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EXHIBIT 10.46
SETTLEMENT AGREEMENT
I. PARTIES
This Settlement Agreement ("Agreement") is entered into between the
United States of America, acting through the United States Department of Justice
and on behalf of the Office of Inspector General ("OIG-HHS") of the Department
of Health and Human Services ("HHS") (collectively the "United States"); Beverly
Enterprises, Inc. ("Beverly Enterprises"), and Domenic Todarello ("Relator")
(collectively, "the Parties"), through their authorized representatives.
II. PREAMBLE
As a preamble to this Agreement the Parties agree to the
following:
A. Beverly Enterprises is a corporation organized pursuant to the laws
of the State of Delaware, with its principal place of business in Fort Smith,
Arkansas. Beverly Enterprises operates, through its subsidiaries, a chain of
nursing homes and is a provider under the Medicare program, administered by the
Health Care Financing Administration ("HCFA").
B. Relator is an individual resident of the State of Arizona. On
October 18, 1995, Relator filed a qui tam action in the United States District
Court for the District of Arizona, styled United States ex rel Todarello v.
Beverly Enterprises, CIV 95-2248 PHX RCB, which was transferred to the North
District of California on or about September 27, 1996, and has been styled
United States ex rel Todarello v. Beverly Enterprises, C96-3697 TEH (N.D. Cal.)
(the "Civil Action").
C. The United States and Relator contend that Beverly Enterprises
submitted or caused to be submitted claims for payment to the Medicare Program
("Medicare"), Title XVII of the Social Security Act, 42 U.S.C. Sections
1395-1395ddd (1997).
D. The United States and Relator contend that they have certain civil
claims against Beverly Enterprises under the False Claims Act, 31 U.S.C.
Sections 3729-3733, and the United States also contends it has certain civil
claims against Beverly Enterprises under other federal statutes and/or common
law doctrines, in the amount of four hundred sixty million ($460,000,000), for
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engaging in the following conduct during the period from 1992 through 1998:
submitting Medicare skilled nursing facility cost reports, for cost report years
1992-1998, that overstated the costs reimbursable to the facilities' Medicare
certified units by mis-allocating labor hours to the Medicare units (the
"Covered Conduct").
E. The United States also contends that it has certain administrative
claims against Beverly Enterprises under the provisions for permissive exclusion
from the Medicare, Medicaid and other federal health care programs, 42 U.S.C.
Section 1320a-7(b), and the provisions for civil monetary penalties, 42 U.S.C.
Section 1320a-7a, for the Covered Conduct.
F. Except as so expressly admitted in the plea agreement executed by
Beverly Enterprises - California, Inc., in connection with the criminal action,
United States v. Beverly Enterprises - California, Inc. (N.D. Calif.), Beverly
Enterprises does not admit the contentions of the United States or the Relator
as set forth in Paragraphs D and E, above.
G. In order to avoid the delay, uncertainty, inconvenience and expense
of protracted litigation of these claims, the Parties have reached a full and
final settlement as set forth below.
III. TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
obligations set forth below, and for good and valuable consideration as stated
herein, the Parties agree as follows:
1. Beverly Enterprises agree to pay to the United States One Hundred Seventy
Million Dollars ($170,000,000) (the "Settlement Amount"), which Settlement
Amount shall be a debt, arising out of a compromise of claims for an alleged
overpayment under the Medicare Provider Agreements held by Beverly Enterprises'
skilled nursing facilities, immediately due and owing to the United States on
the date of execution of this Agreement, as follows:
a. Beverly Enterprises shall pay Twenty-Five Million Dollars ($25,000,000)
within thirty days of the effective date of this Agreement. Beverly Enterprises
shall satisfy this obligation by Fedwire electronic funds transfer to the
"Department of Justice," as arranged through the
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Financial Litigation Unit, United States Attorney's Office, Northern District of
California.
b. In addition to the payment described in Paragraph a, the balance of the
Settlement Amount shall be paid by Beverly Enterprises by accepting a reduction
to its periodic payment from the Medicare program, beginning with the first
payment on or after January 1, 2000, and extending for a period of eight years
thereafter, by an equal pro-rata amount sufficient to total One Hundred Forty
Five Million Dollars ($145,000,000) (without interest). These payments shall be
in the form of a reduction, or withhold, to be implemented by the Medicare
program by means of a recoupment imposed pursuant to 42 C.F.R. Section
405.370-.375, and Beverly Enterprises waives all notice provisions in connection
with such recoupment. The Medicare program will withhold $18,124,999.98 per year
(under current HCFA payment methodologies, this will be accomplished by
withholding $697,115.38 from each of the twenty-six interim payments to Beverly
Enterprises each year). Beverly Enterprises agrees that it will elect to use a
single, national Fiscal Intermediary with respect to each cost reporting year or
period from the effective date of this Agreement until the full Settlement
Amount has been paid. Beverly Enterprises agrees to notify its Fiscal
Intermediary in writing if Beverly Enterprises intends to sell, close or
otherwise dispose of facilities where such sale or disposition will result in a
reduction of the interim payment to Beverly Enterprises below $697,115.38.
(Nothing in this Agreement affects HCFA's right to deny any request for a change
of Fiscal Intermediary consistent with 42 C.F.R. Part 421). If any interim
payment equals less than $697,115.38, Beverly Enterprises must, within five days
of the receipt of notice of the interim payment, pay the difference to the
United States, through electronic funds transfer to "Department of Justice," as
arranged through the Financial Litigation Unit, United States Attorney's Office,
Northern District of California. In the event that HCFA payment mechanisms
change, Beverly agrees to maintain the same repayment schedule so that
recoupment is completed within eight years.
2. Subject to the exceptions in Paragraph 4 below, in consideration of the
obligations of Beverly Enterprises set forth in this Agreement, and conditioned
upon Beverly Enterprises's payment in full of the Settlement Amount, and subject
to Paragraphs 22 and 23 below
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(concerning bankruptcy proceedings commenced within 91 days of any payment (or
reduction in any HCFA payment) under this Agreement), the United States (on
behalf of itself, its officers, agents, agencies and departments) agrees to
release Beverly Enterprises and its subsidiaries, directors, officers,
employees, agents and shareholders from any civil or administrative monetary
claim the United States has under the False Claims Act, 31 U.S.C. Sections
3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. Section 1320a-7a; the
Program Fraud Civil Remedies Act, 31 U.S.C. Sections 3801-3812; or the common
law theories of payment by mistake, unjust enrichment, breach of contract and
fraud, for the Covered Conduct. No individuals are released by this Paragraph.
3. In consideration of the obligations of Beverly Enterprises set forth in this
Agreement and the Corporate Integrity Agreement incorporated by reference,
conditioned upon Beverly Enterprises's payment in full of the Settlement Amount,
and subject to Paragraphs 22 and 23, below (concerning bankruptcy proceedings
commenced within 91 days of any payment (or reduction in the periodic interim
payment) under this 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 any other federal health care
program (as defined in 42 U.S.C. Section 1320a-7b(f)) against Beverly
Enterprises, or its subsidiaries, directors, officers, employees, agents and
shareholders, under 42 U.S.C. Section 1320a-7a (Civil Monetary Penalties Law),
or 42 U.S.C. Section 1320a-7(b) (permissive exclusion), for the Covered Conduct,
except as reserved in Paragraph 4, below, and as reserved in this Paragraph.
Nothing in this Paragraph precludes the OIG-HHS from taking action against
entities or persons, or for conduct and practices, for which civil claims have
been reserved in Paragraph 4, below. No individuals are released by this
Paragraph.
4. Notwithstanding any term of this Agreement, specifically reserved and
excluded from the scope and terms of this Agreement as to any entity or person
(including Beverly Enterprises) are any and all of the following.
5. (1) Any civil, criminal or administrative claims arising under Title 26, U.S.
Code (Internal Revenue Code);
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6. (2) Any criminal liability;
7. (3) Except at explicitly stated in this Agreement, any administrative
liability, including mandatory exclusion from Federal health care programs;
8. (4) Any liability to the United States (or its agencies) for any conduct
other than the Covered Conduct;
9. (5) Any claims based upon such obligations as are created by this Agreement;
10. (6) Any express or implied warranty claims or other claims, to the extent
such claims may otherwise exist at law, for defective or deficient products or
services, including quality of goods and services, provided by Beverly
Enterprises.
11. (7) Except as provided with respect to Relator, any civil or administrative
claims against individuals, including current or former directors, officers,
employees, agents or shareholders of defendant Beverly Enterprises.
12. Beverly Enterprises has entered into a Corporate Integrity Agreement with
HHS, attached as Exhibit A, which is incorporated into this Agreement by
reference. Beverly Enterprises will immediately, upon execution of this
Agreement, commence the implementation of its obligations under the Corporate
Integrity Agreement.
13. The United States
has obtained statements publicly filed by Beverly Enterprises with the
Securities and Exchange Commission (collectively, the "Financial Statements").
The United States has relied on the accuracy and completeness of the Financial
Statements in reaching this Agreement. Beverly Enterprises and its subsidiaries
represent that each of the Financial Statements (including the related notes)
presents fairly, in all material respects, the consolidated financial position
and consolidated results of operations and cash flows of Beverly Enterprises and
its subsidiaries as of the respective dates for the respective periods set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved except as noted therein, and
subject, in the case of the unaudited interim financial statements, to normal
and recurring year-end audit adjustments that have not been and are not
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expected to be material in amount. As such, Beverly Enterprises and its
subsidiaries further warrant that they do not own or have an interest in any
assets which are not accounted for by the Financial Statements.
14. a. Beverly Enterprises represents that Financial Statements did not contain
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
15. b. In the event the United States learns that the Financial Statements
contained any untrue statement of a material fact or omitted to state a material
fact required to make the statement not misleading with respect to the existence
of asset(s) in which Beverly Enterprises and/or its subsidiaries had an interest
at the time of this Agreement, and in the event such nondisclosure or
misrepresentation changes the estimated net worth of Beverly Enterprises set
forth on the Financial Statements by one million dollars ($1,000,000) or more,
the United States may at its option: (1) rescind this Agreement and file suit
upon the underlying claims described in paragraphs D and E (with Relator
retaining all rights and interests under 31 U.S.C. Section 3730); or (2) let the
Agreement stand and collect from Beverly Enterprises the full Settlement Amount
plus one hundred percent (100%) of the value of the previously undisclosed net
worth of Beverly Enterprises. Beverly Enterprises agrees not to contest in any
judicial or administrative forum any collection action undertaken by the United
States pursuant to this provision.
16. In the event that the United States, pursuant to Paragraph 6(b), above, opts
to rescind this Agreement, Beverly Enterprises expressly waives and agrees not
to plead, argue or otherwise raise any defenses under the theories of statute of
limitations, laches, estoppel or similar theories, based on the passage of time,
to any civil or administrative claims which (1) are filed by the United States
within thirty calendar days of written notification to Beverly Enterprises and
Relator that this Agreement has been rescinded, and (2) relate to the Covered
Conduct, except to the extent these defenses were available on October 18, 1995.
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17. With the exception of administrative claims regarding Routine Cost Limit
Exceptions ("RCLEs") which are separately addressed in Paragraphs 10 and 11 of
this Agreement, any administrative claims which HCFA may assert regarding
Beverly Enterprises' 1996, 1997 and 1998 cost reports other than those relating
to the Covered Conduct will be handled in the normal administrative process set
out in the pertinent federal regulations covering the Medicare program. Pending
Routine Cost Limit (RCLE) requests for cost years 1996-1998 will be handled as
provided for in Paragraphs 9 and 10, below.
18. With respect to the 1995 cost reports used as a basis for Skilled Nursing
Facilities Prospective Payment System reimbursement during the transition
period, HCFA reserves its right, if any, to reopen 1995 cost reports and, in
accordance with applicable Medicare law, regulations and manual provisions,
including, but not limited to, Beverly Enterprises' rights to appeal any
determination regarding any adjustment as a result of any reopening, to
recalculate the facility specific rate for Beverly Enterprises' facilities based
on the direct nursing labor allocation issue, but HCFA agrees that the payment
effect of any adjustments will not exceed Thirty Seven Million Dollars
($37,000,000) in the aggregate over the relevant three-year reimbursement period
(1999-2001).
19. Beverly Enterprises agrees that the RCLEs previously submitted for the year
1996 will be denied. However, within one year of the effective date of this
Agreement, Beverly Enterprises may submit to the fiscal intermediary revised
RCLEs for the year 1996. Beverly Enterprises agrees that as part of its
resubmission of 1996 RCLEs as described above, it will reduce the total direct
labor cost in the facility certified unit by 13%. HCFA will adjudicate any
administrative claims regarding the 1996 RCLEs in the normal administrative
claims process set out in the pertinent federal regulations covering the
Medicare program.
20. HCFA shall complete a statistically valid sample audit of Covered Conduct
for cost reports filed for the limited purpose of calculating an average
percentage adjustment, if any, to be applied to the direct labor cost component
of the pending RCLEs for the years 1997 and 1998. Any sample audit conducted by
HCFA with respect to the Covered Conduct shall include at least 10% of the
facilities, randomly selected, and shall employ a statistically valid sampling
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methodology and generally accepted auditing standards including adjustment
methodology. HCFA will adjudicate any administrative claims regarding the
sampling methodology selected, the audit methodology and protocols applied and
the method of extrapolating the sampled results with respect to the 1997 and
1998 direct labor component of the RCLEs in the normal administrative process
set out in pertinent federal regulations covering the Medicare program. In the
event that the audits contemplated under this Paragraph result in the reduction
of amounts claimed by Beverly, the recoupment by HCFA of any amounts paid to
Beverly with respect to the 1997 and 1998 RCLEs shall be limited to an annual
recoupment of no more than $7 million in principal, plus accrued interest per
annum, until such recoupment amounts have been fully liquidated. Nothing in this
section shall limit HCFA's right to audit non-Covered Conduct costs with respect
to the years 1997 and 1998.
21. The United States and the Relator agree that the Relator is entitled,
pursuant to 31 U.S.C. Section 3730(d)(1), to a share equal to 17 percent (17%)
of the United States' recovery of the Settlement Amount under Paragraphs 1.a.
and 1.b. and that Relator is not entitled to any share of any future reduction
by HCFA as described in Paragraphs 9, 10, and 11 of this Agreement. The United
States agrees that, within a reasonable time after it receives or effects a
reduction or withhold that results in any payment of the Settlement Amount or a
payment pursuant to Paragraph 6 of the Agreement from Beverly Enterprises, it
will pay Relator an amount equal to 17 percent (17%) of the payment. All
payments to Relator under this Agreement shall be made by electronic funds
transfer in accordance with the written instructions of Relator's counsel.
22. The Relator and Beverly Enterprises agree that pursuant to 31 U.S.C. Section
3730(d)(1), the Relator is entitled to his necessary expenses, reasonable costs
and attorneys' fees from Beverly Enterprises in the amount of $103,000.00.
Beverly Enterprises shall pay this amount by electronic funds transfer to the
Relator within five days of the effective date of this Agreement.
23. Pursuant to 31 U.S.C. Section 3730(c)(2)(B), the Relator agrees that
the settlement of claims in the Civil Action is fair, adequate and reasonable
under all the circumstances. Further, in consideration of the obligations of
Beverly Enterprises set forth in this Agreement, conditioned
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upon Beverly Enterprises's payment in full of the Settlement Amount, and subject
to Paragraphs 22 and 23, below (concerning bankruptcy proceedings (or reduction
in any HCFA payment) under this Agreement), on the effective date of this
Agreement, the Relator, for himself, his heirs, representatives, successors and
assigns, releases and forever discharges:
a. Beverly Enterprises, and its present or former officers, directors,
employees, shareholders, and agents from claims the Relator has or may have
arising from or relating to the Covered Conduct or relating to the Civil Action;
and
b. The United States from any claims arising from or relating to the filing of
the Civil Action, or, pursuant to 31 U.S.C. Section 3730(d)(1), for a share of
any recoveries relating to or arising out of the Civil Action beyond that
specified in Paragraph 11 of this Agreement.
24. Beverly Enterprises waives and will not assert any defenses Beverly
Enterprises may have to any criminal prosecution or administrative action
relating to the Covered Conduct, based in whole or in part on a contention that,
under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or
under the Excessive Fines Clause in the Eighth Amendment of the Constitution,
this Settlement bars a remedy sought in such criminal prosecution or
administrative action. Beverly Enterprises agrees that this Agreement is not
punitive in purpose or effect. Nothing in this Paragraph or any other provision
of this Agreement constitutes an agreement by the United States concerning the
characterization of the Settlement Amount for purposes of the Internal Revenue
Laws, Title 26 of the United States Code.
25. Beverly Enterprises fully and finally releases the Relator and his
attorneys, 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 Beverly Enterprises has asserted, could have
asserted, or may assert in the future against the Relator and his attorneys, the
United States, its agencies, employees, servants, and agents, related to the
Covered Conduct or the United States', Relator's and Relator's counsel's
investigation and prosecution of the Civil Action.
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26. Beverly Enterprises agrees that all costs (as defined in the Federal
Acquisition Regulations ("FAR") Section 31.205-47 and in Titles XVIII and XIX of
the Social Security Act, 42 U.S.C. Sections 1395-1395ddd (1997) and
1396-1396v(1997), and the regulations promulgated thereunder) incurred by or on
behalf of Beverly Enterprises, its subsidiaries and its present or former
officers, directors, employees, shareholders, and agents, in connection with:
(1) the matters covered by this Agreement, (2) the Government's audit(s) and the
civil and criminal investigation(s) of the matters covered by this Agreement,
(3) Beverly Enterprises' investigation, defense, and corrective actions
undertaken in response to the Government's audit(s) and the civil and criminal
investigations in connection with the matters covered by this Agreement
(including attorneys' fees), including any new obligations undertaken pursuant
to the Corporate Integrity Agreement incorporated in this Settlement Agreement,
(4) the negotiation of this Agreement, the Corporate Integrity Agreement and any
plea agreement, and (5) the payment made pursuant to this Agreement, are
unallowable costs on Government contracts and under the Medicare Program,
Medicaid Program, TRICARE Program, Veterans Affairs (VA) Program, and the
Federal Employees Health Benefits program (FEHBP) (hereafter, "unallowable
costs"). These unallowable costs will be separately estimated and accounted for
by Beverly Enterprises, and Beverly Enterprises and its subsidiaries will not
charge such unallowable costs directly or indirectly to any contracts with the
United States, or seek payment for such unallowable costs through any cost
report, cost statement, information statement or payment request submitted by
Beverly Enterprises or any of its subsidiaries to the Medicare, Medicaid,
TRICARE, VA or FEHBP programs.
27. Beverly Enterprises further agrees that within 120 days of the effective
date of this Agreement, it will identify to applicable Medicare and TRICARE
intermediaries, carriers and/or contractors, and Medicaid, VA, and FEHBP fiscal
agents, any unallowable costs (as defined in this Paragraph) included in
payments previously sought from the United States or any State Medicaid Program,
including, but not limited to, payments sought in any cost reports, cost
statements,
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information reports, or payment requests already submitted by Beverly
Enterprises or any of its subsidiaries, 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. Beverly Enterprises agrees that the United States will be
entitled to recoup from Beverly Enterprises 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
Beverly Enterprises or any of its subsidiaries on the effect of inclusion of
unallowable costs (as defined in this paragraph) on Beverly Enterprises or any
of its subsidiaries' 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 in this
Paragraph.
28. Beverly Enterprises covenants to cooperate fully and truthfully with the
United States' investigation of individuals and entities not specifically
released in this Agreement, for the Covered Conduct. Upon reasonable notice,
Beverly Enterprises 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
relating to the Covered Conduct. Beverly Enterprises agrees to consent to a
motion filed by the United States to permit access by the Office of Counsel to
the Inspector General to information covered by Rule 6(e) of the Federal Rules
of Criminal Procedure.
29. 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 entity.
30. Beverly Enterprises agrees that it will not seek payment for any of the
health care billings covered by this Agreement from any health care
beneficiaries or their parents or sponsors. Beverly Enterprises waives any
causes of action against these beneficiaries or their parents or sponsors based
upon the claims for payment covered by this Agreement.
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31. Beverly Enterprises expressly warrants that it has reviewed its financial
situation after recording a pre-tax charge for the entire payment obligation
hereunder and believes that it currently is solvent within the meaning of 11
U.S.C. Section 547(b)(3). Further, the Parties expressly warrant that, in
evaluating whether to execute this Agreement, the Parties (i) have intended that
the mutual promises, covenants and obligations set forth herein constitute a
contemporaneous exchange for new value given to Beverly Enterprises, within the
meaning of 11 U.S.C. Section 547(c)(1), and (ii) have concluded that these
mutual promises, covenants and obligations do, in fact, constitute such a
contemporaneous exchange.
32. In the event Beverly Enterprises commences, or a thirty party commences,
within 91 days of any payment (or reduction in any HCFA payments) under 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 Beverly Enterprises' debts, or seeking to adjudicate Beverly
Enterprises as bankrupt or insolvent, or (ii) seeking appointment of a receiver,
trustee, custodian or other similar official for Beverly Enterprises or for all
or any substantial part of Beverly Enterprises's assets, Beverly Enterprises
agrees as follows:
33. Beverly Enterprises will not plead, argue or otherwise take the position in
any such case, proceeding or action that: (a) Beverly Enterprises was insolvent
at the time this Agreement was entered into, or became insolvent as a result of
the payments (or reduction in the HCFA payments) made to the United States
and/or Relator hereunder; or (b) the mutual promises, covenants and obligations
set forth in this Agreement do not constitute a contemporaneous exchange for new
value given to Beverly Enterprises.
34. In the event Beverly Enterprises commences, or a third party commences, 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 Beverly Enterprises' debts, or seeking to adjudicate Beverly
Enterprises as bankrupt or insolvent, or (ii) seeking appointment of a receiver,
trustee, custodian or other similar official for Beverly Enterprises or for all
or any substantial part of Beverly Enterprises' assets, Beverly Enterprises
agrees as follows:
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a. If, in any of the proceedings or actions described above in Paragraph 23,
Beverly Enterprises does not or is unable to honor the payment obligations
hereunder, the United States shall hold a valid, allowed, liquidated,
noncontingent, undisputed claim for $460 million under the False Claims Act and
other federal statutes and/or common law doctrines, as specifically enumerated
above, less payments received pursuant to this Agreement, or any other
applicable law in any case, proceeding, or other action described in the first
clause of this Paragraph, and in consideration for the final settlement of the
United States' claims against it in the Civil Action as described herein,
Beverly Enterprises expressly waives and agrees not to plead, argue or otherwise
raise any defenses otherwise available to it regarding the claim asserted by the
Untied States as set forth above in Paragraph 23.a. in such proceeding or other
action;
b. $170 million of the amount specified in Paragraph 23.a. shall constitute an
overpayment under the Medicare Provider Agreements held by Beverly Enterprises'
skilled nursing facilities;
c. If and to the extent that Beverly Enterprises' obligations hereunder are
avoided for any reason, including, but not limited to, through the exercise of
any avoidance powers under the Bankruptcy Code, the United States, at its sole
option, may rescind the releases in this Agreement, return to Beverly
Enterprises any payments collected hereunder, and bring any civil and/or
administrative claim, action or proceeding against Beverly Enterprises for the
claims that otherwise are covered by the releases provided in Paragraphs 2, 3
and 14, above, with Relator retaining all rights and interests under 31 U.S.C.
Section 3730;
d. If the United States chooses to rescind the releases in accordance with
Paragraph 23.c., Beverly Enterprises agrees that (i) any such claims, actions or
proceedings brought by the United States (including any proceedings to exclude
Beverly Enterprises from participation in Medicare, Medicaid and other Federal
health care programs) are not subject to the automatic stay imposed by 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 (ii) it will not plead, argue or otherwise
contend that the United States' claims, actions or proceedings are subject to
such automatic stay; (iii) it will not seek relief under
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11 U.S.C. Section 105 to enjoin or restrain the United States from pursuing such
claims, actions or proceedings; and (iv) it 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 thirty calendar days of
written notification to Beverly Enterprises that the releases herein have been
rescinded pursuant to this Paragraph, except to the extent such defenses were
available on October 18, 1995; and
e. Beverly Enterprises will not (a) oppose any attempt by the United States,
including, but not limited to, a motion filed by the United States seeking
relief from the automatic stay imposed by 11 U.S.C. Section 362, to recover,
either through set off or recoupment, monies owed by Beverly Enterprises to the
United States (either under this Agreement or otherwise) against any monies owed
by the United States to Beverly Enterprises or (b) seek relief under 11 U.S.C.
Section 105 to enjoin or restrain the United States from exercising these
rights.
35. Beverly Enterprises further agrees that the express waivers set forth in
Paragraphs 22 and 23 are in consideration for the final settlement of the United
States' claims against it in the Civil Action as described herein. In
consideration for the final settlement of the United States' claims against it
in the Civil Action as described herein, and in the event, and only in the
event, a proceeding or other actions in commenced as described in Paragraph 23,
Beverly Enterprises expressly waives and agrees not to plead, argue or otherwise
raise any defenses otherwise available to it regarding the claim asserted by the
United States as set forth above in Paragraph 23.a. in such proceeding or other
action.
36. Upon receipt of the payment described in Paragraph 1.a. above, the United
States and Relator shall promptly sign and file in the Civil Action a Notice of
Intervention and Joint Stipulation of Dismissal with prejudice of the Civil
Action pursuant to the terms of the Agreement.
37. Except as otherwise provided, each party to this Agreement will bear its own
legal and other costs incurred in connection with this matter, including the
preparation and performance of this Agreement.
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38. Beverly Enterprises represents that this Agreement is freely and voluntarily
entered into without any degree of duress or compulsion whatsoever.
39. This Agreement is governed by the laws of the laws of the United States. The
Parties agree that the exclusive jurisdiction and venue for any dispute arising
between and among the Parties under this Agreement will be the United States
District Court for the Northern District of California, except that disputes
arising under the Corporate Integrity Agreement shall be resolved exclusively
under the provisions in the Corporate Integrity Agreement.
40. This Agreement and the Corporate Integrity Agreement which is incorporated
herein by reference constitutes the complete agreement between the Parties. This
Agreement may not be amended except by written consent of the Parties except
that only Beverly Enterprises and OIG-HHS must agree in writing to modification
of the Corporate Integrity Agreement.
41. The undersigned individuals signing this Agreement on behalf of Beverly
Enterprises represent and warrant that they are authorized by Beverly
Enterprises to execute this Agreement. The undersigned United States signatories
represent that they are signing this Agreement in their official capacities and
that they are authorized to execute this Agreement.
42. This Agreement may be executed in counterparts, each of which constitutes an
original and all of which constitute one and the same agreement.
43. This Agreement is effective on the date of signature of the last signatory
to the Agreement.
44. This Agreement is binding on successors, transferees, and assignees of the
Parties.
THE UNITED STATES OF AMERICA
Dated: BY:
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Laurie A. Oberembt
Trial Attorney
Commercial Litigation Branch
Civil Division
U.S. Department of Justice
Robert S. Mueller III
United States Attorney
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Dated: BY:
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Gail Killefer
Assistant United States Attorney
Northern District of California
Dated: BY:
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Lewis Morris
Assistant Inspector General
Office of Counsel to the
Inspector General
Office of Inspector General
United States Department of
Health and Human Services
THE RELATOR
Dated: BY:
------------------ -------------------------------
Domenic Todarello
Relator
Dated: BY:
------------------ -------------------------------
Francis J. Balint, Jr.
Bonnett, Fairbourn, Friedman &
Balint, P.C.
Counsel for the Relator
Dated: BY:
------------------ -------------------------------
John J. Stoia, Jr.
Jeffrey W. Lawrence
Milberg Weiss Bershad Hynes &
Lerach LLP
Counsel for the Relator
BEVERLY ENTERPRISES - DEFENDANT
Dated: BY:
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Beverly Enterprises, Inc.
17
17
Dated: BY:
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Griffin B. Bell, Esq.
J. Sedwick Sollers III, Esq.
King & Spaulding
Counsel for Beverly Enterprises,
Inc.
Dated: BY:
------------------ -------------------------------
Joseph E. Casson, Esq.
Proskauer Rose LLP
Counsel for Beverly Enterprises,
Inc.