1987-178ZO45L
AN ORDINANCE ACCEPTING THE PROPOSAL OF COORDINATED BENEFIT
SYSTEMS, INC 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
WHEREAS, the City has advertised and received proposals for
third party administrative services for the City's employee
health insurance program, and
WHEREAS, the City Manager having recommended to the City
Council that the proposal of Coordinated Benefit Systems, Inc
for administrative services was the best proposal received by the
City and that said proposal should be accepted, NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That the City hereby accepts the proposal of
Coordinated B'~neflt Systems, Inc 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 is h~¥eby authorized
SECTION III That this ordinance shall become effective
immediately upon its passage and approval
PASSED AND APPROVED this the~'~day of October, 1987
ATTEST
Tl,FE,, 'fALTERS, CIT
API~ROVED AS TO LEGAL FORM
DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY
BY ¢
2045L
THE STATE OF TEXAS ~ AGREEMENT BETWEEN THE CITY OF DENTON
AND COORDINATED BENEFITS SYSTEMS, INC
COUNTY OF DENTON ~
THIS AGREEMENT, effective October 1, 1987 is made and entered
into by and between Coordinated Benefits Systems, (CBS) Inc 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, CBS, Inc is in the business of providing services
in conjunction with such Plans, and the City desires to engage
CBS, Inc to perform the services enumerated herein below,
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
1 2 Termination
1 2 1 By the Parties 1
1 2 2 By Law 1
1 3 Effect of Termination 1
II PLAN
2 1 Plan Document 1
2.2 Interpretation of Plan 1
2.3 Stop-Loss Insurance 2
III SCOPE OF RELATIONSHIP
3 1 Agency 2
3 2 F~duc~ary 2
3 3 Communications 2
3 4 Parties 2
IV DUTIES OF CBS, INC
4 1 Documentation 2 ~ 3
4 2 Claims Serwces 3
4 2 1 Practices and Procedures 3
4 2 2 Serwces 3
4 2 3 Additional Services 3 ~ 4
4 2 4 Reports 4
4 3 Records and F~les 4
4 4 Reports 4
4 5 Duty of Care 5
V DUTIES OF CITY
5 1 Account 5
5 1 1 Draft Authority on the Account 5
5 2 Determxnatxon of Service Fee 5
5 2.1 Payment of Service Fee 5
5 2 2 Change of Service Fee 5
5 3 Taxes 6
5 4 Conversion Fee 6
5 5 Census 6
5 6 Liability for Benefits 6
5 7 Indemnification 6
VI GENERAL PROVISIONS
6 1 Entire Contract 6
6 2 Applicable Law 7
6 3 Assignment 7
TERM OF AGREEMENT
1 1 Term Thts Agreement shall commence October 1, 1987 and
shall cont~e tn effect for three (3) years, unless terminated
as provided herein below In the third year, the parties may
agree to renegottate the scope of servtces and the constderatlon
provtded for herein and extend the term of this agreement
1 2 Termtnatton
1 2 1 By the Parttes Either Party may terminate this
Agreement at any time, FOR OR WITHOUT CAUSE, by provtding written
notice to the other Party Such termination shall become
effecttve ONE HUNDRED AND TWENTY (120) DAYS after the date of
recetpt of such nottce or a date specified therein Either Party
may terminate this Agreement tf the other party fails to perform
any of the provtstons of thts Agreement Such termtnatlon 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) prtor to
the exptratton of the THIRTY (30) DAY period
1 2 2 By Law If any State or Federal law or regulation is
enacted or pro---$~-~Tgated which prohlbtts the performance of any of
the duttes hereunder, or if any law ts tnterpreted to prohtbtt
such performance, this Agreement shall automattcally terminate as
of the effective date of such prohtbttlon
1 3 Effect of Termlnatton As of the effective date of
termtnatton of this Agreement, CBS, Inc shall have no further
duties of performance hereunder The pertod between notice of
termlnatton and the effective date of termination shall be used
to effect an orderly transfer of records and funds, if any, from
CBS, Inc to the Ctty of Denton or to such person as the City may
designate in writing
II PLAN
2 1 Plan Document No GH-26S Ail services to be provtded
by CBS, Inc 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 thts Agreement for such purpose
2 2 Interpretation of the Plan The Ctty shall be the final
arbtter as to the interpretation of the Plan and as to the
payment of benefits thereunder CBS, Inc shall consult with the
Ctty tn the event questions concerntng beneftt matters arise
PAGE 3
2 3 Stop-Loss Insurance Not withstanding any provision of
this Agreement to the contrary and, in particular, Section 2 2
above, ~ashlngton National Life Insurance Company hereby retains
the sole right to determine whether any payment of benefits under
the Plan shall be deemed to be a "claim" as defined in any
individual or aggregate stop-loss policy of insurance issued by
Washington National Life Insurance Company to the City
III SCOPE OF RELATIONSHIP
3 1 A e~ In performing the services hereunder, CBS, Inc
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, CBS, Inc shall not be liable for any
action brought against the Plan with regard to such failure
3 2 Fiduciary CBS, Inc 1s not and shall not be deemed to
be a fiduciary of the Plan Rather, the duties of CBS, Inc
hereunder are ministerial in nature, and this Agreement shall not
be deemed to confer or delegate any d~scretlonary 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 responslbxllty in the
administration of the Plan
3 3 Communications CBS, Inc shall be entitled to rely,
without question, upon any written or oral communication of the
City, and the agents and employees thereof, which are believed by
CBS, Inc 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 CBS, Inc and the
City, and~d-d-~ not create any rights or legal relationships
between CBS, Inc and any of the Participants or Beneficiaries
under the Plan
IV DUTIES OF CBS, INC
4 1 Documentation CBS, Inc shall draft the Plan Document
for the review and approval of the City, and produce initial
booklets (describing the benefits of the Plan) ~n a quantity
sufficient for distribution by the City to the employee
Participants who are covered as of the effective date of the
Agreement The City agrees to review and approve the booklets as
to form and content prior to such distribution and further agrees
that such approval shall act as a release of CBS, Inc of and
from any liability to the City as to both form and content The
City understands that ERISA requires that its employee welfare
benefit plan be established and maintained pursuant to a written
PAGE 4
instrument (plan instrument or trust instrument), and the City
agrees that CBS, Inc shall have no responsibility with respect
to such Instrument or with respect to the preparation or validity
of such instrument
4 2 Claims Services CBS, Inc agrees to perform the below
enumerated services with respect to the processing and payment of
claims under the Plan
4 2 1 Practices and Procedures In performing such
services, CBS, Inc shall employ its 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 2 2 Services CBS, Inc agrees to
(a) provide claim forms to the City for submitting claims to
CBS, Inc ,
(b) receive claims and claims documentation,
(c) correspond with the Participants and providers of
services if additional information is deemed by CBS, Inc to be
necessary to complete the processing of claims,
(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 CBS, Inc in accordance with
Section 3 2 above,
(h) advise the City in writing of any rights to subrogation
of which CBS, Inc may become aware
4 2 3 Additional Services CBS, Inc agrees to provide the
following services for a charge to be assessed at the time the
service is provided
PAGE S
(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
4 2 4 Recovery of Payment In the event payment is made to
or on behalf of an ineligible employee Participant or any
Ineligible dependent of an employee Participant or that a payment
is made in excess of the amount properly payable, CBS, Inc 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 C~ty
CBS, Inc shall have no further obligation w~th respect to
any such payment or overpayment, except that CBS, Inc is hereby
authorized to offset against any unpaid claim of such employee
Participant of any dependent thereof unless advised otherwise by
the City
4 3 Reports and Files CBS, Inc shall establish and
maintain a record-keeping system concerning the services to be
performed hereunder Ail such records shall be the property of
the Cxty and shall be delivered to the City upon termination of
this Agreement, sub}ect to the right of CBS, Inc to copy and
retain all or any of such records as it deems ~n its ~nterest to
do so All such records shall be available for lnspectxon by the
City at any time during normal bus~ness hours at the office of
CBS, Inc in Dallas, Texas, upon reasonable prior notice
4 4 Reports CBS, Inc 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
(monthly),
(d) Lag Summary Report (monthly),
(e) Report of claims incurred but not reported (annually),
PASE 6
(f) Report of Plan's operation during the preceding year and
cost estimates and guidelines for the ensuing year
(annually),
(g) Claim Exceed Report (monthly), and
(h) Top 50 Provider Report (quarterly)
4 5 Duty of Care CBS, Inc shall not be liable for any
loss resulting from the performance of its duties hereunder,
except for losses resulting directly from
(a) the negligence of CBS, Inc , or
(b) the failure of CBS, Inc 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 CBS, Inc , whether acting alone or in
concert with others
Subject to the above, the defense of any legal actxon 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 CBS,
Inc
V DUTIES OF THE CITY
S 1 Account The City shall establish, maintain, and fund a
checking account ("Account") via Grand Bank, Lakewood for the
payment by CBS, Inc of benefits under the Plan The City shall
be liable for all claim checks issued against the Account CBS,
Inc agrees to provide, at its own expense, all claim checks for
the purpose of issuing benefits for claims on the Account
5 1 1 Draft Authority on the Account The City hereby
grants to CBS, Inc authority to draft against the Account
5 2 Determination of Service Fee The City agrees to pay to
CBS, Inc a Service Fee equal to ~5...-~ per ,Employee Benefit Plan
Participant per month /D~7~f
5 2 1 Payment of Service Fee Upon receipt of the Invoice,
which is furnished by CBS, Inc on a monthly basis, the City
agrees to pay to CBS, Inc the Service Fee as determined by
Sectxon 5 2 above
5 2 2 Change of Service Fee CBS, Inc reserves the right
to change the. Service Fee applicable to this Agreement.~/t~o=l~
PAGE 7
g~?e--IlXI1~b-~f-~£ C ~ploycc3 ~eff~h--i~200~o~-mo~e~ The total/~ of
any lncreas~ shall not exceed seven percent (7%) Written
notice of such change shall be furnished to the City at least
thirty-one (51) days prior to the effective date of such change
5 5 Taxes The City agrees to pay any and all taxes,
licenses an---d--f-ees 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 CBS, Inc hereunder CBS, Inc
agrees to notify the City and make arrangements for payment
thereof is any such levy appears imminent
$ 4 COBRA Fee The City does elect to provide for COBRA
health coverage in the event of termination by a Participant, and
the City agrees to pay a Service Fee of 2% of contribution per
covered Participant per month for COBRA administration plus the
$5 75 per month per Participant for claims administration
5 5 Census The City agrees to verify the eligibility of
Participants an~ to furnish to CBS, Inc such information as may
be necessary or required by CBS, Inc from time to time to
discharge 1ts obligations under Section 4 4 (f) above
S 6 Liability for Benefits It is understood and agreed
that liability for payment of benefits under the Plan is the
liability of the City and that CBS, Inc shall not have any duty
to use any of its funds for the payment of such benefits
S 7 Indemnification Subject to Section 4 5, the City
agrees to indemnify and hold harmless CBS, Inc , 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 CBS, Inc by or on behalf of any person
including, without limitation, any Participant, Beneficiary, or
fiduciary under the Plan
VI GHN~RAL PROVISIONS
6 1 ~ntlre Contract This Agreement, together with any
exhibits, attachments and 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
office of both the City and of CBS, Inc
6 2 Applicable Law This Agreement shall be deemed to have
been made and entered into ~n the State of Texas, and shall be
construed and enforced according to the laws of the State of
Texas
PAGM 8
§ 3 Assignment This Agreement shall not be assigned by
CBS, Inc , nor shall CBS, Inc 's duties, obligations or
responsibilities hereunder be delegated to any other person or
entity without the prior written consent o£ the City
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed by their respective authorized officers
CITY OF DENTON, TEXAS
ATTEST
NIFER[WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY
CBS, INC
BY ~--
DATE
PAGE 9