title
Addendum that is continuing in form and substance of the Third-Party Administrator (“TPA”) Contract with Hammerman and Gainer, Inc. (“HGI”)
end
|
DESCRIPTION: Addendum that is continuing in form and substance of the Third-Party Administrator (“TPA”) Contract with Hammerman and Gainer, Inc. (“HGI”) |
AGENDA NO: Click or tap here to enter text. |
|
ACTION REQUEST: ☒ Approval ☐ Review Comment ☐ Information Only ☐ Other |
RECOMMENDATION:
recommendation
Authorize Chief Executive Officer to execute a contract addendum that is continuing in form and substance with HGI for Third-Party Administration [“TPA”] of Automobile, General Liability and Workers’ Compensation claims for RTA in the amount of $487,875.00, which will be explained in the discussion below. The proposed RTA/HGI addendum that is continuing in form and substance will expire December 31, 2024.
end
ISSUE/BACKGROUND:
body
Hammerman and Gainer, Inc. [“HGI”] has been the Third-Party Administrator [“TPA”] of RTA Automobile and General Liability [“AL and GL”] claims since 2006. The most recent contract by and between RTA and HGI for these services was issued and signed on February 28, 2018. This contract specified a term of three (3) years with an option to renew for an additional two (2) years. This option to renew was exercised accordingly. Therefore, the current contract expired on February 28, 2023. HGI has continued to provide TPA services to RTA on a month-to-month basis to the present date. The February 2018 contractually negotiated agreed-upon rate for handling these AL/GL claims is $16,500/month. Presently, HGI manages 529 matters in litigation with an estimated reserve value of $36,282,115.02 and 231 claims with an estimated reserve value of $313,981.14. In addition, HGI began handling workers’ compensation claims for RTA on December 1, 2020, pursuant to verbal agreement, at a set cost of $1,875.00 per month. This workers’ compensation claim work was not contemplated in the 2018 contract or the two-year renewal. (Notably, HGI had performed this workers’ compensation work back in 2006-2009 but stopped in 2009 when Veolia commenced employee management.) Presently, HGI manages 54 open workers’ compensation claims for the RTA with an estimated reserve value of $1,909,289.65.
Relative to payment for HGI AL/GL claims services, the purchase order for HGI’s AL/GL claims work was essentially exhausted after the December 2022 payment to HGI (with only approximately $10,593.69 left in the PO which could not cover the January 2023 invoicing for $16,500.00). A new procurement action should have occurred in December 2022. However, no new agreement was ever entered into to cover work beyond this date, and payments for AL/GL claims work remain outstanding for the period of January 2023 to present.
end
DISCUSSION:
As presented above, HGI has continued to fully and professionally perform its work as the TPA for the handling of automobile, general liability and workers’ compensation claims after the expiration of the original terms of three (3) years and the two (2) additional option contract years that expired February 28, 2023. For the five-year period of performance (February 28, 2018 to December of 2022) as the TPA, HGI was compensated $972,406.31 by the RTA. It should be noted that $57,618.79 which represents November 2017, December 2017, and January 2018 HGI Invoices were charged against the original contract award of $594,000 which was supposed to cover the period of February 2018 to February 2021. This $57,518.79 was never replenished in the original purchase order and consequently funding was not available to fund the months of January 2023, and February 2023, anticipated by February 2021, two (2) year option. The $972,406.31 is itemized as follows:
February 2018 to December 2018 $180,406.31
January 2019 to December 2019 $198,000.00
January 2020 to December 2020 $198,000.00
January 2021 to December 2021 $198,000.00
January 2022 to December 2022 $198,000.00
Total Paid to HGI $972,406.31
In addition, HGI has continued to provide RTA with automobile and general liability claims services after the expiration of the five-year contract with (3-year original contract and 2-year option) and the following invoices, at the same $16,500.00 contract rate, remain outstanding and unpaid by the RTA:
January 2023 to December 2023 $198,000.00
January 2024 to April 2024 $ 66,000.00
Automobile and General Liability Total $264,000.00
Upon the departure of Transdev, effective December 2020, HGI began providing workers’ compensation claims services on behalf of the RTA at a monthly fee of $1,875.00. HGI did not invoice RTA until August 2023 for TPA workers’ compensation services covering December 1, 2020 to July 31, 2023, for $60,000.00, which is included in $76,875.00 below.
The following $1,875.00 monthly HGI workers’ compensation invoices remain outstanding and unpaid by the RTA:
December 2020 $ 1,875.00
January 2021 to December 2021 $22,500.00
January 2022 to December 2022 $22,500.00
January 2023 to December 2023 $22,500.00
January 2024 to December 2024 $ 7,500.00
Worker’s Compensation Total $76,875.00
Finally, a new competitive automobile, general liability and workers’ compensation Request for Proposal [RFP] solicitation has to be procured by the RTA. This will require development of a scope of services, thirty (30) day advertisement, evaluation of the RFP responses, and recommendation of award to the RTA Board of Commissioners at its September 24, 2024, scheduled board meeting. The successful Third-Party Administrator [“TPA”] vendor will have an effective January 1, 2025 start date. These monthly fees of $16,500.00 and $1,875.00 associated with the contract amendment are the same as February 2018 automobile and general liability contract and the December 2020 quote for workers’ compensation TPA services.
May 2024 $16,500.00 + $1,875.00 = $18,375.00
June 2024 $16,500.00 + $1,875.00 = $18,375.00
July 2024 $16,500.00 + $1,875.00 = $18,375.00
August 2024 $16,500.00 + $1,875.00 = $18,375.00
September 2024 $16,500.00 + $1,875.00 = $18,375.00
October 2024 $16,500.00 + $1,875.00 = $18,375.00
November 2024 $16,500.00 + $1,875.00 = $18,375.00
December 2024 $16,500.00 + $1,875.00 = $18,375.00
Totals $132,000.00 $15,000.00 $147,000.00
In summary, an RTA/Hammerman and Gainer, Inc. [“HGI”] contract addendum that is continuing in form and substance in the amount of $487,875.00 ($264,000.00+76,875.00+147,000.00=$487,875.00) is hereby requested to address the above outstanding issues.
FINANCIAL IMPACT:
The total finance impact is $487,875.00.
The account code for Third-Party claims is:
01-8300-02-7070-165-0000-00000-00000
Available Funding
2023 Approved Budget: $198,588.00
2024 Approved Budget: $189,074.00
Purchase Order Balance $ 10,593.69
Subtotal $398,255.69
Contract Amendment $<487,875.00>
NEXT STEPS:
Upon adoption of the RTA Board Resolution, the CEO will execute a contract addendum that is continuing in form and substance with HGI. Additionally, an amended purchase order will be issued, and invoices will be paid.
ATTACHMENTS:
1. RTA Board of Commissioners Resolution
2. Purchase Order #912330-003
3. Contract for Third Party Administrator for Automobile and General Liability Claims
Prepared By: Donna D. Bowman
Title: Senior Executive Assistant
Reviewed By: Mark A. Major
Title: Deputy CEO
Reviewed By: Gizelle Johnson-Banks
Title: Chief Finance Officer
5/2/2024
Lona Edwards Hankins Date
Chief Executive Officer