Title
Human Resources Department, Risk Management Division, recommending the Board consider the following:
1) Make findings in accordance with County Ordinance 3.13.030 that it is appropriate to contract with Sedgwick as the County’s third-party administrator for Workers’ Compensation tail claims because the work requires specialty skills and qualifications not expressly identified in County classifications and a contract is necessary to protect against a conflict of interest or to ensure independent and unbiased findings where there is a need for an outside perspective;
2) Approve and authorize the Chair to sign Amendment III for the continuation of perpetual Agreement 7803 with Sedgwick as the County’s third-party administrator for Workers’ Compensation tail claims, increasing the amount by $82,620 for the period November 1, 2026 through October 31, 2027 for a total amount not to exceed $400,870;
3) Approve the new pricing proposal as submitted by Sedgwick; and
4) Authorize the Purchasing Agent to execute any necessary amendments relating to Agreement 7803, excluding term extensions and increases to the amount, contingent upon approval by County Counsel and Risk Management.
FUNDING: Workers' Compensation Fund.
Body
DISCUSSION / BACKGROUND
In accordance with Board Policy C-17, departments are required to obtain authorization from the Board of Supervisors to utilize any contract that does not have a stated contract term initially and every three years after that, if it exceeds the Purchasing Agent's authority. The Human Resources Department, Risk Management Division, has a Board approved contract with Sedgwick which does not have a stated contract term. In addition, as tail claims continue to close, Sedgwick has submitted a new pricing proposal for the Workers’ Compensation Administration Fee with an annual cost of $82,620. The Human Resources, Risk Management Division is recommending the Board authorize AGMT 7803 Amendment III with Sedgwick to increase the total amount by $82,620 for a total amount not to exceed $400,870 and extend the pricing to October 31, 2027. Although recently updated Board Policy C-17 only requires a perpetual contract to be brought back to Board for authorization every three years, this agreement requires an amendment to increase the amount for the upcoming year so it will continue to be brought annually.
In September 2018, the County entered into a Primary Workers’ Compensation (PWC) program wherein no new claims would be submitted to Sedgwick for claims management. However, a determination was made that it was necessary to maintain Sedgwick as the claims third-party administrator (TPA) for the administration, investigation, adjustment, utilization review, bill review, and case management for tail claims (claims incurred prior to September 2018).
ALTERNATIVES
The Board could choose not to approve the agreement and Risk Management could find and use a different third-party administrator for tail claims.
PRIOR BOARD ACTION
10/10/2023 Legistar file 23-1248 - Approved perpetual Agreement 7803
10/15/2024 Legistar file 24-1226 - Approved Amendment I to Agreement 7803
10/21/2025 Legistar file 25-1592 - Approved Amendment II to Agreement 7803
OTHER DEPARTMENT / AGENCY INVOLVEMENT
CAO, County Counsel, Procurement and Contracts
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
Funding is included in the Risk Management Workers’ Compensation Program Fund.
CLERK OF THE BOARD FOLLOW UP ACTIONS
Return a signed copy of AGMT 7803 Amendment III to Paula Starr in CAO Fiscal.
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Joseph Carruesco, Director of Human Resources