Exhibit 10.81
ESCROW AND SECURITY AGREEMENT
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This ESCROW AND SECURITY AGREEMENT (the "Agreement") is made and entered
into as of June 11, 1999 by The WellCare Management Group, Inc., a New York
corporation having an address at Park Xxxx/Xxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxx,
Xxx Xxxx 00000 ("WCMG"), WellCare of New York, Inc., a New York corporation
having an address at Park Xxxx/Xxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000
("WCNY," which, together with WCMG, are known collectively herein as
"WellCare"), Garfunkel, Wild & Xxxxxx, P.C., a New York professional corporation
with an address at 000 Xxxxx Xxxx Xxxx, Xxxxx Xxxx, Xxx Xxxx 00000 ("GWT"),
counsel to Healthcare Association of New York State ("HANYS") and Northern
Metropolitan Hospital Association ("NORMET"), on behalf of the member hospitals
of HANYS and NORMET listed on Schedule "A" annexed hereto (collectively, the
"Hospitals"), The Medical Society of the State of New York, having an address at
000 Xxxxxxxxx Xxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000 ("MSSNY"), on behalf of the
providers listed on Schedule "B" annexed hereto (collectively, the "Providers"),
and United States Trust Company of New York, a bank and trust company organized
under the New York banking law, having an office at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, as escrow agent (the "Escrow Agent") for the Hospitals and
the Providers (collectively, the "Secured Parties").
W I T N E S S E T H:
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WHEREAS, the Secured Parties have each executed certain Settlement
Agreements, dated on or about May 1999, with WellCare, Xxxxx X. Xxxxx ("Xx.
Xxxxx") and MSSNY, or with WellCare, Xx. Xxxxx, HANYS and NORMET, substantially
in the form annexed hereto as Schedules "C-1" and "C-2," respectively
(collectively, the "Settlement Agreements");
WHEREAS, pursuant to the Settlement Agreements, WellCare has agreed to
deposit, or has agreed to direct the deposit of, as of the "Effective Date" (as
defined in the Settlement Agreements), a minimum of Ten Million and 00/100
Dollars ($10,000,000) (which, with any additional amounts added thereto pursuant
to the Settlement Agreements, the "Funds") in a "Provider Pool" (as defined in
the Settlement Agreements) for the benefit of the Secured Parties;
WHEREAS, the parties hereto have agreed that the Funds shall be held by the
Escrow Agent for the benefit of the Secured Parties pursuant to the terms of
this Agreement;
WHEREAS, WellCare has opened an interest bearing collateral account (the
"Collateral Account") with United States Trust Company of New York at its office
at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Account No. 00000000 in the
name of "WellCare Provider Pool Collateral Account" but under the sole dominion
and control of the Escrow Agent and subject to the terms of this Agreement;
WHEREAS, to secure the obligations of WellCare under the Settlement
Agreements WellCare has agreed: (a) to pledge to the Escrow Agent for its
benefit and the ratable benefit of the Secured Parties, a security interest in
the Collateral (as defined herein), and (b) to execute and deliver this
Agreement in order to secure the payment and performance by WellCare of all of
its obligations under the Settlement Agreements; and
WHEREAS, unless otherwise defined herein or in the Settlement Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code ("UCC"), as in
effect in the State of New York, are used herein as therein defined.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and in order to induce the Secured Parties to enter into the Settlement
Agreements, WellCare hereby agrees with the Escrow Agent, for the benefit of the
Escrow Agent and for the ratable benefit of the Secured Parties, as follows:
SECTION 1. Certain Definitions; Appointment of the Escrow Agent; Pledge and
Grant of Security Interest; Deposit of Funds; Incorporation
1.1 Certain Definitions.
"Cash Equivalents" means, to the extent owned free and clear of all liens
other than liens created hereunder, Government Securities.
"Government Book Entry Security" means Government Securities maintained in
book-entry form through the United States Federal Reserve Banks pursuant to (A)
the United States Treasury Department regulations codified at 31 C.F.R. Part
357, as modified by the amendments promulgated at 61 Fed. Reg. 43, 626-43, 638
(Aug. 23, 1996), or (B) substantially identical regulations promulgated by any
other agency or instrumentality of the United States whose securities qualify as
"Government Securities" hereunder.
"Government Securities" means direct obligations of, obligations fully
guaranteed by, or participations in pools consisting of obligations of or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of
America is pledged and which are not callable or redeemable at the option of the
issuer thereof.
1.2 Appointment of the Escrow Agent. As of the Effective Date, WellCare, GWT,
as counsel to HANYS and NORMET, on behalf of the Hospitals, and MSSNY, on behalf
of the Providers, hereby appoint United States Trust Company of New York as
Escrow Agent in accordance with the terms and conditions set forth herein and
the Escrow Agent hereby accepts such appointment.
1.3 Pledge and Grant of Security Interest. WellCare hereby pledges, assigns and
sets over to the Escrow Agent for its benefit and for the ratable benefit of the
Secured Parties, and hereby grants to the Escrow Agent for its benefit and for
the ratable benefit of the Secured Parties, as security for the prompt payment
and due performance of all of WellCare's obligations under the Settlement
Agreements and this Agreement, a continuing first priority security interest and
lien in and to all of WellCare's rights, title and interests in, to and under
the following (hereinafter collectively referred to as the "Collateral"),
whether characterized as investment property, general intangibles or otherwise:
(a) the Collateral Account, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing the Collateral
Account, and all Collateral Investments (as hereinafter defined) and all
certificates and instruments, if any, representing or evidencing the Collateral
Investments, and any and all security entitlement to the Collateral Investments,
and any and all related securities accounts in which security entitlement to the
Collateral Investments are carried, (b) all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the then
existing Collateral, and (c) all proceeds of any and all of the foregoing
Collateral (including, without limitation, proceeds that constitute property of
the types described in clauses (a) through (c) of this Section 1.3) and, to the
extent not otherwise included, all cash in the Collateral Account, subject to
withdrawal from the Collateral Account as set forth in the Settlement
Agreements.
1.4 Deposit of Funds.
(a) From and after the Effective Date, WellCare shall or shall cause
all amounts to be deposited in the Collateral Account as required pursuant to
the Settlement Agreements. WellCare agrees that it shall cause all proceeds to
be paid pursuant to the Xxxxx Transaction and the GHI Transaction (as each term
is defined in the Settlement Agreements), which shall be used to fund the
Provider Pool, to be deposited by each of Xx. Xxxxx and Group Health
Incorporated directly into the Collateral Account and no such proceeds shall be
at any time held by or possessed by WellCare, provided, however, that WellCare
shall be entitled to withdraw such monies from the Collateral Account in
accordance with the instructions set forth in Schedule "E" annexed hereto and
the terms of the Settlement Agreements.
(b) The parties hereto further recognize that any funds required to be
provided into the Provider Pool by Xx. Xxxxx pursuant to Section 5(c) of each
Settlement Agreement shall be deposited in the Collateral Account and shall be
treated in accordance with the terms hereof as funds otherwise deposited or
caused to be deposited by WellCare.
1.5 Settlement Agreements
The terms of the Settlement Agreements are hereby incorporated herein by
reference, as if fully set forth herein. Any terms used but not defined in this
Agreement shall have the meaning set forth in the Settlement Agreements.
SECTION 2. Security for Obligation. This Agreement and the grant of a security
interest in the Collateral hereunder secures the prompt payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of all the
obligations of WellCare under the Settlement Agreements and this Agreement.
SECTION 3. Delivery of Collateral.
(a) All certificates and instruments representing or evidencing the
Collateral, including, without limitation, amounts invested as provided in
Section 5 hereof, shall be delivered to (as set forth in Section 6 hereof) and
held by or on behalf of the Escrow Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
sufficient to establish and maintain in favor of the Escrow Agent a valid
security interest in such Collateral, and shall be credited to the Collateral
Account. In addition, the Escrow Agent shall have the right, at any time, to
exchange certificates or instruments representing or evidencing the Collateral
for certificates or instruments of smaller or larger denominations.
(b) As of the Effective Date, the Escrow Agent and WellCare shall
execute a Notification and Control Agreement (the "Control Agreement"),
substantially in form and substance as Schedule "D" annexed hereto, confirming
the Escrow Agent's establishment and separate maintenance of the Collateral
Account, all in accordance with this Agreement.
SECTION 4. Maintaining the Collateral Account.
(a) Prior to the Termination Date (as defined in Section 15.9(b)
hereof), the Escrow Agent will maintain separately the Collateral Account with
United States Trust Company of New York, which account shall at all times be
under the sole dominion and control of the Escrow Agent and subject to the terms
and conditions of this Agreement and the Settlement Agreements.
(b) It shall be a term and condition of the Collateral Account,
notwithstanding any term or condition to the contrary in any other agreement
relating to the Collateral Account, that no amount (including interest on
Collateral Investments) shall be paid or released to or for the account of, or
withdrawn by or for the account of, WellCare or any other person or entity from
the Collateral Account other than a Secured Party in accordance with the terms
of this Agreement and the Settlement Agreements, except as provided in
accordance with the instructions set forth in Schedule "E" annexed hereto and
the Settlement Agreements.
(c) The Collateral Account shall be subject to such applicable laws,
and such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
SECTION 5. Investing of Amounts in the Collateral Account. The Escrow Agent
shall, subject to the provisions of Section 7 hereof, from time to time: (a)
invest amounts on deposit in the Collateral Account in such Cash Equivalents,
each in the name of or for the account of the Escrow Agent, as the Escrow Agent
may determine in its reasonable business judgment, and (b) invest interest paid
on the Cash Equivalents referred to in clause (a) above, and reinvest other
proceeds of any such Cash Equivalents that may mature or be sold, in each case
in such Cash Equivalents, each in the name of or for the account of the Escrow
Agent, as the Escrow Agent may determine in its reasonable business judgment
(the Cash Equivalents referred to in clauses (a) and (b) above being
collectively referred to herein as the "Collateral Investments"). Interest and
proceeds that are not invested or reinvested in Collateral Investments as
provided above shall be deposited and held in the Collateral Account. The Escrow
Agent shall, if it has exercised its reasonable business judgment, in no event
be liable for any loss in the investment or reinvestment of amounts held in the
Collateral Account.
SECTION 6. Delivery of Collateral Investments.
(a) The Escrow Agent shall become the holder of the Collateral
Investments (and any applicable security entitlement thereto) through the
following delivery procedures: (i) in the case of Collateral Investments which
are certificated securities in registered form, delivery of the applicable
certificate(s), specially endorsed to the Escrow Agent or registered in the name
of the Escrow Agent or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Escrow Agent,
to the possession of (A) the Escrow Agent, (B) a securities intermediary or
financial intermediary acting on behalf of the Escrow Agent, or (C) another
person, other than a securities intermediary or financial intermediary, which
person acknowledges that it holds such securities for the Escrow Agent; (ii) in
the case of Collateral Investments which are uncertificated securities,
registration of one of the following as owner of such uncertificated securities:
the Escrow Agent or a person designated by the Escrow Agent, or person other
than a securities intermediary or financial intermediary, that becomes the
registered owner of such uncertificated securities and acknowledges that it
holds the same for the Escrow Agent; and (iii) in the case of Collateral
Investments in the form of Government Book-Entry Securities, the making by a
financial intermediary or securities intermediary (other than a clearing
corporation) to whose account such Government Book-Entry Securities have been
credited on the books of a Federal Reserve Bank (or on the books of another such
financial intermediary or securities intermediary (other than a clearing
corporation)) of book entries indicating that such Government Book-Entry
Securities have been credited to an account of the Escrow Agent, and the sending
by such financial intermediary or securities intermediary to the Escrow Agent of
confirmation of such transfer to the Escrow Agent's account.
(b) Upon delivery of any Collateral Investments to the Escrow Agent
(or the Escrow Agent's acquisition of a security entitlement thereto), the
Escrow Agent shall make appropriate book entries indicating that such Collateral
Investment and/or such security entitlement has been credited to and is held in
the Collateral Account. Subject to the terms and conditions of this Agreement,
all Collateral Investments held by the Escrow Agent pursuant to this Agreement
shall be held in the Collateral Account under the exclusive dominion and control
of the Escrow Agent and for the benefit of the Escrow Agent and the ratable
benefit of the Secured Parties and segregated from all other funds or other
property otherwise held by the Escrow Agent.
SECTION 7. Disbursements.
(a) The Escrow Agent shall hold the assets in the Collateral Account
and release the same, or a portion thereof, only in accordance with the
irrevocable instructions annexed hereto as Schedule "E", and in accordance with
the terms of the Settlement Agreements.
(b) The Escrow Agent and the parties hereto recognize and agree that
all deposits into and disbursements from the Collateral Account shall be subject
to audit or review by the New York State Insurance Department ("SID") and any
other regulatory agency or their respective agents or representatives having
jurisdiction over WellCare. Without limiting the foregoing, the Escrow Agent and
each party hereto further recognize and agree that SID, HANYS and/or NORMET or
their respective agents or representatives shall have the right to audit or
review the Collateral Account and any disbursements or deposits thereto or
therefrom and shall have the right to distribute the results of each audit or
review to all remaining parties hereunder, including, without limitation, MSSNY
and the Secured Parties, as set forth in Section 5(a) of the Settlement
Agreements. The Escrow Agent and the remaining parties hereto shall cooperate
with each other to the extent reasonably necessary to carry out the intent of
this Section 7(b). The terms of this Section 7(b) shall survive the termination
of this Agreement.
SECTION 8. Representations and Warranties. WCMG and WCNY hereby, jointly and
severally, represent and warrant that:
(a) The execution and delivery by WCMG and WCNY of, and the
performance by WCMG and WCNY of their obligations under, this Agreement and the
Control Agreement will not contravene any provision of applicable law or the
certificates of incorporation or bylaws of WCMG and WCNY, or any material
agreement or other material instrument binding upon WCMG and WCNY or any of
their respective subsidiaries or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over WCMG and WCNY or any
of their respective subsidiaries.
(b) Except as provided in the Settlement Agreements, no consent of any
other person and no approval, authorization, order of, or filing, declaration or
qualification with, any governmental body or agency is required: (i) for the
execution, delivery or performance by WCMG and WCNY of their obligations under
either this Agreement or the Control Agreement, (ii) for the grant by WCMG and
WCNY of the security interest created hereby, or (iii) for the pledge by WCMG
and WCNY of the Collateral pursuant to either this Agreement or the Control
Agreement, except for any such consents, approvals, authorizations or offers
required to be obtained by the Escrow Agent (or the Secured Parties) for reasons
other than the consummation of this transaction, for the exercise by the Escrow
Agent of the rights provided for in either this Agreement or the Control
Agreement, or the remedies in respect of the Collateral pursuant to either this
Agreement, the Settlement Agreements or the Control Agreement.
(c) Immediately prior to the deposit of the Funds in the Collateral
Account, the Collateral shall have been free and clear of any lien or claims of
any person or entity (except for the security interests created by this
Agreement and the Settlement Agreements). No financing statement or instrument
similar in effect covering all or any part of the interest in the Collateral is
on file in any public or recording office, other than the financing statements
filed pursuant to this Agreement. Neither WCMG nor WCNY have any trade names.
(d) This Agreement has been duly authorized, validly executed and
delivered by each of WCMG and WCNY and constitutes a valid and binding agreement
of each of them, enforceable against each of them in accordance with its terms,
except as: (i) the enforceability hereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally, (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability, (iii) the exculpation provisions and rights to
indemnification hereunder may be limited by U.S. federal and state securities
laws and public policy considerations, and (iv) the waiver of rights and
defenses contained in Section 15.11 and Section 15.15 hereof may be limited by
applicable law.
(e) Upon the transfer to the Escrow Agent of the Funds and the
acquisition by the Escrow Agent of a security entitlement thereto, in accordance
with Section 3 above, the pledge and grant of a security interest in the
Collateral pursuant to this Agreement for the benefit of the Escrow Agent and
the Secured Parties will constitute a valid and perfected first priority
security interest in such Collateral, securing the payment of the obligations of
WellCare under the Settlement Agreements, enforceable as such against all
creditors of WellCare.
(f) There are no legal or governmental proceedings pending or, to the
best of WCMG's and/or WCNY's knowledge, threatened to which either of them or
any of their subsidiaries is a party or to which any of the properties of WCMG
and/or WCNY or any such subsidiary is subject that would materially adversely
affect the power or ability of WCMG and WCNY to perform their obligations under
this Agreement or to consummate the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Agreement is not
prohibited by any law or governmental regulation (including, without limitation,
Regulations C, T, U and X of the Board of Governors of the Federal Reserve
System) applicable to WCMG and WCNY.
SECTION 9. Filing; Further Assurances.
(a) As soon as practicable after the Effective Date, WellCare shall
deliver to the Escrow Agent acknowledgment copies or stamped receipt copies of
proper financing statements, duly filed on or after the Effective Date in
accordance with the Uniform Commercial Code as in effect in the State of New
York, covering the categories of Collateral described in this Agreement.
(b) WellCare agrees that from time to time, at the sole cost and
expense of the WellCare, WellCare shall, promptly upon request by the Escrow
Agent, HANYS, NORMET and/or MSSNY, on behalf of the Secured Parties, execute and
deliver or cause to be executed and delivered, or use its reasonable best
efforts to procure, all assignments, instruments and other documents, all in
form and substance satisfactory to the Escrow Agent, HANYS, NORMET and/or MSSNY,
as the case may be, deliver any instruments to the Escrow Agent, HANYS, NORMET
and/or MSSNY, as the case may be, and take any other actions that may be
necessary or, in the opinion of the Escrow Agent, HANYS, NORMET and/or MSSNY, as
the case may be, desirable to perfect, continue the perfection of or protect the
first priority of the Escrow Agent's security interest in and to the Collateral,
including the filing of all necessary financing and continuation statements, to
protect the Collateral against the rights, claims, or interests of third persons
(other than any such rights, claims or interests created by or arising through
the Escrow Agent) or to effect the purposes of this Agreement.
(c) WellCare, GWT, as counsel to HANYS and NORMET, on behalf of the
Hospitals, and MSSNY, on behalf of the Providers, hereby authorize the Escrow
Agent to file any financing or continuation statements in the United States with
respect to the Collateral without the signature of WellCare (to the extent
permitted by applicable law). A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(d) Notwithstanding any provision herein to the contrary all costs
incurred by the Escrow Agent in connection with this Agreement shall be paid by
WellCare, provided, however, that WellCare shall be entitled to be reimbursed
for the payment of such costs from the dividends and interests earned on the
Collateral Account in accordance with the payment instructions set forth in
Schedule "E" annexed hereto. At the request of WellCare, GWT, HANYS, NORMET
and/or MSSNY, the Escrow Agent shall provide an invoice to each such party
detailing all such costs charged to the Collateral Account. A schedule of fees
to be charged by the Escrow Agent for its services hereunder is set forth in
Schedule "F" annexed hereto.
SECTION 10. Covenants. WCMG and WCNY jointly and severally covenant and agree
with the Escrow Agent and the Secured Parties that from and after the date of
this Agreement through the Termination Date:
(a) (i) they will not (and will not purport to) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or any of their beneficial interest therein, and (ii) they will not
create or permit to exist any lien or other adverse interest in or with respect
to any of the Collateral or their beneficial interest therein (if any) (except
for the security interests granted under this Agreement); and
(b) they will not: (i) enter into any agreement or understanding that
restricts or inhibits or purports to restrict or inhibit the Escrow Agent's
rights hereunder, including, without limitation, the Escrow Agent's right to
sell or otherwise dispose of the Collateral, or (ii) fail to pay or discharge
any tax, assessment or levy of any nature with respect to any of their
beneficial interest in the Collateral (if any) not later than five (5) days
prior to the date of any proposed sale under any judgment, writ or warrant of
attachment with respect to such beneficial interest.
SECTION 11. Power of Attorney. Each of WCMG and WCNY hereby appoints and
constitutes the Escrow Agent as their attorney-in-fact (with full power of
substitution), with full authority in their place and xxxxx and in their name or
otherwise, from time to time in the Escrow Agent's discretion to take any action
and to execute any instrument that the Escrow Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
(a) to ask for, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a), above;
(c) to file any claims or take any action or institute any proceedings
that the Escrow Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Escrow
Agent with respect to any of the Collateral; and
(d) to pay or discharge taxes or liens levied or placed upon the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Escrow Agent in its sole
reasonable discretion, and such payments made by the Escrow Agent to become
a joint and several obligation of WCMG and WCNY to the Escrow Agent, due
and payable immediately upon demand; and
provided, however, that the Escrow Agent shall have no obligation to perform any
of the foregoing actions. The Escrow Agent's authority under this Section 11
shall include, without limitation, the authority to execute or endorse (a) any
checks or instruments representing proceeds of Collateral in the name of
WellCare, (b) any receipts for any certificate of ownership or any document
constituting Collateral or transferring title to any item of Collateral, (c) any
financing statements (to the extent permitted by applicable law), or (d) any
other documents deemed necessary or appropriate by the Escrow Agent to preserve,
protect or perfect the security interest in the Collateral and to file the same,
prepare, file and sign the WellCare name on any notice of lien, and to take any
other actions arising from or incident to the powers granted to the Escrow Agent
in this Agreement. This power of attorney is coupled with an interest and is
irrevocable by WellCare.
SECTION 12. No Assumption of Duties; Reasonable Care.
(a) The rights and powers conferred on the Escrow Agent hereunder are
solely to preserve and protect the security interest of the Escrow Agent and the
Secured Parties in and to the Collateral granted hereby and shall not be
interpreted to and shall not impose any duties on the Escrow Agent in connection
therewith other than those expressly provided herein or imposed under applicable
law. Except as provided by applicable law or by the Settlement Agreements, the
Escrow Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which the Escrow Agent accords
similar property held by the Escrow Agent for its own account, it being
understood that the Escrow Agent in its capacity as such shall not have any
responsibility for: (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities or other matters relative to any Collateral,
whether or not the Escrow Agent has or is deemed to have knowledge of such
matters, (b) taking any necessary steps to preserve rights against any parties
with respect to any Collateral, or (c) investing or reinvesting any of the
Collateral or any loss on any investment (other than pursuant to Section 5
hereof).
(b) Notwithstanding any provision herein to the contrary, the Escrow
Agent shall not keep records of nor prepare any tax-related documents which may
be required by any Secured Party concerning the distributions to be made
hereunder. WellCare agrees that it shall have sole responsibility to prepare
such documents for and distribute such documents to the Secured Parties.
SECTION 13. Indemnity; Escrow Agent's Limitation of Liability.
(a) WCMG and WCNY shall, jointly and severally, indemnify, reimburse,
hold harmless and defend the Escrow Agent and its directors, officers, agents
and employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including reasonable defense costs, reasonable
investigative fees and costs, and reasonable legal fees and damages arising from
the Escrow Agent's performance or lack of performance as Escrow Agent under this
Agreement, unless such claim, action, obligation, liability or expense is
directly attributable to the bad faith, gross negligence or wilful misconduct of
the Escrow Agent. This indemnity shall be a continuing obligation of the WCMG
and WCNY, and their respective successors and assigns, notwithstanding the
termination of this Agreement.
(b) If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects Collateral (including, but not
limited to, orders of attachment or garnishment or other forms of levies or
injunctions or stays relating to the transfer of Collateral), the Escrow Agent
is authorized to comply therewith in any manner as it or its legal counsel of
its own choosing deems appropriate and if the Escrow Agent complies with any
such judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, the Escrow Agent shall not be liable to
WellCare even though such order, judgment decree, writ or process may be
subsequently modified or vacated or otherwise determined to have been without
legal force or effect.
(c) The Escrow Agent shall not incur any liability to WellCare for not
performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of the Escrow Agent
(including, but not limited to, any act or provision or any present or future
law or regulation or governmental authority, any act of God or war, or the
unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility).
(d) Other than as provided in Sections 3, 4, 5 and 6 hereof, the
Escrow Agent shall not be responsible in any respect for the form, execution,
validity, value or genuineness of documents or securities deposited hereunder,
or for any description therein, or for the identity, authority or rights of
persons executing or delivering or purporting to execute or deliver any such
document, security or endorsement.
SECTION 14. Security Interest Absolute. All rights of the Escrow Agent and the
Secured Parties and security interests hereunder, and all obligations of
WellCare hereunder, shall be absolute and unconditional, subject, however, to
the terms of the Settlement Agreements.
SECTION 15. Miscellaneous Provisions.
Section 15.1. Notices. Any notice or communication given hereunder and any
deliveries made hereunder shall be sufficiently given if in writing and
delivered in person or mailed by first class mail, commercial courier service or
facsimile communication, addressed as follows:
If to WellCare:
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President and Chief Executive Officer
WellCare of New York, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to HANYS & NORMET:
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Xxxxxxxx X. Xxxxxx, Esq.
Garfunkel, Wild & Xxxxxx, P.C.
000 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
If to MSSNY:
------------
Xxxxxx X. Xxx, Esq.
General Counsel
Medical Society of the State of New York
000 Xxxxxxxxx Xxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
If to the Escrow Agent:
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United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxxx, Corporate Trust Administration
All such deliveries, notices and other communications shall be effective when
received.
Section 15.2. No Adverse Interpretation of Other Agreements. This Agreement
may not be used to interpret another pledge, security or debt agreement of WCMG,
WCNY or any subsidiary thereof. No such pledge, security or debt agreement
(other than the Settlement Agreements) may be used to interpret this Agreement.
Section 15.3 Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
Section 15.4 Headings. The headings in this Agreement have been inserted
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
Section 15.5 Counterpart Originals. This Agreement may be signed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall together constitute one and the same agreement.
Section 15.6 Benefits of Agreement. Nothing in this Agreement, express or
implied, shall give to any person, other than the parties hereto and their
successors hereunder, and the Secured Parties, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 15.7 Amendments, Waivers and Consents. Any amendment or waiver of
any provision of this Agreement and any consent to any departure by WellCare
from any provision of this Agreement shall be effective only if made or duly
given in compliance with all of the terms and provisions of the Settlement
Agreements, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. Failure of the
Escrow Agent or any Secured Party to exercise, or delay in exercising, any
right, power or privilege hereunder shall not preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Escrow Agent or any Secured Party of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy that
the Escrow Agent or such Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
Section 15.8 Interpretation of Agreement. As long as the Escrow Agent acts in
good faith to the extent a term or provision of this Agreement conflicts with
the Settlement Agreements, the Settlement Agreements shall control with respect
to the subject matter of such term or provision. Notwithstanding the foregoing
and any other provision of this Agreement or the Settlement Agreements, the
Escrow Agent shall have no fiduciary responsibility under this Agreement.
Section 15.9 Continuing Security Interest; Termination.
(a) This Agreement shall create a continuing security interest in and
to the Collateral and shall, unless otherwise provided in this Agreement, remain
in full force and effect until the Termination Date. This Agreement shall be
binding upon WCMG, WCNY, and their respective transferees, successors and
assigns, and shall inure, together with the rights and remedies of the Escrow
Agent hereunder, to the benefit of the Escrow Agent, the Secured Parties and
their respective successors, transferees and assigns.
(b) This Agreement (other than WellCare's obligations under Section
13) shall terminate as of February 28, 2000 or the date on which the Collateral
Account has a $0 balance and a final report concerning the transactions of,
deposits in and disbursements from the Collateral Account has been provided by
the Escrow Agent to each of HANYS and NORMET, on behalf of the Hospitals, MSSNY,
on behalf of the Providers, SID and WellCare (such date being the "Termination
Date"). On or prior to the Termination Date, the Escrow Agent shall make a final
distribution in cash of all Collateral remaining in its possession as of the
Termination Date in accordance with the provisions of Section 5(e) of each
Settlement Agreement.
Section 15.10 Survival of Representations and Covenants. All representations,
warranties and covenants of WellCare contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the
termination of this Agreement. The obligations of WellCare under Section 13
hereof shall survive the termination of this Agreement.
Section 15.11 Waivers. WellCare waives presentment and demand for payment of any
of their obligations, protest and notice of dishonor or default with respect to
any of the obligations, and all other notices to which WellCare might otherwise
be entitled, except as otherwise expressly provided herein or in the Settlement
Agreements.
Section 15.12 Authority of the Escrow Agent.
(a) The Escrow Agent shall have and be entitled to exercise all powers
hereunder that are specifically granted to the Escrow Agent by the terms hereof,
together with such powers as are reasonably incident thereto. The Escrow Agent
may perform any of its duties hereunder or in connection with the Collateral by
or through agents or employees and shall be entitled to retain counsel and to
act in reliance upon the advice of counsel concerning all such matters. Except
as otherwise expressly provided in this Agreement or the Settlement Agreements,
neither the Escrow Agent nor any director, officer, employee, attorney or agent
of the Escrow Agent shall be liable to the WellCare or Secured Parties for any
action taken or omitted to be taken by the Escrow Agent, in its capacity as
Escrow Agent, hereunder, except for its own bad faith, gross negligence or
willful misconduct, and the Escrow Agent shall not be responsible for the
validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Escrow Agent and its directors, officers,
employees, attorneys and agents shall be entitled to rely on any communication,
instrument or document believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons.
(b) WellCare acknowledges that the rights and responsibilities of the
Escrow Agent under this Agreement with respect to any action taken by the Escrow
Agent or the exercise or non-exercise by the Escrow Agent of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Escrow Agent and the Secured
Parties, be governed by the Settlement Agreements and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Escrow Agent and WellCare, the Escrow Agent shall be conclusively presumed
to be acting as agent for the Secured Parties with full and valid authority so
to act or refrain from acting, and WellCare shall not be obligated or entitled
to make any inquiry respecting such authority.
Section 15.13 Final Expression. This Agreement, together with the Settlement
Agreements and any other agreement executed in connection herewith, is intended
by the parties hereto as a final expression of this Agreement and is intended as
a complete and exclusive statement of the terms and conditions thereof.
Section 15.14 Rights of Secured Parties. No Secured Parties shall have any
independent rights hereunder other than those rights granted to individual
Secured Parties pursuant to law and pursuant to the Settlement Agreements;
provided that nothing in this Section 15.14 shall limit any rights granted to
the Escrow Agent hereunder.
Section 15.15 Governing Law; Submission to Jurisdiction: Waiver of Jury Trial;
Waiver of Damages.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS
OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN WELLCARE, THE
ESCROW AGENT AND THE SECURED PARTIES IN CONNECTION WITH THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) WELLCARE HEREBY APPOINTS CT CORPORATION SYSTEM, 0000 XXXXXXXX, XXX
XXXX, XXX XXXX 00000, AS ITS AGENT FOR SERVICE OF PROCESS IN ANY SUIT, ACTION OR
PROCEEDING WITH RESPECT TO THIS ESCROW AGREEMENT AND FOR ACTIONS BROUGHT UNDER
U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY FEDERAL OR STATE COURT
LOCATED IN THE CITY OF NEW YORK AND AGREES TO SUBMIT TO THE JURISDICTION OF ANY
SUCH COURT.
(c) WELLCARE AGREES THAT THE ESCROW AGENT SHALL, IN ITS CAPACITY AS
ESCROW AGENT OR IN THE NAME AND ON BEHALF OF THE SECURED PARTIES, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST WELLCARE OR
THE COLLATERAL IN A COURT IN THE STATE OF NEW YORK IN ANY LOCATION REASONABLY
SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER WELLCARE
OR THE COLLATERAL, AS THE CASE MAY BE) TO ENABLE THE ESCROW AGENT TO REALIZE ON
SUCH COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR
OF THE ESCROW AGENT. WELLCARE AGREES THAT IT SHALL NOT ASSERT ANY COUNTERCLAIMS,
SETOFFS OR CROSS CLAIMS IN ANY PROCEEDING BROUGHT BY THE ESCROW AGENT TO REALIZE
ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
ESCROW AGENT, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSS CLAIMS WHICH, IF
NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.
WELLCARE WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
THE CITY OF NEW YORK ONCE THE ESCROW AGENT HAS COMMENCED A PROCEEDING DESCRIBED
IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(d) WELLCARE AGREES THAT NEITHER ANY SECURED PARTY NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT OR THE SETTLEMENT AGREEMENTS) THE ESCROW
AGENT IN ITS CAPACITY AS ESCROW AGENT SHALL HAVE ANY LIABILITY TO WELLCARE
(WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY WELLCARE
IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE ESCROW
AGENT OR SUCH SECURED PARTIES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE
RESULT OF ACTS OR OMISSIONS ON THE PART OF THE ESCROW AGENT OR SUCH SECURED
PARTIES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, WELLCARE WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE ESCROW AGENT OR ANY SECURED PARTY
IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER PERTAINING TO THIS AGREEMENT OR ANY RELATED AGREEMENT OR
DOCUMENT ENTERED) IN FAVOR OF THE ESCROW AGENT OR ANY SECURED PARTIES, OR TO
ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR
PERMANENT INJUNCTION, THIS AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT
BETWEEN WELLCARE ON THE ONE HAND AND THE ESCROW AGENT AND/OR THE SECURED PARTIES
ON THE OTHER HAND.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be duly executed and delivered as of the date first above written.
THE WELLCARE MANAGEMENT GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Acting President and
Chief Executive Officer
WELLCARE OF NEW YORK, INC.
By: /s/ Xxxx Xxx Xxxxxxxx-Xxxxxx
------------------------------
Name: Xxxx Xxx Xxxxxxxx-Xxxxxx
Title: President/CEO
GARFUNKEL, WILD & XXXXXX, P.C.,
as counsel to Healthcare Association of
New York State and Northern Metropolitan
Hospital Association, on behalf of the
Hospitals listed on Schedule "A" annexed
hereto
By: /s/ Xxxxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: A Member of the Firm
THE MEDICAL SOCIETY OF THE STATE OF NEW
YORK, on behalf of the Providers listed
on Schedule "B" annexed hereto
By: /s/ Xxxxxx X. Xxx
-----------------------------
Name: Xxxxxx X. Xxx
Title: General Counsel
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ Xxxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Assistant Vice President
SCHEDULE "A"
HOSPITAL SETTLEMENT AGREEMENTS
------------------------------
NYC HEALTH & HOSPITALS CORP.
----------------------------
1) BELLEVUE
2) CONEY ISLAND
3) ELMHURST
4) HARLEM
5) JACOBI
6) KINGS
7) LINCOLN
8) METROPOLITAN
9) NCB
10) QUEENS
11) WOODHALL
12) BELVIS (BRONX)
13) CUMBERLAND
14) E. NEW YORK
15) GOUVERNEUR
16) MORRISANIA
17) RENAISSANCE
18) XXXXXXX HOSPITAL OF SCHOLHARIE (COBLESKILL, NY)
19) MONTEFIORE MEDICAL CENTER
20) WHITE PLAINS HOSPITAL CENTER
CONTINUUM HEALTH PARTNERS
-------------------------
21) XXXX ISRAEL MEDICAL CENTER
22) ST. XXXX'X XXXXXXXXX HOSPITAL
23) LONG ISLAND COLLEGE HOSPITAL
24) XXXX ISRAEL MEDICAL CENTER EMERGENCY MEDECINE
25) ASSOCIATES IN EMERGENCY MEDECINE - ST. XXXX'X XXXXXXXXX HOSPITAL
26) WESTSIDE PEDIATRICS ASSOCIATES
27) BELLEVUE WOMEN'S IN NISCYUANA, NY
28) VASSAR BROTHERS
29) ST. XXXXX OUR LADY OF MERCY (BRONX)
OUR LADY OF MERCY HEALTHCARE SYSTEM, INC.
-----------------------------------------
30) OUR LADY OF MERCY MEDICAL CENTER
31) ST. XXXXX HOSPITAL
MID-XXXXXX HEALTH
-----------------
32) ST. XXXXXXX (POUGHKEEPSIE)
33) STATEN ISLAND UNIVERSITY
34) NORTHERN WESTCHESTER HOSPITAL CENTER
35) OUR LADY OF XXXXXXX MEMORIAL HOSPITAL
36) XXXXXX VALLEY HOSPITAL CENTER
NORTHEAST HEALTH
----------------
37) ALBENY MEMORIAL
38) SAMARITAN
39) JAMAICA HOSPITAL MEDICAL CENTER
40) ALBANY MEDICAL CENTER
41) BENEDICTINE
42) SETON HEALTH SYSTEM, INC.
43) WESTCHESTER COUNTY HEALTH CARE CORP.
CATHOLIC MEDICAL CENTER OF BROOKLYN & QUEENS, INC.
--------------------------------------------------
44) ST. JOHN'S QUEENS HOSPITAL
45) XXXX IMMACULATE HOSPITAL
46) ST. JOSEPH'S HOSPITAL
47) ST. MARY'S HOSPITAL
48) ALBANY MEDICAL CENTER
49) XXXXXX VALLEY HOSPITAL CENTER
50) MID-XXXXXX HEALTH
51) KINGSTON HOSPITAL
52) NEW YORK CITY HEALTH & HOSPITALS CORPORATION
53) FLUSHING HOSPITAL MEDICAL CENTER
GREATER XXXXXX VALLEY HEALTH SYSTEM
-----------------------------------
54) XXXXX XXXX HOSPITAL
55) THE CORNWALL HOSPITAL
56) XXXXXX MEDICAL CENTER
57) ST. LUKE'S HOSPITAL
58) THE BROOKLYN HOSPITAL CENTER
59) COLUMBIA MEMORIAL HOSPITAL
60) X.X. XXX HOSPITAL
61) XXX XXXXXXXX XX XXXXXX
00) XX. XXXXXXXXX MEDICAL CENTER
UNITED HEALTH SERVICES HOSPITALS, INC.
--------------------------------------
63) DELAWARE VALLEY HOSPITAL
64) INTERFAITH MEDICAL CENTER
65) XXXXXX MEMORIAL HOSPITAL CENTER
66) ST. JOHN'S RIVERSIDE HOSPITAL
67) YONKERS GENERAL HOSPITAL
68) NORTHERN DUTCHESS HOSPITAL
69) NYACK HOSPITAL
70) ST. CLARE'S HOSPITAL
MERCYCARE CORPORATION
---------------------
71) ST. PETER'S HOSPITAL
72) COMMUNITY GENERAL HOSPITAL
73) XXXXX HOSPITAL
74) MAIMONIDES MEDICAL CENTER
75) THE SARATOGA HOSPITAL
76) MARGARETVILLE MEMORIAL HOSPITAL
77) DOCTORS HOSPITAL OF STATEN ISLAND
78) THE XXXX XXXXXXX XXXXXXX HOSPITAL
79) X'XXXXXX HOSPITAL
80) STRONG MEMORIAL HOSPITAL
81) CHILD'S HOSPITAL
82) SUNNYVIEW HOSPITAL AND REHAB CENTER
83) CARTHAGE AREA HOSPITAL
84) XXXXXXXX HOSPITAL
85) FAXTON HOSPITAL
86) ST. LUKE'S MEMORIAL HOSPITAl
87) GLENS FALLS HOSPITAL
88) AMSTERDAM MEMORIAL HEALTHCARE SYSTEM
89) XXXX X. XXXXXX MEMORIAL HOSPITAL
90) ST. CLARE'S HOSPITAL & HEALTH CENTER
91) WINTHROP UNIVERSITY HOSPITAL
92) XXXXX XXXXX XXXXXXXX
00) XXX XXXXXXXX XXXXXXXX
00) XX. XXXXX MEDICAL CENTER
95) XXXX XxXXXXXXX HOSPITAL
96) HOSPITAL FOR JOINT DISEASES ORTHOPEDIC INSTITUTE
97) THE NEW YORK EYE AND EAR INFIRMARY
SCHEDULE "B"
SCHEDULE "C-1"
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT (the "Agreement") dated May __, 1999 by and among THE
WELLCARE MANAGEMENT GROUP, INC., a New York corporation ("WCMG"), WELLCARE OF
NEW YORK, INC., a New York corporation ("WCNY" and together with WCMG,
"WellCare"), and XXXXX X. XXXXX ("Xx. Xxxxx") (WellCare and Xx. Xxxxx
collectively, the "WellCare Parties"), and the Provider or Provider group
specified on the signature page of this Agreement ("Provider") and THE MEDICAL
SOCIETY OF THE STATE OF NEW YORK ("MSSNY") (WCMG, WCNY, Xx. Xxxxx, Provider and
MSSNY being referred to individually as a "Party" and collectively as the
"Parties").
WHEREAS, WCMG has signed a letter of intent with Xx. Xxxxx, for a
transaction that would, among other things, encompass an equity investment in
WellCare by Xx. Xxxxx or an affiliate (the "Xxxxx Transaction");
WHEREAS, the Board of Directors of WCNY, a New York certified health
maintenance organization ("HMO"), has approved the sale of its New York State
based commercial business to Group Health Incorporated (the "GHI Transaction");
WHEREAS, WellCare and Xx. Xxxxx contemplate that all or a portion of the
equity investment provided through the Xxxxx Transaction and all of the funds
obtained through the GHI Transaction will be pooled with certain current assets
of WCNY and made available to satisfy claims by providers for services rendered
through April 30, 1999;
WHEREAS, WCNY has agreed to a consent to rehabilitation in which the State
of New York has the right to commence court proceedings and have an order
entered into that would give the State of New York the right to assume the
operation of WCNY;
WHEREAS, Healthcare Association of New York ("HANYS") and Northern
Metropolitan Hospital Association ("NORMET") have entered into a similar
settlement agreement for the purpose of settling any and all disputes, claims
and controversies between WellCare and the member hospital which is also a
signatory to the agreement, relating to the payment for services provided by
member hospitals prior to May 1, 1999 to HMO members of WCNY, in order to assist
their respective member hospitals in the resolution of such member hospitals'
claims against WellCare, with the express understanding that neither HANYS nor
NORMET has authority to bind its member hospitals and that each such member
hospital shall be required to separately execute the agreement if it is to be
binding on such member hospital;
WHEREAS, MSSNY has entered into this Agreement in order to assist their
members in the resolution of such member's claims against WellCare, with the
express understanding that MSSNY does not have authority to bind its members and
each member-Provider shall be required to separately execute this Agreement if
its it be binding on such member-Provider;
WHEREAS, the WellCare Parties and Provider desire, and are mutually
willing, to enter into this Agreement for the purpose of settling any and all
disputes, claims and controversies, as described further below, between WellCare
and the Provider, relating to the payment for services provided by the Provider
prior to May 1, 1999 to HMO members of WCNY; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
agreements herein, the Parties agree as follows:
1. Regulatory Approvals
This Agreement and the terms and conditions contained herein are subject to
the approval of the New York State Insurance Department ("SID") and the New York
State Department of Health ("DOH"). As soon as practicable, the Parties shall
jointly seek approval of this Agreement from SID and DOH, and in accordance with
Section 10(f), the Parties agree to execute or cause their counsel to execute
any additional documents and take any further action which may be reasonably
required in order to facilitate such regulatory approval.
2. Conditions to Effectiveness
This Agreement shall become effective (the "Effective Date") only upon the
satisfaction of each and all of the following conditions:
(a) Regulatory approvals as set forth in Section 1, no later than July
15, 1999;
(b) The deposit of a minimum of Ten Million Dollars ($10,000,000) in
the Provider Pool (as defined below) (the "Initial Funding Date"), no later than
July 15, 1999; and
(c) Agreement by WellCare and Provider as to the amount of its Settled
Claims (defined below) within thirty (30) days following the date of this
Agreement;
provided however that Sections 1, 4, 8, 9 and 10 hereof shall become effective
immediately. WellCare shall provide Provider with written notice of the
Effective Date of this Agreement no later than ten (10) business days after all
of the foregoing conditions have been satisfied.
3. Settled Claims
"Settled Claims" means the dollar amount of all claims against WellCare by
a health care provider that has signed this Agreement or an agreement with
substantially similar terms and conditions, for services rendered to HMO members
of WCNY in any product line prior to May 1, 1999 and received by WellCare within
thirty (30) days following the date hereof, determined as follows: (i) total
adjudicated claims as determined by WellCare on or before April 30, 1999,
namely, claims received by WellCare and approved as properly payable, and (ii)
all other claims (comprised of pended claims and disputed claims) submitted in
good faith and adjudicated in good faith by WellCare within thirty (30) days
following the date hereof at fifty percent (50%) of a Provider's or other
provider's submitted charges. For purposes of clarification, "Settled Claims"
shall not include any claims for payment that a health care provider may have
against independent practice associations, including but not limited to those
owned by Primergy, Inc., and other third parties (such as Merit Behavioral
Services, Access Managed Healthcare, Block Vision, New York Medical Imaging,
PharmaCare and Laboratory Corporation of America) that have contracted with
WellCare to provide or to arrange for the provision of certain health care
services (e.g., physician services or specialty "carve-out" services, such as
mental health services, chiropractic services, laboratory services or pharmacy
services) to HMO members of WCNY.
4. Exchange of Information and Confidentiality; Litigation Stay
(a) In connection with the execution of this Agreement, WellCare has
provided Provider, a provider specific summary of amounts owed for payable and
pended claims for services provided by provider to HMO members of WCNY prior to
May 1, 1999 that have not been paid according to WellCare's records.
(b) Provider agrees to confirm the amounts contained in said list of
all claims for services provided prior to May 1, 1999 and to provide WellCare
with Provider's statement of unpaid (including disputed) WellCare claims based
on its, his or her records as soon as practicable. If there is any disagreement
as to the Settled Claims amount the Parties shall, in good faith, attempt to
resolve any such disagreements within thirty (30) days following the date
hereof.
(c) Upon the determination of and agreement by WellCare and the
Provider as to the Settled Claims for Provider, WellCare shall provide Provider
with a statement of its, his or her Settled Claims and the minimum amount to
which Provider is entitled to payment from the Provider Pool, i.e., thirty
percent (30%) of the Settled Claims. Upon Provider's acceptance thereof, such
statement shall be annexed as Exhibit A to this Agreement.
(d) [THIS SECTION INTENTIONALLY OMITTED]
(e) The Parties each agree that they will not commence, institute or
prosecute any action or other adversary proceeding in any court of law or
equity, arbitration tribunal, or administrative forum ("Litigation") against any
other Party on or after the date hereof relating to or concerning the subject
matter of this Agreement, except (i) following termination of this Agreement as
provided in Section 9 or (ii) following July 15, 1999 if this Agreement shall
not have become effective by such date for failure to satisfy the conditions set
forth in Section 2 or (iii) if a case is commenced in respect to WellCare or any
of its subsidiaries or affiliates under Title 11 of the United States Code
(Bankruptcy), or a trustee, receiver or conservator or the like is appointed
under Article 74 of the New York Insurance Law or any similar law, or by SID, or
any other regulatory body, any Party may appear and participate in any such case
or proceeding. The Parties further agree to take whatever steps are necessary to
stay any Litigation during theperiod between the date hereof and the Effective
Date and thereafter take whatever steps are necessary to discontinue any such
Litigation with prejudice.
5. Establishment of Settlement Fund
(a) A pool of funds (the "Provider Pool") shall be established solely
to pay Settled Claims of the Providers and other providers which have entered
into settlement agreements containing terms similar to those contained in this
Agreement. The Provider Pool shall be established in a segregated cash
collateral account prior to the Effective Date at a bank mutually acceptable to
WellCare, Garfunkel Wild & Xxxxxx, P.C., as counsel to HANYS and NORMET, and
MSSNY, which approval shall not be unreasonably withheld, which bank shall have
had no prior dealings with WellCare. The Provider Pool shall not be disbursed
except in accordance with this Agreement (or other similar settlement
agreement). The Provider Pool account shall contain irrevocable instructions
concerning deposits and withdrawals from the Provider Pool, which shall be
agreed to by Garfunkel, Wild & Xxxxxx, P.C., as counsel to HANYS and NORMET, and
WellCare, subject to notification of MSSNY, prior to the Effective Date, and
which may be modified only with the prior written approval of both WellCare and
Garfunkel, Wild & Xxxxxx, P.C., as counsel to HANYS and NORMET, subject to
notification of MSSNY, or at the direction of SID. The Parties recognize and
agree that deposits into and payments from the Provider Pool may be subject to
audit or review by SID and other regulatory agencies having jurisdiction over
WellCare. The Parties understand that HANYS and/or NORMET or their agents or
representatives, shall have the right to audit or review the Provider Pool, and
the results of any such audit shall be distributed to all Parties. The Parties
agree to cooperate with each other to the extent reasonably necessary to carry
out the provisions of this Section 5(a).
(b) The Provider Pool shall have an initial balance of not less than
Ten Million Dollars ($10,000,000) by the Effective Date and shall be comprised
of proceeds from the Xxxxx Transaction and/or GHI Transaction. In addition, the
Provider Pool shall be supplemented by an amount equal to 80% of all proceeds
from accounts receivables of WCNY which were or should have been recorded in
accordance with generally accepted accounting principles (GAAP) as of April 30,
1999 (the "Accounts Receivable") to the extent such proceeds are collected by
WellCare during the period commencing on May 1, 1999 and ending on the date that
the Provider Pool is no longer in effect. If the amounts deposited in the
Provider Pool shall in the aggregate exceed Ten Million Dollars ($10,000,000)
(the amount so exceeding Ten Million Dollars ($10,000,000) being the "Excess"),
the Excess may be withdrawn from the Provider Pool and retained by WellCare for
purposes of maintaining its statutory reserves in accordance with applicable
law, but in no event shall WellCare be entitled to withdraw from the Provider
Pool and retain more than Two Million Five Hundred Thousand Dollars ($2,500,000)
for such purpose. Any Excess beyond that amount required for statutory reserves
shall be retained in the Provider Pool.
(c) In the event that the amount equal to thirty percent (30%) of the
aggregate Settled Claims for all providers (excluding the five percent (5%)
payments to providers described in Section 6(b)), is greater than Ten Million
Dollars ($10,000,000), but does not exceed Twelve Million Dollars ($12,000,000),
subject to Section 5(b), WellCare shall deposit additional funds into the
Provider Pool to make up the shortfall, to the extent WellCare has sufficient
funds and requisite regulatory authority to so act. In the event WellCare lacks
sufficient funds and/or requisite regulatory authority to deposit such
additional funds in the Provider Pool, Xx. Xxxxx will provide funds in such
amount necessary to pay the thirty percent (30%) of the aggregate Settled Claims
for all providers, not to exceed a total Provider Pool balance of Twelve Million
Dollars ($12,000,000).
(d) In the event the amount equal to thirty percent (30%) of the
aggregate Settled Claims for all providers (excluding the five percent (5%)
payments to providers described in Section 6(b)) is greater than Twelve Million
Dollars ($12,000,000), then the amount required to be deposited into the
Provider Pool in excess of Twelve Million Dollars ($12,000,000) shall be paid by
WellCare; provided, however, that WellCare will be permitted to reduce pro rata
the amount of the Provider's remaining three (3) payments of five percent (5%)
as set forth in Section 6(b) below (and all other providers with Settled Claims
who may receive a similar payment) to the extent that WellCare's payments exceed
Twelve Million Dollars ($12,000,000), and provided, however, in no case shall
Provider receive less than thirty percent (30%) of its Settled Claims under this
Agreement.
(e) In the event a balance remains in the Provider Pool as of six (6)
months after the Effective Date, then such balance will be distributed pro rata
to the Provider and other providers which have entered into agreements to settle
their Settled Claims, based upon the amounts of their respective Settled Claims.
(f) Each health care provider that has Settled Claims shall have a
security interest for the benefit of all health care providers with Settled
Claims, which shall be a first priority lien with respect to the proceeds due to
WellCare from the Xxxxx Transaction and/or GHI Transaction and all amounts in
the Provider Pool, and a second priority lien on and security interest in the
Accounts Receivable, except to the extent there is no other lien on the Accounts
Receivable as of the date of this Agreement, the security interest shall be a
first priority lien. It shall be the responsibility of such providers to timely
and properly prepare and deliver the necessary documents for signature by all
necessary parties, and thereafter cause the appropriate filings to be made to
perfect such security interests, including, without limitation, a financing
statement in the form approved by the Parties. The Parties shall cooperate with
each other in the preparation of any and all documents necessary to give effect
to such security interest and such other terms and obligations hereunder.
(g) Nothing contained herein shall prohibit or restrict WellCare from
settling or paying claims of any nature from sources of funds exclusive of those
deposited (or required to be deposited) in the Provider Pool.
6. Payment by WellCare of Settled Claims
(a) WellCare will pay Provider thirty percent (30%) of the Provider's
Settled Claims within ten (10) days of the Effective Date. If, however, thirty
percent (30%) of the aggregate Settled Claims for all providers exceeds the
funds then in the Provider Pool, then WellCare will pay the Provider and all
other providers with Settled Claims on a pro rata basis from the funds then in
the Provider Pool and thereafter pay the Provider and all other providers with
Settled Claims on a pro rata basis every thirty days (30) thereafter for the
period in which the Provider Pool is in effect. WellCare represents to Provider
that providers with Settled Claims shall all receive payment from the Provider
Pool based upon the same proportion of their Settled Claims. Notwithstanding the
foregoing, in no case shall Provider receive less than thirty percent (30%) of
the amount of its Settled Claims within six (6) months of the Effective Date and
Provider shall continue to have the right to xxxx WCNY members for all
applicable copayments, coinsurance and non-covered services relating to Settled
Claims to the extent permitted under the applicable health plan and provider
agreement, and WellCare shall provide Provider with necessary documentation to
xxxx the member accordingly. Notwithstanding anything to the contrary contained
herein, WellCare shall have the right to recoup, without any right of set-off,
any amounts paid under this Agreement to a Provider if the Provider shall have
failed to be a participating provider in good standing with WellCare at any time
during the period commencing on the date hereof and ending on the date six
months following the date hereof, and in such case of recoupment by WellCare,
this Agreement shall be null and void for all purposes. The foregoing condition
of a provider agreement shall not be applicable on or after the Effective Date
if Provider has terminated the provider agreement for cause or WellCare has
terminated such provider agreement without cause.
(b) WellCare will pay Provider an amount equal to five percent (5%) of
such Provider's Settled Claims on each of February 1, 2000, February 1, 2001 and
February 1, 2002, provided, however, Provider is at that time a participating
provider in good standing with WellCare. The foregoing condition of a provider
agreement shall not be applicable if Provider has terminated the provider
agreement for cause or WellCare has terminated such provider agreement without
cause. The Parties understand and acknowledge that no such payment under this
Section 6(b) shall be made from the Provider Pool.
(c) Subject to regulatory approvals and in accordance with applicable
law, including the federal securities laws, the Provider may elect to receive
WCMG common stock in lieu of one or more of the annual payments set forth in
Section 6(b). The price at which the WCMG common stock shall be valued shall be
the greater of the price of such common stock for the twenty (20) trading days
ending on February 2nd of the calendar year immediately preceding the applicable
payment date or $1.00 per share. Each Provider receiving such WCMG common stock
shall agree to transfer restrictions on such shares for a mutually agreed upon
period after issuance, but not to exceed six (6) months. In the event the
Provider elects to receive WCMG common stock in lieu of a cash payment, the
Parties agree to cooperate and use their best efforts to reach agreement
regarding the terms and conditions of such receipt of WCMG securities and to
accomplish the foregoing.
7. Mutual Releases
(a) Provider together with its subsidiaries, affiliates, officers,
directors, shareholders, employees, agents, attorneys, representatives,
successors and assigns ("Provider Releasor"), hereby releases and discharges the
WellCare Parties, together with their respective subsidiaries, affiliates,
directors, shareholders, employees, agents, attorneys, representatives,
successors and assigns ("WellCare Releasees") from (i) all indebtedness and
other financial obligations arising from the provision of services by each
Provider to members of WCNY in any product line on or before April 30, 1999,
including any prospective adjustments pursuant to the New York Health Care
Reform Act ("NYCRA") for services rendered prior to May 1, 1999, and (ii) all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, rights to contribution, damages,
judgments, extends, executions, claims, and demands whatsoever, in law,
admiralty or equity, which each Provider Releasor ever had, now has or hereafter
can, shall or may have against the WellCare Releasees, for upon, or by reason of
any matter, cause or things whatsoever relating to the matters referred to in
(a)(i) above from the beginning of the world to the day of the date of this
Agreement or arising hereafter as a result of or in connection with the matters
referred to in (a)(i) above. The foregoing release expressly excludes any claims
for payment that Provider may have against independent practice associations,
including but not limited to those owned by Primergy, Inc., and other third
parties (such as Merit Behavioral Services, Access Managed Healthcare, Block
Vision, New York Medical Imaging, PharmaCare and Laboratory Corporation of
America) that have contracted with WellCare to provide or to arrange for the
provision of certain health care services (e.g., physician services or specialty
"carve-out" services, such as mental health services, chiropractic services,
laboratory services or pharmacy services) to HMO members of WCNY and expressly
excludes any action, suits, claims or demands arising from medical malpractice
or negligence.
(b) Each Provider Releasor represents to the WellCare Releasees that
none of the liabilities, claims, causes of actions, costs or demands herein
released has been assigned to any person or entity.
(c) Each Provider Releasor acknowledges that it may hereafter discover
facts different from, or in addition to, those that it now believes to be true,
with respect to all or any of the liabilities, claims, causes or action, costs
or demands herein released but nevertheless agrees that the releases set forth
herein shall be and remain effective in all respects, notwithstanding the
discovery of such different or additional facts.
(d) Each Provider Releasor is forever barred and enjoined from
commencing, instituting or prosecuting any action or other adversary proceeding
in any court of law or equity, arbitration tribunal, or administrative forum,
directly or representatively, against the WellCare Releasees with respect to
any, some or all of the Settled Claims; provided however, each Provider Releasor
and the WellCare Releasees retain all rights and remedies to enforce the terms
of this Agreement.
(e) The WellCare Parties together with their respective subsidiaries,
affiliates, officers, directors, shareholders, employees, agents, attorneys,
representatives, successors and assigns ("WellCare Releasors") hereby release
and discharge Provider and its subsidiaries, affiliates, directors,
shareholders, employees, agents, attorneys, representatives, successors and
assigns ("Provider Releasee") from (i) all indebtedness and other financial
obligations arising from the provision of services by Provider to members of
WCNY in any product line on or before April 30, 1999, including any prospective
adjustments pursuant to the NYCRA for services rendered prior to May 1, 1999,
and (ii) all actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, rights to
contribution, damages, judgments, extends, executions, claims, and demands
whatsoever, in law, admiralty or equity, which the WellCare Releasors ever had,
now have or hereafter can, shall or may have against each Provider Releasee, for
upon, or by reason of any matter, cause or things whatsoever relating to the
matters referred to in (e)(i) above from the beginning of the world to the day
of the date of this Agreement or arising hereafter as a result of or in
connection with the matters referred to in (e)(i) above. The foregoing release
expressly excludes any claims for payment that WellCare may have against
independent practice associations, including but not limited to those owned by
Primergy, Inc., and other third parties (such as Merit Behavioral Services,
Access Managed Healthcare, Block Vision, New York Medical Imaging, PharmaCare
and Laboratory Corporation of America) that have contracted with WellCare to
provide or to arrange for the provision of certain health care services (e.g.,
physician services or specialty "carve-out" services, such as mental health
services, chiropractic services, laboratory services or pharmacy services) to
HMO members of WCNY and expressly excludes any action, suits, claims or demands
arising from medical malpractice or negligence.
(f) The WellCare Releasors represent to each Provider Releasee that
none of the liabilities, claims, causes of actions, costs or demands herein
released has been assigned to any person or entity.
(g) The WellCare Releasors acknowledge that they may hereafter
discover facts different from, or in addition to, those that they now believe to
be true, with respect to all or any of the liabilities, claims, causes or
action, costs or demands herein released but nevertheless agree that the
releases set forth herein shall be and remain effective in all respects,
notwithstanding the discovery of such different or additional facts.
(h) The WellCare Releasors are forever barred and enjoined from
commencing, instituting or prosecuting any action or other adversary proceeding
in any court of law or equity, arbitration tribunal, or administrative forum,
directly or representatively, against any Provider Releasee with respect to any,
some or all of Settled Claims; provided however, the WellCare Releasors and each
Provider Releasee retain all rights and remedies to enforce the terms of this
Agreement.
(i) Nothing contained herein shall be deemed to create any rights or
benefits, or constitutes a release of any kind whatsoever, for any non-Party.
8. Representations and Warranties of the Parties
(a) WellCare represents and warrants that the execution of this
Agreement and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action and will not violate
the provisions of its certificate of incorporation or by-laws or of any
agreement, law, rule, regulation or other commitment to which it is a party of
and by which it is bound.
(b) Provider represents and warrants that, to the extent applicable,
the execution of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
and will not violate the provisions of its certificate of incorporation or
by-laws or of any agreement, law, rule, regulation or other commitment to which
it is a party of and by which it is bound.
9. Termination of Settlement
(a) The Parties agree that this Agreement is binding and irrevocable
(unless terminated pursuant to this Section 9 or as provided in Sections 1 and 2
herein) regardless of future events or changed circumstances of WellCare or any
of its subsidiaries or affiliates, and the Parties agree that the agreements and
covenants contained herein are fair, reasonable and adequate, and WellCare
believes that the agreements and covenants contained herein are in the best
interests of WellCare and its subsidiaries, affiliates, shareholders and
creditors.
(b) If this Agreement shall not be approved by SID and DOH then in
either of these events, this Agreement shall become null and void for all
purposes and all negotiations, transactions and proceedings connected with it
(i) shall be without prejudice to the rights of any Party, (ii) shall not be
deemed or construed as evidence or an admission or a concession by any Party of
any fact, matter or thing; and (iii) shall not be admissible in evidence or used
in any action or proceeding.
(c) If WellCare is unable to fund the Provider Pool with an initial
balance of not less than Ten Million Dollars ($10,000,000) for any reason,
including but not limited to the failure to consummate the Xxxxx Transaction
and/or the failure to consummate the GHI Transaction, this Agreement shall
become null and void for all purposes and all negotiations, transactions and
proceedings connected with it (i) shall be without prejudice to the rights of
any party, (ii) shall not be deemed or construed as evidence or an admission or
a concession by any party of any fact, matter or thing; and (iii) shall not be
admissible in evidence or used in any action or proceeding.
(d) If a case is commenced in respect to WellCare or any of its
subsidiaries or affiliates under Title 11 of the United States Code
(Bankruptcy), or a trustee, receiver or conservator, or the like is appointed
under Article 74 of the New York Insurance Law or any similar law, or by SID, or
any other regulatory body, and in the event of the entry of a final order of a
court of competent jurisdiction determining the transfer of money to the
Provider Pool and/or to the Provider in payment of a Settled Claim, or any
portion thereof, on behalf of WellCare to be a preference, voidable transfer or
fraudulent transfer or similar transaction and any portion thereof is required
to be returned, then WellCare may move a court of competent jurisdiction to
vacate and set aside this Agreement and the releases contained herein, which
Agreement and releases shall be null and void, and the Parties shall be returned
to their respective positions as of April 30, 1999 and any payments made to the
Provider shall be returned to WellCare. In any such event (or otherwise under
any such bankruptcy or similar proceeding), the debt owed by WellCare or its
estate to the Provider shall not be valued on the basis of payments made
pursuant to sections 6(a) and (b) hereunder.
(e) Upon a default by WellCare in respect of any payment coming due
hereunder ("Default"), and unless such Default shall be cured within forty (40)
days after written notice thereof by fax and by certified mail, return receipt
requested, sent to:
President and Chief Executive Officer
WellCare of New York, Inc.
XX Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
and a copy to:
Xxxxxx Xxxxx, Esq.
Xxxxx, Xxxxx & X'Xxxxxx, PA
0000 Xxxxx Xxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Provider shall be entitled, upon not less than ten (10) days' notice to DOH, SID
and WellCare that Wellcare is in Default under the terms of this Agreement, to
seek appropriate judicial relief for payments due under this Agreement.
10. Miscellaneous
(a) This Agreement is a compromise disposing of claims of each
Provider, some or all of which may be controverted. This Agreement and all
negotiations and statements in connection herewith shall not be in any event
construed as or deemed to be evidence or an admission or concession on the part
of any Party of any liability whatever, and shall not be offered or received in
evidence in any action or proceeding in any court or other tribunal or used in
any way as an admission, concession or evidence of any liability by any party.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contracts executed and
performed in such State, without giving effect to the conflicts of laws
principles thereof.
(c) The Parties to this Agreement hereby consent to the jurisdiction
of the courts of the State of New York and the federal courts setting in New
York over them in any action to enforce this Agreement or any provision thereof.
(d) Each of the Parties has received independent legal advice from its
attorneys with respect to the advisability of entering into this Agreement and
the releases contained herein. Each of the Parties has made such investigation
of the facts pertaining to this Agreement and the releases herein and all other
matters pertaining thereto as it deems necessary.
(e) Each of the Parties to this Agreement acknowledges that this
Agreement is reached solely in relation to the subject matter herein and no
agreement reached herein shall constitute an admission or evidence in any other
matter among the parties to this Agreement or in any other matter or proceeding
in which any of the parties may be or become involved.
(f) Each of the Parties agrees to execute or cause their counsel to
execute any additional documents and take any further action which reasonably
may be required in order to consummate this Agreement, or otherwise fulfill the
obligations of the Parties hereunder. Each party is to bear its own costs and
attorney's fees incurred in connection with any such additional action.
(g) This Agreement represents and expresses the entire agreement
between the Parties with respect to the subject matter hereof and may not be
modified or amended except in a writing signed by WellCare and the affected
Provider, so long as such modification or amendment does not adversely effect
other providers with respect to the payment of Settled Claims from the Provider
Pool or for payments similar to those set forth in Section 6(b).
(h) This Agreement and the releases contained herein supersede any
prior agreement or release with respect to the subject matter hereof.
(i) This Agreement shall be binding on and inure to the benefit of the
Parties and their respective successors, administrators or assigns, and upon any
corporation or other entity into or with which any Party may merge, consolidate
or reorganize. This Agreement and the releases contained herein is limited to
the Parties, the Provider Releasors, the Provider Releasees, the Wellcare
Releasors and the Wellcare Releasees and any other third party beneficiary of
this Agreement and the releases contained herein is expressly excluded.
(j) The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
(k) This Agreement may be executed in counterparts, each of which
shall be deemed an original instrument, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day
and year first above written.
PROVIDER THE WELLCARE MANAGEMENT
GROUP, INC.
By:___________________________ By: /s/ Xxxxx Xxxxxx
Title:________________________ -----------------------------
Address:______________________ Xxxxx Xxxxxx
______________________ Acting Chief Executive Xxxxxxx
Xxxx Xxxx/Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
XXXXXX XXXXX, ESQ. WELLCARE OF NEW YORK, INC.
By: /s/ Xxxxxx Xxxxx, Esq. By: /s/ Xxxx Xxx Xxxxxxxx-Xxxxxx
------------------------- -----------------------------
Xxxxxx Xxxxx, Esq. Xxxx Xxx Xxxxxxxx-Xxxxxx
Attorney for Xxxxx X. Xxxxx, M.D., Chief Executive Officer
F.A.C.C. Park Xxxx/Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
(000) 000-0000
MEDICAL SOCIETY OF THE STATE
OF NEW YORK
By: /s/ Xxxxxx X. Xxx, Esq.
-------------------------
Xxxxxx X. Xxx, Esq.
General Counsel
EXHIBIT A
Name and Address of Provider Settled Claim Amount
---------------------------- --------------------
SCHEDULE "C-2"
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT (the "Agreement") dated May __, 1999 by and among THE
WELLCARE MANAGEMENT GROUP, INC., a New York corporation ("WCMG"), WELLCARE OF
NEW YORK, INC., a New York corporation ("WCNY" and together with WCMG,
"WellCare"), and XXXXX X. XXXXX ("Xx. Xxxxx") (WellCare and Xx. Xxxxx
collectively, the "WellCare Parties"), and HEALTHCARE ASSOCIATION OF NEW YORK
STATE ("HANYS"), NORTHERN METROPOLITAN HOSPITAL ASSOCIATION ("NORMET") and the
member hospital of HANYS and/or NORMET specified on the signature page of this
Agreement ("Hospital") (WCMG, WCNY, Xx. Xxxxx, HANYS, NORMET and Hospital being
referred to individually as a "Party" and collectively as the "Parties").
WHEREAS, WCMG has signed a letter of intent with Xx. Xxxxx, for a
transaction that would, among other things, encompass an equity investment in
WellCare by Xx. Xxxxx or an affiliate (the "Xxxxx Transaction");
WHEREAS, the Board of Directors of WCNY, a New York certified health
maintenance organization ("HMO"), has approved the sale of its New York State
based commercial business to Group Health Incorporated (the "GHI Transaction");
WHEREAS, WellCare and Xx. Xxxxx contemplate that all or a portion of the
equity investment provided through the Xxxxx Transaction and all of the funds
obtained through the GHI Transaction will be pooled with certain current assets
of WCNY and made available to satisfy claims by providers for services rendered
through April 30, 1999;
WHEREAS, WCNY has agreed to a consent to rehabilitation in which the State
of New York has the right to commence court proceedings and have an order
entered into that would give the State of New York the right to assume the
operation of WCNY;
WHEREAS, the WellCare Parties and the Hospital desire, and are mutually
willing, to enter into this Agreement for the purpose of settling any and all
disputes, claims and controversies, as described further below, between WellCare
and the Hospital, relating to the payment for services provided by the Hospital
prior to May 1, 1999 to HMO members of WCNY; and
WHEREAS, HANYS and NORMET have entered into this Agreement in order to
assist their respective member hospitals in the resolution of such member
hospitals' claims against WellCare, with the express understanding that neither
HANYS nor NORMET has authority to bind its member hospitals and that each such
member hospital shall be required to separately execute this Agreement if it is
to be binding on such member hospital.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
agreements herein, the Parties agree as follows:
1. Regulatory Approvals
This Agreement and the terms and conditions contained herein are
subject to the approval of the New York State Insurance Department ("SID") and
the New York State Department of Health ("DOH"). As soon as practicable, the
Parties shall jointly seek approval of this Agreement from SID and DOH, and in
accordance with Section 10(f), the Parties agree to execute or cause their
counsel to execute any additional documents and take any further action which
may be reasonably required in order to facilitate such regulatory approval.
2. Conditions to Effectiveness
This Agreement shall become effective (the "Effective Date") only upon
the satisfaction of each and all of the following conditions:
(a) Regulatory approvals as set forth in Section 1, no later than July
15, 1999;
(b) The deposit of a minimum of Ten Million Dollars ($10,000,000) in
the Provider Pool (as defined below) (the "Initial Funding Date"), no later than
July 15, 1999; and
(c) Agreement by WellCare and Hospital as to the amount of its Settled
Claims (defined below) within thirty (30) days following the date of this
Agreement;
provided however that Sections 1, 4, 8, 9 and 10 hereof shall become effective
immediately. WellCare shall provide Hospital with written notice of the
Effective Date of this Agreement no later than five (5) business days after all
of the foregoing conditions have been satisfied.
3. Settled Claims
"Settled Claims" means the dollar amount of all claims against
WellCare by a health care provider that has signed this Agreement or an
agreement with substantially similar terms and conditions, for services rendered
to HMO members of WCNY in any product line prior to May 1, 1999 and received by
WellCare within thirty (30) days following the date hereof, determined as
follows: (i) total adjudicated claims as determined by WellCare on or before
April 30, 1999, namely, claims received by WellCare and approved as properly
payable, and (ii) all other claims (comprised of pended claims and disputed
claims) submitted in good faith and adjudicated in good faith by WellCare within
thirty (30) days following the date hereof at fifty percent (50%) of a
hospital's or other provider's submitted charges. For purposes of clarification,
"Settled Claims" shall not include any claims for payment that a health care
provider may have against independent practice associations, including but not
limited to those owned by Primergy, Inc., and other third parties (such as Merit
Behavioral Services, Access Managed Healthcare, Block Vision, New York Medical
Imaging, PharmaCare and Laboratory Corporation of America) that have contracted
with WellCare to provide or to arrange for the provision of certain health care
services (e.g., physician services or specialty "carve-out" services, such as
mental health services, chiropractic services, laboratory services or pharmacy
services) to HMO members of WCNY.
4. Exchange of Information and Confidentiality; Litigation Stay
(a) In connection with the execution of this Agreement, WellCare has
provided Garfunkel, Wild & Xxxxxx, P.C., as counsel to HANYS and NORMET, a
hospital specific summary of amounts owed for payable and pended claims for
services provided by member hospitals of HANYS and/or NORMET to HMO members of
WCNY prior to May 1, 1999 that have not been paid according to WellCare's
records.
(b) Garfunkel, Wild & Xxxxxx, P.C. has agreed to confirm the amounts
contained in said list of all claims for services provided prior to May 1, 1999
with the Hospital and to obtain from the Hospital its statement of unpaid
(including disputed) WellCare claims based on its records. Garfunkel, Wild &
Xxxxxx, P.C. has agreed to provide said information to WellCare and the Hospital
as soon as practicable. If there is any disagreement as to the Settled Claims
amount the Parties shall, in good faith, attempt to resolve any such
disagreements within thirty (30) days following the date hereof.
(c) Upon the determination of and agreement by WellCare and the
Hospital as to the Settled Claims for Hospital, WellCare shall provide Hospital
with a statement of its Settled Claims and the minimum amount to which Hospital
is entitled to payment from the Provider Pool, i.e., thirty percent (30%) of the
Settled Claims. Upon Hospital's acceptance thereof, such statement shall be
annexed as Exhibit A to this Agreement.
(d) Garfunkel, Wild & Xxxxxx, P.C. agrees to provide the Hospital with
specific information relating only to the Hospital (and no other member hospital
in HANYS or NORMET) and further agrees not to share such information with any
other hospital clients or third parties, except to the extent required by law,
or with the prior written consent of WellCare, which consent may be denied in
WellCare's sole discretion. Notwithstanding the foregoing, Garfunkel, Wild &
Xxxxxx, P.C. may provide any and all such information to HANYS and NORMET and
their respective officers, directors, employees and agents ("Authorized
Agents"), provided, however, HANYS and NORMET and their respective Authorized
Agents hereby agree to similarly maintain the confidentiality of such Hospital
specific information as set forth herein. Such Hospital specific information
shall be used solely to assist the Hospital in the determination of the Settled
Claims.
(e) The Parties each agree that they will not commence, institute or
prosecute any action or other adversary proceeding in any court of law or
equity, arbitration tribunal, or administrative forum ("Litigation") against any
other Party on or after the date hereof relating to or concerning the subject
matter of this Agreement, except (i) following termination of this Agreement as
provided in Section 9 or (ii) following July 15, 1999 if this Agreement shall
not have become effective by such date for failure to satisfy the conditions set
forth in Section 2 or (iii) if a case is commenced in respect to WellCare or any
of its subsidiaries or affiliates under Title 11 of the United States Code
(Bankruptcy), or a trustee, receiver or conservator or the like is appointed
under Article 74 of the New York Insurance Law or any similar law, or by SID, or
any other regulatory body, any Party may appear and participate in any such case
or proceeding. The Parties further agree to take whatever steps are necessary to
stay any Litigation during the period between the date hereof and the Effective
Date and thereafter take whatever steps are necessary to discontinue any such
Litigation with prejudice.
5. Establishment of Settlement Fund
(a) A pool of funds (the "Provider Pool") shall be established solely
to pay Settled Claims of the Hospital and all other providers which have entered
into settlement agreements containing terms similar to those contained in this
Agreement. The Provider Pool shall be established in a segregated cash
collateral account prior to the Effective Date at a bank mutually acceptable to
WellCare and Garfunkel Wild & Xxxxxx, P.C., as counsel to HANYS and NORMET,
which bank shall have had no prior dealings with WellCare). The Provider Pool
shall not be disbursed except in accordance with this Agreement (or other
similar settlement agreement). The Provider Pool account shall contain
irrevocable instructions concerning deposits and withdrawals from the Provider
Pool, which shall be agreed to by Garfunkel, Wild & Xxxxxx, P.C., as counsel to
HANYS and NORMET, and WellCare prior to the Effective Date, and which may be
modified only with the prior written approval of both WellCare and Garfunkel,
Wild & Xxxxxx, P.C., as counsel to HANYS and NORMET, or at the direction of SID.
The Parties recognize and agree that deposits into and payments from the
Provider Pool may be subject to audit or review by SID and other regulatory
agencies having jurisdiction over WellCare. In addition, HANYS and/or NORMET or
their agents or representatives, shall have the right to audit or review the
Provider Pool, the cost of the first of which audit or review shall be borne by
WellCare and the cost of any and all subsequent audits or reviews shall be borne
by HANYS and/or NORMET. The results of such audit or review shall be distributed
to all Parties. The Parties agree to cooperate with each other to the extent
reasonably necessary to carry out the provisions of this Section 5(a).
(b) The Provider Pool shall have an initial balance of not less than
Ten Million Dollars ($10,000,000) by the Effective Date and shall be comprised
of proceeds from the Xxxxx Transaction and/or GHI Transaction. In addition, the
Provider Pool shall be supplemented by an amount equal to 80% of all proceeds
from accounts receivables of WCNY which were or should have been recorded in
accordance with generally accepted accounting principles (GAAP) as of April 30,
1999 (the "Accounts Receivable") to the extent such proceeds are collected by
WellCare during the period commencing on May 1, 1999 and ending on the date that
the Provider Pool is no longer in effect. HANYS and/or NORMET, or their agents
or representatives, shall have the right, subject to compliance with applicable
law, to examine and make copies of and abstracts from all books, records,
computer media and documents in the possession of WellCare relating to the
Accounts Receivable, subject to the confidentiality provisions contained in
section 4(d). If the amounts deposited in the Provider Pool shall in the
aggregate exceed Ten Million Dollars ($10,000,000) (the amount so exceeding Ten
Million Dollars ($10,000,000) being the "Excess"), the Excess may be withdrawn
from the Provider Pool and retained by WellCare for purposes of maintaining its
statutory reserves in accordance with applicable law, but in no event shall
WellCare be entitled to withdraw from the Provider Pool and retain more than Two
Million Five Hundred Thousand Dollars ($2,500,000) for such purpose. Any Excess
beyond that amount required for statutory reserves shall be retained in the
Provider Pool.
(c) In the event that the amount equal to thirty percent (30%) of the
aggregate Settled Claims for all providers (excluding the five percent (5%)
payments to providers described in Section 6(b)), is greater than Ten Million
Dollars ($10,000,000), but does not exceed Twelve Million Dollars ($12,000,000),
subject to Section 5(b), WellCare shall deposit additional funds into the
Provider Pool to make up the shortfall, to the extent WellCare has sufficient
funds and requisite regulatory authority to so act. In the event WellCare lacks
sufficient funds and/or requisite regulatory authority to deposit such
additional funds in the Provider Pool, Xx. Xxxxx will provide funds in such
amount necessary to pay the thirty percent (30%) of the aggregate Settled Claims
for all providers, not to exceed a total Provider Pool balance of Twelve Million
Dollars ($12,000,000).
(d) In the event the amount equal to thirty percent (30%) of the
aggregate Settled Claims for all providers (excluding the five percent (5%)
payments to providers described in Section 6(b)) is greater than Twelve Million
Dollars ($12,000,000), then the amount required to be deposited into the
Provider Pool in excess of Twelve Million Dollars ($12,000,000) shall be paid by
WellCare; provided, however, that WellCare will be permitted to reduce pro rata
the amount of the Hospital's remaining three (3) payments of five percent (5%)
as set forth in Section 6(b) below (and all other providers with Settled Claims
who may receive a similar payment) to the extent that WellCare's payments exceed
Twelve Million Dollars ($12,000,000), and provided, however, in no case shall
Hospital receive less than thirty percent (30%) of its Settled Claims under this
Agreement.
(e) In the event a balance remains in the Provider Pool as of six (6)
months after the Effective Date, then such balance will be distributed pro rata
to the Hospital and other providers which have entered into agreements to settle
their Settled Claims, based upon the amounts of their respective Settled Claims.
(f) Each health care provider that has Settled Claims shall have a
security interest for the benefit of all health care providers with Settled
Claims, which shall be a first priority lien with respect to the proceeds due to
WellCare from the Xxxxx Transaction and/or GHI Transaction and all amounts in
the Provider Pool, and a second priority lien on and security interest in the
Accounts Receivable, except to the extent there is no other lien on the Accounts
Receivable as of the date of this Agreement, the security interest shall be a
first priority lien. It shall be the responsibility of such providers to timely
and properly prepare and deliver the necessary documents for signature by all
necessary parties, and thereafter cause the appropriate filings to be made to
perfect such security interests, including, without limitation, a financing
statement in the form approved by Garfunkel, Wild & Xxxxxx, P.C. The Parties
shall cooperate with each other in the preparation of any and all documents
necessary to give effect to such security interest and such other terms and
obligations hereunder.
(g) Nothing contained herein shall prohibit or restrict WellCare from
settling or paying claims of any nature from sources of funds exclusive of those
deposited (or required to be deposited) in the Provider Pool.
6. Payment by WellCare of Settled Claims
(a) WellCare will pay Hospital thirty percent (30%) of the Hospital's
Settled Claims within ten (10) days of the Effective Date. If, however, thirty
percent (30%) of the aggregate Settled Claims for all providers exceeds the
funds then in the Provider Pool, then WellCare will pay the Hospital and all
other providers with Settled Claims on a pro rata basis from the funds then in
the Provider Pool and thereafter pay the Hospital and all other providers with
Settled Claims on a pro rata basis every thirty days (30) thereafter for the
period in which the Provider Pool is in effect. WellCare represents to Hospital
that providers with Settled Claims shall all receive payment from the Provider
Pool based upon the same proportion of their Settled Claims. Notwithstanding the
foregoing, in no case shall Hospital receive less than thirty percent (30%) of
the amount of its Settled Claims within six (6) months of the Effective Date and
Hospital shall continue to have the right to xxxx WCNY members for all
applicable copayments, coinsurance and non-covered services relating to Settled
Claims to the extent permitted under the applicable health plan and provider
agreement, and WellCare shall provide Hospital with necessary documentation to
xxxx the member accordingly. Notwithstanding anything to the contrary contained
herein, WellCare shall have the right to recoup, without any right of set-off,
any amounts paid under this Agreement to a Hospital if the Hospital shall have
failed to be a participating provider in good standing with WellCare at any time
during the period commencing on the date hereof and ending on the date six
months following the date hereof, and in such case of recoupment by WellCare,
this Agreement shall be null and void for all purposes. The foregoing condition
of a provider agreement shall not be applicable on or after the Effective Date
if Hospital has terminated the provider agreement for cause or WellCare has
terminated such provider agreement without cause.
(b) WellCare will pay Hospital an amount equal to five percent (5%) of
such Hospital's Settled Claims on each of February 1, 2000, February 1, 2001 and
February 1, 2002, provided, however, Hospital is at that time a participating
provider in good standing with WellCare. The foregoing condition of a provider
agreement shall not be applicable if Hospital has terminated the provider
agreement for cause or WellCare has terminated such provider agreement without
cause. The Parties understand and acknowledge that no such payment under this
Section 6(b) shall be made from the Provider Pool.
(c) Subject to regulatory approvals and in accordance with applicable
law, including the federal securities laws, the Hospital may elect to receive
WCMG common stock in lieu of one or more of the annual payments set forth in
Section 6(b). The price at which the WCMG common stock shall be valued shall be
the greater of the price of such common stock for the twenty (20) trading days
ending on February 2nd of the calendar year immediately preceding the applicable
payment date or $1.00 per share. Each Hospital receiving such WCMG common stock
shall agree to transfer restrictions on such shares for a mutually agreed upon
period after issuance, but not to exceed six (6) months. In the event the
Hospital elects to receive WCMG common stock in lieu of a cash payment, the
Parties agree to cooperate and use their best efforts to reach agreement
regarding the terms and conditions of such receipt of WCMG securities and to
accomplish the foregoing.
7. Mutual Releases
(a) Hospital together with its subsidiaries, affiliates, officers,
directors, shareholders, employees, agents, attorneys, representatives,
successors and assigns ("Hospital Releasor"), hereby releases and discharges the
WellCare Parties, together with their respective subsidiaries, affiliates,
directors, shareholders, employees, agents, attorneys, representatives,
successors and assigns ("WellCare Releasees") from (i) all indebtedness and
other financial obligations arising from the provision of services by each
Hospital to members of WCNY in any product line on or before April 30, 1999,
including any prospective adjustments pursuant to the New York Health Care
Reform Act ("NYCRA") for services rendered prior to May 1, 1999, and (ii) all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, rights to contribution, damages,
judgments, extends, executions, claims, and demands whatsoever, in law,
admiralty or equity, which each Hospital Releasor ever had, now has or hereafter
can, shall or may have against the WellCare Releasees, for upon, or by reason of
any matter, cause or things whatsoever relating to the matters referred to in
(a)(i) above from the beginning of the world to the day of the date of this
Agreement or arising hereafter as a result of or in connection with the matters
referred to in (a)(i) above. The foregoing release expressly excludes any claims
for payment that Hospital may have against independent practice associations,
including but not limited to those owned by Primergy, Inc., and other third
parties (such as Merit Behavioral Services, Access Managed Healthcare, Block
Vision, New York Medical Imaging, PharmaCare and Laboratory Corporation of
America) that have contracted with WellCare to provide or to arrange for the
provision of certain health care services (e.g., physician services or specialty
"carve-out" services, such as mental health services, chiropractic services,
laboratory services or pharmacy services) to HMO members of WCNY and expressly
excludes any action, suits, claims or demands arising from medical malpractice
or negligence.
(b) Each Hospital Releasor represents to the WellCare Releasees that
none of the liabilities, claims, causes of actions, costs or demands herein
released has been assigned to any person or entity.
(c) Each Hospital Releasor acknowledges that it may hereafter discover
facts different from, or in addition to, those that it now believes to be true,
with respect to all or any of the liabilities, claims, causes or action, costs
or demands herein released but nevertheless agrees that the releases set forth
herein shall be and remain effective in all respects, notwithstanding the
discovery of such different or additional facts.
(d) Each Hospital Releasor is forever barred and enjoined from
commencing, instituting or prosecuting any action or other adversary proceeding
in any court of law or equity, arbitration tribunal, or administrative forum,
directly or representatively, against the WellCare Releasees with respect to
any, some or all of the Settled Claims; provided however, each Hospital Releasor
and the WellCare Releasees retain all rights and remedies to enforce the terms
of this Agreement.
(e) The WellCare Parties together with their respective subsidiaries,
affiliates, officers, directors, shareholders, employees, agents, attorneys,
representatives, successors and assigns ("WellCare Releasors") hereby release
and discharge Hospital and its subsidiaries, affiliates, directors,
shareholders, employees, agents, attorneys, representatives, successors and
assigns ("Hospital Releasee") from (i) all indebtedness and other financial
obligations arising from the provision of services by Hospital to members of
WCNY in any product line on or before April 30, 1999, including any prospective
adjustments pursuant to the NYCRA for services rendered prior to May 1, 1999,
and (ii) all actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, rights to
contribution, damages, judgments, extends, executions, claims, and demands
whatsoever, in law, admiralty or equity, which the WellCare Releasors ever had,
now have or hereafter can, shall or may have against each Hospital Releasee, for
upon, or by reason of any matter, cause or things whatsoever relating to the
matters referred to in (e)(i) above from the beginning of the world to the day
of the date of this Agreement or arising hereafter as a result of or in
connection with the matters referred to in (e)(i) above. The foregoing release
expressly excludes any claims for payment that WellCare may have against
independent practice associations, including but not limited to those owned by
Primergy, Inc., and other third parties (such as Merit Behavioral Services,
Access Managed Healthcare, Block Vision, New York Medical Imaging, PharmaCare
and Laboratory Corporation of America) that have contracted with WellCare to
provide or to arrange for the provision of certain health care services (e.g.,
physician services or specialty "carve-out" services, such as mental health
services, chiropractic services, laboratory services or pharmacy services) to
HMO members of WCNY and expressly excludes any action, suits, claims or demands
arising from medical malpractice or negligence.
(f) The WellCare Releasors represent to each Hospital Releasee that
none of the liabilities, claims, causes of actions, costs or demands herein
released has been assigned to any person or entity.
(g) The WellCare Releasors acknowledge that they may hereafter
discover facts different from, or in addition to, those that they now believe to
be true, with respect to all or any of the liabilities, claims, causes or
action, costs or demands herein released but nevertheless agree that the
releases set forth herein shall be and remain effective in all respects,
notwithstanding the discovery of such different or additional facts.
(h) The WellCare Releasors are forever barred and enjoined from
commencing, instituting or prosecuting any action or other adversary proceeding
in any court of law or equity, arbitration tribunal, or administrative forum,
directly or representatively, against any Hospital Releasee with respect to any,
some or all of Settled Claims; provided however, the WellCare Releasors and each
Hospital Releasee retain all rights and remedies to enforce the terms of this
Agreement.
(i) Nothing contained herein shall be deemed to create any rights or
benefits, or constitutes a release of any kind whatsoever, for any non-Party.
8. Representations and Warranties of the Parties
(a) WellCare represents and warrants that the execution of this
Agreement and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action and will not violate
the provisions of its certificate of incorporation or by-laws or of any
agreement, law, rule, regulation or other commitment to which it is a party of
and by which it is bound.
(b) Hospital represents and warrants that the execution of this
Agreement and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action and will not violate
the provisions of its certificate of incorporation or by-laws or of any
agreement, law, rule, regulation or other commitment to which it is a party of
and by which it is bound.
9. Termination of Settlement
(a) The Parties agree that this Agreement is binding and irrevocable
(unless terminated pursuant to this Section 9 or as provided in Sections 1 and 2
herein) regardless of future events or changed circumstances of WellCare or any
of its subsidiaries or affiliates, and the Parties agree that the agreements and
covenants contained herein are fair, reasonable and adequate, and WellCare
believes that the agreements and covenants contained herein are in the best
interests of WellCare and its subsidiaries, affiliates, shareholders and
creditors.
(b) If this Agreement shall not be approved by SID and DOH then in
either of these events, this Agreement shall become null and void for all
purposes and all negotiations, transactions and proceedings connected with it
(i) shall be without prejudice to the rights of any Party, (ii) shall not be
deemed or construed as evidence or an admission or a concession by any Party of
any fact, matter or thing; and (iii) shall not be admissible in evidence or used
in any action or proceeding.
(c) If WellCare is unable to fund the Provider Pool with an initial
balance of not less than Ten Million Dollars ($10,000,000) for any reason,
including but not limited to the failure to consummate the Xxxxx Transaction
and/or the failure to consummate the GHI Transaction, this Agreement shall
become null and void for all purposes and all negotiations, transactions and
proceedings connected with it (i) shall be without prejudice to the rights of
any party, (ii) shall not be deemed or construed as evidence or an admission or
a concession by any party of any fact, matter or thing; and (iii) shall not be
admissible in evidence or used in any action or proceeding.
(d) If a case is commenced in respect to WellCare or any of its
subsidiaries or affiliates under Title 11 of the United States Code
(Bankruptcy), or a trustee, receiver or conservator, or the like is appointed
under Article 74 of the New York Insurance Law or any similar law, or by SID, or
any other regulatory body, and in the event of the entry of a final order of a
court of competent jurisdiction determining the transfer of money to the
Provider Pool and/or to the Hospital in payment of a Settled Claim, or any
portion thereof, on behalf of WellCare to be a preference, voidable transfer or
fraudulent transfer or similar transaction and any portion thereof is required
to be returned, then WellCare may move a court of competent jurisdiction to
vacate and set aside this Agreement and the releases contained herein, which
Agreement and releases shall be null and void, and the Parties shall be returned
to their respective positions as of April 30, 1999 and any payments made to the
Hospital shall be returned to WellCare. In any such event (or otherwise under
any such bankruptcy or similar proceeding), the debt owed by WellCare or its
estate to the Hospital shall not be valued on the basis of payments made
pursuant to sections 6(a) and (b) hereunder.
(e) Upon a default by WellCare in respect of any payment coming due
hereunder ("Default"), and unless such Default shall be cured within forty (40)
days after written notice thereof by fax and by certified mail, return receipt
requested, sent to:
President and Chief Executive Officer
WellCare of New York, Inc.
XX Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
and a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Garfunkel, Wild & Xxxxxx, P.C.
000 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
and a copy to:
Xxxxxx Xxxxx, Esq.
Xxxxx, Xxxxx & X'Xxxxxx, PA
0000 Xxxxx Xxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Hospital shall be entitled, upon not less than ten (10) days' notice to DOH, SID
and WellCare that Wellcare is in Default under the terms of this Agreement, to
file a Confession of Judgment against WellCare, in the form approved by
Garfunkel, Wild & Xxxxxx, P.C., for the full amount owed to Hospital under this
Agreement under Section 6(a) and/or (b). WellCare hereby consents to the entry
of such judgment without further notice other than as provided in the preceding
sentence. The original Confession of Judgment shall be signed on behalf of
WellCare and held by counsel for the Hospital.
10. Miscellaneous
(a) This Agreement is a compromise disposing of claims of each
Hospital, some or all of which may be controverted. This Agreement and all
negotiations and statements in connection herewith shall not be in any event
construed as or deemed to be evidence or an admission or concession on the part
of any Party of any liability whatever, and shall not be offered or received in
evidence in any action or proceeding in any court or other tribunal or used in
any way as an admission, concession or evidence of any liability by any party.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contracts executed and
performed in such State, without giving effect to the conflicts of laws
principles thereof.
(c) The Parties to this Agreement hereby consent to the jurisdiction
of the courts of the State of New York and the federal courts setting in New
York over them in any action to enforce this Agreement or any provision thereof.
(d) Each of the Parties has received independent legal advice from its
attorneys with respect to the advisability of entering into this Agreement and
the releases contained herein. Each of the Parties has made such investigation
of the facts pertaining to this Agreement and the releases herein and all other
matters pertaining thereto as it deems necessary.
(e) Each of the Parties to this Agreement acknowledges that this
Agreement is reached solely in relation to the subject matter herein and no
agreement reached herein shall constitute an admission or evidence in any other
matter among the parties to this Agreement or in any other matter or proceeding
in which any of the parties may be or become involved.
(f) Each of the Parties agrees to execute or cause their counsel to
execute any additional documents and take any further action which reasonably
may be required in order to consummate this Agreement, or otherwise fulfill the
obligations of the Parties hereunder. Each party is to bear its own costs and
attorney's fees incurred in connection with any such additional action.
(g) This Agreement represents and expresses the entire agreement
between the Parties with respect to the subject matter hereof and may not be
modified or amended except in a writing signed by WellCare and the affected
Hospital, so long as such modification or amendment does not adversely effect
other providers with respect to the payment of Settled Claims from the Provider
Pool or for payments similar to those set forth in Section 6(b).
(h) This Agreement shall be binding on and inure to the benefit of the
Parties and their respective successors, administrators or assigns, and upon any
corporation or other entity into or with which any Party may merge, consolidate
or reorganize. This Agreement and the releases contained herein is limited to
the Parties, the Hospital Releasors, the Hospital Releasees, the Wellcare
Releasors and the Wellcare Releasees and any other third party beneficiary of
this Agreement and the releases contained herein is expressly excluded.
(i) The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
(j) This Agreement may be executed in counterparts, each of which
shall be deemed an original instrument, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day
and year first above written.
GARFUNKEL, WILD & XXXXXX, P.C. THE WELLCARE MANAGEMENT
GROUP, INC.
By: /s/ Xxxxxxxxx X. Xxxxxx, Esq. By: /s/ Xxxxx Xxxxxx
--------------------------------- --------------------
Xxxxxxxx X. Xxxxxx, Esq. Xxxxx Xxxxxx
000 Xxxxx Xxxx Xxxx Acting Chief Executive Officer
Great Neck, New York 11021 Park West/Xxxxxx Avenue Extension
(000) 000-0000 Xxxxxxxx, XX 00000
Attorneys for Healthcare Association of New (000) 000-0000
York State and Northern Metropolitan Hospital
Association
XXXXXX XXXXX, ESQ. WELLCARE OF NEW YORK, INC.
By: /s/ Xxxxxx Xxxxx, Esq. By: /s/ Xxxx Xxx Xxxxxxxx-Xxxxxx
--------------------------- --------------------------------
Xxxxxx Xxxxx, Esq. Xxxx Xxx Xxxxxxxx-Xxxxxx
Attorney for Xxxxx X. Xxxxx, M.D., F.A.C.C. Chief Executive Officer
. Park Xxxx/Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
(000) 000-0000
HOSPITAL
By: _____________________________
Title____________________________
Hospital_________________________
EXHIBIT A
Name and Address of Hospital Settled Claim Amount
---------------------------- --------------------
SCHEDULE "D"
NOTIFICATION AND CONTROL AGREEMENT
THIS NOTIFICATION AND CONTROL AGREEMENT (the "Agreement"), dated as of June
___, 1999, by and among The WellCare Management Group, Inc. ("WCMG"), WellCare
of New York, Inc. ("WCNY"which, with WCMG, are collectively known herein as
"WellCare") and the United States Trust Company of New York, a bank and trust
company organized under the New York banking law, in its capacity as escrow
agent (the "Escrow Agent") and in its capacity as a bank (the "Bank") at which
WellCare maintains the Collateral Account.
A. WellCare has granted to the Escrow Agent a security interest in the
Collateral, pursuant to, and as more particularly described in, the Escrow and
Security Agreement, dated as of June __, 1999, by and between WellCare, the
Escrow Agent, Garfunkel, Wild & Xxxxxx, P.C. ("GWT"), counsel to Healthcare
Association of New York State ("HANYS") and Northern Metropolitan Hospital
Association ("NORMET"), on behalf of the member hospitals of HANYS and NORMET
listed on Schedule "A" annexed thereto, and The Medical Society of the State of
New York ("MSSNY"), on behalf of the providers listed on Schedule "B" annexed
thereto (as the same may hereafter be amended, supplemented or otherwise
modified from time to time, the "Escrow Agreement;" terms defined in the Escrow
Agreement and not otherwise defined herein are used herein as therein defined).
B. Terms defined in Articles 8 and 9 of the Uniform Commercial Code as in
effect in the State of New York (the "UCC") are used in this Agreement
(including, without limitation, paragraph A above) as defined in Articles 8 and
9, respectively, of the UCC.
C. Pursuant to the Escrow Agreement, the Escrow Agent has required the
execution and delivery of this Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree and acknowledge as follows:
1. Notice of Security Interest. WellCare and Escrow Agent are entering into
this Agreement to perfect, and confirm the first priority lien of, the Escrow
Agent's security interest in the Collateral on behalf of the Secured Parties (as
defined in the Escrow Agreement). The Bank agrees to promptly make all necessary
entries or notations in its books and records to reflect the Escrow Agent's
security interest in the Collateral and to apply any value distributed on
account of any Collateral as provided in the Escrow Agreement without further
consent from WellCare. The Bank acknowledges that the Escrow Agent has sole
control over the Collateral Account in accordance with the terms of the Escrow
Agreement.
2. Separate Account; Escrow Agent Representations and Warranties. (a) The
Escrow Agent hereby instructs the Bank, and the Bank hereby confirms and agrees
that the Collateral Account is to be maintained separately at all times.
(b) The Escrow Agent hereby represents and warrants that it has
acquired its security interest in, and security entitlement to, the Collateral
for value and without notice of any adverse claim thereto. Without limiting the
generality of the foregoing, the Collateral is not, to the Escrow Agent's
knowledge, subject to any lien granted by the Escrow Agent in favor of any
securities intermediary (including, without limitation, the Bank or the Federal
Reserve Bank of New York) and the Escrow Agent has not knowingly or purposefully
caused or permitted the Collateral to become subject to any lien created by or
arising through the Bank.
3. Control. The Bank hereby agrees, upon written direction from the Escrow
Agent and in accordance with the terms of the Escrow Agreement, and without
further consent from WellCare, (a) to comply with all instructions, entitlement
order and directions of any kind originated by the Escrow Agent concerning the
Collateral, to liquidate or otherwise dispose of the Collateral as and to the
extent directed by the Escrow Agent and pay over to the Escrow Agent all
proceeds and other value therefrom or otherwise distributed with respect thereto
without any set off or deduction, and (b) except as otherwise directed by the
Escrow Agent, not to comply with the instructions or directions of WellCare or
any other person.
4. Other Agreements; Termination; Successor Escrow Agent. The Bank shall
simultaneously send to the Escrow Agent, WellCare, GWT and MSSNY copies of all
notices given and statements rendered concerning the Collateral Account. So long
as the Escrow Agreement remains in effect, the Bank shall not terminate the
Collateral Account without thirty (30) days' prior written notice to the other
parties thereto and the Escrow Agent. In the event of any conflict between the
provisions of this Agreement and any other agreement governing the Collateral
Account, the provisions hereof shall control. In the event the Escrow Agent no
longer serves as Escrow Agent for the Collateral, the Collateral Account shall
be transferred to a successor escrow agent appointed in accordance with the
terms of the Escrow Agreement, provided that prior to such transfer, such
successor escrow agent executes an agreement that is in all material respects
the same as this Agreement or is otherwise in form and substance satisfactory to
the Escrow Agent.
5. Indemnity. WCMG and WCNY shall jointly and severally indemnify and hold
the Escrow Agent and the Bank harmless from any and all losses, claims, damages,
liabilities, expenses and fees, including reasonable counsel fees, resulting
from the execution of or performance under this Agreement and delivery by the
Escrow Agent of all or any part of the Collateral to the Bank pursuant to this
Agreement, except claims, losses or liabilities resulting from the Escrow
Agent's or the Bank's gross negligence, bad faith or willful misconduct as
determined by a final judgment of a court of competent jurisdiction. The
provisions of this Section 5 shall survive the termination of this Agreement.
6. Protection of Bank. Except as required by Section 3 hereof, the Bank
shall have no duty to determine that the amount and form of assets constituting
Collateral comply with any applicable requirements. The Bank may rely and shall
be protected in acting upon any notice, instruction, or other communication
which it reasonably believes to be genuine and authorized.
7. Termination/Release of Collateral. This Agreement shall terminate
automatically upon receipt by the Bank of written notice executed by two
officers of the Escrow Agent holding titles of Vice President or higher that:
(a) the Escrow Agreement has terminated, and (b) all of the Collateral has been
released, and the Bank shall thereafter be relieved of all duties and
obligations hereunder.
8. Waiver and Subordination of Rights. The Bank hereby waives its right to
set off any obligations of WellCare to the Bank against any or all assets held
by the Escrow Agent as Collateral, and hereby agrees that any and all liens,
encumbrances, claims or security interests which the Bank may have against the
Collateral, either now or in the future are and shall be subordinate and junior
to the prior payment in full of all obligations of WellCare now or hereafter
existing under the Settlement Agreements (as defined in the Escrow Agreement)
and all other documents related thereto whether for principal, interest,
indemnities, fees, premiums, expenses or otherwise. The Bank will not agree with
any third party that the Bank will comply with any instructions or directions of
any kind concerning the Collateral originated by such third party without the
prior written consent of the Escrow Agent. Except for the claims and interests
of the Escrow Agent in the Collateral, the Bank does not know of any claim to or
security interest or other interest in the Collateral.
9. Expenses. WCMG and WCNY, jointly and severally, shall pay upon demand
all fees, costs and expenses (including reasonable fees and expenses of counsel)
of enforcing the Bank's rights and remedies upon any breach (by the Escrow Agent
or WellCare) of any of the provisions of this Agreement.
10. Notices. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder must be in writing and will be
effective upon receipt if delivered personally, or if sent by facsimile
transmission with confirmation of delivery, or by nationally recognized
overnight courier service with confirmation of delivery, to WellCare's and the
Escrow Agent's respective addresses as set forth in the Escrow Agreement, and to
the Bank's address as set forth below, or to such other address as any party may
give to the others in writing for such purpose.
11. Changes in Writing. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by any party therefrom
will be effective unless made in writing signed by the parties hereto, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
12. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
13. Counterparts. This Agreement may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts (including by
facsimile transmission), but all such copies shall constitute one and the same
instrument.
14. Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
15. Governing Law and Jurisdiction. This Agreement has been delivered to
and accepted by the Escrow Agent and will be deemed to be made in the State of
New York. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. Each of the parties hereby irrevocably submits for itself and its property
in any legal action or proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the exclusive general
jurisdiction and venue of the courts of the State of New York, the courts of the
United States of America in New York, and appellate courts from any thereof.
16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) OF ANY NATURE RELATING TO THIS
AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH PARTY HERETO
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE WELLCARE MANAGEMENT GROUP, INC.
By: _____________________________
Name:
Title:
WELLCARE OF NEW YORK, INC.
By: _____________________________
Name:
Title:
GARFUNKEL, WILD & XXXXXX, P.C.,
as counsel to Healthcare Association of
New York State and Northern Metropolitan
Hospital Association, on behalf of the
Hospitals listed on Schedule "A" annexed
hereto
By: _____________________________
Name: Xxxxxxxx X. Xxxxxx
Title: A Member of the Firm
THE MEDICAL SOCIETY OF THE STATE OF NEW
YORK, on behalf of the Providers listed
on Schedule "B" annexed hereto
By: _____________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK
By:_______________________________
Name:
Title:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Additional Details for Bank Notice:
SCHEDULE "E"
SCHEDULE "F"
UNITED STATES TRUST COMPANY OF NEW YORK
WELLCARE COLLATERAL ACCOUNT
Escrow Agent
Annual Administration Fee $10,000
Extraordinary Services:
Extraordinary services or those not specifically contemplated within the
foregoing proposal may be subject to additional charges.
PST/pg
(rev:kk)
