DATE: MAY 24, 2022
DEPARTMENT: CITY ATTORNEY’S OFFICE
FROM: CHRISTOPHER A. CALLIHAN, CITY ATTORNEY
BY: RHONDA COMBS, ASSISTANT CITY ATTORNEY
TITLE: AGREEMENT FOR SERVICES FOR LIABILITY CLAIMS ADJUSTER RECOMMENDED MOTION:
A motion to approve a Resolution authorizing the City Manager to execute an agreement for services between the City of Salinas and Carl Warren Company (“CWC”) for third party adjusting (“TPA”) services of liability claims brought against the City of Salinas.
RECOMMENDATION:
This recommendation is to contractually move the City of Salinas away from its current liability claims adjuster, Sedgwick Claims Management Services, Inc. (“Sedgwick”), to services provided by CWC.
BACKGROUND:
Since 2017 the City of Salinas has contracted with York Risk Services Group, Inc. (“York,” which was purchased and assumed by Sedgwick in 2019) for liability TPA services. The 2017 contract is nearing expiration and consequently, in January 2022, the City issued a Request for Proposals (“RFP”) for liability TPA services. The City received four proposals, two of which were deemed the most qualified and responsive by a 3-person RFP committee based upon the written proposals and oral interviews. CWC prevailed as the responsive forerunner by presenting a strong lead adjuster and supervising adjuster, along with high audit scores for quality performance, low turnover rate among employees despite the pandemic and high client retention, as well as expertise in public agency adjusting. City staff was able to negotiate with CWC for an elimination in its proposed fees to reduce the transition of data fees from Sedgwick’s risk management information claims system (“RMIS”) to CWC’s RMIS.
The proposed agreement is to begin July 1, 2022 for a 3-year term with a set annual price of $148,789.96 (thru 2025), two additional 3-year terms are subsequently available upon mutual written agreement of the parties, at a slightly elevated rate, namely $150,930.00 for the second 3-year term, and $162,288.00 for the third 3-year term. To perform these services itself the City would need to solicit for, identify compatibility for, staff with its intellectual technology systems team, and pay for an annual license fee for a RMIS that tracks and records data from many years past to present. Such system is estimated to cost approximately $50,000-plus per year, with increased fees based upon the number of users (with a de-escalation calculation based upon the number of users), Notably, the cost of this proposed agreement is higher than the $83,487.00 that the City pays currently to its incumbent provider. Unfortunately, despite intensive City staff time and resources having been applied to coordinate and direct the service provider back into contractual and best practices standards, unnecessary delays in servicing claims, paying invoices, reporting timely to excess insurers, have remained. Also, please note that the $83,487.00 amount currently paid is a discounted amount that the City Attorney’s Office negotiated to reduce the agreement funding of the incumbent due to year-over-year concerns respecting quality and contractual adherence.
CEQA CONSIDERATION:
Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.
STRATEGIC PLAN INITIATIVE:
This item relates to the City Council’s Strategic Goal of providing effective and culturally responsive government.
DEPARTMENTAL COORDINATION:
A liability TPA works directly with the City departments which are affected by claims to gather information, facilitate communication, evaluate responsibility/liability or defenses, and to promptly respond to individuals bringing claims against the City.
FISCAL AND SUSTAINABILITY IMPACT:
Funds are appropriated and available in the City Attorney’s Office budget fund (account #7104.14.1248-64.4210).
ATTACHMENTS:
Resolution
Agreement for Services
RESOLUTION NO. (N.C.S.)
A RESOLUTION SELECTING CARL WARREN COMPANY FOR LIABILITY CLAIMS THIRD PARTY ADMINISTRATION SERVICES WHEREAS, City of Salinas issued a Request for Proposal (“RFP”) on January 25, 2022, for general liability and automobile claims administration services; and WHEREAS, upon evaluation of proposals and interview of two top proposers, City’s RFP Committee has recommended Carl Warren Company as the best qualified proposer to meet the City’s liability claims adjusting needs; and WHEREAS, the agreement is for a three year term with a set annual price of $148,789.96, two additional 3-year terms are subsequently available upon mutual written agreement of the parties, at a slightly elevated rate, namely $150,930.00 annually for a second 3-year term, and $162,288.00 annually for a third 3-year term; and NOW, THEREFORE, BE IT RESOLVED that the Salinas City Council hereby awards a contract for liability claims administration services to Carl Warren Company; and BE IT FURTHER RESOLVED that the City Manager is authorized to sign an agreement with Carl Warren Company to provide such services to the City.
PASSED AND APPROVED this 24th day of May 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED:
_______________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk
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