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HomeMy WebLinkAbout94-132 Resolution No. 94-132 RESOLUTION AUTHORIZING EXECUTION OF A SERVICE AGREEMENT WITH CANNON COCHRAN MANAGEMENT SERVICES, INC. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Richard B. Heiwig, City Manager, be and is hereby authorized and directed to execute a Service Agreement on behalf of the City of Elgin with Cannon Cochran Management Services, Inc. for the administration of the workers' compensa- tion self-insurance program, a copy of which is attached hereto and made a part hereof by reference. s/ George VanDeVoorde George VanDeVoorde, Mayor Presented: May 11, 1994 Adopted: May 11, 1994 Omnibus Vote: Yeas 7 Nays 0 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk SERVICE AGREEMENT BETWEEN Aiji}' Q CITY OF ELGIN AND 1994 CANNON COCHRAN MANAGEMENT SERVICES, INC. THIS SERVICE AGREEMENT is made and entered into this 1st day of October, 1993, by and between the City of Elgin (the "Client"), and Cannon Cochran Management Services, Inc. ("MSI"), a Delaware corporation. It is agreed between the parties hereto as follows: A. APPOINTMENT OF MSI. The Client hereby appoints MS1, and MSI hereby agrees to serve, as Third Party Administrator ("Administrator') of the Client's workers' compensation self-insurance program created and existing under the State of Illinois ("State") Self-Insurance Regulations. B. FUNCTIONS OF MSI. During the term of this Agreement, the regular functions of MSI as the Client's Administrator shall include the following: 1. General Administrative Duties and Responsibilities (a) Regulatory Functions. 1) MSI will perform or supervise all functions set forth in the rules and regulations promulgated by the State Self-Insurance Regulations. 2) MSI will prepare, compile, and file all notices, reports, documents, forms and surveys as may be required of the Administrator by the State. 3) MSI will represent the Client to the best of its ability at all necessary hearings, meetings, conventions and administrative inquiries involving the interests of the Client before the State, except those requiring representation by an attorney at law. (b) Management Functions. MSI will perform and manage the daily business affairs of the Client's self-insurance program, including but not limited to: 1) Preparing and maintaining adequate and correct books, records and accounts on behalf of the Client in compliance with applicable statutes, regulations and established practices. 2) Recommending firms or individuals to perform legal, financial and other professional services in consultation and with Client prior approval, and paying such firms or individuals with Client funds. 3) Coordinate and report to excess insurance carriers, as appropriate, subject to compliance of Section C.5. (c) Provision of Reports. MSI agrees to provide reports to the Client as specified in the Schedule of Reports attached hereto as Exhibit A. SAGALONE March 22,1994 CITY OF ELGIN -SERVICE AGREEMENT Page 2 of 11 (d) Cooperation by MSI. MSI will cooperate with any fiscal or fiduciary agent appointed by the Client for the management of the Client's investments. (e)Additional Services. Subject to joint agreement by the parties and negotiation of a mutually acceptable fee, MSI will provide such additional services as may be reasonable, necessary or prudent for the business and purposes of the Client. 2. Risk Management Services. MS1 will provide the Client risk management services upon mutual agreement of the parties. The Schedule of Risk Management Services is attached hereto in Exhibit B. 3. Loss Control Services. MSI will provide the Client loss control services upon mutual agreement of the parties. The Client shall remain fully responsible for the implementation and operation of its own safety programs and for the detection and elimination of any unsafe conditions or practices. The Schedule of Loss Control Services is attached hereto in Exhibit C. 4. Claim Administration. (a) Claim Management and Administration. MSI will manage and administer all claims of the Client which occur during the period of this Agreement. MSI will act on behalf of Client in handling, monitoring, investigating, overseeing and adjusting all such actual and alleged claims and reporting to excess carriers when applicable. (b) Claim Settlement. MSI will settle claims of the Client with Client funds in accordance with reasonable limits and guidelines established with the Client; provided, however, that MSI may in its sole discretion obtain the prior approval of the Client before settling any claim. (c) Claim Reserves. MSI will recommend reserves for unpaid claims and unpaid claim adjustment expenses. (d)Allocated Claim Expenses. MSI will pay all Allocated Claim Expenses with Client Funds, subject to Client approval. Allocated Claim Expenses are charges for services provided in connection with specific claims by persons or firms other than MS1. Notwithstanding the foregoing, Allocated Claim Expenses will include all expenses incurred in connection with the investigation, adjustment, settlement or defense of out-of-state claims, even if such expenses are incurred by MS1. Allocated Claim Expenses will include, but not be limited to, charges for: 1) Medical examinations of claimants; 2) Managed care, including but not limited to PPO networks, medical bill audits and medical management review; SAGALONE March 22,1994 • CITY OF ELGIN -SERVICE AGREEMENT Page 3 of 11 3) Surveillance; 4) Attorneys, experts and special process servers; 5) Court costs, fees, interest and expenses; 6) Depositions, court reporters and recorded statements; 7) Independent adjusters and appraisers; 8) MSI personnel, at their customary rate or charge, but only with respect to claims outside the State; and 9) Actual expenses incurred by MSI employees outside the State for meals, travel and lodging in conjunction with claim management. (e) Subrogation. MSI will monitor claims for subrogation, which will include preparing subrogation actions on behalf of the Client. Recoveries will be obtained where feasible. C. CLIENT RESPONSIBILITIES. Client agrees to: 1. Report all claims, incidents, reports or correspondence relating to potential claims in a timely manner. 2. Cooperate fully in the disposition of all claims. 3. Provide adequate funds to pay all claims and expenses in a timely manner. 4. Respond to information requests in a timely manner. 5. Provide a complete copy of current excess or other insurance policies applicable to Client's workers' compensation self-insurance program. 6. Promptly pay MSI's fees. D. OPERATING EXPENSES. The Client agrees to be responsible for and pay all of its own operating expenses other than service obligations of MSI. Such operating expenses shall include, but not be limited to, charges for the following: 1. Self-insurance bonds; 2. Certified Public Accountants; 3. Attorneys; SAGALONE March 22,1994 CITY OF ELGIN -SERVICE AGREEMENT Page 4 of 11 4. Independent payroll audits; 5. Allocated Claims Expenses incurred pursuant to Section B.4.(d) of this Agreement; 6. Governmental fees and taxes; and 7. Promotional material, industry-specific loss control material, stationery and supplies. 8. NCCI charges; 9. Excess and other insurance premiums; and 10.Other operating costs as normally incurred by the Client, subject to Client approval. E. BOOKS AND RECORDS. 1. All manuals, forms, files and reports, documents, customer lists, rights to solicit renewals, computer records and tapes, financial and strategic data, or information which documents MSI's processes, procedures and methods, or which MSI employs to administer other programs in addition to the Client's program, shall at all times be and remain the sole and exclusive property of MSI. The Client shall have no ownership, interest or right to duplicate or utilize the foregoing. 2. After termination of this Agreement, MSI shall provide the Client with all books, records, applications and other forms of information relating specifically and only to the Client. Any costs of such reproduction shall be borne by the Client. 3. MSI shall make the materials specific to the Client's program available for inspection by any duly authorized representative of the Client, or any governmental authority having jurisdiction over MSI or the Client. 4. The Client and its members and their affiliates shall not, during this Agreement or thereafter, disclose to any other person or entity or utilize in any way, any confidential information or trade secrets of MSI, including but not limited to MSI's business methods and techniques, research data and financial information. F. SOLICITATION OF EMPLOYEES. The Client agrees not to recruit, solicit or hire any employee of MSI without MSI's written permission during the term of this Agreement and for one year following termination of this Agreement. In the event the Client does recruit, solicit or hire any MSI employee without the written permission of MSI, the Client shall pay to MSI, as liquidated damages, one year of said employee's gross salary. This gross salary will be determined by the amount of annualized income earned by the MSI employee at the time notice of resignation is given to MSI by the employee, and will be due in full within thirty days after the employee's last day of employment at MSI. SAGALONE March 22,1994 CITY OF ELGIN -SERVICE AGREEMENT Page 5 of 11 G. TERM AND TERMINATION. 1. Term of Agreement. Unless earlier terminated as provided hereunder, this Agreement shall be for a term of one (1) year beginning on October 1, 1993, and terminating on September 30, 1994, and will automatically renew for successive one (1) year terms. The parties agree to negotiate in good faith the service fee schedule on an annual basis. If agreement cannot be reached, MSI, at its option, can terminate the Agreement upon sixty (60) days written notice, or elect to continue the Agreement pursuant to the then current fee schedule. 2. Termination of Agreement. This Agreement may be terminated: (a) By mutual agreement of the parties hereto; (b) Upon expiration of the term of this Agreement if either party has given the other at least ninety (90) days written notice of its intention to terminate pursuant to Section G.1.; (c) Upon dissolution of the Client's self-insurance program; (d) Upon ninety (90) days written notice by either party if the other party is in material breach of any term, covenant or condition contained herein; provided, however, that as a condition precedent to termination under this Section G.2.(d), the terminating parties shall give written notice to the other party, who shall have sixty (60) days from the date of such notice to cure or correct the grounds for termination. If the grounds of termination are not corrected or cured during the sixty(60) day period, this Agreement may be terminated on the termination date specified in the notice, but not prior to the expiration of the ninety (90) day period described herein. 3. Services Following Termination of Agreement. Should this Agreement be terminated or non-renewed for any reason, MSI will continue providing services on all active files which occurred during the term of this Agreement and retain all necessary Client files and records to administer these claims. MSI will turn over to the Client all closed Client files, which shall include loss control records, reports, surveys and correspondence, underwriting surveys and premium calculations, reinsurance and excess insurance files, all closed claim files and readable form copies of all regulatory filings. Upon the Client's request and subject to agreement by MSI, MSI will be paid a reasonable negotiated fee to: (a) Cooperate with any successor administrator in the orderly transfer of all functions, including providing a runoff listing of open claim files if the same is desired by the Client and any other records reasonable and necessary for a successor administrator; and (b) Provide tape-to-tape transfer of data if such is feasible, with the cost of providing such borne by the Client. SAGALONE March 22,1994 • CITY OF ELGIN - SERVICE AGREEMENT Page 6 of 11 H. SERVICE FEE PAYMENTS. The Client shall pay to MSI a service fee as outlined in the Fee and Payment Schedule hereto as Exhibit D. I. RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be construed to create a relationship of employer/employee, partners or joint ventures between the Client and MSI. This Agreement is non-exclusive, and MSI shall have the right to perform services on behalf of other individuals, firms, corporations and entities. J. INDEMNIFICATION. 1. Indemnification by Client. The Client agrees that it will indemnify and hold harmless MSI and MSI's directors, officers, employees, agents, shareholders, subsidiaries and other affiliates from and against any and all claims, losses, liability, costs, damages and reasonable attorneys' fees incurred by MSI as a result of breach of this Agreement by the Client, or misconduct, error or omissions by the Client, or by any of the Client's trustees, directors, officers, employees, agents, shareholders, subsidiaries, members or other affiliates in connection with the performance of this Agreement. 2. Indemnification by MSI. MSI agrees that it will indemnify and hold harmless the Client and the Client's trustees, directors, officers, employees, agents, shareholders, subsidiaries, members, or other affiliates from and against any and all claims, losses, liability, costs, damages and reasonable attorneys' fees incurred by the Client as the result of breach of this Agreement by MSI or misconduct, error or omissions by MSI, or by any of MSI's directors, officers, employees, agents, shareholders, subsidiaries or other affiliates in connection with the performance of this Agreement. K. CHANGE IN CIRCUMSTANCES. In the event the adoption of any statute, rule, or regulation materially changes the nature of the relationship between the parties hereto or the legal or economic premises upon which this Agreement is based, the parties hereto shall undertake good faith negotiations to amend the terms of this Agreement to account for such changes in a reasonable manner. L. MISCELLANEOUS. 1. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State without regard to principles of conflicts of law. 2. Timing of Services. MSI may exercise its own judgment, within the parameters set forth herein, as to the time and manner in which it performs the services required hereunder. 3. Successors in Interest. This Agreement shall be binding upon, and inure to the benefit of, the successors in interest and permitted assigns of the parties hereto. SAGALONE March 22,1994 CITY OF ELGIN - SERVICE AGREEMENT Page 7 of 11 4. Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if the invalid or unenforceable provision had been revised to the minimum extent necessary to make it valid and fully enforceable under applicable law. 5. Paragraph Headings. All paragraph headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 6. Waiver. The failure of any party to enforce any provisions of this Agreement shall not constitute a waiver by such party of any provision. A past waiver of a provision by either party shall not constitute a course of conduct or a waiver in the future with respect to that same provision. 7. Entire Agreement/Amendment. This Agreement sets forth the full and final understanding of the parties hereto with respect to the matters described herein, and supersedes any and all prior agreements and understandings between them, whether written or oral. This Agreement may be amended only by written document executed by the Client and MSI. Executed this 21411 day of MN , 1994. CANNON-COCHRAN MANAGEMENT SERVICES, INC. By: ? C Robert L. Cowgill Its: President CITY OF ELGIN By: ) 1 Its: 6 .r SAGALONE March 22,1994 CITY OF ELGIN -SERVICE AGREEMENT Page 8 of 11 EXHIBIT A SCHEDULE OF REPORTS MSI will provide the Client with the following computer reports: 1. A detailed listing of all claims broken down by location, policy year and line of coverage. (MONTHLY) 2. A summary of all claims broken down by location, policy year and line of coverage. (MONTHLY) 3. A check register listing all checks issued during the reporting period. (MONTHLY) 4. Loss Analysis Report by class of injury. (QUARTERLY) 5. Loss Analysis Report by type of injury. (QUARTERLY) 6. Large Claims Summary Report. (QUARTERLY) Effective Date: October 1, 1993 SAGALONE March 22,1994 CITY OF ELGIN - SERVICE AGREEMENT Page 9 of 11 EXHIBIT B SCHEDULE OF RISK MANAGEMENT SERVICES None to be provided. Effective Date: October 1, 1993 SAGALONE March 22,1994 • CITY OF ELGIN - SERVICE AGREEMENT Page 10 of 11 EXHIBIT C SCHEDULE OF LOSS CONTROL SERVICES None to be provided. Effective Date: October 1, 1993 SAGALONE March 22.1994 . CITY OF ELGIN -SERVICE AGREEMENT Page 11 of 11 EXHIBIT D FEE AND PAYMENT SCHEDULE Client agrees to pay MSI a base service fee for the administration of workers' compensation claims occurring during the period of 10/01/93 -9/30/94 of$24,300.00 for up to 120 claims. All claims in excess of 120 will be administered for an additional fee of $95.00 per medical only claim and $525.00 per indemnity claim. Client agrees to pay a minimum of quarterly installments of$6,075.00 each due on the first day of the months of October, January, April and July. In the event the number of claims exceeds 120, the monthly billings for the additional service fee will be sent to the Client with payment due within 15 days. Executed this 11111 day of 1 / , 1994. CANNON-COCHRAN MANAGEMENT SERVICES, INC. By: Re.14L, Robert L. Cowgill Its: President CITY OF ELGIN By: ‘O---1 Its: Effective Date: October 1, 1993 SAGALONE March 22.1994 CLAIM SETTLEMENT AUTHORITY SERVICE INSTRUCTIONS MSI will have authority to pay all temporary total disability (TTD) and medical benefits in compliance with the Illinois Workers' Compensation Act. Claim settlements will be coordinated through the Client's appointed outside legal counsel and the Client's own Legal Department. All proposed settlements will be contingent upon approval by the Client's City Council. i`3 kcLsa, Signature S(�3199 Date Effective Date: October 1, 1993