HomeMy WebLinkAbout16 - Workers Compensation TPA ServicesCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No, 16
December 8, 2009
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources, Lauren Farley, Risk Manager, (949) 644 -3302,
IfarleyOnewpodbeachca.gov and Terri L. Cassidy, Human Resources
Director, (949) 644 -3303, tcassidy(a)newportbeachca.gov
SUBJECT: Contract for Workers Compensation Third Party Administration
(TPA) Services
Issue:
Should the City Council approve an annual expenditure of $312,000 for Workers'
Compensation Third Party Administration services for the period of January 1, 2010
through December 31, 2010?
Recommendation:
Authorize the Mayor to approve the attached contract (Attachment A) for Third Party
Administrator (TPA) services with CorVel Corporation.
Backaround:
The attached contract (Attachment A) reflects a proposed 15% increase to the existing
contract amount of $272,740. The City of Newport Beach also has the right, at its sole
discretion, to extend the Agreement by exercising options per Exhibit B, to extend the
contract an additional 4 years. Exhibit B also offers a consideration for a reduction in
fees, should the City's claims count decrease more than twenty percent.
The City of Newport Beach is authorized by the State of California to be a self- insured
public entity for workers compensation. However, the City is not authorized to self -
administer its workers compensation claims and must contract with a qualified third
party administrator (TPA) to perform this function. Newport Beach continues in a
longstanding partnership with the City of Costa Mesa to jointly contract for TPA services
in order to secure a "dedicated" claims unit for continuity of claims adjusting, higher
level of internal customer satisfaction and the ability to assist in improving the statistics
and administration of the Cities' program. The advantage of a dedicated unit is that the
Contract for Workers Compensation Third Party Administration (TPA) Services
December 8, 2009
Page 2
cities are included in the selection of staff to be assigned our caseloads. This ensures
that our employees, supervisors and managers have experienced personnel handling
the complex issues that occur with a workers compensation claim that could go on for a
significant part of an employee's career. Workers compensation is a very challenging
program, changed frequently by legislation and case law. Costa Mesa and Newport
Beach have had this arrangement for 15 years and it works very effectively.
Request for Proposal (RFP) Process & Analvsis:
The Cities jointly conducted a comprehensive formal Request for Proposal (RFP)
process for services, which began in August 2009 and concluded in November with final
selection and price negotiations.
The RFP was sent to 40 recipients and 12 companies responded. A confidential panel
of five (5) raters comprised of three representatives from the Cities (two from Costa
Mesa and one from Newport Beach) and two outside public agency workers
compensation professionals evaluated the qualified ten (10) responses and rated the
proposals in the areas of Method of Approach, Price Proposal, Support Services,
Qualifications and Experience. The annual price range proposed by the vendors was
between $295,794 and $434,328 annually. The rating sheets were consolidated and
the top six vendors were invited for oral interviews with the panel. The qualified vendor
fees ranged from $306,100 to $365,939 annually. Two vendors were called back for a
second interview and were provided the opportunity to submit a best and final offer. The
current administrator, CorVel Corporation, presented the best qualified proposal at the
best price for the continued administration of the City's workers' compensation program
at $312,000. The competitor's proposal was $333,416.
CorVel Corporation has demonstrated their ability to handle the City's program with
efficiency and professionalism. Program highlights include: a twenty percent reduction
in the total incurred values of Newport Beach claims, as compared to the 2007/2008
program year; the claims staff has continued an above average closing ratio since the
2005/2006 program year; and CorVel has recovered $460,982 in 2009 from our excess
workers compensation insurance carriers on claims that have exceeded the City's Self -
Insured Retention (SIR) limits. CorVel Corporation has been successful at hiring and
retaining claims staff that is knowledgeable and experienced in adjusting claims within
the rapidly changing workers compensation regulations. Newport Beach relies on our
claims unit to interact with management and employees in explaining the complicated
laws surrounding the benefits that are mandated by the State of California and ensuring
that those benefits are provided timely to avoid penalties. These are some of the key
qualities that are necessary to maintain a successful workers compensation program
and were critical components considered in making a final vendor selection.
Contract for Workers Compensation Third Party Administration (TPA) Services
December 8, 2009
Page 3
When Council approved an extension of the CorVel contract last March 2009, an
additional partial claims examiner was added to the unit to handle the increased volume
of future medical maintenance claims. This was the result of a recommendation from
an independent auditor. The City negotiated to start with a .30 FTE examiner for six
months and to reevaluate this addition at our annual stewardship meeting with CorVel in
September 2009. At this meeting, CorVel advised that the volume of maintenance
claims required a .50 FTE examiner and since the City was actively engaged in an RFP
process, they agreed to absorb the price difference for the balance of the contract
period. Due to the continued increase in maintenance claims, as depicted in the chart
below, there remains an ongoing need for the use of a .50 FTE examiner. The increase
in maintenance claims continues to be a result of employees not settling their claims
upon retirement; the continued employment of employees whose claims are stipulated
with awards for future medical care and cannot be settled until they retire; the effects of
the rising cost of health care; and the downturn in the economy.
Claims Reported
FY 05 -06
FY 06-o7
FY -07 -08
FY 08-09
As of
1112009
Number of Open Indemnity Claims in FY
166
177
166
182
166
Number of Open Maintenance Claims in FY
117
94
102
135
143
Number of Open Medical Only Claims in FY
23
28
36
14
13
Overall the stewardship report revealed downward trends for the City in claim incident
rate, loss rate and average cost per claim of $17,086 as compared to the national
average of $56,805. The 32% lower cost per claim can be attributed to the dedicated
claims unit providing a continuity of claims adjusting, high customer satisfaction of
employees with the medical care . they receive, effects of the early return -to -work
program and the utilization of the claims administrator in the long range management of
the City's workers compensation program.
The proposal for the new contract from CorVel beginning January of 2010 has the
following dedicated claims personnel for the City: .65 FTE Claims Supervisor, 1.0 FTE
Senior Claims Specialist, .50 Claims Examiner and .65 FTE Claims Assistant for a total
of 2.80 FTEs. Costa Mesa has. the remaining Claims Supervisor and Claims Assistant
FTEs in their contract, which results in a full claims unit configuration of 4.50 FTEs. The
City negotiated a zero (0 %) increase for the second year and a subsequent 3% on the
third year.
Contract for Workers Compensation Third Party Administration (TPA) Services
December 8, 2009
Page 4
Funding Availability:
Funds which cover the recommended expenditure are in the Internal Services Budget —
Insurance Reserve Fund 6010 -8612 and are sufficient to cover the increase for the
remainder of this fiscal year.
Pr 711? red by
Sheri Anderson, Sr. HR Analyst
Submitted
H Director
Lauren Farley, Risk Manager
ATTACHMENT A
PROFESSIONAL SERVICES AGREEMENT WITH
CORVEL CORPORATION
FOR WORKERS COMPENSATION CLAIMS ADMINISTRATION SERVICES
THIS AGREEMENT is made and entered into as of this 1 st day of January, 2010, by
and between the CITY OF NEWPORT BEACH, a Municipal Corporation ( "City "), and
CORVEL COPORATION, a Delaware Corporation, whose address is 10750 Fourth
Street, Suite 100, Rancho Cucamonga, California 91730 ( "Consultant "), and is made
with reference to the following:
RECITALS
A. City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on its business as it is now being
conducted under the statutes of the State of California and the Charter of City.
B. City is the City is required under state law to contract with a qualified third party
administrator (TPA) to administer City's Worker's Compensation claims. The
City of Newport Beach partnered with the City of Costa Mesa in February 1995 to
jointly contract for TPA services to secure a dedicated claims unit for the
purposes of continuity of claims adjusting and customer satisfaction.
C. City desires to engage Consultant to administer City's Worker's Compensation .
claims as further described in the scope of services attached hereto as Exhibit A
( "Project ").
D. Consultant possesses the skill, experience, ability, background, certification and
knowledge to provide the services described in this Agreement.
E. The principal member[s] of Consultant for purposes of Project, shall be Claims
Manager, Alan Schiller.
F. City has formally solicited and received a proposal from Consultant, has
reviewed the previous experience and evaluated the expertise of Consultant, and
desires to retain Consultant to render professional services under the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as
follows:
TERM
The term of this Agreement shall commence on the above written date, and shall
terminate on the 315` day of December, 2012, unless terminated earlier as set forth herein.
The City, in and at its sole discretion, may choose to extend the Agreement for two (2)
additional one (1) year terms unless either party provides thirty (30) days written notice
that the Agreement shall terminate at the end of any term.
2. SERVICES TO BE PERFORMED
Consultant shall diligently perform all services described in the Scope of Services
attached hereto as Exhibit A and incorporated herein by reference. The City may elect
to delete certain tasks of the Scope of Services at its sole discretion.
3. TIME OF PERFORMANCE
Time is of the essence in the performance of services under this Agreement and the
services shall be performed to completion in a diligent and timely manner. The failure
by Consultant to perform the services in a diligent and timely manner may result in
termination of this Agreement by City.
4. COMPENSATION TO CONSULTANT
City shall pay Consultant for the services on a flat rate quarterly basis in accordance
with the provisions of this Section and the Schedule of Billing Rates attached hereto as
Exhibit B and incorporated herein by reference. Consultant's compensation for all work
performed in accordance with this Agreement, including all reimbursable items and
subconsultant fees, shall not exceed Three Hundred Twelve Thousand Dollars and
no /100 ($312,000), per year, for services provided for fiscal years 2010 and 2011
( "years 1 and 2 "). Compensation for all work performed for services provided for fiscal
year 2012 ( "year 3 ") shall not exceed Three Hundred Twenty One Thousand Three
Hundred Sixty Dollars and 00/100 ($321,360).
Total compensation for the initial term of the Agreement shall not exceed Nine Hundred
Forty Five Thousand Three Hundred Sixty Dollars and 00/100 ($945,360). No billing
rate changes shall be made during the term of this Agreement without the prior written
approval of City.
4.1 Consultant shall submit quarterly invoices to City describing the work
performed the preceding quarter. City shall pay Consultant no later than
thirty (30) days after approval of the quarterly invoice by City staff.
4.2 City shall reimburse Consultant only for those costs or expenses
specifically approved in this Agreement, or specifically approved in writing
in advance by City.
4.3 Consultant shall not receive any compensation for Extra Work performed
without the prior written authorization of City. As used herein, "Extra
Work" means any work that is determined by City to be necessary for the
proper administration of workers compensation claims, but which is not
included within the Scope of Services and which the parties did not
reasonably anticipate would be necessary at the execution of this
Agreement.
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5. PROJECT MANAGER
Consultant shall designate a Claims Manager, who shall coordinate all phases of the
Project. This Claims Manager shall be available to City at all reasonable times during
the Agreement term. Consultant has designated Alan Schiller to be its Claims Manager.
Consultant shall not remove or reassign the Claims Manager or any personnel listed in
Exhibit B or assign any new or replacement personnel to the Project without the prior
written consent of City. City's approval shall not be unreasonably withheld with respect
to the removal or assignment of non -key personnel.
Consultant, at the sole discretion of City, shall remove from the Project any of its
personnel assigned to the performance of services upon written request of City.
Consultant warrants that it will continuously furnish the necessary personnel to
complete the Project on a timely basis as contemplated by this Agreement, including a
dedicated claims unit with one (1) claims supervisor, two and one -half (2.5) claims
examiners and one (1) claims assistant.
6. ADMINISTRATION
This Agreement will be administered by the Human Resources Department. The Risk
Manager shall be the Project Administrator and shall have the authority to act for City
under this Agreement. The Project Administrator or his/her authorized representative
shall represent City in all matters pertaining to the services to be rendered pursuant to
this Agreement.
7. STANDARD OF CARE
7.1 All of the services shall be performed by Consultant or under Consultant's
supervision. Consultant represents that it possesses the professional and
technical personnel required to perform the services required by this
Agreement, and that it will perform all services in a manner commensurate
with community professional standards. All services shall be performed
by qualified and experienced personnel who are not employed by City, nor
have any contractual relationship with City. By delivery of completed
work, Consultant certifies that the work conforms to the requirements of
this Agreement and all applicable federal, state and local laws and the
professional standard of care.
7.2 Consultant represents and warrants to City that it has, shall obtain, and
shall keep in full force in effect during the term hereof, at its sole cost and
expense, all licenses, permits, qualifications, insurance and approvals of
whatsoever nature that is legally required of Consultant to practice its
profession. Consultant shall maintain a City of Newport Beach business
license during the term of this Agreement.
8. HOLD HARMLESS
To the fullest extent permitted by law, Consultant shall indemnify, defend and hold
harmless City, its City Council, boards and commissions, officers, agents, volunteers,
and employees (collectively, the "Indemnified Parties ") from and against any and all
iy
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claims (including, without limitation, claims for bodily injury, death or damage to
property), demands, obligations, damages, actions, causes of action, suits, losses,
judgments, fines, penalties, liabilities, costs and expenses (including, without limitation,
attorney's fees, disbursements and court costs) of every kind and nature whatsoever
(individually, a Claim; collectively, "Claims'), which may arise from or in any manner
relate (directly or indirectly) to any breach of the terms and conditions of this
Agreement, any work performed or services provided under this Agreement including,
without limitation, defects in workmanship or materials or Consultant's presence or
activities conducted on the Project (including the negligent and/or willful acts, errors
and /or omissions of Consultant, its principals, officers, agents, employees, vendors,
suppliers, companies, subcontractors, anyone employed directly or indirectly by any of
them or for whose acts they may be liable or any or all of them).
Notwithstanding the foregoing, nothing herein shall be construed to require Consultant
to indemnify the Indemnified Parties from any Ciaim arising from the sole negligence or
willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be
construed as authorizing any award of attorney's fees in any action on or to enforce the
terms of this Agreement. This indemnity shall apply to all claims and liability regardless
of whether any insurance policies are applicable. The policy limits do not act as a
limitation upon the amount of indemnification to be provided by the Consultant.
9. INDEPENDENT CONTRACTOR
It is understood that City retains Consultant on an independent contractor basis and
Consultant is not an agent or employee of City. The manner and means of conducting
the work are under the control of Consultant, except to the extent they are limited by
statute, rule or regulation and the expressed terms of this Agreement. Nothing in this
Agreement shall be deemed to constitute approval for Consultant or any of Consultant's
employees or agents, to be the agents or employees of City. Consultant shall have the
responsibility for and control over the means of performing the work, provided that
Consultant is in compliance with the terms of this Agreement. Anything in this
Agreement that may appear to give City the right to direct Consultant as to the details of
the performance or to exercise a measure of control over Consultant shall mean only
that Consultant shall follow the desires of City with respect to the results of the services.
10. COOPERATION
Consultant agrees to work closely and cooperate fully with City's designated Project
Administrator and any other agencies that may have jurisdiction or interest in the work
to be performed. City agrees to cooperate with the Consultant on the Project.
11. CITY POLICY
Consultant shall discuss and review all matters relating to policy and Project direction
with City's Project Administrator in advance of all critical decision points in order to
ensure the Project proceeds in a manner consistent with City goals and policies.
12. INSURANCE
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Without limiting Consultant's indemnification of City, and prior to commencement of
work, Consultant shall obtain, provide and maintain at its own expense during the term
of this Agreement, a policy or policies of liability insurance of the type and amounts
described below and in a form satisfactory to City.
A. Certificates of Insurance. Consultant shall provide certificates of
insurance with original endorsements to City as evidence of the insurance
coverage required herein. Insurance certificates must be approved by
City's Risk Manager prior to commencement of performance or issuance
of any permit. Current certification of insurance shall be kept on file with
City at all times during the term of this Agreement.
B. Signature. A person authorized by the insurer to bind coverage on its
behalf shall sign certification of all required policies.
C. Acceptable Insurers. All insurance policies shall be issued by an
insurance Consultant currently authorized by the Insurance Commissioner
to transact business of insurance in the State of California, with an
assigned policyholders' Rating of A (or higher) and Financial Size
Category Class VII (or larger) in accordance with the latest edition of
Best's Key Rating Guide, unless otherwise approved by the City's Risk
Manager.
D. Coverage Requirements.
Workers' Compensation Coverage. Consultant shall maintain
Workers' Compensation Insurance and Employers Liability
Insurance for his or her employees in accordance with the laws of
the State of California. In addition, Consultant shall require each
subcontractor to similarly maintain Workers' Compensation
Insurance and Employer's Liability Insurance in accordance with
the laws of the State of California for all of the subcontractor's
employees. Any notice of cancellation or non - renewal of all
Workers' Compensation policies must be received by City at least
thirty (30) calendar days (10 calendar days written notice of non-
payment of premium) prior to such change. The insurer shall agree
to waive all rights of subrogation against City, its officers, agents,
employees and volunteers for losses arising from work performed
by Consultant for City.
ii. General Liability Coverage. Consultant shall maintain commercial
general liability insurance in an amount not less than one million
dollars ($1,000,000) per occurrence for bodily injury, personal
injury, and property damage, including without limitation,
contractual liability. If commercial general liability insurance or
other form with a general aggregate limit is used, either the general
aggregate limit shall apply separately to the work to be performed
under this Agreement, or the general aggregate limit shall be at
least twice the required occurrence limit.
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iii. Automobile Liability Coverage. Consultant shall maintain
automobile insurance covering bodily injury and property damage
for all activities of the Consultant arising out of or in connection with
work to be performed under this Agreement, including coverage for
any owned, hired, non -owned or rented vehicles, in an amount not
less than one million dollars ($1,000,000) combined single limit for
each occurrence.
E. Endorsements. Each general liability insurance policy shall be endorsed
with the following specific language:
i. The City, its elected or appointed officers, officials, employees,
agents and volunteers are to be covered as additional insureds with
respect to liability arising out of work performed by or on behalf of
the Consultant.
ii. This policy shall be considered primary insurance as respects to
City, its elected or appointed officers, officials, employees, agents
and volunteers as respects to all claims, losses, or liability arising
directly or indirectly from the Consultant's operations or services
provided to City. Any insurance maintained by City, including any
self- insured retention City may have, shall be considered excess
insurance only and not contributory with the insurance provided
hereunder.
iii. This insurance shall act for each insured and additional insured as
though a separate policy had been written for each, except with
respect to the limits of liability of the insuring Consultant.
iv. The insurer waives all rights of subrogation against City, its elected
or appointed officers, officials, employees, agents and volunteers.
V. Any failure to comply with reporting provisions of the policies shall
not affect coverage provided to City, its elected or appointed
officers, officials, employees, agents or volunteers.
vi. The insurance provided by this policy shall not be suspended,
voided, canceled, or reduced in coverage or in limits, by either party
except after thirty (30) calendar days (10 calendar days written
notice of non - payment of premium) written notice has been
received by City.
F. Timely Notice of Claims. Consultant shall give City prompt and timely
notice of claim made or suit instituted arising out of or resulting from
Consultant's performance under this Agreement.
G. Additional Insurance. Consultant shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which in its own
judgment may be necessary for its proper protection and prosecution of
the work.
M
13. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS
Except as specifically authorized under this Agreement, the services to be provided
under this Agreement shall not be assigned, transferred contracted or subcontracted out
without the prior written approval of City. Any of the following shall be construed as an
assignment: The sale, assignment, transfer or other disposition of any of the issued
and outstanding capital stock of Consultant, or of the interest of any general partner or
joint venturer or syndicate member or cotenant if Consultant is a partnership or joint -
venture or syndicate or cotenancy, which shall result in changing the control of
Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty-
five percent (25 %) or more of the assets of the corporation, partnership or joint-venture.
14. SUBCONTRACTING
The parties recognize that a substantial inducement to City for entering into this
Agreement is the professional reputation, experience and competence of Consultant.
Assignments of any or all rights, duties or obligations of the Consultant under this
Agreement will be permitted only with the express written consent of City. Consultant
shall not subcontract any portion of the work to be performed under this Agreement
without the prior written authorization of City.
15. OWNERSHIP OF DOCUMENTS
Each and every report, draft, map, record, plan, document and other writing produced
(hereinafter "Documents "), prepared or caused to be prepared by Consultant, its
officers, employees, agents and subcontractors, in the course of implementing this
Agreement, shall become the exclusive property of City, and City shall have the sole
right to use such materials in its discretion without further compensation to Consultant
or any other party. Consultant shall, at Consultant's expense, provide such Documents
to City upon prior written request.
16. CONFIDENTIALITY
All Documents, including drafts, claim files, notes and communications that result from
the services in this Agreement, shall be kept confidential unless City authorizes in
writing the release of information.
17. RECORDS
Consultant shall keep records and invoices in connection with the work to be performed
under this Agreement. Consultant shall maintain complete and accurate records with
respect to the costs incurred under this Agreement and any services, expenditures and
disbursements charged to City, for a minimum period of three (3) years, or for any
longer period required by law, from the date of final payment to Consultant under this
Agreement. All such records and invoices shall be clearly identifiable. Consultant shall
allow a representative of City to examine, audit and make transcripts or copies of such
records and invoices during regular business hours. Consultant shall allow inspection
of all work, data, Documents, proceedings and activities related to the Agreement for a
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period of three (3) years from the date of final payment to Consultant under this
Agreement.
18. WITHHOLDINGS
City may withhold payment to Consultant of any disputed sums until satisfaction of the
dispute with respect to such payment. Such withholding shall not be deemed to
constitute a failure to pay according to the terms of this Agreement. Consultant shall
not discontinue work as a result of such withholding. Consultant shall have an
immediate right to appeal to the City Manager or his /her designee with respect to such
disputed sums. Consultant shall be entitled to receive interest on any withheld sums at
the rate of return that City earned on its investments during the time period, from the
date of withholding of any amounts found to have been improperly withheld.
20. CITY'S RIGHT TO EMPLOY OTHER COMPANIES
City reserves the right to employ other Consultants in connection with the Project.
21. CONFLICTS OF INTEREST
The Consultant or its employees may be subject to the provisions of the California
Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any
financial interest that may foreseeably be materially affected by the work performed
under this Agreement, and (2) prohibits such persons from making, or participating in
making, decisions that will foreseeably financially affect such interest.
If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to
do so constitutes a material breach and is grounds for immediate termination of this
Agreement by City. Consultant shall indemnify and hold harmless City for any and all
claims for damages resulting from Consultant's violation of this Section.
22. NOTICES
All notices, demands, requests or approvals to be given under the terms of this
Agreement shall be given in writing, and conclusively shall be deemed served when
delivered personally, or on the third business day after the deposit thereof in the United
States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All
notices, demands, requests or approvals from Consultant to City shall be addressed to
City at:
Attn: Risk Manager
Human Resources Department
City of Newport Beach
PO Box 1768
3300 Newport Boulevard
Newport Beach, CA 92658
Phone: 949 -644 -3302
Fax: 949 -644 -3305
n
All notices, demands, requests or approvals from CITY to Consultant shall be
addressed to Consultant at:
Attention: Scotty Benton, Area Vice Preseident
CorVel Corporation
10750 Fourth Street, Suite 100
Rancho Cucamonga, CA 91730
Phone: 909 - 257 -3771
Fax: 866 -402 -1160
23. TERMINATION
In the event that either party fails or refuses to perform any of the provisions of this
Agreement at the time and in the manner required, that party shall be deemed in default
in the performance of this Agreement. If such default is not cured within a period of two
(2) calendar days, or if more than two (2) calendar days are reasonably required to cure
the default and the defaulting party fails to give adequate assurance of due performance
within two (2) calendar days after receipt of written notice of default, specifying. the
nature of such default and the steps necessary to cure such default, and thereafter
diligently take steps to cure the default, the non - defaulting party may terminate the
Agreement forthwith by giving to the defaulting party written notice thereof.
Notwithstanding the above provisions, City shall have the right, at its sole discretion and
without cause, of terminating this Agreement at any time by giving seven (7) calendar
days prior written notice to Consultant. In the event of termination under this Section,
City shall pay Consultant for services satisfactorily performed and costs incurred up to
the effective date of termination for which Consultant has not been previously paid. On
the effective date of termination, Consultant shall deliver to City all reports, Documents
and other information developed or accumulated in the performance of this Agreement,
whether in draft or final form.
24. COMPLIANCE WITH ALL LAWS
Consultant shall at its own cost and expense comply with all statutes, ordinances,
regulations and requirements of all governmental entities, including federal, state,
county or municipal, whether now in force or hereinafter enacted. In addition, all work
prepared by Consultant shall conform to applicable City, county, state and federal laws,
rules, regulations and permit requirements and be subject to approval of the Project
Administrator and City.
25. WAIVER
A waiver by either party 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.
26. INTEGRATED CONTRACT
0
This Agreement represents the full and complete understanding of every kind or nature
whatsoever between the parties hereto, and all preliminary negotiations and
agreements of whatsoever kind or nature are merged herein. No verbal agreement or
implied covenant shall be held to vary the provisions herein.
27. CONFLICTS OR INCONSISTENCIES
In the event there are any conflicts or inconsistencies between this Agreement and the
Scope of Services or any other attachments attached hereto, the terms of this
Agreement shall govern.
28. INTERPRETATION
The terms of this Agreement shall be construed in accordance with the meaning of the
language used and shall not be construed for or against either party by reason of the
authorship of the Agreement or any other rule of construction which might otherwise
apply.
29. AMENDMENTS
This Agreement may be modified or amended only by a written document executed by
both Consultant and City and approved as to form by the City Attorney.
30. SEVERABILITY
If any term or portion of this Agreement is held to be invalid, illegal, or otherwise
unenforceable by a court of competent jurisdiction, the remaining provisions of this
Agreement shall continue in full force and effect.
31. CONTROLLING LAW AND VENUE
The laws of the State of California shall govern this Agreement and all matters relating
to it and any action brought relating to this Agreement shall be adjudicated in a court of
competent jurisdiction in the County of Orange.
32. EQUAL OPPORTUNITY EMPLOYMENT
Consultant represents that it is an equal opportunity employer and it shall not
discriminate against any subcontractor, employee or applicant for employment because
of race, religion, color, national origin, handicap, ancestry, sex or age.
W
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on
the day and year first written above.
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY
By:
/WnetWID.1860u hamp,
Assistant City Atforney
ATTEST:
By:
Leilani Brown,
City Clerk
CITY OF NEWPORT BEACH,
A Municipal Corporation
Edward D. Selich,
Mayor
CONSULTANT: CORVEL
CORPORATION
(Corporate Officer)
Print Name:
By:
(Financial Officer)
Print Name:
Attachments: Exhibit A — Scope of Work
Exhibit B — Schedule of Rates and Fees
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EXHIBIT A
SCOPE OF WORK OVERVIEW
The goal of this RFP process is to secure a Third Party Administrator (TPA) to provide appropriate
workers' compensation claims administration and related services. In addition, the TPA is expected to
analyze loss data, identify trends and develop methods to reduce costs for the Cities, and at the
same time, improve program efficiency and effectiveness.
To be considered, the TPA shall demonstrate that the firm has the personnel and capital resources,
knowledge, expertise, experience, creativity, innovation, insight and customer service skills to serve
as a third party administrator handling both Cities' claims. The TPA must respond to all the required
items in this RFP. The TPA shall demonstrate that all services will be performed in a manner to
commensurate with the highest standards of professionals in the industry...
The respondent's management system shall have the capacity to transition all workers' compensation
claims and related payment and file data from the existing system into data in the respondent's
system. The respondent's system shall have the capacity to normalize during conversion and the
Cities' claim payment data must remain intact.
The Cities reserve the right to select the Administrator that the Cities, in their sole discretion,
determine will best serve its Workers' Compensation Program.
Records
The Administrator shall maintain complete and accurate records with respect to sales, costs,
expenses, receipts, and other such information required by the Cities that relate to the performance of
services under this agreement. The Administrator shall maintain adequate records of services
provided in sufficient detail to permit an evaluation of services. All such records shall be maintained
in accordance with generally accepted accounting principles and shall be clearly identified and readily
accessible. The Administrator shall provide free access to the representatives of the Cities or their
designees at all proper times to such books and records, and give the Cities the right to examine and
audit same, and to make transcripts there from as necessary, and to allow inspection of all work,
data, documents, proceedings and activities related to this agreement. Such records, together with
supporting documents, shall be kept separate from other documents and records and shall be
maintained for a period of no less than three (3) years after receipt of final payment.
All original books, manuals, films or any other patentable or vopyrightable material. developed with
contract funds, reproduced, prepared or caused to be prepared by the Administrator pursuant to or in
connection with this agreement shall be the exclusive property/rights of the Cities. The Administrator
shall not copyright any report required by this agreement. Any report, information and data acquired
or required by this agreement shall become the property of the Cities, and all publication rights are
reserved to the Cities.
All records, files, transcripts, computer tapes, and other material or workers' compensation adjusting
activity reports prepared by the Administrator shall be the property of the Cities and must be
relinquished by the Administrator to the Cities at the conclusion of this contract. The Cities shall not
be required to pay any additional costs for the retrieval of such information, documentation, and
software.
The Administrator shall take all steps necessary to safeguard any data, files, reports or other
information from confidentiality breaches, loss, destruction or erasure. Liability for any costs or
expense of replacing or damages resulting from the loss of such data shall be borne by the
Administrator unless at the time of loss, said data was in the exclusive custody of the Cities.
RFP- 9134 —TPA Worimes Comp
Administrator will cooperate with Cities and make available any .and all claim files and records
available for audits. Cities will have reasonable access to the necessary portions of Administrator
facilities, records and files for review or audit purposes.
The Cities, at their option; shall have the right to have a claims audit(s) performed. The audit(s) will
be directed to, including but not limited to, the following areas: Staffing; Examiner Caseloads;
Reporting; Supervision; Case Reserves; File Documentation; Medical Payments; Disability Benefit
Delivery; Fines & Penalties; Diary System; Claimant, Employer and Doctor Contact; Case
Administration & Investigation; and Contract for Claim Administration Services; application of current
WCAB rules and regulations and case law.
Dedicated Claims Unit and Assigned Personnel
The objective of this RFP is the establishment of a dedicated claims unit to service and manage the
Cities' account exclusively. The respondent shall establish a dedicated claims office, or a segregated
unit whose sole responsibility is the handling of the Cities' workers' compensation claims. Please
provide staffing plan as requested on page 21 of this RFP document.
Administrator shall designate a full time Claims Supervisor to be assigned to these accounts and will
act as the primary contact for the Cities and will be selected with the concurrence of the Cities. The
Claims Supervisor must possess a State of California Self- Insurance Plan Certificate.
If for any reason the Cities find, in their sole discretion, that the service provided by any assigned
personnel is unsatisfactory, the Administrator will agree to assign replacement personnel that must
also be approved by Cities.
Caseloads
Caseload for the purpose of this RFP and the resulting contract are defined as all open claims,
indemnity and medical only, to calculate "Total Caseload." Claims that are designated as companion
files will be counted with the master claim file as one claim file.
The maximum caseload for the assigned personnel shall be as follows:
Claims Assistant:
Claims Examiner:
Claims Supervisor:
Medical only claims
175 open claims
20 open claims
If at any time during the term of the agreement the number of all open claims exceeds 175 per
Examiner and 20 for the Supervisor, the Administrator shall, with the Cities' concurrence, assign
additional staff to the Cities account.
Program Administration
The Cities are seeking a TPA who shall meet the following minimum Program Administration
objectives:
• Develop policies and procedures relating to the workers compensation claims program, as well
as provide information and guidance regarding the workers compensation program and
specified claims.
• Inform the Cities of current changes or proposed changes in statutes, rules and regulations
and case law affecting the workers compensation program.
RFP -1134 —TPA Workers Comp
• Represent Cities. in all matters related to the set -up, investigation, adjustment, processing,
negotiation and resolution of workers compensation claims against the Cities.
• Facilitate risk management and other related seminars for department heads and /or Cities'
staff at request of Cities.
• Represent administrator at quarterly meetings with departments on -site at Cities, including the
preparation of claim narratives for those attending the meetings.
• Provide copies of file correspondence and documentation as requested.
• Maintain and store all hardoopy files for five (5) years after file is dosed.
• Destroy any claim records by shredding. There will be no additional cost to Cities for
destruction of claim records. Provide Certificate of Destruction for all documents.
• Administrator shall provide to Cities, at no additional cost, within five (5) business days of the
date of termination of this Agreement, all claims, reports, files and electronic data of Cities'
self - insured workers' compensation annual reports.
Claims Administration
The Cities are seeking a TPA who shall meet the following minimum Claims Administration
objectives:
• Administer worker's compensation benefits in accordance with the California State Labor
Code.
• Within 24 hours of receipt of the Employer's First Report of Injury the claims administrator will
make initial contact with the injured employee and establish a claims file.
• All claim files, within the laws regarding medical information, are to be made available for
review by the Cities anytime during the administrator's regular business hours.
• Maintain Utilization Review process as governed by Labor Code section 4610 to review
treatment recommended by physicians to determine if it is medically necessary, either in-
house or with the respective City's contracted vendor.
• Monitor treatment programs for injured employees to ensure that they receive proper care and
to avoid over treatment situations.
• Investigate and recommend special, outside independent investigations for questionable
claims with the consent, coordination and assistance of the Cities.
• Serve all medical reports on interested parties to a claim and file with the appropriate State
agency within five (5) days of receipt.
• Complete a thorough analysis of relevant factors and coordinate recommendations with the
Cities for settlement/disposition of claims. Final settlement authority shall rest with the Cities.
• Respond to City staff inquiries within twenty four (24) hours and on the same day involving
critical issues.
• Provide Medicare Agent Services and the required reporting (including Section 111 of the
Medicare, Medicaid & SCHIP Extension Act (MMSEA) of 2007).
Medical Service and Expenditures
With respect to medical services provided to employees who incur job - related injuries or illnesses, the
Administrator shall:
7 RFP -1134 -TPA Worke's camp
• Develop and recommend, as requested by Cities, a panel of physicians for the first treatment
of employee injury or illness and recommend a panel of medical specialists for treatment
requiring long -term or specialty care, utilizing those that are approved by the Cities.
Monitor treatment programs for injured or ill employees including review of all doctors' reports,
referring as necessary to a State - approved and Cities- approved utilization review management
program for required determinations.
• Recommend referral and with the consent of Cities, submit a claim for nurse case
management services for assistance in medical control of the claim or for consultation to a
Cities- approved nurse case management company.
• Maintain close liaison with treating physicians.
• Provide guidance in the evaluation of physical capacity of injured employees and their ability to
return to work.
• Detennine eligibility for and authorize payment of medical benefits, and arrange and authorize
examinations to determine the nature and extent of disability.
• Arrange and advise all interested parties to a claim of all medical appointments, including
Agreed or Independent Medical Evaluations, using the panel list agreed upon between
Administrator and Cities or as required by the State agency.
• File and serve all medical reports on interested parties of a claim and with the appropriate
State agency within five (5) days of receipt.
• Review all billings for reasonableness using the State Medical Fee Schedules and submit for
medical auditing as necessary to a Cities - approved bill review service.
• Assist Cities, as requested, with establishing a Medical Provider Network (MPN) to treat
injured workers.
Consultation
With respect to consultation provided to Cities and /or employees who incur job - related injuries or
illnesses, the Administrator shall:
• Provide information and guidance to injured employees regarding the benefits:they will receive
in accordance with Cities' policies.
• Staff members to attend appointments, including but not limited to meetings, conferences,
court appearances, and scene investigations at the request of City staff.
• . Provide information, guidance and assistance to injured employees regarding permanent
disability ratings, Qualified Medical and Agreed Medical Examiner process, delay process,
conditional denial process and settlement of claims.
• Assist Cities in solving employee . non -legal problems arising out of industrial injury cases.
• Work with the injured employees, Cities' personnel and other agencies to provide
rehabilitation, retraining or reassignment of employees with physical or performance limitations
arising out of industrial injuries.
• Assist in developing policies and procedures to insure that the return to work by, or
reassignment of, injured employees is consistent with the medical findings.
• Assist Cities, as requested, with cost containment and incentive programs.
RFP- 1134 —TPA Wwkefs Comp
Litiaation Management
Litigation management services by the Administrator shall, at a minimum, include the following:
• Refer litigated cases to attorneys using a listing of legal firms provided by Cities.
• Assist in the preparation of litigated cases.
• Assist in negotiation of Compromise and Release settlements.
• Monitor all cases for potential subrogation recoveries, prepare correspondence to effect
collection, and assist legal counsel where litigation is required to affect recovery.
• Ensure that, for employees who are represented by legal counsel, their attorneys receive
copies of reports and correspondence as appropriaterrequired.
• Maintain a litigation management budget for each litigated file and provide litigation status
reports on a monthly basis for each litigation file.
• Cooperate fully with all attorneys chosen by Cities, including City Attorneys.
Information Manaaement and Reports
The Cities are seeking a TPA who shall meet the following minimum Information Management and
Reports objectives:
• Provide Cities' management with computerized reports at specified intervals on new claims,
closed claims, paid losses, incurred costs, the progress of individual claims and the
effectiveness of safety and other cost control programs.
• Administer and provide a comprehensive annual statistical summary survey customized to
meet the Cities' needs, and if requested by Cities, a narrative report to serve as the basis for
evaluation of Cities' programs.
• Prepare the Cities' annual Cal -OSHA Log 300 and the annual Public Entities Self- Insurers
Report as required by the Department of Industrial Relations, Self Insurance Plans. Reports
are to be submitted to the Cities no later than 30 days prior to the due date.
• Provide a written status of cases, as selected by Cities, and meet with Cities to discuss these
cases at established intervals.
• Upon request by Cities, Administrator shall provide on -line usage of Administrator's computer
system at designated individual agency sites.
• Upon request by Cities, Administrator shall provide secure, electronic reports to allow
performance of certain routine data analysis by Cities.
• Upon request by Cities, provide narrative or analytical reports regarding major cases.
• Provide Cities with copies of initial and quarterly reporting to Medicare.
Financial Management
Each City shall establish a Workers' Compensation Trust Fund, of which the Workers' Compensation
Administrator shall be designated co- trustee. The purpose of this fund shall be to pay medicalAegal
and other expenses incurred as a result of accepted industrial injuriesfillnesses, as well as payment
of Workers' Compensation benefits to which eligible employees are entitled. With respect to the Trust
Fund, it shall be the responsibility of the Workers' Compensation Administrator to:
• Report to the Cities at least monthly, or as needed, of charges against the fund, and obtain
reimbursement to maintain the fund at an appropriate level determined by the Cities_
RFP-1 W— TPA Workers Comp
• Manage the Trust Fund in a reasonable and prudent manner and in compliance with Cities'
policies.
• Issue vouchers to Cities from the Trust Fund in those instances where an employee is paid
benefits directly by the Cities, i.e. Labor Code 4850 pay, temporary total disability benefits or
salary continuation in lieu of temporary disability benefits.
• Actively collect any overpayment of benefits.
• Reimburse Cities for any penalties assessed against Cities which are found to be the result of
Administrator's. lack of proper claims handling or the holding of checks due to insufficient funds
in the bank account.
• Establish procedures and necessary documentation enabling Cities to write checks for
payment of benefits or to have Administrator draw checks for payment of benefits on an
appropriate account of Cities.
• Absorb any costs for the printing of any checks. Cities' name will appear on the check, and
imprinted on all check copies. All checks shall be printed in numerical order, locked and
controlled by Administrator's accounting department. All checks must be accounted for as
payments, voids, etc.
• Use a separate check register for Cities. Daily entries will be made on all checks disbursed on
the account. Credits, if any, shall be entered, as well as all deposits made on checks, received
on reimbursement requests made from Administrator's office. Administrator shall provide
Cities with a check register, mailed to Cities.
• Provide Cities' accounting office, it requested, with one (1) copy of each check register, all
voided checks, etc.
• Review periodically all Trustee accounts to determine if initial deposit is adequate for handling
the dollar volume for the month so that the holding of checks waiting for a deposit does not
occur. In such instances where it is determined that deposit is inadequate, Administrator's
accounting office shall submit a report with a recommendation for an increase to the Trustee
account based on this review. Prompt payments on Administrator's reimbursement requests
are a major factor in the efficiency of a Trustee account. Cities' reimbursement payments
should reach Administrator's office within ten (10) days from the date of Administrator's
request in order to maintain a continuous flow of checks issued throughout the month.
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10 RFP- 1134 -TPA WaWS C0MP
SCHEDULE OF RATES AND FEES
RFP 1134 - BEST AND FINAL OFFER PRICING
EXHIBIT B
CITY OF NEWPORT BEACH
Please attach outline of
proposed staff to be handling
account
Base Price: Specify how the base price is computed, i.e. flat
fee or price per claim. Include any minimums and
maximums, and any special services included in the base
price.
Fiscal Year 2010
$ 312,000
Fiscal Year 2011
$ 312,000
Fiscal Year 2012
$ 321,360
Adjustments: Adjustments to base price or optional
services. Include any one0time costs, if any, for additional
services, including data transfer.
$ N/A
Any services considered to be allocated expenses and not
Index fees, attorney fees,
covered under base price.
etc., will be charged to
respective files.
Program Implementation: Include one time costs, if any, for
administration of existing claims (runoff of old claims).
$ N/A
Data Conversion
$ N/A
Customization of reports
$ 0
On -site computer terminal access
$ 0
Special reports
$ 0
Preparation of 1099's
$ 0
Storage of claims
$ 0
Total Annual Admin Fees J
$ 945,360
CorVel is willing to give two 1 year options (41h year and 51h year) at a 2% increase each year.
However, if the claims count has decreased more than 20% CorVel is willing to consider a
reduction in the fee.
RFP 1134 —BAFO Pricing