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J. Provide a monthly check register of all financial transactions. K. Provide a computerized loss analysis and summary each month covering activity of claims reported to CMI to include cumulative loss information to date. L. CMI's employees shall perform field investigations on individual claims upon the mutual agreement of both parties. All costs and fees for these services will be paid at the standard billing rate plus 50 cents per mile. These fees shall be paid under allocated expenses after approval by Client. M. Horizon Managed Care, LLC, an affiliated entity, is our on-site copy service. Allowable photocopy charges are billed to the file under allocated loss expense. N. CMI will fully cooperate with all audit requests by Client or other associated agencies. O. Affiliated Entities. Separate entities, Horizon Managed Care, LLC ("HMC") and Single Source Medical, LLC ("Single Source Medical") are owned by shareholders and executives of CMI. HMC provides a medical cost management program. HMC shall be paid by Client for bill review and other services rendered by staff for the managed care program. Costs for outside services for managed care shall also be paid by Client. Single Source Medical provides durable medical equipment (DME) and other supplies to the injured workers of Client at competitively low rates. Client shall have access to the best pricing offered by Single Source Medical, and will automatically be eligible to receive available discount rates. In the event that Client elects not to participate in the goods and services offered by either of CMl's affiliated entities, but rather to contract through unrelated vendors, please contact CMI's executive staff to make these arrangements. VI. PENALTIES AND CITATIONS CMI shall indemnify and save harmless Client from and against all losses and all claims, demands, payments, suits, actions, recoveries, and judgments of every nature and description brought or recovered against it, by reason of any act or omission of CMI, its agents or employees, in the execution of the service or in consequences of any negligence or carelessness the same and shall provide an Errors and Omissions policy in the amount of $1,000,000 dollars to assure that Client will be protected for any errors and omissions resulting from the work of CMI. The parties acknowledge that the California Workers' Compensation Reform Act of 1989 requires first payment of Temporary Disability Indemnity within 14 days of the Client's knowledge of the injury and generally imposes an automatic penalty of 10% of the amount delayed for late indemnity payments which shall be payable directly to the injured employee without application. Furthermore, the parties agree that unless CMI is provided with notice of the claim within 5 days of the Client's knowledge of the injury, the above-referenced automatic penalty of 10% shall be and remain the sole responsibility of the Client. CMI will agree, however, to make a good faith effort with due diligence to issue the first Temporary Disability Indemnity payment within the 14-day Redwood City 2004-2005lwordlcmilcontracts\lk Page 3 of6 09/08/04