Resolution No. 5657
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RESOLU~ION NO. 5657
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF VERNON APPROVING AND AUTHORIZING
THE EXECUTION OF AN ADMINISTRATIVE
SERVICES CONTRACT BY AND BETWEEN THE CITY
OF VERNON AND UNITED OF OMAHA LIFE
INSURANCE COMPANY (OMAHA)
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WHEREAS, the City of Vernon has established a health
7 care benefit plan or a health care benefit plan and trust
8 (hereinafter referred to as the "Plan") to provide disability
9 and/or medical care benefits for certain eligible persons; and
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WHEREAS, the city of Vernon wishes to retain the
11 services of an independent contractor, who is experienced in
12 handling the types of benefits provided by the Plan, to
13 administer the Plan for the City of Vernon; and
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WHEREAS, OMAHA is willing to administer the Plan for
the City of Vernon; and
WHEREAS, the City of Vernon and OMAHA desire to enter
17 into an agreement to establish the terms and conditions
18 necessary for the administration of the Plan.
19 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
20 THE CITY OF VERNON AS FOLLOWS:
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SECTION 1: The City Council of the City of Vernon
22 hereby finds and determines that the recitals contained
23 hereinabove are true and correct.
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SECTION 2: The City Council of the City of Vernon
25 hereby approves the Administrative Services Contract by and
26 between the City of Vernon and OMAHA for the administration of
27 the Plan for the City of Vernon, a copy of which has been
28 presented to the City Council concurrently with this resolution
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and the City Council hereby orders said Contract to be received
and filed by the City Clerk.
SECTION 3: The City Council of the City of Vernon
hereby authorizes the Mayor and the City Clerk to execute said
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Contract for, and on behalf of, the City of Vernon.
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SECTION 4: The City Clerk of the City of Vernon shall
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certify to the passage of this resolution and thereupon and
thereafter the same shall be in full force and effect.
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A~TES .
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BRUCE V.
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APPROVED AND ADOPTED this 22nd day of August, 1989.
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MALRENHORST,. ci ty Clerk
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STATE OF CALIFORNIA )
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COUNTY OF LOS ANGELES )
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I, BRUCE V. MALKENHORST, City Clerk of the City of
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Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 5657, was duly adopted by the City Council of the
City of Vernon, and was approved by the Mayor of said City at an
adjourned regular meeting of the City Council held on Tuesday,
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Auqust 22. 1989.
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(SEAL)
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BRUCE V. MALKENHORST, city Clerk
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Finance Minutes
Page 3
August 7, 1989
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Communication from Bruce V. Malkenhorst, Director of
Finance, dated August 3, 1989, was presented, recommending that
authority be granted to proceed with the financing of the pooled
Certificates of Participation through Independent Cities Lease
Finance Authority (ICLFA).
It was moved by Ybarra, seconded by Gonzales, that
recommendation be made to City Council that authorization be
granted to proceed with the Certificates of Participation
through the ICLFA for the planned expansion of the City Hall and
reimbursement of funds for the acquisition and installation of
two (2) gas turbine units; and that a resolution be authorized
approving same at the City Council meeting to be held August 22,
1989. Motion carried.
Communication from Bruce V, Malkenhorst, Director of
Finance, dated August 2, 1989, was presented, submitting for
rev~ew a summary of three quotations received for health
insurance administration, life insurance, and stop loss
insurance. MONY has increased the administrative fees from
$122,000 to $136,000, bringing their total to $264,637. This
comparison has been reviewed by our Financial Consultant, Edward
A. Cooney, and it is hereby recommended that approval be granted
for .the City to contract with United of Omaha for its health,
life and administration as of September 1, 1989, with a savings
to the City of $64,000 per year.
It was moved by Ybarra, seconded by Gonzales, that
recommendation be made to City Council to retain the firm. of
United of Omaha for health, life and administration of insurance
for employees of the City of Vernon and to proceed with
finalizing an agreement to be effective September 1, 1989.
Motion carried.
Communication from Bruce V. Malkenhorst, Director of
Finance, dated August 3, 1989, was presented, advising that the
Light & Power Department is in need of an additional remote CRT
to be utilized in the Engineering Department to program the Scada
System and as a standby control position for emergency use. This
item is budgeted and it is hereby recommended that approval be
granted to purchase said CRT at an approximate cost of
$15,693.84.
It was moved by Gonzales, seconded by Ybarra, that
recommendation be made to City Council to approve the purchase of
a remote CRT for the Light & Power Department at an approximate
cost of $15,693,84. Motion carried.
Consideration of vehicle needs for the Light and Power
Department as submitted by Lewis Adams for the 1989-90 Fiscal
Year. (Deferred from the Finance Committee Meeting held July 17,
1989).
It was moved by Ybarra, seconded by Gonzales, that the
aforementioned matter of vehicle needs for the 1989-90 Fiscal
Year be deferred to the next Finance Committee Meeting. Motion
carried.
It was moved by Ybarra, seconded by Gonzales, that the
Committee to into Closed Session pursuant to Government Code
Section 54957, the time being 6:15 p.m. Motion carried,
All persons with the exception of the Director of
Finance were excluded from Closed Session.
Chairman Malburg ordered all communications to and from
Closed Session deemed privileged and confidential.
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PETER H. COBO INSURANCE AGENCY, INC.
PLANNED EMPLOYEE BENEFIT PROGRAMS
PETER H. COBO. CLU
P.O. Box 2577 , COVINA, CAill'ORNlA 91722-0577
(818) 331-0865
CITY OF VERNON
COMPARISON OF COSTS
MONY - PM UNITED OF OMAHA CIGNA
Life $ .53 $ .39 $ .75
AD&D $ .10 $ .05 $ .10
Dep. Life $ .65 $ .38 $ 1.49
ASO 12.2% 8.99% 8.33%
stop Loss - $50.000
Specific $ 21. 39 $ 18.57 $ **50.00
Aggregate 1.42
PPO $ 1.05 $ .35 $ 1.55
U.R. $ 1.75 $ 1.20
Other $ *3.00 1 time
stop Loss
Attachment $ 341..19 $ 304.20 $ 257.00
Totals
Life AD&D 26,233 18,321 35,394
Dep. 1,677 980 3,844
stop Loss 89,068 83,238 208,000
ASO
Based On
1,000,000 122,000 89,900 85,674
PPO-OR 11.659 7.495 6.454
250,637 199,934 339,366
* Set Up Fee
Communication Materials
** $60,000 stop Loss
ADMINISTRATIVE SERVICES AGREEMENT
(GUSI - 2R04 and GUSI - 2R05)
This Administrative Services Agreement, effective September 1, 1989, is between
City of Vernon (Employer) and United of Omaha Life Insurance Company (the
"Company").
WHEREAS, Employer has established an ERISA plan (Plan) of hospital, medical and
dental coverage for certain employees and their dependents; and
WHEREAS, Plan coverage is self-funded by Employer; and excess losses are insured
by the Company under Group Policy GUG-2R03 (Policy); and
WHEREAS, the Policy expressly assumes liability only for Plan coverage in excess
of the self-funded Plan liability" of Employer;
THEREFORE, IN CONSIDERATION of the following promises, the Company and Employer
agree as follows:
1. Definitions.
1.1 "Employer's Bank" means the bank selected by Employer and approved by
the Company.
1.2 "Plan Benefit Account" means the Employer's Bank account on which Plan
benefit payment checks are issued by the Company.
2. Plan Benefit Account.
2.1 The Plan Benefit Account will be established by Employer in Employer's
name.
2.2 The Company will perform all administrative functions necessary for the
proper maintenance of the Plan Benefit Account, including:
2.2.1
an annual accounting of the Plan Benefit Account and Policy
experience.
3. Employer's Responsibilities.
3.1 Employer will:
3.1.1
furnish the Company with a detailed written description of
Plan coverage;
3.1.2
determine claimant eligibility under the Plan;
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3.1.4
3.1.5
3.1.6
make available for inspection by the Company or the Company's
auditor, at any reasonable time during the continuance of this
Agreement and for one year after, Employer's books and records
which may have a bearing on this Agreement; provided, however,
that any examination of individual benefit records will be
conducted in a manner to protect the confidentiality of the
individual's medical information;
make all final decisions on Plan claims referred by the Company
and advise the Company as to their disposition;
be responsible for the investigation and prosecution of any
subrogation recoveries;
pay all costs in excess of $728.00 for printing the Plan
benefits booklet and identification cards.
4. The Company's Services.
4.1.1
4.1 The Company will:
4.1.2
4.1. 3
4.1.4
4.1. 5
4.1. 6
provide claim handling facilities in Seattle, Washington,
furnish personnel and establish procedures, including claim
files and systems, for the administration of Plan claims;
obtain verified claimant eligibility from Employer;
receive from Employer or Plan claimants all Plan claim forms
and related materials;
audit claims in accord with Plan coverage, applying any usual
and customary, medically necessary or coordination of benefits
limitations, then:
4.1.4.1
refer to Employer for consideration and final decision
all questionable claims or any class of claims specified
in writing by Employer and send a courtesy letter to the
claimant; and
4.1.4.2
on all other claims, send the Explanation of Benefits to
the claimant and a copy of the Explanation of Benefits
to the Employer;
prepare claim payments on Plan Benefit Account checks and
forward to claimants or designated providers;
furnish Employer with:
4.1.6.1
a monthly check register;
4.1.6.2
an annual claims study;
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5.2.1
5.2 In addition to the administration fee Employer will pay the Company:
5.2.2
5.2.3
a charge for costs in excess of those specified in Provision
3.1. 6; plus
a conversion charge of $800.00 for each conversion certificate
issued in accord with the Policy; plus
an evaluation charge of $50.00 for each applicant evaluated
by the Company.
6. Agreement Change.
6.1 This Administrative Services Agreement, including the administration
fee, is subject to change:
6.1.1
6.1.2
6.1.3
7. Liability.
any Policy renewal date, provided 30 days' advance written
notice has been given by the Company;
the date any Plan change or modification of the Company's
duties by Employer results in increased expense for the
Company; or
on or after the date the number of employees covered under
the Plan increases or decreases by 10% or 100 employees,
whichever number is less.
7.1 The Company does not intend to insure the liability of Employer under
the Plan and has based its Administration Fee on the assumption that
Plan benefit payments do not constitute taxable premium income.
7.2 Employer is solely responsible for the Plan's compliance with the
requirements of ERISA and other Federal or State laws, except for the
services specifically assumed by the Company in this Agreement.
7.3 Employer agrees that Employer:
7.3.1
7.3.2
retains the final responsibility for Plan claims and all
expenses incident to the Plan, except for the services and
expenses specifically assumed by the Company in this Agreement;
and
will defend any legal action involving a Plan claim and that
such defense is not the obligation of the Company; but it is
understood and agreed that the Company will cooperate fully
with Employer in the defense of any claim arising out of
matters related to the Plan.
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8. Indemnification and Hold Harmless.
8.1 With respect to any action other than for the collection of premium tax
or similar tax, Employer will indemnify and hold the Company harmless
against any and all loss, damage and expense, including attorney's fees,
court costs and extracontractua1 damages occasioned by any claims,
penalties, fines, demands or lawsuits brought against the Company unless
such action arises out of the failure of the Company to use ordinary care
and diligence in the exercise of its duties under this Agreement.
8.2 With respect to any action involving the collection of premium tax or
similar tax, Employer and the Company agree:
8.2.1
if the Company's practice of excluding Plan benefit payments
from the Company's taxable income is challenged by taxing
authorities or called into question as a result of legislative,
administrative or judicial action, the decision whether or not
to pay the tax will be made solely by the Company, provided:
8.2.1.1
the Company will not pay any such tax without first giving
Employer at least 10 days' advance written notice of its
intent to pay; and
8.2.2
if the Company pays any such tax and/or if a deficiency is
assessed for failure to pay such tax, Employer will reimburse
the Company, within 30 days after written demand, an amount
equal to:
8.2.2.1
the tax or deficiency paid;
8.2.2.2
any penalty and interest; and
8.2.2.3
interest of one per cent per month on reimbursements not
made within 31 days after demand.
9. Assignment or Change.
9.1 No assignment or change in this Agreement is valid unless approved in
writing by an officer of the Company; and no agent of the Company has
authority to assign or change this Agreement or waive any of its
provisions.
10. Applicable Law.
10.1 This Agreement is governed by the applicable laws of the United States
and California.
11. Annual Accounting.
11.1 Following any annual accounting or following the final accounting after
termination of the Policy:
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11.1.1
11.1.2
the Company will reimburse Employer for any Plan payments
incurred by Employer which were the Company's obligation under
the terms of this Agreement and the Policy; and
Employer will reimburse the Company for any Plan payments or
expenses incurred by the Company which were the obligation of
Employer under the terms of this Agreement.
12. Termination of Administrative Services Agreement.
12.1 Employer may terminate this Agreement at any time following 30 days'
advance written notice to the Company.
12.2 The Company may terminate this Agreement as of any Policy renewal date
following 30 days' advance written notice of termination to Employer.
12.3 In addition to the terminations provided for in Provisions 12.1 and 12.2
above, this Agreement will automatically terminate at 12:01 A.M. of the
first day following the date:
12.3.1
12.3.2
12.3.3
12.3.4
any check drawn on the Plan Benefit Account and presented for
payment is not honored within 48 hours, exclusive of weekends
and legal holidays, from the time Employer first has notice
that the Plan Bank Account balance is not sufficient to meet
Plan obligations;
Employer fails to pay the Company any monthly administration
fee by the end of the month in which the fee is due;
the Plan is terminated by law; or
a change in this Administrative Services Agreement requested
by the Company in accord with Provision 6 has not been accepted
by Employer.
13. Obligations After Termination.
13.1 Immediately upon termination of this Agreement:
13.1.1
13.1.2
Employer will assume all Plan claim administration; except
the Company will continue Plan claim administration for 90
days if this Agreement terminates in accord with Provision
12.1 or Provision 12.2 and if at least 10 days prior to
termination Employer requests in writing that the Company
continue Plan claim administration; provided:
13.1.2.1 the Company will pay only Plan claim expenses incurred
prior to termination; and
13.1.2.2 Employer continues to pay the Company the administration
fee in effect immediately prior to termination.
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13.2 After termination of this Agreement:
13.2.1
Employer may within three years request in writing that the
Company send Employer any existing Plan claim files which the
Company holds in hard-copy form or stores electronically on
magnetic tape; and
13.2.2
the Company will charge Employer:
13.2.2.1 $500.00 for each magnetic tape in our standard format
sent to Employer; plus
13.2.2.2 $50.00 an hour for the Company's cost of programming and
$75.00 an hour for computer time for providing Plan claim
records.
13.3 It is mutually understood and agreed that obligations incurred under
this Agreement prior to termination will survive termination of this
Agreement.
CITY OF VERNON
UNITED OF OMAHA LIFE
. IN~~~~IIPANY
By ?~4~:.,
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...... Mayor
Title
Date August 30, 1989
Date
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Bruce V. Malkenhorst, City Clerk
APPROVED AS TO FORM
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_'~~. . . CITY ATTORNEY
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