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Kaiser Permanente MEDICAL SERVICE AGREEMENT

ARTICLE L
 

Claims Adjustment and Settlement



     A variety of Claims may arise against Health Plan or Medical Group, or against both of them, or against their representatives, in connection with operating the Medical Care Program.  There are advantages to handling these claims on a coordinated basis, and the following provisions therefore are established.

Section L-1 Professional and General Public Liability Claims and Tort Aspects of Mixed Claims
  (a) Provision for Satisfying Professional and General Public Liability Claims and Tort Aspects of Mixed Claims.

  Health Plan will provide the amounts required to satisfy, adjust, defend and dispose of all liability on account of Professional and General Public Liability Claims and tort aspects of Mixed Claims, including the estimated expense for the year and for all prior years for costs referred to in this Section L-1.  These amounts constitute general assets of Health Plan, and are not the subject of a trust or other secured or special fund.

         (b)     Insurance and Premiums.  After discussion between Health Plan and Medical Group, Health Plan (i) will arrange insurance covering Health Plan, Medical Group, Physicians, and employees and other representatives of Health Plan and Medical Group against Professional and General Public Liability Claims and tort aspects of Mixed Claims, (ii) may exclude form the protection afforded by such insurance such amounts as Health Plan establishes, including residual liability under claims-made insurance policies, and (iii) may establish different liability limits with respect to particular classes of risks.  Health Plan will pay all premiums on such issues.

          (c)     Adjustment, Defense and Settlement.     Until all Professional and General Public Liability Claims and tort aspects of Mixed Claims, whether during the term of this Agreement of thereafter, have been fully satisfied, Health Plan will make arrangements for adjusting, defending, paying and settling and otherwise disposing of those Professional and General Public Liability Claims and tort aspects of Mixed Claims asserted against Health Plan, Medical Group, any Physician, or any employee or other representative of Health Plan or Medical Group, and Health Plan will pay all legal and administrative costs incurred in connection with adjusting, defending or settling said Claims (including legal and administrative costs incurred after termination of this Agreement).  Health Plan and Medical Group will jointly select the law firm for cases involving Medical Group.

                    In carrying out the foregoing responsibilities, Health Plan will maintain liaison with Medical Group, and Health Plan will not allow any Professional and General Public Liability Claim or tort aspect of any Mixed Claim asserted against Medical Group or any Physician or other representative of Medical Group to be settled or paid without Medical Group's written approval.

          (d)  Uninsured Liability.     Health Plan will cover the cost of discharging liability established by settlement or judgment within the scope of the uninsured liability permitted by Section L-1(b), including any such liability established after termination of this Agreement.

          (e)  Loss Prevention Program.     Health Plan will bear all costs incurred in connection with a loss prevention program conducted under the general supervision of Medical Group for the purpose of reducing losses to Health Plan, Hospitals and Medical Group on account of Professional and General Public Liability Claims and tort aspects of Mixed Claims.  The loss prevention program will be conducted on a cooperative basis as a joint effort of Health Plan, Hospitals and Medical Groups, with such assistance from attorneys experienced in liability matters and other qualified personnel as may appear most advantageous to the efficient and economical conduct of the loss prevention program.  Health Plan's responsibility for bearing the costs of such program does not included compensation to Hospitals or Medical Group personnel devoting time to such programs. 

Section L-2.     Contractual Claims

             Health Plan will have sole responsibility for satisfying, adjusting, settling and defending all Contractual Claims and Reimbursement and Service claims.  To the extent that such claims involve problems of medical judgment relating to the emergency nature of Medical Services and Hospital Services and similar matters, Medical Group will, at Health Plan's request, consult with and advise Health Plan.

Section L-3.     Residual Claims

               Health Plan will pay the party incurring the cost the amount of every cost incurred in connection with satisfying, defending and disposing of any Residual Claim, unless the claim would not have arisen but for all of the following circumstances:  (a) a grossly negligent or intentional wrongful act or omission by (or condoned or ignored by) a Physician or other Medical Group employee who (b) at the time of the alleged or actual act or omission forming the basis or the claim held an administrative position with Medical Group that (c) involved responsibility to assure that the act or omission did not occur.

                If Health Plan asserts that any cost incurred in connection with a Residual Claim is not reimbursable under the preceding paragraph, the dispute will be resolved by four arbitrators, two chosen by the Medical Director of Medical Group and two chosen by Health Plan's President or designee.
 

      
    

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