City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council approve an extension and fee increase to the
professional agreement with Colen & Lee to provide workers’ compensation claims
administration services. The fee increase is 4%, or $620, from $15,500 per month to
$16,120 per month, effective July 1, 2006.
BACKGROUND:
Colen & Lee has provided workers’ compensation claims administration services for
the City since July 1986. As the City’s workers’ compensation claims administrator,
Colen & Lee is responsible for setting initial claim reserve amounts; reviewing
medical treatment to ensure that it is appropriate; acting as a liaison between
employees, doctors, attorneys, and the City; generating and mailing statutorily
required notices to employees; processing and filing required forms with the
appropriate parties; consulting with Risk Management staff to provide recommended
courses of action; and generating and providing reports to Risk Management staff
for use in analysis and enhanced program management.
Overall, Colen & Lee has been responsive to the needs of Culver City’s
management and its employees. Over the past few years, Colen & Lee has worked
with Risk Management staff on a number of service enhancements and new
management reports which have improved the availability of information to City staff.
They have also provided in-house training and attended various meetings when
requested.
Meeting Date: 07/10/06 Item Number: A-6
AGENDA ITEM: Consideration of an Extension to a Professional Services
Agreement with Colen & Lee, Inc. to Provide Workers’ Compensation Claims
Administration Services.
Contact Person/Dept.: Kermit Francis;
Nick Kimball
Phone Number: (310) 253-5682
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification:
Colen & Lee Inc. on 7/05/06; Master Notification List on 7/05/06
Department Approval:
Kermit Francis (06/28/06)
CAO Approval:
Jerry B. Fulwood (07/05/06)
City Controller Approval:
Marlee Chang (07/03/06)
City of Culver City, California
City Council Agenda Item Report
The current service agreement was approved in July 1990 and has since been
amended three times (Attachment 1). The first amendment was approved in
October 1997 and set the monthly service contract fee at $11,475. The second
amendment was approved in July 2002 and increased the monthly contract amounts
for Fiscal Years 2001-02, 2002-03, and 2003-04 as follows: $13,000, $14,000 and
$15,000/month respectively. The third amendment was approved in June 2004 and
provided for a monthly increase of $500 to $15,500/month. These fee increases
were requested due to an increase in Culver City’s workers’ compensation case load
(297 open cases in 2001 to approximately 390 open cases currently) and changing
state regulations requiring additional resources for case management.
DISCUSSION:
Colen and Lee Services
The Department of Industrial Relations (DIR) sets forth a number of regulations
pertaining to workers’ compensation administrators. These include the number of
cases each adjuster can handle, certification requirements, continuing education
requirements, etc. Colen & Lee has consistently received high marks from the DIR
and the 13 Independent Cities Risk Management Authority (ICRMA) cities that use
their claims administration services.
While Culver City’s new cases have remained relatively constant in the past few
years, averaging approximately 152 per year, new regulations and increased
litigation have resulted in cases staying open longer. Additionally, as previously
noted, Risk Management staff has required enhanced services to more effectively
manage the workers’ compensation program. Consequently, this has consumed
more of Colen and Lee’s resources to meet the City’s increasing needs.
Colen and Lee has agreed to extend their current contract terms through 6/30/2007,
with a fee increase of 4% ($620) per month effective 7/1/2006 (Attachment 2). The
fee increase is a result of the previously mentioned factors as well as a standard
increase in the cost of doing business.
Colen and Lee has been exceptionally helpful and accommodating during the
transitional phase that resulted from turnover of key staff at the beginning of this
fiscal year. Since Colen and Lee is familiar with the City’s claim files and history and
all systems are in place, it is recommended that, at this time, we continue
contracting with Colen and Lee through 12/31/06, with the option to extend the terms
of the agreement in effect at expiration through 6/30/07. This will give current Risk
Management staff the opportunity to get up to speed on existing workers’ comp
claims, continue to manage new claims in an effective manner, and complete the
RFP process for third party claims administration services. City of Culver City, California
City Council Agenda Item Report
Plan for RFP Process
Lastly, staff is planning to present to Council for consideration an RFP for Workers’
Compensation third party claims administration services in fall 2006. The RFP
process will ensure that the City is receiving quality claims administration services at
a competitive price. An RFP for third party claims administration services was
originally planned for summer 2005, but due to staff turnover, the RFP was delayed.
New staff has since been hired to fill the vacancies and is ready to move forward
with the RFP process. Giving staff the option to extend Colen and Lee’s contract
through 6/30/07 if necessary will ensure that the RFP process will be conducted in a
complete and thorough manner
FISCAL ANALYSIS:
Adequate funds to cover Colen & Lee’s contract fee through 6/30/07 are included in
the 2006/07 budget (Other Contractual Services: 30921100.619800).
ATTACHMENTS:
Attachment 1: Service Agreement with first, second, and third amendments;
Attachment 2: Contract extension proposal letters from Colen & Lee.
MOTION:
That the City Council:
1. Authorize the fourth amendment to the professional services agreement with
Colen & Lee, extending the terms of the contract through 12/31/06 and
increasing the monthly contract amount from $15,500 to $16,120 effective 7/1/06;
and
2. Authorize the Chief Administrative Officer to extend the terms of the agreement
until 6/30/07, if necessary; and
3. Authorize the City Attorney to prepare the amendment ; and
4. Authorize the Chief Administrative Officer to sign the amendment on behalf of the
City.