Adopted: December 11, 1990
Effective: February 15, 1991
Amended: March 11, 2004
Amended: October 5, 2006
Amended: December 8, 2011
Amended: July 1, 2019
MEMORA
NDUM OF UNDERSTANDING
GENERAL LIABILITY PROGRAM 2
This Mem
orandum of Understanding is entered into by and between Public Risk Innovation, Solutions, and Management (hereinafter referred to as PRISM ) and the participating members of the General Li ability Program 2 (hereinafter referred to as “GL2”), consisting of counties and other public entities (hereinafter “Public Entity”) who are signatories to this Memorandum.
1. JOINT
POWERS AGREEMENT . Except as otherwise provided herein, all terms used herein shall be as defined in Article 1 of the Joint Powers Agreement Creating PRISM (hereinafter referred to as "Agreement"). Provisions of any applicable coverage agreement and all other provisions of the Agreement not in conflict with this Memorandum shall be applicable.
2. PROGRA
M COMMITTEE.
A. There is
hereby established a GL2 Program Committee (hereinafter referred to as " GL2 Committee" or “Committee”) and, except as otherwise provided herein, said Committee shall have full authority to determine all matters affecting the participating members.
B. The GL2 Comm
ittee shall consist of all GL2 member counties of PRISM, with the committee member being that person designated as the county’s Board member for PRISM. In the event a county Committee member is not present at a meeting of the Committee, the County’s Alternate Board member may serve as the county’s alternate on the Committee. In addition to GL 2 member counties, each GL2 public entity member shall be a member of the Committee, subject to the GL2 member counties maintaining a minimum of 60% of the eligible voting membership on the Committee. The GL 2 public entity committee members shall be reduced accordingly to ensure at least 60% of the Committee consists of GL 2 member counties. For example, based upon the 8 current GL2 member counties participating in the Program, all 3 current GL2 public entity members would have a seat on the Committee and maintain at least 60% representation by the GL2 member counties. If the number of GL2 member counties is reduced to 4, then the GL2 public entity members would lose one seat and have only 2 votes. GL2 public entity committee members shall be appointed by the Executive Committee and shall serve for a two -year term. Each GL2 public entity committee member shall designate an alternate to vote in their absence. The alternate must be an employee or elected or appointed official of the GL2 public entity committee member.
ATTACHMENT B
General Liability 2 Program Amended: July 1, 2019
Memorandum of Understanding
P age 2 of 5
C. T he GL2 Committee shall meet on the call of the Chair of the Committee as provided in Article 12 of the Agreement and Article VI of the Bylaws of PRISM (hereinafter referred to as the "Bylaws").
D. A
majority of the members of the GL2 Committee shall constitute a quorum for the transaction of business. Except as otherwise provided herein, all actions of the GL2 Committee shall require the affirmative vote of a majority of the members of the Committee. Any meeting of the GL 2 Committee shall be subject to the applicable provisions of Government Code § 54950 et seq., commonly known as the “Brown Act.”
3 . PREMIUMS. The participating members, in accordance with the provisions of Article 14 of the Agreement, shall be assessed an annual premium for the purpose of funding the GL2 Program. Annual premium contributions, including Program administrative costs plus PRISM ’s general expense allocated to the Program by the Board for the next policy period, shall be as established by the GL2 Committee upon consultation with the underwriters.
4 . MEMBER SELF-INSURED RETENTIONS. The self -insured retention amounts of the members shall be established upon consultation with the underwriters and subject to approval by the GL2 Committee.
5 . COST ALLOCATION. The method of allocating contributions to the GL2 Program shall be determined by the GL2 Committee upon consultation with underwriters.
6. F
UNDING FOR CLAIMS.
A. A
t the GL 2 Committee’s discretion, based on market conditions, exposures, and/or loss history, self-insured layers or aggregated retentions may be established for the GL2 Program for any policy period or combination of policy periods. If self - insured and/or aggregated retention layers are established, such will be funded by contributions from the members participating in the self-insured and/or aggregated retention layers, as determined by the Committee. Funding for these layers shall be used exclusively for the payment of claims made against the participating members, including expenses, in accordance with the terms and conditions of the applicable Memorandum of Coverage.
B.
Any self-insured and/or aggregated retention layers shall be fully funded by the participating members, and may, at the discretion of the GL2 Committee, be discounted for anticipated and/or earned investment earnings. Should such not be fully funded for any reason, pro-rata assessments may be made to the participating members pursuant to the provisions of Article 14.b.3. of the Agreement to ensure a 100% funding level.
ATTACHMENT B
General Liability 2 Program Amended: July 1, 2019
Memorandum of Understanding
7. DIVIDENDS. Notwithstanding Article 22.b. of the Agreement, if self-insured and/or aggregated retention layers are established and it i
s determined that funds remain after
the payment of all claims, a dividend may be declared by the GL2 Committee. If a dividend is declared, the dividend shall be payable to the members participating in the layer, during the period in which there are excess
funds, based on each member’s share
of contributions to the applic
able layer, regardless of whether the member is a
participating member
in the GL2 Program at the time the dividend is declared.
8. MEMORANDUM OF COVERAGE. A Memorandum of Coverage will be issued by PRISM evidencing membership in the GL
2 Program and setting forth terms and
conditions of coverage.
9. CLAIMS ADMINISTRATION.
Each participating member is required to comply
with PRISM’s U
nderwriting and Claims Administration Standards (including Addendum B - Liability Claims A
dministration Guidelines) as amended from time-t o-time, and which are attached hereto as Exhibit A and incorporated herein.
10. CLAIMS REVIEW COMMITTEE. There is hereby established a GL2 Claims Review Committee (hereinafter referred to as "
CRC2”) and, except as otherwise provided
herein, the CRC2 shall
have full authority to determine all matters affecting the settlement of claims for
participating members in excess of the members’ respective SIRs. The CRC2 shall als
o have full authority to conduct business on any other matters that have been delegated to it by the GL2 Committee.
The CRC2 shall review all claims arising
out of the GL2
Program against members, which involve or may involve liability of PRISM. The CRC2 may settle claims in excess of the members’ SIRs in accordance with Article XI of
PRISM’s Bylaws. The CRC2 Committee shall advise the GL2 Committee as to the nature and extent
of claims adjusting and legal defense services
necessary to protect the funds of PRISM, as to settlement of claims above its monetary limits which involve liability of PRISM, and such other functions as the GL2 Committee may direct.
The GL2 Committee may appoint legal counsel or use County Counsel representatives to serve in an advisory capacity to the CRC2.
A. The GL2 Committee shall appoint
members to the CRC2. Te rms of service
on the CRC2 will be through December 31 st of the year of expiration or until the GL2 Committee makes new appoin
tments at its meeting the following year,
whichever is later.
i. The CRC2 shall be comprised of 7 members who participate in the GL2 Program, of which 5 are voting members and 2 are alternates who are eligible to vote at any meeting where a voting member is absent. For the first year of t
he Committee, 3 of the voting members will serve 2 year terms and the other 2 voting members will serve 1 year terms. After the completion of the first year of the CRC2, the 2 expiring terms will become 2 year terms
thereafter.
Alternate members serve one-y ear
terms.
ATTACHMENT B
General Liability 2 Program Amended: July 1, 2019
Memorandum of Understanding
P age 4 of 5
B. T
he CRC2 shall meet at regularly scheduled times and places or upon the call of the C hair. Written notice of regular meetings shall be in accordance with the provisions of Article III.(1)(c) of the Bylaws. Special meetings shall be called and noticed in accordance with the provisions of Article III.(2).
A m
ajority of the members of the CRC2 shall constitute a quorum for the transaction of business . All actions of the CRC2 shall require the affirmative votes of a majority of the members at a meeting duly held at which a quorum is present.
C. S
hould a member disagree with the denial of a request for settlement authority, the member may appeal the decision to the GL2 Committee for reconsideration. If the Committee agrees with the CRC2’s decision, then the member may appeal the decision to the Executive Committee pursuant to subsection (c) of Article 31 of the Agreement and thereafter follow the steps laid out in that subsection.
1 1. APPLICATION TO THE PROGRAM.
A. A
ll applications to join the GL2 Program will be evaluated by and subject to approval by the GL2 Committee and the underwriter.
B. Any entity which makes application to become a participating member of the GL2 Program who is not already a participati ng member in PRISM must also be approved in accordance with the provisions of Article 19 of the Agreement.
C. New participating members may be added to the GL2 Program during the term of the coverage period on a pro- rata basis. Notwithstanding late entr y into the Program, the new memb er may be assessed additional sums pursuant to paragraph 6 herein, based upon all claims against the f und during the entire coverage period.
1 2. WITHDRAWAL AND/OR CANCELLATION FROM THE PROGRAM. Withdrawal and/or cancellation of a member from the GL2 Program shall be in accordance with the provisions of Article 20 or 21 of the Agreement, except that any interest or other dividend to which the withdrawing member is otherwise entitled shall be payable to the withdrawing member in accordance with paragraph 7 herein.
1 3. LATE PAYMENTS. Notwithstanding any other provision to the contrary regarding late payment of invoices or cancellation from a program, at the discretion of the Executive Committee, any member that fails to pay an invoice when due may be given a ten (10) day written notice of cancellation.
ATTACHMENT B
General Liability 2 Program Amended: July 1, 2019
Memorandum of Understanding
P age 5 of 5
5/30/19
14. RESOLUTION OF DISPUTES. Any question or dispute with respect to the rights and obligations of the parties to this M emorandum regarding coverage shall be determined in accordance with the Article 31 of the Agreement, and may also be subject to approval of the underwriter.
1 5. AMENDMENT. This Memorandum may be amended by a majority vote of the GL2 Committee and signature on the Memorandum by the member ’s designated representative who shall have authority to execute this Memorandum. Should a member of the GL2 Program fail to execute any amendment to this Memorandum within the time provided by the GL2 Committee, the member will be deemed to have withdrawn as of the end of the policy period.
1 6. COMPLETE AGREEMENT . Except as otherwise provided herein, this Memorandum constitutes the full and complete agreement of the members. 1 7. SEVERABILITY. Should any provision of this Memorandum be judicially determined to be void or unenforceable, such determination shall not affect any remaining provision.
1 8. EFFECTIVE DATE. This Memorandum shall become effective on the effective date of coverage for the member and upon approval by the GL2 Committee of any amendment, whichever is later.
1 9. EXECUTION IN COUNTERPARTS . This Memorandum may be executed in several counterparts, each of which shall be an original, all of which shall constitute but one and the same instrument.
I
n witness whereof, the undersigned have exec uted this Memorandum as of the date set forth below.
D
ated:
Public Risk Innovation, Solutions, and Management
D
ated: ____________ ___________________________________________ N
ame, Position: ______________________________
M
ember Entity: _______________________________
ATTACHMENT B
Adopted: December 6, 1985
Last Amended: July 1, 2019
P
UBLIC RISK INNOVATION, SOLUTIONS, AND MANAGEMENT (PRISM)
UNDERWRITING AND CLAIMS ADMINISTRATION STANDARDS
I. GENERAL
A. Each Member shall appoint an official or employee of the Member to be responsible for the risk management function and to serve as a liaison between the Member and PRISM for all matters relating to risk management.
B. Each Member shall maintain a lo ss prevention program and shall consider and act upon all recommendations of PRISM concerning the reduction of unsafe conditions.
II. EXC
ESS WORKERS' COMPENSATION PROGRAM
A. Members of the Excess Workers’ Compensation Program, except those members of the Primary Workers’ Compensation Program whose responsibilities are outlined in Section IV below, shall be responsible for the investigation, settlement, defense and appeal of any claim made, suit brought or proceeding instituted against the Member.
1. The Member shall use only qualified personnel to administer its workers' compensation claims. At least one person in the claims office (whether in -house or outside administrator) shall be certified by the State of California as a qualified administrator of self-insured workers' compensation plans.
2. Qualified defense counsel experienced in workers’
compensation law and practice shall handle litigated claims.
Members are encouraged to utilize attorneys who have the designation “Certified Workers’ Compensation Specialist, the State Bar of California, Board of Legal Specialization”.
3. The Member shall use PRISM's Workers' Compensation Claims Administration Standards (Addendum A) and shall advise its claims administrator that these standards are utilized in PRISM's workers' compensation claims audits.
B. The Member shall provide PRISM written notice of any potential excess workers' compensation claims in accordance with the requirements of PRISM's Bylaws. Updates on such claims shall be provided pursuant to the reporting provisions of PRISM’s Workers’
EXHIBIT A
ATTACHMENT B
Compensation Claims Administration Standards (Addendum A) or as requested by PRISM and/or PRISM's excess carrier.
C. A claims administration audit utilizing PRISM's Workers' Compensation Claims Administration Standards (Addendum A) shall be performed once every two (2) years. In addition, an audit will be performed within twelve (12) months of any of the following events:
1. There is an unusual fluctuation in the Member's claim experience or number of large claims, or
2. There is a change of workers' compensation claims administration firms, or
3. The Member is a new member of the Excess Workers’ Compensation Program.
The claims audit shall be performed by a firm selected by PRISM unless an exception is approved. Recommendations made in the claims audit shall be addressed by the Member and a written response outlining a program for corrective action shall be provided to PRISM within sixty (60) days of receipt of the audit.
D. E
ach Member shall maintain records of claims in each category of coverage (i.e. indemnity, medical, expense) or as defined by PRISM and shall provide such records to PRISM as directed by the Board of Directors, Claims Review Committee, Underwriting Committee, or Executive Committee. Such records shall include both open and closed claims, allocated expenses, and shall not be capped by the Member’s self-insured retention.
E. The Member shall obtain an actuarial study performed by a Fellow of the Casualty Actuarial Society (FCAS) at least once every three (3) years. Based upon the actuarial recommendations, the Member should maintain reserves and make funding contributions equal to or exceeding the present value of expected losses and a reasonable margin for contingencies.
III
. GENERAL LIABILITY PROGRAMS
A. M
embers of the General Liability 1 or General Liability 2 Programs, except those members of the Deductible Buy-Down Program whose responsibilities are outlined in Section V below, shall be responsible for the investigation, settlement, defense and appeal of any claim made, suit brought or proceeding instituted against the Member.
1. The Member shall use only qualified personnel to administer its liability claims.
ATTACHMENT B
2. Qualified defense counsel experienced in tort liability law shall handle litigated claims. Members are encouraged to utilize defense counsel experienced in the subject at issue in the litigation.
3. The Member shall use the Liability Claims Administration Standards (Addendum B) and shall advise its claims administrator that these standards are utilized in PRISM's liability claims audits.
B. The Member shall provide PRISM written notice of any potential excess liability claim in accordance with the requirements of PRISM's Bylaws.
Updates on such claims shall be provided pursuant to the reporting provisions of PRISM’s Liability Claims Administration Standards (Addendum B) or as requested by PRISM and/or PRISM's excess carrier.
C. A claims administration audit utilizing PRISM's Liability Claims Administration Standards (Addendum B) shall be performed once every two (2) years. In addition, an audit will be performed within twelve (12) months of any of the following events:
1. There is an unusual fluctuation in the Member's claims experience or number of large claims, or
2. There is a change of liability claims administration firms, or
3. The Member is a new member of the General Liability 1 or General Liability 2 Program.
The claims audit shall be performed by a firm selected by PRISM unless an exception is approved. Recommendations made in the claims audit shall be addressed by the Member and a written response outlining a program for corrective action shall be provided to PRISM within sixty (60) days of receipt of the audit.
D. E
ach Member shall maintain records of claims in each category of coverage (i.e. bodily injury, property damage, expense) or as defined by PRISM and shall provide such records to PRISM as directed by the Board of Directors or applicable committee. Such records shall include open and closed claims, allocated expenses, and shall not be capped by the Member’s self-insured retention.
E. The Member shall obtain an actuarial study performed by a Fellow of the Casualty Actuarial Society (FCAS) at least once every three (3) years. Based upon the actuarial recommendations, the Member should maintain reserves and make funding contributions equal to or exceeding the present value of expected losses and a reasonable margin for contingencies.
ATTACHMENT B
IV. PRIMARY WORKERS’ COMPENSATION PROGRAM
A. Members of the Primary Workers’ Compensation Program shall provide the third party administrator written notice of any claim in accordance with the requirements of PRISM. Members must also cooperate with the third party administrator in providing all necessary information in order for claims to be administered appropriately.
B. PRISM shall be responsible for ensuring qualified personnel administer claims in the Primary Workers’ Compensation Program and that claims are administered in accordance with PRISM’s Workers’ Compensation Claims Administration Standards (Addendum A).
C. PRISM shall be responsible for ensuring a claims administration audit utilizing PRISM’s W orkers’ Compensation Claims Administration Standards (Addendum A) is performed once every two (2) years.
D. PRISM shall be responsible for obtaining an actuarial study performed by a Fellow of the Casualty Actuarial Society (FCAS) annually.
V. DE
DUCTIBLE BUY-DOWN PROGRAM
A. M
embers of the Deductible Buy-Down Program shall provide the third party administrator written notice of any claim or incident in accordance with the requirements of PRISM. Members must also cooperate with the third party administrator in providing all necessary information in order for claims to be administered appropriately.
B. PRISM shall be responsible for ensuring qualified personnel administer claims in the Deductible Buy-Down Program and that claims are administered in accordance with PRISM’s Liability Claims Administration Standards (Addendum B).
C. PR
ISM shall be responsible for ensuring a claims administration audit utilizing PRISM’s Liability Claims Administration Standards (Addendum B) is performed once every two (2) years.
D. The Authority shall be responsible for obtaining an actuarial study performed by a Fellow of the Casualty Actuarial Society (FCAS) annually.
VI. PROPERTY PROGRAM
A. M
embers of the Property Program shall maintain appropriate records including a complete list of insured locations and schedule of values pertaining to all real property. Such records shall be provided to PRISM or its brokers as requested by the Executive or Property Committees.
ATTACHMENT B
B. Each Member shall perform a real property replacement valuation for all locations over $250,000. Valuations shall be equivalent to the Marshall Swift system and shall be performed at least once every five (5) years for all locations over $1,000,000 and at least once every ten (10) ye ars for all locations with a valuation between $250,000 and $1,000,000. New members shall have an appraisal or valuation performed within one year from entry into the Program.
V
II. MEDICAL MALPRACTICE PROGRAM
A. Program I
1. Members of Medical Malpractice Program I (hereinafter Program I) shall be responsible for the investigation, settlement, defense and appeal of any claim made, suit brought or proceeding instituted against the Member.
a. Members of Program I shall use only qualified personnel to administer its health facility claims.
b. Qualified defense counsel experienced in health facility law shall handle litigated claims.
c. Members of Program I shall use the "Claims Reporting and Handling Guidelines" in the PRISM Medical Malpractice
Program Operating and Guidelines Manual (hereinafter
Operating and Guidelines Manual), and shall advise its claims administrator that these claims handling guidelines are utilized in PRISM's medical malpractice claims audits.
2. Members of Program I shall provide PRISM written notice of any potential excess claim or "major incident" in accordance with the requirements of PRISM and of the excess carrier as stated in the Operating and Guidelines Manual. Updates on such claims or major incidents shall be provided as requested by PRISM.
3. A claims administration audit utilizing PRISM's Claims Reporting and Handling Guidelines in the Operating and Guidelines Manual shall be performed once every three (3) years. In addition, an audit will be performed within twelve (12) months of any of the following events:
a. There is an unusual fluctuation in the Member's claims experience or number of large claims, or
b. There is a change of health facility claims administration firms, or
ATTACHMENT B
c. The Member is a new member of the Medical Malpractice Program, or
d. The Medical Malpractice Committee requests an audit. The claims audit shall be performed by a firm(s) selected by PRISM.
Recommendations made in the claims audit shall be addressed by the Member and a written response outlining a program for corrective action shall be provided to PRISM within sixty (60) days of receipt of the audit.
4. Each Member shall maintain records of claims in each category of coverage (i.e. bodily injury, property damage, expense) or as defined by PRISM and shall provide such records to PRISM as directed by the Board of Directors or applicable committee. Such records shall include open and closed claims, allocated expenses, and shall not be capped by the Member’s self-insured retention.
5. Members of Program I shall obtain an actuarial study performed by a Fellow of the Casualty Actuarial Society (FCAS) at least once every three (3) years. Based upon the actuarial recommendations, the Member should maintain reserves and make funding contributions equal to or exceeding the present value of expected losses and a reasonable margin for contingencies.
6. The Member shall have an effective risk management program in accordance with the "Risk Management Guidelines" as stated in the Operating and Guidelines Manual.
B. Program II
1. For Medical Malpractice Program II (hereinafter Program II) Members, PRISM shall be responsible for the investigation, settlement, defense and appeal of any claim made, suit brought or proceeding instituted against the Member. PRISM may contract with a third p arty administrator for handling of such claims.
2. PRISM shall be responsible for ensuring the third party administrator uses qualified personnel to administer Program II claims.
3. PRISM shall be responsible for ensuring qualified defense counsel experienced in health facility law shall handle litigated claims.
4. PRISM shall be responsible for ensuring a claims administration audit utilizing PRISM's Claims Reporting and Handing Guidelines in the Operating and Guidelines Manual shall be performed once every two (2) years.
ATTACHMENT B
The claims audit shall be performed by a firm(s) selected by PRISM.
Recommendations made in the claims audit shall be addressed by the third party administrator and a written response outlining a program for corrective action shall be provided to PRISM within sixty (60) days of receipt of the audit.
5. PRISM shall be responsible for obtaining an actuarial study performed by a Fellow of the Casualty Actuarial Society (FCAS) annually.
6. The Member shall have an effective risk management program in accordance with the "Risk Management Guidelines" as stated in the Operating and Guidelines Manual.
V
III. SANCTIONS
A. PRISM shall provide the Member written notification of the Member's failure to meet any of the above-mentioned standards or of other concerns, which affect or could affect PRISM.
B. The Member shall provide a written response outlining a program for corrective action within sixty (60) days of receipt of PRISM's notification.
C. After approval by the Executive or applicable Program Committee of the Member's corrective program, the Member shall implement the approved program within ninety (90) days. The Member may request an additional sixty (60) days from the Executive or applicable Program Committee. Further requests for extensions shall be referred to the Board of Directors.
D. Failure to comply with subsections B or C may result in cancellation of the Member from the affected PRISM Program in accordance with the provisions in the Joint Powers Agreement.
E. Notwithstanding any other provision herein, any Member may be canceled pursuant to the provision of the Joint Powers Agreement.
ATTACHMENT B
Addendum B: Liability
Claims Administration Guidelines
ADDENDUM TO EXHIBIT A Adopted: December 6, 1985
Last Amended: July 1, 2019
A
DDENDUM B
LIABILITY CLAIMS ADMINISTRATION STANDARDS
T
he following Standards have been adopted by Public Risk Innovation, Solutions, and Management (hereinafter PRISM) in accordance with Article 18(b) of the PRISM Joint Powers Agreement. It is the intent that these standards shall be followed by the Member and/or third party administrator.
I. C
LAIMS INVESTIGATION
A. C
omplete initial investigation answering questions such as who, what, where, when and why. Investigations shall be completed within forty-five (45) days of the Member’s knowledge of claim, including statements from participants and witnesses, appropriate official reports , investigative reports , site inspections, relevant documents and photos/videos.
B. I
dentify liability issues, including immunities, comparative negligence, joint tortfeasors and joint and several liability.
C. In
itiate the development of information on damages including, but not limited to:
1. Property damage
2. Nature and extent of injuries
3. Medical costs (billed and paid)
4. Lost wages (past and future)
5. Other economic damages
6. Non-economic damages
D. Ob
tain and review relevant contracts and insurance documents, to determine whether there is any sharing or complete transfer of the risk.
1. Hold-harmless and/or indemnity agreements
2. Additional insured requirements
E. E
nsure proper preservation of evidence.
F. E
valuate the need to utilize experts.
G. I
ndexing.
ATTACHMENT B
Addendum B: Liability
Claims Administration Guidelines
1. All bodily injury claims shall be initially reported to the Index Bureau and re-indexed on an as needed basis thereafter.
PR
ISM maintains a membership with the Index Bureau that members can access.
H. S
ecure estimates or appraisals for damaged property.
I. A
ll notices (pertaining to claim insufficiency, returning late claims, claims rejections, etc.) shall be done in accordance with the relevant Governmental Code provisions.
II. PR
ISM REPORTING REQUIREMENTS
A. F
irst Report
T
he Member shall give PRISM immediate written notice for any claims or suits which the Member becomes aware of that include injury of the following types:
a. Death
b. Paralysis, paraplegia, quadriplegia
c. Loss of eye(s), or limbs
d. Spinal cord or brain injury
e. Dismemberment or amputation
f. Sensory organ or nerve injury or neurological deficit g. Serious burns
h. Severe scarring
i. Sexual assault or battery including but not limited to rape, molestation or sexual abuse
j. Substantial disability or disfigurement
k. Any class action
l. Any claim or suit in which PRISM is named as a defendant; or m. Any injury caused by lead.
A
dditionally, the covered party must report to PRISM an occurrence, offense, or wrongful act as follows:
A
s respect to the General Liability 1 Program members, this includes any occurrence, offense, or wrongful act in which the amount incurred has reached fifty (50) percent or more of their individual self- insured retention or $500,000, whichever is lower.
A
s respect to the General Liability 2 Program members, this includes any occurrence, offense, or wrongful act in which the amount incurred
ATTACHMENT B
Addendum B: Liability
Claims Administration Guidelines
has reached fifty (50) percent of their individual self-insured retention.
T
hese reporting requirements are intended to be consistent with the requirements in the current year Memorandum of Coverage (MOC).
Reporting requirements specific to a loss outside the current MOC year should be verified through the MOC effective for that loss year.
U
tilize the current First Report Potential Excess Liability Claims form, available through PRISM’s website, and transmit to PRISM by email to [email protected].
F
irst report forms shall, at a minimum, include the following:
• E
ntity name
• Entity’s claim number
• Defense counsel’s name and firm name
• Lead Claimant’s first and last name
• Specific date of loss
• Brief description of the incident
• Established reserves for indemnity, litigation, and expense B. S
tatus Reports
A
fter the First R eport to PRISM, status reports, whether provided by the Member, third party administrator or defense counsel, shall be provided at a minimum of every ninety (90) days (more frequently if warranted) . Status reports shall focus on changes in liability analysis, damages, and reserves.
C. P
hotos, diagrams, estimates, statements, contracts, medical, law enforcement and coroner's reports (where applicable), claim forms, lawsuits (including amended complaints), motions for summary judgment, demurrers, dismissals, appellate briefs and orders/rulings/judgments shall be in the claims file, and provided to PRISM, within ninety (90) days of receipt of the material.
D. C
losure Reports
W
hen a claim or suit that has been reported to PRISM is settled, dismissed or closed in any other fashion, PRISM shall be provided with the closing documents and an accounting of the final paid amounts on the exposure for indemnity, litigation, and expense within 90 days from the day the final defense bill is paid.
III
. MEDICARE REPORTING
A. P
roper verification of a claimant’s status as to Medicare eligibility shall be
ATTACHMENT B
Addendum B: Liability
Claims Administration Guidelines
completed and documented in every file involving a bodily injury. In those cases where the claimant does meet the eligibility requirements, mandatory reporting to the Center for Medicare and Medicaid Services (CMS) must be completed directly or through a reporting agent in compliance with State Children’s Health Insurance Program (SCHIP) Section 111 of the Medicare Medicaid and SCHIP Extension Act of 2007.
IV
. RESERVING
E
ach claim should be review ed and evaluated according to the merits of the claim and based upon the most current and reliable information received, starting with the initial report of claim and continuing through final resolution. Delays result in understated reserves and, possibly, missed opportunities to settle.
A.
An accurate and appropriate initial indemnity reserve shall be established on all reportable claims based on facts known, upon completion of the initial investigative report or when suit is filed, whichever occurs first. In addition, separate legal and adjusting reserves shall be established.
I
ndemnity reserves shall reflect the most probable outcome plus exposure to plaintiff attorney’s fees and costs.
Mo
st probable outcome is the potential total amount a plaintiff could expect to receive, either through settlement or verdict, after factoring in the Member’s percentage of liability. (This approach is neither the best or worst case outcome).
F
actors to consider for when evaluating the potential total settlement or verdict a plaintiff could expect to receive include but are not limited to:
• E
xtent of injuries and/or damages
• Medical expenses
• Loss of income
• Any other related expenses
• Future anticipated expenses
• Total of both gross and out-of-pocket expenses
• Permanent injury
• Disfigurement/scarring
• Pain and suffering
• Any other intangible factors which may result in a higher or lower claim value such as jurisdiction, credibility of parties/witnesses, etc.
P
ercentage of liability is determined by various factors that are discovered during an investigation. Reserves shall be adjusted accordingly, as facts are developed, to properly reflect the exposure. These factors include but are not limited to:
ATTACHMENT B
Addendum B: Liability
Claims Administration Guidelines
a. Facts of loss
b. Applicable laws
c. Defense Counsel evaluations
d. Jury Verdict evaluation
e. The extent of plaintiff's liability (comparative negligence) f. The number of co-defendants and their percentage of liability g. The ability of the co -defendants to respond financially to any settlement or verdict.
h. On cases occurring after June 3, 1986, Proposition 51 allows defendants to limit their liability on non-economic damages to their percentage of fault.
i. On cases involving uninsured motorist claimants the recovery is limited to economic damages in accordance with California Code of Civil Procedures sections 3333.3 and 3333.4 (Prop 213).
j. Any other mitigating factors
2. Reserves shall be set at the most probable outcome even if it exceeds the Member’s Self-Insured Retention. In all litigated Excess reportable cases, the Member shall set a meaningful indemnity reserve.
3. Reserves shall be evaluated for adequacy at least every ninety ( 90) days.
All reserve changes shall be documented in a paper or electronic file providing explanation of the reason for the reserve change or notation that the current reserve is adequate and why. PRISM shall be notified of all reserve changes within thirty (30) days of the change being made.
V. DO
CUMENTATION
A. E
ach file shall contain information necessary to document the decisions made, including all demands, offers of settlement and settlement authority.
F
or those cases in which the (1) Bodily Injury claims reserved above twenty- five (25) percent of the S.I.R., (2) Property Damage claims reserved above twenty-five (25) percent of the S.I.R., and (3) All claims that meet PRISM’s excess reporting requirements regardless of reserves, the following information shall be contained in each file:
1. Claimant(s) Information
2. Date of Loss
3. Claim Number
4. Facts of accident or occurrence
5. Witness/Participant Statement
6. Reserve rationale
7. Assessment of liability
8. Damages/injuries, including medical costs, lost wages, dependency,
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Addendum B: Liability
Claims Administration Guidelines
property damage estimates, total loss evaluations, loss of use claims, and other damages
9. Index Bureau reporting
10. Coverage questions
11. Excess potential
12. Structured Settlement possibilities (where applicable)
13. Alternative Dispute Resolution
14. Subrogation potential (where applicable)
12 Governmental Code compliance and immunities
13. Future course of action
14. Next diary date
15. If litigated, identify counsel on both sides
16. Offsets or liens that may need to be considered
17. Medicare eligibility and reporting
18. Risk and insurance transfer
V
I. CASE SETTLEMENT FACTORS
A. S
ettlement evaluation and authority by the Member shall be documented. On cases exceeding the S.I.R., prior written settlement authority must be obtained from PRISM.
B. T
he settlement shall be reasonable in light of damages, injuries, liability, and any obligations to Medicare.
C. S
ettlements shall be effected in a timely manner, with consideration given to structures, statutory offers (Rule 68 or 998) where applicable, and/or alternative dispute resolution.
D. C
ontributions from joint tortfeasors shall be considered.
E. P
roper releases and dismissals shall be secured and copies provided to PRISM.
V
II. LITIGATED FILES
A. D
efense litigation plan shall be in the file.
B. D
efense attorney’s initial evaluation and budget shall be completed and in the file within sixty (60) days of assignment. If the billed amount of attorney’s fees and costs exceeds seventy-five (75) percent of the total budget, then the defense attorney shall provide an updated budget.
C. O
n litigated cases, defense counsel shall also include PRISM on their mailing lists for copies of correspondence, reports, evaluations, interrogatory summaries, deposition summaries and medical summaries. Actual
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Addendum B: Liability
Claims Administration Guidelines
deposition transcripts, interrogatories, their answers to interrogatories and interim billings are not required.
U
pdated reports shall provide a summary of pertinent information based on the status of a case. Pertinent information includes, but is not limited to:
• Identified experts – what their analysis has concluded, their credibility as a witness (both plaintiff and defense), and how their testimony will/will not influence the case potential.
• Witness deposition summaries including an evaluation of their credibility as a witness and how their testimony will/will not influence the case potential.
• A summary of relevant documents disclosed or obtained through discovery and an analysis of their impact on the case.
• A summary of applicable case law and immunities.
• Updated evaluation of damages including, but not limited to, billed and paid medical bills, estimated future medical expenses, past and future wage loss estimates, and general damage estimates.
• Analysis of liability and potential settlement/verdict value as well as suggested next steps (MSJ, Demurrer, Mediation, etc.).
D. T
he defense attorney shall make proper follow-up requests for investigation.
E. T
here shall be timely recommendations from defense firms regarding expert retention, settlements, and trial preparation.
F. D
efense costs shall be controlled by the Member. Depositions, retention of experts, expert costs, and other defense costs shall be approved by the Member.
G. L
itigation outcome and total costs shall be documented.
H. T
here shall be timely notification to relevant employees and other parties regarding pending litigation.
N
o less than forty-five (45) days prior to trial, counsel shall provide a pre-trial report that discusses the following:
1. Case Summary
• Plaintiff and any individual Defendants including counsel’s opinion as to how each will be viewed by a jury
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Addendum B: Liability
Claims Administration Guidelines
• List of claims
• Summary of Facts
• Expected percipient witness testimony
• Expected Liability Expert Testimony
• Critical Liability Issues
• Summary of Special and General Damages including
expected damage expert testimony
• Summary of Punitive Damages and non- monetary reli ef requested (if applicable)
• Attorneys’ fees and costs estimate for claims that involve the potential award of attorneys’ fees
2. Evaluation
• Potential Verdict Value
• Comparative Fault Analysis
• Settlement Discussion summary
• Probability of Defense Verdict
Throughout t
rial, a daily trial status update shall be provided to PRISM by defense counsel, the Member, or the Third-Party Administrator. This can be informal, such as an email or voicemail advising of the day’s activities, impressions of witnesses, any impacting developments, and an update regarding the next day’s schedule.
I. Appropri
ate Dismissal Motions shall be made for failure to meet the applicable Code of Civil Procedure statutes for timely serving, conducting discovery or bringing a complaint to trial.
VIII. SUMM
ARY
The file s
hall be completely documented.
Audits c
onducted by the PRISM Auditor shall measure whether performance is consistent with these standards.
Following i
s the history of amendments to this document:
Adopted: Dec
ember 6, 1985
Amended: January 23, 1987
Amended: October 6, 1995
Amended: October 1, 1999
Amended: March 2, 2007
Amended: March 5, 2010
Amended: March 2, 2012
Amended: June 1, 2012
Amended: July 1, 2019
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