City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council approve an extension (to at least 12/31/06 with
an option to extend to 06/30/07) and fee increase to the professional agreement with
Colen & Lee to provide workers’ compensation claims administration services. The
fee increase is 4%, or $620, 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: 02/27/06 Item Number: C-4
AGENDA ITEM: An Extension to a Professional Services Agreement with Colen &
Lee, Inc. to Provide Workers’ Compensation Claims Administration Services.
Contact Person/Dept.: Nick Kimball, Risk
Management
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 2/23/06; Master Notification List on 2/23/06
Department Approval:
Kermit Francis (02/22/06)
CAO Approval:
Martin R. Cole for Jerry B. Fulwood
(02/22/06)
City Controller Approval:
Marlee Chang (02/22/06)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 380 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 earlier 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 late summer or early fall
2006. The RFP process will help 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 6/30/06 are included in
the 2005/06 budget (Other Contractual Services: 30921100.619800). The 4% fee
increase will be included in the 2006/07 budget.
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. Instruct the City Attorney to prepare the amendment ; and
4. Authorize the Chief Administrative Officer to sign the amendment on behalf of the
City.
MEETING DATE 2/27/06
AGENDA ITEM Consideration of an Extension to a Professional Services Agreement
with Colen & Lee, Inc to Provide Workers' Compensation Claims
Administration Services
ATTACHMENTS
Pages
1 Service Agreement with first, second, and third amendments 1 - 17
2 Contract extension proposal letters from Colen & Lee, 1/5/06 and 2/21/06 18 - 19ATTACHMENT 1
WORKERS' COMPENSATION SELF-INSURANCE
SERVICE AGREEMENT
THIS AGREEMENT is entered into this day of , 1990
between the CITY OF CULVER CITY, hereinafter referred to as the "City
and COLEN & LEE INC , a California Corporation, hereinafter referred to
as the "Administrator
WHEREAS the City has undertaken to self-insure its Workers'
Compensation obligation and
WHEREAS, the Administrator is engaged in the business of
administering Workers' Compensation self-insurance programs, and
WHEREAS, the City desires to retain the services of the
Administrator to administer a Workers' Compensation self-insurance
program, hereinafter referred to as the "Program " for the City,
NOW THEREFORE, the City hereby retains the services of the
Administrator and the Administrator agrees to perform services for the
City under the terms and conditions of this Agreement
1 TERM This Agreement shall become effective as of July 1 1990
and shall continue in effect until terminated by the cancellation
provision set forth herein
2 PERIODIC MEETINGS The Administrator shall meet with City
staff no more than twelve times per year toA Assist the City in developing internal procedures
Provide orientation and training to City personnel involved in
the administration of the Program
C Discuss specific claims and general trends in the Program
3 ADVISORY SERVICES The Administrator shall provide written
advisory bulletins to inform the City of the adoption, amendment or
repeal of all statutes, rules and regulations which directly affect the
Program
4 REQUIRED FORMS The Administrator shall provide the City with
all forms required by the State in connection with the Program
5 COMPLIANCE WITH LAW The Administrator shall administer the
Program in full compliance with all laws, rules and regulations
governing Workers' Compensation and self-insurance
6 CLAIMS ADMINISTRATION The Administrator shall have the
authority and responsibility to provide claims administration services
which include
A Entering claim information on a log and establishing a claim
file upon receipt of an injury report
• Setting and updating reserves
• Arranging for investigation
• Determining compensability
2.
2• Preparing and issuing benefit notices and pamphlets
F Arranging for medical treatment from specialists as necessary
• Initiating and maintaining contact with employees or their
attorneys
H Monitoring disability status by reviewing medical reports and
calling doctors for updates
I Auditing and paying medical bills
• Paying mileage reimbursement to employees
K Paying temporary disability compensation when appropriate to do
so or advising the City of the need to adjust payroll records when
salary continuation is applicable
L Arranging medical exams in conformance with State law to
determine whether an employee's medical condition is permanent and
stationary and what, if any, permanent disability exists
M Paying permanent disability compensation in accordance with the
law
• Arranging for attorney representation of the City whenever the
need arises, selecting attorneys from a list approved by the City
O Monitoring attorneys and assisting them in preparing cases
P Auditing and paying legal expenses
Q Arranging for vocational rehabilitation services when
appropriate
R Monitoring vocational rehabilitation consultants ail ed assisting
them as necessary
Auditing and paying vocational rehabilitation expenses
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• Attending all hearings that are required by law
• Preparing and issuing vocational rehabilitation notices
3 Preparing and issuing permanent disability compensation
notices
• Pursuing subrogation when there is a viable third party
X Notifying the City's excess insurers of all claims which exceed
or may exceed the City s self-insurance retention, maintaining liaison
between the City and its excess insurers on matters affecting the
handling of such claims and arranging for reimbursement to the City of
losses in excess of its self-insurance retention
Y Obtaining settlement authority and negotiating settlement on
appropriate claims
• Closing claim files when appropriate to do so
--------- OBLIGATIONS OF EMPLOYER The City shall
A Submit all reports of work injury to the Administrator within
one day of the City's knowledge of the injury, serializing each report
with an ascending incident number
B Respond to Administrator requests for information and authority
within five days of such requests
C Provide information that is accurate and is in a form specified
by the Administrator
D Grant settlement authority to the Administrator in advance of
vocational rehabilitation and legal hearings or be available by phone or
in person during those hearings8 CHECKING ACCOUNT The City and Administrator agree that
A The City shall establish a checking account from which all
Workers' Compensation benefits and expenses are to be paid
B The Administrator shall prepare checks and issue those checks
directly to payees without delay
C The Administrator shall sign checks with a facsimile check
signing machine
D The Administrator shall secure both checks and check signer
in a locked room accessible to a limited number of personnel
E The City shall maintain an adequate balance in the checking
account to meet all Workers' Compensation obligations without delay
F The Administrator shall order the checks
G The checking account may be used to pay civil penalties in
- - — – —
which case the Administrator shall reimburse the City within fifteen
days for any amount of the penalty which the Administrator caused
9 STATISTICAL REPORTS The Administrator shall provide monthly
statistical reports to assist City management in monitoring the Program
These reports shall include, at a minimum
A A monthly loss experience report on or before the fifteenth
(15) day of each calendar month, for the preceding month, containing the
following information employee's name injury date, closing date,
department, location, cause of injury type of injury, days lost from
work, OSHA coding, reserves and payments
-5--6-
A monthly transaction report, on or before the fifteenth (15)
day of each calendar month for the preceding month containing the
following information check number, transaction date, amount payee,
name of employee and claim number
10 REGULATORY REPORTING The Administrator shall prepare all
reports required by State regulatory agencies in connection with the
Program, including the Self-Insurer's Annual Report required by the
Department of Self-Insurance Plans
11 RECORDS The Administrator shall establish and maintain claim
files claim logs transaction documents and all other records
associated with the Program These records shall be the property of the
City and shall be available, on five (5) days notice, for review or for
transfer to another custodian Unless this Agreement is cancelled,
closed files shall be stored by the Administrator for five (5) years and
shall thereafter become the responsibility of the City Upon
cancellation of this Agreement, the City shall be responsible for
maintaining and storing all records The Administrator shall not
dispose of or destroy these records without the prior, written
authorization of the City
12 CONSIDERATION The City shall pay the Administrator $9 521 00
per month for services rendered under this Agreement Once a year after
the first year of this Agreement, the Administrator may Increase ordecrease the service fee by giving written notice of the change to the
City at least sixty (60) days prior to the change
13 ALLOCATED EXPENSES The City shall pay for check printing
Index Bureau membership, field investigation, defense attorneys legal
costs, remote photocopy, engineering experts, accident reconstruction
experts, process service, messenger service, court reporters, vocational
rehabilitation consultants structured settlement consultants and
translators
14 PENALTIES The Administrator shall be responsible for paying
or appealing penalties unless the penalty results from the City's
failure to
A Provide an Employee Claim Form to an injured employee within 24
- - - - — -
hours of knowledge of the injury
B Date stamp the returned Employee Claim Form
C Provide an Employer's First Report of Work Injury to the
Administrator within five days from the date of knowledge of an injury
D Provide a wage statement within ten days from the date of
knowledge of an injury where the employee is entitled to less than the
maximum temporary disability rate
E Provide information requested by the Administrator within a
timely manner
F Provide accurate information to the Administrator
G Follow a written recommendation of the Administrator|1010| 115 INDEMNIFICATION The Administrator shall indemnify hold
harmless, and defend the City from all claims legal actions losses,
expenses, injuries or damages arising out of the Administrator's actual
or alleged negligence or intentional wrongdoing incident to the
performance of this Agreement except when such claims, legal actions
losses, expenses, injuries or damages are due to the sole negligence of
the City, its officers, agents or employees
16 INSURANCE The Administrator shall
A Maintain in force at all times General Liability and Errors and
Omissions Insurance in the amount of One Million ($1 000 000) Dollars
per occurrence, combined single limit
B Maintain in force at all times a Fidelity Bond in the amount of
Five Hundred Thousand ($500,000) Dollars
• Maintain in force at all times Workers' Compensation Insurance
for employees of the Administrator, as required by law
D Notify the City, in writing, thirty (30) days prior to any
cancellation or reduction in the above coverages
• Maintain evidence of the above coverages on file with the City
throughout the term of this Agreement
17 NOTICES All notices demands, requests, or approvals which
are required under this Agreement, or which either the City or the
Administrator may desire to serve upon the other, shall be in writing
8and shall be conclusively deemed served when delivered personally, or
forty eight (48) hours after the deposit thereof in the United States
Mail with postage pre-paid
18 CANCELLATION This Agreement may be cancelled by either party
giving to the other, in writing notice of its intention to cancel this
Agreement at least sixty (60) days prior to the date of termination
Upon the date of termination of this Agreement or the date on which
records are transferred to another custodian, whichever occurs first,
the Administrator shall no longer be responsible for administration of
the City's claims
19 PARTIAL INVALIDITY 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
20 GOVERNING LAW 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
21 INTERPRETATION The terms and conditions of this Agreement
shall be construed pursuant to their plain ordinary meaning and shall
not be interpreted against the maker
922 ATTORNEY FEES If any action at law or equity, including an
action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to
reasonable attorney fees in addition to any other relief to which it may
be entitled
23 ASSIGNMENT The Administrator shall not assign sublet or
transfer by operation of law or otherwise any or all of its rights,
burdens, duties or obligations of this Agreement without the prior,
written consent of the City
24 CONFLICT OF INTEREST The Administrator agrees not to accept
any employment during the term of this Agreement from any other person
firm or corporation if that employment is likely to result in a conflict
- - - — - - - - -----
between the interests of the City and the interests of any third
parties
25 ENTIRE CONTRACT This instrument contains the entire
Agreement between the parties relating to the rights herein granted and
obligations herein assumed Any oral representations or modifications
concerning this instrument shall be of no force or effect Subsequent
modifications shall be made in writing with the agreement of both
partiesby by
STEVEN GOURL
'111110
by t
DuLC
CITY CLERK
by
CITY OF CULVER CITY
COLEN & LEE, INC
ATTEST
APPROVED AS TO FORM
EXECUTED at Culver City California, on the date and year first
above written
- 11FIRST AMENDMENT TO AGREEMENT
(Workers Compensation Claims Administration Services)
THIS AMENDMENT is made and entered into by and between the City
of Culver City, hereinafter "CITY" and Colen & Lee Inc , hereinafter
"ADMINISTRATOR"
WHEREAS, effective July 1, 1990, CITY and ADMINISTRATOR
entered into an Agreement to administer a Workers' Compensation
Self-insurance Program, hereinafter referred to as the 'PROGRAM", and
WHEREAS CITY and ADMINISTRATOR desire to amend the
Agreement to increase the contract amount to be paid
-- NOW, THEREFORE, the parties agree as follows|109| Paragraph 12 'Consideration of the Agreement is hereby
amended to read as follows
"CITY" shall pay ADMINISTRATOR a monthly sum of $1 1,47 5 for the
services rendered under this Agreement, pursuant to ADMINISTRATOR'S letter
dated April 14 1997 which is attached hereto as Exhibit 'A" and incorporated
herein as though set forth in full The total annual contract compensation for the
PROGRAM shall not exceed $1 3 7 700|109| Except as expressly set forth herein, all other terms and
conditions or the Agreement shall remain in full force and effect
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1APPROVED AS TO CONTENT
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/1 KJ ( ,________
MICHAEL R HOPE
I Risk Manager
DATED / e--)c-f-2
2—|109| The effective date of this Amendment is the date it is
signed by the CITY
APPROVED AS TO FORM
&/,(14 ldf/ed
CAROL-SCHWAB
Acting City Attorney
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am9colen
vl/sm
DATED
COLEN AND LEE, INC
CITY OF CULVER CITY|1010|DATED I (09/qi By
By
DATED 9/25/97
JODY HALL-ESSER
Administrative OfficerI|1010101010101010 10
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SECOND AMENDMENT TO AGREEMENT
(Worker's Compensation Claims Administration Services)
THIS SECOND AMENDMENT is made and entered into by and between the
City of Culver City, hereinafter `City' and Colen & Lee, Inc , hereinafter `Administrator'
WHEREAS, effective July 1, 1990, City and Administrator entered into an
agreement, (the "Agreement') to administer a Workers Compensation Self-Insurance
Program, hereinafter referred to as the Program',
WHEREAS, effective October 6, 1997, the Agreement was amended to
increase the compensation paid by City to Administrator, and
WHEREAS, City and Administrator again desire to amend the Agreement to
increase the contract amount to be paid
NOW, THEREFORE, the parties agree as follows|109| Paragraph 12 'Consideration' of the Agreement is hereby amended
to read as follows
`City' shall pay Administrator a monthly sum of $13,000 00 for the services
rendered under this Agreement from July 1, 2001 through June 30, 2002, $14,000 for
services rendered from July 1, 2002 through June 30, 2003, and $15,000 for services
rendered from July 1, 2003 through June 30, 2004|109| Except as expressly set forth, all terms and conditions of the
Agreement shall remain in full force and effect|109| The effective date of this Amendment is the date it is signed on behalf
of the City
14APPROVED AS TO FORM
By cCIAgjit—e4-
CAR A SCHWAB
u,064- Dated Dated
APPROVED AS TO
By /
MICHAEL HODG
Risk Manager
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IN WITNESS WHEREOF, the parties hereto have caused their names to
be hereunto subscribed
COLEN AND LEE
BY
6 94--
Dated 7/7 04
(Signature)
NAME
TITLE
CITY OF CULVER CITY
BY 0 pie)k_, Dated MICHAEL THOMPSON
MIR-Chief Administrative Officer
2001 196(jp/jm)Contract No 2005-046
CITY OF CULVER CITY
THIRD AMENDMENT TO CONTRACT
WITH COLEN & LEE, INC
FOR WORKER S COMPENSATION CLAIMS ADMINISTRATION SERVICES
This Third Amendment to Standard Form Contract is made and entered into by
and between the CITY OF CULVER CITY, a municipal corporation, hereinafter referred
to as "City," and COLEN & LEE, INC , hereinafter referred to as "Administrator"
WHEREAS, on July 1, 1990, the parties entered into a contract for administration
of the Worker's Compensation Self-Insurance Program (the "Agreement"), and
amended the Agreement on October 6, 1997 (the "First Amendment"), to increase the
amount of compensation, and amended the First Agreement on August 5, 2002 (the
"Second Amendment"), to again increase the amount of compensation (hereinafter, the
Agreement, the First Amendment and the Second Amendment are collectively referred
to as the "Amended Agreement"), and
WHEREAS, the parties desire to modify and amend the term and schedule of
compensation of the Amended Agreement, and
WHEREAS, at its meeting of June 28, 2004, the City Council authorized this
Third Amendment to the Amended Agreement
NOW THEREFORE, in consideration of the foregoing, City and Administrator
mutually agree as follows|109| The term of this Third Amendment shall be from July 1 2004 through December
31, 2005|109| The Schedule of Compensation shall be amended to increase the monthly
compensation for services to Fifteen Thousand Five Hundred Dollars
($15,500 00) per month for a total not-to-exceed amount of One Hundred Eighty-
six Thousand Dollars ($186,000 00) per year|109| Except as expressly set forth herein, all terms and conditions of the Agreement
shall remain in full force and effect
) to
Page 1CITY F CULVER CITY
Jerry ulwood
Chief Administrative Officer
Dated
Page 2
Contract No 2005-046|109| This Amendment shall be effective on July 1 2004
COLEN & LEE
Dated ha/ gg / A9OS By APPROVED AS TO CONTENT
Assistant Chief Administrative Officer / Risk Manager
APPROVi D AS TO FORM
01_41
Cbrol A Schwab
City Attorney
APP" II ED AS TO FINANCING
14
I
mes J r . ."
ty Co tr. -rATTACHMENT 2
Lee
1- -
January 5 2006
Kermit Francis
Interim Personnel Director
City of Culver City
9770 Culvei Boulevard
Culver City California 90232
Re Workers Compensation Claims Administration
Dear Mr Fiancis
This letter is being provided in follow up of our discussion in our meeting on December 20, 2005
as well as Mr Kimball s email of December 22, 2005 regarding continuation of claims
administration services
We will agree to continue claims administration services at the cunent monthly rate of $15,500 00
per month thiough June 30 2006 Effective July 1 2006 our monthly claims administration fee
would increase by 4% to $16,120 00 per month and we would guarantee this fee through
Decembei 31 2006
All other terms and conditions of the workers compensation service agieement would remain in
full foice and effect
Sincerely,
Bernard Colen
President
BC/s
Copy Nick Kimball Management Analyst City of Culver City
1%February 21 2006
Kermit Francis
Interim Personnel Director
City of Culver City
9770 Culver Boulevard
Culver City California 90232
Re Workers Compensation Claims Administration
Dear Mr Francis
This letter is being provided in follow up of my discussion with Nick Kimball this morning as well
as his email of February 20 2006 regarding guaranteeing claims administration service fees at
$16 120 00 per month through June 30 2007
We will agree to continue claims administration services at the monthly rate of $16 120 00 per
month through June 30 2007
All other terms and conditions of the workers compensation service agreement would remain in
full force and effect
Sincerely
Bernard Colen
President
BC/s
Copy Nick Kimball Management Analyst City of Culver City