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Exhibit 1 - Agenda Information SheetCity of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement & Compliance ACM: David Gaines DATE: January 5, 2021 SUBJECT Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, authorizing the City Manager, or his designee, to execute a Professional Services Agreement with Gallagher Bassett Services, Inc., for third party administration services to manage workers’ compensation claims for the employee injuries under the City’s self-funded workers’ compensation program as set forth in the contract; providing for the expenditure of funds therefor; and providing an effective date (File 7553 – Professional Services Agreement for third party administration services awarded to Gallagher Bassett Services, Inc., in the five (5) year not-to-exceed amount of $770,000.00). INFORMATION/BACKGROUND The City of Denton uses the specialized knowledge, experience, and computer systems of a third-party administrator (TPA) to handles the City’s self-funded workers’ compensation claims, in accordance with the Texas Workers’ Compensation Act. Additionally, because the City can, at times, find itself in an adversarial position with the injured worker if a dispute arises during the adjusting and management of a claim, it is beneficial for the City to use a TPA to provide a “buffer” between the parties. The TPA provides the direct and ancillary services needed to properly manage a workers’ compensation claim, including impairment benefit calculation and payment, medical bill reviews, claim investigations, case management, audits and payments, appearance at Division of Workers’ Compensation hearings, among other required services related to workers’ compensation cases. The service level of the City’s current TPA, Texas Political Subdivisions Joint Self-Insurance Fund (TPS) was reviewed when investigating concerns related to the case of a police officer who was catastrophically injured in the line of duty. As a result, on September 15, 2020, Human Resources staff recommended to City Council in closed session to expedite the normal RFP process to secure a new TPA solution. The City’s Risk Management staff, with the assistance of Lockton Companies, LLC (Lockton), the City’s property, casualty, and workers’ compensation consultant, engaged in an expedited process to identify TPA candidates for consideration and obtain quotes for services. It was determined that a Tier 1 TPA should be chosen given the vast difference in knowledge, training, customer service, and anticipated performance. Risk Management staff and Lockton evaluated the proposals from five (5) Tier-1 TPAs with specialty groups for public sector entities. Candidates’ proposals and quotes were reviewed for total pricing and indicators of probable performance. In addition, staff conducted interviews with all candidates to determine customer service level expectations, the experience level of the team proposed to be assigned to the City’s account, and the appetite of each City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com candidate to take on the catastrophic injury claim as a one-off claim before the City’s full workers’ compensation portfolio could be transitioned. Risk Management staff determined Gallagher Bassett Services, Inc. (Gallagher Bassett) was the best TPA candidate to meet the City’s and our employees' needs. In accordance with Texas Local Government Code 252.022, the procurement of professional services is exempt from the requirement of competition-based selection. OPTIONS A total of five Tier-1 TPAs were considered to serve as the City’s third-party claims administrator (TPA) for all workers’ compensation claims. The organizations considered were Gallagher Bassett, Broadspire, Sedgwick, AS&G, and PMA. Criteria that were considered included price, experience working with the City’s current excess workers’ compensation carrier (Midwest Employers Casualty Company), experience working with local governments, customer service standards, and appetite for taking the catastrophic injury case as a “one-off,” among other industry-specific criteria. After an internal review, staff interviews with the candidate organizations, and in consultation with Lockton, of the five candidate companies, Gallagher Bassett was chosen as the preferred vendor. Gallagher Bassett was not the lowest priced but was the clear choice to meet the City of Denton’s needs for many reasons but not the least of which was Gallagher Bassett’s willingness to take the catastrophic injury case in advance of the City’s full workers’ compensation portfolio. RECOMMENDATION Award a contract with Gallagher Bassett Services, Inc., for third party administration services to manage workers’ compensation claims for the employee injuries under the City’s self-funded workers compensation program, in a five (5) year not-to-exceed amount of $770,000. PRINCIPAL PLACE OF BUSINESS Gallagher Bassett Services, Inc. Rolling Meadows, IL ESTIMATED SCHEDULE OF PROJECT This a five (5) year contract. FISCAL INFORMATION Funds for third party administration expenses are budgeted in the Risk Retention Fund. Requisitions will be entered on an as-needed basis. The budgeted amount for this item is $770,000. The City will only pay for services rendered and is not obligated to pay the full contract amount unless needed. EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: TPA Comparison Exhibit 3: Ordinance and Contract Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Deby Skawinski, 940-349-7810. Legal point of contact: Marcella Lunn at 940-349-8333.