HomeMy WebLinkAboutCC 10 ADMIN SVC AGREE 07-21-80DATE: July 15, 1980
CONSENT C~r.RNDAR
NO. 10
7/21/80
Inter-Com
TO: Dan Blankenship, City Administrator
FROM: Loni Hamblin, Finance.Coordinator
SUBJECT: Galbraith & Green Administrative Service Agreement
The Administration and COnsulting Contract between the City
and Galbraith and Green for the period August 1, 1980 through
July 31, 1981 has been reviewed by both the Finance Director
and the City Attorney and is ready for Council consideration.
I recommend the City Council at their meeting of July 21, 1980
approve the contract with the noted changes.
L6ni Hamblin
Finance Coordinator
June 24, 1980
Mr. Ron Riley
Galbraith & Green, Inc.
P. O. Box 160
Tustin, CA 92680
Re: Proposed Contract for
Services
Dear Ron:
Thank you for your recent correspondence and agreement to
reduce the administrative fee to $7.00 per month, per
employee effective August 1, 1980.
I am returning the contract form with this letter for your
review and consideration. Several deletions have been
made and Section 9 regarding indemnification has been re-
written.
The changes we wish to make are as follows:
Section 2 - Delete the last three and one-half lines
regarding interest on delinquent payments. The amount
of the fee and the due date is clearly understood and
the City will pay accordingly.
Section 3 - Change the advance notice requirement to
90 days. The 90 day period is necessary to allow for
City staff evaluation and approval by the City Council
should a change be necessary. Also, a 90 day notice
clause is standard for this type of agreement.
Section 9 - Deleted entirely and replaced by the
following:
The City of Tustin agrees to defend any legal action commenced
against Galbraith & Green, Inc. caused directly or indirectly
by the wrongful or negligent acts of the City of Tustin and/
or the officers, employees, agents, or others engaged by the
City of Tustin; and indemnify Galbraith & Green, Inc. against
any liability, loss, cost or damage including attorney's fees
resulting therefrom.
June 24, 1980
Proposed Contract for Services
Page two
Galbraith & Green, Inc. agrees to defend any legal action commenced
against the City of Tustin caused directly or indirectly by the
wrongful or negligent acts of Galbraith & Green, Inc. and/or the
officers, employees, agents, or others engaged by Galbraith &
Green Inc.; and indemnify the City of Tustin against any liability,
loss, cost,~ or damage including attorney's fees resulting there-
from.
Exhibit B - Section 17 - Deleted entirely. The
City of Tustin is willing to provide an agent or
broker of record letter for these insurance
coverages, but reserves the right to change the
agent for these coverages if deemed to be in the
best interest of the City. This designation is
a separate matter and should not be 'included in
the contract.
Please indicate your concurrence with these changes so that the
Council can have time to review and approve this contract prior
to the August 1st date. I will be on vacation from June 30
thru July 18, but will schedule this item for the July 21st
Council meeting. Your response is needed by July 10th. You
may contact my assistant, Loni Hamblin, if you have any further
questions.
Sincerely,
Ed Bushong ~
Finance .Director
cc:
City Administrator
City Attorney
Ross Oliver
EB:ll
ADMINISTRATION AND CONSULTING CONTRA T ·
THIS ADMINISTRATION AND CONSULTING CONTRACT made and executed., the ' i ,.'~ ;.
Galbraith & Green, Inc., L)t .~(~u[l~{~t'~ [~a'l ~ 1'o~'~ ~. hereinafter referred to as "Plan Sponsor", and
, hereinafter referred to as the "Con-
tract Administrator and Consultant."
RECITALS
The Contract Administrator and Consultant is engaged in the business of performing services as
Employee Benefit Consultants and Administrators.
The Plan Sponsor desires to engage the services of the Contract A. dmi.nistrator and.Consultant to
hereinafter referred to as the
For and in consideration of the mutual covenants and the monetary consideration herein recited, it is
mutually agreed as follows:
1. Services to be Performed The Contract Administrator and Consultant hereby agrees to perform for
the Plan Sponsor administrative and consulting services in conjunction with the administration and
operation of the Plan. The administrative services to be performed by the Contract Administrator and
Consultant are set forth in Exhibit "A," attached hereto and by reference made a part hereof for all pur-
poses. The consulting services to be performed by the Contract Administrator and Consultant are set
forth in Exhibit "B," attached hereto and by reference made a part hereof for all purposes.
(a) As a part of the services to be performed by the Contract Administrator and Consultant. the Con-
tract Administrator and Consultant agrees to maintain and operate an administrative office for such
purposes and to pay all normal costs and expenses for such maintenance and operation (except as
herein set forth).
(b) T~e Contract Administrator and Consultant agrees to employ at its expense a sufficient staff of
employees or others to provide the administrative and consulting services to be performed by the Con-
tract Administrator and Consultant hereunder. It is further understood and agreed
that the Contract Administrator and Consultant will not provide or be responsible for the expense and
cost of legal counsel, actuaries, certified public accountants, investment counselors, investment
analysts or similar type services performed for the Plan Sponsor; the Contract Administrator and Con-
su!tant shall not be authorized to engage such services or incur any expense or cost therefore without
the written consent of the Plan Sponsor. In the event that such services are engaged by the Contract
Administrator and Consultant at the request of the Plan Sponsor. the Plan Sponsor shall be responsi*
hie for such services and the cost and expense thereof.
(c) It is understood and agreed that the services to be performed by the Contract Administrator and
Consultant shall be ministerial in nature and shall be performed within the framework of policies, inter-
pretations, rules, practices and procedures made or established by the Plan Sponsor. It is further un-
derstood and agreed that the Contract Administrator and Consultant shall not have discretionary
authority or discretionary controls respecting management of any trust fund and shall not have authori-
ty to nor exercise any control respecting management or disposition of the assets of any trust fund and
shall not render investment advice with respect to any money or other property of any trust fund.
2. Service Fee The Plan Sponsor agrees to pay to the Contract Administrator and Consultant for
the services to be performed hereunder the following fees:
(a) An initial one-time fee of $ N/A payable on or before
(b) Monthly fee of Seven delia,s ($7.00) per ample.yea pe~' month
The Contract Administrator and Consultant shall provide a statement of the above fees and deduct the
amount from the plan account the first of each month. In tho event that ouffioiont fundo are not available in
tho aooount, e~ if tho ~on ~,por,~e~ does nM .~u~,,.i~ te the Centr~t Ad,,i~,istrete~ e~d Co~ulte~t th~ infer
~ation to doduet tho tooo, intoroot will bo ohargod on tho fooo duo tho odminP~trQtor at tho rate of one and
one half poroont (1%%) per month or tho maximum rate allowed b~j law, whiohovor ic
3. Term The term of this Administration and Consulting Contract shall be for the period of one year,
beginning AtJgtJ~' ~,, ~.'~r~q. and ending July 3T, 198t . At the end of the
.. contract year if neither party requests a change, the contract shall be automatically renewed. The fees
stated in paragraph two (2) are subject to negotiation on the anniversary date of the contract, or on any
monthly due date after the initial one year period, providing theContract AdministratorandConsultant has
............. G & G Adm~n & Cons, SF-120-1 1/80
ygiven timely notice of intent to adjust the fees. The now fe~-.s. ,and contract would then be in force for o
/ year from the effective date.
,! Either party shall have the right to terminate or re-negOtiate the contract after the initial one year period
by giving to the other party written notice of such termination or re-negotiation of tho terms of the contract
[" '.~ at least thirty, ;._'~0~ days in advance. In the event timely notice of intent to re-negotiate the terms of the con-
tract iS given by either party the contract shall continue until such re-negotiated terms are agreed to in
writing. In the event that such re-negotiated terms are not agreed to in writing by both parties within thirty
(30) d~"Ws following the expiration date of the then current contract year. th~s contract shall terminate upon
thirty 130) days notice. The contract admimstrator will have no lurthe~ responsibility or obligation
hereunder upon termination of th~s contract.
4. Records end Files The Contract Administrator and Consultant shall maintain all records in con-
junction with the administrative services to be performed hereunder. In the event of the termination of this
Contrac. t. the Contract Administrator shall deliver to the Plan Sponsor the information on all c!aims
histories in magnetic tape format of industry standards, However. the Contract Administrator and Consul-
tant sh311 be enbt~ed to retain copies of any such records at its own expense. The confidentiality of such
records sha~l be maintained by the Contract Administrator and Consultant and the informalion therein
shell not be d~vulged or a~sc~osed or made availab:e to persons other than the Plan Sponsorwithout the
prior wr~t;en approval of the Plan Sponsor or a COUrt of competent jurisdiction.
5. Liabilities and Obligations The Contract Administrator and Consultant shall have no respon-
sibility, risk. hability or obtigation for the funding of the Plan. The responsibility and obligation for funding
the Plan shaft be so~ely and totally the responsibility of the persons or entities so p,'ovided in the Plan.
(al It is further understood and agreed that the Contract Administrator and Consultant shall have no
reso¢,;~s+bihtv o- chh.cat on to take action, legal or otherwise, a.cainst any employer or employees or
other p~rSOr~ to enlorce crowsior~s cf ¢';e Plan. I'~ the event th3t ;he P!an Spor'sor desires to engage the
serwce5 of theContr~ct Administrator and Consultant for such purposes, such services shall beengag-
~d and ret'tiered on;., pursuant ~c a separate written agreement between the parties.
th) :t ~s 'Jrt~,er ur;cerstooO eno a~-eed that tr~e Contract Administrator and Cc, 2sultant shall not be
resoor'sib!e or obi;Gated for tPe :r:vestment of any asse~s or funds of the Plan. However. the
Contract Adm,m>trator and Cons,,,,ta'-t a~rees to prepare and maintain reno,ds of the investment of the
assets or funds of the Plan if the Plan Spons;,r requests the Contract Administrator and Consultant tO
do $o ar'C. provide t-e Contrsc', Admin:strator and Co~s¢itant with the i~'f?mation and documents
necessary to prepare and maintain such records.
lC/ The Contract Administrator and Consultant will process and pay benefits in accordance with the
plan or oohcy aOoptec by the Plan Sponsor. It is agreed that the Contract Administrator and Consultant
will incorporate sound bus,nesS practices and be responsible for reasonable internal audits. Where an
error exists the Contract Administrator and Consultant shall use reasonable efforts for recovery of any
loss resulting therefrom, but will not be required to initiate legal process for any such recovery.
6. Independent Contractor It is understood ar, d agreed' that the Contract Administrator and Con-
sultant is engaged to p'e-form services under this Agreement as an independent contractor. The Contract
Administrator and Consultant shall use its best efforts to implement such written instructions, if any. as to
policy-and procedures which may be given by the Plan Sponsor to the Contract Administrator and Con-
sultant provided that such instructions are consistent and compatible with the description of services to
be performed by the Contract Administrator and Consultant and are not in violation of or contrary to any
laws or regulations, including but not limited to the Employee Retirement Income Security Act of 1974. as
amended.
7. Plan Sponsor The term "Plan Sponsor" shall be defined in include the employer or corporation
sponsoring the Plan or Trustees of the Trust sponsoring the Plan who serve at the time of execution of this
Contract and shall also include trustees serving from time to time during the term of the Contract. The
Contract Administrator and Consultant shall be entitled to rely upon the actions, notice or instructions
taken or given by the Plan Sponsor.
8. Assignment This Contract shall not be assigned by the Contract Administrator and Consultant or
its duties, obligations or responsibilities hereunder delegated to any other person or entity without the
prior written approval of the Plan Sponsor.
9. Indemnification Thc Plem 6~or~'yar hcrcby ~groco, indcmnific3 end holdc harmlcss tho C4)~ract
Adminiotretor and Consultant 3gaincl 3¢~y 3nd 311 clnimc, damagoc, liabilitioc 3nd o,,~ponc, oo 3ctuall. y and
-' rca:~onab~ ~noucrcd by or irnpe, aed on thc Cont~oot Adm~ni3trotor and Conoultnnt in connection w,th
ae4ucl or throQtonod claim, sE;lion, cult. procr;oding, t-,ottlomont or comprorn~c.o.'thoroo.f 6oncormng tho
I
,ePl', ~.r Tru3t fund~ or thc olio.god Q~:t3 or omi33iono of thc ContrQot Adm~,'.a~u~or ,..qna
3 tO thooc mn!fciC wherein ~no ContracA Adm~nictr3torGa,r.,a,t~g,~,,and Concultapt,~, ic hnally adjudged or wdlfully
/ reo~onablc end ordinory oor¢'. '~
~10. Additional Services Any changes in the Plan which require additional programming, reports or
services will be at the expense of the Plan Sponsor.
11. Other Applicsble Agreement~. The following Galbraith & Green, Inc, agreements are by this
reference incorporated in this agreement:
Form Number Plan Sponsor's Initials Title of Agreement Date
', ',, ~/,~ ~/k '"
By
"Plan Sponsor" Date
-""'Contract Administrator Date
and Consultant"
-L
G & G Adm,~ & Cot, 5 SF-120-3 9'79
EXHIBIT A ~X~
ADMINISTRATIVE SERVICES
ADMINISTRATIVE SERVICES TO BE PROVIDED BY GALBRAITH & GREEN, iNC.
1. Answer all telephone and mail inquiries from participants as to benefits provided for them and their
dependenls.
2. Provide information concerning the plan benefits and eligibility of participants'to providers and par-
ticipants based on eligibility information proviOed by the Plan Sponsor.
3. Receive claims and claim documents from the participants of the plan and verify the eligibility of the
claimants for benefits based on eligibility information provided by the Plan Sponsor.
4. Review a}J claims thoroughly and coordinate them with doctors, hospitals, and other providers of ser-
vices, to determine that the charges made are reasonable and customary.
5. Correspond w~th claimants if additional information is needed for payment of their claims.
6. Coordinate benefits with other benefit plans, insurance plans, arid health maintenance organizations.
organizations.
7. Handle all claims expeditiously
8. Process, issue and distribute the claims drafts to the participants, hOSpitals, doctors, or others as
applicable.
9, Furnish standard Administrator's internal forms and coordinate with the Plan Sponsor the design and
printing o~ claim Forms, ID cards, and other supplies.
10. Notifyc;aimants in writing cfine[ig~blecla~ms f,;ed, indicating the reason for the declination of same,
11. Provide the fo!lowing c/aims reports:
A. Ex;;a~at~on of benefits
13. Claims Analys~s b?' Line of coverage a2d total
C. Monthly Claims Lst by Partic~2ant
D. Coordination of Benefits SavinGs
E. Incurred Claims Lag Study
F. Cia:ms Pendin§ Reports
G. Cash Transaction Register
H, Report to IRS regarding payment to health providers
12. Provide the necessary data to the Plan Sponsor for preparation of ERISA reports and filings.
13. Attend meetings with Plan Sponsor (trust or corporate) as necessary for proper administration of
the Plan.
14. Provide the Plan Sponsor or participating groups of .the plan instructions for reporting their
employees' eligibility to the contract administrator.
15, Prepare all checks or drafts for disbursement from the fund with documents to support these dis-
bursements.
16, Provide a monthly financial report to the Plan Sponsor showing operation of the plan during the
preceding month; and the conition of the plan as of the end of the month. This will include the
following:
a, Contributions and Income
b. Claims paid and expenses
G 5 G ACm,n & CO~S 5r-120-4 9 7.~
EXHIBIT B
CONSULTING SERVICES
Counsel. advise and suggest to the Plan Sponsor a specific set of benefits which will accomplish the
aims of the Plan,
When a specific set of benefits has been agreed upon, perform the marketing function of negotiating
with appropriate insurance carriers.
3. Prepare a detailed written report concerning the companies that have been considered. This report
will contain basically the following material.
A. Plan Pro~risions
B. Service Facilities
C. Net Cost
D. Claim Reserves
E. Dividends
F. Retentions
4. Provide the consulting, actuarial data and planning to initiate a self-funded plan where applicabl~.
5. Provide consulting as to contribution levels for present benefits.
6. Provide evaluation and underwriting data for contract changes and prowsions such as benefit in-
creases and decreases.
7. Keep the Plan Sponsor advised of the innovations and developments in the field of health and
welfare which would be helpful or of interest.
8. Counsel with the Plan Sponsor concerning the financial future of the Plan to assure the accumula-
tion of proper reserves.
9. Provide medical cost data and medical cost trends in the area involved which wou~d aid in designing
the benefits.
10 Coordinate with legal counsel and others in regard to E.R.I.S.A. requirements and information.
11. Assist in the preparation of a Plan Document outlining all benefits and provisions of the Plan.
12. Assist in preparing the announcement material and Summary Plan Description which will be design-
ed lo advise the Participants of the benefits available and the eligibility requirements.
13. Assist the Plan Sponsor in obtaining proper enrollment data.
14. Consult and assist in design of the required administrative forms: enrollment cards, claim forms,
claim explanation of benefits, drafts.
15. Provide a review of marginal or questionable claims.
16. After the Plan ha's been implemented, remain at the service of the Plan Sponsor for advice or
counsel on any problems that may arise in relation to the Plan.
17. Act es "Agent of J'iecor~l" on thc following coverages.'-
This serwce includes competitive bidding of various insured plans as requested.
G & G A~- - ~, Co-$ $;.122-3 979
DATE: 3une 19, 1980
Inter-Corn
TO: ED BUSHONG, FINANCE DIRECTOR
FROM: 3AMES G. ROURKE, CITY ATTORNEY
SUBJECT: GALBRAITH & GREEN, PROPOSED CONTRACT
The form of contract submitted with your Inter-Corn of 3une 13, 1980, is
satisfactory except for paragraph 9 therein.
Paragraph 9 provides that the City will hold Galbraith & Green harmless
from all claims, liability, and expenses incurred in connection therewith, arising
out of any acts or inactions of Galbraith & Green or concerning the administration
of the medical plan except where Galbraith & Green is found guilty of gross
negligence, wilfull misconduct~ or want of reasonable and ordinary care.
This is a very broad and unusual provision. It would be usual and
appropriate for the City to hold Galbraith & Green harmless from liability for
claims arising irom City's negligence and Galbraith & Green to hold the City
harmless from liability for claims arising from Galbraith & Green's negligence.
3GR:se:D:6/I S/g0
lC EB/G&G D:t~
cc: D,B.
DATE:
June 13, 1980
Inter-Corn
TO:
FROI~:
SUBJECT:
Jim R0urke, City Attorney
Ed Bushong, Finance Director
PROPOSED CONTRACT FOR ADMINISTRATIVE SERVICES -
GALBRAITH & GREEN
Attached is a copy of a new contract form proposed
by Galbraith & Green. The original notice requested
a fee of $7.50 but I have since negotiated the fee
down to $7.00. This represents a 12% increase over
our present fee of $6.25. As you will recall, the
original contract provided an administrative fee
based on 8% of paid claims. For the current year
this basis would yield a fee of approximately $7.56.
May I please have your comments by June 27, 1980.
Ed Bushong
Finance Director
June 9, 1980
Mr. Ed Bushong
City of Tustin
300 Centennial Way
Tustin, California
92680
Dear Ed:
In response to your letter dated May 13, 1980 and other discussions we have
had, I wish to clarify our position regarding our fee and the questions you
have raised.
Volume of Claims. Since our fee is based on the actual number of
covered employees each month, we look at utilization per employee.
I have enclosed a worksheet showing utilization for the current
year versus the previous year. Our statistics show that overall
utilization this year is running 11% more than last year.
Use of Computers. Our automated claim system has provided some
financial economies, however, the primary benefit of using computers
has been in greater surveillance of coordination of benefits and
clerical accuracy in claims processing.
o
Claims Turnaround. Our records indicate that our claims turnaround
time has been very reasonable. A spot check of turnaround time
from January 1980 through the present shows we are averaging seven
working days turnaround. The range was from three to fourteen days.
Obviously, some claims that are pending additional information or
coordinating benefits with another plan might take longer to
complete, however, we rarely get complaints about our turnaround
time.
e
Personnel Turnover. Both the City and Galbraith & Green have seen
turnover this past year. While we have both felt the sting of
turnover I do not feel that it has had a disruptive effect on either
the City employees or City management. The lines of communication.
have been open between both Mike and yourself. I have made many
personal visits to the City on many matters just to insure that
problems and questions were resolved.
We are currently acting as agent of record for the City's Life and
Stop-loss insurance. We do not feel that this is a conflict of
interest but actually in the best interest of the City. Stop-loss
insurance is something that many agents do not understand. At
Galbraith & Green we work with this everyday and know where to obtain
the best coverage for the City. In the past we have provided competi-
tive quotes on this coverage from different carriers and will continue
to do so in the future.
Mr. Ed Bushong
June 9, 1980
page 2
We value the City of Tustin as a prestigious client and feel that we have
established a good working relationship over the past year. I have worked
with both Paul and Ron Bateman and they have agreed to adjust the fee to
$7.00 per employee per month. We understand the current pressures on Public
Sector groups and are committed to working with the City in these financially
challenging times.
I have enclosed a new administrative agreement reflecting the $7.00 per
employee per month rate. Should you have any questions, please contact me.
iley V
Consultant ~
RWR:lp
Encl.
CITY OF TUSTIN
MONTH
April 1980
March
February
January
December 1979
November
October
September
August
July
June
flay
April
March
February
January
December 1978
November
October
September
August
July
June
May
April
NUMBER OF
CLAIMS PAID
164
106
84
195
88
131
171
63
llO
136
131
152
90
91
97
141
114
63
81
Ill
105
gl
122
103
ll9
NUMBER OF
EMPLOYEES
149
150
153
~ 'm~ 153
-~"'~ t'"'c~ 150
147
143
147
143
145
140
143
143
146
~' 1~-~ 145
148
146
145
144
140
148
144
142