UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 20, 2012
COMPREHENSIVE CARE CORPORATION
(Exact Name of Registrant Specified in Charter)
Delaware | 1-9927 | 95-2594724 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
3405 W. Dr. Martin Luther King Jr. Blvd, Suite 101 Tampa, Florida |
33607 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (813) 288-4808
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On June 20, 2012, CompCare de Puerto Rico, Inc., a wholly-owned subsidiary of Comprehensive Care Corporation (the Company), entered into a Third Amendment (the Amendment) to the original agreement with MSO of Puerto Rico, Inc. (MSO) to provide its health plan members mental health, substance abuse treatment, and pharmacy management services. The original agreement was filed as Exhibit 10.21 to Form 10-Q/A for the quarter ended September 30, 2010. The second amendment was filed on March 8, 2012 as Exhibit 10.1 to Form 8-K. Pursuant to the Amendment, the parties agreed to revise their method of operations and clarified their respective financial responsibilities for the payment of certain prescriptions during the period May 1, 2012 through December 31, 2012, defined in the Amendment as the Collaboration Period and thereafter, during the period defined as the Post-Collaboration Period. The Companys financial responsibility for psychotropic prescription drugs will be limited to the costs of psychotropic drugs prescribed for current mental health conditions. The parties also agreed to settle, for $2.2 million, all Pharmacy Adjustments previously identified as they relate to drugs which were not prescribed for mental health conditions, which drugs were previously charged to the Company, for all periods prior to April 1, 2012. The $2.2 million was paid to the Companys providers by MSO on behalf of the Company. The foregoing description is a summary of the Amendment and the transaction contemplated thereby. This summary does not purport to be complete and is qualified in its entirety by the complete text of the Amendment, which is filed as Exhibit 10.1 to the Current Report on Form 8-K as is incorporated herein by reference.
Item 8.01 Other Events.
On June 25, 2012, the Company issued a press release announcing the signing of the Amendment and preliminary financial results for the second quarter of 2012. A copy of the press release is attached herein as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits. |
10.1 Third Amendment to the Agreement for the Provision of Services with an effective date of May 1, 2012, by and between CompCare de Puerto Rico, Inc. and MSO of Puerto Rico, Inc.
99.1 Press Release, dated June 25, 2012
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
COMPREHENSIVE CARE CORPORATION | ||||
Date: June 25, 2012 | By: | /s/ Clark A. Marcus | ||
Clark A. Marcus | ||||
Chairman and Chief Executive Officer |
Exhibit 10.1
THIRD AMENDMENT TO THE AGREEMENT FOR THE PROVISION OF SERVICES
This Third Amendment (Amendment) to the Agreement for the Provision of Services (the Agreement), with an effective date of May 1, 2012 (the Effective Date), entered into by and between CompCare de Puerto Rico, Inc. (CCPR) and MSO of Puerto Rico, Inc. (MSO) sets forth additional duties and obligations.
WHEREAS, the Agreement made between the parties referred to above, as amended, is scheduled to expire on December 31, 2012; and
WHEREAS, the parties wish to arrange for a smooth collaboration in the event said Agreement is not renewed or otherwise extended; and
WHEREAS, the parties have agreed upon the method of operation between the date hereof and December 31, 2012 (the Collaboration Period).
NOW, THEREFORE, in consideration of the mutual promises and obligations contained herein, including the work schedules agreed by the parties and other good and valuable consideration, the parties agree as follows.
1. Provider Network.
a. From the Effective Date hereof to December 31, 2012, MSO shall deposit the MHSA capitation fee, as referred to in the Agreement, into a checking account at Banco Popular de Puerto Rico to be opened by MSO (the Claims Account). The MHSA capitation fee shall be used primarily for purposes of paying clean claims of providers as that term is understood under the Agreement and as established in the work schedules. It is understood that payment to the providers is and shall remain the sole responsibility of CCPR.
b. Any Pharmacy Adjustment surplus, as that term is understood under the Agreement, shall be deposited into the Claims Account and used exclusively for the payment of provider claims (clean claims). If the Pharmacy Adjustment surplus exceeds the amount of money required to pay provider claims, the excess shall be maintained in the Claims Account as a reserve against future provider claims. Any surplus remaining in this account on the expiration of the Agreement shall be returned to CCPR the earlier of six (6) months from the expiration date or when the parties mutually agree that all, or substantially all, provider claims have been received through December 31, 2012.
c. At and following December 31, 2012, all remaining provider claims shall be the exclusive responsibility of CCPR, who shall have sole authority to pay, adjust or otherwise compromise with providers all monies owed to them as a result of their servicing MSOs members.
d. On or about December 31, 2012, MSO and CCPR shall enter into such agreement as may be mutually agreed upon assigning to MSO the contracts existing between CCPR and its providers, provided that CCPR may reserve the right to use the providers services as part of CCPRs network servicing CCPRs other and/or future accounts in Puerto Rico. In this connection, CCPR will provide MSO with all credentialing material utilized by CCPR in connection with establishing its network.
2. Collaboration Period. Commencing on the Effective Date of this Amendment and continuing to December 31, 2012 date (the Collaboration Period), CCPR will operate the business of CompCare de Puerto Rico, Inc. as it pertains to MSOs business and the Agreement as follows:
a. Subject to the terms of this Agreement and MSOs rights as set forth below, CCPR will continue to be responsible for the MHSA Services as defined in the Agreement for:
i. | professional services; |
ii. | institutional services; and |
iii. | pharmacy expenses, provided that CCPRs responsibility for drugs shall be limited to drugs prescribed for mental health conditions as described in Exhibit B of the Agreement. Psychotropic drugs shall only be included as part of CCPRs responsibility under Exhibit B if it is prescribed to address a current behavioral health diagnosis. |
iv. | The parties to this Amendment agree to settle a claim presented by CCPR on letter dated April 16, 2012, related to drugs not prescribed for mental health conditions. Notwithstanding the provision of Exhibit A with regard to a limitation of 45 days for claiming any amounts in the Pharmacy Adjustment, MSO and CCPR agree that all Pharmacy Adjustments previously identified, as it relates to drugs which have not been prescribed for mental health conditions, shall be settled for all periods prior to April 1, 2012 for an amount equal to $2.2 million, which sum was, prior to the date hereof, paid by MSO to providers for CCPRs account. CCPR waives any additional claim related to its April 16, 2012 letter regarding drugs which have not been prescribed for mental health conditions for the period prior to April 1, 2012. |
b. Revised service payment process. Consistent with the provisions of paragraph 1 above, CCPRs monthly MHSA capitation payments, as well as any Pharmacy Adjustment surplus, shall be deposited into the Claims Account as described above. CCPR shall be responsible for issuing timely 835/EOPs to MHSA providers.
c. Revised claims adjudication process. CCPR will report on a bi-weekly basis:
i. | the volume and detail of claims received by provider; |
ii. | the volume and dollar amount of claims adjudicated whether for payment, denied or suspended; and |
iii. | aged report of claims adjudicated pending for payment release. |
d. | MSOs personnel will have access to CCPRs employees working on MSOs matters and access to CCPRs premises in relation to the preauthorization process and other areas and other areas relating to MSOs business, as requested. |
e. CCPRs administration during transition period:
i. | MSO will pay directly to CCPR the monthly Administrative Services Capitation fee in a timely manner, according to the Agreement. |
ii. | CCPR will report on a monthly basis the use of the Administrative Services Capitation by type of expense with an amount not to exceed $200,000 for corporate overhead from the Tampa office. The report shall be on an accrual basis, in arrears, for the previous month. |
iii. CCPR will provide MSO, within forty-five (45) days of the Effective Date, the following documentation:
1) | providers demographic and credentialing file; |
2) | detail of claim encounter data through April 30, 2012; |
3) | list of employees and organizational chart; and |
4) | providers contract, including fee schedule. |
3. Post-Collaboration Obligations of CCPR. Following the Collaboration Period, in addition to December 31, 2012 documents herein before described for December 31, 2012 of this transaction, CCPR will:
a. deliver to MSO CCPRs description, policies and procedures for Utilization Management Programs; and
b. allow MSO to solicit CCPRs employees or contract with CCPRs employees or officers who reside in Puerto Rico, free of any restrictive covenant that said employees/officers may have with CCPR. Provided, nothing contained herein shall be deemed to remove any confidentiality undertaking which may exist between said employees/officers and CCPR, except as may be specified herein;
4. Option to Extend. Anything contained herein to the contrary notwithstanding, on the expiration of the Agreement, as amended, MSO shall have the option of extending the Agreement in accordance with the terms of the Agreement. Provided, MSOs election to do so must be made no less than 45 days prior to the expiration of the Agreement.
5. WHEREAS Clauses. The WHEREAS clauses are incorporated herein by reference as if set forth at length.
Except as expressly set forth in this Amendment, the terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their respective duly authorized officers to execute and deliver this Amendment as of the date first written above, to be effective on the Effective Date.
COMPCARE DE PUERTO RICO, INC. | MSO of Puerto Rico, Inc. | |||||||
By: | /s/ Clark A. Marcus |
By: | /s/ Raul Montalvo-Orsini | |||||
Printed Name: Clark A. Marcus | Printed Name: Raul Montalvo-Orsini, M.D. | |||||||
Title: | Chief Executive Officer | Title: | President |
Comprehensive Behavioral Care Inc. and Comprehensive Care Corporation, jointly and severally, hereby guarantee all the payment and performance obligations of CompCare de Puerto Rico, Inc. under or relating to this Agreement.
COMPREHENSIVE BEHAVIORAL CARE, INC. | COMPREHENSIVE CARE CORPORATION | |||||||
By: | /s/ Clark A. Marcus |
By: | /s/ Clark A. Marcus | |||||
Printed Name: Clark A. Marcus | Printed Name: Clark A. Marcus | |||||||
Title: | Chief Executive Officer | Title: | Chief Executive Officer |
Exhibit 99.1
CompCare Announces Preliminary Revenue and Expected Profitability
for the Second Quarter 2012
TAMPA, Florida: June 25, 2012: Comprehensive Care Corporation (CompCare or the Company) (OTCBB: CHCR) announced today that it expects to report a profit for the second quarter of 2012, with revenues for the quarter of approximately $18 million. Revenues for the same quarter in 2011 were $18.6 million. However, during that quarter, the Company posted a loss of $4 million.
Commenting on the expected results for the quarter, Robert J. Landis, CompCares Chief Financial Officer, stated, The Company is particularly excited about our second quarter expected results since, if realized, it will be the first time in many years that the Company has been able to post a profit for two consecutive quarters. The improvement in results from the second quarter of 2011 to the second quarter of 2012, we believe, is primarily attributable to our Pharmacy Management Program which is now achieving traction and our cost reduction efforts to streamline our internal systems. Part of the shift in the pharmacy program occurred from our establishing Company-owned clinics in areas where we experience high patient utilization and cost. The clinics have the effect of reducing those costs and providing us with a greater opportunity to directly service the needs of the patients. Based on our best current available information, for example, the Company expects to realize a profit in its at-risk pharmacy operations in April, and this trend continues in May where preliminary numbers indicate an increase profit in the Companys at-risk pharmacy operations. While there can be no assurances that this trend will continue or that there might not be subsequent positive or negative adjustments to the April and May results, the upward trend is what we were looking for since we believe that it indicates the viability of the overall program. Other aspects of the Pharmacy Management Program are in the process of being implemented and will occur shortly.
Mr. Landis continued, Another aspect of the Pharmacy Management Program that contributed to a successful second quarter was the signing of a Third Amendment (the Amendment) to a material agreement with one of our existing, at-risk pharmacy clients. As a result of the Amendment, the Company received a $2.2 million, retroactive, cash adjustment to pharmacy prescriptions, which were originally charged to the Company. Additionally, the Amendment shifts the financial responsibility for a significant number of prescriptions from the Company to the client for the remainder of 2012. We expect this financial responsibility shift to further reduce the Companys pharmacy expenses throughout the year, and although there can be no guarantees that these expectations will be achieved, we expect the shift to further enhance the Companys profitability in its pharmacy operations for the remainder of 2012.
Additionally, we were able to implement administrative, cost-saving measures that also contributed to a profitable second quarter, Mr. Landis said.
Revenue and other financial estimates contained in this press release have not been audited or reviewed by the Companys independent auditors, and accordingly they express no opinion or other form of assurance as to this information. The Company provides no assurance that these
preliminary results, future expectations or assumptions will be met for the second quarter or fiscal year 2012. The Amendment addresses a number of other aspects of the Companys business with its client. A complete copy of the Amendment has been filed by the Company with the Securities and Exchange Commission, which is available on its website at www.sec.gov.
About CompCare
Established in 1969, CompCare provides behavioral health, substance abuse and employee assistance programs for governmental agencies, managed care companies and employer groups throughout the United States. Headquartered in Tampa, Florida, CompCare focuses on personalized attention, flexibility, a commitment to high-quality services and innovative approaches to behavioral health that address both the specific needs of clients and changing healthcare industry demands. For more information, please call 813-288-4808 or visit our website at www.compcare.com.
Forward-Looking Statements
Except for statements of historical fact, the matters discussed in this press release, including but not limited to our expected profitability in the second quarter of 2012, the continued implementation of our Pharmacy Management Program, the impact of the financial responsibility shift with one of our existing, at-risk pharmacy clients, our ability to increase margins and to obtain sustainable profitability, our ability to reduce overhead and implement further cost savings, our ability to further improve the Companys performance, the outcome of our business strategy, our ability to expand our pharmacy management program with higher profit margins, and our ability to reduce pharmacy expenses throughout the year are forward looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond the Companys control that may cause actual results to differ materially from stated expectations. These risk factors include, among others, changes in local, regional, and national economic and political conditions, the effect of governmental regulation, competitive market conditions, varying trends in member utilization, our ability to manage healthcare operating expenses, our ability to achieve expected results from new and existing business, our ability to expand and manage our provider network, the profitability, if any, of our recently acquired or previously existing capitated contracts, the costs incurred in seeking new contracts, the loss or termination of any existing contract, increases or variations in cost of care, seasonality, the Companys ability to obtain additional financing, and additional risk factors as discussed in the reports filed by the Company with the Securities and Exchange Commission, which is available on its website at www.sec.gov.
Investor Contacts:
Paul Knopick
E & E Communications
pknopick@eandecommunications.com
949.707.5365
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