HomeMy WebLinkAbout1993-03-16; City Council; 12110; CONTRACT FOR THIRD PARTY ADMINISTRATION OF WORKERS' COMPENSATION CLAIMS HCMI‘
Approval of Resolution No. 9 3 -5 3 awarding the contract for the third party administration
of workers compensation claims to HCM Claim Management Corporation and appropriating
$20,252 from the Workers’ Compensation Self-Insurance Fund to cover the cost of the
services for the balance of the 1992/93 ffical year.
ITEM EXPLANATION
HCM Claim Management Corporation is the third party administrator for the City’s workers’
compensation claims program. The last agreement with HCM expired on February 28, 1993;
however, the conditions of that agreement allow the contract to continue on a month to
month basis by mutual consent of both parties.
During the last year of the agreement HCM’s fee was $58,988. HCM now estimates that its
cost to administer the City’s claims for an additional year is $61,710, an increase of 4.6% over
the fee one year ago. However, following negotiations, HCM has decreased its proposed rate
increase to $60,756, a 3% increase over last year’s fee.
The proposed contract contains (1) the new fee of $60,756; and (2) provisions for a term of
one year with the option to extend it for three additional one year periods or parts thereof,
based upon satisfactory performance and the City’s needs.
Based on the working relationship the City has, and continues to build with HCM, and the
substantial conversion fee for the transfer of existing claims to a new administrator, staff is
recommending that this contract for the third party administration of workers’ compensation
claims be awarded to HCM Claim Management Corporation.
FISCAL IMPACT
Resolution No. 5.3 -53
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RESOLUTION NO. 9 3 - 5 3
CONTRACT FOR THIRD PARTY
ADMINISTRATION OF WORKERS’
COMPENSATION CLAIMS
WHEREAS, the City desires to continue to utilize the services of a third
party administrator for its workers compensation claims program; and
WHEREAS, City has determined that a change of administrators at this
point in time would be detrimental to the workers’ compensation program; and
WHEREAS, City desires to have HCM continue to manage and administer
the City’s workers’ compensation claims program;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City
of Carlsbad
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That the above recitations are true and correct.
That the City hereby authorizes Mayor Claude k Lewis to execute the agreement
with HCM Claim Management Corporation.
That the Finance Director is hereby authorized to appropriate $20,252 from the
Workers Compensation Self-Insurance Fund to cover the cost of the services for thc
balance of the 1992/93 year.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City
Council of the City of Carlsbad on the 16th
vote, to wit:
day of March 1993, by the following
AYES: Council Members Lewis, Stanton, Kulchin, Nygaard and Fi
NOES: None
-SENT: None
AITES’I’:
aecdeB - Iv;ETHA L. RAWl!$KRANZ, City C1 rk
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Hmtzcllaim Management
Hertz Claim Management Corportion 870 So. RaymofltZ Pasadem, CA 91105 Telephone: (818j 585-3000
January 25, 1993
Ms. Erin Letscn Risk Manager City of Carlsbad
1200 Carlsbad Village Drive Carlsbad, CA 92008
Re: Workers' Compensation Service Agreement
Dear Ms. Letsch:
Our contract for workers' compensation claims administratic services expires February 28, 1993. Under the terms of our currer agreement, we are paid a flat annual fee of $58,988 to handle bot the existing workers' compensation claims and all new clair reported during the contract.
I have enclosed our pricing work sheet which represents our be: estimate as to the amount of staff and cost to handle your claii an additional twelve months. Based on those staffing needs, tl price is $61,710. This is an increase over the current contract t
4.6%.
If these terms are acceptable, please let me know and I wi prepare a contract for your signature. If you would like discuss the matter further, I am available at your convenience.
Very truly yours,
4
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Bruce L. Miller Division Vice President
BLM/bl Enclosure
A Subsidiaty of Tbe He& CoworatiOfl
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AGREEMENT
THIS AGREEMENT ("Agreement") is entered into this 1 7 .t.4 day of )')?A@ cjl , 1993, 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 for one year with the option to extend it fo
three additional one year periods or parts thereof, based upon satisfactory
performance and the City's needs.
2. 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 I
terminate the Agreement no later than sixty (60) days prior to the effective datc
of termination. HCM shall not be required to perform any of its services beyonc
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 anc
shall be delivered to the City or its designee by HCM upon termination of this
Agreement.
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3. PERFORMANCE 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 b
Detennhe the compensability of claimed injuries and illnesses in
Determine eligibility for and authorize payments of medical benefii
Determine eligibility for and authorize payment of temporary
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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.
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
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 t<
Provide a written summary of litigated and subrogated cases on a
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.
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2.
review of all "Doctor's First Report of Work Injury" to ensure that the
treatment is related to a compensable 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.
F. FISCAL ANALYSIS
Provide information and guidance to the City's employees regarding
Assist in resolving employee problems related to an industrial injur
When medically appropriate, direct rehabilitation programs for
1.
the progress of individual claims.
2.
in the evaluation of the City's program.
3.
of annual incurred costs.
Provide the City's administration with continuing information on
Submit monthly statistical summaries and narrative reports to assii
Provide periodic projections of cash flow and actuarial projections
4. CIWS OBLIGATION
The City shall be obligated under this Agreement as follows:
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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 permit 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 occuning 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.
5. SERVICE FEES AND CHARGES
In consideration of HCM providing the above-described services to the City, the
City agrees to pay HCM a flat fee of $60,756 for the first year of this Agreemen1
In this regard, HCM will issue monthly billings of $5,063.
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 proper
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
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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.
6. RELATIONSHIP
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.
7. 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 ar
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.
8. 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 tc
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
indemnify, 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 responsibilitj
of HCM and HCM hereby agrees to indemnify, defend and hold the City
harmless from all claims arising from the imposition of such administrati1
penalties.
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B. More specifically, the parties acknowledge that the California 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.
9. ASSIGNMENT
Neither party may assign its rights or obligations under this Agreement without
the prior written consent of the other parry.
10. 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.
11. 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.
12. 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 fron
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the award or making this agreement. For breach or violation of this warranty,
the City shall have the right to annd 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.
13. NON-DISCRIMINATION CLAUSE
HCM shall comply with applicable State and Federal laws regarding non-
discrimination.
14. 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 othe
similar functions in connection with the performance of this contract shall
become directly or indirectly interested personally in this contract or any part
thereof.
15. 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 shal 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.
16. CONFLICT OF INTEREST
HCM shall file a conflict of interest statement with the City Clerk of the City of
CarIsbad. HCM shall report investments or interests in real property.
17. APPLICABLE LAW
The validity, interpretation and enforcement of this Agreement shall be govern(
by the laws of the State of California.
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18. 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 by
their duly authorized representatives on the date first noted above.
HCM CLAIM MANAGEMENT CORPORATION
/' --, B BY % J A,. J/ ,Ji ,) , ,(* -
Authorized Signature -
I/ Title: 6 /', L Title: CLAUDE A. LEWIS, Mayor
Date: -; I - L% Date: 3- /7 - y?
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