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Home My WebLink About97-05287 .I' .\ .. '" '~ , " 1': ,~ :" .. 4. ~ l~ l1: :tr ~R jl " " ., ,. ., ,I, .1 " , I " " ~ I. I " ,. I +. :a .'-1 I " ~ 1 ~ ~~ " I, I. ) // ( , II I '. ~ ":, .,' " :1 j , , , I! , , , ., , , , , \', , iI, ,'Ii , , , , "I " , , " I'; , , I , , , ., 'I .li 'If ! , I , , I .. I , I , ., -;1 , " ",I .1 I ." ",';',1' ;,li " ., !,i I:', ,,iF 'A' ., ,. " , , , I , , ;1 i' II' I I I) ,I , , IS' , ",'. " ,;1 I, ", ,>,,) '" ,. ~ """,,..'' , . . ..- - 97-52H7 CIVIL ^greel11ent (the "^greement"). Under the ^greement Med Plus wus to provide managcment serviccs and visit the Clinic several times per month. A partncr of Mcd Plus did visit the Clinic on a regular basis between May Ill. 1997 and .July 31, 1997. While the contract was being negotiated. the Clinic was in operation. The defendants solicited patients through publications published in Cumberland County, among other places. and distributed in Cumberland County on the defendant's behalf by Med Plu~. ^part from the Clinic operations. prior to September 191)7. dclcndants did not regularly advertise in or solicit patients for their medical practice from Cumberland County. Of the ninety- eight patients treall:d at the Clinic between May and Septembcr. when this suit was tiled. cleven resided in Cumberland County. Thereafter. all additional thirty-two paticnts were treated at the Clinic, and lillII' of those patients resided in Cumberland County. The parties continued to negotiate during this time. blltthe delClldants never actually signed the Agreement. However. an addendum was signed by hoth Med Plus and the defendants which stated that Ihe parties to the Agreemell! would meet to negotiate any additional terms or modifications to the ^greement. The parlies signed this addendum in Franklin County. On ^ugust 29. the parties and their attorneys met in Cumberland County to discuss additions and modifications under Ihe addcndum. but no further agreements were reached althis meeting. Med Plus tiled suit in September. They allege that by signing the addendum. the defendants fully executed the Management Services Agreement. which providcs that delendants would pay Med Plus fifty-percent ofprolits in cxcess of l'xpenscs. Med Plus alleges that the defendants have retilsed to compensate them and have therclil!e materially breached the ^greement. 2 97-5287 CIVil. This unulysis ullows us to determine whethcr the county hus a substantial rclalionship to the controversy. "'SUbstlllltiul relutionship' is nothing more than synonymous language for minimum contacts, which, in turn. bears directly on the meaning of 'regularly doing business' ... Subsection (u)(2) provides IiJr general jurisdiction. while the remaining provisions of Rule 2179 form the basis of special jurisdiction covering the legal domicile and acts of the corporate enterprise." Purcell at 246. 579 A.2d at 1286. Venue is improper if there is not a substantial relationship between thc county lInd the controversy. In Purcell the trial court had dismissed objections to venue. holding l.hat vcnue was proper in Philadelphia County. concluding, in turn. that Bryn Mawr regularly conducted business there. The court was satisfied that requirements lor venue had beenmct bccause Bryn Mawr: a) had contractual amliations with residency programs of teaching hospitals in Philadelphia: b) recruitcd and employed medical residents from Philadelphia teaching hospitals: c) purclmsed goods and services from busincsses in Philadelphia: d) maintaincd (md paid lor advertiscments listing the hospital in the Philadelphia yellow pages and maintains and pays for advertisements in the telephonc directory of Philadelphia County; e) placed continuous advertisements in the Philadelphia Inquirer: and f) accepted a portion of its income from residents of I'hiladelphia County. In an opinion without dissent. the Supreme Court held that therc was an insufticicnt nexus with Philadelphia County lilr the purpose of conferring vcnue. Similarly. we lind that Cumberland Counly is not n county whcre the defendant regularly conducts busin('ss. The only contacts Scotland Family Medicine had with Cumberland County 4 -. 2. Defendant Scotland Family Medicine, Inc. is a Pennsylvania professional corporation doing business al 3730 Scotland Road, Scotland, PA 19254. 3. De1endant William J. Ke:.:ing, M.D. is a shareholder in Defendant SFM, is licensed to practice medicine in the Commonweallh of Pennsylvania, and resides at 23 Obsidian Drive, Chambersburg, PA 17201. 4. Defendant Kenneth W. Riclor, M.D. is a shareholder in Defendant SFM, is licensed to practice medicine in the Commonwealth of Pennsylvania, and resides, upon information and belief, in the general Chambersburg area. VENUE AND JURISDICTION 5. Venue in Cumberland County is proper because Defendants regularly conduct business in Cumberland County and the transaction or occurrence giving rise to this cause of aClion arose in Cumberland County. 6. The amount in controversy exceeds Fifty Thousand Dollars ($50,000) and therefore is not appropriate for referral to Compulsory Arbitration in accordance with Cumberland County Rule ofCourl 1301-1. FACTS 7. In or about the Spring of 1997, Med Plus approached Defendanls with the concept of opening a clinic 10 provide medically necessary services for mature male patients who suffer from heinous conditions such as erectile dysfunction and impotency (hereinafter referred to as "the Clinic"). 8. Med Plus. mindful of restrictions under federal and state law precluding self. referrals, proposed a management services organization ("MSO") structure whereby Med Plus 2 . would provide management scrvices and Dclendants would be the actual service providers III Clinic paticnts. 9. In or about early May, 1997, Med Plus presclllcd Delendants with a wriuen Managemcnt Services Agreemcnt (hereinaftcr the" Agreement"). Under the Agreement, il/ler alia, Med Plus would give to Defcndants the extensive diagnostic and treatment regimcn they rcsearched and developed for impotence paticnts, and provide extensive management scrviccs including but notlimitcd to: establishing efficicnt opcration of the Clinic: providing recommendations to maintain a high level of quality scrvices; bc rcsponsible for all financial managcmcnt of the Clinic; maintain effcctivc linancial accounting and rcporling systcms, budgeting procedures and accounting; develop utililation managcmcnt and quality assurnncc plans; manage and opcratc cOlllputcr infonmllion systems and phonc systems; provide hillin~ and reimbursement tracking services and systems; place adverlisemcllls; erfcct pricing and promotion of the Clinic's services; and recruit paticms 10 :he Clinic. 10. Mcd Plus expended substantial time and rcsourccs to rcscarch and dcvcloJ1lhc multi-faccted diagnostic and treatment regimen for impotence patients to he utilizcd by Defendants, of which Defendants wcre completcly unaware prior 10 their involwnllml wilh Med Plus. II. Med Plus and Defendants agreed to their respective obligalions. agreed upon a five-year contract, and agreed that compensation would be distributed pursulIlll III a furmula whereby Defendants would pay Med Plus fifty percent (50%) of profits in ex\:e~~ Ilf expenllCl. . Dcfendants agreed that expenses would be limited 10 salarics Ill' Clinic ernplllyce~ whOle lime 3 . was devotcd exclusively to Clinic functions, Clinic equipmclll rcntal costs, Clinic advertising costs, and misccllancous Clinic cxpenses such as telephonc and postage costs. 12. Despite heing prcsented with the detailed wrillen Agrecment, Defendants decided not to sign thc document at thc time Clinic opcrations were initiated by mutual consent of all parlies, but agreed vcrbally to those terms. 13. Pursuant 10 the verbal agreemcnt set forth in the preceding paragraph, the Clinic initiated operations on or about May 21, 1997. 14. As anticipated by Med Plus, and pursualllto Med Plus' successful management and patient rccruitmcnt, (he Clinic bccame an immcdiate success. Spccifically, from May 21 through May 31, 1997, thc Clinic billed services in (he amount of Ten Thousand Two Hundrcd Seventy Two Dollars and Ninetccn Cents ($10.272.19). 15. Thc Clinic continued to be successful as a rcsullllf Med Plus' management and recruitment of patients, as the following detailcd monthly gross billings indicatc: · $23,246.11 (gross June, 1997 billings) · $26.945.77 (gross July, 1997 billings) · $38,911.66 (gross billings through August 28, 1997) The first three and one-balf months of gross billings amountcd to $99,175.73. Upon information and belief. services actually billcd in August cxcecd $40,000.00, 16. Given natural cash flow and reimburscmenttimeframes in the health care industry. tbe total amount collected by the Clinic by the end of August, 1997, was, upon information and belief, in excess of Twcnty Five Thousand Dollars ($25,000). 4 . 21. Dcfendants Kcating and Rictor signed the Agrecment below thc Addendum c1ausc unequivocally indicating their intcntion to be bound by each of thc tcrms cOlllained in the Agrcement. 22. It is clear the parties intcndcd to bc bound by the Agreement evidenced by the language "!!In Agreement" in thc Addendum clause, which obviously refers to the Management Services Agreement; morcover, the language "will meet to ncgotiate any additional terms or modifications to this Agrcement" unequivocally dt'monstratcs that there is an existing contract bctweenthe parties. Accordingly, mutual assent between the parties occurred upon exccution. 23. Section 1.2 of the Agreement requires that Mcd Plus "shall at all times govern and excrcise ultimate control over operation of thc Clinic." Section 1.3 of thc Agreemcnt provides that "the daily control of all opcnllions rclating to Clinic functions shall be administered by the Manager" (i.e. Med Plus). Section 2.1 of the Agreemclll acknowledges Defendants' appointment of Med Plus as thc Manager of the Clinic and "as the sole and exclusive agent acting for and on behalf of the Practice as Manager of the operations of the Clinic", including the delegation to Med Plus of "tbe general authority to supcrvise and llIanage the day-to-day operations of the Clinic." Section 2.2 and ~2.3 further establish authority in Med Plus to manage all aspects of the operation of the Clinic. 24. Defendants materially breached *1.2, ~1.3. ~2.I, ~2.2 and *2.3 of the Agreement by unequivocally "freezing out" Mcd Plus from any furtber involvcment of the Clinic. The de facto "freeze out" occurred on or about August 29, 1997. Defendants' "freeze out" wa~ confirmed in writing by correspondence dated September 17, 1997 wherein 6 Delendants uncquivoclllly slalcd thill Med Plus "should not appear atthc practicc", notwithslIlllding Med Plus' writtcn demand III bc pcrmitted access to cOlllinue managing the Clinic. 25. Defendants' "frecze out" of Mcd Plus predudcd Mcd Plus from performing its obligations under the Agreemelll, and therefore constitutes a material brcach of the Agreement. 26. Scctions 2.16, 2.16-1 and 2. 16-2 of the Agreement establish furthcr authority in Mcd Plus to supervisc, direct and maintain operation of all accoullling and financial systems with respect to claims processed. billcd and collected by thc Clinic. Defendants improperly seized cOlllrol over these managemcnt, accoullling and linanciiil rcsponsibilities, without the conselll of Med Plus, on or abollt August 29, 1997. Dcfendallls' unlawful seizure cf all managcment. accounting and linancial functions of thc Clinic was confirmed in writing via corrcspondencc dated September 17, 1997. thcreby constituting a matcrial breach of ~2.16, ~2.16-1 and ~2.16-2 of the Agrcemcnt. 27. By correspondence datcd September 16, 1997, Septembcr 23. 1997 and September 24. 1997, Med Plus insisted (hat Defendants return management, accounting and financial cOlllrol of the Clinic to Med Plus. and provide acccss 10 data and financial information nccessary for Med Plus to perform its functions under thc Agreemcnt. Defendants have failed and refused to allow Med Plus to return to its managerial obligatic.ns, and have refused to provide any patient schcduling data or financial information to Med Plus, thereby constituting a material breach of thc Agreement. 28. Section 2.22(a) provides that Defendants "shall nO! do anything to prevent Qr hindcr IMed Plus'l managemcnt of Clinic." 7 29. Defcndants' "freeze out" of Mcd Plus and seizure of control of all management, accounting andl1nancialmallers relative to the Clinic constitutes a Illaterial brcach of ~2.22(u) inasmuch as Delendallls havc uncquivocally prevented IInd hindered Mcd Plus from managing the Clinic. 30. Section 2.18 of the Agreement requircs Med Plus to open and maintain bank accounts in which the Clinic funds shall be deposited. Inasmuch as federal and state third parly payment laws and regulations require services to bc billed under the names of the actual hcalth care providcrs (Defendants in this instance), thc partics mutually agrecd to permit Dcfendants to actually open thc account. 31. Upon receipt of rcimbursement from third parlY paycrs. including the fcdcral Medicare program. Med Plus would determine which services were applicablc tll Clinic diagnostic tests and treatment, then advise Dcfcndams as to the prccise amount that should be deposited in the Clinic account. Dcspite repeated and numerous wrillen and verbal allempts by Med Plus to sccure deposit of Clinic funds in the Clinic account, Dcfcndants failed and refused to distribute such funds and, instead, commingled Clinic funds with Defendants' practicc funds, thereby materially breaching ~2.18 and ~2.19 of the Agreement. 32. Section 3 of the Agreemcnt addresscs compensation mailers. Section 3.2 requires Defendants to pay Med Plus a fair market value Iixed fee in the amount of One Hundred Dollars ($100) per month for Med Plus' scrvices rendered in placing advertisements. 33. Consistent with Med Plus' obligations undcr the Agreement. Med Plus placed adverlisements in thc media during the montbs of May, June, July, August and September of 1997, all of which produced substantial patient recruitment and interest in the Clinic, 8 substalllial generation of billings (in an amount in excess of $100,000 during that time), and substantial collection of those billings. 34. Dcspite repeated demands, Defendants have refused and failed to compensate Med Plus for the five months' fair market value advertising fcc, despite - upon information and belief - thc Clinic's generation of profits, thereby materially breaching ~3.2 of the Agrecment. 35. Section 3.3 of the Agreemelll ohligatcs Defendallls to pay Med Plus compensation in the amount of fifty percent (50%) of the Clinic's net profit. Under ~3.3, Defendants were not under any obligation to p;.y Med Plus any compensation until Clinic revenues exceeded the montbly cxpenses on a cumulativc basis. Section 3.3 further explains how each mOlllh's cxpenses and revenues were required to he computed. Compensation was not due Med Plus ulltil a cumulative profit was made by the Clinic. 36. Upon information and belief, the Clinic has generated suflicielll revenues to producc a profit under the expensc fllrmul" conrained in ~3.3-1. Despite repeatcd demands by Med Plus, Defendants have refused and failed 10 disburse Med Plus' percelllage of the profits, thereby materially breaching *3.3 of the Agreemelll. 37. Section 3.3-1 contains thc expense determination used to calculate thc profit distribution. Expenses were agreed by thc parties to be limited to salaries of Clinic employees whose time was devoted exclusively to Clinic functions, Clinic equipmelll relllal costs, Clinic advertisement costs, and miscellaneous Clinic expenses such as telephonc and postage cosls. Med Plus retains (he authority to approve Clinic expenses under *3.3-1. Med Plus did not approve any fUrlher Clinic expenses. 9 53. Notwithslanding its promises, Dcfcndants did not providc the information by September 5, 1997. Instead, Defendams requcsted a one-week extension until Scptcmber 12, 1997 to submit its documentcd and justifiable cxpense incrcasc proposal. 54. In direct contradiction to its promise, Defendants submillcd the solicitation to extort a Ten Thousand Dollar ($10,000) per month rcntal demand (which exceeds fair market valuc by at least 2000%), thercby brcaching their duty 10 ncgotiate in good faith in violation of the Addendum to thc Agrecment. .55. Upon receipt of Delendants' solicitation to extort a Ten Thousand Dollar ($10,000) kickback from Med Plus, Mcd Plus forwarded correspondcnce to Defcndants in the form of a Notice of Default pursuant 10 ~4.2(b) of the Agreement. Se.;tion 4.2(b) requires a party to providc writlen notice of dcfault to the other party of any material term of the Agrccmcnt, and rcquircs the other parly to curc allY matcrial breach or default within sixty (60) days after rcceiving wrillen noticc. 56. By correspondence dated Scptember 16, 1997, Med Plus forwarded corrcspondence to Defendants advising Derendants thatthc correspondence sh\Juld be treated as a Notice of Default pursuant to *4.2(b) of thc Agreement, and set forth in detail Defendants' matcrial breaches of various scctions of thc Agrecment (known at tbat point), including but not limited to *2.22(a), *1.2, *2.5, ~2. 16. *2.16-1, *2.16-2. *2.17, *2.18, *2.19, *2.2l(e), *2.22(1). etc. 57. Med Plus' September 16, 1997 ~orrespondencc also dcmanded that Defendants provide immediate access to Med Plus of all linancial inl()rmation and collection information, demanded reinsl<ltement of Mcd Plus as the Man<lger of the Clinic, and staled that Dr. 13 Dickson, one of thc partners of Med Plus, would be at Defenllallls' practice locution beginning 9:00 a,m. on September 23, 1997. The correspondence further dirccted Ddendants to cure the breaches promptly and to notify Mcd Plus of Defendallls' plan to cure their material breachcs. 58. Defendants responded with correspondence dated Scptember 17, 1997 indicating that Defendallls would shut down the Clinic by September )0, 19l)7, and expressly stating that .. David Dickson should not appear at the practice." The corrcspondcncc provided no response to the Notice of Default, nor did it indicate any illlelllion to cure Dcfendants' material breaches. 59. By correspondence dated September 19, 1997, Defendallls expressly disaffirmed thc existence of any contract, and dill not rescind their stated intcntions to shut down the Clinic or to frceze out Mcd Plus. The corrcspondence contained no response wthe Notice of Dcfaull nor did it outline any plans to cure Defendallls' material brcaches of the Agreement. 60. Defendallls directed further correspondence datcd Septembcr 22. 1997 to Med Plus. Similarly. the correspondence did not respond to or acknowledge the Notice of Default nor did it outlinc any plans to cure Dcfendants' material breaches 61. Defendallls did not respond to Med Plus' correspondcnce dated September 23, 1997 and September 24, 1997 insisting that acccss to financial and other information be provided in order to permit Med Plus to cOlllillue managing thc Clinic. 62. Defendants' conduct constitutes anticipatory repudiation of the Agreement for the following reasons: (a) Defendants' conduct illustrated in their Septemher 15, September 16, September 17, September 19 and September 22 correspondence demonstrates that 14 Dcfcndants (I) refused to contlnuc pcrformance of their ownoblig;llions under thc Agrccment unless and ulllil Mclt Plus a~qulesced in Defcndants' Ten Thousand Dollar ($10,000) pcr mOlllh eXlOrtion demand; (2) hindered and prevellled Med Plus from performing its obligations undcr thc Agreement by frcezing Med Plus out of all Clinic operations; (iii) cut off all ac~ess by Med Plus to necessary financial and othcr information required to managc the Clinic; (iv) intcnded to shut down the Clinic by September 30, 1997; and (v) rcjcctcd the existence of a binding Agreement, all of which cvidences sufficient conduct to make Med Plus insecure as to whether Dcfendants intcnded to continuc their performan~e of the Agreemelll; (b) Med Plus issued a demand to Defendants dated September 16, 1997 that they fu iii II their obligations under the Agn:emclll through the Notice of Default, and advising Defendants as 10 the necessary stcps that must be taken 10 cure their cxisting material breaches; (c) Dcfendallls failed to provide adequate assurance 10 Med Plus that Defendants would fu IIi !I their obligations under the Agreement, evidenced by Defendallls': (i) rcfusalto acknowledge the existence of the Agrecment; (ii) refusal to respond to the Notice of Default or 10 submit any plan to cure their material breaches; (iii) scizure control of all management, accounting and financial functions of the Clinic which completely hindered and prevellled Mcd Plus from pcrforming its obligations; and (iv) slated intention 10 shut down the Clinic by September 30, 1997. 15 63. The foregoing demonstrates Delendants' delinite and unconditional repudiation of the Agreement unequivocally communicated to Med Plus, thereby accelerating Med Plus' authority to deem the Agrecment in material breach and Defendants' intention to cure as non- existent, all of which authorizes Med Plus to accclerate its right to Iitigatc prior to the conclusion of the sixty (60) day notice clause inasmuch as Defendams havc manifested no intention whatsoever to cure. 64. At all times material hereto, Med Plus in all material respects performed each of its duties and obligations under the Agreement. 65. Defendants' material brcaches hindered Med Plus' ahility to perform under the Agreemcnt, thereby excusing any further pcrformance by Mcd Plus. 66. Despitc satisfactory pcrformance by Med Plus, and contrary to the terms of the Agreement as sct fOrlh in detail ahovc, Defcndants havc failcd and reruscd to distribute expenses due to Med Plus, have failcd and rcfused to distribute prolits pursuant to thc Agreement to Med Plus, and have destroyed Med Plus' involvement in the Clinic which it is contractually obligated to managc, all of which constitute matcrial breaches of the Agreemem. 67. Dcfendants' material breaches of its Agrecment with Med Plus havc directly and proximately causell Med Plus damagcs in terms of lost prolits tbat would have heen generated during the entire live-year term of thc Agrccment in an amount as yet unliquidated, but believcd to be in excess of Seven Hundred Fifty Thousand Dollars ($750.000), have caused Med Plus to lose its capital investmelll in an amount in cxcess of Twenty Five Thousand Dollars ($25,000), and have caused Med Plus to lose its expense contribulions in an amount in exccss of Sixteen Thousand Dollars ($16,000). 16 WHEREFORE, Mcd Plus Mcn's Center Management respectfully requests this Court 10: (a) declarc that Dcfendants are in materi<ll bre<lch of its Agreement with Med Plus as a result of, illler 1I1i1l, [)efend<lIllS' seizure of control of the Clinic, solicitation of an unlawful kickback, f<lilure to pay Med Plus' expenses and fees, commingling funds, unequivocal intcnt to close thc Clinic unilaterally, bad faith selllemelll negoti<ltion, and denial of acccss to all linancial and other data necessary to Med Plus to manage the Clinic: and (b) enter judgment against Delendants individually, jointly and scverally and in favor of Med Plus in an amount in excess of Seven Hundred Fifty Thousand Dollars ($750,000) but as of yet unliquidated, plus interest, allorney's fces, costs <lnd expenses of this <lction, and any other such further relicI' authorizcd by law and deemed to be just by this Court. COUNT II Breach of Contract Implied in Fact 68. Paragraphs 1 through 67 arc incorporated by refcrence as if fully set forth. 69. In the event the Court dctermines that no wrillen <lgrcement by the parties was executed, Med Plus <lnd Defend<lnts nevertheless el1lered into a contract implied in fact as evidcnced by their conduct <lnd course of performancc. 70. Defendants revicwed the tcrms of thc Agreement (attached as Exhibit" A") and agreed to each and cvery oblig<ltion of both Med Plus and Defendants, agrecd to the distribution of profits (i.c. 50% of prol1ts distributed to each party after limited expcnses outlined in ~3.3-1 were paid), and agrced 10 a five-year term of the contr<lct. 17 71. In purticular, Dcfend:lI1ts initiated the Clinic utilizing the experlise 11m! protocols developed by Med Plus. The first date of service occurred on or ubout Muy 21, 1997. 72. Further, Defcndants executed leases lO utilize thc diagnostic testing equipmcnt inhcrenttolhe Clinic functions on or about May 15, 1997. 73. Dcfendants established a room in their mcdical practice in which Clinie patienls would be evaluated, diagnostic testing performed, and subsequent treatment implemented. 74. Detendallls accepted management services performed by Med Plus in terms of developmcnt of the diagnostic and thcrapeutic protocols, recruitment of patiellls, developl)lent of intcrnal billing and managemelll systems, etc. 75. Med Plus performed actual management services pursuant to the precise terms of the Agreement, and did not act as an officious intermcddlcr with respect 10 Clinic operations and functions. 76. Delendallls agreed to and acquiesced in the terms of the Agreement and made no complaints about any terms of the Agreement, particularly thc profit distribution and expensc computations for the firsl several months of operations. It was not until July 31, 1997 that Defendants complained about the linancial structure of the Agreement and desired to change the expensc computation. 77. Defendants cOlllinually relied upon the management expertisc of Med Plus from the inceplion of the Clinic until Defendallls seized control and froze out Med Plus in late August, 1997. Med Plus providcd recommendations to mailllain high quality services, established an excellent public image for the Clinic, operated the Clinic at appropriate levels of slaffing 10 ensurc quality paticnt care, mailllained billing, accounting and reporting systems, 18 conllucted venllor contract negotiations, placed advertiscments lInd recruited nUmerous patiellls III the Clinic, cffectcd pricing and promllliol1 of thc Clinic's scrvices in a competitive manner, analyzcd and developed mcthods to facilitate paliclll scheduling and patient contact to the Clinic, and established Iinandal management procedures to the extent pcrmillcd by Defendants. 78. Thc scrviccs detailed in the foregoing paragraphs were requested by Defendallls and rerformell by Mcd Plus with the expectation of paymelll pursuant to thc prol1t distribution and expense tcrms of the Agreement set forth in Section 3. 79. The foregoing facts demonstrate Defendants' illlclllto be bound by the terms of tbe Agrcement. Accordingly, the parties' course of conduct is sufliciclllto cstablish a contract implied in fact. 80. Delendants matcrially breachcd thc Agrcemelll as dctailed inJra in " 18 through 67. 81. Delendants' material breaches dircctly and proximately caused Med Plus damages in terms of lost profits that would have be~n generated throughout the duration of the five-year term of the contract had Defendants properly performed in an amoulll in excess of Seven Hundred Fifty Thousand Dollars ($750.000>. loss of Med Plus' capital investmcnt in an amoUlll in excess of Fifty Thousand Dollars ($50,000), and a loss of Med Plus' ulll'eimbursed cxpenses in an amount in exccss of Sixteen Tbousand Dollars ($16,000). 82. At alltillles matcrial hercto. Mcd Plus performed cach and every onc of its obligations undcr thc Agrcemelll. 19 83. Dclendants' material hrcaches hindered Mcd Plus' ability to perform, therehy excusing any fUrlher perlilrlllanCe unller the Agreement by Med Plus. WHEREFORE, Med Plus Men's Center Management respectfully rcquests this Court to; (a) declare that Defendants are in material breach of their Agrecmcnt wilh Med Plus as a result of, illler alia, Defendants' seizure of control of the Clinic, solicitation of !in unlawful kickback, failure to pay Mcd Plus' expenses and fces, commingling funds, unequivocal intent to close the Clinic unilaterally, bad faith seulement negotiation, ;Illd dcnial of access of all financial and other data necessary to Med Plus to manage the Clinic; and (b) enter judgment against Defendallls individually, jointly and severally and in favor of Med Plus in an amount in excess of Seven Hundred rifty Thousand Dollars ($750,000) but as of yet unliquidated, plus intcrest. allorncy's fees. costs and expcnses of this action, and any other such further rclief authorized by law and deemed to be just by this Court. COUNT III Iluilch of Contract Implied in Law - Ouasi Contract 84. Paragraphs I through 83 are incorporated by reference as if fully set forth. 85. Med Plus conferred an extraordinary benefit upon Delendants by delivering to them delailcd protocols and diagnostic and treatment rcgimens which were a product of Med Plus' extensivc research and development, whicb Defendants did not possess prior to their involvement with Med Plus, and wbich would have required subslamial dcvelopment, rescarch and effort on the part of Defendants to establish in the first place, as well as expenditure of significant resources, money and time. 20 structure ($4,012,50), mcdiclll Supporltraining ($1,119.48), initilltion 01' un AT&T 800 number ($75,91), physician training anll consulting on dillgnostic tesling equipmcnt ($1.460.13), IInd IIdvertising service fees ($500.00); (b) $50,000 in capital investment; (c) 3n amount in excess of $750,000 (as of yct unliquidatcd) representing lost profits that the Clinic mllY or will generate as a result of Dcfendallls' seizure of the program and the entire operation and management function of thc Clinic, computed as a function of lit least $8,000 per month profit on averllge (representing one-half of projected prolits of $16,000 per month althe minimum), discoull!ed to present value, and taking into considcration expenses which lire limited III Clinic employees whose time is dcvotcd exclusively to Clinic functions. Clinic equipmclll rcntal costs. Clinic advertising costs, and miscellancous Clinic expenses such as telcphonc IInd postagc costs. WHEREFORE, Med Plus respectfully requests this C'JUrI to declare that Defendall!s have been unjustly enriched by Med Plus and hold said Defendall!s individually, jointly and severally liable to Med Plus for the value of thc impotency progralll, management services, expenses incurred by Med Plus but as yet nOI paid hy Dcfcndall!s, fifty percent (50%) of thc profits to date, and fifty percell! (50%) of all futurc profits generated by Dcfendants for the provision of impotency serviccs in an amount in excess of Seven Hundred Fifty Thousand Dollars ($750,000), together with interest, allorney's fecs and expenses of this action and such otber and further relief as this Court dcems just, necessllry and appropriate. 22 COUNT IV fnmd 92. Parographs I through 91 arc incorporatell by refercncc os If fully set forth. 93. In or aboutlhe Spring of 1997, Mcd Plus approachcd Dcfendants with an opponunily to provide medically necessary scrvices to mature males who suffer from heinous conditions such as impotency and erectile dysfunction, which services were not providcd in the geographical markct in which Dclenllants opcrate their medical practicc. 94. Med Plus expended substantial research and development time and resources devcloping a detailcd diagnostic and treatment protocollhat would result in the pwvision of impotcncy services to male patients in thc market that were heretoforc unavailable and could rcsult in an increasc in compcnsation to Defendants in a completely legitimate and bona tide manner. 95. Mcd Plus offered to Defcndants tbe detailed diagnostic testing and treatment . protocols together with managemcnt services in terms of billing, accounting, coding, reimbursement and collection management, statistical analysis of thc Clinic to enhance service, advertisements and patient recluitmcnl. Med Plus agreed to deliver the entire impotency program to Defendants and to manage the impotency clinic. 96. Defendants agreed to be the provider of medical services. 97. Defendant~ were required to provide medical servic..:s in order to satisfy various federal and srate laws prohibiting self-referrals. 98. Defendants agreed to the management services organization ("MSO") structure for those reasons. 23 99. Defendants further agreellw distribute fifty percent (50%) of the profits to Med Plus in return for Mcd Plus' delivery of the entire program (with which Dclendants werc complctely unfamiliar and would havc had to expend substantial time, money and resources to devclop on their own) and management services. 100. Defendants furthcr agrecd to compute expenses which affected total profits as follows: salaries of Clinic employces whose time was devoted exclusively to Clinic functions, Clinic equipment rental costs, Clinic advertising costs, and other miscellaneous expenses such as telephone and postage costs. 101. At the timc Med Plus offered to deli vcr the detailed diagnostic testing and treatmcnt protocols comprising the impotency clinic program and to provide ongoing managemcnt services, Med Plus was unawarc of Dcfendants' actual intcnt In induce Med Plus to give thc entire program to Defendallls. obtain initial management services to ascertain the proper billing and collection methodologies, then freeze Med Plus out of the Clinic, refuse to pay Med Plus' expenses incurred, refuse to disgorge profits, and to then lake over full operation of the Clinic and retain all income generated, which Defendams intended to keep at the outset of the Agreement. 102. Delendants continually assured Med Plus that they would allow Med Plus to manage the Clinic and to share in the profits by receiving fifty percent (50%) of all revenues generated in excess of the limited expenses outlined above. 103. In reliance upon the representations of Defendants that they would allow Med Plus 10 manage the Clinic and share in the profits, Med Plus agreed to deliver the detailed diagnostic testing and treatment protocols for impotency patients (of which Defendants had no 24 prior knowledge), to incur up-front cxpenses in exccss of Sixtcen Thousand Dollllrs ($16,000) which Mcll Plus paid from its own funds, and manage thc Clinic with the cxpectation of receiving expensc reimbursemcnts anll protit distributions. 104. Med Plus' reliance was justifiable bccause Defendants gave assurances thatlhe program possesscd inhercnt clinical value, could confer a benetit on many patients who suffer from impotency problems, and werc clllhused thatthc Clinic would rcsull in a successful joint vcnturc between the parties. Med Plus' rcliance was further justifiablc because Defendants were completely unaware of thc diagnostic and Ireatmelll protocols ncedellto operate an impotence clinic prior to mecting Med Plus, and becausc Derendallls needed an cxpericnccd manager such as Med Plus to manage thc various financial, opcrational and reimburscment functions of the Clinic. 105. Moreover, Med Plus' rcliancc was justifiable bccausc Dcfendants madc assurances to Med Plus that they were quite pica sed with the nUlllber of patiellls that had been recruited to the Clinic, anll were quitc pleased with Med Plus' managcmelll capabilities and input. Defendallls made further assurances that Mcd Plus would bc reimhursed its out-of- pocket expensp.s and paid tifty percclll (50%) of Ihc profits as agreed. 106. Delendants manifcsted their fraudulent intclll by prccluding Med Plus from accessing any finandal or othcr information relative to the Clinic and hy precluding Med Plus from coming on Defendants' prcmises, as demonstratcd by Dcfendallls' September 17, 1997 correspondence stating that "Dr. Dickson should not appear at the practicc" notwithstanding Med Plus' demand to regain access to the Clinic and all financial information and management functions. 25 107. Once Defcndants completely undcrstood thc impotcncy clinic protocols, anll Mcd Plus had recruited scores of patients lilr diagnostic trcatment and scrvices to the Clinic, Dcfcndants then manifcslclltheir intcnt to use Mcd Plus' concept for lhcir own benel1t by insisting on additional expense allocations and by soliciting an unlawful kickback in the IImount of Ten Thousand Dollars ($10,000) per molllh to be paid by Med Plus toward space utilized in the Clinic (the actual fair market value of which does not exceed $500 per mOlllh). 108. Dcfendants further manilested their intcntto defraud Med Plus and further its deceitful schemc 10 seize control of the program and all management funclions, and preclude Med Plus from any fUrlhcr involvemclll in the Clinic, by commingling Defimdants' mellical practice funds with Impotency clinic reimbursemellls. [n parlicular. Defendalll Keating rcceived periodic reports from the Med Plus hilling represcntative detailing thc amount of reimbursemelll received for impotency clinic services rendered. Dr. Kcating acknowlellged rcceipt of the information, and promised on numerous occasions to llistribute a check from Defendants' medical practice to the Clinic account. Dcfendant Keating intelllionally deccived Med Plus into believing it would receivc expense reimbursement and protit distributions, yet he never made such distributions and. as the foregoing demonstrates. never intended to llo so. 109. At the outset of Defcndants' working relationship with Med Plus, Derendants knowingly and intcntionally deccivell Med Plus illlo bclicving it was a joint vcnture partner, yet Defendants knowingly and intentionally perpctrated a schemc whereby they ncwr intcnded to perform their obligations (including prolit and cxpense distributions and ongoing management services by Med Plus). Defendants never intended to do that which they promiscd to do althe outset of the Agreement. 26 110. Defendants knowingly and intelllionally induccd Med Plus to hand over their detailcll dillgnostic and treallnent protocols, induced Med Plus to provide initialmunagement services, induced Med Plus 10 make initial expenditures on udvertisements, computers, etc.. established thc Clinic, then pilfcred thc elllire impotency program, precludcd Mcd Plus from any further involvcmelll in the Clinic, and absconded with all cxpcn~cs and prolits. 111. Delendunts utilized the Managcmelll Scrvices Agreement mcrely as a vehicle to defraud Med Plus out of its impotcncy clinic protocols, expenses, prolits, and ongoing involvemelll, demonstrating thatthc Management Scrvices Agrccmelll by its nature was collateral to the fraud and deceit perpctrated by Defendallls on Med Plus. 112. The foregoing actions of Dcfendants were undertaken intentionally, willfully, knowingly and with malicious disregard of thc illlerests of Mcd Plus solely for the linancial gain of Dcfendallls, which acts amount to fraud and deceit. 113. The fraudulelll conduct of Delendanls directly anu proximately caused Med Plus to incur compensatory damagcs in excess of One Hundred Thousand Dollars ($100,000). 114. Defend,lOts' "bait and switch" conduct ill terms of inducing Med Plus to disclose its impotency protocols and to contribute substalllial up-front capital investmelll, and their subsequent pilfering of the program, the cJ(penscs and thc prolits, was intentional, willful, in malicious disregard of Mcd Plus' interests, wanton and so outragcous to warrant the imposition of punitivc damages in eXCl;SS of Five Hundred Thousand Dollars ($500,000) against each Defendalll. WHEREFORE, Mcd Plus Men's Centers Management respectfully requesls Ihis Court to declare that Defendants' conduct was fraudulent and to impose compensatory damages in 27 MMlAG EMEI.'fIJiEIil'K'.EIi.t\G I{EEMEI'IT This MANAGEMENT SERVICES A<iREEMENT (the "Agrccmcnt") dnted as of this _ day of May, 1997, by and bctwccn MED PLUS MEN'S CENTERS MANAGEMENT, a Pennsylvania purtnership (the "Managcr"), and Scotland Family Medicine, Inc., a Pcnnsylvania Professional Corporation (thc "Practicc"). WIT N E SSE T II: W/IEREAS, the Practicc has bcen organizcd to operate, inter alia. a mcdical diagnostic and therapeutic clinic designed to diagnosc and treat impotence in male pnticnts in Pennsylvania (the "Clinic"); IIlld WHEREAS, aller invcstigating various arrllllgements for mllnaging thc Clinic, the Practice as opcrator of the Clinic hllS cOllcluded that contructing with thc Manllger to managc thc Clinic is the most desirablc coursc of action bascd upon the cost, cflicicncy, and quality of service which will bc providcd by the Manllgcr; and W/IEREAS, it is recognized by the partics that the Managcr is competent to provide the Practice with the management, IIdministrative, and operational services as herein contemplated nnd to advisc rhe Practice as to its nceds regarding the Clinic, and thc means by which the Practice may enhance and improvc its services to patients at the Clinic; and WHEREAS, Ihc Manager shall facilitate thc rmmagemcnt and opcrations of the Clinic in such related arca~ as accounting, adverlising, credit and collection, maintcnance, medical records, medical staff rclations, systems and procedurcs, and third party reimbursement. NOW TIIEREFORE, for and in consideration of thc mutual COV<:I1iUltS and conditions contained herein, and intending to be Icgally bound hereby, the Practice hereby engages the Manager to perform the functions and to providc the services dcscribed in this Agreement and the Manager hcrcby accepts such engagcment under thc terms and conditions statcd in this Agrecmcnt as follows. SECTION ONE: m:n:NTI <m..ill:..Al1IlID1UIYD.Y PRACTI CIi: 1.1 Clinic Dclined. Thc tcrm "Clinic" in this Agrccmcntmcans only that portion of the Practice involving mcdical diagnostic and treatmcnt scrviccs rclating to men with impotence problcms or ercctile dysfunction services. 1.2 Cmllr.ol of OpeW1ilm:i.m-..MunlljU:r. The Managcr shall at all timcs govcrn and exercisc ultimatc control ovcr opcratillnllf thc Clinic, and thc Manager shall perform the functions dcscribcd in this Agrcemcntto be pcrlilrmcd by it in accordancc with policies, directivcs alld bylaws lldoptcd by thc J'ructicc. It is cxpressly agreed by the Practice IInd thc Manager that the Manag~r is at all limes hercunder acting and pcrforming on bchalf of the Practicc. EXHllrr IJ IYkili~ltLilmll)JVli;~~iollllLMull~r.:;. lhc daily cOlllroloLillllperatiolls relating to clinic functiolls shall he admillistcred hy the Mallager. The Mallager shall, however, cOllsult with the Practice, make appropriate recommelldatiolls concerning signilicllntmediclll and prolessionalmatters, and on hehalf of the Practice shall cxccute medical policies estahlished or causellto he establishcJ in accordance with this Agreement. Notwithstanding the lilrcgoing, the Praclice's l11ediclIl j\ldgmcnt shall not he subject to Manllger's supervision or control; Practicl~ shall not be questioncd with respect to its mcdical diagnoses alld recommcnJed treatments: Practice shall have unfettered Jiscretion to trcat paticnts within the unlimited license to practice meJicine of physicians cmployed by Practice; and Manager shall have no authority ovcr any physician or othcr liccnscd person cmploycd by Practicc to rcnder any dccision rcgarding provision of hcalth carc scrvices to paticnts, inclnding hut notlimitcll to diagnosis IInll treatment of paticnts. 1.4 lli'ilu:r~hip. The Practicc is and shall hc thc owncr and holdcr of allliccnscs rcquired to he ohtained, anJ is and shall hc the "proviJcr" within the mcaning of all third party reimburs,:mentlaws and contracts rclating to thc Clinic. 1.5 Practic<:'Ji.fu~ponsibi.lit.ll:~. Thc Practice shall request and rcceive rccommenJatiolls from the Managcr, and upon detcrmining that such rccol1lmcndation3, if adopted, are consistcnt with thc Practice's purpose, shall duly adopt such rcconuncndutions concerning opcrations of thc Clinic. SECTION TWO: ~EMENT 0[0' TilE CLll'jIC 2.1 Appointmcnt of Manal:cr. Thc Praclicc hcrcby appoints thc Manugcr anllthc Managcr hercby accepts such appointmcnt from the Practice, suhjcct at all timcs to the tcrms anll provisions hercin sct filrth, as the solc and cxclusivc agent acting li>r and on bchalf of the Practicc as managcr ofthc opcrations ofthc Clinic. The Practice herehy dclegatcs to the Managcr thc gcncral authority 10 supcrvisc and managc thc day-to-day opcrations of thc Clinic and to rccnlit pcrsonnel neccssary to pcrliml1thc functio1ls hcrcinaftcr sctlilrth. It is cxprcssly rccognizcd and ugrccd by thc partics, howcvcr, thatthc Practicc has, and at alllimcs during thc Tcrm (us dclincd below) shall rctain thc ultimatc control and dircction of thc prolessionalmallcrs of the Clinic. 2.2 'UlI:Manul:cr':iJ.).u.t.il:li. Consistcnt with thc provisions of this Agrccmcnt, thc Munager shall supcrvisc and nHUlagc thc opcralion of the Clinic on hehalf of thc Practicc, which obligution of thc Managcr shall includc lull scrvicc l1Iunagcmcnt scrviccs lilr thc Clinic, including, withoutlimitutio1l, the specific manugerial. administrative and consulting scrvices set limh bclow: (a) cstablish goals und objectives lilr thc eflicicntopcration of 1.11\: Clinic; (b) providc recommendutiolls to maintain a consistcntlevel of high qUlllity services to all Plltients treated atthc C1iuic; 2 2.4 SlilllYllI.l! .<J1: ll~illlllJ.'lIC1:. The Mnnaj.(er shall perlilrln all of the dnties and provide such personnel as IIlny he required to asslll'e that the operations of the ('Iinic meet a sHlJldllrd of health cure consistent with cOllllllunity standards I<lr such care and in accordance with the general practice in the hcalth care industry, thc policies adopted at the Clinic and the resources avnilahle to the Clinic and the Managcr. 2.5 MiJnll~~llli:lltllllilJJpJ:ra1luD~J)J:r~Ulll1d. The Manager shall recruit, hire, train, prornoll:, assign. set thc cOlllpensation level and dischargo: all management, operating and scrvice personnel as neccssary fClr tho: proper operation and maintenanco: or tho: Clinic. Personnel assignments shall he made on the hasis of review hy Manago:r's personnel specialists of staffing anll productivity and the estahlishment of optilllum work standards. All such personnel shall he independent contructors, employees of independent contractors, or employecs of and carried on the payroll of the Mllnager, anll shall not be employees of tho: Practice. 2.6 Professional Service PrQYWru. The Practice shall recruit, hire or otherwise retain, promote and assign, on behalf of and as agent fClr the Practice. all professional service providers, as may bc necessary for the proper operation oflhe Clinic and the dclivcry of (:linic services. All such personncl shall he cmployees of the Praeticc or indo:pcndent contract<'rs or employees of independent eontractors who contract with the Practice and shall hc paid hy thc Practice. 2. 7 l~~ponsibili..ly...furJ.::Jllpl<,))'~. The Manager shall maintain all tax records for its employees (to the cxtent Manager has dcemed it necessary to recruit and hire any employees) and shall hcar the responsihility 1l1r withholding and remitting income taxes. fedcral insurance contribution acttaxcs, and uncmploymcnt insurance taxes to the appropriale governmental agencies with rcspcct to amounts paid hy the Managl~r to its employees ('he Manager shall maintain ill fulllclrce and effect throughout thc term of this Agrecment a policy of workmen's compensation insurance IClr each of it~; employees. Practice will have no liability Illr the payment of wagcs, payroll taxes, hcnefits and other expenses of employment of the Manager's employees. 2.8 (;Qlll.rJll;1s. Thc Manager, on behalf of the Practice as operator of the Clinic, shall secure and retain contracts, including without limitation contracts 1l1r the items and scrvices enumcrated in subscction 2.8-1 through 2.8-6 inclusive that are necessary tilr the proper and crticient functioning of the Clinic, such contracts to he an expensc or the Practice as opcrator of thc Chnic unless Managcr has an ohligationto provide such contract items hcreunder. 2.8-1 ~uppli~. The Manager shall, on hehalf of thc Practice and at Practice's expense, procurc all operating supplics and matcrials necessary fClr the operation and maintenance of the Clinic. Snpplics which arc procured for the Clinic hy the Manager hereunder shall he limited to those snpplies which are usually alld customarily consumcd in connection with the provision of the serviccs and procedurcs perllmned at the Clinie. 2.8-2 b~\tiplliJ:IU. The Managcr shall, from time to time, at Practice's expense, acquire on b<:lmlf of the Practice as oJlcrator of thc ('Iinic snch new or used, replacement or additional furniture. lixturcs and equipmcnt as the Managcr rcasonahly determines 4 nccessary Iilr the opcration or Ihe ('Iinlc and thc pcrlimnanee of the Manager's duties hereunder. Thc Manager shall alsolllake reCllnnnendations to the Practice regarding Ihe nccd Illr such Iilrniturc, Iixtures and equiplllent. 2.11.) Iil:rYil:J:Jj. Thc Managcr shall. on hchalf of the Pructice, negolilltc and cntcr into such agrccmcnts as the Manuger muy dccmncccssllry or advisllhlc tilr thc Iilrnishing of utilitics, services and conccssions Iill the maintcnancc and operation of thc Clinic. 2.11.4 Repairs und Relllal'UJ..:;. The Managcr shall, on behalfofthe Practice, negotillte and contract for and shall supervise thc rcpair and rcncwal of the physical property and cqaipmcnt at thc Clinic (IS necessary to kccp and maintllin such property and equipment in good working ordcr und condition. 2.8-5 purchasinli '2rul:fillll. The Managcr shallusc on bchalf of the Clinic sach purchasing systems and proccdares developcd hy 01' othcrwise availablc to the Manager. lnlhrlherancc thcreof, thc Managcr shull utilize such group purchasing contracts that the Managcr or its afliliates may fromtimc to time have in effect with suppliers of cquipmcnt and supplies. Any purchase hy the Manager nwdc pursuant or othcrwisc ancillary to this Agrecment shull be with the Managcr ucting us thc agcntlilr the Practice; therc!i)re, a, such tcrms are dc!ined by the Pcnnsylvunia lJnitimn Comlllcrcial Codc, as amcnded, lhc Managcr is not a "Mcreharll" and MAKES NO WARRANTY, EXPRESSED OR IMPLIED INCl.lIl>INU, WITIIO[IT I.lMII'ATION, THAT OF FITNESS FOR PARTlClJLAR PURPOSE OR MUU'IIANTABILITY. 2.8-6 IIl:iUI.i1J.ll:1:. The Managcr shall causc to be pluted or kcpt in lilrcc all insurance with respect to the Clinic. 2.9 Qilillil)'..w!.lllruJ:;. The Manager shall implemcnt and maintain a quality assurance progrl\Jllto provide ongoing objectivc lIIeaSUl'ements of the quality ofheallh care provided at the Clinic and to cOlllply with allnpplicable state and lederal requiremcnts. 2.10 Planninli. The Managcr will assist the Practice in developing and reviewing short. medium and long-rnnge objectives of the Clinic and in timllulating recommcndations with respect thereto. 2.11 QQYl:rntlll:n1lli;~li\)ll:i Subjcctto the direction and cooperation of thc Practicc, the Manager shallusc its best erti)rts to cause nil things to he done in and about the ('Iinic necessary ti,r the opcrations at the Chnic to bc in complinnce with the requirements of any applicable statute, ordinance, law, rule. regulation, or order of any govcrnmental or regulatory body having jurisdiction over the Clinic. In the event of uny changc in laws, rules or regul;llions governing the operation of the Clinic to the detriment of cither the Managcr or the Practice, the Manager will keep thc Practice promptly and fully adviscd of such changes and of any actions initillted by (my agcncy which might reusonahly he expected to affect thc Clinic or thc Praeticc's operation of the Clinic. \ 2.12 U1piluLllllllI.\l.Y..ml":J1I~. lhe Manager shall review and make rccommendatiuns to the Pmctice concerning proposed improwlIlents lolhe t 'Iinic that arc ofa capital nature, mill recommendations as to whether such improvcments should be undertaken by Ihe !'rnctice. lIpon upproval of such improvemcnts, thc Managcr shall supervise the installation of all capital improvements rclllted to Ihe opcration of the ('linic. 2.13 Lkl;nses and l'elll1i.l:i. The Manager shall apply filr, and use its hest erforts 10 obtain Wld muintain, all licenses and permits rcquircd in connection with the managcment or operation of the Clinic. Thc Practice shllll coopcrnte with thc Munager in applying for, obtuining and maintllining such liccnses and pcrmits. 2.14 CmIfidcntialit,y OffuWM. The Manager shull comply with all laws and regulations rcspecting thc conlidentiulity of thc rccords of the Clinic and shall comply with all upplicablc fedcral, statc IInd local laws IInd regulations rclating to thc rccords of the Clinic. 2.15 Patient Scl'.Yill:.:i. From time to time and as IIppropriatc, thc Manager shallmuke rccommendations to (hc Practicc conccrning changcs in the scopc of serviccs offcrcd lit the Clinic. In formulating its recommendations, the Manager shall confer with and scck thc advice of the health care profcssionals utilizing thc Clinic and prior to instituting nny matcrial proposcd changes, thc MWlager shall obtain thc approval of the Practice. 2.16 Einiincial Controls lInd ProcedUI\:~. 2.16-1 Financial Mana~mcnt and R":PIl.rli.ni. lhe Managcr shall supervisc, dircct Wld maintain the operation the accounting, financial rcporting and management information systems for the Clinic and shall causc to bc provided to the Practice Iinancial slatemcnts in the gcneral format as described hclow. A. As soon as practicable aticr the closc of cach month, the Managcr shall prcscntto the Practicc and unaudited balancc sheet and a rclatcd statcment ofrevenuc and cxpenses showing the results of Clinic opcrations for thc preceding month Wld of the tiscal ycar to datc. B. Within 120 days aticr the c10sc of the liscal year, cxcept ifdclay in delivering said rcports is causcd by an indcpcndent public accounting lirm through no fault of thc Manager, thc Manager shull prcsent to the Praclicc un audited balance sheet and related statemcnt of rcvenuc anll cxpcnscs showing thc rcsults of the Clinic opcrations during thc lis~'al ycar. Fecs of IIny indcpendcnt public acclllmting lirm shall bc an expcnsc of thc Practicc. C. For cach month of operation li,r the Clinic, thc Practice shall be furnished an unaudited dctllilcd statcmcnt of all amounts paid to thc Managcr by the Practice, or billed to thc Practicc by the Managcr, whether for thc MWlagchlcnt Fce (as dctined below) or othcr itcms. (, D. Thc Munager shllll keep the Practice inlimned of Ihe clllltliti'lI1 and operutionof thc ('Iinic with such other and special reports as the I'rnctice may rellSonably request. E. The fimlllcial and business rccords of the Practicc shall bc kcpt atthc office of thc Malluger and shull bc aVllilablc f(lr inspcction by the Practicc or its aulhorizcd rcprcscntativcs at rCllsonable timcs. F, Fees and wnounts duc hcreunder shall bc cn1culatcd in IIcclJrdance with prevailing accounting stllndllrds. 2.16-2 Accountinll and Financiul R~nb. The Manllger shull eSlublish und administer accounting procedurcs und controls IInd systcms for the dcvclopment, prcparation IInd safekecping of rccords and books of accounting rclatingto thc busincss and finuncial aflilirs of the Clinic. Thc Manager shalllllaintain the Pruclice's books, records Illld accounts relating to Clinic mattcrs only in accordancc with prcvailing IIccounting standards or liS may be othcrwisc mutually agrced. 2.17 ~Ill:i and Proccdurcs. Thc Managcr shall rcvicw thc managemcnt information systems IInll proccdurcs of thc Clinic and makc rccommcndations to the Practice relating to existing and proposed data proccssing systcms and any changcs in manual systems which may he rcquircd. 2.18 12c~and Disburscmcnt of Fund~. Thc Manager shallopcn and maintain accounts and investments in such bunks IInd other linancial institutions as the Manager may from timc to time selecl, with such balanccs therein (which may be intcrest bcaring or non-intcrest bearing) as the Managcr shall from timc to time dcem appropriatc in Clinic's or thc Practicc's nDll1e and, as agent fill' thc Practice, shall dcposit in a special account or accounts of the Managcr, all receipt3 and monies arising from thc opcration for thc Clinic and rcccivcd by the Managcr on behalfofthc Practice. For administrative conveniencc only, thc Manager shall have sole acccss to such accounts anll shall make disburscments from the accounts for and on behalf of the Clinic and the Practice and in such amounts and at such times as thc same are required. Dcposits to thc special account may bc made directly as funds are rcccived by the Manager or transterred from a general receipts account, at the Managcr's discrction. Signatorics and approvals as to the amounts on all checks shall be in accordancc with thc duly adopted policy of the Practice and shall include the Manager's presidcnt, treasurcr, or its designce. Managcr shall also have the authority to draw upon lincs of crcdit establishcd and llIaintaincd by the Practice to providc adequatc working capital for the operation of thc Clinic. The Pructicc agrecs and hcrcby directs Manager to utilize the Clinic's availablc monthly cash !low to lllcetthe Clinic's linancial obligations pursuant to any leasc, assct purchase, loan and t1nancing agrccments tbat Practice may enter with respect to the operation of the clinic. 2.19 Collection of Accounls.. Pursuant to collection policies established from time to time by the Practice, the Manager, as agent of Ihe Praclice (a) shall supcrvise IlllU dircct the 7 billing and collcctillnl)f all aCCllunts duc thc l'racticc Iilr scrviccs and matcrials furnishcd by the Clinic, (h) shall advisc and assist the Prncticc in installing a crcdit and collcctilln syslclll dcsigncd to minimilc thc numbcr and lIlnount llf had dchts and to cffcctuate timely hillings and collcction of amounts and monics owcd the Clinic and thc Practicc, and (c) shall havc thc authority to engagc profcssional scrviccs rclating to the prcfunding ofthc Practicc's rcccivublcs. Thc Munugcr willmakc reconllllendutions to the Practicc with rcspectto thc necd Iilr, and thc cmploymcnt of, any collcction agcncies and the institution of Icgal proccellings to collcct such accounts and to cnlilrce thc rights of thc Practicc as a crcditor. 2.20 Ral~~. The Munager and thc Pructice rccognizc thc importancc of maintaining rutes which enablc thc Pructicc to meet its obligations and providc quality hcalth l~are at a rcasonablc cost. From time to time, thc Manager will rccommend ratc structurcs to the Practicc till' approval which takc into account the financial obligations ofthc Practicc,thc Icvel ofratcs at othcr cOl11panlblc lacilitics aearby, and thc importancc of provilling quality hcalth carc at a rcasonablc cost. 2.21 AdYl:Ili:ilnll. The Managcr shall advisc and assist the Pnlcticc in advcrlising the Clinic's scrviccs to paticnts and health carc providers in the servicc arcn and shall conduct rcasonable advcrtising efforts ncc.::ssary lor thc Cli:lic to compctc effectivcly. 222 ~lli&::iJlb.li~ations. Thc Practice hcrcby agrces to comply with all of thc provisions of this Agrccment and with all obligations of thc Practicc othcrwisc sct linth hcrein and to further aill and assist the Managcr in any rcasonablc manncr rcqucstcd by thc Managcr. Furthcr, during thc tcrm of this ^grcemcnt, thc Practicc shall: (a) notllo anything to prevcnt or hindcr Manager's managemcnt of Clinic; (b) indemnify and hold Manager hamlless from all claims of creditors ofPracticc arising prior to thc commcnccment of this ^grccment and during thc tcrm of this Agrcclllcnt, and subscqucntto thc termination of this Agreemcnt unrelated to Clinic activities; (c) providc a list of furnishings, fixturcs, equipmcnt. machincry and physician invcntory located at Clinic at thc time ofcommcnccmcnt of this ^grecment allachcd hcrcto and made a part hcrcof as Exhibit B; (d) inllcmnify and hold Manager harmlcss from any and all claims by paticnts lilr negligcncc, recklcssncss or any intcntional tort occurring 01\ or by any person associatcd Clinic, which, ifany, have occurrcd prior to thc commenccmcnt of this ^grecmcnt and during Term of this ^greement. or subscqucnt to thc termination of thc ^grecmcnt; (c) authorizc Managcr to collcct allmonics duc and owing to Clinic Irom any source whatsocver and make paymcnt of cxpcnscs and taxes which may bc in Practice's name; and K (I) pny tll Mnnagcr, in all cvellts and circulllstllllcCS, sufliciclll funds so that nll,."sts ofoperutioos and nlUllIlgcment lecs arc liilly paid. Ifthcrc arc not suflicien. ~"'SS rcceipts and rcvcnucs frolll thc ope rut ions ol'Clinic to pay such cxpcnses, Pructice shull pny thcm Irom its own funds or from the pcrsonallimds of thc owner of thc I'ructicc. 2.23 rrllC1k~~~\illtU1i\lJl,'j. At thc time of COlllmcnccmcnt of this Agreemcnt owner represents thut physiciulls und uny \lthcr hcalth carc providcrs employed by Clinic nre liccnsed by the uUlhoritics having jurisdiction over hcalth carc provillcrs in thc Commonwclllth of Pennsylvllnin; und Prnctice shall havc lilll right and aUlhority to cntcr into this Agrccment. 1ili<':UONJ'llllliE.:. _<':1> Mr.EN:}allilll 3.1 81llllllll1. llurin~ cach 1II0nth \If the tcrlll hcrcof, in considcrlltion of thc services to be prelimncd by the Managcr undcr this Agrccmcnt, thc Practicc shall PIlY to thc Managcr monthly compcnsution bascd upon thc schedulc outlined in thc Ii,lIowing sections. 3.2 AdvcrtislnlW:!:.\:. Practice shall pay to the Manager a fair markct vllluc fixcd fec in thc amount of$IOO.OO Jlcr Illonth li,r Managcr's serviccs rcndered in placing advcrtisemcnts in printmcdia, radio, and telcvision as dctermincd by thc Managcr. In addition, thc Practicc shall pay to thc Managcr the exact cost of such advcrtisemcnts pursuant to invoices rcccived by the Managcr and forwardcd to the Practicl~. Thc Managcr shall pass along any discount it obtains to the Practicc. The Mlmager intends to placc advertiscments in print media, radio, and t<:lcvision and conduct no othcr marketing or paticnt rccmitrncnt activities, and no pari of any management fcc is based, directly or indircctly, \In any markcting, paticnt recruitmcnt or any othcr conduct that could bc construed as an inducement tor referrals. Managcr shall pertorm scrviccs in tcrms of placing advcrtiscments hctwecn one and two hours per month to dischargc Managcr's responsibilities undcr this sccti\ln. J.3 Manai:cment Fce. Thc practiec shall pay to th.' Manager compcnsation in the amount of Ii fly pcrccnt (50%.) of Clinic' s net prolit based upon 1 cumulativc monthly expense calculation. Thc Practke shall r.ot pay thc Managcr any compcnsation unless and until Clinic revenues eXl'~cd monthly expcnses on a cUlllulativc basis. The lIIanagcmcnt tee computation shall be bascd upon the liJllowing: gross rcvcnucs shall bc dctermincd cach month and compared with monthly eXJlcnscs. Ifexpcnscs cxcccd gross revcnucs in thc Clinic, no fee is due to be paid by Practicc to Manager. In subscqucnt lII\1nths. Practicc shall pay to Manager a fcc only in the evcnt that total gross revenues on a cUlIIulativc basis (addcd cach month) exceed thc total cumulativc expenses (added cach lIIonth). At thc point in timc whcn CUlIIulative rcvenues exceed cumulativc cxpenscs, Practice shall pay to thc Manager tifty percent (50%) of the excess.. An illustration of the cumulative monthly expcnsc calculation is setli,rth as Exhibit A to this Agrcclllcnt. l) 1. 1-1 bp~ml: 1JI:I.I:nlliJlilllvII Ihl' lelln "expl'lIse" as uSl'd in 911 shnll he limitcd 10 snluries of( 'Iiuic employees (whose li/lll' is deyoll'd l'xdosively 10 ('Iinic funclions), Clinic elluipmenl rental cosls. ('Iink IIdwrlising cllsls, and miscellaneous Clinic expenses such as telephone and postage costs. Mlulllgl'r shall rl'tain nuthority to npprove uny Clinic expenses in IIddition to Ihe tilre~oin~ list. I f( 'Iinic disregurds MlUlllger's IIpprovaluuthority, expellses incurred shall not be tllken illto considenllion in the Manug-.:ment "ee computlltioll. 3.3-2 lJl:ll:nniruJ.till.lJ..llLCJilliI:UI.u~~.Jky~lIU~~. Thc term "gross rcvenues" us used in 93.3 shllll include all palient services directly rclating to erectile dysfunction or impotency and all patient services generaled hy Clinic suhsequent to n patient receiving u prescription ll)r services f,om Clinic till' erectile dysfunction or impotency. .l4 ClilllP.\:.u.:mlll>1l1urAlWiJionuL:SI:I.tl!:I:.:i. Prnctice shall pay 10 Manager for the Mllnager's additional :Iervices, lolhe extentaddiliollal scrviccs arc authorized hy the Pructice, under this Agreement the lilllowing amounts related to the Manager's udditional services (if any), as each item appears on lhe linancial statements of the Munuger prcpared in accordance with Generally Accepted Accounting Principles: (i) the sularics, wuges and benelils (including, without limitations, social security and unemploYlllent taxes) puid by the Manager to all of its employees engllged in Clinic operations and management (less any such umounlS with respect to the servicl's of any such employees contracted out to other organizutions), and (ii) all other reasonable expenses involved with the management and operation of the ('Iinic (including, without limitation, all accounting expenses, as well us all expenses, tuxcs und costs ussociated with the Manllger's performance of its obligation under the Agreement und uny Manager expenses and costs associat"d with and incurred pursuant to the contracts required under Section 2.8, as well as all compensation for all independent contractors). Provided, however, that Manager shall not hire additional employees or provide additionul services that would result in payment of fees under this section without the express approval und consent of Practice. 3.5 Compliance. Mllnager's Ice has not been determined in a manner that takes into account the volume or value of any relerrals or husiness otherwise generated betweellthe parties fiJr which payment may be made under any third purty payment system. In addition. the services perlormed by Manager under the Agreemcnt do lIot involvc the counselillg or promotion ofa business arrangement or olher activity that violates uny state or federulluw. IiE!:TIQN FOUl{: T[<;I~Al'IlRn;HMIMTillN 4.1 Icrm. Subject to the provisions Illr terminution us hereinafter provided, the term of this agreement shall he tilr a period of live (5) years and wlltinuing thereuner throughout the entin: existence of the Clillic or the Practice's involvement with ercctile dystlmction or impotence services, cure or treatment. The post-termination non-competition/non-disclosure agreement executed coneurrent.ly with this Agreelllent is incorporated herein by rcterence. 10 . . 4.2 I~rminution. This Agrccmcllt shnlltcrminate on Ihc earlicst to occur of: (u) cxpirntion ofthc Tcrm hcreofllnd Ihc lililurc or this Agrccmcntto hc rencwcd; (b) thc dcfault by thc Manugcr or the Pructicc in thc pcrlimnuncc of IIny mlltcrilll covenant, ugrecmcnt, termor provision of this Agreemcnl, which Ihc dclillllting purty lilils to cure within 60 duys aner writtcn noticc sctting lilrlh thc spccilic cvcntofdclllUll in detail from thc non-dctillllting party. providcd howcvcr,thut if such delillllt is lIot susceptihlc of cure in 60 days, the dclhulting pllrty shall huve such longer period of time liS is neccssary to cure such delillllt, lurther providcd that such cure is diligen!ly pursued; (c) the dissolution or ccssation of the Practicc; (d) cithcr thc Prncticc or the Munagcr becomcs involvcd in counseling or promotion of a business urrungemcnt or othcr acti vity that violatcs any statc or fcdcrallaw; (e) immediutcly upon any health carc providcr employed by or who is a principal of the Pructice being disqualilicd from practicing in any jurisdiction, or lhiling to have ill full force and cffect uuthori7.:ttion Iromthe Statc and the' US Drug Enforeemcnt Agcncy to prescribe narcotics and othcr drugs; (I) immcdiately if any health carc providcr employed by or who is a principal of the Practice fails to havc in full forcc and cffcct profcssionalliability insurance envcrage covcring the scrvices which Practice is rendcring to patients; (g) immediately if any health carc provider employed by or who is a principal of thc Practice is lound guilty or enters a guilty plea to a crime involving moral turpi tudc; (h) immediatcly if rcasonablc evidence is obtained that any health care provider cmploycd by or who is a principal of the Pruclice that any such provider currently is involved in thc illegal use of drugs or othcr controlled suhstances, or of such individual's intoxication while performing serviccs in the Practicc; or (i) immediatcly ifany health carc provider cmployed by or \\ho is II principul of the Practice is temporarily or pcrnmnently prohibited from rcceiving rcimburscmcnt under any fcderal, state, or commcrcial reimbursement progrum. SOCl'lON FlY!':: INTENI..A.N.D..(.'QN.S]]WCUOl'i 5.1 Mltd.i!atL&~:ilt):. Diagnostic and thcrupcutie serviccs provided by the Clinic will be provided only whcn medically necessary and documcnted based upon the treating physiciun's best c1inicaljudgrncr:'. Further, cach patient shall receivc spccificd and II I.lt:(.'TlON. SIX: ~1I:st.t;I,LANE<)U~ 6.1 Nu.n.~ptilJll..ufLil\bl1ili~ij, Munu~er shull not hy llIunuging the Clinic USSIlIIIC or bceome Iiuble Illr UIlY of the oblil\utiullS, debts ulld liubilities of the Practice, ullLl will in its rolc us llIunuger huvc unly thc ohligutilJnto cxcrcise reusulluhlc carc in its munugcmcnt nnd handling of the funds geucrnted Iromthe operation ufthc Clinic. 6.2 Lilluidutell DumuIICS. In the cvcnt Manllger "lils to perlllflll its matcrial dutics IIndcr thc Agrcemcnt materially breachcs any provision of this Agreement, and luils to curc said breach, MWlUger agrecs to pay Practice us liquidatcd damuges lor material violation of any of the tcrms IInd provisions in this contract the slim of Six Hundred Ninety Dollars ($690.00) per month for Ihe rcmainder of the Initial Pcriod lollowing Ihc Manuger's breach and failurc to curc such breach; provided, howcver, thatlhis liquidatcd damagcs c1ausc shall bc null and void if any physician cmploycd by or who is a principlc of thc Practicc brcaches the non-disclosure/non- competition agreement cxecutcd contcmpornncous with this Agrccmcnt and incorporatcd hcrcin by reference, or breachcs any matcrial tcrm of this Agrcemcnt. 6.3 Notices. Any notice or othcr communication by eithcr party to thc other shall be in writing and shall bc given, and he dcemcd to have hcen given, if either dclivered personally or mailed, postage prcpaid, registercd or certified, return reccipt requested, addrcssed as follows: TO THE PRACTICE: 3730 Scotland Road 1'.0. Box 398 Scotland, PA Allention: 19254 Kcnneth W. Rictor, M.D. William J. Keating, M.D. TO THE MANAGER: 2810 Myrtle Dri ve Mechanicsburg,PA 17055 Allcntion: David C. Dickson, D.C. Andrew C. Madeira, D.C. or to sllch other address, and to the attention of such other pcrson or oflicer as either party may dcsignate in writing. 6.4 Entire Allrccmentl AmendlllCnl. This Agrcemcnt supcrscdes all previous contracts, and constitutes the entire agrcement of whatsocver kind or nature existing betwecn or among the parties respecting thc within suhjcct matter and no party sholl he cntitled to benefits other thllnthose specilied herein; providcd, however, thatthc tcrms and conditions of the non. competition/non-disclosure agrecmcnt cxccutcd contempomncously hcrcwith arc ineorporatcd hercin by refcrencc. This Agrcement may he amcnded only hy an instrumcnt in writing exccutcd jointly by all partics hcreto anll may he supplemcntcd only by documcnts dclivered in accordance with the exprcss terms hcrcof 1.1 , . fl.) ^~~jllllll1~lltLlY.lb.~MillllIll.o,:I. Thc Managcr shall havc thc right to assignlhis Agrccmcntlo a wholly or majority owned suhsidiary or lhc Mallllgcr, or to a corporation or othcr cntity under common colltrol with thc Managcr, or to a succcssor organizution without the Pructicc's conscnt. MUllngcr shallnlso have thc right to collnterally assign its righlto rcceive incomc undcr [his Agreementt" its creditors without the conscnt "f Ihe Practice, and upon writtennotilkntion from Manager, the Practice ngrees to pny nil slllns due hcreunder to such creditor. fl.6 BenelitJAssillnment. Subject to pl'Ovisions herein to the contrary, this Agrcement shall inure to the benefit of lUld be binding upon the parties hereto IUld their rcspecti vc legal representatives, successors and assigns; provided, however, exccptto the extent otherwise provided herein no party may assign this Agrccment without thc prior wrillcn cons,:nt of the othcr party, which consent shall not be unreasonably withheld. All provisions contallled hercin shall not be unreasonably withhcld. All provision containcd hercin shall be binding upon the respcctive parties, thcir legal rcpresentatives, successors and assigns unless othcrwise cxplicitly statcd; provided, however, that thc use of a party's name without more shall not be dcemed such an explicit statcment. 6.7 Hcndin~s. The headings contained hercin are non-substantive and arc for convenicnce of referencc only and arc not intended to definc, limit or describe the scope or intcnt of any provision of this Agrcement. 6.8 Choice of Law and Vcnu~. Thc parties agree that this Agreemcnt shall be governed by and construcd in accordancc with thc laws of thc Commonwealth of Pcnnsylvania, and that thc courts of thc statc shall bc thc exclusive courts ofjnrisdiction and vcnue for any litigation, special proceeding or othcr procecding as bctwccn thc parties that may bc brought, or arise out of, in connection with or by rcason of this Agrecment. 6.9 Disputc Resolu.tim1. Except as spccilically provided hcrein to thc contrary and with rcspect to all remedies available undcr the non-compctitionlnon-disclsoure agreement executcd contcmporancously hercwith and incorporatcd hcrcin by rcfcrence, in the event a dispute arises undcr this agrecmcnt, whcthcr bclore or aller any tCll1Jination of the Agreement, and if the dispute cannot bc settled through negotiation, the plrtics agree first to try in good faith to settle the dispute by non-binding mcdiation administercd hy the Nationalllcalth Lawyers Association beforc re;;orting to arbitration. I I' the dispute cannot bc sell led through mediation, the parties agrce that, cxcept as specifically providcd herein to the contrary any dispute or controversy bc resolved pursuant to arbitration conducted in accordance with the provisions of this Sedion 6.9. Unless otherwise agreed by thc parties, such dispute resolution shall be held in Ilarrishurg, Pennsylvania under thc auspices and thcn-prevailing rules oflhe American Arbitration Association. The costs and expenses or arbitration shall be borne ultimately as Ihe arbitrators dircct, but each party shall pay the costs and expcnscs of their own counsel and of any witncsscs and evidcnce prcsentcd by such party. 14 2. On Septemher 25, 1997, continncd by corrcspondencc dllted Septemher 26, 1997, Defendants' counsel indicated that he sought and obtained authorilationto accept service of any process that Med Plus might serve on Defendants. By correspondence dllted September 26, 1997, Med Plus servcd the Complailll on Defcndants by regular mail.. Accordingly, service was effectuated on Defenllants on or about September 29, 1997. A copy of the correspondence acccpting service of process on behalf of Defendallls is allachell and incorporated by refcrence as Exhibit" A" . 3. Rule 1026(a) requircs that every pleading subsequelllto the Complaint be filed within twenty (20) days after service. 4. Defcndants were required by Rule 1026(a) [0 file a pleading in response to Med Plus' Complaint on or before Octobcr 20, 1997. 5. Because Defendallls failed to tile either an Answer or Preliminary Objections to the Complaint, Med Plus appropriately issued a Notice of Default to Defendants on October 22. 1997. A copy of Med Plus' Notice of DefauIlIO the Defendants is attached and incorporated by rcference as Exhibit "B". 6. Defendants did notlile their Preliminary Objections until November 3, 1997, fourteen (14) days beyond that permilled by the Rules. A copy of Defenllants' Preliminary Objeclions is attached and incorporated by refercnce as Exhibit "C". 7. Preliminary Objections tiled after the expiration of twenty (20) days without agreement of the parties or leave of the Court may he stricken. Commonwealth v. Morcoal ~. 419 A.2d 821, 822 (Pa. Cmwlth. (980); Keilser v. Colony RaCQuet Club. 60 Westmoreland L.J. 27 (1978); Wri~ht v._~~, 26 Lawrcnce L.J. 337 (1975). 2 ~ I hereby certify that this day of November / 1997 I I have served a copy of the forego ng nstrument upon the Collowing person(s) by forwardin9 the same by first class, United states'mail, postage pre-paid, addressed as followSI Charles I. Artz, Esq. 229 state street Harrisburg, PA 17101 ',i I I .-.. ,i Ii i' " I . . ....,.... J: McDowell sharpe " ~. ~ ~. " , I I' " " , I, I d i[ , il " , I " ,I. " , I 'II, , , , , I, , I , , , ;, , " " 11 ,or I " I " " il \; , , , I , ,! 3. Denied. After reasonable investigation, Med Plus is without knowledge or information sufl1cientto limn a helicf as to the truth of this avermelll, the same is therefore denied and strkt proof demanded. 4. Denied. After reasonable investigation, Med Plus is without knowledge or information sufl1ciellllll form a belief as to the truth of this avermcnt, the same is thererore denied and strict proof demanded. 5. Denicd. Defendallls regularly conduct business in Cumberland County by virtue of treating patients who live in Cumberland County anll have advertised for services to solicit patients in Cumberland Coumy. In particular, Defendants have treated impotency paticnts who live in Cumberland County in their clinic and through advertisemellls to solicit Cumberlanll' Cuunty patients in newspaper publications printed in anll/or circulated throughout Cumberland Coullly, including rile Carlisle Selllinel. By way of further response and denial, paymel1l of expenses incurred by Med Plus and clinic protits were due frolll Defendants to Med Plus at Med Plus' partnership headquarters in Cumberland County. Defendants' failurc 10 make these payments at Med Plus' location demonstrates Defendants' breach of contract occurr.:d in Cumberland County. Accordingly, the transaction or occurrcnce giving rise to the cause of action arose in Cumberland County establishing suflicient nexus with Cumberland County for vcnue to properly lie there. 6. Denied. Payment of expenses incurred hy Med Plus and clinic profits were due from Defendants to Med Plus at Med Plus' partnership headquarlers in Cumberland County. Defendants' failure to make these payments at Med Plus' location demonstratcs Defendants' breach of contract occurred in Cumberland County. Accordingly, tbe transaction or 2 occurrcnce giving rise 10 the cause of action arose in Cumberland ('OUJlly ~stllblishing suflicicnt nexus with Cumberland County for venue to properly lie thcre. Med Plus specifically denies each averment contuined in the subparugraphs to 1 6, (except 1 6(d)) as follows: (a) Denied as stated. Med Plus initiated and participated in telephonic meetings thaI originated and occurred in Cumberland Counly. (b) Deniell as slatcd. One or more meelings relative to the contract occurred in Cumberland County; (c) Deniell as slUted. Med Plus mailed from Cumberland County a copy of the contract at issue in this litigation. (d) Admitted. (e) Denied as stated. At least one meeting regarding continued ncgotiation of the business relationship between the parties occurred in Cumberland County. <0 Deniell as stated. Defcndants agreed to solicil patients through adverlisements in wrillen publicalions published and distributed in Cumberland County. By way of further response and denial, Defendants treated patients who live in Cumberland County as a result of solicitations and advertisements that were published in Cumberland County, particularly The Carlisle Sell/il/el. WHEREFORE, venue properly lies in Cumberland County, and Defendants' reference to 42 [sic) Pa. C.S. ~ 2503(7) and ~ 2503(9) is improper and cannot be presented to the Coun althis time. See Sel!helli v. Herital!e Resorts of GCllvsbur\z, 19 D.&C. 4th 218 (1993) (a 3 , ,', , , , , , I,' , , :>.. ..,.... fr.; t"~ (-;. (:i, .. l:',t ~.~' 1;./,. , ( 21~"; ; " ~--" Cl.a , 1'- .. ')f, ";)'~!~ fl' 'J', r" - ,.. . .." tT'I.i c..1~ ; iff.! ".J.. ::1 ~I ! I 0<;1; ..>I: ". ,,~ ::, 0 0" (.) , , , , , , , , , , ,', " , ,