HomeMy WebLinkAboutC-5529 - Administrative Services Agreement, Renewal Amendment2018 RENEWAL AMENDMENT TO
ADMINISTRATIVE SERVICES AGREEMENT
This Amendment ("Amendment") dated as of January 1, 2018 (the "Amendment Effective Date") amends the
Administrative Services Agreement (the "Agreement") entered into as of January 1, 2013, as amended, by and between
Meritain Health, Inc. ("Meritain") and City of Newport Beach ("Client") as follows:
ARTICLE II. TERM:TERMINATION
Notwithstanding anything to the contrary in the Agreement, the parties acknowledge that the renewal Term of the
Agreement begins as of the Amendment Effective Date and continues through and including December 31, 2020
("Renewal Term"), and Section 2.1 of the Agreement is hereby deemed amended to reflect such Renewal Term. Except
as specifically modified by this Amendment, all other provisions concerning the Term and/or termination of this
Agreement, including as set forth in section 2. 1, remains in full force and effect.
It. ARTICLE V. FEES
2.1 Article V of the Agreement is hereby deleted in its entirety and replaced with the following:
"The following services will be provided under this Agreement at the fees and charges indicated below. These fees and
charges are collectively referred to in this Agreement as "Service Rates." Unless otherwise stated, the monthly Service
Rates are calculated by multiplying the following rates by the applicable number of employees enrolled in the Plan each
month and adding the result to the specific fees stated below or elsewhere in this Agreement.
The rates set forth in this Article V. are based on information provided to Meritain by the Client, including without limitation,
information regarding the average number of employees enrolled in the Plan. Meritain has relied on that information in
developing these rates. Should there be a material change in this information, Meritain shall be entitled to adjust these
rates consistent with its customary rates. All fees listed in this Agreement are subject to change in the event the number
of covered employee lives changes by twenty-five (25%) or more during the Term of this Agreement or in the event the
fees and expenses described in this Agreement change during the Term.
The Client agrees to pay the Service Rates set forth in this Agreement subject to the terms and conditions of this
Agreement, as well as other applicable agreements Meritain or its affiliates may have with any network, insurer and/or
prescription drug benefit manager.
Per Employee Per Month
unless otherwise specified)
Broker Fee(s) (to be remitted pursuant to Section (c) Remittance Services Below) - $100.00 10%
enrollment fee
Retiree Premium Billing — Dental & Vision $5.09
Retiree Enrollment— Dental & Vision $6.35
Optional and Non -Standard Administrative Fees and Premiums:
Annual Open Enrollment Processing - $1,100.00 flat fee
Printing Fees — To be billed at cost.
AdHoc Reporting and/or Custom IT Services — $150.00 per hour
Other Fees and Services
(a) Out -of -Network Discount Program Fees — Fees to be paid to out -of -network discount programs will be
billed by Meritain on a contingent fee basis, based on the program's percentage fee of savings resulting from the discount
program.
(b) Remittance Services — Upon Client's written request and if agreed to by Meritain, Meritain may collect
certain fees and premiums from Client for remittance to a third party with whom Client has a direct relationship, e.g. a
broker commission. In these instances, Meritain will pass-through all fees and will not collect or retain an administrative or
0118 -City of Newport Beach -Renewal -07072017 1 2018 Renewal
service fee. Meritain has no relationship with any such third parties, and assumes no risk or liability with respect to such
third parties' services or Client's payment of such fees.
(c) Other Fees and Services — The Client agrees to pay vendors' fees for the following additional services: (i)
fees for independent case review, (ii) contingency fees for subrogation services, and (iii) contingency fees and other fees
for cost management vendors, claim auditors, bill negotiators and discount programs.
In addition, Exhibit B sets forth a description of contingency fees, other administrative fees or similar compensation which
Meritain may receive in connection with these vendor services.
Payment of Fees — Client shall pay Meritain all fees, costs, and other charges as set forth in this Agreement, and any
other fees, costs, or charges that may be set forth in any other Schedule attached hereto (collectively, the "Fees") on the
first (1st) day of the month or on such other date agreed to in writing by the parties, in accordance with Meritain's then -
standard policies, with respect to EFT withdrawals. Meritain will provide appropriate documentation regarding the Fees
due and owed prior to the due date for that month's services based on eligible employees at the time the invoice is
generated. If Client elects EFT withdrawal from Meritain for the payment of Fees, Client authorizes Meritain to withdraw
the Fees from its bank account on the due date for that month's services. Adjustments to eligibility will be accounted for in
the next invoice processing period. If the Fees are not received by Meritain within ten (10) days of due date for that
month's services, Meritain may charge a one and one-half percent (1.5%) late charge per month calculated from the first
day of the month on all unpaid amounts.
All other fees and requirements of this Article V. unless specifically modified by the Amendment remain in full force and
effect.
�37117Yi:
The Agreement is hereby amended by the deletion of Exhibit B in its entirety, and is replaced with the attached new
Exhibit B.
Any capitalized term not defined in this Amendment shall have the meaning ascribed to it in the Agreement. Except as
specifically amended by the terms of this Amendment, all surviving terms and provisions of the Agreement are hereby
ratified and confirmed and the Agreement, as modified by this Amendment, remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date indicated below.
MERITAIN HEALTH, INC.
Name: David C. Parker
Title: Head of National Accounts
Date: 07/07/2017
Attest:
1y� �
Leilani 1. Brown, MMC, City Clerk�,�
Date -
011 8-city
ate:
0118-City
City of Newport Beach
Name' Dave Kiff
Title: City Manager
Date: 12-1— I:?,!!
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date•
V'
Aaro4C.ity Attorney
2018 Renewal
EXHIBIT B
DISCLOSURE NOTICE REGARDING INSURANCE COMMISSIONS AND OTHER COMPENSATION
U.S. Department of Labor rules permit the receipt of insurance commissions and other compensation by service providers
such as Meritain (and its affiliates) if proper disclosure is given and an appropriate independent Plan fiduciary
acknowledges in writing receipt of the information and approves the transaction. The commissions and other
compensation to be paid to Meritain are set forth in this Agreement. By signing this Agreement and any Renewal
Schedules of Services and Fees, Client certifies that it is an independent fiduciary of the Plan and that it acknowledges in
writing receipt of the following information and approves the transactions referenced herein.
A. Statement of Affiliation
Prodigy Health Group, Inc. is a diversified health care services holding company whose subsidiaries include American
Health Holding, Inc., Scrip World, LLC, Precision Benefit Services, Inc., Meritain Health, Inc. and PERFORMAX, Inc. Each
affiliate is free to recommend to a client, products and services offered by other companies, which may include another
affiliate; however, no affiliate is required to recommend an affiliate and no affiliate is limited or restricted in recommending
the products and/or services of any vendor. Affiliates may be entitled to reasonable commissions and fees from other
companies, including affiliates, and such commissions and fees are earned in the ordinary course of business in arms'
length transactions. In addition, certain inter -company agreements exist amongst the affiliates to provide for the
exchange of certain goods, services, and leases of real property at market-based rates of compensation.
Other Fees
From time to time, Meritain may engage third party vendors to perform or provide services in connection with this
Agreement. In some cases Meritain will pay the vendor as a subcontractor out of fees it has collected pursuant to this
Agreement.
When Meritain provides or arranges for subrogation services. Client agrees to pay Meritain an administrative fee of 25%
of the gross savings resulting from such services.
In the event Meritain engages an out -of -network discount program, claim auditor, independent case reviewer, cost
management vendor, bill negotiator, discount program or other contingency fee vendor to provide services on behalf of
the Plan, Meritain shall be entitled to retain a contingency fee up to 25% of the net savings resulting from the
engagement.
In cases where Meritain provides direct services, through its employees and agents, to negotiate bills, reduce claim
amounts, access additional discounts or otherwise increase savings on behalf of the Plan, Meritain shall be entitled to
retain a contingency fee up to 25% of the savings resulting from such services.
The disclosures set forth in this Exhibit B, together with the disclosures set forth in Article V. of this Agreement, represent
Meritain's best reasonable estimate of the total amount of all direct and indirect compensation Meritain may receive in
connection with this Agreement. The actual amount may vary during the course of this Agreement based upon changes
in the number of participants, utilization and other factors external to this Agreement. With respect to all compensation
Meritain actually receives as a result of this Agreement, Meritain will disclose such amounts to Client annually, upon
request, to the extent required to assist Client in filing its Form 5500.
0118 -City of Newport Beach -Renewal -07072017 3 2018 Renewal
2017 RENEWAL AMENDMENT TO
ADMINISTRATIVE SERVICES AGREEMENT
This Amendment ("Amendment") dated as of January 1, 2017 (the "Amendment Effective Date") amends the
Administrative Services Agreement (the "Agreement") entered into as of January 1, 2013, as amended, by and between
Meritain Health, Inc. ("Meritain") and City of Newport Beach ("Client") as follows:
ARTICLE IL TERM:TERMINATION
Notwithstanding anything to the contrary in the Agreement, the parties acknowledge that the renewal Tenn of the
Agreement begins as of the Amendment Effective Date and continues through and including December 31, 2017
("Renewal Term"), and Section 2.1 of the Agreement is hereby deemed amended to reflect such Renewal Term. Except
as specifically modified by this Amendment, all other provisions concerning the Term and/or termination of this
Agreement, including as set forth in section 2.1, remains in full force and effect.
II. ARTICLE III. MERITAIN'S RESPONSIBILITIES
2.1 Section 3.14 of the Agreement is hereby deleted in its entirety and replaced with the following new
Section 3.14:
"3.14 Offer the use of one or more preferred provider network or other provider discount arrangements (collectively
"PPNs") as a Covered Service under this Agreement. The Client acknowledges that the decision to use a PPN and which
PPN(s) to use is at the sole discretion of the Client. In addition, Meritain makes no representations regarding the value or
cost effectiveness of any PPN adopted by the Client. The Client also acknowledges that each PPN it selects as a
Covered Service, and not Meritain, is responsible for its own provider credentialing, contracting with providers, recruiting,
licensing, accreditation, maintaining adequate staffing, practice and professional standards and all other activities
pertinent to the responsibilities accorded PPNs. Access to the PPN and PPN discounts is at all times contingent on
Client's compliance with the terms of the PPN and Provider contracts, including without limitation timely funding of Claims
in accordance with the Provider's contracted rates. Sutter Health and Affiliates, the dominant health system in much of
Northern California, uses its bargaining power to insist on unique requirements to participate in participating provider
networks. Aetna's contract with Sutter requires payment of claims by the Plan that Sutter deems medically necessary or
not experimental or investigational regardless of the Plan's determination (but does not require payment for services the
Plan expressly excludes from coverage)."
2.2 The Agreement is hereby amended by the addition of the following Section 3.24:
"3.24 State Reporting and Remittance — Meritain shall file, on Client's behalf, State Reports, and shall remit Client's
payments of State Assessments, under Applicable State Law, to the extent that Meritain's then -current policies and
procedures support a particular State Report or State Assessment. For the purposes of this Section: (i) "State Reports"
means those reports required to be filed under Applicable State Law with respect to a Plan's eligible Participants or
Claims activity other than any required by any State department of revenue; (ii) "State Assessments" means
assessments or surcharges related to a Plan's Participants or Claims activity levied directly on Client or the Plan other
than any required by any State department of revenue; and (iii) "Applicable State Law" means the Applicable Laws of
any State. Client acknowledges and agrees that: (i) neither Meritain nor its affiliates process or adjudicate claims covered
under any pharmacy benefits plan, and any such claims will not be included within the scope of Meritain's obligations
under this clause; and (ii) Meritain's obligations under this clause are at all times contingent upon Client's timely provision
of all information and funding required for State Reports and State Assessments."
III. ARTICLE IV. THE CLIENT'S RESPONSIBILITIES
4.1: 3.1 Section 4.1 of the Agreement is hereby deleted in its entirety and replaced with the following new section
"4.1 Maintain and furnish to Meritain current, accurate Plan eligibility and coverage information, and submit to Meritain
written notice of any changes respecting the status of any of the Participants within fifteen (15) days after the Client
becomes aware of any such change. When dependents reach the maximum age specified in the Plan Document, such
dependent will no longer be a Participant, and Client hereby directs Meritain to automatically terminate such dependents
from eligibility under the Plan without notice or further instruction from Client. Upon termination of dependent under this
section Meritain will provide notice of such termination to client. Such information shall be provided in a format reasonably
acceptable to Meritain and shall include the following with respect to each Participant: name and address, social security
0117 -City of Newport Beach -Renewal -01122017 1 2016 Renewal
number, date of birth, type of coverage, sex, relationship to employee, changes in coverage, date coverage begins or
ends, and any other information necessary to determine eligibility and coverage levels under the Plan."
IV. ARTICLE V. FEES
4.1 Article V of the Agreement is hereby deleted in its entirety and replaced with the following:
"The following services will be provided under this Agreement at the fees and charges indicated below. These fees and
charges are collectively referred to in this Agreement as "Service Rates." Unless otherwise stated, the monthly Service
Rates are calculated by multiplying the following rates by the applicable number of employees enrolled in the Plan each
month and adding the result to the specific fees stated below or elsewhere in this Agreement.
The rates set forth in this Article V. are based on information provided to Meritain by the Client, including without limitation,
information regarding the average number of employees enrolled in the Plan. Meritain has relied on that information in
developing these rates. Should there be a material change in this information, Meritain shall be entitled to adjust these
rates consistent with its customary rates. All fees listed in this Agreement are subject to change in the event the number
of covered employee lives changes by twenty-five (25%) or more during the Term of this Agreement or in the event the
fees and expenses described in this Agreement change during the Term.
The Client agrees to pay the Service Rates set forth in this Agreement subject to the terms and conditions of this
Agreement, as well as other applicable agreements Meritain or its affiliates may have with any network, insurer and/or
prescription drug benefit manager.
Per Employee Per Month
(unless otherwise specified)
Broker Fee(s) (to be remitted pursuant to Section (c) Remittance Services Below) - 10%
$100.00 enrollment fee
Retiree Premium Billing — Dental & Vision $5.09
Retiree Enrollment— Dental & Vision $6.35
Optional and Non -Standard Administrative Fees and Premiums:
Annual Open Enrollment Processing - $1,100.00 flat fee
Printing Fees — To be billed at cost.
All other fees and requirements of this Article V, unless specifically modified by the Amendment remain in full force and
effect.
V. EXHIBIT B
The Agreement is hereby amended by the deletion of Exhibit B in its entirety, and is replacement with the attached new
Exhibit B.
Any capitalized term not defined in this Amendment shall have the meaning ascribed to it in the Agreement. Except as
specifically amended by the terms of this Amendment, all surviving terms and provisions of the Agreement are hereby
ratified and confirmed and the Agreement, as modified by this Amendment, remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date indicated below.
MERITAIN HEALTH, INC.
Title:
Date:
0117 -City of Ne ort Beacp-Renewal-01122017
rf,�J
Leilani 1. BrowCj��
Date: 3J 1'f
CITY OF W RT BEAC
Name: Kevin Muldoon
Title: Mayor
Date:
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE 2016 Renewal
Date: 1/H
By:r
Aaron Co. arp, City Attorney
,4r3
EXHIBIT B
DISCLOSURE NOTICE REGARDING INSURANCE COMMISSIONS AND OTHER COMPENSATION
U.S. Department of Labor rules permit the receipt of insurance commissions and other compensation by service providers
such as Meritain (and its affiliates) if proper disclosure is given and an appropriate independent Plan fiduciary
acknowledges in writing receipt of the information and approves the transaction. The commissions and other
compensation to be paid to Meritain are set forth in this Agreement. By signing this Agreement and any Renewal
Schedules of Services and Fees, Client certifies that it is an independent fiduciary of the Plan and that it acknowledges in
writing receipt of the following information and approves the transactions referenced herein.
A. Statement of Affiliation
Prodigy Health Group, Inc. is a diversified health care services holding company whose subsidiaries include American
Health Holding, Inc., Scrip World, LLC, Precision Benefit Services, Inc., Meritain Health, Inc. and PERFORMAX, Inc. Each
affiliate is free to recommend to a client, products and services offered by other companies, which may include another
affiliate; however, no affiliate is required to recommend an affiliate and no affiliate is limited or restricted in recommending
the products and/or services of any vendor. Affiliates may be entitled to reasonable commissions and fees from other
companies, including affiliates, and such commissions and fees are earned in the ordinary course of business in arms'
length transactions. In addition, certain intercompany agreements exist amongst the affiliates to provide for the
exchange of certain goods, services, and leases of real property at market-based rates of compensation.
Other Fees
From time to time, Meritain may engage third party vendors to perform or provide services in connection with this
Agreement. In some cases Meritain will pay the vendor as a subcontractor out of fees it has collected pursuant to this
Agreement.
When Meritain provides or arranges for subrogation services, Client agrees to pay Meritain an administrative fee of 25%
of the gross savings resulting from such services
In the event Meritain engages an out -of -network discount program, claim auditor, independent case reviewer, cost
management vendor, bill negotiator, discount program or other contingency fee vendor to provide services on behalf of
the Plan, Meritain shall be entitled to retain a contingency fee up to 25% of the net savings resulting from the
engagement.
In cases where Meritain provides direct services, through its employees and agents, to negotiate bills, reduce claim
amounts, access additional discounts or otherwise increase savings on behalf of the Plan, Meritain shall be entitled to
retain a contingency fee up to 25% of the savings resulting from such services.
The disclosures set forth in this Exhibit B, together with the disclosures set forth in Article V. of this Agreement, represent
Meritain's best reasonable estimate of the total amount of all direct and indirect compensation Meritain may receive in
connection with this Agreement. The actual amount may vary during the course of this Agreement based upon changes
in the number of participants, utilization and other factors external to this Agreement. With respect to all compensation
Meritain actually receives as a result of this Agreement, Meritain will disclose such amounts to Client annually, upon
request, to the extent required to assist Client in filing its Form 5500.
0117-Chy of Newport Beach -Renewal -01122017 3 2016 Renewal
2015 RENEWAL AMENDMENT TO
ADMINISTRATIVE SERVICES AGREEMENT
This Amendment ("Amendment") dated as of January 1, 2015 ("Effective Date") amends the Administrative Services
Agreement ("Agreement") entered into as of January 1, 2013, by and between Meritain Health, Inc. ("Meritain") and
City of Newport Beach ("Client') as follows:
ARTICLE II. TERM;TERMINATION
The parties acknowledge that the renewal Term of this Agreement begins as of the Effective Date and continues
through and including December 31, 2015 ("Renewal Term"). Except as specifically modified by this Amendment, all
other provisions concerning the Term and/or termination of this Agreement, as specifically set forth in section 2.1,
remains in full force and effect.
II. ARTICLE V. FEES
A. The fees for the one (1) year renewal Term beginning January 1, 2015 through December 31, 2015 are as set
forth below:
Per Employee Per Month
*unless otherwise noted
Retiree Premium Billing — Dental & Vision $4.85
Retiree Enrollment — Dental & Vision $6.05
Consulting Fee Broker — All Services 10%
B. Article V. Fee — Optional and Non -Standard Administrative Fees and Premiums is amended as follows:
Optional and Non -Standard Administrative Fees and Premiums:
Annual Enrollment Package (Preparation & Distribution) - $5.78 per employee per package
Annual Enrollment Processing Fee - $1,100.00
Printing Fees - To be billed at cost.
All other fees and requirements of this Article V, unless specifically modified by this Amendment, remain in full force
and effect.
III. EXHIBIT B
Exhibit B of the Agreement is attached to this Amendment.
Any capitalized term not defined in this Amendment shall have the meaning ascribed to it in the Agreement. Except
as specifically amended by the terms of this Amendment, all surviving terms and provisions of the Agreement are
hereby ratified and confirmed and the Agreement, as modified by this Amendment, remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date indicated below.
Meritain Health, Inc.
Marisa Reynolds
Head of Meritain Specialty Products
Date: 12/18/2014
City of Newport Beach
Dave Kiff
City Manager
Date:
APPROVED AS TO FORM:
CITY ATTORN Y'S OFFICE
Date: r
By:
Aar n P. Harp F��S
CityWtorney
ATTEST:
Date:
By:
agk,14
N.—
Leilani I. Brown
City Clerk
'-Ai-i FO
Attachments: Exhibit B — Disclosure Notice Regarding Insurance
Commissions and Other Compensation
2
Exhibit B
DISCLOSURE NOTICE REGARDING INSURANCE COMMISSIONS AND OTHER COMPENSATION
U.S. Department of Labor rules permit the receipt of insurance commissions and other compensation by service
providers such as Meritain (and its affiliates) if proper disclosure is given and an appropriate independent Plan
fiduciary acknowledges in writing receipt of the information and approves the transaction. The commissions and
other compensation to be paid to Meritain are set forth in this Agreement. By signing this Agreement and any
Renewal Schedules of Services and Fees, Client certifies that it is an independent fiduciary of the Plan and that it
acknowledges in writing receipt of the following information and approves the transactions referenced herein.
A. Statement of Affiliation
Prodigy Health Group, Inc. is a diversified health care services holding company whose subsidiaries include American
Health Holding, Inc., Scrip World, LLC, Precision Benefit Services, Inc., Meritain Health, Inc. and PERFORMAX, Inc.
Each affiliate is free to recommend to a client, products and services offered by other companies, which may include
another affiliate; however, no affiliate is required to recommend an affiliate and no affiliate is limited or restricted in
recommending the products and/or services of any vendor. Affiliates may be entitled to reasonable commissions and
fees from other companies, including affiliates, and such commissions and fees are earned in the ordinary course of
business in arms' length transactions. In addition, certain inter -company agreements exist amongst the affiliates to
provide for the exchange of certain goods, services, and leases of real property at market-based rates of
compensation.
Other Fees
From time to time, Meritain may engage third party vendors to perform or provide services in connection with this
Agreement. In some cases Meritain will pay the vendor as a subcontractor out of fees it has collected pursuant to this
Agreement.
When Meritain provides or arranges for subrogation services, Client agrees to pay Meritain an administrative fee of
25% of the gross savings resulting from such services.
In the event Meritain engages an out -of -network discount program, claim auditor, independent case reviewer, cost
management vendor, bill negotiator, discount program or other contingency fee vendor to provide services on behalf
of the Plan, Meritain shall be entitled to retain a contingency fee up to 25% of the net savings resulting from the
engagement.
In cases where Meritain provides direct services, through its employees and agents, to negotiate bills, reduce claim
amounts, access additional discounts or otherwise increase savings on behalf of the Plan, Meritain shall be entitled to
retain a contingency fee up to 25% of the savings resulting from such services.
The disclosures set forth in this Exhibit B, together with the disclosures set forth in Article V. of this Agreement,
represent Meritain's best reasonable estimate of the total amount of all direct and indirect compensation Meritain may
receive in connection with this Agreement. The actual amount may vary during the course of this Agreement based
upon changes in the number of participants, utilization and other factors external to this Agreement. With respect to
all compensation Meritain actually receives as a result of this Agreement, Meritain will disclose such amounts to
Client annually, upon request, to the extent required to assist Client in filing its Form 5500.
2014 RENEWAL AMENDMENT TO
ADMINISTRATIVE SERVICES AGREEMENT
This Amendment ("Amendment") dated as of January 1, 2014 ("Effective Date') amends the Administrative Services
Agreement ("Agreement") entered into as of January 1, 2013, by and between Meritain Health, Inc. ("Meritain") and
City of Newport Beach ("Client") as follows:
I. ARTICLE II. TERMJERMINATION
The parties acknowledge that the renewal Term of this Agreement begins as of the Effective Date and continues
through and including December 31, 2014 (Renewal Term"). Except as specifically modified by this Amendment, all
other provisions concerning the Term and/or termination of this Agreement, as specifically set forth in section 2.1,
remains in full force and effect.
II. ARTICLE V. FEES
A. The fees for the one (1) year renewal Term beginning January 1, 2014 through December 31, 2014 are as set
forth below:
Per Employee Per Month
'unless otherwise noted
Retiree Premium Billin — Dental & Vision $4.65
Retiree Enrollment — Dental & Vision $5.80
Consulting Fee (Broker} — All Services 10%
B. Article V. Fee — Optional and Non -Standard Administrative Fees and Premiums is deleted in its entirety and is
replaced with the following.
Optional and Non -Standard Administrative Fees and Premiums:
Annual Enrollment Package (Preparation & Distribution) - $5.78 per employee per package
Annual Enrollment Processing Fee - $1,100.00
Printing Fees - To be billed at cost.
III. EXHIBIT A
Exhibit A of the Agreement is deleted in its entirety and is replaced by Exhibit A attached to this Amendment.
IV. EXHIBIT B
Exhibit B of the Agreement is deleted in its entirety and is replaced by Exhibit B attached to this Amendment.
Any capitalized term not defined in this Amendment shall have the meaning ascribed to it in the Agreement. Except
as specifically amended by the terms of this Amendment, all surviving terms and provisions of the Agreement are
hereby ratified and confirmed and the Agreement, as modified by this Amendment, remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date indicated below.
Meritain Health, Inc.
Melissa Elwood
Regional President
Date: 11/23/2013
City of Newport Beach
Print Name: Dave Kiff
City Manager
Date: 74 iLo I1 --Y
2
APPROVED AS TO FORM:
CITY ATT?
Date: '//JV�Ta
OFFICE
In
Aaron C. Harp
City Attorney
ATTEST:
Date:
By:
Leilani I. Brown
City Clerk
ATTACHMENTS: Exhibit A: Health Insurance Portability and Accountability
Act (HIPAA)
Exhibit B: Disclosure Notice Regarding Insurance
Commissions and Other Compensation
3
EXHIBIT A
HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)
THIS EXHIBIT to the Administrative Services Agreement between Meritain and Client (the "Agreement") is
incorporated by reference therein. Client represents that it has the authority to execute, and hereby executes,
this Exhibit A for and on behalf of the Plan Sponsor's health benefit plan for which Meritain provides plan
administration services ("the Plan" for the purposes of this Exhibit A).
In conformity with the regulations at 45 C.F.R. Parts 160-164 (the "Privacy and Security Rules") Meritain will
under the following conditions and provisions have access to, maintain, transmit, create and/or receive certain
Protected Health Information:
Definitions. The following terms shall have the meaning set forth below:
(a)ARRA. "ARRA" means the American Recovery and Reinvestment Act of 2009
(b) Breach. "Breach" has the meaning assigned to such term in 45 C.F.R. 164.402.
(c) C.F.R. "C.F.R." means the Code of Federal Regulations.
(d) Designated Record Set. "Designated Record Set" has the meaning assigned to such term in 45 C.F.R.
164.501.
(e) Discovery. "Discovery' shall mean the first day on which a Breach is known to Meritain (including any
person, other than the individual committing the breach, that is an employee, officer, or other agent of
Meritain), or should reasonably have been known to Meritain, to have occurred.
(f) Electronic Protected Health Information. "Electronic Protected Health Information" means information that
comes within paragraphs 1(i) or 1(ii) of the definition of "Protected Health Information", as defined in 45
C.F.R. 160.103.
(g) Individual. "Individual" shall have the same meaning as the term "Individual" in 45 C.F.R. 160.103 and shall
include a person who qualifies as a personal representative in accordance with 45 C.F.R. 164.502 (g).
(h) Protected Health Information "Protected Health Information" shall have the same meaning as the term
"Protected Health Information", as defined by 45 C.F.R. 160.103, limited to the information created or
received by Meritain from or on behalf of Client.
(i) Required By Law. "Required By Law" shall have the same meaning as the term "required by law" in 45
C.F.R. 164.103.
(j}Secrete ."Secretary" shall mean the Secretary of the Department of Health and Human Services or his
designee.
(k) Security Incident. "Security Incident" has the meaning assigned to such term in 45 C.F.R. 164.304.
(1) Standard Transactions. "Standard Transactions" means the electronic health care transactions for which
HIPAA standards have been established, as set forth in 45 G.F.R., Parts 160-162._
(m) Unsecured Protected Health Information. "Unsecured Protected Health Information" means Protected
Health Information that is not secured through the use of a technology or methodology specified by
guidance issued by the Secretary from time to time.
2. Obligations and Activities of Meritain
(a) Meritain agrees to not use or disclose Protected Health Information other than as permitted or required by
this Exhibitor as Required By Law.
(b) Meritain agrees to use appropriate safeguards to prevent use or disclosure of the Protected Health
Information other than as provided for by this Appendix.
(c) Meritain agrees to mitigate, to the extent practicable, any harmful effect that is known to Meritain of a use
or disclosure of Protected Health Information by Meritain in violation of the requirements of this Appendix.
(d) Meritain agrees to report to Client any Security Incident of the Protected Health Information not allowed
by this Exhibit of which it becomes aware, except that, for purposes of the Security Incident reporting
requirement, the term "Security Incident" shall not include inconsequential incidents that occur on a daily
basis, such as scans, "pings" or other unsuccessful attempts to penetrate computer networks or servers
containing electronic PHI maintained by Meritain.
(e) Meritain agrees to report to Client any Breach of Unsecured Protected Health Information without
unreasonable delay and in no case later than sixty (60) calendar days after Discovery of a Breach. Such
notice shall include the identification of each Individual whose Unsecured Protected Health Information
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has been, or is reasonably believed by Meritain, to have been, accessed, acquired, or disclosed In
connection with such Breach. in addition, Meritain shall provide any additional information reasonably
requested by Client for purposes of investigating the Breach. Meritain's notification of a Breach under this
section shall comply in all respects with each applicable provision of Section 13400 of Subtitle D (Privacy)
of ARRA, 45 C.F.R. 164.410, and related guidance issued by the Secretary from time to time.
{f} Meritain agrees to ensure that any subcontractors that create, receive, maintain, or transmit Protected
Health Information on behalf of Meritain agree in writing to the same restrictions and conditions that apply
through this Exhibit to Meritain with respect to such information, in accordance with 45 C.F.R.
164.502(e)(1)(ii) and 164.308(b)(2), if applicable.
(g) Meritain agrees to provide access, at the request of Client, and in the time and manner designated by
Client, to Protected Health Information in a Designated Record Set, to Client or, as directed by Client, to
an Individual in order to meet the requirements under 45 C.F.R. 164.524.
(h) Meritain agrees to make any amendment(s) to Protected Health Information in a Designated Record Set
that the Client directs or agrees to pursuant to 45 C.F.R. 164.526 at the request of Client or an Individual,
and in the time and manner designated by Client.
(i) Meritain agrees to make (i) internal practices, books, and records, including policies and procedures,
relating to the use and disclosure of Protected Health Information received from, or created or received
by Meritain on behalf of, Client, and (ii) policies, procedures, and documentation relating to the
safeguarding of Electronic Protected Health Information available to the Secretary, in a time and manner
designated by the Secretary, for purposes of the Secretary determining Client's or Maritain's compliance
with the Privacy and Security Rules.
0) Meritain agrees to document such disclosures of Protected Health Information as would be required for
Client to respond to a request by an Individual for an accounting of disclosures of Protected Health
Information in accordance with 45 C.F.R. 164.528.
(k) Meritain agrees to provide to Client the information collected in accordance with this Section to permit
Client to respond to a request by an Individual for an accounting of disclosures of Protected Health
Information in accordance with 45 C.F.R. 164.528.
(1) With respect to Electronic Protected Health Information, Meritain shall implement and comply with the
administrative safeguards set forth at 45 C.F.R. 164.308, the physical safeguards set forth at 45 C.F.R.
310, the technical safeguards set forth at 45 C.F.R. 164.312, and the policies and procedures set forth at
45 C.F.R. 164.316 to reasonably and appropriately protect the confidentiality, integrity, and availability of
the Electronic Protected Health Information that it creates, receives, maintains, or transmits on behalf of
Client. Meritain acknowledges that, effective the later of the Effective Date of this Exhibitor February 17,
2010, (i) the foregoing safeguards, policies and procedures requirements shall apply to Meritain in the
same manner that such requirements apply to Client, and (ii) Meritain shall be subject to the civil and
criminal enforcement provisions set forth at 42 U.S.C. 1320d-5 and 1320d-6, as amended from time to
time, for failure to comply with the safeguards, policies and procedures requirements and any guidance
issued by the Secretary from time to time with respect to such requirements.
(m) With respect to Electronic Protected Health Information, Meritain shall ensure that any subcontractors
that create, receive, maintain, or transmit Electronic Protected Health Information on behalf of Meritain,
agree to comply with the applicable requirements of Subpart C of 45 C.F.R. Part 164 by entering into a
contract that complies with 45 C.F.R. Section 164.314.
(n) If Meritain conducts any Standard Transactions on behalf of Client, Meritain shall comply with the
applicable requirements of 45 C.F.R. Parts 160-162.
(o) Meritain acknowledges that, effective the later of the Effective Date of this Exhibitor February 17, 2010, it
shall be subject to the civil and criminal enforcement provisions set forth at 42 U.S.C. 1320d-5 and
1320d-6, as amended from time to time, for faiiure to comply with any of the use and disclosure
requirements of this Exhibit and any guidance issued by the Secretary from time to time with respect to
such use and disclosure requirements.
(p) To the extent Meritain is to carry out one or more of Client's obligation(s) under Subpart E of 45 CFR Part
164, Meritain shall comply with the requirements of Subpart E that apply to Client in the performance of
such obligation(s).
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3. Permitted Uses and Disclosures by Meritain
3.1 General Use and Disclosure
Except as otherwise provided in this Appendix, Meritain may use or disclose Protected Health Information
to perform its obligations under the Agreement, provided that such use or disclosure would not violate the
Privacy and Security Rules if done by Client or the minimum necessary policies and procedures of Client.
3.2 Specific Use and Disclosure Provisions
(a) Except as otherwise provided in this Appendix. Meritain may use Protected Health Information for the
proper management and administration of Meritain or to carry out the legal responsibilities of
Meritain.
(b) Except as otherwise provided in this Appendix, Meritain may disclose Protected Health Information
for the proper management and administration of Meritain, provided that disclosures are Required By
Law, or Meritain obtains reasonable assurances from the person to whom the information is
disclosed that it will remain confidential and used or further disclosed only as Required By Law or for
the purpose for which it was disclosed to the person, and the person notifies Meritain of any
instances of which it is aware in which the confidentiality of the infomnation has been breached in
accordance with the Breach and Security Incident notifications requirements of this Appendix.
(c) Meritain shall not directly or indirectly receive remuneration in exchange for any Protected Health
Information of an Individual without Client's prior written approval and notice from Client that it has
obtained from the Individual, in accordance with 45 C.F.R. 164.508, a valid authorization that
includes a specification of whether the Protected Health Information can be further exchanged for
remuneration by Meritain. The foregoing shall not apply to Client's payments to Meritain for services
delivered by Meritain to Client.
(d) Except as otherwise provided in this Appendix, Meritain may use Protected Health Information to
provide data aggregation services to Client as permitted by 45 C.F.R. 164M,1(e)(2)(i)(B).
(e) Meritain may use Protected Health Information to report violations of law to appropriate Federal and
State authorities, consistent with 45 C.F.R. 164.5020)(1).
4. Obligations of Client.
or
(a) Client shall notify Meritain of any limitation(s) in its notice of privacy practices of Client in accordance
with 45 C.F.R. § 164.520, to the extent that such limitation(s) may affect Meritain's use or disclosure
of Protected Health Information.
(b) Client shall provide Meritain with any changes in, or revocation of, permission by Individual to use or
disclose Protected Health Information, to the extent that such changes affect Meritain's uses or
disclosures of Protected Health Information.
(c) Client agrees that it will not furnish or impose by arrangements with third parties or other Covered
Entities or Business Associates special limits or restrictions to the uses and disclosures of its PHI that
may impact in any manner the use and disclosure of PHI by Meritain under the Agreement and this
Appendix, including, but not limited to, restrictions on the use and/or disclosure of PHI as provided for
in 45 C.F.R. 164.522.
4.2 Permissible Requests by Client
Client shall not request Meritain to use or disclose Protected Health Information in any manner that would
not be permissible under the Privacy and Security Rules if done by Client.
5. Term and Termination
(a) Term. The provisions of this Exhibit shall take effect on the effective date of the Agreement, and shall
terminate upon expiration or termination of the Agreement, except as otherwise provided herein.
(b) Termination for Cause. Without limiting the termination rights of the parties pursuant to the Agreement
and upon either party's knowledge of a material breach by the other party, the non -breaching party shall
either:
I. Provide an opportunity for the breaching party to cure the breach or end the violation, or terminate
the Agreement, if the breaching party does not cure the breach or end the violation within the time
specified by the non -breaching party, or
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ii. Immediately terminate the Agreement, if cure of such breach is not possible.
(c) Effect of Termination.
The parties mutually agree that it is essential for Protected Health Information to be maintained after the
expiration of the Agreement for regulatory and other business reasons. Except as provided below, upon
termination of this Agreement for any reason, Meritain shall return or destroy all Protected Health
Information received from Client, or created or received by Meritain on behalf of Client. Notwithstanding
the expiration of the Agreement, if Meritain determines that returning or destroying Protected Health
Information is infeasible, Meritain shall notify Client of the conditions that make return or destruction
infeasible. Meritain shall extend the protections of this Exhibit to such Protected Health Information, and
limit further use or disclosure of the Protected Health Information to those purposes that make the return
or destruction of the Protected Health Information infeasible.
Miscellaneous
(a) Regulatory References. A reference in this Exhibit to a section in the Privacy and Security Rules means
the section as in effect or as amended, and for which compliance is required.
(b) Amendment. The Parties agree to take such action to amend this Agreement from time to time as is
necessary for Client and Meritain to comply with the requirements of the HIPAA Privacy Rule, the HIPAA
Security Rule, the HITECH Act, and HIPAA, as amended.
(c) Survival. The respective rights and obligations of Meritain under Section 5(c) of this Exhibit shall survive
the termination of this Appendix.
(d) Interpretation. Any ambiguity in this Exhibit shall be resolved in favor of a meaning that permits Client to
comply with the Privacy and Security Rules.
(e) No third party beneficiary. Nothing express or implied in this Exhibitor in the Agreement is intended to
confer, nor shall anything herein confer, upon any person other than the parties and the respective
successors or assigns of the parties, any rights, remedies, obligations, or liabilities whatsoever.
(f) Governing Law. This Exhibit shall be governed by and construed in accordance with the same internal
laws as that of the Agreement.
The parties hereto have executed this Exhibit with the execution of the Agreement.
Meritain Health, Inc.
Melissa Elwood
Regional President
Date: 11/23/2013
City of Newport Beach
��� C..-L"f\ N�
Print Name: lS2wg- \UAi
Title:
Date:
A-4
Exhibit B
DISCLOSURE NOTICE REGARDING INSURANCE COMMISSIONS AND OTHER COMPENSATION
U.S. Department of Labor rules permit the receipt of insurance commissions and other compensation by service
providers such as Meritain (and its affiliates) if proper disclosure is given and an appropriate independent Plan
fiduciary acknowledges in writing receipt of the information and approves the transaction. The commissions and
other compensation to be paid to Meritain are set forth in this Agreement. By signing this Agreement and any
Renewal Schedules of Services and Fees, Client certifies that it is an independent fiduciary of the Plan and that it
acknowledges in writing receipt of the following information and approves the transactions referenced herein.
A. Statement of Affiliation
Prodigy Health Group, Inc. is a diversified health care services holding company whose subsidiaries include American
Health Holding, Inc., Scrip World, LLC, Precision Benefit Services, Inc., Meritain Health, Inc. and PERFORMAX, Inc.
Each affiliate is free to recommend to a client, products and services offered by other companies, which may include
another affiliate; however, no affiliate Is required to recommend an affiliate and no affiliate is limited or restricted in
recommending the products and/or services of any vendor. Affiliates may be entitled to reasonable commissions and
fees from other companies, including affiliates, and such commissions and fees are earned in the ordinary course of
business in arms' length transactions. In addition, certain inter -company agreements exist amongst the affiliates to
provide for the exchange of certain goods, services, and leases of real property at market-based rates of
compensation.
Other Fees
From time to time, Meritain may engage third party vendors to perform or provide services in connection with this
Agreement. In some cases Meritain will pay the vendor as a subcontractor out of fees it has collected pursuant to this
Agreement.
When Meritain provides or arranges for subrogation services, Client agrees to pay Meritain an administrative fee of
25% of the gross savings resulting from such services.
In the event Meritain engages an out -of -network discount program, claim auditor, independent case reviewer, cost
management vendor, bill negotiator, discount program or other contingency fee vendor to provide services on behalf
of the Plan, Meritain shall be entitled to retain a contingency fee up to 25% of the net savings resulting from the
engagement.
In cases where Meritain provides direct services, through its employees and agents, to negotiate bills, reduce claim
amounts, access additional discounts or otherwise increase savings on behalf of the Plan, Meritain shall be entitled to
retain a contingency fee up to 25% of the savings resulting from such services.
The disclosures set forth in this Exhibit B, together with the disclosures set forth in Article V. of this Agreement,
represent Meritain's best reasonable estimate of the total amount of all direct and indirect compensation Meritain may
receive in connection with this Agreement. The actual amount may vary during the course of this Agreement based
upon changes in the number of participants, utilization and other factors external to this Agreement. With respect to
all compensation Meritain actually receives as a result of this Agreement, Meritain will disclose such amounts to
Client annually, upon request, to the extent required to assist Client in filing its Form 5544.
MERITAIN HEALTH, INC.
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement"), effective as of January 1, 2013 (the "Effective Date"), is
by and between Meritain Health, Inc., (defined to include Meritain Health, Inc. and any of its affiliates and entities
that they acquire) having its principal office at 300 Corporate Parkway, Amherst, New York 14226 ("Meritain") and
City of Newport Beach having its principal office at 3300 Newport Boulevard, Newport Beach, California
1) 92663 (`"Client"). This Agreement applies to services to be provided by Meritain to the Client in connection with
Ycr\ Client's self-funded employee welfare benefit plan(s) (the "Plan") formally known as: City of Newport Beach
`� ) Retiree Plan.
1�"; ARTICLE 1. DEFINITIONS
For the purposes of this Agreement, the following words and phrases have the meanings set forth below.
1.1 Claim means a request by a Claimant for payment or reimbursement for Covered Services.
1.2 Claimant means any person or entity submitting expenses for payment or reimbursement.
1.3 Claims Payment Account means an account established, owned and funded by the Client for
payment or reimbursement of Covered Services, which account constitutes an asset of the Client and not the
Plan.
1.4 Covered Services means the care, treatments, services or supplies described in the Plan
Document as eligible for payment or reimbursement under the terms of the Plan. Covered Services may include
at the Client's request, but are not limited to, utilization review services (including pre -admission certification,
second surgical opinion, concurrent review and discharge planning) and case management services (including
those related to transplants, premature births, spinal cord injuries, multiple trauma, chemotherapy claims, medical
appropriateness, end stage cancer patients, AIDS and large claims over $50,000 in the aggregate per year).
1.5 ERISA means the Employee Retirement Income Security Act of 1974, as amended.
1.6 HIPAA means the Health Insurance Portability and Accountability Act of 1996, and the
regulations issued thereunder, as amended.
1.7 Meritain means Meritain Health, Inc. and any of their affiliates and entities that they acquire.
1.8 Participant means any person who is eligible, properly enrolled and entitled to benefits under the
terms of the Plan.
1.9 Plan means the self-insured employee welfare benefit plan which the Client has established
pursuant to the Plan Document and which is made the subject of this Agreement.
1.10 Plan Document(s) means the instrument or instruments, including the Summary Plan
Description, that set forth and govern the duties of the Client, as the designated Plan administrator, as well as the
eligibility and benefit provisions of the Plan which provide for the payment or reimbursement of Covered Services.
1.11 Provider means a preferred provider network, physician, dentist, hospital, laboratory or other
medical practitioner, or medical care facility, or a vendor of supplies or services, who or which is authorized to
receive payment or reimbursement for Covered Services under the terms of the Plan.
1.12 Summary Plan Description means the written materials referred to under Section 102 of ERISA
which are distributed to Participants by the Client and which describes the terms and conditions under which the
Plan operates, including, coverage limits and procedures of the Plan.
ARTICLE 11. TERM,• TERMINATION
2.1 The term of this Agreement shall begin as of the Effective Date as set forth above and shall
continue to and including December 31, 2013 (the "Term"), unless sooner terminated pursuant to the provisions of
this Agreement. Unless either party provides the other with at least sixty (60) days written notice prior to the end
of the then -current Term, the Term of this Agreement shall automatically renew for up to three (3) successive
twelve (12) month terms, provided that Meritain reserves the right to increase the fees payable by Client for such
renewal Term to a mutually agreed upon rate. In the event the parties fail to agree upon new rates for fees, the
existing fees for the prior Term, plus a percentage amount equal to the change in the Consumer Price Index for all
Urban Areas for the previous 12 months, shall apply for each renewal Term.
2.2 Meritain's obligations under this Agreement apply only to Claims for Plan benefits that are
incurred on or after the Effective Date and prior to the date this Agreement terminates or expires in accordance
with its terms.
2.3 In addition to the expiration or non -renewal provisions of this Agreement, this Agreement will
terminate: (a) at the discretion of Meritain, after expiration of five (5) business days' notice to Client for Client's
failure to pay fees or amounts due under this Agreement; (b) at the discretion of Meritain, upon written notice from
Meritain based upon Client's failure to provide funds necessary or required to adequately fund the Claims
Payment Account or to otherwise pay for benefits or Covered Services under the Plan; (c) at the discretion of
Meritain, upon written notice from Meritain based upon Client's failure to promptly sign and deliver insurance
applications and disclosures, or any information or data necessary for Mentain's performance of services under
this Agreement; or (d) in the event either party materially breaches a term, provision or warranty of this
Agreement or defaults (other than for the foregoing reasons and those set forth in Section 2.4 below), and does
not correct the breach to the non -breaching party's reasonable satisfaction within thirty (30) days after receipt of
written notice of breach from the non -breaching party. If Meritain fails to receive fees by the due date thereof,
Meritain may, in addition to other remedies under this Agreement, and at law or in equity, suspend performance of
any or all of Meritain's obligations under or In connection with this Agreement. Meritain agrees to provide Client
two (2) days prior written notice before suspending services.
2.4 In addition to the above, the occurrence of any one of the following events shall constitute a
default under this Agreement, and the party not in default may, at its option, terminate this Agreement upon
written notice to the other party:
2.4.1 if the Client fails to pay any monies due Meritain pursuant to this Agreement within the
applicable grace period; or
2.4.2 thirty (30) days after either party (a) becomes insolvent, (b) is unable to pay its debts as
they become due, (c) states in writing that it is not able to pay its debts as they become due, (d) makes
an assignment for the benefit of its creditors, (e) files, or has filed against it, any proceeding in the United
States Bankruptcy Court, (f) is subject to a levy, seizure or sale of a substantial part of its property or
assets on behalf of creditors, or (g) is subject to the appointment of a receiver for a period equal to or
greater than thirty (30) days.
2.5 Upon expiration or termination of this Agreement:
2.5.1 because the services provided by Meritain include access to provider networks owned or
arranged for by Meritain, Client agrees to engage Meritain for a period of six (6) months following the date
of expiration or termination of this Agreement to administer all Claims incurred prior to such date, and the
Client agrees to tender to Meritain immediately available funds in an amount equal to (i) one -hundred
percent (100%) of three (3) months of the then -current Administration due Meritain pursuant to this
Agreement based upon enrollment at the time of termination, to be paid to Meritain on or before the
termination date of this Agreement, (H) plus an additional three (3) months of run -out fees at the rate of
fifty percent (50%) of Administration fees as of the termination of this Agreement, to be paid to Meritain by
the end of the second month after expiration or termination of this Agreement. In addition to Meritain's
run -out administration fees, Meritain will also bill the Client any applicable PPO access, integration or run-
out fees due for claims processed during the run -out period; and
2
2.5.2 unless within sixty (60) days thereof the Client sends Meritain a written request to receive
all cases in the Meritain subrogation process, Meritain shall continue subrogation and recovery efforts on
all such cases and agrees to remit to the Client all proceeds it receives, minus the subrogation fees set
forth in Article V. and Exhibit B hereof. In the event the Client requests to receive subrogation cases from
Meritain, it agrees to release Meritain and its subrogation vendor from and against any and all suits,
claims, losses, fees and expenses related to the subrogation cases and to reimburse Meritain for all out-
of-pocket costs and expenses.
Notwithstanding the expiration or termination date of this Agreement, this Section 2.5 shall be deemed to survive
for the purpose of effectuating this Section.
2.6 Any party not in breach of this Agreement shall be entitled to exercise any remedy to which it is
entitled at law or in equity and to enforce its rights under this Agreement, including without limitation, enforcement
through specific performance, injunctive relief and the recovery of all costs arising from any litigation or arbitration
including, but not limited to, reasonable attorneys' fees.
2.7 In the event Client is in default of paying any fees or expenses under this Agreement, Meritain
shall have the right to set-off such amounts against any monies due Client under this Agreement, including
without limitation, subrogation recoveries.
ARTICLE Ill. MERITAIN'S RESPONSIBILITIES
Meritain shall provide the following administrative services for the Client during the Term:
3.1 If requested by the Client, prepare, for review and approval by the Client and its counsel, drafts of
the Plan document, Summary Plan Description ("SPD") and the Summaries of Benefits and Coverage ("SBCs").
Notwithstanding the foregoing, the Client shall be responsible for ensuring that these documents are fully
compliant and timely distributed in accordance with applicable law.
3.2 Receive, on behalf of the Client, Claims data and documentation from Participants and Providers.
3.3 Process Claims submitted by Participants and Providers according to the Plan Documents and
Summary Plan Description, as construed by the Client.
3A Refer to the Client, for its exclusive and final resolution, any questions concerning the meaning of
any part of the Plan Documents and Summary Pian Description, or the validity of any questionable or disputed
Claims.
3.5 Refer to the Client, for its exclusive and final resolution, any appeals from any denial of any of the
Claims, pursuant to Section 503 of ERISA.
3.6 Respond to any reasonable request by the Client for information regarding any of the Claims.
3.7 Process, issue and distribute checks from the Claims Payment Account, as instructed by the
Client, to Participants, Providers or others as may be applicable.
3.8 Prepare for the Client a monthly written accounting stating: (a) funding provided by the Client; (b)
the name of each Participant or Provider that made a Claim; (c) the value of each of the Claims made; (d) the
value of each of the Claims satisfied; and (e) the total value of all of the Claims satisfied.
3.9 Prepare for the Client Meritain's standard claim and statistical reports as reasonably requested.
3.10 Deliver to the Client copies of Meritain's electronic files respecting the Claims within thirty (30)
days of the termination of this Agreement, subject to both (a) the payment by the Client of all monies due Meritain,
and (b) the Client's pre -payment of all packaging and delivery expenses.
3.11 Subject to the terms of Section 6.17 hereof, use commercially reasonable efforts to procure stop-
loss insurance proposals (specific and aggregate) for the Client's consideration, which stop -loss insurance shall
K,
be an asset of the Client and not of the Plan (the "Stop -Loss Insurance"), remit Stop -Loss insurance premiums on
behalf of the Client and prepare and file reinsurance claims associated with Stop -Loss Insurance,
3.12 If Client elects COBRA/HIPAA services, provide a HIPAA-compliant Certificate of Creditable
Coverage whenever a Participant terminates Coverage under the Plan; provided the Participant requests the
document and Meritain is still providing services to the Client under the Agreement. The document will provide
the period of coverage beginning on the Participant's date of enrollment (if provided by the Client) and ending on
the Participant's date of termination as verified by eligibility records provided by the Client.
3.13 To the extent maintained by Meritain, provide the Client with the information ERISA requires,
within the time frame required by ERISA, to enable the Client to file the Annual Report (IRS Form 5500) for the
Plan.
3.14 Offer the use of one or more Preferred Provider Organizations or other provider discount
arrangements (collectively "PPOs") as a Covered Service under this Agreement. The Client acknowledges that
the decision to use a PPO and which PPO(s) to use is at the sole discretion of the Client. In addition, Meritain
makes no representations regarding the value or cost effectiveness of any PPO network adopted by the Client.
The Client also acknowledges that each PPO it selects as a Covered Service, and not Meritain, is responsible for
its own provider credentialing, contracting with providers, recruiting, licensing, accreditation, maintaining adequate
staffing, practice and professional standards and all other activities pertinent to the responsibilities accorded
PPOs.
3.15 Provide to the Internal Revenue Service an annual report of tax reportable claim payments made
to medical care Providers.
3.16 Provide Plan Participants with a toll-free telephone number for servicing.
3.17 Maintain adequate records of claims made and benefits paid in such form and format as may be
convenient for Meritain for a period of six (6) years or longer if required by Applicable Law.
3.18 Advise the Client as to all matters actually known to Meritain involving threatened or actual legal
actions involving the Plan and/or the Client.
3.19 Assist in the setting of Pian contribution levels, upon the request of the Client.
3.20 if it is subsequently determined that any payment has been made to or on behalf of an ineligible
Plan Participant, or that any payment made was incorrect as to amount, Meritain will promptly correct
underpayments and use reasonable efforts to recover overpayments. In no event shall Meritain be required to
initiate court proceedings for any such recovery.
3.21 Provide additional services not specified in this Agreement, as mutually agreed upon in writing by
the Client and Meritain.
3.22 Prepare and send explanation of benefits forms to Plan Participants as required by ERISA, which
will provide an explanation of the adjudication of the Claim or reason(s) for the denial of benefits.
3.23 Provide reasonable assistance to the Client in pursuing rights of recovery arising from
coordination of benefits, bill negotiation, discount programs, cost management, subrogation, and fraud detection.
Such services are subject to those fees set forth in Article V. and Exhibit B hereof.
ARTICLE IV. THE CLIENT'S RESPONSIBILITIES
The Client shall perform the following during the Term:
4.1 Maintain and furnish to Meritain current, accurate Plan eligibility and coverage information, and
submit to Meritain written notice of any changes respecting the status of any of the Participants within fifteen (15)
days after the Client becomes aware of any such change. Such information shall be provided in a format
reasonably acceptable to Meritain and shall include the following with respect to each Participant: name and
0
address, social security number, date of birth, type of coverage, sex, relationship to employee, changes in
coverage, date coverage begins or ends, and any other information necessary to determine eligibility and
coverage levels under the Plan.
4.2 Resolve all ambiguities and disputes relating to the Plan eligibility of a Participant, Plan coverage,
denial of Claims and decisions regarding appeals of denials of Claims, as well as any other Plan interpretation
questions.
4.3 Establish a Claims Payment Account, and execute and deliver to Meritain and to a mutually
agreed-upon depository, any and all documents necessary to empower Meritain to act as a signatory on such
account, If requested.
4.4 Provide Meritain with copies of any and all revisions or changes to the Plan within fifteen (15)
days of the effective date of the changes.
4.5 Maintain and operate the Plan in accordance with all applicable laws and regulations, including,
but not limited to, ERISA (collectively the "Applicable Laws"). Client shall provide and timely distribute all notices,
information, materials and documents required to be given to Participants under Applicable Laws, and maintain all
recordkeeping, and file all forms relative to the Plan, as required under Applicable Laws. In addition, Client shall
timely prepare or cause to be prepared, and timely execute, any documents, forms or contracts respecting the
Plan that are required by Applicable Laws.
4.6 Pay any and all taxes, licenses and fees levied, if any, by any local, state or federal authority in
connection with the Plan.
4.7 Hold confidential such information respecting Meritain which is obtained by or disclosed to the
Client, and which is proprietary to Meritain. Such information includes, but is not limited to, Provider contracting
arrangements, Meritain's compensation arrangements with third parties, and Claims administration guidelines,
practices and procedures of Meritain.
4.8 Promptly notify Meritain of any termination, expiration, lapse or modification of Stop -Loss
Insurance.
4.9 in the event that the Client desires Meritain to remit, on the Client's behalf, premiums to insurers,
including Stop -Loss Insurers, Client shall forward to Meritain all monies that Meritain requests for such premiums
within five (5) business days of any such request.
4.10 Forward to Meritain, by the due date, those fees for services rendered under this Agreement as
set forth in Article V. hereof.
4.11 Forward to Meritain, by the due date, all monies that Meritain requests for expenses incurred to
print materials for the Client, which expenses shall be borne solely by the Client.
4.12 Forward to Meritain, by the due date, all monies that Meritain requests for pre -approved
expenses incurred for professional services rendered to or on behalf of the Client or in connection with Meritain's
obligations under this Agreement.
4.13 Deposit into the Claims Payment Account, within 48 hours of the Client's receipt of a funding
request, all monies required for the satisfaction of Claims, which expenses shall be borne solely by the Client.
Meritain will not be responsible for any consequences resulting from Client's untimely funding of Claims. Client
further agrees that upon request by Meritain, it will fund claims within 24 hours as may be necessary for reasons
including, meeting stop -loss funding obligations and meeting funding deadlines for provider discounts. Client
acknowledges and agrees that if it fails to fund claims in a timely manner as requested, such failure may result in
claim denials by its stop -loss carrier, lost discounts from providers, and/or interest and penalties, all of which may
require Client to fund such additional sums.
5
4.14 Forward to Meritain, within twenty (20) days of the Client's receipt of a funding receipt, all monies
that Meritain requests for reimbursement of monies expended to obtain medical records or to investigate Claims,
which expenses shall be bome solely by the Client.
4.15 Safeguard the privacy and confidentiality of individually identifiable health information regarding
Plan Participants ("Protected Health Information") as defined under HIPAA. Client shall adopt policies and
procedures to ensure that it will not use and/or disclose Protected Health Information except as permitted or
required by regulations promulgated under HIPAA and any applicable state laws and regulations. Client must
establish firewalls to ensure that Protected Health Information is not used or disclosed by an employee who does
not need to access such information for purposes of Plan administration, and to provide Meritain a signed
certification indicating its compliance with these requirements. Client will not request Meritain to disclose
Protected Health Information except as consistent with the HIPAA regulations, the Plan Documents, Exhibit A
hereto, and any applicable state laws or regulations. Client will include in its Notice of Practices to Plan
Participants a statement that the Plan's third party administrators may use and disclose Protected Health
Information on behalf of the Plan as set forth in the Plan Documents and subject to all Applicable Laws. Client will
obtain the proper consents and authorizations for Meritain to disclose Protected Health Information if Meritain is
directed by the Client to disclose such information. The parties have executed the HIPAA Business Associate
Agreement, attached hereto as Exhibit A, authorizing Meritain to act as a business associate of the Plan.
ARTICLE V. FEES
The following services will be provided under this Agreement at the fees and charges indicated below. These
fees and charges are collectively referred to in this Agreement as "Fixed Costs." Unless otherwise stated, the
monthly Fixed Costs are calculated by multiplying the following rates by the applicable number of employees
enrolled in the Plan each month and adding the result to the specific fees stated below or elsewhere in this
Agreement.
The rates set forth in this Article V. are based on information provided to Meritain by the Client, including without
limitation, information regarding the average number of employees enrolled in the Plan. Meritain has relied on
that information in developing these rates. Should there be a material change in this information, Meritain shall be
entitled to adjust these rates consistent with its customary rates. All fees listed in this Agreement are subject to
change in the event the number of covered employee lives changes by twenty-five (25%) or more during the Term
of this Agreement or in the event the fees and expenses described in this Agreement change during the Term.
The Client agrees to pay the Fixed Costs set forth in this Agreement subject to the terms and conditions of this
Agreement, as well as other applicable agreements Meritain or its affiliates may have with any network, insurer
and/or prescription drug benefit manager.
Per Employee Per Month
Retiree Premium Billie — Dental & Vision $4.40
Retire Enrollment — Dental & Vision $5.50
Consulting Fee (Broker) — All Services 10%
Optional and Non -Standard Administrative Fees and Premiums:
Initial Implementation Fee — The one-time fee: $2,200.00
Annual Enrollment Package (Preparation & Distribution) - $5.78 per employee per package
Annual Enrollment Processing Fee -$1,100.00
Printing Fees - To be billed at cost.
Stop -Loss, Long Term Disability, Life & AD&D Insurance Coverage Premiums — The applicable rates and premiums
for these optional coverages will be billed in accordance with the terms of the applicable group insurance agreement.
External Pharmacy Benefits Manager - In the event the Client utilizes an external Pharmacy Benefits Manager
2
("PBM"), Meritain may be required to provide eligibility information to the PBM on behalf of the Client, issue
enrollee ID cards containing information about the prescription drug program; assist on coverage issues, and/or
handle Client billing. Meritain shalt not charge Client for such services; provided, however, that Client agrees and
consents that Meritain is permitted to receive from the PBM a fee, which may be in the form of commission
payments, rebates, administrative fees or otherwise, for such services provided to the Plan by Meritain, all as
more particularly described in Exhibit B of this Agreement. The Client fees for the dispensation and administration
of prescription drugs to Plan participants will be billed in accordance with the terms of the Client's agreement with
the PBM.
Other Fees and Services
(a) PPO Network Access Fee - If any PPO networks are accessed on behalf of the Client, Meritain
will bill Client PPO access and integration fees for use of the PPO network for the following PPOs:
Not Applicable
In the event that any of the above listed PPO networks bill access fees during run -out, Meritain will bill the
Client for any applicable access, integration and/or run -out fees in addition to Meritain's run -out administration
fees referenced in Section 2.5.1 of this Agreement.
(b) Out -of -Network Discount Program Fees — Fees to be paid to out -of -network discount programs
will be billed by Meritain on a contingent fee basis, based on the program's percentage fee of savings
resulting from the discount program.
(c) Remittance Services — From time to time, at the Client's request, Meritain may collect certain fees
from Client for remittance to a third party, e.g. a broker commission. In these instances, Meritain will pass-
through all fees and will not collect or retain an administrative or service fee.
(d) Other Fees and Services - The Client agrees to pay vendors' fees for certain additional services
including, but not limited to (i) fees for independent case review, (ii) contingency fees for subrogation services,
and (iii) contingency fees and other fees for cost management vendors, claim auditors, bill negotiators and
discount programs.
In addition, Exhibit B sets forth a description of contingency fees, other administrative fees or similar
compensation which Meritain may receive in connection with these vendor services.
Payment of Fees- The Client agrees to pay Meritain the fees as indicated in this Agreement on the first day of
each month for that month's administrative services. Meritain will provide appropriate documentation regarding
fees due and owing on or about the first day of each month for that month's administrative services and based on
eligible lives at the time the invoice is generated. The Client hereby authorizes Meritain to withdraw the fees from
its bank account on or before the fifth (5"') day of each month based on the monthly employee census. If the fees
are not received by Meritain by the 15th of the month, the Client will be subject to a 1.5% late charge per month
calculated from the first day of the month on all unpaid amounts. Adjustments to eligibility will be accounted for in
the next invoice processing period.
Total Compensations. Consultant's compensation for all Work performed in accordance with this Agreement,
including all reimbursable items and subconsultant fees, shall not exceed Seventy Five Thousand Dollars and
00/100 ($75,000.000) per year without prior written authorization from City. No billing rate changes shall be made
during the term of this Agreement without the prior written approval of City.
ARTICLE VI. ACKNOWLEDGEMENTS AND REPRESENTATIONS
Each of the parties expressly acknowledges and represents to the other party as follows:
6.1 By entering into this Agreement, the Client is delegating to Meritain only those powers and
responsibilities with respect to the Plan which are specifically enumerated herein. Any function not specifically
FA
delegated to and assumed by Meritain pursuant to this Agreement shall remain the sole responsibility of the
Client.
6.2 The parties have entered into this Agreement as independent contractors and not as agents of
one another. Neither party shall have any authority to act in any way as the representative of the other, or to bind
the other to any third party, except as specifically set forth herein.
6.3 The parties mutually represent and warrant to one another that: (a) no further corporate approval
from either of the parties is necessary for this Agreement to be effective; (b) each of the parties has the legal
power, authority and right to enter into, and perform its respective obligations under, this Agreement, and (c) each
party's execution of, delivery of and performance under this Agreement shall not constitute a violation of any oral
or written agreement to which it is a party or by which it is bound.
6A With respect to the satisfaction of Claims or other obligations arising under the Plan, Meritain
shall not be obligated to disburse more than the amount made available by the Client for disbursement from the
Claims Payment Account.
6.5 Meritain shall not, under any circumstance, be responsible to use its corporate assets to satisfy
any Claim or expense that is the responsibility of the Client, the Plan or any Participant.
6.6 This Agreement shall not be deemed a contract of insurance under any Applicable Laws.
Meritain does not insure, guarantee or underwrite the liability of the Client under the Plan. The Client, and not
Meritain, shall remain solely liable for the payment of Claims and all other expenses incidental to the Plan.
6.7 Meritain owes a duty of care only to the Client, which duty is one of reasonable care under the
attendant circumstances. Meritain is not liable for any mistake of judgment or for any action taken in good faith.
6.8 Meritain shall not be liable for any payments, underpayments, fines, penalties, interest or other
charges assessed by the New York State Department of Health, or any other governmental or regulatory agency,
in connection with the surcharge(s) and/or assessments due with respect to the Plan pursuant to the New York
Health Care Reform Act of 1996, and Section 111 penalties resulting from Client's failure to cooperate with
Meritain's requests for information required by law or other Applicable Laws. The Client shall remain solely liable
for any such payments, underpayments, fines, penalties, interest or other charges so assessed, and shall
indemnify Meritain in the event same are assessed against Meritain.
6.9 The Client acknowledges that it is the "plan sponsor," "plan administrator' and "named fiduciary"
with respect to the Plan, as such terms are interpreted in the context of ERISA, the regulations promulgated
thereunder and the case law relevant thereto. As such, the Client shall at all times retain full discretionary control,
authority and responsibility with respect to the operation and administration of the Plan and Plan assets. The
Client agrees that Meritain's role will be limited to that of a provider of the non -fiduciary services specified under
this Agreement, that the services rendered by Meritain under this Agreement will not include the power to
exercise discretionary authority over Plan operations or plan assets (if any), and that Meritain will not for any
purpose, under ERISA or otherwise, be deemed to be the "Plan Administrator' of the Plan or a "fiduciary" with
respect to the Plan. Meritain's services under this Agreement are intended to and will consist only of those
"ministerial functions" described in 29 C.F.R. 2509.75-8, D-2 and will be performed within the framework of
policies and interpretations established by the Client. The Plan's benefit and coverage design has been selected
by the Client and the Client is solely responsible for that design. The Client retains all discretionary authority with
respect to the Plan and the administration of the Pian.
6.10 Meritain shall administer and adjudicate Claims in accordance with Article Ill. hereof if the Plan
Document and Summary Plan Description are clear and unambiguous as to the validity of Claims and the
Participants' eligibility for coverage under the Plan. Meritain shall have no discretionary authority to interpret the
Plan or to adjudicate Claims. if adjudication of a Claim requires interpretation of ambiguous Plan language, and
the Client has not previously indicated to Meritain the proper interpretation of such language, then the Client shall
be responsible for resolving the ambiguity or any other dispute arising therefrom. In any event, the Client's
decision as to any Claim (whether or not it involves a Plan ambiguity or other dispute) shall be final, subject only
to appeals allowed by Applicable Law.
M
6.11 The Client represents and warrants to Meritain that the Plan is in full compliance with, and shall at
all times during the Term remain in full compliance with, all Applicable Laws, including, but not limited to, ERISA.
6.12 The work to be performed by Meritain under this Agreement may, at Meritain's discretion, be
performed directly by it or wholly or in part through a subsidiary or affiliate of Meritain, or by another organization,
agent, advisor or other person(s) with which Meritain has an arrangement.
6.13 Meritain shall be entitled to rely, without investigation or inquiry, upon any written or oral
information or communication of the Client or its agents.
6.14 In the event that the Centers for Medicare and Medicaid Services ("CMS') determines that the
Plan has underpaid a claim under Medicare Secondary Payor laws, the parties acknowledge that Plan assets will
be used to correct such underpayment. Under no circumstances will Meritain be required to make such payment
with Meritain funds, regardless of when CMS requires such payment, during or after the term of this Agreement,
provided that such underpayment is not due to Meritain's gross negligence, bad faith, or willful misconduct. This
provision shall survive the expiration or termination of this Agreement.
6.15 The Client agrees and acknowledges that Meritain is not liable for any act or omission by any
Provider or for a Provider's failure or refusal to provide services or supplies. Care and treatment received by Plan
Participants are subject to the rules and regulations of the Providers.
6.16 The Client agrees and acknowledges that Meritain and its employees shall not be liable, under
any circumstances, for the action or lack thereof by any Provider under theories of vicarious liability, agency,
ostensible authority, respondeat superior, imputed liability, or any other theory of liability.
6.17 Meritain may solicit quotes for Stop -Loss Insurance on the Client's behalf. However, the Client
agrees and acknowledges that it is solely responsible for selecting the Stop -Loss Insurance broker, carrier, and
policy coverage that is utilized in securing Stop -Loss insurance for the Plan. Stop -Loss Insurance policy
coverage includes the Client's deductible/retention exposures, claim submission requirements/limitations, and
contract exclusions. The Client agrees to provide Meritain a copy of the insurance binder or policy within 30 days
of the effective date of the procurement of Stop -Loss Insurance coverage. The Client agrees and acknowledges
that Meritain shall not be liable for any acts or omissions in connection with the placement or administration of the
Stop -Loss Insurance policy, unless such acts or omissions were solely due to Meritain's gross negligence, bad
faith, or willful misconduct. The Client agrees to promptly notify Meritain if any information provided to the Stop -
Loss Insurance carrier on behalf of the Client is incomplete or inaccurate, Meritain does not insure or otherwise
provide any guarantees with respect to the adequacy of the Stop -Loss Insurance selected by the Client, nor does
Meritain make any representations regarding a Stop -Loss Insurance carrier's obligation to reimburse the Client for
any Plan costs, including state -imposed surcharges, taxes, or assessments. The Client agrees and acknowledges
that quotations issued by Stop -Loss insurers are often subject to the insurer's final underwriting guidelines after
coverage is placed. Quotations that are subject to final underwriting may allow the insurer to change the terms of
the policy, including but not limited to changing the premiums, specific and aggregate retention levels, and
excluding or limiting coverage for certain Participants. Meritain shall use commercially reasonable efforts to
submit adequate information to the insurer to limit changes the insurer can make in the final underwriting process,
but Meritain shall not be liable for Client's failure to provide full, complete and timely information to secure Stop -
Loss insurance coverage, or for changes made by the insurer arising out of final underwriting.
6.16 Meritain shall not be liable to Client or a Member for any indirect, consequential, special,
exemplary or punitive damages, or for lost profits, loss of use, cost of procurement of substitute services or any
similar claim or demand, however caused and on any theory of liability.
ARTICLE VII, MISCELLANEOUS
7.1 Exclusivity. Client agrees that, during the term of this Agreement, Meritain shall be the sole
and exclusive provider to Client of each of the products and services described in this Agreement.
7.2 Audit Rights. Subject to the provisions of this Section, Client may audit Meritain's records in
connection with the administration of this Agreement no more frequently than once every 12 months and Meritain
0
agrees to provide Client with reasonable access to such records. Meritain shall only be required to provide
access to such information that is in its possession and which is reasonably necessary to administer the Plan,
provided that disclosure of such information is not prohibited by Mentain's agreements with third parties or any
requirement of Applicable Law. Client shall give Meritain reasonable prior written notice which shall include: a) a
statement of its intent to perform such an audit; b) a statement explaining its need to perform the audit; c) a
description of the type(s) of information within the scope of the audit, including dates; and d) Client's
representation that the information to be disclosed by Meritain is reasonably necessary for the administration of
the Plan. All audits and information disclosures shall occur at a reasonable time and place, in a manner that does
not unreasonably interfere with Meritain's ability to conduct its normal business, and at Client's sole cost and
expense. Subject to Meritain's approval, which may be withheld for any reason, Client may designate a third
party to conduct an audit or receive information hereunder. Upon receipt of such approval by Meritain, the Client
and such third party shall enter into an agreement with Meritain which shall provide at a minimum: (i) a
representation from Client and such third party that no portion of the audit is based upon a contingency fee
arrangement; (ii) a representation from Client and such third party that each shall only use the minimally
necessary amount of audit information solely for purposes of administering the Plan and that each shall protect
and maintain such information as confidential and to not disclose the information to any other person or entity
other than Meritain; and (iii) a representation from Client and such third party that each shall provide Meritain with
copies of all reports and summaries compiled as a result of the audit.
7.3 Full Integration. This Agreement, together with all exhibits and schedules that are attached
hereto, supersedes any and all prior representations, conditions, warranties, understandings, proposals or other
agreements between the Client and Meritain, whether oral or written, respecting the subject matter hereof. In this
regard, the parties, having read and understood this entire Agreement, acknowledge and agree that there are no
other representations, conditions, promises, agreements, understandings or warranties that exist outside this
Agreement which have been made by either of the parties hereto, which have induced either party or has led to
the execution of this Agreement by either party. Any statements, proposals, representations, conditions,
warranties, understandings or agreements which may have been heretofore made by either of the parties, and
which are not expressly contained herein, are void and of no force or effect.
7.4 Use of Trade Names. Client acknowledges that Meritain may do business under the names of
any subsidiary, affiliate or service line, including without limitation: Meritain Health, Inc., PERFORMAX, Inc. and/or
any combination or derivative of the foregoing. Client hereby waives any right to assert any failure by Meritain
and/or any of its affiliates or subsidiaries to register any particular trade name as a defense to, or in avoidance of,
any claim or counterclaim made by Meritain and/or its affiliates or subsidiaries against Client arising out of or in
connection with the Agreement.
7.6 Counterparts. This Agreement may be executed in two or more counterparts, each and all of
which shall be deemed an original and all of which, together, shall constitute one and the same instrument.
7.6 No Oral Modification. No provision of this Agreement may be amended, augmented or in any
way modified except in a writing signed by a duly authorized representative of each of the parties.
7.7 Indemnification. The Client shall indemnify, defend (with counsel mutually agreed upon by the
parties), save and hold Meritain and its affiliates, and their officers, directors, employees and agents harmless
from and against any and all claims, suits, actions, liabilities, losses, fines, penalties, damages and expenses of
any kind (including, but not limited to, actual attomeys' fees) which Meritain may incur by reason of: (i) Client's or
its employees' or agents' failure to perform or abide by any of its duties under this Agreement; (ii) Client's failure
to administer the Plan in a prudent or proper manner; (iii) any negligence or misconduct on the part of the Client
or its agents or representatives; (iv) any disputes arising out of partial payment or denial of a claim by either the
Client or the excess risk carrier; (v) any action taken by Meritain at the direction of the Client; (vi) Meritain's
inability to comply with PPO prompt pay discounts due to circumstances beyond its control such as, additional
information needed from the Client, Participant, excess stop -loss provider or Provider, incomplete claim, eligibility
or coverage information, untimely repricing from the vendor, or Client's failure to fund claims in a timely manner;
or (vii) the Client's violation of any of the acknowledgements, warranties or representations made by the Client
contained herein. Meritain shall indemnify, defend (with counsel mutually agreed upon by the parties), save and
hold the Client harmless from and against any and all claims, suits, actions, liabilities, losses, fines, penalties,
damages and expenses of any kind (including, but not limited to, actual attorneys' fees) which Client may incur by
reason of: (I) Meritain's gross negligence, willful failure to act or willful misconduct in the performance of its duties
10
under the Agreement; (ii) Meritain's fraud or embezzlement or other financial willful misconduct related to the
Agreement; or (iii) Mentain's violation of any of the express warranties of Meritain contained herein; provided,
however that Meritain's cumulative liability arising in connection with the performance of services under this
Agreement shall not exceed the total fees payable by Client under this Agreement for the specific services giving
rise to the claim. Notwithstanding the foregoing, Client acknowledges and agrees that Meritain shall not be liable
for any mistake of judgment or for any action taken in good faith, and that any clerical error made by Meritain in
the performance of its duties under this Agreement will not be construed as negligence or gross negligence
provided that Meritain makes a good faith attempt to correct any such error once it is discovered.
7.8 Severability. In the event any provision of this Agreement is held to be invalid, illegal or
unenforceable for any reason or in any respect, such invalidity, illegality or unenforceability shall in no event
affect, prejudice or disturb the validity of the remainder of this Agreement, which shall be in full force and effect,
enforceable in accordance with its terms.
7.9 Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of
the State of New York, to the extent such laws are not preempted by ERISA.
7.10 Dispute Resolution/Waiver of Jury Trial. in the event either party is dissatisfied with the other
party's performance under this Agreement, or in the event of any other dispute, claim, question, or disagreement
("dispute") arising from or relating to this Agreement or the claimed or actual breach thereof, the parties hereto
shall use their best efforts to settle the dispute without resort to court. To this end, the parties shall consult and
negotiate with each other in good faith and, recognizing their mutual interest, attempt to reach a just and equitable
solution satisfactory to both parties, in as expeditious and non -confrontational manner as possible. Before
invoking litigation and as a condition to an award therein of attorney's fees based on the parties' Agreement, the
parties shall first participate in good faith in a mediation of any dispute arising under this Agreement (whether in
contract, tort or both). Therefore the parties agree to the following dispute resolution procedures:
Step I - Informal Discussion. Should any dispute arise, the complaining party shall first attempt to arrange
for an informal discussion with the other to come to a mutually agreeable resolution within thirty (30) days
of notice of the dispute to the other party.
Step II - Mediation. Should the dispute fail to be resolved by Step 1, the parties shall submit the dispute to
mediation in accordance with the commercial mediation rules of the Judicial Arbitration and Mediation
Service ("JAMS") or another mutually agreeable mediation service. Each party shall pay one-half ('/z) of
the mediation fees charged by the mediation service and the mediator, and each party shall bear its own
attorney's fees and costs for the mediation, which shall occur exclusively in Orange County, California.
If a party has participated in the mediation and is dissatisfied with an outcome, the party may litigate the
dispute and shall not be compelled to proceed with arbitration except as required by law.
Further, and to the extent permitted by law, the parties hereto each waive any right each of them has to a
trial by jury with respect to any issue or controversy arising from, relating to, or with respect to this
Agreement or any of the terms and provisions hereof.
7.10.1 If any action at law or in equity, including an action for declaratory relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable attorneys'
fees, including in-house counsel fees, which may be set by the court in the same action, or in a separate
action brought for that purpose, in addition to any other relief to which that party may be entitled. A good
faith participation in the Dispute Resolution process described in this section is a condition to recovery of
attorney's fees under this Agreement. The venue for any such action will be exclusively Orange County,
California.
7.11 No Third Party Beneficiaries. Nothing expressed or implied in this Agreement is intended or shall
be construed to confer upon, or give to any third party (including without limitation, Plan Participants), any rights
or remedies against any party hereto. The parties agree that Scrip World, LLC is an independent contractor of
Meritain and that Scrip World, LLC shall have no rights, benefits or duties under this Agreement and further, that
11
Meritain shall have no rights, benefits or duties under any agreement between Client and Scrip World, LLC (if
any).
7.12 Force Maieure. Meritain shall not be liable to the Client for any failure to satisfy an obligation,
representation or warranty under this Agreement due to any cause beyond its reasonable control including, but
not limited to, inclement weather, acts of God, war, riot, malicious acts of damage, civil commotion, strike, lockout,
industrial dispute, power failure or fire. If such a condition prevents Meritain's performance under this Agreement
for a continuous period of ninety (90) days or more, the Client may terminate this Agreement by properly delivered
written notice.
7.13 Subsequent Documents. The parties agree that each shall timely execute or provide any further
documents that will be reasonably necessary to effect any term, condition, warranty or other part or aspect of this
Agreement.
7.14 Assignment. The Client may not assign this Agreement, in whole or in part, without the prior
written consent of Meritain, which consent shall not be unreasonably withheld.
7.15 Waiver. No waiver of any term or provision of this Agreement, nor consent to any failure to
perform under, or breach of this Agreement, shall be binding against either of the parties unless such party
delivers a writing, signed by a duly authorized representative, expressly stating that it has waived any such term
or provision. There shall be no implied waivers or consents. No waiver respecting an expressly identified term or
provision, or consent to an expressly identified act or omission, will have any effect on the balance of this
Agreement, or the balance of a party's conduct.
7.16 Approval of Agreement: Binding Nature. Client acknowledges and agrees that it has been
provided with the opportunity to engage its own counsel to review this Agreement and any Plan Documents on its
behalf. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective
legal representatives and permitted successors.
7.17 Notices. Any notice or other communication permitted or required to be given under this
Agreement shall be in writing and shall be (a) delivered in person, (b) mailed, by certified mail, return receipt
requested, postage prepaid, (c) sent by recognized overnight courier, or (d) transmitted by facsimile, to the
following:
If to Meritain:
Meritain Health, Inc.
300 Corporate Parkway
Amherst, New York 14226
Attention: Chairman and CEO
Facsimile: 716-319-5783
With copies to:
Melissa Elwood
Regional President
300 Corporate Parkway
Amherst, New York 14226
and:
Andrea Balogh, Esq.
Senior Vice President and General Counsel
300 Corporate Parkway
Amherst, New York 14226
Facsimile No.: 716-319-5597
If to the Client:
12
City of Newport Beach
PO Box 1768
3300 Newport Boulevard
Newport Beach, California 92658
Attention: Terri Cassidy
Deputy City Manager/Human Resources Director
Facsimile No.: (949) 644-3305
7.18 Miscellaneous. Headings and subheadings herein are for convenience of reference only and are
not of substantive effect. Terms used herein whether singular or plural shall be deemed to be singular or plural as
the context may require.
7.19 Survival. Notwithstanding anything herein to the contrary, the following provisions shall be
deemed to survive the expiration or termination of this Agreement: Exhibit A, and Sections 2.2, 2.5, 2.6, 2.7, 3.4,
3.5, 3.10, 3.17, 4.2, 4.3, 4.5, 4.6, 4.7, 4.15, 6.1, 6.8, 6.9, 6.10, 6.11, 6.14, 6.15, 6.17, 7.2, 7.3, 7.7, 7.9, 7.10 and
7.19.
7.19 Insurance. Without limiting Meritain's indemnification of City, and prior to commencement of Work;
Meritain shall obtain, provide and maintain at its own expense during the term of this Agreement or for other
periods as specified in this Agreement, policies of insurance of the type, amounts, terms and conditions described
in the Insurance Requirements attached hereto as Exhibit C, and incorporated herein by reference.
7.20. Amendments. This Agreement may be modified or amended only by a written document executed
by both Meritain and Client and approved as to form by the City Attorney for the Client.
In Witness Whereof, the parties have executed this Agreement on the dates set forth below.
Meritain Health, Inc.
Melissa Elwood
Regional President
Date: 512-1 b.5
City of Newport Beach
Print Name:_ nave Ki f f
Title: c,; tW Manager
Date: (PI ►-j I n,
APPROVED AS TO FORM:
CITY ATT/O N 'S OFFICE
Date: l,c
By: V
Aaron C. Harp
City Attorney �`�EWPo�r
ATTEST:
Date: ''� "
c41Foa'%P
13
By:
Dgm"� , N��
Leilani 1. Brown / ,�-72
City Clerk Q�
Attachments: Exhibit A: HIPAA Business Associate Agreement
Exhibit B: Disclosure Notice Regarding Insurance Commission and other
Compensation
Exhibit C: insurance Requirements
14
Exhibit A
HIPAA BUSINESS ASSOCIATE AGREEMENT
This HIPAA Business Associate Agreement ("BA Agreement") supplements and is made a part of the
Agreement (defined below), and is effective as of the effective date of the Agreement (the "Effective
Date").
RECITALS
A. City of Newport Beach ("Client") is a Covered Entity as defined under the Health Insurance
Portability and Accountability Act of 1996, Public Law 104-191 ("HIPAA") and regulations promulgated
thereunder by the U.S. Department of Health and Human Services (the "HIPAA Regulations") and other
applicable laws.
B. Meritain Health, Inc. ("Business Associate") may receive certain information, some of which may
be Protected Health Information or PHI (as defined below) or Electronic Protected Health Information or
EPHI (as defined below) from Client pursuant to an agreement under which Business Associate provides
services or products to Client (the "Agreement"). Such information can be used or disclosed only in
accordance with this BA Agreement and the standards established by the Privacy Rule (as defined
below) and the Security Rule (as defined below).
For and in consideration of the mutual promises below and the exchange of information pursuant to this
BA Agreement, the parties agree as follows:
1. Definitions
a. "Business Associate" shall have the meaning given to such term under the Privacy Rule
and the Security Rule, including, but not limited to, 45 CFR § 160.103.
b. "Covered Entity" shall have the meaning given to such term under the Privacy Rule and
the Security Rule, including but not limited to, 45 CFR § 160.103.
a "Data Aggregation" shall have the meaning given to such term under the Privacy Rule
and the Security Rule, including, but not limited to, 45 CFR § 164.501.
d. "Designated Record Set" shall have the meaning given to such term under the Privacy
Rule and the Security Rule, including, but not limited to, 45 CFR § 164.501.
e. "Electronic Protected Health Information" or "EPHI" shall mean that subset of PHI (as
defined below) that is transmitted in electronic media, including, but not limited to, hard drives, disks, on
the internet, or on an intranet.
f. "Individual" shall have the same meaning as defined in 45 CFR § 160.103 and shall
include a person who qualifies as a personal representative in accordance with 45 GFR § 164.502(g).
g. "Privacy Rule" shall mean the Standards for Privacy of Individually Identifiable Health
Information at 45 CFR Part 160 and Part 164, Subparts A and E.
h. "Protected Health Information" or "PHI" includes EPHI, and shall have the same meaning
as defined in 45 CFR § 160.103, limited to the information created or received by Business Associate
from or on behalf of Client.
I. "Required By Law" shall have the same meaning given to such term in 45 CFR §
164.103.
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j. "Secretary" shall mean the Secretary of the Department of Health and Human Services or
his designee.
k. "Security Rule" shall mean the Security Standards at 45 CFR Parts 160, 162, and 164.
Capitalized terms used, but not otherwise defined, in this BA Agreement shall have the same
meaning as those terms in the Privacy Rule or the Security Rule or in the Agreement, as applicable.
2, Obligations of Business Associate.
a. Business Associate agrees to not use or disclose PHI other than as permitted or required
by this BA Agreement or as Required By Law.
b. Business Associate agrees to use appropriate safeguards to prevent use or disclosure of
the PHI other than as provided for by this BA Agreement.
C. Business Associate agrees to report to Client any use or disclosure of the PHI not
provided for by this BA Agreement of which it becomes aware.
d. Business Associate agrees to ensure that any agent, including a subcontractor, to whom
it provides PHI received from, or created or received by Business Associate on behalf of Client, agrees to
the same restrictions and conditions that apply through this BA Agreement to Business Associate with
respect to such Information.
e. Business Associate agrees to provide access, at the request of Client, to PHI in a
Designated Record Set, to Client or, as directed by Client, to an Individual in order to meet the
requirements under 45 CFR § 164.524.
f. Business Associate agrees to make any amendment(s) to PHI in a Designated Record
Set that the Client directs or agrees to pursuant to 45 CFR § 164.526 at the request of Client or an
Individual.
g. Business Associate agrees to make internal practices, books, and records, including
policies and procedures, relating to the use and disclosure of PHI received from, or created or received
by Business Associate on behalf of, Client available to Client, or to the Secretary, or an entity designated
by the Secretary, for purposes of the Secretary determining Client's compliance with the Privacy Rule and
the Security Rule.
h. Business Associate agrees to document such disclosures of PHI and information related
to such disclosures as would be required for Client to respond to a request by an Individual for an
accounting of disclosures of PHI in accordance with 45 CFR § 164.528.
I. Business Associate agrees to provide to Client or an Individual information collected In
accordance with Section 2.h. of this Agreement, to permit Client to respond to a request by an Individual
for an accounting of disclosures of PHI in accordance with 45 CFR § 164.528.
3. Permitted Uses and Disclosures.
a. Except as otherwise limited in this BA Agreement, Business Associate may use or
disclose PHI to perform functions, activities, or services for, or on behalf of, Client as specified in the
Agreement, provided such use or disclosure would not violate the Privacy Rule or the Security Rule if
done by Client or the minimum necessary policies and procedures of Client.
b. Except as otherwise limited in this BA Agreement, Business Associate may use PHI for
the proper management and administration of the Business Associate or to carry out the legal
responsibilities of the Business Associate.
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C, Except as otherwise limited in this BA Agreement, Business Associate may disclose PHI
for the proper management and administration of the Business Associate, provided that disclosures are
Required By Law, or Business Associate obtains reasonable assurances from the person to whom the
information is disclosed that it will remain confidential and used or further disclosed only as Required By
Law or for the purpose for which it was disclosed to the person, and the person notifies the Business
Associate of any instances of which it is aware in which the confidentiality of the information has been
breached.
d. Except as otherwise limited in this BA Agreement, Business Associate may use PHI to
provide data Aggregation services to Client as permitted by 45 CFR § 164.504(e)(2)(i)(B).
e. Business Associate may use PHI to report violations of law to appropriate Federal and
State authorities, consistent with 45 CFR § 164.5020)(1).
4. Obligations of Client. With regard to the use and/or disclosure of PHI by Business Associate,
Client hereby agrees:
a. to inform Business Associate of any changes in the form of Notice of Privacy Practices
(the "Notice") that Client provides to Individuals pursuant to 45 CFR § 164.520, and provide Business
Associate a copy of the Notice currently in use.
b. to inform Business Associate of any changes in, or withdrawal of, authorization provided
to Client by Individuals pursuant to 45 CFR § 164.508 to the extent that such changes may affect
Business Associate's use or disclosure of PHI.
c. to inform Business Associate of any opt -outs exercised by an Individual from fundraising
activities of Client pursuant to 45 CFR § 164.514(e) if Business Associate's services involve fundraising.
d. to notify Business Associate, in writing and in a timely manner, of any arrangements
permitted or required of Client under 45 CFR Part 160 and 164 that may impact in any manner the use
and/or disclosure of PHI as provided for in 46 CFR § 164.522 agreed to by Client.
5. Term and Termination.
a. Term. The term of this BA Agreement shall be effective as of the Effective Date, and
shall terminate when all of the PHI provided by Client to Business Associate is destroyed or returned to
Client, or if it is infeasible to return or destroy PHI, protections are extended to such information in
accordance with the termination provisions of this Section.
b. Termination for Cause. Upon Client's knowledge of a material breach by Business
Associate, Client shall either:
Provide a reasonable opportunity for Business Associate to cure the breach or
end the violation and terminate this BA Agreement if Business Associate does
not cure the breach or end the violation within the reasonable period of time
specified by Client;
(ii) Immediately terminate this BA Agreement if Business Associate has breached a
material term of this BA Agreement and cure is not possible; or
(iii) if neither termination nor cure is feasible, Client shall report the violation to the
Secretary.
c. Effect of Termination. Upon termination of this BA Agreement for any reason, Business
Associate shall return or destroy all PHI that Business Associate or its agents or subcontractors still
maintain in any form, and shall retain no copies of such PHI, except that Business Associate may retain
one archival copy of PHI in a secure environment for the purpose of showing that it complied with the
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terms of this BA Agreement. If return or destruction is not feasible, Business Associate shall continue to
extend the protections of this BA Agreement to such information, and limit further use of such PHI to
those purposes that make the return or destruction of such PHI infeasible.
6. Security Standards.
a. Business Associate shall implement administrative, physical and technical safeguards
that reasonably and appropriately protect the Confidentiality, Integrity and Availability of EPHI that it
creates, receives, maintains, or transmits on behalf of Client.
b. Business Associate shall ensure that any agent, including a subcontractor, to whom it
provides EPHI, agrees to implement reasonable and appropriate safeguards to protect such EPHI.
C. Business Associate shall report in writing to Client upon becoming aware of any Security
Incident involving EPHI, and as reasonably appropriate, shall advise Client of measures Business
Associate will be taking to mitigate harm from such Security Incident, and to prevent similar future
incidents.
d. Without limiting the provisions of Section 6.c. above, Business Associate agrees to report
to Client, after it becomes aware of any breach of Unsecured Protected Health Information (as defined in
Section 13402 of the American Recovery and Reinvestment Act of 2009 ("ARRA"), or if subsequently
defined in any regulations issued by the Secretary, as so defined in such regulations in effect at the time
of such breach), and provide to Client a list of all affected individuals. Business Associate shall cooperate
with Client in making any requisite notifications to individuals and the Secretary as a result of such
breach, including paying for the cost of notification to individuals, and of media notification if the legal
requirements for media notification are triggered by the circumstances of such breach, provided that
Business Associate shall not initiate any such notifications without approval of Client.
e. Business Associate shall make its policies and procedures and documentation required
by the Security Rule relating to the safeguards described in subsection 6.a. above, available to Client and
to the Secretary for purposes of determining Client's compliance with the Security Rule, and the Business
Associate's compliance with ARRA.
7. Amendment, This BA Agreement may not be modified or amended except by a writing duly
signed by an authorized representative of each party, provided, however, that in the event HIPAA or
ARRA is amended, the parties agree that this BA Agreement shall be automatically amended so that it
complies with applicable law, including, without limitation, the requirements of the Privacy Rule, the
Security Rule, and other provisions of HIPAA and ARRA.
8. No Third -Party Beneficiaries_ Nothing express or implied in this BA Agreement is intended to
confer, nor shall anything herein confer, upon any person other than Client, Business Associate and their
respective successors or assigns, any rights, remedies, obligations or liability whatsoever.
9. No Waiver. No waiver of a breach of any provision of this BA Agreement shall be construed to be
a waiver of any breach of any other provision of this BA Agreement or of any succeeding breach of the
same provision. No delay in action with regard to any breach of any provision of this BA Agreement shall
be construed to be a waiver of such breach.
% Effect on Agreement. Except as specifically required to implement the purposes of this BA
Agreement all other terms of the Agreement shall remain in force and effect.
11. Severability. If any section or portion of this BA Agreement shall be determined to be invalid,
such determination shall not affect the enforceability or validity of the remainder of this BA Agreement.
12. Interpretation. The provisions of this BA Agreement shall prevail over any provisions in the
Agreement that may conflict or appear inconsistent with any provision in this BA Agreement.
IN
13. Regulatory References. A reference in this BA Agreement to a section in the Privacy Rule or the
Security Rule means the section as in effect or as amended.
IN WITNESS WHEREOF, the parties hereto have duly executed this BA Agreement, to be effective as of
the date written above.
Meritain Health, Inc.
Melissa Elwood
Regional President
Date: 5/y 1a
City of Newport Beach
C 'lL AN
Print Name: na:IP K i f f
Title: City Manager
Date: (A tAhl
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date:
Aaron C. Harp
Citi Attnrnau
AT
f
By
Le
City Clerk
Attachments: Exhibit A: HIPAA Business Associate Agreement
Exhibit R Disclosure Notice Regarding Insurance Commission and other
Compensation
Exhibit C: Insurance Requirements
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Exhibit B
DISCLOSURE NOTICE REGARDING INSURANCE COMMISSIONS AND OTHER COMPENSATION
U.S. Department of Labor rules permit the receipt of insurance commissions and other compensation by service
providers such as Meritain (and its affiliates) if proper disclosure is given and an appropriate independent Plan
fiduciary acknowledges in writing receipt of the information and approves the transaction. The commissions and
other compensation to be paid to Meritain are set forth in this Agreement. By signing this Agreement and any
Renewal Schedules of Services and Fees, Client certifies that it is an independent fiduciary of the Plan and that it
acknowledges in writing receipt of the following information and approves the transactions referenced herein.
A. Statement of Affiliation
Prodigy Health Group, Inc. is a diversified health care services holding company whose subsidiaries include
American Health Holding, Inc., Scrip World, LLC, Precision Benefit Services, Inc., Meritain Health. Inc. and
PERFORMAX, Inc. Each affiliate is free to recommend to a client, products and services offered by other
companies, which may include another affiliate, however, no affiliate is required to recommend an affiliate and no
affiliate is limited or restricted in recommending the products and/or services of any vendor. Affiliates may be
entitled to reasonable commissions and fees from other companies, including affiliates, and such commissions
and fees are earned in the ordinary course of business in arms' length transactions, in addition. certain inter-
company agreements exist amongst the affiliates to provide for the exchange of certain goods, services, and
leases of real property at market-based rates of compensation.
Other Fees
From time to time, Meritain may engage third party vendors to perform or provide services in connection with this
Agreement. In some cases Meritain will pay the vendor as a subcontractor out of fees it has collected pursuant to
this Agreement.
When Meritain provides or arranges for subrogation services, Client agrees to pay Meritain an administrative fee
of 25% of the gross savings resulting from such services.
In the event Meritain engages an out -of -network discount program, claim auditor. independent case reviewer, cost
management vendor. bill negotiator. discount program or other contingency fee vendor to provide services on
behalf of the Plan, Meritain shall be entitled to retain a contingency fee up to 25% of the net savings resulting from
the engagement.
In cases where Meritain provides direct services, through its employees and agents, to negotiate bills. reduce
claim amounts. access additional discounts or otherwise increase savings on behalf of the Plan. Mentain shall be
entitled to retain a contingency fee up to 25% of the savings resulting from such services.
The disclosures set forth in this Exhibit B. together with the disclosures set forth in Article V. of this Agreement.
represent Meritain's best reasonable estimate of the total amount of all direct and indirect compensation Meritain
may receive in connection with this Agreement. The actual amount may vary during the course of this Agreement
based upon changes in the number of participants. utilization and other factors external to this Agreement_ With
respect to all compensation Meritain actually receives as a result of this Agreement. Meritain wil; disclose such
amounts to Client annually. upon request, to the extent required to assist Client in filing its Form 5500
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INSURANCE REQUIREMENTS — PROFESSIONAL SERVICES
1.1 Provision of Insurance. Without limiting Meritain's indemnification of Client, and prior to
commencement of Work, Meritain shall obtain, provide and maintain at its own expense during the term
of this Agreement, policies of insurance of the type and amounts described below and in a form
satisfactory to Client. Meritain agrees to provide insurance in accordance with requirements set forth
here. If Meritain uses existing coverage to comply and that coverage does not meet these requirements,
Meritain agrees to amend, supplement or endorse the existing coverage.
12 Acceptable Insurers. All insurance policies shall be issued by an insurance company
currently authorized by the Insurance Commissioner to transact business of insurance in the State of
California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII
(or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by
the Client's Risk Manager.
1.3 Coverage Requirements.
1.3.1 Workers' Compensation Insurance. Meritain shall maintain Workers'
Compensation Insurance, statutory limits, and Employer's Liability Insurance with limits of at least one
million dollars ($1,000,000) each accident for bodily injury by accident and each employee for bodily
injury by disease in accordance with the laws of the State of California, Section 3700 of the Labor Code,
1.3.1.1 Meritain shalt submit to Client, along with the certificate of insurance, a
Waiver of Subrogation endorsement in favor of Client, its officers, agents, employees and volunteers.
1.3.2 General Liability Insurance. Meritain shall maintain commercial general liability
insurance, and if necessary umbrella liability insurance, with coverage at least as broad as provided by
Insurance Services Office form CG 00 01, in an amount not less than one million dollars ($1,000,000) per
occurrence, two million dollars ($2,000,000) general aggregate. The policy shall cover liability arising
from premises, operations, products -completed operations, personal and advertising injury, and liability
assumed under an insured contract (including the tort liability of another assumed in a business contract)
with no endorsement or modification limiting the scope of coverage for liability assumed under a contract.
1.3.3 Automobile Liability Insurance. Meritain shall maintain automobile insurance at
least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage
for all activities of the Meritain arising out of or in connection with Work to be performed under this
Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not
less than one million dollars ($1,000,000) combined single limit each accident.
1.3.4 Professional Liability (Errors & Omissions) Insurance. Meritain shall maintain
professional liability insurance that covers the Services to be performed in connection with this
Agreement, in the minimum amount of one million dollars ($1,000,000) per claim and in the aggregate.
Any policy inception date, continuity date, or retroactive date must be before the effective date of this
agreement and Meritain agrees to maintain continuous coverage through a period no less than three
years after completion of the services required by this agreement.
1.4 Other Insurance Requirements. The policies are to contain, or be endorsed to contain,
the following provisions:
1.4.1 Additional Insured Status. All liability policies including general liability, excess
liability, and automobile liability, but not including professional liability, shall provide or be endorsed to
provide that Client and its officers, officials, employees, and agents shall be included as insureds under
such policies.
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1.4.2 Primary and Non Contributory. All liability coverage shall apply on a primary
basis and shall not require contribution from any insurance or self-insurance maintained by Client.
1.4.3 Notice of Cancellation. Meritain shall endeavor to provide Client with thirty (30)
days notice of cancellation (except for nonpayment for which ten (10) days notice is required) or
nonrenewal of coverage for each required coverage.
1.5 Additional Agreements Between the Parties. The parties hereby agree to the following:
1.5.1 Evidence of Insurance. Meritain shall provide certificates of insurance to Client
as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement
for workers' compensation and other endorsements as specified herein for each coverage. Insurance
certificates and endorsement must be approved by Client's Risk Manager prior to commencement of
performance. Current certification of insurance shall be provided to Client Annually upon request.
1.5.2 Client's Right to Revise Requirements. The Client reserves the right at any time
during the term of the Agreement to change the amounts and types of insurance required by giving the
Meritain sixty (60) days advance written notice of such change. If such change results in substantial
additional cost to the Meritain, the Client and Meritain may renegotiate Meritain's compensation.
1.5.3 Enforcement of Agreement Provisions. Meritain acknowledges and agrees that
any actual or alleged failure on the part of the Client to inform Meritain of non-compliance with any
requirement imposes no additional obligations on the Client nor does it waive any rights hereunder.
1.5.4 Requirements not Limiting, Requirements of specific coverage features or limits
contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a
waiver of any coverage normally provided by any insurance. Specific reference to a given coverage
feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party
or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type.
1.5.5 Self-insured Retentions. Any self-insured retentions must be declared to and
approved by Client. Client reserves the right to require that self-insured retentions be eliminated, lowered,
or replaced by a deductible.
1.5.6 Client Remedies for Non Compliance if Meritain or any subconsuitant fails to
provide and maintain insurance as required herein, then Client shall have the right but not the obligation,
to purchase such insurance, to terminate this agreement, or to suspend Meritain's right to proceed until
proper evidence of insurance is provided. Any amounts paid by Client shall, at Client's sole option, be
deducted from amounts payable to Meritain or reimbursed by Meritain upon demand.
1.5.7 Timely Notice of Claims. Meritain shalt give Client prompt and timely notice of
claims made or suits instituted that arise out of or result from Meritain's performance under this
Agreement, and that involve or may involve coverage under any of the required liability policies.
1.5.8 Meritain's insurance. Meritain shall also procure and maintain, at its own cost
and expense, any additional kinds of insurance, which in its own judgment may be necessary for its
proper protection and prosecution of the Work.
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