EXHIBIT 10.6
MEDICAL DIRECTOR AND ADMINISTRATIVE SERVICES AGREEMENT
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THIS MEDICAL DIRECTOR AND ADMINISTRATIVE SERVICES AGREEMENT is made and
entered into as of October 1, 1997, by and between NEPHROLOGY ASSOCIATES OF
NORTHERN ILLINOIS, LTD., an Illinois medical corporation ("NANI"), and EVEREST
HEALTHCARE SERVICES CORPORATION, a Delaware corporation (the "Company"), both in
its individual capacity and as agent for the Facilities listed on EXHIBIT A
hereto, hereafter collectively referred to as the "Parties."
WHEREAS, NANI is a medical group comprised of nephrologists who are
experienced in the provision of medical direction services for dialysis
treatment facilities;
WHEREAS, NANI employs physicians and personnel with expertise in the
business of providing dialysis and dialysis-related services and equipment; and
WHEREAS, the Company and its subsidiaries operate dialysis treatment
facilities at the locations noted on EXHIBIT A attached hereto (the
"Facilities"), and NANI and the Company desire to memorialize their arrangement
regarding the provision of certain management, administrative and medical
direction services by NANI to the Company in connection with its operation of
the Facilities.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. FACILITY MEDICAL DIRECTION DUTIES.
A. The Company hereby engages the services of NANI to provide the
medical direction services at the Facilities, as provided for in this Agreement,
effective as of January 1, 1997 (the "Effective Date"). Specifically, at all
times while this Agreement is in effect, NANI shall designate one or more of its
employed or contracted nephrologists to serve as a "Medical Director" for each
of the Facilities. The Medical Director designated for each Facility shall be
that physician set forth opposite the name of each Facility on EXHIBIT A. The
designated Medical Director for each Facility shall not change or be re-
designated other than as permitted under this Agreement. NANI shall cause each
such Medical Director to agree to perform services for the Company as medical
director at the designated Facility. In such capacity, the Medical Director
shall:
(i) perform, subject to the supervision of the Managers for
the applicable Facility, the duties relating to the operation of the
Facilities which are set forth on EXHIBIT B attached hereto;
(ii) perform the duties required under the Medicare End-Stage
Renal Disease Program Regulations (42 C.F.R. 405.2161); and
(iii) assist the Company in the establishment, supervision
and review of all medical policies and procedures to be utilized by
the applicable Facility.
At all times hereunder, each Medical Director shall assist in the operation
of his/her designated Facility in accordance with all applicable laws,
regulations and governmental standards relating to licensing, certification and
operation. Notwithstanding the delegation of certain duties to the Medical
Directors hereunder, the Company and the Facilities shall retain ultimate
authority over the standards of, and procedures and practices for, the services
provided by the Facilities. NANI shall cause the Medical Directors to abide by
the policies, procedures, rules and regulations of the Company and Facilities at
all times.
B. NANI shall cause each of the Medical Directors hereunder to
personally discharge his/her obligations with respect to his/her respective
Facility. NANI shall also cause each of the Medical Directors to devote so much
time, skill and attention to the affairs and activities of his/her designated
Facility as may reasonably be required to serve as Medical Director of the
Facility. NANI shall also cause each of the Medical Directors to cooperate with
and assist the Company and Facilities with identifying and documenting their
efforts in connection with their Medical Director duties.
C. Each individual designated by NANI to serve as a Medical Director
under this Agreement shall at all times during the Term of this Agreement:
(i) remain duly licensed as a physician in the same state that
his/her designated Facility is located;
(ii) remain board certified or board eligible in internal
medicine or pediatrics, and have at least twelve (12) months of
experience or training in the care of patients at ESRD facilities; or
have previously served as a director of a dialysis or transplantation
program for at least twelve (12) months between September 1, 1971 and
September 1, 1979;
(iii) maintain a current participation agreement with the
Secretary of the United States Department of Health and Human Services,
under the Medicare Program;
(iv) maintain a current registration with the Drug Enforcement
Administration; and
(v) remain otherwise qualified to act as a medical director of
a dialysis treatment facility.
In the event one or more of the Medical Directors specified on EXHIBIT A no
longer meets the above noted criteria, or is no longer willing to perform
Medical Director duties at his/her designated Facility, NANI shall promptly
designate another physician who meets the
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above noted criteria, to serve as the Medical Director for the designated
Facility, and shall provide written notice of said designation to the Company
and applicable Facility. Either the Company or applicable Facility shall have
the right to reject, or request the removal of, any Medical Director designated
by NANI; provided, however, any such rejection or request for removal shall not
be unreasonably made. Notwithstanding the foregoing provisions of this Section
1(C), nothing contained herein shall preclude NANI from assigning, on a
temporary basis, an otherwise qualified physician to serve as a Medical Director
at a Facility during any temporary leave or absence (e.g. vacation, continuing
medical education, illness) on the part of the designated Medical Director.
2. ADMINISTRATIVE AND MANAGEMENT SERVICE DUTIES.
A. NANI hereby agrees that it will provide the following
administrative and management services to the Company and its subsidiaries, as
the Company may from time to time request:
(i) consulting regarding the application or development of
appropriate information systems to track quality of care and associated
costs for all procedures performed at a Facility or any of the
Company's other Affiliates, input of such information into a
centralized information system and generation of appropriate reports to
reflect the necessary information;
(ii) development of protocols, clinical pathways and guidelines
(collectively, "Protocols") for the various procedures performed and
conditions treated in the Facilities or any of the Company's other
Affiliates to ensure the highest quality at the lowest cost, and the
ongoing monitoring, review and updating of such Protocols;
(iii) general consulting regarding hiring and retention of
executive employees and personnel, including, without limitation,
making its key management, employees, and advisors reasonably available
to the Company to consult with the Company's executives, and to review
other executive personnel matters as reasonably requested from time to
time by the Company;
(iv) developing marketing strategies and coordinating the
production of marketing literature and other advertising and
promotional materials, including, but not limited to managed care
relationships;
(v) general executive and administrative services, including,
without limitation, periodic advice and consultation with respect to
the Company's strategic affairs;
(vi) such other corporate, managerial and related strategic
services as the Company may from time to time reasonably request; and
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(vii) acute dialysis medical director services and overall
corporate medical direction, supervision and oversight of the health
care services provided by the Company and its Affiliates and the
services performed by various local medical directors at the dialysis
facilities owned by the Company or its subsidiaries, or at the
hospitals that have acute dialysis service agreements with the Company
or its Affiliates.
B. NANI hereby agrees during the term of this Agreement to consult
with the management personnel of the Company in such manner and regarding such
business and financial matters as may be reasonably requested from time to time
by such management personnel, including but not limited to:
(i) business strategy and development;
(ii) due diligence procedures and policies; and
(iii) acquisition and divestiture strategies.
C. Notwithstanding anything to the contrary contained herein, NANI
shall only be required to devote such time to the performance of its
administrative and management service duties hereunder as is reasonably
necessary for NANI to perform such duties. The Company acknowledges and agrees
that NANI may engage in other business activities without the consent of the
Company.
3. PROTOCOLS.
It is expressly understood by the parties hereto that the right and title
to any and all Protocols developed by NANI in connection with the performance of
its duties under this Agreement shall be the sole property of NANI; however, the
Company shall be permitted to use the Protocols in connection with its business
during the term of this Agreement and thereafter.
4. TERM.
A. The initial term of this Agreement shall commence on the
Effective Date, and shall continue, unless otherwise terminated pursuant to this
Section 4, for a period of five (5) years (the "Initial Term"). Upon
termination of the Initial Term, this Agreement shall be automatically extended
for consecutive one (1) year renewal terms until terminated pursuant to this
Section 4. The initial term and any extensions thereof may be referred to as
the "Term."
B. This Agreement may be terminated:
(i) either by the Company or NANI for cause (as defined below);
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(ii) by the Company in the event it no longer operates the
Facilities, or with respect to a particular Facility in the event it
no longer operates such Facility;
(iii) upon the mutual agreement of the Company and NANI; or
(iv) at any time on or after the expiration of the Initial
Term, by either Party, upon at least ninety (90) days prior written
notice of termination to the other Party.
C. With respect to the termination of this Agreement for cause, the
term "cause" shall mean: (i) a material breach by a Party to this Agreement
which shall not have been cured by such breaching Party within ten (10) days of
receipt of notice from the non-breaching Party of the breach; (ii) conviction of
a crime by either of the Parties; (iii) exclusion or suspension of either of the
Parties from the Medicare or Medicaid Programs; or (iv) the inability of the
Parties to satisfactorily renegotiate any terms of this Agreement required to be
amended by a change in the applicable laws or regulations pursuant to the
requirements of Section 9(J) hereof.
5. COMPENSATION.
A. In consideration of the services, covenants, and agreements agreed
to be performed by NANI pursuant to this Agreement, the Company agrees to pay
NANI the sum of One Million Two Hundred Eighty-Four Thousand Nine Hundred Twenty
Dollars ($1,284,920) per year, payable in twelve (12) equal monthly installments
(the "Base Compensation"). In addition to the Base Compensation, NANI shall also
be eligible to receive "Incentive Compensation" in the event the Medical
Directors are able to cause their respective Facilities to meet the quality,
utilization and other performance measurements established by the Company and
the Facilities. Said quality, utilization and other performance measurements
shall include, but not be limited to, the measurement of hematocrit, URR and
albumin levels, as well as Facility morbidity and mortality data. The amount of
Incentive Compensation payable to NANI hereunder shall not exceed Eighty
Thousand Eighty Dollars ($80,080) for any year, and shall be determined in the
sole discretion of the Company.
B. Both the Base Compensation and the Incentive Compensation will be
reviewed annually by NANI and Company, to determine whether such annual payments
reflect the fair market value of the services performed, and adjusted
appropriately following such review. For the purposes of such calculation, fair
market value of the Medical Directors' services shall be determined using
available market indicators such as compensation surveys, wage index factors and
changes to Medicare fee schedules for free-stranding outpatient dialysis
facilities. It is expressly agreed, however, that (i) any increases to such
payments shall be made only to the extent that the duties and responsibilities
of the Medical Directors and NANI hereunder, as appropriate, increase beyond
those duties and responsibilities in the prior year, and such increases shall be
consistent with the fair market value thereof, and (ii) such payments
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to NANI and any increase thereof shall in no way be determined in a manner that
takes into account the volume or value of referrals or business otherwise
generated between the Company, or any of its Affiliates (including the
Facilities) and the Medical Directors or NANI, for which payment may be made, in
whole or part, under a "federal health care program" (as such term is defined in
Section 1128B(a)(f) of the Social Security Act, as amended).
C. In addition to the amounts payable under Section 5(A) above, the
Company shall reimburse NANI for reasonable out-of-pocket costs and expenses
actually incurred by NANI in connection with the performance of its services and
duties hereunder, including all costs and expenses incurred in any transactions
outside the ordinary course of business on behalf of the Company, regardless of
whether such transactions are finally consummated.
6. NON-COMPETITION COVENANT.
A. Restricted Period. In consideration of the compensation payable
to NANI pursuant to this Agreement, NANI agrees that for the Term of this
Agreement, and for a period of two (2) years after its termination or expiration
for any reason whatsoever, NANI, either individually, or as a member of any
partnership, joint venture, or other entity, shall not:
(i) obtain any Financial Benefit (as hereinafter defined) from,
or any direct or indirect ownership or other interest in, any business,
firm, or entity which (a) provides dialysis services or is engaged in
the sale of durable medical equipment or dialysis supplies to dialysis
patients or in the sale of peritoneal supplies, or (b) competes with
the Company or any of its Affiliates (as hereinafter defined) within a
50 mile radius of any of the locations where the Company, or any of its
Affiliates regularly conduct operations, provided, that the preceding
prohibition shall specifically exclude the business of providing acute
dialysis services. For purposes of this Agreement, "Financial Benefit"
shall include, but shall not be limited to, medical directorship fees,
consultation fees, dividends, lease payments, management fees or any
other payment or financial benefit from professional services rendered
to any dialysis facility or entity or operation related to a dialysis
facility or from the referral of patients to another dialysis facility.
For purposes of this Agreement, "Affiliate" shall mean a person or
entity that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the
Company;
(ii) solicit or attempt to solicit any supplier or patient of any
of the Facilities so as to cause or attempt to cause such supplier or
patient to terminate his/her/its relationship with the Company and/or
Facility; or
(iii) solicit, influence or attempt to influence any employee
or independent contractor of the Company or any of the Facilities to
alter or terminate its relationship with the Company and/or Facility.
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B. No Limitation to Practice. This covenant shall in no way limit NANI
or any of its employed or contracted physicians in the practice of nephrology,
nor shall it be construed to require that NANI or any of its employed or
contracted physicians admit patients to the Facilities or restrict them from
admitting patients to any other dialysis facility or hospital, nor shall it
prohibit or in any way otherwise limit NANI from charging fees for administering
professional medical services to patients admitted to the Facilities or to any
other dialysis facility or hospital.
C. Enforcement. NANI acknowledges that enforcement of this covenant
will not prevent NANI or any of its employed or contracted physicians from
earning a living by practicing medicine or nephrology in the community where
they currently practice. It is also recognized and agreed by the Parties hereto
that any violation of this Agreement by NANI shall cause irreparable harm to the
Company for which monetary compensation shall not be adequate.
D. Blue Pencil. If any court of competent jurisdiction interprets the
covenants contained in this Section 6 to be too broad as to geographic, time or
scope limitations, the court shall have the power to limit said geographic, time
or scope limitations to those deemed to be reasonable and the Agreement shall be
fully enforceable as so limited by the court.
E. Extension of Restricted Period. In the event of a violation by NANI
of the covenants contained in this Section 6, it is mutually agreed that the
term of any such covenant shall be automatically extended against NANI for a
period of two (2) years from the date on which NANI permanently ceases such
violation, or for a period of two (2) years from the date of the entry by a
court of competent jurisdiction of a final order or a judgment enforcing such
covenant, whichever period is later. The extension of the term of the restricted
period provided in this Section 6 shall be in addition to, and not in lieu of
any other available remedies.
F. Definition of Patient. For purposes of this Agreement, the term
"patient" shall mean and include any person that was a patient of a Facility at
any time during the twelve (12) month period immediately preceding any
termination of this Agreement, or any person who thereafter becomes a patient at
a Facility.
G. Restrictions of Medical Directors. NANI hereby covenants and agrees
that it shall cause each of the Medical Directors or the NANI physicians
performing services hereunder to agree to be bound to a non-competition covenant
similar to that set forth above by causing each individual to execute a
Noncompetition Agreement in the form attached hereto as EXHIBIT C. NANI shall
require that each such individual execute such a Noncompetition Agreement as a
condition to the commencement of his/her tenure as a Medical Director or other
provider of services under this Agreement. The restrictive covenants contained
in this Section 6 and in any Noncompetition Agreement executed in connection
with the services to be provided by NANI to the Company and its Facilities as
described herein shall be in addition to and not in lieu of any other
restrictive covenants or agreements that NANI or any of its contracted or
employed physicians or any NANI Representative (as defined below) may have with
the Company or any of its Affiliates.
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7. CONFIDENTIAL INFORMATION.
NANI hereby agrees, and shall cause each of the Medical Directors and any
other NANI employees, officers, directors or agents performing services under
this Agreement (the "NANI Representatives") to agree, that during the Term of
this Agreement and for a period of two (2) years thereafter, neither NANI nor
any of the Medical Directors or NANI Representatives will make any use for its
own benefit, or for the benefit of any person, firm, partnership, joint venture,
corporation or other entity, other than the Company or its Affiliates, or
disclose to any person, firm, corporation or other entity other than the Company
or its Affiliates, any secret or confidential information, patient lists or any
other data or proprietary information of, or pertaining to business and
financial affairs or services of the Company and its Affiliates, to the extent
acquired as a result of this Agreement and not generally known within the
industry or as a matter of public knowledge.
8. EXCLUSIVE USE OF FACILITY RESOURCES.
NANI hereby acknowledges and agrees, and shall cause each of the Medical
Directors to acknowledge and agree, that the Facilities and their supplies,
equipment and employees shall be utilized by the Medical Directors exclusively
for the provision of dialysis services to patients of the Facilities and for the
performance by the Medical Directors of their duties hereunder. No portion of
the Facilities or their supplies or equipment, nor the time of any employee,
shall at any time be utilized by any Medical Director for the practice of
medicine or for any other purpose not expressly set forth in this Agreement.
9. MISCELLANEOUS.
A. Governing Law. The validity, construction, interpretation and
enforceability of this Agreement and the capacity of the Parties shall be
determined and governed by the laws of the State of Illinois.
B. Assignment. NANI shall not be permitted to assign or otherwise
transfer this Agreement without first obtaining the prior written consent of the
Company; provided however, the Company shall be permitted to assign this
Agreement without the consent of NANI. This Agreement shall be enforceable by or
against any permitted assigns hereunder.
C. Status of Parties. The Parties acknowledge that they are
independent parties, acting as independent contractors. The Company shall not be
responsible for nor be held liable for any of the acts or omissions of the
Medical Directors in performing such person's duties hereunder, except to the
extent such acts or omissions were directed to be performed by the Company.
D. Insurance. The Company agrees during the Term of this Agreement
that the Company shall purchase and keep in continuous force and effect a policy
of general liability insurance which shall have a single limit of at least One
Million Dollars ($1,000,000) covering
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the Company and its employees. NANI shall procure and maintain, on behalf of the
NANI Representatives, and on behalf of the Medical Directors, or shall cause
each of the Medical Directors to procure and maintain, professional liability
insurance covering their respective acts and omissions in connection with the
duties and obligations under this Agreement, as well as any professional
services rendered to patients at the Facilities. Such insurance shall have
minimum limits of at least One Million Dollars ($1,000,000) per occurrence and
Three Million Dollars ($3,000,000) in the aggregate per annum and shall name the
Company and Facilities as additional insured parties. Additionally, such NANI
and Medical Director insurance shall be written on an occurrence policy form;
provided, however, NANI and the Medical Directors shall be permitted to procure
said insurance coverage on a claims made policy form, so long as they also
obtain a reporting endorsement to cover any acts or omissions occurring during
the Term of this Agreement, and which reporting endorsement survives the
termination of this Agreement for a period of at least seven (7) years. Upon
request of the Company, NANI shall produce a copy of the certificate of
insurance or other appropriate evidence of such insurance.
E. Access to Books and Records. NANI and Company agree to comply
with Section 1861(v)(1)(I) of the Social Security Act, as amended, and the
regulations promulgated thereunder. Accordingly, during the Term of this
Agreement, and for a period of four (4) years following the termination of this
Agreement, NANI shall make available, upon written request by the Secretary of
the United States Department of Health and Human Services, the Comptroller
General of the United States or any of their duly authorized representatives,
all contracts, books, documents, and other records of NANI which are necessary
to verify the nature and extent of the costs of NANI's services hereunder. NANI
shall notify the Company within ten (10) days from receipt of such a request.
If the statutory provision and regulations noted above shall be deemed
inapplicable hereto, this Section 9(E) shall be deemed inoperative and without
force and effect.
F. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person, via
receipted overnight courier, or deposited in the U.S. mail, registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: If to NANI:
Everest Healthcare Services Corporation Nephrology Associates of Northern
101 North Scoville Illinois, Ltd.
Oak Park, Illinois 60302 101 North Scoville
Attention: Chief Executive Officer Oak Park, Illinois 60302
Attention: President
or to such other address as either party may designate in writing to the other
party in accordance with this Section 9(F).
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G. Waiver of Breach. The waiver by a Party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of the same or any other provision hereof
by that Party.
H. Severability. The provisions of this Agreement shall be
severable, and the invalidity of any provision, or portion thereof, shall not
affect the validity of the other provisions.
I. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
J. Limited Renegotiation. This Agreement shall be construed to be
in accordance with any and all applicable federal and state laws, including,
without limitation, Medicare, Medicaid and other federal and state statutes,
rules, regulations, principles and interpretations. In the event there is a
change in Medicare, Medicaid or other federal or state statutes, rules,
regulations, principles or interpretations that renders any of the material
terms of this Agreement unlawful or unenforceable, including any services
rendered or compensation to be paid hereunder, either party shall have the
immediate right to initiate the good faith negotiation of the affected term or
terms of this Agreement, upon notice to the other party, or remedy such
condition. Should the Parties be unable in good faith to renegotiate the term
or terms so affected so as to bring it/them into compliance with the statute,
rule, regulation, principle or interpretation that rendered it/them unlawful or
unenforceable within thirty (30) days of the date on which notice of a desired
renegotiation is given, then either Party shall be entitled, after the
expiration of said initial thirty (30) day period, to terminate this Agreement
upon an additional thirty (30) days' written notice to the other Party.
K. Entire Agreement. This Agreement constitutes the entire
agreement between the Parties respecting the subject matter hereof and there are
no representations, warranties or commitments, except as set forth herein. This
Agreement may be amended only by an instrument in writing executed by the
Parties hereto.
L. Third Party Beneficiary. Affiliates of the Company, including,
but not limited to, the entities which operate the Facilities, are intended
third party beneficiaries of this Agreement and shall independently have the
right to enforce each of the applicable provisions of this Agreement, including,
but not limited to, the non-compete and non-solicitation provisions contained in
Section 6 of this Agreement.
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IN WITNESS WHEREOF, the Company and NANI have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
COMPANY:
EVEREST HEALTHCARE SERVICES CORPORATION
By: /s/ CRAIG W. MOORE
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Craig W. Moore
Chairman and Chief Executive Officer
EVEREST HEALTHCARE SERVICES CORPORATION,
as agent for the Facilities listed on Exhibit A hereto
By: /s/ CRAIG W. MOORE
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Craig W. Moore
Chairman and Chief Executive Officer
NANI:
NEPHROLOGY ASSOCIATES OF NORTHERN ILLINOIS, LTD.
By: /s/ ARTHUR MORRIS
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Arthur Morris
President
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EXHIBIT A
FACILITY LOCATIONS/DESIGNATED MEDICAL DIRECTORS
Facility Name & Location Designated Medical Director
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1. Aurora Dialysis Center Michael Carbon, M.D.
516 South Lincoln
Aurora, Illinois 60505
2. Chicago Dialysis Center George Dunea, M.D.
640 West Washington
Chicago, Illinois 60606
3. Jackson Park Dialysis Center Douglas Mufuka, M.D.
7531 South Stony Island Avenue
Chicago, Illinois 60649
4. Oak Park Dialysis Center Paul Balter, M.D.
733 Madison Street
Oak Park, Illinois 60302
5. South Side Dialysis Center Ashutosh Gupta, M.D.
7721 South Western Avenue
Chicago, Illinois 60620
6. West Suburban Dialysis Center Arthur Morris, M.D.
Erie at Austin
Oak Park, Illinois 60302
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EXHIBIT B
MEDICAL DIRECTOR QUALIFICATIONS
QUALIFICATIONS:
Each Medical Director shall be:
(i) a licensed physician in the state in which the facility is
located that he/she will serve as a medical director;
(ii) board certified or board eligible in internal medicine or
pediatrics, with a minimum of one year experience or
training in the care of patients at End Stage Renal Disease
("ESRD") treatment facilities, or have previously served as
a director of a dialysis or transplantation program for at
least twelve (12) months between September 1, 1971 and
September 1, 1976;
(iii) maintain a current participation agreement with the
Secretary of the United States Department of Health and
Human Services, under the Medicare Program;
(iv) maintain a current Drug Enforcement Administration
registration; and
(v) otherwise remain qualified to act as a medical director of a
dialysis treatment facility.
DUTIES AND RESPONSIBILITIES:
Each Medical Director shall have immediate responsibility for the quality
of professional care delivered to the patients at his/her respective facility,
and shall exercise said responsibility through directing the professional
services of the facility, including patient care, education and research. The
Medical Director shall serve as the official channel of communications between
the medical staff and the governing body for the facility. The Medical Director
is also responsible to function as a liaison with "affiliated medical
institutions" (as defined in applicable federal regulations) with respect to
his/her facility.
Specific responsibilities for each Medical Director include:
1. Oversight of the administration and execution of the facility's
patient care policies, with day-to-day implementation of these
policies delegated to the nurse manager.
2. Implementation and ongoing oversight of a patient care policy and
procedures manual, in accordance with federal regulations, which
describes:
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(a) the types of dialysis used in the facility and the procedures
followed in performance of each type of dialysis;
(b) procedures for the prevention of hepatitis and the care of
patients with hepatitis;
(c) procedures for dealing with infectious agents (e.g. AIDS); and
(d) a disaster readiness plan.
3. Medical consultation with the nurse manager.
4. Oversight of the proper coordination and performance of all patient
care services within the facility.
5. Regular consultation with the facility's nurse manager and members of
the governing body to encourage the proper maintenance of the
facility, including the daily operation and maintenance of dialysis
equipment and the utilization of medical supplies.
6. Participation in the availability and selection of the appropriate
dialysis treatment modality and setting for facility patients, through
participation in monthly patient care plan/quality assurance meetings
and annual long term patient care plan meetings.
7. Monitoring the adequate supervision of the dialysis operation by
medical and patient care staff and assuring periodic assessment of
patient performance of dialysis tasks for self dialysis patients.
8. Participation in the development, needs analysis, implementation and
evaluation of facility training programs, including in-service
training in dialysis methods for nurses and other personnel. Where
the facility provides self-dialysis training to patients, the Medical
Director is responsible, in consultation with nursing and social work
staff, for assuring that each patient has ready access to all training
materials, supplies and equipment during training and at other times
deemed beneficial to the patient.
9. Oversight of the maintenance of all records relating to the care and
treatment of patients in the facility in accordance with facility
policies and applicable regulations of public health and governmental
reimbursement agencies. While the head nurse has day to day
responsibility in this regard, the Medical Director shall be
responsible for overseeing the integrity and completeness of medical
records, including:
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(a) patient long-term care plans; patient short-term care plans;
medical history;
(b) results of physical examinations and laboratory tests;
(c) the timely completion of all applicable federal, state and local
filings, including but not limited to, Health Care Financing
Administration ("HCFA") certificates and forms;
(d) progress notes by all patient care staff; complete and legibly
signed orders and discharge summary; and
(e) assisting in the implementation and operation of electronic
medical records systems.
10. Review of federal, state and local survey reports and, as needed,
participation in the development and implementation of an appropriate
plan of correction.
11. Review of periodic evaluation reports of all facility incident
reports.
12. Participation in scheduled meetings concerning the facility.
13. Review and approval with appropriate medical staff consultation of
applications for those physicians seeking privileges in the facility.
14. Oversight of all disciplinary action with regard to any matter of the
medical staff or patient care personnel as needed to assure the
quality of services and conformity to facility rules and policies.
15. To the extent that any hospital(s) provide acute hospitalization and
back-up services to patients of the facility, the Medical Director
shall provide coordination and quality assurance functions for the
facility vis-a-vis such hospital(s).
16. Oversight of the facility's overall compliance with:
(i) the Medicare Conditions for Coverage of Suppliers of End-
Stage Rental Disease Services, as set forth in 42 C.F.R. (S)
405.2100 et. seq.; and
(ii) all applicable state laws, regulations or policies
concerning licensure and/or registration of health care
facilities similar to the facilities.
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EXHIBIT C
FORM OF NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is entered into as of
_________________ by and between ____________________________ (the "Company")
and _______________________________ in his/her individual capacity (the
"Physician").
WHEREAS, Physician has been designated to serve as the "Medical Director"
of the Company's facility known as ___________________________ located at
___________________, ___________, ____________ (the "Facility") pursuant to that
certain Medical Director and Administrative Services Agreement (the
"Administrative Services Agreement") dated October 1, 1997 by and between
Nephrology Associates of Northern Illinois, Ltd. and Everest Healthcare Services
Corporation ("Everest");
WHEREAS, as the Medical Director of the Facility, Physician will have
access to, and will gain knowledge of certain proprietary and confidential
information concerning the Company, including, but not limited to, various trade
secrets and competitive information; and
WHEREAS, in order to induce the Company to designate Physician as Medical
Director of the Facility, Physician desires to enter into this Agreement.
NOW, THEREFORE, in consideration of the terms and conditions and the
representations and warranties herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
COVENANT NOT TO COMPETE
1.1 Covenants. Physician agrees that during the time he/she is a Medical
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Director at the Facility and for a period equal to two (2) years following the
termination of Physician's Medical Directorship at the Facility, he/she will
not, directly or indirectly, alone or in association with others, in his/her
capacity as partner, shareholder, member, employee, officer or other legal or
beneficial capacity, or through or in connection with any corporation, limited
liability company, partnership or other form of business entity, without the
prior written consent of Company:
(a) Obtain any Financial Benefit (as hereinafter defined) from, or
any direct or indirect ownership or other interest in, any business, firm,
or entity other than the Company or any of its Affiliates which (i)
provides dialysis services or (ii) is engaged in the sale of durable
medical equipment or dialysis supplies to home dialysis patients or in the
sale of peritoneal supplies, or (iii) competes with the Company or any of
its Affiliates (as hereinafter defined), within a fifty (50) mile radius of
the Facility (the
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"Territory"). For purposes of this Agreement, "Financial Benefit" shall
include, but shall not be limited to, medical directorship fees,
consultation fees, dividends, lease payments, management fees or any other
payment or financial benefit from professional services rendered to any
dialysis facility or entity or operation related to a dialysis facility or
from the referral of patients to another dialysis facility. "Affiliate"
shall mean a person or entity that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common
control with, the Company;
(b) Solicit or attempt to solicit any supplier or patient of the
Facility so as to cause or attempt to cause such supplier or patient to
terminate his/her/its relationship with the Facility; or
(c) Solicit, influence or attempt to influence any employee or
independent contractor of the Company to alter or terminate his/her/its
relationship with the Company.
1.2 No Limitation on Practice. This covenant shall in no way limit the
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Physician in the practice of nephrology, nor shall it be construed to require
that the Physician admit patients to the Facility or restrict him/her from
admitting patients to any other dialysis facility or hospital, nor shall it
prohibit or, in any way, otherwise limit the Physician from charging fees for
administering professional medical services to patients admitted to the Facility
or to any other dialysis facility or hospital.
1.3 Enforcement. The Physician acknowledges that enforcement of the
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covenants contained in Article I of this Agreement shall not prevent him/her
from earning a living by practicing medicine or nephrology in the community
where he/she currently practices. It is also recognized and agreed by the
parties hereto that any violation of the covenants contained in Article I of
this Agreement by the Physician shall cause irreparable harm to the Company for
which monetary compensation shall not be adequate. The Physician further
acknowledges that the medical director services provided to the Facility
pursuant to this Agreement are pursuant to the Administrative Services
Agreement, and that in connection therewith Everest is an intended third party
beneficiary of this Agreement and shall independently have the right to enforce
the provisions hereof including without limitation the provisions of this
Article I.
1.4 Blue Pencil. If any court of competent jurisdiction interprets the
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covenants contained in Article I of this Agreement to be too broad in
geographic, time or scope limitations, the court shall have power to limit said
geographic, time or scope limitations to those deemed to be reasonable and the
Agreement shall be fully enforceable as so limited by the court.
1.5 Extension of Restricted Period. In the event of a violation by the
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Physician of any of the covenants contained in Article I of this Agreement, it
is mutually agreed that the term of any such covenant shall be automatically
extended against the Physician for a period of two (2) years from the date on
which the Physician permanently ceases such violation or for a period of two (2)
years from the date of the entry by a court of competent jurisdiction of a final
order
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or a judgment enforcing the covenant, whichever period is later. The extension
of the term of the covenants provided in Article I of this Agreement shall be in
addition to, and not in lieu of, any other available remedies.
1.6 Definition of Patient. For purposes of this Agreement, the term
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"patient" shall mean and include any person that was a patient of the Facility
at any time during the twelve (12) month period immediately preceding the
termination of Physician's Medical Directorship, or any person who thereafter
becomes a patient at the Facility.
1.7 Other Restrictive Covenants. The Physician acknowledges that the
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restrictive covenants contained in Article I of this Agreement are in
consideration of the provision of medical director services at the Facility and
such restrictive covenants shall be in addition to and not in lieu of any other
restrictive covenants or agreements that the Physician may have with the Company
or any of its Affiliates.
1.8 Right to Injunctive Relief. In the event of a breach of any provision
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of this Agreement, Company, as it may elect, shall be entitled to an injunction
restraining Physician from such conduct in addition to such other remedies as
may be available to Company for such breach.
ARTICLE II
MISCELLANEOUS
2.1 Assignment. This Agreement shall not be assignable by Physician.
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Company, however, may assign this Agreement without Physician's consent.
2.2 Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the heirs, successors and permitted assigns of each party hereto.
2.3 Entire Agreement. Subject to Section 1.7, this Agreement constitutes
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the entire agreement of the parties with respect to the subject matter hereof
and supersedes all prior oral or written representations, warranties and
agreements between the parties with respect to the subject matter hereof.
2.4 Notices. All notices and other communications required or permitted
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to be given under this Agreement shall be in writing and shall be considered
given and delivered when personally delivered to the party to whom such notice
or communication is addressed or when delivered by courier, when received by
facsimile or when deposited in the United States mail, postage prepaid, return
receipt requested, properly addressed to a party at the address set forth below,
or at such other address as such party shall have specified by notice given in
accordance with this Section.
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If to Physician: _____________________________________
c/o Nephrology Associates of Northern
Illinois, Ltd.
101 North Scoville
Oak Park, Illinois 60302
If to Company: _____________________________________
_____________________________________
_____________________________________
With a copy to: Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60611
Attention: Alan M. Berry, Esq.
2.5 Waiver. Any term or condition of this Agreement may be waived at any
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time by the party or parties entitled to the benefit thereof, but only by a
written notice signed by the party or parties waiving such terms or conditions.
The waiver of any term or condition shall not be construed as a waiver of any
other term or condition of this Agreement.
2.6 Amendment. This Agreement may be amended, supplemented or modified at
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any time, but only by a written instrument duly executed by Physician and by
Company, which amendment shall be effective as of the date specified herein.
2.7 Governing Law. This Agreement shall be construed, and the rights and
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liabilities of the parties hereto determined, in accordance with the internal
laws of the State of Illinois, provided, however, that the conflicts of law
principles of the State of Illinois shall not apply to the extent that they
would operate to apply the laws of another state.
2.8 Cost of Litigation. In the event any party to this Agreement (or
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Everest as provided in Section 1.3 hereof) takes legal action to enforce any of
the terms of this Agreement, the prevailing party to such action shall be
entitled to reimbursement for such party's reasonable expenses, including but
not limited to reasonable attorneys' fees, incurred in such action.
2.9 Counterparts. This Agreement may be executed in multiple
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counterparts, each of which shall constitute an original and all of which when
taken together shall constitute one and the same agreement.
2.10 Severability. The provisions of this Agreement shall be severable,
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and the invalidity of any provision, or portion thereof, shall not affect the
validity of the other provisions.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
COMPANY:
WSKC DIALYSIS SERVICES, INC.
By:____________________________________
Arthur Morris
President
PHYSICIAN:
_______________________________________
[Name]
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