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HomeMy WebLinkAbout26-City Administrator 'Clf.." OF SAN BERNARD~ - REQUM FOR COUNCIL ACi10N From: JIM ROBBINS Deputy City Administrator/ Administrative Services Subject: Risk Management Report Date: f't1r Dept: July 24, 1987 Synopsis of Previous Council action: 6/1/87 -- Transfer of Risk Management from City Administrator to City Attorney's Office cont'd to June 8, 1987. 6/8/87 -- Transfer of Risk Management's legal functions only transferred from City Administrator to City Attorney and report back July 6, 1987 7/6/87 -- City Administrator requested to report on 7/20/87 possible alternatives to functions of Risk Management Department. 7/20/87 Above matter continued to August 3, 1987 Recommended motion: 1. Adopt resolution reassigning Risk Management personnel to the City Attorney and Personnel Department, or 2. Adopt resolution reassigning Risk Management Division to City Attorney's Office and deleting position of Risk Manager, or 3. Re-establish Risk Management as a division under the direction of the City Administrator, direct recruitment of Risk Manager, direct close continuous cooperation with the City Attorney's office on liability and workers compensation matters of litigation, or 4. Refer the matter to the Legislative Review Committee. ~~M 1: ~~ ~ Signature Phone: 5122 Cont2Ct person: Jim Robbins Supporting data attached: y"" Ward: FUNDING REQUIREMENTS: Amount: Sou rce: Finance: Council Notes: 75-0262 Agenda Item NO~ (" "*,,.... CITY OF""'AN BERN-.,..;RDINO INTEROFFICE MEMORANDUM 8707-1402 TO: The Honorable Mayor and Common Council FROM: James Robbins, Deputy City Administrator/Administrative Services SUBJECT: Risk Management Report DATE: July 23, 1987 (7144) COPIES: Raymond D. Schweitzer, City Administrator James Penman, City Attorney This report deals with why the City of San Bernardino has a Risk Management Division and its role in day-to-day operations. Further, it also deals with a number of facts regarding the Risk Management Division. Divisional activities were changed on July 8, of this year. The discussion of the Division's activities will be as they existed prior and after July 8, 1987. In 1971, the City of San Bernardino became self-insured. At the same time, a strong loss prevention (safety) program; an aggressive and professional in-house claims management activ- ity; and a litigation avoidance procedure was put in place. As a result, according to former Risk Manager, Scotty Wallace, over eight million dollars in direct savings was recognized from 1971 to 1983. Since 1983, the Division has had different degrees of pro- fessional leadership and direction. Four Risk Managers have been employed or reassigned from other areas as "acting" over this time period. It belabors the point to recount the difficulties. Suffice to say, the Mayor, Common Council and Administrative staff saw the need for strong leadership in a Risk Manager. Shortly, after employment of such a Manager, there was (1) a lack of understanding of the function of Risk Management; (2) an interpretation of responsibility by the City Attorney, and (3) a decision of Common Council to fragment Risk Management activities pending a report describ- ing possible alternatives to functions of the Risk Manage- ment. PRESENT (prior to Julv 8) STRUCTURE) The Division (under the City Administrator's Department) has been made up of seven employees. They include: Risk Management Director - Administrative Leader ,-~t/.'7 I".~ INTEROFFICE MEMORANDUM:~8707-1402 Risk Management Report July 23, 1987 Page 2 ....."..1 Risk Management Specialist - Review Agreements for Adequate Coverage Safety Officer - Administers city Employee safety programs Occupational Health Nurse - Medical Aid and prescreening of applicants Liability Claims Specialist - Handles Liability Insurance claims Workers Compensation Specialist - Handles Workers Compensa- tion forms Workers Compensation Account Clerk - Maintains records and accounts At your meeting of June 8, as a result of information presen- ted by the city Attorney, it was directed that "supervision of the Risk Management Office be transferred to the City Attorney's Office from the City Administrator's Office,... as to legal department functions only..." The directive further called for the City Attorney, City Administrator and Risk Manager to define "legal functions" and report back. The Risk Manager then resigned. "Legal functions" were not defined by the city Council. The City Attorney, based upon the Council's action, assumed the day-to-day supervision and responsibility for liability and Workers compensation Claim activity and the Liability Claims Specialist, Workers Compensation specialist and the Workers Compensation Account Clerk. The Mayor, at about the same time, appointed the Deputy city Administrator/Administrative Services, as the Acting Director of Risk Management. Historically, Risk Management has been and continues to be a vital part of City operations. The objective is the conservation or saving of resources from accidental loss. In order to do this, the Risk Manager has been responsible for: (1) Identifying exposure or checking physical facilities, em- ployee activities and written or verbal communications for liability or workers compensation exposure; (2) Evaluating risk or evaluating past loss frequency, severity of loss and potential for future loss; (3) Controlling risk by establish- ing procedures and practices in personal safety, vehicle safety, product safety, fire prevention, environmental protection, and third party exposure; (4) Funding risk is essential through effective use of financial resources self-insurance - or buying insurance and (5) Administration of Risk Management process. Because of the size of our City and Risk Management Division, the Director is the key to bringing all five of the elements together as well as having a major responsibility in some elements. The major responsibility is administration of the process. This means meeting and working with each person in the division on a regular, daily basis, evaluating their ~~, ...... INTEROFFICE MEMORANDUM:'-8707-1402 ,--, Risk Management Report July 23, 1987 Page 3 input and making adjustments in the program as appropriate. The evaluation is as just noted, making sure the potential exposure or loss to the City is minimized. The evaluation occurs after discussions with the adjusters (specialists) regarding cases that are closing, in process or just occur- ring. The Safety Officer reports on exposure as a result of inspections of city facilities and observing employee work habits. As a result of evaluation process, various changes are prop- osed. In order to insure acceptance of change, top manage- ment (the Mayor and/or city Administrator) must issue orders or direction to cause change. This further includes review of written materials so potential exposure is reduced. The other step is to provide a sufficient fund of money to (1) keep self insurance fund viable (2) purchase various special policies and (3) evaluate and make recommendations for joining self insured pools. This last method is a way to spread large unanticipated disaster losses while attempting to keep overall City losses down. By way of evaluation, the Risk management functions has been effective over the years. There have been problems over the immediate past few years. The Mayor and City Adinistrator being aware, contemplated resolution by the hiring of a professional Risk Manager. Some of the steps to resolve the problems are: 1. There needs to be continued qualified, quality Risk Management staff. If the division remains intact, the Manager must have good technical skills, good management skills and a long term commitment to the City of San Bernardino. 2. There needs to be a strong quality relationship with the City Attorney's office. Adjusters must feel comfortable in discussing issues and potential results with legal staff. 3. There needs to be strong, consistent support both financially and psychologically for effective safety programs; a detailed, analytical evaluation of contracts and agreements; and monitoring of facilities. 4. The level and quality of insurance coverage held by the city as well as third party exposure must be monitored and evaluated to keep exposure to a minimum. ..1.1_8' ...~ "- INTEROFFICE MEMORANDUM: 8707-1402 Risk Management Report July 23, 1987 Page 4 '....~,... 5. The City Attorney's Office must provide the advice and support for claims which result in court activity. The use of outside attorneys has been the most effective of resources. expert legal not A city this size needs a strong identifiable Risk Management division. Currently, the division is administered by two different departments. The rejoining of the two parts under one department will allow a new Risk Manager to be effective in providing technical and administrative leadership. In this setting, either the city Administrator or the city Attorney could provide the needed administrative oversight. In any case, the City Attorney must serve as the advisor and director of liability and workers compensation claims settle- ment. There is another approach to Risk Management which is disper- sal. The claims adjusters and support staff (Account Clerk) could be assigned totally to the City Attorneys Office. This would be a continuation of the current condition. The Employee Safety Officer and Occupational Health Nurse could be assigned to the Personnel Department. This is where these programs are administered in many cities. Another assignment would be to Emergency Services. This would combine day to day safety and good health with long term planning of safety in the event of a disaster. The Risk Management Specialist could be assigned to Personnel (working in conjunction with health insurance activities), to Finance (where often insurance coverage is monitored,) or to the city Attorney's Office (where the legality of various third party certificates can be evaluated as well as the properness of current or proposed policies.) In this approach, the Director's position is no longer necessary. The division is distributed and the City does not have anyone individual responsible for identification, evaluation, control, funding and administration of Risk Management. Summarv The alternatives in resolving this issue are three: 1. Retain existing structure of Risk Management Division with Risk Manager reporting to City Administrator. Liability and Workers Compensation Claims litigation closely coordinated and cooperatively provided through City Attorney's Office. 2. Retain existing structure of Risk Management Division with Risk Manager reporting to City Attorney. 3. Reorganize Risk Management Division eliminating Risk Manager position. The Risk Management Specialist; '- INTEROFFICE MEMORANDUM:~8707-1402 Risk Management Report July 23, 1987 Page 5 '-..... Liability and Workers' Compensation specialist; and Workers Compensation Account Clerk would comprise the Liability and Workers Compensation Claims section of the city Attorneys office. A certified specialist attorney would provide technical and administrative leadership. The Employee Safety Officer and Occupational Health Nurse would be reassigned to the Personnel Department. Alternatives for Action: 1. Adopt a resolution reassigning Risk Management personnel to the City Attorney's and Personnel Department. 2. Adopt a resolution reassigning Risk Management to City Attorney's Office and deleting Risk position. Division Manager 3. Re-establish Risk Management as a division under the direction of the city Administrator; direct recruitment of a Risk Manager; direct close continuous cooperation with the city Attorney's Office on liability and workers compensation litigation.