HomeMy WebLinkAboutContracts & Agreements_71-2024FIRST AMENDMENT TO AGREEMENT TO PERFORM PROFESSIONAL SERVICES
This first amendment ("First Amendment") to the agreement for third party liability claims
administration services ("Agreement"), dated July 5, 2022, by and between the City of Redlands,
a municipal corporation and a general law city ("City"), and George Hills Company, Inc., a
California corporation ("Consultant"), is made and entered into this 16th day of April, 2024.
RECITALS
WHEREAS, it is the desire of the City and Consultant to amend Article 5.1 of their existing
Agreement to amend the Consultant's Scope of Services and increase Consultant's annual
compensation, bringing the Consultant's total compensation to an amount not -to -exceed Two
Hundred Seventy Thousand Dollars ($270,052), and
WHEREAS, it is the desire of the City and Consultant to amend Exhibit "A," "Scope of
Services" to include an amended "Scope of Services," which is attached hereto by reference; and
WHEREAS, it is the desire of the City and Consultant to amend Exhibit "B," "Fee
Schedule" to include an amended "Fee Schedule," which is attached hereto by reference.
NOW, THEREFORE, for good and valuable consideration in the receipt of which is hereby
acknowledged City and Consultant agree as follows:
AGREEMENT
Section 1. The scope of work performed by Consultant pursuant to Exhibit "A" of the
Agreement, entitled "Scope of Services," is hereby amended and replaced by an amended Exhibit
"A," which is attached hereto and incorporated herein by this reference Attachment 1.
Section 2. Subsection 4.2 under Article 4 of the Agreement, entitled "Performance of
Services," is hereby amended to read as follows:
4.2 The term of this Agreement shall be for a period of three (3) years beginning July
5, 2022 and expiring on July 5, 2025.
Section 3. Subsection 5.1 under Article 5 of the Agreement, entitled "Payments to
Consultant," is hereby amended to read as follows:
The total compensation for Consultant's performance of the Services during the Term of
this Agreement shall not exceed the amount of Two Hundred Seventy Thousand Dollars
($270,052.00). Commencing on the Effective Date of this Agreement, fees and expenses
to be paid to Consultant shall not exceed Eighty Thousand Fifty -Two Dollars ($80,052.00)
for the first year of the Agreement and Ninety -Five Thousand Dollars ($95,000.00) for
each subsequent year of the Agreement. Effective July 1, 2023, City shall pay Consultant
on a time and materials basis up to the not to not -to -exceed amount in accordance with the
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rates specified in Exhibit `B," titled "Fee Schedule," which is attached hereto and
incorporated herein by this reference.
Section 4. The scope of services set forth in Exhibit "A" of the Agreement titled, "Scope
of Services," is hereby amended and replaced by an amended Exhibit "A," which is attached hereto
and incorporated herein by this reference as Attachment 1.
Section 5. The fee schedule set forth in Exhibit "B" of the Agreement titled, "Fee
Schedule," is hereby amended and replaced by an amended Exhibit `B," which is attached hereto
and incorporated herein by this reference as Attachment 2.
Section 6. All other provisions of the Agreement shall remain unchanged by this First
Amendment and in effect.
IN WITNESS WHEREOF, the parties have executed this First Amendment, to be effective
as of April 16, 2024.
CITY OF
ddie Tejeda, Mayor
ATTEST:
nne Donaldson, City Clerk
GEORGE HILLS COMPANY, INC.
By: 9'f4 4/11/24
John E. Chaquica, Chief Executive
Officer
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ATTACHMENT 1
EXHIBIT "A"
SCOPE OF SERVICES
SCOPE OF SERVICES AND CLIENT EXPRESSED AUTHORITY
AND LIMITATIONS UNDER THE CONTRACT
This Exhibit A is intended to provide the scope of services and specific service expectations in this
Agreement, that would not otherwise require revision during the contract period, and which may differ
from or elaborate upon our Client Service Profile. Services to be provided by George Hills Company
("GH") on behalf of City of Redlands ("City") may include all or some of the following,
I. SERVICES INCLUDED IN THE CONTRACT
A. General Administrative Services
Throughout each year GH performs numerous functions which support claims administration on behalf
of the City, but do not include any claims handling, and are performed by non -claims personnel.
Additionally, in the first year of a new client there are several "on -boarding" services that are general and
administrative in nature. Below is a list of such services which are included within the terms of this
Contract:
1) Access to CMIS and training.
2) A monthly listing of open claims, showing expense categories, reserves, and total incurred.
3) Monthly claim summary reports.
4) Providing loss run data and required reports.
5) Providing annual reports to outside agencies.
6) Filing of regulatory reports (such as 1099, W-9, etc.).
7) Establish and maintain a trust fund to pay indemnity and expenses that may be due on
claims. The amount to be maintained in the trust fund shall be determined by City.
8) If the trust fund is not set-up with the GH preferred bank —California Bank & Trust, there
may be an additional set-up fee (other banks processes can be extraordinarily time
consuming).
9) New bank account set up (signature cards, test checks, online access, set up bank in CXP).
10) Discussion and agreement on the Approval process.
11) Process checks weekly.
12) Submit positive pay if applicable/monitor positive pay (review daily emails from bank for
exceptions).
13) Maintain a copy of all checks drawn by GH to pay claims and claims related expenses.
14) Submit monthly check registers of all transactions made for the period.
15) Monitor account balance, prepare replenishment requests as needed (customize request for
each client's need).
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16) Monthly bank reconciliation (prepared and sent to City).
17) Special reports that requested to go with billing invoices (by member, claim type, etc.).
18) Payment of invoices that are pass-throughs (i.e., invoices for medical record copies,
ExamWorks, etc.).
19) Certificates of insurance as required by the Contract.
B. Investigative Services
1) Receipt and examination of all reports of accidents or incidents that are or may be the
subject of claims.
2) Investigate accidents or incidents as warranted, to include on -site investigation,
photographs, witness interviews, determination of losses and other such investigative
services necessary to determine all City losses but not to include extraordinary
investigative services outside the expertise of GH.
3) In the event City or other agency conducts any investigation, and upon Client's request,
GH shall review and analyze for liability and/or damage issues and for possible additional
follow-up investigation.
4) Maintain service on a 24-hour, 7 days per week basis, to receive reports of any incident or
accident which may be the subject of a liability claim and provide immediate investigative
services to the extent necessary to provide a complete investigation.
5) Undertake items of investigation requiring special handling for CITY at the direction of
the CITY' s Attorney or authorized representative.
C. Liability and Claim Handling Services
1) Promptly set up a claim file upon receipt of the claim and maintain a claim file on each
potential or actual claim reported.
2) Assess and evaluate the nature and extent of each claim and establish claims reserves for
indemnity and legal expense.
3) GH will follow any City policy regarding tort claim rejection instructions, including
rejection and return of an untimely or insufficient claim.
4) Ensure timely tort claim handling, including contact and follow-up with claimants
regarding claim issues and processing.
5) Any bodily injury claim that is being pursued shall be indexed. Notice only matters or
precautionary bodily injury claims that are not pursued do not need to be indexed.
6) Determine the need for defense representation, recommend legal counsel, and support
litigation activity.
7) Report claims to the excess insurer in compliance with excess carrier's reporting
requirements and coordinate with the excess insurer on a claim's progress in accordance
with the excess insurer's reporting requirements.
8) Maintain records on any such claim and notify City when City is about to exhaust the Self -
Insured Retention.
9) Obtain settlement contracts and releases upon settlement of claims or potential claims not
in litigation.
10) Perform periodic reviews, as needed, of City files and claims as well as statutory
requirements to ensure compliance including excess insurance related requirements.
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11) Perform the necessary data gathering for the Medicare, Medicaid, and SCHIP Extension
Act of 2007 (MMSEA) and the Set Aside Contracts in compliance with Section 111 of the
MMSEA including the required reporting. (See Attachment B)
12) To the extent there is privileged information or PHI shared between agencies, which is
subject to protection under HIPAA, GH shall implement all necessary measures in
compliance with the Act and will execute a Business Associates Agreement (BAA).
D. Litigation Support Services
1) Upon notification by the City that litigation has been filed on an open claim, GH shall
follow the litigation referral process as outlined in the Client Expressed Scope of Work
Instructions form.
2) Work cooperatively with City in choosing outside counsel from approved panel, if any,
and assist defense counsel in on -going litigation defense efforts.
3) Obtain and maintain a Litigation Plan and Budget.
4) Review legal bills for compliance with Litigation Plan and Budget; Review, evaluate and
adjust defense counsel invoices for legal services.
5) Cooperate with and assist defense counsel assigned to litigation of open claims and provide
such investigative services as directed during pre-trial and trial stages.
6) Assist in responding to discovery or preparing discovery.
7) At the request of the City, attend mandatory settlement conferences on behalf of City.
8) At the request of the City, appear on behalf of City in small claims actions filed against
City on open claims handled by GH.
9) At the request of the City, GH can file small claims actions on behalf of the City.
10) Review and evaluate case evaluations, correspondence and status reports forwarded to
GH by counsel. Regularly discuss, review, and direct investigation, discovery, and case
strategy with counsel.
11) Cooperate with counsel as a team with an open communication approach on each case to
obtain the most economical and best result for the City.
E. Reports and Procedures
1) Within thirty (30) days of assignment, or sooner if practicable, required, or requested, GH
will provide City with a report pursuant to specified claims handling instructions, showing
name(s) of claimant(s), type of claim, date of loss, comments on liability, reserve
recommendations, settlement recommendations, and other pertinent information.
Subsequent to the initial thirty (30) day report, GH will report as often as warranted by any
important change in status but no longer than every ninety (90) days until the claim closes
unless extended diary is appropriate.
2) All original reports, documents, and claim data of every kind or description, that are
prepared in whole or in part by or for the GH in connection with this contract shall be City's
property and constitute the GH's work product for which compensation is paid. A copy of
all reports, documents, and claim data of every kind or description that is in whole or in
part by or for the City is the property of GH. Additional copies of original reports,
documents, and data requested by City will be at City's expense in accordance with this
contract.
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3) GH agrees that City have access and the right to audit and reproduce any of the GH's
relevant records to ensure that the City is receiving all services to which the City is entitled
under this Contract or for any purpose relating to the Contract.
F. Data
1) Utilize GH's claims management system—CXP (ClaimsXpress), or a substantially similar
equivalent with comparable features and functionality. City will be provided "read-only"
access to the claims system. "Read-write" access may be obtained at the City's additional
expense.
2) Record all claim information including all financial data.
3) Provide City and broker Read only on-line access to the claims data system (up to five
users), if desired by City.
4) Provide monthly standard loss run and check register.
5) Provide annual claims data report upon request. Written authorization and/or a Business
Associate Agreement may be required for confidential information protected by HIPAA.
6) Provide assistance to City in developing customized reports when requested (may require
additional charge).
7) Arrange for electronic file conversion for any open and closed claims at the direction of
City.
G. Claim Review Meetings
GH shall, on a mutually agreed periodic basis, meet with City to review and discuss the City's
claims inventory and claims results of specified periods and delivery of services by CLAIM
ADMINISTRATOR.
H. Financial Accounting
1) Establish and maintain a trust fund for the purpose of paying indemnity and expenses that
may be due on the claims. The amount to be maintained in the trust fund shall be
determined by the City.
2) Maintain a copy of all checks drawn by the GH to pay claims and claims related expenses.
3) Submit monthly check registers of all transactions made for the period.
4) Complete or update Attachment B "Preferred Method of Check Processing" for check
processing options.
5) Approval process shall be documented in GH Client Expressed Scope of Work Standards
and Instruction Form.
6) GH will provide monthly bank reconciliation reports to City for audit purposes.
I. Third Party Subrogation Services
1) GH personnel are well versed in the identification, handling, and pursuit of subrogation
claims arising out of CLAIMS which are the subject of this Contract. Included within this
contract, GH will perform the following functions:
2) Identify potential opportunities to recover from persons, businesses, and entities other than
the City.
3) Prepare and file a claim with each identified entity.
4) As applicable, tender defense to or seek recovery from any identified entity.
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5) With the assistance of counsel, prepare and file any necessary litigation required to effect
the claim of recovery on behalf of the City
6) Manage litigation related to such claims made to other person, businesses or entities
J. First Party Subrogation Services
GH is a claim administration firm experienced in the handling of first party subrogation claims
and is ready and capable of performing such services on behalf of City. GH does not handle
subrogation claims with a value of less than $1000. For any claim in excess of $1,000, City may
retain GH for Subrogation Services. Our services are unique to a first party loss of the City caused
by the intentional or negligent act of a third party. Such losses generally are for the recovery of
damages, and may include:
1) Labor costs, fully loaded and including benefit costs, for district or other personnel
responding to or in any manner providing services;
2) Services or materials provided by outside vendors or contractors;
3) Internal or external vehicle or equipment use and/or rental;
4) Materials and/or goods utilized for the repair/replacement of damaged property; and/or
5) Additional fees that may be specific to the individual entity that are provided for within
district ordinances or other governing documents.
II. CLIENT EXPRESSED AUTHORITY AND LIMITATIONS
The list immediately below contains numerous services provided in this Contract for which GH
requests the City expressly establish authority and/or limitations, on the ability of GH to act on
behalf of the City. The City will check the appropriate box establishing the authority of GH to act
or the limitation as to that authority.
INVESTIGATION:
❑ George Hills will conduct all investigations
❑ City will conduct all investigations
® City will direct GH on each claim as to who performs investigations
In the event the Client or other agency conducts any investigation, GH shall review for
completeness.
Retention of Vendors (appraisers, translators, copy services, Independent Adjuster, IME's,
Surveillance, etc.):
® Must be preauthorized by City
❑ Does not need preauthorization
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REJECTION OF CLAIMS:
City's position regarding rejections (e.g., if entity so dictates, a claim will be rejected for
insufficiency). Check all that apply.
Protocols for Rejections
® GH needs authorization
❑ GH does not need authorization
® GH sends the Rejection
❑ City sends the Rejection
❑ GH sends out Denial Letter simultaneously with Rejection outlining the reason
LITIGATION:
Check all that apply.
❑ GH will handle litigated claims
❑ Full
❑ As assigned
❑ Check Issuance and Data Input
❑ Data Input only
® City will handle litigated claims in-house, with GH to capture data into SIMS
LI City will send data to GH weekly
❑ City will send data to GH monthly
Mandatory Settlement Conferences
❑ GH always attends
® At City request only
Small Claims Actions filed against City
❑ GH always appears
® At City request only
Legal Counsel
® GH must have City authorization to refer to outside Legal Counsel
❑ GH does not need City authorization to refer to outside Legal Counsel
❑ GH must use City approved Legal Panel for Attorney selection
® City does not have an approved Legal Panel for Attorney selection
❑ All Litigation to be handled by City in-house Legal
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❑ GH always sends Litigation Assignment packets to Legal Counsel
City specific Litigation Guidelines: ❑ Yes ❑ No
City specific Litigation Referral Form/Letter: ❑ Yes ❑ No
City specific Litigation Budget Form: ❑ Yes ❑ No
Pay fees for Experts, photocopies, medical records as: 0 Expense ❑ Legal
EXCESS REPORTING:
0 GH will report claims to the excess insurer in compliance with excess carrier's reporting
requirements and coordinate with the excess insurer on a claim's progress in accordance with the
excess insurer's reporting requirements.
❑ City will report claims to the excess insurer in compliance with excess carrier's reporting
requirements and coordinate with the excess insurer on a claim's progress in accordance with
the excess insurer's reporting requirements.
AUTHORITY LEVELS:
Reserve within SIR:
❑ $0.00 Other: $ (specify amount)
Adjuster must seek approval from (client contact) to post indemnity reserves above authority level.
Medical Treatment:
❑ Medical Authorizations should only be sent to the claimant once liability is determined to be
adverse to the City.
❑ Medical Authorizations should go out as soon as it is determined that a BI claim is being
pursued.
CLAIMS EXCEEDING SIR: •
❑ GH stops tracking activity once the SIR has been reached.
0 GH will continue to track all activity at and/or above the SIR. The Excess JPA/Carrier will
provide GH with activity documentation above the SIR.
❑ GH will reserve to Full Value and track recoveries.
THIRD PARTY SUBROGATION SERVICES:
❑ GH is authorized to initiate third party subrogation claims on behalf of City
0 GH must obtain authorization to initiate third party subrogation claims on behalf of City.
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FIRST PARTY SUBROGATION SERVICES:
❑ City elects to incorporate the first party subrogation services of GH into the contract
® City authorizes GH to initiate first party subrogation claims on behalf of City
❑ City agrees to the additional compensation payable to GH for its first party subrogation services
as follows:
GH shall be entitled to % of the gross recovery for each claim initiated by GH
through its first party subrogation efforts.
® City agrees to the terms and conditions stated in Attachment B, Subrogation Services.
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ATTACHMENT 2
EXHIBIT "B"
FEE SCHEDULE
The following compensation, fees and expenses, shall be paid in consideration for the services
provided by Consultant as described in this Agreement to Perform Professional Services under
Article 5 — Payments to Consultant, which has been agreed to, including claims activity. This
section shall remain in force and services provided during the term of this Contract, unless
otherwise amended by the parties.
The amounts to be paid pursuant to this Agreement are detailed in two distinct areas of services:
First, under subsection 1) below, "Fees for Claims Administration Services"; and
Second, under subsection 2) below, "Reimbursable Costs and Expenses" which specifically relate
to provision of claims handling services which is the subject of this Contract.
The fees and expenses/costs will be billed together monthly in our standard invoice format.
Additionally, if the City elects any optional services identified in this section, such as First Party
Subrogation Services or any of the identified Optional Services, such agreed upon additional
amounts will also be billed together monthly where applicable.
1) Fees for Claims Administration Services
For the first year of the Agreement, Client agrees to pay a fixed fee of $69,000
in exchange for the claim administration and handling services described in this
Agrement and the Exhibits hereto. The fixed fee is a base fee and subject to
reevaluation in the event that the claim volume increases or decreases by more
than 10%. The City agrees that the base number of claims is 70.
Effective July 1, 2023 for the remaining duration of the term of the agreement,
City agrees to pay for all services performed by Consultant on a Time and
Expense basis. Consultant will charge time to each claim using 1/10th of an hour
increments for each task performed on a claim. The time spent and further
descriptions of each task shall be stated on each monthly invoice. The cumulative
annual billing, however, shall not exceed the annual cap of $95,000, which cap
is subject to annual adjustments. It is Consultant's responsibility to monitor,
review and advise City of any annual cap adjustments, whether by increase or
decrease. In the event that Consultant reasonably estimates that the cap will be
reached or exceeded in any year, notice will be provided to the City indicating
that an adjustment may be necessary. If the cap is not adjusted, Consultant will
perform services up to the amount of the cap and must cease all work until the
parties reach an agreement on the annual cap adjustment. To be effective, any
annual cap adjustment must be included in a written amendment to this
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Agreement pursuant to Section 8.6. The current hourly rates for Consultant's
personnel are:
Claims Supervisor: $127/hour*
Claims Adjuster: $102/hour*
Claims Processing: $84/hour*
*All hourly rates and fees in the Agreement are subject to the Annual
Escalator language found in Section 2(i) of this Exhibit.
2) Reimbursable Costs and Expenses
a. Annual Administration Fee: City agrees to pay an annual administration
fee of $10,000 which is billed annually at the beginning of the Agreement
period and thereafter upon the anniversary of the Agreement.
b. Mileage — Adjuster: Mileage is paid at the IRS rate.
c. MMSEA: There is a $500 annual reporting fee which is paid directly to
ExamWorks, for the performance of CMS reporting.
d. Adjuster Travel Expenses: Consultant will separately charge for any
travel expenses in connection with attendance at mediations, settlement
conferences, trials, etc. This will be subject to prior approval and that actual
expenses with no mark-ups will be submitted with receipts on a monthly
basis.
e. System Access Fee: Access to the claims management information system,
"CMIS", carries a cost of $1,500 annually. That cost is included in the
annual administration fee and includes the setup and management of up to
five (5) "read only" user accounts. "Read/write" access to the system can
be obtained for an additional fee.
f. iMetrics Report Fee: There will be no charge for our iMetrics business
intelligence reports with executive in -person debriefs.
g•
Custom Reports: Additional charges for custom reporting shall be defined
as, requiring a third -party programmer for three hours or more and is client
specific.
h. Catastrophic Fees: Consultant recognizes that there are events that are
unanticipated and catastrophic. When such events occur, it requires
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additional hours for the handling of such claims. As such, to preserve the
quality and efficiency of service for which we are known, Consultant
proposes that should any one catastrophic event occur resulting in five or
more claimants, or two or more claimants with their own defense counsel,
City shall be billed at the current hourly rate for all services. Catastrophic
Fees under this section only apply to City's which have selected a "Fixed
Fee" or "Time and Expense with a cap" payment options.
i. 3% Annual Escalator: All Consultant pricing options under this Contract
are subject to an automatic annual increase of 3%. This annual increase shall
take effect upon each anniversary of the Contract effectiveness date. .
J.
General File: A general administrative file shall be established and
maintained to track effort related to services necessary to fulfill our
contractual obligations and not otherwise associated with a claim.
k. Paper Files: Consultant is prepared to take the lead to arrange for all
services relating to conversion storage, copying, scanning, shipping, and
disposal. Consultant will provide you a quote for any services related to
storage, retrieval, copying, scanning, shipping, and disposal of paper files.
3) First Party Subrogation Services And Fees
Consultant is a claim administration firm experienced in the handling of first party
subrogation claims and is ready and capable of performing such services on behalf
of City. Consultant does not handle subrogation claims with a value of less than
$1000. For any claim in excess of $1,000, and with prior written consent from City,
Consultant shall initiate its Subrogation Services as described more fully in Exhibit
A, Scope of Services and Client Expressed Authority and Limitations as well as
Attachment A-1, Subrogation Agreement. Our services are unique to a first party
loss of the City caused by the intentional or negligent act of a third party. City will
pay a Subrogation Fee in the amount of 30% for each and every recovery obtained.
4) Optional Services
a. Legal Services and Consultation (Optional and upon written request):
Consultant employs in-house General Counsel which have vast experience in
claims and litigation handling for all claims which are, or could be, subject to
this agreement. Consultant offers the services of its attorneys as an additional
resource for Consultant clients, on a time and expense basis, as follows:
i. Litigation Management: $175.00 per hour
These services include the oversight of all assigned Consultant claims
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II. ELECTRONIC FUNDS TRANSFER OR DIRECT DEPOSIT
Consultanthas determined that the most efficient and secure default form of payment for
goods and/or services provided under Contract with City shall be Electronic Funds Transfer
(EFT) or direct deposit, unless an alternative method of payment is deemed appropriate by
both Consultantand City and agreed to in writing.
Consultant will submit a direct deposit authorization request via to City with banking and
vendor information, and any other information that the City determines is reasonably
necessary to process the payment and comply with all accounting, record keeping, and tax
reporting requirements.
At any time during the duration of the Contract, Consultant may submit a written request
for an exemption to this requirement. Such request must be based on specific legal,
business or operational needs and Consultant will explain why the payment method
designated by the City is not feasible and an alternative is necessary.
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