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Home My WebLink About25C - AGMT TPA CLAIMS SVCSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: SEPTEMBER 3, 2019 TITLE: APPROVE THE FIRST AMENDMENT TO THE AGREEMENTS WITH ADMINSURE, INC., FOR THIRD PARTY ADMINISTRATOR CLAIMS SERVICES ADDITIONAL ANNUAL FEES FOR GENERAL LIABILITY OF $93,360 AND WORKERS' COMPENSATION CLAIMS OF $49,800 (STRATEGIC PLAN NO. 7; 6) CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 1s' Reading ❑ Ordinance on 20d Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager to execute the attached first amendments to the agreements with AdminSure, Inc., to provide an increased scope of services to the City's self -insured third party claims administration and management for General Liability and Workers' Compensation with term of agreements remaining from September 5, 2018 through August 31, 2021 which include two, two-year options for renewal. Additional amount of $7,780 per month for General Liability and $4,150 per month for Workers' Compensation, subject to non -substantive changes approved by the City Manager and City Attorney. This increase annualized is $49,800 for Workers' Compensation and $93,360 for General Liability. The City is self -insured for General Liability and Workers' Compensation with excess coverage previously through participation in a Joint Powers Agreement with the Big Independent Cities Excess Pool (BICEP). For Workers' Compensation, the City was self -insured and self-administered for claims management and processing and had excess coverage through the California State Association of Counties - Excess Insurance Authority (CSAC-EIA). Due to the dissolution process of BICEP, on July 2, 2019, the City Council approved that the City become a member in excess coverage pool and ancillary insurance coverages with Independent Cities Risk Management Authority (ICRMA). Through this change, the City will realize a savings in Fiscal Year 2019/2020 of approximately $1,000,000. Prospectively, all claims and reporting will be processed with ICRMA by the City's current Third Party Administrator, AdminSure. However, the dissolution of BICEP requires additional and duplicative monitoring, processing and reporting throughout the dissolution process which could extend for several years, dependent upon the closure of each outstanding claim from each Member City or an alternative claim resolution for the remaining open claims. 25C-1 First Amendment AdminSure, Inc. September 3, 2019 Page 2 Due to the increase in scope to the current AdminSure agreement, staff is recommending that City Council authorize the increase of the current monthly rate for Workers' Compensation administration, beginning September 1, 2019 through August 31, 2020, from $42,125 to $47,539, which includes the 3% increase as approved in the original agreement, and General Liability administration from $14,600 to $22,818 monthly, also inclusive of the 3% annual increase. Subsequent years are shown in the table below. The amended scope is due in part, to the enhanced ongoing obligations of the City of Santa Ana under the terms and conditions of the documents that describe BICEP's authority to serve as a risk sharing pool among its Member public agencies. Additionally, current reporting will need to be duplicative in nature but will entail separating the reporting according to the applicable pool coverage terms and differing Self Insured Retentions (SIR) for applicable periods, various insurance carriers, as well as State and Federal reporting requirements. 1. BICEP is required to retain an actuary to prepare a report on each Member's Risk Sharing Premium based on loss rate, if any future Premiums are to be established. In accordance with BICEP's Liability Program, Art. 4.1.2.2; Exhibit A (I.) (A), BICEP is requesting quarterly electronic submittals of all claims data for purposes of conducting actuarial analyses and reinsurance for each Coverage Period for which the City is a participant. 2. In addition to scope of services in the Agreement with TPA regarding requirements by and to BICEP, the TPA will provide all requirements under the ICRMA Agreement, including but not limited to: a. Participate with regular submissions of all qualifying claims to ICRMA Claims Committee and Litigation Manager. b. Observe all claims reporting requirements under ICRMA Liability Program Memorandum of Coverage. c. Follow all State reporting requirements for ICRMA & BICEP The current Agreement defines Consultant's Obligations as follows: "The Consultant represents that it employs, or will employ, at its own expense, all personnel required for the satisfactory performance of the Services." "Consultant shall furnish, at its own expense, all materials, equipment, and personnel necessary to carry out the terms of this Agreement." The increased workload is different and larger in scope than that described and discussed from the original RFP requirements thus increasing the amount of materials, equipment, personnel that the Consultant is obligated to provide under the current rate of compensation. 25C-2 First Amendment AdminSure, Inc. September 3, 2019 Page 3 Fee Structure Comparison: Oriainal Aareement., 91112018 - 8130-2019 AdminSure, Inc. - Fee Structure Year 1 (Completed -No Adjustment) Year 2 Year Optional Year Optional Year 5 Optional Year 6 Optional Year Workers' Compensation Monthly Fee Workers' Compensation Annual Fee General Liability Monthly Fee General Liability i Annual Fee $ 42,125 $ 505,500 $ 14,600 $ 175,200 $ 43,389 $ 520,665 $ 15,038 $ 180,456 $ 44,690 $ 536,285 $ 15,489 $ 185,870 $ 46,031 $ 552,373 $ 15,954 $ 191,446 $ 47,412 $ 568,945 $ 16,432 $ 197,189 $ 48,834 $ 586,012 $ 16,925 $ 203,100 $ 50,299 $ 603,593 $ 17,433 $ 209,193 PROPOSED: EFFECTIVE 91112019 AdminSure, Inc. - Fee Structure Year 1 (Completed -No Adjustment) Year Year Optional Year Optional Year 5 Optional Year 6 Optional Year Workers' Compensation Monthly Fee $ 42,125 $ 47,539 $ 48,965 $ 50,434 $ 51,947 $ 53,505 $ 55,110 Workers' Compensation Annual Fee General Liability Monthly Fee General Liability Annual Fee $ 505,500 $ 14,600 $ 175,200 $ 570,465 $ 22,818 $ 273,816 $ 587,579 $ 23,503 $ 282,030 $ 605,206 $ 24,208 $ 290,491 $ 623,363 $ 24,934 $ 299,206 $ 642,063 $ 25,682 $ 308,182 $ 661,325 $ 26,452 $ 317,428 PROPOSED: EFFECTIVE 91112019 Increase Difference Including Agreement AdminSure, Inc. - Fee Structure Year 1 (Completed -No Adjustment) Year Year Optional Year Optional Years Optional Year 6 Optional Year Annual Increase and Additional Scope Increase Workers' Compensation Monthly Fee Workers' Compensation Annual Fee General Liability Monthly Fee General Liability Annual Fee $ $ $ $ $ 4,150 $ 49,797 $ 7,780 $ 93,360 $ 4,275 $ 51,299 $ 8,014 $ 96,162 $ 4,403 $ 52,834 $ 8,254 $ 99,043 $ 4,535 $ 54,419 $ 8,502 $ 102,022 $ 4,671 $ 56,051 $ 8,757 $ 105,083 $ 4,811 $ 57,733 $ %020 $ 108,235 25C-3 First Amendment AdminSure, Inc. September 3, 2019 Page 4 This amendment will not alter any other terms or conditions of the current Agreements, A-2018- 210 and A-2018-211. Staff recommends that City Council authorize the City Manager to amend the current agreements with AdminSure, Inc. to provide increased scope for TPA services for General Liability and Workers' Compensation claims processing. Documents will be reviewed by the City Attorney's Office before execution by the City Manager or her designee. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's effort to meet Goal #7 — Team Santa Ana, Objective #6, Provide a positive workplace environment that supports the health of its employees and celebrates its success. FISCAL IMPACT Workers' Compensation and General Liability TPA administrative services are currently budgeted under Contract Services in Fiscal Year 2019-20 Budget. Funds are available in the Human Resources Department / Risk Management Division Budget for original agreement fees (initial Workers' Compensation contract agreement fee for a total of $570,465 for FY 2019-20 and initial General Liability contract agreement fee for a total of $273,816 for FY 2019-20) as well as the increased fee for increased scope of services to the City's self -insured third party claims administration and management as follows: Fiscal Year Accounting Unit— Fund Accounting Unit, Account Amount Account # Description Description Workers' Workers'Compensation, FY 2019-20 08209054-62302 Compensation Contracted Vendor Personnel $49,800 Services Liabiltiy & Liability & Property Insurance, FY 2019-20 08009051-62302 Property Contracted Vendor Personnel $93,360 Insurance Services Total Additional Contract $143,160 Amount No additional :)riations are being requested Steven V. PharAl Executive Direct r Human Resources Agency SVP/dsl APPROVED AS TO FUNDS AND ACCOUNTS: Kat ryn Do ns, CPA Executive Director Finance and Management Services Agency Exhibits: 1. First Amendment to Agreements No. A-2018-210 2. First Amendment to Agreements No. A-2018-211 25C-4 EXHIBIT 1 FIRST AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT FOR THIRD PARTY WORKERS' COMPENSATION CLAIMS ADMINISTRATION THIS FIRST AMENDMENT to the above -referenced agreement is entered into on September 3, 2019, by and between AdminSure, Inc. ('Administrator'), and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California ("City"). RECITALS A. The parties entered into Agreement No. A-2018-210, dated September 4, 2018, by which Administrator agreed to provide claims administration services for the City's workers' compensation self-insurance program ("Agreement"). B. The Agreement remains in effect for a three-year term through August 31. 2021, with provision for extension, and the parties now wish to expand the scope of work and increase the annual amount to be expended under the Agreement in consideration of the expanded scope. The Parties therefore agree: Section 6, Claims Administration, is amended to include the following additional services: Where applicable, the Independent Cities Risk Management Association ("ICRMA') shall be included relative to any obligation or duty by the Administrator in Section 6 of the Agreement, including without limitation claims administration, notification, monitoring, reporting, litigation management, and disclosure. 2. Section 12, Consideration, is amended to include the following monthly fee structure effective September 1, 2019. All other fees, if any, shall remain unchanged. AdminSure, Inc. — Fee Structure Workers' Workers' Compensation Compensation Monthly Fee Annual Fee Year (Completed -No Adjustment) Year Year 3 Optional Year Optional Year 5 Optional Year 6 Optional Year? $ 42,125 505,500 $ 47,539 $ 570,465 $48,965 $ 587,579 $ 50,434 $ 605,206 $ 51,947 $ 623,363 $ 53,505 $ 642,063 $ 55,110 $ 661,325 3. Except as modified by this First Amendment, all terms and conditions of the Agreement shall remain in full force and effect. #6970v1 25C-5 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement on the date and year first written above. ATTEST DAISY GOMEZ Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO, City Attorney By:. HN M. FUNK Assistant City Attorney RECOMMENDED FOR APPROVAL Steven V.Pham Executive Director Human Resources Agency 969700 CITY OF SANTA ANA KRISTINE RIDGE City Manager ADMINSURE, INC. 4,r ALITHIAVA G-FLORES President 25C-6 EXHIBIT 2 FIRST AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT FOR THIRD PARTY GENERAL LIABILITY CLAIMS ADMINISTRATION THIS FIRST AMENDMENT to the above -referenced agreement is entered into on September 3, 2019, by and between AdminSure, Inc. ("Administrator"), and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California ("City"). RECITALS A. The parties entered into Agreement No. A-2018-211, dated September 4, 2018, by which Administrator agreed to provide claims administration services for the City's general liability claims ("Agreement"). B. The Agreement remains in effect for a three-year term through August 31, 2021, with provision for extension, and the parties now wish to expand the scope of work and increase the annual amount to be expended under the Agreement in consideration of the expanded scope. The Parties therefore agree: 1. Section 2, Description of Services, is amended to include the following additional services: Where applicable, the Independent Cities Risk Management Association ("ICRMA") shall be included relative to any obligation or duty by the Administrator in Section 2 of the Agreement, including without limitation claims administration, litigation management, and reporting of claims activity. 2. Section 6, Term, is amended to include the following monthly fee structure effective September 1, 2019. All other fees, if any, shall remain unchanged. AdminSure, Inc. —Fee 5tructure General General Liability Liability Monthly Fee Annual Fee Year (Completed -No Adjustment) Year Year Optional Year 4 Optional Year Optional Year 6 Optional Year 7 _14,600 1 $ _ 175,200 $ 22,818 $ 273,816 $ 23,503 $ '282,030 $ 24,208 $ 290,491 $ 24,934 $ 299,206 $ 25,682 $ 308,182 I $ 26,452 $ 317,428 3. Except as modified by this First Amendment, all terms and conditions of the Agreement shall remain in full force and effect. #6977v1 25C-7 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement on the date and year first written above. ATTEST DAISY GOMEZ Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO, City Attorney By:. HN M. FUNK Assistant City Attorney RECOMMENDED FOR APPROVAL Steven V. Pham Executive Director Human Resources Agency #6977v1 CITY OF SANTA ANA KRISTINE RIDGE City Manager ADMINSURE, INC. 4ITHIA VAR AS-FLORES President 25C-8