HomeMy WebLinkAbout12 - General Liability ProgramAugust 22, 2000
CITY COUNCIL AGENDA
ITEM NO. 12
CITY OF NEWPORT BEACH
HUMAN RESOURCES DEPARTMENT
TO: Mayor and Members of the City Council
FROM: Lauren F. Farley, Risk Manager
SUBJECT: Council Approval of Claims Administration Services for the City's
General Liability Program
RECOMMENDATION: Approve the attached contract to provide Third Party
Administration (TPA) services for the self- insured general liability program to Carl
Warren and Company for a 3 -year term beginning 9/1/00. The contract has
been approved substantially in the attached form by the City Attorney's office.
BACKGROUND: The City of Newport Beach has had a self- insured general
liability program for over 15 years. The City averages approximately 170 general
liability claims per year. During this period the City has contracted with various
TPA's to handle the claims administration portion of the program. There are
several benefits of using a TPA in a self insured general liability program and
these are: minimal city staff needed to maintain the program; the TPA can
provide a higher level of claims administration service to claimants, vendors,
excess insurance and other involved parties alike; and the TPA possesses the
technical expertise needed to provide accurate and fair claims administration.
The TPA acts as the primary investigator of liability claims and in an advisory
role to city staff by making recommendations on the appropriate disposition
(settlement or denial) of claims.
Our current contract with Insurance Consulting Associates (ICA) was due to
expire on 7/1/00 when the opportunity to join the neighboring cities of Huntington
Beach and Costa Mesa in a joint Request for Proposal (RFP) for general liability
TPA services became available with an effective date of 9/1/00. Staff
determined that the opportunity to join in the RFP process with these two other
cities could result in a more favorable fee structure, continuity in handling claims
and defense in similar cases; and claim trends for loss prevention policies and
procedures. Therefore, our current contract with Insurance Consulting Services
(ICA) was extended an additional sixty (60) days at the expiring rates to afford
the city the opportunity to participate in this joint RFP. The city of Costa Mesa
acted as the lead agency and coordinated the joint RFP effort.
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RFP documents were mailed to fifteen (15) firms providing TPA services and the
seven firms listed in Attachment A, submitted responses. The proposals were
evaluated by the Risk Managers of all three cities using criteria including
experience in municipal claims administration, proposed staff qualifications,
ability to perform services outlined in the RFP's scope of work and proposed
fees. Attachment A shows the composite score of each of the submitted
proposals from this evaluation. The Risk Managers invited the three (3) highest
rated firms, Carl Warren & Company, Ward North America and ICA for
interviews.
Based on the interviews, Carl Warren & Company was the firm selected by all
three cities. Carl Warren & Company has extensive municipal claim
administration experience and currently provides TPA services to approximately
thirty (30) Orange County cities. All firms submitted proposals based on a "time
and expense" fee schedule, which is standard in the industry. Attachment B
shows the proposed fees of each firm. The proposed Carl Warren & Company
hourly rate is 8.9% less than the expiring rate of ICA. In addition, the other fees
proposed by Carl Warren & Company remain very competitive in the industry
and the entire proposal is guaranteed for three (3) years.
The amount budgeted for claims administration in the 2000/01 fiscal year is
approximately $85,000 and is sufficient to cover the anticipated contract costs
unless some catastrophic loss substantially alters the average annual claim
volume (170 claims per year) in FY 00/01. The contract will continue for the
proposed 3 -year period beginning 9/1/00, unless the annual performance review
is unsatisfactory as determined by staff.
Attachment A
RFP Scoring Summary
Firm:
Total.
Average
Carl Warren & Company
1705
426.25
Ward North America
1615
403.75
Insurance Consulting Associates
(ICA)
1410
352.5
Fleming Associates
1180
295
GAB Robins
1165
291.25
Cunningham/Lindsey
1135
283.75
Willis Administrative Services
Corporation
1085
271.25
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AGREEMENT FOR GENERAL LIABILITY
CLAIMS ADMINISTRATION SERVICES
THIS AGREEMENT is made and entered into by and between the CITY OF NEWPORT
BEACH, ( "CITY "), and Carl Warren & Company
( "CLAIMS ADMINISTRATOR'). CLAIMS ADMINISTRATOR's Home Office is located at
California Regional Office, 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 September
1, 2000 and ending 12:00 midnight on August 31, 2003
2. MINIMUM REQUIRED CLAIM ADMINISTRATION SERVICES TO BE PERFORMED
BY INSURANCE CONSULTING ASSOCIATES. INC.
(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 liability claims
against CITY.
(3)
Inform the CITY of changes or proposed changes in statutes, rules and
regulations and case law affecting its general liability claims program.
(4)
Assist in the development of policies and procedures relating to the
general liability claims program.
(5)
Provide information and guidance regarding the general liability 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 at request of CITY.
(9)
Provide 24 -hour on -call service. This can be accomplished by providing
CITY with a 24 -hour phone number, pager, beeper or telephone number
for key personnel. The 24 -hour on -call service may include, but not
limited to, responding to an incident scene, attending meetings, and
conducting investigations.
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(10) Conduct risk management related seminars for department heads
and /or CITY staff at request of CITY.
(11) Maintain and store all hardcopy files for five (5) years after file is
closed.
B. Claims Administration
(1) Create and enter new claim files into the computer within 48 hours of
receipt of a loss notice from the CITY Clerk's Office.
(2) Maintain a hardcopy file for each claim.
(3) At the direction of the CITY, contact claimants or their attorneys within
five days of receipt of a claim and maintain appropriate contact with
them until the claim is closed.
(4) Obtain two competitive estimates of automobile damage when the
loss is under $1,000. If over this amount, engage the services of a
professional appraiser.
(5) Review the status of claims and adequacy of reserves on all active
cases at least every 90 days.
(6) Provide first Investigative Report within 30 days of receipt of claim to
Risk Manager.
(7) Provide narrative reports when recommending rejection or settlement
of a claim, when claim is going to trial, or other significant events have
or will occur. Reports must be clear and concise.
(8) Negotiate settlements within authority limits.
(9) Process payments within authority level within 14 days of receipt.
(10) Review vendors for appropriateness of work and cost - effectiveness.
(11) All files will be diaried at appropriate intervals to allow for timely
completion of required activity.
(12) Content of all files will be in chronological order with correspondence
in the designated section.
(13) Files will clearly and concisely document action taken on the claim.
(14) Telephone calls will be returned with 24 hours. If the
ADMINISTRATOR's staff member called is not available within this
time frame, another designated staff member will return the call.
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(15) All written communications requiring acknowledgment or action will be
responded to and mailed within ten days, or sooner if an immediate
response is required.
(16) Review all new claims for liability and provide an assessment of
liability to CITY no later than 30 days from receipt of loss notice from
CITY.
(17) Identify and notify possible co- defendants.
(18) Tender claims to other potentially responsible parties.
(19) Process all claims in accordance with CITY's instructions and policies.
(20) Have translators available to assist with non - English speaking
claimants.
C. Investigations
(1) Within 10 days of receipt of claim, unless otherwise requested by Risk
Manager, take statements of facts from claimants when not
represented by an attorney. Statements will be preserved by
recording or taking hand written signed statements.
(2) Further investigate claims where the initial review indicates that it is
warranted. Further investigation may include, but are not limited to,
on -site investigation, photographs, interviewing witnesses and taking
signed or recorded statements, verification of damage or loss, taking
measurements, obtaining maps /diagrams from CITY or other sources,
obtaining medical releases, police reports, internal operations
investigations, paramedics reports, marine department reports,
building permits, or other records as required.
(3) If an attorney is involved, direct all communication to the claimant's
attorney regarding the investigation, negotiation, and evaluation of
any claims leading to a settlement.
(4) Report all Bodily Injury claims to Index Bureau. Conduct Index
Bureau searches for repeat claimants. Conduct additional Index
Bureau searches at request of CITY.
(5) Obtain approval from CITY before engaging the services of an outside
vendor for an investigative assignment.
(6) At the request of the CITY, investigate inverse condemnation claims.
(7) Arrange, with prior CITY approval, for expert services, including but
not limited to, professional photography, independent medical
examinations, professional engineering services, and laboratory
services.
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D. Litigation Management
(1) Provide CITY Attorney's Office with a transmittal letter outlining the
status of the case, results of investigations, primary issues, requested
action, a complete copy of the file and any documentation within 14
days of receipt of lawsuit with a copy to Risk Manager.
(2) Defense counsel will be monitored and evaluated based on quality of
work product, timely communication of important issues, timely filings,
timely written and telephone responses, obtaining required approval,
accurate billings and timely case resolution. Deficiencies in
performance will be reported to the CITY.
(3) Maintain liaison with the CITY Attorney's Office and defense counsel
and provide such investigation as required during the entire litigation
process, including but not limited to, additional investigations for pre-
trial and trial that may be requested by either the CITY Attorney's
Office or defense counsel.
(4) Obtain approval from CITY before agreement of a settlement above
authority limit.
(5) Obtain a fully executed release on all settlements and dismissals.
(6) Attend Settlement Conferences, mediation or arbitrations as
requested.
(7) Assist the CITY Attorney and defense counsel in preparing and /or
answering discovery as requested.
(8) Assist CITY personnel in Small Claims Court actions filed by and
against CITY, including but not limited to, obtaining witness
information, evidence, assistance in preparing the case for trial and
appearance at the trial if deemed necessary by CITY.
E. Subrogation
(1) Place the tortfeasor on notice of the CITY's subrogation rights.
(2) Work with the CITY Attorney's Office to draft the legal documents to
recover monies spent on a claim.
F. Statistical Reports
(1) Specified standard loss reports must be received within 10 days after
the end of the month /quarter, as agreed upon.
(2) Special reports must be provided as needed by the CITY.
(3) Submit monthly reports during the term of the agreement. The
monthly reports shall indicate the status and detail of every open
claim assigned to ADMINISTRATOR, including but not limited to, the
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3.
serves assigned for each claim, summary of each loss by type,
department, year, litigation status, and coded as to cause.
(4) ADMINISTRATOR will enter into its computer any and all files handled
in -house by CITY. CITY will provide ADMINISTRATOR with all
information necessary for such input.
G. 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.
FEES
Fees will be billed according to the following schedule:
Adjusting expense
$
46.00 per hour
Mileage
$
.40 per mile
Photographs
$
2.00 per photo
Telephone expense.
8% of services
Word processing
$
4.50 per page
Office expense
15% of services
File set up fee
$
23.00 life of claim
Monthly Administration Fee
$
5.00 per claim
per each month
claim
is open
All requested computer services, customized reports and
conversion of computer loss data from prior
administrator (subject to quote at time of request)
4. TERMINATION OF AGREEMENT
This Agreement may be terminated by either party without cause at any time by
submitting 60 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
CLAIMS ADMINISTRATOR:
Carl Warren & Company
Attention Joan Weeks
750 The City Drive, Suite 470
Orange, CA 92868
5. INSURANCE REQUIREMENTS
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
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 emissions 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 for 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 any loss, liability, cost or damage, including
attorney's fees resulting therefrom.
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(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
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
(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'
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' 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.
7. RECORDS
All claim files, records, reports and other documents and materials pertaining to the
CITY' 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
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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 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 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 general liability claims
program as set forth in this agreement, and they have no power or authority
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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 unsatisfactory, the 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 affecting the CITY's General Liability program.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Orange County, California as of 2000.
CITY OF NEWPORT BEACH,
A Municipal Corporation
DATED: 2000 By:
APPROVED AS TO FORM:
Homer Bludau, CITY Manager
A
DATED: 2000
NAME OF CLAIMS ADMINISTRATOR:
DATED: 2000 By:
Robin L. Clauson, Assistant CITY Attorney
(name & title)
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