02-66 Resolution No . 02-66
RESOLUTION
AUTHORIZING EXECUTION OF A THIRD PARTY ADMINISTRATION AGREEMENT
WITH GROUP ADMINISTRATORS, LTD.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS, that Olufemi Folarin, Interim City Manager, be and is
hereby authorized and directed to execute a Third Party
Administration Agreement on behalf of the City of Elgin with Group
Administrators, Ltd. for the processing and paying of medical
claims, a copy of which is attached hereto and made a part hereof
by reference .
s/ Ed Schock
Ed Schock, Mayor
Presented: February 27, 2002
Adopted: February 27, 2002
Omnibus Vote : Yeas : 7 Nays : 0
Attest :
s/ Dolonna Mecum _
Dolonna Mecum, City Clerk
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THIRD PARTY ADMINISTRATION AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of March 2002, by and between
the City of Elgin, an Illinois municipal corporation, hereinafter referred to as the Employer, and Group
Administrators, Ltd., an Illinois licensed third party administrator(TPA), hereinafter referred to as G.A.L.
This Agreement relates to the benefit plan established by the Plan Sponsor for eligible employees and
their dependents. This Agreement is to be in effect as of March 1, 2002, and shall continue until
terminated as herein provided.
When the Employer is acting as the Plan Sponsor (as defined in the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") under this Agreement, it shall be referred to as the
"Plan Sponsor," and when it is acting as the Administrator (as defined in ERISA)) under this Agreement,
it shall be referred to as the "Plan Administrator." As Plan Sponsor, the Employer is acting in its capacity
as the settlor ( Plan Sponsor) of the Plan; and, as the Plan Administrator, it is acting in its fiduciary
capacity as defined by"ERISA".
WHEREAS, the Plan Sponsor has established a self-funded Employee Welfare Benefit
Plan (the "Plan"), as defined in section 3(1) of ERISA for eligible employees of the Plan Sponsor and for
eligible dependents of such employees that are identified by the Plan Sponsor as being eligible to
participate in the Plan ("Participants"); and
WHEREAS, G.A.L. is in the business of providing administrative services in conjunction
with such welfare benefit plans, and the Plan Administrator desires to engage G.A.L. to perform the
services enumerated herein below:
NOW THEREFORE, in consideration of the premises and of the mutual promises and
covenants contained herein, the parties agree as follows:
I. PLAN
1.1 Plan Documents. All services to be provided by G.A.L. hereunder shall be performed pursuant to
the policies and procedures of the Plan Administrator, and the provisions of the document establishing,
and setting forth the terms of the Plan (the "Plan Document") and, if applicable, the Summary Plan
Description (as defined in ERISA, and, collectively with the Plan Document, the "Documents"), as
amended. Copies of the Documents and any amendments thereto shall be deemed to be a part of this
Agreement for such purpose.
1.2 Interpretation of the Plan. For purposes of ERISA, the Plan Administrator shall be the decision-
maker as to the interpretation of the Plan and as to the payment of benefits thereunder. The services
performed by G.A.L. are strictly ministerial.
II. SCOPE OF RELATIONSHIP
2.1 Parties. This Agreement is solely between G.A.L. and the Employer. This Agreement does not
create any rights or legal relationships between G.A.L. and any other person or entity, including the Plan's
Participants and the Employer's employees and such employees' dependents.
909786.03
v.8.7.2001
Providing administrative services worldwide.
2.2 Fiduciary. G.A.L. is not and shall not be deemed to be the "Administrator," the "Claims
Fiduciary" nor the "Named Fiduciary" of the Plan within the meaning of ERISA or any state or federal
law. Rather, the duties of G.A.L. hereunder are ministerial in nature; the relationship of G.A.L. to the
Plan is intended to be that of a service provider directed by the Plan Administrator; and this Agreement
shall not be deemed to confer or delegate to G.A.L. any discretionary authority or discretionary
responsibility in the management or the administration of the Plan, or with respect to determining or
changing the rules or policies pertaining to eligibility or entitlement of any Participant to benefits under
such Plan, or discretionary authority respecting management of the funds, payment or non-payment of
claims or any other determination with respect to the Plan. G.A.L. does not render investment advice
with respect to any money or other property of the Plan and has no authority or responsibility to do so.
The parties explicitly agree and affirm that the Employer is the "Administrator" and "Named Fiduciary,"
as well as the "Plan Sponsor" of the Plan within the meaning of ERISA and, to the extent permitted by
law, G.A.L. is not a fiduciary and has no fiduciary responsibility with respect to the Plan. The Plan
Sponsor acknowledges that it has exclusive responsibility for the design and funding of the Plan. All
discretion and control with respect to the terms, administration or assets of the Plan shall remain with the
Plan Sponsor or the Plan Administrator, as appropriate. The Plan Sponsor shall retain responsibility for
setting appropriate benefit policies, while the Plan Administrator shall be responsible for interpreting the
scope of benefits in the event of any employee dispute regarding benefits and authorizing any resolution
of such disputes under the Plan. This provision may be disclosed by G.A.L. in any communication,
whether oral or written, including, without limitation, periodic statements to the Plan Sponsor, the Plan
Administrator or the Plan Participants.
2.3 Communications. G.A.L. shall be entitled to rely upon written communication from the below-
listed person(s) who have been designated by the Employer. Unless amended in writing, the following
individuals shall be so authorized:
Mr. Nick Oriti
III. DUTIES OF G.A.L.
3.1 Documentation. G.A.L. shall assist in the review of booklets describing the Plan's benefits. The
Plan Sponsor understands that ERISA requires that the Plan be established and maintained pursuant to a
written instrument (plan instrument or trust instrument); and the Plan Sponsor agrees that G.A.L. shall
have no responsibility with respect to the preparation or validity of such instrument. However, if
requested, G.A.L. shall draft a Plan Document, and/or Summary Plan Description, in accordance with the
direction and approval of the Plan Sponsor,pursuant to a separate contract and fee arrangement.
3.2 Claims Services. As required by the Documents and applicable law, G.A.L. agrees to perform the
following standard claims administration services:
a. examine claims during the term of this Agreement submitted by or on behalf of
Participants in the Plan,together with supporting claims documentation, to determine if the
same are complete, correct and in proper order;
b. correspond with the Participants or providers of services if additional information is
deemed by G.A.L. to be necessary to complete the processing of claims;
c. coordinate benefits payable under the Plan with other benefit plans, if any;
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d. determine the amount of benefits payable under the Plan in accordance with the terms of
the Documents;
e. in the event the determination of benefits payable with respect to a claim is not clearly set
forth in the Documents but requires the use of discretion, refer the claim, together with a
suggested claim determination, to the Plan Administrator for a final determination of the
benefits payable;
f. if requested, perform the services set forth in sections 3.2(a) through (e) for claims that
were incurred prior to the commencement of this Agreement, and are received by G.A.L.
prior to the termination of this Agreement;
g. to the extent of funds that may from time to time be made available by the Plan Sponsor to
G.A.L., prepare disbursement checks and explanation of benefits forms for the amount of
benefits determined to be payable under the Plan, provided, however, that unless
transferred by certified check, American Clearinghouse (ACH) or wire transfer, funds shall
not be considered collected and available until five (5) banking days after actual receipt by
G.A.L.;
h. provide notice to Participants as to the reason(s) for denial of benefits and the right to file
one or more appeals of the denial, as appropriate, and provide for review of denied claims;
provided, however, that such review shall be advisory to the Plan Administrator and any
decision regarding an appeal which would require the use of discretion shall be referred to
the Plan Administrator for determination;
i. use reasonable efforts in the normal course of its services hereunder to identify hospital
and doctor bills that warrant an outside audit, and at G.A.L.'s election, to contract with an
outside audit firm and remit any audit fees and expenses from the Plan Sponsor's Account
for payment(See section 4.3 of this Agreement for a description of"Account.");
j. use reasonable efforts in the normal course of its services hereunder to identify claims for
which there is the potential for collection of amounts paid to, or on behalf of, Participants
through subrogation of rights of Participants; in which event G.A.L. is authorized, at its
election, to (a) pursue the collection and final settlement of said claim by in-house action
or by contracting with a subrogation firm, and (b) pay any reasonable collection and
reasonable legal fees out of the collected amount; and
k. use reasonable efforts in the normal course of its services hereunder to identify claims that
may be subject to reimbursement pursuant to the terms of any stop-loss insurance policy
and refer such claims to the Plan Sponsor's insurer for reimbursement, but in no event
shall G.A.L. be liable for any claims not reimbursed by a stop-loss insurance policy.
3.3 Administrative Services. G.A.L. agrees to:
a. maintain member enrollment or eligibility for payment of claims and census data;
b. provide accounting details of all billing and collections;
c. maintain stop-loss insurance reporting;
d. provide experience reporting for coverages;
e. assist the Plan Administrator with its HIPAA administration;
f. provide enrollment forms and identification cards to the Plan Administrator; and
g. perform the reporting requirements associated with the surcharge regulations of New York
and Massachusetts.
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3.4 Practices and Procedures. G.A.L. shall employ due care in the performance of the services
hereunder in accordance with industry standards.
G.A.L. disclaims all implied and express warranties not contained herein.
3.5 Recovery of Payment. In the event that payment is made to or on behalf of an ineligible
employee Participant or any ineligible dependent of an employee Participant, or that a payment is made in
excess of the amount properly payable, G.A.L. shall make a diligent effort to recover the funds by:
a. promptly after discovery of such payment or overpayment, request in writing the return of
such payment or overpayment; and
b. report the result of such effort to the Plan Administrator when requested.
G.A.L. shall have no further obligation with respect to any payment or overpayment,
except that G.A.L. is authorized to offset the amount of such payment or overpayment against any unpaid
claim of such employee Participant or any dependent thereof unless advised otherwise by the Plan
Administrator. Additionally, G.A.L. shall not be liable for non-recovery of such improper payments,
except as otherwise set forth in this Agreement.
3.6 Records and Files; Access by Plan Administrator. G.A.L. shall establish and maintain a record
keeping system concerning the services to be performed hereunder. All such records, including hard copy
files, shall be the property of the Plan Sponsor. In the event the Plan Administrator or its employees
access the Plan's records or files, whether to update eligibility information, process claims or perform
some other function, the Plan Administrator acknowledges and agrees that G.A.L. shall have no
responsibility or liability in connection with any actions taken by it or its employees or the results thereof.
All such records, with the exception of optically imaged documents, shall be delivered to the Plan
Administrator within a reasonable time, not to exceed fifteen (15) days, following termination of this
Agreement, subject to the right of G.A.L. to copy and retain all or any of such records as it deems in its
interest to do so and as is permitted by applicable law, including the Privacy Standards (as defined
below). All such records shall be available for inspection by the Plan Administrator at any time during
normal business hours at the offices of G.A.L., upon reasonable prior notice, but not more than once every
six(6)months.
Notwithstanding the foregoing, it is expressly recognized that in connection with the
performance of its duties under this Agreement, G.A.L. shall create and receive Protected Health
Information (as defined in the Standards for Privacy of Individually Identifiable Health Information set
forth by the U.S. Department of Health and Human Services(the "Privacy Standards")). Protected Health
Information shall be dealt with as set forth in section 3.8.
3.7 Reports. G.A.L. shall provide the following reports and data to the Plan Sponsor or Plan
Administrator, as appropriate:
a. check register;
b. monthly and annual claims paid;
c. claims in excess;
d. lag study, if requested; and
e. input for forms required to be filed by the Plan Administrator under ERISA, if applicable.
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3.8 Protected Health Information. G.A.L. shall:
a. use and disclose Protected Health Information (i) as necessary for the performance of its
duties under this Agreement, including providing data aggregation services related to the
Plan, provided that such use and disclosure does not violate the Privacy Standards; and (ii)
for the proper management and administration of G.A.L.'s business and operations and to
carry out G.A.L.'s legal responsibilities, provided that (x) such use and disclosure is
required by law, or (y) G.A.L. obtains reasonable assurances from the person or entity to
whom such information is disclosed that it shall be held confidentially and used or further
disclosed only as required by law or for the purpose for which it was disclosed to the
person or entity, and the person or entity notifies G.A.L. of any instances of which it is
aware in which the confidentiality of such information has been breached;
b. not use or further disclose Protected Health Information other than as permitted or required
by this Agreement or as required by law;
c. take all steps necessary to appropriately safeguard Protected Health Information so as to
prevent its use or disclosure other than as permitted by this Agreement or by the Privacy
Standards;
d. report to the Plan Administrator any use or disclosure of Protected Health Information not
provided for by this Agreement of which G.A.L. becomes aware;
e. ensure that any agents, including a subcontractor, to whom G.A.L. provides Protected
Health Information received from, or created or received by G.A.L. on behalf of the Plan,
agree to the same restrictions and conditions that apply to G.A.L. with respect to such
information;
f. make available Protected Health Information to individuals for inspection and copying, in
accordance with § 164.524 of the Privacy Standards;
g. make available Protected Health Information for amendment and incorporate any
amendments to Protected Health Information, in accordance with § 164.526 of the Privacy
Standards;
h. make available the information required to provide an accounting of disclosures, in
accordance with § 164.528 of the Privacy Standards;
i. make its internal practices, books and records relating to the use and disclosure of
Protected Health Information received from, or created or received by G.A.L. on behalf of
the Plan, available to the Secretary of Health and Human Services for purposes of
determining its compliance with Subpart E of the Privacy Standards; and
j. at termination of this Agreement, if feasible, return or destroy all Protected Health
Information received from, or created or received by G.A.L. on behalf of, the Plan, that
G.A.L. still maintains in any form and retain no copies of such information or, if such
return or destruction is not feasible, extend the protections of this Agreement to the
information and limit further uses and disclosures to those purposes that make the return or
destruction of the information infeasible.
In the event the Plan Administrator determines that G.A.L. has violated a material term of this Agreement
relating to Protected Health Information, the Plan Administrator shall have the right to terminate this
Agreement, and the rights and obligations of the parties following such termination shall be as set forth in
section VII.
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3.9 Duty of Care. G.A.L. shall not be liable for any loss resulting from the performance of its duties
hereunder, except for losses resulting directly from:
a. the gross negligence or failure to act by G.A.L. or its employees or agents; except that if
the cause of such liability was the result of the fault, criminal conduct or fraudulent acts of
the Employer, or any of its directors, officers, employees, or agents, or resulted from the
direction given by the Plan Administrator or its directors, officers, employees or agents in
the administration of the Plan,the Employer shall bear liability for the resulting loss; or
b. the fraudulent or criminal acts of the agents or employees of G.A.L., whether acting alone
or in concert with others; except that if such act or acts shall have been performed in
concert with an agent or employee of the Employer, the Employer shall bear liability for
the resulting loss.
3.10 No Additional Services. G.A.L. shall not be required to provide any services not expressly
provided for herein including, but not limited to, providing consulting, C.P.A., investment, or legal
services, or filing governmental forms such as Form 5500.
3.11 Plan Sponsor Indemnification. Subject to the explicit liability limitations contained in sections
2.2, 3.2(k), 3.4, 3.5, 3.9, 4.9 and 4.13, G.A.L. agrees to indemnify the Plan Sponsor and hold it harmless
from and against any and all claims, losses, liabilities, damages and expenses paid by the Plan Sponsor,
including court costs and reasonable attorneys' fees, to the extent that such claims, losses, liabilities,
damages and expenses result directly from G.A.L.'s failure to comply with its duty of care (as defined in
section 3.9 hereof) in the performance of its duties under this Agreement. Notwithstanding the foregoing,
the amount that G.A.L. shall pay over to, or indemnify,the Plan Sponsor shall be capped at the amount of
the total Service Fee (as defined on Exhibit A) received by G.A.L. from the Plan Sponsor for the prior
twelve-month period pursuant to this Agreement.
3.12 Insurance Coverage. G.A.L. shall carry fidelity bond and errors and omission insurance
coverage, but its agreement to do so does not constitute a waiver of any of the explicit liability limitations
contained in sections 2.2, 3.2(k), 3.4, 3.5, 3.9, 3.12, 4.9 and 4.13.
IV. DUTIES OF THE PLAN SPONSOR
4.1 Establishment and Amendment of the Plan. The Plan Sponsor shall have exclusive authority to
establish, amend and terminate the Plan.
4.2 Documentation. The Plan Sponsor shall have final authority with respect to all Documents,
including the initial documentation and any amendments thereof.
4.3 Account. The Plan Sponsor shall establish, maintain and fund a checking account("Account") for
the payment of benefits under the Plan. The Plan Sponsor shall be liable for all claim checks issued
against the Account. Stop payment charges and any other special banking fees shall be billed to the Plan
Sponsor.
In the event the Plan Sponsor fails to provide funds for payment of claims within thirty
(30) days of receipt of notice of liability from G.A.L., G.A.L. may notify Plan Participants and the U.S.
Department of Labor of the Plan Sponsor's inability to fund processed claims.
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In the event that a delay in funding by the Plan Sponsor causes any discounts to be no
longer available, the Plan Sponsor agrees that G.A.L. shall have no liability with respect thereto and that
G.A.L. shall be indemnified and held harmless against all claims, damages, liabilities, reasonable
attorneys' fees and expenses in connection with any claim, action, suit, proceeding, settlement or
compromise thereof,relating to such lost or rescinded discounts.
4.4 Service Fee. The Plan Sponsor agrees to pay G.A.L. a Service Fee as illustrated in Exhibit A
based on the number of Participants, including active, retired, COBRA, or Participants on approved leave,
who are eligible for benefits under the Plan. The Plan Sponsor agrees to pay the Service Fee on or before
the end of each calendar month. Invoices not paid on time shall be subject to interest computed at the rate
of 1.5%per month.
The parties may agree on a method by which G.A.L. shall continue to process claims
incurred during, but received after, the term of this Agreement. There shall be separate and distinct
service fees for such run-out claims.
4.5 Change of Service Fee. G.A.L. reserves the right to change the Service Fee applicable to this
Agreement each anniversary of the effective date, provided that written notice of such change is furnished
to the Plan Sponsor.
The Plan Sponsor agrees to provide G.A.L. with reasonable advance notice of any changes
in its procedures or amendments to the Documents. The Plan Administrator shall communicate such
changes or amendments to Plan Participants. G.A.L. shall be entitled to reimbursement on a time and
material basis for any work required to make such changes and, if applicable, an increase in the Service
Fee.
Notwithstanding the Service Fee in effect under this Agreement, should the United States
postal service institute a postal rate increase during the term of this Agreement, then G.A.L. shall increase
the Service Fee then in effect.
4.6 Audit Fees. G.A.L. recognizes that from time to time the Plan Sponsor or Plan Administrator
may wish to perform (or have performed) an audit for financial statement purposes, performance standard
related purposes or other purposes. The Plan Sponsor agrees to pay G.A.L. an hourly rate for the staff
time involved in such audit as shown in Exhibit A.
4.7 Taxes and Other Assessments. The Plan Sponsor shall pay G.A.L. within a reasonable time after
assessment, any tax or charge assessed against G.A.L. that is incurred in connection with services
performed in accordance with this Agreement. By way of illustration and not limitation,the Plan Sponsor
shall reimburse G.A.L. for any tax or charge (including any penalties and interest payable with respect
thereto) incurred by reason of (a) a ruling or other determination by an insurance department or other
governmental authority, to the effect that any fees or charges payable under section 4.4 or the amount of
claim payments made in accordance with the Plan and section III of this Agreement is an insurance
premium and subject to the premium tax provisions of the applicable statutes, including any retroactive
assessment; and (b) a change in any charges imposed on G.A.L. by any public body, exclusive of federal
or state income taxes,which affect this Agreement.
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4.8 Tax Collection. The Plan Sponsor shall promptly pay G.A.L. all state and local taxes, including
state surcharges, which may be imposed on the Plan Sponsor or G.A.L. as a result of this Agreement.
G.A.L. agrees to remit these to the proper authorities in a timely fashion.
4.9 Tax Liability. It is agreed that nothing in this Agreement shall be deemed to confer on G.A.L.
any responsibility for any federal, state or local tax liability which may be imposed upon G.A.L.,the Plan
Sponsor,trust, administration, fiduciary or any Participant of the Plan.
4.10 Other Expenses. For any other expenses incurred by G.A.L. in connection with administration of
the Plan, G.A.L. shall bill such expenses and Plan Sponsor shall remit payment upon receipt.
4.11 Reprocessing Fee. In the event a retroactive amendment or the Plan Sponsor's failure to fund
claims in a timely manner results in the need to reprocess claims, the Plan Sponsor agrees to pay G.A.L.'s
expenses in performing that service.
4.12 Stop-Loss Insurance. The Plan Sponsor shall determine if stop-loss insurance coverage is
needed, obtain such insurance coverage, determine the terms and conditions of such coverage and provide
the funds needed to pay the premiums thereon. In the event the Plan Sponsor fails to provide funds for
payment of premiums within thirty (30) days of their due date, G.A.L. may notify Plan Participants and
the U.S. Department of Labor of the Plan Sponsor's inability to pay such premiums.
4.13 No Liability for Benefits. It is understood and agreed that liability for payment of benefits under
the Plan is the sole responsibility of the Plan Sponsor and that G.A.L. shall not have any duty to use any
of its funds for the payment of any such benefits. Both parties recognize that this specifically includes,
but is not limited to, (1) Medicare Secondary Payer Claims, even though such claims may not be
specifically allowed by Plan language or may be time-barred under the terms of the Documents; and (2)
liability for payment of Plan benefits necessary to fulfill the conditions of coverage under any stop-loss
insurance policy. In the event that any jurisdiction imposes upon G.A.L. the duty to make any benefit
payment,the Plan Sponsor shall pay over such amount to G.A.L. when requested.
4.14 G.A.L. Indemnification. Plan Sponsor agrees to indemnify G.A.L. and hold it harmless from and
against any and all claims, losses, liabilities, damages and expenses incurred by G.A.L., including court
costs and reasonable attorneys' fees, to the extent that such claims, losses, liabilities, damages and
expenses arise out of or are based upon the Plan Sponsor's intentional, willful, reckless or negligent acts
or omissions or breach in the performance of its duties under this Agreement. Further, should G.A.L.
become involved in a legal action, claim or proceeding by adhering to the terms and conditions of the
Plan, or following the direction of the Plan Sponsor or Plan Administrator, G.A.L. shall be indemnified by
the Plan Sponsor for all legal fees and expenses incurred in the defense of such legal action, claim or
proceeding.
4.15 Confidentiality. The Plan Sponsor acknowledges that G.A.L. does not intend by this Agreement
to transfer or convey any rights to or interest in, any software used or developed by G.A.L. or any vendor
of G.A.L., in processing data or rendering support for the Plan Sponsor.
Plan Sponsor warrants that should it obtain any knowledge concerning said software, it
shall be held in strict confidence and not disclosed to third parties. Plan Sponsor further warrants that
G.A.L.'s proprietary computer software, records, reports, forms, documents and business methods remain
the sole property of G.A.L. and may not be duplicated or disclosed in any manner.
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V. DUTIES OF THE PLAN ADMINISTRATOR
5.1 Eligibility Verification. The Plan Administrator shall be responsible for verification of
Participants' eligibility under the Plan. Eligibility verification is deemed to be confirmation that the
employee on whom a claim is based (or that employee's dependent) was or was not within an eligible
employee (or dependent) class at the time services were rendered, such that whatever benefits, if any, are
due and payable under the terms of the Documents can be adjudicated accordingly.
5.2 Enrollment Forms and Changes. The Plan Administrator shall furnish to G.A.L. (when
requested) all completed enrollment forms and all additions, changes and terminations of persons under
the Plan.
5.3 Final Authority. The Plan Administrator shall have final authority with respect to all claims
determinations and operations of the Plan.
5.4 COBRA Compliance. The Plan Administrator shall ensure compliance with the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended("COBRA"), including notifying participants of
their COBRA rights and collecting and disbursing premiums for COBRA participants.
5.5 HIPAA Compliance. The Plan Administrator shall ensure compliance with the Health Insurance
Portability and Accountability Act of 1996, as amended("HIPAA").
5.6 Confidentiality. The Plan Administrator acknowledges that G.A.L. does not intend by this
Agreement to transfer or convey any rights to or interest in, any software used or developed by G.A.L. or
any vendor of G.A.L., in processing data or rendering support for the Plan Administrator.
Plan Administrator warrants that should it obtain any knowledge concerning said software, it shall be held
in strict confidence and not disclosed to third parties. Plan Administrator further warrants that G.A.L.'s
proprietary computer software, records, reports, forms, documents and business methods remain the sole
property of G.A.L. and may not be duplicated or disclosed in any manner.
5.7 Additional Payments to Claimants. The Plan Administrator or those authorized by the Plan
Administrator may instruct G.A.L. to pay claims, which in G.A.L.'s opinion are not payable under the
Plan, upon the condition that such instruction is hereby deemed to release G.A.L. from any liability in
connection therewith. The Plan Sponsor and the Plan Administrator hereby acknowledge that such
payments shall not qualify for credit toward stop-loss insurance coverage, if any, and, as such, are
considered "outside" the Plan. The Plan Sponsor and the Plan Administrator assume all legal
requirements for such payment.
VI. GENERAL PROVISIONS
6.1 Entire Contract; Modification. This Agreement, together with any exhibits, attachments,
addenda and amendments appended hereto, constitutes the entire agreement between the parties. No
representation, understanding or agreements which are not expressly contained herein shall be effective
unless evidenced by written amendment hereto and signed by an authorized officer of both the Employer
and G.A.L. (Indicate with a check mark if an addendum is part of this Agreement):
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Texas Indemnification Addendum:
6.2 Applicable Law. This Agreement shall be deemed to have been made and entered into in the
State of Illinois, and shall be construed and enforced according to the laws of the State of Illinois,
exclusive of its choice of law provisions. The venue for the resolution of any disputes or the enforcement
of any rights arising out of or in relation to this Agreement shall be in the Circuit Court of Kane County,
Illinois.
6.3 Non-Solicitation. Each of the parties recognizes the importance of trained and skilled personnel.
During the term of this Agreement and for a period of one (1) year thereafter, neither party shall solicit
any employee of the other party, nor shall either party induce or attempt to persuade any employee of the
other party,to terminate his or her employment.
6.4 Notices. Any notice, report or other communication required or permitted by this Agreement shall
be deemed given when actually received. Any communication shall be sufficient if in writing and sent by
registered or certified United States mail, postage and fees prepaid to the other party at the address shown
below, or at such other addresses as the parties may from time to time designate in writing.
If to G.A.L.
Group Administrators, Ltd.
Mr. David Dorfman
1880 North Roselle Road
Schaumburg, Illinois 60195
847-519-1880 Fax 847-519-1979
If to Employer.
City of Elgin
Mr.Nick Oriti
150 Dexter Court
Elgin, Illinois 60120-5555
847-931-6040 Fax 847-931-5906
6.5 Binding Effect; Assignment. This Agreement shall be binding upon the parties and their
respective successors and assigns, and neither the rights nor obligations hereunder may be assigned
without the prior written consent of the other party.
6.6 Consultants. The Plan Sponsor acknowledges that they have engaged the services of a
consultant/broker in connection with the Plan. THE PLAN SPONSOR AGREES TO DEFEND,
INDEMNIFY, AND HOLD G.A.L. HARMLESS AGAINST ALL CLAIMS, DAMAGES, LIABILITES
AND EXPENSES REASONABLY INCURRED OR IMPOSED ON IT IN CONNECTION WITH ANY
SERVICES PROVIDED BY THE CONSULTANT/BROKER, INCLUDING ANY SERVICES OF
THIRD PARTIES OR STOP-LOSS INSURANCE COVERAGE WHICH ARE RECOMMENDED OR
OBTAINED BY THE CONSULTANT/BROKER.
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VII. TERM OF AGREEMENT
7.1 Term. This Agreement shall commence on March 1, 2002 and shall continue in effect for two
successive one-year periods unless terminated as provided herein below.
(a) Termination By Notice. After the initial year of the Agreement, either Party
may terminate this Agreement for any reason by providing at least ninety (90) days'
advance written notice to the other party of its intent to terminate.
(b) Termination by Default. Should either party default in the performance of
any of the terms or conditions of this Agreement, the other party shall deliver (personally
or by certified mail) to the defaulting party written notice thereof specifying the matters in
default. The defaulting party shall have thirty (30) calendar days after its receipt of the
written notice to cure such default. If the defaulting party fails to cure the default within
such thirty-day period, this Agreement shall terminate at 11:59 p.m. on the thirtieth day
after receipt of the notice by the defaulting party. Notwithstanding the foregoing, if the
Plan Sponsor fails to provide adequate funds necessary for the payment of claims pursuant
to the Plan, or at any time G.A.L. believes that the Plan Sponsor does not have the
financial ability to adequately fund the Plan, and the Plan Sponsor has failed to
immediately provide adequate assurances of such ability to G.A.L., G.A.L. may
immediately terminate this agreement.
7.2 By Law. If any state law, federal law or regulation is enacted or promulgated which prohibits the
performance of any of the duties hereunder, or if any law is interpreted to prohibit such performance, this
Agreement shall automatically terminate with respect to such prohibited duties as of the effective date of
the prohibition.
7.3 Severability. The invalidity of any provision of this Agreement shall not affect the validity or
enforceability of the other provisions hereof. Such invalid provision shall be stricken from this
Agreement.
7.4 Effect of Termination. As of the effective date of termination of this Agreement, G.A.L. shall
have no further duties of performance or obligations hereunder, except as may be required by the Privacy
Standards. This period between notice of termination and the effective date of termination shall be used
to affect an orderly transfer of records and funds, if any, in accordance with the terms of this Agreement,
from G.A.L. to the Employer or to such person as the Employer may designate in writing. Any records
transfer shall be completed within a reasonable time after receipt of the termination report fee then
charged.
City of Elgin Group Administrators, Ltd.
tar At
David A. Dorfman
Title Title
11
909786.03
EXHIBIT A
Administration Fees
Start-up Fee. For initial Plan start-up,the Plan Sponsor shall pay G.A.L.a non-refundable fee of$0.00 for expenses incurred
by G.A.L.
Service Fee Per Plan Participant Per Month("Service Fee")
Year 1 Medical Administration $10.00 per employee per month
Year 2 Medical Administration $10.34 per employee per month
Year 3 Medical Administration $10.69 per employee per month
Preferred Provider(PPI) $3.60 per employee per month
Shared Savings. In the event a Plan Participant incurs medical expenses which are not eligible for a discount under the Plan's
primary preferred provider or secondary preferred provider(if any),or under any other discount arrangement,G.A.L. is hereby
authorized to negotiate with the provider of services or supplies for a discount or, in its discretion,to use the services of a third
party to obtain a discount. The Plan Sponsor shall pay a fee to G.A.L. or such third party equal to thirty percent(30%), of the
amount of the discount.
Compensation of Other Providers. The Plan Administrator has elected to utilize the services of certain ancillary providers
(the"Providers")in connection with the administration of the Plan. The Plan Administrator authorizes G.A.L.to enter into an
agreement on its behalf or G.A.L. shall allow the Plan access to and benefit from its master agreement with the Providers. The
Plan Sponsor authorizes G.A.L. to prepare periodic billing statements for payment by the Plan Sponsor of the Provider fees as
agreed upon from time to time. The Plan Sponsor further authorizes G.A.L. to collect and remit such fees on its behalf to the
Providers. G.A.L. shall collect such fees from the Plan Sponsor, either directly or as a part of the Plan Sponsor's funding of
claims where the Provider fee is based upon a percentage discount, deposit them into an account maintained for this purpose
and pay the appropriate Provider therefrom.
The Plan Sponsor acknowledges that G.A.L. has no ownership or affiliation with the Providers, other thanthe right to access
their networks or services. The Plan Sponsor further acknowledges that G.A.L. may receive compensation from certain
Providers for providing support to them in connection with the services they provide to the Plan.
HOURLY RATES
Executive staff including officers $150.00
Supervisory staff $75.00
Claim adjusters $60.00
Billing Staff $50.00
Clerical $25.00
12
909786.03
•
TEXAS INDEMNIFICATION ADDENDUM
THIS ADDENDUM TO THIRD PARTY ADMINISTRATION AGREEMENT, is entered into by and between
G.A.L. and the Employer(as such terms are defined in the Third Party Administration Agreement between those parties(the
"Agreement").
Whereas,the parties wish to amend certain provisions of the Agreement,as set forth below.
Now, therefore, the parties hereto, in consideration of the promises contained herein, and intending to be legally
bound hereby,agree as follows:
1. Capitalized terms that are not otherwise defined herein shall have the meanings ascribed to them in the
Agreement.
2. Section 3.12 of the Agreement shall be amended as follows:SUBJECT TO THE EXPLICIT LIABILITY
LIMITATIONS CONTAINED IN SECTIONS 2.2, 3.2(K), 3.4, 3.5, 3.9, 4.9 AND 4.13, G.A.L. AGREES
TO INDEMNIFY THE PLAN SPONSOR AND HOLD IT HARMLESS FROM AND AGAINST ANY
AND ALL CLAIMS, LOSSES, LIABILITIES, DAMAGES AND EXPENSES PAID BY THE PLAN
SPONSOR, INCLUDING COURT COSTS AND REASONABLE ATTORNEYS' FEES, TO THE
EXTENT THAT SUCH CLAIMS, LOSSES, LIABILITIES, DAMAGES AND EXPENSES RESULT
DIRECTLY FROM G.A.L.'S FAILURE TO COMPLY WITH ITS DUTY OF CARE (AS DEFINED IN
SECTION 3.9 HEREOF) IN THE PERFORMANCE OF ITS DUTIES UNDER THIS AGREEMENT.
NOTWITHSTANDING THE FOREGOING, THE AMOUNT THAT G.A.L. WILL PAY OVER TO, OR
INDEMNIFY, THE PLAN SPONSOR WILL BE CAPPED AT THE AMOUNT OF THE TOTAL
SERVICE FEE (AS DEFINED ON EXHIBIT A) RECEIVED BY G.A.L. FROM THE PLAN SPONSOR
FOR THE PRIOR TWELVE-MONTH PERIOD PURSUANT TO THIS AGREEMENT.
3. Section 4.14 of the Agreement shall be amended as follows: PLAN SPONSOR AGREES TO DEFEND,
INDEMNIFY AND HOLD G.A.L. HARMLESS AGAINST ALL EXPENSES, LOSSES, CLAIMS,
DAMAGES, LIABILITIES, REASONABLE ATTORNEYS' FEES AND COSTS OF SUIT IN
CONNECTION WITH ANY CLAIM, ACTION, SUIT, PROCEEDING, SETTLEMENT OR
COMPROMISE THEREOF, CONCERNING THE PLAN, INCLUDING, BUT NOT LIMITED TO, ANY
INTENTIONAL, WILLFUL, RECKLESS OR NEGLIGENT ACTS OR OMISSIONS OF G.A.L., ITS
OFFICERS, REPRESENTATIVES, AGENTS OR EMPLOYEES OR ANY BREACH IN THE
PERFORMANCE OF PLAN SPONSOR'S DUTIES UNDER THIS AGREEMENT.
4. In all other respects,the Agreement shall remain unchanged and in full force and effect.
IN WITNESS THEREOF, the parties hereto have caused this Addendum to be executed as of h i 0A,g,,h e',
200.Z .
ATTEST: THE EMPLOYER
By: JL
Its Duly • • • orize• '
ATTEST: GROUP AD .. l"P ,LTD.
Its Duly Authorized , f!
13
909786.03
t
`.0 OF E4Ci __
` , `�§ Agenda Item No.op .¢ r - City of Elgin g
oi r,
G ��0 No ' it
February 8 , 2002
rn � (.til pill'
N r:1 ! r
. t it t8.,
TO: Mayor and Members of the City Council
Y Y FINANCIALLY STABLE CRY GOVERNMENT
EFFICIENT SERVICES,
AND QUALITY INFRASTRUCTURE
FROM: Olufemi Folarin, Acting City Manager
SUBJECT: Medical Claims - Third Party Administrator
PURPOSE
The purpose of this memorandum is to provide the Mayor and members
of the City Council with information relative to the changing of
our current Third Party Administrator, who handles the processing
and paying of medical claims for those employees and retirees, who
are members of the Preferred Provider Organization (PPO) .
BACKGROUND
em. The City currently has a contract with Health Plan Management
(HPM) for Administrative Services . This contract is a one year
contract and will expire on February 28, 2002 . Over the past year,
employee discontent with HPM has been increasing at an alarming
rate. Causes of dissatisfaction range from slow payment/processing
of claims to slow response time when employees call with questions
about the status of their claims .
Health Plan Management recently notified the City that if our
contract would be renewed their annual fee would be increased from
$80, 295 per year to $87, 870 per year, a 9 .4% increase.
Realizing that this contract will expire on February 28, 2002, the
City has investigated other Third Party Administrators and has
determined that the best interest of the City and its covered
employees will be served if the City selects a new Third Party
Administrator called Group Administrators, located in Hoffman
Estates, Illinois . Group Administrators has offered to process our
PPO claims for an annual fee of $82, 416, thus enabling a savings of
$5, 454 over HPM' s proposed rates . Additionally, Group
Administrators is willing to enter into a 3 year plan, instead of
a 1 year plan, with future rate increases held to 3% to 5% . Their
ability to process claims is enhanced as they have purchased the
rib. latest computer technology and have a staff which will provide a
"dedicated" team and staff to handle the City' s claims .
C
Medical Claims - Third Party Administrator
top. February 8, 2002
Page 2
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
Efforts have been in progress since May, 2001, in conjunction with
Global Benefits and City Management to determine what our best
source of Third Party Administration would be .
.V FINANCIAL IMPACT
Funds in the amount of $87, 870 have been budgeted for this contract
in account number 635-0000-796 . 53-08, Medical Insurance. First
year savings with Group Administrations is estimated to be $5, 454 .
LEGAL IMPACT
V401// The proposed agreement requires an exception to the procurement ordinance.
ALTERNATIVES
Remain with HPM.
e RECOMMENDATION
It is recommended that the City Council approve Group
Administrators as our Third Party Administrator, for a three year
program.
Respectfully submitted,
ft.NKJ,..:_ St,,,,,,NL,
Olufemi ' olari
Acting Ci ► Manager
NAO/mh
Attachments
tow
) TPA COMP,1SON 3
Health Plan Mgmt;Renewal Group Administrators Professional Benefit Adms. ,
Services
Medical Claim Proc. Offered: Yes Offered: Yes Offered: Yes
Per EE per Month Cost: $10.00 Cost: $10.00 Cost: $11.25
Annual Fee $60,600 $60,600 ' $68,175
One Time Set Up Fee N/A N/A $4,000
Annual Maintenance Fee $750 None $1,000
PPO Network Offered: Preferred Plan Offered: Preferred Plan Offered: Preferred Plan
PPO Access per EE per Mo. Cost: $4.50 Cost: $3.60 Cost: $3.60
Annual $27,270 $21,816 $21,816
Annual Claim Processing and
PPO fee combined $87,870 $82,416 $89,991
Cobra Administration Offered: No Offered: Yes Offered: Yes
Per Occurrence Cost: Cost: $15.00 Initial Cost: $1.25 PEPM
$6.00 Accepted+ Plus 2%Of
2%Or.75 PEPM COBRA Premium
HIPPA Administration Offered: Yes Offered: Yes Offered: Yes
Cost per certification Cost: Inc Cost: Inc Cost: Inc
1
I D cards Offered: Yes Offered: Yes Offered: Yes
Per Participant Cost: Inc Cost: Inc Cost: Inc
Summary Plan Description Offered: Yes Offered: Yes Offered: Yes
Per SPD (includes printing) Cost: $4.00 Cost: None Cost: Inc
Plan Document Preparation Offered: Yes Offered: Yes Offered: Yes
Cost: Inc Cost: None Cost: $1,200
Claim Run-out Administration Offered: Yes Offered: Yes Offered: Yes
Approximate Cost: $12,000 Cost: Inc Cost: $15,000
•
Claim Run-in Administration Offered: N/A Offered: Yes Offered: Yes
Approximate Cost: None Cost: None Cost: $5,030
. Rate Guarantee Offered: Yes Offered: Yes Offered: Yes
Duration: 1 Year Duration: 3 Years Duration: 1 Year