HomeMy Public PortalAbout2004-07-01 Agreement - Workers Comp Third Party Admin Service - AdminSureSERVICE AGREEMENT FOR ADMINISTRATION OF THE CITY OF FULLERTON
WORKERS' COMPENSATION PROGRAM
This Agreement is entered into this 1st day of July, 2004, between CITY OF FULLERTON, with its
principal place of business located at 303 West Commonwealth Avenue, Fullerton, California 92832,
hereinafter, called CITY, and COLEN & LEE, with its principal place of business located at 1470 South
Valley Vista Drive, Suite 230, Diamond Bar, CA 91765, hereinafter, called TPA.
CITY and TPA agree as follows:
I. The period of the Agreement shall be from July 1, 2004, through June 30, 2007, a period of
thirty-six months, except as provided herein.
II. TPA RESPONSIBILITIES:
A. CLAIMS ADMINISTRATION
TPA shall:
1. Consult with CITY personnel and assist in developing and maintaining the necessary
procedures, practices, and coordination to operate aself-insured workers' compensation
program and to meet the legal requirements of the State of California;
2. Conduct, or assist in conducting, orientation meetings for CITY personnel involved
directly or indirectly in the processing of industrial injury cases;
3. Provide the CITY with written notices of changes or proposed changes in statutes or
rules and regulations affecting the CITY's self-insured workers' compensation program;
4. Review with CITY program progress, including identification of problem areas and
recommendations for solutions;
5. Provide efficient and accurate systems for establishing financial reserves and payment of
benefits and allocated expenses in accordance with sound claims practices;
6. Process all claims for workers' compensation benefits until conclusion in accordance
with requirements of the Division of Workers' Compensation/State of California;
7. Conduct meetings to report to CITY staff on program progress, including identification
of problem areas and recommended solutions thereto; and to review all open claims.
Said meetings shall occur every two weeks or less frequently if mutually agreed upon.
Meetings shall alternate between the CITY and TPA's office;
8. Attend other meetings required by the CITY relative to the workers' compensation
program;
9. Pay for a membership in the nationwide Index System; on the CITY's behalf, submit all
indemnity claims to the Index system as regular practice;
10. Provide (at no cost to the CITY) informational pamphlets in appropriate languages to
employees relative to their workers' compensation benefits as required by the State of
California;
11. Assess liability of claimed injuries and illnesses on a timely basis and in accordance with
the California Labor Code and make appropriate recommendations to the CITY;
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12. Pay any and all penalties due in accordance with the reform legislation of 1989 and any
subsequent amendments to the California Labor Code. Such penalties shall be paid by
the Administrator with liability for the action determined by the record unless such
penalties were incurred as a result of the CITY's action or inaction;
13. Establish hard files containing medical and factual information and complete accounting
records on each reported claim, in accordance with State requirements and in a form
acceptable to the CITY. Maintain same in accordance with statutory time requirements;
14. Review, compute and, after approval by the CITY, pay all informal ratings, findings and
awards, settlements and life pensions. Arrange for informal disability ratings whenever
possible to avoid unnecessary litigation;
15. After approval by the CITY, arrange for and supervise all necessary investigations to
determine eligibility for compensation benefits and liability of negligent third parties;
16. Arrange and supervise rehabilitation services where indicated, in accordance with the
California Labor Code;
17. Prepare and file in a timely manner all reports and forms required by the State of
California for self-funded programs, including but not limited to the Self-Insurer's
Annual Report required by the Department of Self-Insurance Plans and the OSHA
Summary required by the Department of Industrial Relations;
18. Establish procedures to support the payment of all benefits and allocated expenses
including appropriate documentation necessary to reconcile the trust fund checking
account;
19. Identify all eligible claims and prepare the necessary documentation on behalf of the
CITY for reimbursement from the California Subsequent Injuries Fund;
20. Assure compliance with Labor Code Section 4906(g), by providing a declaration under
penalty of perjury that claims personnel have not violated Labor Code Section 139.5
which prohibits compensation or inducement for any referred examinations;
21. Maintain a claims log in compliance with the State of California Workers' Compensation
Rules and Regulations, Section 10102;
22. Determine the eligibility for and recommend to the CITY payment of all temporary,
permanent, and rehabilitation disability compensation in coordination with medical
advice, rehabilitation efforts, and advisory ratings, as appropriate;
23. Upon CITY approval, refer litigated cases to selected attorneys. Assist in the preparation
of litigated cases, negotiations of settlement agreements, and subrogation actions;
24. Identify all claims and timely report all losses as required to the CITY's excess workers'
compensation insurance carrier(s). Request reimbursement of expenditures which pierce
the CITY's self-insured retention level on a schedule mutually agreed upon with CITY;
25. Assign to the CITY account a certified claims adjuster and claims supervisor approved
by the CITY to properly and adequately handle the CITY's claims volume within the
guidelines established by the State of California. The claims adjuster assigned to the
CITY's account shall at no time handle an open caseload exceeding 150 indemnity
claims and 200 claims overall. The CITY shall be notified of additional clients assigned
to the adjuster;
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26. Provide to the CITY duplicates of all correspondence relative to the administration of
each claim file, including but not limited to: reserve changes, and delay and denial
notices;
27. Attend all hearings related to the CITY's cases where legal counsel is not assigned and
any other cases that the CITY deems necessary;
28. Comply with all reporting requirements mandated by:
a. Division of Workers' Compensation or its equivalent;
b. Excess insurance carriers;
c. Third parties who may be liable in whole or part for liabilities incurred for any
workers' compensation claim;
d. Internal Revenue Service (1099).
29. File and serve all medical reports, settlement documents, and necessary rehabilitation
documents and forms as required Division of Workers' Compensation/State of
California;
30. Coordinate claims handling activities with the CITY's policies and procedures for
modified job duties and early return to work;
B. MEDICAL CONTROL
TPA shall:
1. Maintain, subject to CITY approval, a panel of physicians, dentists, chiropractors, and
other practitioners for the initial treatment (primary care) of injured employees, and of
such specialists as may be required for long-term or other disabilities requiring special
treatment;
2. Monitor treatment programs for injured employees, including review of all "Doctor's
First Report of Work Injury", to ensure that the treatment rendered is appropriate and
related to a compensable injury or illness;
3. Maintain close liaison with treating physicians to ensure that employees receive proper
care, avoid over-treatment, and to ensure that employees are returned to work at the
earliest reasonable date;
4. In accordance with the fee schedule promulgated and adopted by the Division of
Workers' Compensation, adjust and pay all medical expenses using MedReview, Inc. a
subsidiary of Colen & Lee, Inc. Whenever possible, adjust medical expenses further
using MedReview, Inc., utilizing preferred provider organizations and/or hospital
network providers. The cost for Medical bills reviewed shall be 14% of savings. The cost
for PPO and in-patient bills shall be 24% of savings. If no savings are achieved, there
shall be no charge for the reviews.
5. Consult frequently with appropriate CITY personnel and provide guidance and
evaluations on the physical capabilities of injured employees, including those cases in
which partial disabilities might involve work restrictions;
6. Arrange for medical/legal opinions in disputed cases, conferring with medical examiners,
professional personnel, the CITY and legal counsel, when warranted.
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C. EMPLOYEE COMMUNICATION
TPA shall:
1. Provide information and guidance to CITY employees, when un-represented, on the
process necessary to obtain permanent partial disability ratings and awards;
2. Provide pamphlets advising the injured employees of benefits available to them;
3. Contact all employees by phone within 48 working hours of notice of injury regardless of
whether or not the claim is compensable, unless prohibited by law. Contact all ongoing
lost time employees at least semi-monthly thereafter;
4. Assist with potential vocational rehabilitation cases by referring the employee early for
evaluation and determination of qualified injured worker status.
D. ACCOUNTING CONTROLS
TPA shall:
1. Establish procedures and necessary documentation to enable TPA to issue payment of
benefits as required by law on the CITY's behalf from the trust account maintained by
CITY;
2. Utilize the funds within the trust account maintained by the CITY for the purpose of
issuing checks for the payment of:
a. Medical bills (copies of all medical bills shall be sent to the CITY along with the
daily pending payable);
b. Temporary disability benefit payments, including payments of temporary disability
during participation in a vocational rehabilitation program, (as allowed by law),
whether referred to as vocational rehabilitation, temporary disability or vocational
maintenance allowance benefits;
c. Permanent disability advances and payments pursuant to Findings and Awards,
CITY approved Stipulations with Findings and Awards, and Compromise and
Release;
d. Payment of all expenses for CITY approved services, including: court costs, fees and
expenses; fees for service of process; fees to attorneys; fees for copy service not
performed by TPA; fees of independent adjusters or attorneys for investigation or
adjustment of claims not performed by TPA; cost of employing experts for the
purpose of preparing maps, photographs, diagrams, chemical or physical questions;
costs for copies of transcripts of testimony at coroner's inquests or private costs or
expenses properly chargeable to the defense of a particular CITY claim.
e. Under no circumstances pay penalties from the trust account without written
authorization from the CITY;
Penalties are defined in accordance with the Workers' Compensation Laws of the
State of California. Responsibility for payment of penalties will be borne by the
party assessed by the Audit Unit.
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TPA shall not be liable for penalties arising from the actions of any party other than
the TPA.
NO PENALTIES SHALL BE PAID, REGARDLESS OF RESPONSIBILITY,
WITHOUT PRIOR DISCLOSURE TO THE CITY.
f. All services performed by TPA shall not be considered as an expense for the purpose
of this section. At no time shall any check be issued through this trust account to
TPA.
3. Provide for separation of the following duties in a manner approved by the CITY:
a. Authorization of payment(s);
b. Preparation or running of checks;
c. Signing of checks.
4. Provide checks at no cost to the CITY;
5. Staple check copies onto original support documents (i.e., invoices from doctors,
attorneys, hospitals, etc.) immediately upon preparation, prior to signing of the
applicable check and before returning it to the person authorizing the payment;
6. Use an original date-stamped document for support documentation for authorization of a
payment;
7. Not sign checks in advance or issue checks payable to cash. All original checks and
copies of voided checks will be forwarded to the CITY;
8. Use checks in sequence. Supplies of unused checks shall be safeguarded to the extent
that unauthorized access is precluded;
9. Furnish to the CITY, on a daily basis, reports of all checks issued, and on a monthly
basis, reports of all checks issued for the entire month. These reports shall include
information on canceled, voided, or refunded checks, as well as any recoveries received
from third parties. The monthly register shall also include payee, amount, date, check
number, case number, and type of expense (indemnity, medical, legal, or other);
10. Include on the face of all checks the language "VOID AFTER 90 DAYS." Checks
outstanding in excess of 60 days shall be investigated by the CITY;
11. Issue checks exceeding $1,500 with two authorized signatures. The two-signature
requirement shall be printed on the face of all checks;
12. Declare those individuals who are designated to be authorized as signatories on the
account for approval by the CITY. At no time shall an individual sign a check without
CITY approval and an approved signature on ale;
13. Notify the CITY immediately when any authorized signatory on the trust account leaves
the employment of TPA;
E. INFORMATION SYSTEM SERVICES
TPA shall:
1. In a timely manner, prepare and file all reports, forms, and other documents which are
now or will be required by the State of California or other governmental agencies
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relating to workers' compensation claims, including but not limited to the Self-Insurer's
Annual Report and the annual OSHA Summary as required by the California Department
of Industrial Relations, Division of Labor Statistics and Research.
2. Maintain computer capability to produce reports as specified by the CITY, including, but
not limited to:
a. Historical financial summary;
b. Claims history by cost allocation center;
c. Current month opened/closed claims;
d. Claims with subrogation potential;
e. Safety analyses designated by cost center, indicating statistical data regarding the
cause, nature, body part, and the accident description of current claims, with costs
incurred and payments made to date;
f. Frequency and severity reports by cost center for current claims indicating nature
and body part;
g. Annual detailed register of all claims for all years (open and closed) with reported
incurred losses (paid losses and case reserves) that are $50,000 and above;
h. Listing of all litigated claims by fiscal year, open and closed;
i. OSHA log;
j . Additional reports as requested by CITY at a cost of no more than $125 per hour of
development time.
3. Supply, prepare and submit electronically IRS 1099 Forms on the CITY's behalf;
4. Maintain and support all software and hardware to provide continuing capability;
5. Provide CITY personnel appropriate and necessary training for utilization of the system;
6. Provide an electronic link allowing the CITY to access the TPA claims management
system.
III. RIGHTS AND RESPONSIBILITIES OF CITY
CITY shall:
1. Submit all reports of work injuries to TPA within one business day of CITY's knowledge of the
injury.
2. Respond to TPA's requests for information and authority within 5 days of such a request.
3. Grant settlement authority to the Administrator in advance of legal hearings or be available by phone
or in person during such hearings:
4. Have input and final approval of TPA personnel assigned to CITY's account;
5. Have final approval on all vendors and subcontractors utilized on CITY claims, including but not
limited to attorneys, investigators, rehabilitation consultants, doctors, and facilities retained on CITY
claims;
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6. Have final approval on the resolution of CITY claims, including but not limited to settlement
amounts and structure;
7. Periodically audit trust account and claim files either by Risk Management staff or contract auditors
at a frequency and duration as specified by the City. TPA will provide auditors work space and
assistance to locate files;
8. Establish and maintain a trust account for payment of claims and related expenses, and designate
TPA as signatory.
IV. FEES AND PAYMENTS
A. CITY agrees to pay TPA the service fees listed below:
First Year (July 1, 2004 -June 30, 2005) $119,927
Second Year (July 1, 2005 -June 30, 2006) $125,923
Third Year (July 1, 2006 -June 30, 2007) $132,219
Each year's service fee will be paid in 12 monthly installments issued within 30 days of receipt
of TPA' monthly invoice.
V. CONTRACT TERMS
A. This Agreement is for a period of 36 months for rates quoted, commencing at 12:01 a.m. July 1,
2004, and ending at midnight, June 30, 2007 (hereinafter referred to as TERM);
B. After the initial TERM, this Agreement may be renewed upon approval by the Fullerton City
Council. However, any proposed revisions must be submitted in writing, no later than 60 days
preceding the expiration date;
C. This Agreement may be extended on a month-to-month basis by a "letter of agreement," which.
shall include any modification of terms or provisions during the period of extension. However,
the period of extension shall not exceed six months;
D. If during the TERM of this Agreement, the CITY elects to participate in the loss portfolio transfer
currently under development by the Independent Cities Risk Management Authority (ICRMA) or
some similar program whereby the CITY transfers liability for all or most of the prior claims years
to another entity, the parties will renegotiate the annual fees for the remainder of the TERM to
fairly compensate TPA for services to be provided on the claims years for which the CITY retains
liability.
E. Either party may terminate this Agreement, with or without cause, upon service of a 60-day
written notice to the other party;
F. All claims files, records, reports, data tapes, and other documents and material pertaining to the
CITY's claims shall be the sole property of the CITY and shall be delivered to the CITY or its
designee by TPA upon termination of the Agreement.
VI. INDEMNIFICATION AND INSURANCE
A. HOLD HARMLESS AND INDEMNIFICATION AGREEMENT
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As respects negligent acts, errors or omissions in the performance of professional
services, TPA shall indemnify and hold harmless the CITY, its elected officials,
officers, agents, employees and volunteers from and against any and all loss, claims,
demands, suits, actions or proceedings of any kind or nature, defense costs, liability or
consequential damages of any kind or nature arising directly out of TPA' acts, errors or
omissions in the performance of professional services under the terms of this Agreement.
As respects all acts or omissions which do not arise directly out of the performance of
professional services, TPA shall indemnify, defend and hold harmless the CITY, its
elected officials, officers, agents, employees and volunteers from and against any and all
losses, claims, demands, suits, actions or proceedings of any kind or nature, defense
costs, liability, consequential damages of any kind or nature arising out of the negligence
of the TPA or any subcontractor selected at the discretion of the TPA. This article does
not apply to losses arising from the sole negligence or willful misconduct of the CITY.
CITY agrees to indemnify, defend, and hold harmless TPA for all claims arising out of
the sole negligence or willful misconduct of the CITY, its elected officials, officers,
employees, volunteers, or agents.
B. INSURANCE AND BONDS
TPA shall procure and maintain, at its sole cost and expense, for the duration of the
contract, insurance against claims for injuries to persons or damages to property which
may arise from or in connection with the performance of the work hereunder by TPA, its
agents, representatives, employees or subcontractors. TPA shall furnish the CITY with
current evidence, acceptable to the CITY, of the required insurance.
Minimum Scope and Limits of Insurance
TPA shall maintain coverage at least as broad as:
a) Commercial General Liability Insurance. Said insurance shall have a
minimum limit of $1,000,000 combined single limit per occurrence for
bodily injury, personal injury and property damage.
b) Business Automobile Liability Insurance to include all autos owned or
hired. Said insurance shall have a minimum limit of $1,000,000
combined single limit per accident for bodily injury and property
damage.
c) Workers' Compensation Insurance as required by the Labor Code of the
State of California and Employer's Liability Insurance with a minimum
limit of $1,000,000 per accident.
d) Professional Liability Insurance to include coverage for damages or
claims for damages arising out of the rendering or failure to render any
professional services. Said insurance shall have a minimum limit of
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$1,000,000 per occurrence. TPA shall maintain policy for a minimum of
three years from the termination date of this Agreement.
e) Employee/Officers Fidelity Bond. Said bond shall have a minimum
limit of $1,000,000 and shall provide protection from acts of all
employees, including the principals of TPA.
2. Deductibles and Self-Insured Retentions
Any deductible or self-insured retention must be declared to and approved by the
CITY. At the option of the CITY, the insurer shall reduce or eliminate such
deductibles or self-insured retentions as respects the CITY, its elected officials,
officers, agents, employees and volunteers.
3. Other Insurance Provisions
The required policies are to contain or be endorsed to contain the following
provisions:
a) General Liability and Automobile Liability
i) The City of Fullerton, its elected officials, officers, employees,
agents and volunteers are to be named as additional insured as
respects liability arising out of the activities performed by or on
behalf of TPA; premises owned, leased or used by TPA; or
automobiles owned, leased, hired or borrowed by TPA. The
coverage shall contain no special limitations on the scope of
protection afforded to the CITY, its elected officials, officers,
employees, agents or volunteers.
ii) TPA' insurance coverage shall be primary insurance and non-
contributory as respects the CITY, its elected officials, officers,
agents, employees and volunteers.
iii) Any failure to comply with the reporting provisions of the
policies shall not affect coverage provided to the CITY, its
elected officials, officers, agents, employees and volunteers.
b) Workers' Compensation and Employers' Liability
The insurer shall agree to waive all rights of subrogation against the
CITY, its elected officials, officers, agents, employees and volunteers
for losses arising from work performed by TPA for the CITY.
c) Employee/Officer Fideli Bond
The CITY shall be named as a third-party beneficiary in the event funds
are inappropriately taken or alleged to have been taken from CITY's
trust account.
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d) All Covers es
Each insurance policy required herein shall be endorsed to state that
coverage shall not be suspended, voided, canceled, reduced in coverage
or in limits except after 30 days' prior written notice by certified mail,
return receipt requested, has been given to the CITY.
4. Acceptability of Insurance
Insurance shall be placed with California licensed insurers with BEST'S ratings
of no less than B+, Class X. Workers' Compensation coverage may be provided
by the State Compensation Insurance Fund.
VII. INDEPENDENT CONTRACTOR
A. TPA is an independent contractor and not an employee of the CITY, and all personnel to be
utilized by TPA in the performance of this Agreement shall be employees of TPA and not
employees of the CITY. TPA shall pay all salaries and wages, employer's social security
taxes, unemployment insurance and similar taxes relating to employees and shall be
responsible for all applicable withholding taxes.
B. This Agreement may not be sold, transferred or assigned by either party, or by operation of
law, to any other person or persons or business entity, without the other party's written
permission. Any such sale, transfer or assignment, or attempted sale, transfer or assignment
without written permission may be deemed by the other party to constitute a voluntary void.
C. The invalidity in whole or in part of any provision of this Agreement shall not void or affect
the validity of any of the other provisions of this Agreement.
D. This Agreement shall be governed by and construed in accordance with the laws of the State
of California.
E. This Agreement supersedes any and all other agreements, whether oral or written, between
the parties hereto with respect to the subject matter hereof and contains all of the covenants
and agreements between the parties with respect to said matter, and each party to this
agreement acknowledges that no representations, inducements, promises or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf of any party,
which are not embodied herein, and that any other agreement or modification of this
Agreement shall be effective only if executed in writing and signed by both the CITY and
TPA.
F. In the event any legal proceeding is instituted to enforce any term or provision of this
Agreement, the prevailing party in said legal proceeding shall be entitled to recover
attorney's fees and costs from the opposing party in an amount determined by the Court to be
reasonable.
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G. The Fullerton City Manager or his designee shall be the representative of CITY for purposes
of this Agreement and may issue all consents, approvals, directives and agreements on behalf
of the CITY, called for by this Agreement, except as otherwise expressly provided in this
Agreement.
Bernard Colen, Vice President, shall be the representative of TPA for purposes of this
Agreement and may issue all consents, approvals, directives and agreements on behalf of
TPA, called for by this Agreement, except as otherwise expressly provided in this
Agreement.
All notices and written communications sent by one party to the other (other than routine
correspondence on CITY claims which shall be sent to the Risk Management Analyst) shall
be personally delivered or sent by registered or certified U.S. Mail, postage prepaid, return
receipt requested to the following addresses indicated below:
To CITY: Director of Personnel/Risk Management
City of Fullerton
303 West Commonwealth Avenue
Fullerton, CA 92832
To TPA: Colen and Lee
Attn.: Bernard Colen
1470 South Valley Vista Drive, Suite 230
Diamond Bar, CA 91765
The effective date of any notice or written communications sent by one party to the other
shall be the date received if by personal service, or 48 hours after deposit in the U.S. Mail as
reflected by the official U.S. postmark.
Either party may change its address by giving notice in writing to the other party.
H. No waiver of any provision of this Agreement shall be effective unless in writing and signed
by a duly authorized representative of the party against whom enforcement of a waiver is
sought referring expressly to this Paragraph. The waiver of any right or remedy in respect to
any occurrence or event shall not be deemed a waiver of any right or remedy in respect to
any other occurrence or event, nor shall any waiver constitute a continuing waiver.
I. Section and subsection headings are not to be considered part of this Agreement, are
included solely for convenience, and are not intended to modify or explain or to be a full or
accurate description of the content thereof.
This Agreement may be executed in one or more counterparts by the parties hereto. All
counterparts shall be construed together and shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through
their respective authorized officers, as of the date first above written.
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AGREED TO AND ACCEPTED BY:
COLEN AND LEE
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Berrnard Colen
Vice President
Date: ~~~/
ATTEST:
Beverley White
City Clerk
APPROVED:
City attorney
~~
~ ~ I~'
~~~
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Mark Flannery
Director of Personnel/Risk Management
CITY OF FULLERTON
Chris Meyer
City Manager
Date: S~/d~
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