HomeMy WebLinkAbout1992-02-18; City Council; 11566; AMENDMENT TO CONTRACT FOR THIRD PARTY ADMINISTRATION OF WORKERS COMPENSATION CLAIMSOF WORKERS
RECOMMENDED ACTION:
Approval of Resolution No. %2 -60 amending the contract with HCM Claim Management
Corporation for the third party administration of workers compensation claims and
appropriating $6,000 from the Workers Compensation Self-Insurance Fund to cover the cost
of the fee increase for the balance of the 1991/92 fiscal year.
ITEM EXPLANATION
HCM Claim Management Corporation is the third party administrator for the City’s workers
compensation claims program.
The current agreement for those services is for a period of two years, beginning on March 1,
1991 and terminating on February 28, 1993. The first year of the agreement called for an
annual fee of $35,000. The second year of the agreement, beginning on March 1, 1992, calls
for an annual fee of $42,000.
On January 17, 1992, HCM forwarded a letter (Exhibit 2) indicating that they were continuing
to lose money on the contract as a result of the favorable conditions initially negotiated by the
City. They outlined the costs involved in handling the City’s account and stated that they
were going to have to give the required 60 day notice of cancellation unless the City would be
willing to amend the contract by increasing the annual fee to a level which would prevent any
further losses.
After reviewing the matter and analyzing the costs involved in acquiring a new third party
administrator, it was determined that the least expensive and most efficient option available to
the City was to agree to amend the contract by increasing the annual fee for the second year
from $42,000 to $58,988. That represents an increase of $16,988 for the second year.
However, only $6,000 would need to be appropriated for the balance of the current fiscal
year. The balance of the fee increase, approximately $11,OOO, would be incorporated into the
budget for FY 1992/93.
It is Staffs recommendation that the original agreement be amended as indicated herein.
The cost of services for the second year of the existing agreement will be increased by
$16,988. Only $6,000 will need to be appropriated from the Workers Compensation Self-
Insurance Fund for the balance of the current fiscal year. The balance of the fee increase will
be incorporated into the budget for FY 1992/93.
Letter from HCM, Dated 1/17/92
Letter from HCM, dated 1/31/92
e w EXHIBIT 2
Hertz Claim Management Workers' Compensation Divisio 870 S. Raymond Ave. Pasadena, CA 91 105 Telephone: 81 8-585-3000 January 17, 1992
Robert J. German Risk Manager
City of Carlsbad
1200 Carlsbad Village Dr. Carlsbad, CA 92008
Re: Workers' Compensation Service Agreement
Dear Mr. German:
As you are aware, we are about to enter the second year of our tw year contract with you. While we recognize that the fee for th second year was set at $42,000, we need to increase it at thi time .
Continued cost increases for labor, supplies and other bushes necessities have forced us to re-evaluate all of our contracts.
You will recall that when the fee was reached with you last year it was against our better judgement to enter into a multi-yea contract. You prevailed on us to go with the two year deal as i
was the only way you could get it approved.
Unfortunately, we again lost money handling your account and wil
do so again at the existing fee. Enclosed is a pricing workshec
showing what we will need to handle your account for the upcomir
year.
Please review this information and give me a call to discuss ar
questicns you mzy have. If we are unGble t~ reach an a3reSiTiSi this letter will serve as our sixty day notice of termination undt
Paragraph Three of the Agreement to be effective March 17, 1992
Thank you for giving this matter your earliest attention.
Sincerely,
,
6,- 4&&
Louis P. Arevalo Division Vice President, Field Operations
LA/gm
A Professional Approach To Claim Management"
e w
II II a II a II
In II
e3 II II II a~------------- ll II I! " I!
00000 II O II
II II
II
--------------
2 II 5l II
% 1;
=lov)*oa
b- II Q1arnarn *- Lo- g * % &SI % 0 401 & g z a0 I v)3 I
SI
WI ll ll ~I------------- ll C II *p . II
ll 3
000 II g
-------------- 3
0, '3 a z b-
& a a 3
z '3 a
&~ooooo II II 2 II II
F
0- 0- 8 8 8 3Gaaa
y U 3+3tfttffff)e3 II II
g v)Ic70abb II g II &I q u3 cv - 0 a TU[ 0 0 9 9 9
F< I II 2 8 II a 32; 11 a II
3 I- -------------- T
0- II
c7 II W U
w 33 11 )r II LO I II a II
w a
a z 3 a
II 2 I- JZ i OaQI c7 c7 c9 c7 c)
II z ll E I I-2% I c!c!c?c?"
v) OZ,l x x x x x
FJO I "ye00 ll 0 II -g 0 dwdl -
% I--~------------- _------------- II 0 c3 I II I- II 3 8 ll - z I 0 I I! II g G II 2 z ZI E
II 3 II If g 01 CI
> II g LL 5; v)
01 c 11 c 8 II a s F
I1 & $ II g Y v) a $I .- w
-E ll x n II 6 II s * II $ a yl I c
T 01 E?
ZI 5.0 .- II 8 a, 11 . .
II 0 E 25E
Y 9; *E 8 E a .-
0 3 hggg2 WI a p II v) II II 0
l-
II 11 8
v) II I= II q II x
ll 5
ll 0 11 a,
II 7ij x II 0
II II
II fff II 0 II Q)
II
wI------------- ----------- --- 11
Y II .e w W
Y a ma
II .-
CI
0 !!
Q) cn
a
0 z 0
0 II Q) .-
II w c/) II u z W
U
0
0
0
G z W i 0
a
C II 'F; c 11 m
ll 3
LL
I- 0 0
U W
U
II k
II E II a 0
;Ill La, II E II $j = 11 0
ca+
Is) -E = -c .- c E
WI
-111 >o
?n ZI - c
>I 8 -
U 0
0 EXHIBIT 3 e
Hertz Claim Management Workers’ Compensation Divisic 870 S. Raymond Ave. Pasadena, CA 91 105 Telephone: 81 8-585-3000
January 31, 1992
VIA AIRBORNE EXPRESS
Mr. Robert J. German Risk Manager City of Carlsbad
1200 Carlsbad Village Drive Carlsbad, CA 92008
Dear Bob:
Thank you for your recent letter regarding the Amendment to OL Agreement. Please be advised that we will hold in abeyance oc ninety day notice of termination pending your Council meeting c February 18, 1992.
Enclosed is the signed Amendment per your request. know if you need any other information from us.
sincerely,
Please let II
-7 q *T 2- - ‘1+5Z&A
Louis P. Arevalo
Division Vice President, Field Operations
LA/bl Enclosure
A Professional Approach To Claim Management”
0 W
AMENDMENT TO AGREEMENT
THIS AMENDMENT TO AGREEMENT ("Amendment") is entered into, on the date last
signed, between HCM Claim Management Corporation, located at 870 S. Raymond
Avenue, Pasadena, California 91105 hHereinafter "HCM") and the City of Carlsbad,
located at 1200 Carlsbad Village Drive, Carlsbad, California 92008 (hereinafter "City").
WHEREAS, HCM and City entered into a two year agreement for the provision of
administrative services for workers compensation claims; and
WHEREAS, HCM has determined that the financial terms of said agreement have prover
to be detrimental to their business; and
WHEREAS, City has determined that a change of administrators at this point in time
would be detrimental to its operation; and
WHEREAS, City desires to have HCM continue to manage and administer the Citys
workers compensation claims program for the balance of the contract term;
NOW, THEREFORE. in consideration of these recitals and the mutual covenants and
conditions contained herein, HCM and City agree to amend the original agreement as
follows:
1. City agrees to pay HCM a flat annual fee of $58,988 for the second year of the
agreement, with monthly billings of $4,915.66.
All other terms and conditions previously agreed to and set forth in the original
agreement shall remain the same.
2.
IN WITNESS WHEREOF, the undersigned have caused this amendment to be executed
by their duly authorized representatives on the dates indicted below.
HCM CLAIM MANAGEMENT CORPORATION
'? BY: #$:-&&.a- L ,TId&- B
Authorized Signature
CLAUDE A. LEWIS,
Title: May Or f7 Title:
Date: a'- 3/-3, .- Date: $&A&-'
/,d c r 1 i-c*< I~(c~~ 5
M.
I
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
e w
RESOLUTION NO. 92 - 60
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF CARLSBAD, CALIFORNIA, AMENDING
THE CONTRACT FOR THE THIRD PARTY
ADMINISTRATION OF ITS WORKERS
COMPENSATION CLAIMS PROGRAM
WHEREAS, the City is permissibly sei€-insured €or workers compensation
purposes; and
WHEREAS, the City desires to continue to utilize the services of HCM
Claim Management Corporation for the administration of its workers compensation claims
program; and
WHEREAS, the City has determined that amending the existing agreement
is the most efficient and cost effective method for handling its workers compensation claims
program at this time.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City
of Carlsbad:
1.
2.
That the above recitations are true and correct.
That the City hereby authorizes Mayor Claude A. Lewis to execute
the amendment to agreement with HCM Claim Management Corporation on the City’s
behalf. i -
*r
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
w a
3. That the Finance Director is hereby authorized to appropriate $6,000
from the Workers Compensation Self-Insurance Fund to cover the cost increase for
administrative services for the balance of the current fscal year.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City
Council of the City of Carlsbad on the 18th day of Febtuary 1992, by the following
vote, to wit:
AYES: Council Members Lewis, Kulchin, Larson, Stanton and N
NOES: None
ABSENT None
xrrm-:
LW. iiui-lerk
1