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DATE: November 3, 2025
TO: Mayor and Members of the City Council
VIA: Stefan Chatwin, City Manager
FROM: Diane Pitman, Administrative Services Director
DEPARTMENT: Administrative Services
SUBJECT: AUTHORIZATION TO CITY MANAGER TO SETTLE WORKERS’ COMPENSATION CLAIMS UNDER $50,000 NOT INCLUDING
STATUTORY REQUIRED PAYMENTS
RECOMMENDATION
It is recommended that the City Council adopt the attached resolutions authorizing the City Manager to settle workers’ compensation claim settlements under $50,000 not including statutory required payments.
EXECUTIVE SUMMARY
Effective July 1, 2025, Foster City was granted approval to self-insure workers’ compensation claims as part of the transition out of the Cities Group Joint Powers Authority (JPA). Effective August 1, 2025, all open and closed claims were forwarded to LWP Claims Solutions, Inc. as the City’s third-party administrator for workers’ compensation claims. As claim review occurred, it became apparent that some long- standing claims could be resolved through settlement. In order to settle workers’ compensation claims efficiently, best practice dictates that the City Manager be authorized to settle claims under $50,000 not including statutory required payments.
Claim settlements in excess of $50,000, not including statutory required payments, will be brought to the City Council for review and approval. The attached resolution provides authority to the City Manager.
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BACKGROUND/ANALYSIS
The Administrative Services Department has been transitioning workers’ compensation claim administration from a JPA arrangement into a self-insured administration. The City Council approved a three-year contract with LWP Claims Solutions, Inc. (LWP) on June 2, 2025 to provide third-party administration services to Foster City. The City Council approved a resolution on June 16, 2025 declaring the assumption of any and all workers’ compensation liabilities as a self-insured employer. These two actions provided Foster City control over the administration of those claims.
All claims have been transitioned out of the JPA and to LWP as of August 1, 2025.
LWP has been reviewing claims files, transferring litigation claims files to different law firms to reduce costs, and working with Human Resources staff to process claims timely and provide excellent customer service to all. The next step, and best practice, in the claims administration process is to finalize and settle those claims deemed appropriate for settlement.
To ensure timely settlement of claims, and ease in administering workers’ compensation claims, it is recommended that the City Manager be granted the authority to settle claims under a specified amount. There are two types of workers’ compensation settlements: Compromise and Release (C&R) and Stipulations Request for Award (STIP). A C&R is a settlement agreement that resolves a claim with a one- time lump sum payment, and in exchange, the injured worker gives up their right to any future benefits (future medical costs) from that claim. A STIP is a settlement agreement that allows an injured worker payment of Permanent Disability, over time, rather than a one-time lump sum payment. In addition, for STIPS, the injured worker is entitled to lifetime future medical care related to the work injury. Also, in certain circumstances, usually a given timeframe, the injured worker may be able to reopen the claim for additional benefits.
The attached resolution is requesting authorization for the City Manager to approve C&R and STIP agreements, up to $50,000, not including any statutory required payments. The statutory required payments are the mandatory temporary disability payments and other payments separate and apart from the settlement amounts agreed to by an injured worker. The City Manager currently has the authority to approve professional services contracts up to $50,000 which is why the amount was selected for C&R and STIP agreements. All C&R and STIP agreements over $50,000 will be brought to the City Council for approval.
California Environmental Quality Act
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The approval of the settlement authority is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378 as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment.
FISCAL IMPACT
There is no current fiscal impact to adopting this resolution. Finance established a Workers Compensation Self-Insurance Fund 510 as part of the Fiscal Year 2025-2026 budget. Any settlements approved by the City Manager will be paid from that fund. If the fund requires additional appropriation for claims administration or settlements, a request will be brought to the City Council for approval.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Staff Empowerment and Operational Excellence
ATTACHMENTS:
Attachment 1 - City Resolution