City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JUNE 27, 2023 FROM: FINANCE DEPARTMENT, RISK MANAGEMENT WARDS: ALL
SUBJECT: APPROVE AMENDMENT NO.1 TO PROFESSIONAL SERVICES AGREEMENT WITH SEDGWICK CLAIMS MANAGEMENT SERVICES, INC. FOR THE ADMINISTRATION AND MANAGEMENT OF ALL PARADA CLAIMS AND PAYMENTS DUE TO RIVERSIDE PUBLIC UTILITIES IN THE AMOUNT OF $155,358, INCREASING THE AGGREGATE AWARD AMOUNT TO $475,633, INCLUDING A 20% CONTINGENCY OF $95,126.60 FOR A TOTAL NOT TO EXCEED $570,759.60 FROM AUGUST 16, 2022, TO AUGUST 16, 2027.
ISSUE:
Approve Amendment No.1 to the Professional Services Agreement with Sedgwick Claims Management Services, Inc. for the administration and management of all Parada claims and payments due to Riverside Public Utilities in the amount of $155,358.
RECOMMENDATIONS:
That the City Council:
Approve Amendment No.1 to the Professional Services Agreement with Sedgwick Claims Services to increase funds by $155,358 for a revised aggregate award total of $475,633.
Authorize a 20% contingency of $95,126.60, for a total amount not to exceed $570,759.60 for the remainder of the agreement.
Authorize the City Manager, or his designee, to execute the Amendment No.1 with Sedgwick Claims Management Services, including making minor and non-substantive changes.
BACKGROUND:
In 2010, California voters passed Proposition 26 which provided that certain fees and charges unrelated to electric service must be approved by voters.
In 2018, the City of Riverside was served with a lawsuit titled Parada v. City of Riverside. The plaintiffs argued that the General Fund Transfer (GFT) was an added tax that required voter approval and that the City violated Proposition 26 by not securing voter approval for the 11.5% GFT.
In May 2021, a settlement was reached by the City and Parada plaintiffs. The settlement required the City to place a measure on an upcoming ballot that asks voters to authorize the Utility Fund Transfer to the General Fund to pay for City services unrelated to the utility.
On July 20, 2021, the City Council voted 5-2 to place the Council’s amendment, The Service Protection Measure (Measure C), on the November 2021 ballot.
On September 20, 2021, the City released Request for Information (RFI) 2128 in an effort to gather general industry knowledge and best practices for claims administration to prepare to initiate claims administration shall Measure C pass.
On November 2, 2021, Riverside residents voted and passed Measure C.
On May 27, 2022, the City released RFP 2207 in an effort to retain a professional claims administrator to assist the City in executing the City’s obligations under the settlement terms.
On June 10, 2022, the City closed RFP 2207. The City received a total of three responsive bids.
On July 11, 2022, the City entered into negotiations with Sedgwick Claims Management Services, Inc.
On August 16, 2022, the City awarded a Professional Services Agreement to Sedgwick Claims Management Services, Inc. for the Administration and Management of all Parada claims and payments.
DISCUSSION:
The Risk Management team has been working vigorously with Sedgwick Claims Management Services, Inc. to execute and comply with the City’s claim obligations per the Parada settlement terms. During the planning phase of the project, the City approved an upgrade to the claim notices to include City branding and color. These changes were recommended by our Marketing team and approved by Finance in an effort to boost claim filings by former customers.
The total cost of upgrading 157,475 notices was $115,728.66, inclusive of printing and postage rates, which equates to $0.7349 per notice. To date, the City has used 94% of available funds and the Risk Management team is now seeking Council approval for additional funds so our consultant can continue assisting the City in administering the remainder of the claims.
Summary of all Invoice Activity as of May 25, 2023
Invoice #
Date Issued
Amount Due
145445
10/28/2022
$49,141.13
145161
9/27/2022
$8,390.18
145640
11/30/2022
$84,320.61
145878
12/21/2022
$66,608.64
147132
1/26/2023
$37,130.31
148495
2/24/2023
$22,413.71
148637
3/22/2023
$16,919.44
148915
4/19/2023
$15,063.92
Total Paid as of May 25, 2023:
$299,987.94
The City of Riverside does not pay the consultant upfront. The City only pays for services as they are rendered STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 2-Community Well-Being and Goal 2.6- Strengthen community preparedness for emergencies to ensure effective response and recovery.
Community Trust – The City engaged in the necessary procurement processes needed to ensure that the City entered into an agreement with a claims administrator who is equipped to assist the City in satisfying the Parada settlement terms.
Equity – The City worked with Sedgwick/JND to develop and implement an equitable distribution strategy for current and former utility customers.
Fiscal Responsibility – The City performed extensive research to ensure accurate reporting of the GFT paid by each qualifying utility customer to form the basis for the claim payments.
Innovation – The City of Riverside will continue to work collaboratively with Sedgwick to ensure the highest quality customer service.
Sustainability & Resiliency – The City of Riverside implemented a streamlined process inclusive of email and mail notifications aimed to maximize communication.
FISCAL IMPACT:
The total fiscal impact of this action is $155,358. Sufficient funds are available within the Liability Insurance Trust Fund, City Attorney- Claim Management, and Professional Services account number 131000-421000.
Prepared by: Kristie Thomas, Assistant Chief Financial Officer Certified as to
availability of funds: Edward Enriquez, Interim Assistant City Manager/ Chief Financial Officer/Treasurer
Approved by: Edward Enriquez, Interim Assistant City Manager/ Chief Financial Officer/Treasurer
Approved as to form: Phaedra A. Norton, City Attorney
Attachment: Amendment to Professional Consultant Services Agreement RFP 2267 Emergency and Non-Emergency Contractor Award ● Page 3