EX-10.22



 





Confidential Treatment

Exhibit 10.22



PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO REGISTRANT’S APPLICATION OBJECTING TO
DISCLOSURE AND REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406. THE OMITTED
PORTIONS HAVE BEEN MARKED WITH BRACKETS.




MINIMUM PREMIUM ACCOUNTING AGREEMENT




BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.

HEALTH OPTIONS, INC.




and




STRATEGIC OUTSOURCING, INC.




Effective Date: March 1, 2005




 









 







BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.

HEALTH OPTIONS, INC.

MINIMUM PREMIUM ACCOUNTING AGREEMENT




TABLE OF CONTENTS




	 	 	 
	SECTION I

	 	TERM OF THE AGREEMENT
	 
	 	 
	SECTION II

	 	BENEFIT PLAN
	 
	 	 
	SECTION III

	 	RATE SHEET
	 
	 	 
	SECTION IV

	 	MINIMUM PREMIUM CHARGE
	 
	 	 
	SECTION V

	 	LETTER OF CREDIT
	 
	 	 
	SECTION VI

	 	CLAIM LIABILITY CHARGE
	 
	 	 
	SECTION VII

	 	INDIVIDUAL EXCESS LIABILITY COVERAGE
	 
	 	 
	SECTION VIII

	 	TERMINATION PROVISIONS
	 
	 	 
	SECTION IX

	 	MODIFICATION OF RATES
	 
	 	 
	SECTION X

	 	LATE PAYMENT CHARGE
	 
	 	 
	SECTION XI

	 	RENEWAL
	 
	 	 
	SECTION XII

	 	GENERAL PROVISIONS





 




BCBSF/HOI





Page 2 









 







AGREEMENT TO PROVIDE

COMPREHENSIVE HEALTH CARE BENEFITS



 




     This is an Agreement (hereinafter “Agreement”) between the Blue Cross and Blue Shield of
Florida Inc. (hereinafter referred to as “BCBSF”) and its subsidiary HEALTH OPTIONS, INC.,
(hereinafter referred to as “HOI”) located at 4800 Deerwood Campus Parkway, Jacksonville Florida
32246, (hereinafter jointly referred to as “the Plan”), and Strategic Outsourcing, Inc.
(hereinafter referred to as “Employer/Plan Sponsor”) and the Strategic Outsourcing. Group Health
Plan (hereinafter jointly referred to as “the Group”) located at 5260 Parkway Plaza Boulevard,
Suite 140, Charlotte, NC 28217.




	 	 	WHEREAS, the Group is a Professional Employer Organization (PEO) and requests BCBSF/HOI to
provide health insurance and health maintenance organization products (hereinafter referred
to as “the Product Offering”), to its Florida located client group employees; and
	 
	 	 	WHEREAS, BCBSF agrees to offer health insurance products; and
	 
	 	 	WHEREAS, HOI agrees to offer health maintenance organization products, and
	 
	 	 	WHEREAS, each of the parties to this Agreement seeks to set forth, in writing, the terms and
conditions of this Agreement;
	 
	 	 	THEREFORE, the parties agree as follows:
	 
	I.	 	Term of the Agreement
	 
	 	 	This Agreement between the parties is for the period beginning March 1, 2005 (the effective
date) and
shall end on February 28, 2006 (the termination date), and will renew automatically unless
otherwise terminated or revised in accordance with the provisions of this Agreement.
	 
	II.	 	Benefit Plan
	 
	 	 	The Plan agrees to administer the Group’s benefit plan (herein referred to as the “Benefit
Contract”), which may be amended from time to time, and which is hereby incorporated by
reference into and made a part of this Agreement.
	 
	III.	 	Rate Sheet
	 
	 	 	The rates, charges, and maximum amounts applicable to this Agreement are set forth in
Exhibit A titled “Minimum Premium Accounting Agreement Rate Sheet,” which may be modified
from time to time with the mutual consent of the parties and which is hereby incorporated by
reference into and made a part of this Agreement.
	 
	IV.	 	Minimum Premium Charge
	 
	 	 	The Group shall pay to the Plan, each month, a Minimum Premium Charge. Such charge shall be
equal to the product of the Minimum Premium rates then in effect multiplied by (times) the
number of applicable contracts as determined by the Plan. This charge will include any
commission or Fees to be paid to the Group’s agent/consultant at the level indicated by the
Group. This charge is due and the Group shall pay this charge to the Plan by the first day
of the month following the invoice date.




 




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Page 3 









 






	V.	 	Letter Of Credit
	 
	 	 	Prior to the effective date of this Agreement the Group shall provide the Plan an
irrevocable Letter of Credit (“LOC”) solely in favor of the Plan in the amount set forth in
Exhibit A. Such LOC shall be available to the Plan in the event any obligation of the Group
under this Agreement is not, in the opinion of the Plan, fully satisfied on a timely basis
by the Group. Such LOC must be acceptable to the Plan, and must be for a term that exceeds
three (3) months beyond the term of this Agreement, or its renewal periods. The Group must
provide additional irrevocable LOC’s that are acceptable to the Plan after quarterly review
of the continued adequacy of the amount of the LOC and/or prior to any extension of this
Agreement. Each such additional LOC must have a term that extends three (3) months beyond
the extended term of this Agreement.
	 
	VI.	 	Claim Liability Charge






	 	A.	 	The Group shall pay to the Plan, each month, a Claim Liability Charge.






	 	1.	 	A monthly claims billing schedule will be established each year
at renewal for the upcoming contract period. Approximately 15 days before the
First day of each month, The Plan will submit to the Group a bill for the
amount of expected claims to be paid during the forthcoming month. The Group
agrees to pay to the Plan, each month, the amount of expected claims, in full,
by the due date.
	 
	 	2.	 	At the end of each month, the Plan will provide the Group with
a detailed printout of the previous month’s claims payments. In the event the
actual claims are in excess of the estimated amount received on the first of
the month, the Group will be notified by the Plan of the additional amount due
the Plan for said month. The Group agrees to pay the total amount due to the
Plan within 15 days of written notification. In the event the actual claims
are less than the estimated claims, the Plan shall offset a future month’s
estimated payment.
	 
	 	3.	 	For the purposes of this Section, actual Paid Claims is the sum
total of all benefit checks written by the Plan (less refunds received), in
accordance with the applicable Benefits Contract(s) and health care provider
agreement(s), during the applicable current month for claims incurred during
the term of this Agreement, as determined by the Plan. “Claims” or “paid
claims” includes capitation, physician incentives, pharmacy, physician,
hospital, other fee-for-services claims expenditures, and fees paid to other
Blue Cross and/or Blue Shield Licensees for access to the applicable Plans’
network providers within the area covered by the other Blue Cross and/or /Blue
Shield Plan. However, actual Paid Claims does not include Benefit checks (or
refunds) for benefits which are determined by the Plan to be in excess of the
Individual Excess Liability Coverage limit as described in section VII, and
shown on Exhibit A.
	 
	 	4.	 	The Group’s payment of the Claim Liability Charge(s) to the
Plan shall be paid either by Automatic Clearing House ACH or check. The Plan
will notify the Group by secure email of the amount to be sent between the
10th calendar day and the last calendar day of each month. Payment
is expected within 10 (ten) days of receipt of the bill. In the event the Plan
does not receive payment of the Group’s Claim Liability Charge, the Plan has
the right, in addition to any other rights set forth in this Agreement, to
suspend all claims payments.






	 	B.	 	In the month following the term of this agreement, the Plan will perform an
accounting. This




 




BCBSF/HOI




Page 4 









 








accounting will establish the Policyholder Annual Limit (“PAL”). If the Paid Claims
exceed the PAL, the Plan will reimburse the Group for the amount of the overage.




	 	1.	 	The Policyholder Annual Limit is equal to the product of the
Policyholder Annual Limit Factors then in effect multiplied by the number of
applicable contracts.
	 
	 	 	 	For purposes of this Section, the number of applicable contracts each month
shall be added to arrive at the sum of contracts for the number of months of
the Term of the Agreement, or twelve (12) months of total enrollment (by
tier and by plan). The number of applicable contracts for any given month
shall be the number of contracts covered during the month three (3) months
prior to that month, as determined by the Plan. However, for the first four
(4) months following the effective date of this Agreement, the number of
applicable contracts shall be the number of applicable contracts covered as
of the effective date of this Agreement, as determined by the Plan. This 12
(twelve) month total will be averaged, or divided by 12, and rounded to the
nearest whole number.
	 
	 	 	 	For purposes of this Agreement, Accumulated Surplus is equal to the
aggregate amount, if any, of accumulated Policyholder Annual Limit amount(s)
in excess of the accumulated actual Paid Claims, as determined by the Plan.
Any Accumulated Surplus shall be carried forward year-to-year during the
entire term, as it may be extended, to this Agreement, and shall be
available to the Plan following the final settlement of this Agreement as
set forth in Section VIII of this Agreement.
	 
	 	4.	 	For purposes of this Agreement, Accumulated Deficit is equal to
the amount, if any, of accumulated actual Paid Claims in excess of the
accumulated Policyholder Annual Limit amounts(s), as determined by the Plan.
Any Accumulated Deficit shall be carried forward year-to-year during the entire
term, as it may be extended, of this Agreement. If subsequent accountings show
the Paid Claims to be under the Policyholder Annual Limit, then the Plan will
bill the group for the amount of the accumulated deficit from prior years up to
the difference between the Policyholder Annual Limit and the Paid Claims for
that year. Payment to the Plan by the Group is to be made within ten (10) days
of receipt of the bill.






	VII.	 	Individual Excess Liability Coverage (Pooling)






	 	A.	 	The Plan agrees to provide Individual Excess Liability Coverage (Pooling),
whereby the Group’s maximum annual actual paid claims liability for any individual
Insured of the Group is $250,000 (the Pooling Point), or the Pooling Point as may be
amended and placed on the Exhibit A. The Plan will be responsible for any claims(s)
incurred by such Insured in excess of the Pooling Point, provided that the claim: is
covered under the terms of the Benefit Contract as determined by the Plan; is incurred
subsequent to the original inception date of this Agreement; and is actually paid by
the Plan during the current annual term of this Agreement as set forth in the Exhibit
A, which is in effect. Any claims paid prior to the beginning of such term (i.e., paid
prior to the most recent Anniversary Date of this Agreement) is not credited towards
the Pooling Point for purposes of the current term’s calculation.
	 
	 	B.	 	The Group shall pay to the Plan, each month, in Individual Excess Liability
Coverage charge. Such charge shall be equal to the product of the Individual Excess
Liability Coverage rates then in effect multiplied by (times) the number of applicable
contracts as determined by the Plan. This charge is due and the Group shall pay this
charge to the Plan by the first day of the month following the invoice date.




 




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Page 5 









 








	 	C.	 	Upon termination of the Agreement, the Individual Excess Liability Coverage
shall immediately terminate. The Plan has no liability under this Excess Liability
Coverage Section for any claims paid after such termination date regardless of when the
claim was incurred, even if the claims was incurred during the term of the Agreement.
Upon termination of this Agreement, the parties will be liable for covered claims as
set forth in Section VIII of this Agreement.






	VIII.	 	Termination Provisions






	 	A.	 	This Agreement may be terminated at any time by either party by giving the
other party at least forty-five (45) days prior written notice of such termination.
	 
	 	B.	 	Upon termination of this Agreement by either party or automatically by its
terms, for any reason, including termination for non-payment of any charges/fees due
under this Agreement, the Group shall pay to the Plan the Policyholder Terminal Limit
Charge. The Policyholder Terminal Limit Charge is equal to the product of the
Policyholder Terminal Limit rates then in effect multiplied by the number of applicable
contracts. The Group shall pay these total charges to the Plan in three (3) equal
installments. The initial payment is due on the termination date of this Agreement.
The second payment is due within thirty (30) days of the termination date of this
Agreement. The third payment is due within sixty (60) days of the termination date of
this Agreement. The Group shall pay these charges to the Plan within ten (10) days of
the invoice date. The Group shall pay these charges in accordance with the banking
procedures set forth in Section VI (A.4.) of this Agreement.
	 
	 	 	 	For purposes of this Section, the number of applicable contracts is determined as
follows:






	 	 	 	In the event this Agreement terminates prior to the end of the third month
of its term, the number of applicable contracts shall be equal to the
product of the average number of contracts covered under this Agreement each
month multiplied by three (3), as determined by the Plan.
	 
	 	2.	 	In the event this Agreement terminates on or after the end of
the third month of its term, the number of applicable contracts shall be equal
to the sum of the number of contracts covered under this Agreement for each of
the three (3) months immediately preceding the termination date of this
Agreement, as determined by the Plan.






	 	C.	 	Within a reasonable time period after the expiration of the eighteen (18) month
period immediately following the date this Agreement terminated, the Plan will develop
a final settlement and deliver such settlement to the Group. This final settlement
will compare the total amount of funds actually paid to the Plan as Policyholder
Terminal Limit Charges in accordance with this Section, to the total amount of claims
paid by the Plan for claims incurred during the term of this Agreement but paid by the
Plan during the eighteen (18) month period immediately following the date this
Agreement was terminated (i.e., the claims run off liability).
	 
	 	 	 	In the event the total amount of funds actually paid to the Plan as Policyholder
Terminal Limit Charges exceeds the claims run off liability, as determined by the
Plan and indicated in the final settlement, the excess funds will be disposed of in
the following order:






	 	 	 	Retained by the Plan to the extent of any Accumulated Deficit existing as of
the date immediately preceding the date this Agreement was terminated.
	 
	 	2.	 	Returned to the Group to the extent of any remaining excess
funds after the Accumulated Deficit is satisfied.




 




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	 	3.	 	In the event the total amount of funds actually paid to the Plan as Policyholder
Terminal Limit Charges is less than the claims run off liability, as determined by
the Plan and indicated in the final settlement, the shortage of funds will be
handled as follows:






	 	 	 	The Group agrees to reimburse the Plan for such shortage of funds to the
extent of the Accumulated Surplus, if any, existing as of the date
immediately preceding the date this Agreement terminated. Such
reimbursement is due and shall be made by the Group to the Plan, in full,
immediately upon notice to the Group that a shortage of funds exists.
	 
	 	2	 	Any amount of shortage of funds in excess of the Accumulated
Surplus existing as of the date immediately preceding the date this Agreement
terminated will be absorbed by the Plan.






	 	D.	 	Provided the Group has paid all monies owed to the Plan under this Agreement,
the Plan shall be solely responsible for the payment of covered claims, as determined
by the Plan, which were incurred during the term of this Agreement, and paid by the
Plan after the end of the eighteen (18) month period immediately following the date
this Agreement terminated, provided, however, that any such claim must have been filed
with the Plan within the fifteen (15) month period immediately following the date the
claim was incurred.






	IX.	 	Modification of Rates
	 
	 	 	Rates/charges/maximum amounts for the initial year the Group is enrolled with the Plan are
not subject to change, provided there is no material change to the Benefit Plan, the
enrollment, or any other risk factor, as determined by the Plan. Following such initial
year all rates/charges/maximum amounts set forth in Exhibit A (i.e., the Rate Sheet) of this
Agreement are subject to change by the Plan at any time following at least forty-five (45)
days prior written notice to the Group. The modified rates/charges/maximum amounts,
including renewal rates/charges/maximum amounts, will be set forth and presented to the
Group on a revised Exhibit A form. All other provisions of this Agreement shall remain in
effect without modification.
	 
	X.	 	Late Payment/Charge
	 
	 	 	In the event the Group fails to make any payment due under this Agreement, in full, prior to
the applicable due date, such payment may be made to the Plan up to ten (10) days after such
due date without penalty. Payments received by the Plan eleven (11) to thirty-one (31) days
after such due date are subject to a late payment charge as set forth in Exhibit A. The
Group shall pay any late payment charge to the Plan immediately upon receipt of the notice
of such charge. In the event any charge under this Agreement is not paid, in full, by the
Group to the Plan within thirty-one (31) days after the applicable due date, this Agreement
will automatically terminate as of the applicable due date and the provisions of Section
VIII will govern. In the event this Agreement terminates retrospectively for any reason,
the Group shall be liable, in addition to all other liabilities set forth in this Agreement,
for any claim(s) paid by the Plan which were incurred after the termination date.
	 
	XI.	 	Renewal
	 
	 	 	This Agreement shall automatically renew/extend for additional one year period(s) on each
Anniversary Date at the rates then in effect (the renewal rates), unless either party
notifies the other party of its intent not to extend this Agreement at least forty-five (45)
days prior to the applicable Anniversary Date. The renewal rates/charges/maximum amounts
will be set forth and presented to the Group on a revised Exhibit A form.




 




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	XII.	 	General Provisions






	 	A.	 	Inconsistencies
	 
	 	 	 	If any provision(s) of this Agreement is in any way inconsistent with a provision(s)
of the Benefit Contract then the provision(s) of this Agreement shall prevail, and
the inconsistent provision(s) of the Benefit Contract shall be deemed modified, but
only to the extent necessary to implement the intent of the parties as expressed
herein.
	 
	 	B.	 	Survival
	 
	 	 	 	The rights and obligations of the parties as set forth herein shall survive the
termination of this Agreement to the extent necessary to effectuate the intent of
the parties as expressed herein.
	 
	 	C.	 	Waiver of Breach
	 
	 	 	 	The failure by either party at any time to enforce or to require the strict
adherence to any provision of this Agreement shall not be deemed to be a waiver of
such provision or any other provision of this Agreement.
	 
	 	D.	 	Governing Law
	 
	 	 	 	This Agreement and the rights of the parties hereunder shall be construed according
to the laws of the State of Florida.
	 
	 	E.	 	Severability
	 
	 	 	 	In the event any provision of this Agreement is deemed to be invalid or
unenforceable, all other provisions shall remain in full force and effect.
	 
	 	F.	 	Amendment
	 
	 	 	 	This Agreement may be amended at any time by the Plan, without the consent of the
Group, any Member, or any other person, upon at least thirty (30) days prior notice
to the Group. No agent or person, except a duly authorized officer of the Plan, has
the authority to amend this Agreement. This Agreement may be amended by the Group
upon at least sixty (60) days written notice to the Plan, provided such amendment is
signed in advance by a duly authorized representative of the Group and by a duly
authorized officer of the Plan.
	 
	 	G.	 	Entire Agreement
	 
	 	 	 	This Agreement, including Exhibit A, the application for coverage (e.g., the True
Group Application), which is hereby incorporated by reference into and made a part
of this Agreement, and the Benefit Contract(s), constitute the entire
Agreement between the Group and the Plan. Any prior agreements, promises, or
representations, either oral or written, relating to the subject matter of this
Agreement, and not expressly set forth in this Agreement are of no force or effect.
	 
	 	H.	 	Notices
	 
	 	 	 	Any notice required or permitted under this Agreement shall be deemed given if hand
delivered or if mailed by United States mail, or an overnight mail service (e.g.,
Federal Express), postage




 




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prepaid, to the applicable address as set forth above or to such other address as a
party may designate in writing to the other party. Such notice shall be deemed
effective as of the date so deposited or delivered.


 




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IN WITNESS WHEREOF, each of the parties to this Agreement, through their duly authorized
representative, hereby acknowledges that they have read and understand this Agreement and agree to
be bound by its terms.




	 	 	 	 	 
	STRATEGIC OUTSOURCING, INC.
	 	 
	 
	 	 	 	 
	By:

	 	/s/ Sarah M. Smith
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	Sarah M. Smith	 	 
	 

	 	 	 	 
	 

	 	(typed)	 	 
	 
	 	 	 	 
	Title:

	 	VP Benefits	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:

	 	3/9/2006	 	 
	 

	 	 	 	 





	 	 	 	 	 
	BLUE CROSS AND BLUE SHIELD OF
	 	 
	FLORIDA, INC.
	 	 
	 
	 	 	 	 
	By:

	 	/s/ William Coats
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	William Coats	 	 
	 

	 	 	 	 
	 

	 	(typed)	 	 
	 
	 	 	 	 
	Title:

	 	Vice President Group Underwriting	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:

	 	3/14/06	 	 
	 

	 	 	 	 




 




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Exhibit A




MINIMUM PREMIUM ACCOUNTING AGREEMENT




RATE SHEET




FOR




STRATEGIC OUTSOURCING, INC.




GROUP NO. 44872



Term: March 1, 2005 through February 28, 2006




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Single	 	Employee+Sp	 	Employee+Child	 	Employee+Family
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minimum Premium Rates:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PPO 702
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	PPO 704
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	HMO
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Individual Excess Liability
Coverage Rates:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PPO 702
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	PPO 704
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	HMO
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Policyholder Annual Limit Factors:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PPO 702
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	PPO 704
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	HMO
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Policyholder Terminal Limit Rates:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PPO 702
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	PPO 704
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	HMO
	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 	 	$	[___]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Individual Excess Liability Coverage — Pooling level:
	 	 	 	 	 	 	 	 	 	$	250,000	 	 	 	 	 
	Letter of Credit amount:
	 	$	[___]	 	 	 	 	 	 	 	 	 	 	 	 	 





Late Payment Charge 1.5% per month of amount in arrears.



 




BCBSF/HOI





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