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HomeMy WebLinkAboutMINUTES - 04211987 - 2.4 d�(AKI Y i r TO. BOARD OF SUPERVISORS t� inn,,��,,..,, FROM: Phil Batchelor, County Administrator t�.� tra f- Costa DATE: April 21, 1987 Corm/ SUBJECT: Liability & Medical Malpractice Claims Management Program SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION• 1. Approve establishment of an in-house liability and medical malpractice claims management program. 2. Approve the addition of three positions to the Risk Management Division in the County Administrator' s Office: Liability Claims Officer, Liability Claims Adjuster and Clerk-Experienced Level. 3 . Approve the allocation of funds from the Automobile Liability, General Liability and Medical Malpractice Trust Fund to reflect the above action. 4. Direct the Risk Manager to explore using County Counsel for selected litigated claims. REASONS FOR RECOMMENDATION: 1. Increased control over the management of the liability and medical malpractice claims program. 2. Increased control over escalating costs in liability claims and litigation expenses. 3. Reduced costs through having the County administer the program in-house. FINANCIAL IMPLICATIONS: A reduction in General Fund costs for administration is anticipated. Costs for the positions and program would be funded from insurance trust funds. Savings in administrative costs would accrue to the trust fund. BACKGROUND: The County has self-insured its liability and medical malpractice claims since 1975 . George Hills Company has provided claims adjusting services for those claims since that time. CONTINUED ON ATTACHMENT: X YES SIGNATURE' ...d Q ayf RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMEN TIO OF COMMITTEE APPROVE OTHER SIGNATURE I S): ACTION OF BOARD ON APPROVED RECOMMENDED � OTHER _ VOTE OF SUPERVISORS ,2�_ I HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS (ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. cc: CAO - Risk Management ATTESTED APR 2 1 1987 PHIL BATCHELOR, CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR BY M382 �Q.G(/R DEPUTY /7-83 TY J The September 9, 1985 Risk Management Audit performed by the Wyatt Company recommended that the County utilize outside service for liability and medical malpractice claims as field adjusting only, and bring the administration in-house. That study stated in part: "We further believe it will be cost-effective to change the relationship with the liability claims administrator. Liability claims should be managed by the Risk Manager who assigns to the outside adjuster only those claims which require that firm' s special expertise. All other adjusting on minor bodily injury and property damage claims and subrogation efforts should be handled internally. " The March 30, 1987 audit performed by Heyenrath and Associates found the liability and medical malpractice claims adjusted by the third-party administrator, George Hills Company, are satisfactorily handled. However, the auditor found adjusting fees and legal expenses are higher when compared to similar public entities, and believes costs can be reduced and services improved by having the County administer the entire program in-house. The Auditor recommends hiring a working claims manager or officer, an adjuster and a clerk. Staff concurs with the recommendations of the Wyatt Company and Heyenrath and Associates on adjusting the liability claims in-house. It is recommended the Board authorize hiring of a Liability Claims Officer, a Liability Claims Adjuster and a Clerk-Experienced Level. The functions of this program will be to: o Oversee the entire claims process; o Handle most of the liability/medical malpractice claims; o Evaluate and direct claims; o Set reserves; o Take over management of the litigated cases; o Attend settlement conferences on behalf of the County; o Closely manage and direct the legal defense; o Explore using County Counsel to handle selected litigated cases; o Attempt faster resolution of claims; o Send selected cases to George Hills Company with specific instructions on what they are to do. o Perform field investigations on selected workers ' compensation claims. Plans are to phase in the in-house claims management program by first hiring the Liability Claims Officer and Clerk-Experienced Level. The Liability Claims Officer will immediately review all outstanding claims and assess the program. Then, with the Liability Officer' s involvement, the Liability Claims Adjuster will be hired. COST ANALYSIS• In 1985, the County paid the George Hills Company $182,527 for claims adjusting services. In 1986, the County paid $214, 253 for those services. Costs for adjusting services in 1987 are projected to be $241,035. The reason for the 1987 increase is a 12. 5% increase in adjusting service fees. Projected savings to the County after the first year phase-in period are estimated to be approximately $100,000 per year. See attached analysis (Exhibit A) . CONSEQUENCES OF NEGATIVE ACTION: If the Board does not approve the creation of the new positions, it will result in increased costs, reduced control over those costs and less effective control over the liability claims program. r Exhibit A PROJECTED COST COMPARISON Outside Services Year One Year Two 7/1/87-88 & Thereafter From 7/1/88 Hills $241,035 $241,035 Workers' Compensation 35,000 35,000 Field Investigations (estimated) $276,035 $276,035 In-house Adjusting/Selected Use of Outside Services In-house Costs $120,217 $143,353 Hills ' Services 94, 000 12,000 Workers' Comp. Field Investigations Outside Services 30,000 20,000 $244, 217 $175,353 Difference/Savings to the County $ 31,818 $100,682 POSITION ADJUSTMENT REQUEST No. ' Date: F County Administrator Dept. No./ Copers Department Risk Management Budge�;Uni`� Np.�003 Org. No.1220 Agency No. 03 Action Requested: Establish the class of Liability Claims Officer (AJDH) and allocate to the basic salary schedule at level C5- - ; c asst y—one-position. Classify one position of Clerk-Experienced Level. actions to be effective May 1, 1987. Proposed Effective Date: May 1, 1987 Explain why adjustment is needed: Classification Questionnaire attached: Yes C1 No El Estimated cost of adjustment: $ Cost isl�rit I departure pt's budget: Yes No O�S�t bH fiws+ jvVul rt ve n vS If not within budget, use reverse side to explain how costs are to be funded. Department must initiate necessary appropriation adjustment. Use additional sheets for further explanations or comments. RWAA Tfor Depa ent Head Personnel Department Recommendation Date: April 7, 1987 Establish the class of Liability Claims Officer (AJDH) and allocate to the basic salary schedule at level C5-1862 ($2923-3553); classify one position. Classify one position of Clerk-Experienced Level . All actions effective May 1, 1987. Amend Resolution 71/17 establishing positions and resolutions. allocating classes to the Basic/Exempt Salary Schedule, as described above. Effective: day following Board action. Date for Director of Personnel County Administrator Recommendation Date: ✓Approve Recommendation of Director of Personnel Disapprove Recommendation of Director of Personnel Other: for Co ty Administrator Board of Supervisors Action Phil Batchelor, Clerk of the Board of Adjustment APPROVED/RfSAPPR6Y D on APR 211987 Supervis r and County Administrator e Dat : APR 21 1987 By.. APPROVAL OF THIS ADJUSTMENT CONSTITUTES A PERSONNEL/SALARY RESOLUTION AMENDMENT.