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COUNCIL AGENDA REPORT
DATE: June 7, 2010
TO: .MAYOR AND TOWN COUNCIL
MEETING DATE:. ~06/21~10
ITEM NO:
FROM: GREG CARSON, TOWN MANAGER ,.~~~ ~~
SUBJECT: ADOPT RESOLUTION AUTHORIZING THE TOWN MANAGER TO
EXECUTE A CONTRACT WITH INNOVATIVE CLAIMS
SOLUTIONS, INC. TO PROVIDE WORKERS' COMPENSATION
THIRD PARTY ADMINISTRATIVE SERVICES
RECOMMENDATION:
It is recommended that Council adopt a resolution authorizing the Town Manager to
execute a contract with Innovative Claims Solutions, Inc. to provide workers'
compensation third party administrative services effective July 1, 2010 through June 30,
2013.
BACKGROUND:
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.
Therefore, staff recommends that Council adopt 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.
PREPARED BY: RUMI PORTILLO &~~
Human Resources hector ~
C:\Users\MBERMU~I\AppData\Local\Temp\XPgrpwise\RTC_ ICS Contract Juue 2010.doc
Reviewed by ~~, Assist n Manager own Attorney
Clerk Administrator Finance Community Developrrzent
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION AUTHORIZING 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
COMPENSATION CLAIMS ADMINISTRATION
DATE: ~ JUNE 7, 2010
DISCUSSION:
Third Party Administrator is a service provider who not only handles Town's claims, but
also serves as a business partner in :contributing toward the overall success of Town's
worker's compensation program and in reducing claim costs. The best way to reduce
workers compensation costs is to build a strong relationship, enabling the TPA to know
the preferences and claim handling philosophy of the Town. This typically tapes at least
a year of actual experience in administering Town's workers' compensation program
before the TPA is comfortable in the assignment. Town staff has worked with ICS since
the inception of the original contract in 2002, and there is a clear understanding between
the parties of expectations.
Further, Town staff s objective is to secure competitive administrative costs with minimal
disruption in the administration of workers' compensation claims services, to Town
employees. ICS has proposed a fixed. fee of $42,000 per year for fiscal years 2010
through 20.13, for a total .administrative cost of $126,000. The proposed contract will
result in a decrease in annual costs from $44,000 to $42,000 for an estimated savings of
$6,000 over the life of the contract. The Town also avoids paying a conversion fee
providing for an additional savings of approximately $5;000.
Staff believes that ICS is doing a satisfactory job in providing workers' compensation
third party administrative services and recommends that Council adopt a resolution
authorizing the Town Manager to execute a contract with ICS as the Town's workers'
compensation TPA for athree-year term, from July 1, 2010 through June 30,.2013,. with
an option to renew for one or more years.
CONCLUSION:
ICS's proposal will result in a decrease in annual. administrative costs in the Town's
workers' compensation program. The services provided by ICS have also been
satisfactory. Therefore, staff recommends that. ICS continue to serve as the Town's TPA
under the terms of the proposed contract: This continuation will minimize disruption in
the management of claims and will allow ICS and Town staff to continue their efforts in
process improvement and cost containment.
ENVIRONMENTAL ASSESSMENT:
The RFP for a Workers' Compensation TPA is not a project defined under CEQA, and no
further action is required:
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION AUTHORIZING 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
COMPENSATION CLAIMS ADMINISTRATION
DATE: JUNE 7, 2010
FISCAL IMPACT:
The Town is currently paying $3,667.33 a •month in professional service fees to ICS to
serve as the Town's workers' compensation TPA. ICS has proposed, for the new
contract, a monthly fee at $3,500 for the duration of the three-year contract, resulting in a
decrease in annual costs from $44;000 to $42,000, for an estimated savings of $6,000
over the life of the contract. Sufficient funds .are available in the adopted FY 2010/11
budget for this agreement.
Attachments:
Resolution authorizing the Town Manager to execute a contract with Innovative Claims
Solutions, Inc. to provide workers' compensation third party administrative services
effective July 1, 2010-through June 30, .2013.
Distribution: Gary Archibald ,Innovative Claims Solutions, Inc., 11030 White Rock
Road, Suite 210, Rancho Cordova, CA 95670
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RESOLUTION NO.
ADOPT RESOLUTION AUTHORIZING THE TOWN MANAGER TO EXECUTE A
CONTRACT WITH INNOVATIVE CLAIMS SOLUTIONS, INC. TO PROVIDE
WORKERS' COMPENSATION THIRD PARTY ADMINISTRATIVE SERVICES
WHEREAS, on March 8, 2010, the Town of Los Gatos issued a Request for Proposal for the
administration of Town's self-insured workers' compensation program.
WHEREAS, Innovative Claim Solutions, Inc. responded to Request for Proposal and
proposed a fixed fee of$42,000 per year for fiscal years 2010 through 2013, for a total administrative
cost of $126,000.
WHEREAS, Innovative Claim Solutions, Inc. has served as Town's workers' compensation
Third Party Administrator since 2002 and has demonstrated effective case management.
WHEREAS, the Town has selected Innovative Claim Solutions, Inc. to continue to serve as
the Town's workers' compensation Third Party Administrator TPA for athree-year term, from July
1, 2010 through June 30, 2013, with an option to renew for one or more years.
. NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Los
Gatos, County of Santa Clara, State of California,-that the Town Manager is authorized, and is
hereby directed to execute the contract with Innovative Claim Solutions Inc. to provide worker's'
compensation third party administrative services.
PASSED AND ADOPTED at a regular meeting to the Town Council of Los Gatos,
California, held on the 21St day of June, 2010 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
N:\MGR\AdminWorkFiles\2010 Council Reports\6.21.1Q ICS Reso.doc
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