HomeMy WebLinkAboutMINUTES - 05311994 - 1.3 (2) TO: %. BOARD OF SUPERVISORS _5E Contra
FROM:
Phil Batchelor, County Administrator Costa
9 County
Py
DATE: May 31, 1994
SUBJECT: 1st Choice Employee Benefits Trust
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)8 BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
Approve and authorize the Chair, Board of Supervisors, to execute an
agreement with the Contra Costa 1st Choice Employee Benefits Trust.
BACKGROUND:
The 1st Choice Employee Benefits Trust is now in the process of winding
down in preparation for termination. Several issues of concern to both the
County and the Trust remain outstanding, such as the Trust's claims for
November and December 1993 contributions and the status of the Trust ' s third
party liens against individuals who injured 1st Choice participants (usually
in auto accidents) .
The Trust has agreed to a proposed contract between the Trust and the
County to resolve outstanding issues .
CONTINUED ON ATTACHMENT: YES SIGNATURE-,A0Lj,, J
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BO OMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON May 31 , 1994 APPROVED AS RECOMMENDED OTHER
VOTE OF SUPERVISORS
1 HEREBY CERTIFY THAT THIS IS A TRUE
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.
Contact: Joseph. J. Tonda - . 646-2014
CC: CAO Risk Management ATTESTED May 31 , 1994
Benefits Dlvl s ion PHIL BATCHELOR,CLERK OF THE BOARD OF
County Counsel SUPERVISORS AND COUNTY ADMINISTRATOR
Jim Hicks, Chair, Health Care Coalition
1st Choice .Trust (via Risk Management)
BY DEPUTY
M382 (10/88)
1 . .30
AGREEMENT
PARTIES
The County of Contra Costa ("County") and the Contra Costa
County 1st Choice Employee Benefits Trust ("trust") hereby enter
into the following agreement.
BACKGROUND
The parties acknowledge the following:
A. The County and various of its recognized employee
organizations created the trust on July 1, 1992 to
provide certain health benefits to certain
employees of the County.
B. Based on certain actuarial assumptions concerning
the need for trust reserves for an ongoing plan,
medical inflation, the costs of medical claims and
other factors, the trust implemented a rate
increase effective November 1, 1993 .
C. The County has refused to pay the rate increases
for November and December 1993 .
D. The Joint Board of the trust on December 21, 1993
decided to terminate the 1st Choice Health Plan,
effective January 31, 1994 and to terminate the
trust effective not later than January 31, 1995.
E. The trust is now in the process of winding down
its affairs, which includes paying claims for
services incurred by trust participants prior to
February 1, 1994 and taking action concerning
other termination matters, such as approving the
final trust audit, approving the filing of
termination reports to the appropriate government
agencies, providing for the storage of trust
records, etc.
F. The trust in the period after January 31, 1994
needs funds to pay the claims described in the
immediately preceding paragraph and to pay for
related trust administrative expenses.
G. The trust has provided to the County a list of its
wind-down activities and a termination budget.
H. The trust has filed a claim with the County for
$389,899. 00 for unpaid contributions due for
November 1993 , which claim the County has denied.
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I. The trust has filed a claim with the County of
$386, 845. 00 for unpaid contributions due for
December 1993, which claim the County has denied;
J. The County's Board of Supervisors in an order
dated December 20, 1993 , ordered:
In consideration of effective action by the
Joint Board of .Trustees of .the Contra Costa County
1st Choice Employee Benefits Trust on December 21,
1993 , to terminate all benefits provided by the
1st Choice Health Plan as of 12 : 00 midnight on
January 31, 1994, subject to the obligations of
the Plan to provide benefits after termination,
and to terminate the 1st Choice Health Plan and
Trust upon the completion of processing of all
claims for services rendered through January 31,
1994, and of any claims for benefits after
termination in accordance with the Plan, but in
any event no later than January 31, 1995, the
County of Contra Costa agrees as follows:
1. The County will guarantee the payment of
all benefit entitlements under the 1st
Choice Health Plan, if the reserves of
the 1st Choice Trust are insufficient to
cover the cost of claims runout.
2 . The County will indemnify, defend, and
hold harmless each and every member of
the Joint Board of Trustees of the
Contra Costa County 1st Choice Employee
Benefits Trust, together with each and
every employee organization which was a
party to the agreement between the
County of Contra Costa and recognized
employee organizations of the County of
Contra Costa to establish the Contra
Costa County First Choice Employee
Benefits Trust, from any and all claims,
actions, or liabilities which may occur
on account of the action by the Joint
Board of Trustees of the Contra Costa
County 1st Choice Employee Benefits
Trust, to terminate the benefits, the
Plan, and the trust, as provided above.
K. In view of the fact that the 1st Choice Health
Plan has been terminated thereby eliminating the
need for trust reserves and lessening the impact
of medical inflation, the fact that the medical
expenses for November 1993 through January 1994,
were lower than expected, and the fact that the
County has agreed to guarantee payment of the
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trust's expenses, the Joint Board has determined
that, based on actual experience rather than
projected experience, the full rate increase
previously implemented is not now necessary.
MUTUAL ACKNOWLEDGMENTS
Both parties agree that it is desirable to have the debts of
the trust paid in a timely fashion. Both parties acknowledge
that, in a memorandum to the trust's Joint Board, dated April 14,
1994, Russell Richeda of Saltzman & Johnson Law Corporation,
trust counsel for the trust, stated that it was his opinion that
the trust's Joint Board would be acting in accord with its
fiduciary obligations by entering into this agreement. Both
parties agree that it is also desirable to ensure that the trust
be terminated on or before January 31, 1995 with a minimum of
disputes.
AGREEMENT
Based upon the proceeding the parties agree as follows:
1. The trust agrees to use its assets to pay the
debts of the trust.
2 . The trust hereby changes the implementation date
of its previously voted rate increase from
November 1, 1993 , to January 1, 1994 .
3 . Without affecting the guarantees in paragraphs 4
and 5, the County hereby agrees that the trust may
set aside the sum of Fifty Thousand Dollars
($50, 000. 00) as a contingency reserve which does
not have to be spent but may be spent at the
trustees' discretion. In the event the assets of
the trust, exclusive of the $50, 000 contingency
reserve, are insufficient to pay the debts of the
trust, the County agrees to pay such debts.
4. The County hereby guarantees that payment shall be
made of all claims for benefits under the 1st
Choice Health Plan, insofar as the trust or its
administrator has approved the claims for payment.
5. The County hereby guarantees that payment shall be
made of all trust administrative expenses which
the trust has approved for payment, including but
not limited to legal fees, accounting fees,
document storage fees, consulting fees, trust
administrative fees, etc.
6. The parties agree that almost all, if not all, of
the claims or expenses described in paragraphs 4
and 5 will be presented for payment no later than
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December 31, 1994 and that the trust shall
terminate on January 31, 1995 if it has not sooner
terminated.
7 . The County agrees to indemnify, defend, and hold
harmless each and every member of the Joint Board
of Trustees of the Contra Costa County 1st Choice
Employee Benefits Trust from any and all claims,
actions, or liabilities which may occur on account
of the action by the Joint Board of Trustees of
the Contra Costa County 1st Choice Employee
Benefits Trust to terminate the benefits, the
Plan, and the trust.
8. In reliance upon these contractual commitments of
the County, the trust has changed the effective
date of the 1993 rate increase and hereby with-
draws its claims for unpaid contributions for
November and December 1993 and further agrees not
to initiate any other action with respect to those
claims.
9 . The trust agrees to assign to the County, or to
subrogate, and does hereby so assign and subrogate
its rights to the County with respect to any third
party liens which are still outstanding as of the
date of termination of the trust.
10. The parties agree that each possesses the
authority to enter into this agreement, that this
agreement is valid and binding, that neither party
will raise in any subsequent proceeding their
alleged incapacity to enter into this agreement,
and that the individual signing this agreement
possesses the authority to execute this agreement;
11. The parties agree that (a) this agreement may be
amended only in writing, (b) this agreement may
not be assigned without the written approval of
the other party, and (c) that this writing is
intended as a complete and exclusive statement of
the parties ' agreement, and that the terms set
forth in this writing are intended as the final
expression of their agreement with respect to such
terms as included herein, with the parties
intending this provision to constitute an
integration clause under California law.
12 . Any controversy or claim arising out of this
agreement shall be resolved by means of arbitra-
tion conducted pursuant to the commercial
arbitration rules of the American Arbitration
Association, with the trust' s trust counsel
immediately requesting a list of arbitrators upon
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being notified by either party of a claim or
controversy, with the County and the trust there-
after alternately striking one name from the list
until one arbitrator remains who shall hear the
matter as soon as possible, with the arbitrator
determining the procedures to be followed in the
arbitration, and with the arbitrator required to
award costs and reasonable attorneys' fees to the
party prevailing in the arbitration.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
Dated: Xa, 31 , OUNT O TRA STA
By. /1 Q
Title:
APPROVED AS TO FORM:
OFFICE OF THE COUNTY
COUNSEL
y: ' f
Title:
CONTRA COSTA COUNTY IST
CHOICE EMPLOYEE BENEFITS
TRUST
Dated• 4X 9 /1 By:
Carl Doolittle, Chair
Dated• By
(j]e Tonda, Co-chair
APPROVED AS TO FORM:
SALTZMAN & JOHNSON LAW
CORPORATION
By: 2"V��
Russell L. Richeda
Trust Counsel
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