REPORT TO COUNCIL
SUBJECT
Title
Action on Amendment No. 1 to the Agreement with Sedgwick Claims Management Services, Inc., for Third Party Administrator (TPA) Services in Support of the City's Self-Insured Workers' Compensation Program
Report
COUNCIL PILLAR
Manage Strategically Our Workforce Capacity and Resources
BACKGROUND
Sedgwick Claims Management Services, Inc. (Sedgwick) has served as the City's third-party administrator (TPA) for Workers' Compensation claims since 1977. Sedgwick is the successor organization to Gates McDonald and Cambridge, and has provided claims administration services including assisting in managing employee workers' compensation claims, claims costs, and claims outcomes in accordance with the State Labor Code. Sedgwick also provides ancillary services including bill review, utilization review and nurse case management.
The current agreement with Sedgwick was approved by the City Council on June 23, 2020, for an initial two-year term beginning July 1, 2020, with an option to renew for three additional one-year extension options through June 30, 2025.
Staff was planning to conduct a thorough analysis of the third-party claims management services prior to the expiration date. However, due to staff changes/vacancies, including the Risk Manager vacancy, staff was unable to complete this assessment. The Human Resources Department is now recruiting for the new Risk Manager, which will report to the City Attorney's Office, and anticipates that the recruitment will be completed by Summer 2025.
DISCUSSION
To ensure uninterrupted workers' compensation administration services, staff is seeking City Council approval to negotiate and execute Amendment No. 1 to the agreement with Sedgwick to extend the term through June 30, 2028. The proposed amendment would increase the compensation by $1,289,078 for a revised total maximum compensation of $3,143,657. The 3.5% annual increase proposed in the amendment is consistent with the Consum...
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