Services and License Agreement
Between ActaMed Corporation
and United HealthCare Corporation
This Services and License Agreement (the "Agreement") is made and
entered into as of April 4, 1996 (the "Effective Date"), by and between
ActaMed Corporation ("ActaMed") and United HealthCare Corporation ("UHC"),
for itself and on behalf of each of the Managed Plans which has given its
written consent (as hereinafter defined).
RECITALS
A. ActaMed is in the business of providing electronic data
interchange products and services to the health care industry.
B. UHC, for itself on and behalf of its Affiliates (including The
MetraHealth Companies, Inc.), and other entities that UHC may hereafter
acquire, and on behalf of the health maintenance organizations identified in
Exhibit A hereto that are managed by UHC or an Affiliate thereof and which
have given their consent to be bound by this Agreement (which plans which
give their consent are referred to herein as the "Managed Plans"), desires to
obtain from ActaMed certain software and materials and access to the Network,
on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties agree as follows.
1. DEFINITIONS.
1.1 "Affiliate" means with respect to a party, an entity directly
or indirectly controlling, controlled by or under common control with such
party where control means the ownership or control, directly or indirectly,
of more than fifty percent of all of the voting power of the shares (or other
securities or rights) entitled to vote for the election of directors or other
governing authority, as of the Effective Date or hereafter during the term of
this Agreement; provided that such entity shall be considered an Affiliate
only for the time during which such control exists. The Managed Plans shall
be considered to be Affiliates of UHC.
1.2 "Cosmos" means the computer program owned by UHC which is
commonly known as Cosmos, and which UHC operates for health care claims
adjudication and other business functions.
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1.3 "Enhancements" means changes or additions to application
software and documentation that improve existing Functions, add new
Functions, or improve performance through changes in the system design or
coding.
1.4 "Functions" means the tasks employed by users to exchange
information within the Network.
1.5 "Licensed Materials" shall mean the Network Software, the
ORBIT software (i.e., the ProviderLink billing and registration system), and
the documentation, training materials, and other materials related to the
Network Software or the Network which are listed on Exhibit B attached to
this Agreement. All updates and new versions of such materials are also
included in the definition of "Licensed Materials".
1.6 "Network" means the electronic data interchange ("EDI") system
and network operated by ActaMed, which includes the Network Software,
including any future versions of the EDI network or products substituting for
it which include the basic functionality of the Network Software and network
as of the Effective Date, regardless of the name under which it is marketed.
The term "Network" specifically excludes any telecommunications network.
1.7 "Network Software" means the personal computer version of the
ProviderLink and ActaLink presentation and network software programs, and all
updates to them, which are licensed to users and which allow access to the
Network for the transmission and reception of information.
1.8 "Provider" means a provider of health care services, which is
not UHC, an Affiliate of UHC, or operated by UHC.
1.9 "UHC" means United HealthCare Corporation and its Affiliates.
2. LICENSE AND NETWORK ACCESS.
2.1 ActaMed grants UHC the nonexclusive, nontransferable right to
use the Licensed Materials, to reproduce and modify those of the Licensed
Materials so designated on Exhibit B, and to access and utilize the services
of the Network, for UHC's internal use, on the terms set forth in this
Agreement. UHC's internal use shall include use by and/or on behalf of (a)
UHC or any UHC Affiliate; and (b) third parties that are purchasers of UHC's
products and/or services, including management services, as well as UHC's
health care service providers (including, without limitation, NYH Health Plan
Services, Inc. ("NYHHPS") and its subsidiaries and/or affiliates pursuant to
the First Restated Administrative Services Agreement between UHC and NYHHPS,
dated September 1, 1994, as amended from time to time). UHC's access to use
the Network will be on the same operational basis which ActaMed offers the
Network to its other customers of the Network, except as otherwise provided
in this Agreement.
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2.2 UHC shall submit all permitted modifications it makes to the
Licensed Materials for ActaMed's approval, prior to distributing the
modifications. If ActaMed does not respond to UHC within fourteen days after
UHC submits modifications to ActaMed for approval, the modifications shall be
deemed approved. On the copies of the Licensed Materials UHC makes, UHC
shall reproduce all notices or legends appearing on the original copy,
including the copyright notice. All copies of the Licensed Materials made by
UHC can be used only as permitted under this Agreement. At any time within
ten days after ActaMed's written request, UHC shall inform ActaMed of the
number and location of all copies of the Licensed Materials UHC has made.
2.3 UHC shall have the right to install the Network Software at
any UHC location and at any locations of Providers working with UHC, and to
connect such locations to the Network. ActaMed will install the Network
Software at UHC or Provider sites and connect them to the Network, when
mutually agreed by the parties. UHC and ActaMed will do agreed upon
installations in a timely manner. UHC and ActaMed must continue to use the
installation procedures developed by UHC or other mutually agreeable
installation procedures (except as provided in any agreements directly
between ActaMed and a UHC health plan, such as UHC Georgia) for such sites.
UHC shall not be obligated under paragraph 12.1 to pay a monthly site fee or
transaction fees for any Provider connected to the Network by ActaMed, unless
UHC has agreed to be responsible for such Provider and fees.
2.4 Any development work on the Licensed Materials or the Network
which was in progress on the date of this Agreement, will be provided to UHC
upon completion and included within the definition of "Licensed Materials",
at no charge to UHC, if it is set forth on Exhibit C attached to this
Agreement.
2.5 UHC shall not act as a clearinghouse for health care claims
going to payors other than UHC, other than as required by a UHC client, such
as UBS misdirected Railroad Retirement claims and Medicare cross-over claims.
2.6 If UHC desires to and ActaMed agrees that UHC may use and
implement the Licensed Materials or the Network technology outside North
America, UHC and ActaMed shall mutually agree upon the terms and conditions
of such use and implementation.
2.7 Except as otherwise provided in this Agreement, ActaMed
provides the Licensed Materials to UHC on an "AS IS, WHERE IS" basis.
ACTAMED EXPRESSLY DISCLAIMS ANY WARRANTIES, EXPRESS OR IMPLIED, RELATING TO
THE LICENSED MATERIALS, INCLUDING, BUT NOT LIMITED TO, THE WARRANTIES OF
TITLE, NONINFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
OR USE.
2.8 Except as otherwise provided in this Agreement, UHC shall not
(a) copy, reproduce, modify, or excerpt any of the Licensed Materials for any
purpose; (b) distribute,
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rent, sublicense, share, transfer or lease the Licensed Materials or access
to the Network, to any person or entity which is not a party to this
Agreement; or (c) attempt to reverse engineer or otherwise obtain copies of
the source code for the Licensed Materials.
2.9 UHC acknowledges that the Licensed Materials may contain
embedded runtime modules of products licensed to ActaMed by Sybase, Inc.
("Sybase") and, accordingly, that Sybase as an interested third party
beneficiary of this Agreement, may enforce this Agreement directly against
UHC and shall have no liability to UHC. In addition, UHC agrees that Sybase
shall have the right to direct a recognized independent accounting firm to
conduct, during normal business hours, an audit of appropriate records of UHC
to verify (a) the number of copies of the Licensed Materials in use by UHC,
and the computer systems on which such copies are installed, the number of
processors in such computer systems, and the number of users using such
copies; and (b) UHC's compliance with this Agreement. Representatives of the
auditing firm shall protect the confidentiality of UHC's confidential
information and abide by UHC's reasonable security regulations while on UHC's
premises.
2.10 ActaMed agrees that ActaMed does not own and cannot use,
distribute or publish any data transmitted over the Network either to or from
UHC, except to the extent such data originates with ActaMed. Notwithstanding
the above, ActaMed shall have the right to collect and distribute data
transmitted over the Network back to the originator of such data.
3. MARKETING AND IMPLEMENTATION OF NETWORK PRODUCTS.
3.1 UHC will identify the business needs, goals and objectives of
UHC for ActaMed, and will establish targets for the number and volume of
Providers submitting electronic transactions. These numbers will be
estimates, and not guarantees, for any amount of business for ActaMed. UHC
will provide this information to ActaMed no less often than quarterly, and
shall respond to additional requests for information within thirty days of
ActaMed's request. The parties shall mutually agree upon any other
information or data which UHC may give to ActaMed under this Agreement.
3.2 ActaMed will appoint at least one representative dedicated to
the UHC account, who will have decision making capabilities for ActaMed.
This person will attend planning meetings with UHC, keep UHC updated on
national trends in EDI, and consult with UHC regarding ActaMed's software and
network strategy. ActaMed will provide a representative to WEDI and ANSI to
represent UHC, upon UHC's request. UHC shall also designate a representative
to work with ActaMed and to coordinate UHC's activities with ActaMed, who
will have decision making capabilities for UHC. This person will attend
planning meetings with ActaMed, keep ActaMed updated on technical
developments with respect to Cosmos, and coordinate UHC's activities with
ActaMed. J.R. Hughes will be the initial representative for ActaMed and Joy
Bahnemann will be the initial representative for UHC. Each party will
consult with the other before changing its designated representative.
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3.3 Exhibit D to this Agreement specifies the reports UHC will
deliver to ActaMed and ActaMed will deliver to UHC daily, weekly, monthly,
quarterly and annually. The parties shall also provide ad hoc reports to
each other at no cost to the requesting party.
3.4 ActaMed will submit to UHC for its input and comments a
comprehensive disaster recovery plan and documentation within 90 days after
the date of this Agreement. The plan shall include testing of the plan no
less often than annually and agreed upon time constraints within which full
recovery will be expected. ActaMed will accept comments from UHC and make
reasonable commercial efforts within the context of the Network to
incorporate such comments. ActaMed will use its best efforts to establish a
hot site under its disaster recovery plan which is not at a UHC data center
within one year after the date of this Agreement. ActaMed will submit
amended disaster recovery plans to UHC, for its information and input, any
time that ActaMed makes substantial changes to its plan. ActaMed will
participate in UHC's annual test of the UHC disaster recovery plan, with up
to forty hours of ActaMed personnel time at no cost to UHC. For any
additional time beyond the forty hours which UHC requests from ActaMed for
this purpose, UHC will pay ActaMed an agreed upon price.
3.5 ActaMed will establish a user group, to consult on priorities
and provide direction to ActaMed on system initiatives, which will include
representation from UHC, Providers and payors. ActaMed will solicit user
suggestions, input and feedback regarding the Network. ActaMed will provide
to UHC copies of customer satisfaction surveys and other similar information
regarding use of the Network at sites for which UHC is paying the monthly
site fee or any transaction fees.
3.6 UHC will make its sales and Provider relations personnel
available to work with ActaMed to develop new sites for use of the Network by
Providers working with UHC, to the same extent that such personnel work with
UHC's EDI Services to develop new sites as of the Effective Date. Pursuant
to paragraph 12.2, UHC shall have the option of performing installations and
implementations of the Network software itself, rather than contracting for
them through ActaMed. In such circumstances where UHC has decided not to
out-source such functions to ActaMed, UHC will continue to use health plan
ProviderLink representatives to install and implement the Network for new and
existing UHC-sponsored sites. UHC will also continue to use health plan
ProviderLink representatives to train and provide technical support to the
extent required under Exhibit F and section 8.
3.7 UHC shall sponsor a reasonable number of reference inquiries
and visits (not to exceed two visits in any calendar month) by customers and
potential customers of the Network, pursuant to ActaMed's Showcase Program,
on mutually agreeable terms. UHC shall retain the right to reasonably refuse
a site visit to any competitor or potential competitor of UHC, and ActaMed
shall inform all customers and potential customers allowed on UHC's premises
under this paragraph 3.7 that they are required to abide by
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UHC's security procedures and policies.
4. ACTAMED'S OBLIGATIONS REGARDING, NETWORK PRODUCT LINE.
4.1 ActaMed will, during the term of this Agreement, continue
maintaining the Licensed Materials and the Network, or other ActaMed products
which provide, at a minimum, substantially the same functionality as provided
by the Licensed Materials and the Network, on the Effective Date.
4.2 ActaMed will update the licensed Materials and the Network
with changes mandated by state or federal law and other changes required in
the reasonable opinion of the parties to meet market expectations for EDI,
including the ANSI X12N standard. The parties will mutually agree upon any
additional standards which ActaMed will need to maintain. If the changes
mandated by this paragraph apply to substantially all of ActaMed's customers,
then ActaMed will make such changes as part of a release of the Network or
the Licensed Materials pursuant to paragraph 8.1 or paragraph 8.2.
4.3 Subject to section 9, both parties will continue to work with
practice management system vendors to develop interfaces between practice
management programs and the Network, in order to be able to market the
Network to Providers. UHC will assist ActaMed in its attempts to establish
relationships with and work with practice management system vendors.
4.4 ActaMed will work with and cooperate with Allina and UHC to
formulate a plan allowing Allina to use the Network to operate its LaborLink
product, at UHC's request.
4.5 ActaMed will be responsible for notifying all Providers,
practice management vendors and other entities which are signatories to
Network agreements to be assigned by UHC to EDI Services, Inc. that the
assignee will be merged with and into ActaMed. UHC shall have the right to
review and approve the notice prior to ActaMed sending it to any Providers or
other signatories.
4.6 ActaMed shall place a copy of the source code, object code and
technical documentation for all software used in the operation of the Network
in escrow, including the Network Software, for the benefit of UHC, pursuant
to the escrow agreement attached to this Agreement as Exhibit E (the "Escrow
Agreement"). ActaMed shall cause UHC to be listed as a "Licensee" under the
Escrow Agreement and shall cause the Licensed Materials and all operational
computer software and documentation ActaMed uses to operate the Network to be
listed as a "System" under the Escrow Agreement, as soon as practical after
the Effective Date. In the event ActaMed ceases operating the Network for
any reason defined in such Escrow Agreement during the duration of this
Agreement, ActaMed shall deliver to UHC, for UHC's nonexclusive use, one
then-current copy of all operational computer software and documentation
ActaMed uses to operate the Network.
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5. UIHC'S OBLIGATIONS REGARDING THE NETWORK.
5.1 UHC shall generate or receive transaction data in the standard
format and the protocol set forth in such format which is in use as of the
Effective Date, or as otherwise mutually agreed upon by the parties. In the
event that ActaMed changes such format, UHC shall provide ActaMed with
standard output and test messages for ActaMed's use.
5.2 UIHC shall provide, at its own expense, all necessary
hardware, including terminal equipment, compatible with and suitable for its
communications with the Network. UIHC shall prepare the proper operating
environment as described in Exhibit J attached to this Agreement. ActaMed
shall verify UHC's operating environment with the testing procedure
established by ActaMed and agreed to by UHC.
6. ACCESS TO COSMOS AND OTHER PROPRIETARY UHC SOFTWARE.
6.1 ActaMed will not have access to Cosmos or any other UHC
proprietary systems, and will have no right to modify the computer code in
Cosmos, except as mutually agreed by the parties in writing. ActaMed will
not receive any part of the Cosmos code, except as mutually agreed by the
parties in writing. The Network will deliver claims and information to
Cosmos, and UHC is solely responsible for the operation of Cosmos.
6.2 UHC produces new releases of Cosmos four to five times each
year, and new releases of other UHC host computer systems (including host
computer systems operated by third party out-sources on behalf of UHC), from
time to time. UHC will give ActaMed notice of such changes and information
regarding them, and, if the changes require any modifications to the Network
or the Licensed Materials, the parties will mutually agree on the scope of
the project, the deliverables, deadlines, any fees ActaMed will charge UHC, a
test plan and an acceptance test plan.
6.3 If, at any point, UHC agrees that ActaMed needs access to any
other proprietary UHC software or systems, the parties shall negotiate a
limited license allowing ActaMed such access to be used only for UHC's
benefit.
6.4 ActaMed agrees that UHC shall be the sole and exclusive owner
of any and all changes ActaMed makes to the code in Cosmos or any other
computer system proprietary to UHC. ActaMed agrees to assign and hereby
assigns and transfers to UHC any and all rights which ActaMed may have in
such code, including any copyright, patent, trademark, trade secret and other
intellectual property rights. ActaMed will cooperate with UHC and will
execute any documentation reasonably required by UHC to assert or protect its
property rights in such code.
7. DEVELOPMENT OF NEW FUNCTIONALITY.
7.1 When ActaMed develops new functionality for the Network that
ActaMed
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offers generally to its customers, which is not included in a maintenance
release that ActaMed offers generally to its customers pursuant to paragraph
8.1, [*]
7.2 When UHC specifically requests development work from ActaMed,
for UHC's own use, the parties will negotiate a price at the time such work
is requested. If ActaMed will be permitted to use this custom work for other
customers, the price UHC pays ActaMed for such work [*] that [*] and [*]
7.3 When ActaMed performs development work on the Network at the
request of another customer, [*] to [*] at [*] for the [*] as long as
ActaMed has the legal right to [*] and such [*] is [*].
7.4 If, at any time, UHC chooses to contract with ActaMed for a
dedicated services team from ActaMed to handle development of new
functionality and other changes to the Network, the Licensed Materials, or
UHC's proprietary systems which are not covered under maintenance, ActaMed
will provide the dedicated team on mutually agreeable terms and conditions.
8. ACTAMED'S MAINTENANCE AND SUPPORT OBLIGATIONS.
8.1 ActaMed's maintenance releases for the Network and the
Licensed Materials shall be denoted by a three digit number where the first
number is the version number, the second number is the level number, and the
third number (if it is greater than 1) is the build number. For example,
release 2.1.2 is a maintenance release for the version 2.1.1 software.
ActaMed will provide new maintenance releases at no charge to all its Network
maintenance customers, including, without limitation, UHC.
8.2 The price UHC will pay ActaMed under paragraph 12.1 for
ActaMed's maintenance services under this Agreement does not include
Enhancements to the Network Software, such as new Functions, significant
redesigns or improvements of current Functions, or significant advances in
system performance. Enhancements are contained in Actamed's new versions
which are denoted by a three digit number, the first digit of which is the
version number, the second digit of which is a level number, and the third
digit of which is 1. For example, version 2.1.1 is followed by new version
numbers 2.2.1, 2.3.1, 2.4.1, 3.0.1, etc. ActaMed will make new versions of
the Network Software available to UHC upon payment in accordance with
paragraph 7.1.
8.3 ActaMed will provide free Network maintenance and support
services to UHC at a minimum level which will meet or exceed the free Network
maintenance and support
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ActaMed provides to its other customers for the Network. ActaMed will also
provide the support and maintenance services to UHC which are specified on
Exhibit F attached to this Agreement. ActaMed will notify UHC of any
technical errors in the Network Software reported to the ActaMed help desk,
and will use reasonable efforts to provide customers with corrections of such
technical errors in a timely manner. ActaMed will provide all support and
maintenance services directly to UHC and the Providers who subscribe to the
Network, as required. UHC shall have no obligation to provide any support,
training or maintenance services to Providers, other than as specified on
Exhibit F attached to this Agreement. In order to allow UHC to implement a
new release of the Network or the Licensed Materials on an orderly schedule,
ActaMed shall maintain the current release and one prior release of the
Network and the Licensed Materials, at all times. The maintenance services
specified in this Agreement shall be provided at no cost to UHC beyond the
fees set forth below in section 12.
8.4 UHC inquiries and appeals will be handled by ActaMed within
time frames specified on Exhibit F or as mutually agreed to, and with the
utmost customer focus in mind.
8.5 ActaMed will maintain the security standards for the Network
which are set forth on Exhibit G attached to this Agreement.
9. EXCLUSIVITY.
9.1 UHC agrees to use the services of the Network under this
Agreement. UHC agrees that it will accept and attempt to process all
transactions listed on Exhibit H and intended for UHC which the Network
delivers to UHC. UHC will pay ActaMed for all such transactions pursuant to
paragraph 12.1 of this Agreement.
9.2 For [*] term of this Agreement (except as otherwise permitted
under this Agreement), UHC will not promote, develop, sell or distribute any
product [*] except as permitted under this Agreement. UHC also agrees that
it will not develop an interface for any third party, or provide any third
party with access to Cosmos or any other host computer under the control of
UHC for the purpose of developing an interface for any network that competes
with the Network, except to the extent UHC is allowed to work with other
vendors under this section 9 or UHC is allowed to continue existing projects
under paragraph 9.6.
9.3 For [*] term of this Agreement, UHC will not promote or
contract for services providing essentially the same functionality as the
Network from third party providers of [*] PROVIDED, HOWEVER, that UHC shall
not be required to terminate any existing contracts with vendors of services
similar to the Network (including, specifically, the contracts entered into
by The MetraHealth Companies, Inc.), which are listed on Exhibit K attached
to this Agreement. Prior to automatic or optional renewal of any such
contracts, however, UHC shall give ActaMed 15 business days in which to bid
on such contracts,
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pursuant to paragraph 9.7 of this Agreement. UHC shall cease actively
promoting any products similar to the Network from vendors other than ActaMed
in markets where ActaMed's services are available; provided, however, that
UHC may promote products similar to the Network in markets where ActaMed has
waived its rights under this section 9. Nothing in this paragraph shall
limit UHC's ability to meet its contractual obligations in such existing
contracts, such as a contractual obligation to perform specified promotional
activities.
9.4 UHC agrees that, for [*] term of this Agreement, UHC will not
and will not permit any of its subsidiaries to, directly or indirectly, (a)
engage in or (b) have any ownership or equity interest exceeding five percent
in any business, firm, corporation, joint venture, or other entity engaged in
any business which competes with ActaMed's Network product (a "Competitive
Business"). However, nothing contained herein shall prohibit UHC from
acquiring any business, the principal line of business of which is not a
Competitive Business and less than fifty percent of the revenues of which are
derived from a Competitive Business. In such case, UHC shall use its
reasonable efforts to cause the competitive portion of such business to be
sold or disposed of as soon as reasonably possible, and, pending such sale,
shall not use such business in such manner as would violate the provisions of
this section 9 or seek to expand such business in a manner that would
substantially adversely affect ActaMed's rights hereunder. Not later than
one month following such acquisition, UHC shall give to ActaMed a notice of
the acquisition of such Competitive Business and set forth the net purchase
price (collectively, a "Sale Proposal") at which UHC would be prepared to
sell such Competitive Business to ActaMed. ActaMed she have the right to
purchase such Competitive Business for such terms or on such other basis as
UHC and ActaMed may actually agree. In the event that, within 60 days after
ActaMed's receipt of a Sale Proposal, UHC and ActaMed shall not have reached
agreement that ActaMed will acquire such Competitive Business, each of UHC
and ActaMed shall appoint an appraiser, which two appraisers shall select a
mutually acceptable third appraiser. As promptly as practicable such three
appraisers shall determine the fair value of the Competitive Business and
shall notify UHC and ActaMed of their determination. ActaMed shall have
sixty days after such notification in which to determine whether to acquire
the CompetitiveBusiness at the value so determined. If ActaMed does not
elect to acquire the Competitive Business at the appraised value, UHC shall
be free to sell such Competitive Business to another entity; PROVIDED,
HOWEVER, that UHC shall not sell such Competitive Business to another entity
within six months after the appraisers' determination on terms and conditions
which are substantially more favorable to such other entity than the terms
and conditions last offered to ActaMed.
9.5 The restrictions set forth in this section 9 shall apply only
to activities within North America.
9.6 Nothing in this section 9 shall be construed to prohibit UHC
from engaging in activities relating to or contracting with third parties
relating to the following, as long as each of the following is not intended
primarily as a connection from a Provider's desk to a
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network for communication of data:
(a) promoting, developing, using, selling, and distributing its
EmployerLink and LaborLink products and future versions of
them, and any other initiatives for employers and brokers, and
shall retain the right to contract with third parties to
perform any work relating to these products. UHC agrees,
however, that EmployerLink, LaborLink and such other
initiatives shall not be intended for use primarily as
connections to Providers' desk tops;
(b) using and developing Internet connections;
(c) electronic medical records and clinical data;
(d) electronic mail (other than e-mail to and from a Provider's desk
top);
(e) financial or banking electronic data interchange,
telecommunications networks, or EDI used by the UHC purchasing
department or other internal departments which are not connecting
to a Provider's desk top;
(f) EDI between clinics and other facilities owned and/or operated by
UHC;
(g) claims repricing; or
(h) UHC's "Total Recall" project, AdjudiPro product, or Q-Star
product, and all future versions of them.
9.7 In the event that this section 9 requires UHC to offer any
business opportunities or new development work to ActaMed, ActaMed shall
notify UHC of ActaMed's prices and terms for such business or work. If
ActaMed declines such business or work, or if ActaMed cannot provide the
requested business or work to UHC [*] [*] UHC shall have the right to
contract with a third party for such business or work or to do such business
or work itself, and the provisions of this section 9 shall not apply to such
business or work. To [*] ActaMed's [*] is [*] the parties [*] among other
things, the [*] by [*] from [*] the [*] and the [*] offered by [*] and
whether [*]. If the parties cannot agree upon [*] the parties shall resolve
the dispute pursuant to section 15. In the event that any customer and/or
supplier, including an integrated delivery system, of UHC or a UHC Affiliate
requires, as a condition of doing business with the customer or supplier,
that a different EDI system be-used in regard to that customer or supplier,
UHC shall use all reasonable efforts to encourage the customer or supplier to
utilize ActaMed's EDI system. In the event the customers or
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supplier [*], UHC or the UHC Affiliate [*] with [*].
9.8 For the initial five year term of this Agreement, ActaMed agrees
that it will not sell or distribute the Network in the Republic of South Africa,
except with UHC's prior, written approval.
9.9 This section 9 shall not preclude UHC from providing factual
information on other EDI vendors to Providers, as long as this section 9 permits
UHC to work with such vendors and provided UHC does not promote such vendors.
10. PERFORMANCE STANDARDS.
10.1 Exhibit I to this Agreement specifies the performance standards
and measurements ActaMed must achieve and the applicable time periods for
measuring compliance with the performance standards (the "Performance
Standards"). The parties shall measure, at a minimum, performance of ActaMed's
help desk and customer support and the Network. The goal of these Performance
Standards is to ensure that the performance of the Network during the term of
this Agreement meets or exceeds the performance of the ProviderLink Network
immediately prior to the Effective Date. In addition, ActaMed shall develop and
deliver to UHC, from time to time, ActaMed's plans to increase performance of
the Network beyond the minimum levels specified in Exhibit I.
10.2 The Performance Standards on Exhibit I apply only to transactions
sent from or to Cosmos. At any time that UHC uses a different host computer to
connect to the Network, the parties shall mutually agree upon performance
standards for the Network and its connection to the different host computer,
which shall become an amendment to this Agreement.
10.3 Any time that UHC's host computers are down and/or the down time
on UHC computers will not be counted as down time for the Network.
10.4 In the event that ActaMed fails to meet any Performance Standard
on Exhibit I in any month, ActaMed shall begin to diagnose the cause of the
failure to meet the Performance Standard promptly after being notified of or
discovering the failure to perform. Thereafter, ActaMed shall work continuously
and diligently to correct such failure to perform until it is corrected. The
failures to meet the Performance Standards which occur while ActaMed is working
to remedy the problem shall continue to be counted for the purposes of paragraph
10.5.
10.5 In the event that ActaMed fails to meet any Performance Standard
on Exhibit I for [*] in any [*] period, ActaMed shall be deemed to
be in material breach of this Agreement, which allows UHC to terminate this
Agreement under paragraph 14.2 of this Agreement. In this event, UHC shall also
have the right, at its option, to
[*] CONFIDENTIAL TREATMENT REQUESTED
12
terminate section 9 of this Agreement and retain the rest of the Agreement in
full force and effect, by giving the notice and opportunity to cure specified
in paragraph 14.2 of this Agreement.
11. REPRESENTATIONS AND WARRANTIES.
11.1 The parties agree that ActaMed owns the Network and ActaMed
represents that it has the right to license the Licensed Materials and grant
access to the Network to UHC. All rights in patents, copyrights, trademarks and
trade secrets encompassed in the Licensed Materials will remain in ActaMed or
its licensors, as applicable. No title to or ownership of the Licensed
Materials is transferred to UHC. UHC agrees that it does not obtain any rights
in the Licensed Materials except the limited right to use the Licensed Materials
as provided herein.
11.2 ActaMed agrees to defend UHC against and, to the extent of
amounts paid to third parties in infringement damage awards and approved
settlement awards, hold it harmless from all claims, damages and liabilities
resulting from a claim that the Network or the Licensed Materials (other than
the version of the Licensed Materials which ActaMed acquired from UHC) infringes
a United States patent or United States copyright, provided that UHC gives
ActaMed prompt, written notice of any such claim, sole control of the defense
and settlement of such claim, and all reasonable assistance to defend such
claim. UHC may appear in such action with counsel of its choice, at its own
expense. ActaMed shall have no obligations under this paragraph if such claims,
damages and liabilities result from UHC's breach of any term of this Agreement,
UHC's unauthorized use of or modifications to the Licensed Materials or the
Network, or the combination of the Licensed Materials with other materials not
provided by ActaMed.
11.3 If UHC's right to use the Licensed Materials or the Network is
enjoined or limited in any way, or if ActaMed believes that the Licensed
Materials or the Network is likely to become subject to such action, then
ActaMed, at its option and expense, may either:
(a) procure for UHC the right to continue to use the Licensed
Materials and the Network free from such limitations;
(b) modify the Licensed Materials and the Network to be free from
such limitations, but equivalent in all material functional and
performance respects to the Licensed Materials and Network prior
to such modification;
(c) replace the Licensed Materials and the Network with materials
that are free of claims, but equivalent in all material
functional and performance respects to the Licensed Materials and
the Network; or
(d) if none of the above are reasonably possible or likely to be
effective,
13
terminate this Agreement and the licenses granted herein.
11.4 Except as set forth in this Agreement, ACTAMED EXPRESSLY
DISCLAIMS ANY WARRANTIES, EXPRESS OR IMPLIED, RELATING TO THE NETWORK OR
SERVICES TO BE PERFORMED BY ACTAMED HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR USE.
12. PRICES, PATENTS AND AUDITS.
12.1 For [*] after the date of this Agreement, UHC will pay ActaMed
(a) [*] per user site identification number established by ActaMed at UHC;
(b) [*] per user site identification number established by ActaMed for which
UHC has agreed to be responsible; (c) [*] per transaction listed on Exhibit H
attached to this Agreement, [*] and (d) [*] transaction listed on
Exhibit H [*]. UHC shall not pay for any transactions a Provider sends to a
different payor. ActaMed shall not charge UHC for any unclean transactions
which are not able to access UHC's host computer. These payments cover all
license fees, subscription fees, and access fees for usage of the Licensed
Materials and the Network and all fees for the maintenance services set forth
in section 8.
12.2 The fees set forth in paragraph 12.1 do not cover charges for any
services UHC requests and obtains from ActaMed beyond the services specified in
paragraph 12.1, including, without limitation, file transfer of data,
installation, implementation or Enhancements of the Network, a particular sales
effort from ActaMed which ActaMed would not otherwise be providing, or a
telecommunications connection between the Network and UHC's host computers. For
all services UHC requests from ActaMed for which this Agreement does not set
forth a price (including, without limitation, UHC's request for a particular
sales effort from ActaMed which ActaMed would not otherwise be providing), UHC
shall pay ActaMed an agreed upon price. ActaMed shall not charge UHC anything
for installation and implementation of the Network at sites where UHC chooses to
do the installation and implementation itself. UHC shall pay all taxes levied
in connection with this Agreement, except for any taxes based on ActaMed's net
income.
12.3 After [*] after the date of this Agreement, the parties shall
agree upon prices to supersede the prices in paragraph 12.1 of this
Agreement, which new prices shall [*] [*]. To [*] is [*] the parties shall
[*] among other things, the [*]. If the parties cannot agree upon [*] the
parties shall resolve the dispute pursuant to section 15.
12.4 When ActaMed offers transactions other than those set forth on
Exhibit H,
[*] CONFIDENTIAL TREATMENT REQUESTED
14
UHC will decide, in its sole discretion, whether it will agree to receive
and/or send such transactions. Upon deciding to receive and/or send any such
new transaction, UHC shall pay ActaMed a mutually agreeable price for its own
such transactions and for such transactions from any other user site
identification number where UHC (in its sole discretion) decides to be
responsible for the fees.
12.5 ActaMed will bill UHC monthly for the site and transaction fees
for UHC and any Providers where UHC has asked ActaMed to bill UHC directly, in a
mutually agreeable format. When ActaMed bills UHC for a Provider's site and
transaction fees, ActaMed shall not bill the Provider directly for the same
charges. Invoices will include any additional fees for other services purchased
by UHC. UHC agrees to pay all undisputed fees and expenses invoiced by ActaMed
within thirty days after receipt of each invoice, and to pay a late payment
charge equal to the lesser of [*] per month or the maximum rate allowed by
law on all amounts outstanding after thirty days.
12.6 ActaMed shall maintain accurate and complete books and records
regarding the transactions to and from UHC and the amounts ActaMed is charging
UHC under this Agreement, with a system of audit trails, records and controls
sufficient to satisfy the requirements imposed on ActaMed by its external
auditors and governmental regulators. UHC shall have the right, not more often
than once in each calendar year, to have employees or mutually agreeable
external auditors audit the books and records of ActaMed relating to UHC
transactions and charges for which UHC is responsible, to determine the proper
amounts which should have been billed to UHC, which were billed to UHC, and
which UHC has paid under this Agreement, and ActaMed's procedures for handling
transactions to and from UHC. UHC shall give ActaMed two weeks prior notice of
any such audit, and shall abide by reasonable ActaMed security and
confidentiality procedures during the audit. UHC shall bear the cost of such
audit, provided that in the event the audit determines that ActaMed has
overcharged UHC by more than five percent of the amount properly due ActaMed in
any month beginning on or after July 1, 1996, ActaMed shall pay all costs of
such audit.
12.7 ActaMed will, at its expense, provide UHC annually with a report
produced in accordance with standards established by the American Institute of
Certified Public Accounts' Statement on Auditing Standards Number 70: Reports on
the Processing of Transactions by Service Organizations. ActaMed shall submit
the first such report to UHC by the end of third quarter 1997.
13. CONFIDENTIALITY AND SECURITY.
13.1 "Proprietary Information" means information that is (a)
confidential to the business of a party, including, without limitation, computer
software source code, technical documentation and information regarding
proprietary computer systems, marketing and product development plans, financial
and personnel information, and other business information not generally known to
the public; and (b) is designated and identified as such
[*] CONFIDENTIAL TREATMENT REQUESTED
15
by a party, or which the other party should have reasonably known was
confidential. Proprietary Information belonging to ActaMed includes, without
limitation, the Licensed Materials and the source code for its proprietary
software used in connection with the Network. Proprietary Information
belonging to UHC includes, without limitation, information relating to Cosmos
or other UHC computer systems, and information regarding UHC's members,
Providers or health plans. "Proprietary Information" does not include
information which a party had in its possession prior to receiving it from
the other party, or which a party properly receives from a third party, or
which is or becomes available to the public, or which a party independently
develops without reference to information received from the other party under
this Agreement.
13.2 Proprietary Information and all physical embodiments thereof
received by either party (the "Receiving Party") from the other party (the
"Disclosing Party") during the term of this Agreement are confidential to and
are and will remain the sole and exclusive property of the Disclosing Party. At
all times, both during the term of this Agreement and after its termination, the
Receiving Party shall hold all Proprietary Information of the Disclosing Party
in confidence, and will not use, copy or disclose such Proprietary Information
or any physical embodiment thereof (except as permitted by this Agreement), or
cause any of the Proprietary Information to lose its character as confidential
information.
13.3 The Disclosing Party's Proprietary Information shall be
maintained under secure conditions by the Receiving Party, using reasonable
security measures which shall be not less than the same security measures used
by the Receiving Party for the protection of its own Proprietary Information of
a similar kind, and any specific security measures required by this Agreement.
The Receiving Party shall not remove, obscure or deface any proprietary legend
relating to the Disclosing Party's rights, on or from any tangible embodiment of
any Licensed Materials without the Disclosing Party's prior written consent.
Within thirty days after the termination of this Agreement, the Receiving Party
shall deliver to the Disclosing Party all Proprietary Information belonging to
the Disclosing Party, and all physical embodiments thereof, then in the custody,
control or possession of the Receiving Party.
13.4 If the Receiving Party is ordered by a court, administrative
agency or other governmental body of competent jurisdiction to disclose
Proprietary Information, or if it is served with or otherwise becomes aware of a
motion or similar request that such an order be issued, then the Receiving Party
will not be liable to the Disclosing Party for disclosure of Proprietary
Information required by such order if the Receiving Party complies with the
following requirements:
(a) If an already-issued order calls for immediate disclosure, then
the Receiving Party shall immediately move for or otherwise
request a stay of such order to permit the Disclosing Party to
respond as set forth in this paragraph 13.4; and
(b) The Receiving Party shall immediately notify the Disclosing Party
of the
16
motion or order by the most expeditious possible means; and
(c) The Receiving Party shall join or agree to (or at a minimum shall
not oppose) a motion or similar request by the Disclosing Party
for an order protecting the confidentiality of the Proprietary
Information including joining or agreeing to (or not opposing) a
motion for leave to intervene by the Disclosing Party.
13.5 The Receiving Party shall immediately report to the Disclosing
Party any attempt by any person of which the Receiving Party has knowledge (a)
to use or disclose any portion of the Proprietary Information without
authorization from the Disclosing Party; or (b) to copy, reverse assemble,
reverse compile or otherwise reverse engineer any part of the Proprietary
Information (except as permitted herein).
13.6 Each party agrees not to disclose or utilize individual health
care claim information in any way that would violate any physician-patient
confidence or any state or federal regulations.
13.7 The obligations of this section 13 shall survive termination or
expiration of this Agreement as to any Proprietary Information which falls under
the definition of "trade secret" under the Uniform Trade Secret Act, as adopted
in the State of Georgia and as amended from time to time. For all other
information which falls under the definition of Proprietary Information used in
this Agreement, the obligations of this section 13 shall terminate five years
after termination or expiration of this Agreement.
14. TERM AND TERMINATION.
14.1 This Agreement commences as of the date set forth above and
continues for five years thereafter, unless earlier terminated as provided
herein. The parties shall mutually agree upon any renewal of this Agreement,
but the provisions of section 9 shall not be part of any renewal. Upon
termination or expiration of this Agreement, UHC's rights to use the Licensed
Materials and the Network shall cease.
14.2 If one party breaches any material provision of this Agreement,
the nonbreaching party may terminate this Agreement by giving 60 days written
notice of termination to the breaching party. If the breach is capable of being
cured and the other party acts diligently and continuously to cure such breach
within the 60 days, the termination shall not become effective. In the event
ActaMed attempts to terminate this Agreement pursuant to this paragraph 14.2 due
to UHC's failure to pay any undisputed amounts due, the sixty day notice and
cure period set forth above shall be reduced to fifteen working days.
14.3 If UHC or an affiliate thereof shall, at any time, cease to
manage or administer any Managed Plan, then, as of the date of such cessation,
this Agreement shall terminate as to such Managed Plan. UHC shall inform
ActaMed that an entity has ceased or will cease to be a Managed Plan promptly
after such information is known to UHC.
17
14.4 Upon termination or expiration of this Agreement, the parties
shall cooperate in the orderly and reasonable removal of UHC from the Network.
The parties shall jointly develop a transition plan, which will allow UHC to use
the Network services for a mutually agreeable time after termination or
expiration, which shall be not less than three months. The transition plan will
provide for a reasonable level of support to transition UHC off the Network.
Each party will bear its own costs in developing the transition plan. During
such additional time, UHC shall continue to pay ActaMed all fees due under
section 12 of this Agreement. In the event that ActaMed has terminated this
Agreement pursuant to paragraph 14.2 due to UHC's failure to pay amounts due to
ActaMed, ActaMed will not be required to perform services for UHC or to allow
UHC access to the Network during the transition period unless UHC pays ActaMed
in advance for such services and Network access. UHC shall not be obligated to
pay any site or transaction fees that accrue after the effective date of
termination with respect to Providers that remain connected to the Network.
15. DISPUTE RESOLUTION.
15.1 In the event a dispute between ActaMed and UHC arises out of or
is related to this Agreement, either party may request in writing that the
representatives of the parties designated pursuant to paragraph 3.2 of this
Agreement meet and negotiate in good faith to attempt to resolve the dispute
without a formal proceeding. During the course of such negotiations, all
reasonable requests made by one party to the other for information, including
copies of relevant documents, will be honored. The specific format for such
discussions will be left to the discretion of the designated representatives.
15.2 If the designated representatives conclude in good faith that
amicable resolution through continued negotiation in this forum does not appear
likely, then the matter will be escalated to a joint panel of ActaMed and UHC
senior executives, by formal written notification by either party to the other.
This panel will meet as required to attempt to resolve the dispute. The number
and nature of the senior executives will depend on the issues in dispute, but
will include those senior executives with authority to resolve all matters in
dispute. At either party's election, this panel will be facilitated by an
external facilitator designated by both parties.
15.3 Formal proceedings for the resolution of a dispute may not be
commenced until the earlier of (a) the panel referred to in paragraph 15.2
concluding in good faith that amicable resolution through continued negotiation
of the matter does not appear likely; or (b) 30 days after the first notice of
the dispute was sent under paragraph 15.1 or paragraph 15.2. However, nothing
in this section 15 shall preclude either party from seeking temporary or
preliminary injunctive relief where a party determines in good faith that such
relief is necessary to limit its damage or injury under this Agreement.
15.4 In the event the dispute is not resolved as outlined in
paragraphs 15.1 and 15.2, and if either party wishes to pursue the dispute,
either party may submit it to binding
18
arbitration in accordance with the rules of the American Arbitration
Association. In no event may arbitration be initiated more than one year
following the sending of written notice of the dispute. The parties shall
request a list from the American Arbitration Association of five possible
arbitrators who shall each have had at least five years experience in some
aspect of computer networking matters or health care. Each of the parties
will select one of these arbitrators and the parties or their selected
arbitrators shall jointly select the third arbitrator from the proposed list.
Any arbitration proceeding under this Agreement shall be conducted in
Hennepin County, Minnesota, Atlanta, Georgia, or in a mutually agreeable
location. The arbitrators shall have no authority to award any punitive or
exemplary damages, or to vary or ignore the terms of this Agreement, and
shall be bound by controlling law.
16. LIMITATION ON DAMAGES AND ALLOCATION OF RISK.
16.1 Except to the extent of ActaMed's obligation to indemnify UHC
as provided in [*] IN NO EVENT SHALL EITHER PARTY'S LIABILITY TO THE OTHER
PARTY (INCLUDING LIABILITY TO ANY PERSON WHOSE CLAIM OR CLAIMS ARE BASED ON
OR DERIVED FROM A RIGHT OR RIGHTS CLAIMED BY THE OTHER PARTY) WITH RESPECT TO
ANY AND ALL CLAIMS ARISING FROM OR RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT IN CONTRACT, TORT OR OTHERWISE, EXCEED [*].
16.2 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY (NOR TO ANY
PERSON CLAIMING RIGHTS DERIVED FROM THE OTHER PARTY'S RIGHTS) FOR INCIDENTAL,
CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES OF ANY KING (INCLUDING,
BUT NOT LIMITED TO, LOST PROFITS, LOSS OF BUSINESS OR OTHER ECONOMIC DAMAGE) AS
A RESULT OF BREACH OF THIS AGREEMENT.
16.3 Notwithstanding anything to the contrary set forth in this
Agreement, ActaMed shall not be responsible for any breach of this Agreement or
loss to UHC to the extent such breach or loss is caused by materials that
ActaMed purchased from UHC or services provided by UHC.
17. GENERAL.
17.1 This Agreement, including the Exhibits to it, constitutes the
entire understanding between the parties and supersedes all proposals,
communications and agreements between the parties relating to its subject
matter. However, this Agreement does not supersede the UHC Outsourcing
Agreement between ActaMed and UHC, dated December 4, 1995, as amended from time
to time. No amendment, change, or waiver of any provision of this Agreement
will be binding unless in writing and signed by both parties.
[*] CONFIDENTIAL TREATMENT REQUESTED
19
17.2 This Agreement will be governed by and construed in accordance
with the laws of the State of Georgia applicable to contracts made and performed
therein.
17.3 Neither party may assign this Agreement without the prior,
written consent of the other party, which shall not be unreasonably withheld.
Any attempted assignment without such consent shall be void. Any assignment
with consent does not release the assigning party from any of its obligations
under this Agreement unless the consent so states. Notwithstanding the above,
however, ActaMed may assign this Agreement without UHC's consent to the
purchaser of all or substantially all the business or assets of ActaMed related
to the Licensed Materials and the Network, as long as the purchaser is not a
company which competes with UHC in any of the businesses UHC owns or operates at
the time of the assignment. If the parties cannot agree upon whether a company
competes with UHC in any of the businesses UHC owns or operates at the time of
the assignment, the parties shall resolve the dispute pursuant to section 15.
17.4 Any notices relating to this Agreement shall be in writing and
will be sent by certified United States mail, postage prepaid, return receipt
requested, or by facsimile transmission or overnight courier service, addressed
to the party at the address set forth below, or at such different address as a
party has advised to the other party in writing and shall be deemed given and
received when actually received:
United HealthCare Corporation ActaMed Corporation
9900 Bren Road East 7000 Central Parkway
Minneapolis, MN 55440 Suite 600
Attn: Chief Information Officer Atlanta, Georgia 30328
Attn: President
17.5 In the event one or more of the provisions of this Agreement are
found to be invalid, illegal or unenforceable by a court with jurisdiction, the
remaining provisions shall continue in full force and effect.
17.6 The obligations of the parties under this Agreement (other than
the obligation to make payments) shall be suspended to the extent a party is
hindered or prevented from complying therewith because of labor disturbances
(including strikes or lockouts), war, acts of God, fires, storms, accidents,
governmental regulations, failure of telecommunications vendors or suppliers, or
any other cause whatsoever beyond a party's control. For so long as such
circumstances prevail, the party whose performance is delayed or hindered shall
continue to use all commercially reasonable efforts to recommence performance
without delay and shall declare a disaster under its disaster recovery plan.
17.7 Each party shall have the right to include the other party's name
on its customer or vendor list and to disclose the nature of the services and
products provided under this Agreement, so long as such services and products
are accurately represented; provided, however, that neither party has the right
to use the other's name, trademarks or
20
trade names for other advertising, sales promotion, or publicity purposes
without the other's prior written consent.
17.8 During the term of this Agreement, neither party will solicit or
attempt to hire any individual who is then currently an employee of the other
party or who has been an employee of the other party within the six months prior
to the solicitation or hiring, without the other party's prior, written consent.
This paragraph 17.8 shall only apply to individuals who, in the case of ActaMed,
have performed services for UHC under this Agreement or worked in connection
with the Network or the Licensed Materials, or who, in the case of UHC, have
worked with ActaMed or received services from ActaMed, on behalf of UHC.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE
ENFORCED BY THE PARTIES.
This Agreement may be executed in one or more counterparts each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
UNITED HEALTHCARE CORPORATION ACTAMED CORPORATION
By: /s/ Travers H. Wills By: /s/ Michael K. Hoover
------------------------------- -------------------------------
Its: Chief Operating Officer Its: President
------------------------------ ------------------------------
Date: Date: April 4, 1996
----------------------------- -----------------------------
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EXHIBIT LIST
Exhibit A: Managed Plans
Exhibit B: Licensed Materials
Exhibit C: Development Work in Progress
Exhibit D: Reports
Exhibit E: Escrow Agreement
Exhibit F: Network Maintenance and Support Services
Exhibit G: Security
Exhibit H: Transactions
Exhibit 1: Performance Standards and Methods of Measurement
Exhibit J: UHC Operating Environment
Exhibit K: MetraHealth EDI Contracts
22
EXHIBIT A
MANAGED PLANS
Community Health Network of Louisiana, Inc. (purchase pending)
PHP, Inc. (Michigan)
PHP of Mid Michigan
PHP of South Michigan
PHP of Southwest Michigan
PHP of West Michigan
PHP of South Carolina
PHP of North Carolina, Inc. (purchase pending)
Physicians Plus Insurance Corporation
Allina
EXHIBIT B
LICENSED MATERIALS
Services and License Agreement - ActaMed Corp. and United HealthCare Corp.
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