COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Human Resources Department

DATE:

April 21, 2008

BOARD MEETING DATE:

May 6, 2008

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Donna J. Vaillancourt, Human Resources Director

Janine Keller, Risk Manager

SUBJECT:

Authorization to Exercise Options to Extend the Agreement for Administration of Workers’ Compensation Claims for up to Two Years.

RECOMMENDATION:

Authorize the Human Resources Director to exercise options to extend the agreement with Northern Claims Management, Inc. to administer Workers’ Compensation claims for two one-year periods, June 1, 2008 through May 31, 2009 in an amount not to exceed $701,364, and June 1, 2009 through May 31, 2010 in an amount not to exceed $715,392.

VISION ALIGNMENT:

Commitment: Responsive, effective and collaborative government.

Goal No. 20: Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain. Extending the agreement will allow the continuation of cost effective workers’ compensation claims processing for County employees.

Performance Measure(s):

Measure

FY 2006-07
Actual

FY 2007-08
Projected

FY 2008-09
Projected

Number of claims filed and those claims resulting in lost work time

541/269

590/290

590/290

BACKGROUND:

Northern Claims Management, Inc. (NCM) has served as the County’s Third Party Administrator (TPA) for Workers’ Compensation claims for eight years. In May 2005, after a Request for Proposal was completed, this Board adopted Resolution No. 067333, which authorized the execution of an agreement with NCM to continue as the TPA for a three year period (June 1, 2005 – May 31, 2008), with the right of the County, in its sole discretion, to exercise one or two one-year options to extend the term of the agreement with NCM.

DISCUSSION:

In administering workers’ compensation claims, NCM creates claim files, determines compensability, provides all benefits required under the law, coordinates litigation and rehabilitation and communicates with the County on an on-going basis.

The Human Resources Department is pleased with the services performed by NCM, and believes that the agreed-upon rates are appropriate for the level of service provided to the County. NCM was initially selected due to its expertise, experience, customer service and lowest price schedule. The 2% annual rate increases continue to be lower than the Bay Area CPI. The Human Resources Director requests authority to specifically exercise the option for each of the next two years.

FISCAL IMPACT:

Funding for NCM costs are offset by the Risk Management Workers’ Compensation Trust Fund. This Board previously authorized the County to exercise the options to extend the agreement an additional two years. The costs associated with the extension will be a maximum fiscal obligation of $701,364 for June 1, 2008 through May 31, 2009 and a maximum fiscal obligation of $715,392 for June 1, 2009 through May 31, 2010.