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Exhibit 10.197    
    


 
 

MANAGEMENT SERVICES AGREEMENT    
    


        THIS MANAGEMENT SERVICES AGREEMENT ("Agreement") is effective as of May 19, 2003, by and between SIERRA MEDICAL MANAGEMENT, INC., a Delaware
corporation ("Manager"), and ANTELOPE VALLEY MEDICAL ASSOCIATES, INC., a California professional corporation ("GROUP"). 


RECITALS



        A.    GROUP
is a California professional medical corporation duly organized under the laws of the State of California and operated as an independent practice association, which
enters into agreements with organizations such as health care service plans (HMOs), preferred provider organizations (PPOs), exclusive provider organizations (EPOs), and other purchasers of medical
services (hereinafter collectively referred to as "Plans") for the arrangement of the provision of health care services to subscribers or enrollees of said Plans (the "Practice"); and 


        B.    Manager
has special expertise and experience in the operation, management and marketing aspects of independent practice associations of the type operated or intended to
be operated by GROUP. Manager has made a significant investment in the development of a system of operations, management and marketing necessary for management of the functions desired by GROUP to be
undertaken by Manager; and 


        C.    GROUP
desires to devote all of its time to arranging for the delivery of health care services to Plan subscribers or enrollees, and in connection therewith desires to
obtain the professional assistance of Manager in managing the business aspects of the Practice; and 


        D.    Manager
desires to provide GROUP with the necessary support to manage the business aspects of the Practice, including but not limited to clerical and billing services,
claims pursuit and collection, cash flow management, marketing and general administrative services (collectively, "Management Services"), to enable GROUP to concentrate on the development of the
professional aspects of the Practice. 


        E.    GROUP
and Manager desire to enter into this Agreement to set forth the terms of Manager's Management Services. 


        NOW
THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth and in exchange for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows: 


AGREEMENT


1.    PREMISES.    Pursuant to the Master Lease specified below, Manager shall provide GROUP with adequate
administrative office space at the addresses described therein (the "Premises") and Group shall retain all of its remaining facilities for the operation of the Practice with leasehold improvements,
auxiliary services and utilities in order that GROUP may effectively perform its functions and duties. 


        In
consideration of the sums to be paid to Manager under the terms of this Agreement, Manager hereby leases to GROUP during the term of this Agreement the furniture, fixtures and
equipment (the "FF&E") listed on Exhibit "B" attached hereto and incorporated herein by this reference, under the following terms and conditions: 



        1.1.  Manager
is the lessee under certain leases for the Premises (hereinafter collectively referred to as the "Master Lease") copies of which are attached hereto as Exhibit
"A" and incorporated herein by this reference. GROUP hereby acknowledges that the Premises described in the Master Lease are suitable for the administrative office of the Practice. Based and
contingent 



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upon
GROUP's promise to timely pay all amounts due under this Agreement, Manager hereby agrees to sublease the leased Premises to GROUP upon the following terms and conditions: 



        1.1.1. This
sublease between Manager and GROUP of the Premises shall be subject to all of the terms and conditions of the Master Lease. In the event of the termination of
Manager's interest as lessee under the Master Lease for any reason, then the sublease created hereby shall simultaneously
terminate unless GROUP is willing to assume the obligations under the Master Lease and the Lessor consents thereto. 



        1.1.2. All
of the terms and conditions contained in the Master Lease are incorporated herein as terms and conditions of the sublease (with each reference therein to "Lessor"
and "Lessee," to be deemed to refer to Manager and GROUP, respectively) and, along with the provisions of this Section and Exhibit "A," shall be the complete terms and conditions of the sublease
created hereby. 


        1.1.3. Notwithstanding
the foregoing, as between Manager and GROUP, Manager shall remain responsible for meeting the financial obligations of "Lessee" under the Master
Lease, and GROUP shall have no monetary obligation in that regard. In addition, as between Manager and GROUP, Manager shall retain all rights to exercise any options to purchase the Premises, or other
similar rights of ownership or possession, which may be granted under the Master Lease, and GROUP shall have no rights in that regard. 


        1.1.4. In
the event this Agreement is terminated according to its terms, this sublease shall also terminate automatically. 


        1.1.5. If
the Master Lease contains an option to renew the term thereof, Manager shall notify GROUP, at least thirty (30) days prior to the expiration of the time for
exercising such option, of Manager's intention to renew or not to renew such term. If Manager determines not to renew such term, Manager shall, at GROUP's option and upon the consent of the Landlord
in accordance with the terms of the Master Lease, assign the Master Lease to GROUP, including Manager's right to renew the term thereof. 





2.    PROVISION OF FURNITURE, FURNISHINGS AND EQUIPMENT ("FF&E").    Manager hereby provides to GROUP, and
GROUP hereby leases from Manager, all the FF&E, which FF&E GROUP agrees are suitable and sufficient for GROUP's use in the operation of GROUP's medical practice at the Premises and are generally in
good repair. The use by GROUP of said FF&E shall be subject to the following conditions: 



        2.1.  Title
to all of the FF&E shall remain in Manager at all times, and upon the termination of this Management Services Agreement, GROUP shall immediately surrender the
FF&E to Manager in as good condition as of the date hereof, normal wear and tear excepted. Alternatively, GROUP, in its sole discretion, shall have the option to purchase any or all of the FF&E upon
termination hereof. GROUP shall exercise such option, if at all, by giving Manager written notice of same (the "Notice") within twenty (20) days of the effective date of termination hereof.
Upon exercise of such option, Manager shall convey to GROUP within thirty (30) days of the effective date of termination hereof, all of the FF&E identified in the Notice, together with
(i) any manufacturer's warranties that Manager has received in connection with such FF&E and (ii) a bill of sale or such other instrument of conveyance as is reasonably necessary to
accomplish said purchase; and GROUP shall simultaneously convey to
Manager the purchase price for said FF&E. The purchase price shall be paid all in cash, and shall equal the fair market value of the FF&E. 


        2.2.  Manager
shall be responsible for all repairs and maintenance of the FF&E other than damage caused by negligence or willful misuse by GROUP; provided, however, GROUP
shall employ reasonable efforts to prevent damage to and excessive wear of the FF&E, and shall promptly notify Manager of any needed repairs thereto. 



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        2.3.  Manager
shall be responsible for all property taxes and other assessments relating to or arising out of ownership or use of the FF&E that accrue on and after the date
hereof. 


        2.4.  Manager
shall provide and maintain, at its expense, such additional or replacement FF&E as the Practice reasonably requires from time to time, as determined by Manager
in its sole discretion, in consultation with GROUP. Such additional or replacement FF&E shall be subject to all of the terms of Section above. 


        2.5.  GROUP
may provide additional equipment at the Practice ("GROUP Equipment") at its sole cost and expense. GROUP shall be responsible for all repairs, maintenance and
replacement of, as well as all property taxes and other assessments relating to or arising out of ownership or use of, such additional equipment, unless GROUP requests that Manager provide such
repairs, maintenance and replacement upon such terms and conditions as the parties may agree including, without limitation, an increase in the Management Fee (as defined in Section 9 below).
Title to said GROUP Equipment shall remain in GROUP's name at all times. 


        2.6.  All
revenues of the GROUP derived directly or indirectly from any and all FF&E or GROUP Equipment located at or used in connection with the Practice, shall be included
in "Gross Revenues" as defined in Exhibit "D." 




3.    MANAGER RESPONSIBILITIES.    



        3.1.  During
the term of this Agreement, GROUP appoints and engages Manager to serve as its exclusive manager and administrator of all non-physician functions and
services relating to the operation of the Practice, and Manager agrees to furnish to GROUP those Management Services set forth below. Notwithstanding such appointment and engagement, GROUP will have
exclusive authority and control over the professional aspects of the Practice to the extent the same
constitute or directly affect the practice of medicine, including all diagnosis, treatment and ethical determinations with respect to patients which are required by applicable law to be decided by a
physician. 



        3.1.1.    General Administrative Services.    Manager shall provide general business
management, administration and supervision for the business operations of GROUP, which shall include secretarial and other office personnel support services, staff support for GROUP'S board of
directors and committee meetings, administrative record keeping, and other similar administrative services required in the day-to-day operation of GROUP. 


        3.1.2.    Accounting and Financial Management Services.    Manager shall provide the following
accounting and financial management services: 



        3.1.2.1. Manager
will prepare, in consultation with GROUP, annual budgets for the Practice, reflecting in reasonable detail anticipated revenues and expenses. 



        3.1.2.2. Manager
shall, pursuant to GROUP's instructions, establish bank accounts in the name of GROUP ("Accounts") for the deposit of all sums received by GROUP for
services provided to Members. GROUP agrees that Manager shall have the authority to deposit checks and funds received by GROUP in Accounts. Manager shall further have the authority to make transfers
of funds to Accounts and further, Manager shall have the authority to sign checks and stop payment on any checks drawn on Accounts. 


        3.1.2.3. Manager
agrees to reconcile checks written with bank statements on a monthly basis; 


        3.1.2.4. Manager
agrees to make recommendations regarding check signature approvals and banking procedures of GROUP; 



        3.1.2.5. Manager
agrees to prepare balance sheets and income statements on a monthly basis during the term of this Agreement. Such financial statements shall not be 





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audited
statements. Manager agrees to cooperate with any annual audit GROUP obtains at its sole cost and expense by an independent public accountant selected by GROUP; 


        3.1.2.6. Manager
shall receive and deposit on a timely basis capitation and other payments received by GROUP; 



        3.1.2.7. Manager
shall calculate primary care capitation and specialty, ancillary and other payable claims based on the records provided by the Participating Plans and shall
prepare checks to pay such amounts due and shall mail said payments to the respective providers; 


        3.1.2.8. Manager
shall monitor Plan subscribers or enrollees exceeding stop loss deductibles and communicate with Plans orally or in writing to seek reimbursement on behalf
of GROUP; 


        3.1.2.9. Manager
shall bill other payors for coordination of benefits and other third party liability payments according to the terms of the Plan/GROUP Agreements; 



        3.1.2.10. Manager
shall administer capitation and other distributions from Plans including auditing and monitoring of risk pools, negotiation settlement of GROUP's share of
such pools and establishment and maintenance of incurred but not reported ("IBNR") reserves for GROUP; 


        3.1.2.11. Manager
shall monitor any other revenue receipt programs Plans may have, including but not limited to pre-existing pregnancy recovery, and seek
reimbursement from said Plans; and 


        3.1.2.12. Manager
shall assist GROUP in establishing and administering a physician incentive system and a system to establish and adjust reserves for medical expenses. 




        3.1.3.    Office Service; Billing.    Manager shall provide bookkeeping and accounting
services, including, without limitation, maintenance, custody and supervision of GROUP's business records, papers and documents, ledgers, journals and reports, and the preparation, distribution and
recording of all bills and statements for professional services rendered by GROUP, as well as all reports and forms required by applicable third party payors. GROUP shall at all times have the
ultimate responsibility for setting all fees for professional services provided on a fee for service basis to patients of the Practice, as well as negotiating with each managed care contract Payor.
All billings for services rendered to patients by the Practice shall be made under GROUP's name and provider number(s), and Manager shall act as GROUP's agent in the preparation, rendering and
collection of such billings. GROUP hereby appoints Manager for the term hereof as its true and lawful agent for the following purposes: 



        3.1.3.1. to
bill patients in GROUP's name and on its behalf; 


        3.1.3.2. to
collect accounts receivable generated by such billings in GROUP's name and on GROUP's behalf; 


        3.1.3.3. to
receive on behalf of GROUP payments from the patients, Plans, Medicare, Medicaid, and all other third-party payors; 



        3.1.3.4. to
take possession of and deposit in the name and on behalf of GROUP to one or more Accounts designated by GROUP any notes, checks, money orders, insurance
payments, and any other instruments received as payment of accounts receivable; and 


        3.1.3.5. to
collect in GROUP's name and on its behalf all collections of Gross Revenues (as defined in Exhibit "D" hereto). 




        3.1.4.    Claim Settlement; Exculpation.    GROUP acknowledges and agrees that Manager shall
have discretion to compromise, settle, write off or determine not to appeal a denial of 




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any
claim for payment for any particular professional service rendered at the Practice. Further, GROUP agrees to hold harmless Manager and its officers, directors, agents, contractors, representatives
and employees, from and against any and all liability, loss, damages, claims, causes of action, and expenses associated therewith (including, without limitation, attorneys' fees) caused or asserted to
have been caused, directly or indirectly, by or as a result of any acts, errors or omissions hereunder of Manager or any of its officers, directors, agents, contractors, representatives and employees,
in performing Manager's billing or collection duties hereunder. 


        3.1.5.    Financial Reports.    Furnishing to GROUP monthly and annual financial reports
reflecting the GROUP's financial status, provided that Manager shall have no obligations with respect to any shareholder's of GROUP personal finances or any tax returns of the GROUP or any shareholder
of GROUP. 


        3.1.6.    Provider Contract Administration.    During the term of this Agreement, Manager
shall provide the following provider contract administration services to GROUP: 



        3.1.6.1. Identify
and solicit participation of health care providers identified by the GROUP as necessary for GROUP operations; 


        3.1.6.2. Review
and make recommendations regarding the business terms of agreements between GROUP and Participating Providers; 


        3.1.6.3. Make
recommendations regarding compensation to Participating Providers; 


        3.1.6.4. Make
recommendations regarding the definition of primary, specialty and ancillary services; 


        3.1.6.5. Instruct
all Participating Providers and their office staff regarding established GROUP policies and procedures at least annually during the term of this Agreement. 


        3.1.6.6. Coordinate
the preparation, negotiation and renewal of GROUP Participating Provider Agreements. 




        3.1.7.    Administer Member Eligibility Process.    Manager shall provide the following
services regarding administration of the member eligibility process: 



        3.1.7.1 Maintain
and update a current eligibility list to Plan subscribers and enrollees under all Plan agreements. 


        3.1.7.2 Verify
eligibility on claims and referrals based on the most current information provided by Plans; 



        3.1.7.3 Administer
system for retroactive eligibility determination and assist GROUP in identifying outstanding accounts receivable from ineligible patients. 




        3.1.8.    Utilization Management/Quality Assurance.    Manager agrees to provide the following
services regarding utilization management and quality assurance. 



        3.1.8.1. Manager
shall implement systems, programs and procedures necessary for GROUP and Participating Providers to perform utilization and quality management. 



        3.1.8.2 Manager
shall recommend procedures for prior authorization of elective, urgent and emergent out-patient ambulatory surgery and hospital procedures; 


        3.1.8.3 Manager
shall assist GROUP with prospective, concurrent and retrospective review of medical procedures in accordance with GROUP policies and Plan requirements; 


        3.1.8.4 Manager
shall provide data regarding the use of outpatient and inpatient services by provider to GROUP; 





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        3.1.8.5 Manager
shall provide data regarding the use of noncontracting providers; 


        3.1.8.6 Manager
shall provide secretarial support, logs, and minutes to the Medical Director and the Quality and Utilization Management Committee of GROUP; 


        3.1.8.7 Manager
shall assist Medical Director and the Quality and Utilization Management Committee in responding to Plan Member grievances based on the instructions of the
Medical Director; 


        3.1.8.8 Manager
shall provide staff assistance to GROUP in the credentialing process GROUP is required to conduct to assure that providers have current licenses and medical
staff privileges. 




        3.1.9.    Supplies.    Manager shall order and purchase all supplies required by GROUP in
connection with the operation of the administrative office of the Practice, including furnishing to GROUP all necessary forms, supplies, postage and duplication services, provided that all supplies
acquired and services provided shall be reasonably necessary in connection with the day-to-day operations of the Practice. 



        3.1.10.    Filing of Reports.    Manager shall prepare and file all forms, reports, and
returns required by law in connection with unemployment insurance, workers' compensation insurance, disability benefits, social security, and other similar laws (excluding income or franchise tax
forms of GROUP or any of GROUP's shareholders, employees or contractors or providing any other tax-related services on their behalf) now in effect or hereafter imposed. 


        3.1.11.    Marketing and Public Relations Services.    Manager will assist GROUP in GROUP's
marketing, public relations and advertising of the health care services provided by GROUP. Manager, shall provide and be principally responsible for marketing and advertising services for GROUP and
prepare signs, brochures, letterhead, advertisements, and other marketing materials for GROUP. Manager may, at its discretion, contract with third parties to assist it in the provision of GROUP
marketing and public relations services, should Manager deem such action advisable. Manager shall produce and distribute such written descriptive materials concerning GROUP's professional services,
subject to the prior approval of GROUP, as may be necessary or appropriate to the conduct of the Practice. In providing such marketing services, Manager is acting solely in its capacity as
administrator for the GROUP. At no time shall Manager hold itself out as providing, or actually provide, medical services on behalf of GROUP. All such marketing services shall be conducted in
accordance with the laws, rules, regulations and guidelines of all applicable governmental and quasi-governmental agencies, including but not limited to the Medical Board of California. Manager shall
be the owner and holder of all right, title and interest in and to any such marketing and advertising materials. 


        3.1.12.    Professional and Other Services.    Manager shall be responsible for arranging and
paying for payroll, legal and accounting services related to GROUP operations in the ordinary course of business, including the cost of enforcing any managed care plan, physician or subcontractor
contracts, but excluding the cost of malpractice suits. 




        3.2.    Managed Care Contracting.    



        3.2.1. Manager
shall act as GROUP's exclusive agent in seeking and negotiating managed care contracts ("Contracts"). Manager is hereby authorized to negotiate, in its sole
discretion, all terms of the Contracts. GROUP hereby appoints Manager for the term hereof as its true and lawful agent to perform all actions contemplated by this Section including, without
limitation, the evaluation, negotiation, administration, renewal and execution of Contracts on GROUP's behalf and binding GROUP to performance thereunder, provided that the Plan with whom each
Contract is entered agrees to pay an amount for GROUP's professional 




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services
thereunder equal to or greater than the minimum rate that GROUP shall specify to Manager. GROUP shall complete and execute the Power of Agency attached hereto as Exhibit "C." 


        3.2.2. Manager
shall also be responsible for general monitoring of GROUP compliance with the requirements, terms and conditions of Plan Contracts. 



        3.2.3. Manager
shall notify and provide copies to GROUP of each Contract (together with all related materials received from the applicable Payor) that Manager executes as
GROUP's agent. GROUP shall comply with all terms of each Contract including, without limitation, the terms of all documents or
instruments incorporated therein by reference and all documents or instruments related thereto that Manager executes or agrees to on GROUP's behalf, as well as all applicable law. GROUP further agrees
that an essential term of this Agreement is GROUP's undertaking to provide cost-effective medical care consistent with accepted medical practices prevailing in the GROUP's service area. 



        3.2.4. Nothing
in this Agreement shall prevent Manager from entering into similar agreements with Plans on behalf of other independent practice associations, medical groups,
physicians, health care professionals or entities comprised of physician or health care professionals. 


        3.2.5. GROUP
acknowledges and agrees that (i) Manager shall in no way be responsible for payment of any sums payable to GROUP under any such Contract (whether by any
Payor or otherwise), and (ii) Manager in no way guarantees or insures the payment to GROUP of any such amounts. 




        3.3.    Personnel.    Manager shall employ or contract with and provide all necessary
personnel, including quality assurance, utilization review, claims processing, secretarial and clerical personnel as are reasonably necessary for the conduct of the Practice (collectively, "Manager
Personnel"). Manager shall, in its sole and absolute discretion, determine the types and numbers of personnel and the number of hours and schedules of said personnel it determines are necessary or
appropriate to provide the administrative and management services to be provided pursuant to this Agreement. Manager shall provide such personnel at its sole cost and expense and such personnel may,
at the sole and absolute discretion of Manager, be employees or independent contractors of Manager. Manager shall, in its sole and absolute discretion, have the right, but shall not be required, to
engage as Manager Personnel any or all of those individuals who were employees of GROUP immediately prior to the date hereof ("GROUP's Former Employees"). Manager shall have sole control over
promotion and employee disciplinary and termination matters with respect to Manager Personnel (including, without limitation, GROUP's Former Employees), and shall not be responsible for any accrued
vacation, paid time off or other benefits to such individuals that have accrued prior to the date that Manager engages them as its employees. 


        3.4.  Notwithstanding
the delegation of management and administrative functions to Manager pursuant to this Agreement, GROUP and its board or directors or other governing
body shall retain and exercise ultimate control and authority over the direction, policies, management and operation of GROUP at all times. Therefore, management and administrative functions delegated
to Manager pursuant to this Agreement shall be performed in a manner consistent with the general policies and directives of GROUP. All professional medical and health care services provided to
subscribers or enrollees shall be the ultimate responsibility of the GROUP's Participating Providers. GROUP shall use its best efforts to cause Participating Providers to cooperate with Manager in the
implementation of the protocols, programs, policies, and procedures developed for GROUP by Manager. 



        3.5.  Manager
is hereby expressly authorized by GROUP to perform all services required of Manager pursuant to the terms of this Agreement in the manner Manager deems
reasonable and 



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appropriate
to meet the day-to-day requirements of GROUP. To the extent required or desirable to enable Manager to perform such services, GROUP hereby appoints Manager for the
term hereof as its true and lawful agent. GROUP acknowledges and agrees that Manager may subcontract with other persons or entities, including entities related to Manager by ownership or control, to
perform any part or all of the services required of Manager hereunder. 



        3.6.  Upon
the request of GROUP, Manager shall provide or arrange for the provision of additional services, beyond those described herein. Any additional services provided by
Manager are subject to Manager's capacity and availability to provide the services so requested. Should Manager provide such additional services, GROUP agrees to pay Manager for such services at its
then current rates as a supplemental payment to the Management Fee described herein. 


        3.7.  Notwithstanding
any other provision contained herein, Manager shall not be liable to GROUP and shall not be deemed to be in default hereunder for the failure to perform
or provide any of the services, personnel or other obligations to be performed or provided by Manager pursuant to this Agreement if such failure is a result of collective bargaining, a labor dispute,
act(s) of God, or any other event which is beyond the reasonable control of Manager or which was not reasonably foreseeable by Manager. 




4.    RESPONSIBILITIES OF GROUP.    



        4.1.  GROUP
covenants and agrees that, at all times during the term of this Agreement and any extension thereof, it shall conduct all corporate activities required by its
Articles of Incorporation and Bylaws, including but not limited to election of a Board of Directors, election of Officers, appointment of committee members including but not limited to the Quality and
Utilization Management Committee. In addition, GROUP agrees to appoint a Medical Director. GROUP shall be solely responsible for payment of any and all compensation, payroll taxes, fringe benefits,
disability insurance, workers' compensation insurance and any other benefits of all such individuals. 


        4.2.  GROUP
shall not enter into any agreements with Participating Providers unless such Participating Providers have: (i) current unrestricted licenses to practice
their respective professions in the State of California and (ii) current unrestricted Federal Drug Enforcement Agency ("DEA") numbers. In addition, where GROUP contracts with individual
physicians, such physicians shall have medical staff membership at the hospitals required by Participating Plans and where GROUP contracts with licensed clinics and medical groups, at least one
primary care physician practicing at each clinic or medical group shall have medical staff membership at the hospitals required by Participating Plans. GROUP further agrees to establish procedures to
ensure that Participating Providers meet these requirements
on an ongoing basis. Manager shall reasonably cooperate with and assist GROUP to meet its obligations under this Section; provided however, that GROUP acknowledges and agrees that it shall retain
ultimate responsibility for meeting such obligations. 


        4.3.  GROUP
acknowledges and agrees that it is solely responsible for making all required reports to the Medical Board of California under Section 805 of the
California Business and Professions Code and the National Practitioner Data Bank. 



        4.4.  GROUP
shall, at its sole cost and expense, procure and maintain at all times during the term of this Agreement comprehensive general and professional liability
insurance covering all activities of GROUP directly or indirectly relating to GROUP, each policy in a minimum amount of $1,000,000.00 per occurrence and $3,000,000.00 in the aggregate. The
aforedescribed comprehensive general and professional liability insurance shall be issued by a company or companies authorized to do business in California with a financial rating of at least A or AA
or better in "Best's Key Rating Guide" or its equivalent. In the event GROUP procures a "claims made" policy as distinguished from an "occurrence" policy, GROUP shall procure and maintain at its sole
cost and expense, prior to termination of such insurance, "tail" coverage to continue and 



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extend
coverage complying with this Agreement after the end of the "claims made" policy. Upon reasonable request from Manager, GROUP shall cause to be issued to Manager proper certificates of
insurance, evidencing that the foregoing provisions of this Agreement have been complied with, and said certificates shall provide that prior to any cancellation or change in the underlying insurance
during the policy period, the insurance carrier shall first give thirty (30) calendar days written notice to Manager. 



        4.5.  GROUP
shall ensure that Participating Providers procure and maintain professional liability insurance with minimum coverage amounts of $1,000,000.00 per occurrence and
$3,000,000.00 in the aggregate. GROUP shall ensure that any Participating Provider who procures insurance required hereunder on a "claims made" rather than an "occurrences" form will obtain either
extended reporting insurance coverage ("tail coverage") with liability limits equal to those most recently in effect prior to the day of termination of such Participating Provider's contract with
GROUP, or will enter into such other arrangements as shall reasonably assure the maintenance of coverage for such Provider, GROUP, and Manager against the risk of loss in respect of professional
services rendered by such provider while this Agreement was in effect and for a period of not less than seven (7) years after the date of termination of this Agreement. 


        4.6.  GROUP
acknowledges and agrees that it shall reasonably assist and cooperate with Manager to meet all of Manager's obligations under this Agreement, including approval
of agreements and provision of information. GROUP acknowledges and agrees that Manager shall have no liability for GROUP's failure to pay any and all of GROUP's debts and expenses. 




5.    TERM; TERMINATION.    



        5.1.  Term. The term of this Agreement (the "Term") shall commence on the date hereof and shall expire on the thirtieth (30th)
annual anniversary hereof unless earlier terminated as provided below. The term of this Agreement shall be automatically extended for additional terms of ten (10) years each, unless either
party delivers to the other party, not less then twelve (12) months nor earlier than fifteen (15) months prior to the expiration of the preceding term, written notice of such party's
intention not to extend the term of this Agreement. 


        5.2.    Termination for Cause.    Either party may terminate this Agreement for cause at any
time during the Term immediately upon written notice (except as otherwise provided below). For purposes of this Section "cause" shall include, without limitation, the following: 



        5.2.1. If
either party fails to materially perform any obligation required hereunder, and such default shall continue for sixty (60) calendar days after written
notice from the other party specifying the nature and extent of failure to materially perform such obligation, this Agreement shall terminate automatically and immediately upon the expiration of said
sixty (60) calendar day period; provided, however, that if the obligation which the defaulting party fails to perform is other than the failure to make payment of money, and greater than sixty
(60) calendar days are required to perform said obligation, then such party shall not be in default of this Agreement and the Agreement shall not terminated as provided hereinabove if such
party commences performance within said sixty day period and diligently pursues said obligation to completion. 


        5.2.2. If
either party shall apply for or consent to the appointment of a petition in bankruptcy, make a general assignment for the benefit of creditors, file a
petition or answer seeking reorganization or arrangement with creditors, or take advantage of any insolvency, or if any order, judgment, or decree shall be entered by any court of competent
jurisdiction on the application of a creditor or otherwise adjudicating either party bankrupt or approving a petition seeking reorganization of either party or appointment of a receiver, trustee or
liquidator of either party or all or a substantial part of its assets, and such order, judgment or decree shall continue stayed and in effect for sixty (60) calendar days after its entry, 




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termination
shall be effective automatically and immediately upon the occurrence of the foregoing. 




        5.3.    Jeopardy.    In the event the performance by either party hereto of any term,
covenant, condition or provision of this Agreement should be determined by a state or federal court or governmental agency to be in violation of any statute, ordinance, or be otherwise deemed illegal
("Jeopardy Event"), then the parties shall use their best efforts to meet forthwith and attempt to negotiate an amendment to this Agreement to remove or negate the effect of the Jeopardy Event. In the
event the parties are unable
to negotiate such an amendment within thirty (30) days following written notice by either party of the Jeopardy Event, then either party may terminate this Agreement immediately upon written
notice. 




6.    RIGHTS OF MANAGER UPON TERMINATION.    



        6.1.  In
the event of the termination of this Agreement for any reason, including without limitation the breach of this Agreement by either party, Manager shall be entitled
to recover (out of the Accounts (as defined in Section 3.1.2.2 hereof) or otherwise) from GROUP all fees, and any and all advances and other charges owed to Manager that had accrued but were
unpaid as of the date of termination. 


        6.2.  In
the event of termination of this Agreement for any reason, Manager shall remain entitled to its Management Fee with respect to all Gross Revenues (as defined in
Exhibit "D" hereto) that have accrued on or before the effective date of termination, which shall be payable, without limitation, out of Net Revenues attributable thereto whether received before, on
or after the effective date of termination. Further, GROUP shall remain obligated to reimburse Manager for any and all other unpaid Management Fees that have accrued hereunder as of the date of
termination. 




7.    REPRESENTATIONS AND WARRANTIES OF GROUP.    The following representations and warranties of GROUP are
made to Manager for the purpose of inducing Manager to enter into this Agreement. GROUP represents and warrants as follows: 



        7.1.  GROUP
is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all necessary corporate powers to own its
properties and to operate pursuant to its corporate purposes. 


        7.2.  GROUP's
Board of Directors has all requisite power to execute, deliver and perform this Agreement. Neither the execution and delivery of this Agreement, nor the
consummation and performance of the transaction contemplated in this Agreement, shall constitute a default or an event that would constitute a default under, or violation or breach of, GROUP's
Articles of Incorporation, Bylaws or any license, lease, franchise, mortgage, instrument, or other agreement to which GROUP may be bound. 



        7.3.  GROUP
has furnished Manager full and complete copies of all contracts and agreements affecting GROUP including, but not limited to, all contracts to which GROUP is a
party. 



10









  



        7.4.  GROUP
and any and all physicians providing services to Participating Plans have each complied with, and are not in violation of, applicable federal, state or local
statutes, laws and regulations including, but not limited to, statutes, laws and regulations regarding the practice of medicine and surgery in California, participation in the Medicaid and Medicare
programs or the operation of GROUP and all applicable standards of practice relating to the provision of professional services hereunder. 



        7.5.  GROUP
and any and all Participating Providers providing services for the GROUP have each obtained and currently maintain all necessary licenses, permits, contracts, and
approvals required by federal, state or local statutes and regulations for the proper conduct of the business of the GROUP as it is now being conducted and have been approved by the Board of Directors
or its properly designated committee, as documented by written committee minutes. 


        7.6.  There
is no action, suit, proceeding, investigation or litigation outstanding, pending or, to the best of GROUP's knowledge, threatened, affecting GROUP other than
routine patient collection matters and professional liability cases adequately covered by insurance. 



        7.7.  GROUP
represents and warrants that each GROUP Participating Provider is as of the date hereof, and shall at all times during the term hereof be and remain: 



        7.7.1. duly
licensed to practice medicine within the State of California and in possession of a federal DEA number, all without limitation, restriction or condition
whatsoever; 


        7.7.2. entitled
to receive Medicare and Medicaid reimbursement without limitation, restriction or condition whatsoever; 


        7.7.3. in
compliance with the insurance requirements set forth in Section 4.5 hereof. 




        7.8.  GROUP
represents and warrants that it and each GROUP Participating Provider shall (i) comply with all applicable governmental laws, regulations, ordinances, and
directives and (ii) perform his or her work and functions at all times in strict accordance with currently approved methods and practices in his or her field. 


        7.9.  GROUP
represents and warrants that, as of the date hereof: 



        7.9.1. (i) All
of GROUP's Former Employees and any current non-professional employees of GROUP related to the Practice ("Practice Employees")
(i) if terminated, have been properly terminated as of the consummation of the merger between Professional Care Medical Group, Inc. and Prospect LA Medical Group, Inc., which
resulted in GROUP (the "Closing") without creating any cause of action or otherwise giving rise to any liability for wrongful discharge, breach of contract, tort or other cause of action at law or in
equity, and there are no such actions pending or, to GROUP's knowledge, threatened, and GROUP has satisfied all obligations to such employees for all accrued salaries and benefits, or (ii) are
subject to such other disposition as is satisfactory to Manager. 


        7.9.2. There
is no liability to any employee or third party, including any governmental agency, for any employee benefits, compensation, taxes or withholdings of any kind
with respect to any of the Practice Employees other than those items arising in the normal course of business immediately prior to the Closing, all of which items shall be set forth in
Schedule 7.9.2. There are no accrued vacations or sick leave for any of the Practice Employees for which Manager may become liable by reason of any of the transactions contemplated under this
Agreement. GROUP shall be solely responsible to comply with the requirements, if any, of the federal Worker Adjustment and Retraining Notification Act. 



        7.9.3. There
are no threats of strikes or work stoppages by any of the Practice Employees. The GROUP is not a party to any contract or agreement with a labor union or any
local or 




11







 





subdivision
thereof, and has not been charged with any unresolved unfair labor practices, and there are no labor grievances or any present union organizing activity among any of the Practice
Employees. 





8.    REPRESENTATIONS AND WARRANTIES OF MANAGER.    The following representations and warranties of Manager
are made to GROUP for the purpose of inducing GROUP to enter into this Agreement. Manager represents and warrants as follows: 



        8.1.  Manager
is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all necessary corporate powers to own
its properties and to operate pursuant to its corporate purposes. 


        8.2.  Manager
has all requisite power to execute, deliver and perform this Agreement. Neither the execution and delivery of this Agreement, nor the consummation and
performance of the transaction contemplated in this Agreement, shall constitute a default, or an event that would constitute a default
under, or violation or breach of, Manager's Certificate of Incorporation, Bylaws or any license, lease, franchise, mortgage, instrument, or other agreement to which Manager may be bound. 


        8.3.  There
is no action, suit, proceeding, investigation or litigation outstanding, pending or, to the best of Manager's knowledge, threatened, affecting Manager. 




9.    MANAGER COMPENSATION.    



        9.1.  As
compensation for its services hereunder, Manager shall be reimbursed its Costs (as defined in Exhibit D attached hereto) and a management fee (the "Management
Fee") in the amount set forth on Exhibit D attached hereto and incorporated herein by reference. 


        9.2.  After
deduction of amounts which are reimbursed to Manager and which are retained by Manager as Management Fee compensation, all remaining Gross Revenues shall be
remitted to GROUP. From such sums, Manager shall pay, on GROUP's behalf, the Cost of Medical Services (as defined in Exhibit D attached hereto), such other payments or disbursement which
Manager may be authorized or required to make pursuant to this Agreement and such payments or disbursements which GROUP shall direct Manager to make. Should the funds in GROUP's accounts not be
sufficient at any time during the term of this Agreement to make such disbursements and to meet the GROUP's financial obligations, Manager shall have the right (but not the obligation) to loan to
GROUP funds in an amount sufficient to allow GROUP to meet its financial obligations. Such loan shall bear interest at a rate that is at or above fair market value and shall have such other terms as
the parties may agree from time to time. Manager shall not lend any funds to GROUP for such purposes without the prior approval of GROUP's Board of Directors or the officer(s) of GROUP delegated such
power of approval by GROUP's Board of Directors. 




10.    RECORDS.    



        10.1. All
medical records and documents, including reports, x-rays, and other similar types of reports for patients of GROUP providers shall be the property of
GROUP's providers. GROUP agrees to require GROUP providers to allow Manager and its duly authorized representatives to inspect, audit and duplicate any data or records necessary for Manager to perform
its duties pursuant to this Agreement. GROUP and Manager shall comply with all applicable federal, state, and local laws and regulations pertaining to the confidentiality of said medical records. 


        10.2. All
business records, information, software and systems of the Manager relating to the provision of its services under this Agreement shall remain the property of the
Manager and may be removed by the Manager upon any termination of this Agreement. 



12







 





11.    INDEMNIFICATION.    Each party shall indemnify, defend and hold harmless the other, its officers,
directors, agents, contractors, representatives and employees, and each of its affiliates from and against any and all liability, loss, damages, claims, causes of action, and expenses associated
therewith (including, without limitation, attorneys' fees) caused or asserted to have been caused, directly or indirectly, by or as a result of any acts, errors or omissions hereunder of the other,
its contractors, shareholders, employees or agents during the term hereof. The provisions of this section shall survive the expiration or earlier termination of this Agreement. 



12.    PROPRIETARY INFORMATION.    



        12.1. At
all times during the term hereof and following the expiration or earlier termination of this Agreement, all trade secrets and proprietary confidential information
of Manager, including without limitation, all forms of contracts and other business documents or information of Manager, whether currently or in the future developed or maintained by Manager and
including any and all deletions, additions, modifications and amendments thereto (collectively, "Manager's Proprietary Materials"), shall be the exclusive, sole and absolute property of Manager. Both
parties acknowledge and agree that Manager has developed Manager's Proprietary Materials at significant expense, and that said Proprietary Materials are not available for review or use by members of
the public. All of Manager's Proprietary Materials are and shall at all times remain confidential and proprietary and constitute valuable trade secrets of Manager. Except in the ordinary course of
performing its obligations under this Agreement and except upon Manager's prior written consent, GROUP shall not disclose to anyone, use, copy, or take any such trade secrets or confidential and
proprietary information for GROUP's benefit or gain either during the term of this Agreement or at any time after the termination hereof. Upon any expiration or earlier termination of this Agreement
for any reason, GROUP shall not, without the prior written consent of Manager, take or use any of Manager's Proprietary Materials, and shall return to Manager all of Manager's Proprietary Materials in
GROUP's possession or control. 


        12.2. At
all times during the term hereof and following the termination of this Agreement, GROUP shall not, directly or indirectly, interfere with, disrupt or attempt to
disrupt the relationship, contractual or otherwise, between Manager and any health care provider or supplier (including, without limitation, any physician or osteopath), or any employee, independent
contractor, consultant or agent of Manager. GROUP further agrees not to hire, engage or contract with, either as an independent contractor, employee or in any other capacity, any personnel of Manager,
other than personnel of Manager who are GROUP's Former Employees, during the first twelve (12) months following the effective expiration or termination date hereof without Manager's prior
written consent. 


        12.3. The
provisions of this Section 12 shall survive the termination of this Agreement. 




13.    INDEPENDENT CONTRACTORS.    The parties hereto acknowledge and agree that the relationship created
between Manager and GROUP is strictly that of independent contractors. Nothing contained herein shall be construed as creating a partnership or joint venture relationship between the parties. Each
party hereto shall be responsible for all compensation, salaries, taxes, withholdings, contributions, benefits, and workers' compensation insurance with respect to all personnel employed or contracted
by said party and shall indemnify, defend and hold harmless the other party and its officers, directors, agents, contractors, representatives and employees (and, in the case of GROUP's indemnification
of Manager, Manager's affiliates and subcontractors) from and against any and all liability, loss, damages, claims, causes of action, and expenses associated therewith (including, without limitation,
attorneys' fees) caused or asserted to have been caused, directly or indirectly, by or as a result of same. The provisions of this Section shall survive the expiration or earlier termination of this
Agreement. 


13







 

14.    INTENTIONALLY OMITTED.    


15.    MISCELLANEOUS.    



        15.1.    No Third Party Beneficiaries.    The parties intend that the benefits of this
Agreement shall inure only to Manager and GROUP and not to any third person, except as expressly so stated herein. Notwithstanding anything contained herein, or any conduct or course of conduct by any
party hereto, before or after signing this Agreement, this Agreement shall not be construed as creating any right, claim or cause of action against either Manager or GROUP by any other person or
entity. 


        15.2.    Entire Agreement.    This Agreement, together with all exhibits and schedules hereto,
and all documents referred to herein, constitutes the entire agreement between the parties with respect to the subject matter hereof, supersedes all other and prior agreements on the same subject,
whether written or oral and contains all of the covenants and agreements between the parties with respect to the subject matter hereof. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise, have been made by the other party(ies), or by anyone acting on behalf of any party, that are not embodied herein, and that
no other agreement, statement, or promise not contained in this Agreement shall be valid or binding. 


        15.3.    Successors and Assigns.    All of Manager's rights and duties under this Agreement
may be assigned or delegated by Manager, including but not limited to, an assignment to Comerica Bank, a Michigan banking corporation successor to Imperial Bank, a California banking corporation.
Notwithstanding any
other provision of this Agreement, neither this Agreement nor the rights and duties of this Agreement may be assigned or delegated by GROUP. This Agreement binds the successors, heirs, and authorized
assignees of the parties. 


        15.4.    Counterparts.    This Agreement, and any amendments thereto, may be executed in
counterparts, each of which shall constitute an original document, but which together shall constitute one and the same instrument. 


        15.5.    Headings.    The section headings contained in this Agreement are inserted for
convenience only and shall not effect in any way the meaning or interpretation of this Agreement. 


        15.6.    Notices.    Any notices required or permitted to be given hereunder by either party
to the other shall be in writing and shall be deemed delivered upon personal delivery or delivery by electronic facsimile; twenty-four (24) hours following deposit with a courier
for overnight delivery; or seventy-two (72) hours following deposit in the U.S. Mail, registered or certified mail, postage prepaid, return-receipt requested, addressed to the
parties at the following addresses or to such other addresses as the parties may specify in writing: 



	If to GROUP:	 	Antelope Valley Medical Associates, Inc.

1920 East 17th Street, Suite 200

Santa Ana, CA 92705-8626

Attn: Jacob Y. Terner, M.D.
	

If to Manager:	
 	

Sierra Medical Management, Inc.

6083 Bristol Parkway, Suite 100

Culver City, CA 90230

Attn: Jacob Y. Terner, M.D.






        15.7.    Governing Law.    This Agreement shall be governed by and construed in accordance
with the laws of the State of California. 



14







 

        15.8.    Amendment.    This Agreement may be amended at any time by agreement of the parties,
provided that any amendment shall be in writing and executed by both parties. 


        15.9.    Severability.    If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions will nevertheless continue in full force and effect, unless such invalidity or unenforceability would defeat an essential business
purpose of this Agreement. 


        15.10.    Exhibits and Schedules.    All exhibits and schedules attached to this Agreement are
incorporated herein by this reference and all references herein to "Agreement" shall mean this Agreement together with all such exhibits and schedules. 


        15.11.    Time of Essence.    Time is expressly made of the essence of this Agreement and each
and every provision hereof of which time of performance is a factor. 


        15.12.    Dispute Resolution.    



        15.12.1. In
the event the parties hereto are unable to resolve any and all disputes in connection with this Agreement, either party may commence arbitration by sending a
written demand for arbitration to the other party, setting forth the nature of the matter to be resolved by arbitration. Except as may be expressly provided to the contrary herein, the arbitration
procedure described in this Section shall be the sole means of resolving any disputes hereunder. 



        15.12.2. There
shall be one arbitrator. If the parties shall fail to select a mutually acceptable arbitrator within ten (10) days after the demand for arbitration is
mailed, then the parties stipulate to arbitration before a retired judge sitting on the Los Angeles Judicial Arbitration Mediation Services (JAMS) panel. 


        15.12.3. The
parties shall share all costs of arbitration. The prevailing party shall be entitled to reimbursement by the other party of such party's attorneys' fees and
costs and any arbitration fees and expenses incurred in connection with the arbitration hereunder. 



        15.12.4. The
substantive law of the State of California shall be applied by the arbitrator. The parties shall have the rights of discovery as provided for in Part 4
of the California Code of Civil Procedure and as provided for in Section 1283.05 of said Code. The California Code of Evidence shall apply to testimony and documents submitted to the
arbitrator. 


        15.12.5. Arbitration
shall take place in Los Angeles, California unless the parties otherwise agree. As soon as reasonably practicable, a hearing with respect to the dispute
or matter to be resolved shall be conducted by the arbitrator. As soon as reasonably practicable thereafter, the arbitrator shall arrive at a final decision, which shall be reduced to writing, signed
by the arbitrator and mailed to each of the parties and their legal counsel. 


        15.12.6. All
decisions of the arbitrator shall be final, binding and conclusive on the parties and shall constitute the only method of resolving disputes or matters subject
to arbitration pursuant to this Agreement. The arbitrator or a court of appropriate jurisdiction may issue a writ of execution to enforce the arbitrator's judgment. Judgment may be entered upon such a
decision in accordance with applicable law in any court having jurisdiction thereof. 



        15.12.7. Notwithstanding
the foregoing, because time is of the essence of this Agreement, the parties specifically reserve the right to seek a judicial temporary restraining
order, preliminary injunction, or other similar short term equitable relief, and grant the arbitrator the right to make a final determination of the parties' rights, including whether to make
permanent or dissolve such court order. 




15







 





        15.12.8. Notwithstanding
the foregoing, any and all arbitration proceedings are conditional upon such proceedings being covered under the parties' respective risk insurance
policies. 




        15.13.    Attorneys' Fees.    Should either party institute any action or procedure to enforce
this Agreement or any provision hereof, or for damages by reason of any alleged breach of this Agreement or of any provision hereof, or for a declaration of rights hereunder (including, without
limitation, arbitration), the prevailing party in any such action or proceeding shall be entitled to receive from the other party all costs and expenses, including without limitation reasonable
attorneys' fees, incurred by the prevailing party in connection with such action or proceeding. 


        15.14.    Further Assurances.    The parties shall take such actions and execute and deliver
such further documentation as may reasonably be required in order to give effect to the transactions contemplated by this Management Services Agreement and the intentions of the parties hereto. 



        15.15.    Rights Cumulative.    The various rights and remedies herein granted to Manager or
GROUP shall be cumulative and in addition to any other rights Manager or GROUP, respectively, may be entitled to under law. The exercise of one or more rights or remedies shall not impair the right of
Manager or GROUP to exercise any other right or remedy, at law or equity. 


        15.16.    Federal Social Security Requirements.    Pursuant to Section 1395x
(V)(1)(I) of Title 42 of the United States Code, with respect to any services furnished under the terms of this Agreement if the value or cost of which is Ten Thousand Dollars ($10,000) or more
over a twelve (12) month period, until the expiration of four (4) years after the termination of this Agreement, Manager shall make available upon written request to the Secretary of the
United States Department of Health and Human Services, or upon request by the Comptroller General of the United States General Accounting Office, or any of their duly authorized representatives, a
copy of this Agreement and such books, documents and records as are necessary to certify the nature and extent of the costs of the services provided by Manager under this Agreement. 




        Manager
further agrees that in the event Manager carries out any of its duties under this Agreement through a subcontract, with a value or cost of Ten Thousand Dollars ($10,000) or more
over a twelve (12) month period, such subcontract shall contain a clause to the effect that until the expiration of four (4) years after the furnishing of such services pursuant to such
subcontract, the subcontractor shall make available, upon written request to the Secretary of the United States Department of Health and Human Services, or upon request to the Comptroller General of
the United States General Accounting Office, or any of their duly authorized representatives, the subcontract and such books, documents and records of such organization as are necessary to verify the
nature and extent of such costs. 


        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. 



	"MANAGER"

SIERRA MEDICAL MANAGEMENT, INC.	 	"GROUP"

ANTELOPE VALLEY MEDICAL ASSOCIATES, INC.
	

 	
 	

 
	/s/  R. STEWART KAHN      
 R. Stewart Kahn

Executive Vice President	 	/s/  JACOB Y. TERNER, M.D.      
 Jacob Y. Terner, M.D.

Chief Executive Officer




16







 
LIST OF EXHIBITS AND SCHEDULES  



	Exhibits
	

A	
 	

—	
 	

Master Lease
	

B	
 	

—	
 	

Furniture, Fixtures & Equipment
	

C	
 	

—	
 	

Power of Agency
	

D	
 	

—	
 	

Management Fee
	
Schedule
	

7.9.2	
 	

Practice Employee Liabilities




17








EXHIBIT "A"  


 MASTER LEASE  







EXHIBIT "B"  


 FURNITURE, FIXTURES & EQUIPMENT  







EXHIBIT "C"  


 POWER OF AGENCY  







POWER OF AGENCY  


        This Power of Agency is made and entered into in connection with that certain Management Services Agreement dated as of May 19, 2003, between Sierra
Medical Management, Inc., a Delaware corporation ("Manager"), and Antelope Valley Medical Associates, Inc., a California professional corporation ("GROUP"). 



        1.    Definitions.    Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned
to them in the Agreement. 


        2.    Power of Manager.    GROUP hereby appoints the President of Manager or his designee or successor, as GROUP's
agent ("Agent") to act for GROUP and in GROUP's name, place and stead for the purposes of: (a) communicating the terms and conditions under which GROUP would accept a Contract with each Plan,
as set forth in the Agreement and Exhibit "C" thereto; (b) executing on behalf of GROUP each Contract that contains said terms and conditions or that contains any other terms and conditions
that are not rejected by GROUP; and (c) administering executed Contracts, as set forth below. 


        3.    Administration.    Agent shall maintain in his/her files a copy of each executed Contract and shall provide to
GROUP a list of Plans contracting with GROUP. Notwithstanding anything herein to the contrary, GROUP shall look solely to Plans and/or enrollees or beneficiaries of Plans, as applicable, for payment
for medical services and supplies and neither Manager nor any officer, employee, agent or affiliate of Manager shall be liable for such payment. 



        4.    Term.    The term of this Power of Agency shall be coextensive with the term of the Agreement. 


        5.    Full Authority.    Agent is hereby granted full authority to act in any manner proper, necessary or convenient
to the exercise of the foregoing powers, including substitution and revocation. GROUP hereby ratifies every act that Agent may lawfully perform in exercising those powers. 



        IN
WITNESS WHEREOF, this Power of Agency is executed effective as of the day and year first above written. 



	"MANAGER"

SIERRA MEDICAL MANAGMENT, INC.	 	"GROUP"

ANTELOPE VALLEY MEDICAL ASSOCIATES, INC.
	

 	
 	

 
	/s/  JACOB Y. TERNER, M.D.      
 Jacob Y. Terner, M.D.

Chief Executive Officer	 	/s/  JACOB Y. TERNER, M.D.      
 Jacob Y. Terner, M.D.

Chief Executive Officer









EXHIBIT "D"  


 MANAGEMENT FEE  







MANAGEMENT FEE  


        A.    Definitions    


        Cost of Medical Services means with respect to the GROUP, the aggregate compensation of GROUP's employed physicians and physician
extenders (e.g. physician assistants and nurse practitioners), charges incurred by the GROUP for independent contractor physicians, the cost of services ordered by GROUP through its physicians for
managed care patients, the cost of GROUP's employee benefits including, but not limited to, vacation pay, employer and employee contributions to any 401(k) plan or other retirement plan for the
benefit of GROUP employees, sick pay, health care expenses, GROUP's share of employment and payroll taxes, GROUP's employees' professional dues and all other expenses and payments required to be made
by GROUP to or for physicians pursuant to physician employment, and independent contractor agreements (including expense reimbursements, discretionary bonuses, incentives based on profitability or
productivity, and payments paid and accrued or deferred). 


        Manager's Costs means all operating and non-operating third party vendor and consultant expenses and costs, as well as
expenses and costs directly related to Manager's employees working at GROUP's facility, incurred by Manager on behalf of GROUP in conjunction with the operation of the Practice. These expenses and
costs include, but are not limited to, direct labor costs (for all employees of Manager or its affiliates working at GROUP's facility, and for any independent contractors or consultants to Manager or
other third parties whose services are specifically retained primarily for the benefit of GROUP), indirect labor costs for services primarily for the benefit of GROUP, supplies, all amounts paid by
Manager or GROUP to satisfy any obligations of GROUP to non-professional employees and third parties (other than for the Cost of Medical Services), obligations under any lease or purchase
agreement or arrangement for which Manager has direct or indirect financial liability, and direct and indirect corporate overhead of GROUP. 



        Gross Revenues means all sums which are (i) attributed to GROUP (determined on an accrual basis) as compensation for the provision
of medical services by GROUP employed and independent contractor physicians and physician extenders, including but not limited to all capitated income, all rights to receive GROUP's portion of
hospital and other shared risk pool payments, all copayments, coordination of benefits, third party recovery, insured services, enrollment protection (or other such revenue as is available to
replenish capitated services) and all rights to receive fee-for-service income for medical, diagnostic and therapeutic services provided to GROUP patients; and
(ii) derived by GROUP or its employees other than from the provision of medical services, including but not limited to consulting services, insurance and legal recoveries, royalties and
licensing payments, franchise payments, rents and lease payments, and proceeds from the sale of assets or the merger or other business combination of GROUP. 


        Net Pre-Tax Income means Gross Revenues less the sum of Manager's Costs and the Cost of Medical Services after provision of
any physician incentive payments but before provision for income taxes. 


        Net Pre-Tax Loss means any loss resulting after the deduction from Gross Revenues of Manager's Costs and the Cost of Medical
Services after provision of any physician incentive payments but before provision for income taxes. 



        Net Pre-Tax Profit means any profit resulting after the deduction from Gross Revenues of Manager's Costs and the Cost of
Medical Services after provision of any physician incentive payments but before provision for income taxes. 


        B.    Management Fee    


        Base Management Fee: for its services hereunder, which shall include the provision of all facilities and furniture, fixtures and equipment
at the Premises and all non-physician employees of Manager who perform services at or for the Practice and all management services provided hereunder, Manager shall (i) retain that
portion of the Gross Revenues which is equal to Manager's Costs plus (ii) fifteen percent 










(15%)
of Gross Revenues the ("Management Fee") plus (iii) a fee for marketing and public relations services in the amount of four thousand dollars ($4,000) per month. Notwithstanding the
foregoing, if, after the payment of Manager's Costs as set forth in item (i) above, GROUP's working capital is insufficient to meet GROUP's liabilities or other obligations to the extent
necessary to meet such obligations, the Management Fee provided for in item (ii) above shall be deferred until GROUP is able to meet all such obligations. The Management Fee shall be reviewed
on an annual basis by Manager's Board of Directors to ensure that it remains consistent with the fair market value for the services rendered to GROUP by Manager. 


        Performance Incentive Bonus Payment: if, at the end of GROUP's fiscal year, it is determined that GROUP has a Net Pre-Tax
Profit for the year, Manager shall be entitled to a performance incentive bonus payment consistent with the fair market value of the services provided by Manager to Group (as determined on an annual
basis by the Board of Directors of Manager), but no more than fifty percent (50%) of Net Pre-Tax Income in excess of eight percent (8%) of Net Pre-Tax Profits. 



        Performance Incentive Penalty Payment: if, at the end of GROUP's fiscal year, it is determined that GROUP has a Net Pre-Tax
Loss for the year, Manager shall be obligated to pay to GROUP (in the form a reduction in future management fees) a penalty payment in the amount of fifty percent (50%) of one hundred percent
(100%) of such Net Pre-Tax Loss. 








SCHEDULE 7.9.2  


 PRACTICE EMPLOYEE LIABILITIES  


        None 











QuickLinks



Exhibit 10.197


MANAGEMENT SERVICES AGREEMENT