HomeMy WebLinkAbout11/19/2003 - STAFF REPORTS (25) DATE: November 19, 2003
TO: City Council
FROM: Director of Human Resources
Assistant City Manager
APPROVE FIRST AMENDMENT TO CONTRACT FOR THIRD PARTY CLAIMS
ADMINISTRATION (TPA) TO COLEN AND LEE FOR THE CITY'S WORKERS'
COMPENSATION PROGRAM
RECOMMENDATION:
It is recommended that City Council approve the First Amendment to the contract with
Colen and Lee, for Third Party Administration (TPA) of the City's Workers' Compensation
Program.
SUMMARY:
The City has heretofore entered into a contract with Colen and Lee for Third Party Claims
Administration of the City's Workers' Compensation Program. Under the terms of the
City's contract, the contractor's compensated is based on the total number of open claims
that existed upon execution of the contract. When the City awarded this contract there
were 137 open claims. However, upon execution of the contract, the actual number of
open claims, as reported on the City's Interim Annual Report to the State of California,was
167 claims. Unfortunately, the actual numberwas never included in the final contract. The
requested action will adjust the total number of open claims from 137 to 167 to properly
reflect the actual number of open claims turned over to Colen and Lee upon execution of
the contract.
BACKGROUND:
Last year, the City issued a Request for Proposals (RFP)for Third Party Administration of
the City's workers' compensation program. As part of the RFP, each firm was asked to
base their compensation requirements on the assumed number of open claims reported by
the City. At the time the RFP was issued the City reported a total of 137 open claims.
In May 2003, The City Council approved a contract with Colen and Lee for Third Party
Claims Administration of the City's workers' compensation program. When the contract
was executed the actual number of open claims, as reported on the City's Interim Annual
Report to the State of California, had increased to 167 claims. Unfortunately, this
discrepancy was not discovered until late August afterthe contractor had received all of the
City's claim files and completed their preliminary analysis. Colen and Lee has met with
staff to discuss the discrepancy in the number of open claims and how to best resolve the
issue. They have indicated that they are unable to absorb the additional number of claims
under the current contract and that unless the City is willing to adjust the number of open
4A ah
Although the existing contract contains an adjustment provision for dealing with claims
above or below the base year amount, this adjustment can only be done on the
anniversary date of the contract. Since the anniversary date of this contract is May 1 st,
the contractor would normally have to wait until next May before requesting an
adjustment. In light of the discrepancy in the number of open claims that existed upon
execution of the contract, staff believes that it would be unreasonable to ask the
contractor to wait until May of 2004 before adjusting the base year. Therefore, staff
recommends that the base year be corrected to reflect 167 open claims, which is the
correct number of claims turned over to them upon execution of the contract.
Compensation underthe current contract is set at$9,247.50 per month. If the City Council
approves the attached amendment modifying the number of open claims that were turned
over to the contractor upon execution of the contract,the contractor would be entitled to an
additional $2,025.00 per month. This would increase the contractor's total compensation
to $11,272.50 per month or $135,270.00 annually. Although not budgeted, funding is
available in the Risk Management Fund.
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SUSAN E. MILLS, PHL _-�P 4istA
U L F
Director of Human Resources it n ger
DAVID H. READY
City Manager
Attachments
1 . Minute Order
2. Contract Amendment No. 1
FIRST AMENDMENT TO CONTRACT SERVICES AGREEMENT
FOR THIRD PARTY ADMINISTRATION OF
THE WORKERS COMPENSATION SERVICES
This First Amendment to Contract Services Agreement for Third Party Administration of
the Workers' Compensation Services ("First Amendment") is made and entered into on
, 2003, but effective as of May 1, 2003, by and between the City of Palm Springs, a
California municipal corporation ("City") and Colen & Lee, Incorporated, a California
Corporation ("Administrator"), amending that certain Agreement for Third Party Administration
of the Workers' Compensation Services ("Original Agreement") dated May 1, 2003 between the
City and Administrator,
RECITALS
A. On or about May 1, 2003, City and Administrator entered into the Original
Agreement for Third Party Administration of Workers' Compensation Services
pursuant to which Original Agreement Administrator agreed to administer the
City's workers' compensation self-insurance program during the tern of the
Agreement.
B. City agreed to compensate Administrator on a monthly basis for services rendered
under the agreement
C. Administrator's monthly fee was based on the assumption that the City had 137
open claims during the first year of the Agreement.
D. Upon execution of the agreement the actual number of open claims, as reported
on the City's Interim Am2ual Report to the State of California, was 167 claims
E. City and Administrator now desire to amend the Agreement to adjust the total
number of open claims from 137 to 167 to properly reflect the actual number of
open claims turned over to Administrator upon execution of the agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intended to be bound, the parties agree as follows:
1. Section 19 of the Agreement are amended to read, in their entirety, as follows:
,�-.;3h �
1003/002/26303.01
"19 COMPENSATION. The City shall pay the Administrator
$11,272.50 per month for services rendered under this Agreement, based on the assumption that
the City has 167 open files, during the first year of this Agreement. There is also a one-time data
conversion fee of $7,000, which shall be paid at the end of the first month of this Agreement.
The monthly fee to be paid to Administrator will be adjusted up or down on the anniversary of
this Agreement based on the average raimber of open files. The adjustment will be made on a
direct percentage basis. The second year fees, based on 167 open files, will be per month.
The third year fees, based on 167 open files, will be per month. The fourth year fees,
based on 167 open files, will be per month. The fifth year fees, based on 167 open files,
will be per month."
2. Except as modified by this First Amendment, all other terns and conditions of the
Agreement are hereby ratified and confirmed by the parties.
IN WITNESS WHEREOF, the parties hereto executed this First Amendment to be
effective as of the date first written above.
CITY OF PALM SPRINGS,
a municipal corporation
By:
City Manager
ATTEST:
City Cleric
APPROVED AS TO FORM:
City Attorney
COLEN & LEE
By:
Name:
Title:
1003/002/26303.01 A-2
MINUTE ORDER NO.
APPROVING THE FIRST AMENDMENT TO THE CONTRACT
FOR THIRD PARTY CLAIMS ADMINISTRATION FOR THE
CITY'S WORKERS' COMPENSATION PROGRAM
---------------
I HEREBY CERTIFY that this Minute Order, approving First Amendment to the Contract for Third
Party Administration for the City's Workers' Compensation Program was adopted by the City
Council of the City of Palm Springs, California, in a meeting thereof held on the 19th day of
November, 2003.
PATRICIA A. SANDERS
City Clerk