Report to Mayor and City Council
Tuesday, September 05, 2023
Consent
SUBJECT:
Title
CONSIDER APPROVAL OF AMENDMENT NO. 3 TO THE CARL WARREN & COMPANY AGREEMENT (CONTRACT C-19-124) FOR ADMINISTRATION OF THIRD PARTY LIABILITY CLAIMS (CITY COUNCIL)
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I. SUMMARY
The City has been self-insured for its General Liability Program since its incorporation in 1968. The City maintains a contract with a third-party administrator (TPA) to administer the self-insured claims. Carl Warren & Company has provided TPA services to the City since 1978. The most recent contract agreement was awarded in September 2019 for a three-year term, expiring on September 30, 2022. The agreement was amended in 2021 to add scope and funding for handling the Dominguez Channel claims (Amendment No. 1). The agreement was amended a second time in 2022 to add a pre-negotiated extension of the term, and funding, to September 30, 2023 (Amendment No. 2).
Staff is now asking City Councill to consider approving Amendment No. 3, exercising the second of two optional one-year extensions provided in the contract; and increasing the funding for handling the higher than anticipated number of Dominguez Channel claims.
II. RECOMMENDATION
Recommendation
1. APPROVE Amendment No. 3 to the Carl Warren & Company agreement for Third Party Liability Claims Administration services, extending the contract term by one additional year through September 30, 2024, at a cost of $65,739.36; and adding $100,000 additional funding for handling the Dominguez Channel claims.
2. AUTHORIZE the Mayor to execute the amendment following approval as to form by City Attorney.
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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 third-party claims administrator that is competent and performance oriented. General liability claims must be managed in accordance with the Tort Claims Act of the State Government Code. The City’s third-party administrator must have litigation cost containment measures in place, have knowledge of City issues and provide prompt and professional communication with City staff and residents.
Carl Warren & Company has provided third party claims administration services to the City since 1978 in a competent and efficient manner. The most recent contract was awarded in 2019 for a three-year term with two optional one-year extensions thereafter. That agreement was amended in 2021 (Amendment No. 1) to add scope and funding for handling the Dominguez Channel claims. However, the number of Dominguez Channel claims proved to be significantly higher than anticipated. As of August 14, 2023, the City had received a total of 1,779 individually-submitted claims, plus 24 batches of claims submitted by law firms representing 22,945 individual claimants.
Staff is now asking City Council to consider Amendment No. 3, exercising the second of two optional one-year extensions provided within the contract at a pre-negotiated cost of $65,739.36; and providing $100,000 in additional funding for handling the Dominguez Channel claims.
V. FISCAL IMPACT
Funds have been budgeted in the Risk Management Division’s FY 23-24 budget in account 101-50-660-172-6004.
VI. EXHIBITS
1. Carl Warren & Company Contract Agreement, pages 3 - 34
2. Amendment No.1 to the Carl Warren & Company agreement, pages 35 - 42
3. Amendment No.2 to the Carl Warren & Company agreement, pages 43 - 50
4. Amendment No.3 to the Carl Warren & Company agreement, pages 51 - 58
Prepared by: Roobik Galoosian, Risk Manager