South Coast Air Quality Management District

Execute Contracts for Workers' Compensation Claims Third-Party Administration and General and Automobile Liability Adjusting Services

SYNOPSIS:

On November 17, 2000, the Board approved release of an RFP for Workers' Compensation Claims Third-Party Administrator and/or General Liability Adjusting Services. This action is to execute two contracts: one with Tristar Risk Management for workers' compensation claims administration, in an amount not to exceed $44,200 for the base period May 1, 2001, through April 30, 2002, with two additional one-year options at $45,526 and $46,892, respectively; and the other, a three-year contract with Colen & Lee for general and automobile liability adjusting services, in amounts not to exceed $7,200, $7,560, and $7,920 per year beginning FY 2001-02. Sufficient funds remain for FY 2000-01 for the Tristar contract and funding has been included in the FY 2001-02 Budget for both contracts. Funding for subsequent years will be requested in the budget process.

COMMITTEE:

Administrative, March 9, 2001, Recommended for Approval

RECOMMENDED ACTION:

1. Authorize the Executive Officer to terminate the current contract with JT2 Integrated Resources for workers' compensation claims administration effective April 30, 2001.
   
   
2. Authorize the Chairman of the Board to execute a contract for the base period May 1, 2001, through April 30, 2002, with Tristar Risk Management to perform workers' compensation claims administration, in the amount of $44,200, with two additional one-year options at $45,526 and $46,892, respectively. Funding in the subsequent years will be requested during the budget process.
   
   
3. Authorize the Executive Officer to execute a three-year contract for the period July 1, 2001, through June 30, 2004, with Colen & Lee to perform general and automobile liability adjusting services, in an amount not to exceed $7,200 in FY 2001-02. For the subsequent years of this contract, the amounts of the contract shall not exceed $7,560 and $7,920 per year, respectively. Funding in the subsequent years will be requested during the budget process.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

AQMD currently contracts with JT2 Integrated Resources to provide workers’ compensation claims administration. These services include the processing of all workers’ compensation claims in accordance with applicable Labor Code regulations; engaging the services of medical providers, defense attorneys, and other firms or individuals to perform specialized work in connection with claims handling; conducting the necessary investigation of claims and assisting AQMD to identify and aggressively defend against fraudulent claims; and, making timely payments on behalf of AQMD to claimants and service providers in accordance with Labor Code regulations to minimize the risk of late-payment penalties.

AQMD first contracted with JT2 Integrated Resources for workers' compensation claim administration and general liability adjusting in July 1995. A subsequent three-year contract for these services was entered into in November 1998. In October 1999, by mutual agreement of the parties, JT2 Integrated Resources was determined to be inappropriately experienced and inadequately staffed to continue general liability adjusting services for AQMD. Since November 1999, AQMD staff has performed the general liability claims adjusting services. Staff has now decided to seek outside contractor services for this area based on cost-effectiveness considerations and the need for more-highly specialized expertise on complex liability claims.

The current contract for workers' compensation claims administration expires on October 31, 2001. However, JT2 Integrated Resources has indicated it cannot meet AQMD service requirements under current contract cost arrangements. To ensure the most cost-effective services are obtained, the Board approved releasing the RFP and terminating the current contract effective June 30, 2001, or, if necessary, earlier.

Based on JT2 Integrated Resources' service and performance, with the firm having been assessed two administrative penalties for late payment of mandated indemnity benefits to AQMD employees in the last three months of 2000, staff recommends terminating their contract effective April 30, 2001.

RFP #2001-20 was released on November 17, 2000, to seek proposals from interested third-party claims administrators. A total of 19 RFPs were mailed to claims administration firms. JT2 Integrated Resources notified AQMD in writing in January 2001 that they would not be submitting a proposal.

Outreach

In accordance with AQMD's consulting and contracting policies, a public notice advertising the RFP and inviting proposals were published in the following publications:

1.	Antelope Valley Press	10	La Opinion	19.	Precinct Reporter
2.	Black Voice News	11.	La Voz	20.	Rafu Shimpo
3.	Chinese Daily News	12.	Los Angeles Daily News	21.	Riverside Press Enterprise
4.	Eastern Group Publications	13.	Los Angeles Sentinel	22.	San Bernardino Sun
5.	El Chicano	14.	Los Angeles Times	23.	Santa Clarita Signal
6.	The Excelsior	15.	M/W/DVBE Source	24.	State of California
7.	Inland Empire Hispanic News	16.	Orange County Register		Contracts Register
8.	Inland Valley Daily Bulletin	17.	Palm Springs Desert Sun
9.	Korea Central Daily	18.	Philippine News

Additionally, potential bidders were identified using Los Angeles County MTA Directory of Certified Minority, Women, Disadvantaged and Disabled Veterans Business Enterprises; the Inland Empire Opportunity Pages Ethnic/Women Business & Professional Directory; AQMD’s own electronic listing of certified minority vendors; and AQMD Purchasing’s mailing list. RFPs were mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce, and placed on the Internet at AQMD’s Web site [http://www.aqmd.gov, "Business and Job Opportunities" icon]; and on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Bid Evaluation

A panel of four people, including AQMD's Controller, two Workers' Compensation and Safety Analysts, and a non-AQMD employee who is a Certified Workers' Compensation Hearing Representative, reviewed the proposals. The panel consisted of two males and two females and included one Asian-Pacific Islander, two Caucasians, and one Hispanic.

Eight proposals were received in response to the RFP by the deadline for submittal of 5:00 p.m. on January 19, 2001. The panel scored the proposals based on criteria set forth in the RFP. Firms' responsiveness to the RFP, their technical expertise in workers' compensation and/or general liability adjusting services, and their public-sector experience were the major evaluation factors.

The RFP established two Scopes of Work, one for workers' compensation claims administration, and one for general and automobile liability adjusting services. One firm, Tristar Risk Management, provided the lowest-cost proposal with the highest-rated experience and responsiveness for workers' compensation claims administration. Another firm, Colen & Lee, provided the lowest-cost proposal with the highest-rated experience and responsiveness for general and automobile liability adjusting services.

Attachment A reflects the listing of all eight proposals received and their final ratings.

Proposal

This action is to authorize the Executive Officer to terminate the current contract with JT2 Integrated Resources for workers' compensation claims administration, effective April 30, 2001. This action would also authorize the Chairman of the Board to execute a contract for workers' compensation claims administration with Tristar Risk Management, for the base period May 1, 2001, through April 30, 2002, in an amount of $44,200, with two additional one-year options in amounts of $45,526 and $46,892, respectively. Tristar Risk Management will utilize its resources to perform claims administration, including the retention of cost-effective service providers to ensure aggressive claims administration. Funds for workers' compensation claims administration purposes are included in AQMD’s budget each fiscal year under the District General – Insurance account.

This action would further authorize the Executive Officer to execute a contract with Colen & Lee for the period July 1, 2001, through June 30, 2004, to perform general and automobile liability adjusting services, in an amount not to exceed $7,200 for FY 2001-02. Colen & Lee would utilize its resources to perform general and automobile liability adjusting services, and, subject to Executive Officer approval, retain cost-effective service providers to ensure aggressive claims resolution. For the subsequent years of this contract, the amounts of the contract shall not exceed $7,560 and $7,920 per year, respectively. Funds for general and automobile liability adjusting are included in AQMD’s budget each fiscal year under the District General – Insurance account.

Resource Impacts

Sufficient funds remain in the FY 2000-01 Budget for workers' compensation claims administration, and funding has been included in the FY 2001-02 Budget. Funding has also been included in the FY 2001-02 Budget for general and automobile liability adjusting services. Board approval for funding in subsequent years of the contracts will be requested in the budget process.

Attachment

Attachment A - Evaluation of Proposals for RFP #2001-20

ATTACHMENT A

EVALUATION OF PROPOSALS FOR RFP #2001-20

WORKERS' COMPENSATION CLAIMS THRID-PARTY ADMINISTRATOR AND/OR GENERAL LIABILITY ADJUSTING SERVICES

SCOPE OF WORK #1 - Workers' Compensation Claims Administration

* Non-responsive to RFP requirements.
** Maximum points available is 115

SCOPE OF WORK #2 - General and Automobile Liability Adjusting Services

* Non-responsive to RFP requirements.
** Maximum points available is 115

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