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HomeMy WebLinkAbout08-227 Resolution No. 08-227 RESOLUTION AUTHORIZING EXECUTION OF A SERVICE AGREEMENT WITH CLAIM MANAGEMENT CONSULTANTS, L.L.C. FOR WORKERS COMPENSATION INSURANCE SERVICES BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Olufemi Folarin,City Manager,and Diane Robertson,City Clerk,be and are hereby authorized and directed to execute an agreement on behalf of the City of Elgin with Claim Management Consultants, LLC for workers compensation insurance services, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: September 24, 2008 Adopted: September 24, 2008 Vote: Yeas: 5 Nays: 0 Attest: s/Diane Robertson Diane Robertson, City Clerk SERVICE AGREEMENT This Agreement is hereby made and entered into this 1st day of October 2008, by and between Claim Management Consultants, LLC, an Illinois limited liability company(hereinafter referred to as the"Service Agent")and The City of Elgin, Illinois, a municipal corporation (hereafter referred to as the"Client"). NOW THEREFORE, in consideration of the promises and covenants contained herein, the sufficiency of which is hereby mutually acknowledged, the parties hereto agree as follows: SECTION I: SERVICE AGENT The Service Agent shall provide the following Illinois workers' compensation claim management services to the client: • Administer and manage all of the workers' compensation claims during the period of this contract. • Determine the liability, if any, the settlement thereof, and issue all payments, with funds provided by the Client. • Prepare and file all claim reports in accordance with established administrative procedures and state guidelines and by law. • Establish a separate claim file on each reported claim with appropriate documentation. • Provide computerized monthly loss reports disclosing pertinent claims data. • Coordinate all litigation activity with outside legal counsel. • Establish initial claim reserves and reserve changes for each claim file. • Provide 4(four) meetings per year to review mutually agreed upon claim files or other issues. • Assign and coordinate all claims for any medical management, cost containment and provider bill review programs. • Select, assign and coordinate any outside field investigations/surveillance. • Coordinate all subrogation activities. • Make prompt payments of all medical bills to avoid late payment consequences. • Communicate in a timely manner with employees involved in lost time claims in order to advise them promptly of their rights and benefits. • Prepare any Federal 1099 tax forms where required. • Coordinate and cooperate with any applicable excess carrier(s) in their investigation and defense of any applicable claims. • Provide medical cost containment services including, but not limited to, medical bill review and pharmacy bill review. • Assume all existing open claims. 1 • Provide the appropriate notification to excess insurers as required by policy reporting requirements. • Provide the client with the necessary investigation of each claim using competent and qualified personnel. • Conduct the necessary investigation of each claim using competent and qualified personnel. • With reasonable prior notice, the Client has the right to designate a representative to visit CMC's premises for file audits and have access to all data which relates to payment of non- payments made by CMC and charged to the Client as well as general claims handling review. • Review all claims against the Client and make recommendations to the Client as to the denial, delay, or settlement of claims on behalf of the Client. Client approval is necessary for any and all claims settlements in excess of$5,000. • Provide detailed loss reports on a monthly basis showing all claims including claimant's name, claim number, occurrence data, expenditures paid to date, outstanding reserves for each case, status (open/closed). Report must include a check register detailing monthly financial activity including payments issued, payee, amount of check, type of payment, claim number, and claimant name. • Designate one specific representative to handle all client claims. • Coordinate legal defense of litigated claims, including subrogation issues. The Client reserves the right to select legal counsel. Ensure that, for employees who are represented by legal counsel, their attorneys receive copies of reports and correspondence, as appropriate and/or required. • Initiate and coordinate vocational rehabilitation services for qualified injured workers. The client reserves the right to select the rehabilitation vendor. • Provide 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. • Provide detailed AD HOC reports regarding safety loss analysis data to be used for loss prevention activities. • Determine the extent and degree of permanent disability based upon medical evidence. • Maintain insurance of the type and amount detailed in Attachment A(Certificate of Insurance), incorporated by reference herein. SECTION II: CLIENT The Client Agrees to: • Provide the Service Agent with timely, accurate and complete accident reports and correspondence on all claims and related claim matters. • Cooperate fully in the claim administration process, disposition, payment, etc. of all claims and related claim matters/and expenses. 2 • Provide the Service Agent with timely and up to date written information on any changes in insurance carriers, insurance coverage's, claim reporting requirements, brokers, consultants, etc. • Establish or have the Service Agent establish on the Client's behalf an Escrow Loss Fund from which to pay all claims and related claim expenses on a timely basis. The account will be reviewed periodically to determine any under funding. If the account if under funded the Client will increase the deposit in a timely manner based on supportive documentation from the Service Agent. The Service Agent will not issue, hold or distribute any checks/payments without adequate funds. The Service Agent will not be responsible for any penalties, lack of provide discounts, etc. due to inadequate funds. Reconciliation of the escrow bank statement will be the responsibility of the Client. The untimely replenishment of the escrow account may be considered a breach of this Agreement. Client will pay for all check stock. • Provide written notice as to any changes in the distribution of Loss Reports, Changes in Loss Report Format, Data Tapes, etc. • Provide thirty(30)days prior written notice of the setting up of any claim reviews, meetings, audits beyond the four meetings the Service Agent is required to attend. • Pay the Service Agent's fee in accordance with this Agreement. • Set forth in writing to the President of the Service Agent, any requested changes in service procedures. • The Client, as Self-Insured, agrees to be responsible for the full compliance of the USA Patriot Act(Section 326)of October 1, 2003. The USA Patriot Act(Section 326)has ordered financial institutions, including insurance companies, TPA's and self-insurers, as well as their employees including US citizens and permanent resident aliens employees by non-US insurers, to be responsible for checking claims and payments against a master list published by the Office of Foreign Assets Control (OFAC) of the US Department of Treasury. The intention of this screening is to ensure that money in not paid to persons or organizations involved in terrorism, international drug trafficking, or activities related to the proliferation of weapons of mass destruction(i.e. transactions with"enemies" of the United States as defined by various Executive Orders of Congress). As a Self-Insured it is your responsibility to comply with this Act, and to notify the Service Agent, in writing, if any payments are to be withheld. SECTION III: GENERAL CONDITIONS The Client agrees that it will indemnify and hold harmless the Service Agent and its directors, officers, employees, parents, subsidiaries and affiliates from and against any and all claims, loss, liability, costs, and damages incurred by the Service Agent as the direct or indirect results of any misconduct, claim instructions or omission of the Client, or any of its directors, officers or employees, taken in connection with the furtherance or performance of any provision of this agreement, provided that said misconduct error or omission have not been directly caused by the Service Agent, its directors, officers, and employees. 3 The Service Agent agrees that it will indemnity and hold harmless the Client and its directors, officers, employees, parents, subsidiaries and affiliates from and against any and all claims, loss, liability, costs, damages and reasonable attorneys' fees incurred as the direct or indirect result of any misconduct, error omission of the Service Agent or any of its directors, officers, employees, parents, subsidiaries or affiliates taken in connection with the furtherance or performance of any provision of this agreement, provided that said claims, loss liability, costs, damages and reasonable attorneys'fees have not been directly caused by any misconduct or omission of the Client, its directors, officers and employees. This contract shall be interpreted and construed in accordance with the laws of the State of Illinois. Venue for the enforcement of any rights and the resolution of any disputes arising out of or in connection with the provisions of performance of this Agreement shall be in the Circuit Court of Kane County, Illinois. This agreement shall not be construed so as to create a joint venture, employment, partnership or other agency relationship between the parties hereto except as specifically provided for herein. This agreement is the sole agreement between the parties hereto regarding the subject matter hereof. There are no other agreements, either oral or implied, between the parties hereto regarding the subject matter hereof. This agreement shall be construed as having been drafted by the Service Agent. SECTION IV: FEES/SERVICE PERIOD This agreement shall terminate October 1, 2011. The Client agrees to pay the Service Agent a fee of$240 for each new Workers' Compensation claim plus$500 per month for Loss Reports and Special Status Reports plus an Annual Administrative Fee of$5000(payable at inception). Invoices to be issued monthly based on actual claim counts. The above rates/fees are guaranteed for each of three years. Such fee is due and payable by no later than thirty-(30) days from the date of the invoice. Any additional services requested and/or any service modification by the Client must be in writing and addressed to the President of the Service Agent. If acceptable to the Service Agent, such services will be provided on a time and expense basis and/or a negotiated fee. This agreement may not be modified or amended except in writing by both parties hereto. The Service Agent also reserves the right to review with the Client, and adjust its service fees if, within the service agreement period, the Client, Client's broker, excess carrier, fronting company, insurance consultant, etc. materially changes the basic services provided, or requests additional modifications in EDP systems, reports, magnetic tapes, etc. In addition to the Service Agents'fees the Client also agrees to pay all Allocated Expenses as defined below: Allocated Loss Expenses means any cost or expense we incur on your behalf as a result of our engaging the service of firms or persons outside our organization, for work in connection with the investigation, medical case management, cost containment, provider bill review, adjustment, settlement of defense of a Claim. Allocated Loss Expenses includes, but is not limited to the automobile or other physical damage appraisal; all court 4 costs, fees and expenses; fees for services of process; fees to attorneys; the cost of services of undercover operations, detectives fees, independent adjusters, or attorneys for investigation or adjustment of Claims; the cost of employing experts for the purpose of preparing maps, photographs, diagrams, chemical or physical analysis, expert advise of opinion; the cost of depositions and court reporters, or recorded statement, the indexing of claims, the cost to tape transfers, etc. SECTION V: CANCELLATION The cancellation or non-renewal of this Agreement by the Service Agent, shall be given to the Client, in writing, sixty(60)days prior to the actual effective date of such cancellation/non- renewal. Upon cancellation/non-renewal, the Service Agent will not be required to provide any further services to the Client since such services were provided only for the life of the contract and not for the life of the claim. The Service Agent may also cancel this Agreement with ten (10) days written notice, for the untimely or non-payment of service fees, or the untimely replenishment of claim payment funds to the Escrow Account. The cancellation of non-renewal of this Agreement by the Client shall be given to the Service Agent, in writing, thirty(30)days prior to the actual effective date of such cancellation on non- renewal. In the event of cancellation and/or non-renewal of this Agreement, for any reason whatsoever, the Client shall designate, in writing, one of the following options: Option I: Require the Service Agent to return all open/pending or closed files to the Client on the effective date of the termination at the Client's expense. Option II: Require the Service Agent to continue to provide all services as previously outlined in this Agreement, at a fee to be negotiated between the Client and the Service Agent. Both parties acknowledge that all claim files are property of the Client. In the event of cancellation and/or non-renewal of this Agreement, for any reason whatsoever, all claim files shall be promptly returned to the Client or as directed. This agreement may be terminated and cancelled by either party hereto for any reason as provided above. SECTION VI: AGENCY AUTHORIZATION/WAVER The undersigned duly authorizes the Service Agent, when an Escrow Bank Account is established for the Client, to act as its agency(fiduciary), for the purpose of endorsement and deposits of items, payable totally or in part to the undersigned), to, or withdrawal from any account, at Hams Bank entitled for the purpose of claim payments and related expenses. The undersigned agrees to waive any and all claims it may have against the Service Agent, its parent company, its directors, officers, employees, subsidiaries and affiliated as a direct result of any failure of the Hams Bank which makes it impossible for the Service Agent to fulfill its financial obligations to the undersigned. 5 SECTION VII: TRANSFER OF OPEN FILES It is hereby agreed, that upon inception of this Agreement, if the Service Agent is requested by the Client to assume the servicing of any open files from another service company, open indemnity(wage loss)files will be priced in accordance with the fee structure for new claims. No cost shall be charged for medical only claims. The Service Agent is only responsible for the claim activities and management of same from the inception date of the transfer through the expiration of this Agreement. The Service Agent is not responsible for any management activities, decision, services, liabilities, procedures, etc. that occurred prior to the transfer. SECTION VIII: SIGNATORY PARTIES IN WITNESS WHEREOF, the parties have caused this agreement to be executed on their behalf by the undersigned duly authorized persons. CITY OF ELGIN/C NT CMC/SERVICE AGENT By 0 ufem' Folarin Dan Huggins ty Manager PA Title Title t n�, September 24, 2008 O�}ld-kk Date Date 1 Attest: �i.i n LJ-et. -,rt—., \I, C 4, __ Winesz City Clerk Witness 6 Aug 2/ 08 02:38p Dan and Diane Huggins 1-847-265-5023 p.2 db/ biduu 1.3:dt N0.3% DOi f ATTACHMENT "A" CLAIMAN-01 PUSH /E C/1 n OATS IMNI O Y+) I"1 V {J,, CERTIFICATE OF LIABILITY INSURANCE 6119/2006 , • PRODUCER (708)2724500 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION Emerald Insurance Services,inc. ONLY AND OGNFERS NO RIGHTS UPON THE CERTIFICATE 12555 S.Cicero Avenue HOLDER.THIS CERTIFICATE DOES NOT AMEND.EXTEND DR Alsip,12555 IL Cicero THE COVERAGE AFFORDED BY THE POLICIES BELOW. INSURERS AFFORDING COVERAGE NAIL C INSURED Claim Management Consultants!LC IHSURERA:Hartford Casualty Insurance Company , 3325 N Arlington Isla.Rd. INSURER a,Hartford Fire Insurance Company Arlington Heights,It.60004- INSURER c:Landmark American insurance Company INsuRERD:Maaum Indemnity Company _ I _ INeuRER E: i COVERAGES THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WTH RESPECT TO VENICE THIS CERTIFICATE MAYBE ISSUED OR MAY PERTAIN.THE INSURANCE AFFORDED SY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS.EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.AGGREGATE LIMITS SHOWN IMAM HAVE SEEN REDUCED BY PAID CLAMS. I AOCt - - -. .. _.. . ... -. _ POI.Tcv trite i�cir-.._._.n M 1.TR/NSRii TYPP OP NsIRANcE POLICY NUMBER FOAiE h 0/YYI pi WYYI LIMR9 GENERAL uAeLnY EACH OCCURRENCE t 1,900,000 A lit COMMERCIAL GENERAL LIABILITY 835BAUQ8421 6/1/2008 811009 PR IEEE Oft?"' ure ) S 500,000 jCLAMS MADE Xi OCCUR Yeo EKP Wry one Fallon) $ 10,000 PERSONAL t ADV INJURY • 1,900,090 GENERAL AGGREGATE S 2,900.000 GENT AGGREGATE UNIT APPLIES PER PRODUCTS•COMP/OP AGO,1 2,400,009 POLICY ■ 4.1 IIII Loc ' A AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT 6 1,900,000 -ANY AurO 85SBAUQ94Z1 6/1/2008 6/1/2009 (Ea wladenlI ALL OWED AUTOS BODILY INJURY �-- SCHEDULED AUTOS (Pempmeon) _ X HIRED AUTOS 90o)L+IN/URY I X NON•OWNED AUTOS (PoacrJOra)' ._ PROPERTY DAMAGE 1 INN ScoNVN) OARAOE uABIuTT AUTO ONLY-EA ACCIDENT I ANY AUTO OTHER THAN EA A".I - AUTO ONLY; AOC 1 ExCE10NMeRELLALIABILITY EAC,ROCCURRENCE S 3,900,000 A ]OCCUR [CLnlaIS MADE 83SBAUQ9421 61112008 6/112009 AGGQEGATE I: 3,000,000 I __. DEDUCTIBLE F -X 1 RETENTION $ 10,000 __, F NORIMDRSCOMPENSATOR AND x Y■C STATT- I OTH. —1 EMPLDYdIt'LIA9ILI'Y c TORY LRCM ER B 83 WEC T07186 6/1/2008 8/112008 E.L EACH AC=ENT $ 500.00d ANY PRONNETORIPARTNERIEXECUTIVE OFFICERIMEMSER EXCLUDED$ EL.DISEASE•EA EMPLOYEE $ 600,000 Yree dewiheunaw EPELIIAL PROYIS10N9..., ,EL DISEASE.POLICY UMR I 500,000 OTHER Ji C Professional Liability LNR713575 8/1/2008 611/2009 Deduaebli: $6,000 SUICIP,010 ; U ,Excese Liability PFX6005915-02 6/1/2008 611/2009 16oDQ,DDO� • DESCRIPTION OF OPERATIONS I LOCATIONS I1mm:t a l E CLUSlONs ADDED RV ENDORSEMENT I SPECIAL PROVISIONS Re!City of Elgin ' CERTIFICATE HOLDER CANCELLATION SMONLO ANY OF THE ABOVE DESCRIEED POLICIES BE CANCELLED*PORE TMB MIRApc City of Elgin DATE THEREOF.THE IaSUIG4$LiNER Nil-I.ENUtAVOR TO MAIL 30 OATSWPRTEN Elgin,Dexter 128 Court NOrCE TO THE CeRVPICATE NOW eta NAMED To The LEFT,BUT FAILURE TO 00 30 MULL Elgin,IL 80120- . IMPOSE HO COLIGATION OR LIABILITY Or ANY I ND UPON The mNSURER,ITS AOeNYSRVA REPRESENTATIVES. _ AUTHOR12ED REPRESENTATIVE ._ ^• It ..1_,..�. P1bwe-110L. i ACORD 26(2001/09) ©ACORD CORPORATION 1988 • r�J September 18, 2008 ■ TO: Mayor and Members of the City Council FROM: Olufemi Folarin, City Manager Gail Cohen, Human Resources and Purchasing Director SUBJECT: Worker's Compensation Third Party Administration Services PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with information to award a contract for third party administration services of the City's worker's compensation Claim for the period October 1, 2008, through September 30, 2011. RECOMMENDATION It is recommended that the City Council award a contract to Claim Management Consultants, LLC, for the period of October 1, 2008 through September 30, 2011. BACKGROUND Our current contract with Claim Management Consultants, LLC, the City's worker's compensation third party administrator, expires on September 30, 2008. Claim Management Consultants has administered our worker's compensation Claim since 2001. They have provided excellent service, working well with City staff and our outside counsel. Claim Management Consultants has proposed no increase to its fees for the upcoming year. Given the high level of satisfaction with this firm and the number of complex cases they are currently administering, it is recommended to continue our business relationship with Claim Management Consultants. GROUPS/INTERESTED PERSONS CONTACTED None FINANCIAL IMPACT The cost of this contract for the remaining three months of 2008 is estimated to be $18,920. There are sufficient funds budgeted ($240,000) and available ($55,878) in the Risk Management Fund, account 630-0000-796.30-99, Risk Management Professional Services, to continue this agreement for the remainder of 2008. Sufficient funds will need to be included within the 2009 Risk Management Fund budget for next year's expenses. Worker's Compensation Third Party Administration Services September 18, 2008 Page 2 LEGAL IMPACT None ALTERNATIVES 1. The City Council may choose to renew the agreement with Claim Consultant Services, LLC. 2. The City Council may choose to solicit proposals for third party administration services. Respectfully submitted for Council consideration. GAC Attachment