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Exhibit 10.26    
  

 
 

HEALTH OPTIONS, INC.
  
    PARTICIPATION AGREEMENT
  
    (CAPITATION)
  
    OPTION CARE    
  

 
  HEALTH OPTIONS, INC.
  PARTICIPATION AGREEMENT
  (CAPITATION)
  
    TABLE OF CONTENTS    
  

	Article
	 	 
	 	Page

	I.	 	Definitions and Parties	 	1
	II.	 	Term and Termination	 	1
	III.	 	Independent Relationship	 	3
	IV.	 	Provider Services	 	3
	V.	 	Compensation	 	5
	VI.	 	Authorization	 	5
	VII.	 	Membership Identification	 	5
	VIII.	 	Billings	 	5
	IX.	 	Insurance	 	6
	X.	 	Listing, Advertising and Promotion	 	6
	XI.	 	Cooperation with Health Options	 	6
	XII.	 	Maintenance and Inspection of Records; Confidentiality	 	7
	XIII.	 	Access to Medical Records	 	7
	XIV.	 	Member Non-Liability for Payment	 	7
	XV.	 	Subcontracting of Service	 	8
	XVI.	 	Coordination of Benefits	 	8
	XVII.	 	Member Grievance Resolution	 	9
	XVIII.	 	Dispute Resolution; Arbitration	 	9
	XIX	 	Assignment and Delegation	 	10
	XX.	 	General Provisions	 	10
	XXI.	 	Notices	 	11
	XXII.	 	Year 2000 Compliance	 	12
	Attachment 1 Definitions	 	 
	Attachment 2 Description of Services	 	 
	Attachment 3 Compensation for Services and Payment Procedures	 	 
	Schedule "A" Capitation Payments	 	 
	Schedule "B" Service Area	 	 

  

 
 

HEALTH OPTIONS, INC.
  
    PARTICIPATION AGREEMENT
  
    (CAPITATION)    
  

THIS
PARTICIPATION AGREEMENT (hereinafter referred to as "Agreement") is made and entered into by and between the parties described in Article I of this Agreement. 

WHEREAS,
HEALTH OPTIONS is operating a state certified health maintenance organization in accordance with applicable laws; and 

WHEREAS,
Provider is willing to participate in such health maintenance organization as a Participating Provider by providing services to Members of HEALTH OPTIONS in accordance with the terms of this
Agreement; 

NOW,
THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the parties agree to the following: 

	1.  DEFINITIONS AND PARTIES.
	

1.1	
 	

The terms used in this Agreement as set forth in Attachment 1 ("Definitions") shall have the meanings set forth in Attachment 1: The parties to this Agreement are:
	

 	
 	

HEALTH OPTIONS, INC.

Corporate Offices at

4800 Deerwood Campus Parkway

Jacksonville, Florida 32246
	

 	
 	

a Florida corporation, hereinafter referred to as "HEALTH OPTIONS", and
	

 	
 	

OptionCare Enterprises, Inc.

d/b/a OptionCare

100 Corporate North, Suite 212

Bannockburn, Illinois 60015
	

 	
 	

a Delaware corporation, hereinafter referred to as "Provider".
	
II.  TERM AND TERMINATION.
	

2.1	
 	

This Agreement shall become effective as of the Effective Date appearing on the signature page hereof, and shall continue in effect until the date shown on such signature page as the Initial Anniversary Date. Thereafter, this Agreement
shall continue in effect from year to year from such Initial Anniversary Date unless terminated by the mutual written agreement of the parties. Notwithstanding the foregoing and any other provisions of this Agreement, either party may terminate this
Agreement at any time by giving at least sixty (60) days prior written notice of such termination to the other party.

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2.2	
 	

Subject to the requirements of Sections 2.3 and 2.4 directly below, HEALTH OPTIONS or Provider may terminate this Agreement immediately at any time if the other party fails to have all applicable licenses or the full amount of insurance coverage
required under the provisions of Article IX ("Insurance") below; or, if the other party fails to meet any obligations under applicable state and local laws pertaining to the operation of HEALTH OPTIONS or Provider. In addition, either party may
terminate this Agreement immediately at any time for cause. For purposes of this Agreement, "cause" shall include a material breach of an obligation to be performed hereunder and shall include in any event a breach of any of the obligations set forth
in Section 4.2 of this Agreement, or a conviction of a felony by a party or any individual affiliated with Provider who provides or arranges the provision of services to Members. Further, HEALTH OPTIONS may terminate this Agreement immediately
at any time if HEALTH OPTIONS determines that Member dissatisfaction exists with respect to services provided by Provider. Termination shall have no effect upon the rights and obligations of the parties arising out of any transactions occurring prior
to the effective date of such termination. Upon the written request of HEALTH OPTIONS, Provider will continue to treat Members of HEALTH OPTIONS who began a course of treatment prior to such termination, subject to all of the terms and provisions of
this Agreement, until such course of treatment has been completed or arrangements satisfactory to HEALTH OPTIONS and such Member have been made to have such treatment provided by another provider.
	

2.3	
 	

RIGHT OF DEPARTMENT OF INSURANCE TO ORDER CANCELLATION. As required under FLORIDA STATUTES Section 641.234 as amended effective October 1, 1988, if the Department of Insurance has information and belief that this Agreement requires HEALTH
OPTIONS to pay a fee which is unreasonably high in relation to the services provided, after review of this Agreement the department may order HEALTH OPTIONS to cancel this Agreement, if it determines that the fees to be paid by HEALTH OPTIONS are so
unreasonably high as compared with similar contracts entered into by HEALTH OPTIONS or as compared with similar contracts entered into by other health maintenance organizations in similar circumstances, such that this Agreement is detrimental to the
subscribers, stockholders, investors, or creditors of HEALTH OPTIONS. This Agreement shall be canceled upon issuance of such order by the department pursuant to this section.
	

2.4	
 	

MANDATORY 60-DAY NOTICE OF CANCELLATION BY PROVIDER AND HEALTH OPTIONS
	

 	
 	

2.4.1	
 	

As required under FLORIDA STATUTES Section 641.315 as amended effective October 1, 1991, Provider shall provide sixty (60) days' advance written notice to HEALTH OPTIONS and the Department of Insurance at the addresses listed in the
"Notice" section of this Agreement before canceling this Agreement with HEALTH OPTIONS for any reason. Nonpayment for goods or services rendered by the Provider to HEALTH OPTIONS or any of its Members shall not be a valid reason for avoiding such
60-day advance notice of cancellation. Upon receipt by HEALTH OPTIONS of a 60-day cancellation notice, HEALTH OPTIONS may, if requested by the Provider, terminate the contract in less than sixty (60) days if HEALTH OPTIONS is not financially impaired
or insolvent.
	

 	
 	

2.4.2	
 	

As required under FLORIDA STATUTES Section 641.315 as amended effective October 1, 1996, HEALTH OPTIONS shall provide sixty (60) days' advance written notice to Provider and the Department of Insurance at the addresses listed in the
"Notice" section of this Agreement before canceling, without cause, this Agreement with Provider, except in such cases where a Member's health is subject to imminent danger or Provider's ability to provide services pursuant to this Agreement is
effectively impaired by the Board of Medicine or other government or regulatory agency.

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2.4.3	
 	

HEALTH OPTIONS and Provider hereby acknowledge and agree that the provisions of 2.4.1 and 2.4.2 above do not relieve either party of any of its other obligations under this Agreement that are not inconsistent with the foregoing, including without
limitation any obligation either party has to provide more than sixty (60) days' notice of cancellation of this Agreement, to the other party.
	
III.  INDEPENDENT RELATIONSHIP.
	

3.1	
 	

Notwithstanding the provisions of Article XI ("Cooperation With HEALTH OPTIONS") or any other provisions hereof, in the performance of the obligations of this Agreement each party is at all times acting and performing as an independent
contractor with respect to the other party, and no party shall have or exercise any control or direction over the method by which the other party shall perform such work or render or perform such services and functions. It is further expressly agreed
that no work, act, commission or omission of any party (or any of its agents, servants or employees) pursuant to the terms and conditions of this Agreement, shall be construed to make or render such party (or any of its agents, servants or employees)
an agent, servant, representative, or employee of, or joint venturer with, such other party.
	

3.2	
 	

Provider hereby expressly acknowledges its understanding that this Agreement constitutes a contract between Provider and HEALTH OPTIONS, that HEALTH OPTIONS is an independent corporation operating under a license or sublicense with the Blue Cross and
Blue Shield Association (the "Association"), an association of independent Blue Cross and Blue Shield Plans, permitting HEALTH OPTIONS to use the Blue Cross and/or Blue Shield Service Mark in the State of Florida, and that HEALTH OPTIONS is not
contracting as the agent of the Association. Provider further acknowledges and agrees that it has not entered into this Agreement based upon representations by any person other than HEALTH OPTIONS and that no person, entity, or organization other
than HEALTH OPTIONS shall be held accountable or liable to Provider for any of HEALTH OPTIONS' obligations to Provider created under this Agreement. This paragraph shall not create any additional obligations whatsoever on the part of HEALTH OPTIONS'
other than those obligations created under other provisions of this Agreement.
	
IV.  PROVIDER SERVICES.
	

4.1	
 	

Provider will make available to HEALTH OPTIONS, for the use and benefit of Members, those services that may be requested by or on behalf of HEALTH OPTIONS in order to provide Members with those Covered Services described and set forth in Attachment 2
of this Agreement ("Description of Services"). Such Covered Services are to be provided in accordance with accepted professional practices and standards and (except in cases of Emergency) with the informed consent of such Members. In addition, such
Covered Services are to be provided by qualified professional health personnel. HEALTH OPTIONS and Provider may mutually agree in writing either to increase or decrease the Covered Services made available hereunder. Provider shall not discriminate
against Members in any manner vis-a-vis other patients served by Provider.
	

4.2	
 	

Provider represents and agrees:
	

 	
 	

4.2.1	
 	

That it has, and will during each term of this Agreement maintain in full force and effect, all licenses, permits, certifications, (including, if Provider provides Covered Services to Members who are Medicare beneficiaries, certification from the
U.S. Department of Health and Human Services as a provider under the Medicare program), and other regulatory approvals required under federal and/or state  law in connection with providing the Covered Services contemplated by this
Agreement.

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4.2.2	
 	

That all personnel who are used by Provider, directly or indirectly, to provide Covered Services to Members are competent to do so and that all such personnel possess any and all licenses, permits, certifications and regulatory approvals required by
law in connection with providing such Covered Services; that all such personnel will perform only those services which they are legally authorized and permitted to perform; and that Provider and all such personnel will perform their duties hereunder
in accordance with all applicable local, state and federal requirements, as well as such national, state and county standards of professional ethics and practice as may be applicable.
	

 	
 	

4.2.3	
 	

That Provider will promptly notify HEALTH OPTIONS of the loss of, or any limitation with respect to, any such license, permit, certification, or regulatory approval.
	

 	
 	

4.2.4	
 	

That any and all facilities, equipment, goods and supplies (including, if applicable, vehicles) used by Provider to provide Covered Services to Members will be available, properly serviced and maintained, and otherwise appropriate for providing any
Covered Services to Members pursuant to this Agreement.
	

 	
 	

4.2.5	
 	

That, except in cases of Emergency, Provider and any physicians or other health care professionals who do or may provide services to Members hereunder will not admit a Member to a hospital without first obtaining prior authorization, on an
appropriate HEALTH OPTIONS referral or authorization form, from the Member's HEALTH OPTIONS Primary Care Physician or the HEALTH OPTIONS Medical Director for the HEALTH OPTIONS service area in which Provider is located (or, if requested in advance in
writing, from both such Primary Care Physician and Medical Director). In cases of Emergency, if Provider (or any physician or other health care professional providing services to Member hereunder for or on behalf of Provider) refers, transfers, or
admits any Member to a hospital, Provider will notify HEALTH OPTIONS thereof as soon as possible unless prior authorization from HEALTH OPTIONS has been obtained.
	

 	
 	

4.2.6	
 	

That it will inform any physicians and other health care professionals who do or may provide services on behalf of Provider to Members hereunder of the existence of this Agreement and of any provisions herein that are applicable to them. Additionally,
 Provider will, after receipt of written request from HEALTH OPTIONS, immediately terminate any agreement or agreements it has for the provision of Covered Services to Members specific to the provider or providers of such services included in such
written request from HEALTH OPTIONS. In any event HEALTH OPTIONS retains the right to approve, or disapprove, new providers of Covered Services to Members and/or new sites of service.
	

 	
 	

4.2.7	
 	

That it has arrangements with emergency services to enable Provider to arrange for prompt, safe, referral and transfer of any Member for Medically Necessary treatment in appropriate situations.
	

 	
 	

4.2.8	
 	

That it will provide Covered Services to Members on a twenty-four (24) hour daily basis or will assure that any Member who is referred for receipt of such services at any hour obtains appropriate instructions as to how and where to obtain such
services at other facilities, to assure that the life or safety of any Member will not be jeopardized.

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V.  COMPENSATION.
	

5.1	
 	

HEALTH OPTIONS agrees to pay to Provider the compensation set forth in Attachment 3 ("Compensation For Services and Payment Procedures") for those Covered Services described and set forth in Attachment 2 of this Agreement ("Description of Services")
and provided pursuant to this Agreement to a Member that have been duly authorized as set forth in Article VI below ("Authorization"). Rates of compensation shall remain constant for the term of this Agreement, unless HEALTH OPTIONS and Provider
mutually agree in writing that any or all such rates be either increased or decreased. Provider agrees to be responsible for collecting any applicable Copayments required for Covered Services directly from the Members, and shall not waive, discount
or rebate any such deductibles or Copayments without the prior written consent of Health Options.
	

5.2	
 	

In the event of any overpayment, duplicate payment, or other payment of an amount in excess of that to which Provider is entitled, HEALTH OPTIONS may, in addition to any other remedy, recover the same by way of offsetting the amounts overpaid against
current and future amounts due to Provider and/or seeking an immediate refund of the amount of controversy from the Provider.
	
VI.  AUTHORIZATION.
	

6.1	
 	

Except in cases of Emergency, Covered Services shall be provided to Members under this Agreement only as authorized by the Medical Director of HEALTH OPTIONS (or his designee), or by a physician who has contracted with HEALTH OPTIONS to provide
health services to Members. Provider shall attempt to contact HEALTH OPTIONS to verify that a patient is a Member of HEALTH OPTIONS and eligible to receive the services to be provided.
	
VII.  MEMBER IDENTIFICATION.
	

7.1	
 	

HEALTH OPTIONS shall furnish to its Members identification cards which, except in an Emergency, must be presented to Provider at the time Covered Services are rendered. However, such identification cards in no way create, or serve to verify,
eligibility to receive Covered Services under this Agreement. Upon request by Provider, HEALTH OPTIONS shall provide available information concerning a Member's eligibility to receive Covered Services under this Agreement. Such information shall not
be deemed to be a promise or guarantee of payment by HEALTH OPTIONS under this Agreement.
	
VIII.  BILLINGS.
	

8.1	
 	

Provider shall submit to HEALTH OPTIONS, for all Covered Services rendered to Members in accordance with the terms of this Agreement, complete, accurate and itemized billings, which shall include identifying patient information and itemized records
of such services and charges, in billing form and content that are acceptable to HEALTH OPTIONS and as may be required by applicable laws or regulations.

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IX.  INSURANCE.
	

9.1	
 	

Each party to this Agreement, at its sole cost and expense, shall procure and maintain such policies of general liability and professional liability insurance and other insurance as shall be adequate to insure such party and its employees against any
claim or claims for damages arising by reason of personal injuries or death occasioned directly or indirectly in connection with the performance of services and activities by such party, and the use of any facilities, equipment or supplies provided
by such party, in connection with this Agreement. Each of such policies shall be in form and amounts acceptable to the other party, but not more than two (2) million dollars per occurrence and five (5) million dollars in the aggregate. Each
party shall furnish the other party reasonable proof of such adequate insurance as shall be requested upon execution of this Agreement and/or at any reasonable time thereafter, and shall notify the other in writing at least thirty (30) days prior to
the termination or any reduction of such coverage. The failure to give such notice, or the absence of such coverage, is grounds for immediate termination of this Agreement.
	
X.  LISTING, ADVERTISING AND PROMOTION.
	

10.1	
 	

Provider agrees that HEALTH OPTIONS may identify Provider as a provider of services to HEALTH OPTIONS Members and specifically agrees that HEALTH OPTIONS may advertise, publicize, and otherwise promote its relationship with Provider to potential and
existing Members in accordance with HEALTH OPTIONS' marketing program. HEALTH OPTIONS may list the name, address, telephone number of Provider, and a description of its facilities and services, in HEALTH OPTIONS' directories or other lists of
providers of services. HEALTH OPTIONS and Provider further agree that, except as provided in the foregoing sentence, the name, symbols, trademarks, trade names, and service marks of each party, whether presently existing or hereafter established, are
proprietary; and each party reserves to itself the right to the use and control thereof. In addition, except as provided in the first sentence hereof, neither party shall use the other party's name, symbols, trademarks or service marks in advertising
or promotional materials or otherwise without the prior written consent of that party and shall cease any such usage immediately upon written notice of the party or upon termination of this Agreement, whichever is sooner.
	
XI.  COOPERATION WITH HEALTH OPTIONS.
	

11.1	
 	

COOPERATION WITH HEALTH OPTIONS. Provider agrees to cooperate with HEALTH OPTIONS fully in connection with the conducting by HEALTH OPTIONS of its regular audit activities, credentialing activities, peer review activities, utilization management
programs, quality assurance programs, and discharge planning activities. In connection therewith, Provider will allow employees, agents, and/or independent contractors retained by HEALTH OPTIONS for the performance of such activities, access to
Members, and/or to records pertaining to such Members at reasonable times, consistent with applicable Florida law, and, if applicable, consistent with reasonable previously established policies of Provider concerning patient safety and welfare.
Provider will comply with all reasonable requirements and policies of HEALTH OPTIONS used in administering such activities and/or programs, and further shall comply with administrative policies and procedures that are used by HEALTH OPTIONS in
conducting its business operations. HEALTH OPTIONS shall not be subject to liability to Provider as a result of conducting such activities or programs, provided that HEALTH OPTIONS has acted in good faith.
	

11.2	
 	

COORDINATION OF DEFENSE OF CLAIMS. Provider and HEALTH OPTIONS agree to make all reasonable efforts, consistent with advice of counsel and the requirements of applicable insurance policies and carriers, to coordinate the defense of all claims in
which the  other is either a named defendant.

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XII.  MAINTENANCE AND INSPECTION OF RECORDS; CONFIDENTIALITY.
	

12.1	
 	

Provider agrees to maintain adequate business and medical records in English relating to the provision of Covered Services to Members during the entire term of this Agreement and for a period of at least seven (7) years thereafter.
	

12.2	
 	

Provider and HEALTH OPTIONS agree that all Member medical records shall be treated as confidential so as to comply with all state and federal laws regarding the confidentiality of patient records. However, HEALTH OPTIONS and any HEALTH OPTIONS
Affiliate, subject to applicable laws, shall have access to, and shall have the right upon request to inspect and, at its own expense, copy, at all reasonable times, any accounting, administrative, and medical records maintained by Provider
pertaining to HEALTH OPTIONS, to Covered Services provided to Members, and to Provider's participation hereunder. In addition, Provider will allow inspection of books and records related to Providers' dealings with HEALTH OPTIONS by HEALTH OPTIONS,
by authorized state agencies, and by the Department of Health and Human Services and the Comptroller General of the United States or their duly authorized representatives; provided, however, that, whenever feasible, Provider shall notify HEALTH
OPTIONS prior to releasing information to any agency or entity other than HEALTH OPTIONS.
	

12.3	
 	

The provisions of this Article shall not be interpreted to place any obligation on Provider that would cause Provider to act or otherwise be in violation of applicable state or federal law.
	
XIII.  ACCESS TO MEDICAL RECORDS.
	

13.1	
 	

Until the expiration of four (4) years after the furnishing of services pursuant to this Agreement, Provider shall make available, upon written request, to the Secretary of the Department of Health and Human Services, or upon request, to the
Comptroller General, or to any of their duly authorized representatives, this Agreement and books, documents and records of Provider that are necessary to certify the nature and extent of costs incurred with respect to any services furnished for
which payments may be made under the Medicare and Medicaid programs. If Provider carries out any of the duties of this Agreement through a subcontract, having a value or costs of $ 10,000 or more over a twelve (12) month period, with a related
organization, 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 related organization shall make available, upon written
request, to the Secretary of the Department of Health and Human Services, or upon request, to the Comptroller General, or to any of their duly authorized representatives, the subcontract, and books, documents and records of such organization that are
necessary to verify the nature and extent of costs incurred with respect to any services furnished for which payments may be made under the Medicare and Medicaid programs.
	
XIV.  MEMBER NON-LIABILITY FOR PAYMENT.
	

14.1	
 	

Provider hereby agrees that in no event, including but not limited to non-payment by HEALTH OPTIONS, insolvency of HEALTH OPTIONS, or breach of this Agreement, shall Provider bill, charge, collect a deposit from, seek compensation, remuneration or
reimbursement from, or have any recourse against any Member or persons other than HEALTH OPTIONS acting on their behalf for Covered Services provided pursuant to this Agreement. This provision shall not prohibit collection of supplemental charges,
Copayments, or charges for non-Covered Services in accordance with the terms of the applicable Health Services Agreement.
	

14.2	
 	

Provider further agrees that (1) this provision shall survive the termination of this Agreement regardless of the cause giving rise to termination and shall be construed to be for the benefit of HEALTH OPTIONS Members and that (2) this
provision supersedes any oral or written contrary agreement now existing or hereafter entered into between Provider and any Member or persons acting on their behalf,

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14.3	
 	

Any modification, addition, or deletion to the provisions of this Article shall become effective on a date no earlier than fifteen (15) days after the Florida Commissioner of Insurance has received written notice of such proposed
change.
	
XV.  SUBCONTRACTING OF SERVICES.
	

15.1	
 	

Provider shall not subcontract this Agreement or any portion of it without the prior written consent of HEALTH OPTIONS if the subcontract in any manner pertains to patient care that Members are to receive hereunder. Provider shall remain fully liable
and responsible for the performance of its obligations hereunder notwithstanding the existence of any such subcontract and any consent thereto by HEALTH OPTIONS. Such consent shall not be unreasonably withheld.
	

15.2	
 	

In the event of any such subcontract, Provider will monitor the performance of the subcontractor and will provide HEALTH OPTIONS with evidence, in form and substance satisfactory to HEALTH OPTIONS, concerning the rendering of services to Members by
such subcontractor and payment by Provider to such subcontractor.
	
XVI.  COORDINATION OF BENEFITS.
	

16.1	
 	

The provisions of this Coordination of Benefits Article are subject to applicable federal and/or state law concerning coordination of health insurance benefits, including without limitation Florida Insurance Code, Section 627.4235, as
amended ("the C.O.B. rules"), and shall be modified to the extent necessary to enable the parties to comply with such law.
	

16.2	
 	

SERVICE AREA MEMBERS. In any case where a Service Area Member is entitled to payment from any third party for Covered Services provided by Provider in accordance with the provisions of this Agreement, and such third party is other than the primary
payor under the C.O.B. rules, payment to Provider for that Member shall not be made by HEALTH OPTIONS of any amount(s) which, when added to all other payments made to Provider for such services, would exceed 100% of the amount agreed to be paid to
Provider by HEALTH OPTIONS under this Agreement for providing such services; and, Provider will neither bill nor attempt to collect from HEALTH OPTIONS, nor any Service Area Member, any such amounts.
	

16.3	
 	

NON-SERVICE AREA MEMBERS. In any case where a Member other than a Service Area Member is entitled to payment from any third party for Covered Services provided by Provider in accordance with the provisions of this Agreement, and such third party is
other than the primary payor under the C.O.B. rules, HEALTH OPTIONS will pay Provider for Covered Services provided that: (1) Provider is in compliance with all other terms of this Agreement, and (2) such HEALTH OPTIONS payment to Provider
shall not be made to the extent that such payment, when added to all other payments made to Provider for that Member for such services, would exceed 100% of the amount agreed to be paid to Provider by HEALTH OPTIONS under this Agreement for providing
such services; and Provider will neither bill nor attempt to collect from HEALTH OPTIONS, nor any non-Service Area Member, any such amounts.

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	16.4	 	Provider will cooperate fully with HEALTH OPTIONS in all lawful efforts by HEALTH OPTIONS to collect such amounts under the C.O.B. rules. In addition, Provider shall make a good faith effort to obtain information that may
be helpful to HEALTH OPTIONS in coordinating such benefits, shall otherwise assist HEALTH OPTIONS in such coordination of benefits, and shall promptly refund any overpayments made by HEALTH OPTIONS to Provider pursuant to the foregoing
provisions.

XVII.  MEMBER GRIEVANCE RESOLUTION PROCEDURE.  

	17.1	 	Provider acknowledges that HEALTH OPTIONS, in and pursuant to its various agreements with groups and individuals to provide prepaid health care, has established a grievance resolution procedure which provides a meaningful
process for hearing and resolving disputes arising thereunder, involving Members, HEALTH OPTIONS, Participating Providers and/or Provider. A copy of said grievance resolution procedure will be made available to Provider upon reasonable request. The
parties agree that any complaint, grievance or claim asserted pursuant to such grievance resolution procedure shall be resolved in accordance with such grievance resolution procedure and that they will comply with all final determinations made
through the grievance procedure.

XVIII.  DISPUTE RESOLUTION; ARBITRATION.  

	18.1	 	Both parties agree to meet and confer in good faith to resolve any controversy or claim arising out of or relating to this Agreement or the breach thereof; provided, however, that the foregoing shall in no way be
construed in a manner that would modify or limit the rights and obligations of the parties under Article 11 above with respect to termination of this Agreement. Unless otherwise prohibited by law, any such controversy or claim which cannot be so
resolved shall be submitted to binding arbitration. Unless the parties agree in writing to modify the procedure for such arbitration, the following procedure shall be followed: Arbitration may be initiated by either party making a written demand for
arbitration on the other party within a reasonable time from the date the claim, dispute, or controversy arose, but in no event later than the date legal proceedings would be barred by the applicable statute of limitations. The party making such
demand shall designate a competent and disinterested arbitrator in such written demand. Within thirty (30) days of that demand, the other party shall designate a competent and disinterested arbitrator and give written notice of such designation to
the party making the initial demand for arbitration. Within thirty (30) days after such notices have been given, the two arbitrators so designated shall select a third competent and disinterested arbitrator and give notice of the selection to both
parties. If the two arbitrators designated by the parties are unable to agree on a third arbitrator within thirty (30) days, then upon request of either party such third arbitrator shall be selected by a Circuit Judge in the county in which
arbitration is pending. The arbitrators shall then hear and determine the question or questions in dispute, and the decision in writing of any two arbitrators shall be binding upon the parties. The arbitration shall be held in the State of Florida at
a location to be designated by the party not making the initial demand for arbitration. Unless the parties otherwise agree, the arbitration shall be conducted in accordance with the rules governing procedure and admission of evidence in the
courts of the State of Florida. Each party shall pay its chosen arbitrator and shall bear equally the expense of the third arbitrator and all other expenses of the arbitration, provided that attorney's fees and expert witness fees are not deemed to
be expenses of arbitration but are to be borne by the party incurring them. Except as otherwise provided in this Agreement, arbitration shall be governed by the provisions of the Florida Arbitration Code.

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XIX.  ASSIGNMENT AND DELEGATION,  

	19.1	 	Neither party may assign any rights or delegate any duties or obligations under this Agreement, or transfer this Agreement in any manner, without the express written approval of a duly authorized representative of the
other party, and any such attempted assignment, delegation or transfer in violation of this provision shall be void; provided, however, that HEALTH OPTIONS expressly reserves the right to assign any and all of its rights, and to delegate any and all
of its duties and obligations hereunder, and to in any manner transfer this Agreement, to a HEALTH OPTIONS Affiliate, provided that HEALTH OPTIONS shall notify Provider of any such assignment, delegation or transfer in writing at least thirty (30)
days prior thereto.

XX.  GENERAL PROVISIONS.  

	20.1	 	Amendment. This Agreement or any part of it may be amended at any time during the term of the Agreement by mutual consent in writing of duly authorized representatives of the parties. Provided,
however, that any change (including any addition and/or deletion) to any provision or provisions of this Agreement that is required by duly enacted federal or Florida legislation, or by a regulation or rule finally issued by a regulatory agency
pursuant to such legislation, rule or regulation, will be deemed to be part of this Agreement without further action required to be taken by either party to amend this Agreement to effect such change or changes, for as long as such legislation,
regulation or rule is in effect,
	

20.2	
 	
Applicable Law. The validity of this Agreement and of any of its terms and provisions, as well as the rights and duties of the parties hereunder, shall be interpreted and enforced pursuant
to and in accordance with the laws of the State of Florida.
	

20.3	
 	
Attorney Fees; Enforcement Costs. Except in the case of arbitration proceedings referred to above, or if the parties otherwise agree in writing, if any permitted legal action or other
proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any provision of this Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorney's fees, court costs, and other reasonable expenses incurred in connection with maintaining or defending such action or proceeding, as the case might be, including any such reasonable attorney's fees, costs, or expenses
incurred on appeal, in addition to any other relief to which such party or parties may be entitled.
	

20.4	
 	
Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties, their successors, and their permitted assigns, unless otherwise set forth herein or agreed to by
the parties in writing.
	

20.5	
 	
Confidentiality of Contract Terms and Member Listings. Provider acknowledges and agrees that the reimbursement rates paid by HEALTH OPTIONS, and other aspects of this Agreement, including,
without limitation, any and all membership listings provided to Provider by HEALTH OPTIONS, are competitively sensitive. Provider will not disclose such rates, membership listings, and other aspects of this Agreement, to third parties, except upon
the prior written authorization of HEALTH OPTIONS.
	

20.6	
 	
Enforceability. In the event any provision of this Agreement is rendered invalid or unenforceable by a valid Act of Congress or of the Florida Legislature or by any regulation duly
promulgated by officers of the United States or of the State of Florida acting in accordance with law, or declared null and void by any court of competent jurisdiction, the remainder of the provisions of this Agreement shall remain in full force and
effect.
	

20.7	
 	
Entire Agreement; Signatures Required. This Agreement, which shall be deemed to include all attachments, amendments, exhibits, addenda, and schedules, if any, contains the entire Agreement
between the parties. Any prior agreements, promises, negotiations 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. This Agreement
will be effective and binding on the parties only if the duly authorized signatures of the parties are affixed hereto where indicated on the signature page below, and not otherwise.

10

 

	

20.8	
 	
Headings. The headings of sections contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
	

20.9	
 	
Limitations on Liability. Although this Agreement contemplates services for Members, the parties reserve the right to amend or terminate this Agreement without notice to, or consent of, any
such Member. Subject to the provisions of Article XIV (Member Non-Liability for Payment), no persons or entities except for HEALTH OPTIONS and Provider are intended to be or are, in fact, beneficiaries of this Agreement; and its existence shall
not in any respect whatsoever increase the rights of any Member or other third party, or create any rights on behalf of any Member or other third party vis-a-vis either of the parties. Furthermore, nothing in this Agreement shall impose upon HEALTH
OPTIONS any obligation to render health care services, but only to arrange for the provision of health care services by hospitals, physicians, and other independent contractors. HEALTH OPTIONS shall not be responsible for any act, omission, or
default of any hospital, physician or other independent contractor, or for any negligence, misfeasance, malfeasance or nonfeasance of any hospital, physician or other provider of health care services participating in HEALTH OPTIONS' health plan.
Provider shall not be responsible for any act, omission, or default of HEALTH OPTIONS, or for any negligence, misfeasance, malfeasance, or nonfeasance of HEALTH OPTIONS. No provision of this Agreement shall be deemed to, nor shall, constitute an
agreement by either party to indemnify or hold harmless any other person or entity, whether or not a party hereto.
	

20.10	
 	
Nondiscrimination. In carrying out their obligations under this Agreement, Provider shall not discriminate against any Member on a basis of race, color, religion, sex, national origin, or
physical or mental handicap; nor shall Provider knowingly contract with any person or entity which discriminates against any Member on any such basis.
	

20.11	
 	
Non-Exclusivity. The parties hereby acknowledge that this Agreement is not exclusive, and that each party may freely contract with any other person, firm or entity concerning the subject
matter hereof.
	

20.12	
 	
Survival of Provisions Upon Termination. Any provision of this Agreement which requires or reasonably contemplates the performance of obligations by either party after the termination of
this Agreement shall survive such termination unless otherwise specifically provided herein.
	

20.13	
 	
Waiver of Breach. Waiver of a breach of this Agreement shall not be deemed to be a waiver of any other breach and shall not bar any action for subsequent breach thereof.

XXI.  NOTICES.  

	21.1	 	Any notice required to be given pursuant to the terms and provisions of this Agreement shall be in writing, postage prepaid, and shall be hand delivered or sent (by certified or registered mail, return receipt requested,
or by federal express or other overnight mail delivery for which evidence of delivery is obtained by the sender), to the address or addresses set forth below unless the sender has been otherwise instructed in writing or unless otherwise provided by
law. The notice shall be deemed to be effective on the date hand delivered or as indicated on the return

11

 

	 	 	 receipt or, if no date is so indicated, then on the date of the notice.

	 	 	To Provider:	 	To Department of Insurance
	

 	
 	

OptionCare Enterprises, Inc.

d/b/a OptionCare

Attn: General Counsel

100 Corporate North

Suite 212

Bannockburn, Illinois 60015	
 	

Bureau of Specialty Insurers

Department of Insurance

200 E. Gaines Street

Tallahassee, Florida 32399-0300
	

 	
 	

To HEALTH OPTIONS:	
 	

With a copy to:
	

 	
 	

HEALTH OPTIONS, INC.

8400 N. W. 33 Street

Suite 100

Miami, Florida 33122	
 	

HEALTH OPTIONS, INC.

Attn: S.V.P., Healthcare Services

41800 Deerwood Campus Parkway

Jacksonville, Florida 32246

XXII.  YEAR 2000 COMPLIANCE.  

	22.1	 	Provider specifically acknowledges that it has, or will have, in place an appropriate management plan to, when necessary, modify, in order to be "Year 2000 Ready", the operation of its computer systems and equipment
necessary for it to provide services to be delivered under this Agreement and, as a consequence: (i) such systems and equipment will not materially malfunction when transitioning from December 31, 1999 to January 1, 2000 or from
twentieth century dates to twenty-first century dates; and/or (ii) even if such systems and equipment malfunction when making such date transition, Provider will have in place a contingency plan permitting it to continue to materially comply
with its obligations under this Agreement notwithstanding any such computer system/equipment malfunction.

[THE
FOLLOWING PAGE IS THE SIGNATURE PAGE OF THIS AGREEMENT] 

12

   IN WITNESS WHEREOF, by placing their duly authorized signatures below, the parties hereby execute this Agreement and agree to be bound by its terms. 

Effective Date: 6-1-97.  

Initial Anniversary Date:  

	PROVIDER	 	HEALTH OPTIONS, INC.
	

/s/ MICHAEL A. RUSNAK
 Signature	
 	

/s/ BRUCE A. DAVIDSON
 Signature
	

Michael A. Rusnak
 Name (Printed or Typed)	
 	

Bruce A. Davidson
 Name (Printed or Typed)
	
President/CEO
 Title	
 	
Senior Vice President
 Title
	

Date Signed: April 19, 1999	
 	

Date Signed: 4/28/99

13

  

 
 

ATTACHMENT 1    
  

 
  HEALTH OPTIONS, INC.
  PARTICIPATION AGREEMENT
  (CAPITATION)    
  

 
  DEFINITIONS    
  

Definitions.  If, and as, used in this Agreement and any amendments hereto, the following terms shall have the meanings set forth below
unless otherwise specifically provided: 

	1.
	Capitation Payment means the payment, subject to adjustments, made under an arrangement whereby a provider of health care services
receives an amount, expressed as dollars per Member per month, in consideration for providing, and based upon the projected cost of, all Covered Services under a Health Services Agreement that
applicable Members are expected to use during a month's time.

	2.
	Copayment means that amount of money required under a Health Services Agreement to be paid directly by the Member to any medical
provider who provides services or supplies to such Member.

	3.
	Covered Services means the benefits described and set forth in the Health Services Agreement, including any endorsements and riders
thereto, provided that the Member is entitled to receive such benefits.

	4.
	Emergency means the sudden and unexpected onset of an illness or injury which requires the immediate care and attention of a
qualified physician and which, if not treated immediately, would seriously jeopardize or impair the health of the Member, as determined by the Medical Director.

	5.
	Health Options Affiliate means Blue Cross and Blue Shield of Florida, Inc. and/or any entity certified to operate as a health
maintenance organization that is affiliated with HEALTH OPTIONS by or through common ownership or control. (HEALTH OPTIONS shall provide Provider with a current list of all such HEALTH OPTIONS
Affiliates upon written request.)

	6.
	Health Services Agreement means an agreement between HEALTH OPTIONS and a third party which, by its terms, requires HEALTH OPTIONS to
arrange for the delivery of health care services to individuals designated in said agreement.

	7.
	Medical Director means a physician who is designated by HEALTH OPTIONS to have the overall administrative responsibility for the
direction of HEALTH OPTIONS' medical delivery system.

	8.
	Medically Necessary means any service and/or supply provided by a hospital, physician, or other provider for the diagnosis or
treatment of a Member's condition and which, as determined by HEALTH OPTIONS is: (1) consistent with the symptom, diagnosis, and treatment of the Member's condition; and, (2) in
accordance with standards of good medical practice; and (3) not primarily for the convenience of the Member, the Member's family, the physician or other provider; and, (4) approved by
the appropriate medical body or board for the Member's condition; or, if different, the meaning of such term as set forth in the Health Services Agreement under which services are being provided to a
Member hereunder.

	9.
	Member and Members means each individual eligible for coverage and properly enrolled: (a) under a Health Services Agreement
with HEALTH OPTIONS (including, without limitation, Service Area Members, as defined below, except when the context requires otherwise); (b) under a Health Services Agreement with a health
maintenance organization that is a corporate parent, subsidiary or affiliate of HEALTH OPTIONS or Blue Cross and Blue Shield of Florida, Inc.; (c) under a health services agreement with
a health plan that is participating with HEALTH OPTIONS in a national network of Blue Cross and Blue Shield health maintenance organizations; 

1

 

(d) under
a self-insurance agreement administered by HEALTH OPTIONS; and/or (e) in another health plan which has a reciprocity or other agreement with HEALTH OPTIONS for the arrangement
of the provision of health care services to its members by HEALTH OPTIONS. Provider shall be entitled to notification from HEALTH OPTIONS as to the identity of each such health maintenance
organization or health plan, as the case may be. 

	10.
	Participating Provider means a Primary Care Physician, other physician, a participating hospital, or any other provider of medical or
other health care services or supplies which has entered into a written agreement with HEALTH OPTIONS to provide such services or supplies to Members.

	11.
	Physician means any individual who is licensed by the state in which Covered Services are provided by such individual to a Member, as
a Doctor of Medicine, Doctor of Osteopathy, Doctor of Podiatry, or Doctor of Chiropractic.

	12.
	Primary Care Physician means a duly licensed physician who has entered into a written Primary Care Physician Medical Services
Agreement with HEALTH OPTIONS, through which such physician agrees to provide Primary Care Services to Members.

	13.
	Primary Care Services means those services normally provided by a Primary Care Physician, including but not limited to physician
office visits, nursing home visits, emergency room services, injections and immunizations, screening EKG's, well-child care, periodic health assessments, physician home care, minor office surgeries
and any other routine medical care normally rendered by a physician to his/her patients; provided that all such services are Covered Services.

	14.
	Service Area means the county or counties set forth and described in Schedule "B" of this Agreement.

	15.
	Service Area Member means each individual eligible for coverage and properly enrolled under a Health Services Agreement with HEALTH
OPTIONS for the provision or arranging of health care services in the county or counties set forth in Schedule "B", and for whom a Capitation Payment is made by HEALTH OPTIONS to Provider pursuant to
Attachment 3 hereof. 

2

  

*A Confidential Treatment Request pursuant to Rule 24(B)-2 under the Securities Exchange Act Of 1934, as amended, for certain information in this
document has been filed with the Securities and Exchange Commission. The information for which treatment has been sought has been deleted from such exhibit and the deleted text replaced by an asterisk
(*). 

 
 

ATTACHMENT 2
  HEALTH OPTIONS, INC.
  PARTICIPATION AGREEMENT
  (CAPITATION)
  DESCRIPTION OF SERVICES AND PAYMENT    
  

The
following services which are Covered Services will be included in the Capitation Rate as set forth in Schedule A: 

Home Infusion Therapy:  

* 

Also
included are all charges for: 

*

The
following are not included in the Capitation Rate: 

*

1

 
	*
	A
full evaluation of the drug or therapy in question will be reviewed by a medical committee made up of the OptionCare pharmacist and OptionCare medical director, along with the Blue
Cross/HEALTH OPTIONS pharmacist and medical director. The committee will decide on what new drugs will or will not be covered under the Capitation Rate. 

Drugs Administered in Physician Offices  

All
drugs, which are Covered Services, and administered in a physician's office will be paid by HEALTH OPTIONS at Average Wholesale Price ("AWP") minus *. 

Notwithstanding
the foregoing, the following drugs, which are Covered Services, and administered in a physician's office will be paid by HEALTH OPTIONS at AWP minus *: 

*

Notwithstanding
the above the following drugs, which are Covered Services, and administered in a physician's office will be paid by HEALTH OPTIONS at *: 

*

The
following Supplies will be paid at * of the Medicare Allowable for Dade county available to HEALTH OPTIONS at the time such Covered Services were provided: 

	•
	Huber
needles

	•
	Deitec
(or other brand) of microbore extension tubings for ambulatory pumps

	•
	Brand
specific infusions sets, as required for physician's stationary pumps

	•
	Bags
of diluent for office based infusion (volumes of 50ml to 1000ml)

	•
	Gravity
tubing sets

	•
	Deltec
reservoir cassettes

	•
	Taxol
compatible tubings

	•
	Herparin
for flushing as provided in vials

	•
	Bone
marrow trays 

2

  

	*
	A
Confidential Treatment Request pursuant to Rule 24(B)-2 under the Securities Exchange Act Of 1934, as amended, for certain information in this document has been filed with
the Securities and Exchange Commission. The information for which treatment has been sought has been deleted from such exhibit and the deleted text replaced by an asterisk (*). 

 
 

ATTACHMENT 3
  HEALTH OPTIONS, INC.
  PARTICIPATION AGREEMENT
  (CAPITATION)
  
    COMPENSATION FOR SERVICES AND PAYMENT PROCEDURES    
  

	1.
	General
Provisions for Payment to Provider. HEALTH OPTIONS shall make payments, in accordance with the provisions below, directly to
Provider. Such payments will be made to Provider as payment in full for all Covered Services which Provider provides or arranges hereunder, for each month during the term of this Agreement.

	2.
	Capitation
Payment to Provider. Subject to the further provisions hereof, on or before the 15th day of each month this Agreement is in
effect, or other date if mutually agreed upon, HEALTH OPTIONS will make an adjusted Capitation Payment to Provider, as adjusted in accordance with the provisions of this Agreement. The manner and
amount of such Capitation Payments are as follows:

	a.
	Such
adjusted Capitation Payment may be based upon the age and sex of such Members, and in any event shall not be less than as set forth in Schedule "A".

	b.
	HEALTH
OPTIONS may change any or all of the payment amounts and/or categories set forth in Schedule "A" at any time by giving Provider at least thirty (30) days prior
written notice of the effective date of each such change; provided, however, that if Provider notifies HEALTH OPTIONS in writing prior to said effective date that any or all of such change(s) are
unacceptable to Provider and that Provider therefore intends to terminate the Agreement, notwithstanding any other provisions of this Agreement, such change(s) shall not become effective, and this
Agreement shall terminate as of the first day of the first month that begins at least ninety (90) days after said effective date, unless the parties agree otherwise in writing.

	c.
	When
applicable, the following adjustments to Provider's Capitation Payment will be made in order to reflect the actual number of contract months or portions thereof for which
prepayment fees have been billed by HEALTH OPTIONS under its Health Services Agreements (however such fees may be described or defined therein):

	(i)
	Capitation
Payments for Service Area Members enrolling in HEALTH OPTIONS subsequent to an initial enrollment or subsequent to an open enrollment period (such as "new hires",
newborn children, and other new dependents), will be adjusted as follows: For Service Area Members enrolling on or before the 15th of a month, Provider will be paid a Capitation Payment for that
month. For individuals enrolling after the 15th of a month, Provider will not be paid a Capitation Payment, or any other payment for such Service Area Member (notwithstanding the provisions of
Section 3.c. below), for that month.

	(ii)
	Capitation
Payments for Service Area Members whose effective date of termination of coverage occurs on or before the 15th of a month, Provider will not be paid a Capitation
Payment, or any other payment for such Service Area Member (notwithstanding the provisions of Section 3.c. below), for that month. However, for a Service Area Member whose effective date of
termination of coverage occurs after the 15th of a month, a full Capitation Payment will be made to Provider for that month. 

1

 

	d.	 	(i)	The adjustments to the Capitation Payment set out in Section 2.c. above will be made on or about the same date each month that the Capitation Payment to Provider is made, as provided in this Section 2. Such
adjustments will be made only with respect to enrollments and terminations occurring during the three (3) calendar months immediately preceding the month in which each such adjustment is made.
	

 	
 	

(ii)	

If adjustments are made in accordance with Section 2.c. above, HEALTH OPTIONS shall pay Provider the amounts of any such adjustments and shall be entitled to recover from Provider the amounts of any such adjustments. In addition, HEALTH OPTIONS
shall be entitled to add to, or reduce, a subsequent Capitation Payment payable to Provider under this Agreement based upon any such adjustments.
	

 	
 	

(iii)	

Notwithstanding the foregoing, or any other provision hereof, if an adjustment to the Capitation Payment is made for a Service Area Member whose coverage in HEALTH OPTIONS has terminated pursuant to Section (c) (ii) above; and, if Provider
in good faith, and without knowledge that coverage had terminated, provided or arranged for the provision to such Member of services that would have been Covered Services duly authorized by HEALTH OPTIONS to be provided pursuant to the applicable
Health Services Agreement had such Member's coverage not terminated, then HEALTH OPTIONS will pay Provider for such Services in accordance with the provisions of Section 3 of this Attachment 3, provided that such services were rendered, and
further provided that HEALTH OPTIONS was notified thereof, during the three (3) calendar months immediately preceding the month in which each such adjustment is made.

	3.
	Fee
For Service Payment to Provider. HEALTH OPTIONS agrees to pay Provider as payment in full the lower of * on the dates such services were provided or
arranged, under any of the following conditions; provided that HEALTH OPTIONS is otherwise obligated to make such payments to Provider hereunder:

	a.
	When
the Member to whom Covered Services are provided by Provider hereunder is a non-Service Area Member or otherwise is covered under a Health Services Agreement which includes fee
for service payment for the Covered Services; or

	b.
	When
Provider is providing Covered Services, after the termination of this Agreement, to Member(s) who began a course of treatment prior to such termination; or

	c.
	When
Provider is directly providing Covered Services which are not included in Provider's Capitation Payment described in Section 2 of this Attachment 3. 

HEALTH
OPTIONS shall exercise its best efforts to pay to Provider all undisputed bills rendered to HEALTH OPTIONS in accordance with this Section 3 and this Agreement within thirty
(30) days after such bills have been received. Notwithstanding any other provision of this Agreement, such billings must be submitted to HEALTH OPTIONS within ninety (90) days of the
date such services were provided in order for Provider to be entitled to payment for such services provided pursuant to this Agreement. 

	4.
	Other
Adjustments to Compensation and Payment Procedures.

	a.
	Should
Provider fail to provide any Covered Services to Members which Provider is obligated to provide under this Agreement, HEALTH OPTIONS may deduct the amount of expenses for
such Covered Services incurred by HEALTH OPTIONS as a result of such failure by Provider to provide such Covered Services, from any amounts otherwise payable to Provider hereunder, or HEALTH OPTIONS
may otherwise recover such amount from Provider.

	b.
	If,
under non-emergency circumstances, Provider utilizes or refers a Service Area Member to any non-Participating Provider to receive services without the prior written approval of
the Medical Director, when a Participating Provider is available and able to provide such services 

2

 

to
such Member, the cost to HEALTH OPTIONS of such services may be deducted by HEALTH OPTIONS from subsequent Capitation Payments due Provider under this Agreement, or HEALTH OPTIONS may otherwise
recover such amounts from Provider. 

	5.
	Prohibition
on Billing of Members. All services, the cost of which may cause an adjustment to compensation under this Attachment 3, are services
provided pursuant to this Agreement for purposes of Article XIV of this Agreement ("Member Non-Liability for Payment"), and Provider shall not bill nor attempt to collect from any Member for
such cost of any such services except as permitted under Section V of the Agreement. 

3

*A
Confidential Treatment Request pursuant to Rule 24(B)-2 under the Securities Exchange Act Of 1934, as amended, for certain information in this document has been filed with the Securities and
Exchange Commission. The information for which treatment has been sought has been deleted from such exhibit and the deleted text replaced by an asterisk (*). 

 
 

SCHEDULE "A"    
  

 
  HEALTH OPTIONS, INC.
  PARTICIPATION AGREEMENT
  (CAPITATION)
  CAPITATION PAYMENTS    
  

    The amount of the Capitation Payment, prior to adjustments under this Agreement, for each Service Area Member shall be as follows: 

	 
	 	 

	Commercial Members:	 	*  PMPM
	Medicare Members:	 	*  PMPM

Page 1
of Schedule A 

 
 

SCHEDULE "B"
  
    HEALTH OPTIONS, INC.
  
    PARTICIPATION AGREEMENT
  
    (CAPITATION)    
  

 
  SERVICE AREA    
  

Services
are to be provided to Members in the counties of: 

 
 

BROWARD
  
    DADE
  
    INDIAN RIVER
  
    MONROE
  
    OKEECHOBEE
  
    PALM BEACH
  
    ST LUCIE    
  

Page 1
of Schedule B 

QuickLinks

Exhibit 10.26

HEALTH OPTIONS, INC. PARTICIPATION AGREEMENT (CAPITATION) OPTION CARE

HEALTH OPTIONS, INC. PARTICIPATION AGREEMENT (CAPITATION) TABLE OF CONTENTS

HEALTH OPTIONS, INC. PARTICIPATION AGREEMENT (CAPITATION)

ATTACHMENT 1

HEALTH OPTIONS, INC. PARTICIPATION AGREEMENT (CAPITATION)

DEFINITIONS

ATTACHMENT 2 HEALTH OPTIONS, INC. PARTICIPATION AGREEMENT (CAPITATION) DESCRIPTION OF SERVICES AND PAYMENT

ATTACHMENT 3 HEALTH OPTIONS, INC. PARTICIPATION AGREEMENT (CAPITATION) COMPENSATION FOR SERVICES AND PAYMENT PROCEDURES

SCHEDULE "A"

HEALTH OPTIONS, INC. PARTICIPATION AGREEMENT (CAPITATION) CAPITATION PAYMENTS

SCHEDULE "B" HEALTH OPTIONS, INC. PARTICIPATION AGREEMENT (CAPITATION)

SERVICE AREA

BROWARD DADE INDIAN RIVER MONROE OKEECHOBEE PALM BEACH ST LUCIEPrepared by MERRILL CORPORATION

QuickLinks
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EXHIBIT 10.27    
    

  
 

    BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.
  and
  HEALTH OPTIONS, INC.
  
    PRESCRIPTION DRUG AGREEMENT
  
    with
  
    Option Care Enterprises, Inc.
  d/b/a Option Med
  100 Corporate North,
Suite 212
  Bannockburn, Illinois 60015    
  

 
 

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.
  and
  HEALTH OPTIONS, INC.
  PRESCRIPTION DRUG AGREEMENT    
  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 

	I.	 	DEFINITIONS AND PARTIES	 	1
	II.	 	INDEPENDENT RELATIONSHIP	 	3
	III.	 	SERVICE AVAILABILITY	 	3
	IV.	 	PROFESSIONAL JUDGEMENT	 	4
	V.	 	GENERIC SUBSTITUTION AND DRUG FORMULARY COMPLIANCE	 	4
	VI.	 	ON-LINE PROCESSING	 	4
	VII.	 	REPRESENTATIONS OF PHARMACY	 	4
	VIII.	 	TERM AND TERMINATION	 	5
	IX.	 	PAYMENT TO PHARMACY	 	6
	X.	 	COPAYMENTS; OTHER CHARGES	 	6
	XI.	 	MEMBER NON-LIABILITY	 	7
	XII.	 	COORDINATION OF BENEFITS	 	7
	XIII.	 	INSURANCE	 	7
	XIV.	 	COOPERATION WITH COMPANIES	 	7
	XV.	 	MEMBER GRIEVANCE RESOLUTION PROCEDURE(S)	 	8
	XVI.	 	DISPUTE RESOLUTION; ARBITRATION	 	8
	XVII.	 	LISTING, ADVERTISING AND PROMOTION	 	8
	XVIII.	 	MAINTENANCE AND INSPECTION OF RECORDS; CONFIDENTIALITY	 	9
	XIX.	 	ACCESS TO MEDICAL RECORDS	 	9
	XX.	 	ASSIGNMENT AND DELEGATION	 	10
	XXI.	 	YEAR 2000 COMPLIANCE WARRANTY AND INDEMNIFICATION	 	10
	XXII.	 	GENERAL PROVISIONS	 	10
	XXIII.	 	NOTICES	 	12
	Exhibit "A"	 	Pharmacy Locations	 	 
	Exhibit "B"	 	Performance Standards	 	 

  

 
 

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.
  AND
  HEALTH OPTIONS, INC.    
  

 
  PRESCRIPTION DRUG AGREEMENT    
  

THIS
PRESCRIPTION DRUG AGREEMENT (the "Agreement", including by this reference any attached Exhibits) is made and entered into on the date or dates set forth on the signature page below by and between
the parties described in Article 1 of this Agreement. 

WHEREAS
Blue Cross and Blue Shield of Florida, Inc. ("BCBSF") is operating as a health insurance company and Health Options, Inc. ("HEALTH OPTIONS") is operating as a state certified
health maintenance organization in the state of Florida in accordance with applicable laws; and 

WHEREAS
BCBSF and HEALTH OPTIONS offer certain Members programs for the purchase of prescription drugs (the Program); and 

WHEREAS,
PHARMACY, is willing to participate in the Program as a supplier to Members of BCBSF and HEALTH OPTIONS (which organizations may be referred to collectively hereafter as "COMPANIES" or
individually as "COMPANY") in accordance with the terms of this Agreement; 

NOW,
THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the parties agree to the following: 

	I.  Definitions and Parties
	

 	
 	

The parties to this Agreement are:
	

 	
 	

Blue Cross and Blue Shield of Florida, Inc.

4800 Deerwood Campus Parkway

Jacksonville, Florida 32246
	

 	
 	

a Florida corporation, and
	

 	
 	

HEALTH OPTIONS, INC.

Corporate Offices at

4800 Deerwood Campus Parkway

Jacksonville, Florida 32246
	

 	
 	

a Florida corporation, and
	

 	
 	

OptionCare Enterprises, Inc

d/b/a OptionMed

100 Corporate North, Suite 212

Bannockburn, Illinois 60015
	

 	
 	

hereinafter referred to as "PHARMACY".
	

As used herein, the term "COMPANIES" shall be deemed to refer both to BCBSF and HEALTH OPTIONS collectively, and to each of them individually, unless specifically states or required by the context to be otherwise.
	

1.1	
 	

AVERAGE WHOLESALE PRICE (AWP) means the wholesale price of a drug or supply at the time of purchase as defined by the latest edition of the drug file utilized by the Designated Administrator. The price shall be based on the National Drug Code (NDC)
number of the container from which the drug or supply was dispensed.
	

1.2	
 	

CHARGE; COPAYMENT means the amount(s) required to be paid by a Member in accordance with the requirements set out in the applicable Health Benefits Contract or Health Services Agreement.

1

 

	

1.3	
 	

COVERED PRESCRIPTION means a prescription of a Legend Drug or a supply that a Member is entitled to receive under applicable Health Benefits Contract or Health Services Agreement. The term "Covered Prescription" does not include, and in no event will
payment be made for, any prescription to which a Member is not entitled to payment under the applicable Health Benefits Contract or Health Services Agreement, and endorsements thereto.
	

1.4	
 	

COVERED MEMBER, MEMBER, BCBSF MEMBER, AND HEALTH OPTIONS' MEMBER means an individual or dependent of an individual who, as determined by COMPANIES, is eligible to receive services from PHARMACY by virtue of this Agreement and is properly enrolled:
(a) under a Health Benefits Contract or Health Services Agreement with COMPANIES, and/or affiliates or subsidiary of either; (b) under a Health Benefits Contract or Health Services Agreement with a health plan that is participating in a national
network of Blue Cross and Blue Shield organizations, including health maintenance organizations; (c) under a self-insurance agreement administered by COMPANIES, and/or an affiliate or a subsidiary of either; (d) under a health plan entitling the
individual to receive benefits under the federal Medicare program and is approved by the Health Care Financing Administration as being entitled to receive benefits under a Medicare risk contract (in lieu of benefits otherwise available under the
federal Medicare program and under any supplemental Medicare policies), and/or (e) in another health plan which has reciprocity or an agreement with COMPANIES, and/or affiliates, or a subsidiary of either, for the provision of health care
services to its Members by COMPANIES. PHARMACY shall be furnished Member eligibility information by COMPANIES' Designated Administrator. Additionally, as determined by COMPANIES, COVERED MEMBER, MEMBER, BCBSF' MEMBER, AND HEALTH OPTIONS' MEMBER shall
mean an individual who is eligible to receive services from PHARMACY by virtue of this Agreement and his or her status as an employee of a participating employer that has entered into a workers' compensation managed care arrangement with COMPANIES,
and/or affiliates or a subsidiary of either.
	

1.5	
 	

COVERED QUANTITY means a quantity of a Covered Prescription which is prescribed in accordance with the requirements set out in applicable Health Benefits Contract or Health Services Agreement.
	

1.6	
 	

COVERED REFILLS means refills of a Covered Quantity of a Covered Prescription as allowed by law and authorized by a prescribing physician.
	

1.7	
 	

DESIGNATED ADMINISTRATOR means the entity with which COMPANIES contract to perform various administrative services as such relates to COMPANIES' programs for the purchase of prescription drugs.
	

1.8	
 	

DRUG FORMULARY means a select list of prescription drugs which are available to Member(s) through the Participating Pharmacy in accordance with the Health Benefits Contract or Health Services Agreement. The Drug Formulary may be updated for time to
time.
	

1.9	
 	

HEALTH BENEFITS CONTRACT means a Contract, endorsement, or other agreement which, by its terms, provides coverage for health care services and/or supplies to Members. This may include, but is not limited to, group or individual Comprehensive,
Preferred Provider Organization ("PPO"), Point of Service, or Medicare Supplement contracts.
	

1.10	
 	

HEALTH SERVICES AGREEMENT means a HEALTH OPTIONS Health Services Agreement or other agreement which, by its terms, arranges for the delivery of health care services and/or supplies to Members.
	

1.11	
 	

LEGEND DRUG means a drug which in accordance with federal law can be dispensed only pursuant to a prescription and which is required by law to bear the legend, "Caution—Federal law prohibits dispensing without prescription," or other similar
language.
	

1.12	
 	

MAXIMUM ALLOWABLE COST (MAC) PRICE means the upper limit reimbursement for a multiple source prescription drug at the time of processing.

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1.13	
 	

NEGOTIATED RATE means the cost of the covered prescription based on the rate negotiated between COMPANIES and PHARMACY as stated in section IX.
	

1.14	
 	

OVER THE COUNTER (OTC) DRUG means a medication which by state or federal law does not require a prescription.
	

1.15	
 	

PARTICIPATING PHARMACY means a pharmacy that has entered into an agreement either with COMPANIES, or through an agreement with a third party, to provide Covered Prescriptions to Members according to the applicable Health Benefits Contract or Health
Services Agreement.
	

1.16	
 	

PARTICIPATING PHYSICIAN means a physician who is authorized to provide medical services to Members pursuant to a written agreement with COMPANIES, and their affiliates and/or subsidiaries.
	

1.17	
 	

USUAL AND CUSTOMARY CHARGE means the customary dollar amount charged (including any applicable PHARMACY discount programs) for a covered drug or supply to customers not covered under a third party payor program in which PHARMACY
participates.
	
II.  Independent Relationship
	

2.1	
 	

In the performance of the obligations of this Agreement, regarding any services rendered to, or performed on behalf of, Members by either party or its agents, servants or employees, each party is at all times acting and performing as an independent
contractor with respect to the other party, and no party shall have or exercise any control or direction over the method by which the other party shall perform such work or render or perform such services and functions. It is further expressly agreed
that no work, act, commission or omission of any party, its agents, servants or employees, pursuant to the terms and conditions of this Agreement, shall be construed to make or render any party, its agents, servants or employees, an agent, servant,
representative, or employee of, or joint venturer with, the other party.
	

2.2	
 	

PHARMACY hereby expressly acknowledges its understanding that this Agreement constitutes a contract between PHARMACY and COMPANIES, that BCBSF is an independent corporation operating under a license with Blue Cross and Blue Shield Plans, permitting
BCBSF to use the Blue Cross and or Blue Shield Service Mark in the States of Florida and Alabama, that HEALTH OPTIONS is an independent corporation operating under a license or sublicense with the Blue Cross and Blue Shield Association (the
"Association"), an association of independent Blue Cross and Blue Shield Plans, permitting HEALTH OPTIONS to use the Blue Cross and/or Blue Shield Service Mark in the States of Florida and Alabama, and that COMPANIES are not contracting as agents of
the Association, PHARMACY further acknowledges and agrees that it has not entered into this Agreement based upon representations by any person other than COMPANIES and that no person, entity, or organization other than COMPANIES shall be held
accountable or liable to PHARMACY for any of COMPANIES' obligations to PHARMACY created under this Agreement. This paragraph shall not create any additional obligations whatsoever on the part of COMPANIES other than those obligations created
under other provisions of this agreement.
	
III.  Service Availability
	

3.1	
 	

PHARMACY shall be a provider of pharmacy services restricted to non-compounded member administered injectable medications to Covered Members pursuant to the terms of this Agreement, and delivered to location requested by member from THE LOCATIONS
SHOWN ON EXHIBIT A. PHARMACY shall notify COMPANIES in writing of significant changes in operating hours of PHARMACY, or of locations, within a reasonable period of time from occurrence.

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3.2	
 	

In the event that an individual presents a prescription to be filled by PHARMACY and shows evidence of being a Member, but the individual's name does not appear on the most current eligibility information furnished to PHARMACY, PHARMACY will:
(1) call a designated COMPANIES office and request verbal confirmation, and if confirmation is then received, COMPANIES will be responsible for payment; or (2) if not so confirmed, collect cash and provide the individual with a receipt; or
(3) fill the prescription under the Program, and assume the risk if the individual is determined to be ineligible.
	
IV.  Professional Judgment
	

4.1	
 	

PHARMACY reserves the right to refuse to compound or dispense any prescription in the exercise of its pharmacists' professional judgment; provided, however, that PHARMACY shall remain solely liable to any and all persons and/or entities resulting
therefrom.
	
V.  Generic Substitution and Drug Formulary Compliance
	

5.1	
 	

PHARMACY will promote and, where not specifically prohibited by a prescribing physician, utilize generic products to the greatest extent possible. All generic products utilized must be in compliance with applicable federal and state requirements
including those of the Federal Food and Drug Administration. COMPANIES will encourage Participating Physicians to permit generic substitution as a means of cost containment whenever, in the judgement of such physicians, such substitution would not
jeopardize the health of his or her patients. It is acknowledged that, in addition to any other copayment amounts, Members may be responsible for the difference between the price of the generic drug and the price of the brand drug, as such may be
required in applicable Health Benefits Contracts or Health Services Agreements.
	

5.2	
 	

PHARMACY, when providing services under this Agreement, agrees to utilize the COMPANIES Drug Formularies.
	
VI.  On-line Processing
	

6.1	
 	

Pharmacy shall submit all claims for Covered Prescriptions provided under this Agreement on-line (i.e. electronic) to the Designated Administrator within 14 days of dispensing, including claims where the Negotiated Rate or the Usual and Customary
Charge is less than the applicable copayment. On-line claims shall include the PHARMACY'S Usual and Customary Charge.
	

6.2	
 	

PHARMACY shall utilize on-line processing capabilities that are compatible with COMPANIES' Designated Administrator. Pharmacy shall file all claims for any Member whose Health Benefits Contract contains a Copayment arrangement for covered
Prescriptions. Pharmacy shall provide all Members whose Health Benefits Contract does not contain a Copayment arrangement with a receipt containing all applicable information required on COMPANIES' Drug Claim Form, including the Pharmacy's Charge as
defined by this agreement.
	
VII.  Representations of Pharmacy
	

 	
 	

PHARMACY represents and agrees:
	

7.1	
 	

That it has and shall, during each term of this Agreement, maintain in full force and effect, all licenses, permits, certifications, and other approvals required under federal, state and/or local law in regard to providing services in accordance with
this Agreement.
	

7.2	
 	

That all personnel who are employed by PHARMACY, directly or indirectly, to compound, dispense or otherwise provide Covered Prescriptions or Covered Refills to Members possess any and all licenses, permits, certifications and regulatory approvals
required by law; that all such personnel shall perform only those services which they are legally authorized and permitted to perform; and that all such personnel shall perform their duties in accordance with all local, state and federal licensing
requirements, as well as national, state and county standards of professional ethics and practice as may be applicable.

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VIII.  Term and Termination
	

8.1	
 	

This Agreement shall become effective as of the effective date appearing on the signature page hereof, and shall continue in effect until the date shown on such signature page as the initial termination date. Thereafter, this Agreement shall
continue in effect from year to year from such initial termination date unless terminated by the mutual written agreement of the parties. Notwithstanding the foregoing, and notwithstanding any other provisions of this Agreement, either party may
terminate this Agreement at any time by giving at least ninety (90) days prior written notice of such termination to the other party.
	

8.2	
 	

Subject to the requirements of Sections 8.3 and 8.4 directly below, COMPANIES or PHARMACY may terminate this Agreement immediately at any time if the other party fails to have all applicable licenses or the full amount of insurance coverage
required under the provisions of Section XIII ("Insurance"). In addition, either party may terminate this Agreement immediately at any time for cause. For purposes of this Agreement, "cause" shall include a material breach of an obligation to be
performed hereunder, or a finding that there was fraud, and/or a conviction of a felony, by a party or any individual affiliated with PHARMACY who provides or arranges the provision of services to Members. Further, COMPANIES may terminate this
Agreement immediately at any time if COMPANIES determine that Member dissatisfaction exists with respect to services provided by PHARMACY. Termination shall have no effect upon the rights and obligations of the parties arising out of any transactions
occurring prior to the effective date of such termination.
	

8.3	
 	

RIGHT OF DEPARTMENT OF INSURANCE TO ORDER CANCELLATION. As required under FLORIDA STATUTES Section 641.234, the Department of Insurance may order HEALTH OPTIONS to cancel this Agreement, if it determines that the fees to be paid by HEALTH
OPTIONS are so unreasonably high as compared with similar contracts entered into by HEALTH OPTIONS or as compared with similar contracts entered into by other health maintenance organizations in similar circumstances, such that this Agreement is
detrimental to the subscribers, stockholders, investors, or creditors of HEALTH OPTIONS, This agreement shall be canceled upon issuance of such order by the department pursuant to this section.
	

8.4	
 	

As required under FLORIDA STATUTES Section 641.315, PHARMACY shall provide sixty (60) days' advance written notice to HEALTH OPTIONS and the Department of Insurance at the addresses listed in the "Notice" section of this Agreement before
canceling this Agreement with HEALTH OPTIONS for any reason. Nonpayment for goods or services rendered by the PHARMACY to HEALTH OPTIONS or any of its Members shall not be a valid reason for avoiding such 60-day advance notice of cancellation. Upon
receipt by HEALTH OPTIONS of a 60-day cancellation notice, HEALTH OPTIONS may, if requested by the PHARMACY, terminate the contract in less than sixty (60) days if HEALTH OPTIONS is not financially impaired or insolvent.
	

8.5	
 	

As required under FLORIDA STATUTES Section 641.315, HEALTH OPTIONS shall provide sixty (60) days' advance written notice to PHARMACY and the Department of Insurance at the addresses listed in the "Notice" section of this Agreement before
canceling, without cause, this Agreement with PHARMACY, except in such cases where a Member's health is subject to imminent danger.
	

8.6	
 	

HEALTH OPTIONS and PHARMACY hereby acknowledge and agree that the provisions of 8.4 and 8.5 above do not relieve either party of any of its other obligations under this Agreement that are not inconsistent with the foregoing, including without
limitation any obligation either party has to provide more than sixty (60) days' notice of cancellation of this Agreement, to the other party.

5

 

	
IX.  Payment to Pharmacy
	

9.1	
 	

COMPANIES PAYMENT. Subject to the restrictions set forth in this Agreement, Pharmacy shall charge, and be paid by COMPANIES, for Members enrolled in PPO, HMO, Point of Service, Comprehensive or Major Medical Health Benefits Contract for each Covered
Quantity of a Covered Prescription or Covered Refill properly dispensed by PHARMACY the lesser of: (i) PHARMACY'S Usual and Customary Charge; or (ii) as to brand name products, the Average Wholesale Price (AWP) less 13%; as to generic
products, the COMPANIES MAC Price plus dispensing fee of $2.50, less the Copayment or other charge liability of Member as set forth in Section X of this Agreement. COMPANIES shall supply PHARMACY current MAC Prices upon request. Any other
pharmacy charges shall be agreed upon by the parties in writing and may become an addendum to this Agreement if so designated in writing. Payment to PHARMACY may be made by COMPANIES through COMPANIES' Designated Administrator who shall have the
responsibility to process Member claims and who will make payment to PHARMACY. Payment(s) by such Designated Administrator shall, however, be conditioned upon Administrator's receipt from PHARMACY of all information designated by COMPANIES or
Administrator as a condition precedent to payment to PHARMACY.
	

9.2	
 	

In the event of any overpayment, duplicate payment, or other payment of an amount in excess of that to which PHARMACY is entitled, COMPANIES may, in addition to any other remedy, recover the same by way of offsetting the amounts overpaid against
current and future amounts due to PHARMACY and/or seeking an immediate refund of the amount deemed by COMPANIES to be an overpayment from PHARMACY.
	

9.3	
 	

Pursuant to paragraph VI hereof, all claims must be submitted on-line within fourteen (14) days of the date a covered prescription is dispensed even if the prescription cost is less than the Copayment. Failure to submit claims within fourteen
(14) days shall result in non-payment by COMPANIES. PHARMACY acknowledges that member shall not be liable for payment for such claims which are not timely submitted.
	
X.  Copayments; Other Charges
	

10.1	
 	

At the time of receipt of the Covered Prescription or Covered Refill, a Member may be required, in accordance with applicable COMPANIES' Agreements, to pay PHARMACY a Copayment or other charge(s) for each Covered Quantity of a Covered Prescription or
Covered Refill. The amount of such Copayment or other charge(s) shall be the amount set out in the applicable Health Benefits Contract or Health Services Agreement. PHARMACY shall have full responsibility for the collection of such Copayment(s) as
well as any other charge(s) set out in the applicable Health Benefits Contract or Health Services Agreement.
	

 	
 	

Any such payment shall not be affected by any discount, coupon, or other promotional allowance that may be in existence at the time of such payment. PHARMACY shall not receive any payment or credit for any reduction of a Member's payment resulting
from any discount, coupon, or other promotional allowance. Members, in addition to Copayment responsibility, also shall be responsible for charges for any items or services that are not the responsibility of COMPANIES, including charges for
quantities of Covered Prescriptions or Covered Refills which are (1) dispensed prior to a Member's satisfaction of his or her deductible obligations as are set forth in the applicable Health Benefits Contract or Health Services Agreement; or,
(2) are in excess of applicable Covered Quantities. PHARMACY shall not receive any payment or credit from COMPANIES for charges for any items or services that are dispensed contrary to this section.

6

  

	XI.  Member Non-liability
	

11.1	
 	

PHARMACY hereby agrees that in no event including, but not limited to, non-payment by COMPANIES, insolvency of COMPANIES, or breach of this Agreement, shall PHARMACY bill, charge, collect a deposit from, seek compensation, remuneration or
reimbursement from, or have any recourse against any Member or persons other than COMPANIES acting on the Member's behalf, for services provided pursuant to this Agreement. This provision shall not prohibit collection of supplemental charges or
Copayments in accordance with the terms of the applicable Health Benefits Contract or Health Services Agreement.
	

11.2	
 	

PHARMACY further agrees that: (1) this provision shall survive the termination of this Agreement regardless of the cause giving rise to termination and shall be construed to be for the benefit of COMPANIES' Members; and that, (2) this
provision supersedes any oral or written contrary agreement now existing or hereafter entered into between PHARMACY and any Member or persons acting on such Member's behalf.

XII.  Coordination of Benefits  

	12.1	 	Pharmacy agrees to cooperate fully with the coordination of benefits procedures of COMPANIES then in effect.

XIII.  Insurance  

	13.1	 	PHARMACY, at its sole cost and expense, shall procure and maintain such policies of general and professional liability insurance and such other insurance as shall be necessary to insure it and its employees against any
claim or claims for damages arising out of, or related to, alleged personal injuries or death resulting from the performance or non-performance of services and activities of PHARMACY or its employees, or the use of any facilities, equipment or
supplies provided by PHARMACY. Each of such policies shall be in amounts acceptable to COMPANIES. PHARMACY shall furnish COMPANIES reasonable proof of such insurance as may be requested upon execution of this Agreement and/or at any reasonable time
thereafter, and shall notify COMPANIES in writing at least  thirty (30) days prior to the termination or any reduction of such coverage. The failure to give such notice, or the absence of such coverage, is grounds for immediate termination of this
Agreement.

XIV.  Cooperation with Companies  

	14.1	 	PHARMACY agrees to cooperate with COMPANIES fully in connection with the conducting by COMPANIES of their credentialing activities, peer review activities, utilization management programs, drug use evaluation programs,
complaint resolution processes, and quality management programs which COMPANIES establish to the extent that such programs relate to pharmacy services and/or supplies to be provided in accordance with this Agreement, and in connection with its
regular audit activities. In connection therewith, PHARMACY will allow employees, agents, and/or independent contractors retained by COMPANIES for the performance of such activities, access to records pertaining to Members at reasonable times,
consistent with applicable Florida law. PHARMACY will comply with all reasonable requirements and policies of COMPANIES used in administering such activities and/or programs and, further, shall comply with administrative policies and procedures that
are used by COMPANIES in conducting their business operations. COMPANIES shall not be subject to liability to PHARMACY as a result of conducting such activities or programs, provided that COMPANIES have acted in good faith.
	

14.2	
 	

PHARMACY agrees to comply with the specific Performance Standards set out in Exhibit B.
	

14.3	
 	

PHARMACY and COMPANIES agree to make all reasonable efforts, consistent with advice of counsel and the requirements of applicable insurance policies and carriers, to coordinate the defense of all claims in which the other is either a named defendant
or has a substantial possibility of being named.

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XV.  Member Grievance Resolution Procedure(s)  

	15.1	 	PHARMACY acknowledges that COMPANIES, in and pursuant to their various agreements with groups and individuals to provide  prepaid health care, have established a grievance resolution procedure which provides a meaningful
process for hearing and resolving disputes arising thereunder, involving Members, COMPANIES, Participating Providers and/or PHARMACY. A copy of the applicable grievance resolution procedure will be made available to PHARMACY upon reasonable request.
The parties agree that any complaint, grievance or claim asserted pursuant to such grievance resolution procedure shall be resolved in accordance with such grievance resolution procedure and that they will comply with reasonable requests from
COMPANIES to assist in resolving such disputes and will comply with all final determinations made through the grievance procedure.

XVI.  Dispute Resolution; Arbitration  

	16.1	 	Both parties agree to meet and confer in good faith to resolve any controversy or claim arising out of or relating to this Agreement or the breach thereof; provided, however, that the foregoing shall in no way be
construed in a manner that would modify or limit the rights and obligations of the parties under Section VIII above with respect to termination of this Agreement. Unless otherwise prohibited by law, any such controversy or claim which cannot be
so resolved shall be submitted to binding arbitration. Unless the parties agree in writing to modify the procedure for such arbitration, the following procedure shall be followed: Arbitration may be initiated by either party making a written demand
for arbitration on the other party within a reasonable time from the date the claim, dispute, or controversy arose, but in no event later than the date legal proceedings would be barred by the applicable statute of limitations. The party making such
demand shall designate a competent and disinterested arbitrator in such written demand. Within thirty (30) days of that demand, the other party shall designate a competent and disinterested arbitrator and give written notice of such designation to
the party making the initial demand for arbitration. Within thirty (30) days after such notices have been given, the two arbitrators so designated shall select a third competent and disinterested arbitrator and give notice of the selection to both
parties. If the two arbitrators designated by the parties are unable to agree on a third arbitrator within thirty (30) days, then upon request of either party such third arbitrator shall be selected by a Circuit Judge in the county in which
arbitration is pending. The arbitrators shall then hear and determine the question or questions in dispute, and the decision in writing of any two arbitrators shall be binding upon the parties. The arbitration shall be held in the State of Florida at
a location to be designated by the party not making the initial demand for arbitration. Unless the parties otherwise agree, the arbitration shall be conducted in accordance with the rules governing procedure and admission of evidence in the
courts of the State of Florida. Each party shall pay its chosen arbitrator and shall bear equally the expense of the third arbitrator and all other expenses of the arbitration, provided that attorney's fees and expert witness fees are not deemed to
be expenses of arbitration but are to be borne by the party incurring them. Except as otherwise provided in this Agreement, arbitration shall be governed by the provisions of the Florida Arbitration Code.

XVII.  Listing, Advertising and Promotion  

	17.1	 	PHARMACY agrees that COMPANIES may identify PHARMACY as a provider of services to COMPANIES and also agrees that COMPANIES may advertise, publicize, and otherwise promote their relationship with PHARMACY to potential and
existing Members in accordance with COMPANIES' marketing program. COMPANIES may list the name, address, telephone number of PHARMACY, and a description of its facilities and services, in COMPANIES' directories or other lists of providers of services.
COMPANIES further agree that, except as provided in the foregoing sentence, the name, symbols, trademarks, trade names, and service marks of each party, whether presently existing or hereafter established, are proprietary; and each party reserves to
itself the right to the use and control thereof. In addition, except as provided in the first sentence hereof, neither party shall use the other party's name, symbols, trademarks or service marks in advertising or promotional materials or otherwise
without the prior written consent of that party and shall cease any such usage immediately upon written

8

 

	 	 	 notice of the party or upon termination of this Agreement, whichever is sooner.

XVIII.  Maintenance and Inspection of Records; Confidentiality  

	18.1	 	PHARMACY agrees to maintain adequate business and medical records in English relating to the provision of Covered Services to Members during the term of this Agreement for a period not less than seven (7) years of
the record's creation.
	

18.2	
 	

PHARMACY and COMPANIES agree that all Member medical records shall be treated as confidential so as to comply with all state and federal laws regarding the confidentiality of patient records. However, COMPANIES and any COMPANIES Affiliate, subject to
applicable laws, shall have access to, and shall have the right upon request to inspect and, at its own expense, copy, at all reasonable times, any accounting, administrative, and medical records maintained by PHARMACY pertaining to COMPANIES,
relating to Covered Services provided to Members, and to PHARMACY's participation hereunder. In addition, PHARMACY will allow inspection of books and records related to PHARMACY's dealings with COMPANIES by COMPANIES, by authorized state agencies,
and by the Department of Health and Human Services and the Comptroller General of the United States or their duly authorized representatives; provided, however, that, whenever feasible, PHARMACY shall notify COMPANIES prior to releasing information
to any agency or entity other than COMPANIES.
	

18.3	
 	

This section shall not be interpreted to place any obligation on PHARMACY that would cause PHARMACY to act or otherwise be in violation of applicable state or federal law.
	

18.4	
 	

Pharmacy shall maintain a signature log at each pharmacy location. Each Covered Member or his or her authorized agent who receives a Covered Prescription shall be required to sign the log, acknowledging the date the Covered Prescription is received,
the prescription number and whether the prescription is for a work-related injury or illness, if so required by state and/or federal regulation.

XIX.  Access to Medical Records  

	19.1	 	Until expiration of six (6) years after the furnishing of services pursuant to this Agreement, PHARMACY shall make available, upon written request, to the Secretary of the Department of Health and Human Services, to
the Comptroller General, or to any other applicable governmental authority, this Agreement and books, documents and records of PHARMACY that are required by such authorities in order to certify the nature and extent of costs incurred with respect to
any services furnished for which payments may be made under the Medicare and Medicaid programs. If PHARMACY carries out any of the duties of this Agreement through a subcontract, having a value or a cost of $10,000 or more over a twelve month period,
such subcontract shall incorporate by reference all terms and conditions required of such a clause whereby, until expiration of six (6) years after the furnishing of such services pursuant to such subcontract, the related organization shall make
available, upon written request, to the Secretary of the Department of Health and Human Services, to the Comptroller General, or to their duly authorized representatives, the subcontract, and the books, documents and records of such organization that
are necessary to verify the nature and extent of costs incurred with respect to any services furnished for which payments may be made under the Medicare or Medicaid programs. Further, PHARMACY specifically acknowledges that, and agrees to inform any
subcontractor who performs any of the obligations of PHARMACY under this Agreement that,

9

 

	 	 	 payments received under this Agreement may, in whole or part, be Federal funds.

XX.  Assignment and Delegation  

	20.1	 	Neither party may assign any rights or delegate any duties or obligations under this Agreement, or transfer this Agreement in any manner, without the express written approval of a duly authorized representative of the
other party, and any such attempted assignment, delegation or transfer in violation of this provision shall be void; provided, however, that COMPANIES expressly reserve the right to assign any and all of their rights, and to delegate any and all of
their duties and obligations hereunder, and to in any manner transfer this Agreement, to a COMPANIES Affiliate, provided that COMPANIES shall notify PHARMACY of any such assignment, delegation or transfer in writing at least thirty (30) days prior
thereto.

XXI.  Year 2000 Compliance Warranty and Indemnification  

	21.1	 	PHARMACY specifically acknowledges that it has, or will have, in place an appropriate management plan to, when necessary, modify, in order to be "Year 2000 Ready", the operation of its computer systems and equipment
necessary for it to provide services to be delivered under this Agreement and, as a consequence: (i) such systems and equipment will not materially malfunction when transitioning from December 31, 1999 to January 1, 2000 or from
twentieth century dates to twenty-first century dates; and/or (ii) even if such systems and equipment malfunction when making such date transition, PHARMACY will have in place a contingency plan permitting it to continue to materially comply
with its obligations under this Agreement notwithstanding any such computer system/equipment malfunction."

XXII.  General Provisions  

	22.1	 	AMENDMENT: This Agreement or any part of it may be amended at any time during the term of the Agreement by mutual consent in writing of duly authorized representatives of the parties except that COMPANIES may unilaterally
amend this Agreement by giving ninety (90) days written notice of a proposed amendment to PHARMACY. If PHARMACY does not make a written objection to COMPANIES within ninety (90) days after receipt of notification of proposed amendment, the amendment
will be deemed acceptable. Provided, however, that any change (including any addition and/or deletion) to any provision or provisions of this Agreement that is required by duly enacted federal or Florida legislation, or by a regulation or rule
finally issued by a regulatory agency pursuant to such legislation, rule or regulation, will be deemed to be part of this Agreement without further action required to be taken by either party to amend this Agreement to effect such change or
changes, for as long as such legislation, regulation or rule is in effect.
	

22.2	
 	

APPLICABLE LAW: The validity of this Agreement and of any of its terms and provisions, as well as the rights and duties of the parties hereunder, shall be interpreted and enforced pursuant to and in accordance with the laws of the State of
Florida.
	

22.3	
 	

ATTORNEY FEES: ENFORCEMENT COSTS: Except in the case of arbitration proceedings referred to above, or if the parties otherwise agree in writing, if any permitted legal action or other proceeding is brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in connection with any provision of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorney's fees, court costs, and other
reasonable expenses incurred  in connection with maintaining or defending such action or proceeding, as the case might be, including any such attorney's fees, costs, or expenses incurred on appeal, in addition to any other relief to which such party
or parties may be entitled.

10

 

	

22.4	
 	

BINDING EFFECT: This Agreement shall be binding upon and inure to the benefit of the parties, their successors, and their permitted assigns, unless otherwise set forth herein or agreed to by the parties in writing.
	

22.5	
 	

CONFIDENTIALITY OF CONTRACT TERMS AND MEMBER LISTINGS: PHARMACY acknowledges and agrees that the reimbursement rates paid by COMPANIES, and other aspects of this Agreement, including, without limitation, any and all membership listings provided to
Provider by COMPANIES, are competitively sensitive. PHARMACY will not disclose such rates, membership listings, and other aspects of this Agreement, to third parties, except upon the prior written authorization of COMPANIES.
	

22.6	
 	

ENFORCEABILITY: In the event any provision of this Agreement is rendered invalid or unenforceable by a valid Act of Congress or of the Florida Legislature or by any regulation duly promulgated by officers of the United States or of the State of
Florida acting in accordance with law, or declared null and void by any court of competent jurisdiction, the remainder of the provisions of this Agreement shall remain in full force and effect.
	

22.7	
 	

ENTIRE AGREEMENT: SIGNATURES REQUIRED: This Agreement, which shall be deemed to include all attachments, amendments, exhibits, addenda, and schedules, if any, contains the entire Agreement between the parties. Any prior agreements, promises,
negotiations 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. This Agreement will be effective and binding on the parties only if the
duly authorized signatures of the parties are affixed hereto where indicated on the signature page below, and not otherwise.
	

22.8	
 	

HEADINGS: The headings of sections contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
	

22.9	
 	

LIMITATIONS ON LIABILITY: Although this Agreement contemplates services for Members, the parties reserve the right to amend or terminate this Agreement without notice to, or consent of, any such Member. Subject to the provisions of Section XI
(Member Non-Liability for Payment), no persons or entities except for COMPANIES and PHARMACY are intended to be or are, in fact, beneficiaries of this Agreement; and its existence shall not in any respect whatsoever increase the rights of any Member
or other third party, or create any rights on behalf of any Member or other third party vis-a-vis either of the parties. Furthermore, nothing in this Agreement shall impose upon COMPANIES any obligation to render any health care services. COMPANIES
shall not be responsible for any act, omission, or default of any hospital, physician or other independent contractor, or for any negligence, misfeasance, malfeasance or nonfeasance of any other independent contractor. PHARMACY shall not be
responsible for any act, omission, or default of COMPANIES, or for any negligence, misfeasance, malfeasance, or nonfeasance of COMPANIES. No provision of this Agreement shall be deemed to constitute an agreement by either party to indemnify or hold
harmless any other person or entity, whether or not a party hereto.
	

22.10	
 	

NON-DISCRIMINATION: In carrying out their obligations under this Agreement, PHARMACY shall not discriminate against any Member on a basis of race, color, religion, sex, national origin, marital status, or physical or mental handicap; nor shall
PHARMACY knowingly contract with any person or entity which discriminates against any Member on any such basis.
	

22.11	
 	

NON-EXCLUSIVITY: The parties hereby acknowledge that this Agreement is not exclusive, and that each party may freely contract with any other person, firm or entity concerning the subject matter hereof.

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22.12	
 	

SURVIVAL OF PROVISIONS UPON TERMINATION: Any provision of this Agreement which requires or reasonably contemplates the performance of obligations by either party after the termination of this Agreement shall survive such termination unless otherwise
specifically provided herein.
	

22.13	
 	

WAIVER OF BREACH: Waiver of a breach of this Agreement shall not be deemed to be a waiver of any other breach and shall not bar any action for subsequent breach thereof.

XXIII.  Notices  

	23.1	 	Any notice required to be given pursuant to the terms and provisions of this Agreement shall be in writing, postage prepaid, and shall be sent (by certified or registered mail, return receipt requested, or by federal
express or other overnight mail delivery for which evidence of delivery is obtained by the sender), to the address or addresses set forth below unless the sender has been otherwise instructed in writing or unless otherwise provided by law. The notice
shall be deemed to be effective on the date indicated on the return receipt or, if no date is so indicated, then on the date of the notice.

TO
PHARMACY: 

Option
Care Enterprises, Inc.

100 Corporate North, Suite 212

Bannockburn, Illinois 60015 

TO
DEPARTMENT OF INSURANCE 

Bureau
of Allied Lines

Room 637, Larson Building

200 East Gaines Street

Tallahassee, Florida 32399-03

TO
BCBSF AND HEALTH OPTIONS: 

Blue
Cross and Blue Shield of FL, Inc. and Health Options, Inc.

Attn: Director of Pharmacy

4800 Deerwood Campus Parkway

Jacksonville, Florida 32246 

WITH
A COPY TO: 

Blue
Cross and Blue Shield of FL, Inc. and Health Options, Inc.

Attn: Legal Affairs

4800 Deerwood Campus Parkway

Jacksonville, Florida 32246 

12

 

IN
WITNESS WHEREOF, by placing their duly authorized signatures below, the parties hereby execute this Agreement and agree to be bound by its terms. 

Effective
Date: 3/8/2000 

Initial
Termination Date: 3/8/2001 

	

BCBSF, INC. AND HEALTH OPTIONS, INC.
	 	OPTION CARE ENTERPRISES, INC.

dba OPTION MED
 PHARMACY (correct legal name)
	

By:	

/s/ LAWRENCE P. TREMONTI
	
 	

By:	

/s/ MICHAEL A. RUSNAK

	Name:	Lawrence P. Tremonti
 (Print)	 	Name:	Michael A. Rusnak
 (Print)
	

Title:	
VP
	
 	

Title:	
President & CEO

	

Date Signed: 3/8/00	
 	

Date Signed: March 6, 2000
	 	
	 	 	

13

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.

AND

HEALTH OPTIONS, INC.

PRESCRIPTION DRUG AGREEMENT  

  
 

    EXHIBIT "A"    
    
    PHARMACY LOCATIONS    
  

OptionCare, Inc.

8600 NW 17th Street, Suite #100

Miami, Florida 33126

NABP # 1080340 

Page 1
Exhibit "A" 

*A Confidential Treatment Request pursuant to Rule 24(B)-2 under the Securities Exchange Act Of 1934, as amended, for certain information in this document has been filed with the Securities and
Exchange Commission. The information for which treatment has been sought has been deleted from such exhibit and the deleted text replaced by an asterisk (*). 

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.

AND

HEALTH OPTIONS, INC.

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.

AND

HEALTH OPTIONS, INC.

PRESCRIPTION DRUG AGREEMENT  

  
 

    EXHIBIT "B"    
    
    PERFORMANCE STANDARDS    
  

1.  Pharmacy
will ensure that at least * of COMPANIES' members will wait no more than * for their prescription to be delivered. The time will be measured from the time the Pharmacy or
their agent receives the prescription until the completed prescription is received by the member or their agent by mail or other means. This time requirement only applies to routine prescriptions, and
does not apply to prescriptions that require communication with a physician, COMPANIES, COMPANIES' Designated Administrator, or other parties. On a quarterly basis, PHARMACY will provide COMPANIES
information that validates the level of PHARMACY'S compliance to the Performance Standard. 

2.  PHARMACY
to ensure COMPANIES that services will be provided in such a manner that at least * of COMPANIES members will be satisfied with PHARMACY'S service. During January of each
year PHARMACY will provide COMPANIES information that validates the level of PHARMACY'S compliance to the Performance Standard. 

Page 1
Exhibit "B" 

QuickLinks

EXHIBIT 10.27

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC. and HEALTH OPTIONS, INC. PRESCRIPTION DRUG AGREEMENT with Option Care Enterprises, Inc. d/b/a Option Med 100 Corporate North, Suite 212 Bannockburn, Illinois
60015

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC. and HEALTH OPTIONS, INC. PRESCRIPTION DRUG AGREEMENT

TABLE OF CONTENTS

BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC. AND HEALTH OPTIONS, INC.

PRESCRIPTION DRUG AGREEMENT

EXHIBIT "A" PHARMACY LOCATIONS

EXHIBIT "B" PERFORMANCE STANDARDS

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