Health Net 2009 Annual Report Download - page 526

(b) Within twenty (20) days after each calendar month after the Effective Date, the Administrator shall prepare and submit
to the Company a report of the Administrator’s compliance with the Service Standards for the immediately preceding month and all
prior months subsequent to the Effective Date (the “Monthly Compliance Report”), determined in accordance with the past practices
of the Administrator and the Company, as applicable, immediately prior to the Effective Date. If the Monthly Compliance Report
establishes the Administrator’s non-compliance with any Service Standard during the preceding month, then the Administrator shall
promptly take steps, using commercially reasonable efforts, to correct the deficiency. For purposes of this Section 3.1 and
Section 16.2, “non-compliance” means the Administrator (or its permitted Subcontractor) failed to meet a Service Standard target set
forth in Exhibit 3.1(a).
(c) If the Monthly Compliance Report received by the Company after each calendar quarter (the “Quarterly Compliance
Report”) reveals that the Administrator has failed, on average, to comply with any Service Standard for such calendar quarter, the
Administrator shall, within ten (10) Business Days after the delivery of such Quarterly Compliance Report to the Company,
(i) develop a corrective action plan (“CAP”) with respect to such Service Standard and (ii) shall pay the Company the penalty for the
applicable Service Standard, as set forth on Schedule 3.1(a). Each CAP shall include a reasonable estimate of the timeframe expected
for implementing the CAP and correcting the Service Standard deficiency. The Company shall approve or disapprove of such CAP
within ten (10) Business Days of receipt, such approval not to be unreasonably withheld. If the Company disapproves such CAP, then
the Parties shall work together in good faith to arrive at a mutually acceptable CAP. The Administrator shall promptly commence
implementation of such CAP upon approval of the CAP by the Company.
(d) In each Monthly Compliance Report submitted to the Company after the approval of a CAP, the Administrator shall
include a summary of its compliance with any outstanding CAPs.
(e) The implementation of a CAP does not relieve the Administrator from any monetary penalties due under this
Section 3.1 or any indemnification obligation related to the failure to meet any Service Standard.
(f) If the Administrator does not comply with a Service Standard as a result of the Company’s failure to perform a Retained
Service (i.e., the Administrator would have achieved the Service Standard but for the Company’s failure to perform such Retained
Service) or due to the circumstances described in Section 9.1(b), the Administrator shall be relieved, to the extent permitted by
applicable Law, of any obligation to comply with such Service Standard and shall not be obligated to adopt a CAP or pay any
monetary penalty unless and until the Company resumes performance of the Retained Service or the Services Standards are adjusted
as set forth in Section 9.1(b).
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