04-003, California Public Entity Insurance Authority
EXHIBIT A
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Adopted: April 18, 2001
JOINT POWERS AGREEMENT
CREATING THE
CALIFORNIA PUBLIC ENTITY INSURANCE AUTHORITY
This Agreement is executed in the State of California by and among those public
agencies organized and existing under the Constitution of the State of California, which are
parties signatory to this Agreement. All such agencies which become members shall be listed in
Appendix A, attached hereto and made a part hereof.
RECITALS
WHEREAS, Article 1, Chapter 5, Division 7, Title 1 of the California Government Code
(section 6500 et seq.) permits two or more public agencies by agreement to exercise jointly
powers common to the contracting parties; and
WHEREAS, the public agencies executing this Agreement desire to join together for the
purpose of jointly funding, purchasing and/or establishing insurance and risk management
programs as determined; and
WHEREAS, Article 16, Section 6 of the California Constitution provides that insurance
pooling arrangements under joint exercise of power agreements shall not be considered the
giving or lending of credit as prohibited therein; and
WHEREAS, California Government Code Section 990.4 provides that a local public
entity may self-insure, purchase insurance through an authorized carrier, or purchase insurance
through a surplus line broker, or any combination of these; and
WHEREAS, California Government Code Section 990.6 provides that the cost of
insurance is a proper charge against the local public entity; and
WHEREAS, California Government Code Section 990.8 provides that two or more local
public entities by a joint powers agreement may provide insurance by anyone or more of the
methods specified in Government Code Section 990.4, and the pooling of self-insured claims or
losses is not considered insurance nor subject to regulation under the Insurance Code; and
WHEREAS, California Government Code Section 990.8 also provides that a joint powers
agreement may provide that if any peril insured or covered under a contract has existed and the
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joint powers authority or other parties participating in the pool have been liable for any period,
the agreement may provide that the insured or covered party is not entitled to the return of
premiums, contributions, payments, or advances so far as the particular risk insured or covered is
concerned;
NOW THEREFORE, the parties agree as follows:
ARTICLE 1. DEFINITIONS
"Authority" or "CPEIA"
shall mean the California Public Entity Insurance
Authority created by this Agreement.
"Authority Program" or "CPEIA
separate Program"
shall mean a program authorized by the Board
and apart from a program of the EIA.
"Board of Directors"
or "Board"
shall mean the governing body of the Authority.
"Excess Insurance Authority" or
"EIA"
shall mean the CSAC Excess Insurance Authority.
"EIA Program"
shall mean a program established by the EIA that is
made accessible to the Authority and in which the
Board may authorize Authority participation.
"Fiscal Year"
shall mean that period of twelve (12) months which
is established by the Board as the fiscal year of the
Authority.
"Government Code"
shall mean the California Government Code.
"Insurance program"
or "Program"
shall mean a program of the Authority under which
a participating member or other public entity is
protected against designated losses, either through
joint purchase of primary or excess insurance,
pooling of self-insured claims or losses, purchased
insurance or reinsurance or any other combination
as determined by the Board. The Board may
determine applicable criteria for determining
eligibility in any program, as well as establishing
program policies and procedures.
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"Joint Powers Law"
shall mean Article 1, Chapter 5, Division 7, Title 1
(commencing with section 6500) of the Government
Code.
"Memorandum of
Understanding" or "MOD"
shall mean a document executed by a member
setting forth provisions for program coverage or
establishing a program of the Authority or
otherwise providing for implementation of the
provisions of this Agreement.
"Participating Member"
or "Member"
shall mean any public agency, which has entered a
program of the [or, which has obtained insurance
coverage through the] Authority pursuant to this
Agreement and has not withdrawn or been canceled
therefrom.
"Public Agency"
shall also mean "public entity."
"Reinsurance"
shall mean insurance purchased by the Authority as
part of an insurance program to cover that portion
of any loss that exceeds the joint funding capacity
of that program.
"Self- Insured Retention"
or "SIR"
shall mean that portion of a loss resulting from an
occurrence experienced by a member that is
retained as a liability or potential liability of the
member and is not subject to payment by the
Authority.
ARTICLE 2. PURPOSES
This Agreement is entered into by the members in order to jointly develop and fund
insurance and other related programs as determined by members and other public entities
wishing to participate in such programs or obtain services. Programs may be either EIA
Programs or Authority Programs and may include, but are not limited to, the creation of joint
insurance funds, including excess insurance funds, the pooling of self-insured claims and losses,
purchased insurance, including reinsurance, and the provision of necessary administrative and
other services. Such services may include, but shall not be limited to, risk management
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consulting, loss prevention and control, centralized loss reporting, actuarial consulting, claims
adjusting and legal defense services.
ARTICLE 3. PARTIES TO THE AGREEMENT
(a) Each member, as a party to this Agreement, certifies that it intends to and does
contract with all other members as parties to this Agreement and, with such other members as
may later be added as parties to this Agreement pursuant to Article 18 as to all programs in
which the member participates. Each member also certifies that the removal of any party from
this Agreement, pursuant to Articles 19 and 20, shall not affect this Agreement or the member's
obligations hereunder.
(b) Should any conflict arise between the provisions of this Article and any applicable
Memorandum of Understanding or other similar document evidencing coverage, such
Memorandum of Understanding or other document shall prevail.
ARTICLE 4. TERM
This Agreement shall become effective when executed and returned to the Authority
within thirty (30) days after execution by at least two (2) public agencies. The Authority shall
promptly notify all members in writing of the effective date of this Agreement. This Agreement
shall remain in effect until terminated as provided herein.
ARTICLE 5. CREATION OF THE AUTHORITY
Pursuant to the joint powers law there is hereby created a public entity separate and apart
from the parties hereto, to be known as the California Public Entity Insurance Authority, with
such powers as are hereinafter set forth.
ARTICLE 6. ACCOUNTABILITY AND REPORTS
The Authority, pursuant to Government Code Section 6505, shall provide for strict
accountability of all funds and report of all receipts and disbursements. The auditor or controller
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of the Authority shall contract with a certified public accountant to perform an annual audit of
the accounts and records of the Authority.
ARTICLE 7. POWERS OF THE AUTHORITY
The Authority shall have all of the powers common to its members and all additional
powers as set forth in the joint powers law, and it is hereby authorized to do all acts necessary in
the exercise of said powers. Such powers include, but are not limited to, the following:
(a) To make and enter into contracts.
(b) To employ agents and employees.
(c) To incur debts, liabilities and obligations.
(d) To acquire, hold, or dispose of property, contributions and donations of property,
funds, services and other forms of assistance from persons, firms, corporations
and public agencies.
(e) To sue and be sued in its own name and to settle any claim against it.
(f) To receive and use contributions and advances from members as provided in
Government Code Section 6504, including contributions or advances of
personnel, equipment or property.
(g) To invest any money in its treasury that is not required for its immediate
necessities, pursuant to Government Code Section 6509.5.
(h) To carry out all provisions of this Agreement
Said powers shall be exercised pursuant to the terms hereof and in the manner provided by law.
ARTICLE 8. BOARD OF DIRECTORS
The Authority shall be governed by a Board of Directors, which shall consist of the
eleven (11) members. Beginning on July 1, 2001, the members shall consist of the nine (9)
voting members of the EIA Executive Committee, plus two (2) representatives of parties to the
Agreement appointed by the Board. As of January 1, 2002, the Board shall consist of seven (7)
voting members of the EIA Executive Committee to be selected by the EIA Executive
Committee, plus four (4) representatives of parties to the Agreement to be elected by the CPEIA
members in a manner prescribed in the Bylaws.
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As of January 1, 2003 the Board shall consist of five (5) EIA Executive Committee
members and six (6) elected CPEIA members. As of January 1,2004, the Board shall consist of
two (2) EIA members and nine (9) elected CPEIA members. As of January 1, 2004, the
membership of the Board shall remain the same unless otherwise amended by this Agreement. If
at any time sufficient CPEIA members are not available to fill their designated slots, then the
EIA Executive Committee shall fill vacant positions from their own membership until the next
annual election. The Board, through adoption or amendment of its Bylaws, may designate
certain positions of the Board members to be from designated entities (for example, three (3)
from Joint Powers Authorities, three (3) from cities, three (3) from other entities.).
Seven (7) members of the Board shall constitute a quorum for the transaction of business.
Each Board member shall have one vote. Except as otherwise provided in this Agreement or any
other duly executed agreement of the participating members, action by the Board shall require an
affirmative vote of a majority of the member present and voting.
At any meeting at which a quorum is initially present the Board may continue to transact
business notwithstanding the withdrawal of enough members to leave less than a quorum,
provided that no action shall be valid or binding unless approved by a majority of the members
of the Board.
ARTICLE 9. POWERS OF THE BOARD OF DIRECTORS
The Board of Directors shall have the following powers and functions:
(a) The Board shall exercise all powers and conduct all business of the Authority,
either directly or by delegation to other bodies or persons unless otherwise prohibited by this
Agreement, or any other duly executed agreement of the member or by law.
(b) The Board of Directors may adopt such resolutions as deemed necessary in the
exercise of those powers and duties set forth herein.
(c) The Board, in accordance with Article 12 of the Agreement, may create those
committees it deems appropriate to carry out the work of the Authority. The Board may
designate those committees that are advisory only, and may from time to time provide powers
and duties to any committee, as the board deems appropriate. The committees may develop,
evaluate and review all matters pertaining to the business of the Authority, as well as any of its
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programs and services. The powers and duties so delegated shall be specified in resolutions
adopted by the Board or otherwise set forth in the Bylaws.
(d) The membership of any such committee may consist in whole or in part of
persons who are not members of the Board.
(e) The Board may appoint or employ necessary staff in accordance with Article 13.
(f) The Board shall cause to be prepared, and shall review, modify as necessary, and
adopt the annual operating budget of the Authority. Adoption of the budget may not be
delegated.
(g) The Board shall develop, or cause to be developed, and shall review, modify as
necessary, and adopt each program of the CPEIA, including all provisions for reinsurance and
administrative services necessary to carry out such program and the Board shall determine those
programs of the EIA that will be available to members of CPEIA
(h) The Board shall provide for necessary services to the Authority and to members,
by contract or otherwise, which may include, but shall not be limited to, staff, risk management
consulting, loss prevention and control, centralized loss reporting, actuarial consulting, claims
adjusting, and legal services.
(i) The Board shall provide general supervision and policy direction to the staff.
(j) The Board shall receive and act upon reports of the committees and the staff.
(k) The Board shall act upon each claim involving liability of the CPEIA, directly or
by delegation of authority to a committee, body or person, provided, that the Board shall
establish monetary limits upon any delegation of claims settlement authority, beyond which a
proposed settlement must be referred to the Board for approval.
(1) The Board may require that the Authority review, audit, report upon, and make
recommendations with regard to the safety or claims administration functions of any member,
insofar as those functions affect the liability or potential liability of the Authority. The Board
may forward any or all such recommendations to the member with a request for compliance and
a statement of potential consequences for noncompliance.
(m) The Board shall receive, review and act upon periodic reports and audits of the
funds of the Authority, as required under Article 16 of this Agreement.
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(n) The Board may, upon consultation with a casualty actuary, declare that any funds
established for any CPEIA program has a surplus of funds and determine a formula to return
such surplus to the participating members that have contributed to such fund.
(0) The Board shall have such other powers and duties as are reasonably necessary to
carry out the purposes of the Authority.
ARTICLE 10. MEETINGS OF THE BOARD OF DIRECTORS
(a) The Board shall hold at least two (2) meetings each year and shall provide for
such other meetings and for such special meetings, as it deems necessary.
(b) The staff of the Authority shall provide for the keeping of minutes of regular and
special meetings of the Board, and shall provide a copy of the minutes to each member of the
Board at the next scheduled meeting.
(c) All meetings of the Board and such committees as established by the Board
pursuant to Article l2 herein, shall be called, noticed, held and conducted in accordance with the
provisions of Government Code Section 54950 et seq.
ARTICLE 11. OFFICERS
The President and Vice President of the Board shall be selected as provided in the
Bylaws and shall serve for one-year terms.
The President, or in his or her absence, the Vice President, shall preside at and conduct
all meetings of the Board.
ARTICLE 12. COMMITTEES
The Board of Directors may establish committees, as it deems appropriate to conduct the
business of the Authority. Members of the committees shall be appointed by the Board, to serve
two-year terms in accordance with the Bylaws. The members of each committee shall annually
select one of their members to chair the Committee.
Each committee shall be composed of at least five members and shall have those duties
as determined by the Board, or as otherwise set forth in the Bylaws.
Each committee shall meet on the call of its chair, and shall report to the Board.
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ARTICLE 13. STAFF
(a) Principal Staff. The following staff members shall be provided by the EIA to the
Authority as set forth in the Joint Powers Agreement between the EIA and CPEIA, which
provisions are incorporated herein by reference:
(1) General Manager/Secretary/Treasurer. The General
Manager/Secretary/Treasurer shall administer the business and activities of the Authority,
subject to the general supervision and policy direction of the Board of Directors; shall be
responsible for all minutes, notices and records of the Authority and shall perform such other
duties as are assigned by the Board.
(2) Treasurer. Pursuant to Government Code Section 6505.6, the Board shall
use the Treasurer of the EIA, who shall comply with the provisions of Government Code Section
6505.5 (a-d).
(3) Auditor. The Auditor shall draw warrants to pay demands against the
Authority when approved by the Treasurer. Pursuant to Government Code Section 6505.6, the
Board shall use the Auditor of the EIA, who shall comply with the provisions of Government
Code Section 6505.5 (a-d).
(b) Other Staff. The Board or General Manager/Secretary shall provide for the
appointment of such other staff as may be necessary for the administration of the Authority.
ARTICLE 14. DEVELOPMENT, FUNDING AND
IMPLEMENTATION OF PROGRAMS
(a) Access to the EIA's programs and services shall be made available to public
entities and members as is more particularly set forth in the Joint Powers Agreement between the
EIA and CPEIA. CPEIA programs and services may be established by the Board, the details of
which will be outlined in a Memorandum of Understanding.
(b) Program Coverage. Programs may include CPEIA Programs and EIA Programs
both of which may provide coverage, including, but not limited to, excess or primary insurance
coverage for:
(1 ) Workers' compensation;
(2) Comprehensive liability, including but not limited to general, personal
injury, contractual, public officials errors and omissions, and incidental malpractice liability;
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(3) Comprehensive automobile liability;
(4) Health facilities professional liability;
(5) Property and related programs;
and may provide any other coverages authorized by the Board of Directors.
(c) EIA Programs. CPEIA members participating in EIA programs shall execute a
Memorandum of Understanding (MOU) for each EIA program in which they are a participant.
Such MOU(s) may provide for, but not be limited to, program funding, Authority funding,
development charges, annual premium, premium surcharge, implementation and effective date,
late entry into program, administration of claims, underwriting and claims administration
standards, and program withdrawal or cancellation.
CPEIA members participating in EIA Programs shall fund program charges, program
administrative costs and general administrative costs in accordance with the equitable allocation
formula developed and approved by the EIA.
(d) CPEIA Programs. Members participating in CPEIA programs shall execute a
MOU for each CPEIA Program in which they are a participant. Such MOU(s) may provide for,
but not be limited to, program funding, Authority funding, development charges, annual
premium, premium surcharge, implementation and effective date, late entry into program,
administration of claims, underwriting and claims administration standards, and program
withdrawal or cancellation.
Members participating in CPEIA Programs shall fund program charges, program
administrative costs and general administrative costs in accordance with an equitable allocation
formula developed and approved by the Board of Directors.
ARTICLE 15. ACCOUNTS AND RECORDS
(a) Annual Budget. The Authority shall annually adopt an operating budget pursuant
to Article 9 of this Agreement, which shall include a separate budget for each program under
development or adopted and implemented by the Authority.
(b) Funds and Accounts. The Auditor of the Authority shall establish and maintain
such funds and accounts as may be required by good accounting practices and by the Board of
Directors. Separate accounts shall be established and maintained for each program under
development or adopted and implemented by the Authority. Books and records of the Authority
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in the hands of the Auditor shall be open to inspection at all reasonable times by authorized
representatives of the members.
The Authority shall adhere to the standard of strict accountability for funds set
forth in Government Code Section 6505.
(c) Auditor's Report. The Auditor, within one hundred and twenty (120) days after
the close of each fiscal year, shall give a complete written report of all financial activities for
such fiscal year to the Board and to each member.
(d) Annual Audit. Pursuant to Government Code Section 6505, the Authority shall
either make or contract with a certified public accountant to make an annual fiscal year audit of
all accounts and records of the Authority, conforming in all respects with the requirements of
that section.
ARTICLE 16. RESPONSIBILITIES FOR FUNDS AND PROPERTY
(a) The Treasurer shall have the custody of and disburse the Authority's funds. He or
she may delegate disbursing authority to such persons as may be authorized by the Board of
Directors to perform that function, subj ect to the requirements of (b) below.
(b) Pursuant to Government Code Section 6505.5, the Treasurer shall:
(1) Receive and acknowledge receipt for all funds of the Authority and place
them in the treasury of the Treasurer to the credit of the Authority.
(2) Be responsible upon his or her official bond for the safekeeping and
disbursements of all Authority funds so held by him or her.
(3) Pay any sums due from the Authority, as approved for payment by the
Board of Directors or by any body or person to whom the Board has delegated approval
authority, making such payments from Authority funds upon warrants drawn by the Auditor.
(4) Verify and report in writing to the Authority and to members, as of the
first day of each quarter of the fiscal year, the amount of money then held for the Authority, the
amount of receipts since the last report, and the amount paid out since the last report.
(c) Pursuant to Government Code Section 6505.1, the General
Manager/Secretary/Treasurer, and such other persons as the Board of Directors may designate
shall have charge of, handle, and have access to the property of the Authority.
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(d) The Authority shall secure and pay for a fidelity bond or bonds, in an amount or
amounts and in the form specified by the Board of Directors, covering all officers and staff of the
Authority, and all officers and staff who are authorized to have charge of, handle, and have
access to property of the Authority.
ARTICLE 17. RESPONSIBILITIES OF MEMBERS
Members shall have the following responsibilities under this Agreement.
(a) Each member shall appoint an officer or employee of the entity to be responsible
for the risk management function for that member and to serve as a liaison between the member
and the Authority for all matters relating to risk management.
(b) Each member shall maintain an active safety program, and shall consider and act
upon all recommendations of the Authority concerning the reduction of unsafe practices.
(c) Each member shall provide the Authority such other information or assistance as
may be necessary for the Authority to develop and implement insurance programs under this
Agreement.
(d) Each member shall cooperate with and assist the Authority, the EIA, and any
insurer of the Authority or EIA, in all matters relating to this Agreement, and shall comply with
all Bylaws, and other rules adopted by the Board of Directors.
(e) Each member shall have such other responsibilities as are provided elsewhere in
this Agreement, program MOU(s), and Bylaws, and as are established by the Board of Directors
in order to carry out the purposes of this Agreement.
ARTICLE 18. NEW MEMBERS
Any non-member may become a party to this Agreement and participate in any CPEIA
Program in which it is not presently participating upon approval of the Board of Directors, by a
majority vote of the Board. For participation in an EIA Program, approval by the EIA in a
manner prescribed by the EIA shall also be required.
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ARTICLE 19. WITHDRAWAL
A member, after becoming a participant in a program of the Authority, may withdraw
from that program only at the end of a policy year for the program, and only if it gives the
Authority at least sixty (60) days advance written notice of such action.
ARTICLE 20. CANCELLATION
(a) Notwithstanding the provisions of Article 19, the Board of Directors may:
(1) Cancel any member from this Agreement and membership III the
Authority, on a vote of two-thirds of the Board members present and voting. Such action shall
have the effect of canceling the member's participation in all CPEIA Programs and EIA
Programs as of the date that all membership is canceled.
(2) Cancel any member's participation in a CPEIA or EIA Program, without
canceling the member's membership in the Authority or participation in other programs, on a
vote of two-thirds of the Board members present and voting.
The Board shall give sixty (60) days advance written notice of the
effective date of any cancellation under the foregoing provisions. Upon such effective date, the
member shall be treated the same as if it had voluntarily withdrawn from this Agreement, or
from the program, as the case may be.
(b) A member which withdraws from all programs of the Authority in which it was a
participant and does not enter. any program for a period of six (6) months thereafter shall be
considered to have withdrawn from the Agreement at the end of such period, and its membership
in the Authority shall be automatically canceled as of that time, without action of the Board of
Directors.
ARTICLE 21. EFFECT OF WITHDRAWAL OR CANCELLATION
(a) If a member's participation in a program is canceled under Article 20, with or
without cancellation of membership in the Authority, and such cancellation is effective before
the end of the policy year for that program, the Authority shall promptly determine and return to
that member the amount of any unearned premium payment from the member for the policy
year, such amount to be computed on a pro-rata basis from the effective date of cancellation.
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(b) Except as provided in (a) above, a member which withdraws or is canceled from
this Agreement and membership in the Authority, or from any CPEIA or EIA program, shall not
be entitled to the return of any premium or other payment to the Authority, or of any property
contributed to the Authority. However, in the event of termination of this Agreement, such
member may share in the distribution of assets of the Authority to the extent provided in Article
22 provided; however, that any withdrawn or canceled member which has been assessed a
premium surcharge pursuant to any Memorandum of Understanding shall be entitled to return of
said member's unused surcharge, plus interest accrued thereon, at such time as the Board of
Directors declares that a surplus exists in any insurance fund for which a premium surcharge was
assessed.
(c) Except as provided in (d) below, a withdrawn or cancelled member shall pay any
premium charges which the Board of Directors determines are due from the member for losses
and costs incurred during the entire coverage year in which the member was a participant in such
program regardless of the date of entry into such program. Such charges may include any
deficiency in a premium previously paid by the member, any premium surcharge assessed to the
member under an MOU; and any additional amount of premium which the Board determines to
be due from the withdrawn or cancelled member upon final disposition of all claims arising from
losses under the program during the entire coverage year in which the member was a participant
regardless of date of entry into such program. Any such premium charges shall be payable by
the member in accordance with the Authority's invoice and payment policy.
(d) Those members which who have withdrawn or been canceled pursuant to Articles
19 and 20 from any program of the Authority during a coverage year shall pay any premium
charges which the Board of Directors determines are due from the members for losses and costs
which were incurred during the member's participation in any program or as otherwise defined
in any program MOD.
ARTICLE 22. TERMINATION AND DISTRIBUTION OF ASSETS
(a) This Agreement may be terminated by three-fourths of the members, acting
through their governing bodies; provided, however, that this Agreement and the Authority shall
continue to exist after such election for the purpose of disposing of all claims, distributing all
assets, and performing all other functions necessary to conclude the affairs of the Authority.
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(b) Upon termination of this Agreement, all assets of the Authority in each program
shall be distributed among those members that participated in that program in proportion to their
cash contributions, including premiums paid and property contributed (at market value when
contributed). The Board of Directors shall determine such distribution within six (6) months
after disposal of the last pending claim or other liability covered by the program.
(c) Following termination of this Agreement, any member who was a participant in a
program of the Authority shall pay any additional amount of premium, determined by the Board
of Directors in accordance with a loss allocation formula, which may be necessary to enable fmal
disposition of all claims arising from losses under that program in accordance with an applicable
MOD.
(d) Termination of this Agreement by any party shall not be construed as a
completion of the purposes of the Agreement and shall not require the repayment or return to the
parties of all or any portion of any contributions, payments, or advances made by the parties until
the Agreement is rescinded or terminated as to all parties.
ARTICLE 23. LIABILITY OF BOARD OF DIRECTORS, OFFICERS,
COMMITTEE MEMBERS AND LEGAL ADVISORS
The members of the Board of Directors, Officers, committee members and legal advisors
to any Board or committees of the Authority shall use ordinary care and reasonable diligence in
the exercise of their powers and in the performance of their duties pursuant to this Agreement.
They shall not be liable for any mistake of judgment or any other action made, taken or omitted
by them in good faith, nor for any action taken or omitted by any agent, employee or
independent contractor selected with reasonable care, nor for loss incurred through investment of
Authority funds, or failure to invest.
No Director, Officer, committee member, or legal advisor to any Board or committee
shall be responsible for any action taken or omitted by any other Director, Officer, committee
member, or legal advisor to any committee. No Director, Officer, committee member or legal
advisor to any committee shall be required to give a bond or other security to guarantee the
faithful performance of their duties pursuant to this Agreement.
The funds of the Authority shall be used to defend, indemnify and hold harmless the
Authority and any Director, Officer, committee member or legal advisor to any committee for
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their actions taken within the scope of the authority of the Authority. Nothing herein shall limit
the right of the Authority to purchase insurance to provide such coverage, as is hereinabove set
forth.
ARTICLE 24. BYLAWS
The Board may adopt Bylaws consistent with this Agreement, which shall provide for the
administration and management of the Authority.
ARTICLE 25. NOTICES
The Authority shall address notices, billings and other communications to a member as
directed by the member. Each member shall provide the Authority with the address to which
communications are to be sent. Members shall address notices and other communications to the
Authority to the General Manager/Secretary of the Authority, at the office address of the
Authority as set forth in the Bylaws.
ARTICLE 26. AMENDMENT
This Agreement may be amended by a two-thirds (2/3) vote of the Board following a ninety (90)
day review and comment period during which time proposed amendments shall be circulated to
the members of the CPEIA and approved by the EIA Executive Committee. After five (5) years
from the date of this Agreement, approval of the EIA Executive Committee shall no longer be
needed for amendment of this Agreement.
ARTICLE 27. PROHIBITION AGAINST ASSIGNMENT
No member may assign any right, claim or interest it may have under this Agreement,
and no creditor, assignee or third party beneficiary of any member shall have any right, claim or
title to any part, share, interest, fund, premium or asset of the Authority.
ARTICLE 28. AGREEMENT COMPLETE
This Agreement constitutes the full and complete Agreement of the parties.
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ARTICLE 29. EFFECTIVE DATE OF AMENDMENTS
Any amendment of this Agreement shall become effective upon the approval of any
Amended Agreement by the Board of Directors as set forth in Article 26.
ARTICLE 30. DISPUTE RESOLUTION
When a dispute arises between the Authority and a member, the following procedures are
to be followed:
(a) Request for Reconsideration. The member will make a written request to the
Authority or the appropriate Committee to reconsider its position, citing the arguments in favor
of the member and any applicable case law that applies. The member can also request a personal
presentation to that Committee, if it so desires.
(b) Committee Appeal. The committee responsible for the program or having
jurisdiction over the decision in question will review the matter and reconsider the Authority's
position. This committee appeal process is an opportunity for both sides to discuss and
substantiate their positions based upon legal arguments and the most complete information
available. If the member requesting reconsideration is represented on the committee having
jurisdiction, that committee member shall be deemed to have a conflict and shall be excluded
from any vote.
(c) Board of Directors Appeal. If the member is not satisfied with the outcome of the
committee appeal, the matter will be brought to the Board of Directors for reconsideration upon
request of the member. If the member requesting reconsideration is represented on the Board,
that Board member shall be deemed to have a conflict and shall be excluded from any vote.
(d) Arbitration. If the member is not satisfied with the outcome of the Board of
Directors appeal, the next step in the appeal process is arbitration. The arbitration may be
binding or non-binding, as mutually agreed upon by the parties. The matter will be submitted to
a mutually-agreed-upon arbitrator or panel of arbitrators for a determination. If binding
arbitration is selected, the decision of the arbitrator or panel of arbitrators will be final and
conclusive and the member and the Authority will abide by the decision of the arbitrator. The
cost of arbitration will be shared equally by the involved member and the Authority.
Page 17 of 18
JP A, CPEIA
Adopted: April 18, 2001
( e) Litigation. If, after following the dispute resolution procedure set forth in
paragraphs (a)-(d) above, either party is not satisfied with the outcome of the non-binding
arbitration process, either party may consider litigation as a possible remedy to the dispute.
ARTICLE 31. FILING WITH SECRETARY OF STATE
The General Manager/Secretary of the Authority shall file a notice of this Agreement
with the office of California Secretary of State within 30 days of its effective date, as required by
Government Code Section 6503.5 and within 70 days of its effective date as required by
Government Code Section 53051.
IN WITNESS WHEREOF, the undersigned party hereto has executed this Agreement
on the date indicated below.
DATE:
I. t .04
MBER David W. Knapp
~~
BY:
Page 18 of 18
Adopted: 06/01/01
~~
~
CALIFORNIA PUBLIC ENTITY INSURANCE AUTHORITY
EXCESS WORKERS' COMPENSATION PROGRAM
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (hereafter "MEMORANDUM") is entered into by and
between the California Public Entity Insurance Authority (hereafter "CPEIA"), the CSAC
Excess Insurance Authority (hereafter "EIA") and the participating public entities
(hereafter "MEMBERS") who are signatories to this MEMORANDUM.
1. JOINT POWERS AGREEMENT. Except as otherwise provided herein, all terms used
shall be as defined in Article 1 of the Joint Powers Agreement Creating the
CPEIA (hereafter "AGREEMENT"), and all other provisions of the AGREEMENT not in
conflict with this MEMORANDUM shall apply.
2. PURPOSE. CPEIA MEMBERS are signatories to this MEMORANDUM for the express
purpose of joining the EIA's Excess Workers' Compensation (EWC) Program
(hereafter "PROGRAM"). Under this PROGRAM, CPEIA EWC MEMBERS shall be
considered to be one (1) MEMBER for purposes of participating in the PROGRAM.
3. ENTRY INTO PROGRAM. Any public entity wishing to become a MEMBER of the
PROGRAM shall make application to and be approved by the CPEIA Board of
Directors in a manner prescribed by them and must also be approved by the EIA
Board of Directors (hereafter "EIA BOARD") in a manner prescribed by the EIA
BOARD.
4. PROGRAM DEVELOPMENT. MEMBERS shall be charged a $350.00 program
development charge that shall be a one-time charge assessed upon entry into
the PROGRAM.
5. ANNUAL PREMIUM. Participating MEMBERS shall be assessed an annual premium for
the purpose of funding the PROGRAM. Premiums for the PROGRAM shall be
established annually in conjunction with the insurance carriers. Premiums to
CPEIA EWC MEMBERS shall be billed and paid annually in accordance with the
EIA's Invoicing and Payment Policy (Resolution 94-003). Premium rates shall be
established based upon factors that include, but are not limited to, negotiations
with insurance carriers, expenditures, administrative costs and other appropriate
factors.
1
Adopted: 06/01/01
6. COST ALLOCATION. Each participating MEMBER'S share of annual premium shall be
determined by the EIA BOARD.
2
7. ASSESSMENTS, DIVIDENDS AND PREMIUM SURCHARGE.
(a) Assessments. The PROGRAM shall be funded in accordance with paragraph
5 above. In general, the annual premium, as determined by the EIA BOARD,
will be established at a level that will provide adequate overall funding without
the need for adjustments to past policy period(s) in the form of dividends and
assessments. However, should the PROGRAM for any reason not be
adequately funded, except as otherwise provided herein, pro-rata
assessments to the participating MEMBERS may be utilized to ensure the
approved funding level for those policy periods individually or for a block of
policy periods, in accordance with the Premium Surcharge provision set forth
below.
(b) Dividends. Pro-rata dividends will be declared as provided herein.
Dividends may also be declared as deemed appropriate by the EIA BOARD.
(c) Premium Surcharge.
(i) If there are an unusually large number of losses under the
PROGRAM during a policy year, such that notwithstanding
reinsurance coverage for large individual losses, the funds for the
PROGRAM may be exhausted before the next annual premiums are
due, the EIA BOARD may, upon consultation with a casualty
actuary, impose premium surcharges on all MEMBERS; or
(H) If it is determined by the EIA BOARD, upon consultation with a
casualty actuary, that the funds for the PROGRAM are insufficient to
pay losses, fund known estimated losses, and fund estimated
losses which have been incurred but not reported, the EIA BOARD
may impose a surcharge on all participating MEMBERS.
(iii) Premium surcharges imposed pursuant to (i) and/or (ii) above shall
be in an amount that will assure adequate funds for the PROGRAM
to be actuarially sound. Premium surcharges shall be assessed in
accordance with paragraph 8 below.
(iv) A MEMBER which is no longer participating in the PROGRAM at the
time the premium surcharge is assessed shall pay such premium
surcharges as it would have otherwise been assessed in
accordance with the provisions of (i), (H), and (Hi) above.
8. CLOSURE OF POLICY PERIODS. Notwithstanding any other provision of this
MEMORANDUM, the following provisions are applicable:
Excess Workers' Compensation Program
Memorandum of Understanding
Adopted 06/01/01
2
(a) Upon reaching ten (10) years of maturity after the end of a program period,
that period shall be "closed" and there shall be no further dividends declared
or assessments made with respect to those program periods except as set
forth in paragraphs 9(a) and 9(b), below.
(b) Notwithstanding sub-paragraph (a) above, the EIA BOARD may take action to
leave a policy period "open" even though it may otherwise qualify for closure.
In addition, the last ten (10) policy periods shall always remain "open" unless
the EIA BOARD takes specific action to declare any of the last ten (10) policy
periods closed.
(c) Dividends and assessments (other than as outlined in paragraphs 9(a) and
9(b), below) shall be administered to the participating MEMBER based upon
the proportion of premiums paid to the PROGRAM in "open" periods only. For
purposes of administering dividends and assessments pursuant to this sub-
paragraph, all "open" policy periods shall be considered as one block.
9. DECLARATION OF DIVIDENDS. Dividends shall be payable from the PROGRAM to a
participating MEMBER in accordance with its proportionate funding to the PROGRAM
during the applicable program period as follows:
(a) A dividend shall be declared at the time a program period is closed on all
amounts over the 90% confidence level.
(b) A dividend shall be declared at the time a program period is closed on all
amounts which represent premium surcharge amounts assessed pursuant to
this MEMORANDUM where the funding exceeds the 80% confidence level.
10. MEMORANDUM OF COVERAGE. A Memorandum of Coverage will be issued by the
EIA evidencing membership in the PROGRAM and setting forth terms and conditions
of coverage.
11. CLAIMS ADMINISTRATION AND RESPONSIBILITY FOR CLAIMS.
(a) Subject to subparagraph (e), each MEMBER shall be responsible for the
investigation, settlement or defense, and appeal of any claim made, suit
brought, or proceeding instituted against the MEMBER arising out of a loss.
(b) CPEIA EWC MEMBERS are required to comply with the EIA's Underwriting
and Claims Administration Standards (including Addendum A-W.C.
Claims Administration Guidelines) as amended from time to time, and
which are attached hereto as Exhibit A and incorporated herein.
(c) Each participating MEMBER shall give the EIA timely written notice of
claims in accordance with the policy established by the EIA.
Excess Workers' Compensation Program
Memorandum of Understanding
Adopted 06/01/01
3
(d) A MEMBER shall not enter into any settlement involving liability of the EIA
without the advance written consent of the EIA.
(e) The EIA, at its own election and expense, shall have the right to
participate with a MEMBER in the settlement, defense, or appeal of any
claim, suit or proceeding which, in the judgment of the EIA, may involve
liability of the EIA.
12. DISPUTES. Any question or dispute with respect to the rights and obligations of the
parties to this MEMORANDUM shall be determined by the EIA Executive Committee.
If the MEMBER is not satisfied with the Committee's decision, the matter may be
appealed through arbitration. Arbitration may be either binding or non-binding,
as mutually agreed upon by the parties. The matter will be submitted to a
mutually agreed upon arbitrator or panel of arbitrators for determination. If
binding arbitration is selected, the decision of the arbitrator or panel of arbitrators
will be final and conclusive, and the MEMBER and EIA will abide by the decision.
The cost of arbitration will be shared equally by the MEMBER and the EIA.
13. AMENDMENT. This MEMORANDUM may be amended by a majority vote of the EIA
BOARD and signature on the MEMORANDUM by the MEMBER'S designated liaison
who shall have authority to execute this MEMORANDUM. Any MEMBER that fails or
refuses to execute an amendment to this MEMORANDUM shall be deemed to have
withdrawn from the PROGRAM on the next annual renewal date.
14. WITHDRAWAL FROM THE PROGRAM. Withdrawal of a MEMBER from the PROGRAM
shall be in accordance with the withdrawal provisions of Article 19 of the
AGREEMENT.
15. COMPLETE AGREEMENT. Except as otherwise provided herein, this MEMORANDUM
constitutes the full and complete agreement of the MEMBERS.
16. SEVERABILITY. Should any provision of this MEMORANDUM be judicially determined
to be void or unenforceable, such determination shall not affect any remaining
provision.
17. EFFECTIVE DATE. This MEMORANDUM shall become effective on the first effective
date of coverage for the MEMBER and upon the approval by the EIA and CPEIA
and the signing of this agreement by the MEMBERS, the General
Manager/Secretary/Treasurer of the EIA and the President of the CPEIA.
Excess Workers' Compensation Program
Memorandum of Understanding
Adopted 06/01/01
4
18. EXECUTION IN COUNTERPARTS. This MEMORANDUM may be executed in several
counterparts, each of which shall be an original, all of which shall constitute but one
and the same instrument.
In Witness Whereof, the undersigned have executed this MEMORANDUM as of
the date set forth below.
CSAC Excess Insurance Authority
Dated:
By:
California Public Entity
Insurance Authority
Dated:
By:
[Name of Public Entity] ~~
Dated:
(.? . 0<-(
By:
Excess Workers' Compensation Program
Memorandum of Understanding
Adopted 06/01/01
5
Adopted: December 6,1985
Amended:January 23, 1987
Amended: October 6,1995
Amended: October 1, 1999
EXHIBIT A
CSAC Excess Insurance Authority
Underwriting and Claims Administration Standards
I. GENERAL
A. Each Member shall appoint an official or employee of the Entity to be
responsible for the risk management function and to serve as a liaison
between the Member and the Authority for all matters relating to risk
management.
B. Each Member shall maintain a loss prevention program and shall consider
and act upon all recommendations of the Authority concerning the reduction
of unsafe conditions.
C. Each Member shall maintain records of claims in each category of insurance
covered by a program of the Authority and shall provide copies of such
records to the Authority as directed by the Executive, Underwriting or Claims
Review Committees.
Such records shall provide the following information by fiscal year: number of
claims (open and closed); amounts paid, amounts reserved and total
incurred. Allocated expenses shall be included. If losses are capped, the
excess amount shall be indicated.
II. EXCESS WORKERS' COMPENSATION PROGRAM
A. The Member shall be responsible for the investigation, settlement, defense
and appeal of any claim made, suit brought or proceeding instituted against
the Member.
1. The Member shall use only qualified personnel to administer its
workers' compensation claims. At least one person in the claims
office (whether in-house or outside administrator) shall be certified by
the State of Califomia as a qualified administrator of self -insured
workers' compensation plans.
2. Qualified defense counsel experienced in workers' compensation law
and practice shall handle litigated claims. Counties are encouraged to
utilize attorneys who have the designation "Certified Workers'
Compensation Specialist, the State Bar of California, Board of Legal
Specialization" .
3. The Member shall use the Authority's Workers' Compensation Claims
Administration Guidelines (Addendum A) and shall advise its claims
administrator that these guidelines are utilized in the Authority's
workers' compensation claims audits.
B. The Member shall provide the Authority written notice of any potential excess
workers' compensation claims in accordance with the requirements of the
Authority's bylaws. Updates on such claims shall be provided as requested
by the Authority and/or the Authority's excess carrier.
C. A claims administration audit utilizing the Authority's Workers' Compensation
Claims Administration Guidelines (Addendum A) shall be performed once
every three (3) years. In addition, an audit will be performed within twelve
(12) months of any of the following events:
1. There is an unusual fluctuation in the Member's claim experience or
number of large claims or
2. There is a change of workers' compensation claims administration
firms or
3. The Member is a new member of the Excess Workers' Compensation
Program.
The claims audit shall be performed by a firm selected by the
Authority. Recommendations made in the claims audit shall be
addressed by the Member and a written response outlining a program
for corrective action shall be provided to the Authority within sixty (60)
days of receipt of the audit.
D. The Member shall obtain an actuarial study performed by a Fellow of the
Casualty Actuarial Society (FCAS) at least once every three- (3) years.
Based upon the actuarial recommendations, the Member should maintain
reserves and make funding contributions equal to or exceeding the present
value of expected losses and a reasonable margin for contingencies.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
2
III. EXCESS LIABILITY PROGRAMS
A. The Member shall be responsible for the investigation, settlement, defense
and appeal of any claim made, suit brought or proceeding instituted against
the Member.
1. The Member shall use only qualified personnel to administer its
liability claims.
2. Qualified defense counsel experienced in tort liability law shall handle
litigated claims. Counties are encouraged to utilize defense counsel
experienced in the subject at issue in the litigation.
3. The Member shall use the Liability Claims Administration Guidelines
(Addendum B) and shall advise its claims administrator that these
guidelines be utilized in the Authority's liability claims audits.
B. The Member shall provide the Authority written notice of any potential excess
liability claim in accordance with the requirements of the Authority's bylaws.
Updates on such claims shall be provided as requested by the Authority
and/or the Authority's excess carrier.
C. A claims administration audit utilizing the Authority's Liability Claims
Administration Guidelines (Addendum B) shall be performed once every
three (3) years. In addition, an audit will be performed within twelve (12)
months of any of the following events:
1. There is an unusual fluctuation in the Member's claims experience or
number of large claims or
2. There is a change of liability claims administration firms or
3. The Member is a new member of the Excess Liability Program.
The claims audit shall be performed by a firm selected by the
Authority. Recommendations made in the claims audit shall be
addressed by the Member and a written response outlining a program
for corrective action shall be provided to the Authority within sixty (60)
days of receipt of the audit.
D. The Member shall obtain an actuarial study performed by a Fellow of the
Casualty Actuarial Society (FCAS) at least once every three- (3) years.
Based upon the actuarial recommendations, the Member should maintain
reseNes and make funding contributions equal to or exceeding the present
value of expected losses and a reasonable margin for contingencies.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
3
IV. PROPERTY PROGRAMS
A. The Member shall maintain appropriate records including a complete list of
insured locations and schedule of values pertaining to all real property.
Copies of such records shall be provided to the Authority or its brokers as
requested by the Executive or Property Committees.
B. Each Member shall perform a real property replacement valuation for all
locations over one million dollars. Valuations shall be equivalent to the
Marshall Swift system and shall be performed at least once every five- (5)
years. New members shall have an appraisal or valuation performed within
one year from entry into the program.
V. MEDICAL MALPRACTICE PROGRAM
A. The Member, if a member of Medical Malpractice Program I (hereinafter
Program I), or Mid Mal Program; or the third party administrator for Medical
Malpractice Program II (hereinafter Program II); shall be responsible for the
investigation, settlement, defense and appeal of any claim made, suit
brought or proceeding instituted against the Member.
1. The Member (Program I and Mid Mal Program) or third party
administrator (Program II) shall use only qualified personnel to
administer its health facility claims.
2. Qualified defense counsel experienced in health facility law shall
handle litigated claims.
3. The Member (Program I and Mid Mal Program) or third party
administrator (Program II) shall use the "Claims Reporting And
Handling Guidelines" in the CSAC/Excess Insurance Authority
Medical Malpractice Excess Insurance Proqram Operatinq And
Guidelines Manual (hereinafter OPERATING AND GUIDELINES
MANUAL), and shall advise its claims administrator that these claims
handling guidelines are utilized in the Authority's medical malpractice
claims audits.
B. The Member (Program I and Mid Mal Program) or third party administrator
(Program II) shall provide the Authority and its excess carrier written notice of
any potential excess claim or "major incident" in accordance with the
requirements of the Authority and of the excess carrier as stated in the
OPERATING AND GUIDELINES MANUAL. Updates on such claims or
major incidents shall be provided as requested by the Authority and/or the
Authority's excess carrier.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
4
VI.
C. A claims administration audit utilizing the Authority's Claims Reporting and
Handing Guidelines in the OPERATING AND GUIDELINES MANUAL shall
be performed once every three (3) years. In addition, an audit will be
performed within twelve (12) months of any of the following events:
1. There is an unusual fluctuation in the Member's claims experience or
number of large claims or
2. There is a change of health facility claims administration firms or
3. The Member is a new member of the Medical Malpractice Program or
4. The Medical Malpractice Committee requests an audit.
The claims audit shall be performed by a firm selected by the
Authority. Recommendations made in the claims audit shall be
addressed by the Member and a written response outlining a program
for corrective action shall be provided to the Authority within sixty (60)
days of receipt of the audit.
D.
If a member of Program I or the Mid Mal Program, the Member shall obtain
an actuarial study performed by a Fellow of the Casualty Actuarial Society
(FCAS) at least once every three (3) years. Based upon the actuarial
recommendations, the Member should maintain reserves and make funding
contributions equal to or exceeding the present value of expected losses and
a reasonable margin for contingencies.
E.
The Member shall have an effective risk management program in
accordance with the "Risk Management Guidelines" as states in the
OPERATING AND GUIDELINES MANUAL.
SANCTIONS
A.
The Authority shall provide the Member written notification of the Member's
failure to meet any of the above-mentioned standards or of other concerns,
which affect or could affect the Authority.
B.
The Member shall provide a written response outlining a program for
corrective action within sixty (60) days of receipt of the Authority's
notification.
C.
After approval by the Executive Committee of the Member's corrective
program, the Member shall implement the approved program within ninety
(90) days. The Member may request an additional sixty (60) days from the
Executive Committee. Further requests for extensions shall be referred to
the Board of Directors.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
5
D. Failure to comply with subsections B or C may result in cancellation of the
Member from the affected Authority insurance program in accordance with
the provisions in the Joint Powers Agreement.
E. Notwithstanding any other provision herein, any member Member may be
canceled pursuant to the provision of the Joint Powers Agreement.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A . CPEIA Version
6
Adopted:
Amended:
Amended:
Amended:
Amended:
Amended:
December 6, 1985
March 4, 1988
October 7, 1988
October 6, 1995
October 1, 1999
June 6, 2003
ADDENDUM A
WORKERS' COMPENSATION
CLAIMS ADMINISTRATION GUIDELINES
The following Guidelines have been adopted by the CSAC Excess Insurance Authority in
accordance with Article 18(b) of the March 1993 Amended Joint Powers Aqreement
Creatinq the CSAC Excess Insurance Authoritv.
I. CASE LOAD
A. On or after 07/01/2004, the claims examiner assigned to the Member
shall handle a caseload not to exceed 175 indemnity claims. This
caseload will include future medical cases with every 4 future medical
cases counted as 1 indemnity case.
B. Supervisory personnel should not handle a caseload, although they
may handle specific issues.
II. CASE REVIEW AND DOCUMENTATION
A. Documentation should reflect any significant developments in the file
and include a plan of action. The examiner should review the file
every 45 days. The supervisor shall monitor any significant activity on
the file every 120 days. An accomplishment level of 95% shall be
considered acceptable.
III. COMPENSABILITY
A. The initial compensability determination (accept claim, deny claim or
delay acceptance pending the results of additional investigation) and
the reasons for such a determination will be made and documented in
the file within fourteen (14) calendar days of the filing of the claim with
the employer. An accomplishment level of 100% shall be considered
acceptable.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
1
B. Delay of benefit letters shall be mailed in compliance with Department
of Industrial Relations' guidelines. An accomplishment level of 100%
shall be considered acceptable.
C. The final compensability determination shall be made by the claims
examiner or supervisor within 90 days of employer receipt of the claim
form. An accomplishment level of 100% shall be considered
acceptable.
IV. THREE POINT CONTACT
A. The claims examiner shall conduct the three (3) point contact with the
injured worker, employer representative and treating physician within
five (5) working days of receipt of the notice of the claim. An
accomplishment level of 95% shall be considered acceptable.
V. INITIAL INDEMNITY PAYMENT
A. The initial indemnity payment will be issued and mailed to the injured
employee within fourteen (14) days of the first day of disability. This
shall not apply with salary continuation. An accomplishment level of
100% shall be considered acceptable.
B. The properly completed DWC Benefit Notice shall be mailed to the
employee within fourteen (14) days. An accomplishment level of
100% shall be considered acceptable.
C. Late payments due directly to the injured worker must include the self
imposed 10% penalty in accordance with Labor Code Section 4650.
An accomplishment level of 100% shall be considered acceptable.
VI. SUBSEQUENT INDEMNITY PAYMENTS
A. All indemnity payments subsequent to the first payment will be
verified, except for obvious long-term disability, and issued in
compliance with Labor Code Section 4651. An accomplishment level
of 100% shall be considered acceptable.
B. Late payments must include the self-imposed 10% penalty in
accordance with Labor Code Section 4650. An accomplishment level
of 100% shall be considered acceptable.
VII. FINAL INDEMNITY PAYMENTS
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
2
A. All final payments will be issued with the appropriate DWC benefit
notices.
VIII. TRANSPORTATION EXPENSE
A. . Transportation reimbursement will be mailed within fifteen (15)
working days of the receipt of the claim for reimbursement. Advance
travel expense payments will be mailed to the injured employee ten
(10) days prior to the anticipated date of travel. An accomplishment
level of 100% shall be considered acceptable.
IX. MEDICAL PAYMENTS
A. Medical treatment billings (physician, pharmacy, hospital,
physiotherapist, etc.) will be matched to the file, reviewed for
correctness, approved for payment and paid within sixty (60) calendar
days of receipt. An accomplishment level of 100% shall be considered
acceptable.
B. The medical provider must be notified in writing within 30 working
days if a medical bill is contested, denied or incomplete.
C. A bill review process should be utilized wherever possible. There
should be participation in a PPO whenever possible.
X. PHYSICIAN CONTACT
A. In cases involving loss of time from work, the attending physician's
office will be contacted within five (5) working days of notice of claim.
Such contact will continue as needed during the continuation of
temporary disability to assure that treatment is related to a
compensable injury or illness.
XI. LITIGATED CASES
The claims administrator and Member shall establish written guidelines for
the handling of litigated cases. The guidelines should, at a minimum, include
the points below, which may be adopted and incorporated by reference as
"the guidelines".
A. Defense of Litigated Claims
1. The claims administrator shall promptly initiate investigation of
issues identified as material to potential litigation. The Member
shall be alerted to the need for in-house investigation, or the
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
3
need for a contract investigator who is acceptable to the
Member. The Member shall be kept informed on the scope
and results of investigations.
2. The claims administrator shall, in consultation with the
Member, assign defense counsel from a list approved by the
Member. (Note: To comply with Government Code Section
25203, the Member's list should be approved by a two-thirds
vote of the board of supervisors.)
3. Settlement proposals directed to the Member shall be
forwarded by the claims administrator or defense counsel in a
concise and clear written form with a reasoned
recommendation. Settlement proposals shall be presented to
the Member as directed so as to insure receipt in sufficient
time to process the proposal.
4. Knowledgeable Member personnel shall be involved in the
preparation for medical examinations and trial, when
appropriate or deemed necessary by the Member so that all
material evidence and witnesses are utilized to obtain a
favorable result for the defense.
5. The claims administrator shall comply with any reporting
requirement of the Member.
B. Subrogation
1. In all cases where a. third party (other than a Member
employee or agent) is responsible for the injury to the
employee, the third party shall be contacted within 10 days
with notification of the Member's right to subrogation and the
recovery of certain claim expenses. If the third party is a
governmental entity, a claim shall be filed with the governing
board (or State Board of Control as to State entities) within 6
months of the injury or notice of the injury.
2. Periodic contact shall be made with the responsible party
and/or insurer to provide notification of the amount of the
estimated recovery to which the Member will be entitled.
3. The file will be monitored to determine the need to file a
complaint in civil court in order to preserve the statute of
limitations.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
4
4. If the injured worker brings a civil action against the party
responsible for the injury, the claims administrator shall consult
with the Member about the value of the subrogation claim and
other considerations. Upon Member authorization,
subrogation counsel shall be assigned to file a Lien or a
Complaint in Intervention in the civil action.
5. Whenever practical, the claims administrator will aggressively
pursue recovery in any subrogation claim. They should
attempt to maximize the recovery for benefits paid, and assert
a credit against the injured workers' net recovery for future
benefit payments.
XII. VOCATIONAL REHABILITATION
A. Adjusting personnel will notify the injured worker of their potential
rights to rehabilitation benefits per Labor Code Section 4636 after 90
days of aggregate temporary disability and get the treating doctor to
determine if injured worker is a Qualified Injured Worker.
B. Determination of the Qualified Injured Worker/Non-Qualified Injured
Worker status shall be made in accordance with Labor Code Section
4637. The adjusting personnel shall advise the injured worker of
his/her rehabilitation benefits in accordance with the Rules of the
Division of Workers' Compensation, within ten (10) days of knowledge
of medical eligibility. The claims administrator will:
1. Notify the employer of the employee's permanent work
restrictions so that the employer can determine the availability
of permanent modified or alternate work.
2. Make timely referral to a Qualified Rehabilitation
Representative in accordance with Labor Code Section 4637
3. Control rehabilitation costs. .
4. Attempt to secure the prompt conclusion of vocational
rehabilitation benefits, and settle rehabilitation where
appropriate.
XIII. FISCAL HANDLING
A. Active indemnity cases will be balanced with appropriate file
documentation on a semi-annual basis to verify that statutory benefits
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
5
are paid, and medical, legal and vocational rehabilitation charges are
appropriate. An accomplishment level of 100% shall be considered
acceptable.
XIV. EXCESS INSURANCE
A. Potential Workers' Compensation excess cases shall be reported in
accordance with the reporting criteria established by The Bylaws of
the_ CSAC Excess Insurance Authority.
All cases which meet the established reporting criteria are to be
reported within five (5) working days of the day on which it is known
the criterion is met. An accomplishment level of 100% shall be
considered acceptable.
xv. AWARD PAYMENT
A. Payments on undisputed Awards, Commutations, or Compromise
and Releases will be issued within ten (10) days following receipt of
the appropriate document. An accomplishment level of 100% shall be
considered acceptable.
XVI. PENALTIES
A. If the Member utilizes a third party administrator, the Member will be
advised of the assessment of any penalty for delayed payment and
the reason thereof, and the administrators plans for payment of such
penalty within five (5) days of assessment. An accomplishment level
of 100% shall be considered acceptable.
B. If the Member utilizes a third party administrator, the Member, in their
contract with the administrator, shall specify who is responsible for
specific penalties.
XVII. RESERVES
A. Using the information available at the time, an initial reserve will be
established at the most probable case value. Claim reserves shall be
reviewed on a regular basis and updated as case values increase or
decrease.
XVIII. RESOLUTION OF CLAIM
A. Within ten (10) days of receiving medical information indicating that a
claim be finalized, the claims examiner shall take appropriate action to
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
6
finalize the claim. An accomplishment level of 95% shall be
considered acceptable.
XIX. CASE CLOSURE
A. All indemnity cases will be closed within sixty (60) days of the final
financial transaction or final correspondence to the injured worker as
required by law. An accomplishment level of 95% shall be considered
acceptable.
B. All medical only cases will be closed or transferred to an indemnity
status by the ninetieth (90) day following incurral. An accomplishment
level of 95% shall be considered acceptable.
xx. TELEPHONE INQUIRIES
A. Return calls will be made within one working day of the original
telephone inquiry. An accomplishment level of 90% shall be
considered acceptable.
XXI. INCOMING CORRESPONDENCE
A. All correspondence received will have the date of receipt clearly
stamped on the front side. An accomplishment level of 100% shall be
considered acceptable.
XXII. RETURN CORRESPONDENCE
A. All correspondence requiring a written answer will have such answer
completed and transmitted within five (5)working days of receipt. An
accomplishment level of 95% is acceptable.
XXIII. SETTLEMENTS
A. The third party administrator shall obtain the Member's authorization
on all settlements or stipulations in excess of the settlement authority
provided in any provision of the individual contract between the
Member and the claims administrator.
B. No agreement shall be authorized involving liability, or potential
liability, of the Authority without the advance written consent of the
Authority.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
7
Adopted: 06/01/01
~~
CALIFORNIA PUBLIC ENTITY INSURANCE AUTHORITY
EXCESS WORKERS' COMPENSATION PROGRAM
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (hereafter "MEMORANDUM") is entered into by and
between the California Public Entity Insurance Authority (hereafter "CPEIA"), the CSAC
Excess Insurance Authority (hereafter "EIA") and the participating public entities
(hereafter "MEMBERS") who are signatories to this MEMORANDUM.
1. JOINT POWERS AGREEMENT. Except as otherwise provided herein, all terms used
shall be as defined in Article 1 of the Joint Powers Agreement Creating the
CPEIA (hereafter "AGREEMENT"), and all other provisions of the AGREEMENT not in
conflict with this MEMORANDUM shall apply.
2. PURPOSE. CPEIA MEMBERS are signatories to this MEMORANDUM for the express
purpose of joining the EIA's Excess Workers' Compensation (EWC) Program
(hereafter "PROGRAM"). Under this PROGRAM, CPEIA EWC MEMBERS shall be
considered to be one (1) MEMBER for purposes of participating in the PROGRAM.
3. ENTRY INTO PROGRAM. Any public entity wishing to become a MEMBER of the
PROGRAM shall make application to and be approved by the CPEIA Board of
Directors in a manner prescribed by them and must also be approved by the EIA
Board of Directors (hereafter "EIA BOARD") in a manner prescribed by the EIA
BOARD.
4. PROGRAM DEVELOPMENT. MEMBERS shall be charged a $350.00 program
development charge that shall be a one-time charge assessed upon entry into
the PROGRAM.
5. ANNUAL PREMIUM. Participating MEMBERS shall be assessed an annual premium for
the purpose of funding the PROGRAM. Premiums for the PROGRAM shall be
established annually in conjunction with the insurance carriers. Premiums to
CPEIA EWC MEMBERS shall be billed and paid annually in accordance with the
EIA's Invoicing and Payment Policy (Resolution 94-003). Premium rates shall be
established based upon factors that include, but are not limited to, negotiations
with insurance carriers, expenditures, administrative costs and other appropriate
factors.
Adopted: 06/01/01
6. COST ALLOCATION. Each participating MEMBER'S share of annual premium shall be
determined by the EIA BOARD.
2
7. ASSESSMENTS, DIVIDENDS AND PREMIUM SURCHARGE.
(a) Assessments. The PROGRAM shall be funded in accordance with paragraph
5 above. In general, the annual premium, as determined by the EIA BOARD,
will be established at a level that will provide adequate overall funding without
the need for adjustments to past policy period(s) in the form of dividends and
assessments. However, should the PROGRAM for any reason not be
adequately funded, except as otherwise provided herein, pro-rata
assessments to the participating MEMBERS may be utilized to ensure the
approved funding level for those policy periods individually or for a block of
policy periods, in accordance with the Premium Surcharge provision set forth
below.
(b) Dividends. Pro-rata dividends will be declared as provided herein.
Dividends may also be declared as deemed appropriate by the EIA BOARD.
(c) Premium Surcharge.
(i) If there are an unusually large number of losses under the
PROGRAM during a policy year, such that notwithstanding
reinsurance coverage for large individual losses, the funds for the
PROGRAM may be exhausted before the next annual premiums are
due, the EIA BOARD may, upon consultation with a casualty
actuary, impose premium surcharges on all MEMBERS; or
(ii) If it is determined by the EIA BOARD, upon consultation with a
casualty actuary, that the funds for the PROGRAM are insufficient to
pay losses, fund known estimated losses, and fund estimated
losses which have been incurred but not reported, the EIA BOARD
may impose a surcharge on all participating MEMBERS.
(iii) Premium surcharges imposed pursuant to (i) and/or (ii) above shall
be in an amount that will assure adequate funds for the PROGRAM
to be actuarially sound. Premium surcharges shall be assessed in
accordance with paragraph 8 below.
(iv) A MEMBER which is no longer participating in the PROGRAM at the
time the premium surcharge is assessed shall pay such premium
surcharges as it would have otherwise been assessed in
accordance with the provisions of (i), (ii), and (iii) above.
8. CLOSURE OF POLICY PERIODS. Notwithstanding any other provision of this
MEMORANDUM, the following provisions are applicable:
Excess Workers' Compensation Program
Memorandum of Understanding
Adopted 06/01/01
2
(a) Upon reaching ten (10) years of maturity after the end of a program period,
that period shall be "closed" and there shall be no further dividends declared
or assessments made with respect to those program periods except as set
forth in paragraphs 9(a) and 9(b), below.
(b) Notwithstanding sub-paragraph (a) above, the EIA BOARD may take action to
leave a policy period "open" even though it may otherwise qualify for closure.
In addition, the lastten (10) policy periods shall always remain "open" unless
the EIA BOARD takes specific action to declare any of the last ten (10) policy
periods closed.
(c) Dividends and assessments (other than as outlined in paragraphs 9(a) and
9(b), below) shall be administered to the participating MEMBER based upon
the proportion of premiums paid to the PROGRAM in "open" periods only. For
purposes of administering dividends and assessments pursuant to this sub-
paragraph, all "open" policy periods shall be considered as one block.
9. DECLARATION OF DIVIDENDS. Dividends shall be payable from the PROGRAM to a
participating MEMBER in accordance with its proportionate funding to the PROGRAM
during the applicable program period as follows:
(a) A dividend shall be declared at the time a program period is closed on all
amounts over the 90% confidence level.
(b) A dividend shall be declared at the time a program period is closed on all
amounts which represent premium surcharge amounts assessed pursuant to
this MEMORANDUM where the funding exceeds the 80% confidence level.
10. MEMORANDUM OF COVERAGE. A Memorandum of Coverage will be issued by the
EIA evidencing membership in the PROGRAM and setting forth terms and conditions
of coverage.
11. CLAIMS ADMINISTRATION AND RESPONSIBILITY FOR CLAIMS.
(a) Subject to subparagraph (e), each MEMBER shall be responsible for the
investigation, settlement or defense, and appeal of any claim made, suit
brought, or proceeding instituted against the MEMBER arising out of a loss.
(b) CPEIA EWC MEMBERS are required to comply with the EIA's Underwriting
and Claims Administration Standards (including Addendum A-W.C.
Claims Administration Guidelines) as amended from time to time, and
which are attached hereto as Exhibit A and incorporated herein.
(c) Each participating MEMBER shall give the EIA timely written notice of
claims in accordance with the policy established by the EIA.
Excess Workers' Compensation Program
Memorandum of Understanding
Adopted 06/01/01
3
(d) A MEMBER shall not enter into any settlement involving liability of the EIA
without the advance written consent of the EIA.
(e) The EIA, at its own election and expense, shall have the right to
participate with a MEMBER in the settlement, defense, or appeal of any
claim, suit or proceeding which, in the judgment of the EIA, may involve
liability of the EIA.
12. DISPUTES. Any question or dispute with respect to the rights and obligations of the
parties to this MEMORANDUM shall be determined by the EIA Executive Committee.
If the MEMBER is not satisfied with the Committee's decision, the matter may be
appealed through arbitration. Arbitration may be either binding or non-binding,
as mutually agreed upon by the parties. The matter will be submitted to a
mutually agreed upon arbitrator or panel of arbitrators for determination. If
binding arbitration is selected, the decision of the arbitrator or panel of arbitrators
will be final and conclusive, and the MEMBER and EIA will abide by the decision.
The cost of arbitration will be shared equally by the MEMBER and the EIA.
13. AMENDMENT. This MEMORANDUM may be amended by a majority vote of the EIA
BOARD and signature on the MEMORANDUM by the MEMBER'S designated liaison
who shall have authority to execute this MEMORANDUM. Any MEMBER that fails or
refuses to execute an amendment to this MEMORANDUM shall be deemed to have
withdrawn from the PROGRAM on the next annual renewal date.
14. WITHDRAWAL FROM THE PROGRAM. Withdrawal of a MEMBER from the PROGRAM
shall be in accordance with the withdrawal provisions of Article 19 of the
AGREEMENT.
15. COMPLETE AGREEMENT. Except as otherwise provided herein, this MEMORANDUM
constitutes the full and complete agreement of the MEMBERS.
16. SEVERABILITY. Should any provision of this MEMORANDUM be judicially determined
to be void or unenforceable, such determination shall not affect any remaining
provision.
17. EFFECTIVE DATE. This MEMORANDUM shall become effective on the first effective
date of coverage for the MEMBER and upon the approval by the EIA and CPEIA
and the signing of this agreement by the MEMBERS, the General
Manager/Secretary/Treasurer of the EIA and the President of the CPEIA.
Excess Workers' Compensation Program
Memorandum of Understanding
Adopted 06/01/01
4
18. EXECUTION IN COUNTERPARTS. This MEMORANDUM may be executed in several
counterparts, each of which shall be an original, all of which shall constitute but one
and the same instrument.
In Witness Whereof, the undersigned have executed this MEMORANDUM as of
the date set forth below.
Dated: 1- I {, .. 6 L{
By:
Dated:
(elf. Of
California Public Entit
Insurance Authority
By:L#<A -/21~
I
[Name of PUb1t E~ty] ~~
By:~~~r
David W. Knapp - C~ty anager
Dated: (.1. o{
Excess Workers' Compensation Program
Memorandum of Understanding
Adopted 06/01/01
5
Adopted:December 6, 1985
Amended:January 23, 1987
Amended: October 6, 1995
Amended: October 1, 1999
EXHIBIT A
CSAC Excess Insurance Authority
Underwriting and Claims Administration Standards
I. GENERAL
A. Each Member shall appoint an official or employee of the Entity to be
responsible for the risk management function and to serve as a liaison
between the Member and the Authority for all matters relating to risk
management.
B. Each Member shall maintain a loss prevention program and shall consider
and act upon all recommendations of the Authority concerning the reduction
of unsafe conditions.
C. Each Member shall maintain records of claims in each category of insurance
covered by a program of the Authority and shall provide copies of such
records to the Authority as directed by the Executive, Underwriting or Claims
Review Committees.
Such records shall provide the following information by fiscal year: number of
claims (open and closed); amounts paid, amounts reserved and total
incurred. Allocated expenses shall be included. If losses are capped, the
excess amount shall be indicated.
II. EXCESS WORKERS' COMPENSATION PROGRAM
A. The Member shall be responsible for the investigation, settlement, defense
and appeal of any claim made, suit brought or proceeding instituted against
the Member.
1. The Member shall use only qualified personnel to administer its
workers' compensation claims. At least one person in the claims
office (whether in-house or outside administrator) shall be certified by
the State of California as a qualified administrator of self -insured
workers' compensation plans.
2. Qualified defense counsel experienced in workers' compensation law
and practice shall handle litigated claims. Counties are encouraged to
utilize attorneys who have the designation "Certified Workers'
Compensation Specialist, the State Bar of California, Board of Legal
Specialization" .
3. The Member shall use the Authority's Workers' Compensation Claims
Administration Guidelines (Addendum A) and shall advise its claims
administrator that these guidelines are utilized in the Authority's
workers' compensation claims audits.
B. The Member shall provide the Authority written notice of any potential excess
workers' compensation claims in accordance with the requirements of the
Authority's bylaws. Updates on such claims shall be provided as requested
by the Authority and/or the Authority's excess carrier.
C. A claims administration audit utilizing the Authority's Workers' Compensation
Claims Administration Guidelines (Addendum A) shall be performed once
every three (3) years. In addition, an audit will be performed within twelve
(12) months of any of the following events:
1. There is an unusual fluctuation in the Member's claim experience or
number of large claims or
2. There is a change of workers' compensation claims administration
firms or
3. The Member is a new member of the Excess Workers' Compensation
Program.
The claims audit shall be performed by a firm selected by the
Authority. Recommendations made in the claims audit shall be
addressed by the Member and a written response outlining a program
for corrective action shall be provided to the Authority within sixty (60)
days of receipt of the audit.
D. The Member shall obtain an actuarial study performed by a Fellow of the
Casualty Actuarial Society (FCAS) at least once every three- (3) years.
Based upon the actuarial recommendations, the Member should maintain
reserves and make funding contributions equal to or exceeding the present
value of expected losses and a reasonable margin for contingencies.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
2
III. EXCESS LIABILITY PROGRAMS
A. The Member shall be responsible for the investigation, settlement, defense
and appeal of any claim made, suit brought or proceeding instituted against
the Member.
1. The Member shall use only qualified personnel to administer its
liability claims.
2. Qualified defense counsel experienced in tort liability law shall handle
litigated claims. Counties are encouraged to utilize defense counsel
experienced in the subject at issue in the litigation.
3. The Member shall use the Liability Claims Administration Guidelines
(Addendum B) and shall advise its claims administrator that these
guidelines be utilized in the Authority's liability claims audits.
B. The Member shall provide the Authority written notice of any potential excess
liability claim in accordance with the requirements of the Authority's bylaws.
Updates on such claims shall be provided as requested by the Authority
and/or the Authority's excess carrier.
C. A claims administration audit utilizing the Authority's Liability Claims
Administration Guidelines (Addendum B) shall be performed once every
three (3) years. In addition, an audit will be performed within twelve (12)
months of any of the following events:
1. There is an unusual fluctuation in the Member's claims experience or
number of large claims or
2. There is a change of liability claims administration firms or
3. The Member is a new member of the Excess Liability Program.
The claims audit shall be performed by a firm selected by the
Authority. Recommendations made in the claims audit shall be
addressed by the Member and a written response outlining a program
for corrective action shall be provided to the Authority within sixty (60)
days of receipt of the audit.
D. The Member shall obtain an actuarial study performed by a Fellow of the
Casualty Actuarial Society (FCAS) at least once every three- (3) years.
Based upon the actuarial recommendations, the Member should maintain
reserves and make funding contributions equal to or exceeding the present
value of expected losses and a reasonable margin for contingencies.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
3
IV. PROPERTY PROGRAMS
A. The Member shall maintain appropriate records including a complete list of
insured locations and schedule of values pertaining to all real property.
Copies of such records shall be provided to the Authority or its brokers as
requested by the Executive or Property Committees.
B. Each Member shall perform a real property replacement valuation for all
locations over one million dollars. Valuations shall be equivalent to the
Marshall Swift system and shall be performed at least once every five- (5)
years. New members shall have an appraisal or valuation performed within
one year from entry into the program.
V. MEDICAL MALPRACTICE PROGRAM
A. The Member, if a member of Medical Malpractice Program I (hereinafter
Program I), or Mid Mal Program; or the third party administrator for Medical
Malpractice Program II (hereinafter Program II); shall be responsible for the
investigation, settlement, defense and appeal of any claim made, suit
brought or proceeding instituted against the Member.
1. The Member (Program I and Mid Mal Program) or third party
administrator (Program II) shall use only qualified personnel to
administer its health facility claims.
2. Qualified defense counsel experienced in health facility law shall
handle litigated claims.
3. The Member (Program I and Mid Mal Program) or third party
administrator (Program II) shall use the "Claims Reporting And
Handling Guidelines" in the CSAC/Excess Insurance Authority
Medical Malpractice Excess Insurance Proqram Operatinq And
Guidelines Manual (hereinafter OPERATING AND GUIDELINES
MANUAL), and shall advise its claims administrator that these claims
handling guidelines are utilized in the Authority's medical malpractice
claims audits.
B. The Member (Program I and Mid Mal Program) or third party administrator
(Program II) shall provide the Authority and its excess carrier written notice of
any potential excess claim or "major incident" in accordance with the
requirements of the Authority and of the excess carrier as stated in the
OPERATING AND GUIDELINES MANUAL. Updates on such claims or
major incidents shall be provided as requested by the Authority and/or the
Authority's excess carrier.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
4
C. A claims administration audit utilizing the Authority's Claims Reporting and
Handing Guidelines in the OPERATING AND GUIDELINES MANUAL shall
be performed once every three (3) years. In addition, an audit will be
performed within twelve (12) months of any of the following events:
VI.
1. There is an unusual fluctuation in the Member's claims experience or
number of large claims or
2. There is a change of health facility claims administration firms or
3. The Member is a new member of the Medical Malpractice Program or
4. The Medical Malpractice Committee requests an audit.
The claims audit shall be performed by a firm selected by the
Authority. Recommendations made in the claims audit shall be
addressed by the Member and a written response outlining a program
for corrective action shall be provided to the Authority within sixty (60)
days of receipt of the audit.
D.
If a member of Program lor the Mid Mal Program, the Member shall obtain
an actuarial study performed by a Fellow of the Casualty Actuarial Society
(FCAS) at least once every three (3) years. Based upon the actuarial
recommendations, the Member should maintain reserves and make funding
contributions equal to or exceeding the present value of expected losses and
a reasonable margin for contingencies.
E.
The Member shall have an effective risk management program in
accordance with the "Risk Management Guidelines" as states in the
OPERATING AND GUIDELINES MANUAL.
SANCTIONS
A.
The Authority shall provide the Member written notification of the Member's
failure to meet any of the above-mentioned standards or of other concerns,
which affect or could affect the Authority.
B.
The Member shall provide a written response outlining a program for
corrective action within sixty (60) days of receipt of the Authority's
notification.
C.
After approval by the Executive Committee of the Member's corrective
program, the Member shall implement the approved program within ninety
(90) days. The Member may request an additional sixty (60) days from the
Executive Committee. Further requests for extensions shall be referred to
the Board of Directors.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
5
D. Failure to comply with subsections B or C may result in cancellation of the
Member from the affected Authority insurance program in accordance with
the provisions in the Joint Powers Agreement.
E. Notwithstanding any other provision herein, any member Member may be
canceled pursuant to the provision of the Joint Powers Agreement.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - CPEIA Version
6
Adopted:
Amended:
Amended:
Amended:
Amended:
Amended:
December 6, 1985
March 4,1988
October 7, 1988
October 6, 1995
October 1, 1999
June 6, 2003
ADDENDUM A
WORKERS' COMPENSATION
CLAIMS ADMINISTRATION GUIDELINES
The following Guidelines have been adopted by the CSAC Excess Insurance Authority in
accordance with Article 18(b) of the March 1993 Amended Joint Powers Aqreement
Creatinq the CSAC Excess Insurance Authoritv.
I. CASE LOAD
A. On or after 07/01/2004, the claims examiner assigned to the Member
shall handle a caseload not to exceed 175 indemnity claims. This
case load will include future medical cases with every 4 future medical
cases counted as 1 indemnity case.
B. Supervisory personnel should not handle a caseload, although they
may handle specific issues.
II. CASE REVIEW AND DOCUMENTATION
A. Documentation should reflect any significant developments in the file
and include a plan of action. The examiner should review the file
every 45 days. The supervisor shall monitor any significant activity on
the file every 120 days. An accomplishment level of 95% shall be
considered acceptable.
III. COMPENSABILITY
A. The initial compensability determination (accept claim, deny claim or
delay acceptance pending the results of additional investigation) and
the reasons for such a determination will be made and documented in
the file within fourteen (14) calendar days of the filing of the claim with
the employer. An accomplishment level of 100% shall be considered
acceptable.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
B. Delay of benefit letters shall be mailed in compliance with Department
of Industrial Relations' guidelines. An accomplishment level of 100%
shall be considered acceptable.
C. The final compensability determination shall be made by the claims
examiner or supervisor within 90 days of employer receipt of the claim
form. An accomplishment level of 100% shall be considered
acceptable.
IV. THREE POINT CONTACT
A. The claims examiner shall conduct the three (3) point contact with the
injured worker, employer representative and treating physician within
five (5) working days of receipt of the notice of the claim. An
accomplishment level of 95% shall be considered acceptable.
V. INITIAL INDEMNITY PAYMENT
A. The initial indemnity payment will be issued and mailed to the injured
employee within fourteen (14) days of the first day of disability. This
shall not apply with salary continuation. An accomplishment level of
100% shall be considered acceptable.
B. The properly completed DWC Benefit Notice shall be mailed to the
employee within fourteen (14) days. An accomplishment level of
100% shall be considered acceptable.
C. Late payments due directly to the injured worker must include the self
imposed 10% penalty in accordance with Labor Code Section 4650.
An accomplishment level of 100% shall be considered acceptable.
VI. SUBSEQUENT INDEMNITY PAYMENTS
A. All indemnity payments subsequent to the first payment will be
verified, except for obvious long-term disability, and issued in
compliance with Labor Code Section 4651. An accomplishment level
of 100% shall be considered acceptable.
B. Late payments must include the self-imposed 10% penalty in
accordance with Labor Code Section 4650. An accomplishment level
of 100% shall be considered acceptable.
VII. FINAL INDEMNITY PAYMENTS
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
2
A. All final payments will be issued with the appropriate DWC benefit
notices.
VIII. TRANSPORTATION EXPENSE
A. Transportation reimbursement will be mailed within fifteen (15)
working days of the receipt of the claim for reimbursement. Advance
travel expense payments will be mailed to the injured employee ten
(10) days prior to the anticipated date of travel. An accomplishment
level of 100% shall be considered acceptable.
IX. MEDICAL PAYMENTS
A. Medical treatment billings (physician, pharmacy, hospital,
physiotherapist, etc.) will be matched to the file, reviewed for
correctness, approved for payment and paid within sixty (60) calendar
days of receipt. An accomplishment level of 100% shall be considered
acceptable.
B. The medical provider must be notified in writing within 30 working
days if a medical bill is contested, denied or incomplete.
C. A bill review process should be utilized wherever possible. There
should be participation in a PPO whenever possible.
X. PHYSICIAN CONTACT
A. In cases involving loss of time from work, the attending physician's
office will be contacted within five (5) working days of notice of claim.
Such contact will continue as needed during the continuation of
temporary disability to assure that treatment is related to a
compensable injury or illness.
XI. LITIGATED CASES
The claims administrator and Member shall establish written guidelines for
the handling of litigated cases. The guidelines should, at a minimum, include
the points below, which may be adopted and incorporated by reference as
"the guidelines".
A. Defense of Litigated Claims
1. The claims administrator shall promptly initiate investigation of
issues identified as material to potential litigation. The Member
shall be alerted to the need for in-house investigation, or the
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
3
need for a contract investigator who is acceptable to the
Member. The Member shall be kept informed on the scope
and results of investigations.
2. The claims administrator shall, in consultation with the
Member, assign defense counsel from a list approved by the
Member. (Note: To comply with Government Code Section
25203, the Member's list should be approved by a two-thirds
vote of the board of supervisors.)
3. Settlement proposals directed to the Member shall be
forwarded by the claims administrator or defense counsel in a
concise and clear written form with a reasoned
recommendation. Settlement proposals shall be presented to
the Member as directed so as to insure receipt in sufficient
time to process the proposal.
4. Knowledgeable Member personnel shall be involved in the
preparation for medical examinations and trial, when
appropriate or deemed necessary by the Member so that all
material evidence and witnesses are utilized to obtain a
favorable result for the defense.
5. The claims administrator shall comply with any reporting
requirement of the Member.
B. Subrogation
1. In all cases where a third party (other than a Member
employee or agent) is responsible for the injury to the
employee, the third party shall be contacted within 10 days
with notification of the Member's right to subrogation and the
recovery of certain claim expenses. If the third party is a
governmental entity, a claim shall be filed with the governing
board (or State Board of Control as to State entities) within 6
months of the injury or notice of the injury.
2. Periodic contact shall be made with the responsible party
and/or insurer to provide notification of the amount of the
estimated recovery to which the Member will be entitled.
3. The file will be monitored to determine the need to file a
complaint in civil court in order to preserve the statute of
limitations.
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
4
4. If the injured worker brings a civil action against the party
responsible for the injury, the claims administrator shall consult
with the Member about the value of the subrogation claim and
other considerations. Upon Member authorization,
subrogation counsel shall be assigned to file a Lien or a
Complaint in Intervention in the civil action.
5. Whenever practical, the claims administrator will aggressively
pursue recovery in any subrogation claim. They should
attempt to maximize the recovery for benefits paid, and assert
a credit against the injured workers' net recovery for future
benefit payments.
XII. VOCATIONAL REHABILITATION
A. Adjusting personnel will notify the injured worker of their potential
rights to rehabilitation benefits per Labor Code Section 4636 after 90
days of aggregate temporary disability and get the treating doctor to
determine if injured worker is a Qualified Injured Worker.
B. Determination of the Qualified Injured Worker/Non-Qualified Injured
Worker status shall be made in accordance with Labor Code Section
4637. The adjusting personnel shall advise the injured worker of
his/her rehabilitation benefits in accordance with the Rules of the
Division of Workers' Compensation, within ten (10) days of knowledge
of medical eligibility. The claims administrator will:
1. Notify the employer of the employee's permanent work
restrictions so that the employer can determine the availability
of permanent modified or alternate work.
2. Make timely referral to a Qualified Rehabilitation
Representative in accordance with Labor Code Section 4637
3. Control rehabilitation costs.
4. Attempt to secure the prompt conclusion of vocational
rehabilitation benefits, and settle rehabilitation where
appropriate.
XIII. FISCAL HANDLING
A. Active indemnity cases will be balanced with appropriate file
documentation on a semi-annual basis to verify that statutory benefits
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
5
are paid, and medical, legal and vocational rehabilitation charges are
appropriate. An accomplishment level of 100% shall be considered
acceptable.
XIV. EXCESS INSURANCE
A. Potential Workers' Compensation excess cases shall be reported in
accordance with the reporting criteria established by The Bylaws of
the_CSAC Excess Insurance Authority.
All cases which meet the established reporting criteria are to be
reported within five (5) working days of the day on which it is known
the criterion is met. An accomplishment level of 100% shall be
considered acceptable.
xv. AWARD PAYMENT
A. Payments on undisputed Awards, Commutations, or Compromise
and Releases will be issued within ten (10) days following receipt of
the appropriate document. An accomplishment level of 100% shall be
considered acceptable.
XVI. PENALTIES
A. If the Member utilizes a third party administrator, the Member will be
advised of the assessment of any penalty for delayed payment and
the reason thereof, and the administrators plans for payment of such
penalty within five (5) days of assessment. An accomplishment level
of 100% shall be considered acceptable.
B. If the Member utilizes a third party administrator, the Member, in their
contract with the administrator, shall specify who is responsible for
specific penalties.
XVII. RESERVES
A. Using the information available at the time, an initial reserve will be
established at the most probable case value. Claim reserves shall be
reviewed on a regular basis and updated as case values increase or
decrease.
XVIII. RESOLUTION OF CLAIM
A. Within ten (10) days of receiving medical information indicating that a
claim be finalized, the claims examiner shall take appropriate action to
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
6
finalize the claim. An accomplishment level of 95% shall be
considered acceptable.
XIX. CASE CLOSURE
A. All indemnity cases will be closed within sixty (60) days of the final
financial transaction or final correspondence to the injured worker as
required by law. An accomplishment level of 95% shall be considered
acceptable.
B. All medical only cases will be closed or transferred to an indemnity
status by the ninetieth (90) day following incurral. An accomplishment
level of 95% shall be considered acceptable.
xx. TELEPHONE INQUIRIES
A. Return calls will be made within one working day of the original
telephone inquiry. An accomplishment level of 90% shall be
considered acceptable.
XXI. INCOMING CORRESPONDENCE
A. All correspondence received will have the date of receipt clearly
stamped on the front side. An accomplishment level of 100% shall be
considered acceptable.
XXII. RETURN CORRESPONDENCE
A. All correspondence requiring a written answer will have such answer
completed and transmitted within five (5)working days of receipt. An
accomplishment level of 95% is acceptable.
XXIII. SETTLEMENTS
A. The third party administrator shall obtain the Member's authorization
on all settlements or stipulations in excess of the settlement authority
provided in any provision of the individual contract between the
Member and the claims administrator.
B. No agreement shall be authorized involving liability, or potential
liability, of the Authority without the advance written consent of the
Authority .
Excess Workers' Compensation Program
Memorandum of Understanding
Exhibit A - Addendum A
7