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Admin Ser Agree Benefit ConsultMEMORANDUM October 29, 2002 TO:The Honorable Mayor and City Council Members FROM:Michael C. Van Milligen, City Manager SUBJECT:Administrative Services Agreement for Benefit Consulting Services Personnel Manager Randy Peck is recommending approval of the Administrative Services Agreement between the City of Dubuque and Gallagher Byerly, Inc. for benefit consulting services related to the City's self-funded health plans. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM/jh Attechment cc: Berry Lindehl, Corporation Counsel Cindy Steinheuser, Assistent City Manager Randy Peck, Personnel Manager CITY OF DUBUQUE, IOWA MEMORANDUM October 10, 2002 TO:Michael C. Van Milligen City Manager FROM:Randy Peck Personnel Manager SUBJECT:Administrative Services Agreement for Benefit Consulting Services Attached is the Administrative Services Agreement between the City of Dubuque and Gallagher Byedy, Inc. for benefit consulting services related to the City's self- funded health plans. The City has been under contract with the Segal Company for benefit consulting services since 1989. On August 14, 2002, Gallagher Byerly, Inc. presented a proposal to provide benefit consulting services to the City of Dubuque. The scope of services is consistent with the scope of services currently provided by the Segal Company. We pay an annual fee to the Segal Company of $24,360. The fee for services contained in the proposal presented by Gallagher Byerly, Inc. is $21,000, and it would be guaranteed from October 1, 2002 through June 30, 2004. The only significant difference in the scope of services is that the proposal presented by Gallagher Byerly, Inc. does not include preparation of plan documents and summary of plan descriptions. The fee charged by the Segal Company includes this service. This service can be obtained through Health Choices for a fee of $2,000. This Agreement has been reviewed by Corporation Counsel Barry Lindahl and he found the terms acceptable. The Agreement has also been approved by the Health Care Committee. I request that the City Council pass a motion approving the Agreement and authorizing you to sign the Agreement. If you have any questions, please feel free to call. RP:bf Enclosure AGREEMENT THIS AGREEMENT is made and entered into this 1st day of October 2002 by and between The City of Dubuque, Iowa ("cliant') and GALLAGHER BENEFIT SERVICES, INC., a Delaware corporation (Gallagher"). I. RECITALS A. Client desires to receive professional consulting services for its Employee Benefit Program (the "Program"). The Program includes coverage for life, medical, dental, prescription drugs, workers compensation and flexible spending account benefit plans. B. Crallagher is engaged in the business of advising its clients on their insurance needs and procuring insurance on behalf of its clients as an insurance consultant. C. Gallagher desires to provide certain consulting services and Client desires to have Gallagher provide such consulting services in accordance with the terms hereof. II. TERM & TERMINATION A. TERM This Agreement shall be effective for an initial tcun cormnancing October 1, 2002, and shall remain in full force and effect until June 30, 2003. Thereafter, this Agreement shall be automatically renewed for successive one (1) year terms until terminated as provided herein B. TERMINATION Either party may terminate this Agreement, with or without cause, upon the conclusion of the initial term or the conclusion of any successive renewal term by providing thirty (30) days written notice prior to the conclusion of any term. In the event either party materially breaches this Agreement at any time, this Agreement shall terminate upon the failure of the breaching party to remedy the breach within thirty (30) days of receipt of written notice of the breach. III. AGREEMENT A. Obligations of Gallagher i. Financial Reports Gallagher will prepare an annual report analyzing claim~ experience, benefits paid, contributions, administrative expenses, gross and net cost of insured benefits, net cost of any self-insured coverages and other relevant items that pertain to the plans. Gallagher will also provide up to two interim financial reports for ~he self-funded plans per contract year that will allow the City to monitor the performance of those plans. The annual report includes a projected income and expense budget based on an analysis of prior experience and known or anticipated factors affecting future operatiom. Together with an evaluation of the plan's reserve position, this budget serves as a guide to financial and benefit planning decisions. 2. Consultation Gallagher will be available for consultation on many aspects of the plan's operation including claims, reserves, and insurance company performance, as well as the plan's overall progress and development. 1 Gallagher is available to consult with the City's legal counsel and the plan administrator regarding changes to be made in the plan of benefits and eligibility for such benefits. 3. Benefit Changes Gallagher will provide advice and then take appropriate action as authorized by the City for implementing any benefit changes including revision in premium and plan recordkeeping procedures, master policy certificates, and booklet amendments or modificatiom. 4. Insurance Company Negotiations As authorized by the City, Gallagher will negotiate with the insurance companies to obtain appropriate adjustments. In the event that an insurance company's proposed annual retention is not consistent with its projection or if the renewal premium rates do not appear justified by claims experience, Gallagher will attempt to obtain more favorable results for the plan. An annual renewal report will be prepared for the City. Services under this Section include workers' compensation stop-loss insurance and third party admini~tt'ation (TPA) services. 5. Self-lm'ured Benefits For all benefits self-funded by the City, GaIlagber will calculate the appropriate reserve and claims trend factors to be taken into account from a sound planning and policy point of view. 6. COBRA Gallagher will update the COBRA premiums for core coverage and for total health coverage charged to former participants and family members who elect to continue the plan's health coverage. (Special COBRA experience studies and manuals are not within this retainer.) 7. Annual Audits and Filings with the Government Gallagher will work closely with the auditor and the plan administrator to provide any required data or information we may have readily available to expedite thc preparation of any required financial report, e.g. Form 5500 for cafeteria plans and Iowa Chapter 509(A) requirements (ff this optional service is selected by the City). 8. Communication with Participants Gullagher will be available for consultation with the City, legal counsel, or the plan administrator to assist in drafting notices to plan participants about plan or administrative changes. Also, we will review all policies and amendments drafted by the City's Administrator. 9. Administrative Support Gallagher shall continue to be available for consultation with the plan administrator, as requested, with regard to routine changes in forms and procedures and general recordkeeping, in terms of efficiency and cost. Compliance with the recordkeeping requirements of hws or regulations are matters subject to the advice of legal counsel and the City. However, Gallagher shall be avaihble for consultation in this regard from a non-legal standpoint. 101 Organization of Issues Gallagher will be available for consultation and will assist in preparing meeting agendas to aid the City in reaching decisions on issues that arise in the course of plan operation or that flow from our annual report, plan design or admlnlstmtion questions, national and industry trends, or public policy. 11. Coordination with Other Professional Advisors Crallagher will, as appropriate, coordinate our efforts with those of legal counsel, the plan administrator and the auditor regarding policy matters of interest to the City and the efficient operation of the plans. 12. Trends in Legislation New Benefits, Plan Design By means of our publications and special advisory reports, Galhgher shall continue to keep you apprised of new developments in the employee benefits field that may bear upon your planning and policy decisions. However, specific technical compliance advice in connection with compliance with new legishtion or 2 regulations that occur after the effective date of this retainer will generally be treated as a supplementary service, at an additional fee, based on our regular time charge rates. Of course, questions on the interpretation and application of laws, regulations, rulings and court decisions are a legal matter, subject to legal counsel's advise. 13. Meetings Gallagher will attend up to two meetings with the City as requested per contract year. Of course, between meetings Gallagher will be continually available for consultation by phone and in writing to the City, the plan administrator and the plan's other professional advisor. Other Supplementary Services The preceding list of services describe the matters that regularly arise in the course of the Plan's annual operations that call for general consulting services. However, it is difficult to predict in advance whether your Plan will be involved in complicated, time consuming special problems, and, if so, to what extent. If our assistance involves services which are beyond, but incidental to our regular services, then, of course, Gallagher would render such services within the scope of this retainer. If, on the other hand, the occasion requires the expenditure of time not anticipated within this retainer, we would proceed only after consultation with the City. Our compemation for such agreed-upon supplementary services will be based on our regular time-charge rates. In addition to those items referred to earlier, some further examples follow of supplementary consulting and actuarial services that may be required by the Plan: 1. Analysis of and compliance with new legislation of new regulations adopted after the effective date of this retainer, which affects your Plan. 2. Litigation, law suits, or arbitration. 3. Competitive bidding for the solicitation of bids fi:om insurance companies to underwrite all or a portion of the Plan's benefits (including stop-loss, ASO arrangements, rninlrmun preiniulns, or tax shelter annuity programs) or from other vendors to provide other services to the Plan. 4. Drafting of revised Summm3r Plan Descriptions or plan documents, subject to legal counsel's and the City's approval. 5. Redesign of basic administrative and/or recordkeeping methods and computer systems. 6. New procedures, calculations and determinations required due to changes in accounting/auditing standards, usually through guidelines issued by the Governmental Accounting Standards Board, through state or federal legislation. 7. Services involving special claims audits. 8. Assisting legal counsel in the preparation of materials in support of special IRS ruling applications, reviews or appeals, including conversations or meeting with IRS staff to the extent requested by legal counsel and the City. 9. Special studies on retiree health coverage costs and 6uancing. 10. Assistance in the evaluation and selection of alternative delivery systems such as new HMO's PPO's, EPO's or in the development of such systems. 11. Consultation on the development, implementation and monitoring of Employee Assistance Programs (EAPs). 3 12. Services involving Tax Sheltered Annuity (403(b)) program, deferred compensation (457) and other retirement programs. 13. Auditing the basic dam maintained by the plans for their recordkeeping purposes or mede available to us for calculation purposes. 14. Any services not specifically set forth in this retainer. AccountManagement Gallagher will provide notification of any change in senior account management, and understands that the continuation of this Agreement is contingent upon the satisfactoxy transition in account management responsl'bflities, as determined solely by the City. B. Obligations of Client 1. Gallagher shall be compensated an amount of $15,750 for the period of October 1, 2002 - June 30, 2003. For the period July 1, 2003 - June 30, 2004, fees will be payable in an amount of $21,000. Billings will be submitted semi-armTmlly in advance. Travel expenses, including coach aiffare, rental car, meals and accommodations will be reimbursed based on actual costs. 2. In addition to the fees provided herein, it is understood and agreed that other parties, such as excess and surplus line brokers, wholesalers, re-insurance intermediaries, underwriting manager8 and similar parties, some of which may be owned in whole or in part by G-ailagher's corporate parent, may earn and retain usual and customary commissions and fees in the course of providing insurance products to Client pursuant to this Agreement. Any such fees or commissions will not constitute compensation to Gailagher under Section III.B.1 above. 3. Gallagher and certain of its insurance carrier markets from time to time enter into arrangements providing for additional compensation to be paid to Gallagher by such carrier generally with respect to the volume of premium or insurance coverages writton through Gallagher with such can/er. 4. Client is responsible for payment of premiums for all insurance placed by Gallagher on its behalf. If any amount is not paid in full when due, including premium payments to insurance companies, that nonpayment shall constitute a meterial breach of this Agreement that shall allow Gallagher to terminate this Agreement, at its option, in accordance with Section II.B. C. Mutual Obligations 1. Ownership of Records and Documents Gallagher agrees that all books, records, lists of names, journals, ledgers and other recorded information developed specifically in connection with the admiuistmtion of Client shall always be and remain the property of Client. G-allagher agrees to keep all such meterial confidential and not to reproduce, disclose or disseminate the material or the information contained therein to third parties without the prior written consent of Client. Upon termination of this Agreement fur any reason, Gallagher shall immediately return ail such meterial, and any copies thereof, to Cliant; Client agrees that Gallagher is the sole owner of the following meterial and that Client has no right to its use followin~ termination of this Agreement: i. Proprietary computer programs; 4 ii. Proprietary procedures and methods of administration; and iii. Underwriting and client files developed by Gallagber. Except as required by Iowa Public Records law or other court order, client agrees to keep all such material confidential and not to reproduce, disclose or disseminate the material or the information contained therein to third parties without the prior written consent of Gallagher. Upon termination of this Agreement for any reason, Client shall immediately remm all such material, and any copies thereof, to Gallaghar, Waiver of Nonperformance No waiver of any default in performance on the part of Gallagber or like waiver by Client, or any breach or a series of breacbes of any of the terms, core-ams or conditions of this Agreement shall constitute a waiver of any subsequent breach or a waiver of said terms, covenants or conditions. Resort to any remedies refer~ed to herein shall not be conslrued as a waiver of any other fights and remedies to which either party is entitled under this Agreement or otherwise. 3. Partial Invalidity Should any part of this Agreement, for any reason, be declared invalid by a court of competent jurisdiction, the renl0i~ing port/on shall remain in full force and effect as if this Agreement had been executed without the invalid portion. 4. Governing Law The validity, interpretation and performance of this Agreement shall be controlled and construed according to the internal laws of the State of Iowa. Successors This Agreement shall be binding upon and shall inure to the benefit of all assigns, transferees and successors in the interest of the parties harero. Entire Agreement; Modification or Amendment This Agreement and the Exhibit hereto represent the entire and exclusive statemam of the agreement of the parties and may be modified or amended only by a written statement signed by both parties. Such modification or amendment shall be attached to, and shall thereupon become a part of this Agreement. 7. Headings Headings herein are for convenience of reference only and shall not be considered in any interpretation of this Agreement. 8. Practice of Law It is understood and agreed that Gallagher will not perform, and Client will not request performance of; any services which may constitute the unauthorized practice of law. 5 9. Counterparts This Agreement may be executed by the parties in several counterparts, each of which shall be deemed to be an original copy. 10. Remedies Not Exclusive No remedy conferred hereunder is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. 11. Subcontracting Gallagher will not subcontract any or all of the services required to be performed by it hereunder without prior approval of the City. 12. Insurance Gallagher shall secure and maintain during the term of this Agreement insurance coverage as set forth in the attached Insurance Schedule. 13. Indemnification Gallagher agrees to defend, indemnify and hold City, its officers, agents and employees harmless from and against any and all claims of any kind arising out of Gallagher's negligence in the performance of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first written above. City Manager Title 6 KVFprospect\City of Dubuque\\City of Dubuque Agreement.doc INSURANCE SCHEDULE INSURANCE REQUIREMENTS FOR PROFESSIONAL SERVICES All policies of insurance required hereunder shall be with an insurer authorized to do business in Iowa. All insurers shall have a rating of A or better in the current A.M. Best Rating Guide. All policies of insurance required hereunder shall be endorsed to provide a thirty (30) day advanced notice to the City of Dubuque of any cancellation of the policy prior to its expiration date. This endorsement supersedes the standard cancellation statement on the Certificate of Insurance. shall furnish Certificates of Insurance to the City of Dubuque, Iowa for the coverage required .in Paragraph 7. Such certificates shall include copies of the endorsements set forth in Paragraphs 2 and 5 to evidence inclusion in the policy, shall also be required to provide Certificates of Insurance of all subcontractors, and all sub-subcontractors who perform work or services pursuant to the I~rovisions of thiscontract. Said certificates shall meet the same insurance requirements as are required of Each Certificate of Insurance shall be submitted to the contracting department of the City of Dubuque, Iowa .prior to commencement of work/service. (The contracting department shall submit the certificates to the Finance Director.) All policies of insurance required in Paragraph 7, except Professional Liability, shall include the City of Dubuque, Iowa under the attached Additional insured Endorsement (CG2026) and the attached Governmental Immunities Endorsement. Failure to provide evidence of minimum coverage shall not be deemed a waiver of these requirements by the City of Dubuque. Failure to obtain or maintain the insurance required herein shall be considered a material breach of this agreement. , subcontractors, and all sub-subcontractors shall be required to carry the following minimum insurance coverages or greater if required by law or other legal agreement: PROFESSIONAL LIABILITY: $1,000,000 COMMERCIAL GENERAL LIABILITY: General Aggregate Limit. Products-Completed Operation Aggregate Limit Personal and Advertising Injury Limit Each Occurrence Limit Fire Damage Limit (any one occurrence) Medical Payments $ 2,000,1:)00 $1,000,000 $1,000,000 $1,000,000 $ 50,000 $ 5,000 Commercial general liability shall be written on an occurrence form, not a claims made form. Coverage to include premises-operations-products-completed operations, independent contractors coverage, contractual liability, broad form property damage, and personal injury. UMBRELLA OR EXCESS LIABILITY: * To be determined on a case-by-case basis by Finance Director. Revised January, 2002 POLICY NUMBER COMMERCIAL GENERAL LIABILITY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - DESIGNATED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART. SCHEDULE Name of Person Or Organization: The City of Dubuque, including all its elected and appointed officials~ all its employees and volunteers, all its boards, commissions and/or authorities and their board members, employees, and volunteers. (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement) WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability adsing out of your operations or premises owned by or rented to you. Copyright. Insurance Services Office. Inc. 1994 CG 20 26 11 85 CITY OF DUBUQUE, IOWA GOVERNMENTAL IMMUNITIES ENDORSEMENT Nonwaiver of Governmental Immunity. The insurance carrier expressly agrees and states that the purchase of this policy and the including of the City of Dubuque, Iowa as an Additional Insured does not waive any of the defenses of governmental immunity available to the City of Dubuque, Iowa under Code of Iowa Section 670.4 as it is now exists and as it may be amended form time to time. Claims Coverage. The insurance carrier further agrees that this policy of insurance shall cover only those claims not subject to the defense of governmental immunity under the Code of Iowa Section 670.4 as it now exists and as it may be amended from time to time. Those claims not subject to Code of Iowa Section 670.4 shall be covered by the terms and conditions of this insurance policy. Assertion of Government Immunity. The City of Dubuque, Iowa shall be responsible for asserting any defense of governmental immunity, and may do so at any time and shall do so upon the timely wdtten request of the insurance carder. Non-Denial of Coverage. The insurance carrier shall not deny coverage under this policy and the insurance carrier shall not deny any of the fights and benefits accruing to the City of Dubuque, Iowa under this policy for reasons of governmental immunity unless and until a court of competent jurisdiction has ruled in favor of the defense(s) of governmental immunity asserted by the City of Dubuque, Iowa. No Other Change in Policy. The above preservation of governmental immunities shall not otherwise change or alter the coverage available under the policy.