June 28, 2022
Human Resources
DATE: June 28, 2022
TO: Mayor Butt and Members of the City Council
FROM:
Laura Marquez, Risk Manager
Subject:
Contract Amendment with George Hills Company, Inc. to
Continue to Provide Third-Party Administration (TPA) of General Liability Claims Received by the City
FINANCIAL IMPACT: The proposed expenditure is included within the approved fiscal year 2022-2023 budget for the Human
Resources Department, Risk Management Division
(50182316)
PREVIOUS COUNCIL
ACTION:
June 16, 2019, approved standard contract with an
option for two-year extension.
STATEMENT OF THE
ISSUE:
General liability or government tort claims are currently administered by a third-party administrator. A Request for Proposals for third party administration of these claims was issued in May of 2019. Following the completion of
the proposal evaluation process, George Hills Company,
Inc. was retained for three years with an option for a two- year extension to provide third party administration of general liability claims.
RECOMMENDED ACTION:
APPROVE a six-month contract amendment with George
Hills Company, increasing the amount of the contract by $88,560, for a total amount not to exceed $598,560 to
continue to provide third party administration of general liability claims received by the City, with an extended term ending December 31, 2022 - Human Resources,
Risk Management (Laura Marquez 620-6974).
AGENDA
REPORT
June 28, 2022
DISCUSSION:
The City is responsible for selecting its own claims adjusting firm, or third-party administrator (TPA) to investigate and manage tort claims filed against the City. The City participates in a general liability insurance program and then is part of a pooled insurance program with the California Joint Powers Risk Management Authority (CJPRMA). In FY 2021-2022, the City’s self-insured retention level was $500,000 but this retention level is now increasing to $750,000 in FY 2022-2023.The Risk Management Division is responsible for managing the third-party claims administrator.
The third-party administrator is responsible for investigating and managing claims and is also required to maintain and manage an adequate reserve to pay for all liability claims and related costs.
George Hills has been the City’s third-party claims administrator since 2004. A competitive process was initiated in 2019 and George Hills was retained again with a three-year contract and a two-year option to extend. Given the $250,000 increase in the City’s self-insured retention limit and the rising number of tort claims being filed against the City, City staff is recommending a six-month contract extension of the current contract with George Hills to continue claims management. During this six-month period, the City Attorney’s Office, in coordination with the Risk Management Division and the Finance Department, will be reviewing claims handling and making recommendations to determine whether additional performance measures need to be incorporated into the current contract with George Hills or whether to recommend issuing a new Request for Proposals to engage a different third-party administrator.
DOCUMENTS ATTACHED:
Attachment 1 – Original Contract
Attachment 2 – First Amendment to the Contract
Attachment 3 – Proposed Second Amendment to the Contract