Service Contract for Workers' Comp Claims Handlingc7~c ~~.-9-05 ~ddg_ ~ ~~~ 2
.lOIiNS EASTER/Y COiMP1ANY, INS.
Claim Adjusters and Third Party Administrators
SERVICE CONTRACT FOR WORKERS' COMPENSATION CLAIMS HANDLING
THIS SERVICE CONTRACT FOR WORKERS' COMPENSATION CLAIMS HANDLING is made
and entered into this 11th day of January 2010, but is effective for all purposes as of the 1st day of
February 2010, by and between the CITY OF MIAMI BEACH (referred to as the "Client"), and JOHNS
EASTERN COMPANY, INC. (referred to as the "Service Agent").
WITNESSETH:
WHEREAS, the Client has undertaken to self-insure its Workers' Compensation liability
in accordance with the Workers' Compensation Law and other applicable statutes and regulations; and
WHEREAS, the Service Agent is engaged in the supervision and administration of
programs for self-insured employers;
,M;
` WHEREAS, the Client desires to engage the Service Agent for, and the Service Agent
desires to assist the Client in workers' compensation claims handling;
NOW, THEREFORE, for and in consideration of the premises and of the mutual
obligations, performance of services, and payment of compensation set forth herein, the parties agree as
follows:
Engagement. The Client hereby engages the Service Agent to supervise and
administer the Self-Insured Workers' Compensation Program of the Client in
accordance with the Workers' Compensation Law as adopted and amended by the
State of Florida (the "Law") and the applicable rules and regulations as
promulgated by the applicable agencies of the State of Florida relating to the Law
(the "Rules"), all in accordance with the Service Agent's proposal dated September
3, 2009 a copy of which is attached hereto and incorporated herein by this reference
(the "Proposal").
2. Term. Subject to termination pursuant to Paragraph 9, the term of this Agreement
shall begin as of February 1, 2010 and shall terminate on January 31, 2015;
provided.
3. Fund for Payment of Claims. The Client has the sole obligation and
responsibility for funding the payment of claims made by its employees under the
Law and Rules. The Service Agent assumes no duty to fund any such claims at any
time and shall have no obligation to advance funds for any such payment. The
Client agrees to maintain all necessary funds for payment of claims in accordance
with the Law and Rules and to inform the Service Agent of all relevant details with
respect to any such accounts in order for the Service Agent to perform its duties
under this Agreement. The Client shall add to or increase the amount in any such
accounts as needed, and, in any event, within five (5) business days from the
Service Agent's notice to the Client to such effect.
4. Allocated Claims Expenses. Charges for services below are billed at negotiated
rates for vendors selected by CLIENT/SERVICE AGENT unless otherwise
outlined below. "Allocated Claims Expenses" shall be defined as expenses arising
in connection with the settlement of claims, which shall be defined as expenses
directly allocated to a particular claim to be discharged from the accounts funded
by the CLIENT specified in Paragraph 3, including, but not limited to:
a. Attorneys' and legal assistants' fees for claim and any lawsuits, before and
at trial, on appeal, or otherwise;
b. Court and other litigation and settlement expenses, including, without
limitation:
(i) Medical examinations to determine extent of liability;
(ii) Expert medical and other testimony;
(iii) Laboratory, X-ray and other diagnostic tests;
(iv) Autopsy, surgical reviews, and other pathology services;
(v) Physician and related fees and expenses in reading, interpreting, or
performing any of the foregoing tests or services;
(vi) Stenographer, process server, and other related trial preparation,
trial, settlement, and court costs;
(vii) Witnesses fees and.expenses before and at trial, deposition,
settlement discussions, or otherwise; and
c. Fees and expenses for surveillance, private investigators, or otherwise,
d. Fees for the indexing of injured employees,
e. Fees for any work done outside the office, including, but not limited to,
field investigations necessary to determine compensability, liability, Special
Disability Trust Fund or subrogation recoverability, claimant control,
attendance at mediations, hearings and depositions, attendance at
management meetings, attendance at medical consultations or hearings,
appraisals, case management, recorded statements,
f Telephonic medical management will be $195.00 per lost time and medical
only exposure whose dates of loss fall between February 1, 2010 and
January 31, 2013. This fee applies only to cases handled by the Service
Agent.
g. Fees for over-night or special mail service for various documents,
h. Fees for examining and reducing hospital and medical bills as appropriate
are $5.95 per bill and 30% of savings over and above Fee Schedule savings.
i. Photocopying and/or CD-ROM copies, review of relevant documentation.
Pre-Certification of Hospital Admissions, On-Site Case Management, Peer
Review, Medical Care Audits, and Hospital Bill Audits.
k. Medicare Set-Aside (MSA) services to include; recommendation for MSA
submission, MSA cost projection, MSA submission, liability MSA services,
comprehensive drug utilization review, lien search, conditional lien dispute,
projection update.
5. Compensation for the Service Agent. For performing its services under this
Agreement, the Service Agent shall be entitled to the following compensation:
a. Fees for claims handling for the Client's exposures whose dates of loss fall
between February 1, 2010 and January 31, 2011 will be a minimum and deposit
of $200,000.00. The Service Agent will bill this minimum and deposit
quarterly, with the first payment due upon program inception.
The annual minimum and deposit covers handling 450 workers' compensation
exposures. If the number of exposures exceeds 450, the Service Agent will
increase the fees proportionately. This fee covers all claims
management/administration and data processing services outlined in the
original proposal. All years are subject to audit.
b. Fees for claims handling for the Client's exposures whose dates of loss fall
between February 1, 2011 and January 31, 2012 will be a minimum and deposit
of $200,000.00. The Service Agent will bill this minimum and deposit
quarterly, with the first payment due upon program inception.
The annual minimum and deposit covers handling 450 workers' compensation
exposures. If the number of exposures exceeds 450, the Service Agent will
increase the fees proportionately. This fee covers all claims
managementladministration and data processing services outlined in the
original proposal. All years are subject to audit.
c. Fees for claims handling for the Client's exposures whose dates of loss fall
between February 1, 2012 and January 31, 2013 will be a minimum and deposit
of $200,000.00. The Service Agent will bill this minimum and deposit
quarterly, with the first payment due upon program inception.
The annual minimum and deposit covers handling 450 workers' compensation
exposures. If the number of exposures exceeds 450, the Service Agent will
increase the fees proportionately. This fee covers all claims
management/administration and data processing services outlined in the
original proposal. All years are subject to audit.
d. Fees for years 2013/14, and 2014/15 will not exceed 7.5% over the previous
year's fees.
e. Allocated expenses are costs associated with investigation and/or adjustment of
a claim. The Service Agent will charge the allocated expense to the claim file.
Fees for any field investigation will be $95.00 per hour, $0.55 a mile, and 1.00
per color photograph, and administrative expenses. The Service Agent will bill
at these rates all activities involving handling, controlling or settling an
employer's liability on a claim.
£ Loss control services are available through the Service Agent's consultant at a
rate of $95.00 per hour. The Service Agent can customize Safety/Loss Control
services to meet the Client's program and risk needs. This service is offered on
an as needed basis.
6. Excess Reporting Obligation -Unless otherwise specified in this addendum,
Service Agent agrees that reporting claims to excess insurance carrier is the Service
Agent's responsibility. It is the responsibility of the Client to provide accurate
coverage information regarding any insurance policies insuring claims covered by
this contract. The information for all claim years that the Service Agent is handling
will be made available to the Service Agent within 90 days of contract inception.
New insurance information on renewal years will be made within 90 days of
renewal date. Excess information will include name and claims reporting address
and phone number of all carriers, policy number, effective dates, limits of liability,
deductibles, specific retentions and loss funds. Actual policies will be provided.
This information is required for each claim year that the Service Agent is handling
for the Client. If this information is not made available as outlined in this
Paragraph, Service Agent will not be responsible for any penalties, interest, or
reductions in excess recoveries because of late reporting.
7. Continuing Handling of Claims After Termination of Contract or Legally Imposed
Mandates. Upon termination of this Agreement as set forth in paragraph 8, the
Service Agent agrees to continue handling all claims that have been made and
reported to it prior to such date of termination for thirty (30) days unless the parties
have agreed otherwise in writing.
Upon repeal of any service mandated by the workers' compensation law and/or
other applicable statutes and/or regulations, the Service Agent agrees to continue
handling all claims under the repealed service that have been reported to it prior to
the date of such repeal for thirty (30) days unless the parties have agreed otherwise
in writing.
Upon exiting, client data will be provided to the new TPA either by a series of
attachments to one or more email messages containing zip files which can be
password-protected or via CD ROMS. The claim files may exist as paper files and
will be shipped as such. If the claim files are stored as images in a document
retrieval system, they will be provided via CD ROM or the most current means of
providing data. The cost for this will be no greater than $3,500.00. The Client will
be billed for any additional programming to help in data transfer.
8. Disputes Subject to Arbitration. Any dispute or claim arising out of or relating to
this Agreement or any breach thereof shall be resolved by submission of such
dispute or claim to an arbitration panel composed as follows: The Client and the
Service Agent shall each select one member of the panel and the two selected
members shall select a third member. The parties agree to follow the rules of the
American Arbitration Association.
9. Termination. This Agreement may be terminated by either the Client or the
Service Agent by giving prior written notice of ninety (90) days. In the event of
such termination, compensation paid or payable to Service Agent under Paragraph
5 shall be prorated as appropriate. Notwithstanding anything in this Paragraph 8 to
the contrary, the insolvency or filing for relief from creditors of any party pursuant
to the United States Bankruptcy Code or the material breach of a material provision
of this Agreement by any party shall permit the other party to cancel this
Agreement immediately upon written notice.
10. Covenants of the Service Agent and the Client. Each of the Service Agent and the
Client agrees to use its normal and ordinary professional care and diligence in the
performance of its duties under this Agreement and will use its best efforts to
comply at all times with the Law and the Rules.
11. Indemnification. Service Agent agrees to indemnify and hold harmless the Client
and its officers, employees, and agents, from and against any and all actions,
claims, liabilities, losses and expenses, including but not limited to, attorneys' fees,
for personal, economic or bodily injury, wrongful death, loss of or damage to
property, at law or in equity, which may arise or be alleged to have arisen from the
negligent acts, errors, omissions or other wrongful conduct of the Service Agent, its
employees, agents, sub-contractors, or any other person or entity acting under
Service Agent's control, including without limitation any and all temporary
personnel assigned to the Client pursuant to this Agreement, in connection with the
Service Agent's performance of the Services pursuant to this Agreement; and to
that extent, the Service agent shall pay all such claims and losses and shall pay all
such costs and judgments which may issue from any lawsuit arising from such
claims and losses, and shall pay all costs and attorneys' fees expended by the Client
in the defense of such claims and losses, including appeals. The parties agree that
one percent (1%) of the total compensation to the Service Agent for performance of
the Services under this Agreement is the specific consideration from the Client to
the Service Agent for the Service Agent's Indemnity Agreement.
The Service Agent's obligation under this Subsection shall not include the
obligation to indemnify the Client and its officers, employees and agents, from and
against any actions or claims which arise or are alleged to have arisen from the sole
negligent acts or omissions or other wrongful conduct of the Client and its officers,
employees and agents. The parties each agree to give the other party prompt notice
of any claim coming to its knowledge that in any way directly or indirectly affects
the other party.
12. Miscellaneous.
a. Each party represents and warrants that it has full power and authority to
enter into this Agreement.
b. All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic telephone line
facsimile transmission, or other similar electronic or digital transmission
method; the day after it is sent, if sent by recognized expedited delivery
service; and five (5) days after it is sent, if mailed, certified or registered
mail, return receipt requested, postage prepaid. In each case, notice shall be
sent to:
If to the Client: City of Miami Beach
1700 Convention Center Dr.
City Hall
Miami Beach, FL 33139
If to the Service Agent: Johns Eastern Company, Inc.
Post Office Box 110259
Lakewood Ranch, FL 34211-0004
or to such other address as either party may have specified in writing to the
other using the procedures specified above in this Paragraph.
c. (i) This Agreement shall be construed pursuant to and governed
by the substantive laws of the State of Florida (and any
provision of Florida law shall not apply if the law of a
state or jurisdiction other than Florida would otherwise apply).
(ii) The headings of the various Paragraphs in this Agreement are
inserted for the convenience of the parties and shall not affect the
meaning, construction, or interpretation of this Agreement.
(iii) Any provision of this Agreement which is determined by a court of
competent jurisdiction to be prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or non-
authorization without invalidating the remaining provisions hereof
or affecting the validity, enforceability or legality of such provision
in any other jurisdiction. In any such case, such determination shall
not affect any other provision of this Agreement, and the remaining
provisions of this Agreement shall remain in full force and effect. If
any provision or term of this Agreement is susceptible to two or
more constructions or interpretations, one or more of which would
render the provision or term void or unenforceable, the parties agree
that a construction or interpretation which renders the term or
provision valid shall be favored.
d. This Agreement constitutes the entire Agreement, and supersedes all prior
agreements and understandings, oral and written among the parties to this
Agreement with respect to the subject matter hereof.
e. (i) If, within ten (10) days after demand to comply with the obligations
of one of the parties to this Agreement served in writing on the
other, compliance or reasonable assurance of compliance is not
forthcoming, and the other party takes steps to enforce rights under
this Agreement pursuant to Paragraph 8 or otherwise, the prevailing
party in any action shall be entitled to recover all reasonable costs
and expenses (including reasonable attorneys' and legal assistants'
fees before and at trial, on appeal, or otherwise.)
(ii) If any monies shall be due either of the parties to this Agreement
hereunder and shall not be paid within forty-five (45) days from the
due date of such payment, interest shall accrue on such unpaid
amount at the rate of 1% per month in accordance with the Florida
Prompt Payment Act - F.S.218.70-79.
f. This Agreement shall be binding upon and inure to the benefit of the
successors in interest and assigns of the parties.
g. The parties to this Agreement will execute and deliver, or cause to b
executed and delivered, such additional or further documents, agreements,
or instruments and shall cooperate with one another in all respects for the
purpose of carrying out the transactions contemplated by this Agreement.
h. This Agreement may be executed in any number of counterparts, each of
which shall be considered an original, but all of which together shall
constitute one and the same instrument and shall become effective when
each of the parties has executed at least one of the counterparts even if all
the parties have not executed the same counterpart.
1N WITNESS WHEREOF, the parties have executed this Agreement effective for all
purposes as of February 1, 2010.
CITY OF MIAMI BEACH
/ Matti Herrera Bower
~~, ~ ~ ~~ ~ (,(..Q'` Mayor
City Clerk
WI SSES:
~,
JOHNS EASTERN COMPANY, INC.
Bever y Adkin ,AIM, AIC
Executive Vice President
APPROVED AS TO
FORM & LANGUAGE
ek FOR EXECUTION
.}
,~ r. Z-~r-ib
.__
I~ Att _ ~ Data