HomeMy WebLinkAbout2001-06-05; City Council; 16198; Liability Claims Settlement AuthorityCITY OF CARLSBAD -AGENDA BILL
AB# /&I; 192 - TITLE: LIABILITY CLAlMS SETTLEMENT AUTHORITY
MTG. 5/l 5/01
DEPT. RM
RECOMMENDED ACTION:
Adopt Resolution No. AOO/ - /5/ revising liability claims settlement authority.
ITEM EXPLANATION:
The evaluation of a liability claim begins the day it is received. Staff reports are gathered
and an investigation is initiated so that the claimant receives a response and any
compensation due as quickly as possible. This emphasis on expeditious processing is
possible through the settlement authority provided to staff, and provides claimants with high
quality customer service, minimizes inconvenience to the claimant, and reduces the
potential for additional costs to the claimant and the City.
Liability claims settlement authority since 1996 is as follows: The City Manager, with the
concurrence of the,City Attorney, maintains settlement authority up to ten thousand dollars
($10,000); in the case of water or sewer related claims, the limit is twenty-five thousand
dollars ($25,000).
Consistent with our efforts to resolve sewer and water related claims efficiently and in a
timely manner, staff recommends adoption of the attached resolution to provide the Risk
Manager the authority to settle these claims or approve emergency expenditures when the
amount to be paid pursuant to the settlement or emergency expenditure does not exceed
twenty-five hundred dollars ($2,500).
FISCAL IMPACT:
Revising the settlement authority limits will not have a direct fiscal impact on the City.
However, the quick and expeditious settlement of certain claims may help the City avoid
additional legal costs and/or increases in the amounts claimed due to frustration with the
settlement process.
EXHIBITS:
1. Resolution No. Jml d /s/ Revising Liability Claims Settlement Authority.
Risk Liability AgendaBill - Liability Claims Settlement Authority
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RESOLUTION NO. 2001-151
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, REVISING LIABILITY CLAIMS
SETTLEMENT AUTHORITY
WHEREAS, the effective and expedient administration of the liability self-insurance
program requires that the authority to settle claims be clearly defined and established; and
WHEREAS, current liability claims settlement authority limits were set in 1996; and
WHEREAS, the need exists to revise the settlement authority limits.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad,
California, as follows:
1. That the above recitations are true and correct.
2. That the City Manager with the concurrence of the City Attorney shall have authority
to settle liability claims against the City when the amount to be paid pursuant to the settlement
does not exceed ten thousand dollars ($lO,OOO), or twenty-five thousand dollars ($25,000) in the
case of liability claims related to water or sewer service.
3. That in the case of liability claims related to water or sewer service, the Risk Manager
shall have authority to settle the claims or approve emergency expenditures when the amount
does not exceed twenty-five hundred dollars ($2,500) and per the policy in Exhibit 1.
4. That the City Council shall have authority to settle liability claims against the City
when the amount to be paid pursuant to the settlement exceeds ten thousand dollars ($lO,OOO), or
twenty-five thousand dollars ($25,000) in the case of liability claims related to water or sewer
service.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the
City of Carlsbad on the 5th day of June ,200 1, by the following vote:
AYES: Council Members Lewis, Kulchin, Nygaard, and Hall.
NOES: None.
ABSENT: Council Member Finnila.
ATTEST:
Risk Liability AgendaBill - Liability Claims Settlement Authority Resolution
April 26,2001
TO: ClTY MANAGER
VIA: ADMINISTRATIVE SERVICES DIRECT0
PROM: Risk Manager @--
SEWER AND WATER OVJBUCLOW ON PRIVATE PROPERTY - RESPONSE
POLICY
This report is a review of, and recommendations for, the City’s response procedures as
they relate to property damage resulting from a water or sewer overflow. The report has
been reviewed by the City Attorney, Public Works Director and Deputy Public Works
Director, and includes their input. The first part of the report is a discussion of the issues
and the second is the recommended policy for response procedures.
1. ISSUES
Health Concerns and Cleanup/Restoration Costs: Sewer backups bring concerns about
bacterial contamination. Both sewer and water. overflows bring concerns about mold.
Surfaces that become wet, drywall paper, wood, certain paints, fabrics, carpet and others,
are where tiold thrives. Mold can appear in these places within several days or less of
becoming wet.
In the past few years, concerns about the health hazards associated with exposure to mold
have come to light. Health hazards cited by the Environmental Protection Agency
include: allergic, infectious or toxic reactions. However, some people have no reaction
to mold at all. In addition, a home may have many “biological pollutants” that make
someone ill and it can be difficult to pinpoint which one is causing the illness. Also,
because the body of knowledge about mold and its health related impacts is growing and
, often still in dispute, there is no set standard for acceptable levels of indoor mold
exposure.
Measures to find and eradicate mold have become part of the cleanup and restoration
process following overflows. After the cleanup of ,ti>sewer overflow, testing for both
bacterial contamination and mold by an industrial hygienist, with additional work to
correct any negative findings has become an accepted practice. As a result, the cleanup
for a sewage overflow that used to be relatively inexpensive and include a simple carpet
cleaning now requires removal and replacement of carpeting, walls and floors
contaminated by the effluent. According to property claims adjtister Larry Gustafson, of
Walsh Adjusting, the claims adjusting company for the property coverage program of
which the City is a member, a sewer overflow into l/3 to ‘/z of a residence can easily -
result in costs totaling $50,000.
Just as there are no standards for indoor mold exposure, according to Mr. Gustafson,
there are no industry standards for the cleanup costs of a sewer backup on property. Mr.
Gus&on assists the City of San Diego as well as insurance companies on these claims
and he states that this industry has many businesses that charge extremely high clean-up
fees that are very difficult to dispute. The industry has established extensive
“decontamination” steps in their work. The extent of work and amount of equipment
necessary to properly “clean-up” is difficult to dispute after, and even during, the fact.
Customer Service
Under our current claims processing policies, the resident is to handle the clean-up,
property restoration and other emergency needs, and then submit his total expenses with a
claim. We then issue one payment in exchange for a release from the claimant.
However, we are realizing that this type of incident involves customer service issues we
don’t see in other claims, and therefore, a change is our processing policies is warranted.
The resident may be in shock in response to the incident. He is unexpectedly seeing
property damage to his home and the damage may include personal items. When the
overflow is sewage, the resident fears the possibility that his property, both real and
personal, can never be restored. In the long term, he is worried about a loss of value to
his home. In the short term, among other things, he is worried about where he and his
family may have to eat, stay and do laundry during the time of cleanup and restoration, as
well as selecting contractors to perform the emergency services. If he is an absentee
owner, management of the situation is even more difficult and the difficulties can result
in delays that result in additional damages and expenses. In any case, the resident is
presented with an emergency situation that results in immediate needs, and he has few
places to look for assistance.
Homeowner insurance policies exclude coverage for property damage as a result of a
sewer back-up due to a problem in the main line. As a result, the resident is faced with
both securing and paying for all emergency services up front, and all those incurred
during property restoration. These expenses can be difficult to settle upon before
contracts must be signed and payment is due, and final costs may exceed estimates. As a
result, a resident must have substantial disposable funds to cover the significant costs that
can be incurred quickly.
Liability
A citizen has several potential causes of action available, including inverse
condemnation, nuisance, trespass, and emotional distress. An action for inverse
condemnation does not require filing a claim before the lawsuit, so a demand for attorney
fees and expert fees, including others, may be substantial before the City is even aware
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there is a demand. Add in medical costs if health impacts are claimed, and loss exposure?
to the City becomes even greater.
2. POLICY
To achieve a high level of customer service and control costs requires that the City act
quickly in response to an overflow. The resident needs immediate assurance that the
property will be cleaned and restored;immediate assistance with living arrangements and
expenses if the residence is uninhabitable, and the City needs to retain control of clean-up
and restoration work. The recommended policy components to achieve these goals are
listed below and apply to overflows which appear to emergency response crews to be in a
portion of the line for which the City has accepted responsibility and where the cause of
the blockage has not been determined to be the occupant/property owner’s actions.
l The City will secure clean-up and restoration services, on an emergency basis, for
the occupant/property owner. This will include temporary housing at a hotel if
necessary. If a resident needs assistance with living expenses during clean-up and
restoration, the Risk Manager shall be authorized to pay up to $2,500 for these
expenses.
l The Risk Manager will notify the City Attorney and Administrative Services
Director of the incident within 24 hours and provide on-going status reports on
remediation progress and cost. Each case will be handled on its’own merits. The
Risk Manager will coordinate with the City Attorney and Administrative Services Director to evaluate each case on an individual factual basis. In those situations
where it is ultimately determined that the property owner is responsible for the
blockage, the evaluation will include a determination as to whether or not to seek
reimbursement of any expenditures.
Please let me know if you have any questions or comments.
c: City Attorney
Public Works Director
Deputy Public Works Director
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File: IibraryAVordlSewer Water Issues - Policy
d’ .,. 5