1987-1692005L
NO
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE TEXAS POLITICAL SUBDIVISIONS
WORKERS' COMPENSATION JOINT INSURANCE FUND, AUTHORIZING THE
EXPENDITURE OF FUNDS, AND PROVIDING AN EFFECTIVE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I. That the Mayor is authorxzed to execute an
agreement between the Cxty of Denton and the Texas Political
Subdlvlsxons Workers' Compensatxon Joint Insurance Fund for the
purpose of providing the statutory benefits prescrxbed by art
8309h of the Texas Workers' Compensation Act, under the terms and
condltxons contained in said agreement whxch xs attached hereto
and made a part hereof
SECTION II That the City Councxl hereby authorxzes the
expenditure of funds in the manner and amount as speclfxed in the
agreement
SECTION III That this ordinance shall become effective
lmme~iately upon 1ts passage and ~oval ~~
PASSED AND APPROVED this the day of , 1987
ATTEST
APPROVED AS TO LEGAL FORM
DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY
TEXAS POLITICAL SUBDIVISIONS UORKERS' COMPENSATION
JOINT INSURANCE FUND
(Flexible Cost Plus/Cash Flow Plan For Large Political Subdivisions)
INTEPLOCAL AGREEMENT
This Contract and Interlocal Agreement entered into by and between
the Texas Political Subdivisions Workers' Compensation Joint Insurance
Fund (hereinafter referred to as "Fund") and the undersigned political
subdivision of the State of Texas (hereinafter referred to as "Fund
Member") for the purpose of providing the statutory benefits prescribed
by Article 8309h of the Texas Workers' Compensation Act for employees of
political subdivisions
~IITNESSETH
The undersigned Fund Member in consideration of the adoption of a
plan of self-insurance as authorized in Article 8309h, Vernon's Annotated
Texas Statutes, to provide Workers' Compensation benefits at a minimum
cost and in further consideration of other political subdivisions
executing similar interlocal agreements does hereby agree to become a
self-insured workers' compensation employer by becoming one of the
members of the Fund The conditions of membership agreed upon by and
between the parties are as follows
l, Definition of terms used in th~s Interlocal Agreement
a "Board" - refers to the Board of Trustees of the Texas
Political Subdivisions Workers' Compensation Joint
Insurance Fund
,, ,, ,' utlon" - are used ~nterchangeably
b Premium and ~o~rib. ~ _,A_~, ~ .... nt "Premium" is
in some parts ot this ln~erm~a, ~,:~m~ ~.~ k,, +k~
used tO identify the rating tormumas es~a~m,~-:~ ~ ....
State Board of Insurance, which are used as quidel~nes to
establish Fund Members' cash contributions to the Fund
Any reference at any t~me in this Interlocal Agreement to
an insurance term not ordinarily a part of self-insurance
shall be deemed for convenience only and ~s not to be
construed as being contrary to the self-insurance concept
except where the context clearly indicates no other
possible ~nterpretatlon such as but not l~mited to the
reference to "reinsurance"
c, "Servicing Contractor" ..Texas. Fmp}oyers' In~rance~A~sociation
d "Manual Rates" - the basic workers compensation ra~es
applicable to each classification of employees promulgated
by the State Board of Insurance
e "Manual Premium or Contribution" -the premium determined
by applying the manual rate of each classification code
to the payroll in that classification It is the oross
premium before any modifiers or discounts are applied
f. "Experience Modifier" - that factor which reflects the
Fund Member's individual loss experience and is based on
the State Board of Insurance experience rating plan
g "Standard Premium or Contribution" - the amount that is
determined by applying the experience modifier of the
Fund Pember to the Fund Member's manual premium. Uhile
?is premium figure under the Fund ~ember's sel?tnsured
Cost Plus plan does not reflect payments or charges
made, it does serve as a desirable benchmark and allows
the Fund Member to compare its results with other entities
of comparable size,
h. "Fund Year" - October 1 through September 30
2. This Contract shall commence at 12 O1 a m on the date shown
as "effective date" found on the signatory page of this contract, and
shall remain in full force and effect until terminated as hereinafter
Irovtdad. This Contract may be terminated by mutual consent or by sixty
60) days prior written notice by certified mail of such termination by
either party.
3. Annually, each Fund Member shall submit to the Fund on a Premium
Worksheet form supplied by the Fund, its estimated payroll for each
classification of e~ployees The rates established by the State Board
of Insurance shall be applied to arrive at a nanual premium If the
Fund Member has established, through experience, a modifier, then the
experience modification of that Fund Member shall be used to arrive at
the standard premium In the absence of an earned experience modification
for the Fund ~ember, the manual rate as established by the State Board
of Insurance will be used as a guide to produce a manual, as well as a
standard, contribution
The newly enrolling Fund ~ember who has not previously been a
member of this Fund or the Fund Member who has not previously operated
under this "Cost Plus" plan, agrees to pay the Fund, on or before the
inception date of this Interlocal Agreement, an ~nitlal deposit of one
(1} month's estimated paid losses plus 1/12 of the administrative service
charge, catastrophic excess of loss excess insurance/reinsurance charge,
aggregate excess of loss excess insurance/reinsurance charge, and the
afet en ineertng charge {if applicable) as set forth in Exhihtt A
~tta~ed ~ereto On or before the beginning of the ,econd month after
the inception date of this Interlocal Agreement, the Fund Member agrees
to make an identical payment as determined above On or before the
beginning of the third month after the inception date of this Interlocal
Agreement, the Fund Member shall pay an amount equal to the actual paid
losses of the first month times {x) the loss conversion factor as set
forth in Exhibit A, for claims administration serwces plus 1/12 of the
annual administrative service charge, catastrophic excess of loss excess
rice reinsurance charge, aggregate excess of loss excess insurance/
tn~?__.~ ~-r-e and safety engineering charge (l~ ~pp!ica~l?}.
relnsura.~= ~-- ~ , rtoca/ ~ reeme.~,
or before the beginning of the fourth month of this ~n[e g
a similar payment based upon the actual paid losses of the second ~onth
shall be paid to the Fund with subsequent monthly payments to be paid
each~ and every month thereafter, based upon actual paid losses
The Fund Member who has previously been a member of th~s Fund prior
to the inception date of this Interlocal Agreement and has operated
under this "Cost Plus" plan agrees to pay the Fund for those services
described in this Agreement and at the charges listed in Exhibit A
attached hereto Each month's billing will ~nclude 1/12 of the annual
charge for administrative services, safety engineering, catastrophic
excess of loss excess insurance/reinsurance, and aggregate excess of
loss excess insurance/reinsurance as set forth in Exhibit A attached
hereto Also included in this billing will be an amount equal to the
actual paid losses of the Fund Member times (x) the loss conversion
factor as set forth in Exhibit A as the claims administration charge
The actual paid losses of the Fund rember are those losses paid by the
Fund on behalf of the Fund Member in the month which is two months prior
to the billing month These payments are due at the beginning of the
month, that is, for example, the December billing is due at the Servicing
Contractor's office on December 1.
It is further agreed that those charges (administrative services,
catastrophic excess of loss excess Insurance/reinsurance, aggregate
excess of loss excess insurance/reinsurance, and safety engineering)
that are based on standard contribution will be adjustable at the end of
each Fund Year, based on audited standard premium which is calculated
uslno actual payrolls, manual rates, and experience modifiers. At the
end of each Fund Year there will be submitted by the Fund Member actual
payrolls as reflected on the books of the Fund Member The Fund reserves
the right to audit the payroll recorus of any Fund Member
It is further agreed that the Fund Member will maintain a loss
deposit with the Fund equal to two months estimated paid losses and th~s
deposit will be adjustable ~eriodlcally to accurately reflect realistic
~onthly loss payments
After termination of this Agreement, the Fund will continue to
handle claims with an accident date occurring durlno the term of this
Agreement until such claims are disposed of After termination of this
Agreement, the Fund Member will pay the Fund each and every month, until
all claims handled by the Fund are disposed of, only the monthly claims
administration charge calculated as described above, and the monthly
reimbursement of actual claims losses pard on behalf of the Fund Member
as determined above
In the event that the Fund Member falls or refuses to make the
payments of charges as herein provided, the Fund reserves the right to
terminate such Fund Member by giving ten (10) days written notice by
certified mail and to collect any and all payments that are earned pro
rata for the period preceding contract termination
4. The Fund has obtained specific excess of loss excess insurance/
reinsurance and aggregate excess of loss excess insurance/reinsurance on
behalf of its Fund )~embers. The excess insurance/reinsurance protection
is, however, optional with the Fund Member. If the Fund Member elects
this protection, its election shall be indicated on Exhibit A
3
5, The Fund has contracted with the Servicing Contractor to
supply safety engineering services to the Fund Member to assist them in
following a plan of loss control that may result in reduced losses The
Servicing Contractor shall prowde all of the services as provided in
the service contract entered into by and between the Serwcing Contractor
and the Fund or as may be modified for the ind~wdual Fund Member The
Fund Member agrees that it will cooperate in instituting any and all
reasonable safety regulations that may be recommended for the purpose of
eliminating or minimizing hazards that would contribute to workers'
compensation losses. In the event that the recommendations submitted by
the Servicing Contractor on behalf of the Fund seem unreasonable, the
Fund Member has a right to appeal to the Board of Trustees The Board
shall hear the objections of the Fund Member at its next regularly
scheduled meeting and its decision will be final and binding on all
parties The safety engineering services provided are, however, optional
with the Fund Member If the Fund Member elects this serwce, its
election shall be indicated on Exhibit A
6. The Fund Member agrees that it will appoint a workers' compensation
coordinator of department head rank, and that the Fund and ~ts Servicing
Contractor shall not be required to contact any other individual except
this one person Any notice to or any agreements w~th the workers'
compensation coordinator shall be b~ndino upon the Fund Member. The
Fund Member reserves the riqht to chanqe the coordinator from time to
time but when doing so agrees to give written notice to the Fund
7 The Fund, through the Servlctnq Contractor employed by the
Fund, agrees to handle any and all claims after notice of injury has
been given, to prepare all required Industrial Accident Board forms, and
provide a defense The Fund Member hereby appoints the Servicing Contractor
as its agent to act in all matters pertaining to processing and handling
of workers' compensation claims and shall cooperate fully in supplying
any information needed or helpful in such defense They shall carry on
all negotiations with the injured employee and h~s attorney at the
preheartng conference and negotiate within authority previously qranted
by the Fund If a personal appearance by a representative or a co-
employee is necessary, the expense of this appearance w~ll be paid by
the Fund Member. The Servicing Contractor will retain and supervise
legal counsel on behalf of and at the expense of the Fund necessary for
the prosecution of any litigation All decisions on individual cases
shall be mede by the Fund through the Servicing Contractor, which includes
the decision to appeal or not to appeal an Industrial Accident Board's
final ruling and decision. However, any Fund tlember shall have the
right in any case involving one of their employees, to consult with the
Fund on any decision made by the Servicing Contractor The Board shall
hear the objections of the Fund Member at ~ts next regularly scheduled
meeting and their decision will be final and b~nding on all parties
Any suit brouqht or defended by the Servicing Contractor and the Fund
shall be in the name of the political subdivision Notwithstanding any
provisions of th~s paragraph, all reports and filings required by the
Workers' Compensation Law and the Industrial Accident Board of any
employer will be the responsibility of the Fund Member. It is further
understood that this agreement does not cover discrimination suits under
Article 8307c. There shall be supplied periodically to each Fund Member
a computer printout involving a statement of claims, claims status, and
activity report cumulative for each Fund Year
8. The Fund Member acknowledges that it has received a copy of
the Bylaws of the Fund and agrees to abide by the Bylaws and any amendments
thereto.
9. The Fund agrees that all Fund transactions will be annually
audited by a nationally recognized, certified public accounting f~rm
10. The Fund )~ember agrees to pay any Industrial Accident Board
maintenance tax that may be imposed and the Fund agrees to file the
necessary tax forms with the Internal Revenue Service
ll. Any party hereto paying for the performance of governmental
functions or services shall make payments therefor from current revenues
available to the paying party.
12. The Fund further agrees to provide a complete range of admini-
strative services to include, by way of example, but not of l~r~itation,
the following
a. Statement of claims printouts rendered monthly and keyed
by designated functions or departments
b Monthly billing statements for reimbursement of current
payments plus contracted fees
c Semi-annual printouts of all claims including prior Fund
Years indicating current incurred loss valuation
d. Maintenance of loss and payroll statistics for determination
of the Fund Member's experience modifier
13. The Fund agrees to provide Employers Liability Insurance
coverage (commonly called coverage B), in accordance with and to the
same extent as, the provisions of Part Two-Employers Liability Insurance
of the standard Workers Compensation and Employers Liability Insurance
Policy, as approved by the Texas State Board of Insurance, includlna the
Texas Amendatory Endorsement as it is applicable to such Part Two,
except as follows
a. In Part Two, paragraph A, 2, the state or territory
listed is to be Texas
b, In Part Two, paragraph G, the limits of liability of this
coverage are to be as follows
Bodily Injury by Accident $100,000 each accident
Bodily In3ury by Disease $100,000 each accident
Bodily In3ury by Disease $500,000 policy limit
5
c It is understood that this Employer Liability coverage
does not cover discrimination su~ts under Article 8307c
d References to "workers' compensation" in this Interlocal
Aqreement shall include Employers L~ab~lity Coverage
unless the context clearly shows otherwise All other
provisions of this Interlocal Agreement shall apply to
this Employers Liability Coverage unless the context
clearly shows otherwise
e. The Fund agrees to provide at no additional charge Employers
Liability Coverage at the following l~mlts
Bodily Injury by Accident $100,000 each accident
BoUily Injury by Disease $100,000 each accident
Bodily Injury by Disease $500,000 policy limit
If the Fund Member elects higher l~mlts than this, the
Fund Member agrees to pay an additional charge for the
higher limits at a mutually agreeable rate The higher
limits and corresponding charge, if so elected, shall be
indicated on Exhibit A
14 No accidental errors or omissions upon the part of either
party shall relieve the other party of its responsibilities under th~s
Agreement, provided such errors or omissions are rectified as soon after
discovery as possible. The Fund shall not be held accountable for any
increased cost or expense to the Fund Member under any contention that a
claim, safety engineering, or an administrative service could have been
handled differently except that the Fund may be held accountable for any
deliberate or willful failure to carry out reasonable instructions of
the Fund Member with respect to a specific matter
15 The Fund Member will be solely responsible for future benefits
payable and for funding its net reserve The Fund )lember agrees to hold
the Fund harmless from any and all claims {includinq attorney fees) that
may be asserted against the Fund for the non-payments of any claim due
to the failure of the Fund Member to maintain adequate reserves for the
payment of claims.
6
E~HIBIT A
CITY OF DENTON
TtmS ~a3RKERS' C(3v~ATION JOINT I~ FUND
I~r~oca~ A(~T
I The Fund shall at all times provide for specific excess of loss
(catastrophe) reinsurance of the FundMsmberexcess of $ 200,000 for any one
accident or occurrence up to a maximum limit of $ 10,000,000 for anyone
accident or occurrence
2 It is mutually agreed that the fees payable for services and excess
reinsurance under this contract shall be based on the fo]lowing
schedule
Claims Admin~stration 7 54 of Pa~d Loese~
Administrative Services 3 04 of First $100,000 of Standard
Contribution ,1 §4 of Next $400,000 of
Standard Contribution,O ?§4 of Star~4~d
Contribution over 8500,000, Not toE xceed
Overall Charge of $25,000
SefetyEnginsering I 04 of Standard contribution
Catastrophe Reinsurance 4 34 of Standard Contr~bution
IN WITNESS WHEREOF, the parties have hereunto set their hands by
their representatives thereunto duly authorized this day of
Contract Number_ H0165
TEXAS POLITICAL SUBDIVISIONS
WOPKERS' COMPENSATION
JOINT INSURANCE FUND
i0-i-87 BY Fund Secretary
Effective Date
Dallas, Texas
FOR City of Denton
Fund Member Name
kYSignature & Title
Denton , Texas
The Workers' Compensation Coordinator
for the Fund Member is
COORDINATOR
NArlE Harlan Jefferson
FUND MEMBER
NAME City of Denton
ADDRESS 901-B Texas Street
TELEPHONE 817-566-8)~0