Resolution 81-16593 RESOLUTION NO.81-16593
A RESOLUTION OF THE CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AUTHORIZING THE
SETTLEMENT OF WORKERS' COMPENSATION LIABILITY
IN CONJUNCTION WITH THE FLORIDA LEAGUE OF
CITIES WORKERS' COMPENSATION PROGRAM.
WHEREAS, for the reasons more particularly set forth in Commission
Memorandum No. 8871 , the City Commission of the City of Miami Beach
deems it to be in the best interest of the City to enter into a settlement as
therein set forth; and
WHEREAS, the Administration has recommended that the City enter into
said settlement;
NOW, THEREFORE, BE IT DULY RESOLVED BY THE CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, that the City Manager be, and is
hereby authorized and directed to execute any and all documents necessary to be
executed by the City in connection with the acceptance of a settlement not to
exceed $314,588.00.
PASSED and ADOPTED this 4th day March , 1981.
Ma •
Attest:
City 1 rk
/lb
APPROVED
LEGAL DEPT.
$y
Date
1
I ,
&telt tiv
eeeete4
Mame
;► �..14' ,, FLORIDA 3 3 1 3 9
'* VIC0'( *; "VA CA TIONLAND U
..1
OFFICE OF THE CITY MANAGER CITY HALL
HAROLD T.TOAL 1700 CONVENTION CENTER DRIVE
CITY MANAGER TELEPHONE: 673-7010
COMMISSION MEMORANDUM NO. it
DATE: March 4. 1981
TO: Mayor Murray Meyerson and
rs of the i ommission
erasS
FROM: of . o
City Manager
SUBJECT: FLORIDA LEAGUE OF CITIES/
WORKERS' COMPENSATION SETTLEMENTS
In August, 1979, the City of Miami Beach elected to participate in the Florida
League of Cities Workers' Compensation Self-Insurers program. As part of the
Workers' Compensation program, the Florida League contracts with professional
risk managers, Risk Management Services, Inc., for the claims handling and claims
administration of all City files.
Historically, the City had been operating its Workers' Compensation program on a
"pay-as-you-go" basis, insomuch as full funding of losses and reserves were never
properly allocated or appropriated. Compounding this problem were some 500 open
files which were becoming increasingly more costly to manage, particularly since
there was little attempt made to settle these claims. Complicating both of these
issues was the City's lack of aggressive claims management in its Workers'
Compensation program, including the failure to develop a truly comprehensive
safety program. When these files were turned over to Risk Management Services,
Inc. a complete review and analysis was done on each and every open claim. The
purpose of this review was to help put the program on a proper management and
fiscally sound basis. Some benchmark statistics refelct that in the past year and
one-half, over 350 claims have been settled, some of these dating back to 1957.
The City's loss ratio has improved by over 60%, and we are now within .06% of the
funds overall loss ratio average. For the first time adequate funds have been set
aside for losses and reserves which should negate the necessity of allocating large
sums of dollars in future years to the Workers' Compensation program in either
premiums to be paid or reserve set asides. In addition, the City's safety program
is well underway with the development of the City's first safety manual and the
establishment of labor management safety committees in each of the departments.
For the past year, the City and Risk Management Services, Inc. have been
aggresivesly seeking the reimbursements from the State of Florida's Second Injury
Fund. This fund has been established to reimburse employers for certain types of
job-related injuries. A portion of the employer's premium is used to fund this
program. Traditionally, the City had never actively pursued, nor received, any
reimbursements from the State fund. However, the Administration is pleased to
report to the Commission that we were recently notified that approximately
$30-40,000.00 will be returned to the City within the next 6-8 weeks for two
specific Workers' Compensation cases. These efforts will continue in the future
with hopes of securing an additional $100,000.00 from the State pool.
36
AGENDA c
ITEM
DATE '`�
During the past year, a full and complete financial audit was performed on our
Workers' Compensation program by the State in conjunction with Risk Management
staff. The final audit determines, to a large degree, the premium that the
employer must pay the following year. The City's yearly premium to the Florida
League of Cities program is based on two factors: 1) actual payroll, and 2) the
experience modification (a rate assigned by the State for each and every job
occupation and based on the expected frequency of accidents for a particular job
occupation). The first audit covered October 1, 1979 through October 1, 1980. The
City's estimated billing premium for that year was $650,662.00. This figure was
determined by the final audited payroll of the previous year. Based on the actual
audit that was just completed, the final audit premium requires an increase of
premium to $754,252.00, resulting in an additional premium due of $96,588.00 for
the 1979/1980 fund year. This increase is a direct result of additional employees
having been added to the payroll and increases to the existing payroll due to
contractual labor agreements and other annual increases. The total amount of
payroll, as indicated by the City's final audit, must agree with the quarterly report
submitted by the City to the State of Florida. This amount of $96,588.00
represents a liability of the City to the Florida League's fund. This is actual
dollars owed the program's fund. Furthermore, the Board of Trustees has requested
that the City pay the entire amount no later than March 18, 1981 in order to close
out the funds account for that year. Payment of this amount in full will close out
fiscal year 1979/1980 and will reduce the City's outstanding liability in this regard.
As a result of having the 1979/1980 premium increased, the City has incurred a
higher than originally anticipated premium for the fund year October 1, 1980
through October 1, 1981. This increase is a result of two factors: the first being
the necessity of bringing the City's payroll current to coincide with the City's final
audit premium of the 1979/1980 fund year; the second being an increase due to a
change in the City's experience modification, which resulted from insufficient
reserves and insufficient information provided to the Division of Workers' Compen-
sation of the State of Florida. This resulted in the assignment of a low
modification that was not truly reflective of our actual experience. Premiums for
all Workers' Compensation programs are based on formulas taking into
consideration the last three of the last four years Workers' Compensation claims,
losses and reserves. Therefore, the data that is currently being used as a basis for
• premiums estimation was prepared by the City several years ago. However, as
each year ends and more current and improved data is submitted to the Division of
Workers' Compensation it is anticipated that the experience modification in
conjunction with an improved loss ratio pattern will significantly reduce the
amount of premiums paid to the program. However, because of these
unestimations of premiums, it is necessary at this time to increase the City's
current premium from $665,124.00 to $1,061,000.00 for a balance due to the
Florida League of Citie's fund of $395,876.00. In order to satisfy this liability, the
City Administration met with members of Risk Management Services, Inc. and Mr.
Raymond Sittig, Executive Director of the Florida League of Cities, for the
purpose of negotiating an installment financing plan which could be absored by the
City with minimal impact.
As a result of these negotiations, the City's monthly premium will be increased as
of March 1, 1981 from approximately $45,000.00 to $76,427.33 per month through
September 1, 1981. This will satisfy approximately 75% of the monies owed. The
balance of $178,330.45 or 25% will be due at the close of the fund year; however, it
will not be paid until December 15, 1981. By postponing the payment to this date
it is anticipated the payment of said amount will coincide with the dividend
declaration that will be authorized by the Board of Trustees in September or
October of 1981. Unofficially, and only informally, but based on the City's recent
good experience and reduction in its loss ratio formula, it is anticipated that this
dividend could be approximately $100,000.00. This conservative estimate will then
leave a balance of approximately $78,000.00, which will be budgeted for in the
City's FY 1981/1982 budget. As stated previously, based on the League's analysis
of our experience modification change, the records indicate that we have done very
well in the past two years. Accordingly, the League feels that our future premiums
will favorably reflect this good experience and that the declared dividends will also
reflect this marked improvement.
2
ADMINISTRATION RECOMMENDATION
It is recommended that the Mayor and City Commission authorize the City
Manager to settle its Workers' Compensation liability for the 1979/1980 fund year
in the amount of $96,587.35. Furthermore, these monies should be allocated from
the contingency fund and shall be paid no later than March 18, 1981 according to
the request by the Florida League of Cities.
It is further recommended that the City Manager be authorized to increase the
monthly premiums of the current Workers' Compensation fund year to the amount
of $76,427.33, and that this total increase of approximately $218,000.00 be
appropriated from the contingency fund.
HTT/M MF:lb
3
38
ORIGINAL
RESOLUTION NO. 81-16593
(Authorizing the settlement of Workers'
Compensation Liability in conjunction
with the Florida League of Cities -- •
Workers' Compensation Program)