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Attachment 1SECOND AMENDMENT TO AGREEMENT This second AMENDMENT TO AGREEMENT is entered into this 17 day of May, 2016 by and between the Town of Los Gatos, State of California, herein called "Town", and Innovative Claim Solutions, Inc., herein called "Consultant." RECITALS A. Town and Consultant entered into an Agreement on June 30, 2010 to provide workers' compensation administration consulting services, a copy of which is attached hereto and incorporated by reference as Attachment 1. B. The Town and Consultant entered into a First Amendment to Agreement on October 8, 2013, a copy of which is attached hereto and incorporated by reference as Attachment 1. C. The Town desires to extend the contract through June 30, 2017. AMENDMENT 1. Section 1 "Scope of Services" of the Agreement is hereby amended and incorporated by reference as Exhibit A. 2. Section 3 "Time of Performance" of the Agreement is hereby amended to provide that the term of the Agreement is for a period of one year, July 1, 2016 through June 30, 2017. 2. Section 7 "Compensation" of the Agreement is hereby amended to reflect that the Town pays Consultant an annual fee of $52,000 for the period July 1, 2016 through June 30, 2016 for a total contract amount not -to -exceed of $52,000. 3. All other terms and conditions of the Agreement effective July 1, 2010 remain in full force and effect. IN WITNESS WHEREOF, the Town and Consultant have executed this Agreement as of the date indicated on this agreement. TOWN OF LOS GATOS: CONSULTANT: Laurel Prevetti, Town Manager Date Gary Archibald, CIO, President Date APPROVED AS TO FORM: Robert Schultz, Town Attorney Date ATTEST: Shelley Neis, Clerk Administrator Date Innovative Claim Solutions, Inc. Attachment 1 EXHIBIT A SCOPE OF SERVICES During the Term of this Agreement, Consultant shall provide the following services to ensure compliance with workers' compensation statutes and regulations as established by the Department of Industrial Relations: A. WORKERS' COMPENSATION CLAIMS MANAGEMENT AND ADMINISTRATION: 1. To review on behalf of the Town all reports of injury as defined by California Labor Code Sections 3208 and 3208.1 that are reported by the Town to Consultant. 2. To determine on behalf of the Town for each reported employee injury those benefits, if any, that should be paid or rendered under the California Workers' Compensation laws (the "WC Laws"). 3. To establish and maintain a claim file on each reported claim, which file shall be available to the Town for inspection. The maintenance of such files shall exhibit handling practices which meet or exceed minimum industry standards for California workers' compensation claims. 4. To maintain current cost -benefit figures and an estimate of the total costs of all reasonable and foreseeable benefits and related expenses on each case. 5. To prepare and file on behalf of the Town all legally required forms and reports with the Administrative Director or Self -Insurance Plans, or any other report required by the State. 6. To pay on behalf of the Town, from a segregated bank workers' compensation account funded and maintained by the Town, those sums that should reasonably be paid for claims and claims -related expenses under the California Workers' Compensation Laws for each reported claim. 7. When required and appropriate, to refer cases where an employee of the Town files an application with the California Workers' Compensation Appeals Board or any other activity involving litigation to attorneys selected and approved by the Town and not to any other attorneys without the prior written consent of the Town, 8. To render assistance as is reasonably necessary in the preparation of litigated cases. 9. To pay on behalf of the Town out of the bank workers' compensation trust account funded by the Town all "Allocated Loss Expense" which is defined to include all fees of attorneys, witnesses, court reporters, process servers, independent investigators, any court or Workers' Compensation Appeals Board, for depositions, surveillance or the necessary engagement of personnel in the handling of any claim subject to this Agreement. Exhibit A 10. To provide computerized loss analysis and financial claim detail reports within ten days following the end of the month. At no additional charge, Consultant will provide the following reports: 1 Annual graphic reports reflecting the highest cost department and loss -types. Annual recaps, litigated claims and other mutually accepted categories. 11. To provide and make appropriate claims reports to excess carriers and collect excess recoveries, including the retum of excess recoveries to Town, subject to the Town providing Consultant with a list of excess carriers for all preceding years, and identifying the policy numbers and the parties to whom reports are to be directed. 12. To attend Worker's Compensation Appeals Board hearings, rehabilitation hearings, meetings with defense counsel, and meetings with Town staff, departments, and employee groups as necessary and as requested to do so. 13. To provide monthly summaries of all Town of Los Gatos workers' compensation bank trust account activities undertaken by Consultant. 14. To advise the Town on any material problems or need for improvement in the claims reporting, administration or other aspects of the workers' compensation program. 15. To employ, as necessary, outside vendors subject to the obtaining the Town's prior written approval of all vendors eligible to provide services, directly or indirectly, on behalf of, or for the Town pursuant to this Agreement. 2. PROGRAM IMPLEMENTATION SERVICES: Because Consultant has already performed all implementation processes when originally award the contract, Consultant will provide the following services, or provide assistance to the Town if updating of prior information is required: 16. Continued storage of all closed files, even those assumed from the prior administrators. 17. Develop and print up to fifty copies of a claim reporting procedure manual (including the most recent workers' compensation reform information) for distribution to all departments and key employees, should any major changes in procedures be required. 18. Implementation visits to the Town to distribute daim manuals and discuss self-insurance and Innovative Claim Solutions, Inc. service program with key personnel, should any major changes in procedures be required. 19. Design and implement all accounting and trust fund procedures, should any changes be required. 20. Produce and design all necessary reports. A-2 EXHIBIT B INCORPORATED TERMS During the Term of this Agreement, Consultant shall provide services in accordance with the procedures and performance standards included below: GENERAL: 1. Availability: Consultant shall at all times, have one or more of the examiners assigned to the Town's account, or in their absence, the supervisor or Vice President of Workers' Compensation available by telephone for emergencies through a 24-hour emergency telephone number. Consultant shall ensure at least one or more of the examiners assigned to the Town's account is on -site and available to the Town every business day throughout the term of the contract period. 2. Review of Examiner: The Town shall have the right and opportunity to approve or reject any proposed examiner provided by Consultant. The Town shall also have the opportunity to review service provided by examiner and require a new examiner if service is unacceptable to Town. 3. Caseload: Caseload of Town's designated examiner will not exceed 175 open indemnity claims excluding future medical cases. 4. Return Calls: Return calls to claimants and Town will be made within four (4) business hours of receipt when possible and no later than the next business day. 5. Training: Consultant shall provide training, workshops, or guest lecturers presented in a classroom setting or as informal "brown bag" sessions on topics related to Safety, Workers' Compensation and Medical Management, including information appropriate to employees, supervisors, and Town Administration in their respective roles. Training shall be provided at least annually, when requested, and may be on -site at Town facilities, with advance notice, or at a location determined by the Consultant. CLAIMS PROCESSING: 1. Claims will be created and entered into the computer system within two (2) working days of Consultant's receipt. 2. Lost -time claims, with the exception of future medicals, will be reviewed on diary at least every 30 days or more frequently where needed. 3. Medical -Only claims whose medical payments exceed $3,000 will be placed on supervisory diary of not more than 90 days. 4. Benefit payments (TTD, TPD, PPD, PTD, LP, DB, VR, etc.) Will be paid promptly as required by state statute following verification of compensability. 5. Transportation reimbursement will be mailed within five (5) days of the receipt of the claim for reimbursement, whenever possible. Advance travel expense payments will be mailed to the injured employee ten (10) days prior to the anticipated date of travel. 6. Prior to approval for payment, medical bills will be reviewed for causal relationship and propriety of charges. Bills will be subject to applicable fee schedule adjustments and paid/denied/objected to within 30 days of Consultant's receipt. 7. Reserves established on lost -time claims will reflect the ultimate probable cost of each claim based on the information developed to date. Reserve worksheets will reflect amounts allocated to temporary disability, permanent disability, and vocational rehabilitation (if applicable), medical care and allocated expense. 8. Medical -only claims will be reviewed every 30 days for possible closure. 9. Consultant shall program salary continuation or 4850 payment tracking for actual check production, voucher production, payment posting or any combination of these items as required by the Town. 10. Indemnity claims will be reviewed by the appropriate supervisor no less frequently than at the following intervals for quality control: 1. File creation 2. Denials 3. Delayed claims 4. When reserve increases exceed examiner authority 5. Closures 6. When a proposed settlement exceeds examiner authority 7. AOE/COE and sub-rosa investigative referrals 8 . Open indemnity files at 90 days from date of creation, and every 90 days thereafter until claim resolution, and every 180 days on settled claims 9. 15 days prior to mandatory settlement conference 10. 15 days prior to scheduled trials 1 1 . The Town will be advised of the assessment of any penalty for delayed payment and the reason thereof and Consultant's plans for payment of such penalty within five (5) days of assessment. FILE DOCUMENTATION: L The basis for initial and subsequent reserve changes and payments will be clearly explained in the claim file. B-2 2. Summary of investigative plan of action and efforts will be documented in the claim file. 3. A decision on compensability will be documented in the file along with the basis for that decision within 14 days of receipt of the Claim Form (DWC 1), whenever possible. 4. Claims on which a delay is necessary must clearly document the reasons for the delay; the information needed to determine compensability and the anticipated date of a final decision. In no case will the final date be more than 90 days after the Town's date of knowledge. 5. Employer contact is required to verify continued disability and explore the availability of modified or Tight duty prior to processing of disability payments. 6. Claims involving lost time will be reported to the Index Bureau and this referral will be reflected in the claim file. INVESTIGATIONS 1. Lost time claims will be investigated. At a minimum, the Town will be contacted to obtain accident information, witness names, and to verify disability dates and wage information. 2. On questionable indemnity claims, investigative assignments will be made to outside vendor within 5 days of Consultant's notice of claim to obtain statements from witnesses and the injured employee, when necessary. 3. Medical verification of causation and disability will be obtained prior to each payment of disability benefits. An estimate as to length of disability and extent of disability will be obtained. 4. Consultant will contact the injured employee via telephone within 24 hours of notice of injury on all lost time cases to verify injury, prior related medical history, and accident information and to explain benefits. The results of this contact and all contact attempts will be documented in the claim file. Subsequent regular contact with temporarily disabled employees will be maintained. 5. Investigative assignments will address the applicability of apportionment, subrogation potential and the need for surveillance or activity checks. 6. Outside investigative services will be retained on an as -needed basis only, with concurrence from the Town. The need for outside services will be clearly documented in the file. 7. Where medical causation is unclear, a medical evaluation will be requested with a qualified physician following the required QME process. All relevant medical records and investigative information will be provided to the physician for review prior to the date of examination. B-3 MEDICAL MANAGEMENT 1. Initial investigative contacts with the employer, employee, and physician's office will be made within 24 hours of Consultant's notice of the claim on all lost time cases. 2. Medical verification of disability will be obtained in a timely manner and maintained in the claim file to document the need for continuing indemnity benefits. 3. Medical treatment provided will be reviewed for necessity, reasonableness, and relationship to the industrial injury with appropriate referrals for Utilization Review services. 4. Catastrophic injury claims and extensive lost -time claims will be reviewed by a qualified medical management provider, as needed. Claims referred for outside medical management services will reflect the intent and scope of services requested. 5. Independent medical examinations by qualified physicians will be scheduled when needed to address necessity or reasonableness of care, following the appropriate QME procedures requirements. A cover letter will be provided to the physician outlining the specific issues and concerns along with the examiner's questions. 6. Recommendations for back surgery shall be confirmed through a second opinion unless objective signs of neurological involvement and radiculopathy exist, following the labor code requires procedures. 7. Pre-existing medical conditions and medical records will be explored/obtained on all lost -time claims, as needed when an issue of apportionment exists. 8. Treatment recommendations for care such as physical therapy, chiropractic manipulations, etc., will be verified with the physician as to duration, frequency and anticipated results. 9. Medical bills submitted without supporting medical reports shall not be paid until a medical report is obtained. All bills will be adjusted according to the fee schedule and paid or objected to according to the law. 10. Medical -legal costs will be reviewed for appropriateness and necessity. Bills which do not qualify as a valid medical -legal expense will be objected to on a timely basis. RESERVING 1. Lost -time claims will be reviewed at 30 days, 90 days from date of creation and every 90 days thereafter for the life of the claim for adequacy of reserves and proper development of the action plan on all unresolved claims and every 180 days on resolved claims. 2. Reserve amounts will reflect the ultimate probable cost of the claim, and worksheets detailing reserve changes will be kept in the claim file.. 3. Claims with aggregate reserve increases exceeding $25,000 require supervisory review and B-4 approval. Evidence of supervisory review and direction shall be clearly documented in the claim file. COMMUNICATION 1. Quarterly Claim Reviews will be provided if requested by the Town, and if requested, a detailed review of selected claims and their medical management will be presented by Consultant. 2. Annual Stewardship Reports shall be created and reviewed in detail with the Town. 3. The Town shall be consulted prior to all settlements beyond the prearranged authority levels, if any. MIS 1. Agreed to monthly, quarterly and annual reports will be produced and forwarded to the Town by the 14th of the month. 2. Check production will occur on a daily basis. Signatures will be obtained as required by the Town. 3. On-line access will be made available to the Town. Training on report formatting and production capabilities will also occur, as required. LITIGATION MANAGEMENT 1 The examiner will retain primary responsibility on all claims referred to defense counsel. Defense counsel will not be used to perform activities that should be the responsibility of the examiner. Referrals will be made to hearing representatives whenever possible and feasible consistent with the Town's guidelines. B-5 2. Legal counsel will be selected on the basis of expertise and performance and as agreed to with the Town. 3. Claims sent to defense counsel will be accompanied by a referral form outlining the status of the case, results of investigations and primary issues. 4. Defense counsel will be required to provide a case summary with recommendations for resolution and an action plan within 15 days of referral. 5. At least two weeks prior to close of discovery on cases proceeding to trial, the file will have been adequately prepared to include necessary depositions, medical examinations and witness identification and contacts. EXHIBIT C COMPENSATION SCHEDULE Compensation for Consultant's professional services shall not exceed the amounts set forth below: I. Claims Administration Services: On or before the first day of each month during the Term, the Town will pay Consultant a fixed monthly fee for the claims administration services described in this Agreement. The Town's obligation to pay compensation in future fiscal years shall be contingent upon budget authorization b the Town Council. 2. Pro ram Im MMSEA Reporting . Iementation: Custom computer programming Index Bureau reporting $500 flat rate due on 7/1 of each year the contract commences. $150.00 per hour, as needed $9.20 each time a claim is reported, or whatever the current costs may be as determined by ISO. 3. Expenses: In addition to the payment of all medical and indemnity Toss expenses incurred by or on behalf of the Town in connection with the handling of any claim under this Agreement, the Town will pay "Allocated Expenses", which are defined as those costs incurred on a claim file unrelated to administration or management services as described in this proposal. Allocated Expenses may include legal fees, court reporters, court costs, professional photographers, expert witness fees, sub - rasa, field investigation and outside services and other similar services not considered administrative in this proposal. 4. Medical Management: Unless otherwise directed, consultant shall utilize the following companies for medical cost containment services: Bill Review Diamond Bill Review Services to provide all bill review functions, whose charges are as follows an paid through a monthly invoice on a designated claim file: d $3.00 Header per bill, $1.00 per line Fees for Review Only bills and liens Utilization Review GENEX for all Utilization and Physician/Peer Review services, whose charges are as follows and off the claim files: paid $100.00 per RN determination, including all letters $220.00/hr (billed in 1/4 hr increments) Physician Advisor Review, including letters $310.00/hr (billed in 1/4 hr increments) Specialty Physician Reviews on Appeals, including letters $310.00/hr (billed in 1/4 hr increments) Peer Review, with report EXHIBIT D INSURANCE A Minimum Scope of Insurance: i Consultant agrees to have and maintain, for the duration of the contract, General Liability insurance policies insuring him/her and his/her firm to an amount not Tess than: one million dollars ($1,000,000) combined single limit per occurrence for bodily injury, personal injury and property damage. Consultant agrees to have and maintain for the duration of the contract, an Automobile Liability insurance policy ensuring him/her and his/her staff to an amount not less than one million dollars ($1,000,000) combined single limit per accident for bodily injury and property damage. iii. Consultant shall provide to the Town all certificates of insurance, with original endorsements effecting coverage. Consultant agrees that all certificates and endorsements are to be received and approved by the Town before work commences. iv. Consultant agrees to have and maintain, for the duration of the contract, professional liability insurance in amounts not less than $1,000,000 which is sufficient to insure Consultant for professional errors or omissions in the performance of the particular scope of work under this agreement. B General Liability: i The Town, its officers, officials, employees and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on behalf of the Consultant; products and completed operations of Consultant, premises owned or used by the Consultant. This requirement does not apply to the professional liability insurance required for professional errors and omissions. The Consultants insurance coverage shall be primary insurance as respects the Town, its officers, officials, employees and volunteers. Any insurance or seif- insurances maintained by the Town, its officers, officials, employees or volunteers shall be excess of the Consultant's insurance and shall not contribute with it. iii. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the Town, its officers, officials, employees or volunteers. iv. The Consultant's insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability. C All Coverages: Each insurance policy required in this item shall be endorsed to state that Exhibit D Insurance (continued) coverage shall not be suspended, voided, canceled, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the Town. Current certification of such insurance shall be kept on file at all times during the term of this agreement with the Town Clerk. D. In addition to these policies, Consultant shall have and maintain Workers' Compensation insurance as required by Califomia law and shall provide evidence of such policy to the Town before beginning services under this Agreement. Further, Consultant shall ensure that all subcontractors employed by Consultant provide the required Workers' Compensation insurance for their respective employees. ROUTE: DATE 1 INTEROFFICE MEMORANDUM AGREEMENT PROCESS DEPARTMENT HEAD TOWN ATTORNEY CLERK DEPARTMENT, PROCESSING Please return originals to Clerk Department. VENDOR: Innovative Claims Solutions (ICS) SUBJECT Amendment to Agreement. - 12x7 BACKGROUND The Town utilizes a State -licensed third party administrator (TPA) to manage workers' compensation claims of injured workers. The purpose of this provider is to interpret the labor code with respect to worker's compensation and advance benefits to injured workers as prescribed by the laws of the State of California. DISCUSSION The Town has contracted with Innovative Claim Solutions, Inc. (ICS) since July 2002 to serve as the Third Party Administrator (TPA) for the Town's Workers' Compensation program. ICS has demonstrated effective case management prompting Council to approve extensions with the last due to expire on June 30, 2010. On March 8, 2010, the Town issued a Request for Proposal (RFP) that was sent to a number of firms who performed this type of service as well as posted the document on various websites. Human Resources staff reviewed the proposals, from four (4) vendors who responded to the RFP, based on objective selection criteria and determined that it would be in the Town's best interest to appoint ICS as the Town's workers' compensation TPA. Council adopted a resolution authorizing the Town Manager to execute a contract with ICS as the Town's workers' compensation TPA for a three-year term, from July 1, 2010 through June 30, 2013, with an option to renew for one or more years. FISCAL The Town will be billed $3,500 monthly for the service. The total cost is approximately $42,000 anually. Funds are included in the FY 2010-11 Operating Budget (2202-65521) LLERK DEPARTMEN1 AGR l 3 - lUFA IIII1 FIRST AMENDMENT TO AGREEMENT 1)RD This FIRST AMENDMENT TO AGREEMENT is dated for identiREC fF tjon this 8th day of October, 2013 and amends that certain agreement for WORKERS' COMPENSATION CLAIMS ADMINSTRATION dated the 30th day of June, 2010, made by and between the Town of Los Gatos, ("Town,") and Innovative Claims Solutions, Inc., ("Consultant.") RECITALS A. Town and Consultant entered into an agreement to provide services in providing workers' compensation administration consulting services on June 30, 2010, ("Agreement"), a copy of which is attached hereto and incorporated by reference as Attachment 1 to this Amendment. B. Town desires to renew the contact for period of July 1, 2013 through June 30, 2016. AMENDMENT 1. Section 3 "Time of Performance" of the Agreement is hereby amended to provide that the term of the Agreement is for a period of three years from July 1, 2013 through June 30, 2016 2. Exhibit C "Compensation" of the Agreement is hereby amended to reflect that the Town pay Consultant an annual fee of $45,000 for the period July 1, 2013 through June 30, 2014. The fee will increase to $48,000 for the period July 1, 2014 through June 30, 2015 and $50,000 for the period July 1, 2015 through June 30, 2016 for total of $143,000. 3. All other terms and conditions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the Town and Consultant have executed this Amendment. Town of Los Gatos — Approved . s s Cons By: G -g L. rson, Town Manager Human Resources Director Approved as to Form: Judith J. Propp, To 1 By: ary Archib Innovative C IO, President Solution, Inc. Attachment 1 EXHIBIT A SCOPE OF SERVICES During the Term of this Agreement, Consultant shall provide the following services to ensure compliance with workers' compensation statutes and regulations as established by the Department of Industrial Relations: A. WORKERS' COMPENSATION CLAIMS MANAGEMENT AND ADMINISTRATION: 1. To review on behalf of the Town all reports of injury as defined by Califomia Labor Code Sections 3208 and 3208.1 that are reported by the Town to Consultant, 2. To determine on behalf of the Town for each reported employee injury those benefits, if any, that should be paid or rendered under the California Workers' Compensation laws (the "WC Laws"). 3. To establish and maintain a claim file on each reported claim, which file shall be available to the Town for inspection. The maintenance of such files shall exhibit handling practices which meet or exceed minimum industry standards for California workers' compensation claims. 4. To maintain current cost -benefit figures and an estimate of the total costs of all reasonable and foreseeable benefits and related expenses on each case. 5. To prepare and file on behalf of the Town all legally required forms and reports with the Administrative Director or Self -Insurance Plans, or any other report required by the State. 6. To pay on behalf of the Town, from a segregated bank workers' compensation account funded and maintained by the Town, those sums that should reasonably be paid for claims and claims -related expenses under the California Workers' Compensation Laws for each reported claim. 7. When required and appropriate, to refer cases where an employee of the Town files an application with the California Workers' Compensation Appeals Board or any other activity involving litigation to attorneys selected and approved by the Town and not to any other attorneys without the prior written consent of the Town. 8. To render assistance as is reasonably necessary in the preparation of litigated cases. 9. To pay on behalf of the Town out of the bank workers' compensation trust account funded by the Town all "Allocated Loss Expense" which is defined to include all fees of attorneys, witnesses, court reporters, process servers, independent investigators, any court or Workers' Compensation Appeals Board, for depositions, surveillance or the necessary engagement of personnel in the handling of any claim subject to this Agreement. 10. To provide computerized loss analysis and financial claim detail reports within ten days following the end of the month. At no additional charge, Consultant will provide the following reports: 1. Annual graphic reports reflecting the highest cost department and loss -types. Annual recaps, litigated claims and other mutually accepted categories. 11. To provide and make appropriate claims reports to excess carriers and collect excess recoveries, including the retum of excess recoveries to Town, subject to the Town providing Consultant with a list of excess carriers for all preceding years, and identifying the policy numbers and the parties to whom reports are to be directed. 12. To attend Worker's Compensation Appeals Board hearings, rehabilitation hearings, meetings with defense counsel, and meetings with Town staff, departments, and employee groups as necessary and as requested to do so. 13. To provide monthly summaries of all Town of Los Gatos workers' compensation bank trust account activities undertaken by Consultant. 14. To advise the Town on any material problems or need for improvement in the claims reporting, administration or other aspects of the workers' compensation program. 15. To employ, as necessary, outside vendors subject to the obtaining the Town's prior written approval of all vendors eligible to provide services, directly or indirectly, on behalf of, or for the Town pursuant to this Agreement. 2.PROGRAM IMPLEMENTATION SERVICES: Because Consultant has already performed all implementation processes when originally award the contract, Consultant will provide the following services, or provide assistance to the Town if updating of prior information is required: 16. Continued storage of all closed files, even those assumed from the prior administrators. 17. Develop and print up to fifty copies of a claim reporting procedure manual (including the most recent workers' compensation reform information) for distribution to all departments and key employees, should any major changes in procedures be required. 18. Implementation visits to the Town to distribute claim manuals and discuss self-insurance and Innovative Claim Solutions, Inc. service program with key personnel, should any major changes in procedures be required. 19. Design and implement all accounting and trust fund procedures, should any changes be required. 20. Produce and design all necessary reports. A-2 EXHIBIT B INCORPORATED TERMS During the Term of this Agreement, Consultant shall provide services in accordance with the procedures and performance standards included below: GENERAL: 1. Availability: Consultant shall at all times, have one or more of the examiners assigned to the Town's account, or in their absence, the supervisor or Vice President of Workers' Compensation available by telephone for emergencies through a 24-hour emergency telephone number. Consultant shall ensure at least one or more of the examiners assigned to the Town's account is on -site and available to the Town every business day throughout the term of the contract period. 2. Review of Examiner The Town shall have the right and opportunity to approve or reject any proposed examiner provided by Consultant. The Town shall also have the opportunity to review service provided by examiner and require a new examiner if service is unacceptable to Town. 3. Caseload: Caseload of Town's designated examiner will not exceed 175 open indemnity claims excluding future medical cases. 4. Retum Calls: Return calls to claimants and Town will be made within four (4) business hours of receipt when possible and no later than the next business day. 5. Training: Consultant shall provide training, workshops, or guest lecturers presented in a classroom setting or as informal "brown bag" sessions on topics related to Safety, Workers' Compensation and Medical Management, including information appropriate to employees, supervisors, and Town Administration in their respective roles. Training shall be provided at least annually, when requested, and may be on -site at Town facilities, with advance notice, or at a location determined by the Consultant. CLAIMS PROCESSING: 1. Claims will be created and entered into the computer system within two (2) working days of Consultant's receipt. 2. Lost -time claims, with the exception of future medicals, will be reviewed on diary at least every 30 days or more frequently where needed. 3. Medical -Only claims whose medical payments exceed $3,000 will be placed on supervisory diary of not more than 90 days. 4. Benefit payments (TTD, TPD, PPD, PTD, LP, DB, VR, etc.) Will be paid promptly as required by state statute following verification of compensability. 5. Transportation reimbursement will be mailed within five (5) days of the receipt of the claim for reimbursement, whenever possible. Advance travel expense payments will be mailed to the injured employee ten (10) days prior to the anticipated date of travel. 6. Prior to approval for payment, medical bills will be reviewed for causal relationship and propriety of charges. Bills will be subject to applicable fee schedule adjustments and paid/denied/objected to within 30 days of Consultant's receipt. 7. Reserves established on lost -time claims will reflect the ultimate probable cost of each claim based on the information developed to date. Reserve worksheets will reflect amounts allocated to temporary disability, permanent disability, and vocational rehabilitation (if applicable), medical care and allocated expense. 8. Medical -only claims will be reviewed every 30 days for possible closure. 9. Consultant shall program salary continuation or 4850 payment tracking for actual check production, voucher production, payment posting or any combination of these items as required by the Town. 10. Indemnity claims will be reviewed by the appropriate supervisor no Tess frequently than at the following intervals for quality control: 1. File creation 2. Denials 3. Delayed claims 4. When reserve increases exceed examiner authority 5. Closures 6. When a proposed settlement exceeds examiner authority 7. AOE/COE and sub-rosa investigative referrals 8. Open indemnity files at 90 days from date of creation, and every 90 days thereafter until claim resolution, and every 180 days on settled claims 9. The Town will be advised of the assessment of any penalty for delayed payment and the reason thereof and Consultant's plans for payment of such penalty within five (5) days of assessment. FILE DOCUMENTATION: 1. The basis for initial and subsequent reserve changes and payments will be clearly explained in the claim file. 8-2 2. Summary of investigative plan of action and efforts will be documented in the claim file. 3. A decision on compensability will be documented in the file along with the basis for that decision within 14 days of receipt of the Claim Form (DWC 1), whenever possible. 4. Claims on which a delay is necessary must clearly document the reasons for the delay; the information needed to determine compensability and the anticipated date of a final decision. In no case will the final date be more than 90 days after the Town's date of knowledge. 5. Employer contact is required to verify continued disability and explore the availability of modified or light duty prior to processing of disability payments. 6. Claims involving lost time will be reported to the Index Bureau and this referral will be reflected in the claim file. INVESTIGATIONS: 1. Lost time claims will be investigated. At a minimum, the Town will be contacted to obtain accident information, witness names, and to verify disability dates and wage information. 2. On questionable indemnity claims, investigative assignments will be made to outside vendor within 5 days of Consultant's notice of claim to obtain statements from witnesses and the injured employee, when necessary. 3. Medical verification of causation and disability will be obtained prior to each payment of disability benefits. An estimate as to length of disability and extent of disability will be obtained. 4. Consultant will contact the injured employee via telephone within 24 hours of notice of injury on all lost time cases to verify injury, prior related medical history, and accident information and to explain benefits. The results of this contact and all contact attempts will be documented in the claim file. Subsequent regular contact with temporarily disabled employees will be maintained. 5. Investigative assignments will address the applicability of apportionment, subrogation potential and the need for surveillance or activity checks. 6. Outside investigative services will be retained on an as -needed basis only, with concurrence from the Town. The need for outside services will be clearly documented in the file. 7. Where medical causation is unclear, a medical evaluation will be requested with a qualified physician following the required QME process. All relevant medical records and investigative information will be provided to the physician for review prior to the date of B-5 examination. MEDICAL MANAGEMENT: 1. Initial investigative contacts with the employer, employee, and physician's office will be made within 24 hours of Consultant's notice of the claim on all lost time cases. 2. Medical verification of disability will be obtained in a timely manner and maintained in the claim file to document the need for continuing indemnity benefits. 3. Medical treatment provided will be reviewed for necessity, reasonableness, and relationship to the industrial injury with appropriate referrals for Utilization Review services. 4. Catastrophic injury claims and extensive lost -time claims will be reviewed by a qualified medical management provider, as needed. Claims referred for outside medical management services will reflect the intent and scope of services requested. 5. Independent medical examinations by qualified physicians will be scheduled when needed to address necessity or reasonableness of care, following the appropriate QME procedures requirements. A cover letter will be provided to the physician outlining the specific issues and concerns along with the examiner's questions. 6. Recommendations for back surgery shall be confirmed through a second opinion unless objective signs of neurological involvement and radiculopathy exist, following the labor code requires procedures. 7. Pre-existing medical conditions and medical records will be explored/obtained on all lost -time claims, as needed when an issue of apportionment exists. 8. Treatment recommendations for care such as physical therapy, chiropractic manipulations, etc., will be verified with the physician as to duration, frequency and anticipated results. 9. Medical bills submitted without supporting medical reports shall not be paid until a medical report is obtained. All bills will be adjusted according to the fee schedule and paid or objected to according to the law. 10. Medical -legal costs will be reviewed for appropriateness and necessity. Bills which do not qualify as a valid medical -legal expense will be objected to on a timely basis. VOCATIONAL REHABILITATION: 1. Referral to QRR will occur within 90 days of cumulative disability for completion B-6 of the RU-91, on all required pre-2004 claims. 2. Within 30 days of initial assignment, vocational rehabilitation service providers will be required to provide an assessment of the worker's ability to participate in the vocational rehabilitation process and an assessment of transferable skills. 3. Vocational rehabilitation service providers will be required to submit plan outline and recommendations within 60 days of assignment. RESERVING 1. Lost -time claims will be reviewed at 30 days, 90 days from date of creation and every 90 days thereafter for the life of the claim for adequacy of reserves and proper development of the action plan. 2. Reserve amounts will reflect the ultimate probable cost of the claim, and worksheets detailing reserve changes will be kept in the claim file.. 3. Claims with aggregate reserve increases exceeding $25,000 require supervisory review and approval. Evidence of supervisory review and direction shall be clearly documented in the claim file. COMMUNICATION 1. Quarterly Claim Reviews will be provided if requested by the Town, and if requested, a detailed review of selected claims and their medical management will be presented by Consultant. 2. Annual Stewardship Reports shall be created and reviewed in detail with the Town. 3. The Town shall be consulted prior to all settlements beyond the prearranged authority levels, if any. MIS 1. Agreed to monthly, quarterly and annual reports will be produced and forwarded to the Town by the 14`h of the month. 2. Check production will occur on a daily basis. Signatures will be obtained as required by the Town. 3. On-line access will be made available to the Town. Training on report formatting and production capabilities will also occur, as required. B-7 LITIGATION MANAGEMENT 1. The examiner will retain primary responsibility on all claims referred to defense counsel. Defense counsel will not be used to perform activities that should be the responsibility of the examiner. Referrals will be made to hearing representatives whenever possible and feasible consistent with the Town's guidelines. 2. Legal counsel will be selected on the basis of expertise and performance and as agreed to with the Town. 3. Claims sent to defense counsel will be accompanied by a referral form outlining the status of the case, results of investigations and primary issues. 4. Defense counsel will be required to provide a case summary with recommendations for resolution and an action plan within 15 days of referral. 5. At least two weeks prior to close of discovery on cases proceeding to trial, the file will have been adequately prepared to include necessary depositions, medical examinations and witness identification and contacts. B-8 EXHIBIT C COMPENSATION SCHEDULE Compensation for Consultant's professional services shall not exceed the amounts set forth below: I. Claims Administration Services: On or before the first day of each month during the Term, the Town will pay Consultant a fixed monthly fee for the claims administration services described in this Agreement. The Town's obligation to pay compensation in future fiscal years shall be contingent upon budget authorization by the Town Council. FY 2013-14 $3,750.00 monthly FY 2014-15 $4,000.00 monthly FY 2015-06 $4,166.67 monthly 2. Program Implementation: MMSEA Reporting $500 flat rate due on 7/1 of each year the contract commences. Custom computer programming $150.00 per hour, as needed Index Bureau reporting $8.20 each time a claim is reported, or whatever the current costs may be as determined by ISO. 3. Expenses: In addition to the payment of all medical and indemnity loss expenses incurred by or on behalf of the Town in connection with the handling of any claim under this Agreement, the Town will pay "Allocated Expenses", which are defined as those costs incurred on a claim file unrelated to administration or management services as described in this proposal. Allocated Expenses may include legal fees, court reporters, court costs, professional photographers, expert witness fees, sub -rasa, field investigation and outside services and other similar services not considered administrative in this proposal. 4. Medical Management: Unless otherwise directed, consultant shall utilize the following companies for medical cost containment services: Bill Review Diamond Bill Review Services to provide all bill review functions, whose charges are as follows and paid through a monthly invoice on a designated claim file: Medical bills $3.00 Header per bill, $1.00 per line Inpatient Bills 20% of savings Outpatient Bills 16% of savings Out of Network Bills 25% of savings PPO Network 20% of savings* Fees for Review Only bills and liens $100.00 flat rate Utilization Review GENEX for all Utilization and Physician/Peer Review services, whose charges are as follows and paid off the claim files: $100.00 per RN determination, including all letters $220.00/hr (billed in 1/4 hr increments) Physician Advisor Review, including letters $310.00/hr (billed in 1/4 hr increments) Specialty Physician Reviews on Appeals, including letters $310.00/hr (billed in 1/4 hr increments) Peer Review, with report EXHIBIT D INSURANCE A Minimum Scope of Insurance: i Consultant agrees to have and maintain, for the duration of the contract, General Liability insurance policies insuring him/her and his/her firm to an amount not Tess than: one million dollars ($1,000,000) combined single limit per occurrence for bodily injury, personal injury and property damage. Consultant agrees to have and maintain for the duration of the contract, an Automobile Liability insurance policy ensuring him/her and his/her staff to an amount not Tess than one million dollars ($1,000,000) combined single limit per accident for bodily injury and property damage. iii. Consultant shall provide to the Town all certificates of insurance, with original endorsements effecting coverage. Consultant agrees that all certificates and endorsements are to be received and approved by the Town before work commences. iv. Consultant agrees to have and maintain, for the duration of the contract, professional liability insurance in amounts not Tess than $1,000,000 which is sufficient to insure Consultant for professional errors or omissions in the performance of the particular scope of work under this agreement. B General Liability: The Town, its officers, officials, employees and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on behalf of the Consultant; products and completed operations of Consultant, premises owned or used by the Consultant. This requirement does not apply to the professional liability insurance required for professional errors and omissions. ii. The Consultants insurance coverage shall be primary insurance as respects the Town, its officers, officials, employees and volunteers. Any insurance or self - insurances maintained by the Town, its officers, officials, employees or volunteers shall be excess of the Consultant's insurance and shall not contribute with it. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the Town, its officers, officials, employees or volunteers. iv. The Consultant's insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability. C. All Coverages: Each insurance policy required in this item shall be endorsed to state that coverage shall not be suspended, voided, canceled, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the Town. Current certification of such insurance shall be kept on file at all times during the term of this agreement with the Town Clerk. In addition to these policies, Consultant shall have and maintain Workers' Compensation insurance as required by Califomia law and shall provide evidence of such policy to the Town before beginning services under this Agreement. Further, Consultant shall ensure that all subcontractors employed by Consultant provide the required Workers' Compensation insurance for their respective employees. ROUTE: DATE 1 INTEROFFICE MEMORANDUM AGREEMENT PROCESS DEPARTMENT HEAD TOWN ATTORNEY CLERK DEPARTMENT, PROCESSING Please retum originals to Clerk Department. VENDOR: Innovative Claims Solutions (ICS) SUBJECT Amendment to Agreement. - 12x7 BACKGROUND The Town utilizes a State -licensed third party administrator (TPA) to manage workers' compensation claims of injured workers. The purpose of this provider is to interpret the labor code with respect to worker's compensation and advance benefits to injured workers as prescribed by the laws of the State of California. DISCUSSION The Town has contracted with Innovative Claim Solutions, Inc. (ICS) since July 2002 to serve as the Third Party Administrator (TPA) for the Town's Workers' Compensation program. ICS has demonstrated effective case management prompting Council to approve several contract extensions with the last due to expire on June 30, 2010. On March 8, 2010, the Town issued a Request for Proposal (RFP) that was sent to a number of firms who performed this type of service as well as posted the document on various websites. Human Resources staff reviewed the proposals, from four (4) vendors who responded to the RFP, based on objective selection criteria and determined that it would be in the Town's best interest to appoint ICS as the Town's workers' compensation TPA. Council adopted a resolution authorizing the Town Manager to execute a contract with ICS as the Town's workers' compensation TPA for a three-year term, from July 1, 2010 through June 30, 2013, with an option to renew for one or more years. FISCAL The Town will be billed $3,500 monthly for the service. The total cost is approximately $42,000 anually. Funds are included in the FY 2010-11 Operating Budget (2202-65521) CLERK DEPARTMENT AGR IO. 12 1 IHH AGREEMENT FOR WORKERS' COMPENSATION CLAIMS ADMINAETRATION CONSULTANT SERVICES REC THIS AGREEMENT is entered into this day of June, 2010, gshd-between-the------- Town of Los Gatos, State of California, herein called the 'Town", and Innovative Claim Solutions, Inc., engaged in providing workers' compensation administration consulting services herein called the "Consultant". RECITAL$ A. The Town endeavors to ensure the proper administration of its self -insured workers' compensation program. B. The Town desires to engage a workers' compensation administration consultant to provide high -quality claims administration services for the Town's workers' compensation program, because of Consultant's experience and qualifications to perform the desired work. C. The Consultant represents and affirms that it is qualified and willing to perform the desired work pursuant to this Agreement. AGREEMENTS NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: 1. Scope of Services. The Consultant shall provide the services as set forth in the "Scope of Services", referred to as Exhibit A and incorporated herein by reference. 2. Incorporated Terms. The Consultant shall provide services in accordance with the terms as set forth in the "Incorporated Terms", referred to as Exhibit B and incorporated herein by reference. Any violation of the terms and conditions of this contract shall be identified in writing by the Town. After a thirty day resolution period, commencing on the date of mailing of written notice, continued violations by Consultant shall result in a 10% monthly reduction in fees until the condition is resolved to the satisfaction of the Town. Such right shall not limit the Town's right to terminate this contract if the Town determines that it is in the best interest to do so, in the Town's sole discretion and with or without cause. 3. Time of Performance. The services of the Consultant shall commence July 1, 2010, for a three year contract period, ending June 30, 2013. The services of the Consultant are to commence upon the execution of this Agreement and issuance of a Town purchase order. The purchase order shall issue upon receipt by the Town of evidence of insurance and a Town business license as required by this Agreement. Page 1 of 6 \Revised July 1, 2010 Nr\PSL\Current\REP\Worker's Comp Contract\Contract ICS Rnal.doc ATTACHS1E'T 1 4. Compliance with Laws. The Consultant shall comply with all applicable laws, codes, ordinances, and regulations of governing federal, state and local laws. Consultant represents and warrants to Town that it has all licenses, permits, qualifications and approvals of whatsoever nature which are legally required for Consultant to practice its profession. `Consultant represents and warrants to Town that Consultant shall, at its sole cost and expense, keep In effect or obtain at all times during the term of this Agreement any licenses, permits, and approvals which are legally required for Consultant to practice its profession. Consultant shall maintain a Town of Los Gatos business license pursuant to Chapter 14 of the Code of the Town of Los Gatos. 5. Sole Responsibility. Consultant shall be responsible for employing or engaging all persons necessary to perform the services under this Agreement. 6. Information/Report Handling. All documents furnished to Consultant by the Town and all reports and supportive data prepared by the Consultant under this Agreement are the Town's property and shall be made available for retrieval by the Town upon the completion of Consultant's services or at the Town's written request. All reports, information, data, and exhibits prepared or assembled by Consultant in connection with the performance of its services pursuant to this Agreement are confidential until released by the Town to the public, and the Consultant shall not make any of the these documents or information available to any individual or organization not employed by the Consultant or the Town without the written consent of the Town before such release. The Town acknowledges that the reports to be prepared by the Consultant pursuant to this Agreement are for the purpose of evaluating a defined project, and Town's use of the information contained in the reports prepared by the Consultant in connection with other projects shall be solely at Town's risk, unless Consultant expressly consents to such use in writing. Town further agrees that it will not appropriate any methodology or technique of Consultant which is and has been confirmed in writing by Consultant to be a trade secret of Consultant. 7. Compensation. Compensation for Consultant's professional services shall not exceed the amounts set forth in the "Compensation Schedule", referred to as Exhibit C and incorporated herein by reference. Payment shall be net thirty (30) days. Billing shall be accompanied by a detailed explanation of the work performed by whom at what rate and on what date. Also, documents or other pertinent materials shall be submitted for Town review, even if only in partial or draft form. All invoices and statements to the Town shall reference the Town's purchase order number and be addressed as follows: Invoices: Statements: Town of Los Gatos Town of Los Gatos Attn: Accounts Payable Attn: Finance Department P.O. Box 655 P.O. Box 655 Los Gatos, CA 95030 Los Gatos, CA 95030 Page 2 of 6 \Revised July 1, 2010 N:\PSL\Current\RFP\Worker's Comp Contract\Contract ICS Final.doc 8. Availability of Records. Consultant shall maintain the records supporting thls billing for not less than three (3) years following completion of the work under this Agreement. Consultant shall make these records available to authorized personnel of the Town at the Consultant's offices during business hours upon written request of the Town. 9. Project Manager. The Project Manager for the Consultant for the work under this Agreement shall be: Gary Archibald, CIO, President 11030 White Rock Road, Suite 210 Rancho Cordova, CA 95670 Phone: (916) 852-8588 Fax: (916)852-8505 Unless otherwise specified, consultant contact with Town shall be limited to the Human Resources Director, Human Resources Specialist, Town Attorney, Assistant Town Manager or their designee. 10. Assignability and Subcontracting. The services to be performed under this Agreement are unique and personal to the Consultant. No portion of these services shall be assigned or subcontracted without the written consent of the Town. 11. Notices. Any notice required to be given shall be deemed to be duly and properly given if mailed postage prepaid, and addressed to: To Town: To Consultant: Rumi Portillo Director of Human Resources 110 E. Main Street P. 0. Box 949 Los Gatos, CA 95031 Gary Archibald, CIO, President 11030 White Rock Road, Suite 210 Rancho Cordova, CA 95670 or personally delivered to Consultant to such address or such other address as Consultant designates in writing to Town. 12. Independent Contractor. It is understood that the Consultant, in the performance of the work and services agreed to be performed, shall act as and be an independent contractor and not an agent or employee of the Town. As an independent contractor he/she shall not obtain any rights to retirement benefits or other benefits which accrue to Town employee(s). With prior written consent, the Consultant may perform some obligations under this Agreement by subcontracting, but may not delegate ultimate responsibility for performance or assign or transfer interests under this Agreement. Page 3of6 \Revised July 1, 2010 N:\PSL\Current\RFP\Worker's Comp Contract\Contract ICS Finai.doc Consultant agrees to testify in any litigation brought regarding the subject of the work to be performed under this Agreement. Consultant shall be compensated for its costs and expenses in preparing for, traveling to, and testifying in such matters at its then current hourly rates of compensation, unless such litigation is brought by Consultant or is based on allegations of Consultant's negligent performance or wrongdoing. 13. Conflict of Interest. Consultant understands that its professional responsibility is solely to the Town. The Consultant has and shall not obtain any holding or interest within the Town of Los Gatos. Consultant has no business holdings or agreements with any individual member of the Staff or management of the Town or its representatives nor shall it enter into any such holdings or agreements. In addition, Consultant warrants that it does not presently and shall not acquire any direct or indirect interest adverse to those of the Town In the subject of this Agreement, and it shall immediately disassociate itself from such an interest should it discover it has done so and shall, at the Town's sole discretion, divest itself of such Interest. Consultant shall not knowingly and shall take reasonable steps to ensure that it does not employ a person having such an Interest in this performance of this Agreement. If after employment of a person, Consultant discovers it has employed a person with a direct or indirect interest that would conflict with its performance of this Agreement, Consultant shall promptly notify Town of this employment relationship, and shall, at the Town's sole discretion, sever any such employment relationship. 14. Eaual Employment Opportunity. Consultant warrants that it is an equal opportunity employer and shall comply with applicable regulations governing equal employment opportunity. Neither Consultant nor its subcontractors do and neither shall discriminate against persons employed or seeking employment with them on the basis of age, sex, color, race, marital status, sexual orientation, ancestry, physical or mental disability, national origin, religion, or medical condition, unless based upon a bona fide occupational qualification pursuant to the California Fair Employment & Housing Act. 16. Indemnification. Each party shall defend, indemnify and hold harmless the other party, and its directors, officers, employees, consultants, affiliates and agents from and against any and all claims, demands, suits, causes of action, awards, penalties, judgments and liabilities, including, without limitation, attorneys' fees and costs arising from any actual or alleged negligent, intentional or wrongful acts or omissions committed by the party or its employees, consultants, agents or other individuals working for the party arising out of or related to performance under this Agreement, save and except claims, demands, suits, causes of action, awards, penalties, judgments and liabilities arising through the negligence or intentional wrongful misconduct or omission of the other party, whereupon the relative liabilities shall be attributed and assessed by legal process. Notwithstanding, Consultant shall have no liability or obligation to the Town in the event the act or omission giving rise to a claim was directed in writing by the Town contrary to the written recommendation of Consultant. The duty to indemnify and hold harmless shall survive the termination of this Agreement and shall include the duty to pay all reasonable costs, attorneys' fees, expenses and liabilities incurred in the investigation or defense of any claim or suit. Town shall not be liable to Consultant for personal injury of employees or property damage Page 4of6 \Revised July 1, 2010 N:\PSL\CURRENT\RFP\WORKER'S COMP CONTRACT\CONTRACT 1CS FINAL.DOC sustained by Consultant in the performance of the services specified in this Agreement. Penalties and Fines Under Workers' Compensation (WC) Laws: Consultant and the Town acknowledge that there are various penalties and administrative fines that are contained in the State of California Workers' Compensation laws that may be imposed on both employers and claim administrators. Notwithstanding the indemnification provisions set forth above, the parties expressly agree that: (i) Consultant shall be responsible for any fines or penalties associated with questionable or controverted claims which Consultant denies without first consulting and obtaining approval by Town for denial of the claim(s). Consultant will not be responsible for any fines or penalties levied by the Division of Workers' Compensation or any other judicial or quasi- judicial organization for improper denial of a claim(s), if over the objections of Consultant, Consultant denied said claim(s) at the direction of the Town. (ii) The Town shall be responsible for all penalties where Consultant has not been given sufficient notice such that Consultant has had at least five (5) working days in which to investigate the claim and to pay temporary disability or send the required wage continuation notice before the penalties were assessed. Consultant shall be responsible for all penalties in which it has had five (5) or more working days in which to investigate and pay temporary disability or send a wage continuation notice. For the purpose of this section "working day" means all days except Saturdays, Sundays and Town observed holidays. (iii) Any penalties and fines arising under WC Laws caused by failure of Consultant to perform its obligations under this Agreement shall be paid by Consultant. (iv) Any penalties and fines arising under the WC Laws caused by failure of the Town to perform its obligations under this Agreement shall be paid by the Town. Notice of Penalties: Consultant agrees to use its best efforts to promptly notify the Town of situations that they discover which may result in penalties. Survival: The provisions of this Section 16 regarding penalties shall survive any termination of this Agreement for a period of three (3) years. 17. Waiver. No failure on the part of either party to exercise any right or remedy hereunder shall operate as a waiver of any other right or remedy that party may have hereunder, nor does waiver of a breach or default under this Agreement constitute a continuing waiver of a subsequent breach of the same or any other provision of this Agreement. 18. Governing Law. This Agreement, regardless of where executed, shall be governed by and construed to the laws of the State of California. Venue for any action regarding this Page 5 of 6 \Revised July 1, 2010 N:\PSL\CURRENT\RFP\WORKER'S COMP CONTRACT\CONTRACT ICS FINAL.DOC Agreement shall be In the Superior or Municipal Court of the County of Santa Clara. 19. Termination of Agreement. The Town and the Consultant shall have the right to terminate this agreement with or without cause by giving not less than sixty (60) days written notice of termination. In the event of termination, the Consultant shall make available for retrieval by the Town all files, documents, reports, performed to date by the Consultant. In the event of such termination, Town shall pay Consultant an amount that bears the same ratio to the maximum contract price as the work delivered to the Town bears to completed services contemplated under this Agreement pursuant to EXHIBIT A attached hereto, unless such termination is made for cause, in which event, compensation, if any, shall be adjusted In light of the particular facts and circumstances involved in such termination. In addition, .in the event the Town purchases Workers' Compensation Insurance, or its Certificate of Consent to Self -Insure is rescinded or revoked, this Agreement shall automatically terminate upon the effective date of such event. Certain Rights After Termination: Upon termination of this Agreement, a final accounting shall be made of all fees and other amounts payable to Innovative Claim Solutions, Inc. pursuant to this Agreement and of any funds belonging to the Town in the possession of Innovative Claim Solutions, Inc., any balance due and owing Innovative Claim Solutions, Inc. or the Town, as the case may be, will be promptly paid based on such accounting. In addition, all original claim files, records and reports in the possession of Innovative Claim Solutions, Inc. and pertaining to employee claims subject to this agreement shall be made available for retrieval by the Town or its designee upon request following termination of this Agreement. 20. Amendment. No modification, waiver, mutual termination, or amendment of this Agreement is effective unless made In writing and signed by the Town and the Consultant. 1. Disputes. In any dispute over any aspect of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, including costs of appeal. Any disputes arising from or related to this Agreement may be resolved and determined through binding arbitration before the American Arbitration Association, pursuant to the Commercial Arbitration Rules. 21. Entire Agreement. This Agreement, including Exhibits A through D, constitutes the complete and exclusive statement of the Agreement between the Town and Consultant. No terms, conditions, understandings or agreements purporting to modify or vary this Agreement, unless hereafter made in writing and signed by the party to be bound, shall be binding on either party. Page 6 of 6 \Revised July 1, 2010 N:\PSL\CURRENT\RFP\WORKER'S COMP CONTRACT\CONTRACT ICS FINAL.DOC EXHIBIT A SCOPE OF SERVICES During the Term of this Agreement, Consultant shall provide the following services to ensure compliance with workers' compensation statutes and regulations as established by the Department of Industrial Relations: A. WORKERS' COMPENSATION CLAIMS MANAGEMENT AND ADMINISTRATION: 1. To review on behalf of the Town all reports of injury as defined by California Labor Code Sections 3208 and 3208.1 that are reported by the Town to Consultant. 2. To determine on behalf of the Town for each reported employee Injury those benefits, if any, that should be paid or rendered under the California Workers' Compensation laws (the "WC Laws"). 3. To establish and maintain a claim file on each reported claim, which file shall be available to the Town for inspection. The maintenance of such files shall exhibit handling practices which meet or exceed minimum industry standards for California workers' compensation claims. 4. To maintain current cost -benefit figures and an estimate of the total costs of all reasonable and foreseeable benefits and related expenses on each case. 5. To prepare and file on behalf of the Town all legally required forms and reports with the Administrative Director or Self -Insurance Plans, or any other report required by the State. 6. To pay on behalf of the Town, from a segregated bank workers' compensation account funded and maintained by the Town, those sums that should reasonably be paid for claims and claims -related expenses under the California Workers' Compensation Laws for each reported claim. 7. When required and appropriate, to refer cases where an employee of the Town files an application with the California Workers' Compensation Appeals Board or any other activity involving litigation to attorneys selected and approved by the Town and not to any other attorneys without the prior written consent of the Town. 8. To render assistance as Is reasonably necessary in the preparation of litigated cases. 9. To pay on behalf of the Town out of the bank workers' compensation trust account funded by the Town all "Allocated Loss Expense" which is defined to include all fees of attorneys, witnesses, court reporters, process servers, independent investigators, any court or Workers' Compensation Appeals Board, for depositions, surveillance or the necessary engagement of personnel in the handling of any claim subject to this Agreement. EXHIBIT A SCOPE OF SERVICES During the Term of this Agreement, Consultant shall provide the following services to ensure compliance with workers' compensation statutes and regulations as established by the Department of Industrial Relations: A. WORKERS' COMPENSATION CLAIMS MANAGEMENT AND ADMINISTRATION: 1. To review on behalf of the Town all reports of injury as defined by California Labor Code Sections 3208 and 3208.1 that are reported by the Town to Consultant. 2. To determine on behalf of the Town for each reported employee Injury those benefits, if any, that should be paid or rendered under the California Workers' Compensation laws (the "WC Laws"), 3. To establish and maintain a claim file on each reported claim, which file shall be available to the Town for inspection. The maintenance of such files shall exhibit handling practices which meet or exceed minimum industry standards for Califomia workers' compensation claims. 4. To maintain current cost -benefit figures and an estimate of the total costs of all reasonable and foreseeable benefits and related expenses on each case. 5. To prepare and file on behalf of the Town all legally required forms and reports with the Administrative Director or Self -Insurance Plans, or any other report required by the State. 6. To pay on behalf of the Town, from a segregated bank workers' compensation account funded and maintained by the Town, those sums that should reasonably be paid for claims and clalms-related expenses under the California Workers' Compensation Laws for each reported claim. 7. When required and appropriate, to refer cases where an employee of the Town files an application with the California Workers' Compensation Appeals Board or any other activity involving litigation to attorneys selected and approved by the Town and not to any other attorneys without the prior written consent of the Town. 8. To render assistance as Is reasonably necessary in the preparation of litigated cases. 9. To pay on behalf of the Town out of the bank workers' compensation trust account funded by the Town all "Allocated Loss Expense" which is defined to include all fees of attorneys, witnesses, court reporters, process servers, independent Investigators, any court or Workers' Compensation Appeals Board, for depositions, surveillance or the necessary engagement of personnel in the handling of any claim subject to this Agreement. IN WITNESS WHEREOF, the Town and Consultant have executed this Agreement as of the date indicated on page one (1). Town of Los Gatos Ru Portillo, HR',Director To •f Los Gat Greg Larson, Town Manager Town of Los Gatos ATTEST: Clerk of the Town of Los Gatos, Los Gatos, California e Rose, Town Clerk Approved as to Form: ichael Martello, Interim Town Attorney Consultant: 40F0 Gary Archib•!10, President Innovative CISolutions, Inc. Page 7 of 6 \Revised July 1, 2010 N:\PSL\CURRENT\RFP\WORKER'S COMP CONTRACT\CONTRACT ICS FINAL.DOC 10. To provide computerized Toss analysis and financial claim detail reports within ten days following the end of the month. At no additional charge, Consultant will provide the following reports: 1. Annual graphic reports reflecting the highest cost department and Toss -types. Annual recaps, litigated claims and other mutually accepted categories. 11. To provide and make appropriate claims reports to excess carriers and collect excess recoveries, incuding the return of excess recoveries to Town, subject to the Town providing Consultant with a list of excess carriers for all preceding years, and identifying the policy numbers and the parties to whom reports are to be directed. 12. To attend Worker's Compensation Appeals Board hearings, rehabilitation hearings, meetings with defense counsel, and meetings with Town staff, departments, and employee groups as necessary and as requested to do so. 13. To provide monthly summaries of all Town of Los Gatos workers' compensation bank trust account activities undertaken by Consultant. 14. To advise the Town on any material problems or need for improvement in the claims reporting, administration or other aspects of the workers' compensation program. 15. To employ, as necessary, outside vendors subject to the obtaining the Town's prior written approval of all vendors eligible to provide services, directly or indirectly, on behalf of, or for the Town pursuant to this Agreement. 2. PROGRAM IMPLEMENTATION SERVICES: Because Consultanthas already performed all implementation processes when originally award the contract, Consultant will provide the following services, or provide assistance to the Town if updating of prior information is required: 16. Continued storage of all closed files, even those assumed from the prior administrators. 17. Develop and print up to fifty copies of a claim reporting procedure manual (including the most recent workers' compensation reform information) for distribution to all departments and key employees, should any major changes in procedures be required. 18. Implementation visits to the Town to distribute claim manuals and discuss self-insurance and Innovative Claim Solutions, Inc. service program with key personnel, should any major changes in procedures be required. 19. Design and implement all accounting and trust fund procedures, should any changes be required. 20. Produce and design all necessary reports. A-2 EXHIBIT B INCORPORATED TERMS During the Term of this Agreement, Consultant shall provide services in accordance with the procedures and performance standards included below: GENERAL: 1. Availability: Consultant shall at all times, have one or more of the examiners assigned to the Town's :account, or in their absence, the supervisor or Vice President of Workers' Compensation available by telephone for emergencies through a 24-hour emergency telephone number. Consultant shall ensure at least one or more of the examiners assigned to the Town's account is on -site and available to the Town every business day throughout the term of the contract period. 2. Review of Examiner: The Town shall have the right and opportunity to approve or reject any proposed examiner provided by Consultant. The Town shall also have the opportunity to review service provided by examiner and require a new examiner if service is unacceptable to Town. 3. Caseload: Caseload of Town's designated examiner will not exceed 175 open indemnity claims excluding future medical cases. 4. Return Calls: Return calls to claimants and Town will be made within four (4) business hours of receipt when possible and no later than the next business day. 5. Training: Consultant shall provide training, workshops, or guest lecturers presented in a classroom setting or as informal "brown bag" sessions on topics related to Safety, Workers' Compensation and Medical Management, including information appropriate to employees, supervisors, and Town Administration in their respective roles. Training shall be provided at least annually, when requested, and may be on -site at Town facilities, with advance notice, or at a location determined by the Consultant. CLAIMS PROCESSING: 1. Claims will be created and entered into the computer system within two (2) working days of Consultant's receipt. 2. Lost -time claims, with the exception of future medicals, will be reviewed on diary at least every 30 days or more frequently where needed. 3. Medical -only claims whose medical payments exceed $3,000 will be placed on supervisory diary of not more than 90 days. 4. Benefit payments (TTD, TPD, PPD, PTD, LP, DB, VR, etc.) Will be paid promptly as required by state statute following verification of compensability. 5. Transportation reimbursement will be mailed within five (5) days of the receipt of the claim for reimbursement, whenever possible. Advance travel expense payments will be mailed to the injured employee ten (10) days prior to the anticipated date of travel. 6. Prior to approval for payment, medical bills will be reviewed for causal relationship and propriety of. charges. Bills will be subject to applicable fee schedule adjustments and paid/denied/objected to within 30 days of Consultant's receipt. 7. Reserves established on lost -time claims will reflect the ultimate probable cost of each claim based on the information developed to date. Reserve worksheets will reflect amounts allocated to temporary disability, permanent disability, and vocational rehabilitation (if applicable), medical care and allocated expense. 8. Medical -only claims will be reviewed every 30 days for possible closure. 9. Consultant shall program salary continuation or 4850 payment tracking for actual check production, voucher production, payment posting or any combination of these items as required by the Town. 10. Indemnity claims will be reviewed by the appropriate supervisor no less frequently than at the following intervals for quality control: 1. File creation 2. Denials 3. Delayed claims 4. When reserve increases exceed examiner authority 5. Closures 6. When a proposed settlement exceeds examiner authority 7. AOE/COE and sub-rosa investigative referrals 8. Open indemnity files at 90 days from date of creation, and every 90 days thereafter until claim resolution, and every 180 days on settled claims 9. 15 days prior to mandatory settlement conference 10. 15 days prior to scheduled trials 11. The Town will be advised of the assessment of any penalty for delayed payment and the reason thereof and Consultant's plans for payment of such penalty within five (5) days of assessment. FILE DOCUMENTATION: 1. The basis for initial and subsequent reserve changes and payments will be clearly explained in the claim file. B-2 2. Summary of Investigative plan of action and efforts will be documented in the claim file. 3. A decision on compensability will be documented in the file along with the basis for that decision within 14 days of receipt of the Claim Form (DWC 1), whenever possible. 4. Claims on which a delay is necessary must clearly document the reasons for the delay; the information needed to determine compensability and the anticipated date of a final decision. In no case will the final date be more than 90 days after the Town's date of knowledge. 5. Employer contact is required to verify continued disability and explore the availability of modified or light duty prior to processing of disability payments. 6. Claims involving lost time will be reported to the Index Bureau and this referral will be reflected in the claim file. INVESTIGATIONS 1. Lost time claims will be investigated. At a minimum, the Town will be contacted to obtain accident information, witness names, and to verify disability dates and wage Information. 2. On questionable indemnity claims, Investigative assignments will be made to outside vendor within 5 days of Consultant's notice of claim to obtain statements from witnesses and the injured employee, when necessary. 3. Medical verification of causation and disability will be obtained prior to each payment of disability benefits. An estimate as to length of disability and extent of disability will be obtained. 4. Consultant will contact the injured employee via telephone within 24 hours of notice of injury on all lost time cases to verify injury, prior related medical history, and accident Information and to explain benefits. The results of this contact and all contact attempts will be documented in the claim file. Subsequent regular contact with temporarily disabled employees will be maintained. 5. Investigative assignments will address the applicability of apportionment, subrogation potential and the need for surveillance or activity checks. 6. Outside investigative services will be retained on an as -needed basis only, with concurrence from the Town. The need for outside services will be clearly documented in the file. 7. Where medical causation is unclear, a medical evaluation will be requested with a qualified physician following the required QME process. All relevant medical records and investigative information will be provided to the physician for review prior to the date of examination. B-3 MEDICAL MANAGEMENT 1. Initial investigative contacts with the employer, employee, and physician's office will be made within 24 hours of Consultant's notice of the claim on all lost time cases. 2. Medical verification of disability will be obtained in a timely manner and maintained in the claim file to document the need for continuing indemnity benefits. 3. Medical treatment provided will be reviewed for necessity, reasonableness, and relationship to the industrial Injury with appropriate referrals for Utilization Review services. 4. Catastrophic injury claims and extensive lost -time claims will be reviewed by a qualified medical management provider, as needed. Claims referred for outside medical management services willreflect the intent and scope of services requested. 5. Independent medical examinations by qualified physicians will be scheduled when needed to address necessity or reasonableness of care, following the appropriate QME procedures requirements. A cover letter will be provided to the physician outlining the specific issues and concerns along with the examiner's questions. 6. Recommendations for back surgery shall be confirmed through a second opinion unless objective signs of neurological involvement and radiculopathy exist, following the labor code requires procedures. 7. Pre-existing medical conditions and medical records will be explored/obtained on all lost -time claims, as needed when an issue of apportionment exists. 8. Treatment recommendations for care such as physical therapy, chiropractic manipulations, etc., will be verified with the physician as to duration, frequency and anticipated results. 9. Medical bills submitted without supporting medical reports shall not be paid until a medical report is obtained. All bills will be adjusted according to the fee schedule and paid or objected to according to the law. 10. Medical -legal costs will be reviewed for appropriateness and necessity. Bills which do not qualify as a valid medical -legal expense will be objected to on a timely basis. VOCATIONAL REHABILITATION 1. Referral to QRR will occur within 90 days of cumulative disability for completion of the RU-91, on all required pre-2004 claims. 2. Within 30 days of initial assignment, vocational rehabilitation service providers will be required to provide an assessment of the worker's ability to participate In the vocational rehabilitation process and an assessment of transferable skills, 3. Vocational rehabilitation service providers will be required to submit plan outline and 8-4 recommendations within 60 days of assignment. RESERVING 1. Lost -time claims will be reviewed at 30 days, 90 days from date of creation and every 90 days thereafter for the life of the claim for adequacy of reserves and proper development of the action plan. 2. Reserve amounts will reflect the ultimate probable cost of the claim, and worksheets detailing reserve changes will be kept in the claim file., 3. Claims with aggregate reserve Increases exceeding $25,000 require supervisory review and approval. Evidence of supervisory review and direction shall be clearly documented in the claim file. COMMUNICATION 1. Quarterly Claim Reviews will be provided if requested by the Town, and If requested, a detailed review of selected claims and their medical management will be presented by Consultant. 2. Annual Stewardship Reports shall be created and reviewed in detail with the Town. 3. The Town shall be consulted prior to all settlements beyond the prearranged authority levels, if any. MIS 1. Agreed to monhly, quarterly and annual reports will be produced and forwarded to the Town by the 14thof the month. 2. Check production will occur on a daily basis. Signatures will be obtained as required by the Town. 3. On-line access will be made available to the Town. Training on report formatting and production capabilities will also occur, as required. LITIGATION MANAGEMENT 1. The examiner will retain primary responsibility on all claims referred to defense counsel. Defense counsel will not be used to perform activities that should be the responsibility of the examiner. Referrals will be made to hearing representatives whenever possible and feasible consistent with the Town's guidelines. B-5 5. At (east two weeks prior to close of discovery on cases proceeding to trial, the file will have witness identification and contacts, been adequately prepared to include necessary depositions, medical examinations and 2 Legal counsel will be selected on the basis of expertise and performanc with the Town. a and as agreed to 3. Claims sent to defense counsel will be accompanied by a referral form o the case, results of investigations and primary issues, utlining the status of 4. Defense counsel will be required to provide a case summary with recommendations for resolution and an action plan within 15 days of referral. B-6 EXHIBIT C COMPENSATION SCHEDULE Compensation for Consultant's professional services shall not exceed the amounts set forth below: 1. Claims Administration Services: On or before the first day of each month during the Term, the Town will pay Consultant a fixed monthly fee for the claims administration services described in this Agreement. The Town's obligation to pay compensation in future fiscal years shall be contingent upon budget authorization by the Town Council. FY 2010-11 FY 2011-12 FY 2012-13 $3,500.00 monthly $3,500.00 monthly $3,500.00 monthly 2. Pro ram Im Iementation: MMSEA Reporting Custom computer programming Index Bureau reporting 3. Expenses: $1,500 flat rate which can be pro -rated across three years at $500 each year, due on 7/1 of each year the contract commences. If paid all at once, $1500 will be due on 7/1/10. $150.00 per hour, as needed $7.25 each time a claim is reported, or whatever the current costs may be as determined by ISO. In addition to the payment of all medical and indemnity loss expenses incurred by or on behalf of the Town in connection with the handling of any claim under this Agreement, the Town will pay "Allocated Expenses", which are defined as those costs incurred on a claim file unrelated to administration or management services as described in this proposal. Allocated Expenses may include legal fees, court reporters, court costs, professional photographers, expert witness fees, sub- rosa, field investigation and outside services and other similar services not considered administrative in this proposal. 4. Medical Management: Unless otherwise directed, consultant shall utilize the following companies for medical cost containment services: Bill Review Diamond Bill Review Services to provide all bill review functions, whose charges are as follows and paid through a monthly invoice on a designated claim file: 9 Medical bills In•atient Bills Out.atient Bills Out of Network Bills PPO Network Fees for Review Onl bills and liens Utilization Review GENEX for all Utilization and Physician/Peer Review services, whose charges are off the claim files: ar 9 as follows and paid $100.00 per RN determination, including all letters $220.00/hr (billed in 1/4 hr increments) Physician Advisor Review, including letters $310.00/hr (billed in 1/4 hr increments) Specialty Physician Reviews on A $310.00/hr (billed in 1/4hr increments) Peer Review, with report ppeals, including letters 3.00 Header •er bill .1.00 .er line 20% of savin s 16% of savin•s 25% of savin•s 20% of savin•s* 100.00 flat rate EXHIBIT D INSURANCE A. Minimum Scope of Insurance: i• Consultant agrees to have and maintain, for the duration of the contract, General Liability insurance policies insuring him/her and his/her firm to an amount not Tess than: one million dollars ($1,000,000) combined single limit per occurrence for bodily injury, personal injury and property damage. ii. Consultant agrees to have and maintain for the duration of the contract, an Automobile Liability insurance policy ensuring him/her and his/her staff to an amount not Tess than one million dollars ($1,000,000) combined single limit per accident for bodily injury and property damage. Consultant shall provide to the Town all certificates of insurance, with original endorsements effecting coverage. Consultant agrees that all certificates and endorsements are to be received and approved by the Town before work commences. iv. Consultant agrees to have and maintain, for the duration of the contract, professional liability insurance in amounts not Tess than $1,000,000 which is sufficient to insure Consultant for professional errors or omissions in the performance of the particular scope of work under this agreement. B. General Liability: i• The Town, its officers, officials, employees and volunteers are to be covered as Insured as respects: liability arising out of activities performed by or on behalf of the Consultant; products and completed operations of Consultant, premises owned or used by the Consultant. This requirement does not apply to the professional liability insurance required for professional errors and omissions. 1i. The Consultant's insurance coverage shall be primary insurance as respects the Town, its officers, officials, employees and volunteers. Any insurance or self - insurances maintained by the Town, its officers, officials, employees or volunteers shall be excess of the Consultant's insurance and shall not contribute with it. iii. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the Town, its officers, officials, employees or volunteers. iv. The Consultant's insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability. C. All Covera9es: Each insurance policy required in this item shall be endorsed to state that Exhibit D Insurance (continued) coverage shall not be suspended, voided, canceled, reduced in coverage or in limits except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the Town. Current certification of such insurance shall be kept on fil times during the term of this agreement with the Town Clerk. eat all D. In addition to these policies, Consultant shall have and maintain Workers' Compensation insurance as required by California law and shall provide evidence of such policy to the Town before beginning services under this Agreement. Further, Consultant shall ensurepeth l subcontractors employed by Consultant provide the required Workers' Com ensa t al insurance for their respective employees. P tion D-2 INTEROFFICE MEMORANDUM AGREEMENT PROCESS ROUTE: DATE 10 '7/2 Ce. DEPARTMENT HEAD TOWN ATTORNEY CLERK DEPARTMENT, PROCESSING Please return originals to Clerk Department. VENDOR: Innovative Claims Solutions (ICS) SUBJECT Amendment to Agreement. BACKGROUND The Town utilizes a State -licensed third party administrator (TPA) to manage workers' compensation claims of injured workers. The purpose of this provider is to interpret the labor code with respect to worker's compensation and advance benefits to injured workers as prescribed by the laws of the State of California. DISCUSSION The Town has contracted with Innovative Claim Solutions, Inc. (ICS) since July 2002 to serve as the Third Party Administrator (TPA) for the Town's Workers' Compensation program. ICS has demonstrated effective case management prompting Council to approve several contract extensions with the last due to expire on June 30, 2010. On March 8, 2010, the Town issued a Request for Proposal (RFP) that was sent to a number of firms who performed this type of service as well as posted the document on various websites. Human Resources staff reviewed the proposals, from four (4) vendors who responded to the RFP, based on objective selection criteria and determined that it would be in the Town's best interest to appoint ICS as the Town's workers' compensation TPA. Council adopted a resolution authorizing the Town Manager to execute a contract with ICS as the Town's workers' compensation TPA for a three-year term, from July 1, 2010 through June 30, 2013, with an option to renew for one or more years. FISCAL The Town will be billed $3,500 monthly for the service. The total cost is approximately $42,000 anually. Funds are included in the FY 2010-11 Operating Budget (2202-65521) COUNCIL AGENDA REPORT DATE: August 8, 2013 TO: MAYOR AND TOWN COUNCIL MEETING DATE: 08/19/2013 ITEM NO; 3 FROM: GREG LARSON, TOWN MANAGE R SUBJECT: AUTHORIZE THE TOWN MANAGER TO EXECUTE AN AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT WITH INNOVATIVE CLAIMS SOLUTIONS, INC., TO EXTEND THE CONTRACT FOR THREE YEARS TO PERFORM WORKERS' COMPENSATION CLAIMS ADMINISTRATION RECOMMENDATION: It is recommended that Council authorize the Town Manager to execute an amendment to the Professional Services Agreement with Innovative Claims Solutions, Inc. (ICS), to extend the contract for three years to perform workers' compensation claims administration. BACKGROUND: The Town uses an administrator for its self -funded workers' compensation program. ICS was selected from a competitive bid process conducted in 2010 to serve as the third -party administrator for the Town's Workers' Compensation program. The original agreement with ICS was established through June 30, 2013. An amendment is necessary for ICS to continue for an additional three years as the Town's third party administrator. DISCUSSION: Under the existing contract, ICS has been highly effective in assisting the Town to contain costs associated with the workers' compensation program. For the most recent reportable claim period ending August 2012, ICS successfully recovered approximately $161K from the Town's excess insurance carriers, assisted in reducing estimated future liability by $873K and served as an agent on the Town's behalf to negotiate a reduction in medical treatments by approximately $1.3M. ICS also ensures the Town's compliance with State of California workers' compensation requirements and keeps Town staff updated on legal and procedural changes. As costs in the workers' comp environment are escalating, it is in the interest of the Town to secure favorable contract rates in a multi -year extension as proposed. PREPARED BY: RUMI PORTILLQ Human Resources Reviewed by: Assistant Town Manager � Town Attorney ----finance U:\Council Memos\ CS Council Memo to Amend Contract 08.19.2013.doc