Approval is requested for the award of a three-year contract to Claims Management Inc. (CMI) to provide third-party workers’ compensation claims’ administration services for the City of Sunnyvale’s Self Insurance Program.

Since it became an authorized self-insured entity for workers’ compensation, the City has contracted with a third-party claims administrator (TPA) because of the complexities and administration requirements of the Labor Code.

Because of its experience and expertise in the handling of workers’ compensation claims filed against public entities, CMI is an ideal service provider in this field.

The City has used the services of Clark & Associates since 1988. Clark and Associates was one of the providers considered for this contract. Their expiring contract cost was at $69,367 annually.

The existing contract for claims’ administration services expires on December 31, 1999. Staff issued a formal Request for Proposal (RFP) in September 1999. Staff utilized the services of Morosini Consultants, who specialize in workers’ compensation programs, to assist in the development of the RFP and the selection process.

Ten (10) companies responded to the proposal by submitting comprehensive written proposals that addressed specific issues identified in the RFP.

All ten responses were reviewed for specific criteria by Morosini Consultants and the City’s Risk and Insurance staff. Public entity experience, including public safety expertise, and a high level of automation, were considered the most important criteria when selecting finalists.

The following three (3) finalists were selected for interviews after the initial review process.

1. Claims Management Inc.
2. Athens Administrators
3. Clark & Associates.

Extensive interviews for the finalists were held on October 8, 1999 and were conducted by staff from Finance, Risk & Insurance and Morosini Consultants.

It was the unanimous decision of all the interviewers that Claims Management Inc. (CMI) was the entity best suited to provide this service to the City of Sunnyvale. CMI has extensive public entity experience and is offering a level of service that meets the City’s expectations in all respects. The cost of their service proposal was within the multi year budget parameters for program 785 at $88,800 for the first year, $88,832 for the second year and $92,000 for the third year.

Clark and Associates proposed a first year fee of $79,368 up from $69,367 and Athens Administrators a first year fee of $171,136. Staff believes the $9,432 difference between the CMI and Clark & Associates fee not to be significant when the improved level of service and automation proposed by CMI over that proposed by Clark and Associates is taken into consideration.

Reference and background checks on CMI were excellent and included an extensive follow up meeting to discuss the contract terms with the company and an on site inspection of their facility in Rancho Cordova.

Agenda publication.

Staff recommends the award of this contract for a three-year period from January 1, 2000 through December 31, 2002 to Claims Management Inc.

Prepared by:

James Harrington
Risk and Insurance Manager

Reviewed by:

David Nieto
Director of Human Resources

Approved by:

Robert S. LaSala
City Manager