HomeMy WebLinkAbout30- Human Resources ORIGiNIIAL
CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION
From: Linn Livingston, Director Subject: RESOLUTION OF THE CITY OF
of Human Resources SAN BERNARDINO AUTHORIZING THE
EXECUTION OF AN AGREEMENT WITH
Dept: Human Resources MERCER HEALTH AND BENEFITS LLC
TO PROVIDE BROKER AND
Date: May 25, 2010 ADMINISTRATION SERVICES FOR THE
CITY'S EMPLOYEE HEALTH CARE
PROGRAM.
M/CC Meeting Date: June 7, 2010
Synopsis of Previous Council Action:
On May 3, 2010, Mayor and Common Council authorized the Director of Human
Resources to negotiate the terms of a contract with Mercer Health & Benefits for broker
and administration services.
Recommended Motion:
1. Adopt Resolution.
Si Lure
Contact person: Linn Livingston Phone: 384-5161
Supporting data attached: Ward:
Funding Requirements: Amount $275,000 FY 2010/11
Source: (Acct. No.) 001-092-5502
(Acct. Description) Health & Life Insurance
Finance:
Council Notes: �7A 41!9D
Agenda Item No. *36
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CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION
Staff Report
SUBJECT
Resolution of the City of San Bernardino authorizing the execution of an agreement with Mercer
Health and Benefits, LLC to provide broker and administration services for the City's employee
healthcare program.
BACKGROUND
In July 2007, the Mayor and Common Council authorized an agreement with Mercer health
benefits consulting/broker and administrative services for a period of three (3) years. Prior to the
conclusion of this agreement, the Human Resources Department went out to bid in February
2010 for these services. In response to the Request for Proposal (RFP), seven(7) firms submitted
proposals. In March 2010, proposals were reviewed by an evaluation committee that short-listed
four(4) firms. Interviews with the four(4) firms were conducted by the evaluation committee on
March 24, 2010:
BB&T John Burnham Insurance
Keenan &Associates
Mercer Health&Benefits
Wells Fargo Insurance Services
Following the interviews, the committee discussed and came to a unanimous consensus to
recommend Mercer as the City of San Bernardino's Administrator for Health Care & Benefits if
financial terms could be negotiated successfully.
On May 3, 2010, Mayor and Common Council authorized the Director of Human Resources to
negotiate the terms of the contract with Mercer Health & Benefits for broker and administration
services for the City's health care plans.
Mercer is a wholly-owned subsidiary of Marsh&McLennan Companies,Inc., a Fortune 500
diversified financial services company. Mercer is the largest benefit consulting firm in the
world, yet it delivers local services with experienced and expert staff and has extensive
experience working with public sector employers and labor organizations.
Mercer's health benefits consulting/broker and administration fees are very competitive. For the
previous three(3)years, Mercer's broker fees were$327,000 annually. As a result of our
negotiations,Mercer has agreed to reduce their cost by approximately 19% for the first year. As
a result,the first year's broker fee will be$275,000; second year$282,500 and third year is
$290,000. These fees are based on basic annual benefits which include consulting services,
administrative on-line services,consolidated billing services, call center services,communication
services, Section 125 FSA administration,retiree medical,open enrollment and COBRA. In
addition,Mercer is placing a significant amount of their consulting/broker fees at risk(10%)to
guarantee delivery of the most appropriate and valuable service to the City's satisfaction(as
outlined in Performance Standard Guarantees, attached as Exhibit`B').
Effective July 1, 2010, we are recommending Mercer's services continue as the City's Broker of
Record. Since 2008,Mercer has negotiated with vendors to hold gross cost increases at 2.9%,
5.1%, and 7.3%,which is significantly below the average trend of 12-13%annually. The Human
Resources Department looks forward to continuing the consistency and continuity of Mercer's
services and anticipates an increased stability to the benefits program.
The Human Resources Department is requesting this agreement be approved to provide Broker
and Administration services for City of San Bernardino beginning July 1, 2010 and continuing
for a period of three(3) years with an option of two(2),one(1) year extension.
FINANCIAL IMPACT
The cost of these services is at $275,000 for FY 2010/11; $282,500 for FY 2011/12; and
$290,000 for FY 2012/13. Pricing is a flat annual fee for services quoted. The City's FY 2010-
11 proposed budget includes funds to cover the anticipated broker fees.
The Water Department participates in the City's Health Care plans and services. The cost share
portion for FY 10/11 to the Water Department is $48,500. This will reduce the City contribution
to $226,500 for FY 10/11.
RECOMMENDATION
1. Adopt Resolution.
Resolution No
i
2 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
3 EXECUTION OF AN AGREEMENT WITH MERCER HEALTH AND BENEFITS LLC
TO PROVIDE BROKER AND ADMINISTRATION SERVICES FOR THE CITY'S
4 HEALTH CARE PROGRAM.
5 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AS FOLLOWS:
6
SECTION 1: The Human Resources Director of the City of San Bernardino is hereby
7
8 authorized and directed to execute on behalf of said City an Agreement with Mercer Health and
9 Benefits LLC to provide health, broker, and administration services for a period of three (3)
10 years with an option of two (2), one (1) year extension, commencing on July 1, 2010; authorize
I 1 the Purchasing Manager to issue an annual purchase order as outlined in Exhibit "A" and
12 incorporated herein by reference as fully as though set forth at length.
13 SECTION 2: The authorization to execute the above mentioned agreement is rescinded
14 if the parties to the agreement fail to sign it within sixty (60) days of the passage of this
15
resolution.
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I RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
EXECUTION OF AN AGREEMENT WITH MERCER HEALTH AND BENEFITS LLC
2
TO PROVIDE BROKER AND ADMINISTRATION SERVICES FOR THE CITY'S
3 HEALTH CARE PROGRAM.
4 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
5 the Common Council of the City of San Bernardino at a meeting thereof,
6 held on day of 2010, by the following vote,to wit:
7
8 COUNCILMEMBERS`. AYES NAYES ABSTAIN ABSENT
9 MARQUEZ
DESJARDINS
10
BRINKER
11 SHORETT
12 KELLEY
13 JOHNSON
MCCAMMACK
14
1s
16 Rachel G. Clark, City Clerk
17
The foregoing resolution is hereby approved this day of
18
, 2010.
19
20 Patrick J. Morris, Mayor
21 City of San Bernardino
22 Approved as to form:
23 JAMES F. PENMAN,
City Attorney
24
25
By:
HR/Agenda Items:Reso.Mercer.2010
SERVICES AGREEMENT
1
2 THIS AGREEMENT is made and entered into this 1st day of July, 2010 ("Effective
3 Date"), by and between the CITY OF SAN BERNARDINO, a charter city ("City"), and
4 MERCER HEALTH & BENEFITS LLC, a Delaware limited liability company
5 ("CONSULTANT").
6 WITNESSETH :
7 A. WHEREAS, CITY proposes to have CONSULTANT perform the services
8 described herein below; and
9 B. WHEREAS, CONSULTANT represents that it has that degree of specialized
10 expertise contemplated within California Government Code, Section 37103, and holds all
11 necessary licenses to practice and perform the services herein contemplated; and
12 C. WHEREAS, CITY and CONSULTANT desire to contract for professional
13 services as described in the Scope of Services, attached hereto as Exhibit "A"; and
14 D. WHEREAS, no official or employee of CITY has a financial interest, within the
15 provisions of California Government Code, Sections 1090-1092, in the subject matter of this
16 Agreement.
17 NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
19 contained herein,the parties hereby agree as follows:
19 1.0. SERVICES PROVIDED BY CONSULTANT
20 1.1. Scone of Services. For the remuneration stipulated, CONSULTANT shall
21 provide the professional services described in the Scope of Services attached hereto as Exhibit
22 "A" and incorporated herein by this reference ("Services'). If a conflict arises between the
23 Scope of Services document and this Professional Services Agreement (hereinafter
24 "Agreement"), the terms of the Agreement shall govern.
25 1.2. Professional Practices. All Services to be provided by CONSULTANT pursuant
to this Agreement shall be provided by skilled personnel and in a manner consistent with the
standards of care, diligence and skill ordinarily exercised by professional consultants in similar
i fields and circumstances in accordance with sound professional practices. CONSULTANT
2 also warrants that it is familiar with all laws that may affect its performance of this Agreement
3 and shall advise CITY of any changes in any laws that may affect CONSULTANT's
4 performance of this Agreement if the CONSULTANT has actual knowledge of such changes.
5 CONSULTANT and the CITY each represent that no CITY employee will provide any Services
6 under this Agreement.
7 1.3. Warranty. CONSULTANT warrants that it shall perform the Services required
8 by this Agreement in compliance with all applicable Federal and California employment laws
9 including, but not limited to, those laws related to minimum hours and wages; occupational
10 health and safety; fair employment and employment practices; workers' compensation insurance
11 and safety in employment; and all other Federal, State and local laws and ordinances applicable
12 to the services required under this Agreement. CONSULTANT shall indemnify and hold
13 harmless CITY from and against all claims, demands,payments, suits, actions,proceedings, and
14 judgments of every nature and description including reasonable attorneys' fees and costs, or
15 recovered against CITY to the extent arising from CONSULTANT's violation of any such
16 applicable law.
17 1.4. Non-discrimination. In performing this Agreement, CONSULTANT shall not
18 engage in, nor permit its officers, employees or agents to engage in, discrimination in
19 employment of persons because of their race, religion, color, national origin, ancestry, age,
20 mental or physical disability, medical condition, marital status, sexual gender or sexual
21 orientation, except as permitted pursuant to Section 12940 of the Government Code. Violation
22 of this provision may result in the imposition of penalties referred to in Labor Code, Section
23 1735.
24 1.5 Non-Exclusive Agreement. CONSULTANT acknowledges that CITY may enter
25 into agreements with other consultants for services similar to the Services that are subject to this
Agreement or may have its own employees perform services similar to those services
contemplated by this Agreement.
1 1.6. Delegation and Assignment. This is a personal service contract, and the duties
2 set forth herein shall not be delegated or assigned to any person or entity without the prior
3 written consent of CITY, which consent shall not be unreasonably withheld or delayed.
4 CONSULTANT may engage a subcontractor(s) as permitted by law and may employ other
5 personnel to perform services contemplated by this Agreement at CONSULTANT's sole cost
6 and expense.
7 1.7 Conflicts of Interest. During the term of this Agreement, CONSULTANT shall
8 at all times maintain a duty of loyalty as to the CITY and shall not accept payment from or
9 employment with any person or entity which will constitute a conflict of interest with the CITY.
10 1.8 CITY Business Certificate. CONSULTANT shall obtain and maintain during
11 the term of this Agreement, a valid CITY Business Registration Certificate pursuant to Title 5
12 of the City of San Bernardino Municipal Code and any and all other licenses, permits,
13 qualifications, insurance and approvals of whatever nature that are legally required of
14 CONSULTANT to practice its profession, skill or business.
15 2.0. COMPENSATION AND BILLING
16 2.1. Compensation. Except as provided herein, CONSULTANT compensation shall
17 be as set forth in Exhibit"A".
18 2.2. Additional Services. CONSULTANT shall not receive compensation for any
19 services provided outside the scope of services specified in the Exhibit "A" unless the CITY,
20 prior to CONSULTANT performing the additional services,approves such additional services
21 in writing. It is specifically understood that oral requests and/or approvals of such additional
22 services or additional compensation shall be barred and are unenforceable.
23 2.3. Method of Billing. CONSULTANT may submit invoices to CITY for approval.
24 Said invoice shall be based on the total of all CONSULTANT's services which have been
25 performed in accordance with the terms of this Agreement during the period covered by such
invoice. CITY shall pay CONSULTANT's invoice within thirty (30) days from the date CITY
receives said invoice. The invoice shall describe in detail, the services performed and the
1 associated time for completion. Any additional services approved and performed pursuant to
2 this Agreement shall be designated as "Additional Services" and shall identify the number of the
3 authorized change order, where applicable, on all invoices.
4 2.4. Performance Standard Guarantees. The CONSULTANT shall reduce the total
5 cost of service related fees to the project, up to a maximum of 10%, if their services are not
6 satisfactory to the CITY as outlined in the chart(Exhibit`B").
7 2.5. Records and Audits. Records of CONSULTANT's Services directly relating to
8 this Agreement shall be maintained in accordance with generally recognized accounting
9 principles and shall be made available to CITY for inspection and/or audit at mutually
10 convenient times for a period of three (3) years from the Effective Date. Any such inspection
11 shall be conducted at the CITY's expense, during normal business hours and upon reasonable
12 prior written notice to CONSULTANT. Such audit shall also be subject to the execution of a
13 confidentiality agreement regarding inadvertent access to confidential information not related to
14 the CITY.
15 3.0. TERM AND NOTIFICATION.
16 3.1. Term. This Agreement shall commence on the Effective Date and continue until
17 the third anniversary of the Effective Date unless the Agreement is previously terminated as
18 provided for herein.
19 3.2 Termination. CITY or CONSULTANT may terminate the Services provided
20 under Section 1.1 of this Agreement upon thirty(30)days written notice to the other party. In
21 the event of termination, CONSULTANT shall be paid the reasonable value of Services
22 rendered to the date of termination.
23 3.3 Documents. In the event of an early termination of this Agreement, all
24 documents prepared by CONSULTANT in its performance of this Agreement including,but not
25 limited to, finished or unfinished background investigations, shall be delivered to the CITY
within ten (10) days of delivery of termination notice to CONSULTANT, at no cost to CITY.
Any use of uncompleted documents without specific written authorization from
1 CONSULTANT shall be at CfI'Y's sole risk and without liability or legal expense to
2 CONSULTANT.
3 4.0. INSURANCE
4 4.1. Scone and Limits of Insurance. CONSULTANT shall obtain and maintain
5 during the term of this Agreement all of the following insurance coverages:
6 (a) Commercial general liability, including premises-operations,
7 products/completed operations, broad form property damage, blanket
a contractual liability, independent contractors, personal injury with a
9 policy limit of One Million Dollars ($1,000,000.00), combined single
10 limits,per occurrence and aggregate.
11 (b) Automobile liability for owned vehicles, hired, and non-owned vehicles,
12 with a policy limit of One Million Dollars ($1,000,000.00), combined
13 single limits,per occurrence and aggregate.
14 (c) Workers'compensation insurance as required by the State of California.
15 4.2. Endorsements. The commercial general liability insurance policy shall contain
16 or be endorsed,using general policy endorsements,to contain the following provisions:
17 (a) Additional insureds: "The City of San Bernardino and its elected and
18 appointed boards,officers, and employees are additional insureds with
19 respect to their vicarious liability arising out of CONSULTANT'S
20 performance of the Services hereunder."
21 (b) Other insurance: "Any other insurance maintained by the City of San
22 Bernardino shall be excess and not contributing with the insurance
23 provided by this policy with respect to claims arising solely and directly
24 from CONSULTANT's provision of the Services."
25 4.3. Certificates of Insurance. CONSULTANT shall provide to CITY certificates of
insurance showing the insurance coverages and required endorsements described above, prior
to performing any services under this Agreement.
1 4.4. Non-limiting. Nothing in this Section shall be construed as limiting in any way,
2 the indemnification provision contained in this Agreement, or the extent to which
3 CONSULTANT may be held responsible for payments of damages to persons or property.
4 4.5 Notice of Cancellation: CONSULTANT shall provide the CITY thirty(30)days
5 prior written notice of cancellation of or a material change in any of the required coverages.
6 5.0. GENERAL PROVISIONS
7 5.1. Entire Agreement: This Agreement together with the Exhibits attached hereto
8 constitute the entire Agreement between the parties with respect to any matter referenced herein
9 and supersedes any and all other prior writings and oral negotiations. This Agreement may be
10 modified only in writing, and signed by the parties in interest at the time of such modification.
11 The terms of this Agreement shall prevail over any inconsistent provision in
12 any other contract document appurtenant hereto,including exhibits to this Agreement.
13 5.2. Notices. Any notices, documents, correspondence or other communications
14 concerning this Agreement or the work hereunder may be provided by personal delivery,
15 deemed served or delivered: a)at the time of delivery if such communication is sent by personal
16 delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48
17 hours after deposit in the U.S. Mail as reflected by the official U.S. postmark if such
18 communication is sent through regular United States mail.
19 IF TO CONSULTANT: IF TO CITY:
Richard Hill,Principal Linn Livingston,
20 Mercer Health&Benefits,LLC Director of Human Resources
21 4695 MacArthur Court, Suite 600 City of San Bernardino
Newport Beach, CA 92660 300 North"D" Street
22 Telephone: (949)222-1300 San Bernardino,CA 92418
Telephone: (909)384-5161
23 Fax: (909) 384-5397
24 5.3. Governing Law. This Agreement shall be governed by and construed under the
25 laws of the State of California without giving effect to that body of laws pertaining to conflict of
laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto
1 agree that the sole and exclusive venue shall be a court of competent jurisdiction located in San
2 Bernardino County, California.
3 5.4. Assignment: CONSULTANT shall not voluntarily or by operation of law
4 assign, transfer, sublet or encumber all or any part of CONSULTANT's interest in this
5 Agreement to an unrelated third party without CITY's prior written consent,which consent shall
6 not be unreasonably withheld or delayed. Any attempted assignment, transfer, subletting or
7 encumbrance shall be void and shall constitute a breach of this Agreement and cause for
8 termination of this Agreement. Regardless of CITY's consent,no subletting or assignment shall
9 release CONSULTANT of CONSULTANT's obligation to perform all other obligations to be
10 performed by CONSULTANT hereunder for the term of this Agreement.
11 5.5. Indemnification and Hold Harmless. CONSULTANT shall protect,defend,
12 indemnify and hold harmless CITY and its elected and appointed officials, boards,
13 commissions, officers and employees from any and all claims, losses, demands, suits,
14 administrative actions, penalties, liabilities and expenses, including reasonable attorneys' fees,
15 damage to property or injuries to or death of any person or persons or damages of any nature
16 including, but not limited to, all civil claims or workers' compensation claims to the extent
17 directly arising from or in CONSULTANT's negligent or wrongful acts or omissions in
18 connection with the performance under this Agreement, except to the extent caused by an
19 indemnified party's negligent or wrongful acts or omissions. Notwithstanding anything
20 contained herein to the contrary, in no event shall CONSULTANT be liable for any damages
21 not directly or proximately caused by CONSULTANT's negligent or wrongful acts or
22 omissions.
23 5.6. Independent Contractor. CONSULTANT, at all times while performing under
24 this Agreement, is and shall be acting at all times as an independent contractor and not as an
25 agent or employee of CITY. CONSULTANT shall secure, at his expense, and be responsible
for any and all payment of wages, benefits and taxes including, but not limited to, Income Tax,
I Social Security, State Disability Insurance Compensation, Unemployment Compensation, and
2 other payroll deductions for CONSULTANT and its officers, agents, and employees, and all
3 business licenses,if any are required, in connection with the Services to be performed
4 hereunder. Neither CONSULTANT nor its officers, agents and employees shall be entitled to
5 receive any benefits which employees of CITY are entitled to receive and shall not be entitled to
6 workers'compensation insurance,unemployment compensation,medical insurance, life
7 insurance, paid vacations, paid holidays, pension, profit sharing or social security on account of
8 CONSULTANT and its officers', agents' and employees' work for the CITY. This Agreement
9 does not create the relationship of agent, servant, employee partnership or joint venture between
10 the CITY and CONSULTANT.
11 5.7 Conflict of Interest Disclosure: CONSULTANT or its employee may be subject
12 to the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires
13 such persons to disclose financial interests that may be materially affected by the work
14 performed under this Agreement, and (2)prohibits such persons from making or participating in
15 making decisions that will have a foreseeable financial affect on such interest.
16 CONSULTANT shall conform to all requirements of the Act. Failure to do so
17 constitutes a material breach and is grounds for termination of the Agreement by CITY.
18 5.8. Responsibility for Errors. CONSULTANT shall be responsible for its work and
19 results under this Agreement. CONSULTANT,when requested, shall furnish clarification
20 and/or explanation as may be required by the CITY's representative, regarding any services
21 rendered under this Agreement at no additional cost to CITY. In the event that an error or
22 omission attributable to CONSULTANT occurs, then CONSULTANT shall, at no cost to
23 CITY, provide all other CONSULTANT professional services necessary to rectify and correct
24 the matter to the sole satisfaction of CITY and to participate in any meeting required with
25 regard to the correction. CONSULTANT will assume the information supplied by the CITY, (or
on its behalf by third parties) is accurate and complete. CONSULTANT'S responsibilities (and
associated compensation)do not include independent verification of required information.
I Problems with information quality and/or delays in providing such information may result in a
2 delay in the performance of the Services or an increase in fees.
3 5.9. Prohibited Employment. CONSULTANT shall not employ any current
4 employee of CITY to perform the work under this Agreement while this Agreement is in effect.
5 5.10. Costs. Each party shall bear its own costs and fees incurred in the preparation
6 and negotiation of this Agreement and in the performance of its obligations hereunder except as
7 expressly provided herein.
8 5.11. No Third Party Beneficiary Rights. This Agreement is entered into for the sole
9 benefit of CITY and CONSULTANT and no other parties are intended to be direct or incidental
10 beneficiaries of this Agreement and no third party shall have any right in, under or to this
11 Agreement.
12 5.12. Headings Paragraphs and subparagraph headings contained in this Agreement
13 are included solely for convenience and are not intended to modify, explain or to be a full or
14 accurate description of the content thereof and shall not in any way affect the meaning or
15 interpretation of this Agreement.
16 5.13. Amendments. Only a writing executed by all of the parties hereto or their
17 respective successors and assigns may amend this Agreement.
18 5.14. Waiver. The delay or failure of either party at any time to require performance
19 or compliance by the other of any of its obligations or agreements shall in no way be deemed a
20 waiver of those rights to require such performance or compliance. No waiver of any provision
21 of this Agreement shall be effective unless in writing and signed by a duly authorized
22 representative of the party against whom enforcement of a waiver is sought. The waiver of any
23 right or remedy with respect to any occurrence or event shall not be deemed a waiver of any
24 right or remedy with respect to any other occurrence or event, nor shall any waiver constitute a
25 continuing waiver.
5.15. Severability. If any provision of this Agreement is determined by a court of
I competent jurisdiction to be invalid or unenforceable for any reason, such determination shall
2 not affect the validity or enforceability of the remaining terms and provisions hereof or of the
3 offending provision in any other circumstance, and the remaining provisions of this Agreement
4 shall remain in full force and effect.
5 5.16. Counterparts: This Agreement may be executed in one or more counterparts,
6 each of which shall be deemed an original. All counterparts shall be construed together and
7 shall constitute one agreement.
a 5.17. Corporate Authority. The persons executing this Agreement on behalf of the
9 parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said
10 parties and that by doing so, the parties hereto are formally bound to the provisions of this
11 Agreement.
12 5.18. Limitation of Liability. The aggregate liability of CONSULTANT,its affiliates
13 and any officer, director or employee of CONSULTANT and its affiliates("CONSULTANT
14 Parties')to the CITY its elected and appointed officials,boards, commissions,officers, directors
15 or employees and any third party(including any benefit plan,its fiduciaries or any plan sponsor)
16 for any and all Losses arising out of or relating to this Agreement shall not exceed five times the
17 compensation for the Services. CONTRACTOR shall have no liability for the acts or omissions
18 of any third party(other than its subcontractors and affiliates).
19 In no event shall either party or its affiliates be liable in connection with this Agreement
20 or the Services for any loss of profit or incidental, consequential, special,indirect,punitive or
21 similar damages. The provisions of this Section shall apply to the fullest extent permitted by
22 law. Nothing in this Section limiting the liability of a party shall apply to any liability for
23 property damage or personal injury or that has been finally determined by a court to be a breach
24 of the confidentiality provisions contained herein or have been caused by the fraud or such party.
25 For purposes of this Agreement"Loss"means damages, claims, liabilities, losses,
awards,judgments,penalties, interest, costs and expenses, including reasonable attorneys' fees,
whether arising in tort, contract or otherwise. For the avoidance of doubt, multiple claims arisin
1 out of or based upon the same act, error or omission,or series of continuous, interrelated or
2 repeated acts, errors or omissions shall be considered a single Loss.
3
4 IN WITNESS WHEREOF,the parties hereto have executed this Agreement on the day
5 and date first above shown.
6 ATTEST: CITY OF SAN BERNARDINO
Municipal Corporation and
7 Charter City
s
Rachel Clark Linn Livingston
9 City Clerk Director of Human Resources
10
11
CONSULTANT:
12 By:
13
14 Approved as to form:
15 JAMES F. PENMAN
City Attorney
16
17
18
By:
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HR/Agenda Items:MERCER.2010
Exhibit A
Health & Benefits Services Statement of Work ("SOW")
Mercer is engaged as the Client's exclusive employee benefits insurance broker/consultant and
shall perform the following services for the Client with respect to the lines of coverage listed
below. The objective of this Statement of Work ("SOW") is to confirm the scope of our work
and the compensation for this engagement. This SOW is subject to the terms and conditions
contained in our Service Agreement to which it is attached.
Mercer's ability to provide you the following services is conditioned upon Mercer's receipt of
accurate and timely information related to you and the plans and products subject to our
services. Mercer will not independently verify or authenticate information not originating from
Mercer. Client shall be solely responsible for the accuracy and completeness of such
information and other documentation furnished to Mercer. The Client understands that the
failure to provide all necessary information to an insurer, employee benefit provider and third
party vendor, whether intentional or by error, could result in the impairment or voiding of
coverage or service.
A. Core Broker/ Consulting Services:
Mercer will:
• Conduct strategic planning sessions to review current performance of Client's
current employee benefits coverage and establish future objectives and strategies to
manage Client's employee benefit coverages to which this agreement applies.
• Meet with the Client's key people designated by the Client's Human Resources
Director, on at least an annual basis, to discuss strategy and open items.
• Develop a mutually agreeable renewal action plan and timeline that meets the
Client's stated objectives. Details provided in the renewal services plan developed
by Mercer and the Client.
• Keep the Client informed of significant changes and/or trends in the employee
benefits marketplace.
• Benchmark medical plan costs and employee contributions to industry, size and
regional standards on an annual basis.
• Analyze factors driving Client's plan costs if experience data is available. In
connection with such analysis, Mercer will review utilization reports to determine
possible causes of identified cost increases. Assist Client in managing risks and
costs of its employee benefits coverages.
• Establish comprehensive claims reports for identified coverages if available from
carrier: Carrier medical/prescription drug detailing paid claims (and reimbursements
10
Mercer Service Agreement San Bemardino042110.doct
if applicable), premium/funding and enrollment summaries. Mercer will review these
reports with Client periodically and will identify and discuss trends and potential
problems.
• Provide cost projections and funding analysis (review of funding methodology
with emphasis on employer costs and the tier structure of the contribution.)
• When marketing your plans, prepare an analysis comparing current costs, plan
designs, administration costs, network discounts and network accessibility.
• With respect to the renewal process of Client's employee benefit program,
Mercer will conduct an annual review during the renewal process to include
negotiations, on Client's behalf, with current vendors/carriers, as per Client's
request.
• Upon the request of Client, Mercer will assist Client in the preparation of a RFP
for purposes of obtaining competitive quotes from the marketplace. Mercer will be
the primary point of contact during the bidding process.
• Upon request of Client, evaluate and assist in the management of voluntary
benefit products offered to Client's employees.
• Assist Client in the implementation of the benefit program by dealing with
vendor/carriers and performing contract and SPD review for purposes of determining
conformity to agreed-upon plan provisions and costs.
• Advise Client with respect to available technology platforms to support delivery
and administration of its employee benefit plans. Support implementation and
maintenance of the Mercer Administration suite of services purchased.
• Assist Client in the development of paper and/or web-based communication
strategies.
• Identify and negotiate on the Client's behalf with insurers and other benefit
program providers and keep the Client informed of significant developments.
Mercer shall be authorized for purposes of this Agreement to represent and assist
the Client in all discussions and transactions with all insurers/providers, provided that
Mercer shall not place any insurance or vendor programs on behalf of the Client
unless so authorized by the Client.
• Assist with documentation and other steps to obtain commitments for and
implement insurance policies and other services selected by the Client regarding its
employee benefits program upon the Client's instructions, it being understood that
Mercer will not independently verify or authenticate information not originating from
Mercer necessary to prepare proposals or underwriting submissions and other
documents relied upon by insurers/providers, and the Client shall be solely
responsible for the accuracy and completeness of such information and other
documents furnished to Mercer and/or insurers/providers and shall sign any
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Mercer Service Agreement San Bemardino042110.doct
application for coverage. The Client understands that the failure to provide all
necessary information to an insurer, employee benefit provider or third party vendor
whether intentional or by error, could result in the impairment or voiding of coverage
or service.
• Provide Client access to the national insurance marketplace and related services
marketplace and use Mercer's commercially reasonable efforts to place insurance
policies and other services selected by the Client regarding its employee benefit
program on behalf of the Client, if so instructed by the Client.
• Act as a liaison between the Client and insurers/ providers for the lines of
coverage and services that Mercer has placed or obtained on behalf of Client or for
which Mercer is named as the broker of record.
• Provide the Client with detailed invoices, except in the case of direct billing by
insurers or employee benefits providers.
• Mercer may utilize the services of other intermediaries to assist in the marketing
of the Client's program (including brokers in the London and other markets), when in
Mercer's professional judgment those services are necessary or appropriate. Such
intermediaries may be affiliates of Mercer or not related to Mercer. The
compensation of such intermediaries is not included in Mercer's compensation under
this Agreement and will be paid by insurers/providers out of paid premiums.
• Follow up with insurance carriers/providers for timely issuance of policies and
endorsements/contracts.
• Follow up with insurance carriers/providers with respect to the payment or return
premiums.
• Review policies, contracts and endorsements for accuracy and conformity to
specifications provided by Client and the related negotiated coverages.
• Assist the Client in connection with issues relating to interpretation of insurance
policies/contracts placed by Mercer.
• Provide information/coverage summaries for all new coverages and updates on
changes to existing coverages.
• Following any such placement, deliver confirmation of coverages as promptly as
practicable
• Provide Client access to Mercer Select—HB KnowHow self service site. Also,
provide access to topical Mercer publications, seminars, roundtables, executive
forums, and webcasts.
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Mercer Service Agreement San Bemardino042110.doct
• Other Services:
• Mercer will provide annual creative services through its Benefits Publishing
Product. Communications Brochures development is included within the quoted
fees. Printing fees may be billed separately or alternatively the Client may use its
own printer for printing of the benefits brochures.
• Mercer will provide its annual series of wellness materials, called the Healthy
Habits Newsletter within the quoted fees. These newsletters will be provided in
PDF format only, but may be printed by the Client at its own expense
B. Employee Benefit Programs related to the Core Services:
• Group Life
• Group AD&D
• Long Term Disability
• Short Term Disability
• Medical Plans
• Prescription Drugs
• Dental Plans
• Vision Plan
• Flexible Benefits and FSA Accounts
C. Additional Terms:
1. Mercer does not act on behalf of any insurer or other service provider, is not bound to utilize
any particular insurer or service provider, and does not have the authority to make binding
commitments on behalf of any insurer or service provider. In addition, Mercer does not
guarantee or make any representation or warranty that coverage or service can be placed
on terms acceptable to you. Mercer is not responsible for the solvency or ability to pay
claims of any insurance carrier or for the solvency or ability of any service provider to
provide service. Insurance carriers or service providers with which your other risk or
insurance coverage or other business is placed will be deemed acceptable to you, in the
absence of contrary instructions from you.
2. You understand that the failure to provide, or cause to provide, complete, accurate, up-to-
date, and timely documentation and information to us, an insurer, or other service provider,
whether intentional or by error, could result in impairment or voiding of coverage or service.
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Mercer Service Agreement San Bemardino042110.doct
You agree to review all policies, endorsements and program agreements delivered to you
by us and will advise Mercer of anything which you believe is not in accordance with the
negotiated coverage and terms within thirty (30) days following receipt.
3. You expressly acknowledge that, with respect to the provision of the Services, Mercer is
not, nor are any of our Affiliates or subcontractors, an "administrator'within the meaning
under applicable law, including the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), nor, with respect to the provision of the Services, are we or any of our
Affiliates or subcontractors a "fiduciary"within the meaning under applicable law or ERISA,
unless provided otherwise herein or required by applicable law.
4. Title V of the Gramm-Leach-Bliley Act and related state laws and regulations establish
limitations on the use and distribution of non-public information collected by financial
institutions from their customers and consumers. Our insurance-related work qualifies us as
a financial institution under this Act. Our Privacy Policy Notice is available at
www.mercer.com/transparency. At this web address you will also find information regarding
Marsh & McLennan Companies, Inc. and its subsidiaries' equity interests in certain insurers
and contractual arrangements with certain insurers and wholesale brokers.
5. Without limiting the generality of Section 2 of our engagement letter, you will inform us at
the commencement of our work under each SOW (and thereafter in the event of any
change) as to whether or not you or any of your Affiliates are subject to any restrictions or
obligations directly relevant to the Services as a result of or in connection with having
received any federal financial assistance in connection with any federal law or program,
including, but not limited to, the American Recovery and Reinvestment Act of 2009 and the
Emergency Economic Stabilization Act of 2008, including the Troubled Assets Relief
Program. In the event that you or your Affiliates are subject to such restrictions or
obligations, you will also promptly describe such restrictions and obligations to us in writing
in reasonable detail and make an expert (including internal or external counsel)available to
us for additional clarification that we reasonably request regarding the analysis or
interpretation of any such restrictions or obligations. You agree that we will be entitled to
rely on, and have no liability for, the accuracy and completeness of the information, analysis
or interpretation that is provided to us in connection with the foregoing.
D. Period of time over which work will be performed: July 1, 2010 through June
30, 2013. The contract may be extended for up to two (2) additional one (1)year terms at the
City's discretion.
E. Compensation and Fees:
Mercer will deliver the services as outlined in Exhibit A with respect to the stated coverages (the
"Fee Coverages")for annual broker/ consulting fees in accordance with the schedule below,
.payable and to be invoiced as follows: Monthly Installments.
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Mercer Service Agreement San Bemardin0042110.dOct
7/1/2010—6/30/2011 $114,301
7/1/2011 - 6/30/2012 $117,417
7/1/2012 -6/30/2013 $120,536
Mercer will provide a suite of Administrative Services which are governed by a separate
agreement through its Mercer Administration operation and subcontractor(s). These services
are provided for a separate annual administration fee in accordance with the schedule below
and invoiced monthly as more fully described in that Agreement.
7/1/2010-6/30/2011 $160,699
7/1/2011 - 6/30/2012 $165,083
7/1/2012 - 6/30/2013 $169,464
Mercer will invoice these fees monthly on a consolidated billing to the City. Total annual fees
are:
7/1/2010—6/30/2011 $275,000
7/1/2011 - 6/30/2012 $282,500
7/1/2012 -6130/2013 $290,000
7/1/2013 -6/30/2014 Fees to increase no more than 3%
over prior year
7/1/2014 -6/30/2015 Fees to increase no more than 4%
over prior year
Mercer will continue to instruct insurance carriers that all coverages be provided "net" of
commissions as directed by the City of San Bernardino. Such commissions do not include, and
Mercer shall be entitled to receive and retain, as to all lines of coverage, wholesale
commissions with respect to placements for the Client. Should commissions be received,
Mercer will disclose to the Client any commissions or wholesale commissions collected by
Mercer.
Method of Billing.
Consultant may submit invoices to the City for approval. Said invoice shall be based on the
total of all consultants' services, both consulting and administrative, which have been performed
in accordance with the terms of this Agreement during the period covered by such invoice. City
shall pay Consultant's invoice within thirty(30) days from the date City receives said invoice.
The invoice shall describe the services performed and the associated time for completion. Any
additional services approved and performed pursuant to this Agreement shall be designated as
"Additional Services" and shall identify the number of the authorized change order, where
applicable, on all invoices.
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CITY OF SAN BERNARDINO (CITY)
PERFORMANCE STANDARD GUARANTEES EXHIBIT B
Health and Welfare Plans and Programs
MERCER HEALTH &BENEFITS,LLC (MERCER)
Performance Standard Performance Standard Methodology Financial
Description Amount at Risk
Timely response to verbal City to receive verbal response within two(2)City 2%of the cost of
inquiries business days of verbal inquiry the service
related to each
inquiry.Penalty
to be assessed at
the end of each
quarter.
Timely response to written City to receive written response within 2 City 2%of the cost of
inquiries business days of receipt of inquiry the service
related to each
inquiry.Penalty
to be assessed at
the end of each
quarter.
Projects completed by Mercer shall reduce the total cost of the service 2%of the cost of
predetermined deadline " related to the specific project or project phase(for the project or
multiple-phase projects)by two percent(2%)for each project phase(for
business day that the service is delinquent with a multiple-phase
maximum penalty not to exceed ten percent(10%)of projects)for each
the project cost City business day
that the service
If the service related to the project or project phase is related to a
delayed by the City,the number of days the project or project or project
project phase is delayed will be added to the original phase is delayed.
due date) Penalty to be
assessed at the
end of each
project.
Account management An account management satisfaction score of`3' or 2%of the total
satisfaction better on a"1-5"scoring system based on a survey cost of services
tool mutually agreed upon by the City and consultant. for the quarter
The survey tool will be completed on a quarterly basis being rated.
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Mercer Service Agreement San Bemardino0421 1 0.doct
Consulting team continuity If a key personnel is no longer employed by Mercer, Timing of
Mercer shall notify the City within 72 hours of the replacement of
person leaving and shall promptly replace such person key personnel—
with a reasonably acceptable replacement. City shall 1%of the total
have the option to interview up to 2 Mercer cost of services
employees before selecting a replacement. The for the three
replacement shall be assigned to the City within three months following
weeks of either the notification date if no interviews the change in key
are conducted or one week from the City selecting personnel.
from interviewed employees.
A City"key personnel transition"satisfaction score of Satisfaction with
"Y'or better on a 1-5 scoring system based on criteria key personnel
mutually agreed upon by the City and Mercer,to be transition- I%of
assessed at the end of three months following the the total cost of
change in key personnel. services for the
three months
following the
change in key
personnel.
Total Financial Liability 10% of the total
per Contract Year Not to cost of services
Exceed er Ian ear
*Penalties will be waived or reduced if project delays are due to extenuating circumstances outside of
the control of Mercer. These situations will be reviewed on a"case-to-case"basis.
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