Exhibit 10.113


 


CLAIMS MANAGEMENT AGREEMENT


 


This Claims
Management Agreement (the “Agreement”) is entered into with an effective date
of October 1, 2003 (the “Effective Date”), by and among Prospect Medical Group
and Professional Care IPA Medical Group (collectively referred to as “Medical
Groups”) and PacifiCare of California (“PacifiCare”) with reference to the
following facts;


 


A.                                   WHEREAS,
Medical Groups and PacifiCare are parties to those certain agreements described
on Schedule 1 attached hereto, as amended (collectively, the “Provider
Agreement”), pursuant to which Medical Groups arranges health care services to
enrollees of PacifiCare’s Medicare-risk plan, Secure Horizons, who have
selected or been assigned to Medical Groups as their participating medical
groups (“Senior Members”) and of PacifiCare’s various commercial health benefit
plans (“Commercial Members”);


 


B.                                     WHEREAS,
Medical Groups’ obligations under the Provider Agreement include the
performance of certain delegated claims processing and payment functions with
respect to medical services provided or arranged by Medical Groups to Senior
Members and Commercial Members, subject to Medical Groups’ compliance with
Health Care Financing Administration’s (“HCFA”) and California Department of
Corporations (“DOC”) claims processing standards, as applicable;


 


C.                                     WHEREAS,
Medical Groups has failed to comply with HCFA’s claims processing standards
with respect to Senior Members;


 


D.                                    WHEREAS,
PacifiCare has determined (i) that it is necessary for PacifiCare to manage and
control the claims processing and payment functions for Senior Members and (ii)
that the least disruptive and most efficient method for PacifiCare to manage
and control the claims processing and payment functions is for PacifiCare to
utilize Medical Groups’ premises, equipment, systems and support personnel;


 


NOW THEREFORE, the parties
hereto agree as follows:


 


1.                                       Definitions.  Whenever used in this Agreement, the
following terms shall have the definitions contained in this Section 1:


 


Data
is all information, data, documentation, reports and records relating to the
Support Services.


 


Commercial
Members means those persons enrolled in PacifiCare’s
various commercial health benefit plans who have selected or been assigned to
Medical Groups as their participating medical groups, including, without
limitation, PacifiCare commercial plan members.


 


Medical Groups
Risk Services means medical services provided to
Senior Members that are the financial responsibility of Medical Groups pursuant
to the terms of the Provider Agreement.


 


Professional
Care IPA Medical Group and Prospect Medical Group

Claims
Management Agreement

Effective:  October 1, 2003


 


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Management
Services means the management and supervision of the
Support Services as more particularly described on Schedule 2, attached hereto.


 


Monthly HCFA
Payment is the revenue received by PacifiCare each
month from HCFA, as determined by HCFA, for providing covered health care
services to Senior Members.


 


PacifiCare
Capitation Payments means the monthly capitation
payments payable by PacifiCare to Medical Groups pursuant to the terms of the
Provider Agreement.


 


PacifiCare
Management Personnel means (i) the PacifiCare
employees identified to Medical Groups from time to time by PacifiCare, and
(ii) third party consultants retained from time to time on a temporary or
emergency basis by PacifiCare.


 


Support
Facilities means Management Company’s premises,
equipment and systems set forth on Schedule 3, attached hereto, as such
schedule may be modified from time to time upon the written consent of
PacifiCare and Medical Groups.


 


Support
Services means the claims processing and payment
support service functions and related services provided in connection with
Medical Groups Risk Services under the management and supervision of the
PacifiCare Management Personnel, which service functions are more particularly
described on Schedule 4, attached hereto. 
Support Services shall include, without limitation, claims processing
and payment support service functions for Medical Groups-Risk Services when
such claims are incurred on a fee-for-service, discounted fee-for-service or
per-diem basis and for both contracted and non-contracted providers.


 


Support Staff
means (i) the claims processing and other administrative staff positions
utilized by Medical Groups to perform the Support Services, and (ii) adequate
support by clerical staff and mailroom staff as deemed reasonably necessary by
PacifiCare for use by the PacifiCare Management Personnel in the performance of
the Management Services and Support Services. 
With respect to the Support Staff described in clause (i) above, the
staff positions and full-time-equivalent (“FTE”) employee allocations and
allocation criteria shall be mutually agreed upon by Medical Groups and
PacifiCare prior to the Effective Date.


 


2.                                       Management
Services.  Commencing the Effective
Date and continuing until this Agreement is terminated pursuant to the terms of
Section 11 below, PacifiCare shall cause the PacifiCare Management Personnel to
provide the Management Services.  Except
as otherwise provided in this Agreement, PacifiCare shall not unreasonably
interfere in the operations and activities of Medical Groups unrelated to the
Support Services or Management Services. 
Medical Groups agrees that PacifiCare may amend the Management Services
by providing notice to Medical Groups in order to ensure compliance by
PacifiCare with the requirements of HCFA or the DOC and that such amendment may
include, without limitation, expansion of the Management Services to include
claims processing and payment management and supervision for medical services
provided to Commercial Members.


 


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3.                                       Support
Services and Support Staff.  Medical
Groups will make available to PacifiCare the Support Staff for purposes of
performing the Support Services. 
Medical Groups represents and warrants that the Support Staff is
sufficient and competent to timely and accurately perform the Support
Services.  Pursuant to this Agreement,
the PacifiCare Management Personnel shall manage and supervise the Support
Staff and Support Services.  Except as
set forth in this Agreement, Medical Groups shall be responsible for the
Support Staff in all other aspects of their employment.  PacifiCare, at its sole discretion, may
remove any individual from the Support Staff upon written notice to Medical
Groups of PacifiCare’s reason for such removal.  Medical Groups, however, shall have the sole authority with
respect to (i) the engagement, termination of the support staff, and (ii) the
reassignment of any individual removed from the Support Staff by
PacifiCare.  Although PacifiCare will
utilize the Support Staff where possible, PacifiCare may utilize its own staff
in lieu of some or all of the Support Staff as it reasonably deems necessary
for purposes of ensuring timely and accurate performance of the Support
Services.  Medical Groups agree that
PacifiCare may amend the Support Services and/or the Support Staff by providing
notice to Medical Groups in order to ensure compliance by PacifiCare with the requirements of HCFA or the DOC and
that such amendment may include, without limitation, expansion of the
Support Services to include claims processing and payment support for medical
services provided to Commercial Plan Members.


 


4.                                       Compensation. 
PacifiCare will charge and collect from Medical Groups its actual expenses
incurred in providing the Management Services and the Support Services ( the
“PacifiCare Administrative Cost”).  The
PacifiCare Administrative Cost shall be equal to the sum of the following:  (i) for PacifiCare employees, the number of
hours spent by each such employee performing Management Services and/or Support
Services multiplied by an hourly rate which, in PacifiCare’s good faith
determination, will fully reimburse PacifiCare for the salary or wages and all
employee benefits paid to such employee on an hourly basis; (ii) for third
party consultants who are PacifiCare Management Personnel, the actual billings
provided by such consultants in support of the Management Services and the
Support Services; and (iii) actual travel expenses determined according to
PacifiCare’s standard travel expense reimbursement procedures.  The PacifiCare Administrative Cost will be
calculated in increments of one quarter of an hour, rounded off to the nearest
one quarter of an hour.  Each month,
PacifiCare will submit a billing to Medical Groups that shall itemize the PacifiCare
Administrative Cost.  Medical Groups
shall pay the PacifiCare Administrative Cost identified in the monthly billing
within thirty (30) days of receipt.  If
PacifiCare has not received payment in full of the PacifiCare Administrative
Cost within such thirty (30) day period, PacifiCare shall, in its sole
discretion, have the right to withhold from future PacifiCare Capitation
Payments an amount to cover the PacifiCare Administrative Cost attributable to
such month.  In addition, if Medical
Groups fails to make timely payments of the PacifiCare Administrative Cost,
PacifiCare shall have the right to establish a withhold from the PacifiCare
Capitation Payments to cover the estimated PacifiCare Administrative Cost for
the month covered by the PacifiCare Capitation Payment.  The compensation set forth in this Section 4
shall be in lieu of and shall not be limited by any specified reduction to the
PacifiCare Capitation Payments as may be set forth in the Provider
Agreements.  Medical Groups shall be
obligated to reimburse PacifiCare for PacifiCare Administrative Costs incurred
beginning the Effective Date and continuing for the remaining term of this
Agreement.


 


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5.                                       Access
to and Maintenance of Support Facilities and Data.  Medical Groups will allow PacifiCare and
PacifiCare Management Personnel full and complete access to and use of the
Support Facilities and the Data for the purpose of providing Management
Services and facilitating the performance of Support Services.  Medical Groups shall maintain the Support
Facilities and the Data during the entire term of this Agreement and for a
period of at least two (2) years from the termination of this Agreement.


 


6a.                                 Cooperation
of Medical Groups.  Medical Groups
shall (i) fully cooperate with PacifiCare in the performance of the services
provided under this Agreement, (ii) take all actions necessary to cause the
timely and accurate performance of the Support Services, and (iii) make
available on a timely basis for use, review, or copying by duly authorized
representatives of PacifiCare any and all contracts, Data, records, reports,
information and resources deemed reasonably necessary by PacifiCare in
connection with providing Management Services and facilitating the performance
of Support Services in accordance with the standards of PacifiCare, HCFA and
the DOC, including, without limitation, claims processing data, subcontracted
provider rates, and authorization and utilization management information.


 


6b.                                Cooperation
of PacifiCare.  PacifiCare shall cooperate
with Medical by forwarding to Medical Groups claims for Medical Groups-Risk
Services which are received by PacifiCare on or after the Effective Date.


 


7.                                       Claims
Account.  Upon the execution of this
Agreement, Medical Groups shall (a) establish a segregated checking account
(the “Medical Groups Account”) with a continuing balance no less than
$50,000.00 (the “Minimum Balance”), and (b) in the event that the normal
payment and check writing process will cause Medical Groups to be out of
compliance with HCFA claims processing standards, and upon notification from
PacifiCare to Medical Groups, take all action necessary to cause PacifiCare to
be authorized to make withdrawals from and write checks upon such account for
the sole purpose of paying claims for Medical Groups Risk Services.  Medical Groups shall deposit such additional
funds in the Medical Groups Account to cause the balance thereof to equal or
exceed the Minimum Balance no later than two (2) business day following Medical
Groups becoming aware that the balance of the Medical Groups Account is less
than the Minimum Balance.


 


If Medical
Groups fails to maintain the segregated checking account in accordance with the
terms of this Section 7 or PacifiCare determines that the following action is
necessary to comply with HCFA’s standards, then, in lieu of the Medical Groups
Account, PacifiCare may withhold from the PacifiCare Capitation Payment an
amount equal to the Minimum Balance and deposit such amount into its own
segregated checking account (the “PacifiCare Account”) for the sole purpose of
paying claims for Medical Groups Risk Services.  PacifiCare may continue to withhold from each PacifiCare
Capitation payment as necessary to maintain the Minimum Balance in the
PacifiCare Account.


 


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PacifiCare may increase the amount of the Minimum Balance in the
Medical Groups Account or the PacifiCare Account, as the case may be, upon
notice to Medical Groups if PacifiCare determines that such action is necessary
to comply with HCFA and/or DOC standards.


 


8.                                       PacifiCare
Corrective Action Plans.  PacifiCare
may recommend improvements and develop corrective action plans regarding the
Support Facilities, the Support Services and other services and functions
related to the proper performance of Medical Groups under the Provider
Agreements, including without limitation, utilization management and quality
management.  Medical Groups will allow
PacifiCare access to appropriate Medical Groups management and to its respective
boards of directors for purposes of communicating such recommendations and
corrective action plans.  Medical Groups
will promptly and fully implement any and all such recommendations and
corrective action plans developed by PacifiCare.


 


9.                                       Membership
Freeze.  PacifiCare reserves the
right, at its discretion, to discontinue marketing and enrollment of new Senior
Members until PacifiCare determines that claims processing and payment
functions for Medical Groups have been brought into compliance with HCFA’s
claims processing standards (the “Membership Freeze Period”).  During the Membership Freeze Period,
PacifiCare will cease any and all marketing, sales and enrollment activities
for Senior Members at Medical Groups. 
Exceptions will be allowed only upon the prior written approval of
PacifiCare.


 


10.                                 PacifiCare
Audits.  PacifiCare and its
representatives will conduct any and all audits that PacifiCare reasonably
determines are necessary to (i) monitor Medical performance under this
Agreement and (ii) assure PacifiCare of Medical Groups’ ability to satisfy its
continuing obligations under the Provider Agreement.  Medical Groups will cooperate in full with all such audits.


 


11.                                 Termination
of this Agreement.  This Agreement
may be terminated as set forth below:


 


11.1                           Immediately
and automatically upon the termination of any one or more of the Provider
Agreements with respect to Senior Members covered by the terminated Provider
Agreement.


 


11.2                           Upon
written notice of termination by PacifiCare to which notice under this Section
11.2 shall only be provided if PacifiCare has confirmed that all of the
following are true:


 


a.                                       Medical
Groups has demonstrated to PacifiCare’s satisfaction that adequate systems,
resources and personnel are available to perform the Support Services without
the Management Services and in compliance with DOC’s and HCFA’s claims
processing standards applicable to Senior Members.


 


b.                                      Medical
Groups has fully complied with any and all reasonable corrective action plans
developed by PacifiCare.


 


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c.                                       Medical Groups has fully cooperated with
PacifiCare during the term of this Agreement, including, without limitation,
provision of requested information on a timely basis and cooperation with
audits conducted by PacifiCare.


 


d.                                      Medical Groups has entered into a delegation
amendment, substantially in the form attached hereto as Schedule 5, which
amendment will amend each of the Provider Agreements.


 


e.                                       Any and all required regulatory approvals
have been obtained.


 


12.                                 Notice of Assumption of Support Services.  In
the event of Medical Groups’ breach of this Agreement or inability to continue
performing the Support Services or at the direction of HCFA or DOC, PacifiCare
may, upon written notice to Medical Groups, elect to assume full control for
the Support Services and discontinue utilizing the Support Facilities and the
Support Staff.  In such event,
PacifiCare may, in its sole discretion, elect to utilize PacifiCare Management
Personnel to perform the Support Services directly, utilizing the Support
Facilities and the Data.  In such event,
(i) Medical Groups shall allow PacifiCare full and complete access to and use
of the Support Facilities and the Data in order to perform the Support Services
and shall fully cooperate with PacifiCare as specified in Section 6 above; (ii)
PacifiCare shall deduct from the PacifiCare Capitation Payments during the
period it assumes full responsibility for Support Services and Management
Services an amount reasonably estimated by PacifiCare to cover its actual costs
for providing the Support Services, including any and all start-up costs
incurred by PacifiCare, which amount shall be adjusted from time-to-time to
reflect the actual costs of PacifiCare; and (iii) PacifiCare shall further
withhold from the PacifiCare Capitation Payments an amount reasonably necessary
to cover PacifiCare’s costs in performing the Support Services.


 


PacifiCare’s
full assumption of Support Services shall continue until (i) Medical Groups has
demonstrated to PacifiCare’s satisfaction that adequate systems, resources and
personnel are available to perform the Support Services without the Management
Services and in compliance with PacifiCare’s, HCFA’s and DOC’s claims
processing standards, (II) Medical Groups has fully complied with any and all
reasonable corrective action plans developed by PacifiCare, (iii) Medical
Groups has fully cooperated with PacifiCare during the term of this Agreement,
including, without limitation, provision of requested information and Data on a
timely basis and cooperation with audits conducted by PacifiCare, and (iv) any
and all required regulatory approvals have been obtained.  The rights set forth in this Section 12 and
in Section 11 above are not intended as exclusive remedies and PacifiCare may
seek whatever action in law or equity as may be necessary to enforce its rights
under this Agreement or under the Provider Agreements.


 


13.                                 Non-Solicitation of Employees.  The
parties agree that during the term of this Agreement and for one (1) year after
the termination of this Agreement, (i) Medical Groups will not solicit the
employment of, or employ, any of PacifiCare’s personnel involved in the
provision of Management Services or Support Services without PacifiCare’s prior
written consent and (ii)


 


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PacifiCare will not solicit
the employment of, or employ, any of Medical Groups’ personnel involved in the
provision of Support Services without the prior written consent of Medical Groups,
as the case may be.


 


14.                                 Independent
Contractor Status.  PacifiCare and
Medical Groups agree that the parties hereto shall perform the services
described herein as independent contractors. 
This Agreement is not and shall not be considered to create an
employer/employee relationship, joint venture, partnership or agency
relationship of any kind, and none of the parties hereto shall represent to any
third persons that any such relationship exists.  Each party hereto is and shall remain professionally and
economically independent of the others, and none of the parties hereto will
have any authority to bind or commit the other parties.  With respect to its own personnel, each
party is, accordingly, independently responsible for all obligations incumbent
upon an employer.


 


15.                                 Liability
of Obligations.  Notwithstanding the
provisions of any other section of this Agreement, nothing contained herein
shall cause PacifiCare to be liable or responsible for any debt, liability or
obligation which Medical Groups has to the employees of Medical Groups, as the
case may be, or to any third party, unless such liability or responsibility is
assumed in writing by an authorized representative of PacifiCare.  Notwithstanding the provisions of any other
section of this Agreement, nothing contained herein shall cause Medical Groups
to be liable or responsible for any debt, liability or obligation which
PacifiCare has to its employees, or to any third party, unless such liability
or responsibility is assumed in writing by an authorized representative of
Medical Groups or Management Company. 
Each party shall be solely responsible for any obligation for payment of
wages, salaries or other compensation (including all state and federal withholding
taxes and mandatory employee benefits), insurance and any voluntary
employment-related or other contractual or fringe benefits that may be due or
payable by the party on behalf of such party’s employees, agents and
representatives.


 


16.                                 Indemnity.


 


16.1                           Medical Groups Obligation to PacifiCare. 
Medical Groups shall defend, indemnify and hold harmless PacifiCare and
its directors, officers, employees, affiliates and agents against any claim,
loss, damage, cost, expense or liability (collectively, “Losses”) arising out  of or related to the performance or
nonperformance by Medical Groups and its respective employees, agents or
contracting providers of any services to be performed or arranged by Medical
Groups under this Agreement or the Provider Agreements.


 


16.2                           PacifiCare Obligation to Medical Groups. 
PacifiCare shall defend, indemnify and hold harmless Medical Groups and
its directors, officers, employees, affiliates and agents against any Losses
arising out of or related to the performance or nonperformance by PacifiCare,
its employees or agents of any services to be performed by PacifiCare under
this Agreement or the Provider Agreements. 
Notwithstanding the foregoing sentence, PacifiCare shall not be liable
to Medical for any Losses sustained by Medical Groups or Management Company as
a result of PacifiCare’s performance of Management Services and Support
Services


 


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or
the exercise of any right which PacifiCare has under this Agreement, provided
that PacifiCare performed such Management Services or Support Services or
exercised such right in good faith.


 


17.                                 No
Implied Warranties.  Except as
expressly set forth in this Agreement, PacifiCare makes no express or implied
warranties regarding the Management Services or Support Services.


 


18.                                 Confidential and Proprietary Information.


 


18.1                           Information Confidential and Proprietary to
PacifiCare.  Medical Groups shall maintain the
confidentiality of all information designated in this Section.  For purposes of this Section 18, the
term Medical Groups shall include its partners, shareholders, owners, officers, directors, employees, agents,
representatives, consultants and contractors. 
The information which Medical Groups shall maintain confidential (the
“Confidential Information”) consists of: 
(i) the list of Senior Members for whom Medical Groups shall provide or
arrange Covered Services (as defined in the Provider Agreements) and any other
information containing the names, addresses and telephone numbers of Senior
Members which has been compiled by PacifiCare; (ii) lists or documents compiled
by PacifiCare which include the names, addresses and telephone numbers of
employers, employees of such employers responsible for health benefits and the
officers and directors of such employers; (iii) the PacifiCare Provider
Policies and Procedures Manual, related written materials and any of
PacifiCare’s member, employer and administrative service manuals and all forms
related thereto; (iv) the financial arrangements between PacifiCare and any of
PacifiCare’s Participating Providers (as defined in the Provider Agreements);
(v) PacifiCare underwriting and rating information and any other information
utilized by PacifiCare for determining eligibility or rates for the Managed
Care Plans (as defined in the Provider Agreements); and (vi) any other
information compiled or created by PacifiCare which is proprietary to
PacifiCare and which PacifiCare identifies in writing to Medical Groups.  The term “Confidential Information” does not
include information which either Medical can prove:  (i) is already in its possession, provided that such information
is not known by it to be subject to another confidentiality agreement or other
obligation of secrecy; (ii) was or becomes generally available to the public
other than as a result of disclosure by it in violation of this Agreement;
(iii) was or becomes available to it on a non-confidential basis from a source
other than PacifiCare, provided that such source is not known to the recipient
of the information to be bound by a confidentiality agreement, or other
obligation of secrecy or otherwise prohibited from transmitting such
information by a contractual, legal or fiduciary obligation to PacifiCare; or
(iv) is independently developed by it.


 


18.2                           Non-Disclosure of Confidential Information. 
Medical Groups shall not disclose or use the Confidential Information
for  its own benefit or gain
either during the term of this Agreement or after the date of termination of
this Agreement.  Medical Groups may use
the Confidential Information in negotiations with PacifiCare and to the extent
necessary to perform its duties under this Agreement or upon express prior
written permission of PacifiCare.  Upon
the effective date of termination of this Agreement, Medical Groups shall
provide and return to PacifiCare the Confidential Information in its possession
in the manner specified by PacifiCare.


 


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18.3                           Information Confidential and Proprietary to
Medical Groups.  PacifiCare shall maintain the confidentiality
of all information designated in this Section 18.3.  For purposes of this Section 18.3, the term PacifiCare shall
include its partners, shareholders, owners, officers, directors, employees,
agents, representatives, consultants and contractors.  The information which PacifiCare shall
maintain confidential (the “Medical Groups Confidential Information”) consists
of the following information to the extent it was in the lawful possession of
Medical Groups and made available to PacifiCare in the course of performing
Management Services hereunder; (i) the list of senior members for whom other
HMOs provide or arrange for Covered Services and any other information
containing the names, addresses and telephone numbers of seniors which have
been compiled by the other HMOs; (ii) lists or documents compiled by other HMOs
which include the names, addresses and telephone numbers of employers,
employees of such employers responsible for health benefits and the officers
and directors of such employers; (iii) other HMOs’ Provider Policies and
Procedures Manual, related written materials and any of the other HMOs’ member,
employer and administrative service manuals and all forms related thereto; (iv)
the financial arrangements between the other HMOs and any of the other HMOs’
participating providers; (v) the other HMOs’ underwriting and rating
information and any other information utilized by the other HMOs for
determining eligibility or rates for the managed care plans; and (vi) any other
information compiled or created by Medical Groups which is proprietary to
Medical Groups and which Medical Groups identifies in writing to
PacifiCare.  The Term “Medical Groups
Confidential Information” does not include information which PacifiCare can
demonstrate:  (i) is already in its
possession, provided that such information is not known by it to be subject to
another confidentiality agreement or other obligation of secrecy; (ii) was or
becomes generally available to the public other than as a result of disclosure
by it in violation of this Agreement; (iii) was or becomes available to it on a
non-confidential basis from a source other than Medical Groups, provided that
such source is not known to the recipient of the information to be bound by a
confidentiality agreement, or other obligation of secrecy or otherwise
prohibited from transmitting such information by a contractual, legal or
fiduciary obligation to Medical Groups; or (iv) is independently developed by
it.


 


18.4                           Non-Disclosure of Medical Groups Confidential
Information.  PacifiCare shall maintain and shall
cooperate with Medical Groups to maintain the confidentiality of the Medical
Groups Confidential Information. 
PacifiCare shall not disclose or use any of the Medical Groups
Confidential Information for its own benefit either during the term of this
Agreement or after the effective date of termination of this Agreement.  Upon termination of this Agreement,
PacifiCare shall provide and return to Medical Groups all of the Medical Groups
Confidential Information in its possession in the manner to be specified by
Medical Groups.


 


18.5                           Provider
Agreement.  With respect to
PacifiCare and Medical Groups, the provisions of this Section 18 shall
supplement, but not replace, the covenants regarding confidential information
set forth in the Provider Agreement.


 


19.                                 General
Provisions.


 


19.1                           Notice.  All notices required or
permitted by this Agreement shall be in writing and may be delivered in person
or may be sent by registered or certified mail or US


 


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Postal Service Express Mail,
with postage prepaid, or by Federal Express or other overnight courier that
guarantees next day delivery, or by facsimile transmission, and shall be deemed
sufficiently given if served in the manner specified in this Section.  The addresses below shall be the particular
party’s address for delivery or mailing of notice purposes:


 


If to PacifiCare:

PacifiCare of California
5757 Plaza Drive, Suite 150
Cypress, California 90630
Mail Stop
CY44-116


Attention:  Vice President, Network Management


 


If
to Medical Groups:


 


Professional
Care IPA Medical Group

1920 E. 17th St

Santa Ana, CA 92705

Attention:  President


 


Prospect
Medical Group

1920 E. 17th St

Santa Ana, CA 92705

Attention:  President


 


The parties may change the names and addresses noted above through
written notice in compliance with this section.  Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark date.  Notices delivered by US Postal Service
Express mail, Federal Express or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the
notice to the United States Postal Service, Federal Express or overnight
courier.  If any notice is transmitted
by facsimile transmission or similar means, the notice shall be deemed served
or delivered upon telephone confirmation of receipt of the transmission,
provided a copy is also delivered via delivery or mail.


 


19.2                           Assignment.  This Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred or pledged in any way by
Medical Groups or PacifiCare and shall not be subject to execution, attachment
or similar process.  However, PacifiCare
may assign this Agreement and its rights, interests and benefits hereunder to
any entity which is a corporate affiliate of PacifiCare.


 


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19.3                           Amendments.  Amendments or modifications to this
Agreement shall be effective only upon mutual written agreement of the parties,
except as provided below or as specifically authorized elsewhere in this
Agreement:


 


a.                                       PacifiCare
may amend this Agreement by providing written notice to Medical Groups in order
to maintain compliance with state and federal law or the directives of HCFA or
DOC.


 


b.                                      The
Support Staff positions and FTE allocations may be modified from time to time
by PacifiCare upon notice to Medical Groups, except that any addition of a
Medical Groups employee to the Support Staff shall require the approval of
Medical Groups and PacifiCare.


 


c.                                       PacifiCare may amend the PacifiCare
Management Personnel upon notice to Medical Groups.


 


19.4                           Invalidity
of Sections of Agreement.  The
unenforceability or invalidity of any paragraph or subparagraph of any section
or subsection of this Agreement shall not affect the enforceability and
validity of the balance of this Agreement.


 


19.5                           Captions.  Captions in this Agreement are descriptive
only and do not affect the intent or interpretation of the Agreement.


 


19.6                           Waiver
of Breach.  The waiver by either
party to this Agreement of a breach or violation of any provision of this
Agreement shall not operate as or be construed to be a waiver of any subsequent
breach or violation thereof.


 


19.7                           No
Third Party Beneficiaries.  This
Agreement shall not create any rights in any third parties who have not entered
into this Agreement, nor shall this Agreement entitle any such third party to enforce
any rights or obligations that may be possessed by such third party.


 


19.8                           Entire
Agreement.  This Agreement,
including all schedules attached hereto, contains all the terms and conditions
agreed upon by the parties regarding the subject matter of this Agreement.  Except as specifically provided below, any
prior agreements, promises, negotiations or representations of or between the
parties, either oral or written, relating to the matters specifically addressed
in this Agreement, which are not expressly set forth in this Agreement are
Superseded.  Notwithstanding the other
provisions of this Section 19.8 to the contrary, PacifiCare and Medical Groups
agree that (i) this Agreement amends the Provider Agreement, (ii) except as
specifically provided herein, to the extent the terms of this Agreement
conflict in any way with the terms of the Provider Agreement, the terms of this
Agreement shall govern, and (iv) in all other respects, the Provider Agreement
shall remain in full force and effect, as amended by this Agreement.  The termination of this Agreement shall not
affect the enforceability of the Provider Agreement and the provisions thereof
superseded by this


 


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Agreement during the term
hereof shall come into full force and effect upon the termination of the
Agreement.


 


19.9                           Incorporation
of Schedules.  The schedules
attached hereto and referenced herein are an integral part of this Agreement
and are incorporated in full herein by this reference.


 


This
Agreement is executed by the parties and is effective as of the date set forth
above.


 


	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
  BY:

  	
   

  	
   

  
	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PROFESSIONAL CARE IPA MEDICAL GROUP

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ Catherine Dickson

  	
   

  
	
   

  	
   

  
	
  TITLE:

  	
  COO-PMS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PROSPECT MEDICAL GROUP

  
	
   

  
	
  BY:

  	
  /s/ Catherine Dickson

  	
   

  
	
   

  	
   

  
	
  TITLE:

  	
  COO-PMS

  	
   

  
				



 


12

















 


SCHEDULE 1


 


PROVIDER
AGREEMENTS


 


 


The
Professional Capitation Medical Group/IPA Services Agreement between PacifiCare
of California and Professional Care IPA Medical Group effective June 1, 1999.


 

















 


SCHEDULE
2


 


MANAGEMENT
SERVICES


 


 


PacifiCare, through the
PacifiCare Management Personnel, shall manage and supervise the Support Staff
in the performance of the Support Services, including but not limited to the
following:


 


1.                                       Interpret and analyze daily receipts volume
(both total and PacifiCare)


2.                                       Utilize PacifiCare criteria for payment or
denial of claims including PacifiCare medical criteria


3.                                       Quality review/auditing of claims processing


4.                                       Interpret and analyze management reports


5.                                       Participate in management meetings with
cross-functional activities (e.g. utilization management and/or information
services)


6.                                       Manage and supervise Support Staff


•                                          goals setting


•                                          provide feedback (on, e.g., productivity and
quality)


•                                          provide performance evaluations


7.                                       Issue periodic reports to Medical Group
regarding findings and recommendations with respect to the Support Services


8.                                       Such other services which the PacifiCare
Management Personnel deems reasonably necessary for the processing and payment
of claims in connection with Medical Group Risk Services in compliance with
HCFA’s and DOC’s claims processing standards applicable to Senior Members.


 

















 


SCHEDULE 3



SUPPORT FACILITIES


 


 


1.             Office
space for use by the PacifiCare Management Personnel.


2.             Access to hardware, software and other
systems owned, leased or operated by or on behalf of Medical Group which relate
to the Support Services.


3.             Access
to telephones, telecopier, facsimile machine, word processing equipment,
printers and other general office equipment that is deemed reasonably necessary
by PacifiCare for use by the PacifiCare Management Personnel in the performance
of the Management Services.


4.             Access
to dedicated space and facilities, in a central location, for use by the
Support Staff and the PacifiCare Management Personnel.


 

















 


SCHEDULE
4


 


SUPPORT
SERVICES


 


 


All claims processing and
payment support functions and related services provided in connection with
Medical Group Risk Services, including but not limited to the following:


 


1.                                       Track daily receipts volume (both total and
PacifiCare)


2.                                       Sort and distribute work (both contract and
non-contract) (and route to PacifiCare if needed)


 


Process (i.e. pay or deny)
claims pursuant to contracts and PacifiCare medical necessity guidelines,
including:


•                                          data entry


•                                          document authorization


•                                          document eligibility


 


3.                                       Production and distribution of checks,
explanation of benefits and explanation of payment


4.                                       Reprocessing of errors


5.                                       Handling of returned checks


6.                                       Provide information regarding opportunities
for improvement


7.                                       Generate management reports


8.                                       Submit encounter data to PacifiCare


9.                                       Identify COB, TPL, overpayment processes


10.                                 Such other services which the PacifiCare
Management Personnel deems reasonably necessary for the processing and payment
of claims in connection with Medical Group Risk Services in compliance with
HCFA’s and DOC’s claims processing standards applicable to Senior Members.


 

















 


SCHEDULE
5


 


DELEGATION
AGREEMENT


 


 


Exhibit 2, Delegated
Activities, effective January 1, 2003 in the Amendment to the Professional
Capitation Medical Group/IPA Services Agreement between PacifiCare of
California and Professional Care IPA Medical Group.