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HomeMy WebLinkAbout4536 Vendor Subject Department Status Code Amount Begin Date End Date Review Date Insurance Comments Contract Number 4536 KPS HEALTH PLANS Note - Surplus (Affidavit & Indemnity Agreement) Finance FIN File Class Leg 12-1 . $3902.00 06/19/2000 08/17/2007 02/15/2009 GL $ AL $ E&O $ Insurance Total $ Insurance Review Date Original Note not found 1/06 Vault 01/01/2009 . KPS health plans ,r DATE: AUGUST, 2007 TO: KPS PARTICIPATING SURPLUS NOTE HOLDERS FROM: RICHARD MARKS, PRESIDENT f?rv1 SUBJECT: FINAL NOTE REPAYMENT KPS is pleased to make the final installment of Participating Surplus Notes. Enclosed is your check for the remaining balance of your Participating Surplus Note, along with a Statement Summary of all payments made. Again, KPS greatly appreciates the physician and provider support shown to KPS during a difficult period and continues to look forward to a strong relationship with you in the future. KPS shares a mutual commitment to provide quality health care services to our community. If you have questions regarding your final payment check, please contact Jan Blackburn at 360-478-2607, or toll-free at 1-800-552-7114, extension 2607. , Enclosures P,O, Box 339,400 Vvarren Ave, Bremerton, Washington 9833/-0039' (360) 37/-5576 www.kpshealthplans.com KPS health plans PARTICIPATING SURPLUS NOTE SUMMARY DATE: 8/15/2007 PARTICIPATING SURPLUS NOTE NO.: 00456 NAME: CITY OF BREMERTON ORIGINAL SURPLUS NOTE PRINCIPAL: $3,902.00 PAID TO DATE: $3,239.38 CURRENT PAYMENT: $662.62 PARTICIPATING SURPLUS NOTE REMAINING BALANCE: 0.00 FROM (MON)APR 10 2006 10:421ST.10:41/No. 6827378173 P 4 SURPLUS NOTE KPS Health Plans, In Rehabilitation Note Number: 00456 Payee Number: 9160)123102 Principal Amount: $3~902.00 Date Issued: June 19, 2000 KPS Health Plans, a Washington nonprofit corporation, in Rehabilitation, hereinafter referred to as the "Company /' does hereby acknowledge receipt of. monies from (educed claims payments treated as a prorata allocation deduction ("PAD") from amounts due CITY OF BREMERTON, hereinafter referred to as "Note Holder," in the amount of THREE THOUSAND NINE HUNDRED TWO AND 00/100 DOLLARS ($3,902:00), whict. amount shall be used to provide additional net worth (surplus) to correct the financhH impairment of the Company and to maintain compliance with the minimum net worth requirements set forth in RCW 48.44.037. This Note is one of a series of Notes to Providers for PAD fuIlds being acquired from each on an equi[able basis. This Note shares prorata with 'other Surplus Nores in interest and principal.payments to be made to Surplus Note Holders. Except as hereinafter provided, Company hereby promises to pay to the"order of Note Holder or transferee, as provided below, the principal amount of THREE THOUSAND NINE HUNDRED TWO AND 001100 DOLLARS.($3,902.00), together with~interest thereon at fhe same rate published on December 31, 1999 for 30-year U.S. Treasury bo'nds from Jamary 14, 2000 until paid; provided however, that in January of each year subsequent to 'the year of issue, such.rate: may be adjusted, upward or downward, by the Receiver or Board of Directors of Company, as is applicable, to equal the rate for 30-year U.S'-.Treasury bonds as published . (In the immediately preceding December 31. Such adjusted interest rate shall remain in effect . until subsequently adjusted or until final payment of the. Surplus Note', whichever occurs first. Upon full payment of principal and interest, this Surplus Note shall be sUrrendered together with all other Surplus Notes payable to all Surplus Note Holders. Interest shall be payable only as provided below and, if not so paid, shall accumulate but not be compouJ].ded. The rights of the Note Holder to the principal sum and/or interest thereon are. and shill remain subject to and subordinate to all the liabilities of the Company I and upon.'dissc.Jution or liquidation of the Company, no payment upon this instrument shall be' made until all other Jiabilitiesof the Company have been paid; provided however, payments or distriblltions'to Shareholders shall be subordinate to the payment of any claim under thIs Surplus Note and all other Surplus Notes; provided further, in the event that. rehabilitation is not achieved and the :Company.isJiquidated in the matter styled Senn v. KPS Health Plans, Cause No. 99-2-01441-1 In the Superior Court of Thurston County.. Washington, the outstanding principal obligations exclusive of interest shall remain as Provider debt for priority "purposes undl~r RCW 48.3L280.This Surplus 'Note does not confer any rights upon the Note Holder other than the right:to'receive payment of principal and interest on thetenns and subjecllO the conditioIl.'\ set forth'in this SuqjlusNote. Principal and interest due under this Surplus Note are payable only -in compliance with the prior written approval of the Insurance Commissioner of the State of Washington. - I - FROM (MON)APR 10 2006 10:43/ST.10:41/No. 6827378173 P 5 The Company shall pay any amounts due and owing.to the extent provided; however, repayment of the principal and interest due under this Surplus Note shall be repaid only out of the Company's earned surplus, as defined in WAC 284-13-160(1), in excess of MinimJm Net Worth requirements. Further, payments of principal and interest shall be prorated for this Surplus Notels principal compared to the principal of all Surplus Notes held by Providers. . The Insurance Commissioner has determined, consistent with the Rehabilitation Plan approved 'by the Receivership Court on January 14',.2000, that the smnltory ,minimum net worth requirement for'KPS is $3~OOO,OOO. Further, there will be set aside an additiom1 sixty- six and' tWo-thirds percent (66 2/3 %) of this statutory niinimum before any interest or princip,!-l . . paymerits..can be 'made: On this Note. Amouhts in .excess of this total Minimum Net Worth . '($5.~OOO~OOO). wilt be surplus' and will be available' for payments prorated among all Surplus. : Notes if approved by the Insurance Commissioner's Office and if, after distribudon,the capital ; of the Company 'exceed~.' the greater of statutory minimum net worth or: the 'amount produced by. the risk-based capital requirements and the fonnulas;schedulesand "instructions underRCW 48.43.300 through 48.43.370. The Company and Note Holder agree that no Surplus Note Agreement or Series thereof shall have been given any preferential rights over any other such Surplus Note Agreement or . Series. - at . . is .. further. agreed by and between. the parties hereto' that nocomriIis:,ion or .; promot~onal e!<pense shall be incurre1 or. be ~aid on account'from any such'Surplus ~ot:. ',. . '.' ...:. . '. ',',' ,', . ., ".;, ", ' '.,' : '. ,.:.'", . '. . This. Surplus Note.may only be transferred dr. an interest herein assigned: (I) upon the death .of the Note. IIolder. or upon'lhe:termination by the Note Hol4er :of his,her or its f'rovid~r . .Contract ~ith the~Company; or .(2) where the: Note 'Holder is a Provider.practice group, .c~htic .".or hospital, to a ':;Provider who is or was either (a) a member or participant in the I'rovider : .pr'actic~. g~oup or (b) an employee :.of.the clinic or'hospital. Except in those cases where . " transfer;;; .are upon the death of the Note Holder., PIior written consent of the Compan:r to the . transfer , ,shall be Obtained', .which consent: will not be unreasonably.withheld; . , . . ~ . . ; . - ., ." .1. The Company attests that. the Washington State Insurance Commissioner has heretofore approved the tenns and conditions of this Surplus Note. ;' , I' . I' The. obligation of the Compa"QY to pay shall remain and become an ol?,ligation of KPS Health Plans following termination of the sta~utory rehabilitation proceedings and discharge of . the Receiver.. . IN-WITNESS' WHEREOF, this Surplus Note is executed by the Receiver of KPS Health :~lans, :in Rehabi1~tation, as of this 19t~ day of June, 2000. '. KPSHEALTH PLANS, IIi Rehabilitation .~~..p~ '00...,. sT. Odiorne, Deputy Insurance Commissioner, . only in his 9apacity as Receiver ' John B. Woodall, Assistant Deputy Insurance Commhisioner, only in his capacity as Deputy Receiver . John F. Hamje, Special Deputy Insurance Commissioner, only in his capacity as Deputy Receiver .2- +--------------------------------------------------------------------------+ tEnter Search Criteria, Press Esc Key to Transmit tPress Del Key to Terminate Delete Mode + CHANGE 1= Contract Number + +vendor Name tsubject 1=Department tStatus Code 1= 1= 1= 1= Contract Transactions + t t 1= 1= t $3902.00 1= 06/19/2000 1= 06/16/2008 1= 06/01/2008 1= + 1= 1= 1= + 1= i $0.00 4536 KPS HEALTH PLANS NOTE - SURPLUS (AFFIDAVIT FINANCE FIN & INDEMNITY AGREEMENT) Insurance Type Amount Amount Begin Date End Date Review Date Insurance Total Insurance Review Date t 1= +--------------------------------------------------------------------------+ Comments ORIGINAL NOTE NOT FOUND 1/06 REVIEW DATE FOR TRACKING PURPOSES ONLY PARTICIPATING SURPLUS NOTE KPS Health Plans Note Number: 0045602 Payee Number: 91600123102 Principal Amount: $1,951.00 Date Issued: 2/1 /2006 KPS Health Plans ("KPS"), a Washington nonprofit corporation, for value received, hereby promises to pay to CITY OF BREMER TON (the "Note Holder"), the principal amount of $1,951.00 without interest on the terms and subject to the conditions set forth in this Participating Surplus Note. This Participating Surplus Note is being issued by KPS, with other Participating Surplus Notes of KPS (collectively, the "Notes"), pursuant to a Modified Plan of Rehabilitation for KPS approved by the Superior Court of Thurston County, Washington on August 19, 2005 in the matter entitled Kreidler v. KPS Health Plans, Cause No. 992-01441-1. Each Note ranks pari passu with the other Notes for all purposes hereunder. Payments of principal on each Note shall be paid simultaneously and in pro-rata amounts based upon the then unpaid balances of principal with respect to each Note. Pursuant to the Court's Order on August 19, 2005 approving KPS' Rehabilitation Plan, the undersigned is required and authorized to execute this Participating Surplus Note on behalf of KPS. This Participating Surplus Note shall not be a liability or claim against KPS or any of its assets, except as provided in this Participating Surplus Note. This Participating Surplus Note does not confer any rights upon the Note Holder other than the right to receive payment of the unpaid principal on the terms and subject to the conditions set forth in this Participating Surplus Note. The principal amount of this Participating Surplus Note shall be repaid only out of the net income of KPS in accordance with the specific requirements set forth in this Participating Surplus Note, and only with the prior written approval of the Washington State Insurance Commissioner as to each payment. This Participating Surplus Note does not have a stated maturity or repayment date. Furthermore, the Note Holder shall only be entitled to repayment on the dates set forth in Exhibit A in the event that KPS has achieved, based upon KPS' statutory-basis audited financials, the income targets set forth in Exhibit A attached hereto and incorporated herein by reference (the "Payment Formula"). The repayment of any principal pursuant to the Payment Formula shall be pro-rated for this Participating Surplus Note's principal compared to the principal of all Notes. IN NO EVENT SHALL THE TOTAL AMOUNT PAID TO THE NOTE HOLDER PURSUANT TO THE PAYMENT FORMULA EXCEED, IN THE AGGREGATE, THE PRINCIPAL AMOUNT OF THIS NOTE. Further, no payment shall be due and payable to the Note Holder at the end of any fiscal year in which the capitalization of KPS in said year did not exceed three hundred percent (300%) of risk-based capital (as defined in RCW 48.43.300) on a pro-forma basis factoring in any and all payments otherwise due and payable pursuant to the Payment Formula. If any ofthe payment conditions set forth in this Participating Surplus Note are not met in a given fiscal year, the opportunity for payment of principal in said year shall expire and no accumulation or carry-forward of such payment obligation shall accrue to the next fiscal year. If a payment is made in any fiscal year, the total principal amount of this Participating Surplus Note shall be reduced by the amount of any such payment. All partial payments of principal shall be made by KPS to the Note Holder without presentment of this Participating Surplus Note or endorsement of such payment. The final payment Revised Form of KPS Note (final).DOC of principal, if any, shall be made only on surrender of this Participating Surplus Note at the office of KPS. All payments and notices shall be mailed to the Note Holder at his or her last known address appearing on the books of KPS. By acceptance of this Participating Surplus Note, the Note Holder agrees that (i) this Participating Surplus Note does not confer any rights upon the Note Holder other than the right to receive payment of principal on the terms and subject to the conditions set forth in this Participating Surplus Note; and (ii) the payment of principal is expressly contingent upon KPS satisfying the income target set forth herein and that Note Holder shall not have the status of a creditor of KPS or have any other claim with respect to the payment of principal. If, after calculation of the Payment Formula for Fiscal Year 2007, KPS did not achieve the income targets set forth in this Participating Surplus Note for any reason, or in the event any other condition precedent for payment in full of the principal amount of all outstanding Notes has not been satisfied, then KPS shall have no obligation to pay the outstanding principal amount on any of the Notes, and such Notes shall be deemed paid in full, expired and cancelled. Regardless of the issuance date of this Participating Surplus Note or any other Participating Surplus Note of KPS, this Participating Surplus Note shall be of equal rank with any other Participating Surplus Note, unless such other Participating Surplus Note is expressly subordinated to this Participating Surplus Note. No recourse under this Participating Surplus Note shall be had against any past, present and future assigns, directors, officers, employees, agents, attorneys or representatives of KPS or its affiliated entities, either directly or indirectly, by virtue of any statutes, by enforcement of any assessment or otherwise. By acceptance of this Participating Surplus Note, the Note Holder waives and releases any liability of or claims against such directors, officers, employees, agents, attorneys, representatives and affiliates under this Participating Surplus Note. No recourse under this Participating Surplus Note shall be had against the State of Washington, its officers, directors, commissioners, agents, employees or programs. By acceptance of this Participating Surplus Note, the Note Holder waives and releases any liability of or claims against the State of Washington, its officers, directors, commissioners, agents, employees, or programs under this Participating Surplus Note. This Participating Surplus Note shall be governed by, and construed in accordance with, the laws of the State of Washington, and the parties hereto shall submit any disputes related to this Participating Surplus Note to the Superior Court of Thurston County, Washington. KPS may treat the Note Holder as the owner of this Participating Surplus Note for all purposes including payment of principal. No transfer of this Participating Surplus Note shall be valid for any purpose until all transfer restrictions have been satisfied and such transfer shall have been recorded in the books ofKPS. KPS has issued this Participating Surplus Note pursuant to exemptions from registrations under the federal and state securities laws. A holder of this Participating Surplus Note may not sell or otherwise transfer this Participating Surplus Note unless the offer and sale is registered or exempt from registration under the federal and applicable state securities laws. Without limiting the foregoing, this Participating Surplus Note may only be transferred or an interest herein assigned: (I) upon the death of the note holder or upon the termination by the note holder of his, her or its provider contract with KPS; or (2) where the note holder is a provider practice group, clinic or hospital, to a provider who is or was either (a) a member or participant in the provider practice group or (b) an employee of the clinic or hospital. Furthermore, as a condition of any transfer, KPS may require an opinion of counsel acceptable to KPS that any sale or other transfer of this participating surplus note shall not violate the federal and any applicable state securities laws. IN WITNESS WHEREOF, this Participating Surplus Note has been executed by KPS Health Plans, as of the day and year first above written. KPS HEALTH PLANS By: ~ell.~ President and Chief Executive Officer Exhibit A The Payment Formula In accordance with the other terms and condition set forth in the Participating Surplus Note, of which this Exhibit A is attached, the Note Holder shall only be entitled to repayment in the event that KPS has achieved, based upon KPS's statutory-basis audited financials, the following income targets in the years indicated (the "Payment Formula"): KPS's Payment Trigger Payment Amount Payment Due Date Fiscal Year 2005 KPS's net income for FY 2005 Note Holders to June 15,2006 (as a percentage of KPS's total receive, pro-rata, revenue) exceeded 1.75% 50% of the dollar amount in net income between 1.75% and 4.5% 2006 KPS's net income for FY 2006 Note Holders to June 15,2007 (as a percentage ofKPS's total receive, pro-rata, revenue) exceeded 1.75% 50% of the dollar amount in net income between 1.75% and 4.5% 2007 KPS's net income for FY 2007 Note Holders to June 16,2008 (as a percentage of KPS ' s total receive, pro-rata, revenue) exceeded 1.75% 50% of the dollar amount in net income between 1.75% and 4.5% Exul11/Jle Usim! the Payment Formula: By way of example, in the evenl KPS's total revenues for FY 2006 were $20,000.000, and KPS's net income for the same period was $1,000,000 (5% of total revenues), $275,000 would be distributed pro-rata to the Note Holders, provided that the other conditions set forth in this Participating Surplus Note have been satistied and that the payment is not otherwise limited. The $275,000 amount is calculated as follows: 50% of $550,000 (the dollar amount in net income between 1.75% and 4.5%, 4.5% being the maximum rate payable in FY 2006. Note that in addition to the $275,000 to be retained by KPS (KPS's 50% share ofthe net income between 1.75% and 4.5%), KPS also retains the "first" $350,000 (representing the dollar amount in net in<:ome between 0% and 1.75%) as well as the remaining $100,000 (representing the remaining dollar amount in net income between 4.5% and 5%) for a total to be retained by KPS of $725,000. +--------------------------------------------------------------------------+ fpress Esc Key to Insert new record, Ctrl-Z to Clear form f fpress Del Key to Terminate Insert Mode + f . INSERT Contract Maintenance f + Contract Number 4536 + f f fVendor Name KPS HEALTH PLANS f fSubject NOTE - SURPLUS (AFFIDAVIT & INDEMNITY AGREEMENT) f fDepartment FINANCE + +Status Code FIN f f Amount $3902.00 + + Begin Date 06/19/2000 + f Insurance End Date + f Type Amount Review Date 06/15/2007 + + Press F1 for + +t valid insurance t type codes Insurance Total $0.00 f Insurance Review Date + f f f Comments NOTE NOT FOUND 1/06 + + REVIEW DATE FOR TRACKING PURPOSES ONLY + + + +--------------------------------------------------------------------------+ AFFIDAVIT AND INDEMNITY AGREEMENT The City of Bremerton, (hereinafter called "Holder:'), deposes and says: 1. That the Holder is the legal and beneficial holder of the participating surplus note (the "Note") issued by KPS Health Plans ("KPS") in the principal amount of $3,902.00 (hereinafter called "original"). 2. That the original was acquired by the Holder on or about June 19, 2000 and has been mislaid, lost, stolen, seized or destroyed, so that the original cannot be found or produced. 3. That the Holder has not sold, assigned, endorsed, pledged, transferred, deposited under any agreement, or hypothecated the original or any interest therein or signed any power of attorney or other authorization respecting same which is now outstanding and in force, or otherwise disposed of the same; and no person, firm, corporation, agency or government other than the Holder has or has asserted any right, title, claim, equity or interest in,. to or respecting the original or proceeds thereof. ' 4. That the Holder hereby declares that this affidavit and indemnity agreement is made and executed for the purpose of inducing KPS (a) to refuse to recognize any person or entity other than the Holder as the holder of the original and to refuse to make any payment, credit, transfer, guarantee, exchange, issue or delivery called for by the original to or for any person other than the Holder, or to refuse to take any other action in respect of the original pursuant to the request or demand 'of any person or entity other than the Holder, and (b) to pay to Holder all amounts owed under the original Note. ' 5. That if the Holder should find or recover the original, the Holder will immediately surrender the original to KPS for cancellation without requiring any consideration for such surrender. ' . ' 6. That the Holder agrees, in consideration of the compliance by KPS with the requests in paragraph 4 above to indemIiify and protect, KPS, its respective successors and assigns? from any and all loss, liability, costs, damages, attorneys' fees and expenses whatever in connection with or, arising out of such compliance with such requests, and further agrees to furnish to,KPS without any expense to it, a bond of indemnity, in such form and amounts as may be required, with satisfactory surety or sUreties, in case this Affidavit and Indemnity Agreement should not at any time for any reason be deemed to afford sufficient protection.' ' Signed, sealed and delivered by the Holder this 10th day 0, fJanuary,2006. ...~ BY:~~ rtf . rin A. J on . Finance Officer' KPS LOST NOTE AFFIDAVIT October 12, 2005 Dear KPS Surplus Note holder: This mailing includes important information about your KPS Health Plans' surplus note. Enclosed with this letter are two detailed notices regarding the provider surplus note. Effective October 1, 2005, Group Health Cooperative acquired control of KPS Health Plans from the Office of the Insurance Commissioner, which had been acting as the receiver of KPS. As you know, KPS agreed to pay half the value of your surplus note promptly after receipt of your tendered note (but not before October 31, 2005) with the remainder be to repaid over a three-year period provided KPS meets minimum financial performance standards as described in the new note you will receive upon tender of your existing note. As described in the enclosed notices, you need to submit your original surplus note to KPS by June 15, 2006 in order to receive the 50 percent payment and the new note. If you are unable to locate your original surplus note, please complete the enclosed affidavit. You can deliver the note or affidavit to us in person or mail it to: Attention: Jan Blackburn , KPS Health Plans 400 Warren Avenue, P. O. Box 339 Bremerton, W A 98337 If you have questions about this letter, please call Jan at 360-478-2607. Sincerely, ~~'~ Elizabeth A. Gilje President and Chief Executive Officer KPS Health Plans