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EXHIBIT 10.33
INJURED WORKERS' INSURANCE FUND
Contract No. IWIF 8-96
MANAGED CARE CONTRACT
THIS CONTRACT MADE THIS day of , 1996 by and
between the INJURED WORKERS' INSURANCE FUND (hereinafter called "IWIF") and
Statutory Benefits Management Corporation (hereinafter called "Contractor"),
whose principal place of business is located at 111 S. Calvert Street,
Baltimore, Maryland, 21202.
EXPLANATORY STATEMENT
IWIF desires to employ Contractor to provide its services in planning,
designing and managing a fully integrated managed care program on behalf of,
and with the approval of, IWIF. Contractor is qualified and prepared to
provide such services subject to the terms, conditions and approvals herein set
forth. The parties recognize that IWIF requires certain mandatory clauses to
be incorporated within its contracts and agree that each mandatory clause shall
be paramount and take precedence over any other term, clause or conditions.
NOW THEREFORE, THIS CONTRACT WITNESSETH:
That for and in consideration of the covenants herein contained, the
parties agree as follows:
1. INCLUSIONS
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The Request for Information (RFI) issued by IWIF, dated
April, 1996 and Contractor's reply thereto dated May, 1996, as well as the
above Explanatory Statement are incorporated by reference herein and made part
of this Agreement.
2. SCOPE OF THE CONTRACT
Contractor shall provide all services necessary to fulfill the objectives
outlined in the RFI and Contractor's response thereto. These services shall
include, but not be limited to, the following:
A. Pre-Loss
a. Loss Control Services
b. Stakeholder Education and Training
B. Post-Loss
a. Plan Design.
b. Electronic Data Interchange - Information
Services.
c. 24 hour per day, 7 days per week rapid reporting
and early response system.
d. Preferred Provider Network Coordination and
Development.
e. Medical Case Management.
f. On-site Medical Management, Medical Bill
Repricing and Vocational Rehabilitation.
g. Quality Assurance Program.
h. Durable Medical Equipment.
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i. Prescription Drug Program.
j. Professional Advisory Services.
k. Program Management and Management Reports.
Within 60 days after the Contract commences, the Parties shall review the
Scope for its adequacy.
3. COMPENSATION AND METHOD OF PAYMENT
As consideration of the Services, IWIF agrees to pay Contractor fees
subject to Annual Risk/Reward Adjustments. A service fee of $280 per First
Report of Injury (FROI) will be applied to the first 25,000 FROI's during each
contract year. FROI in excess of 25,000 each year will incur a service fee of
$140 for each additional FROI processed. If the actual annual FROI times the
service fee is less than the monthly installments, the actual result will
become the service fee due Contractor. Any excess payment will be credited
against the next invoice, adjusted by the risk/reward calculation (Exhibit A).
Reporting and adjustments will occur on a quarterly basis throughout the term
of the contract, which will be used to track the actual FROI count. The Annual
Service Fee, either original or as adjusted, shall be paid by IWIF on a monthly
basis in 12 equal installments and paid within thirty (30) days after receipt
of Contractor's invoice in form acceptable to IWIF. The initial Annual Service
Fee shall be based upon 25,000 FROI. The first invoice shall be submitted on
the last day of the month in which the Contract commences, as hereinafter set
out.
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In consideration of the Program being designed and used exclusively for
the benefit of IWIF, start-up costs, not to exceed a total of $600,000, shall be
shared equally between Contractor and IWIF. Contractor shall invoice and
substantiate the 50 percent portion to be paid by IWIF within a period not to
exceed 180 days from the commencement of the Contract.
The monthly payments shall be subject to the following provisions and
adjustments:
A. Contractor's billing systems shall be subject to IWIF's
review and approval, which shall not be arbitrarily withheld or
delayed.
B. If IWIF reasonably determines that the fee schedule and the
monthly payments require adjustment or are excessive, it shall have
the right to adjust the annual fee and monthly payments. The cases
handled by Contractor shall be reviewed by IWIF on a semi-annual
basis and adjustments made based upon the results of the review. If
the fee is to be adjusted upward, the increase shall not exceed the
percent represented by the increase in the U.S. Department of
Labor's general goods and services consumer price index (CPI) for
the current available year.
C. In the event Contractor does not agree with an adjustment to
the annual management fee, the sole remedy shall be a termination of
the Contract and a
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settlement by IWIF for cases processed and managed by Contractor
based upon a per case rate as explained above.
D. All invoices must separately disclose the service fee and an
itemization of other billed transactions, with documentation. This
data must also integrate into IWIF's claims system as appropriate.
E. Specific invoice guidelines as outlined in the Request for
Information should be followed.
4. COMMENCEMENT AND TERM OF CONTRACT
The Contract shall be effective for an initial three (3) year term
commencing on June 30, 1996 (the "commencement date") and ending on June 30,
1999. In the event Contractor does not have its systems and procedures in
place and approved by IWIF prior to June 30, 1996, the commencement date shall
be delayed until such time as the systems and procedures are in place so that
Contractor can receive First Reports of Injury and process and manage care of
the injured party. The first invoice for services from Contractor shall be
submitted at the end of the month on which the commencement date occurs and the
service fee shall be prorated to reflect the number of days from commencement
date to the end of the month.
The initial term of the Contract shall end three (3) years after the newly
established commencement date. Thereafter, by agreement of the Parties, the
Contract may continue for up to
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three (3) successive one (1) year periods under the same terms and conditions
contained herein.
IWIF shall provide, within its corporate offices, sufficient furnished
space to house up to two (2) employees of Contractor,
which shall be provided at no cost to Contractor. Upon termination of this
Contract, Contractor shall leave such space in the condition in which it was
originally, fair wear and tear excepted.
No other provisions of this agreement to the contrary withstanding, IWIF
retains the right to terminate this agreement if, within its sole and absolute
discretion, it determines that Contractor has not performed within the terms
and requirements of this Contract. IWIF shall give 30 days written notice of
such termination.
Contractor will notify IWIF, in writing, of the names and responsibilities
of all vendors, providers and other subcontractors it intends to use to fulfill
the requirements of this Contract.
5. PROPRIETARY RIGHT IN SYSTEM
It is anticipated that the Integrated Managed Care Program and network may
become an innovative and sought after program in the Workers' Compensation
Insurance Industry. IWIF retains, and Contractor grants IWIF, a proprietary
interest in, and ownership of rights to, the system to the extent that IWIF
shall receive from Contractor five (5) percent of the gross value of any
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contract for an integrated managed care program between Contractor and any
other private or public insurer writing workers' compensation insurance. The
parties agree that they will not utilize, market or sell the systems developed
in concert with IWIF, under this agreement, to any commercial insurance
carrier for Maryland coverages while this contract or any successors thereto
are in force, without the consent of IWIF.
6. CONTRACT MANAGER
Paul M. Rose, CEO, or his designee, shall serve as Contract Manager. All
matters relating to this Contract, such as, but not limited to, payments to
Contractor and interpretations of contractual provisions shall be referred to
the Contract Manager, who may be reached at (410) 494-2200.
7. EXECUTION OF CONTRACT
Contractor agrees that this Contract shall not be binding on IWIF until
approved by all of the parties hereto and ratified by the IWIF Board.
8. HOLD HARMLESS
Contractor shall indemnify and save harmless IWIF from any and all claims,
demands, suits, liabilities, and expenses by reason of injury to or death of
any person(s) or damage to any property caused by any acts or omissions of the
Contractor, agents, or employees relating to the performance of this Contract.
9. LIABILITY INSURANCE
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A. During the term of this Contract the following insurance
shall be maintained by the Contractor:
(a) General Liability Insurance:
Comprehensive General Liability Insurance naming Contractor
as the named insured. This policy shall cover liability for
injury to or death of persons or damage to property, limited
to work associated with this Contract, including such
liability as may arise from contractual liability assumed
under this Contract. The policy shall provide a limit of
$1,000,000 per occurrence for personal injury and property
damage. Such insurance shall carry:
(i) Completed operations/products liability.
(ii) Broad form/blanket contractual liability
(both oral and written contracts).
(iii) Personal injury liability.
(iv) Employees as additional insured.
(b) Business Automobile Liability Insurance:
Business Automobile Liability Insurance including coverage
for owned, hired, and non-owned vehicles in the amount of
$1,000,000 per occurrence for bodily injury and property
damage.
(c) Workers' Compensation and Employees' Liability
Insurance:
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Workers' Compensation in the maximum amount(s) and with
benefits required by the laws of the state in which the work
is performed and the state(s) in which employees are hired,
if the state(s) are other than that in which the work is
performed. Employers' Liability with minimum limit of
liability of: $1,000,000 for bodily injury by accident/each
accident.
B. No alteration, modification or termination of such coverage
shall be effective without at least ten (10) days advance notice to
IWIF.
10. ATTACHMENTS TO THE CONTRACT
Attached hereto and made a part hereof are Attachment "A" (Mandatory
Provisions), Attachment "B" (Contract Affidavit), Attachment "C" (MBE/WBE
Requirements), Attachment "D" (Minority Business and General Contractor's
Statement of Intent) and
Attachment "E" (Solicitation Affidavit). Contractor shall comply with all
MBE/WBE requirements.
Attached hereto and made a part hereof is Exhibit "A" (Annual Risk/Reward
Adjustment).
11. NOTICES
Any notice, advice or report to be given pursuant to this Agreement must
be in writing and shall be delivered by (including but not limited to) U.S.
mail, telex, telegraph, personally or by other means to:
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The Contract Manager:
Mr. Paul M. Rose
President and CEO
Injured Workers' Insurance Fund
8722 Loch Raven Boulevard
Towson, Maryland 21286
with copy to:
Mr. Fred J. Pelosi
Director of Total Quality Care
Injured Workers' Insurance Fund
8722 Loch Raven Boulevard
Towson, Maryland 21286
The Contractor:
Mr. Spencer Vavas
President and Senior Consultant
Statutory Benefits Management Corporation
111 S. Calvert Street, Suite 2640
Baltimore, Maryland 21202
with copy to
Mr. Joseph B. Harlan
Vice President and Senior Consultant
Statutory Benefits Management Corporation
111 S. Calvert Street, Suite 2640
Baltimore, Maryland 21202
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IN WITNESS WHEREOF the parties have caused this Agreement to be properly
executed, this___________day of June, 1996.
ATTEST: INJURED WORKERS' INSURANCE FUND
_____________________________ BY:____________________________
(Injured Workers' Insurance Paul M. Rose
Fund Witness) President and CEO
ATTEST:
_____________________________ BY:____________________________
(Contractor's Witness) Spencer Vavas
President and CEO
Telephone Number: (410) 986-2075
CERTIFICATION OF FUNDING AVAILABILITY
AND COMPLIANCE STATEMENT
Certification is hereby made as to funding availability and compliance
with the provisions set forth in the Injured Workers' Insurance Fund's
Procurement Policy:
BY:_______________________________
DEMETRIS B. BROWN
Vice President of Finance
Approved this_______day of June, 1996 as to form and
legal sufficiency.
BY:_______________________________
R. BRUCE ALDERMAN
General Counsel
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