3cow" 0 MEETING DATE: 08/19/2013
ITEM NO:
3
COUNCIL, AGENDA REPORT
DATE: August 8, 2013
TO: MAYOR AND TOWN COUNCIL
C
FROM: GREG LARSON, TOWN MANAGER ,
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 $13M. 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:
e
RUMI PORTILLO
Human Resources e
Reviewed by: Assistant Town Manager Town Attorney inance
UACouncil Memos \ICS Council Memo to Amend Contract 08.19.2013.doc
PAGE 2
MAYOR AND TOWN COUNCIL
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
August 8, 2013
CONCLUSION:
ICS has demonstrated effective case management and has produced cost savings in the Town's
Workers' Compensation program. It is recommended that ICS continue to serve as the Town's third
party administrator for an additional three years, under substantially the same terms as the original
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 related to
workers' compensation.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
Under the prior contract, the Town's most recent billing rate was $3,500 per month ($42K per year)
based upon the volume and level of support required to administer the Town's claim. Based upon the
current and projected volume of claims, the rates to be charged by ICS are as follows:
Period Annual Fee
FY 2013/14 $45,000
FY 2014/15 $48;090
FY 2015/16 $50,000
Total for 3 years $143,090
% Increase over prior year
7.1 % increase
6.7 % increase
4.2 % increase
Funding to support this agreement is provided as follows:
Department: Administrative Services Department
Program: 2202 Workers' Compensation
Account: 65521 Insurance Administration (Operating Expenses)
Attachments:
Amendment to ICS Service Agreement
Distribution: Cheryl Westernen, Innovative Claims Solutions, Inc.,
PO Box 5128, San. Ramon, CA 94583
FIRST AMENDMENT TO AGREEMENT
This FIRST AMENDMENT TO AGREEMENT is dated for identification this day of
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 contract 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 a 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
to
Greg Larson, Town Manager
Department Approval:
Rumi Portillo
Human Resources Director
Approved as to Form:
Judith J. Propp, Town Attorney
Approved as to Consent:
in
Gary Archibald, IO, President
Innovative Claim Solutions, Inc.
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