DEPARTMENT: Office Of Risk Management
FILE TYPE: Consent Action
TITLE
title
Authorization To Execute Contract Amendment With SFM Risk Solutions, Inc. For Administration Of Workers’ Compensation Claims
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PURPOSE/ACTION REQUESTED
Authorize the execution of a contract amendment with SFM Risk Solutions, Inc. (SFM) for administration of workers’ compensation claims.
SUMMARY
Since 1990, Dakota County has been self-insured for workers’ compensation claims and has contracted for administration of claims through a third-party administrator (TPA). Dakota County has utilized the services of SFM, since October 2013 when our previous long term TPA- RTW, Inc. (RTW) abruptly exited the TPA market.
SFM is the leading workers' compensation insurer in the Midwest, serving businesses of all sizes and types in 16 states. Since assuming our business in 2013, SFM has provided exceptional customer service and management of County employee’s workers compensation claims. Staff has found SFM to be extremely responsive to Dakota County’s needs. At the County’s request, SFM has provided a dedicated claims manager. A dedicated claims manager provides a single point of contact for conducting business and strong communication lines which is especially important in the management of lost time claims.
In 2015, Risk Management completed a survey of similarly sized, self-insured entities and worked with the County’s insurance broker to identify vendors to solicit proposals for TPA services. Three TPA vendors were sent requests for proposals: SFM, Corvel, Inc. and Gallagher Basset. At that time, SFM provided the most competitive quote for TPA services, and has maintained a modest cost of living increase in annual costs.
SFM has a close working relationship with several other counties and municipalities in Minnesota and understands the complexities of handling workers’ compensation for government entities. Dakota County has been pleased with the services provided by SFM and the claims handling of our larger and more complex workers’ compensation claims. Dakota County currently has several complex workers’ compensation claims which staff expect to bring to closure in 2023. Maintaining the working relationship with SFM will help keep the management of these claims moving in the right direction.
SFM has offered to amend the contract (a one-year extension of the five-year contract executed in 2017). SFM’s proposal continues to reflect an annual premium increase of 3 percent. This increase in cost has been consistent since 2020. SFM’s proposal for a one-year amendment for third party administration of workers’ compensation claims is $41,619.00 higher for 2023. Staff intend to issue an RFP for TPA services workers’ compensation claims in late 2023.
RECOMMENDATION
recommendation
Staff recommends executing a one-year amendment to the contract with SFM based on the positive working relationship between the County and SFM and an annual cost reflecting a reasonable cost-of-living increase. The amendment is for $41,619 for the term of January 1, 2023 through December 31, 2023 which increases the total contract amount to $231,875.
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EXPLANATION OF FISCAL/FTE IMPACTS
Funds are included in the Office of Risk Management Workers’ Compensation TPA recommended 2023 budget in the amount of $41,619.00 for the one-year amendment to the contract.
☐ None ☒ Current budget ☐ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
body
WHEREAS, Dakota County purchases services for the administration of workers’ compensation claims; and
WHEREAS, by Resolution No. 17-606 (November 28,2017), the Dakota County Board of Commissioners authorized the execution of a five-year contract with SFM Risk Solutions, Inc. (SFM) that will expire on December 31, 2022; and
WHEREAS, the staff from the Office of Risk Management evaluated available services through a review of the marketplace for third party administration (TPA) services; and
WHEREAS, the results of the review showed that SFM continues to be cost competitive for workers’ compensation claim TPA services; and
WHEREAS, the Office of Risk Management staff have been satisfied with the TPA services for Dakota County’s self-insured workers’ compensation claims; and
WHEREAS, the Risk and Homeland Security Manager recommends the amendment of the current contract for one additional year with SFM for administration of workers’ compensation claims.
NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby authorizes the Enterprise Finance and Information Systems Director to execute a contract amendment with SFM Risk Solutions, Inc. for $41,619 for the term of January 1, 2023 through December 31, 2023 increasing the total contract amount to $231,875.
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PREVIOUS BOARD ACTION
17-666; 11/28/17
ATTACHMENTS
Attachment: None.
BOARD GOALS
☒ A Great Place to Live ☐ A Healthy Environment
☐ A Successful Place for Business and Jobs ☐ Excellence in Public Service
PUBLIC ENGAGEMENT LEVEL
☐ Inform and Listen ☐ Discuss ☐ Involve ☒ N/A
CONTACT
Department Head: B.J. Battig
Author: Sarah Fenske