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June 13, 2023
ITEM TITLE
Agreement: Approve an Agreement with Pacific Secured Equities Doing Business As Intercare Holdings Insurance Services, Inc., as the City’s Workers' Compensation Third Party Administrator
Report Number: 23-0154
Location: No specific geographic location
Department: Human Resources
Environmental Notice : The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Adopt a resolution approving an agreement with Pacific Secured Equities, doing business as Intercare Holdings Insurance Services, Inc., as the City’s Workers' Compensation Third Party Administrator.
SUMMARY
California employers, including cities, are required to provide workers’ compensation benefits when employees are injured on the job. The City of Chula Vista, in compliance with its workers’ compensation obligations, has a self -insured workers’ compensation program . To administer the City of Chula Vista’s workers’ compensation program, the City requires a qualified workers’ compens ation claims management service company to supervise and administer the workers’ compensation claims and pay benefits to injured workers on behalf of the City’s self-insured program.
Staff is recommending that the City Council authorize the City Manager to execute a second agreement with Intercare Holdings Insurance Services, Inc., to act as the third-party administrator (“ TPA”) for the City’s workers’ compensation program, effective July 1, 2023, for a period of three years with the option to extend in one-year increments for up to an additional three years.
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ENVIRONMENTAL REVIEW
The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060( c)(3) no environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
California employers, including cities, are required to provide workers’ compensation benefits when employees are injured on the job . The City o f Chula Vista, in compliance with its workers’ compensation obligations, has a self -insured workers’ compensation program . To administer the City of Chula Vista’s workers’ compensation program, the City requires a qualified workers’ compensation claims man agement service company (commonly called “third party administrators” or “TPA”) to supervise and administer the workers’ compensation claims and pay benefits to injured workers on behalf of the City’s self -insured program.
In 2017, staff completed R equest For Proposal (RFP) P15-16/17 and recommended Intercare Insurance (“Intercare”) be selected as the City’s TPA. Prior to this RFP, TPA services had been provided by TriStar Risk Management for a period of 22 years.
On June 20, 2017, Council approved Intercare as the City’s TPA effective July 1, 2017, for a period of one year with the option to extend in one-year increments for up to an additional five years. Effective June 30, 2023, Intercare will have provided TPA services for the City for a period of six years.
Staff is recommending that the City Council authorize the City Manager to execute a second agreement with Intercare Holdings Insurance Services, Inc., to act as the TPA for the City’s workers’ compensation program, effective July 1, 2023, for a period of three years with the option to extend in one-year increments for up to an additional three years. Intercare provides two full -time dedicated claims examiners, one de signated claims assistant and one part -time claims examiner and that are respon sible for the administration of the City’s workers’ compensation program . Maintaining claims examiner staff provides a continuity of claims management for current and former employees that have open workers’ compensation claims. On this basis, staff is rec ommending Intercare be awarded the contract pursuant to Chula Vista Municipal Code Section
2.56.110.H.2 Impractical or Impossible and that the City interests are materially better served by negotiating directly with the current firm.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
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CURRENT-YEAR FISCAL IMPACT
There is no current-year fiscal impact for this action.
ONGOING FISCAL IMPACT
Intercare Holdings Insurance Services, Inc. administrative costs by fiscal year (FY) are as follows:
FY 2023-24 $528.531.59
FY 2024-25 $546,361.83
FY 2025-26 $562,179.80
FY 2026-27 $578,472.31
FY 2027-28 $595,253.39
FY 2028-29 $612,538.31
The FY 2023-24 costs are included in the FY 2023-24 Adopted Budget and will be incorporated in the annual budget development process for future respective fiscal years Note: Bill Review expenses and other claim expenses are allocated to individual workers’ compensation claims. These expenses vary by year and are impacted by individual employee workers’ compensation claims.
ATTACHMENTS
1. Contract
Staff Contact: Courtney Chase, Director of Human Resources/Risk Management