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HomeMy WebLinkAboutAgenda Report - June 15, 2022 C-16CITY OF AGENDA ITEM "'to v CALIFORNIA COUNCIL COMMUNICATION AGENDA TITLE: Adopt Resolution Authorizing the City Manager to Execute a Professional Services Agreement with Sedgwick Claims Management Services, Inc, ("Sedgwick"), for Workers' Compensation Claims Administration Services for the Period July 1, 2022, to June 30, 2023 ($148,933) MEETING DATE: June 15, 2022 PREPARED BY: Risk Manager RECOMMENDED ACTION: Adopt resolution authorizing the City Manager to execute a professional services agreement with Sedgwick Claims Management Services, Inc., ("Sedgwick"), for workers' compensation claims administration services for the period July 1, 2022, to June 30, 2023 ($148,933). BACKGROUNWNFORMATION: The City of Lodi has retained the services of Sedgwick (previously named York) for workers' compensation claim administration since 2015. The current contract expires June 30, 2022. Staff is recommending a new one year agreement. Prior to the next renewal, a comprehensive request for proposals process will be done to ensure the City is receiving the best service and value for the cost currently available in the marketplace. The attached Agreement reflects a five percent increase in administration costs in the first year and provides pricing for two subsequent years should the City extend the agreement by amendment. The Agreement also allows for termination without cause on 60 -day notice. All other fees will remain capped for the duration of the Agreement. FISCAL IMPACT: Claims administration services - $148,933 (July 1, 2022 — June 30, 2023). Additional fees such as bill review, utilization review, and investigations are billed based on factors detailed in the Agreement. FUNDING AVAILABLE: Funds are available in the Workers Compensation 66525100.72450 account to cover expenditures for Sedgwick Claims Management Services, Inc., ("Sedgwick") Andrew Keys Andrew Keys Deputy City Manager/Internal Services Director Adopt Resolution Authorizing the City Manager to Execute a Professional Services Agreement with Sedgwick Claims Management Services, Inc, ("Sedgwick"), for Workers' Compensation Claims Administration Services for the Period July 1, 2022, to June 30, 2023 ($148,933) June 15, 2022 Page 2 of 2 Beverly Jensen Beverly Jensen Risk Manager SERVICE AGREEMENT FOR ADMINISTRATION OF A CLAIMS PROGRAM This Service Agreement for Administration of a Claims Program dated June , 2022 (the "Agreement"), is entered into by and between Sedgwick Claims Management Services, Inc. ("Sedgwick"), and City of Lodi (the "Client") (Sedgwick and Client together the "Parties"). RECITALS 1. Client self -insures its claims administration program for workers compensation risks and desires to have Sedgwick provide the specific services set forth below in connection with such self-insured program (the "Program," as defined on the attached Exhibit A). 2. Sedgwick is willing to provide such services on the terms and conditions hereinafter stated. AGREEMENT 1. Services to Be Performed by Sedewick: Sedgwick agrees to perform the following services: A. With regard to Claims Administration, Sedgwick shall: (1) During the term of this Agreement, review all claim and loss reports received from Client that are required to be reviewed under the Program (a "Qualified Claim"), and process each such claim or loss report in accordance with applicable statutory and administrative regulations; (2) Conduct an investigation of each Qualified Claim to the extent deemed necessary by Sedgwick in the performance of its obligations hereunder; (3) Arrange for independent investigators, appraisers, or medical or other experts to the extent deemed necessary by Sedgwick in connection with processing any Qualified Claim; (4) Pay benefits, expenses, and adjust or settle each Qualified Claim, but only if in the sole judgment of Sedgwick such payment would be prudent for Client and the anticipated amount thereof does not exceed the limit specified in accordance with paragraphs 2F and 2G below, or as Client specifically approves or directs such action in writing; (5) Maintain a file for each Qualified Claim which shall be the property of Client (for self-insured claims) or Insurer (for insured claims) and which shall be available for review by Client or Insurer during normal business hours upon three (3) days' prior written notice; 28127 1 (6) Notify Client's first layer of insurance coverage for each Qualified Claim where the values may exceed Client's retention, providing such insurer with necessary information on the current status of those claims, unless relieved of this obligation by Client pursuant to paragraph 2A; (7) Assist Client's counsel, if requested, in preparing the defense of litigated cases arising out of Qualified Claims, negotiating settlements and pursuing subrogation or contribution actions; (8) Maintain a current estimate of the expected total cost of each Qualified Claim which is based on facts known at the estimation date, but is not trended or actuarially developed; (9) Use a proprietary data management system to furnish to Client agreed upon loss and information reports. These reports shall contain information such as each Qualified Claim date, condensed claim description, payments made, estimated future costs and total expected costs of all Qualified Claims, as well as summary and other data deemed relevant by Sedgwick, but not IBNR (incurred but not reported) claims or actuarially developed loss values; and (10) Annually report federal, state and local 1099 information under Client's tax identification number(s), when Client has provided all required IRS authorizations, for vendor payments issued by Sedgwick on bank accounts owned by Client, but not for payment authorizations when Sedgwick does not issue the checks. B. Sedgwick will provide managed care services as set forth in the attached Managed Care Service Schedule. C. Sedgwick shall provide the special investigative unit (SIU) services set forth in the attached SIU Service Schedule. D. Sedgwick will provide the MMSEA/SCHIP Reporting services as set forth in the Medicare Reporting Services Schedule attached hereto. E. Sedgwick will provide the clinical consultation services as set forth in the Clinical Consultation Services Schedule attached hereto. 2. Obligations of Client: A. Client shall provide Sedgwick in a timely manner with its first layer of insurance coverage for the policy years necessary for proper notification of applicable Qualified Claims to such first layer insurers by Sedgwick. Should Client fail to provide this information, Sedgwick shall be relieved of any such reporting obligations. 28127 2 B. Client shall pay to Sedgwick a service fee which, in the initial term of this Agreement, shall be computed and payable as shown on the attached Exhibit B, plus applicable taxes, if any. Client shall reimburse Sedgwick for the reasonable and customary out-of-pocket expenses incurred by Sedgwick such as travel expenses in conjunction with the services being performed. If Client, in its sole discretion, requests Sedgwick to perform services outside of the scope of work listed herein, then Client shall compensate Sedgwick for such services at Sedgwick's then applicable standard rates for such service. C. Client shall at all times provide funds adequate for the payment of Qualified Claims, including allocated loss adjustment expenses. For purposes of this Agreement, allocated loss adjustment expenses shall mean all costs, charges or expenses incurred by Sedgwick, its agents or its employees which are properly chargeable to a Qualified Claim including, without limitation, court costs; fees and expenses of attorneys; appeal bonds; independent adjusters; investigators; appraisers; vocational services, training or evaluation; medical expenses and medical cost containment service providers (including those provided by Sedgwick, if applicable); durable medical equipment; rehabilitation services; experts and witnesses; fees for obtaining statements, diagrams, reports, records, documents, transcripts, depositions, Medicare reporting and compliance services fees and costs, index bureau filings and re -filings, and photographs; cost of file retrieval; cost associated with the pursuit of subrogation and/or Special Injury Fund claims; hearing representation services; and travel fees and expenses incurred at Client's request. Sedgwick may, but need not, elect to utilize its own staff or affiliated entities to perform these services. Associated fees and costs will be charged as allocated loss adjustment expenses. D. Client shall deposit funds for payment of Qualified Claims, including allocated loss adjustment expenses, in a bank account or accounts (the "Claim Account"). Client shall be responsible for providing sufficient funds to enable Sedgwick to write checks on the Claim Account for use in the payment of Client's Qualified Claims. Such funds shall be provided by electronic funds transfer at the inception of the Program and replenished by electronic funds transfer promptly from time to time thereafter. The amount of the escrow required for the Claim Account may be modified in the following instances: (1) There is a substantial increase or decrease in claims payment activity; (2) Client fails to fund the Claim Account within the agreed upon time period; (3) There is a change in funding cycle; (4) The escrow is recalculated at Client's request; or (5) The escrow amount is automatically recalculated on an annual basis. E. It is expressly understood that Sedgwick shall not be required to advance its own 28127 3 funds to pay losses or allocated loss adjustment expenses for any Qualified Claim hereunder. It is further understood that if Client fails to promptly provide funds sufficient to allow required payments to be made timely, or if funds previously provided by or on behalf of Client are seized, frozen or otherwise unavailable to Sedgwick to allow required payments to be made timely on account of the bankruptcy, receivership, or other insolvency proceeding of Client [or Insurer, in cases where Insurer funds claim account], Sedgwick will have no obligation to perform any claims payments services during any period of underfunding. F. Sedgwick shall have full discretion to make an individual payment of an allocated loss adjustment expense in an amount up to $25,000 on any Qualified Claim and shall not need the approval of Client to make such payments. This amount may be changed at any time by Client upon ten (10) days' prior written notice to Sedgwick. It is agreed that Sedgwick shall have full authority and control in all matters pertaining to the payment, processing, investigation and administration of Qualified Claims within the limit established by this paragraph. G. Sedgwick shall have full discretion to redeem, compromise or settle any Qualified Claim for an amount not to exceed $0.00 and shall not need the approval of Client to consummate such redemption, compromise or settlement. This amount may be changed at any time by Client upon ten (10) days' prior written notice to Sedgwick. Failure of Sedgwick to settle a Qualified Claim within such limit, however, shall not subject Sedgwick to any liability whatsoever in the event of an adverse judgment entered by any court or the settlement of such Qualified Claim for an amount in excess of such limit. H. Should Client fail to make timely payments of any service fees due Sedgwick or should Client in any other way breach a material term of this Agreement, Sedgwick shall then have the right to refuse to perform any further services or terminate this Agreement. If Sedgwick elects to exercise its rights under this paragraph, in addition to all other legal or equitable remedies, Sedgwick will have the right to its full minimum fee, if any, as well as any other fees for which Sedgwick may be eligible, and may collect such fees from any loss fund that may be in Sedgwick's care, custody and control. I. Upon receipt of any form of notice advising of facts which are or may be a Qualified Claim, Client shall promptly assign the Qualified Claim to Sedgwick for management. Client shall promptly provide Sedgwick with such information as Sedgwick may require, including, but not limited to, any copy of documents describing its Program, including but not limited to documents submitted to any legal, administrative or regulatory authority for approval of the Program, as well as incident reports and related information in Client's possession and otherwise cooperate with Sedgwick in carrying out Sedgwick's tasks hereunder. 28127 4 3. Discontinuance of Operations: Should Client discontinue its business for any reason, all fees due Sedgwick shall be paid immediately. Sedgwick shall have no further obligation to continue to provide the services called for in this Agreement, and, at Sedgwick's option, this Agreement shall be considered terminated as of the date Client ceases operations or is subject to a bankruptcy or receivership filing, either voluntarily or involuntarily. 4. Covered Jurisdictions: This Agreement shall cover all operations of Client in the state of California. 5. Term of Agreement and Termination: A. The term of this Agreement shall be for the period commencing on July 1, 2022 and ending on June 30, 2023. Client shall have the option to extend the Agreement term for two (2) additional one (1) year periods upon terms and conditions mutually agreeable to the Parties. It shall be a condition to effective exercise of an option period that not less than ninety (90) days prior to the expiration of the then current term Client shall give Sedgwick written notice of its intent to exercise an option term. B. This Agreement may be terminated by either party at any time, provided that at least sixty (60) days' prior written notice of the effective date of termination is given to the other party. C. Sedgwick is providing services to Client on a life of contract basis. If requested by Client, Sedgwick will continue to process Client's Qualified Claims remaining open at the expiration or termination of this Agreement, if any, provided that Client shall continue to make adequate funds available for the payment of such Qualified Claims, including any allocated loss adjustment expenses and pay information technology fees, fees for encrypted data files, program management fees, and any other applicable fees. This provision shall not apply unless the additional fee for this service shall have been negotiated and agreed to in writing prior to the effective date of termination. D. If Sedgwick is required by Insurer to adjust Client's insured Qualified Claims after expiration or termination of this Agreement, Client shall continue to fund claims payments and allocated loss adjustment expenses as otherwise provided herein, and Client shall pay Sedgwick a mutually agreed upon fee, plus the prevailing fee for any information technology or encrypted data files required by Insurer. E. If Insurer fails to pay Sedgwick service fees which it is obligated to pay, then Sedgwick may present all unpaid invoices to Client and Client shall pay such service fees within thirty (30) days of presentment. If Insurer is responsible for 28127 5 funding the Claim Account and fails to adequately do so, then Client shall immediately and adequately fund the Claim Account upon notice from Sedgwick of the deficiency. F. Upon expiration or termination of this Agreement, Sedgwick shall deliver, at Client's sole cost, the hard copy and imaged files that Sedgwick has maintained for Qualified Claims (but not including any computer hardware, firmware, software or other proprietary information of Sedgwick), except those Sedgwick has agreed in writing to continue to process or files that are owned by Insurer; provided, however, that Sedgwick or its agents, employees or attorneys shall continue to be entitled to inspect all such files and make copies or extracts there from. Imaged files shall be transferred to Client in the same electronic format. Client shall pay Sedgwick a one-time payment for transition of Qualified Claims as consideration for Sedgwick's associated costs, which costs may include, but are not limited to, carrier coordination, coordination with the new third party administrator, if any, necessary mailings and notifications, catalog and transfer of hard inventory, digital recording retrieval & transfer, advanced TTD payments, multiple loss runs, payment history for advanced TTD, claim hot list, banking reconciliation, validation of billings paid in field prior to transfer, field examiners validation and release of pending payments, client services & parameters group time (13213 interface shutoff, intake shutoff, CSI shutdown), as well as technology items such as preliminary and final data extract, image extract, bill review extract, MMSEA extract and hierarchy structure extract. If Client does not agree to accept such files, they will be retained or destroyed at Sedgwick's option and Client shall have no recourse against Sedgwick for failure to retain them. G. Should Client terminate the Agreement for convenience within the first twelve months of the Agreement, the Client shall pay Sedgwick fees equal to three months of the service fees. Should Client terminate for convenience within the second twelve months of the Agreement, the Client shall pay Sedgwick fees equal to two months of the service fees. Termination fees are payable within thirty (30) days of the date of notice of such termination. 6. Professional Advice: Nothing in this Agreement is intended to require Sedgwick to engage in the practice of law, and services provided shall not be considered legal, tax or accounting advice, and Sedgwick shall in no event give, or be required to give, any legal opinion or provide any legal, tax or accounting representation to Client. Client acknowledges that Sedgwick has been engaged to provide certain professional services and that it is not the intent of the Parties that Sedgwick assume any insurance risk. Sedgwick shall not act as an insurer for Client, and this Agreement shall not be construed as an insurance policy; it being understood that Sedgwick is in no event financially responsible for payment or satisfaction of Client's claims, lawsuits, or any form of cause of action against Client from Sedgwick funds. 28127 6 7. Indemnification: A. Sedgwick shall be fully responsible for exercising reasonable care at all times in the performance of its obligations hereunder. However, if Sedgwick is named as a party to any litigation or proceeding, or is the subject of any claim or demand because of its actions on behalf of Client, Client agrees to indemnify, defend, and hold Sedgwick, its officers, directors, employees and agents harmless from any and all losses, damages, costs, judgments and expenses (including attorneys' fees and costs) with respect to any such litigation, proceeding, claim or demand, unless and until a finding is entered to the effect that Sedgwick failed to exercise such reasonable care in the performance of its obligations hereunder. Sedgwick agrees to indemnify, hold harmless and defend Client, its directors, officers, employees and agents from and against any and all liabilities, loss or damage that they may suffer as a result of any claim, demand, cost or judgment against them arising out of the negligence or willful misconduct of Sedgwick in connection with its performance under this Agreement, provided that such acts or omissions do not arise out of or relate to oral or written instructions, procedures or forms supplied by Client or to Client's internal management or adjustment of its claims. Each party agrees to keep the other fully informed of any matter for which it is defending, holding harmless or indemnifying the other party. Each party reserves the right to appoint its own counsel, at its own expense, regarding any matter defended hereunder and to approve any settlements of same. B. Notwithstanding anything to the contrary contained in the above paragraph, it is understood and agreed that if Client, directly or through a subcontractor or vendor of Client's choosing ("Client Subcontractor"), retains administration of a claim or performs any services for a claim Sedgwick administers, or if Client otherwise directs the administration of a claim, Client will indemnify, defend, and hold Sedgwick, its officers, directors, employees and agents harmless from the losses, damages, costs, judgments and expenses (including attorneys' fees and costs) as a result of any litigation or proceeding, fines, penalties, revocation of license, or any other state regulatory investigation or action arising against Sedgwick related to the acts or omissions of Client or the Client Subcontractor. C. If Client's access to claim data includes the ability to add and modify data, Sedgwick shall not be required to verify, or otherwise be responsible for, the accuracy of data added or modified by Client. Client shall indemnify, defend and hold Sedgwick, its officers, directors, employees and agents harmless for any loss, cost (including attorneys' fees), claim or judgment which is attributable to Client's input or modification of data. D, The Parties agree that in no event shall Sedgwick's liability under this Agreement exceed the service fees paid to Sedgwick for the six (6) months immediately prior to the event from which the claim or matter arises. IN NO EVENT SHALL SEDGWICK BE LIABLE FOR ANY LOSS OR DAMAGE TO REVENUES, PROFITS OR GOODWILL OR OTHER SPECIAL, INDIRECT, INCIDENTAL 28127 7 OR CONSEQUENTIAL DAMAGES OF ANY KIND RESULTING FROM ITS PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT OR RESULTING FROM THE FURNISHING, PERFORMANCE, USE OR LOSS OF USE OF ANY SOFTWARE, SYSTEM, SITE, OR DELIVERABLE PROVIDED TO CLIENT HEREUNDER, INCLUDING WITHOUT LIMITATION ANY INTERRUPTION OF BUSINESS, EVEN IF SEDGWICK HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE. E. Notwithstanding the foregoing, an indemnifying party will not settle a claim without the indemnified party's written consent, unless such settlement results in (i) a full release of all Parties, (ii) no liability to the indemnified party or future obligation of the indemnified party, and (iii) no admission of wrongdoing by Client or Sedgwick. F. The provisions of this section shall survive the expiration or termination of the Agreement. 8. Network Security/Confidentiality: A. If Client's access to the data management system requires a network connection (the "Network Connection") between Client's network and Sedgwick's network, Sedgwick and Client shall take reasonable and customary precautions to prevent unauthorized access to or use of the Network Connection through their respective networks. The Parties agree, however, that each party is responsible for the security of its own network. Neither party shall be liable to the other for unauthorized access to the Network Connection, so long as the accused party shall have taken reasonable and customary precautions to prevent such unauthorized access. B. Whether or not marked as such, and without regard to the media in which such records are stored, "Confidential Information" shall mean: (1) any business or technical information pertaining to the Parties or to third parties, which is furnished, disclosed or made available by one party to the other, including, without limitation, specifications, prototypes, software, marketing plans, financial data and personnel statistics; and (2) Medical records, reports and information, as well as any other non- medical records, reports or information pertaining to claimants under the Program. C. Each party agrees to protect Confidential Information received hereunder with the same degree of care that such party exercises with its own confidential information (but in no event less than reasonable care) and to limit access and disclosure of Confidential Information only to their employees, agents and 28127 8 contractors who have a "need to know," and who agree to maintain confidentiality in accordance with this section. Notwithstanding the foregoing, Client agrees to permit Sedgwick to compile and disseminate aggregate, de -identified information for auditing, compliance, internal assessments, process improvement and related analytics, benchmarking purposes or forward to a data collection facility data for Qualified Claims handled pursuant to this Agreement, provided that such facility agrees in writing to keep Client's data confidential. Further, Sedgwick shall be entitled, without violation of this section and without the prior consent of Client, to retain claims administration information and to forward claims administration information to government agencies to the extent required by law for the proper performance of the services set forth herein. D. The provisions of this section shall survive the expiration or termination of the Agreement. 9. Notices: Any notice required to be given under this Agreement shall be sent by certified or registered mail, postage prepaid, to General Counsel - Americas, Sedgwick Claims Management Services, Inc., 8125 Sedgwick Way, Memphis, TN 38125, in the case of Sedgwick, and to the City of Lodi - Risk Manager, P.O. Box 3006, Lodi, CA 95241-1910 in the case of Client. 10. Assignment: The Client may not assign its rights or obligations under this Agreement. Sedgwick may assign or subcontract part of the services required hereunder and may at its discretion delegate to a subsidiary or affiliate such of its duties as it deems appropriate, provided that such subcontracting or delegation shall not relieve Sedgwick of any of its obligations hereunder. 11. Entire Agreement and Modification or Amendment: This Agreement and its attached exhibits and schedules represents the full and final understanding of the Parties with respect to the subject matter described herein and supersedes any and all prior agreements or understandings, written or oral, express or implied. This Agreement may be modified or amended only by a written statement signed by both Parties. 12. Applicable Law: The terms and conditions of this Agreement shall be governed by the laws of the State of Tennessee without regard to conflicts of law principles. If any dispute or claim arises hereunder that the Parties are not able to resolve amicably, the Parties agree and stipulate that such litigation shall be resolved in the State of Tennessee, and the Parties irrevocably submit to the exclusive venue and jurisdiction of such court for the purpose of any such 28127 action or proceeding. In the event of a dispute between the Parties resulting in litigation, the prevailing party may, in addition to any other relief obtained, recover its court costs and reasonable attorney's fees. 13. Force Ma'eure: Neither party shall be liable to the other party or be deemed to have breached this Agreement for any failure or delay in the performance of all or any portion of its obligations under this Agreement if such failure or delay is due to any contingency beyond its reasonable control (a "Force Majeure Event"). Without limiting the generality of the foregoing, such contingency includes, but is not limited to, acts of God, fires, floods, pandemics, storms, earthquakes, riots, boycotts, strikes, lock -outs, acts of terror, wars and war operations, restraints of government, power or communication line failure or other circumstance beyond such party's reasonable control, or by reason of the bankruptcy, receivership or other insolvency proceeding of any bank or other financial institution where funds to pay losses and allocated loss adjustment expenses are held, or by reason of a judgment, ruling or order of any court or agency of competent jurisdiction or change of law or regulation subsequent to the execution of this Agreement. Both Parties are obligated to provide reasonable back-up capability to avoid the potential interruptions described above. If a Force Majeure Event occurs, the party delayed or unable to perform shall give immediate notice to the other party. Client acknowledges that the foregoing provision does not apply to Client's obligation to make timely payment of any fees due Sedgwick, and that Sedgwick shall be entitled to all remedies set forth in this Agreement and those allowed by law for Client's failure to timely pay such fees. 14. Headjn,2s: Headings herein are for convenience of reference only and shall not be considered in any interpretation of this Agreement. 15. Relationshi of Parties; Expenses: Nothing contained in this Agreement shall be deemed to create a partnership or joint venture between the Parties; the only relationship among the Parties shall be that of independent parties to a contract. Except as expressly provided herein, no party hereto shall have authority or shall hold itself out as having authority to act for or bind any other party hereto. Except as expressly set forth herein, each party shall bear all expenses it may incur in connection with the execution, delivery and performance of this Agreement. 16. Waiver of Breach: Failure of either party hereto to require the performance by the other party hereto of any obligation under this Agreement shall not affect its right subsequently to require performance of that or any other obligation. Any waiver by any party hereto of any breach of any provision of this Agreement shall not be construed as a continuing waiver 28127 10 of any such provision or a waiver of any succeeding breach or modification of any other right under this Agreement. 17. Subcontractor Disclosure: Through contractual arrangements with subcontractors, Sedgwick provides a full range of medical management and investigative services to its clients, as well as structured settlements, claim indexing services, imaging, auto -bill adjudication, and extra -territorial claims administration services. Medical management services include, but are not limited to, bill review, network access, pharmacy benefits management, peer review, field case management, electro -medical devices, bone growth stimulators, orthotics, prosthetics, translation and interpretation, transportation, medical supplies, IV and respiratory therapy, home health, and durable medical equipment. Client recognizes and agrees that delivery of some of these services are being provided pursuant to separate agreements between subcontractors and Sedgwick. Invoices for these services will be paid as allocated loss adjustment expenses on individual claims, unless otherwise agreed between Client and Sedgwick. Notwithstanding the foregoing, Client agrees and understands that Client is obligated to make payment to the subcontractors either directly or by remitting such payment to Sedgwick, for any money due for subcontracted services which have been provided under this Agreement. Client acknowledges that Sedgwick receives a portion of charges for subcontracted services as reimbursement for cost of program management, administration, and technological and service enhancements. In no event will charges to Client exceed the amount indicated in the Agreement. 18. Equitable Adjustment: This Agreement contemplates that the standards applicable to this Agreement are those in effect on the date of this Agreement, whether such standards are set forth in statutes, regulations, rules, orders, case law or otherwise. In the event of a change in a service standard, Sedgwick shall be entitled to an equitable adjustment in its compensation if such change increases Sedgwick's cost of providing the services under this Agreement or reduces its profitability. 19. Non -Solicitation: Client acknowledges and agrees that Sedgwick personnel who perform the services are a valuable asset to Sedgwick and difficult to replace. Accordingly, Client agrees that, during the term of the Agreement, and for twelve months thereafter, it will not solicit, contract or hire Sedgwick personnel or encourage them to seek employment or any other contractual arrangements with Client. The Parties further agree that in the event Client breaches the provision of this Section, Client shall pay Sedgwick liquidated damages in the amount of two times the annual compensation to be paid to such person for each such breach, which is the Parties' good faith estimate of the amount of damages to Sedgwick from such breach. This Section shall survive the termination of this Agreement. 28127 11 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the dates written below. City of Lodi, a municipal corporation Sedgwick Claims Management Services, Inc. LM Title: City Manager Title Date ATTEST: OLIVIA NASHED City Clerk APPROVED AS TO FORM: JANICE D. MAGDICH City Attorney Date 28127 12 EXHIBIT A SERVICE PROGRAM OVERVIEW I. Introduction Sedgwick is administering the self-insured workers compensation claims for Client as follows: State(s) Serviced: California Sedgwick Servicing Office: Roseville, CA Insured Claims (if applicable): A portion of Client's program is insured. Client shall provide the relevant policy information, including a complete copy of all applicable policies, as soon as reasonably practical after same becomes available. II. Account Coordination On behalf of Client, this service program will be coordinated by: Client Representative: Beverly Jensen Client Name: City of Lodi Client Address: P.O. Box 3006, Lodi, CA 95241-1910 Telephone # (209) 333-6708 Fax # (209) 333-6807 On behalf of Sedgwick, this service program will be coordinated by: Sedgwick Representative: Elizabeth Horeczko Sedgwick Office Address: 8855 Haven Avenue, Rancho Cucamonga, CA 91730 Telephone # (909) 269-1062 Fax # Each party reserves the right to change its designated representative during the term of the Agreement. 28127 13 EXHIBIT B SERVICE FEES Client shall pay the following fees on a life of contract basis for services provided during the term of this Agreement: 1. Per Claim Fees A. Client shall pay the following fees for claims received by Sedgwick during the period beginning July 1, 2022 and ending June 30, 2025: Fiscal Year 7/1/2022-6/30/2023 7/1/2023-6/30/2024 7/l/2024-6/30/2025 Annual Rate $148,933 $154,518 $160,312 B. For purposes of this Agreement, an "Indemnity Claim" shall mean any workers' compensation Qualified Claim: - For which a payment is made or reserve is posted under the indemnity portion (i.e. not medical and not expense) of the Qualified Claim or there is time lost from work; - For which an application for adjudication of a claim or hearing notice is received or otherwise involves litigation or communication from or to a petitioner's attorney; - Where incurred medical costs exceed $3,000; - That is denied but otherwise would have been classified as Indemnity Claims; - For which Client requests to be investigated or classified as an Indemnity Claim; - That Sedgwick determines additional investigation is necessary to determine compensability, to comply with applicable laws, or both; - For which subrogation is investigated or pursued; or - That is open longer than twelve months. C. For purposes of this Agreement, a "Medical Only Claim" shall mean any workers' compensation Qualified Claim which is not an Indemnity Claim or an Incident Only. D. For purposes of this Agreement, an "Incident Only" shall mean claims reported by Client that require no payment or activity other than generating a record in the data management system. These claims carry no reserves and no contacts are made by Sedgwick. If contacts are required on incident only cases, additional fees will apply. 28127 14 E. For purposes of this Agreement, a "Takeover Claim" shall mean any claim opened prior to July 1, 2022. Takeover Claims are charged the annual per claim fee shown in the pricing section for claims that are open as of the effective date of this Agreement, open at the beginning of any subsequent contract year, or are reopened during any contract year. F. Client acknowledges that if an Incident Only Claim is converted to another claim type, then Client shall pay the difference in the per claim fee between the per claim fee already paid and the applicable per claim fee after the claim's conversion. G. Client acknowledges that the per claim fees set forth in this section 1 are based on the assumption that Client will forward to Sedgwick all claims arising under the Program within the applicable time period in a covered jurisdiction. In the event that Client does not forward to Sedgwick all such claims, Sedgwick may in its discretion adjust the per claim fees accordingly. 2. Miscellaneous Cha es Client shall pay the following fees for services provided during the period beginning on July 1, 2022 and ending on June 30, 2025: A. viaOne access, which includes 4 users, is provided for a fee of $0.00. Additional access is available for a fee of $870 per user per year. Sedgwick will make available, through Sedgwick's proprietary claims system, claim -related data with "web -enabled" access. Client will have "view only" access to the system for the term specified or as contemplated in Section 5(C) of this Agreement. Client will bear responsibility for its own hardware, software, connection and similar costs for accessing the electronic claims management system. B. Intake by any means other than utilizing Sedgwick Call Center or web reporting technology (i.e. fax, e-mail) will incur a fee of $22 per report 3. Invoicing All one-time implementation and data conversion fees are billed upon notification of award. All recurring fees such as claims service, program management and information technology fees are billed on actuals on a monthly basis in arrears. If a budget -based or flat fee pricing option is selected, all recurring fees are billed on a quarterly basis in advance based on annual estimates. The estimates are subject to audit thirty (30) days after the conclusion of each contract year. Takeover Claims (if applicable) are billed annually based on the number of takeover claims open at the beginning of each contract year or reopened during the year. 28127 15 4. Care Management Fee Schedule All claims administration fees and services contemplate the deployment of Sedgwick's managed care services for all bill review and case management services. 1 - - -=NZE_ Medical bill review State fee scheduling/usual, customary and reasonable; state reporting $9.95 per bill Provider networks PPO networks/out of network services it 25% of savings Telephonic clinical services Telephonic case management (TCM): Evaluation and recommendation $104 • Telephonic nurse case manager 1-30 days: $395 • Surgery nurse case manager Every 30 days thereafter: $295 Behavioral Health Specialist $105 per hour 0) Customized nurse services $105 per hour 0) Utilization review (UR) and physician advisor UR $149 per review Physician advisor/peer review $275 per review Physician review of records $275 per hour Physician advisor appeal $350 per review Pharmacy nurse management/pain coaching: Complex pharmacy management $115 per hour Ph d Ph D t d d Medical FCM: Full field Crisis care RN FCM tasks: One visit clinical assessment yscan an arm managemen (as nee a ). $275 per hour Field case management (FCM) $105 per hour, plus direct expenses Urgent/catastrophic case management: $165 per hour 0) $165 per hour 0) Limited assignment task Specialty task services: life care plan, expert testimony, customized services $720 flat fee $105 per hour 0) $165 per hoar Vocational and work placement solutions Transitional work placement (at not-for-profit) $900 for placement or no-show Return to work (RTW) specialist $105 per hour (') Telephonic RTW Workplace consultation - program/policy design and planning $200 per hour, plus direct expenses Vocational - full FCM $105 per hour, plus direct expenses (1)(2) Vocational field tasks: Vocational assessment/testing $950 flat fee 28127 16 Labor market survey $640 flat fee Automated transferable skills analysis $360 flat fee Job analysis or ergonomic evaluation $790 flat fee Clinical consultation services Standard (24x7x365 access to nurse): $90 per triage call Premium (blended nurse intake option): $105 per Clinical consultation triage call Advanced (ability to customize workflows): $115 per triage call* *level of customization may warrant additional fees Sedgwick -managed care administrative services 28% of the below fee schedule savings subject to minimum fee of $125 and cap of $7,500 per lien Lien resolution Expert witness testimony or hearing representation charged at $125 per hour plus direct expenses Sedgwick standard medical card No charge; customization starts at $3,500 Mandatory state panel postings Non -mandatory state panel postings (1) California @ $135 per hour; CAT @ $185 per hour 5. SIU Service Fees Included in Sedgwick bill review program fees $9.00 per panel The charges set forth below are the current fees for the services listed, and these fees may change from time to time upon sixty days' prior written notice to Client: Research services Social media investigation $275 Smart plus investigation $475 Comprehensive background Canvassing services Skip tracing/individual locate Asset check Criminal and civil check Records request Social media monitoring Other research services $525 $250 $175 $225 $135 plus cost of records Additional counties: $35 (per county) $100 plus cost of records $25 per week of monitoring Quote upon request Surveillance services 28127 17 Activity check $375: California AOE/COE Recorded statement Scene investigation $95 per hour (portal to portal): California Trial/deposition Mileage charged at IRS standard mileage rate International investigations Quote upon request Other field services Quote upon request Assessment services Suspect file review $95 per hour Fraud investigation (includes state reporting) $95 per hour Workers' compensation and general liability — SIU intelligence program $150 per claim triggered (includes up to three claim triage reviews per claim triggered) Other assessment services Quote upon request 6. Subrogation and Other Recoveries: A. Sedgwick shall pursue recoveries for subrogation, second injury funds, and other applicable special funds such as supplemental state funds, COLA reimbursements, retro funds, and other similar funds. Client shall pay Sedgwick twenty-five percent (25%) of the recovery received. All fees and expenses, including attorneys' fees or investigations, for pursuit of any recovery shall be charged to the appropriate Qualified Claim file as an allocated loss adjustment expense. 28127 18 $95 per hour (portal to portal): California Mileage charged at IRS standard mileage rate Additional expenses to hourly rate: Surveillance Report writing (up to 1/2 hour per day at standard surveillance rates) Pre -surveillance investigation: $85 License plate searches: $10 (post prelim) $700 per day (three-day minimum) Deployment and extraction of stationary device: Unmanned surveillance $85 per hour: All other states $95 per hour: California Mileage charged at IRS standard mileage rate Video copies $60 per additional copy plus shipping Field services Alive and well check - in $350: California person Alive and well check - $125 virtual interview Activity check $375: California AOE/COE Recorded statement Scene investigation $95 per hour (portal to portal): California Trial/deposition Mileage charged at IRS standard mileage rate International investigations Quote upon request Other field services Quote upon request Assessment services Suspect file review $95 per hour Fraud investigation (includes state reporting) $95 per hour Workers' compensation and general liability — SIU intelligence program $150 per claim triggered (includes up to three claim triage reviews per claim triggered) Other assessment services Quote upon request 6. Subrogation and Other Recoveries: A. Sedgwick shall pursue recoveries for subrogation, second injury funds, and other applicable special funds such as supplemental state funds, COLA reimbursements, retro funds, and other similar funds. Client shall pay Sedgwick twenty-five percent (25%) of the recovery received. All fees and expenses, including attorneys' fees or investigations, for pursuit of any recovery shall be charged to the appropriate Qualified Claim file as an allocated loss adjustment expense. 28127 18 B. As determined by the Parties, Sedgwick shall either: a. Deposit the recovery funds and issue payment from Sedgwick's accounts payable system to Client for the net recovery (less Sedgwick's fee). Sedgwick will deposit the net recovery check into the Client's loss -funding account or forward it directly to the Client; or b. Deposit the recovery funds into the Client's loss -funding account and Sedgwick shall receive payment from the claim file or directly from Client. 7. MMSEA/SCHIP Medicare Reporting Fee The charges set forth below are the current fees for the services listed, and these fees may change from time to time upon sixty days' prior written notice to Client: One time $9 charge per claim for claims involving bodily injuries (WC, liability, no fault). 8. Payment Terms Client acknowledges that all fees set forth in the Agreement are due and payable within thirty (30) days of the invoice. Any and all past due fees will incur interest at the rate of 1.5% per month, unless otherwise prohibited by law. Client acknowledges that in the event Sedgwick undertakes collection proceedings for any outstanding fees, then Client will reimburse Sedgwick for all costs associated with such collection action, including a reasonable attorney fee and court cost. All fees are contingent upon claim management from Sedgwick's systems. 28127 19 MANAGED CARE SERVICE SCHEDULE Client has chosen the following managed care services, as defined herein: (1) Provider Fee Management - The bill review process reviews bills against up-to- date and accurate mandated state fee schedules or the usual and customary ("UCR") data base, whichever is appropriate, to reveal excessive, duplicate, or inappropriate charges. (2) Preferred Provider Organization ("PPO") Networks - Sedgwick will arrange for access and channeling to national and regional PPO networks including specialty networks (Diagnostics, Physical Therapy, etc.) under the managed care program in conjunction with the Provider Fee Management service. (3) Hospital Bill Review - Hospital or outpatient non -PPO bills will be reviewed by a nurse for possible errors or excessive charges relative to the patient's medical diagnosis at Sedgwick's or Client's request. (4) Out of Network Bill Review — Bills from out of network health care providers will be reviewed, and if appropriate a negotiation with the billing provider will be pursued. Additionally, inpatient and outpatient procedures that are not addressed by an individual state's fee schedule or UCR will be repriced to a geographically driven and cost to charge repricing database to determine appropriate reimbursement. (5) Specialty Usual and Customary Review — Sedgwick's vendors will apply geographic charges (fee for same procedure charged by other providers in same area) and cost to charge ratios (actual cost to provider for procedure or hospital stay v. amount charged) to determine reimbursement of medical services billed that are not addressed within the jurisdictional fee schedule or usual and customary reimbursement. (6) Field Case Management - Sedgwick will assign appropriate cases for field medical and vocational management services. (7) Utilization Review, which includes the following components: (a) Prospective Review - a review prior to treatment or admission conducted by an experienced registered nurse to validate or negotiate the necessity, setting, frequency, intensity and duration of care delivery. (b) Concurrent Review - during the course of treatment, a review of treatment and planned procedures and establishment of target completion dates. (c) Retrospective Utilization Review- a review post treatment conducted by an experienced registered nurse to identify inappropriate treatment utilization. (d) Peer Review - physician -to -physician contact to resolve treatment and diagnosis questions. 28127 20 (8) Prescription Services — Pharmacy program made available to Client's employees whereby a network of pharmacies, local to Employer sites/employee residences will provide prescription medications related to the work related injury with no out of pocket expenses to the employee. (9) Pharmacy review services include a review of all current medications prescribed to the claimant as well as a review of over the counter medication being taken by the claimant. The purpose of the review is to evaluate whether the medications prescribed to and/or taken by the claimant are appropriate for treatment of the injury or ailment which is the subject of the underlying claim being administered by Sedgwick. (10) Telephonic Case Management services are described below and are available upon request and for an additional fee. (11) Complex file review (nurse review) - Hospital or outpatient non -PPO bills that meet specific, pre -established criteria may be reviewed by a nurse for possible errors or excessive charges relative to the patient's medical diagnosis. Additional Managed Care Services Telephonic Case Management Sedgwick will provide a telephonic medical case management program in which nurse case managers receive early notice of a worker's injury and telephonically manage the appropriate cases. Other elements of the Telephonic Case Management program include: • The management phase includes ongoing return to work ("RTW") and treatment plan management and negotiation. The treating physician will be contacted within forty-eight (48) hours to assess/determine the treatment and RTW plan, including any negotiation required to approve the treatment plan. The Client may also be contacted to assess/determine RTW opportunities. By continuing to contact the injured worker, the provider, and the Client, case management is best able to facilitate early RTW and appropriate treatment. • The case may go simultaneously to the assigned claim examiner and nurse or the Sedgwick claims professional will make initial contacts to determine compensability and triage based on preset triggers and/or the claims professional's judgment to determine if the case will be sent to a telephonic case management nurse. • Throughout the telephonic case management process, telephone contact will be made with the provider, employee, and Client. Status reports will be provided, within seventy-two (72) hours, to the claims professional via documentation in the data management system as significant events (e.g., surgery, treatment plan updates, RTW status, etc.) occur in a case, and no less often than every thirty (30) days. If, at the end of thirty (30) days, the case has not closed, the nurse case manager will contact the claims professional with a recommendation. At that time, the case will either: Close based on a decision by the claims professional Continue with case management on a month-to-month basis until closure and/or RTW 28127 21 and/or maximum medical improvement (MMI). Be referred for Field Case Management Documentation of this contact will be transmitted electronically to the data management system. • Sedgwick claims offices will receive standard, open, closed, referred, and savings reports. All information collected will allow for insured level, by office reporting. Client customized communication reports may carry an additional charge to be borne directly by Client. If this is the case, these charges will be detailed in a separate document to be agreed upon in writing between the Parties. Evaluation and Recommendation The Sedgwick Evaluation and Recommendation program involves triage contact with the injured worker, treating physician and, if appropriate and necessary, Client, to determine treatment and return to work ("RTW") plans and appropriateness for telephonic case management. • In the evaluation and recommendation phase, a Sedgwick nurse will receive demographic and initial claims professional contact information and open the case. The treating physician will be contacted within forty-eight (48) hours to assess/determine the treatment and RTW plan, including any negotiation required to approve the treatment plan. The Client may also be contacted to assess/determine RTW opportunities. • Status reports will be provided, within seventy-two (72) hours to the claims professional via documentation in the data management system as significant events (e.g., surgery, treatment plan updates, RTW status, etc.) occur in a case, and no less often than every thirty (30) days. • Continued telephonic case management will proceed on only those cases in which clinical activities can assist in resolving medical or RTW issues at the discretion of the Sedgwick claims professional. These activities require regular contact with the injured worker, treating physician or therapist, and Client, as appropriate. 28127 22 SIU SERVICE SCHEDULE Sedgwick Special Investigations Unit ("Sedgwick SIU") will provide centralized management of investigative service vendors and will maintain a national vendor list of approved service providers based upon client or local Sedgwick office preference. Sedgwick SIU will establish quality benchmarking and ensure its vendors are properly licensed and maintain insurance coverage as mandated in vendor agreements with these firms. Sedgwick SIU will serve as a central referral and coordination unit providing the following SIU services for the fees itemized in Exhibit B: 1. Assessment services including case review, consultation, action plan development, state fraud filing, claim file demand and fraud packaging. 2. Field services including surveillance, activity checks, alive and well checks, and on-site investigations including recorded statements, AOE/COE, and scene investigations. 3. Research services including comprehensive background checks, internet searches, facility canvasses public records, skip tracing, criminal, civil and asset checks. 4. SIU compliance services including carrier and state annual reporting and fraud awareness training. 5. And, other services as outlined in Exhibit B. 28127 23 MEDICARE REPORTING SERVICES SCHEDULE To assist the Client in fulfilling Client's Medicare beneficiary reporting obligations under Medicare, Medicaid and State Children's Health Insurance Program Extension Act of 2007 ("MMSEA") Section 111 as set forth in 42 U.S.C. §1395y(b)(7)&(8) and the CMS User Guide ("User Guide") published on March 16, 2009 (and as amended and revised), Sedgwick will perform the following reporting services: 1. Sedgwick will electronically interface with the Centers for Medicare and Medicaid Services ("CMS") to capture and report data in the format prescribed by the CMS Specifications. 2. Sedgwick will report directly to CMS on behalf of Client as an Account Designee (reporting agent), as such term is defined in the CMS User Guide as amended from time to time by CMS. 3. Client will be considered a Responsible Reporting Entity ("RRE") as that term is defined in the User Guide. a. Client will be responsible for maintaining a valid RRE Identification Number as described in the User Guide and is a condition precedent to Sedgwick preforming the duties under this section. Failure to maintain the RRE Identification Number will result in Sedgwick's inability to properly report claims on behalf of the Client. Sedgwick assumes no responsibility for maintaining a valid RRE Identification Number on behalf of the Client. 4. Sedgwick will assist Client as follows: a. Sedgwick will electronically interface with the Centers for Medicare and Medicaid Services ("CMS") to capture and report data in the format prescribed by the User Guide. b. Sedgwick will report directly to CMS on behalf of the Client as an Account Designee (reporting agent), and/or Account Manager as such term is defined in the User Guide. c. Sedgwick will prepare the required data files and submit them to CMS on a periodic basis in order to properly query and report the appropriate files as defined in the User Guide. 5. Sedgwick will be responsible for payment of any and all fines assessed to Client regarding compliance with the Medicare beneficiary reporting requirements of Medicare, Medicaid and SCHIP Extension Act of 2007 that relate to the negligent acts or omissions of Sedgwick except to the extent that: a. Such fines or penalties are the direct result of specific direction given by Client and/or its agent or the actions or omissions of Client and/or its agent; or b. Sedgwick did not receive information from Client that is essential to the performance of the duties set forth herein in a timely manner so as to be able to comply with the terms of this Agreement. 28127 24 CLINICAL CONSULTATION SERVICES SCHEDULE Sedgwick will provide clinical consultation services. Clinical consultation services allow a nurse to speak with the injured employee at the time that the claim is reported in order to make recommendations whether medical intervention is needed. At the time of the initial call to Sedgwick, the injured employee will be transferred to a nurse who will utilize clinical guidelines to assess the injury, recommend immediate return -to -work or refer the claimant to the appropriate medical treatment provider, and document the care recommendation. Sedgwick will make outbound calls to the injured employee on appropriate claims to obtain injured employees status and conduct the clinical consultation survey 24 hours after the initial clinical consultation call. The current fee for agreed upon clinical consultation services are set forth in Exhibit B, but this fee will be reviewed and agreed upon annually with sixty days' written notice to Client of any changes. The fee for this service shall be added to Client's periodic invoicing. 28127 25 RESOLUTION NO. 2022-159 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH SEDGWICK CLAIMS MANAGEMENT SERVICES, INC., OF RANCHO CUCAMONGA, FOR WORKERS' COMPENSATION CLAIMS ADMINISTRATION SERVICES WHEREAS, the City of Lodi is permissibly self-insured by the State of California for workers' compensation claims liability; and WHEREAS, Sedgwick Claims Management Services, Inc., (Sedgwick) has been in contract with the City since 2015 to provide workers' compensation claims administration services; and WHEREAS, the proposed Professional Services Agreement also includes pricing for ancillary services on an as -needed basis for individual claim management; and WHEREAS, staff recommends authorizing the City Manager to execute a Professional Services Agreement with Sedgwick Claims Management Services, Inc., (Sedgwick) for workers' compensation claims administration services in the amount of $148,933. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize the City Manager to execute a Professional Services Agreement with Sedgwick Claims Management Services, Inc., of Rancho Cucamonga, California, for workers' compensation claims administration services, in the amount of $148,933 for the period of July 1, 2022 through June 30, 2023; and BE IT FURTHER RESOLVED pursuant to Section 6.3q of the City Council Protocol Manual (Res. No. 2019-223), the City Attorney is hereby authorized to make minor revisions to the above -referenced document(s) that do not alter the compensation or term, and to make clerical corrections as necessary. Dated: June 15, 2022 I hereby certify that Resolution No. 2022-159 was passed and adopted by the City Council of the City of Lodi in a regular meeting held June 15, 2022, by the following vote: AYES: COUNCIL MEMBERS — Hothi, Khan, Kuehne, and Mayor Chandler NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — Nakanishi ABSTAIN: COUNCIL MEMBERS — None OLIVIA NASHED City Clerk 2022-159