REPORT TO COUNCIL
SUBJECT
Title
Amend an Existing Contract with Keenan & Associates for Workers’ Compensation Claims Administration Services to Extend the Term by ix Months and Increase the Not-To-Exceed Contract Amount to $2,959,634.28 (F25-112)
Report
REPORT IN BRIEF
Approval is requested to reinstate and amend an existing agreement for six additional months beyond the original authority awarded by Council with Keenan & Associates of Torrance, CA for professional support services in relation to Workers’ Compensation Claims Administration, increasing the not-to-exceed contract amount by $243,028.28 for new total not-to-exceed contract amount of $2,959,634.28.
EXISTING POLICY
Pursuant to Chapter 2.08 of the Sunnyvale Municipal Code, City Council approval is required for the procurement of goods and/or services exceeding $250,000 in any one transaction.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.
BACKGROUND AND DISCUSSION
The City currently has 955 full-time and part-time budgeted positions, of which 907 are filled, as well as 392 casual employees. Full-time employees and eligible part-time employees are members of the California Public Employees Retirement System (CalPERS) and covered under the City’s workers’ compensation program. In addition to full-time, part-time, and casual staff, the City also has more than 900 volunteers over the course of the year, who are also covered under the City’s workers’ compensation program.
The City maintains a self-insured workers’ compensation program with a self-insured retention of $500,000 and purchases excess workers' compensation coverage from
Public Risk Innovation, Solutions, and Management (PRISM). The City's Risk Manager is responsible for management of the City's workers' compensation program including administration of the third-party administrator (TPA) contract. The City's Risk Management Division coordinates all aspects of the workers' compensation program with the TPA. The Division includes a Human Resources Analyst who manages the day-to-day aspects of the self-insured program under the direction of the Risk Manager.
In 2018, the City requested proposals from qualified TPAs for administration of the City’s self-insured workers’ compensation claims with experience in public entity workers’ compensation self-insurance, who promote a proactive approach to manage and administer benefits in accordance with California State laws and statutes with a focus on quality care.
Keenan & Associates (Keenan) was awarded a three (3) year contract with the option to renew for two additional one-year periods. Additionally, a one-year bridge contract was approved to give the City time to complete the RFP process, expiring on December 31, 2024. The City is currently reviewing RFP proposals and requires additional time to establish a new contract. Keenan’s service to the City continues to be acceptable to the City and provides an essential service to the City. Keenan provides two Senior Claims Indemnity Examiners, a Medical Only Examiner and a Future Claims Examiner to adjudicate the City’s workers’ compensation claims.
Since Keenan became the City’s workers’ compensation TPA, Keenan has maintained an average claim closing ratio of 117%. As of October 30, 2024, 565 workers’ compensation claims have been filed by City employees, of which Keenan has closed 662 claims. More claims have been closed than opened due to the large number of open claims at the time Keenan took over as the City’s TPA.
As of October 30, 2024, the City’s workers’ compensation caseload consists of 272 claims:
• 195 indemnity cases
• 4 medical only cases
• 73 future medical cases
FISCAL IMPACT
Costs for claims administration are budgeted in Fund 7065 - Employee Payroll & Benefits Fund Workers’ Compensation Sub-Fund. Funding is provided through transfers from all other funds where personnel are budgeted. Approximately 95% of the transfers come from the General Fund, which accounts for the most employees, including all safety employees that comprise the largest share of cost for claims due to the dangerous and physical nature of the work.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Authorize the City Manager to reinstate the existing contract with Keenan & Associates, and execute a Fifth Amendment, in substantially the same form as Attachment 1 to the report, extending the contract term by six months and increasing the not-to-exceed amount by $243,028.28 for new total not-to-exceed contract amount of $2,959,634.28.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $250 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
_X_ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: David Battaglia, Purchasing Officer
Reviewed by: Dennis Jaw, Acting Director of Finance
Reviewed by: Tina Murphy, Director of Human Resources
Reviewed by: Connie Verceles, Deputy City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Draft Fifth Amendment to Consultant Service Agreement