HomeMy WebLinkAboutItem 2g - Agreement for Claims Administration Srvices for Workers' Compensation Third Party Administrative Services
DATE: June 20, 2017
TO: Honorable Mayor and City Council
FROM: Hue C. Quach, Administrative Services Director
Prepared by: Jeannette Chavez, Human Resources Administrator
SUBJECT: AGREEMENT FOR CLAIMS ADMINISTRATION SERVICES WITH
ADMINSURE, INC. FOR WORKERS’ COMPENSATION THIRD PARTY
CLAIMS ADMINISTRATION SERVICES IN THE AMOUNT OF $321,792
Recommendation: Approve
SUMMARY
On August 5, 2014, the City Council approved a three-year Agreement with AdminSure,
Inc. for third party claims administration services for workers’ compensation claims,
which is coming to an end. As a member of an insurance pool, the City’s Joint Powers
Authority went out to bid on behalf of participating member cities. Based on competitive
bid results and the excellent services provided, it is recommended that the City Council
approve, and authorize and direct the City Manager to execute a three-year Agreement
with AdminSure, Inc. from July 1, 2017, through June 30, 2020. The proposed
Agreement provides a 3% escalator on the anniversary of the Agreement, effective July
1 each year. The three-year contract totals $321,788 with the detailed annual cost as
follows: FY17-18 $104,108; FY 18-19 $107,232; and FY 19-20 $110,448.
DISCUSSION
The City of Arcadia participates in the California Insurance Pool Authority (“CIPA”), a
group of cities who exercise their joint powers rights to self-fund a workers’
compensation insurance program. The program requires the services of a third party
administrator (“TPA”) to handle the daily operations of the City’s claims.
The services provided by the TPA include the monitoring of claims and disability status,
setting and updating reserves, authorizing medical treatments, and processing medical
bills. Additionally, the TPA ensures the City maintains compliance with workers’
compensation law and the State of California’s Division of Workers’ Compensation
Appeals Board.
Agreement with AdminSure Inc. for Third Party Claims Administration Services
June 20, 2017
Page 2 of 2
The City entered into its current agreement for these services with AdminSure, Inc. on
August 5, 2014. As the current agreement is set to expire on June 30, 2017, CIPA went
out to bid on behalf of participating member cities and was successful in getting a
favorable three-year agreement.
The proposed agreement provides a 3% increase effective July 1, 2017, 3% increase
July 1, 2018, and 3% increase July 1, 2019. The increases are due to rising health care
costs.
The proposed agreement will run through June 30, 2020, and at such time it can be
renewed, renegotiated, or re-bid. A copy of the proposed agreement is attached.
FISCAL IMPACT
The annual cost of the current agreement is $101,076. Under the terms of the proposed
agreement, the claims administration fees will increase as follows:
FY 2017-18 - $104,108
FY 2018-19 - $107,232
FY 2019-20 - $110,448
Appropriate funding has been budgeted in the FY 2017-18 Budget for the proposed
Agreement with AdminSure Inc. Future year increases will be budgeted annually as part
of the budget adoption process.
RECOMMENDATION
It is recommended that the City Council approve, and authorize and direct the City
Manager to execute an Agreement for Claims Administration Services with AdminSure,
Inc. for Workers’ Compensation Third Party Claims Administration Services in the
amount of $321,788.
Attachment: Proposed Agreement for Claims Administration Services
AGREEMENT FOR
CLAIMS ADMINISTRATION SERVICES
Article 1. GENERAL
This Agreement is entered into on July 1, 2017 by and between the CITY OF ARCADIA
(“CITY”), a California public entity and AdminSure, Inc. (“Administrator”), having an office at
3380 Shelby Street, Ontario, CA 91764-5566.
Article 2. SCOPE OF APPOINTMENT/RELATIONSHIP OF THE PARTIES
Administrator, its agents and employees are hereby appointed as the City agents and
representatives to administer the City’s self-insured workers' compensation program and process,
evaluate, adjust and handle workers' compensation claims against the City. Administrator agrees
to provide the services set forth in Article 4 of this Agreement.
The relationship of Administrator and the City established by this Agreement is that of
independent contractors, and nothing contained in this Agreement shall be construed to establish
an employer/employee relationship or to constitute the parties as partners, joint ventures, co-
owners, or otherwise as participants in a joint and common undertaking. Administrator, its agents
and employees are representatives of the City only for the purpose of administering the City’s
self-insured workers' compensation program as set forth in this Agreement, and they have no
power or authority as agent, employee, or in any other capacity to represent, act for, bind or
otherwise create or assume any obligation on behalf of the City for any purpose whatsoever,
except as specifically required to perform Administrator's obligations under this Agreement.
Article 3. DURATION
This Agreement applies to all work performed by Administrator which is described in Article 4,
whether performed in anticipation of or following the execution of this Agreement. The initial
term shall begin on July 1, 2017 and shall expire June 30, 2020. Subsequent annual terms from
July 1, to June 30, may be mutually agreed upon between the parties.
The Agreement shall automatically renew from year-to-year subject to termination by either party
at any time during the life of the Agreement upon sixty (60) days written notice. The City of
Arcadia maintains the right to terminate this Agreement if the City determines that it is in the best
interest to do so, in the City’s sole discretion and with or without cause. In the event that the
City purchase 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. When this Agreement is terminated, the parties shall, as necessary, make an adjustment to
the payment schedule in Article 6 to prorate fees through date of termination. Thereafter, the
City shall pay Administrator moneys due and owing after such adjustment, if any, or
Administrator shall refund moneys due and owing City after such adjustment, if any. Adjustments
due and owing shall be paid within 60 days after termination of the Agreement.
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Upon notice of termination of the Agreement, the Administrator will fully cooperate with the new
Administrator, and the City in providing required information and service. Failure to fully
cooperate will result in a 10% reduction in fees paid to the Administrator during the period of
time the Administrator does not fully cooperate.
Article 4. ADMINISTRATOR SERVICES
Administrator will provide the City the following services:
A. Claims Administration
1. Administrator will adhere to the Minimum Performance Standards enumerated in
Addendum 1.
2. Provide all forms and reports necessary for the efficient operation of the City’s
programs of self-insurance with respect to workers’ compensation claims and losses,
and prepare and file all forms and reports required by law in a timely manner.
3. Identify each claim which has subrogation recovery potential. Initiate correspondence
to effect collection, and follow up, as appropriate. Assist legal counsel where
litigation is required to affect recovery. Establish, maintain and monitor monthly
subrogation report which details all potential recoveries and statute of limitation dates.
4. Obtain settlement authority on all cases from the City.
5. Administrator will participate and assist the City in coordination of this program with
other associated disability and medical programs.
6. At the request of the City, Administrator will attend hearings at no charge to the
City.
7. Maintain records in accordance with legal requirements.
8. Perform other general administrative services, as necessary, to effectively
discharge the City’s duties to its employees and under the workers' compensation
State statutes.
B. Communication and Training
1. Attend CIPA and City meetings as requested.
2. Conduct on-site formal educational programs for supervisors, managers and other staff
responsible for managing the workers’ compensation program as requested, and at
least once a year.
3. Review open claims, procedures and other issues on-site at City, as requested, and no
more than quarterly for City.
4. Conduct meetings with City preferred medical providers to maximize effectiveness of
procedures and medical care as requested, and no more than quarterly for the City.
5. To the extent allowable by law, provide copies of file correspondence and
documentation as requested by CIPA and/or City.
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C. State and Federal Reports
1. Prepare Self-Insurer's Annual Reports for City and/or CIPA’s signature and
submission to the State of California.
2. Prepare Federal Information Return (Forms 1099) for applicable payments.
E. Information Management System
1. In coordination with CIPA and/or City, develop management reports that assist CIPA
and/or City and Administrator in effectively managing the workers' compensation
program. Standard Reports will be provided within ten (10) days after the end of the
month or quarter.
2. Any hardware or cabling required by City to access the on-line system is City’s
responsibility.
3. The Administrator will report loss information to the excess insurance carrier(s),
including CIPA, in accordance with established procedures.
F. Consulting
Provide a comprehensive Annual Program Review which:
1. Analyzes past statistics, program costs and projects future trends.
2. Recommends program changes to favorably impact costs and improve procedures.
3. Upon request, Administrator will provide a comprehensive program review more
frequently than annually.
G. Compliance
Provide all aforementioned services in accordance with the applicable Workers'
Compensation Laws of the State of California.
H. Allocated Loss Expense
"Allocated loss expense" shall mean all reasonable costs actually incurred by
Administrator including, without limitation, all Workers' Compensation Appeals Board
or court fees and expenses; fees for service or process; copy service; fees to retain
attorneys; the cost of the services of investigators and detectives to perform
surveillance; and other professional assistance required to provide these services, if
previously authorized by City. Allocated loss expense shall not include any costs or
expenses incurred by Administrator in connection with services performed by it,
which services are approved by CIPA and/or City and are normally performed in the
course of administering workers' compensation claims. Allocated charges are to be paid
by City.
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I. Index Bureau & Edex Charges
Index Bureau and Edex charges will be paid by the Administrator. Copies of the reports
will be distributed to City within 10 days of receipt.
J. Storage of Closed Claims
Administrator will provide storage of all closed claims, including storage of closed claims
from prior administrator(s).
Article 5. CITY OBLIGATIONS
In connection with this Service Agreement, the City of Arcadia accept responsibility to:
A. Provide data to Administrator on a timely basis to permit compliance with State of
California reporting requirements.
B. Obtain and pay for excess insurance coverage, if desired by City.
C. Arrange for checking account and provide appropriate funding.
Article 6. COMPENSATION
In consideration of the services provided by Administrator, the City agrees to pay Administrator
the monthly fee as shown below. The City’s Joint Powers Authority, CIPA, has no obligation to
pay fees:
A. Claims Administration
Monthly claims administration fees for the City of Arcadia are shown below:
Monthly Fee Monthly Fee Monthly Fee
(7/1/17-6/30/18) (7/1/18-6/30/19) (7/1/19-6/30/20)
$8,676 $8,936 $9,204
B. Ancillary Services
Ancillary services are not tied to this Agreement and may be purchased from another
vendor at the option of CIPA. When purchased from Administrator, the fee shall be as
follows:
1. Bill Review
a. The flat fee per bill is $9.00.
b. The PPO fee is 20% of savings above the fee schedule with the exception of
Blue Cross PPO which is at 23% of savings.
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If bill review services are not purchased from AdminSure, all electronic data
interchange services will be provided by vendor, and not by AdminSure.
2. Utilization Review
a. The Utilization Review fee is $85.00 per hour, billed at 10 minute increments.
Examiners will perform Utilization Review in accordance with the Guidelines.
b. Utilization review by a physician is billed separately at 10 minute increments,
at the rate of $200 per hour.
3. Medical Provider Network
Medical Provider Network fees, if utilized, will be billed at cost.
Article 7. REIMBURSEMENTS
The City agrees to reimburse Administrator within thirty (30) days of presentation of an itemized
statement for the costs of charges not considered allocated expenses or included in
Administrator's fee, which are incurred on behalf of the City, provided the City has previously
authorized such expense.
Article 8. AUDITS
Administrator agrees to cooperate with CIPA and the City in making any and all claim files and
records available to CIPA and the City for audit by CIPA or the City’s appointed representatives.
During normal office hours, CIPA and/or the City’s representatives shall have reasonable access
to the necessary portions of Administrator's facilities, files and records for review or audit
purposes, so as not to interfere with Administrator's normal business.
Article 9. ASSIGNMENTS
Neither party may assign this Agreement, in part or in total, without the express written consent
of the other party.
Article 10. LEGAL RESPONSIBILITIES
A. The Administrator shall comply with all State and Federal laws, as well as all county and
municipal ordinances and regulations which in any manner affect the performance of
services pursuant to this agreement, or persons employed by the Administrator.
B. Administrator agrees that in the performance of the terms of this Agreement, no
discrimination shall be made in the employment of persons because of race, color, national
origin, ancestry, or religion of such persons. A violation of this provision will subject the
Administrator to all penalties imposed by law.
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Article 11. INSURANCE
A. Administrator shall provide to CIPA and the City, on the effective date of this Agreement,
Certificates of Insurance for the following coverages from insurance companies acceptable
to CIPA and the City. Administrator further agrees to maintain this insurance in full force
and effect throughout the period of this Agreement, and any renewals or extensions
thereof. All policies shall be endorsed to provide that the policy shall not be canceled or
the coverage reduced until a thirty (30) day written notice of cancellation or reduction has
been served upon CIPA abd the City except ten (10) days shall be allowed for non-
payment of premium:
1. Commercial General Liability insurance with minimum limits of $1,000,000 per
occurrence.
2. Automobile Liability insurance with minimum limits of $1,000,000 per
accident.
3. Workers' Compensation with statutory limits, as required by the Labor Code of
the State of California, and Employer’s Liability with minimum limits of
$1,000,000 per occurrence.
4. Professional Liability/Errors and Omissions insurance with minimum limits of
$2,000,000 per occurrence.
5. Crime Loss or Fidelity Coverage with minimum limits of $1,000,000 per
occurrence.
Article 12. INDEMNIFICAITON
Administrator shall defend, indemnify and hold harmless CIPA and the City of Arcadia including
its governing board, directors, officers, administrators, employees, and agents, from any and all
claims, losses and liabilities against or incurred by CIPA and the City arising out of the actions,
omissions to act or other conduct of Administrator, its agents, employees or subcontractors, in
the performance of its duties under this Agreement or otherwise in connection with its activities
pursuant to this Agreement. This includes, but is not limited to, any breach by Administrator of
its duties or responsibilities under the Agreement, as well as any losses occasioned by a failure of
Administrator to provide the services contracted for by CIPA and the City pursuant to this
Agreement. In addition, Administrator agrees to assume the defense, at Administrator's expense,
using attorneys reasonably acceptable to CIPA of any lawsuit or other proceeding which names
CIPA and or the City of Arcadia or its directors, officers, employees and agents as defendants.
Article 13. BUSINESS LICENSE.
Administrator shall maintain a business license for the City as required.
Article 14. RIGHTS TO DATA
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All claim files, paper and computer, are and shall remain the property of CIPA and the City of
Arcadia. CIPA and the City of Arcadia reserve the right to obtain original claim files, data discs,
copies of reports and other documents applicable to CIPA and the City in the event this
Agreement is terminated. No documents shall be destroyed unless they have been scanned into
the system. Original documents received after termination of this agreement shall be forwarded to
the new administrator. Administrator shall bear the cost of relocating any claim files from the
premises of Administrator to the premises of CIPA and the City or designated party upon
termination of the Agreement.
Article 15. CONFIDENTIALITY
It is agreed and understood that Administrator shall treat information, reports and analyses
obtained or developed pursuant to this Agreement as being confidential. Prior written consent
from CIPA and the City shall be required before any information, in any format, is disclosed to
any third party. It is further agreed and understood that Administrator shall produce, maintain
and dispose of all such information, reports and analyses in a manner to guarantee reasonable
safeguards to such confidentiality.
Article 16. INTERNAL SERVICES PROVIDED BY ADMINISTRATOR
No internal services shall be provided for a fee without the express written permission of the City.
Article 17. EXTERNAL PROVIDER/VENDOR SERVICES
All services provided by external providers/vendors shall be approved by the City and billed at
actual cost with no “mark-up” by the Administrator. All external providers/vendors will be
selected from a panel approved by the City. Prior to establishment of the approved panel, the
administrator will provide each City with a listing of all proposed providers/vendors. The list shall
include the fee charged by each provider/vendor.
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Article 18. DOCUMENTS/CORRESPONDENCE
The City will designate documents/correspondence they will require for their files and a timeframe
for receipt of such documents/correspondence.
Article 19. MATERIAL PROBLEMS AND REGULATORY CHANGES
The Administrator will advise the City on any material problems or need for improvements in any
matter related to this Agreement, including advice relating to changes and proposed changes in
statutes, regulations and rules affecting the City’s workers’ compensation programs.
Article 20. NOTICES
All notices required or permitted hereunder shall be personally delivered or dispatched by first
class mail and sent to the other party at the following addresses, or at such other address as may
be provided in writing to the other party from time to time:
To Administrator: Alithia Vargas-Flores
AdminSure Inc.
3380 Shelby Street
Ontario, CA 91764-5566
To City: Hue Quach
Administrative Services Director
City of Arcadia
240 W. Huntington Drive
Arcadia, CA 91007
CC CIPA: Janet D. Kiser
General Manager
California Insurance Pool Authority
366 San Miguel Drive
Suite 312
Newport Beach, CA 92660
Article 21. DWC AUDIT PENALTY
All penalties assessed by the Workers' Compensation Division, Office of Benefit Assistance and
Enforcement shall be paid, whether directly or through reimbursement, by the party responsible
for the assessment of the penalty. No claim shall be settled to include payment of any penalty
without the express written consent of the City. Settlement of any penalty incurs an additional
settlement cost and the responsible party shall pay the additional cost for the penalty. If either
party disputes the liability for payment of the penalty, the parties shall negotiate to resolve the
dispute. If the dispute is not resolved within 30 days after notice to both parties of the penalty,
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then such dispute shall be submitted to arbitration for determination of the party responsible for
the assessment and payment of the penalty. The provisions of this Article shall survive any
termination of this Agreement.
The Administrator shall provide a detailed monthly listing of penalties identifying those payable by
the City and those payable by the Administrator. The listing shall include fines, penalties and 10%
self-imposed increases paid through settlement of a claim. The obligations of the Administrator to
pay for fines, penalties, and 10% self-imposed increases shall survive the termination of this
Agreement.
Article 22. MMSEA Reporting
The Administrator shall report all claims in compliance with Medicare, Medicaid and SCHIP
Extension Act (MMSEA) Section 111 Mandatory Reporting.
Article 23. ASSIGNED PERSONNEL
Each dedicated claims adjuster assigned to the City will not have a case load that exceeds 150 for
all claims combined (including indemnity, medical only, future medical, record only or any other
type of claim). The claims adjusters will not handle claims for any other account. Designated
claims assistants and medical only clerks will be assigned. If the caseload of a claims adjuster
exceeds 150 claim files for two consecutive months, the City will have the discretion of allowing
the excess, or will have the Administrator assign an additional non-dedicated claims adjuster to
handle the overflow claims. The claims adjusters will have a valid California Self-Insured
Administrator Certificate, unless mutually agreed to otherwise by the parties. The City will
maintain final approval in the selection of staff assigned to their account and the right to request
new staff if the service is unacceptable to the City for any reason.
The claims adjusters assigned to the account must have a minimum of five years full-time
experience as a workers’ compensation claims adjuster in California, and have a California Self-
Insured Workers’ Compensation Certificate unless otherwise agreed to in writing by City.
Article 24. FUNDS
The City may provide Administrator initial funding in an amount mutually agreed to by the City
and Administrator to be held in trust by, and used by Administrator to meet the obligations of the
City. Administrator and the City may establish written procedures for approval or ratification of
expenditures from such trust accounts and methods of handling such funds; in such event
Administrator shall provide a copy of the written procedures to the City. Trust funds shall be
used and paid out by Administrator only in the manner set forth in this Agreement.
Article 25. WAIVER
The failure of either party at any time to enforce any right or remedy available to it under this
contract with respect to any breach or failure by the other party shall not be constructed to be a
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waiver of such right or remedy.
Article 25. MISCELLANEOUS
This Agreement shall be governed by, and construed in accordance with, the laws of the State of
California. In the event that any of the provisions of this Agreement shall be held by a court or
other tribunal of competent jurisdiction to be unenforceable, the remaining portions of this
Agreement shall remain in full force and effect.
All terms and conditions of the Administrator’s proposal of August 4, 2008 are incorporated into
this contract, except that in the event of any conflict between the Agreement and the proposal,
this Agreement shall be controlling. Any modifications of this Agreement must be in writing and
signed by both parties.
CIPA herein shall be a third party beneficiary of this Agreement with the right to enforce the
provisions of this Agreement against Administrator.
In witness whereof the parties hereto have signed this Agreement as of the date set forth in Article
1.
CITY: City of Arcadia APPROVED AS TO FORM:
_______________________________
Dominic Lazzaretto Stephen P. Deitsch
City Manager City Attorney
_______________________________ ATTEST:
Date
ADMINISTRATOR: AdminSure, Inc. City Clerk
______________________________
Authorized Signature
_______________________________
Print Name
_______________________________
Title
_______________________________
Date
ADDENDUM 1
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MINIMUM PERFORMANCE STANDARDS
THIRD PARTY ADMINISTRATOR
Minimum performance standards are listed below and will be incorporated as a part of the
Agreement between the City of Arcadia (CITY) and the selected third party administrator (TPA).
Modifications to the Minimum Performance Standards may be made by the City. All staff
assigned to the account must read and sign that they acknowledge receipt and will adhere to the
Minimum Performance Standards.
1. PROCESSING
A. All Employers’ Reports of Occupational Injury or Illness, or notification of a new claim
from any other source, will be reviewed for compensability and a decision made to accept,
delay or deny within seven (7) calendar days of receipt, or sooner if a delay in payment or
notice will result.
B. Employees will be contacted by telephone or in person within two (2) business days of
receipt of a claim by the examiner unless the employee is represented by an attorney.
During this initial contact, employees will be provided with an explanation of their
benefits, and will be asked whether they have any questions or concerns. These will be
addressed immediately. A benefit pamphlet will be sent to the employee notifying them of
their rights under workers’ compensation laws of California. Contact will be made sooner
if delay will result in a late payment or a penalty situation.
C. The injured or ill employee will be contacted at least every two (2) weeks while they are
disabled from working, unless they are represented by an attorney or their claim has been
finalized.
D. The City will be contacted within three (3) business days of receipt of a claim to verify
continuing disability, clarify issues and request additional required information. Contact
will be made sooner if delay will result in a late payment or a penalty situation.
E. Employer contact is required to verify continuing disability and explore the availability of
modified or light duty before processing disability payments.
F. The employee’s treating doctor will be contacted within three (3) business days of receipt
of claim to verify duration of disability, compensability, proposed treatment, clarify issues
and request additional information. Contact will be made sooner if a delay will result in a
late payment or penalty situation. Thereafter, the Administrator will maintain contact, at
least every thirty (30) calendar days with the attending physician, obtaining medical
reports, reviewing and monitoring medical treatment progress and facilitating an early
return to work.
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G. Claims will be created and entered in the computer within two (2) business days of receipt
of the Form 5020.
H. Telephone calls will be returned within twenty-four (24) hours. If the Administrator’s
staff member called is not available within this time frame, another designated staff
member will return the call.
I. All written communications requiring acknowledgment or action by a claims administrator
will be responded to and mailed within ten days or sooner if an immediate response is
required.
J. Accurate and timely benefits will be paid to employees as required by State statutes.
K. Accurate and timely benefit notices will be sent in accordance with Title 8, California
Code of Regulations.
L. Lost-time claims, with the exception of future medical claims, will be reviewed on diary
every thirty (30) calendar days or more frequently when needed.
M. Medical-only claims will be reviewed every thirty (30) calendar days for possible closure.
They will be transferred to an indemnity claim when disability is due, compensability is an
issue, they are over ninety (90) calendar days old or medical payments (excluding
diagnostic expenses) exceed $1,500.
N. Indemnity claims will be reviewed by the appropriate supervisor no less frequently than at
the following intervals: file creation, before cases are delayed and/or denied, when reserve
increases exceed the examiner’s limit of authority, proposed settlements or payments
exceed the examiner’s limit of authority, at AOE/COE and subrosa investigative referrals,
at medical case management referrals, upon defense counsel referrals, fifteen (15) calendar
days before mandatory settlement conferences and fifteen (15) calendar days before
scheduled trials.
O. Subrogation possibilities will be identified and appropriate steps taken to investigate
within five (5) calendar days after a claim is opened, or within five (5) calendar days after
information is available that subrogation may exist.
P. All medical, legal, rehabilitation, investigation and other service provider invoices will be
reviewed before payment regarding causal relationship to injury and if services billed are
for services requested. Invoices will be paid according to State allowable rates, or
appropriateness, or for compliance with any agreements in place with the facility, or as
agreed to when service was requested. Vendors providing service at an excessive rate, or
billing for services that are not requested or required will be notified of the amount and
reason for their reduction in payment. The City will be notified of any provider who
continues to bill unreasonably for services.
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Q. Obtain proof of life confirmation annually from all claimants receiving life pensions.
2. FILE DOCUMENTATION
A. All files will have a “Plan of Action” identified including time frames for completing
activity. Progress on the plan of action will be documented, as will the reasons for any
delays or modifications to the plan and include all information that relates to the direction
and value of the case. An active case strategy will be documented in the case until
closure.
B. Delayed claims will 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 decision be more than eighty-five (85) calendar days from the City’s date of
knowledge. Cases will be diaried every fourteen (14) calendar days or sooner to monitor
the investigation process. All delay in decision letters will be reviewed by the appropriate
Supervisor before mailing.
C. All denied claims will document the factual, medical or legal basis for denial in accordance
with State statutes. Denials will be made as soon as information is available that the claim
should be denied. All denial letters will be reviewed by the appropriate supervisor before
mailing.
D. All invoices from medical, legal, rehabilitation, investigation and other service providers
will be reviewed for accuracy, appropriateness and relationship to injury. Vendors
providing service at an excessive rate or billing for services that are not requested or
required will be notified of the amount and reason for their reduction in payment. The
City will be notified of any provider who continues to bill unreasonably.
E. All hardcopy files will be in chronological order with correspondence in the designated
section. All handwritten correspondence must be legible and any action taken on the file
must identify who completed it. Notes and activity completed in the computer system
must identify who completed the entry and dated. All actions must be documented in the
computer file notes.
F. All files will contain file contents as specified in Title 8, California Code of Regulations.
3. INVESTIGATIONS
A. The City will be notified of any claim being delayed or denied before a Notice is sent to
the employee. The City will also be notified before any questionable claim is accepted.
B. On questionable indemnity claims, investigative assignments will be made to outside
vendors with prior authorization from City. Referrals will include specific written
instructions regarding the scope of the investigation.
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C. In cases where claims investigations are being conducted, claims will be placed on diary
every fourteen (14) calendar days until all outstanding issues are resolved.
D. Where medical causation is unclear, a qualified medical examination will be scheduled. All
relevant medical records and investigative information will be provided to the physician for
review before the date of examination.
E. An Index Bureau and Edex Request will be submitted on all new claims. Thereafter,
requests will be submitted at least annually, or at appropriate intervals if the possibility of
other injuries is suspected, and when requested by City.
F. Investigators will be selected from a panel approved by City. The Administrator will
evaluate and monitor the panel’s performance. All concerns or recommendations for
panel additions/deletions will be discussed with City.
4. MEDICAL MANAGEMENT & COST CONTAINMENT
A. Employees who have not pre-designated a personal physician will be directed to panel
medical providers. Panel medical providers will be selected and approved by City. The
Administrator will evaluate and monitor the panel’s performance. All concerns or
recommendations for panel additions/deletions will be discussed with City.
B. Medical treatment will be monitored to ensure that treatment is appropriate and related to
the compensable injury or illness. Inappropriate medical reports will be objected to timely.
C. The employee will be called before sending notification of permanent disability and QME
letter, to explain process and answer employee’s questions.
D. The City will be notified within three (3) business days after knowledge that employee has
been found permanent and stationary by the treating doctor.
E. Independent medical examinations by qualified physicians will be scheduled when needed
to address necessity or reasonableness of care. A cover letter will be provided to the
physician outlining the specific issues and concerns along with the examiner's questions.
All medical/investigations reports will be sent to the physician prior to the examination.
F. Pre-existing medical conditions and medical records will be explored/obtained on lost-time
claims and as requested by City.
G. Treatment recommendations for care such as physical therapy, chiropractic manipulations,
etc., will be verified with the physician as to duration, frequency and anticipated results.
H. Claims referred for outside medical management services will reflect the intent and scope
of services requested and must be authorized on a case-by-case basis by City. The City
will approve medical management firms and all other review firms.
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I. On future medical claims, yearly medical reports will be obtained if the employee
continues to receive medical treatment.
J. Medical bills submitted without a supporting medical report will not be paid until a
medical report is obtained. Medical bills will be paid/denied/objected to in accordance with
state statutes, and paid in accordance with the fee schedule or negotiated rate.
K. Medical-legal costs will be reviewed for appropriateness and necessity. Bills which do not
qualify as valid medical-legal expense will be objected to on a timely basis according to the
Labor Code.
5. SUPPLEMENTAL JOB DISPLACEMENT /REHABILITATION MANAGEMENT
A. For injuries on or after January 1, 2004, the Administrator shall coordinate with City to
offer modified or alternate work within twenty-five (25) calendar days of the last payment
of temporary disability.
B. For injuries on or after January 1, 2004, employees not returning to work shall be
provided a supplemental job displacement benefit in accordance with regulations,
including the issuance of timely notices.
6. ALLOCATION OF CLAIMS COSTS TO APPROPRIATE FILE OR OCCURRENCE
A. For all injuries resulting in the need for permanent disability and/or future medical care
where the injured worker has a prior claim to the same body part, the claims administrator
shall obtain a medical opinion addressing allocation and payment of future benefits. The
medical opinion is to determine the specific allocation for permanent disability and a
separate allocation for future medical care related to the industrial injuries. The percentage
allocated to indemnity and future medical care benefits will not be assumed to be the same.
7. CLAIMS LITIGATION MANAGEMENT
A. The examiner will retain primary responsibility on all claims referred to defense counsel.
Defense counsel will not be used to perform routine activities that should be the
responsibility of the examiner. Some examples of routine tasks include: setting medical
examinations, preparing medical cover letters, filing and serving medical reports, lien
negotiations, arranging for photocopying, investigators or other outside vendors.
Exceptions will be approved by City.
B. Legal counsel will be selected from a panel approved by City. The Administrator will
evaluate and monitor the panel’s performance. Legal counsel will be reviewed for their
ability to identify issues, aggressiveness in resolving claims, responsiveness, timeliness, and
billing practices. All concerns or recommendations for panel additions/deletions will be
discussed with City.
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C. Claims sent to defense counsel will be accompanied by a transmittal letter outlining the
status of the case, results of investigations, primary issues, requested action, a complete
copy of the file, and any documentation. Ongoing documentation will be sent timely to
defense counsel.
D. At the close of discovery on cases going to trial, the file will have been adequately
prepared to include necessary depositions, medical examinations and witness identification
and contact information.
E. Settlement worksheets will be prepared and submitted to City and CIPA for approval on
all settlements as required. Overpayments will be identified on any settlement request.
F. Legal counsel will be monitored for adherence to CIPA’s Litigation Management
Guidelines.
8. RESERVING
A. Reserves established on indemnity claims will reflect the ultimate probable cost of each
claim based on the information developed to date. Reserve worksheets will be used to
document all reserve changes and reflect amounts allocated to temporary disability,
permanent disability, and vocational rehabilitation (if applicable), medical care and
allocated expense. The injured workers’ disability, age and occupation will be considered
in estimating permanent disability.
B. Reserves will be evaluated and modified upon receipt of new information, and no less
frequently than every ninety (90) calendar days on indemnity claims that have not been
finalized. Reserves on claims finalized will be evaluated at least annually.
C. Payments and reserves will not be lumped on one claim when a claimant has multiple
claims, including continuous trauma claims. Files will accurately reflect the payments and
reserves related to the exposure on each separate claim.
9. EXCESS INSURANCE REPORTING
The Administrator shall report to the excess insurance carrier(s), including CIPA, in
accordance with established procedures.
10. MMSEA REPORTING
The Administrator shall report all claims in compliance with Medicare, Medicaid and SCHIP
Extension Act (MMSEA) Section 111 Mandatory reporting.
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