BOARD MEETING DATE: April 21, 2000 AGENDA NO. 11
PROPOSAL:
Amend Contract with JT2 Integrated Resources Regarding Selection of Legal Defense Attorneys for Workers' Compensation Matters
SYNOPSIS:
AQMD contracts with JT2 Integrated Resources (JT2) to administer workers’ compensation claims. Under the contract, JT2 selects all related services except legal defense attorneys, for which AQMD contracts directly through an RFP process. Given the cost of the RFP process relative to the contract award, which is estimated not to exceed $10,000 per year for the next two years, staff recommends amending the contract with JT2 and to include this amount in the JT2 contract, to permit JT2 to select legal defense attorneys.
COMMITTEE:
Administrative, April 14, 2000, Recommended for Approval
RECOMMENDED ACTION:
Authorize the Executive Officer to amend the contract with workers’ compensation third-party administrator JT2 to allow JT2 to select legal defense attorneys for workers' compensation matters in an amount not to exceed $10,000 per year for the next two years.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
AQMD currently contracts with JT2 Integrated Resources for workers' compensation claims administration. As part of the agreement, JT2 selects various specialist service providers, including physicians, therapists, pharmacists, vocational rehabilitation counselors, investigators, and forensic experts, to achieve a cost-effective approach to claims handling utilizing experienced and state-certified claims examiners. Prior to April 1997, AQMD’s third-party claims administrator also selected legal defense attorneys for AQMD cases, based on individual law firms’ specialized experience and expertise, prior successful litigation results, and geographical proximity to the location of hearings.
In 1997, the Board authorized the release of an RFP for AQMD to select its own workers' compensation legal defense attorneys. Existing contracts with the five law firms that were selected expired on April 11, 2000. However, over the last three years, AQMD, because of the closure of several complex claims, has experienced a substantial decline in the need for legal defense attorneys. Based on the limited amount of services needed, the cost of advertising the RFP, and the concern that AQMD’s RFP process would not result in proposals from a sufficiently large number of well-qualified defense attorneys, staff recommends the existing contract with JT2 be amended, at no additional cost, to allow JT2 to select appropriate defense attorneys based on case-specific needs. This arrangement is standard practice for JT2 with its over 45 other public-sector clients and would allow AQMD to draw on JT2’s pool of highly experienced defense attorneys in the area of workers’ compensation claims. AQMD would retain the right to approve JT2’s selections of defense attorneys. The attorneys would then be paid through the JT2 contract.
Proposal
Staff proposes discontinuing the costly RFP process to contract directly for workers' compensation defense attorneys. Instead, it is recommended that AQMD modify its contract with JT2 to permit the third-party claims administrator to select, with AQMD approval, defense attorneys appropriate to AQMD cases.
Resource Impacts
The recommended contract amendment with JT2 would be a $10,000 per year amendment, but would not increase resources since this money is already budgeted for workers’ compensation litigation expenses. Staff projects that workers' compensation legal costs for defense attorneys should be less than $10,000 per year for the next two years. This contract amendment would result in a savings of the administrative cost of conducting an RFP process, including up to $12,000 in advertising costs.
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