1989-1452819L
NO 951-1,11-5
AN ORDINANCE ACCEPTING THE PROPOSAL OF AUGUST INTERNATIONAL
CORPORATION TO PROVIDE THIRD PARTY ADMINISTRATIVE SERVICES FOR
THE CITY'S EMPLOYEE HEALTH INSURANCE PROGRAM, AUTHORIZING THE
MAYOR TO EXECUTE AN AGREEMENT FOR SAID SERVICES, AUTHORIZING THE
EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIVE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That the City hereby accepts the proposal of
August International Corporation to provide for third party
administrative services for the City's employee health insurance
program, and the Mayor is hereby authorized to execute an
agreement for said services, a copy of which agreement is
attached hereto and incorporated by reference herein
SECTION II That the expenditure of funds pursuant to said
agreement iereby authorized
SECTION III That this ordinance shall become effective
imme at~upon its passage and approval
PASSED AND APPROVED this the 17 t/1 day of October, 1989
ATTEST
RAY ST PR NS, AYOR
t7 NIFEW-WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY
BY
2819L
THE STATE OF TEXAS 9
COUNTY OF DENTON §
AGREEMENT BETWEEN THE CITY OP DENTON
AND AUGUST INTERNAPIONAL
CORPORATION (AIC)
THIS AGREEMENT, effective December 1, 1989 is made and
entered into by and between August International Corporation,
Inc (AIC) and City of Denton ("Employer") having its offices at
Denton, Texas
PREMISES
WHEREAS, the City has established a self-funded Employee
Welfare Benefit Plan pursuant to the Employee Retirement Income
Security Act of 1974, as amended, (the "Plan") for certain
employees of the City and for certain dependents of such
employees ("Participants"), and
WHEREAS, Employer has contracted with the predecessor
Corporation of AIC, Coordinated Benefits Systems, Inc , for a
three year term to perform professional administration services
for the plan, and
WHEREAS, Employer will terminate its plan December 1, 1989
and is desirous of amending the contract for administrative
services to provide services for the phase out of such Plan, and
WHEREAS, AIC is in the business of providing services in
conjunction with such Plan, and the City desires to engage AIC to
perform the services enumerated herein below,
WHEREAS, AIC and Employer have agreed to execute an amended
agreement,
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and covenants contained herein, the parties agree
as follows
TABLE OF CONTENTS
I TERM OF AGREEMENT
1 1 Term
1 2 Termination
1 2 1 By the Parties
1 2 2 By Law
1 3 Effect of Termination
II PLAN
2 1 Plan Document
2 2 Interpretation of Plan
III SCOPE OF RELATIONSHIP
3 1 Agency
3 2 Fiduciary
3 3 Communications
3 4 Parties
IV DUTIES OF AIC
4 1 Claims Services
4 1 1 Practices and Procedures
4 1 2 Services
4 1 3 Additional Services
4 1 4 Recovery of Payment
4 2 Records and Files
4 3 Reports
4 4 Duty of Care
V DUTIES OF CITY
5 1 Account
5 1 1 Draft Authority on the Account
5 2 Determination of Service Fee
5 2 1 Payment of Service Fee
5 2 2 Change of Service Fee
5 3 Taxes
5 4 Census
5 5 Liability for Benefits
5 6 Indemnification
VI GENERAL PROVISIONS
6 1 Entire Contract
6 2 Applicable Law
6 3 Assignment
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2S19L
2819L
I TERM OF AGREEMENT
1 1 Term This Agreement shall commence December 1, 1989
and shall continue in effect until November 30, 1990, unless
terminated as provided herein below
1 2 Termination
1 2 1 B~th__e~ Parties Either Party may terminate this
Agreement at any time,FOR OR WITHOUT CAUSE, by providing written
notice to the other Party Such termination shall become
effective ONE HUNDRED AND TWENTY (120) DAYS after the date of
receipt of such notice or a date specified therein Either Party
may terminate this Agreement if the other party fails to perform
any of the provisions of this Agreement Such termination shall
become effective THIRTY (30) WORKING DAYS after the date of
receipt of written notice of such default(s) by the other Party,
unless such other Party shall have cured such default(s) prior to
the expiration of the THIRTY (30) DAY period
1 2 2 By Law If any State or Federal law or regulation is
enacted or promulgated which prohibits the performance of any of
the duties hereunder, or if any law is interpreted to prohibit
such performance, this Agreement shall automatically terminate as
of the effective date of such prohibition
1 3 Effect of Termination As of the effective date of
termination o this Agreement, AIC shall have no further duties
of performance hereunder The period between notice of
termination and the effective date of termination shall be used
to effect an orderly transfer of records and funds, if any, from
AIC to the City of Denton or to such person as the City may
designate in writing
II PLAN
2 1 Plan Document No GH-265 All services to be provided
by AIC hereunder shall be performed pursuant to the provisions of
the Plan Document, as amended A copy of the Plan Document and
any amendments thereto shall be deemed to form part of this
Agreement for such purpose
2 2 Inter retortion of the Plan The City shall be the final
arbiter as to t e nterpre at on of the Plan and as to the
payment of benefits thereunder AIC shall consult with the City
in the event questions concerning benefit matters arise
III SCOPE OF RELATIONSHIP
3 1 Agency In performing the services hereunder, AIC is
acting solely as the agent of the City, and the respective rights
of the Parties shall be determined in accordance with the laws of
agency In the event that the City fails to comply with any
federal or state law, AIC shall not be liable for any action
brought against the Plan with regard to such failure
3 2 Fiduciary AIC is not and shall not be deemed to be a
fiduciary ofthe Plan Rather, the duties of AIC hereunder are
ministerial in nature, and this Agreement shall not be deemed to
confer or delegate any discretionary authority or control of the
management of the Plan or of the management or discretion of the
assets of the Plan or to confer or delegate any discretionary
authority or discretionary responsibility in the administration
of the Plan
3 3 Communications AIC shall be entitled to rely, without
question, upon any written communication of the City, and the
agents and employees thereof, which are believed by AIC to be
genuine and to have been presented by a person having the
apparent authority to do so
3 4 Parties This Agreement is between AIC and the City,
and does not create any rights or legal relationships between AIC
and any of the Participants or Beneficiaries under the Plan
IV DUTIES OF AIC
4 1 Claims Services AIC agrees to perform the below
enumerated services w t respect to the processing and payment of
claims under the Plan
4 1 1 Practices and Procedures In performing such
services, AI shall employ is standard practices and procedures,
whether written or otherwise, provided, however, such performance
shall be subject to the provisions of this Agreement, and in
particular, but without limitation, Section 2 2 above
4 1 2 Services AIC agrees to
(a) provide claim forms to the City for submitting claims to
AIC,
(b) receive claims and claims documentation,
(c) correspond with the Participants and providers of
services if additional information is deemed by AIC to be
necessary to complete the processing of claims,
PAGE 2
(d) coordinate benefits payable under the Plan with other
benefit plans, if any,
(e) determine the amount of benefits payable under the Plan,
(f) pay from the Account (as described in Section 5 1 below)
the amount of benefits determined to be payable under the Plan,
the time for payment shall average not more than fifteen (15)
days from the receipt of complete information to process the
claim
(g) provide notice to Participants as to the reason(s) for
denial of benefits and provide for the review of denied claims,
provided, however, that such review shall be advisory to the City
in accordance with Section 2 2 above and shall not be deemed to
be an exercise of discretion by AIC in accordance with Section
3 2 above,
(h) advise the City in writing of any rights to subrogation
of which AIC may become aware
(i) At the termination of this contract, November 30, 1990,
AIC will provide City with its standard, unlabeled, 1600 BPI,
computer tape of all claims data paid from November 1, 1988
through November 30, 1990 including employee name, dependent
name, birthdate, physician, and hospital data Such tape will be
furnished to the City within 45 days from the termination date
(j) It is understood that customer service telephone calls
and client service inquiries will be forwarded to the new Health
Insurance carrier effective December 15, 1989 except for those
calls related to claims which occurred prior to November 30, 1989
(k) At completion of this contract period, and within
forty-five (45) days from such termination, AIC will box all
claims, files, and reports and ship to the City This
information will be shipped COD for City receipt
4 1 3 Additional Services
following services or a charge
service is provided
AIC agrees to provide the
to be assessed at the time the
(a) hospital audits for claims exceeding $10,000,
(b) large case management, and
(c) outside investigations and reviews
These services are provided only after City approval has been
obtained
PAGE 3
4 1 4 Recover of Payment In the event payment is made to
or on behaTt o an ne g ble employee Participant or any
ineligible dependent of an employee Participant or that a payment
is made in excess of the amount properly payable, AIC shall
(a) promptly advise the City of such event, and
(b) make a single demand with respect to the Participant in
writing for return of such payment or overpayment and report the
result of such effort to the City
AIC shall have no further obligation with respect to any such
payment or overpayment, except that AIC is hereby authorized to
offset against any unpaid claim of such employee Participant of
any dependent thereof unless advised otherwise by the City
4 2 Records and Files AIC shall establish and maintain a
record-keep ng system concerning the services to be performed
hereunder All such records shall be the property of the City
and shall be delivered to the City upon termination of this
Agreement, subject to the right of AIC to copy and retain all or
any of such records as it deems in its interest to do so All
such records shall be available for inspection by the City at any
time during normal business hours at the office of AIC in Dallas,
Texas, upon reasonable prior notice
4 3 Reports AIC shall provide the following to the City
(a) Explanation of Benefit Forms (as issued),
(b) Check register (weekly),
(c) Report of claims paid identified as to Participants
(b3--monthly),
(d) Lag Summary Report (bi-monthly),
(e) Report of claims incurred but not reported as of November
30, 1990,
(f) Report of Plan's operation during the preceding year and
cost estimates,
(g) Claim Exceed Report (bi-monthly), and
(h) Top 50 Provider Report as of November 30, 1990
PAGE 4
4 4 Duty of Care AIC shall not be liable for any loss
resulting from t he performance of its duties hereunder, except
for losses resulting directly from
(a) the negligence of AIC, or
(b) the failure of AIC to follow the written directions of
the City in the processing of a particular claim, or
(c) the fraudulent or criminal acts of the agents or
employees of AIC, whether acting alone or in concert with others
Subject to the above, the defense of any legal action brought
by or on behalf of any person, including, without limitation, any
Participant, Beneficiary, or fiduciary of the Plan, shall be the
obligation of the City and shall not be the obligation of AIC
V DUTIES OF THE CITY
5 1 Account The City shall continue to maintain, and fund
a checking account ("Account") at First State Bank, Denton, Texas
for the payment by AIC of benefits under the Plan The City
shall be liable for all claim checks issued against the Account
AIC agrees to continue to provide, at its own expense, all claim
checks for the purpose of issuing benefits for claims on the
Account
5 1 1 Draft Authoritto on the Account The City hereby
grants to A C aut or ty draft against the Account for the
purposes set forth in Section 4 1 2
5 2 Determination of Service Fee The City agrees to pay to
AIC a Service Fee equal to six percent (67) of claims paid during
the period December 1, 1989 to November 30, 1990
5 2 1 Payment of Service Fee Upon receipt of the Invoice,
which is furnished by I -on a monthly basis, the City agrees to
pay to AIC the Service Fee as determined by Section 5 2 above
5 2 2 Chang of Service Fee AIC agrees not to change the
Service Fee applicable to this greement
5 3 Taxes The City agrees to pay any and all taxes,
licenses and fees levied, if any, by any Local, State, or Federal
authority in connection with the operation of the Plan or in
connection with the duties of AIC hereunder AIC agrees to
notify the City and make arrangements for payment thereof is any
such levy appears imminent
PAGE 5
5 4 Census The City agrees to verify the eligibility of
Participants and to furnish to AIC such information as may be
necessary or required by AIC from time to time to discharge its
obligations under Section 4 4 (f) above
5 5 Liability for Benefits It is understood and agreed
that liab ty or payment o benefits accrued under the Plan is
the liability of the City and that AIC shall not have any duty to
use any of its funds for the payment of such benefits
5 6 Indemnification Subject to Section 4 5, the City
agrees to indemnify and hold harmless AIC, its agents, and
employees against any and all liability, damages, expenses and
costs, including, without limitation, extra-contract damages,
court costs, and attorneys' fees, resulting from or arising out
of any claim, demand, or legal or administrative proceeding made
or brought against AIC by or on behalf of any person including,
without limitation, any Participant, Beneficiary, or fiduciary
under the Plan
VI GENERAL PROVISIONS
6 1 Entire Contract This Agreement, together with any
exhibits, attachments an amendments appended hereto, constitutes
the entire Agreement between the Parties No representations,
understandings, or agreements which are not expressly contained
herein shall be binding or enforceable No modification of the
terms or provisions of this Agreement shall be effective unless
evidenced by a written amendment hereto, signed by an authorized
officer of both the City and of AIC
6 2 Applicable Law This Agreement shall be deemed to have
been made an entered--into in the State of Texas, and shall be
construed and enforced according to the laws of the State of
Texas
6 3 Assignment This Agreement shall not be assigned by
AIC, nor shall-QC's duties, obligations or responsibilities
hereunder be delegated to any other person or entity without the
prior written consent of the City
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed by their respective authorized officers
on the _ day of , 1989
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CITY OF DENTON, TEXAS
BY
RAY 7 F ENS MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
BY
APPROVED AS TO LEGAL FORM
DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY
0
AIC
0
NARD DIFIORE
ICE PRESIDENT
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