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HomeMy WebLinkAbout1991-03-19; City Council; 11065; AWARD OF CONTRACT FOR THE THRID PARTY ADMINISTRATION OF WORKERS COMPENSATION CLAIMS4 is e .. z G I- o a G z 3 0 o u UP GAHLSBAU - Ab311 PILL DEPT. H AB#II.i)(L75 TITLE: MTG. 3/89 191 PARTY ADMINISTRATION OF WORKERS CITYAT DEPT. RM COMPENSATION CLAIMS CITY MC RECOMMENDED ACTION: AWARD OF CONTRACT FOR THE THIRD Approval of Resolution No. 71 -83- awarding the contract for the Third Party Administration of Workers Compensation claims to Bierly & Associates, Inc. and appropriating $4,000 from the Workers Compensation Self-Insurance Fund to pay for the cost increases for the balance of the 1990/91 fiscal year. ITEM EXPLANATION On June 30, 1990, the initial contract period for the third party administration of the City’s workers compensation claims expired. However, pursuant to the terms and conditions of that agreement, the contract was renewed automatically on a month-to-month basis by mutual consent of the parties. Subsequent to that renewal, the City issued Requests for Proposals to a number of providers of this type of service. Ten (10) responses were received, including one from the curreni administrator (Bierly & Associates). A preliminary review of the proposals was conducted in order to eliminate those which did no1 meet the City’s needs. A total of five proposals were eliminated. Of the remaining five, foul were reviewed in depth by an oral board which met with the candidates. One provider withdrew After completing the oral board interviews, two candidates appeared to be able to satisfy the City’s requirements. Those two finalists were Associated Risk Services and Bierly & Associates Since the service levels appear to be equivalent in terms of quality, it is staffs recommendatioi that the contract be awarded to Bierly & Associates, the City’s current third party administratoi There are four reasons for the recommendation. 1. 2. 3. The proposed service levels are of equal quality; The contract proposal was one of the two lowest that were submitted; Although the contract prices were comparable, renewing with the currer administrator will eliminate the need to pay a substantial conversion fee, for th transfer and review of existing claims, to a new administrator, thereby saving th City that additional cost; and Renewing the contract with the existing administrator will assure that servicc remain uninterrupted and that continuity is maintained. 4. e e PAGETWOOFBB# 11,065 HSCAL IMPACT The two year contract proposal will cost $35,000 during the first year and $42,000 during the second year. Since the proposed effective date is March 1, 1991, an appropriation of approximately $4,000 will be required, from the Workers Compensation Self-Insurance Fund, in order to meet the cost of services for the balance of the current fiscal year. Thereafter, the fees will be allocated during the budget process. EXHIBITS 1. Resolution No. 9 I - 8 2-J 2. Proposed Contract 3. Outline of Proposals 1 !. I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 l6 17 18 19 20 21 22 23 24 25 26 27 28 e m RESOLUTION NO. 9 1 - 8 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AWARDING THE CONTRACT FOR THE THIRD PARTY ADMINISTRATION OF ITS WORKERS COMPENSATION CLAIMS PROGRAM WHEREAS, the City is permissibly self-insured for workers compensation purposes; and WHEREAS, the City desires to continue to utilize the services of a third par6 administrator for its workers compensation claims program; and WHEREAS, the City has received and reviewed proposals submitted b! potential providers of said service; and WHEREAS, the City desires to award the contract for the third paq administration of its workers compensation claims program to Bierly & Associates, as a resul of that review process. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City c Carlsbad: 1. That the above recitations are true and correct. 2. That the City hereby authorizes Mayor Claude A. Lewis to execute th agreement with Bierly & Associates on the City’s behalf. Ill JJI Ill Ill 111 Ill IIJ 1 T 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 I.7 18 19 20 21 22 23 24 25 26 27 28 a w 3. That the Finance Director is hereby authorized to appropriate $4,000 from the Workers Compensation Self-Insurance Fund to cover the cost increases for administrative services for the balance of the current fiscal year. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City . 1991, by the following vote, Council of the City of Carlsbad on the 19th day of March to wit: AYES: Council Members Lewis, Kulchin, Larson, Nygaard and NOES: None ABSENT: None St ant on ATEST Ak!&%iU&*k I a m 4. EXHIBIT 2 AGREEMENT THIS AGREEMENT ("Agreement") is entered into this 20 i% day of w 1991, between HCM Claim Management Corporation, located at 870 S. Raymond Avenue, Pasadena, California 91105 (hereinafter "HCM") and CITY OF CARLSBAD located at 1200 Carlsbad Village Drive, Carlsbad, California 92008 (hereinafter "City"). WHEREAS, HCM is engaged in the business of claims management and administration; and WHEREAS, the City desires to contract with HCM to manage and administer the City's workers' compensation claims programs, as set forth herein; NOW, THEREFORE, in consideration of these recitals and the mutual covenants and conditions contained herein, HCM and the City agree as follows: 1. DURATION The term of this Agreement shall be from March 1, 1991 through February 28, 1993, unless terminated as provided herein. 2. RENEWAL After the initial contract period, this Agreement may be renewed from month to month by mutual consent. Any renewal period shall be subject to the termination requirements set forth herein. 3. TERMINATION Either party may terminate this Agreement or any renewal by submitting to the other party, in writing, at the address noted above, notice of its intent to terminate. Such notice of termination shall be submitted by the party desiring tc terminate the Agreement no later than sixty (60) days prior to the effective date of termination. HCM shall not be required to perform any of its services beyond the date of termination. All claim files, records, reports, and other documents and material pertaining to the City's claims shall be the property of the City and shall be delivered to the City or its designee by HCM upon termination of this Agreement. 0 m -6. 4. PERFORMAMCE OF SERVICES BY HCM HCM shall perform the following services on behalf of the City: A. PROGRAM DEVELOPMENT 1. necessary procedures, practices and coordination to implement the City's self-insured program to meet the legal requirements of the State. 2. personnel involved directly or indirectly in the processing of industrial injury cases. 3. Provide the City with information on changes or proposed changes in statutes, rules and regulations affecting the City's responsibility under a legally uninsured workers' compensation program. 4. identification of problem areas and recommend solutions thereto. 5. Establish procedures and necessary documentation to provide for the payment of benefits, medical costs, legal fees and other related costs to enable either the City or HCM to issue checks to cover such expenditures. Consult with the City's personnel and assist in developing the Conduct, or assist in conducting, orientation meetings for the City's Review with the City's representatives program progress, including B. CLAIMS ADMINISTRATION 1. accordance with the requirements of the Industrial Relations Department for reporting and notification. 2. accordance with the State's Workers' Compensation Law. 3. and authorize examinations to determine the nature and extent of disability, when appropriate. 4. disability compensation in coordination with medical advice and rehabilitation efforts. Review and process all claims for workers' compensation benefits ir Determine the compensability of claimed injuries and illnesses in Determine eligibility for and authorize payments of medical benefit Determine eligibility for and authorize payment of temporary 2 0 m '9. 5. disability, if any, of injured workers utilizing, as necessary and desirable, advisory ratings of the Office of Benefit Determination. 6. Authorize the payment of permanent disability compensation and death benefits in accordance with advisory ratings, orders of the Workers' Compensation Appeals Board, or Compromise and Release settlements as approved by the City. 7. firms with the approval of the City. Assist in the preparation of litigated cases, negotiations of Compromise and Release settlements and subrogation actions. 8. related expenses on each case. 9. Investigate, or arrange for investigation of, as necessary and appropriate, questionable cases and the status of disabled employees in order to adjust all cases and to assist in the trial or settlement of litigated cases. 10. that no claims examiner will be required to handle more than 250 open indemnity cases at any one time. Determine and recommend to the City the degree of permanent Refer litigated cases to attorneys, utilizing an agreed listing of legal Maintain current estimates of costs for all anticipated benefits and Assure that sufficient numbers of claims personnel are available so C. LITIGATION AND SUBROGATION 1. assist counsel in the preparation of cases and the negotiation of case dispositions. 2. effect recovery, take all necessary action, including timely notification to the City, assist in recovering through third party subrogation and recommend retaining Counsel and assist Counsel where litigation is necessary to effect recovery. 3. semi-annual basis. Recommend legal counsel for the defense of litigated claims, and Monitor all cases for potential subrogation, write correspondence tc Provide a written summary of litigated and subrogated cases on a 3 m cfl . D. MEDICAL CONTROL 1. Develop and recommend to the City a panel of physicians, dentists, chiropractors and other practitioners for the initial treatment of injured employees and recommend a panel of such specialists as may be required for long-term or other disabilities requiring special treatment. 2. review of all ”Doctor‘s First Report of Work In&y” to ensure that the treatment is related to a compensaile injury or illness. 3. employees receive proper care and to avoid over-treatment situations. 4. Consult with the City‘s personnel and provide guidance and evaluations of the physical capabilities of injured employees to return to work. Monitor treatment programs for injured employees including the Maintain close liaison with treating physicians to ensure that E. EMPLOYEE SERVICES 1. workers’ compensation benefits, inquiries on specific injuries and permanent disability ratings in accordance with the City‘s policies. 2. in non-litigated cases. 3. injured employees for approval by the City, the employee and other agencies to provide rehabilitation, retraining or reassignment for employees with physical or performance limitations resulting from industrial injuries. 4. Develop and recommend policies and procedures to insure that the employee’s ability to work is consistent with the findings of the Workers’ Compensation Appeals Board. Provide information and guidance to the City‘s employees regarding Assist in resolving employee problems related to an industrial injury When medically appropriate, direct rehabilitation programs for F. FISCAL ANALYSIS 1. the progress of individual claims and the effectiveness of safety and other cost control programs for workers’ compensation claims. Provide the Civs administration with continuing information on 4 0 m ".. 2. in the evaluation of the City's program. 3. of annual incurred costs. Submit monthly statistical summaries and narrative reports to assist Provide periodic projections of cash flow and actuarial projections 5. CITY'S OBLIGATION The City shall be obligated under this Agreement as follows: A. To promptly report to HCM, as they shall occur and become known, the incidents of occupational injury, disease or death of City's workers or employees on forms provided by the City and to provide full and accurate information relative to such reports of injury, disease or death. To peht HCM's employees to periodically inspect and audit City's payroll books and records upon reasonable notice to the City during the period of this contract and for one year after its expiration or termination, and to periodically make payments under the provisions of this Agreement subject to proper adjustment for any excess payment of fees or payments of less than earned fees. To cooperate With HCM, its agents, servants and employees, including independent contractors, in the investigation of any claim for workers' compensation benefits against the City. To promptly forward to HCM all applications, notice of claims, notices of hearings or other legal notices pertaining to claims against the City for occupational injury, disease or death occurring during any period covered by the terms of this Agreement. To reports all instances of death, regardless of cause, involving the City's employees Within twenty-four (24) hours to HCM or its agents. B. C. D. E. 6. SERVICE FEES AND CHARGES In consideration of HCM providing the above-described services to the City, the City agrees to pay HCM a flat annual fee of $35,000 for the first year of this Agreement. In this regard, HCM will issue monthly billings of $2,916.66. The second year's fee will be $42,000 With monthly billings of $3,500 per month. 5 a m c The preceding Service Fees shall not include the payment of Allocated Loss Expenses, as hereinafter defined, or any payment made by HCM on the City's behalf for medical disability or other benefits ("loss payments"). "Allocated Loss Expenses" shall mean all Workers' Compensation Appeals Board or court costs, fees and expenses; fees for service of process; fees to attorneys; fees of independent adjusters or attorneys for investigation or adjustment of claims not performed by HCM's workers' compensation claims technicians; the cost of employing experts for the purpose of preparing maps, photographs, diagrams, chemical or physical questions; the cost of copies of transcripts of testimony at coroneis inquests or private records; the cost of depositions and court reporter or recorded statements; and any similar costs or expenses properly chargeable to the defense of a particular claim or to the protection of the subrogation rights of the City, provided, however, that all of the above services performed by claims technician employees of HCM shall not be considered Allocated Loss Expenses. HCM shall determine, in its sole discretion, the Allocated Loss Expense to be incurred in the investigation, adjustment, settlement and subrogation of any and all losses. 7. RELATfONSHIP HCM shall exercise full control and direction over the subcontractors, agents and employees of HCM performing the services covered in this Agreement. While performing services hereunder, HCM is an independent contractor and its employees, agents or subcontractors shall not be deemed to be officers, agents or employees of the City. 8. INDEMNIFICATION AND HOLD HARMLESS HCM will indemnify, defend and hold harmless the City with respect to any claims asserted as a result of any alleged errors, omissions, torts, intentional acts or other negligence on the part of HCM, and/or its employees, agents or servants, unless the claim is based upon action(s) of HCM that were undertaken at the specific direction of the City. The City agrees that in the event HCM, acting at the specific direction of the City, becomes liable to any third party, the City will indemnify, defend and hold harmless HCM and/or its employees, agents or servants. If HCM or any of its employees, agents or servants are named as defendants in any action (i) where the plaintiff's cause of.action involves a claim hereunder, and (ii) where there a no claims asserted as a result of any alleged errors, omissions, torts, intentional acts or other negligence on the part of HCM, and/or its employees, agents, or servants, the City will indemnify, defend and hold harmless HCM and/or its employees, agents or servants. 6 m w a, 9. COMPLIANCE WITH APPLICABLE LAW A. HCM and the City hereto acknowledge the various penalties that are contained in the California Workers' Compensation Reform Act of 1989 (effective as of January 1, 1990) that may be imposed on both employers and claim administrators. Penalties arising from the failure of the City to provide timely notice of claim or such other City obligations shall be and remain the sole responsibility of the City and the City hereby agrees to indemmfy, defend and hold HCM harmless for all claims arising from the imposition of such penalties. Administrative penalties arising solely from the failure of HCM to comply in a timely and proper manner with its duties as a claim administrator shall be and remain the sole responsibility of HCM and HCM hereby agrees to indemnify, defend and hold the City harmless from all claims arising from the imposition of such administrative penal ties. More specifically, the parties acknowledge that the Califonria Workers' Compensation Reform Act of 1989 requires first payment of Temporary Disability Indemnity within 14 days of the City'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 HCM is provided with notice of the claim within 7 days of the City's knowledge of the injury, the above referenced automatic penalty of 10% shall be and remain the sole responsibility of the City. B. 10. ASSIGNMENT Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party. 11. NON-SOLICITATION During the term of the Agreement,, and for a period of one (1) year thereafter, HCM agrees not to solicit for employment or employ any of the City's employees contacted during the performance of this Agreement; and the City agrees not to solicit for employment or employ during the term of this Agreement and for a period of one (1) year thereafter any employees of HCM contacted by the City during the performance of this Agreement. 7 m m c 12. CONFIDENTIAL INFORMATION The parties hereto acknowledge that they may acquire and develop knowledge, information and materials concerning the other party which shall be the trade secrets and confidential and proprietary information of the other party ("Confidential Information"). The parties shall hold such Confidential Information in strict confidence and not disclose to others, nor use it in any way or permit others to use it, commercially or otherwise, and not allow any unauthorized person, firm or corporation access to it either before or after termination of the Agreement, without the prior written consent of the other party. This provision shall survive termination of this Agreement. 13. COVENANT AGAINST CONTINGENT FEES HCM warrants that their firm has not employed or retained any company or person, other than a bona fide employee working for HCM, to solicit or secure this agreement, and that HCM has not paid or agreed to pay any company or person, other than a bona fide employee, any fee, commission, percentage, brokerage fee, gift or any other consideration contingent upon, or resulting from, the award or making this agreement. For breach or violation of this warranty, the City shall have the right to annul this agreement without liability, or, in its discretion, to deduct from the agreement price or consideration, or otherwise recover, the full amount of such fee, commission, percentage, brokerage fee, gift or contingent fee. 14. NON-DISCRIMINATION CLAUSE HCM shall comply with applicable State and Federal laws regarding non- discrimination. 15. PROHIBITED INTEREST No official of the City who is authorized in such capacity on behalf of the City tc negotiate, make, accept, or approve, or take part in negotiating, making, accepting, or approving any contract, shall become directly or indirectly interested personally in this contract or in any part thereof. No officer, employee, attorney, or agent of or for the City who is authorized in such capacity and on behalf of the City to exercise any executive, supervisory, or othr similar functions in connection with the performance of this contract shall become directly or indirectly interested personally in this contract or any part thereof. 8 @ rn P 16. INSURANCE A. HCM shall obtain and maintain a policy of liability insurance from an insurance company authorized to be in business in the State of California, in an insurable amount of not less than one million dollars ($1,000,000). This insurance shall be in force during the lift of this agreement and shall not be cancelled without ten (10) days prior written notice to the City. The City shall be named as additional insured on this policy. HCM shall furnish a certificate of said insurance to the City upon request. B. 17. CONFLICT OF INTEREST HCM shall file a conflict of interest statement with the City Clerk of the City of Carlsbad. HCM shall report investments or interests in real property. 18. APPLICABLE LAW The validity, interpretation and enforcement of this Agreement shall be governed by the taws of the State of California. 19. ENTIRE AGREEMENT; MODIFICATION WAIVER The provisions of this Agreement constitute the whole and entire agreement between HCM and the City and supersede any prior written or oral negotiations and/or agreements between the parties. This Agreement shall not be modified, amended, or altered except by an instrument in writing signed by the parties hereto. The failure of either party at any time to enforce any right or remedy available to it under this Agreement with respect to any breach or failure by the other party shall not be construed to be a waiver of such right or remedy. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed b, their duly authorized representatives on the date first noted above. CLAUDE A. LEWIS Mayor Title: Date: 3 - d --- TI Date: h &d<, I 9 - w Q-Y 2s 22 Eg: &qE 5%: gp ggE gg; & 2w n+Ic E Lno z w w March 25, 1991 TO: KAREN KUNDTZ, INFORMATION SYSTEMS FROM: Risk Manager AGENDA BILL #11,065: AWARD OF CONTRACT. FOR THE THIRD PARTY ADMINISTRATION OF WORKER’S COMPENSATION CWMS The Agenda Bill submitted on this matter referred to Bierly & Associates. However, the contract referred to HCM Claim Management Corporation. As a matter of clarification, it should be noted that HCM Claim Management Corporation purchased Bierly & Associates two years ago. The organization became known as HCM/Bierly. Unfortunately, just prior to the Council meeting, we were informed that HCM/Bierly had changed its name to HCM Claim Management Corporation. We were asked to revise the contract and did so. However, we did not change the Agenda Bill because of the shortness of the notice. The contract was awarded to the proper company, as requested. It simply changed its name at the last minute. If you have any questions, please contact me. Tha*y:ul // / , . 1 L ++ / /// IZOBEdT J. GERMAN Risk Manager RJG:emr