Exhibit 10.85
LETTER OF INTENT FOR THE TRANSFER OF MEDI-CAL
MEMBERS AND PROVISION OF SERVICES
This Letter of Intent is made as of May 23, 1997, between
▇▇▇▇▇▇ MEDICAL CENTERS, INC., a California corporation ("MMC"), and
MAXICARE, a California corporation ("Maxicare").
1. BACKGROUND. MMC holds Agreements with the California
Department of Health Services ("DHS") to provide or arrange for
health care services to Medi-Cal beneficiaries in San Bernardino,
Riverside and Sacramento Counties, California (collectively
referred to as the "PHP Contracts"). Maxicare is prepared to
accept an assignment or transfer and assume MMC's obligation under
the PHP Contracts to provide or arrange for healthcare services in
San Bernardino, Riverside and Sacramento Counties.
2. ASSIGNMENT/TRANSFER AND ASSUMPTION. The parties agree to
complete an assignment of MMC's contract rights or a transfer of
enrollees, at the discretion of DHS, to provide that Maxicare will
have full financial and administrative responsibility to provide or
arrange for healthcare services to Medi-Cal beneficiaries presently
enrolled in MMC's plans in San Bernardino, Riverside and Sacramento
counties pursuant to a formal agreement that will contain the
following terms:
2.01 Effective Date. The transfer of Enrollees as
provided herein shall be effective as of June 30, 1997, at 11:59
p.m. (the "Effective Date").
2.02 Consent of DHS. Maxicare and MMC will use their
best efforts to obtain written consent from DHS indicating DHS'
approval of the assignments or the transfer of the Enrollees.
2.03 Financial Responsibility. Commencing July 1, 1997,
Maxicare shall have the primary responsibility, including the
financial responsibility, to provide or arrange for "Covered
Services", as such term is defined in the PHP Contract.
2.04 Oversight Responsibility. Commencing July 1, 1997,
Maxicare will provide all oversight and administrative
responsibilities for providing Covered Services to Enrollees, in
accordance with the Maxicare Contract, Medi-Cal laws, the ▇▇▇▇-
▇▇▇▇▇ Health Care Services Plan Act and the ▇▇▇▇▇▇ promulgated
thereunder.
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2.05 Enrollee Disenrollment. Enrollees shall have the
right to disenroll from Maxicare at the time of the
assignment/transfer or at any time thereafter.
2.06 Conduct of Business in Normal Course. MMC will
carry management and activities related to the PHP Contracts
diligently and in substantially the same manner as they previously
have been carried out.
2.07 Representations and Warranties. The definitive
agreement will contain representations and warranties furnished by
MMC customary with a transaction of this nature, including
financial covenants.
2.08 Pretransfer Obligations. It is expressly
understood and agreed that Maxicare shall not be liable for any
obligation or liability of MMC of any kind or nature incurred by
MMC in providing health care services to the Enrollees under the
PHP Contracts prior to the Effective Date.
2.09 Conditions Precedent to Assignment or Transfer.
The transfer of enrollees under this Agreement is subject to the
approval of DHS and any other state or federal agency with
jurisdiction over this transaction.
3. PROVIDER AGREEMENT. Subject to the terms of a definitive
agreement to be entered into by the parties, commencing as of July
1, 1997, MMC, on behalf of Maxicare, shall arrange for the
provision of all "Covered Services" for the Enrollees (whether
provided by participating or nonparticipating providers). The
definitive agreement shall include the following terms:
3.1 Oversight Responsibilities. Maxicare will assume
all responsibilities of oversight and administration of the
responsibilities to be delegated to MMC in accordance with
applicable Medi-Cal laws, the ▇▇▇▇-▇▇▇▇▇ Health Care Service Plan
Act and rules promulgated thereunder and the Maxicare contracts
with DHS. MMC shall abide by any determination of Maxicare made
pursuant to the PHP Contracts, Medi-Cal laws and the ▇▇▇▇-▇▇▇▇▇
Health Care Service Plan Act and the rules promulgated thereunder
that require Maxicare to provide oversight of the responsibilities
delegated to MMC pursuant to this Agreement.
3.2 Financial Responsibility. Maxicare shall have
financial responsibility for any Covered Services provided or
arranged for by MMC that exceed 115 percent of the total
compensation paid to MMC.
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4. INDEMNIFICATION. Neither MMC nor Maxicare (nor any of
their respective agents or employees) shall be liable to the other
for any act or omission of the other party. The parties agree to
defend, indemnify and hold the other harmless from any against any
and all liabilities, losses, damages, claims and expenses of any
kind, including costs and attorney fees, incurred by the
indemnified party, and arising from, or in connection with, the
indemnified party's performance of, or failure to perform, its
duties and obligations under this Agreement.
5. PUBLICITY. All notices to third parties other publicity
concerning the transaction contemplated by this Letter of Intent
shall be jointly planned and coordinated by and between MMC and
Maxicare. No party shall act unilaterally in this regard without
the prior written approval of the others; however, this approval
shall not be unreasonably withheld.
6. LEGALLY BINDING. This Letter of Intent is legally
binding and creates an enforceable obligation of the parties to
consummate the transaction contemplated herein. This Letter of
Intent is free from any and all contingencies.
Dated: May 23, 1997 "MMC"
▇▇▇▇▇▇ MEDICAL CENTERS, INC.
a California Corporation
/s/ ▇▇▇ ▇▇▇▇▇▇, M.D.
President
Dated: May 23, 1997 "Maxicare"
MAXICARE
a California Corporation
/s/ ▇▇▇▇▇▇ ▇▇▇▇
Vice President & General Manager
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