SETTLEMENT AGREEMENT
THIS AGREEMENT is made this ____ day of January, 1997, by and among PRISON
HEALTH SERVICES, INC., ("PHS") and THE GEORGIA DEPARTMENT OF CORRECTIONS (the
"GDC") and THE GEORGIA DEPARTMENT OF ADMINISTRATIVE SERVICES ("DOAS")
(collectively the "Department").
WHEREAS, on February 2, 1995, the DOAS, acting on behalf of the GDC,
issued Invitation to Bid 000-000-000000 (the "ITB") requesting bids for the
provision of comprehensive medical services to Georgia's prison population; and
WHEREAS, the Department selected PHS's bid; and
WHEREAS, on October 1, 1995, PHS and the Department (the "Parties")
entered into a contract for PHS to provide comprehensive medical services for a
term to expire on June 30, 1996, with an option to renew for four (4) successive
one-year terms (the "Agreement"); and
WHEREAS, on June 26, 1996, the parties agreed to extend the term of the
Agreement through June 30, 1997; and
WHEREAS, on October 15, 1996, the GDC informed PHS that it was exercising
its right not to renew the Agreement and to allow it to expire as of midnight on
June 30, 1997 because it desired to enter into an inter-governmental
relationship with the Medical College of Georgia ("MCG") beginning July 1, 1997;
and
WHEREAS, a number of disputes have arisen based on the parties' differing
interpretations of the Agreement and the extension thereof; and
WHEREAS, the parties desire to settle and resolve all outstanding disputes
and claims.
NOW, THEREFORE, the parties agree as follows:
1. Liquidated Damages, Penalties, and Fines. In consideration of PHS's
payment of $300,000.00, receipt and sufficiency of which is acknowledged, and
the Department's retention of amounts previously withheld for liquidated
damages, penalties, and fines, the Department releases PHS from any further past
or future liability for liquidated damages, penalties, and fines under the
Agreement, PHS's bid, or the ITB. Compromise and settlement of this issue shall
not be deemed an admission of liability and PHS expressly denies any liability
whatsoever for liquidated damages, penalties, and fines.
2. Performance Bond. The Department agrees to release the $30,000,000.00
performance bond PHS was required to obtain and maintain under the Agreement
immediately upon termination of the Agreement for any reason and, under any
circumstances, no later than July 1, 1997. Nothing in this Settlement Agreement
shall be construed to waive the Department's rights in the performance bond
prior to the termination of the Agreement or July 1, 1997, whichever first
occurs.
3. Non-competition Provisions. PHS agrees to waive any and all
non-competition and non-solicitation provisions in any and all agreements or
contracts PHS had, has, or might have in the future with any health care
provider for services PHS is required to provide under the Agreement, including
but not limited to the Physician Independent Contractor Agreement between it and
MCG dated October 25, 1995.
4. HIV Protocol. The Department agrees to reimburse PHS for any and all
actual and reasonable costs PHS incurs in providing viral load testing,
crixivan, and dual drug or poly-drug therapy (to the extent that the cost of
providing dual drug or poly-drug therapy exceeds the
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cost of providing AZT alone within the parameters of the catastrophic limits of
the Agreement as amended by this Settlement Agreement). Absent the prior written
approval and agreement as to reimbursement from the Department, PHS shall not be
required to provide any such therapy or testing and the Department shall not be
required to reimburse any amount associated with such therapy or testing to the
extent the provision of such therapy or testing brings the total cost of the
amount to be reimbursed under this paragraph above $2,000,000.00.
5. MIS Equipment. The Department agrees to pay a sum equal to the
unamortized cost of the "MIS Hardware and Software Development Costs" as
described in the inventory and schedule attached as Exhibit A immediately upon
termination of the Agreement for any reason and, under any circumstances, no
later than July 15, 1997. The sum will be determined by reference to the
schedule of "Georgia MIS Assets" attached as Exhibit B. PHS agrees to convey
title and ownership of the MIS system and all related equipment and to convey
whatever and whichever transferable rights it might have in any warranties
relating to the MIS system and all related equipment and the Department agrees
to take same "As Is" and hereby releases PHS for any liability related to MIS
services and equipment to be provided by PHS under the Agreement. PHS further
agrees that the Department shall have a non-exclusive, royalty-free software
license to be valid in perpetuity. PHS shall use its best efforts for the
duration of the Agreement to provide such MIS services and equipment although
PHS shall not purchase any additional MIS equipment, software, or development
services without prior written approval and agreement as to reimbursement from
the Department.
6. ASMP Sundown Bed Count. The Department agrees to reimburse PHS
$209,191.00, which is equal to the amount that PHS has been denied through
September 1996
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because it was prohibited from using four (4) beds at ASMP. The Department
agrees that for the duration of the Agreement (starting as of October 1, 1996),
PHS shall be credited for those four beds and will be credited for additional
beds that are in rooms that do not have functioning locks or toilets or that PHS
is not permitted to use for any other reason. Effective as of October 1996 all
sundown counts at ASMP will be made on the last day of the month.
7. "Mental Health Hospitalization". The Department agrees to reimburse PHS
$165,000.00 which represents PHS's mental health hospitalization costs through
October 31, 1996. The parties agree that for the duration of the Agreement
(starting as of November 1, 1996), the Department will be responsible for all
costs of inpatient hospitalizations relating to patients who are listed on the
mental health case load or who are later placed on the mental health case load
to the extent that the costs of such hospitalization are associated with the
condition(s) for which the patient was placed on or remained on the mental
health case load. This provision is intended to clarify the responsibilities of
the parties under Paragraph III(B)(7) of the ITB, titled "Mental Health
Services." Absent the prior written approval and agreement as to reimbursement
from the Department, PHS shall not be required to pay for any mental health
hospitalizations and the Department shall not be required to reimburse any
amount associated with such mental health hospitalizations to the extent that
the related total cost of the amount to be reimbursed under this paragraph (not
including the above initial $165,000.00) exceeds $500,000.00.
8. Transition and Diversion Centers. The Department acknowledges that it
is impractical for it to provide the names and current status of all maintenance
workers and other residents at all transition and diversion centers or to verify
that all invoices submitted to PHS for
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payment are beyond the subject resident's ability to pay as is required under
the Agreement and therefore agrees to reimburse PHS for all actual and
reasonable costs associated with health care services already provided or that
PHS provides during the duration of the Agreement to maintenance workers and
other residents of transition and diversion centers less any amounts already
paid to PHS under the Agreement relating to the provision of such services.
Absent the prior written approval and agreement as to reimbursement from the
Department, PHS shall not be required to provide any such health care services
and the Department shall not be required to reimburse any amount associated with
such health care services to the extent the provision of such health care
services brings the total cost of the amount to be reimbursed under this
paragraph above $1,000,000.00.
9. Catastrophic Care. With regard to the allocation of costs to be borne
by the parties in connection with certain defined catastrophic costs as set
forth in Paragraph VII(A) at page 34 of the ITB, PHS, effective as to cases
commencing from the date hereof, agrees to increase the cap on the range for
which it will pay 25% of individual prisoner care from $99,000.00 to
$199,999.00, and the Department will pay 100% of such individual prisoner care
exceeding $199,999.00.
10. Transition. PHS agrees to cooperate with the Department and MCG
(including allowing MCG to immediately begin recruiting and hiring employees for
newly-opened or vacant positions and to extend offers of employment to PHS
employees with the understanding that employment of PHS employees shall not
commence until after the termination of the Agreement) as MCG assumes many of
the duties and responsibilities that PHS had been performing under the
Agreement. PHS further agrees that it will deliver within five business days of
this Agreement a
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listing of all PHS staff employed under the Agreement by facility with
corresponding salary and benefit structure, copies of all agreements or
contracts PHS has with any health care provider for services PHS has agreed to
provide under the Agreement, and a listing by facility of all computer equipment
utilized under the Agreement. PHS agrees to use its best efforts to continue to
fill necessary staffing positions.
11. Physical Exams. PHS agrees to provide up to 575 Cardiovascular Risk
Screening examinations to GDC employees who are Rehabilitation Training
Instructor Course ("RTIC") candidates.
12. Reduction of Staff. The parties agree to work together regarding
reductions in necessary staff resulting from GDC's new policy requiring inmates
to make "co-payments" for sick call, provided that the GDC shall have final
approval of any such reduction in staff.
13. Indemnity. PHS agrees to release the Department, and its officers and
employees, from any loss or liability that PHS may suffer arising out of the
execution, defense, or performance of this Settlement Agreement or the
Department's decision not to renew the Agreement or to enter into a relationship
with MCG. PHS agrees to indemnify the Department, and its officers and
employees, for any loss or liability incurred arising out of the execution,
defense, or performance of this Settlement Agreement. The Department, and its
officers and employees, agree that PHS's obligation to indemnify under this
paragraph is limited to the amount of actual monetary damages finally awarded by
a judge or jury to CMS following a trial on the merits and for which all appeals
have been finally resolved or the time to file an appeal has expired and does
not include legal fees, costs, or expenses nor any amount the Department, or any
of its officers and employees, may agree to pay in settlement of any claims. The
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Department agrees that PHS will have the right to advise in the defense of any
claim or to intervene as a defendant and that if the Department abandons or
waives any right to appeal without the express written agreement of PHS then
this indemnity shall not be of any force or effect. The Department also agrees
that PHS's obligation to indemnify it under this Agreement is limited to damages
awarded as a proximate cause or result of the Department's decision to enter
into this Settlement Agreement, and does not include damages awarded as a
proximate cause or result of the Department's decisions to award the contract to
PHS, to enter into the Agreement and the extension thereof, or to enter into a
new agreement with MCG without submitting the new contract to competitive
bidding. The Department, and its officers and employees further agree that PHS's
obligation to indemnify under this Settlement Agreement does not include any
amounts awarded based on claims of fraud, collusion, or intentional or negligent
misrepresentation on the part of the Department or its officers and employees.
The indemnity provided for in this paragraph is in addition to and is not
intended to replace any indemnity provided for under the Agreement.
14. No Admission. The parties agree that this "Settlement Agreement" does
not constitute an admission by any party of any liability and acknowledge that
both parties contend they have fully complied with their obligations under the
Agreement.
15. Miscellaneous Provisions. This Settlement Agreement shall be
interpreted and enforced in accordance with the laws of the State of Georgia.
This Settlement Agreement represents the sole and entire agreement between
the parties solely with respect to these disputes and supersedes any and all
prior agreements, negotiations, and discussions between the parties and/or their
respective counsel with respect to the subject
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matters covered in this Settlement Agreement. The parties acknowledge, however,
that except as expressly modified herein, the terms of the Agreement shall
continue in full force and effect.
If one or more paragraph(s) of this Settlement Agreement are ruled invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Settlement Agreement, which shall remain in full force and
effect.
This Settlement Agreement may not be modified orally but only by a writing
signed by all parties to this Settlement Agreement.
This Settlement Agreement shall be binding on the Parties, their
successors, and assigns.
PRISON HEALTH SERVICES, INC.
By: __________________________________
Title: _________________________________
THE GEORGIA DEPARTMENT OF CORRECTIONS
By: __________________________________
Title: _________________________________
THE GEORGIA DEPARTMENT OF
ADMINISTRATIVE SERVICES
By: __________________________________
Title: _________________________________
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