employees, counsel, agents, representatives, heirs, and assigns, from any and
all claims that Bentley, Jones and/or Cobo has or may have related to or arising
from any and all of the allegations in the Ven-A-Care Civil Actions, and the
conduct described in Preamble Paragraph G, except claims by Relator Ven-A-Care
for expenses necessarily incurred and attorney's fees and costs pursuant to 31
U.S.C. (S) 3730(d)(1). If NMC and FMCH default on their payment obligations
under Paragraph 1 above, the release given by Bentley, Cobo, and
Jones shall, at each's sole option and discretion upon written notice to NMC and
FMCH, be rescinded.
19. Relator Austin agrees that the settlement of the Austin Civil Action
is fair, adequate and reasonable under all the circumstances, pursuant to 31
U.S.C. (S) 3730(c)(2)(B). On the United States' receipt of the first payment
required by Paragraph 1, Relator Austin, for himself, his heirs, successors and
assigns, will release and will be deemed to have released the NMC Companies,
NMC, NMC Homecare, FMCH and Spectra Laboratories, Inc., SRC Holdings Company,
Inc., Qix, Inc., Spectra Medical Products, Inc., and Spectra Laboratories
Information Services, Inc., and their present and former officers, directors,
employees, counsel, agents, representatives, heirs, and assigns from any and all
claims that Relator Austin has or may have related to or arising from any and
all of the allegations in his Civil Action, and the conduct described in
Preamble Paragraph G, with the exception of Relator Austin's claim for expenses
necessarily incurred and attorney's fees and costs pursuant to 31 U.S.C. (S)
3730(d)(1). If NMC and FMCH default on their payment obligations under
Paragraph 1 above, the release given by Relator Austin shall, at his sole option
and discretion, upon written notice to NMC and FMCH, be rescinded.
20. The United States agrees to pay the Relator Ven-A-Care $40,347,463 in
principal, plus 16.2% of any interest paid by NMC and FMCH on the federal share
of the Settlement Amount. The United States agrees to pay the Relator Austin
$4,483,052, in principal, plus 1.8% of any interest paid by NMC and FMCH on the
federal share of the Settlement Amount. The United States will make these
payments to Relators from the amounts paid by NMC and FMCH, and will make the
first payment to each such Relator within 21 days after the First Payment Date,
and subsequent payments to the Relators within 21 days after each additional
payment is received by the United States, by wire transfer to each of the
Relators in accordance with instructions to be provided by each Relator's
counsel. Relators Ven-A-Care and Austin, for themselves individually, and for
their respective heirs, successors, and assigns, will release and will be deemed
to have released and forever discharged the United States from any claims
pursuant to 31 U.S.C. (S) 3730, including 31 U.S.C. (S)(S) 3730(b),(c),(d) and
(d)(l), for a share of the proceeds of their Civil Actions relating to the
Covered Conduct in Preamble Paragraph G above, from any claims for a share of
the Settlement Amount, from any claims for a share of the Unpaid Claims amount
or other denied claims to be withdrawn or released by the NMC Companies in
Paragraph 9 above, and in full settlement of any and all claims that each
Relator has or may have that arise from or relate to any and all of the
allegations in their respective Civil Actions, except Relator Ven-A-Care's
claims regarding Epogen in its Amended Complaint filed in July 1996 in Civil
Action No. 94-1234 (S.D. Fla.), transferred to the District of Massachusetts and
now pending as Civil Action No. 97-10962-NG (D. Mass.). This Agreement does not
resolve or in any manner affect any claims the United States has or may have
against any Relators
Ven-A-Care or Austin arising under Title 26, U.S. Code (Internal Revenue Code),
or any claims arising under this Agreement.
21. After this Agreement is fully executed, the United States and the
Relators will notify the Court that all pertinent Parties have stipulated that,
to the extent alleged in Paragraph G only, the Civil Actions shall be dismissed
with prejudice effective upon receipt by the United States and the Participating
States of the payments described in Paragraph 1 above, pursuant to and
consistent with the terms of this Agreement. The United States and the Relators
will also notify the Court that all pertinent Parties have stipulated that the
remaining claims by the Relators in the Civil Actions, to the extent not alleged
in Preamble Paragraph G, shall be dismissed with prejudice as to the Relators
and without prejudice as to the United States, with the exceptions of: the
Relators' claims for expenses necessarily incurred and attorney's fees and costs
pursuant to 31 U.S.C. (S) 3730(d)(1); and Relator Ven-A-Care's claims regarding
Epogen in its Amended Complaint filed in July 1996 in Civil Action No. 94-1234
(S.D. Fla.), transferred to the District of Massachusetts and now pending as
Civil Action No. 97-10962-NG (D. Mass.), none of which shall be dismissed. The
Parties agree that the United States District Court for the District of
Massachusetts shall maintain jurisdiction of the Civil Actions in the event that
the Plea Agreement referenced in Preamble Paragraph F is not accepted by the
Court, in any Events of Default, in the event of disputes under this Agreement,
and for purposes of the Relators' claims for expenses necessarily incurred and
attorneys' fees and costs.
NMC and FMCH agree that the Relators are entitled to reasonable expenses
necessarily incurred and reasonable attorney's fees and costs and agree to pay
the same.
22. Effective upon the filing and docketing of the notices of dismissal
described in Paragraph 21, and the acceptance by the Court of the Plea Agreement
referenced in Preamble Paragraph F, the NMC Companies, NMC, NMC Homecare and
FMCH, and Spectra Laboratories, SRC Holdings Company, Inc., Qix, Inc., Spectra
Medical Products, Inc., and Spectra Laboratories Information Services, Inc.,
release and will be deemed to have released Ven-A-Care and Austin, individually
and collectively, and the current and former officers, directors, employees,
counsel, agents, representatives, heirs, successors and assigns of Ven-A-Care
from any and all claims that these corporations have or may have related to or
arising from any of the allegations in the Civil Actions, the conduct described
in Preamble Paragraph G, and any matters arising from Relator Austin's
employment with the corporate entities referenced in this Paragraph.
23. NMC Homecare, NMC and FMCH, and the NMC Companies waive and will not
assert any defenses these entities may have to any criminal prosecution or
administrative action relating to the conduct described in Preamble Paragraph G,
which defenses may be based in whole or in part on a contention that, under the
Double Jeopardy Clause of the Fifth Amendment of the Constitution or Excessive
Fines Clause of the Eighth Amendment of the Constitution, this Settlement
Agreement bars a remedy sought in such criminal prosecution or administrative
action.
NMC Homecare, NMC, FMCH, and the NMC Companies further agree that nothing in
this Agreement is punitive in purpose or effect.
24. The NMC Companies covenant to cooperate fully and truthfully with the
United States' civil investigation of individuals and entities not specifically
released in this Agreement. Upon reasonable notice the NMC Companies will make
reasonable efforts to facilitate access to, and encourage the cooperation of,
its directors, officers, and employees for interviews and testimony, consistent
with the rights and privileges of such individuals, and will furnish to the
United States, upon reasonable request, all non-privileged documents and records
in its possession, custody or control.
25. Effective on the date of acceptance by the Court of the Plea Agreement
referenced in Preamble Paragraph F, NMC Homecare, NMC, FMCH, and the NMC
Companies release and will be deemed to have released the United States, its
agencies, employees, servants, and agents from any claims (including attorneys'
fees, costs, and expenses of every kind and however denominated) which Homecare,
and the NMC Companies have or may have against the United States, its agencies,
employees, servants, and agents, related to or arising from the United States'
civil, criminal and administrative investigation and prosecution of Homecare,
NMC and FMCH.
26. The Settlement Amount that NMC and FMCH must pay pursuant to Paragraph
1 of this Agreement above will not be decreased as a result of the denial of
claims for payment being withheld from payment by any Medicare carrier or
intermediary,
Railroad Retirement Medicare carrier, TRICARE, FEHBP, VA, or any Medicaid payer
on the Effective Date of this Agreement, or pending on appeal for dates of
service prior to January 1, 2000 on the Effective Date of this Agreement,
related to the conduct described in Preamble Paragraph G; and NMC Homecare, NMC
and FMCH, and the NMC Companies agree not to resubmit to any Medicare carrier or
intermediary, Railroad Retirement Medicare carrier, TRICARE, FEHBP, VA, or any
Medicaid payer any previously denied claims related to the conduct described in
Preamble Paragraph G, and agree not to appeal any such denials of claims.
27. The NMC Companies agree that all costs (as defined in the Federal
Acquisition Regulations ("FAR") (S) 31.205-47 and in Titles XVIII and XIX of the
Social Security Act, 42 U.S.C. (S)(S) 1395-1395ddd (1997) and 1396-1396v(1997),
and the regulations promulgated thereunder) incurred by or on behalf of NMC
Homecare, and the NMC Companies, and their divisions, subsidiaries and
affiliates, and their present and former officers, directors, employees,
shareholders and agents in connection with: (a) the matters covered by this
Agreement and the related Plea Agreement described in Preamble Paragraph F; (b)
the Government's administrative, civil and criminal investigation and
prosecution of NMC Homecare, NMC, and FMCH; (c) these corporate entities'
investigation, defense, and corrective actions undertaken in response to the
Government's administrative, civil and criminal investigations, and in
connection with the matters covered by this Agreement, the Plea Agreements, and
including the obligations undertaken pursuant to the Corporate Integrity
Agreement (including attorneys fees); (d) the negotiation and performance of
this Agreement, the Plea Agreements, and the Corporate Integrity Agreement; and
(e) the payments made to the United States provided for in this Agreement and
the Plea Agreements, and to Relators for expenses necessarily incurred and
attorney's fees and costs or wrongful termination claims, are unallowable costs
on Government contracts and under Medicare, Railroad Retirement Medicare,
Medicaid, TRICARE, FEHBP, and the VA programs (hereafter "unallowable costs").
These unallowable costs will be separately estimated and accounted for by NMC
Homecare and the NMC Companies and these entities will not charge such
unallowable costs directly or indirectly to any contracts with the United States
or any Medicaid program, or seek payment for such unallowable costs through any
cost report, cost statement, information statement or payment request submitted
by the NMC Companies or any of their divisions, subsidiaries or affiliates to
the Medicare, Railroad Retirement Medicare, Medicaid, TRICARE, VA or FEHBP
programs.
NMC Homecare and the NMC Companies further agree that within 270 days of
the effective date of this Agreement these entities will identify to applicable
Medicare, Railroad Retirement Medicare, and TRICARE fiscal intermediaries,
carriers and/or contractors, and Medicaid, VA and FEHBP fiscal agents, any
unallowable costs (as defined above) included in payments previously sought from
the United States, or any Medicaid Program, including, but not limited to,
payments sought in any cost reports, cost statements, information reports, or
payment
requests already submitted by the NMC Companies or any of their subsidiaries,
affiliates, or divisions and will request, and agree, that such cost reports,
cost statements, information reports or payment requests, even if already
settled, be adjusted to account for the effect of the inclusion of the
unallowable costs. NMC Homecare and the NMC Companies agree that the United
States will be entitled to recoup from the NMC Companies any overpayment as a
result of the inclusion of such unallowable costs on previously-submitted cost
reports, information reports, cost statements or requests for payment. Any
payments due after the adjustments have been made shall be paid to the United
States pursuant to the direction of the Department of Justice, and/or the
affected agencies. The United States reserves its rights to disagree with any
calculations submitted by NMC Homecare, the NMC Companies, or any of their
subsidiaries, affiliates or divisions, on the effect of inclusion of unallowable
costs (as defined above) on the NMC Companies or any of their subsidiaries,
affiliates or divisions' cost reports, cost statements or information reports.
Nothing in this Agreement shall constitute a waiver of the rights of the United
States to examine or reexamine the unallowable costs described above.
28. This Agreement is intended to be for the benefit of the Parties only,
and by this instrument the Parties do not release any claims against any other
person or entity except as specifically identified in Paragraphs 11, 15, 16, 17,
18, 19, and 22 above.
29. NMC Homecare and the NMC Companies agree that they will not seek
payment for any of the health care billings covered by this Agreement from any
health care beneficiaries or their parents, sponsors, estates, heirs, successors
or assigns. NMC Homecare and the NMC Companies waive any causes of action
against these beneficiaries or their parents, sponsors, estates, heirs,
successors, or assigns based upon the claims for payment covered by this
Agreement.
30. Nothing in this Agreement constitutes an agreement by the United
States concerning the characterization of the amounts paid hereunder for
purposes of any proceeding under Title 26 of the Internal Revenue Code.
31. Except as provided in Paragraph 6, and except for Relators' claims for
expenses necessarily incurred and attorney's fees and costs, each party to this
Agreement will bear its own legal and other costs incurred in connection with
this matter, including by way of example only, all costs incurred in the
investigation and defense of this matter, the preparation and performance of
this Agreement, and all corrective actions taken in response to the
investigation and resolution of this matter.
32. NMC and FMCH expressly warrant that they have reviewed their financial
condition and that they currently are solvent on a consolidated basis within the
meaning of 11 U.S.C. Section 547(b)(3), and expect to remain solvent on a
consolidated basis following payment to the United States hereunder. Further,
the Parties expressly warrant that, in evaluating whether to execute this
Agreement, the Parties (a) have intended that the mutual
promises, covenants and obligations set forth herein constitute a
contemporaneous exchange for new value given to NMC Homecare, NMC and FMCH
within the meaning of 11 U.S.C. Section 547(c)(1), and (b) have concluded that
these mutual promises, covenants, and obligations do, in fact, constitute such a
contemporaneous exchange.
33. In the event NMC or FMCH commences, or a third party commences, within
91 days of any payment under of this Agreement, any case, proceeding, or other
action (i) under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have any order for relief of NMC and/or FMCH's
debts, or seeking to adjudicate NMC and/or FMCH as bankrupt or insolvent, or
(ii) seeking appointment of a receiver, trustee, custodian or other similar
official for NMC and/or FMCH or for all or any substantial part of NMC and/or
FMCH's assets, NMC and FMCH agree as follows:
a. NMC and FMCH's obligations under this Agreement may not be
avoided pursuant to 11 U.S.C. Section 547, and NMC and FMCH will not argue or
otherwise take the position in any such case, proceeding or action that: (i)
NMC and/or FMCH's obligations under this Agreement may be avoided under 11
U.S.C. Section 547; (ii) NMC and FMCH were insolvent on a consolidated basis at
the time this Agreement was entered into, or became insolvent on a consolidated
basis as a result of the payment made to the United States hereunder; or (iii)
the mutual promises, covenants and obligations set forth in this Agreement do
not
constitute a contemporaneous exchange for new value given to NMC and/or FMCH.
b. In the event that NMC and/or FMCH's obligations hereunder are
avoided pursuant to 11 U.S.C. Section 547, the United States, at its sole
option, may rescind the releases in this Agreement, and bring any civil and/or
administrative claim, action or proceeding against NMC Homecare, NMC, and/or
FMCH for the claims that would otherwise be covered by the releases provided in
Paragraphs 11, 15, 16, and 17 above. If the United States chooses to do so, NMC
Homecare, NMC and FMCH agree that (i) any such claims, actions or proceedings
brought by the United States (including any proceedings to exclude NMC Homecare
from participation in Medicare, Medicaid, or other federal health care programs)
are not subject to an "automatic stay" pursuant to 11 U.S.C. Section 362(a) as a
result of the action, case or proceeding described in the first clause of this
Paragraph, and that NMC Homecare, NMC and FMCH will not argue or otherwise
contend that the United States' claims, actions or proceedings are subject to an
automatic stay; (ii) that NMC Homecare, NMC and FMCH will not plead, argue or
otherwise raise any defenses under the theories of statute of limitations,
laches, estoppel or similar theories, to any such civil or administrative
claims, actions or proceeding which are brought by the United States within 90
calendar days of written notification to NMC and FMCH that the releases herein
have been rescinded pursuant to this Paragraph; and (iii) the United States has
a valid claim against NMC and FMCH in the amount of the Default Obligation, and
the
United States may pursue its claim, inter alia, in the case, action or
proceeding referenced in the first clause of this Paragraph, as well as in any
other case, action, or proceeding.
c. NMC Homecare, NMC and FMCH acknowledge that its agreements in
this Paragraph are provided in exchange for valuable consideration provided in
this Agreement.
34. NMC Homecare, NMC, FMCH and the Relators represent that this Agreement
is freely and voluntarily entered into without any degree of duress or
compulsion whatsoever.
35. This Agreement is governed by the laws of the United States. The
Parties agree that the exclusive jurisdiction and venue for any disputes arising
between and among the Parties under this Agreement will be the United States
District Court for the District of Massachusetts, except that disputes rising
under the Corporate Integrity Agreement shall be resolved exclusively upon the
dispute resolution provisions set forth in the Corporate Integrity Agreement.
36. The undersigned NMC Homecare, NMC and FMCH signatories represent and
warrant that they are authorized by their respective Board of Directors to
execute this Agreement. The undersigned United States signatories represent
that they are signing this Agreement in their respective official capacities and
that they are authorized to execute this Agreement.
37. Except for the guilty plea by NMC Homecare and the representations in
Paragraph 32 (regarding solvency), and Paragraph 33 (concerning bankruptcy
proceedings commenced within 91 days of any payments under this Agreement), the
Parties agree
that nothing in this Agreement constitutes an admission by any person or entity
with respect to any issue of law or fact.
38. This Agreement is effective on the date of signature of the last
signatory to the Agreement (the "Effective Date").
39. This Agreement shall be binding on all successors, transferees, heirs
and assigns.
40. This Agreement, together with Exhibits A through D, the Plea Agreement
described in Preamble Paragraph F, and the Corporate Integrity Agreement,
constitute the complete agreement among the Parties with regard to the conduct
described in Preamble Paragraph G and the Civil Actions. This Agreement may not
be amended except by written consent of the Parties, except that only FMCH and
OIG-HHS must agree in writing to modification of the Corporate Integrity
Agreement.
41. This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which shall constitute one and the same
Agreement.
THE UNITED STATES OF AMERICA
----------------------------
By: /s/ Suzanne E. Durrell Dated: January 18, 2000
--------------------------- ------------------
SUZANNE E. DURRELL
Assistant U.S. Attorney
District of Massachusetts
By: /s/ Patricia Connolly Dated: January 18, 2000
--------------------------- ------------------
PATRICIA CONNOLLY
Special Assistant U.S. Attorney
District of Massachusetts
By: /s/ Mark Lavine Dated: January 18, 2000
-------------------------- ------------------
MARK LAVINE
Assistant U.S. Attorney
Southern District of Florida
By: /s/ Maya S. Guerra Dated: January 19, 2000
-------------------------- ------------------
MAYA S. GUERRA
Trial Attorney
Civil Division
U.S. Department of Justice
By: /s/ Lewis Morris Dated: 1/18/00
-------------------------- ------------------
LEWIS MORRIS
Assistant Inspector General
Office of Inspector General
U.S. Department of Health and
Human Services
By: /s/ Frank D. Titus Dated: Jan. 18, 2000
-------------------------- ------------------
FRANK D. TITUS
Assistant Director for
Insurance Programs
U.S. Office of Personnel
Management
By: /s/ Robert D. Seaman Dated: 1-18-00
-------------------------- ------------------
ROBERT D. SEAMAN
General Counsel
TRICARE Support Office
U.S. Department of Defense
NMC HOMECARE, INC., NATIONAL MEDICAL CARE, INC.,
FRESENIUS MEDICAL CARE HOLDINGS, INC.
By: /s/ Ben J. Lipps Dated: 1/18/00
------------------------ --------------------
BEN J. LIPPS
President
NMC Homecare, Inc.
By: /s/ Ben J. Lipps Dated: 1/18/00
------------------------ --------------------
BEN J. LIPPS
President
National Medical Care, Inc.
By: /s/ Ben J. Lipps Dated: 1/18/00
------------------------ --------------------
BEN J. LIPPS
President
Fresenius Medical Care Holdings, Inc.
Acknowledged:
- ------------
By: /s/ Jonathan Chiel Dated: January 18, 2000
------------------------ --------------------
JONATHAN CHIEL
By: /s/ Alan E. Reider Dated: 1/18/00
------------------------ --------------------
ALAN E. REIDER
By: /s/ Ronald L. Castle Dated: 1/18/00
------------------------ --------------------
RONALD L. CASTLE
Counsel to NMC Homecare, Inc.
National Medical Care, Inc.
Fresenius Medical Care Holdings, Inc.
RELATOR VEN-A-CARE OF THE FLORIDA KEYS, INC.
By: /s/ Zachary T. Bentley Dated: 1/18/00
----------------------- -------------------
ZACHARY T. BENTLEY,
President
By: /s/ T. Mark Jones Dated: 1/18/00
----------------------- -------------------
T. MARK JONES,
Vice President and
Secretary
By: /s/ Luis E. Cobo Dated: 1/18/00
----------------------- -------------------
LUIS E. COBO,
Former President
By: /s/ Zachary T. Bentley Dated: 1/18/00
----------------------- -------------------
ZACHARY T. BENTLEY,
Individually, as to Paragraph
18.b. only
By: /s/ T. Mark Jones Dated: 1/18/00
----------------------- -------------------
T. MARK JONES,
Individually, as to Paragraph
18.b. only
By: /s/ Luis E. Cobo Dated: 1/18/00
----------------------- -------------------
LUIS E. COBO,
Individually, as to Paragraph
18.b. only
Acknowledged:
- ------------
By: /s/ Atlee W. Wampler III Dated: January 18, 2000
------------------------ -------------------
ATLEE W. WAMPLER, III
By: /s/ James J. Breen Dated: 1/18/00
----------------------- -------------------
JAMES J. BREEN
Counsel to Ven-A-Care
of the Florida Keys, Inc.
RELATOR DANA R. AUSTIN
By: /s/ Dana R. Austin Dated: 1/18/00
----------------------- --------------------
DANA R. AUSTIN
Acknowledged:
- ------------
By: /s/ Robert L. Vogel Dated: 1/18/00
----------------------- --------------------
ROBERT L. VOGEL
Counsel to Dana R. Austin
EXHIBIT A
(Promissory Note)
The Promissory Note dated January 19, 2000 from National Medical Care, Inc. and
Fresenius Medical Care Holdings, Inc. payable to the order of the United States
is incorporated by reference to Exhibit A of Exhibit 10.2 to this Current Report
on Form 8-K.
EXHIBIT B
(Amendment to Irrevocable Nontransferable Letter of Credit)
The Amendment to Irrevocable Nontransferable Letter of Credit dated January 19,
2000 issued by the Bank of Nova Scotia, Atlanta Agency to the United States is
incorporated by reference to Exhibit B of Exhibit 10.2 to this Current Report
on Form 8-K.
EXHIBIT C
(Guarantee)
The Guarantee Agreement dated as of July 31, 1996 among Fresenius Medical Care
GmbH, the predecessor to Fresenius Medical Care AG, National Medical Care, Inc.,
W.R. Grace & Co. and the United States of America, is incorporated by reference
to the Company's Registration Statement on Form S-4 (Registration No. 333-09497)
dated August 2, 1996 and the exhibits thereto.
EXHIBIT D
(List of Fresenius Affiliated Entities)
The List of Fresenius Affiliated Entities is incorporated by reference to
Exhibit D of Exhibit 10.2 to this Current Report on Form 8-K.