Report to Mayor and City Council
Tuesday, August 06, 2024
Consent
SUBJECT:
Title
CONSIDER AWARD OF CONTRACT FOR GENERAL LIABILITY THIRD PARTY CLAIMS ADMINISTRATION SERVICES FOR THE PERIOD OCTOBER 1, 2024 THROUGH SEPTEMBER 30, 2027 WITH TWO OPTIONAL ONE-YEAR EXTENSIONS THEREAFTER, TO CARL WARREN & COMPANY, LLC (CITY COUNCIL)
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I. SUMMARY
The City has been self-insured for its General Liability Program since its incorporation in 1968 and maintains a contract with a third-party administrator (TPA) to handle the self-insured claims. Carl Warren & Company has provided TPA services to the City since 1978. The most recent (and current) contract agreement was awarded in 2019, and through three amendments the term was extended to September 30, 2024, at which point the agreement is scheduled to expire.
In the last few years, there has been an increase in the number of liability claims including thousands from the Dominguez Channel incident, plus other property damage, bodily injury, pollution, and employment-related claims. This increase has resulted in a large inventory of open, active claims. To achieve the best outcome, it is important to maintain continuity in handling these claims utilizing the existing TPA.
Therefore, staff recommends awarding a new contract to Carl Warren & Company, LLC for the continued performance of the TPA services for the initial three-year term of October 1, 2024 through September 30, 2027, with two optional one-year extensions thereafter. Per Section 2.1 of the proposed agreement (Exhibit No. 1), the Contract Sum for the initial three-year term is $389,074, plus 18% of the net recovery from subrogation claims. The proposed rates of compensation are detailed in Exhibit “C” of the proposed agreement.
II. RECOMMENDATION
Recommendation
TAKE the following actions:
1. AWARD and APPROVE the Agreement for Contract Services between the City of Carson and Carl Warren & Company, LLC, attached as Exhibit No. 1 (the “Agreement”); and
2. AUTHORIZE the Mayor to execute the Agreement following approval as to form by the City Attorney.
1.
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III. ALTERNATIVES
TAKE another action the City Council deems appropriate.
IV. BACKGROUND
The administration of a self-insured general liability program requires a TPA that is competent and performance oriented. General liability claims must be managed in accordance with the Government Claims Act of the State Government Code and any applicable charter and municipal code provisions. The City’s TPA must have litigation cost containment measures in place, have knowledge of City issues, and provide prompt and professional communication with attorneys, staff, and residents. Carl Warren & Company continues to perform well as the City’s liability TPA.
The current inventory of open claims includes over 25,000 resulting from the Dominguez Channel incident, plus other property damage, bodily injury, and employment related cases. To maintain continuity in handling this large inventory, staff recommends renewing TPA services with the existing provider, Carl Warren & Company.
The proposed Agreement includes handling of up to 250 new claims per year for a fixed annual fee that would be $119,392 for the first year of the Agreement term and that would increase by 3% for each subsequent year of the Agreement term. Additional fees will apply if new claims exceed 250 during any contract year.
For comparison, the existing contract provides for a fixed annual fee for handling of just 125 new claims for the current contract year (10/1/23-9/30/24) in the amount of $65,739.36; the number of claims included in the fixed annual fee has been doubled to 250 in the proposed Agreement.
Per CMC 2611(i)(4), insurance and insurance-related services are exempt from bidding provisions of the municipal code. The proposed procurement, consisting of third-party claims administration services, falls within this exemption.
V. FISCAL IMPACT
Funding for this item is included in the FY 2024/25 budget in account 101-50-660-172-6004.
VI. EXHIBITS
1. Agreement for Third Party Claims Administrator services between the City of Carson and Carl Warren & Company, LLC (Pages 4 - 38).
Prepared by: Roobik Galoosian, Risk Manager