HomeMy WebLinkAbout0526.000I r
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0cI0ber 9, 1990
THE HONORABLE CITY C()(JNCjL
Palo AlIa. Ca1iIomla
RePOrt In Brief
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The Cify or Palo .AIIo cootracts rot claims administration services fOr the aboIIe-rtsted se.T--fUnded
programs. The prevlous cTaims admtrostratar, AaSeN COrporation. abruptly ceased operations last
month. This report recommends the approval cI a SUCC8SSOf agreemenl wtlh Risk Management
Resources, effective October 10. 1990. In conjuncfion with claIms adrrunfstration, 1he ~ atso
contracts fa( mecflCa!' utiflZafioo review services to provide cost conta1nrllef"t programs for 111e ely's
Healtt'l. -Plans. This report atso recommends U1e award -.:f a new agreement !Or \Jtifa.atlon rev-w
services 10 Health Intemafonaf, tnc. Funds have been budgeted in the City's empfoyee benefItS and
nsurance ihlemai service fund to cover Ihe COSIs under lhese agreements; however. 1hese accounts
are IJghfIy budgeted and Ihe rn1d-year tinanciar review" Will defermine the need for any budget
aqustments due 10 aduaJ ciafms history.
Bacl<around
The C4 !irst contracted with AdSetv Colpora!ion Jot claims ad'mWstraoon services and with Paclfic
~ew Services for cost: containmenl programs in September 1986. to October 1989, Councij
approved exrensiOns r.:I1hese agreements peOOklg consideration ct the transfer CI our City emp;oyee
medical coverage 10 the PERS Health Plans. As iii resurt r.J s.taffs recornmend'aflOn i1 May 1990,
Councl decided (hat we would not change to 111e PERS Health P1ans lhis }lear ooe to me i'1creased
cost or making suefl a change at thEs. time. Cons.equenf)y. on J~ 15, 1990, 'Staff requested proposals
lOr Third Party Claims Admlnlstratoo $en;k:es and Utiflz.at'ion REM"e. 5eNlces,
The bid process had not )lElt been compreted wlleo (he City was irtonned by AaSeN' Orl September
7, 1990. !hal Olley would be 'going out cI buSiness." eftBC!ive $ep<ember 30. 1990_ As a ,esut cll11e
~ ded"ning sluafoo all AdServ and AdServ~s growing L.MY'etiabiTIty. ) became necessary 10 arrange
to -co1Iecl 0tZ rncords and unpakf claIms on September 17~ ACCOf'dingTy, we accEllerdtod 1he sefection
process Jar a new daims ad'mirYstralor.
tntervfews w1th fi\le flMIisrs were I1ald on Septernbef' 20. Participants on 1he sefoction committee
i1c~cred the {Mec1or ~ Human Resources. Manager d Employee Benerlls, !he C.ty~s Emp;oyee
Benefits Consurtart from KPMG Pear Marwick ClOd representatNes from the Finance and Inforrnatlon
Resources Oepartments and the Palo Aha Ponce OffICers Association.
The selection cA a new ctajms administrator was based upon the abinty to provide an or the servk;es
required by our ptan.. a proven trac'k recOfd ..-itn sImllar crler\ts as de.terfTllne<1 by exte.nsive reference
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cheCks. computer capabilities, Iocaborl of claims adm(1iSfation facilities, abiflt)! 10 respond immediately
~ -10 an accelerated implementation pan and a competitive rate str _ ~ '!ure.
The selectioo ct a new lKirization revie .... organilabon .... as based upon an ioolVkfuafizoo approach 10
case management, e)(cenent ComptJ!:Of reporting capabIT"rties which i1cJude cornpalibi~ 'k) interface wfth
the c1'aims acfrrl1nistrat(l('s. Sjlstem. as Yw'e~ a'5 a proven track record based upon ex!cnsive reference
checks.
The recommended craims admWS:ratioo sen;k:e, PJsk ManClgement Rescurces, InC. ~ pro .... ides
claims administration services ?or a number cA pubrlC SectCl( cilents ... hie" i"Ic'k.Jde City cf Sunnyvale.
Sacramento MUf1icipaI Utirrty District, eft-i c( MOnlerey. City of Morgan Hi" City d Saratoga. Santa
Clara County Centraf Fire Protectioo Dfstrict,. the City 01 Paim Sprfngs, and the City cI $pati<s. Ne\.'ada
Most recenrTy AMR tlas contracted '.iith the O~!and and E3erl<erey SChool Df$iCtS ..... 00 were also
former AdServ dents. As a result, RMR ts wen prepared with a plan geared loward acce1erarlng 1he
iriptemenration process in order to be a~e to cornmence claims processing by 0c10bef 15, 1990.
Tne recommended utffizat)Qn review seNice, I-\ealth intemationa. \.0c. also "Wo~s. "With public s.ec1Or
c~ents incfuding the cities r:A Monte!"ey, Palm Springs, and Glendale as ·~Ien as l11e Santa Clara School
District.
From a cost standpoint. the per capita rates f<x Risk Ma.1agement Resources represent appr0J6matery
a 5% increase over the rates urxler the AOServ contract. The capitcded fees under 1he Health
International contract .... 111 result in af1 annual cost or apPw)(imately 527,000 as compared 10 the
$20,000 per year under tile agreement .... rth Pacffic Revie .... Seriices. Kowever, for this increase, we
feel' COfIfid"enl Ihat we .... iI receive more compfehensive and effectiva cost conlaTnmert sel'\lices.
Addltionany, lhese are both three-ye<Y agreemen~s .... tlich eiti"ler guarantesd Of capped r,creases i1
1he second and 1hrrd years. In the case or Ole Risk Managemant Resources, Me ra!as are guaranteed
b" each year cI the tem d ttle agreement The Healt~ lntematjoOaI contract prav1des for It1e
negoflafK>O cI capped i1creases based upon Ihe Crry·s e)(perip.nce rating "in lhe llrst year of Itle
agr~ment
.However, there wiD be some adcfrt:kJnaI <:OSis du ring tne fjrst ya3r of the agreement: with Risk
Management Resources as a rasul of Charges for processing II"',e additkmaf cTaims backtog from
AdSeN. The contract vo./Kies kx' additional fees of fi·"e ooflars ($5.00) per clairrl 1C process ctaims
incurred before October 1, 1990. Sa~ upo'"Jn t"he bac""klog of approximately 2,400 claims U1at ..... ere
iniliarly received from Ad$erll' and est;matIng tnar: Iflis backlog eX claims incurred prior to Octoher 1,
coord grow 10 a kJ(af d as much as 6,000 claims, it is estimated mat 1here may be an adcWtionai
$30,000 in proc:essJng costs 10 ciean up L'11s claims backlog. The CIty Attorney's OffICe wiD review
these Costs and QthE!f po5SIo~ damages suffered as a result of AdSe,....'s demise, and recommend
legal action, I appropriate.
It: shOuld aIso be noted that the RMR cootract prQ\lideos for administration or C08RA ~so1T.j'atad
Omnibus Rec.(YiCaiarloo Act) provislor.s whk::h require the C~ f.O offer comir;uation r:A insurance kI
<:ert3i"n inarviduaTs based upon qualifying events such as termlnation, retirement, diIlOfCe,. e!:c. Wrthout
acScfrtionci staffing, staff cannot cootJnue 10 iidmirf~er this program "in··hOuse. • is estimated m<l l;le
addaionar costs for C08RA adrninfsi:ra!:"OO .... m be $7,000 per year.
Due \0 111e unt\me~ dissolution ~ AdSeN, it bt..."">Came necessary for us \Q take immediate action in
order 10 restore cfalms administration services for the City's Heatth and Dentar ?taIlS as quickly as
possibre. Accordingly, staff entered into short form agreements en an emergency basis..-ith bo(h Risk
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... anagemert __ Inc. and _ lnlemalion.I.1n.o. 00 O<;tober '. 1990. pending fulaI Coone.
>W«"'ai ~ II1e aIIaChed _loa" agreements.
Stilt[ recommends thai Councl authOrize lhe MWJor '10 execute I11e attached agreilments with Risk
Management Resoorces, Inc. for claims admin6tr"ation services a'ld wTth Health ~emationaI. Inc. for
uti1f.zation review services.
JCRN
Altachrr~nts
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A G • I I K I • T
BETWEEN THE CXWY or PALO AL~ AND
RISK MANAGEMENT RESOURCES, INC. FOR
ADMINISTRATION O~ CITY XEALTH
AND DENTAL CLAIKS
THIS AGREEMENT is made and entered into this __ day of
__ ~ ___ ~ 1990,-by and bet .. een the CIT'! OF PALO ALTO" a municipal
corporation of california~ hereinafter referred to as ·CITY~-and
RISK HANAGEMENT RESOURCES" INC. (Taxpayer Identification N~ber
S(-2596070) a California corporation. wi~h offices at 500 Sansome
Street~ suite 20S. San Francisco. CA 94111. hereinafter referred
to as ·CONTRACTOR";
LImn' • E R sir R;
'WHEREAS,. CITY desires certain services in conjunction
-with the claims administration for City employees' health and
dental plans and City retirees' health and reimbursement plans; and
WHEREAS.. CI1'Y desires to engage CONTRACTOR to provide
these services by reason of its qualifications and experience for
performing such services. and CONTRACTOR has offered to provide t.he
required services on the terms and in the manner set forth nereiD;
NOW, THEREFORE,. in consideration of their mu~ual
covenants,. the parties hereto agree as follows:
SECTION 1 -DEFINITIONS
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The term ·City· as used in this Agreement shall mean and
include all the territory lying within the municipal boundaries of
the city of Falo Alto,. California,. as presently existing, plus all
territory which may be added thereto during the term of this
Agreement by annexation or otherwise~
1.2 City Man~ger
Tbe term ·City Manager-shall mean the duly appointed
city Manager of the City of Palo Alto,. California.. or h.is
designated representative~
The term ·City Attorney· shall mean the duly appointed
City Attorney of the City of Palo Alto,. California, or his
designated representative.
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The term -city Clerk-shall mean the duly appointed Citf
Clerk of the City of Palo Al to, C<:lIlifornia, or her designated
representative.
The term -Risk Manager-shall mean the duly appointed
Risk Kanager o~ t~e City of Palo Alto, California, or his
designated representative.
1.6 Froject
The term
Exhibit -A-entitled
part hereof by this
·Project
·Scope of
reference.
means the services described in
Project-attached hereto and made a
SECTI9l::! :2 -PROJECT CCKlRDINAl.JON
2.1 City
The City Manager shall be representative of CITY for all
purposes under this Agreement. Jay C. Rounds is designated as the
PROJECT ~~~GER for the City ~anager, and he shall supervise the
progress and execution of this Agreement, and shall be assisted by
Amy L. Mosgraves# EMPLOYEE BENEFITS MANAGER.
CONTRACTOR shall assign a single PRO,JECT DIRECTOR to have
overall responsibility for thP. progress and exec..lJtion of this
Agreement for CONTRACTOR. Margaret A. Harter hereby is designated
as the PROJECT DIRECTOR for CONTRACI'OR. Should circumstances or
conditions subsequent to the execution of this Agreement require a
substitute PROJECT DIRECTOR for any reason. the PROJECT DIRECTOR
designee shall be subject to the prior .... rritten approval of the
PROJECT MANAGER.
CONT.R...1!,.CTOR sh2'!11 provide all specified services as
set forth in Exhibit A.
CONTRACTOR sha 11 :
3.2.1 PrOC'ure all permits and licenses. pay all
charges and fees, and give a 11 notices which may be necessary and
incident to the due and la~ful prosecution of the services to be
performed by CONTRACTOR under this Agreement;
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3.2.2 J::e.ep itself fully in.formed of all existinq
and future tederal, state~ and local la~s, ordinances, regulations~
orders" and decrees .. hieh may affect those engaged or employed
under this Agreement, any ~aterials used in CONTRACTOR's perform
ance und~r this Agreement, or the code of the services under this
A~reement;
3.l.1 At all times observe and comply ~lth, and
cause all of its S\locontractors and employees, if any, to observe
and comply with, all of said laws, ordinances, regulations, orders
and decrees ~entioned above: and
3.2 .. 4 Immediately report to the PROJEC'.r KANAGER
in writing any discrepa.ncy or inconsistency it discovers in said
laws, ordir~nces, regulations. orders, and decrees mentioned above
in relation t.o any plans, computerized or hard copy files and
records, specifications, or provisions of thIs Agreement.
3.3 Release of Reports and Info~~Qn
Any reports, infor.mation, data or other m~terial given
to, or prepaced or assembled by, CONTRACTOR or its subcontracto·rs l
if any, under this Agreement shall be the property of CITY and
shall not be made available to any individual or organization by
CONTRACTOR or its subcontractors ... if any, 'Without the prior written
approval of the City Manager.
3.. Copies of Reports and Information
If CITY requests additional copies of any records,
reports, studies or any other material .. hieh CONTRACTOR is required
to f"urnish in limited quanti ties as part of the services under this
Agreement, CONTRACTOR shall provide such additional copies as are
re-quested and CITY shall compensate CONTRACTOR far the costs .of
duplicating such copies at CONTRACTOR's reasonable cost~
). 5 ~.9 .. liJ: __ i.c;:_~_t.i..ons of Contx_i1i..q,t-.9-I:
CONTRACTOR represents that it is qualified to furnish the
services described under this Agreement.
SECTION 4 -COMPENSA1:10l!
For the full performance of the services described herein
by CONTRACTOR, CITY shall pay CONTRACTOR a total sum not to exceed
Four Hundred Thirty Five Thousand Dollars ($435,OOO.OO}, payable
within thirty (30) days of sub::llission by CONTRACTOR of its itemized
billings in triplicate in accordance with the attached Fee Schedule
marked Exhibit B vhich is incorporated herein by this reference;
provided, however, that such payment is subject to the Palo Alto
City Council's continued annual appr-opriation of money to fund this
Agreement for each year of the term.
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SECTION 5 -PUTIES QF CITY
5.1 Services to be Fur~~~
5.1.1 CITY sh~ll establish a bank account(s) in
a state or federally chartered bank selected by CITY and deposit
daily such funds as may be required to adequately honor drafts
issued by CONTRACTOR under the CITY health plans and denta1 plan~
City shall further bE responsible to reconcile all statements
related to the account(s).
5 .. 1. 2 CITY shall be responsible for the final
determination of coverage issues on all claims appealed to CITY
under the provisions of the CITY health plans and dental plan.
necessary
under the
5.1.3
information
CITY health
CITY shall provide CONTRACTOR 'With all
related to claimants and their eligibility
pl~~s and dental plan.
5.1.4 CITY recognizes that in the ccurse of
performing its duties under this Aqreement l CONTRACTOR ~ill
necessarily reveal to CITY~ and certain of its employees, valuable
trade secrets of CONTRACTOR.. including but not 1 imited to the
design and other features of CONTRACTOR's ·TRMS· data processing
system. CITY will make its best efforts to keep all .such 'informa
tion strictly secret .. and to alert all its employees to the value
of this proprietary information and the need to keep it secret.
CITY further agrees to use all such measures as are reasonably
necessary to protect these trade secrets.
S.1.5 CITY recogni~es that all printed and
visually displayed materials provided to it by COt;TRACTOR are
copyrighted by CONTRACTOR whether or not. they are so marked.
Accordingly, such reports, manuals l screen formats.. and other
similar materials may not. be duplicated by CITY or any o,ther party 1
unless CITY receives CONTRACTOR'S prior approval. Further, unless
agreed to by CONTRACTOR, such items are provided to CITY for its
sole use and may not, under any circumstances 1 be provided or
distributed to any other party~
SECTION 6 -TERM
The services to be performed hereunder shall commence on
October 9 1 1990 and shall be performed through September 30.. 1993 ..
subject to the Palo Alto City Ccuncil 's continued annual appropria
tion of ~ey to fund the Agreement for each year of the term~
SECTION 7 -TEMPORARY SUSPENSION
The City Manager shall have the authority to suspend this
Agreement, wholly or in part 1 for sllch period as he deems necessary
due to unfavorable conditions or due to the failure on the part of
the CONTRACTOR to perform any provision of this ~greement.
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SECTION 9 -EXTENSION OF TEBK
In the event that the services called for under this
Agreement are not completed within the time specified above, the
city Manager shall have the option to extend the time for comple
tion~ This paragraph does not preclude the recovery of damages for
delay by either party.
SECTIQN 9: -TERMINATION OR SUSPENSION OF AGREnE_HE_N'I'
9.1 Eight to suspend or Terminate
The City Manager may suspend or terminate this Agreement ..
by giving thirty (30) days' written notice to CONTRACTOR .. but only
in the event of substantial failure of performance by CONTRACTOR.
upon receipt of such notice, CONTRACTOR shall immediately discon
tinue its performance under this Agreement.
CONTRACTOR may terminate this Agreement or suspend work
on the Project upon sixty (60J ~ays' written notice to CITY, but
only in the event of 5u:pstantial failure of performance by CITY or
in the event CITY abandons or indefinitely postpones the Project.
9. 2 PaYlnent.
Upon such suspension or termination by CITY .. CONTRACTOR
shall be paid for all services actually rendered to CITY to the
date of such suspensicn or termination; provided, however, if this
Agreement is suspended or terminated for fault of CONTRACTOR, CITY
shall be obligat.ed to compensate CO::-'"TRACTOR only for that portion
of CONTRACTOR's services .... hic·h are of benefit to CITY.
9.3 Return of Materials
Upon sllch suspension or termination, CONTRACTOR shall
turn over to the city Manager immediately any and all copies of all
CITY records.. including studies, computer tapes, claim files
[including unprocessed claims). computations, and other data ..
whether or not completed, prepared by CONTRACTOR or its subcontrac
tors, if any_ or given to CONTRACTOR or its subcontractors, if any ..
in connection with this Agreement. Such materials shall become the
permanent property of CITY.
SECTION 10 -INDEPENDENT J'",JDGMENT
Failure of CITY to agree with CONTRACTOR's independent
findings, conclusions .. or recommendations~ if the same are called
for under this Agreement, en the basis of differences in matters .of
judgment shall not be construed as failure on the part of COtlTRAC
TOR to meet the requirements of this Agreement.
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SEctION 11 -ASSIGNMENT ... SUBCONTRACTORS; EMPLOYEES
11. 1 Ass i gmnii nt
Both partie5 shall 9ive their personal attention to the
faithful performance of this AgreemeJ'lt and shall not assign,
transfer, convey, or otherwise dispose of this Agreement or any
right, title Clr interest in or to the same or any part thereof
without the prior written consent of the other party, and then only
subject to such terms and conditions as tl::le other party Jrtay
require. A consent to one assignment shall not be deemed to be a
consent to any subsequent assignments. My assignment 'Withol;.t such
approval shall be void and. at the option of the other party. shall
terw:inate this Agreement and any license or privilege granted
herein.. This Agreement and any interest herein shall not be
assiqnable by operation of laW' without the prior written consent of
the other party ..
11.2 Subcontractors
It is agreed that this Agreement is for the personal
services .of CONTRACTOR and cannot be performed by any other person
or organization.
11.3 Sl]'b.coptractors; Employees
CONTRACTOR shall b. respon.ible for employing or-engaginq
all persons necessary to perfonl. the services of COb ""TRACTOR
bereunder. No subcontractor of CONTRACTOR will be recognized by
CITY as such; rather l all subcorltractorfi. are deemed to be employees
of CONTRACTOR, and it agrees to be responsible for their perform
ance.. CONTRACTOR shall give its personal attention to the
fulfillment of the provisions of this Agreement by all of its
employees and subcor'ltractors .. if any, and shall keep the 'Work under
its control. If any employee or subcontractor of CONTRACTOR fails
or refuses to carry out the provisiOllS of this Agreement or appears
to be incompetent or to act in a disorderly or improper manner, he
shall be discharged immediately fron the ~ork under this Agreement
on demand of the PROJECT MANAGER.
SECTION 12 -NOTICES
All notices hereunder shall be qiven in writing and
mailed .. postage prepaid, by certified mail, addressed as follows:
Te> CITY:
90100-1: Iw.L: 0020191
Office of the City Clerk
250 Hamilton Avenue
Palo Alto, CA 94303
.. nd
Human Resources Department
25-0 Hamilton Avenue
Palo Alto~ CA 9430)
ATTENTION: Jay Rounds
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To CONTRACTOR: Attention of the PROJECT DIRECTOR
at the address of CONTRACTOR recited above
SECTION 13 .. ~_ INTEREST OF CONTRACTOR
In acx::eptill9 this Agreement .. CONTRACTOR covenants that it
presently has no interest .. and shall not acquire any interest ..
direct ~t' indire-:::t" finltoncial or otherwise .. which 'Wo\lld conflict in
any manner or degree with the performance of the services here
under~ CONTRACTOR further covenants that" in the performance of
this Agreement l no subcontractor or-~rson baving such an interest
shall be employed. CONTRACTOR certifies that no one who has or
vi11 have any financial interest under this Agreement is an officer
or employee of CITY. It is expressly agreed that in the perform
ance of the professio-nal services required under this Agreement
CONTRACTOR .. and any of its subconsultants or employees, shall at
all times ~e considered independent contract~rs and not agents or
employees of CITY~
SECTION 14 -INDEMNITY
14 ~ 1 In<Jemni.f_i.9_ation by CONTRACTOR
CONTRACTOR agrees to indemnify,. defend and hold harmless
CITr, its officers .. agents and employees Crom any and all demands,
claims, or liability of any nature, incloding death or injury to
any person, property damage or any other loss .. caused by or arising
cut of CONTRACTOR's" its officers'~ a;ents', SUSCONTPACTORS' or
employees' negligent acts, errors, or-omissions.. or ~illfol
misconduct, or conduct for -which the law imposes strict liability
on CONTRACTOR in t1le performance or failure to perform this
Agreement~
14.2 Indemnification by CITY
CITY agrees to indemnify. defend and hold harmless
CONTRACTOR .. its officers, agents and employees from any and all
demands .. claims" O~ liability of any nature .. including death or
injury to any person, property damage or any other loss .. caused by
or arising out of CITY·s., its officers·, agents' or EIr.ployees'
negligent acts" errors,. or omissions, or willful misccnduct, or
conduct for vhich the law imposes strict liability on CITY in the
performance or failure to perform this Agreemcnt~
SECTION 15 -1rlORKERS_~ _____ COKPENS_A_TION
CONTRACTOR .. by executing -this Agreement .. certifies that
it is aware of the provisions of the Labor Code of the state of
California 'Which require every employer to be insured against
liability for workers' compensation or to undertake self-insu"rance
in accordance with the provisi~s of that Code, and certifies that
it will comply vlth su~h provisions before commencing the perform
ance of th~ york of this Agreement.
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SECTION 16 -INSURANCE
16.1 In.urIOC_ coyerage
CONTRACTOR, at it. 801. coat and expense, shall obtain
and maintain, in full torce and eff.ct throughout the entire term
of this Agreement, the Insuranc. c:ov.ra9" cie5cribed in Exhibit ·C·,
attached her.to aM incorpor«t.cS herein by this reference, insuring
not only CONTRACTOR and its aUbcontractor., if any, but also, with
the exceptIon of work*r.1 comp.nsation .. nd. amployer's liability
insurance, CITY, its ofticer., .q.n~. and .mployees, and each of
theD, yith r.spect to activiti.. and .ervices performed by
CONTRACTOR tor or on behalf o~ CITY under the provisions of this
Agreement.
16.2 Certificate. gf Insurance
certificat.s ot auch in.ur.nc.~ prefer&bly on the toms
provided by CITY, sball be tiled with CITY concurrently with the
execution of tbi. Agreem.nt or, with. CITY'. approval. within ten
(10] workinq daya thereafter. S~id certificate5 shall be subject
to the approval of tbe CITY Risk ~n .. ger it_nd shall contain an
endorsement stating that said in.url.nce i. primary coverage and
will not be cancelled or altered by the in5urer e~cept after filing
with the City Clerk thirty (30) day.' prior written notice of such
cancellation or alter-.ation~ and th~t the city of Palo Alto is named
as an additional inliured (except in policies of professional
liability insurAnce) .. CUrrent certificates of such insurance shall
be ke~ on file at all tim •• during the term of this Agreement with
the City Clerk.
SECTION 17 -AUPITS
CONTRACTOR agrees to penait CITY to audit... at any
reasonable time during the term of this Agreement and for three (3)
years thereaft.r~ CONTRACTOR' • .accounting records relatirl9 to
CONTRACTOR'. co:m,.ens.a:tion under this Agr.ement. CONTRACTOR further
agrees to aaintain such recorda for ~t le •• t three (3) years after
the term of this Agr •• ment ..
SECTION 11 -AGBEEKEn II NQING
The t.rm8~ covenant.~ and conditions of this Agreement
shall apply to ... and shall bind ... the h.ir.~ succes&ors~ executors~
~inistrators~ assigns, and subcontractors of both parties.
SEctION l' -WAIVE!S
Th. waiver by either party ot any breach or violation of
any term, covenant. or condit.ion of thla Agreement o,r of any
provision~ ordinanc.~ or l~w .hall no~ b. deemed to be a ~aiver of
any other tera. covenant. condition, ordinance~ or lav or of any
subsequent bre~cb or viol.atlon of t.he •••• or of any other terD~
covenant~ condition~ ordin.nc.~ or law. The subsequent acceptance
I
901001 w.-: OOOOlllt
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by either party of any fee or other money which may become due
hereunder shall not be deemed to be a waiver of any preceding
breach or violation by the other party of any terM~ covenant. or
condition of this A~reement or of any applicable law or ordinance.
SECTION 20 -COSTS AND ATTQ.F-\lEYS t FEES
The prevailing party in any action or arbi tration brought
to enforce the terms of this Agreement or arising out of this
Agreement lIay recover its reasonable costs and attorney fees
expende~ in connection with such an action from the other party.
SECTION 21 -NO.IMPLIED WAIVER
No . payment, pa.rt.ial payment,. acceptance.. or partial
acceptance by CITY shall operate as a waiver on the part of CITY of
any of its rights under this Agreement~
SECTiON 21. -NONDISCRIMINhTION; ?ENAL~Y
22.1 OOT'{ OF CONTRACTQB
No discriminatior, shall be m.ade in the employment of
pe:~s und~r this Agreement because of the race, color~ nati~nal
or~gln, ancestry, religion or se~ of such persvn. If the value of
this Agreement is, or may be, Five Thousand Dollars {$-5-, D·OO} or
more¥ CONTRACTOR agrees to met all requirements of the Palo Alto
Municipal Code pertaining to nondiscrimination in employment and to
complete and submit the ·Compliance Report--Nondiscrimination
Pr Jvisions of City .of palo Alto Contracts· on the form furnished by
CITY.
22.2 PENAL~¥ FOR DISCRIMINATrON
If CONTRACTOR is found in violation of the nondiscrimina
tion prov~slons of the state of California Fair Employment
Practices Act or similar provisions of federal law or executive
order in the performance of this Agreement, it shall thereby be
found in material breach of this Agreement. Thereupon, CITY shall
have the power to cancel or suspend this Agreement, in -whole or in
part, or to deduct from the amount payable to CONTRACTOR the SUD of
Twenty-Five Dollars ($2:5) for each person for each calendar day
durinq which such person was discriminated against~ as damages for
said breach of contract, or both. Only a finding of the State of
California Fair Employment Practices Commission or the equivalent
federal ageocy or officer shall constitute evidence of a violation
of ~tract under this section~
If COtlTRACTOR is found in violation of the nondis
crimination provisions of this Agreement or the applicable
affirmative action guidelines pertaining to this Aqreement,
OONTPACTOR shall be found. in material breach of this Agreement~
Thereupon~ CITY sball have the po'Wer to cancel or suspend this
Agreement, in whole or in par-t~ or to deduct from the amount
payable to CONTRACTOR the sum of Two Hundred Fifty Dollars ($25,0)
9
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for each calendar day during 'Which CONTRACTOR is found to have been
in such noncompliance as damag.. for .aid ~reach of oontract~ or
both.
Thi. document repr •• ent. the entire and integrated
agreement be-tv.en CITY and CONTItACTOR and supersedes all prior
neqotiations, repr •• 8ntation., and agr.ements, either vritten or
oral. This ~m.nt may be amended only by written instrument,
signed by both CITY and CONTRACTOR.
SEctION 24 -ARBITRATION
Upon aqreement of the parties any controversy or
claim arisinq out of or relating to this Agreement may be settled
by arbitration In accordance with the Rules of the American
Arbitration Association, and judqment upon the award rendered by
the Arbitrators .ay be entered in any court having jurisdiction
thereof ..
S ECTIQN 25 -GOVERNING Va ..
Thi. Agreement .hall be qoverned by the la'Ws of the state
of california.
IX WITNESS WHEREOF .. the parties hereto have Ex:ecuted ttlis
Agreement the day and year first above written.
ATTEST:
city Clerk
APPROVEO AS TO FORK:
Assistant city Attorney
APPROVED:
Assistant City Manager
Director of Finance
Risk Manager
APPROVED AS TO CONTENT:
Director or Human Resource.
90100; b&: 0020191
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CITY OF PAW ALTO
Mayor
RISK MANAGjMENT RESOURCES. INC.
8y~$4el' ~ Ita: K€ t«SlPUIT
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A.ttachlllent.~
EXHIBIT -A,-.:
EXHllIIT "B":
EXHIBIT ·C·:
!I01OOL b& 00l!l11l1
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SCOPE 0 F PR<:lJECf
FEE SCHEDULE
INSURANCE
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SCOPE Qf PROJECT
RISK MANAGEMENT RESOURCES, INC.
ConrraclOt &hal pr_ \IlO ~ HIVi<eo una. lIlia Agr_ In administorlng Itoo _ and
oentar claIrm lor \IlO City d Polo AlIo'S Employ .. Hoolth and o.nIa/ Plans and Re&oos Heath and
PremMn Ro1mI>u'MmonI Ptano (herfi'wfter. ",. "PIonI"):
1. RocoNO claim ~ :or tho Plan parIicIparOs (horetoalter. !he 'CIaimantJ;~ and verly !heir
erogibilily lor bonofitlI bas«! upon TnIormIIOon pr_ by CIIy.
COrrespond prompdy with cIai/nants rogatding any odditiona1 Oiccrnatioo _ to Il'OC'=
• claim.
_ on __ to dolormino 1ha! .. charges ... 1lIC8SSaI)I. usual, reasonable and
cuslomaI)' •
.(, Process all claims based on IN tnforrnafKM1 preHOted Jar payment CIaims.mich are
~. Ihd be enter., mg Conlractor". computer wfthln ;0 WOt1ting days foIJowing recefpl
I add"rtion.iI __ II nocaoary. C<nrac\or _ request IIlo TnIormaIion prompdy.
1.
Is8uII paylT'lMllS from e«y' .. bank accourt 10 Iithtlr If1I prcMder or daimart as directed by Ole
claim form.
No4iIy City. 0f1 • regular basis, d III dlsbu""""'s modo 110m the COy's bani< eccounI with
respect to Iho Plans.
No4iIy cI8imorU. In wrtinjj. d Iho r.uono for doniaI or Illy claim under !he Plans.
8. _or II te1ophono and mail Inquirtoo !rom ~ as to _ provided under 1I1e
Pia-ls.
9. ProoMe 1hIoonaIIon to p<OYlder$ 01 COlI as 10 ollglblllly d par1IcIpat1Is based upon Wormar"",
conlainod In Iho Plan documonls.
}o. Establish ond mlirt ... files Qr1 all cIa1mar1!1, lf10wing aI claims, ..-paid or _
11. Proooo COy wiIIl h data noe11OlI)' to .-1111 COy to IiIot 1111 proper ERISA. Federal Tax, __ or ... _
,~ PtoYide CIIy _ add"rliooa/ data and roporu rogarding Plan uliliz..oon as may be le<juired by
City sial!.
13. Cooporalo lully _ cay and is ropt_or ... including. W not imlted to. legal counse!,
actualfes,. acco..rd.anIs. and brolcn.
1-<. I roquosil':1 by City. arronge for !hi prinfing or fOrl11$ Iud! as claim loon .. chec1<s. plan bookrocs. Il1j)IanafIOflO or -. .... iooory. and D carcfs needed 10 __ or !he Plan.
Such prtnting. at reasonable COlI. sh&II be .. Clio _.
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15.
16.
Be rasponsibIe for !he calcu!8I1on d Ihe t>eneIits payable, h:ludlng nvostlgatJon. _'allon.
1OIloW_ OOOfdinatlon d _ .. p"'parmlon. and sending d Foon >099 IO~" and
!he drawing d checf<s. CI1ecl<s are 10 be mailed dilecI1y 10 !he C1aimanIs beep! undo< Ihe
.enns d any managed hoaIlh care opfioo 0< for hospiIals 0< _ on app<CMKI assIgrvner<.
Process .. c!aIms via <fn>ct submission by c/aimanI or ~. adhering 10 Iho following
scho<IuIe:
a 95% r:I an claims ~1iId in Contrador"s oI'fice shaI be caIctAaled and
paid wIIhIn ten buSineo8 days unless additional irIorma!ion.
_ 0< CoordInaIion d BeneIb ('C08~ p<0cesse5 oppIy.
b. AI _ _ "'" 10 rNCh Ihe cfajrnalll or p«M<Ie< wlthin 20
buSineo8 days after submission d • clBn unl8ss aclditional Wormalklo
at COB is i'nK>!ved
d
The """us d .. open and pendinQ claims shall be updated within •
period not 10 ~ 20 buoIr-. days.
Respond 10 claimarts ragardIng quesIioos concOO'Iing Ihe sen_
0< Sl8IUS d • c!8im _ 5 buslness days.
17. CorIonn 10 the kJtowing SlandarcJs and produc1lon levels:
a.
b.
AI claims which oro compIaIe shall be entered into COntraclOr'o
Cot11jJUIar system _ 3 worI<i1g days ~ receTjJI by CoottacIOr.
I acIditionaI WormaIion is .-..y, ConIracIOr shall request the
i lot mariO' I prorrpdy.
Claims roqulriilg I:wost1ga!ion. la, COB or poosi>Ie fraud cases, wiI not
be held 10 the above tumoroond lime. as addiOonaI Tnfoonalion may
be required d the ctaimonI or p<0Yi<I0f. How_.!he ConIracIor shall
_ale kliow-l4' _ r8Q<JeSIing soch WormaIioo, i'l a !imeIy
marner.
c. ConIracIOr _ provide for loIIow-up ancI rosolJIion d i'1qt.iries
corootnJng claims ""Iulrilg nvOSfigaflOll "'W'f 15 days for a period d
2 mon!hs.
18. Per10tm an audit by !he COntrSClOr'I 0uaJiIy Assurance Dopartmer"<. on claims pay"""""
issued 10 ompI<>j>OOI i'l _ d $760, and II hospiIaI claims ...... ssooo.
19. Claims _ be processed !rom !he Contrador". Son Francisco oI!ice. My cIlange i'l !oca!ion
d ciaims 1'10 dog'-sholl reqUn prior _on approval d!he ProjocI Manager.
20.' A dedicated claim exarriner shall be asoIgned 10 !he City 01 Polo AIIo. (S)he wiI be availabre
10 answer questions and resolv-. .... ubIM lIS from Ihe cIaimarts and pOYiders. The Ctaims
Manager rasponsibIe for 1his ICOOUf1I 'IriI be ,"vailab,a .. any time for any queslioos or
concerns.
21. Pr<McIe 10 the CI!y lila following "'--" ropor1S os ditOClOCi' by City • and as agr_ 10
be m"'''''' cleCinilion, which aha! _. W are not _ad 10:
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I!ankJng and __ recordo, checI<s issued, cI1ech cleared, wire
....".,.,., and adjustmenIs on • weekly basis.
MortI1Iy summary ropons. if1c!uding coyered Iiv ... paid claims, and
001 IM1go by c!amants, 1fletr _ and any 0Ih0r d6jlOfldenJs.
c....... and billing report> are 10 be prOYldod In boIh a1phabe{ica1 and
by~code_.
d. MooIhIt ropotts on Cortrac!or. cJalm prOOfiOlng poOOm\arlce Inc!uding
1UmarOOnd, claim _ pendinQ cIa1mo, and CU!bacIc stalisrlCS le.,
Usual, CuoIamaty and __ ('UC!I') .. _ maximums. and "Ik •.
o. -1\1 utiIlza!Ion report> by Inoo <:A COYO<age, __ and diagnooiS.
l IoIor<hly OIralifoed claims l~, $200-$500, $500-$1,000 Ole.).
gc Von!hIy roport on lOp 50 utilizeB lor _, incIo<fong hoopiIai and
pIly$ician &eM._
WIlh regard 10 UCR """""""-ComacIOr uses In proceuing claims, ) &halt
.. UpdaI. lIMo 1M scheduIo mIrY Ii>< IBJ I11Of1IhI, tdzino Jhe _ and
~ opocI*! by 1110 Cly.
b. I ~"'" _1110 Cly _ding cIaImo In _ <:A ~
one! CUOIOnWy prb-to tInaI ldJudIaIIlon fA lIMo claim.
23. Willi rog_ to COBRA ad~ ComacIOr ahaA:
.. \Jpon r~ fA _ tam IIlI City ci cortain 'qualifying ..... nJs'
_ .. COBRA JegisIafion (such as divorce, Jegaf separaflOO,
_ fA an employ ... I!C.) IOI1ich wooId _ cortJin irldMduats to
_n righIo ..-COBRII. cornOClor _ MOd .-'"" C&rtJiod
mail 10 _ IndMduaIo .. IhoIr moiling addf ...... SoparaIo _
wi! aIIo be proYiclod 10 opo<»n r appIicabIO, !lui not to dependonI
children. ComacIOr wi! provide City wiIh • &sting ci Jhe nomos and
addr ..... fA 1110 depondenIs who __ natirKKI.
b. Conrractor shall receiv.~ rrom .ngibkl incfrviduals or Cleir dependents.
a ......... fA 1fletr Intortion to .. 0fCise 1I1eir COBRA righI<.
Tho IoIIoIot1g _ wII be po<fCflTlOCl ortr lor Close oI"lgibIo
___ or 1fletr do~ who gh noIIoo fA 1fletr <leslro to
continue II1eir coverage as proYiclod under C08RA.
t. CoIIod 1IMI sums remitted and depool Ihem in • bonk
account fA City', ~
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kc<l<rt lor .. such cIopooIIs showing 1110 name 011110
p&yOI', .... omounI pold, and \he dat. paid.
~ 1110 claims paying "'IIanizaflOO 0I1heir continuing
eI!gibiIIIy Ii:>IIowing rocetpl 01 paymert.
Nolfy Ihooe who fall 10 male. ~moIy payments 01 Ihe
_ 01 ~ c.t wi1I be p<OYIded will a
IIs61g dI ... ".... and addr ...... 011110 _
1MhO were notI"l8d.
~ _ """"" OOBRA rig!1ts .. duo 10 0Jq)ite 60
<Iayw prior 10 _"'" 01 cov.rage.
24. MaintaIn """"do il accordOnco with !he Ii:>IIowing procedures,
25.
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29.
30.
31.
a CIaImart oIigibifll)' WormI!Ior1 shall be loaded lnIo Contrac1<>l's
""""""or lySIom and mair1IaInod on-Dne lor u~
b. ~I comput8f system ahalI retain employment Sl:alUS and date
(o.g., ac\MI, r1I!ired. Medicaro, 'armlnaIO<I. ....... 01 .-nca, disabiiIy).
c. The eystem &hal mainlain .-..on:naoon cI each Plan member and each
0I1hotr ~ _~ lnIonnaIIon concomiilg ..... _
dale 01 birth. ~ 10 Iho member, .... oItocfive <!ale, 1ocaIIoo
oncfCOBdaIa.
P>ovi<!e direcI rr<orIace will ... City', Contrac1Or lor Wflzaliorl Review Services os clifected by
City.
Produce __ " Explana!lon 01 Bonefts (EOBs) lor each cIaimarC and e_ proYidet".
Reasooalltt comIlIne muniple oxpenses any claimart sutxnits lor relrnbu<semenl rna coo
check.
Mail 0\.( a r.-claim Iorm 10 claimants with oach E08 ..... 10 ampIoy ....
Administer pnMTlUn rairnbur'semer1 claims 'Jar eGgiblI: rerJred empioyees with aJlemaflYa
nsuranoe COYlIfago up 10 cIi:l4ar IimIls 10 be spocfied by !he City.
The c.t rM<INOS 1110 rig!"< 10 IUdiIIhI claim rOC<l<ds and 0Iher financial rOCOfds 01 Contrac1Or,
as !he records pertain 10 any Plan. ..-... 1 is _ 1pIlrOPrlaIe. Such audits may be
perfonned by c.t pe<SOfV1OI or l>y 0<J!skIe audiloro oeIec1ad by !he City 01 Palo Mo. .. CitY.
expense.
c.t ... be allowed 10 access CooIrilClOl'. """""" ... IySIBm 1 ~ .. u.-... Agreemer<
l>y .-no 01 a modem. SUCh access shall be lmIIad 10 proIocI Contraclor'. prop<ieIaty
irt.en&.
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fEE SCHEOULE
RISK MANAGEMENT RESOURCES. 11lC,
COY shall pay CONTRACTOR for its services under !his Agreef1'1eri based on \he
following rales:
1. Medical/DenIal Monlhly Capilated Fee Per EmpIoye./Re~ree 0< "Claimant':
Medicall~
FIrS! Year 01 Contract Term
Second Year 01 Cor.'Jact Term
Third Year 01 Contract Term
Oen!a! Only:
F,st Year of Contract Term
Seoond Year of Contract Term
Third Year of Contract Term
2. Reliree Reimbursement Program:
Per Iransaclion {for 8~ 3 years
01 Contract Term}
3. C08RA Administration.
ntial notmcaflOll (Q!lI! IiID§ ct.arge
per claimant):
Ongoing notif""rlOll (per ac!lve
claimanl per month):
CoI!ecIion and Remittance (per
cootinujog cIalmanl per month):
.c. Oaims 8acklog:
$ 8.00
$ 8.48
$ 8.95
S 2.50
$ 2.65
$ 2.75
$ 7.50
$ 1.00
$ .75
$ 10.00
Claims with elates of seMceS priOr 10 0cI00er 1. 1990 wift be processed at
a lee of $5.00 per claim. Backlog claims for fle Refiree Reimbursement
Program (~ma!ed 12 claims with dales of servlce prior 10 0cI0ber 1.
t990) Wll be processed at no additional cost 10 !he City.
5. Pri'l!ing charges wil be billed at cost Such costs shan be reasonable and
"IlP'OI/ed by City stall i'l adIIance.
6. In no even! shan IoIaI compensation tnfer 1his Agreement exceed
$(35,000 00.
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BETWEEN TO CIT r O:r PALO liTO DO
ItBALTH IllTBRNA'I'IOBAL" rile. FOR
MEDICAL 07ILIIA~IO. REVIEW SERVICES
THIS AGREEMENT is made and entered into this ___ day of
_____ ~ ________ " 1990., by and bebreen the CITY OF PAID ALTO, a municipal
corporation of California., hereinafter referred to as ·CITY,-and
HEALTH INTERNATIONAL, INC. (Taxpayer Identification Number 95-
39'99237), a Delar.are corporation., with offices at 1840 Century Park
East .. Suite 67(}, Los Angeles., CA 90'061. hereinafter referred to as
• CONTRACTOR II' ;
L.l.JJfl , S IT I:
WHEREAS. CITY desires certain medical utilization reviev
services: and
WHEREAS, CITY (lesires to engage CONTRACroR to provide
these services by reason of its qualifications and experience for
perforlllinq such services, and CONTRACTOR has offered to provide tbe
required services on th~ terms and in the mar~er set Eorth herein~
NOW r THEREFORE r in ~sideration of their mutual
covenants, the parties hereto agree as follows:
SECTION 1 DEFINITIONS
1.1 !:..i..U
The term ·City· as used in this Aqieement shall mean and
include all the territory lyinq within the municipal boundaries of
the City of Palo Alto, California, as presently existing, plus all
t.erritory lIhich may be added thereto du.ring the term. of this
Agreement by annexation or otherwise.
1.2 city Manager
The term ·City Manager-shall mean the duly appointed
City Manager of the city of Palo Alto., C3.1ifornia, or his
designated representative.
1.3 City Attorney
The term ·City Attorney· shall mean the duly appointed
City Attorney of the city of Falo Alto, California r or his
deSignated representative.
1..,( Cit. Clerk
The term ·City Clerk-shall ~ean the duly appointed City
Clerk of the City of Palo Alto, California, or her designated
representative.
1
901001 Me Ol)l-Ol91
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1.S Risk Manager
The term -Risk Manager-shall mean the dtJly appointed
Risk Manager of the city of" Palo Alto .. California. or his
designated representative.
1.6 Project
The tera ·Project
Exhibit ·A· entitled ·Scope of
part hereof by this reference.
means the services described in
Project-attached hereto and made a
SECTION 2 -PROJECT COORDINATION
2.1 ~
The City Manager shall be representative of CITY for all
purposes under this Agreement. Jay C. Rounds is designated as the
PROJECT ¥ANAGER for the City Manager .. and he shall supervise the
progress and execution of this Agreement, and sball be assisted by
Amy L. Xosgraves .. EMPLOYEE BENEFITS MANAGER.
2.2 Contractor
CONTRACTOR sball assign a single PROJECT DIRECTOR to have
overall responsibility for the progress and execution of this
Agreement for CONTRACTOR.. Michael peerbooll. bereby is designated as
the PROJECT DIRECTOR fo·r CONTRACTOR.. Should circumstances or
conditions subsequent to the execution of this Agreement require a
substitute PROJECT DIRECTOR :or any reason# the PROJECT DIRECTOR
designee shall be subject to the prior written approval of the
PROJECT MANAGER.
SECTION 3 ______ ':' [)(]'JIES OF CONTRACTOR
3.1 Services to be Fu.~.1'Iished
COSTRACTOR shall provide all specified services as
set forth in Exhibit A.
3. 2 Laws to be Obse~
CONTRACTOR shall,
3.2 .. 1 Procure all permits and licenses# pay all
charges and fees. and give all notices ~hich may be necessary and
incident to the due and lawful prosecution of the services to be
perforJled by CONTRACTOR tInder this Agreement:
3 .. 2 .. 2 Keep itself fully informed of all e:dsting
and future federal. state, and local laws 6 ordinances, regulations,
orders# and decrees which may affect those engaged or employed
under this Agreement, any materials used in CONTRACTOR's perform
ance under this Agreement 6 or the code of the services under this
Agreement;
2
90IfYli Nk 00101112
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3.2.3 At all times observe and comply with, and
cause all of its sUbcontractors and employees, if any, to observe
and comply with, all of said laws, ordinances, regulations, orders
and decrees mentioned above; and
3.2.4 Immediately report to the PROJEC'l' MANAGER
in writing any discrepancy or inconsistency it discovers in said
laws, ordinances, regulations, orders~ and decrees mentioned above
in relation to any plans, computerized or hard copy files and
records, specifications, or provisions of this Agreement.
3.3 Release of Reports and __ Inf.9rmation
Any reports, information, data or other material given
to, or prepared or assembled by, CONTRACTOR or its subcontractors,
if any, under this Agreement shall be tbe property of CITY and
shall not be made available to any indivIdual or organization by
CONTRACTOR or its subcontractors, if any, without the prior vri tten
approval of the city Xanager~
3.4 Copies of Reports and IJlformation
If CITY requests additional copies of any records ...
reports .. studies or any other material 1tI'hich CONTRACTOR is required
to Curnish in limited quantities as part of the services under tbis
Aqreement, CONTRACTOR shall provide such additional copies as are
requested and CITY shall compensate CONTR'CTOR for the costs of
duplicating of sQCh copies at CONTRACTORts reasonable cost.
3.5 Qualifications of Contractor
CONTRACTOR represents that it is qualified to furnish the
services described under this Agreement.
SECTION • -DUTIES OF CITY
4.1 F_Qtif_i.~ation to Enrollees
Along with CONTRAC':'OR~ CITY shall notify in writing,
after the commencement date of this Agreement and thereafter as
appropriate, each of the health care plans' enrollees of CITY's
participation in CONTRACTOR'S utililation review proqram r and of
the necessity of participation in the program by each enrollee or
his or her covered dependent. The notice referred to in this
section Shall also advise enrollees that such review by CONTRACTOR
may be made mandatory by CITY to receive full reimbursemerot l~er
City's health care plans.
4~ 2 Financial Resoon§.Jbility
CONTRACTOR shall not be responsible
financial risk of payment of any enrolleets
dental or other bills, debts, obligations ..
liabilities of any kind relating to or arising
surgical or dental treatzr.ent or-confinement.
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for nor assu~e any
medical, hospital,
expenses or ether
out of any medical,
CITY assumes the
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financial responsibility for the payment of an enrollee's covered
health care expenses in excess of the applicable deductibles and
enrollee co-payments, ~ursuant to the terms of the policy or health
care contract under which the e~rollee is covered.
SECtION S -COMPENSATION
For the full performance of the services described herein
by CONTRACTOR .. CITY shall pay CONTRACTOR a total sum not to exceed
One Hundred Thousand Dollars ($100,000.00J, payable vithin thirty
{30} days of submission by CONTRACTOR of its itsrniled billings in
triplicate in accordance with the attached Fee SChedule marked
Exhibit -8-which is incorporated herein by this reference:
provided, however, that such payment is subject to the Falo Alto
city council's continued annual appropriation of money to fund this
Agreement for each year of the term.
~QN 6 -TERK
The services to be performed hereunder shall commence on
Octooer 9. 1990 and shall continue through September 30.. 1993 ..
subject to the Palo Alto City Council's continued annual appropria
tlon of money to fund the Aqreement for each year of the term.
SECTION 7 -TEMpoRARY susPEl'lSION
The city Manager shall have the authority to suspend this
Agreement ... wholly or in part, for such period as be deems necessary
due to unfavorable conditions or due to the failure on the part of
the CONTRACTOR to perform any provision of this Agreement.
SEctION 8 -EXTENSION OF TERK
In the event that the services called far under this
Agreement are not completed within the time specified above.. the
City Manager shall have the option to extend the time for comple
tion. This paraqraph does not preclude the recovery of damages for
delay by either party.
~~CTION 9 -TERMINATION OR SUSPENSION OF AGREEKE~
9.1 Ejght to Suspend or Terminate
The city Manager may suspend or terminate thi.s Agreement
without cause by -qiving thirty (30) days' written notice to
CONTRACTOR. Opon receipt of such notice, CONTRACTOR snaIl
immediately discontinue its performance under this Agreement.
CONTRACTOR may terminate this Agreement or suspend work
on tbe Project upon sixty (60) days' written notice to CITY, bot
only in the event of substantial failure of performance by CITY or
in the event CITY abandons or indefinitely postpones the project.
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9.2 Paqent
upon such suspension or termination by CITY, CONTRACTOR
shall be paid for all services actually rendered to CITY to the
date of such suspension or termination: p~ovided~ ho~ever. if this
Agreement is suspended .or terminated for fault of CONTRACTOR, CITY
shall be obligated to compensate CONTRACTOR only for that portion
of CONTRACTOR's services which are of benefit to CITY.
9.3 Return of Materials
upon such suspension or termination., CONTRACTOR shall
turn over to the city Kanager immediately any and all copies of
studies ... computer tapes., claim tiles (including processed claims).
computations., and other data, -whether or not completed ... prepared by
CONTRACTOR or its subcontractors, if any. or given to CONTRACTOR or
its subcontractors, if any, in connection "With th:is Agreement.
Such materials shall become the permanent property of CITY.
~~rON 10 -INDEPENDENT JUDGMENT
Failure of CIT1 to agree with CONTRACTOR's independent
findings. conclusions, or recommendations, if the same are called
for unde.r this Agreement, on the basis of differences in matters of
judgment shall not be construed as failure on the part of CONTRAC
TOR to meet the requirements of this Agreement.
SECTION 11 -ASSIGNME~TnL_.?rrBCONTRACTQRS; EM?WYEES
11~1 Assignment
Both parties shall give their personal attention to the
faitbful performance of this Agreement and shall not. assign ..
transfer, convey, or otherwise dispose of this Agreement or any
right, title or interest in or to the same or any part thereof
without the prior written consent of the other party, and then only
subject to such terms and conditions as the other party may
require~ A consent to one assignment shall not be deemed to be a
consent to any subsequent assign.ments~ Any assignmer..t 'Without such
approval shall be void and. at the option of the other party~ shall
tenninate this Agreement and any license or privilege granted
herein.. This Agreement and any interest herein shall not_ be
assignable by operation of law without the prior written consent of
the other party.
11.2 Subcontractors
It is agreed that this Agreement is for the personal
services of CONTRACTOR and cannot b~ performed by any o<ther person
~r organization.
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11.3 Subcontractors; Employees
CONTRACTOR shall be responsible for .employing or engaging
all persons nec.ssary to perform the services of CONTRACTOR
hereunder. No subcontractor of CONTRACTOR ~ill be recognized by
CITY as such; rather, all subcontractors are deemed to be employees
of CONTRACTOR 1 and it agrees to be responsible for th~ir perform
ance. CONTRACTOR shall give. its personal attention to the
fulfillment of the provisions of t.his Agreement by all of its
employees and subcontractors. if any, and shall keep the work under
its control. If any employee or subcontractor of CONTRACTOR fails
or refuses to carry out the provisions of this Agreement or appears
to be incompetent or to act in a disorderly Qr improper manner l be
shall be discha~ed imm.diately from the work under this Agreement
on demand of the. PROJECT MANAGER.
SECTIDt"« 12 -NO'l'ICES
All not.ices hereunder sha11 be given in writing and
mailed~ postage prepaid~ by certified mail, addressed as follows~
To CITY: Office of the City Clerk
250 Hamilton Avenue.
Palo Alto~ CA 94303
Human Resources Department
250 Hamilton Avenue
Palo Alto, CA 94303
ATTENTION: :Jay Rounds
To CONTRACTOR: Attention of the PROJECT DIRECTOR
at the address of CONTRACTOR recited above
SECTION 13 -INTEREST OF CONIR.\CTOR
In accepting: this Agreement .. CONTRACl'OR covenants that it
present.ly has no i..,terest~ and shall not acquire any interest,
direct cr indirect~ financial or othe~ise, which would conflict in
any manner or degree with the performance of the services he.re
under~ CONTRACTOR further covenants that, in the performance of
this Agreement, no subcontractor or person having such an interest
shall be employeeS.. CONTRACTOR certifies that no one who has or
will have any financial interest under this Aqreement is an officer
or employee of CITY. It is expressly agreed that in the perform
ance of the profe.ssional services required under this Agreement
CONTRACTOR .. and any of its subconsultants or employees~ shall at
all times be considered independent contractors and not agents or
employees of CIT~.
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~rlON 14 -INDEMNITY
14. • 1 Indemnl fi<;at ien by CONTRACTOR
CONTRACTOR aqrees to indemnify, defend and hold harmless
CITY, its officers r agents and employees from any and all demands,
claims, or liability of any nature, including death or injury to
any person, property damage or any other loss, caused by or arising
~t of CONTRACTOR's, its officers', agents', SU8CONTRACTORS' or
employees' negligent acts, errors, or omissions, or villful
misconduct, or conduct for vbich the law imposes strict liability
on CONTRACTOR in the performance or failure to perform this
Agreement.
14.2 Jngemnification by CITY
CITY' agrees to indemnify., defend and bold harmless
CONTRACTOR" its officers, agents and employees Crom any and all
demands, claims, or liability of any nature, including death or
injcr.l to any persoD, property damage or any other loss" cal.lsed by
or arising out of CITY's, its officers', agents'" SUBCONTRACTORS'
.or employees' negligent acts ... errors" or omissions" or willful
misconduct ... or conduct for which the law imposes strict liability
on CITY In the performance or failure to perform this Agreement.
SECTION 15 n_-WQBKERS J COKPENSATION
CONTRACTOR, by e~ecutin9 this Agreement" certifies that
it is aware of the provisions of the Labor c~~ of the State of
California which require every employer to be insured against
liability for workers' compensation or to undertake sel£-insurance
in accordance vith the provisions of that Code" and certifies that
it will comply with such provisions before commencing the perform
ance of the work of this Agreement~
SECTION 16 -INSURANCE
16~1 Insurance coverage
CONTRACTOR" at its sole cost and e~~ense" shall obtain
and maintain l in full force and effect throughout the entire term
of this Agreement" the insurance co'.rerage described in Exhibit ·C",
attached bereto and incorporated herein by this reference" insuring
not only CONTRACTOR and its subcontractors" if any" but also" with
the exception of yorleers' cc.mpensation and employer's liability
insurance, CITY ... its officers" agents and employees, and each of
them, with respect to activities and services performed by
CONTRACTOR for or en behalf of CITY under the prOVisions of this
Agreement.
16.2 ~_t.i£~_1;es of Insurance
Certit"icates of such insuranc02, preferably on the fOrIns
provided by CI'fY ... shall be filed with CITY concurrently with the
execution of this Agreement or, with CITY's approval, within ten
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(10) working day. thereafter. 5a14 certificates shall be subject
to the approval of the CITY Ri.k Manager and shall contain an
endorsement. statlnq: that 61!id Insurance .1. primary coverage and
will not be cancelled or altered by the insurer except after filing
with ~he city cl.rk thirty (30) days' prior written notice of such
cancellation or alteration, and that the city of Palo Alto is named
as an additiOf'lal insured (except in policies of professional
liability insurance). Cllrrent certificates of such insurance shall
be kept on fil~ at all time. during the tera of this Agreement with
the City Clerk.
SECTION 17 -AUDITS
CONTRACTOR agrees to permit CITY-to audit, at any
reasonable time durIng the tera of this Agreement and for three (3]
years thereafter" CONTRACTOR's records pertaining to matters
covered by this Agreement~ CONTRACTOR further aqrees to maintain
such records for at least three (3) years after the term of this
Agreement.
SECTION 18 -AGREEMENT BINPING
The terms. covenants, and conditions o~ this Agreement
shall apply to, and shall bind. the heirs, successors, e~ecutors"
administrators, assigns, and subcontractors of both parties.
SECTION 19 -WAIVERS
The waiver by either party of any breach or violation of
an~t terlll" covenant.. or condition of this Aqreement or of any
provision, ordinance. or law shall not be deemed to be a waiver of
any other term l covenant l condition, ordinance, ~r law or of any
subsequent breach or violation of the same or of any other term"
covenant. condition, ordinance. or laW".. The subsequent acceptance
by either party of any fee or other money 'Which may become d·ue
hereunder shall not be deemed to be a waiver of any preceding
breach or violation by the other party of any term, covenant, or
condition of this Agreement or of any applicable law or ordinance ..
S E'CJ'IOlf 2 Q -COSTS AND ATTORNEYS' F~
The prevailing party in any action brouqbt to enforce the
terms of this Aqreement or arising: out of this Agreement :!lay
recover its reasonable costs and attorney tees expended in.
connection with such an action from the other party.
~CTION 21 -HO IMpLIEp WAIVER
No payment. partial payment" acceptance, or partial
~cceptance by CITY shall operate as a waiver on the part of CIT~ of
any of its right. under this Agreement.
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SECTION 22 -NQNPISCBIMUlATION; PENAl,TV
22. 1 lXIU._Qi: CONTRAC1:2.B
No discrimination sball be made in the employment of
pe:s?ns under this Agreement because of the race, color~ national
orlg1n, ancestry, religion or se¥ of su~h person. If the value of
this Agreement Is, or may be, Five Thousand Dollars ($5,000) or
more, CONTRACTOR agrees to met all requirements of the Palo Alto
Municipal Code pertaining to nondiscrimination in employment and to
complete and submit the ·Compliance Report--Nondiscrimination
Provisions of city of Palo Alto contracts· on the form furnished by
CITY.
22.2 PENALTY FOR DISCRIMINATION
If CONTRACTOR is found in violation of the nondiscrimina
tIon provlslons of tbe state of California Fair Employment
Practices Act or similar provisions of federal law or executive
order in the performance of this A9reement~ it shall thereby be
found in material breach of this Agreement. Thereupon. CITY shall
have the power to cancel or suspend this Agreement. in whole or in
part. or to deduct from the amount payable to CONTRACTOR the sum of
TWenty-Five Dollars ($25) for each person for each calendar day
d,uring which such person was discriminated against. as damages for
said breach of contract. or both. Only a finding of the state of
California Fair Employment Practices commission or the equivalent
federal agency or officer shall constit~te evidence of a violation
of ocntract onder this section.
If CONTRACTOR is found in violation of the nondis
crimination prov~s10ns of this Agree~ent or the applicable
affirmative action guidelines pertaining to this Agreement.
CONTRACTOR shall be round in material breach of this Agreement.
Thereupon~ CITY shall have the power to cancel or suspend this
Agreement. in whole or in part, or to deduct iron th~ amount
payable to CONTRACTOR the SUD of Two Hundred Fifty Dollars {$2S0}
for each calendar day during Which CONTRACTOR is found to have been
in su~h noncompliance as damages tor said breach of contract. or
botb.
SECTION 23 -l-GRE~IIT---="IlIS ALL
UNDERSTAN.J)INGS: AMENDMENT
This document represents the entire a~ integrated
agreement between CITY and CONTRACTOR and supersedes all p::-ior
negotiations. representations, and agreeme~ts# either written or
oral. This document may be amended only by written instrument.
signed by both CIT~ and CONTRACTOR.
This Agreement shall be governed by the la~s of the State
of California.
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IN WITNESS WHEREOF, the parties hereto have el/:ecuted this
Agreement the day and year first above written.
ATTEST: CITY OF PALO ALTO
City CIerI< Mayor
APPROVED AS TO FORI!:
Assis~ant city Attorney
APPROVED: HEALTH INT
Assistant city Manager
Director of Finance
Ri sJe. Manager
APPROVED AS TO CONTENT:
Director of Human Resources
Attachments:
EXHIBIT -A
EXHIBIT -8-
EXHl.BIT ·C·
SOOPE OF PROJECT
FEE SCHEOOLE
lllSUl\WCE COVERAGE
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scopE OF PBO./ECT Exhibit A
HEALTH INTERNATIONAl INC.
1, CONTRACTOA shaiI establish and administer an effective utilizatioo review
program (hereinafter, !he 'Program'1 for CflY's ertglble errollees in aocorclance with
U1e standards agreed upon by CONTRACTOA and !he City of Palo AnD, The services
herein contemplated shan rover enrolled members of \he City Employees' and Refired
City Employees' Heallh Plans,
2. CONTRACTOA shan have no responsibiTity 10 determina a particular
enrollee's erlgibllity for, or coverage of. benelits under' orr. heaflll plans and shaD
rely solely on oral and written informafion provi6ed CONTRACTOA by OTY. In
coo. MlCfion wflll its u!ilizafion review services, CONTRACTOA shan no! asstIe \hat U1e
particular patient is actuany covered under' CflY's health care plan. The benefits
agreemenl under' which \he efYolIee is covered shan determine whether or no( U1e
benefits should be paid in any particular case, OTY has !he !inaI autIlorily for U1e
payment of a~ claims,
3, CONTRACTOA shan act as representative of 0 TV in mailers related 10
CflY's administrative obr.gafions under' U1e employee and retiree health plans and shan
provide services more particularly set forth hereinafter; providecl, however,
CONTRACTOR shan not perfo<m any services which are now, or in U1e lutlJe are
deemed 10 be, \he practice of fa ... :
(aJ Aclminisler fle Program in full compliance with an requiremenls, Codes,
laws and administrative procedures of !he Stale of CaI~ornia,
{bj Utilize !he services of physicians and specialists as medical oonsunants and
when appropriate es1ablish second opinion SIXg6'Y panels,
(0) Furnish each 9fYoI1ee with appropriate written expianaUons of \he
CONTRACTOR ulilizafion review services and procedures which are accepted by U1e
City under !he Program. i'1cIucfong obtairJng approp<iale medical elata, medjca/ releases
and spadal informafion essential 10 performing reviews and medical audits,
«1) Prepare and file in \he name of OTY all edminiSlralNe forms, reports, and
othe< cIocumants required under' fle laws of fle Sta!e of Cal~ornia and/or federal
gove<rvnent related 10 U1e Program
Cel Maintain an records and statistical dala on losses arising under !he Program
in accorc!ance with fle reqJirements of fle Sta!e of Caidornia,
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(I) Provide monthly rnachi1.-labulat&d r.ports on at! Programs 10 City_
ol CONTRACTOR shan perform an 0( the following services related 10 !he
Program lor !he erYoiled members 0( the City healtll plans:
-Arrangemenls lor Second Surghoa! Opinions
-OuIpatieni Surge<y Precertification
-\-1patient Precertification
-~fi.nt Discl1alge Planning
-Home Health Care Precertilication and Concurrent Review
-Arrangements lor Psychiatric!Substanco Abuse Second Opinjoo Screening
-Inpatiert Psychiatric Precertifica1ion. Concurrent Review, Discl1alge PIaming
-Inpatiert Substance Abuse Precertificalion, Concurrent Review, Discharge
Planning
-large Case Management
-Telephonic Medical ArJvisOfy Se<vice/Ho!fIl1fl
-High Ris!< Pregnancy Evaluation and ManagemenI:
-Shock loss Notification
-Customized CompuI ... Reporting
-Ad Hoc Utilization Reporting
-Retrospective Review
-Communication Materials
5. Activities Oy!sjdt f1e Sooot of CONTB.\CTOfl's ReSQQ!!5iblity: Pursuant 10
INs Agreement. orr agrees flat CONTRACTOR has no responsibTiIy 0( any kind 10
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(e} The propriety, necessity or advisabmty at any specifIC recorrmencled
treatment. operalion. lherapeu!ic procedl.xe, medicine, drug prescffplion, care,
maintenance, conflfl8mtlnt or other matter relating 10 "" rendition at an)' medical
services b)' any doctor. nurse or oIher medical practitione< for any health care plan
ervollee.
(b) VerifICation at any health care plan enrollee's enliUement 10, or reduclior.
of, group medical/heallh plan coverage or reimbursement.
!c} Payment Irom CONTRACTOR funds at an)' health care plan ervoll .. '.
medical, flospiIa! or oIher bill., debIs. OOI'lQation or oIher IiaboTIOOs of any kind relating
10 or arising oul at any medica! or surgicallrealment or oonlinernMJL
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FEE SCHEDUle
HEALTH IHTERNATiONAL IHC.
Exhibit B
CITY shaI p;ry CONTRACTOR "" its seMceS according \0 "'" following
capitalecl rales:
1. One ~me set-up $2.00{ervollee
2. Compos~e moolhly fee "" an services (except fees ""
Second Opillion Consultalion) ~sted h Scope of Project
(Exhibit Al:
F.-51 Year:: $2.50/ervollee
Per cap1a rales are based upon an estimated en-oliment of
900 10 1,000 Ives. These rales are sooject 10 negoIiallon.
between City and Co<oflaclOr, based upon experience raling.
n .,. second and V1ird year. of .,. term of flis agfeemen!.
but n no even! \0 exceed .... fo!!c?vOOg rales:
Second Vear:
Third Year:
$2.751er.-olIee
$3.00/ervo!lee
Howev6(, i1 no even! shaA City's payment 10 ConIraclo< "" services under lhis
Agreement exceed $100,000.00.
3. Fees "" Second Opinion consuftalion are not included
under llis contract. Such fees shall be billed on a
reasonable '_""·seMce basis, 10 City. with no venclo<
mar1<-up by Conlraclo<.
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