HomeMy WebLinkAbout13 - Claims Administration Services for the General LiaJune 28, 1999
Agenda Item # 13
CITY OF NEWPORT BEACH
ADMINISTRATIVE SERVICES DEPARTMENT
Resource ManagemenMuman Resources-Risk Management-Fiscal Services-M.I.S.-Revenue-Accounting
DATE: June 17, 1999
TO: Honorable Mayor and Members of the City Council
FROM: Lauren F. Farley, Risk Manager yf -16-
SUBJ.: Claims Administration Services for the General Liability Program
RECOMMENDATION: Approve the attached contract to provide Third Party
Administration (TPA) services for the self- insured general liability programs to
Insurance Consulting Associates (ICA). The contract is attached and has been
approved as to form by the City Attorney's office.
BACKGROUND: The City of Newport Beach has had a self- insured general
liability program for over 15 years. During this period the City has contracted
with various TPA's to handle the claims administration portion of the program.
There are several benefits of using a TPA in a self insured general liability
program and these are: minimal city staff needed to maintain the program; the
TPA can provide a higher level of claims administration service to claimants,
vendors and other involved parties alike; and the TPA possesses the technical
expertise needed to provide accurate and fair claims administration.
Our current contract is with Riveria Adjusters and the principal, Richard Effertz,
has now become associated with ICA. ICA is a northern California based
administrator who has established a southern California office in Yorba Linda.
This new arrangement will provide the City with the greater resources of a larger
claims administrator to assist the City in evaluating claim trends for loss control
and prevention purposes and fraud detection capabilities to detect and deter
fraudulent claims by assisting in the prosecution of such claims. The City
averages approximately 170 general liability claims per year.
The amount budgeted for claims administration in the 1999 /00 fiscal year is
approximately $80,000 and is sufficient to handle this claim volume unless some
catastrophic loss substantially alters this average annual claim volume in FY
99100. The fee structure in the contract is standard in the industry and staff has
also confirmed that this proposed fee structure is competitive and in the mid-
range in the industry for qualified claims administrators. This contract will begin
7/1/99 and be renewed annually based on performance.
AGREEMENT FOR GENERAL LIABILITY
CLAIMS ADMINISTRATION
THIS AGREEMENT is made and entered into by and between the CITY OF NEWPORT
BEACH, hereinafter referred to as the CITY, and INSURANCE CONSULTING ASSOCIATES,
INC., hereinafter referred to as the CLAIMS ADMINISTRATOR. CLAIMS
ADMINISTRATOR's Home Office is located at 1304 Southpoint Boulevard, Suite 250,
Petaluma, California 94954. Its Southern California Regional Office, where the CITY'S claims
will be administered, is located at 17451 Bastanchury Road, Suite 104C, Yorba Linda, California
92886.
The term of this Agreement shall be for a period commencing 12:01 a.m. on July 1, 1999
and ending 12:00 midnight on June 30, 2000.
A. Program Administration
(1) Provide professional and technical staff to perform the services as
described in this Agreement.
(2) Inform the City of changes or proposed changes in statutes, rules and
regulations and case law affecting its general liability claims program.
(3) Assist in the development of policies and procedures relating to the general
liability claims program.
(4) Provide information and guidance regarding the general liability claims
program and specified claims.
(5) Inform the city of problem areas or trends and recommend solutions.
(6) Provide copies of file correspondence and documentation as requested by
City.
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(7) Provide 24 hour on call service. This can be provided through a 24 hour
phone number, a beeper or the phone numbers of key personnel who will
be available.
(8) Attend meetings at the request of the City.
(9) Conduct seminars for department heads and/or other City staff at the
request of the City.
(10) Store all files for five years after closed.
B. Claims Administration
(1) Create and enter new claim files into the computer within 48 hours of
receipt of a loss notice from the City Clerk's Office.
(2) Review all new claims for liability.
(3) At the direction of the City, contact claimants or their attorneys within five
days of receipt of a claim and maintain appropriate contact with them until
the claim is closed.
(4) Obtain two competitive estimates of automobile damage when the loss is
under $1,000. If over this amount, engage the services of a professional
appraiser.
(5) Review the status of claims and adequacy of reserves on all active cases at
least every 90 days.
(6) Provide first Investigative Report within 30 days of receipt of claim to
Risk Manager.
(7) Provide narrative reports when recommending rejection or settlement of
a claim, when claim is going to trial, or other significant events have or will
occur. Reports must be clear and concise.
(8) Negotiate settlements within authority limits.
(9) Process payments within authority level within 14 days of receipt.
(10) Review vendors for appropriateness of work and cost- effectiveness.
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(11) All files will be diaried at appropriate intervals to allow for timely
completion of required activity.
(12) Content of all files will be in chronological order with correspondence in
the designated section.
(13) Files will clearly and concisely document action taken on the claim.
(14) Telephone calls will be returned with 24 hours. If the Administrator's staff
member called is not available within this time frame, another designated
staff member will return the call.
(15) All written communications requiring acknowledgment or action will be
responded to and mailed within ten days, or sooner if an immediate
response is required.
C. Investigations
(1) Within 10 days of receipt of claim, unless otherwise requested by Risk
Manager, take statements of facts from claimants when not represented by
an attorney. Statements will be preserved by recording or taking hand
written signed statements.
(2) Further investigate claims where the initial review indicates that it is
warranted. Further investigation may include on -site investigation,
photographs, interviewing witnesses and taking signed or recorded
statements, verification of damage or loss, taking measurements, obtaining
maps/diagrams from City, obtaining medical releases, police reports,
internal operations investigations, paramedics reports, marine department
reports, building permits, or other records as required.
(3) If an attorney is involved, direct all communication to the claimant's
attorney regarding the investigation, negotiation, and evaluation of any
claims leading to a settlement.
(4) Report bodily injury cases to the Index Bureau.
(5) Investigative assignments to outside vendors will only be made with
approval from the City.
(6) At the request of the City, investigate inverse condemnation claims.
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• D. Litigation Management
(1) Provide City Attorney's Office with a transmittal letter outlining the status
of the case, results of investigations, primary issues, requested action, a
complete copy ofthe file and any documentation within 14 days of receipt
of lawsuit with a copy to Risk Manager.
(2) Defense counsel will be monitored and evaluated based on quality of work
product, timely communication of important issues, timely filings, timely
written and telephone responses, obtaining required approval, accurate
billings and timely case resolution. Deficiencies in performance will be
reported to the City.
(3) Assist defense counsel in preparation of litigation and negotiation of
settlements at request of Risk Manager.
(4) Obtain approval from City before agreement of a settlement above
authority limit.
(5) Obtain a fully executed release on all settlements and dismissals.
(6) Attend Mandatory and Voluntary Settlement Conferences.
(7) Attend mediation or arbitrations as requested.
E. Subrogation
(1) Place the tortfeasor on notice of the City's subrogation rights.
(2) Work with the City Attorney's Office to draft the legal documents to
recover monies spent on a claim.
F. Statistical Reports
(1) Specified standard loss reports must be received within 10 days after the
end of the month/quarter, as agreed upon.
(2) Special reports must be provided as needed by the City.
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3.
4.
G. Excess Insurance Reporting is
(1) Report to the excess insurance carrier(s) in accordance with the policy
language.
(2) Seek reimbursement from the excess insurance carver for losses in excess
of the City's self- insurance retention.
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Fees will be billed according to the following schedule:
Adjusting expense
$ 51.50 per hour
Mileage
$ .40 per mile
Photographs
$ 2.00 per photo
Telephone expense
Included
Photocopies
$ .20 per page
Audio cassettes
$ 2.50 each
Word processing
$ 4.25 per page
Courier / Fed Ex
As incurred
Office expense
Included
File set up fee
$ 20.00 each
Outside expenses
As incurred .
Loss run
$ 20.00 life of claim
Index Bureau request .
$ 6.00 each
Specially requested computer services and customized ICA prevailing
reports (subject to quote at time of request) market rate
The cost to convert the computer loss data from the prior administrator will be a minimum
of $900.00, to a maximum (not to exceed) $2,000.00.
This Agreement may be terminated without cause at any time by submitting 60 days prior
written notice of intention to terminate; provided, however, that should the City determine
not to renew this Agreement on any annual renewal date, no advance notice of termination
need be given. The cost associated with the transfer will be reimbursed as negotiated
between the parties and only as agreed upon in advance by the CITY. The CLAIMS
ADMINISTRATOR shall not be required to perform any of its services beyond the date
of ternination and all fees owed to the CLAIMS ADMINISTRATOR by the City will be
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paid on a pro -rata basis up to the date of termination. Such notices of intent to terminate
shall be sent to the parties addressed as follows:
CITY:
City of Newport Beach
Attention Risk Manager
P.O. Box 1768
Newport Beach, CA 92658 -8915
CLAIMS ADMINISTRATOR:
Insurance Consulting Associates, Inc.
P.O. Box 750849
Petaluma, CA 94975 -0849
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Before performing SERVICES, CLAIMS ADMINISTRATOR will provide a copy of a
Certificate of Insurance for the following:
A. Workers Compensation Insurance with a minimum of $1,000,000 in
employer liability. Statutory limits, as required by the Labor Code of the State of
California.
B. Commercial general and automobile liability insurance with a minimum of
$1,000,000, combined single limit per occurrence, to include premises operations;
independent contractual; broad -form property damage endorsement; and vehicles
owned, non -owned and hired.
C. Professional liability/errors and emissions insurance with a minimum of
$1,000,000 per occurrence, to include coverage for all errors and omissions which
may result in financial loss to the City.
D. Fidelity bond with a minimum limit of $500,000 per occurrence, applied
exclusively to the City.
E. During the tam ofthe Agreement, the CLAIMS ADMINISTRATOR shall
purchase and provide copies of the Certificates of Insurance and maintain insurance
coverage that is acceptable to the City. Endorsements of insurance will be required,
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naming the City as additional insured on all policies; and providing the City with a
30 -day written notice of cancellation, material change, or non - renewal.
F. City shall not be liable to CLAIMS ADMINISTRATOR for personal injury
or property damage sustained by CLAIMS ADMINISTRATOR in the performance
of this Agreement, whether caused by CLAIMS ADMINISTRATOR, its officers,
agents or employees, or by any third person.
G. CLAIMS ADMINISTRATOR agrees to defend any legal action commenced
against City caused directly or indirectly by wrongful or negligent acts of CLAIMS
ADMINISTRATOR, CLAIMS ADMINISTRATOR' officers, employees, agents or
others engaged by CLAIMS ADMINISTRATOR and to indemnify City against any
loss, liability, cost or damage, including attorney's fees resulting therefrom.
H. City agrees to defend any legal action commenced against CLAIMS
ADMINISTRATOR caused directly or indirectly by wrongful or negligent acts by
City officers employees, agents or others engaged by City, and to indemnify
CLAIMS ADMINISTRATOR against any loss, liability, cost or damage, including
attorney's fees resulting therefrom.
I. CLAIMS ADMINISTRATOR agrees that in the event of loss due to any of
the perils for which it has agreed to provide insurance. CLAIMS
ADMINISTRATOR hereby grants to the City on behalf of any insurer providing
insurance to either CLAIMS ADMINISTRATOR herein, a waiver of any right of
subrogation which any insurer of said CLAIMS ADMINISTRATOR may acquire
against the City by virtue of the payment of any loss under such insurance.
J. Any controversy arising out of this Agreement between the parties shall be
resolved by non - binding mediation under the provisions of California law. In the
event either party incurs attorney fees, court costs and other expenses in an action
brought to enforce rights hereunder, the prevailing parties shall be paid by the other
party a reasonable amount therefore to be fixed by the court in any such action.
K. CLAIMS ADMINISTRATOR will be required to obtain, and maintain in full
force and effect during the term of the Agreement, a valid City of Newport Beach
Business License.
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6. AUDIT
CLAIMS ADMINISTRATOR agrees to cooperate with the City in making any and
all claim files and records available to the City for audit by City or City' appointed
representatives.
A. Ail claim files, records, reports and other documents and materials pertaining
to the City' claims shall be the property of the City and shall be delivered to City,
or its designee, by CLAIMS ADMINISTRATOR, upon termination of this
agreement. CLAIMS ADMINISTRATOR shall also provide computer tapes
containing all computerized data pertaining to the City and their claims, together
with the format thereof upon such termination.
B. The City reserves the right to inspect and audit CLAIMS
ADMINISTRATOR's records relevant to the City' account at any time upon giving
reasonable notice. City will provide necessary information pertaining to claims
reported for adjustment under the provisions of any Agreement.
S. PROHIBITION AGAINST TRANSFERS
CLAIMS ADMINISTRATOR shall not assign, sublease, hypothecate, or transfer
this Agreement or any interest therein directly, or indirectly, by operation of law or
other -wise. Any attempt to do so without said consent shall be null and void; and
any assignee, sublessee, hypothecate or transferee shall acquire no right or interest
by reason of such attempted assignment, hypothecation or transfer.
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A waiver by the City of any breach of any term, covenant, or condition contained
herein shall not be deemed to be a waiver of any subsequent breach of the same or
any other term, covenant, or condition contained herein whether of the same or a
different character.
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10. FN F. CONTRACT
This instrument contains the entire Agreement between the parties relating to the
rights herein granted and the obligations herein assumed. Any oral representations
or modifications concerning this instrument shall be of no force or effect. Such
representations or modification shall be made in writing.
If any provision of this Agreement is held by a competent court to be invalid, void
or unenforceable, the remaining provisions shall nevertheless continue in full force
and effect. The validity of this Agreement and of any of its terms and provisions
shall be interpreted pursuant to the Laws of the State of California.
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The relationship of CLAIMS ADMINISTRATOR and the City established by this
agreement is that of independent contractors, and nothing contained in this
agreement shall be construed to establish an employer /employee relationship or to
constitute the parties as partners, joint ventures, co- owners or otherwise as
participants in a joint and common undertaking. CLAIMS ADMINISTRATOR, its
agents and employees are representatives of the City only for the purpose of
administering the City's general liability claims program as set forth in this
agreement, and they have no power or authority as agent, employee, or in any other
capacity to represent, act for, bind or otherwise crease or assume any obligation on
behalf of the City for any purpose whatsoever, except as specifically required to
perform CLAIMS ADMINISTRATOR's obligations under this Agreement.
The City will maintain final approval in the selection of staff assigned to their
account and the right to request new staff if the service is unacceptable to the City
for any reason.
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14. VENDORS
All SERVICES provided by outside providers/vendors shall be approved by the City
in writing and billed at actual cost with no "mark -up" by CLAIMS
ADMINISTRATOR
CLAIMS ADMINISTRATOR shall treat information, reports and analyses obtained
or developed pursuant to this Agreement as being confidential. Prior written
consent from the City shall be required before any information, in any format, is
disclosed to any third party. It is further agreed that Administrator shall produce,
maintain and dispose of all such information reports and analyses in a manner to
guarantee reasonable safeguards to such confidentiality.
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CLAIMS ADMINISTRATOR will advise the City on any material problems or need
for improvements in any matter related to this agreement, including advice relating
to changes and proposed changes affecting the City's General Liability program.
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IN WITNESS WHEROF, the parties hereto have caused this Agreement to be executed in
Orange County, California as of June 16, 1999.
CITY OF NEWPORT BEACH, A Municipal
Corporation
La
Homer Boudau, City Manager
City of Newport Beach
APPROVED AS TO FROM:
DATED: ;
By:
Rdb�m`Clauson, Assistant City Attorney
City of Newport Beach
INSURANCE CONSULTING
ASSOCIATES, INC.
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