HomeMy WebLinkAboutC-3040 - PSA for Workers' Compensation Claims Administration ServicesAMENDMENT NO. 1
TO
PROFESSIONAL SERVICES AGREEMENT WITH CORVEL COMPANY
FOR WORKERS COMPENSATION CLAIMS ADMINISTRATION SERVICES
THIS AMENDMENT NO. 1 TO PROFESSIONAL SERVICES AGREEMENT, is
entered into as of this 1 day of March, 2009, by and between the CITY OF NEWPORT
BEACH, a Municipal Corporation ("CITY"), and CorVel a California Corporation or
whose address is 10750 Fourth Street, Suite 100, Rancho Cucamonga, California,
91730 ("COMPANY "), and is made with reference to the following:
RECITALS:
A. On April 1, 2006 CITY and CONSULTANT entered into a Professional Services
Agreement, hereinafter referred to as "AGREEMENT", for Claims Administration
Services.
B. CITY desires to enter into this AMENDMENT NO. 1 to reflect additional services
not included in the AGREEMENT and to extend the term of the AGREEMENT to
December 31, 2009.
C. CITY desires to compensate COMPANY for additional professional services
needed for workers compensation claims administration.
D. CITY and COMPANY mutually desire to amend AGREEMENT, hereinafter
referred to as "AMENDMENT NO. 1", as provided here below.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as
follows:
In addition to the services to be provided pursuant to the AGREEMENT and
AMENDMENT NO 1, COMPANY shall diligently perform all the services
described in AMENDMENT NO. 1 including, but not limited to, all changes
recommended in the Workers Compensation Claims Audit, Index of
Recommendations 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.
2. City shall pay Company for the services on a quarterly flat fee basis not -to -
exceed Two hundred, seventy-two thousand, seven hundred and forty dollars
and no/100 ($272,740) without prior written authorization from City.
3. The term of the AGREEMENT shall be extended to December 31, 2009.
4. Except as expressly modified herein, all other provisions, terms, and covenants
set forth in AGREEMENT shall remain unchanged and shall be in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT NO. 1
on the date first above written. ,--
APPROVED AS TO FORM:
ity Attorney
for the City of Newport Beach
ATTEST:
By:
d' t 1 '$1W-
Leilani Brown,
City CIff��
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CITY.OF NEW�►P�ORT �E 'CH,
A M,unic6ml C666ration
MhyoK
for the City of Newport Beach
CONSULTANT:
By:
( por a Officer)
Title:LE�C-1DONT- -d C-L�o
Print Name: e� 6 C'T-6 l%r
By: �—
(Financial Officer)
Title:�Gt,�'V�
Print Name: h'YA, 1,(--
Attachments: Exhibit A - Claims Audit, Index of Recommendations
F:\users\cat\shared\ContractTemplatesPublishedon Intranet\FO RMPSAAmendment.doc
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City of Newport Beach
REVIEW OF WORKERS'
COMPENSATION CLAIM
MANAGEMENT
PROGRAM
George Kingston & Associates
Corona, California
February 15, 2009
INDEX OF RECOMMENDATIONS
Discussion
on Page(s)
Continue the current staffing level of the CITY
account with the replacement of the assistant who
recently teff Corvel.
2 Require Corvel to reassign the 55 maintenance 11
claims to another staff member.
Increase the staff level assigned to the CITY 11
account by 113 potion to accommodate the
reassignment of the 55 maintenance claims.
4 Require Corvel to implement a written plan 14
describing what steps will be taken to prevent the
City's claim riles from being lost In the future -
5 The City should take steps to monitor the progress 14
of the plan to ensure that it is implemented and has
the desired affect.
6 Conduct a file reconciliation of all claim files 15
reported in the last two years and all currently open
files to determine the extent of the problem.
7 Require Corvel to take steps, including training, to 16
ensure that all payments are supported by the
appropriate documentation.
8 Provide training to the examiner and assistant 15
responsible for payment of disability benefits.
Emphasize the importance of prompt payment and
the need to pay voluntary penalties when
applicable.
QWF KkWW 8 amodaWs
8 Require Corvel to determine why benefit notices 18
are sent late and take corrective action to prevent
this from occurring in the future.
10 Implement procedures at the CITY to ensure that 18
the Employee Claim Form (DWG1) is given to the
employee in a timely manner.
11 provide the examiner and assistant with additional 21
training and oversight to correct weaknesses
leading to the errors found in the administration of
claims.
12 Adjust the contract language to include the 22
changes recommended in items 7 and 2 above.
13 Design minimum performance standards that 22
define specific performance, and incorporate them
into the contract at the next opportunity.
George KkWtm & AmodaW
AGREEMENT FOR WORKERS' COMPENSATION
CLAIMS ADMINISTRATION SERVICES
THIS AGREEMENT is made and entered into as of this 1st day of April 2006, by and
between the CITY OF NEWPORT BEACH, a Municipal Corporation ("City"), and
Hazelrigg Risk Management Services, a California corporation, whose address is
14275 Pipline Avenue, Chino, California, 91710, ("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 desires to engage Consultant to provide workers compensation claims
administration services ("Project").
C. Consultant possesses the skill, experience, ability, background, certification and
knowledge to provide the services described in this Agreement.
D. The principal member[s] of Consultant for purposes of Project shall be a
dedicated claims unit with one claims supervisor, two claims examiners and one
claim assistant.
E. City has 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:
1. TERM
The term of this Agreement shall commence on the above written date, and shall
terminate on December 31, 2006, unless terminated earlier as set forth herein.
The City, in at its sole discretion, may choose to extend the Agreement by
exercising the two one year options as provided for in Exhibit B of this Agreement
by providing written notice to the Consultant prior to the expiration date.
2. SERVICES TO BE PERFORMED
Consultant shall diligently perform all the workers compensation claims
administrative services, regardless of caseload, including but not limited to all
services described in the Scope of Services — Claims Administration 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. The following
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A
are the minimum claims administration services to be performed by the
Consultant:
Program Administration
2.1 Provide professional and technical staff to perform the services as
described in this Agreement. Pursuant to Paragraph 3 in the Scope of
Services — Exhibit A, the claims examiner's caseload shall not exceed 150
open claims. The City and the Consultant agree that such maximum shall
be subject to a ten percent (10%) variance only as it relates to the claims
examiner's caseload. In the event the caseload of the examiner exceeds
10% of the maximum on average for a period of two calendar months, the
City at its discretion may request, in writing, additional examiner support.
The terms and conditions regarding the nature and extent of the additional
examiner support will be determined by mutual consent of the parties.
2.2 Represent CITY in all matters related to the set-up, investigation,
adjustment, processing, negotiation and resolution of workers'
compensation claims against the CITY.
2.3 Inform the CITY of changes or proposed changes in Labor Code statutes,
rules and regulations and case law affecting its workers' compensation
claims program.
2.4 Assist in the development of policies and procedures relating to the
workers' compensation claims program.
2.5 Provide information and guidance regarding the workers' compensation
claims program and specified claims.
2.6 Provide copies of file correspondence and documentation as requested by
City.
2.7 Inform CITY of problem areas or trends, both potential and perceived, and
provide recommendations and/or solutions to address problem areas or
trends.
2.8 Attend appointments, including but not limited to meetings, conferences,
Court appearances, and scene investigations.
2.9 Conduct risk management related seminars for department heads and/or
City staff at request of City.
2.10 During the term of this Agreement, all closed claims will be stored by the
Consultant for a period of one hundred eighty (180) days following the
claim closure date at no charge to the City. The Consultant will advise the
City of the date their files are closed, so that the City and the Consultant
can make the necessary arrangements to have the those files copied to
another medium or stored for retention by a vendor of the City's choice
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within the 180 day gratis period.
3. MATERIAL PROBLEMS AND REGULATORY CHANGES
Consultant 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 affective the City's Workers' Compensation
program.
4. 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.
5. COMPENSATION TO CONSULTANT
City shall pay Consultant for the services in accordance with Exhibit B of this
Agreement. No billing rate changes shall be made during the term of this
Agreement without the prior written approval of City.
5.1 Consultant shall quarterly invoices to City describing the work performed
the preceding month. City shall pay Consultant no later than thirty (30)
days after approval of the monthly invoice by City staff.
5.2 City shall reimburse Consultant only for those costs or expenses
specifically approved in this Agreement, or specifically approved in
advance by City in writing.
5.3 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 completion of the Project, 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
6. PROJECT MANAGER
Consultant shall designate a Project Manager, who shall coordinate all phases of
the Project. This Project Manager shall be available to City at all reasonable
times during the Agreement term. Consultant has designated Alan Schiller,
Claims Manager, to be its Project Manager. Consultant shall not remove or
reassign the Project Manager or any personnel listed in Exhibit A 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.
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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.
7. 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.
8. STANDARD OF CARE
8.1 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.
8.2 Consultant represents and warrants to City that it has or shall obtain all
licenses, permits, qualifications, insurance and approvals of whatsoever
nature that are legally required of Consultant to practice its profession.
Consultant further represents and warrants to City that Consultant shall, at
its sole cost and expense, keep in effect or obtain at all times during the
term of this Agreement, any and all licenses, permits, insurance and other
approvals that are legally required of Consultant to practice its profession.
Consultant shall maintain a City of Newport Beach business license
during the term of this Agreement.
9. INDEMNIFICATION AND 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
and employees (collectively, the "Indemnified Parties') from and against any and
all 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 work performed or
services provided under this Agreement 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, consultants, subcontractors, anyone employed directly or
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10.
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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 Claim 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.
INDEPENDENT CONTRACTOR
The relationship of Consultant 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. Consultant, its agents and employees are
representatives of the City only for the purpose of administering the City's
workers' compensation 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
Consultant's obligations under this Agreement.
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.
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.
INSURANCE REQUIREMENTS
Before performing Services, Consultant will provide proof 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.
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14. AUDIT
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 omissions 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 term of the Agreement, the Consultant 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, 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 Consultant for personal injury or property
damage sustained by Consultant in the performance of this
Agreement, whether caused by Consultant, its officers, agents or
employees, or by any third person.
g) Consultant agrees to defend any legal action commenced against
City caused directly or indirectly by wrongful or negligent acts of
Consultant, Consultant's officers, employees, agents or others
engaged by Consultant and to indemnify City against nay loss,
liability, cost or damage, including attorney's fees resulting there
from.
h) City agrees to defend any legal action commenced against
Consultant caused directly or indirectly by wrongful or negligent
acts by City officer's employees, agents or others engaged by City,
and to indemnify Consultant against any loss, liability, cost or
damage, including attorney's fees resulting therefrom.
i) Consultant agrees that in the event of loss due to any of the perils
for which it has agreed to provide insurance. Consultant hereby
grants to the City on behalf of any insurer providing insurance to
either Consultant herein, a waiver of any right of subrogation which
any insurer of said Consultant 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 taw.
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Consultant agrees to cooperate with the City in making any and all claim files,
records, reports and other documents and materials pertaining to City's claims
available to the City for audit by City or City's appointed representatives, at any
time during Consultant's regular business hours upon 24 -hours advance notice.
The City reserves the right to inspect and audit Consultant's financial records
relevant to the City's account at any time during regular business hours upon 24 -
hours notice. City will provide necessary information pertaining to claims
reported for adjustment under the provisions of any Agreement.
15. 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.
16. 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.
17. OWNERSHIP OF DOCUMENTS
Each and every report, draft, record, 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. Consultant shall also
provide computer tapes containing all computerized data pertaining to the City
and their claims, together with format thereof upon termination of this
Agreement.
18. CONFIDENTIALITY
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Consultant 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 Consultant shall produce, maintain and
dispose of all such information reports and analyses in a manner to guarantee
reasonable safeguards to such confidentiality.
19. 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
period of three (3) years from the date of final payment to Consultant under this
Agreement.
20. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS
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, to City by Consultant 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,
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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
P.O. Box 1768
Newport Beach, CA, 92658-8915
Phone: 949-644-3300
Fax: 949-644-3305
All notices, demands, requests or approvals from City to Consultant shall be
addressed to Consultant at:
Attn: Arlene Hazelrigg, President
Hazelrigg Risk Management Services (HRMS)
P. O. Box 669
Chino, CA 91708
TERMINATION
This Agreement may be terminated by the City without cause at any time by
submitting 30 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
Consultant shall not be required to perform any of its services beyond the date of
termination and all fees owed to the Consultant by the City will be 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
COMPLIANCE WITH ALL LAWS
Consultant:
Hazelrigg Risk Management Services
Attention Arlene Hazelrigg
P.O. Box 669
Chino, CA 91708
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
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of the same or any other term, covenant or condition contained herein, whether
of the same or a different character.
26. INTEGRATED CONTRACT
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. 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.
29. 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.
30. 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.
31. 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.
32. 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 this Agreement or any other rule of construction
which might otherwise apply.
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For
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on
the day and year first written above.
APPROVED AS TO FORM:
.z4
City Attorney
For the City of Newport Beach X
ATTEST:
CITY OF NEWPORT BEACH,
A Muipal_ Corporation
By:
Mayor
For the City of Newport Beach
CONSULTANT:
LaVonne Harkless,
City Clerk
Arlene Hazelrigg,
Attachments: Exhibit A — Scope of Services
Exhibit B — Schedule of Billing Rates
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Rev: 08-30-04/da
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SCOPE OF SERVICES
(1) Dedicated Claims Unit
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Exhibit A
The objective of this scope of services is the establishment of a dedicated claims
unit to service and manage only the City's account. The unit will consist of a
minimum of three (3) technical personnel selected with the concurrence of the City
and one (1) clerical supporttclaims assistant to sufficiently assist the claims unit.
(2) Assigned Personnel
Administrator shall designate a full time Claims Supervisor to be assigned to this
account and will act as the primary contact for the City and selected with the
concurrence of the City. The Claims Supervisor must possess the Self -Insurance
Plan Certificate.
The Administrator shall assign two (2) full time Claims Examiners to the claims
unit selected with the concurrence of the City. The Claims Examiners must
possess the Self -Insurance Plan Certificate.
The Administrator shall assign (1) full time clerical support/Claims Assistant to the
account.
If for any reason the City 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 City. Supervisors and
(3) Caseloads
Caseload for the purpose of this scope of services and the 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
150 open claims
20 open claims
If at any time during the term of the agreement the number of all open claims
exceeds 150 per Examiner and 20 for the Supervisor, the Administrator shall
assign additional staff to the City account with City concurrence.
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(4) Program Administration
Program administration services shall, at a minimum, include the following:
(A) Provide professional and technical staff to perform the services as agreed
upon under separate contract with the City and this scope of services.
(B) Represent City in all matters related to the set-up, investigation, adjustment,
processing, negotiation and resolution of workers compensation claims
against City.
(C) Inform City of changes or proposed changes in statutes, rules and
regulations and case law affecting the workers compensation program.
(D) Assist in the development of policies and procedures relating to the workers
compensation claims program.
(E) Provide information and guidance regarding the workers compensation
program and specified claims.
(E) Inform City of problem areas or trends, both potential and perceived, and
provide recommendations and/or solutions to address problem areas or
trends.
(G) Provide copies of file correspondence and documentation as requested.
This element is, of course, subject to the parameters of the laws of the State
of California, i.e., medical related information.
(H) Attend appointments, including but not limited to meetings, conferences,
court appearances, and scene investigations at request of City.
(1) Conduct risk management related seminars for department heads and/or
City staff at request of City.
(J) Maintain and store all hardcopy files for five (5) years after file is closed.
(K) Provide the City with an adequate supply of preprinted forms and notices
specific to each City during the term of the contract.
(L) Destroy any claim records by shredding. There will be no additional cost to
City for destruction of claim records.
(M) Administrator shall provide to City, at no additional cost, within five (5)
business days of the date of termination of this Agreement, all claims,
reports, files and a computer tape of City's self-insured workers'
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compensation program in a computer program compatible with new
Administrator's computer system and information on the tape lay-out/format.
(5) Claims Administration
Claims Administration services shall, at a minimum, include the following:
(A) Create and enter new claim files into the computer within 48 hours of receipt
of notice from City.
(B) Injured workers who are disabled more than three (3) days or are involved
in serious accidents shall be contacted by telephone by Administrator within
48 hours after constructive knowledge that an injury has occurred.
(C) Maintain a hardcopy file for each claim.
(D) Review the Employer's and Doctor's first report of Industrial Injury/Illness,
make a determination as to accept, deny or delay the claim and inform the
employee in a timely manner. Notify employee when benefits are being
initiated, interrupted, or terminated, as well as the reason therefore.
(E) Process all claims in accordance with City's instructions and policies.
(F) Monitor and pay medical/legal expenses. In addition, Administrator will
require medical treatment to be pre -authorized whenever possible and that
all charges are paid according to the provisions of workers compensation
laws.
(G) Establish, maintain and manage an interest bearing trust account for each
City. The City will be co-signer on their respective accounts. Administrator
shall provide copies of check registers and copies of checks (at City option)
from the account.
(H) Initiating and coordinating supplemental job displacement benefits for
qualified injured workers.
(I) Arrange for independent investigators or experts when, in Administrator's
judgment and with the consent of City, such action is deemed necessary to
(1) properly process questionable cases; (2) assist in determining the status
of disabled employees; (3) prepare litigated cases; or (4) assist in
determining fraudulent claims.
(J) Making recommendations to City's staff regarding settlement/disposition of
claims, based on thorough analysis of relevant factors. Final settlement
authority shall rest with the City.
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(K) Determining the extent and degree of permanent disability based upon
medical evidence.
(L) The Administrator will be required to complete the annual Public Entities
Self -Insurers report for the City as required by the Department of Industrial
Relations, Self -Insurance Plans; to be submitted to the City, no later than 30
days prior to the due date.
(M) Provide the City with the following information:
1) Copies of all medical reports on injured/ill employees. This element is,
of course, subject to the parameters of the laws of the State of
California, i.e., medical related information.
2) Copies of all correspondence to and from service providers with
respect to individual claims. This element is, of course, subject to the
parameters of the laws of the State of California, i.e., medical related
information.
3) Copies of all documents/correspondence pertaining to litigated claims.
This element is, of course, subject to the parameters of the laws of the
State of California, i.e., medical related information.
4) Narrative reports of claims involving major injuries, or significant
financial .exposure, on request. This element is, of course, subject to
the parameters of the laws of the State of California, i.e., medical
related information.
5) Periodic (semi-annual or annual) risk management analysis reports,
including recent statutory and case law regulation and
recommendations for preventive measures based on analysis of City
claims and losses.
(N) Conduct a case file review meeting at least semi-annually with each
respective City.
(0) A quarterly meeting shall be held between the Administrator, and each
respective Risk Manager. The purpose of this review shall be to outline
losses and identify problems, examine reserves, identify current trends,
discuss changes in the Labor Code, apply new case law to existing claims,
discuss the needs for improving or altering claims management, and to
make recommendations for improvement in communications between the
Administrator and the City.
(P) At the direction of City, contact claimant or their attorney and maintain
appropriate contact until the claim is closed.
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(Q) Review status of claims and adequacy of reserves on all active cases at
least every 90 days.
(R) Provide narrative reports to City when recommending disposition of a claim,
when a claim goes to trial, or any other significant events that have or will
occur. Reports must be clear and concise and be provided in a format as
approved by City.
(S) Diary all files at appropriate intervals to allow for timely completion of
required activity.
(T) Files will clearly and concisely document action taken on the claim.
(U) Telephone calls from City's staff, claimants or claimant's attorneys shall be
returned within 24 hours. If the Administrator's appropriate staff member
called is not available to return the call within this time frame, another
designated staff member shall return the call.
(V) Have translators available to assist with non-English speaking claimants.
(W) Also, the Administrator may be asked to attend additional meetings upon
request.
(X) Request an Index check on all new claims and at six (6) month intervals on
continuing active claims. Administrator shall report all of City's claims to the
Index System.
(6) Medical Service and Expenditures
With respect to medical services provided to employees who incur job-related
injuries or illnesses, the Administrator shall:
(A) Develop and recommend, as requested by City, 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.
(B) Monitor treatment programs for injured or ill employees including review of
all doctors' reports, referring as necessary to a State -approved and City -
approved utilization review management program for required
determinations.
(C) Recommend referral and with the consent of City, submit a claim for nurse
case management services for assistance in medical control of the claim or
for consultation to a City -approved nurse case management company.
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(D) Maintain close liaison with treating physicians
(E) Provide guidance in the evaluation of physical capacity of injured employees
and their ability to return to work.
(F) Determine eligibility for and authorize payment of medical benefits, and
arrange and authorize examinations to determine the nature and extent of
disability.
(G) 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 City or as required by
the State agency.
(H) File and serve all medical reports on interested parties of a claim and with
the appropriate State agency within five (5) days of receipt.
(1) Review all billings for reasonableness using the State Medical Fee
Schedules and submit for medical auditing as necessary to a City -approved
bill review service.
(J) Assist City, as requested, with establishing a Medical Provider Network
(MPN) to treat injured workers.
(7) Consultation
With respect to consultation provided to City and/or employees who incur job-
related injured or illnesses, the Administrator shall:
(A) Provide information and guidance to injured employees regarding the
benefits they will receive in accordance with City's policies.
(B) Provide information, guidance and assistance to injured employees
regarding permanent disability ratings, Qualified Medical Examiner process
and settlement of claims.
(C) Assist City in solving employee non -legal problems arising out of industrial
injury cases.
(D) Work with the injured employees, City's personnel and other agencies to
provide rehabilitation, retraining or reassignment of employees with physical
or performance limitations arising out of industrial injuries.
(E) 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.
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(F) Assist City, as requested, with cost containment and incentive programs.
(8) Litigation Management
Litigation management services by the Administrator shall, at a minimum, include
the following:
(A) Refer litigated cases to attorneys using a listing of legal firms provided by
City.
(B) Assist in the preparations of litigated cases.
(C) Assist in negotiation of Compromise and Release settlements.
(D) Monitor all cases for potential subrogation recoveries, prepare
correspondence to effect collection, and assist legal counsel where litigation
is required to effect recovery.
(E) Ensure that, for employees who are represented by legal counsel, their
attorneys receive copies of reports and correspondence as
appropriate/required.
(F) Maintain a litigation management budget for each litigated file and provide
litigation status reports on a monthly basis for each litigation file.
(G) Cooperate fully with all attorneys chosen by City, including City Attorneys.
(9) Information Management and Reports
Administrator shall, at a minimum, include the following:
(A) Utilize computer programs to provide City's management with continuing
information on paid losses, incurred costs, the progress of individual claims
and the effectiveness of safety and other cost control programs.
(B) Submit a comprehensive annual statistical summary survey and, if
requested by City, narrative report to serve as the basis for evaluation of
City's programs.
(C) Prepare reports required by the California Department of Industrial
Relations.
(D) Prepare the City's annual CalOSHA Log 300.
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(E) Prepare any reports on City's claims and expenditures as may be required
by the California Department of Industrial Relations.
(F) Provide, upon City's request, narrative or analytical reports of major cases.
(G) Provide the following monthly reports by the 5`" business day of the
following month:
1) Management summaries by department, locations and for the total
program.
2) Check Register by payment type.
3) Listing of checks received
overpayments).
4) Voucher Register by payment type.
(reinsurance, subrogation and
5) Alphabetical listing of open claims with date of injury, body part, paid to
date, reserves and expected total incurred.
6) Alphabetical listing of opened claims.
7) Alphabetical listing of closed claims with date closed and amount paid
on claim.
8) Alphabetical listing of aggregate closed claims with date closed and
amount paid on claim.
9) Alphabetical listing of denied claims.
10) Alphabetical listing of all claims with Total Incurred > $1,000,000.
11) Fiscal Year Summaries by department and for the total program.
(H) Provide a written status of cases, as selected by City, and meet with City to
discuss these cases at established intervals.
(1) Provide City on the first workday of each month the following information for
the previous month:
1) Number of closed files
2) Number of new files
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3) Number of open files by category of Medical Only, Indemnity and
Maintenance cases
4) Number of claims assigned to each member of the dedicated unit
5) Settlement Award Log
6) Litigation Assignment Log
7) Penalties Log
(J) Provide City on January 1, April 1, July 1 and October 1 of each year the
following information on open claims with total incurred > $100,000:
1) Claimant's Name
2) Date of injury
3) Reinsurance Carrier(s)
4) Self -Insured Retention Level
5) Total Incurred
6) Total Paid
7) Total Reserves
(K) Upon request by City, Administrator shall provide on-line usage of
Administrator's computer system at designated individual agency sites.
(L) Upon request by City, Administrator shall provide secure, electronic reports
to allow performance of certain routine data analysis by City.
(10) 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 medical/legal and other expenses incurred as
a result of accepted industrial injuries/illnesses, 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:
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(A) Report at least monthly, or as needed, to the City of charges against the
fund, and obtain reimbursement to maintain the fund at an appropriate level
determined by the City.
(B) Manage the Trust Fund in a reasonable and prudent manner and in
compliance with City's policies.
(C) Issue vouchers to City from the Trust Fund in those instances where an
employee is paid Labor Code 4850 pay, temporary total disability benefits or
salary continuation in lieu of temporary disability benefits.
(D) Actively collect any overpayment of benefits.
(E) Reimburse City for any penalties assessed against City 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.
(F) Establish procedures and necessary documentation enabling City to write
checks for payment of benefits or to have Administrator draw checks for
payment of benefits on an appropriate account of City.
(G) Pay for the printing of any checks. City's 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.
(H) Use a separate check register for City. 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 City with one (1)
copy of each check issued, to be included with the check register and
mailed to City.
(1) Provide City's accounting office, if requested, with one (1) copy of each
check register, all voided checks, etc.
(J) 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. City's 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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Exhibit B
COMPENSATION/PAYMENT SCHEDULE
Claims Administration Services
The fee structure for the initial year and two one year options is as follows:
A. For claims administration services from April 1, 2006 through December 31,
2006 shall be One Hundred and Seventy Five Thousand and Five Hundred Dollars
($175,500).
B. For claims administration services from January 1, 2007 through December 31,
2007 shall be Two Hundred Forty Three Thousand and Three Hundred Sixty Dollars
($243,360).
C. For claims administrations services from January 2008 through December 31,
2008 shall be Two Hundred Fifty Four Thousand and Three Hundred and Eleven
Dollars ($254,311).
Tail Claims
Administration of existing claims is included for the life of the agreement in the above
compensation structure, so long as such claims were open as of the day preceding the
first day of the first agreement year.
Start -Uy Costs
There are no start up costs.
Annual License Fee
Included at no additional cost.
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9 9 C'3c�o
AGREEMENT FOR WORKERS' COMPENSATION
CLAIMS ADMINISTRATION SERVICES
THIS AGREEMENT is made and entered into by and between the CITY OF NEWPORT
BEACH, ("CITY'), and Hazelrigg Risk Management Services
("CLAIMS ADMINISTRATOR"). CLAIMS ADMINISTRATOR's Home Office is located at
14275 Pipeline Ave.. Chino, California 91710
where the CITY'S claims will be administered
1. TERM OF AGREEMENT
The term of this Agreement shall be for a period commencing 12:01 a.m. on
Septemeber 1, 2002 and ending 12:00 midnight on August 31, 2005
2. MINIMUM REQUIRED CLAIM ADMINISTRATION SERVICES TO BE
PERFORMED BY HAZELRIGG RISK MANAGEMENT SERVICES
A. Program Administration
(1) Provide professional and technical staff to perform the services as
described in this Agreement.
(2) Represent CITY in all matters related to the set-up, investigation,
adjustment, processing, negotiation and resolution of workers'
compensation claims against the CITY.
(3) Inform the CITY of changes or proposed changes in Labor Code
statutes, rules and regulations and case law affecting its workers'
compensation claims program.
(4) Assist in the development of policies and procedures relating to the
workers' compensation claims program.
(5) Provide information and guidance regarding the workers'
compensation claims program and specified claims.
(6) Provide copies of file correspondence and documentation as
requested by CITY.
(7) Inform CITY of problem areas or trends, both potential and
perceived, and provide recommendations and/or solutions to
address problem areas or trends.
(8) Attend appointments, including but not limited to meetings,
conferences, Court appearances, and scene investigations.
3.
4.
5.
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(9) Conduct risk management related seminars for department heads
and/or CITY staff at request of CITY.
(10) Maintain and store all hardcopy files for five (5) years after file is
closed.
B. Claims Administration — Scope of Work — Attachment A
C. Excess Insurance Reporting
(1) Report to any excess insurance carrier(s) in accordance with policy
provisions. CITY will provide the names and addresses of excess
insurance carriers. Provide CITY with written notification that the
required notice has been made to the excess carrier within ten (10)
days of the notice of claim.
COMPENSATION/PAYMENT SCHEDULE - Attachment A, Scope of Work,
Section H.
TERMINATION OF AGREEMENT
This Agreement may be terminated by either party without cause at any time by
submitting 30 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
CLAIMS ADMINISTRATOR shall not be required to perform any of its services
beyond the date of termination and all fees owed to the CLAIMS
ADMINISTRATOR by the CITY will be 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
INSURANCE REQUIREMENTS
CLAIMS ADMINISTRATOR:
Hazelrigg Risk Management Services
Attention Arlene Hazelrigg
P.O. Box 669
Chino, CA 91708
Before performing SERVICES, CLAIMS ADMINISTRATOR will provide proof 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
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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 omissions 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 term of the 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, 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 foe 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 nay 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.
(1) 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
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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.
(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.
6. AUDIT
7.
(A) CLAIMS ADMINISTRATOR agrees to cooperate with the CITY in making
any and all claim files, records, reports and other documents and
materials pertaining to CITY's claims available to the CITY for audit by
CITY or CITY's appointed representatives, at any time during CLAIMS
ADMINISTRATOR'S regular business hours upon 24 -hours advance
notice.
(B) The CITY reserves the right to inspect and audit CLAIMS
ADMINISTRATOR's financial records relevant to the CITY's account at
any time during regular business hours upon 24 -hours notice. CITY will
provide necessary information pertaining to claims reported for adjustment
under the provisions of any Agreement.
All claim files, records, reports and other documents and materials pertaining to
the CITY's 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.
8. 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
otherwise. 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.
9. WAIVER
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
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or a different character.
10. ENTIRE 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.
11. SEVERABILITY
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 of any
of its terms and provisions shall be interpreted pursuant to the Laws of the State
of California.
12. INDEPENDENT CONTRACTOR
(A) 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 workers' compensation 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.
13. SELECTION OF PERSONNEL
Assigned personnel, if for any reason, the CITY finds, in its sole discretion, that
the service provided by any assigned personnel is unsatisfactor, the CLAIMS
ADMINISTRATOR will Agree to assign replacement personnel that must also be
approved by the CITY.
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.
15. CONFIDENTIALITY
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.
16. MATERIAL PROBLEMS AND REGULATORY CHANGES
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 affective the CITY's Workers'
Compensation program.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Orange County, California as of 12002.
CITY OF NEWPORT BEACH,
A Municipal Corporation
DATED: , 2002
APPROVED AS TO FORM:
DATED:A _ , 2002
NAME OF CLAIMS ADMINISTRATOR:
DATED: 2002
BY: *o,� ZX -e,,,4..,
omer BI dau, CITY Manager
Hazelrigg Risk Management Se ices
BY:
(name & title)
on
F. Overview and Approach
1. Understanding
• Attachment A
Scope of Work
One of the major reasons the founder established a third party claims administration fine in
January 1988 was to provide personalized service to the cities that she managed while working
as a claims adjuster. The fine was designed to specialize in municipalities and to provide
customized administration to fit the individual needs of each client. Many of the original clients
have worked with the owner and HRMS' staff for over twenty years. All of FIRMS'
administrators are State certified and have extensive background in the specialized
administration of cases involving State mandated presumptions, industrial disability retirement
plans, 4850 benefits and a special handling of sworn safety personnel claims. The administrators
have an average of 12 years claims adjusting experience and have been with HRMS for about ten
years.
In regard to the dedicated unit that is currently assigned to the Cities of Costa Mesa and Newport
Beach, all unit members understand the Cities' expectation and required scope of work. Through
the years working jointly with the Cities, the unit has fine-tuned the administration of the
program, where it is flawing almost seamlessly. The unit is committed to providing exceptional
work, and we believe the Cities will agree that the unit understands the work, and that they are
getting the service that was promised.
r 2. Approach
a. Since we are the current administrator for the Cities, no transition would be implemented
to transfer and convert the files. Should the Cities select another administrator, HRMS
will provide a smooth file and data transfer. There would be no additional cost for the
transfer.
b. Claims procedures from initial notification of a claim through case closure:
Early Intervention
We believe that effective cost containment goes far beyond just our medical contracts. Solid cost
containment starts with the examiner, who should always be cognizant of the bottom line. This is
why we take great care to hire very proactive, experienced and technically strong examiners that
are familiar with the requirements of the Labor Code and the potential abuses that can take place in
the system.
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We take a strong philosophical approach toward early and effective intervention on all of our new
losses. We believe that through early file intervention, successful communication between the
examiner and the injured worker can take place. By establishing a good rapport early on, we know
that we can lower the probability of unnecessary litigation.
Set-up of Claim
At HRMS, all of the new losses are set tip within five working days upon receipt from our office.
This "set-up" process includes a documented three-point contact, claims narrative and plan of
action.
The three-point contact includes the content of the communication with the employer, injured
worker and provider. The claims narrative includes a description of the injury, place of
treatment, treating physician, diagnosis, prognosis and treatment plan. The plan of action
documents what our plan is with regard to authorization, treatment and claims adjustment to
bring the file to cost effective closure within a reasonable time frame.
Further, by intervening early, the examiner can direct the injured worker's medical needs to a
contracted clinic or physician that specializes in workers' compensation related injuries who is
aware of the desires of the employer with regard to medical cost containment and return to work.
At HRMS, every new loss is audited in compliance with our standards in set-up time,
documentation and claimant contact. Every closure is also audited at month end to ensure that all
benefits and notices were delivered timely. The compliance to these standards is built into an
examiner's review so that the examiner has an incentive to perform up to par in these areas.
We believe that the'fruits from early file intervention such as lower litigation rates and shorter
claim lives will lead to significant cost reductions on the Cities' aggregate inventory.
Return to Work
Tremendous savings for an employer can be derived through an effective return to work
program. The most obvious of which would come from a significant reduction of temporary
disability payments. Further savings can result from the benefits of lower litigation rates on cases
where there is no lost time. Plus, our lengthy experience in claims administration has taught us
that likelihood for permanent disability (on equally severe injuries) decreases significantly on
medical only versus indemnity files.
Among the more appreciable cost control techniques utilized by HRMS is our practice of
focusing administrative awareness on the advantage of establishing early return -to -work
programs. We assist human resource personnel in developing useful procedures with which they
can structure temporary light duty and modified work positions. HRMS' staff is proficient in
creating approaches to encourage a quick return to duty. This helps management avoid the
hazards inherent under ADA and FMLA regulations. The pitfalls in these federal mandates are
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often seen by employers as a reason not to adopt early retum-to-work policies. Coordination
between the HRMS adjuster and the various Cities' personnel departments has been shown to be
very effective in this regard. Such coordination is even more important now that Moorpark has
been decided.
From a personnel standpoint, when modified work positions are identified in advance of need, an
early return to work assignment for an injured employee does not become a management
scheduling hardship. The employee acquires a sense of usefulness and acceptance in the
workgroup, which has been proven to be a positive factor in the recovery process.
During our three-point contact, we will inquire of the Cities what modified positions are
available and relay that information from the onset to the treating physician. We will continue to
work with the Cities and the physician during our disability phone calls until the employee
reaches a level where he/she can retum to modified duty.
Medical Management Procedures
At HRMS, we believe that efficacious monitoring of a treatment protocol comes through open
communication with the employer, injured worker and provider (in that order). Once we have
established the initial communication from the employer and the employee, we can determine
what body parts are injured and authorize accordingly.
Every treatment procedure requires our express verbal or written authorization. We will not
f approve treatment to unrelated body parts or disorders. Treatment protocols and their
corresponding bills that are not approved will be objected to therewith.
Nurse Case Management Procedures
If temporary disability extends beyond 4 weeks or treatment extends beyond 90 days without a
clear discharge date or permanent and stationary date, our examiners will intervene at that point
to see that the proper specialist is in place through a phone call or letter to the provider. If the
provider is still unclear, then the examiner has the option to refer the case to Nurse Case
Management or establish a Labor Code 4050 consult evaluation. We find that a lot can be
accomplished through phone calls to either the treating physician or the injured worker.
We take a practical approach to the utilization of Nurse Case and Field Case Management. We
do not believe that we should use a nurse on every case. We believe that to do such would
unnecessarily burden the file with superfluous charges. We judge the criteria for nurse case
management on a case-by-case basis where there is a positive cost benefit derivative. We believe
that when good medical protocols are in place, a seasoned examiner can manage the medical
aspects of an "average" less complicated file more efficiently than a nurse case manager can.
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In all, we estimate that just less than 10% of our Indemnity files require a Nurse Case
Management referral. Our experienced claims examiners use their discretion on when these
services are�te essary through the following guidelines and with the concurrence of the client:
a. Surgical Cases:
When sur r hospitalization is requested, the examiners will refer the case to our Nurse
Case Manager (NCM). This in-house NCM can provide same day service on authorization if
necessary. She will thoroughly review the file for the treatment appropriateness and will
authorize reasonable treatment and fees consistent with their pre -negotiated rates.
Surgical cases that are generally referred to Nurse Case Management include:
i). When there is a need to determine medical necessity of a surgical procedure.
ii). Complicated post-operative needs (ie: home health vs prolonged hospital stay, confusing
DME needs).
iii). Any In-patient procedures.
iv) Any claimant that needs special attention.
v). Need for Medical Reserves Estimate.
Nou-Surgical Cases:
i) Any case that is complicated and needs special attention for which the Nurse Case
Manager should attend the medical appointments.
ii) Old files that need file review/case analysis and medical direction.
iii) Confusing files: That also needs to be reviewed with analysis and to have the claimant set
up for a second opinion or Peer Review.
iv) Disability beyond 4 weeks.
v When the client requests nurse case management.
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Medical Network Management
We have a very strong repertoire of providers that supply our clients with significant savings. We
recommend an initial meeting to compare rates and fees with cost containment providers so as to
ensure that the Cities are maximizing their potential. Once these providers have been identified
and agreed upon, the examiner will authorize treatment and bills accordingly. When legally
prudent, we will not authorize treatment for out of network providers and will object to their bills
therewith.
We take great care to assure maximum network usage by requiring contractual relationships with
the assigned facilities. These relationships require treatment protocols for each category of
industrial illness, ie. foreign bodies, lacerations, soft tissue injuries etc. We will also designate an
agreed upon panel for specialist referrals; all of whom should be network providers whenever
demographically feasible. We will do this by submitting a list to all industrial clinic that outlines
our preferred provider network for hospitals, surgery centers, diagnostic centers, durable medical
equipment, orthotics and prosthetics.
Treatment plans from our contracted providers are referenced through established guidelines as
recommended by Presley Reed, M.D. software (Medical Disability Advisor). Both in network
and out of network providers are profiled on a 21 -day calendar schedule. Measurements of each
open case continues of progress review of the treating physician to compliance with reporting
and billing requirements.
On the rare occasions when, due to factors outside of our control, treatment is channeled to an
out of network provider, we still aggressively require reasonable treatment levels and strict
adherence to the official medical fee schedule. Our professionals have a number of tools at their
disposal to assist in the out of network management process including, but not limited to,
Retrospect Review, Peer to Peer Review, Concurrent Review and on site nurse case management
visitations.
Standards and Performance Measurements
At HRMS, we realize that we are, first and foremost, a service organization. In fact, we attribute
our strong, steady growth rate, and our high account retention, to our commitment to excellence
in service. Our exceptional service and reputation have allowed us to grow steadily in a very
competitive market, in spite of a limited marketing endeavor.
When it comes to excellence in service, we do not believe that we can over -emphasize the
importance of compliance to standard operations procedures and high standards. Our ability to
achieve these high standards is made possible through our exceptionally low caseloads. Caseloads
are kept below State mandated maximum levels, allowing our staff the time to pro -actively manage
their files, rather than just reacting to events. Such highly individualized service returns dividends
in the form of better employee relations, lessens the life of the claim, and ultimately results in
lower claim costs. Currently, our average indemnity caseload is less than 150 files.
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We take great care in identifying key standards that we believe will ultimately affect the bottom
line costs of our clients. Our standards are as follows:
❑ 48 Hour Claimant Contact: 90% or better is Satisfactory
o Average Set up Time: Average of 7 days from knowledge to complete the entire set up
including 3 point contact, initial investigation, plan of action, documentation, reserve
setting and payment of indemnity benefits.
❑ Percentage of timely Set -Ups: 80%
❑ Closing Ratio: 95% or better monthly
❑ Mail and Bills Processing Time: 2 Days
❑ Clerical Instruction Sheet: All done within 7 days
o Diaries: 95% current within all times
❑ File Documentation: 98% on files
Compliance Measurements
These standards are measured and accomplished through the following reports and procedures.
❑ End of the Week Report: Every Monday morning each unit supervisor is charged
with reporting a weekly assessment of their unit's compliance to the manager in
selected areas for their unit. This is done to minimize backlogs.
❑ Claimant Contact and Set up Report: All new set ups are audited internally on a
weekly and monthly basis for compliance on `claimant contact' and `set tip time.
This is reported to the manager by the auditor. The results are addressed in the weekly
supervisor meeting.
❑ Departmental Monthly Report: All monthly closings and new incur -rats are audited
on a monthly basis to determine compliance levels with regards to claimant contact,
set up time, DWC notices etc.
A financial and procedural compliance analysis is compiled in a monthly report by the
manager. This tracks our inventory status, closing ratio, salvage percentage, mail
processing, claimant contact, set up time, subrogation and other financial data.
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o Internal Audits: We have audit forms that are filled out on randomly selected files.
We strive to complete four per Examiner per week. These are used to identify
compliance in claims handling procedures ie. Timeliness of payments, DWC notices,
set up, claimant contact and documentation as well as to identify areas for growth in
claims handling efficiency. These are to be used constructively to help the examiner
continually improvement their claims handling skills.
o Over diaries: The manager and supervisors have over -diaries on their examiner's
caseloads to ensure quality claims handling and follow up. Issues of concern are
addressed immediately.
Claim Closure Techniques
At HRMS, we are pleased to report a consistent track record of 100% + annual closing ratios of
our office aggregate inventory. This ratio is not just a factor of opens to closed but also factors in
re -opens and medical only conversions. Such a continuous track record helps keep your
examiner's inventories low, which beneficially impacts their ability to spend more analytical
time strategizing cost effective resolution to your files.
Consistent high closing ratios are usually reflective of two practices which (as explained above)
are monitored and tracked heavily at HRMS:
Early file intervention: Early communication and file investigation keeps severity
€ down through prompt rapport building with the injured worker. Such a rapport
decreases litigation ratios. Lower litigation rates lower the likelihood of permanent
disability. Files with no permanent disability have a much shorter life span.
Diary compliance: HRMS examiners review all files every 30-45 days. These
reviews include a synopsis of what transpired during the last period and a plan of
action to bring the file to closure, This brings constant direction to file to a resolution
state.
In compliance with State regulations, injured workers with no permanent disability are sent a
permanent disability denial letter along with panel qualified medical examiner information. if
there is no response in 30 days, we close out the file.
As a guideline, all files with permanent disability are forwarded to the DEU for a rating.
Nevertheless, our examiners do perform an initial rating of the report to commence disability
advances.
As a guideline, we close out the matured future medical maintenance files when there is sufficient
evidence to suggest that the injured worker has discontinued treatment on a permanent basis. This
is usually evident when the injured worker has abandoned treatment from 6 months to a year. We
close out executed compromise and release files upon the payment of the award.
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Written Procedures and Documentation
At HRMS, we believe that our standards, performance measurements, and policies and
procedures are above the industry.
Every staff member has a Policy and Procedure Manual that is reviewed and updated for each
client.
All mail is reviewed on a daily basis, and pertinent information is updated on the individual claims,
computer file notes. On a case by case basis, individual claim issues will be identified and plans of
actions developed to address the issues and the plan for closing of the claim. These plans of actions
will be updated when the file is reviewed on regularly scheduled diary dates or when significant
issues arise on an individual claim.
Settlement Procedures
Upon receipt of appropriate medical documentation, HRMS will rate all reports and calculate the
remaining exposures on the file. Although greater weight is usually given to the treating
physician's report, HRMS adjusters are trained to take various other factors into consideration
when weighing reports. Often times, this may involve input from the Cities.
Generally speaking, if the injured worker continues to work for the Cities, we most likely will
recommend a Stipulation. However, if the injured worker no longer works for the Cities, we will
l provide the Cities with a recommendation for a fixture medical buy out through a Compromise and
Release in addition to the Stipulation recommendation.
HRMS will conduct settlement negotiations on behalf of the Cities with the opposing attorney. We
are confident in our examiners' skill in resolving cases prior to trial. We attempt to establish and
maintain a good working relationship with applicant counsel in order to reach final settlements
quickly, fairly and at the lowest possible price.
Prior to recommending a settlement, we will provide the Cities with an in-depth analysis of our
options including an evaluation of potential costs in terms of time and money. Concluding our
analysis will be a suggested direction for action we can take. HRMS will always contact the Cities
to obtain authorization before entering any settlement agreements. With many of our current
clientele, we are accustomed to obtaining written settlement authority on all settlements. If such is
the level of involvement required by the Cities, we are eager to oblige. Nevertheless, we also
recognize and honor your time constraints. Therefore, if the Cities desire not to get involved in low
exposure settlements, we honor that request as well. We recommend an initial meeting to discuss
comfort levels on settlement and reserve authorities.
HRMS adjusters prepare Compromise and Release Agreements and Stipulations with Request
for Awards in specific cases on our claims systems. As indicated above the unit supervisor will
maintain first tier approval before the examiner makes settlement recommendations to the Cities.
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Excess Insurance
When reserves exceed a reserve threshold for reporting to the re -insurance carrier, HRMS
employees will draft the appropriate documentation to forward to the re -insurer. Our RMIS system
is capable of alerting us to such retention levels. Further, we have the capability to report these
cases on line, if the re -insurer is so inclined to receive notification in electronic format.
We will monitor all cases to assure compliance with the reporting standards dictated by the
Cities' reinsurance carriers. Further, where the self-insured retention level is exceeded, we will
submit billings and collect paid loss reimbursements from the excess carrier on a timely basis
and forward these recoveries to. the Cities.
We will identify and process all claims eligible for reimbursement from the California
Subsequent Injuries Fund and/or State Fund. HRMS will prepare the necessary
documentation to submit to the State and/ or State Fund for reimbursement to the Cities.
Medical Control
At HRMS we believe that efficacious monitoring of a treatment protocol comes through open
communication with the employer, injured worker and provider (in that order). Once we have
established the initial communication from the employer and the employee we can determine
what body parts are injured and authorize accordingly.
Every treatment procedure requires our express verbal or written authorization. We will not
approve treatment to unrelated body parts or disorders. Treatment protocols and their
corresponding bills that are not approved will be objected to therewith.
Rehabilitation
Unlike other fimzs that supplement service fees through the use of in-house rehabilitation
counselors, we maintain our independence from all vocational rehabilitation firms. HRMS
recommends utilization of at least two qualified independent firms with certified vocational
rehabilitation counselors on staff to serve our clients professionally and at reasonable rates.
Selected firms will also furnish job analyses and work feasibility studies in order to facilitate an
injured worker's timely return to duty.
HRMS will provide notice of entitlement to vocational retraining services to injured workers when
legally required, and will monitor these services for compliance with the Department of Industrial
Relations Rehabilitation Unit. HRMS provides full vocational rehabilitation services and benefits
as defined by Labor Code Section 4635. This is done at no extra charge to the file.
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Salary Continuation
We currently administer over a hundred public entities. Due to our many years of service, we have
acquired extensive experience in the specialized administration of cities involving 4850 benefits and
salary integration/supplemental pay as well as industrial retirement plans.
During our 3 -point contact with the Cities, we will document the compensation benefit that the
employee will be receiving from the Cities. HRMS will then issue vouchers to the Cities for
accounting/payroll. Should the employee's disability exceed the Cities' salary continuation, FIRMS
will be in contact with the Cities to coordinate further benefits.
Cost Containment Results
Successful medical management ultimately leads to lower claims costs, which translates into
significant savings for our clients. At HRMS, we believe that we have a proven record of
containing costs. Recently, we researched the results of our Diamond Bar office for the fiscal
year 2000 - 2001. Specifically, we compared our aggregate closed claims costs on indemnity
files that closed in the year with the average costs on indemnity files in California. The averages
for the State of California can be found through the WCIRB 2000 annual report (See Appendix
VII). The industry average based on this report is $36,000. We are very pleased with our results.
Our average closed claim costs is $16,381.40. This amount includes reimbursement for the
Educational Code, Salary Continuation programs and Labor Code Section 4850 benefits, which
at times can exceed all other costs of the claims. This reflects the aggressive claims handling and
utilization of the cost containment programs that HRMS has in place.
We also compared our average medical expenditures on our indemnity files that closed in the
year 2000 with the average paid on an indemnity file in California. We are also very satisfied
with these results.
$20,000
$15,000
$10,000
$5,000
$0
California Average 2000
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Cost Containment Reporting
For those clients that desire a report of the medical management cost containment savings, we
can supply them with a report to our clients in an Excel format that outlines their program's
savings. This report can be mailed in paper or electronic form.
The claims manager can also supply the Cities with detailed monthly reports specifying their
closed claims costs and trends thereof.
c. Reserving Practices and Philosophy
Our reserving practice procedures allows us a 90%+ confidence level. However, annually, we
would advise the Cities' auditors or actuaries to add on an additional 25% for any unexpected
reserve development.
Alt initial reserves are reviewed and approved by claims supervisors. Subsequent reserve
increases will require supervisor intervention on aggregate losses of over $25,000 incurred.
Manager intervention occurs on aggregate incurred reserve levels of $100,000.
Immediately upon knowledge of a claim from any source, HRMS' adjusters prepare a
comprehensive reserve worksheet to determine the amount of the expected loss. The worksheet
requires that the claims examiner document the reasoning behind the forecasted expenditure.
Reserves are reviewed in all cases on a 30, 60, and 90 -day basis, or at any time when
circumstances dictate re-evaluation. There are numerous details considered in establishing
reserves. Those factors include the nature and extent of the injury, whether or not the case
involves lost time, the amount of investigation required, if the case is being litigated, and if there
exists any possibility of having to provide vocational rehabilitation benefits.
All reserves changes of over $25,000 gross incurred will be reported to the Cities through e-mail
outlining the factors affecting the reserve amount, facts of the accident, nature and extent of the
injuries and any other pertinent investigation details.
Because our claims examiners are fully trained in rating medical reports, their expertise in
accurately assessing the extent of possible, or probable, temporary or permanent disability is
noteworthy. This skill, coupled with, the requirement to document the rationale behind the
incurred loss, leads to the setting of actuarially responsible reserves.
HRMS' supervisors review and approve all reserve changes within the module. The claims
manager has to approve all reserve increases over $100,000. As another step in this process,
HRMS' internal auditors will randomly review files for reserve adequacy.
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d. Service Providers and Allocated Expenses
Financial Independence
HRMS is strictly a claims administration fum. By doing so, we maintain independence from
service providers associated with the workers' compensation industry. Independence allows us to
offer complete objective assistance to injured workers, as well as the employer. By being
independent, we have no in-house requirement to choose pre -designated investigators,
rehabilitation vendors or attorneys. This autonomy avoids frustration and eliminates tendency to
provide ancillary services that may be in question. HRMS is free to select the provider with the
best reputation for quality and service at the most cost-effective price to the Cities.
Attorneys, Doctors, Rehab Counselors and Investigators
A panel of service providers to be utilized for the Cities is prepared jointly by HRMS and the
client. These providers usually know the needs of the particular client and have an established
relationship with the employer. If the provider is providing quality work at reasonable rates, then
we maintain the same vendors and work with them.. Ultimately, the client controls the panel of
providers utilized on its account.
General Claims Handling
Investigation
Pursuit of Fraud
At HRMS, we take the pursuit of fraud very seriously. Over the past years, we have had
remarkable success at reporting workers' compensation fraud, which has resulted in several
successful prosecutions.
Our claims manager has a strong background in fraud investigation. As the SN Director for a large
workers' compensation carrier, he orchestrated the investigations of over 50 successful
prosecutions and convictions. As our internal SN program overseer, Mr. Adams has helped us
successfully investigate several claims to successful prosecution. He has an in depth knowledge of
the Insurance Codes 1871.4, 1875 and 1877 as well as Labor Code 139.3 and Criminal Codes 418,
487, and 550.
HRMS fights fraudulent activity through an aggressive internal SN program. Our procedure is to
report any suspected fraudulent activity to the supervisor and claims manager itmnediately upon
suspicion. Our examiners are afforded a fraud checklist to assist them in the identification process.
Generally speaking, they report all suspected fraudulent claims immediately upon suspicion.
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Our examiners have undergone and continue to receive extensive fraud training twice a year. From
this they have developed and acute awareness of the four types of fraud that can impact a self-
insured workers' compensation program. These are: l) Claimant Fraud 2) Provider Fraud 3)
Employer Fraud and 4) Forgery. They also have a solid understanding of the number of insurance
and criminal code statutes that apply to the arena of workers' compensation.
The supervisor and manager will maintain an active "SIU" diary on all identified fraud cases. The
examiner and supervisor will jointly prepare a case synopsis. Once this is done, the manager will
review the case and formulate an investigative plan of action. Once the evidence is obtained to
report the claim, the manager and supervisor will prepare a case synopsis to the corresponding
District Attorney's office along with the appropriate Fraud Department forms.
The examiners assigned to the Cities of Costa Mesa and Newport Beach program have received
extensive fraud training from in-house personnel as welt as outside training. The examiners are
trained on the checklist procedure for fraud identification and will follow the office procedures for
reporting and investigating such.
All fraud referrals will be formulated in a monthly report to the corresponding Cities'
representatives. This report will include the number of claim denials, District Attorney referrals,
arrests and convictions. A savings report will be presented showing withdrawn liens, reserve
savings and fraud investigation expenses.
Investigations
£ A preliminary determination of compensability in accordance with the California Labor Code is
made following a review of the Employer's Report of Injury or Doctor's First Report of Injury. If
a question arises regarding compensability, we will contact the Cities' representatives to gather
more data. Based upon the information obtained, HRMS will suggest an appropriate course of
action. This recommendation may include a delay or denial of the claim. Final determination of
compensability, however, will generally rest with the Cities. The initial decision to either accept
or deny a claim will be made within time frames mandated by the State.
At HRMS, every claim is investigated. However, care is taken to eliminate overuse of outside
investigators. In many cases, AOE/COE issues can be resolved by HRMS' claims professionals
during our three-point contact process.
Communication as soon as possible after an injury has occurred has been proven to be a key
element in the potential scope of the claim. For this reason, we use the "48 hour -three-point
contact" approach. We make every effort to contact the injured worker, the employer, and the
treating doctor within 48 hours of our knowledge of a work-related injury. This allows us to
retain more medical control, evaluate the circumstances giving rise to the industrial accident,
take necessary action to prevent possible expansion of the claim and establish a rapport with the
injured worker.
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However, in cases where the employer has serious questions concerning the legitimacy of a
claim, we find it cost effective to refer such matters out for investigative services to support a
potential denial. By having a concrete statement in hand, we are able to solidify the facts early on
so that they do not change in the future.
We also recommend investigation referrals on subrogation cases where the potential recovery
may significantly exceed the costs of the investigation report. On such cases, we will refer out to
a provider to take pictures, determine the fault ratios and identify the third parties.
Matters in which we may employ the use of an investigator include:
A) Factual AOE/COE disputes
B) Subrogation: where recovery potential exceeds $1,000.
C) Labor Code 3600 (a)(10) "post tennination" claims
D) Psychological claims
E) Questionable Cumulative Traumas
All investigation assignments are to be completed within 30 days of assignment.
Index Bureau
Part of our commitment to investigate all claims includes our pledge to index all the Cities'
claims. As a long-standing subscriber to the Index Bureau, HRMS reports all new claims to the
Index System. Consistent with our current policy, HRMS will send all of the Cities' claims to the
Index Bureau and will copy all such reports to the Cities' Safety and Risk Managers,
Surveillance
As with all investigation referrals, it is our practice to discuss any subrosa activities with the
Cities' contact prior to the assignment. We recommend only referring out for such services
where there is a reasonable suspicion that there is malingering on behalf of the injured worker.
Before such a referral, an examiner does a costibenefit analysis to determine if the subrosa has
the potential to derive the savings necessary to employ the expense.
Matters in which we may engage in subrosa include:
a) We have reason to believe that the injured worker is working while collecting temporary
disability or salary continuation.
b) We have reason to believe that the injured worker is engaging in activities outside of their
restrictions.
c) The injured worker's permanent disability is grossly inconsistent with reported activities
or the objective findings.
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We do not recommend subrosa assignments on files with very little potential exposure. Usually
subrosa investigations are reserved for those cases where we expect a high cost benefit ratio of
rettmi for our clients. We will discuss all subrosa assignments with the Cities and obtain their
authority prior to referral. Any request by the Cities for subrosa will be honored. HRMS has a
provider list for subrosa investigators, but will certainly honor any vendor selection by the Cities
for case referrals. As with all investigations, subrosa assignments are to be completed and
submitted within 30 days.
Litigation
Initial Legal Analysis
HRMS does not employ staff hearing representatives. Legal assignments or recommendations
are made after review of such factors as the complexity of the case, the presence of opposing
counsel or degree of litigation expected, the need for a particular defense strategy, and the
existence of appealable issues. We will prepare an analysis of all legal cases, outlining exposures
and evaluating possible defense options. We will handle all non-complex legal claims in-house
whenever possible. Before referring any file to outside counsel, HRMS will prepare a
recommendation for such action, and forward it to the Cities for approval.
Legal Firms
If we are awarded the contract, we recommend meeting with the Cities prior to the
i commencement of services to discuss which attorneys the Cities are amenable to using. As we
have no monetary affiliations with any provider, we have no financial incentive to recommend
any firm over another. In fact, we believe that specific attorneys, rather than firms, have
generally been found to provide the most effective representation. HRMS will work closely with
counsel in evaluating and making recommendations for case management.
If so desired, we will work closely with the Cities in evaluating legal counsel and make
recommendations regarding suitable panel attorneys. We can also use existing attorneys if
preferred.
Referral Criteria
Legal assignments or recommendations are made after review of such factors as, the complexity
of the case, the presence of opposing counsel or degree of litigation expected, the need for a
particular defense strategy, and the existence of appealable issues.
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At HRMS, we recognize the below issues or characteristics of files that may be indicators to make
a legal assignment:
Case is set for hearing or trial
Case is represented and delayed: Need deposition
Represented case with potential of appreciable apportionment:
Need deposition.
Complex contribution issues with need to seek order joining co-defendants.
132(a) and S&W allegations
A need to depose a treating physician or panel QME.
Discovery order compelling
Other complex factors where there is a positive cost benefit ratio benefit.
Legal Handling Protocols
When a legal referral is appropriate, the scope of services and defense issues are identified.
HRMS maintains litigation control by providing specificauthorization to attorneys to conduct
clearly defined and agreed upon tasks. This authority is set forth in writing. HRMS will monitor
all legal activity throughout the life of the claim. Changes in our defense posture, or approach,
will not be accepted unless by our agreement. The Cities' consensus is also required. We will
ensure that all obligations imposed by the courts relating to cases under our charge will be met,
including those involving subpoenas, depositions, and timely filing of necessary legal documents.
Legal Monitoring
Litigation monitoring is achieved through provision of regular status reports, which are to be
served to HRMS and the Cities. An initial progress report is due from the attorney within thirty
days of receipt of the case. Follow-up reports are required a minimum of every 90 days, or
whenever significant events occur. These periodic reports must be pertinent updates of case status
and prognosis, with a realistic time -line and strategy, not just a recitation of prior reports.
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Subrogation
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During the initial audit of the Cities' existing files, HRMS will analyze each claim for this
potential. In addition, as new claims arrive, possible third party liability will be taken into account
during our initial file review. The original set-up of a claim in our Risk Management Information
System (RMIS) requires documentation that a decision has been made with respect to potential
recovery.
Once identified, all subrogation case assignments are referred to the claims manager for specialized
handling. However, before initiating subrogation recovery, we will obtain specific direction from
the Cities. If the Cities agree that we should pursue their third party interests, we will do so
aggressively. The claims manager will then review the progress of our recovery effort no less often
than every 90 days.
In those instances where third party liability is evident, HRMS' claims manager will put the
responsible parties on notice and continually monitor the file for recovery no later than every 90
days. Subrogation reports will be provided to the Cities on a semi-annual basis, or more frequently
if desired. The HRMS RMIS report provides for separate analysis and tracking of all third party
cases.
Whenever possible, our claims manager will attempt to settle the subrogation matter without the
use of attorneys. This further increases the potential reimbursement to the Cities. In addition to
limiting the amount of time an attorney is needed, HRMS will provide a determined in—house
subrogation effort. We will only assign counsel as a last resort to recover financial loss incurred
by the Cities as a result of employee injuries and property damage.
e. Americans with Disabilities Act
The claims manager, supervisors and claims examiners all have working knowledge of ADA,
FMLA, Employment Law and Section 504 of the Rehabilitation Act. The dedicated claims unit
proposed attended a recent seminar on these issues in 2001. In addition, HRMS has conducted
two seminars in 1998 and 1999 for our clients and claims staff.
3. Offeror works jointly with the Cities as partners in the administration of the program. The
Cities are expected to report all claims timely and to fund the claims when payment is needed.
4. HRMS is a claims adjusting firm, and all aspects of claims administration is provided.
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5. Additional Services
Training and Safety Programs
Communication/File Review
As with all of our clients, HRMS will provide the Cities with quarterly or monthly file reviews of
all of their open claims. Our file reviews contain narratives -of the selected claims along with a
reserve analysis (See Appendix VI).
The Cities can also request monthly visitations to meet with department heads to review selected
files, meet with safety committee personnel, conduct on-site visitations with injured workers and
educational seminar sponsorships. These services are provided to the Cities without further
charges.
HRMS conducts periodic seminars for our clients in which we review new developments in workers'
compensation laws and regulations. For example, one of our recent seminars dealt with methods for
reducing the additional loss exposure inherent in the Moorpark decision. Another was a
comprehensive program concerning AB 435. These "workshop style" conferences allow us to share
our experiences with those of our clients, and provide clear, step-by-step advice about claims
management, reporting procedures and providing information to the client needed to effectively
participate in claim handling strategies.
t At HRMS, we recognize that the passing of A.B. 435, left most employers in the dark, when it
comes to the medical status of their employees. It is our position that the passing of this bill was
not to withhold relevant medical information, but in fact, to keep the employee's private medical
history, private. When we receive a medical report from a physician, which renders temporary or
permanent work restrictions, we review the history provided to the doctor from the employee. If
we determine that there is non -relevant medical information in this report, we exclude this
information. We then provide the relevant information to the Cities, to make a determination on
whether or not modified duty or permanent modified duty is available, pending the case. In the
event that the case is litigated, an employee will receive medical information, once the medical
has been served on the WCAB which now makes it public record. The Cities can also implement
that all injured workers' sign a medical release at the time of completing the claim form.
HRMS has an experienced claims manager on staff whose primary function is to manage the
claims staff and to assure adherence to the Labor Code Rules of Practice & Procedure as well as
monitor all guidelines set forth by the Self -Insurance Plans. Our claims manager will provide
copies of any changes, statutes, rules or regulations directly to the Cities. Currently, we have
requested the new OSHA log to distribute to our clients. This service is provided at no additional
cost to the Cities.
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HRMS has developed a comprehensive Claims Manual for its clients. This reference material will
be updated to include the specific guidelines required by the Cities for administration of workers'
compensation claims in accordance with its overall philosophical framework. We also provide a
comprehensive employee booklet explaining the Workers' Compensation system, with appropriate
caveats about misuse of the system, for distribution by the Cities to its current and future
employees.
HRMS has had considerable experience assisting clients in identifying the need for, and
implementing, safety and loss control practices in the workplace. This includes introduction of
respected safety consultants to the Cities for the purpose of controlling accident frequency. These
professionals are able to develop and carry out specific recommendations and procedures to
address loss exposures that may have been identified. We also work closely with the designated
safety personnel for insurers, as we firmly believe that prevention of work related injuries is the
best cost containment device available. We provide these services to the Cities, as part of our
program. There are no additional costs to the Cities.
Other Services
Medical Bill Review
Our medical cost containment program is among the most effective in the industry. Through our
contacts, we have established contracts and relationships with various bill review organizations
and providers to ensure that our clients are maximizing their medical savings potential.
€ Medical Auditing Services (MAS): This is an in-house bill review program, which is solely
owned and managed by HRMS. Last year, MAS saved our clients over 40% of the gross amount
billed. MAS charges a competitive rate of 206/o of savings as fees.
Photocopy Costs
Included without further costs.
Safety Inspection & Loss Control Services
Loss analyses are provided at claims administration level without further costs.
Fraud Investigation Services
Included without further costs.
Index Bureau Membership/Usage
Part of our commitment to investigate all claims includes our pledge to index all of the Cities'
claims. As a long-standing subscriber to the Index Bureau, HRMS reports all new claims to the
Index System. Consistent with our current policy, HRMS will send all of the Cities' claims to the
Index Bureau and will copy all such reports to the Cities' Safety and Risk Managers. The
membership fee is paid by HRMS. However, there is a $4.00 fee for each claim indexed in the
system.
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G. Reports and Forms
Computer -Related & Reports
a. Reporting Capability
Our RMIS system identifies injuries by various criteria and can be sorted in over 100 ways on
existing Cities' converted files and new losses. Some of the basic criterion by which the claims
can be sorted include the following:
* Type
* Examiner
* Status (open and closed)
* Location
* Body Part
* Cause
* Policy Year
Claim Number
b. Loss Runs
* Injured Worker Name
* Delay/Denied
* Fiscal Year
* Incident Date
* Report Date
* Nature of Injury
* Department
* Subrogation
Loss Runs (Please see sample in Appendix II) will be provided on a monthly basis. At a
minimum, the Loss Runs include the following information:
* Type of claim
*
Future & paid medical
* Cause of loss
*
Future & paid T.D.
* Status (open and closed)
*
Future & paid P.D.
* Litigation status
*
Future & paid voc. rehab
* Specific Cities' site and division
*
Allocated loss adjustment
* Vocational rehabilitation status (if applicable)
*
Total incurred
Date
*
Subrogation recovery
* Time of Day
*
Excess insurance payment
* Body part, identifying injured side
*
Investigation services
* Object/substance involved
*
Legal services
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These reports are available in various time formats and history periods, including "as of and
actual time. Upon the initiation of the program, we will meet with the Cities to determine what
reports are necessary on a monthly basis. At a minimum, the Cities' Risk Managers can expect to
receive, no later than the 15`x' of each month, standard reports which include:
• Open and closed claims summary report — all years, date of injury, employee department,
employee job class, claim number, employee name, cause of injury, nature of injury, body part.
• Open claims summary report — all years.
• Check register by check number.
• Trust account activity register.
• Summary of losses by year.
• Log of Occupational hijuries and Illnesses —Annual OSHA log.
• Annual list of all claims having a total incurred over $25,000.
• Summary of penalties (if any).
• The public sectors self -insurer's annual report as required by the Department of Industrial
!. Relations Office of Self -Insurance Plans, and submit it to the Cities no later than 30 days prior
to the due date.
• Maintain a list of all claims referred to case management, including the date of referral, the
name of the case manager, the recommendations of the case manager, including savings, and
the date the case management issue is closed.
• Loss triangle.
C. Other Reports
In addition to these computer-generated reports, the Cities can also receive the following monthly
reports from the office manager:
• Manager's Monthly Report: Summarizing results for the Cities in closing ratios, claimant
contact, set up time etc.
• Subrogation Report: Outlines all recoveries and credits for the month.
• Hearing calendar report.
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HRMS will develop and provide to the Cities, as requested, specialized reports and statistical
summaries to assist in the evaluation and management of the Cities' compensation program. Such
reports and summaries, except those, which are unusually complex, shall be delivered to the Cities
usually within 14 calendar days of request. Should such reports require an additional charge,
authorization will be obtained from the Cities prior to producing those reports.
Our system also accommodates the entry of supplemental pay information. This data is
identifiable and can be included or excluded in reports depending on the needs of the Cities.
Specific payroll information could be gathered through the Employer's Report of Occupational
Injury. Our system is also capable of providing the information necessary for Cal OSHA
reporting requirements..
In addition, RMIS allows us to prepare custom tailored reporting to suit our clients' needs. The
new syllabus will include Report Writer software that will facilitate custom reports. On a
monthly basis, HRMS will provide the Cities with a loss run report. This analysis will contain a
summary of OSHA recordable days by employee, (we will train designated City personnel if
necessary) and an alphabetical listing of all open and closed claims. We will provide any
specialized reports or statistical data necessary to support the Cities' risk management program.
Software Design
HRMS currently utilizes the new state-of-the-art Windows based Valley Oaks System Portal
software to capture claims information for its clients. This system allows reports to -be generated
in a variety of formats using a custom "Report Writer" module. This innovative software brings
many new features to workers' compensation data capture; is "Y2K" compliant and runs on
Microsoft NT. Connectivity is effected through a Citrix system, and we use a secure Web Site
for enhanced EDI.
Currently, our computer system is available 24 hours a day, Monday through Friday.
Our computer system has the capabilities for remote access between the Cities and defense .
attorney firms. There is a licensing fee for each remote access account of $1,000.00 per year.
On -Line RMIS Access
HRMS has available on-line "read only" access to the database. This allows the client to look at
the entire file, including the adjuster's daily notes. The Portal system is configured to include E -
Mail capabilities for leaving messages for the adjuster, and remote report writing and printing at
the client's facility, in this package. The client may access these features after providing
hardware and software at its facility capable of Internet access with sufficient RAM to handle
downloading of Windows based data. The Portal system will require an annual license fee for
this optional remote use.
29
Diary and Notes
This software provides for an automatic diary system requiring review of files on a 30, 60, and 90 -
day basis. Warnings are programmed into the system to alert adjusters to the need for diary review.
Automatic diaries are in place QRR referrals at 70 days of lost time. Supervision overview diaries
automatically posted on every file.
Diary updates and reviews. are a significant part of our internal audit process. The system also
provides for examiner notes. These entries are confidential to the actual claim file, but the Cities'
files would be available for `real time" read-only review through accessing the Internet and
thereby the secure Web Site.
Electronic Data Interface
We currently have the capability to export and import data via Internet in a wide range of
formats, including ASCII and Microsoft Excel. The Portal system includes interconnectivity
through a secure Web Site. This capability also allows us to securely export and import each
client's data to that client (but no client's data is accessible by any other client) without
corruption concerns. We also have the ability to download our client's Unit Stat data with this
system.
On -Line / Remote Claims Reporting
( HRMS has designed and operates a program allowing our clients to report all new injuries "on
line" with our computer system. When they are done entering the data on the computerized 5020
form, they simply save the document. By doing this, an actual pending claim is created within our
system. The employer can then print the 5020 for their records and note the claim number. HRMS
then receives a message of receipt of this pending claim instantaneously. Upon notification we
immediately begin to process the claim. Upon receipt of a fully completed Form 5020
electronically, we are able to download it to our RMIS system, facsimile execute it on behalf of the
employer, forward the required copy to the State and return the employer's copy to the client by
fax.
Documents, Records and Files
All documents, records, files and computer information relating to an injured worker's file
(except for software) will remain the exclusive property of the Cities. We maintain these records
on behalf of the client for the period required by the California Labor Code. Such maintenance
will continue for the duration of our service as Claims Administrator.
30
t
DWC Notices and Correspondence
Our system integrates all of the state mandatory DWC letters. These pre -formatted letters are easily
accessed by the examiner or assistant through the RMIS system itself, which retrieves all system
data related material in the required fields. HRMS currently has over 300 correspondence
documents (letters) in the database. In addition, HRMS has full capability to integrate new letters.
Tlurough an approval process new letters are continually being input on an as needed basis. This
saves our technical and clerical personnel considerable time which we use for more productive
tasks such as case analysis and claimant contact.
HRMS provides, at no cost to the Cities, all State mandated forms. This includes our pre-printed
5020, DWC-1 and the information pamphlets for your employees. We will also supply the Cities with
Supervisor Reports of Injury, doctor referral forms, return to work slips and wage statements.
31
H. Compensation/Payment Schedule
Service Agreement and Fees
The fee structure over a three-year initial contract term is as follows:
A. YEAR ONE. For Administration of claims from September 1,
2002 through August 31, 2003, and thereafter for the life of the contract period,
the sum of Three Hundred Ten Thousand Dollars ($310, 000), payable
quarterly in advance.
B. YEAR TWO. For Administration of claims from September 1, .
2003 through August 31, 2004, and thereafter for the life of the contract period,
the sum of Three Hundred Nineteen Thousand and Three Hundred Dollars
($319, 300), payable quarterly in advance.
C. YEAR THREE. For Administration of claims from September 1,
2004 through August 31, 2005, and thereafter for the life of the contract period,
the sum of the contract fees are subject to further negotiation up to a maximum
increase cap of 3% from the base amount of $319, 300.
D. "TAIL CLAIMS". Administration of existing claims is included for the
life of the contract in the above prices, so long as such claims were open as of the
day preceding the first day of the first contract year.
E. START UP COSTS.
F. ANNUAL LICENSE FEE.
There are no start-up costs.
Included at no additional cost.
G. MEDICAL BILL REVIEW. Medical bills will be reviewed, at a service fee of
twenty percent (201/o) of net savings generated by review and reduction, through
Medical Auditing Services.
32
I. Validity of Proposal
This proposal shall remain valid for one hundred twenty (120) days.
J. Certificate of Insurance
Insurance Requirements
HRMS maintains. in force insurance coverage, in the policy amounts, as follows:
General Liability
$1,000,000
Automobile Liability
$1,000,000
Workers' Compensation
Statutory Limits
Fidelity Bond
$1,000,000
Claims Adjusting E & O
$1,000,000
The Cities of Costa Mesa and Newport Beach will be named as "additional insureds" under
the general liability policy and as "loss payees" under the fidelity coverage. A thirty -day notice
of termination clause will be provided to the Cities.
33
SECOND ADDENDUM TO
AGREEMENT FOR WORKERS COMPENSATION
CLAIMS ADMINISTRATIONS SERVICES
This Second Addendum ("Addendum") is made and entered into by and between the City of Newport
Beach and the City of Costa Mesa ("Cities") and Hazelrigg Risk Management Services, Inc. ("HRMS") on
July 1, 1997, with respect to that certain Agreement for Workers Compensation Claims Administration
Services by and between the City of Newport Beach, The City of Costa Mesa and HRMS ("Agreement"),
dated April 18, 1995, and as amended July 1, 1996.
Term of Agreement
Section 1. of the Agreement is hereby amended to extend the ending date to June 30, 1998.
Entire Contract
Other than the amendments set forth in this Second Addendum, all other terms and conditions of the
Agreement shall remain in full force and effect. The Agreement and Addendum's shall constitute the
entire agreement between the parties.
DATED: % /y
DATED: - ` - ri - 1?I
DATED:
Approved_as to form:
Ln
51
6 -)o -V7
A. Kathe, City Attorney
Costa Mesa
ity Attorney
ity of Newport Beach
.1.ti1 AI
City of Newport Beach
A Municipal Corporation
M Via... •�����
w� J. M)4hy/ity Manager
City of Costa Mesa
A Municipal Corporation
By:
A an L. Roeder, City nager
Hazelrigg Risk Management Services, Inc.
By: a4w�
Arlene Hazelrigg, Pr . e t
AGREEMENT FOR WORKERS COMPENSATION
CLAIMS ADMINISTRATION SERVICES
THIS AGREEMENT is made and entered into by and between:
CITY OF NEWPORT BEACH AND CITY OF COSTA MESA
Municipal Corporations
(hereinafter "Cities")
AND
HAZELRIGG RISK MANAGEMENT SERVICES
Independent Contractor
(Hereinafter "HRMS")
1. TERM OF AGREEMENT.
The term of this Agreement shall be for a period commencing on 12:01 a.m. on
May 1, 1995 for the City of Newport Beach and July 1, 1995 for the City of Costa
Mesa and ending 12:00 midnight on June 30, 1996.
2. SERVICES TO BE PERFORMED BY HRMS.
HRMS shall perform the following services for the Cities:
A. Program Development
(1) Consult with the Cities personnel and assist in developing the necessary
procedures, and practices to implement the Cities self-insured program
and to meet legal requirements of the State of California Workers'
Compensation Laws.
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(2) Conduct or assist in conducting orientation meetings for the Cities
personnel in the processing of industrial injury cases.
(3) Provide information on changes or proposed changes in the Workers'
Compensation laws of the State of California.
(4) Identify problem areas in the Cities individual Workers' Compensation
Programs and recommend solutions.
(5) Establish procedures for reporting industrial injuries, medical referrals,
personnel -payroll responsibilities and necessary documentation to
provide for the payment of benefits, medical costs, legal fees and other
related costs.
(6) Design all forms necessary for the efficient operation of the Cities
Workers' Compensation program.
(7) HRMS shall provide notification to all employees, medical providers
and service providers of the change in Workers' Compensation
Administrators. This notification shall include a statement indicating that all
outstanding past and present billings on any of the Cities claims should be
submitted or forwarded to HRMS for processing.
(1) Review and process all claims for Workers' compensation benefits in
full compliance with the workers' compensation laws of the State of
California and other state regulations governing the administration of the
self-insured workers' compensation programs.
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(2) Determine the compensability of claimed injuries and illnesses in
accordance with the Sate of California Workers Compensation laws and
decide what benefits, if any, should be paid or rendered in each in a timely
manner.
(3) Determine eligibility for and authorize payment of medical benefits
and authorize examinations to determine the nature and extent of disability
when appropriate.
(4) Determine eligibility for and authorize payment of temporary disability
compensation and salary continuation in accordance with medical
recommendations.
(S) Determine the extent and degree of permanent disability, if any, of
injured workers utilizing medical sources provided. All findings will be
reported to the City involved before any action is taken.
(6) Authorize the payment of permanent disability compensation and
death benefits in accordance with advisory ratings, findings and awards, all
of which have been approved by the involved City in advance.
(7) Refer litigated cases to attorneys utilizing an agreed listing of legal firms
provided by the Cities. Assist in the preparation of litigated cases,
negotiations of Compromise and Release settlements and subrogation
actions.
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(8) Ensure that, for employees who are represented by legal counsel, their
attorneys receive copies of reports and correspondence, as appropriate
and/or required.
(9) Maintain, on each claim, reserves for all anticipated benefits and related
expenses.
(10) Investigate or arrange for investigation of questionable cases and long
term cases to determine disability or continuous disability status of
employees in order to properly adjust all cases.
(11) Assure that all claims staff assigned to the Cities "Dedicated Claims
Unit" are approved by Cities and possess all the
qualifications/certifications/licenses required to administer the Cities
workers' compensation self-insured program.
(12) Ensure and maintain the integrity of the "Dedicated Claims Unit" with
the following personnel:
A. Supervising Claims Examiner with a minimum of 5 years
experience and with a case load not to exceed 75 claims, plus or
minus 10%;
B. Two Claims Examiners with a minimum of 3 years experience
and with a case load not to exceed 150 claims each, plus or minus
10%, and a
C. Claims Assistant to provide clerical support to the claims staff.
(13) Establish and maintain, for a minimum of five (5) years after closure, all
claim files. Claim files shall be the property of the Cities. At the discretion
of each City closed claim files may be either destroyed or possession of the
files transferred to the individual City.
(14) Apply for and collect reimbursement from all excess insurers on the
Cities behalf where a loss exceeds the Cities self-insurance retention limit.
(15) Timely inform the City of all hearings and matters scheduled before
the Workers' Compensation Appeals Board.
(16) Cooperate fully with all Attorneys chosen by the Cities, including the
City Attorney, or any other Attorneys engaged on the Cities behalf.
(17) Assume all existing claims at the time the contract is awarded.
(18) Provide a complete claims audit of all transferred files for City of
Newport Beach, by June 1, 1995 and for City of Costa Mesa, by September
1,1995.
(19) Comply with the following performance standards:
A. Within 24 hours of receipt of notice of the claim, the claims
examiner must contact the injured employee suffering an injury. In
serious cases, the Supervising Claims Examiner, will contact the
City's Risk Manager to discuss appropriate claims management of
the case.
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B. First payment of temporary disability compensation or salary
continuation must be made within 14 days of employee's first day of
disability.
C. Examiners must contact the Cities whenever there is a change in
status of temporary disability or permanent disability.
D. Permanent disability advances shall be made in accordance with
the Labor Code.
E. Supervising Claims Examiner shall review every case opened
within 30 days of its receipt.
F. All inquiries from injured workers and City personnel will be
responded to within 24 hours of receipt.
G. Monitor and pay medical/legal expenses within 14-21 days of
receipt of the bill. HRMS shall provide the Cities with copies of
medical bills upon request by each City; will require medical
treatment be pre -authorized whenever possible, and that all charges
are to be paid at the usual and customary rate according to the
provisions of the Workers' Compensation laws.
(1) Develop and recommend with the Cities input a panel of medical
providers for the initial treatment of injured employees and recommend a
panel of such specialists as may be required for long-term or other
disabilities requiring special treatment.
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(2) Monitor treatment programs for injured employees, including the
review of all "Doctor's First Report of Work Injury" to assure that
treatment is related to a compensable injury or illness. Copies of all
medical records will be sent to the Cities.
(3) Advise the panel of medical providers that both Cities have active
modified/light duty "return to work" programs. The Claims Staff will work
closely with medical providers to monitor and assist employees return to
full work or modified duty.
(4) Audit all medical bills prior to payment to determine whether they are
reasonable, necessary and directly related to the injury or illness. HRMS
will provide medical bill review and auditing services by in-house staff at a
fee of 200 of medical cost savings.
(5) Administer and process all lifetime medical cases.
D. Claims Investigative Services
HRMS agrees to arrange for the claims investigative services necessary to
conduct a thorough investigation of any claim or dispute. These services shall
include the following:
(1) Arrange investigation, with approval of the Cities, to confirm whether
the injury or illness arose out of and occurred during the course and scope
of employment.
(2) Monitor all cases for potential subrogation recoveries and arrange for
investigations as, necessary.
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HRMS agrees to provide consultative services necessary to supply the Cities
employees with full and complete information and guidance regarding their rights
and benefits.
These services shall include the following:
(1) Send an injured employee a "Claim Acceptance" letter explaining their
Workers' Compensation benefits.
(2) Arrange for informal permanent disability ratings.
(3) Identify and solve employee problems arising out of work -incurred
disabilities.
(4) Ensure that the return to work or reassignment of injured employees
to other jobs is consistent with the medical recommendation of the
treating physicians.
(5) When medically appropriate, develop rehabilitation programs for
injured employees with approval by the Cities and the employee. The
Cities reserve the right to select the vocational rehabilitation vendor.
(6) Maintain close liaison with treating physicians to assure that employees
receive proper care to avoid over -treatment situations.
(7) Recommend and assist in the development of medical standards and
health requirements for the Cities occupational classifications.
(8) Carefully monitor medical reports and fees for self -procured medical
services.
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(9) Inform the employee of all medical appointments in a timely manner.
WENIFT I .@ -r
HRMS agrees to procure rehabilitation services necessary to develop and maintain
a good, sound rehabilitation system. These services shall include:
(1) Work with employees, Risk Management and departments of the Cities
to provide for the rehabilitation, retaining or reassignment of employees
with physical limitations occurring from industrial injuries.
(2) Administer rehabilitation program for the Cities pursuant to applicable
State Laws, rules and regulations.
(3) Closely monitor plans which are submitted to the Rehabilitation Bureau
for vocational rehabilitation.
G. Statistical Reporting Services
HRMS agrees to provide appropriate data on all reportable injuries as follows:
(1) Provide a monthly loss experience report, on or before the fifteenth
day of each calendar month, for the preceding month.
(2) A detailed listing of open claims by location, stating claim number;
employee name; cause of injury; nature of injury; body part; medical paid
last month; TTD paid to date; medical paid to date; remaining indemnity,
medical and allocated reserves; litigation expenses paid to date; type of
claim (lost time or medical only); and a short summary of planned handling
activity.
!LIE
(3) Summaries of all open and closed claims by location, fiscal year; total
number of open and closed claims; current month open and closed claims;
type of claim; medical paid to date; indemnity paid to date; remaining
reserves; and total incurred loss; all claims in alpha order.
(4) A detailed safety loss analysis including employee name and social
security number; date, day and time of accident; detailed location of
accident; employee's occupation and name of supervisor; employee's
department and division; date of hire; days lost; all costs related to injury; a
detailed description of the accident; and any other accident statistical data
which the Cities may require for its loss prevention efforts, on an as needed
basis.
(5) A monthly reconciliation of the Workers' Compensation checking
account, listing all checks, vouchers and voids, in numerical sequence;
stating date issued, claim number, claimant name, payee and amount.
(6) HRMS will be required to complete annual Public Entities self -insurers
report for the Cities as required by the Department of Industrial Relations,
Self -Insurance Plans; to be submitted to the Cities, no later than 30 days
prior to the October 1 due date.
(7) Periodic (semi-annual or annual) risk management analysis reports,
including recent statutory and case law regulations and recommendations
for preventive measures based on analysis of Cities claims and losses.
(8) Narrative reports of claims involving major injuries, or significant
financial exposure, on request.
(9) Reconcile the open claim summary report on a quarterly basis.
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(10) A quarterly meeting shall be held between HRMS, and each City's
respective Risk Manager. The purpose of this review shall be to outline
losses and identify problems, examine reserves, identify current trends,
discuss changes in the Labor Code, apply new case law to existing claims,
discuss the need for improving or altering claims management, and to
make recommendations for improvement in communication between the
claims administrator and the Cities.
(11) HRMS may be asked to attend additional meetings upon request.
A. As total compensation from the Cities for services rendered under this
Agreement, HRMS shall be entitled to receive an annual sum of $245,000.
These fees are payable quarterly in advance upon receipt of HRMS' invoice.
(B) A one-time data processing conversion fee, up to a maximum of $6,000
will be charged to each City.
(C) The annual fees will be subject to an audit, conducted by the Cities, at
the end of the contract to determine an equitable re -apportionment of fees
between the Cities, based on the claim counts, if necessary.
(D) The above fee shall include all services under this Agreement, except
for payments made by HRMS on the Cities behalf for medical, disability or
other benefits and allocated loss expenses.
(E) "Allocated loss expenses" shall mean all Workers' Compensation
Appeals board costs, Court costs, fees and expenses; fees for service of
process; fees to attorneys; fees for independent adjusters or attorneys for
services outside the scope of this Agreement, costs of employing experts
for the purpose of preparing maps, photographs, diagrams, chemical or
physical questions; cost for copies of transcripts of testimony at Coroner's
inquest or private records; costs for depositions and court reporters or
recorded statements and any similar costs or expenses properly
chargeable to the defense of a particular claim or to protection of the
subrogation rights of the Cities.
This Agreement may be terminated by submitting 60 days prior written notice of
intention to terminate; provided, however, that should the Cities determine not to
renew this Agreement on any annual renewal date, no advance notice of
termination need be given. HRMS shall not be required to perform any of its
services beyond the date of termination and all fees owed to HRMS by the Cities
will be 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:
Cities: City of Costa Mesa
Attention Risk Manager
77 Fair Drive
Costa Mesa CA 92626
City of Newport Beach
Attention Risk Manager
PO Box 1768
Newport Beach CA 92658-8915
HRMS: Hazelrigg Risk Management Services
Attention: Arlene Hazelrigg
1310 S. Valley Vista Drive
Diamond Bar CA 91765
5. Insurance Requirements
Before performing services, the HRMS will provide a copy of the certificate of
insurance for the following:
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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 omissions 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 of Newport Beach and the City
of Costa Mesa.
D. Fidelity bond with a minimum limit of $500,000 per occurrence,
applied exclusively to the City of Newport Beach and the City of Costa
Mesa.
E. During the term of the Agreement, the Administrator shall purchase
and provide a copy of the certificate of insurance and maintain insurance
coverage that is acceptable to the Cities. Endorsements of insurance will
be required, naming the Cities as additional insured on all policies; and
providing the Cities with a 30 -day written notice of cancellation, material
change, or non -renewal.
F. Cities shall not be liable to HRMS for personal injury or property
damage sustained by HRMS in the performance of this Agreement,
whether caused by HRMS, its officers, agents or employees, or by any third
person.
G. HRMS agrees to defend any legal action commenced against Cities
caused directly or indirectly by wrongful or negligent acts of HRMS, HRMS'
officers, employees, agents or others engaged by HRMS and to indemnify
Cities against any loss, liability, cost or damage, including attorney's fees
resulting therefrom.
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H. Cities agree to defend any legal action commenced against HRMS caused
directly or indirectly by wrongful or negligent acts by Cities officers
employees, agents or others engaged by City, and to indemnify HRMS
against any loss, liability, cost or damage, including attorney's fees resulting
therefrom.
1. HRMS agrees that in the event of loss due to any of the perils for which it
has agreed to provide insurance, that HRMS shall look solely to its insurance
for recovery. HRMS hereby grants to the Cities on behalf of any insurer
providing insurance to either HRMS herein, a waiver of any right of
subrogation which any insurer of said HRMS may acquire against the Cities
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 under the provisions of the California laws pertaining to
arbitration. Attorney fees, if any, shall be set by the arbitrator as to
payment thereof. 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. HRMS will be required to obtain, and maintain in full force and effect
during the term of the Agreement a valid City of Newport Beach and City
of Costa Mesa Business License.
6. Financial Management
A Workers' Compensation Trust Fund, of which HAMS shall be designated as co -
trustee will be established. HRMS shall maintain the Cities monies in separate
interest bearing, insured, accounts for each City. HRMS and the individual City will
be co-signers on each account. The purpose of this fund shall be to pay
medical/legal and other expenses incurred as a result of valid industrial
injuries/illnesses, 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 HRMS to:
A. Approve, and pay appropriate medical and legal expenses, Workers
Compensation benefits, and other expenses from the trust fund.
14-
B. Report monthly to the Cities of charges against the fund, and obtain
reimbursement to maintain the fund at an appropriate level determined by
the Cities.
C. Manage the trust fund in a reasonable and prudent manner and in
compliance with the Cities Policies.
7. Audit
The Cities, at their option, shall have the right to have a claims audit(s) performed.
The audit(s) will be directed to the following areas:
A. Compliance with contractual and fiduciary obligations;
B. Compliance with the Cities performance standards;
C. Application of all current W.C.A.B. rules and regulations and case law;
D. Accuracy of computer loss runs and records.
L INEWO-er-a. 1 I. ;. 1-1
A. Penalties and assessments arising from the failure of the Cities to provide
timely notice of claims or of such other employer obligations as provided under
the California Worker's Compensation Reform Act of 1989, shall be and remain
the sole responsibility of the Cities and the Cities hereby agree to indemnify,
defend, and hold HRMS harmless for all claims arising from the imposition of such
penalties and assessments resulting from such actions by the Cities.
Administrative penalties arising solely from the failure of HRMS to comply in the
timely and proper manner with its duties as the Claims Administrator shall be and
remain the sole responsibility of HRMS and HRMS hereby agrees to indemnify,
defend and hold Cities harmless from all claims arising from the imposition of
such administrative penalties.
B. The parties acknowledge that the California Workers' Compensation Reform
Act of 1989 requires first payment of temporary disability indemnity within 14
days of the Agencies' knowledge of injury and generally imposes the automatic
penalty of ten percent of the amount delayed for late indemnity payments which
shall be payable directly to the injured employee without application.
Furthermore, the parties agree that unless HRMS is provided with a notice of the
15-
• 9
claim within seven days of the Agencies' knowledge of the injury, the above -
referenced automatic penalty of ten percent shall be and remain the sole
responsibility to Agencies.
A. All claim files, records, reports and other documents and materials pertaining
to the Cities claims shall be the property of each City and shall be delivered to
City, or its designee, by HRMS, upon termination of this agreement. HRMS shall
also provide computer tapes containing all computerized data pertaining to the
Cities and their claims, together with the format thereof upon such termination.
B. The Cities reserve the right to inspect and audit HRMS records relevant to the
Cities account at any time upon giving reasonable notice. Cities will permit HRMS
to inspect and audit Cities payroll and Workers' Compensation Records at any
time, upon giving reasonable notice. Cities will provide necessary information
pertaining to claims reported for adjustment under the provisions of any
Agreement.
10. Prohibition Against Transfers
HRMS shall not assign, sublease, hypothecate, or transfer this Agreement or any
interest therein directly, or indirectly, by operation of law or otherwise. 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.
11. Waiver
A waiver by the Cities 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.
12. Entire 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.
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•
13. Severability
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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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
the day and year first written above.
DATED:
DATED: �5`
CITY OF NEWPORT BEACH
A Municipal Corporation
By: I
e 'n J. M r
City Manage
o,
CITY OF COSTA MESA
A Municipal Corporation
By: —
Allan L. Roeder
City Manager
DATED: /,7 -�S H
APPROV S`T ORM:
By:
R bin Clauson, Assistant City Attorney
City of Newport Beach
i
By: �'•� I _ '�-13
Thomas A. Kathe, City Attorney
City of Costa Mesa
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Management Services