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Resolution No. 94581 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION,NO. 9458 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A LETTER AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND KEYGENT LLC WHEREAS, the Risk Manager of the City of Vernon desires to iretain the services of a consultant to perform audit services on the City's health care benefit program to identify possible health care cost savings; and WHEREAS, the Risk Manager has determined that Keygent LLC ("Keygent") has the experience and expertise to perform the benefit audit services; and WHEREAS, the City desires to employ Keygent to furnish the benefit audit services to assist the City in effectively managing human resource operations efficiently and effectively; and WHEREAS, in accordance with its proposal, Keygent shall provide the benefit audit services at 50% of identified first year cost savings in the City's health and welfare benefit premiums or reduction in health and welfare expenses resulting from the audit plus a monthly handling fee of 0.75%; and WHEREAS, the City and Keygent desire to enter into a Letter Agreement setting forth the terms and conditions under which Keygent will perform its benefit audit services for the City; and WHEREAS, the City Council of the City of Vernon has determined that, pursuant to the provisions of subsection (a) of Section 2.27 of the Vernon City Code, it is in the public interest and necessity to enter into a contract with Keygent for benefit audit services to enhance services'provided to the Vernon community. 1 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 2 CITY OF VERNON AS FOLLOWS: 3 SECTION 1: The City Council of the City of Vernon hereby 4 finds and determines that the recitals contained hereinabove are true 5 and correct. 6 OP SECTION 2: The City Council of the City of Vernon hereby 7 approves the Letter Agreement with Keygent, in substantially the 8 same form as the copy which is attached hereto as Exhibit A and 9 incorporated by reference. 10 SECTION 3: The City Council of the City of Vernon hereby 11 authorizes the Mayor or Mayor Pro-Tem to execute the Letter Agreement 12 with Keygent for, and on behalf of, the City of Vernon and the City 13 Clerk is hereby authorized'to attest thereto. 14 SECTION 4: The City Council of the City of Vernon hereby 15 directs the City Clerk, or her designee, to give one fully executed 16 Letter Agreement to: 17 Keygent LLC Attn. Eugene Yee, Partner 18 1020 Manhattan Beach Blvd., Suite 103 19 Manhattan Beach, CA 90266 20 SECTION 5: The City Council of the City of Vernon hereby 21 authorizes the City Administrator, or his designee, to make whatever 22 nonsubstantive, administrative and/or text changes, upon advice of 23 counsel, to the Letter Agreement. 24 SECTION 6: The City Council of the City of Vernon hereby 25 authorizes the City Administrator, or his designee, to execute any and 26 all documents necessary or to take any action deemed necessary to 27 implement and carry out the purposes of the Letter Agreement. 28 2 - l 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 7: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 6th day of November, 2007. ATTEST: ' "t'ct� MANUELA GIRON, City Clerk Name: Leonis C. Malburg Title: Mayor - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 9458, was duly adopted by the City Council of the City of Vernon at an adjourned regular meeting of the City Council duly held on Tuesday, November 6, 2007, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. (SEAL) MANUELA IRO , City Clerk - 4 - EXHIBIT A ky,9_01-errh October 30, 2007 Mr. Willard G. Yamaguchi Chief Deputy City Attorney City of Vernon 4305 Santa. Fe Avenue Vernon, CA 90058 Re: RecoveryMax Benefit Eligibility Review Dear Mr. Yamaguchi This letter confirms that Keygent LLC, a California limited liability company ("Keygent" or "we") has been retained by the City of Vernon ("the City" or "you") to perform the RecoveryMax Benefit Eligibility Review (the "RecoveryMax Review") described herein. The purpose of this letter is to confirm the understanding of our respective responsibilities and the terms of this engagement (the "Agreement"). If Keygent commenced the performance of the RecoveryMax Review prior to the execution of this Agreement, this Agreement shall be effective as of the commencement of such RecoveryMax Review. I. RecoveryMax Review Consulting Services. The City hereby retains Keygent to perform the RecoveryMax Review, which services are described in Exhibit A, attached hereto and incorporated herein, and Keygent hereby agrees to perform said services pursuant to the terms and conditions of this Agreement. It is understood and agreed by the parties hereto that said services shall be provided directly to the City and will be based upon the City's month -end records pursuant to the date of the Agreement unless mutually agreed to by both parties. Keygent will not be responsible for work that is beyond the services set forth in Exhibit A. Either party may request changes to the services set forth in Exhibit A. All changes must be agreed in writing between the parties prior to any change in the services in Exhibit A. We will perform the RecoveryMax Review in accordance within industry standards for such services. We will provide no opinion, attestation or other form of assurance with respect to our work or the information upon which our work is based. The procedures we will be performing under this Agreement will not constitute an examination, review or audit in accordance with generally accepted auditing standards or attestation standards for Certified Public Accountants. We will not audit or otherwise verify the information supplied to us in connection with any engagement under this Agreement, from whatever source, except as may be specified in this Agreement. The RecoveryMax Review does not include the provision of legal advice and Keygent makes no representations regarding questions of legal interpretation. The City should consult with its attorneys with respect to any legal matters or items that require legal interpretation, under federal, state or other type of law or regulation. 1020 MANHATPAN BEACH BLVD., SUITE 103, MANHATTAN BEACH, CALIFORNIA 90266 1 PHONE & FAx (866) 518-7656 www.keygentcorp.com II. City Responsibilities. The City shall provide Keygent with all information relevant to the RecoveryMax Review and any reasonable assistance as may be required to properly perform the RecoveryMax Review. The City represents and warrants to Keygent that all such information provided by the City and any designated third party will be accurate and complete in all material respects. Keygent cannot warrant the correctness of data supplied by the City or other parties, nor can Keygent be responsible for data not provided in a timely manner. The City shall perform all management functions and make all management decisions in connection with the RecoveryMax Review, and shall assign competent individuals to oversee the RecoveryMax Review. The City is also responsible for the implementation of actions identified in the course of this engagement and results achieved from the RecoveryMax Review. Any timing or fee estimate we have provided for this engagement is based upon the agreed - upon level of assistance from the City and commitment of City resources. Keygent has not been engaged to, nor will Keygent provide any management functions or make management decisions for the City under this Agreement. It is the City's responsibility to establish and maintain its policies and procedures related to its benefit plans. III. Tool Development. Except otherwise set forth in this Agreement, the City will own all tangible written material originally prepared expressly for the City and delivered to the City under this Agreement (the "Work Product"), excluding any Keygent materials contained or embodied therein, which includes all: proprietary information, general skills, know-how, expertise, ideas, concepts, methods, techniques, processes, software, materials or other intellectual property or information which may have been discovered, created, developed or derived by Keygent either prior to or as a result of its provision of RecoveryMax Review Consulting Services under this Agreement. Keygent's working papers which belong exclusively to Keygent. The City will have a non- exclusive, non -transferable license to use Keygent's working papers for its own internal use and only for the purposes for which they are delivered to the extent that they form part of the Work Product. IV. Limited Third Party Distribution. The Work Product is solely for the City's internal use and benefit. The City shall not authorize any third party to rely upon any of the Work Product without Keygent's prior written consent. To the extent that Keygent's work is not subject to disclosure under applicable public record laws, the City shall not distribute to, discuss with, or otherwise disclose the Work Product to any third. party without Keygent's prior written consent, and the City shall not otherwise discuss the fact or substance of the RecoveryMax Review hereunder with third parties without Keygent's prior written consent, except for any applicable regulatory or governmental agency as required. Keygent accepts no liability or responsibility to any third party who benefits from or uses the RecoveryMax Review or gains access to the Work Product. Keygent and the City may have discussions regarding the RecoveryMax Review; provided, however, that oral or preliminary information, drafts or advice given by Keygent may not be relied upon or attributed to Keygent unless Keygent specifically confirms such information or advice or otherwise reduces such draft to a final writing. Because Keygent accepts no liability to third parties with respect to the RecoveryMax Review and Work Product, the City agrees (without limiting any other indemnification provision set forth in this Agreement) to indemnify and hold Keygent and any of its members, officers, employees, and directors harmless from and against any and all third party claims, suits and actions, and all Keygent RecoveryMax Review Page 2 of 8 associated damages, settlements, losses, liabilities, costs, and expenses, including without limitation reasonable attorneys fees, arising from or relating to the RecoveryMax Review or Work Product under this Agreement, except to the extent finally determined to have resulted from the gross negligence or intentional misconduct of Keygent relating to such RecoveryMax Review and Work Product. Keygent reserves the rights to disclose that it has been retained by the City and the results of the RecoveryMax Review for marketing purposes only. In such capacity, Keygent shall not disclose any Confidential Information as described in Section VIII below. V. Fees and Expenses. The City acknowledges the obligation to pay Keygent for services rendered in accordance with this Agreement between Keygent and the City. Keygent shall only receive compensation for services performed under this Agreement if the RecoveryMax Review finds ineligible enrollees or dependents in the City's employee benefit plan(s) or identifies other cost savings related to our RecoveryMax Review. The fee for services rendered under this Agreement shall be fifty percent (50%) of identified first year (annualized) cost savings in the City's health and welfare benefit premiums or reduction in health and welfare expenses resulting from the RecoveryMax Review. Such savings shall include identification of underpayment of employee contributions for health and welfare premiums in excess of City established limits or "caps" and unpaid premiums that reduce liability in connection with life, disability or other City provided insurance. All savings identified by Keygent will be described in a Draft Report that is sent to the City at the completion of the RecoveryMax Review. After the Draft Report is issued, the City will have 30 days to review the Draft Report and discuss any changes with Keygent before Keygent issues its Final Report. At the election of the City, our fee may be paid (1) in full upon receipt of the Final RecoveryMax Review Report or (2) in equal installments over twelve (12) months beginning the first day of the following month after the Final Report is issued, plus a monthly handling fee of 0.75% of Keygent's total compensation per monthly payment. The City is responsible for expenses related to the printing and postage of all correspondence in connection with all written communication set out in Section D — "Communication Services" in Exhibit A. VI. Limitation of Liability. THE PARTIES AGREE THAT KEYGENT LLC SHALL BE SOLEY LIABLE FOR ANY FINALLY DETERMINATED DAMAGES IN CONNECTION WITH THIS AGREEMENT THE PARTIES AGREE THAT KEYGENT'S OFFICERS, DIRECTORS, AGENTS, AND EMPLOYEES SHALL NOT BE PERSONALLY LIABLE TO THE CITY, WHETHER IN TORT, CONTRACT OR OTHERWISE, FOR ANY DAMAGES IN CONNECTION WITH THIS AGREEMENT. EXCEPT TO THE EXTENT FINALLY DETERMINED TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF KEYGENT, KEYGENT'S LIABILITY TO PAY DAMAGES FOR ANY LOSSES AND CLAIMS INCURRED BY THE CITY AS A RESULT OF BREACH OF CONTRACT, NEGLIGENCE OR OTHER TORT COMMITTED BY KEYGENT, REGARDLESS OF THE THEORY OF LIABILITY ASSERTED, IS LIMITED TO NO MORE THAN THE TOTAL AMOUNT OF FEES PAID TO KEYGENT UNDER THIS AGREEMENT. IN ADDITION, KEYGENT WILL NOT BE LIABLE IN ANY EVENT FOR LOST PROFITS OR ANY CONSEQUENTIAL, INDIRECT, PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES. Keygent RecoveryMax Review Page 3 of 8 THE PROVISIONS OF THIS SECTION WILL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. VII. Mediation and Arbitration. In the event of any dispute arising out of or relating to the engagement of Keygent by the City, the parties agree first to try in good faith to settle the dispute voluntarily with the aid of an impartial mediator who will attempt to facilitate negotiations. A dispute will be submitted to mediation by written notice to the other party or parties. The mediator will be selected by agreement by the parties. If the parties cannot agree on a mediator within 30 days of the receipt of the notice of request for mediation, a mediator will be designated by the American Arbitration Association ("AAA") at the request of either party. The mediation will be treated as a settlement discussion and therefore will be confidential. Any applicable statute of limitations will be tolled during the pendency of the mediation. Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally by the parties. If the dispute has not been resolved within 60 days after the written notice beginning the mediation process (or a longer period, if the parties agree to extend the mediation), the mediation will terminate, and the dispute will be resolved by final and binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association. The arbitration will take place before a panel of three arbitrators. Within 30 days of the commencement of the arbitration, each party will designate in writing a single neutral and independent arbitrator. The two arbitrators designated by the parties will then select a third arbitrator. The arbitrators will have a sufficient background in either employee benefits or law to reasonably prepare them to decide the dispute. The arbitrators will have the authority to permit limited discovery, including depositions, prior to the arbitration hearing, and such discovery will be conducted consistent with the Federal Rules of Civil Procedure. The arbitrators will have no power or authority to award punitive or exemplary damages. The arbitrators may, in their discretion, award the cost of the arbitration, including reasonable attorney fees and costs, to the prevailing party. Any award made may be confirmed and enforced in any court having jurisdiction. Any arbitration shall be confidential, and except as required by law, neither party may disclose the content or results of any arbitration hereunder without the prior written consent of the other parties, except that disclosure is permitted to a party's auditors, insurers and legal advisors. VIII. Handling of Data and Other Confidential Information. Keygent acknowledges that in connection with this engagement it may have access to confidential protected health information ("PHI"), including, but not limited to, employee identifying information. Keygent agrees that it (a) will not use or further disclose PHI other than as permitted by this Agreement or required by law; (b) will protect and safeguard from any oral and written disclosure all confidential information regardless of the type of media on which it is stored with which it may come into contact; (c) use appropriate safeguards to prevent use or disclosure of PHI other than as permitted by this Agreement or required by law or professional regulation; (d) will require that all of its subcontractors and agents to which it provides PHI pursuant to the terms of this Agreement agree to all of the same restrictions and conditions to which Keygent is bound; (e) will report to the City any unauthorized use or disclosure promptly upon becoming aware of it; and (f) make available PHI for amendment and incorporate any amendments to PHI. Upon termination of this Agreement, Keygent will return or destroy all PHI received from the City that Keygent maintains and retain only that PHI that is required for Keygent's work papers prepared in connection with this engagement (and will extend the Keygent RecoveryMax Review Page 4 of 8 protections of this Agreement to any such retained information). Keygent recognizes that any breach of confidentiality or misuse of information found in and/or obtained from records may result in the termination of this Agreement. IX. Status of Keygent. Keygent will provide the services in this Agreement as an independent contractor. No other relationship to the City or its benefit plan(s) is implied or intended. Keygent shall not be deemed to be a "named fiduciary" or "plan administrator" as these terms are defined under ERISA or any similar or successor law. X. Acceptance. The passage of ten (10) business days from the date when the final RecoveryMax Review report is provided to the City without receipt by Keygent of notice of non -acceptance by the City, or any use by the City of the information contained in the final RecoveryMax Review report will constitute final acceptance by the City. XI. Termination. Either party may terminate this Agreement at any time by giving the other party sixty (60) days written notice of termination. If the City elects to terminate Keygent at any time prior to the final RecoveryMax Review report, Keygent shall be entitled to the greater of fifty percent (50%) of identified cost savings at the time of termination, or payment for services completed prior to such termination based upon an hourly rate of $300 for Partners and $150 for Associates. Keygent may also resign from performing all or any portion of the services in connection with the RecoveryMax Review and terminate this Agreement immediately upon written notice in the event that circumstances arise that would make continuation of all or any portion of the work by Keygent in conflict with any professional regulations, standards or guidelines to which Keygent conforms. XII. Choice of Law and Forum. The construction, interpretation, and enforcement of this Agreement shall be governed by the substantive contract law of the State of California without regard to its conflict of laws provisions. It is the intention of the parties that the Limitation of Liability paragraph above shall be enforceable and the parties believe that the clause is enforceable under California law. In the event that the Limitation of Liability clause is not enforceable, then the parties agree that New York law, and not California law shall apply to that clause. In the event any provision of this Agreement is unenforceable as a matter of law, the remaining provisions will stay in full force and effect. XIII. Entire Agreement. These terms and conditions contained in this Agreement constitute the entire agreement between the City and Keygent. This Agreement includes all representations of every kind and nature made by each of the parties to the other and sets forth the entire Agreement of the parties. All previous agreements are superseded, revoked, terminated, and canceled. No representations, warranties, covenants, or agreements of any kind have been made by either party hereto except as those expressly set forth in this Agreement. Neither this Agreement nor any of its terms, covenants or conditions, nor any modification or addendum to this Agreement shall be valid unless it is in writing and signed by both Parties. If any provision of this Agreement is held in whole or part to be unenforceable for any reason, the remainder of the Agreement is severable and shall remain in effect and binding on the Parties. We are pleased to have the opportunity to provide our services to the City and appreciate your Keygent RecoveryMax Review Page 5 of 9 confidence in us. If you have any questions about the contents of this letter, please discuss them with Mr. Gene Yee at (310) 546-1910. If the Services and terms outlined herein are acceptable, please sign one copy of this letter in the space provided. Please mail us an original copy and fax a copy to (866) 518-7656. Very truly yours, KEYGENT LLC Eugene Yee, Partner ACKNOWLEDGED AND AGREED: CITY OF VERNON Signature: Please print name: Title: Date: ATTEST: By: MANUELA GIRON, City Clerk APPROVED AS TO FORM: Jeff A. Harrison Keygent RecoveryMax Review Page 6 of 8 EXHIBIT A Exhibit A RecoveryMax Benefit Eligibility Review Process Overview and Scope of Services PROCESS OVERVIEW Our RecoveryMax Benefit Eligibility Review will be conducted in the following four phases: ➢ Phase I - Project Planning and Design ➢ Phase II - Primary Insured Eligibility ➢ Phase III - Dependent Eligibility — Verification & Documentation ➢ Phase IV - Final Reporting and Recovery The scope of services shall be limited to an examination of primary enrollees and their respective dependents. The Phase III Dependent Eligibility — Verification and Documentation portion of our review shall be limited to enrollees in either two-party or family medical insurance coverage unless otherwise agreed to in writing. Phase III will include preparing the initial dependent eligibility verification and documentation correspondence, preparing the written follow-up letter for non -responders, and making up to two follow-up phone calls to non -responders. SCOPE OF SERVICES A. Introduction and Presentation of the RecoveryMax Review 1. Present the RecoveryMax Review process and procedures 2. Explain the benefits and advantages of the RecoveryMax Review 3. Meet with administration and staff 4. If requested, discuss the RecoveryMax Review with the City Council, benefits committee members, bargaining units, management and any other interested groups B. Program Design 1. Establish operating procedures and protocols to ensure confidentiality 2. Review health plan eligibility rules and procedures 3. Suggest amendments to the health plan document to permit program design 4. Review the process and stages 5. Assist the City with determining "proof' of eligibility requirements 6. Assist the City with establishing standards and action for non-compliance C. Analytical Services 1. Initiate and coordinate data collection process 2. Compile employment and benefit data 3. Analyze data using proprietary applications 4. Prepare analytical report categorizing employee, retiree and dependent eligibility coverage Keygent RecoveryMax Review Page 7 of 8 -Ar, _ . 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583-8811 November 6, 2008 Mr. Eugene Yee, Partner Keygent LLC 1020 Manhattan Beach Blvd., Suite 103 Manhattan Beach, CA 90266 Re: Letter Agreement for Benefit Audit Services Dear Mr. Yee: Transmitted herewith is an executed letter agreement approved by City Council on November 6, 2007, through Resolution No. 9458. If you have any questions regarding this matter, please call Mr. Willard Yamaguchi, at (323) 583-8811 ext. 175. Ve truly yours, Nelly G -ron City Clerk NG:dr c: Willard Yamaguchi Karina Rueda Resolution No. 9458 Agreement File No. 07-122 E-(clusively Industrial T9099 ED OCT 2 0CITY ATTORNEY 200� RISK MANAGEMENT D PT October 30, 2007 Mr. Willard G. Yamaguchi Chief Deputy City Attorney City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Re: RecoveryMax Benefit Eligibility Review Dear Mr. Yamaguchi: This letter confirms that Keygent LLC, a California limited liability company ("Keygent" or "we") has been retained by the City of Vernon ("the City" or "you") to perform the RecoveryMax Benefit Eligibility Review (the "RecoveryMax Review") described herein. The purpose of this letter is to confirm the understanding of our respective responsibilities and the terms of this engagement (the "Agreement"). If Keygent commenced the performance of the RecoveryMax Review prior to the execution of this Agreement, this Agreement shall be effective as of the commencement of such RecoveryMax Review. I. RecoveryMax Review Consulting Services. The City hereby retains Keygent to perform the RecoveryMax Review, which services are described in Exhibit A, attached hereto and incorporated herein, and Keygent hereby agrees to perform said services pursuant to the terms and conditions of this Agreement. It is understood and agreed by the parties hereto that said services shall be provided directly to the City and will be based upon the City's month -end records pursuant to the date of the Agreement unless mutually agreed to by both parties. Keygent will not be responsible for work that is beyond the services set forth in Exhibit A. Either party may request changes to the services set forth in Exhibit A. All changes must be agreed in writing between the parties prior to any change in the services in Exhibit A. We will perform the RecoveryMax Review in accordance within industry standards for such services. We will provide no opinion, attestation or other form of assurance with respect to our work or the information upon which our work is based. The procedures we will be performing under this Agreement will not constitute an examination, review or audit in accordance with generally accepted auditing standards or attestation standards for Certified Public Accountants. We will not audit or otherwise verify the information supplied to us in connection with any engagement under this Agreement, from whatever source, except as may be specified in this Agreement. The RecoveryMax Review does not include the provision of legal advice and Keygent makes no representations regarding questions of legal interpretation. The City should consult with its attorneys with respect to any legal matters or items that require legal interpretation, under federal, state or other type of law or regulation. 1020 MANHATTAN BEACH Bum, SUITE 103, MANHATTAN BEACH, CALIFORNIA 90266 PHONE & FAx (866) 518-7656 www.keygentcorp.com Il. CiIy Responsibilities. The City shall provide Keygent with all information relevant to the RecoveryMax Review and any reasonable assistance as may be required to properly perform the RecoveryMax Review. The City represents and warrants to Keygent that all such information provided by the City and any designated third party will be accurate and complete in all material respects. Keygent cannot warrant the correctness of data supplied by the City or other parties, nor can Keygent be responsible for data not provided in a timely manner. The City shall perform all management functions and make all management decisions in connection with the RecoveryMax Review, and shall assign competent individuals to oversee the RecoveryMax Review. The City is also responsible for the implementation of actions identified in the course of this engagement and results achieved from the RecoveryMax Review. Any timing or fee estimate we have provided for this engagement is based upon the agreed - upon level of assistance from the City and commitment of City resources. Keygent has not been engaged to, nor will Keygent provide any management functions or make management decisions for the City under this Agreement. It is the City's responsibility to establish and maintain its policies and procedures related to its benefit plans. III. Tool Development. Except otherwise set forth in this Agreement, the City will own all tangible written material originally prepared expressly for the City and delivered to the City under this Agreement (the "Work Product"), excluding any Keygent materials contained or embodied therein, which includes all: proprietary information, general skills, know-how, expertise, ideas, concepts, methods, techniques, processes, software, materials or other intellectual property or information which may have been discovered, created, developed or derived by Keygent either prior to or as a result of its provision of RecoveryMax Review Consulting Services under this Agreement. Keygent's working papers which belong exclusively to Keygent. The City will have a non- exclusive, non -transferable license to use Keygent's working papers for its own internal use and only for the purposes for which they are delivered to the extent that they form part of the Work Product. IV. Limited Third Party Distribution. The Work Product is solely for the City's internal use and benefit. The City shall not authorize any third party to rely upon any of the Work Product without Keygent's prior written consent. To the extent that Keygent's work is not subject to disclosure under applicable public record laws, the City shall not distribute to, discuss with, or otherwise disclose the Work Product to any third party without Keygent's prior written consent, and the City shall not otherwise discuss the fact or substance of the RecoveryMax Review hereunder with third parties without Keygent's prior written consent, except for any applicable regulatory or governmental agency as required. Keygent accepts no liability or responsibility to any third party who benefits from or uses the RecoveryMax Review or gains access to the Work Product. Keygent and the City may have discussions regarding the RecoveryMax Review; provided, however, that oral or preliminary information, drafts or advice given by Keygent may not be relied upon or attributed to Keygent unless Keygent specifically confirms such information or advice or otherwise reduces such draft to a final writing. Because Keygent accepts no liability to third parties with respect to the RecoveryMax Review and Work Product, the City agrees (without limiting any other indemnification provision set forth in this Agreement) to indemnify and hold Keygent and any of its members, officers, employees, and directors harmless from and against any and all third party claims, suits and actions, and all Keygent RecoveryMax Review Page 2 of 8 associated damages, settlements, losses, liabilities, costs, and expenses, including without limitation reasonable attorneys fees, arising from or relating to the RecoveryMax Review or Work Product under this Agreement, except to the extent finally determined to have resulted from the gross negligence or intentional misconduct of Keygent relating to such RecoveryMax Review and Work Product. Keygent reserves the rights to disclose that it has been retained by the City and the results of the RecoveryMax Review for marketing purposes only. In such capacity, Keygent shall not disclose any Confidential Information as described in Section VIII below. V. Fees and Expenses. The City acknowledges the obligation to pay Keygent for services rendered in accordance with this Agreement between Keygent and the City. Keygent shall only receive compensation for services performed under this Agreement if the RecoveryMax Review finds ineligible enrollees or dependents in the City's employee benefit plan(s) or identifies other cost savings related to our RecoveryMax Review. The fee for services rendered under this Agreement shall be fifty percent (50%) of identified first year (annualized) cost savings in the City's health and welfare benefit premiums or reduction in health and welfare expenses resulting from the RecoveryMax Review. Such savings shall include identification of underpayment of employee contributions for health and welfare premiums in excess of City established limits or "caps" and unpaid premiums that reduce liability in connection with life, disability or other City provided insurance. All savings identified by Keygent will be described in a Draft Report that is sent to the City at the completion of the RecoveryMax Review. After the Draft Report is issued, the City will have 30 days to review the Draft Report and discuss any changes with Keygent before Keygent issues its Final Report. At the election of the City, our fee may be paid (1) in full upon receipt of the Final RecoveryMax Review Report or (2) in equal installments over twelve (12) months beginning the first day of the following month after the Final Report is issued, plus a monthly handling fee of 0.75% of Keygent's total compensation per monthly payment. The City is, responsible for expenses related to the printing and postage of all correspondence in connection with all written communication set out in Section D — "Communication Services" in Exhibit A. VI. Limitation of Liability. THE PARTIES AGREE THAT KEYGENT LLC SHALL BE SOLEY LIABLE FOR ANY FINALLY DETERMINATED DAMAGES IN CONNECTION WITH THIS AGREEMENT. THE PARTIES AGREE THAT KEYGENT' S OFFICERS, DIRECTORS, AGENTS, AND EMPLOYEES SHALL NOT BE PERSONALLY LIABLE TO THE CITY, WHETHER IN TORT, CONTRACT OR OTHERWISE, FOR ANY DAMAGES IN CONNECTION WITH THIS AGREEMENT. EXCEPT TO THE EXTENT FINALLY DETERMINED TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF KEYGENT, KEYGENT'S LIABILITY TO PAY DAMAGES FOR ANY LOSSES AND CLAIMS INCURRED BY THE CITY AS A RESULT OF BREACH OF CONTRACT, NEGLIGENCE OR OTHER TORT COMMITTED BY KEYGENT, REGARDLESS OF THE THEORY OF LIABILITY ASSERTED, IS LIMITED TO NO MORE THAN THE TOTAL AMOUNT OF FEES PAID TO KEYGENT UNDER THIS AGREEMENT. IN ADDITION, KEYGENT WILL NOT BE LIABLE IN ANY EVENT FOR LOST PROFITS OR ANY CONSEQUENTIAL, INDIRECT, PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES. Keygent RecoveryMax Review Page 3 of 8 THE PROVISIONS OF THIS SECTION WILL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. VII. Mediation and Arbitration. In the event of any dispute arising out of or relating to the engagement of Keygent by the City, the parties agree first to try in good faith to settle the dispute voluntarily with the aid of an impartial mediator who will attempt to facilitate negotiations. A dispute will be submitted to mediation by written notice to the other party or parties. The mediator will be selected by agreement by the parties. If the parties cannot agree on a mediator within 30 days of the receipt of the notice of request for mediation, a mediator will be designated by the American Arbitration Association ("AAA") at the request of either party. The mediation will be treated as a settlement discussion and therefore will be confidential. Any applicable statute of limitations will be tolled during the pendency of the mediation. Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally by the parties. If the dispute has not been resolved within 60 days after the written notice beginning the mediation process (or a longer period, if the parties agree to extend the mediation), the mediation will terminate, and the dispute will be resolved by final and binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association. The arbitration will take place before a panel of three arbitrators. Within 30 days of the commencement of the arbitration, each party will designate in writing a single neutral and independent arbitrator. The two arbitrators designated by the parties will then select a third arbitrator. The arbitrators will have a sufficient background in either employee benefits or law to reasonably prepare them to decide the dispute. The arbitrators will have the authority to permit limited discovery, including depositions, prior to the arbitration hearing, and such discovery will be conducted consistent with the Federal Rules of Civil Procedure. The arbitrators will have no power or authority to award punitive or exemplary damages. The arbitrators may, in their discretion, award the cost of the arbitration, including reasonable attorney fees and costs, to the prevailing party. Any award made may be confirmed and enforced in any court having jurisdiction. Any arbitration shall be confidential, and except as required by law, neither party may disclose the content or results of any arbitration hereunder without the prior written consent of the other parties, except that disclosure is permitted to a party's auditors, insurers and legal advisors. VIIL Handling of Data and Other Confidential Information. Keygent acknowledges that in connection with this engagement it may have access to confidential protected health information ("PHI"), including, but not limited to, employee identifying information. Keygent agrees that it (a) will not use or further disclose PHI other than as permitted by this Agreement or required by law; (b) will protect and safeguard from any oral and written disclosure all confidential information regardless of the type of media on which it is stored with which it may come into contact; (c) use appropriate safeguards to prevent use or disclosure of PHI other than as permitted by this Agreement or required by law or professional regulation; (d) will require that all of its subcontractors and agents to which it provides PHI pursuant to the terms of this Agreement agree to all of the same restrictions and conditions to which Keygent is bound; (e) will report to the City any unauthorized use or disclosure promptly upon becoming aware of it; and (f) make available PHI for amendment and incorporate any amendments to PHI. Upon termination of this Agreement, Keygent will return or destroy all PHI received from the City that Keygent maintains and retain only that PHI that is required for Keygent's work papers prepared in connection with this engagement (and will extend the Keygent RecoveryMax Review Page 4 of 8 protections of this Agreement to any such retained information). Keygent recognizes that any breach of confidentiality or misuse of information found in and/or obtained from records may result in the termination of this Agreement. IX. Status of Keygent. Keygent will provide the services in this Agreement as an independent contractor. No other relationship to the City or its benefit plan(s) is implied or intended. Keygent shall not be deemed to be a "named fiduciary" or "plan administrator" as these terms are defined under ERISA or any similar or successor law. X. Acceptance. The passage of ten (10) business days from the date when the final RecoveryMax Review report is provided to the City without receipt by Keygent of notice of non -acceptance by the City, or any use by the City of the information contained in the final RecoveryMax Review report will constitute final acceptance by the City. XI. Termination. Either party may terminate this Agreement at any time by giving the other party sixty (60) days written notice of termination. If the City elects to terminate Keygent at any time prior to the final RecoveryMax Review report, Keygent shall be entitled to the greater of fifty percent (50%) of identified cost savings at the time of termination, or payment for services completed prior to such termination based upon an hourly rate of $300 for Partners and $150 for Associates. Keygent may also resign from performing all or any portion of the services in connection with the RecoveryMax Review and terminate this Agreement immediately upon written notice in the event that circumstances arise that would make continuation of all or any portion of the work by Keygent in conflict with any professional regulations, standards or guidelines to which Keygent conforms. XII. Choice of Law and Forum. The construction, interpretation, and enforcement of this Agreement shall be governed by the substantive contract law of the State of California without regard to its conflict of laws provisions. It is the intention of the parties that the Limitation of Liability paragraph above shall be enforceable and the parties believe that the clause is enforceable under California law. In the event that the Limitation of Liability clause is not enforceable, then the parties agree that New York law, and not California law shall apply to that clause. In the event any provision of this Agreement is unenforceable as a matter of law, the remaining provisions will stay in full force and effect. XIII. Entire Agreement. These terms and conditions contained in this Agreement constitute the entire agreement between the City and Keygent. This Agreement includes all representations of every kind and nature made by each of the parties to the other and sets forth the entire Agreement of the parties. All previous agreements are superseded, revoked, terminated, and canceled. No representations, warranties, covenants, or agreements of any kind have been made by either party hereto except as those expressly set forth in this Agreement. Neither this Agreement nor any of its terms, covenants or conditions, nor any modification or addendum to this Agreement shall be valid unless it is in writing and signed by both Parties. If any provision of this Agreement is held in whole or part to be unenforceable for any reason, the remainder of the Agreement is severable and shall remain in effect and binding on the Parties. We are pleased to have the opportunity to provide our services to the City and appreciate your Keygent RecoveryMax Review Page 5 of 8 confidence in us. If you have any questions about the contents of this letter, please discuss them with Mr. Gene Yee at (310) 546-1910. If the Services and terms outlined herein are acceptable, please sign one copy of this letter in the space provided. Please mail us an original copy and fax a copy to (866) 518-7656. Very truly yours, KEYGENT LLC r By: Eugene Yee, artn r ACKNOWLEDGED AND AGREED: CITY OF VERNON Signature: Please print name: Lconis C . Malburg Title: Mayor Date: November 4. 2008 ST : 77"I'o-f 1-, 4, A r-- Z �' 4Q& /iNkfUlff-A GIR , Ci y Clerk APPROVE S TO FORM: Qin J A. RRISON, City Attorney Keygent RecoveryMax Review Page 6 of 8 EXHIBIT A Exhibit A RecoveryMax Benefit Eligibility Review Process Overview and Scope of Services PROCESS OVERVIEW Our RecoveryMax Benefit Eligibility Review will be conducted in the following four phases: ➢ Phase I - Project Planning and Design ➢ Phase II - Primary Insured Eligibility ➢ Phase III - Dependent Eligibility — Verification & Documentation ➢ Phase IV - Final Reporting and Recovery The scope of services shall be limited to an examination of primary enrollees and their respective dependents. The Phase III — Dependent Eligibility — Verification and Documentation portion of our review shall be limited to enrollees in either two-party or family medical insurance coverage unless otherwise agreed to in writing. Phase III will include preparing the initial dependent eligibility verification and documentation correspondence, preparing the written follow-up letter for non -responders, and making up to two follow-up phone calls to non -responders. SCOPE OF SERVICES A. Introduction and Presentation of the RecoveryMax Review 1. Present the RecoveryMax Review process and procedures 2. Explain the benefits and advantages of the RecoveryMax Review 3. Meet with administration and staff 4. If requested, discuss the RecoveryMax Review with the City Council, benefits committee members, bargaining units, management and any other interested groups B. Program Design 1. Establish operating procedures and protocols to ensure confidentiality 2. Review health plan eligibility rules and procedures 3. Suggest amendments to the health plan document to permit program design 4. Review the process and stages 5. Assist the City with determining "proof' of eligibility requirements 6. Assist the City with establishing standards and action for non-compliance C. Analytical Services 1. Initiate and coordinate data collection process 2. Compile employment and benefit data 3. Analyze data using proprietary applications 4. Prepare analytical report categorizing employee, retiree and dependent eligibility coverage Keygent RecoveryMax Review Page 7 of 8 Exhibit A (continued) RecoveryMax Benefit Eligibility Review Process Overview and Scope of Services D. Communication Services 1. Prepare announcement of benefit eligibility review 2. Draft all outgoing employee correspondence, including announcements, document requests, confirmations, and non-compliance letters (note all COBRA notifications will handled by the City) E. Implementation Services 1. Determine employment status based on payroll records 2. Review employee records and files 3. Monitor mandatory reporting period (documentation and verification phase) 4. Collect and review documentation 5. Confirm eligibility F. Final Reporting 1. Summarize the RecoveryMax Review savings 2. Categorize and identify areas of non-compliance 3. Provide a record of employees, retirees and dependents who are eligible and ineligible for benefit coverage 4. Recommend strategies to improve plan effectiveness Keygent RecoveryMax Review Page 8 of 8