HomeMy WebLinkAboutContract 47365 CITY BECRETAW . M
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EXCESS POLICY COMMUTATION AGREEMENT
` This Excess Policy Commutation Agreement (hereinafter referred to as the
"Commutation Agreement") is entered into by and between the City of Fort Worth, Texas
(hereinafter referred to as "Fort Worth") and the North River Insurance Company and its
successors in interest and assigns with respect to the North River Policies, as defined herein
(all such entities are hereinafter referred to collectively as "the Company"). The Company and
Fort Worth shall be referred to herein collectively as the "Parties."
Recitals
WHEREAS, the North River Insurance Company issued or caused to be issued to Fort
Worth the North River Policies as defined further herein and as identified on Schedule A
(hereinafter referred to as "Policies");
WHEREAS, the Policies applied to workers' compensation and related claims for which
Fort Worth permissibly self-insured under the laws of the State of Texas when the total of such
claims for a covered individual exceeded an identified amount;
WHEREAS, claims to which the Policies apply have been or may in the future be
asserted against Fort Worth ("Claims" as defined herein);
WHEREAS, Fort Worth has requested reimbursement for Claims from the Company
under the Policies, whether previously disclosed to the Company or its representatives or not;
WHEREAS, disputes have arisen between Fort Worth and the Company as to the extent
to which claims are covered under the Policies and the extent to which Fort Worth is entitled
to reimbursement;
WHEREAS,the Parties wish to resolve all past,present and future disputes and requests
for reimbursement for claims under the Policies by entering into a commutation of all rights,
obligations, liabilities and defenses under the Policies;
NOW THEREFORE, in return for the mutual promises herein and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereby
agree as follows:
Definitions
1. The "Company" shall mean the North River Insurance Company, on its own
behalf and its subsidiaries, predecessors, successors, assigns, officers, directors, shareholders,
employees, agents, attorneys, heirs, executors, and underwriting agents with respect to the
North River Policies.
2. "Fort Worth" shall mean the City of Fort Worth, Texas, as defined in the
Policies, and its predecessors, successors, and any and all agencies that claim to be insured or
otherwise entitled to coverage under the Policies, and their respective officers, officials,
employees, volunteers, agents, attorneys, heirs, executors and assigns.
OFF"ICIAL, RECORD
CITY MUMMY
Y
MP,. 11VORT1,1v TX
Commutation Agreement for Policv 544-000168-8 1 of 8
3. "North River Policies" or "Policies" shall mean those policies of excess
insurance generally providing specific excess workers' compensation and employers' liability
coverage, issued by or on behalf of The North River Insurance Company to Fort Worth as
specifically identified on Schedule A attached hereto.
4. "Workers' Compensation Claims"shall mean any and all claims that have been
asserted or may be asserted in the future against Fort Worth for workers' compensation benefits
under the laws of the State of Texas or other applicable law, and for which Fort Worth has or
could seek reimbursement under the Policies regardless of any applicable attachment point.
5. "General Liability Claims"shall mean any and all claims that have been or may
be asserted in the future against Fort Worth for damages because of bodily injury or property
damage, and for which Fort Worth has or could seek reimbursement under the Policies
regardless of any applicable attachment point.
6. "Claims" shall mean collectively Workers' Compensation Claims and General
Liability Claims for"loss" and/or"claim expenses" as those terms are defined by the Policies.
7. "Effective Date" shall mean the date upon which the Commutation Agreement
has been fully executed by both Parties.
Agreement
1. Commutation Payment. Following full execution of this Commutation
Agreement, Company shall pay to Fort Worth the amount of Five Million Two Hundred
Thousand U.S.Dollars and zero cents ($5,200,000.00) ("Commutation Payment"). No later
than the tenth business day after the Effective Date the Company shall pay or deposit or cause
to be paid or deposited, as the case may be, the full amount of the Commutation Payment by
wire transfers of immediately available funds to the following account:
JPMorgan Chase
ABA#021-000-021
City of Fort Worth
Account#1180121202
The date by which the Commutation Payment is due shall be referred to herein as the
"Closing Date." In the event that the Commutation Payment, or any part of it, is not made on
or before the "Closing Date," interest shall accrue on the full amount of the Commutation
Payment at the rate of 4.75%per annum with such interest accruing weekly but not
compounding.
Further, Fort Worth agrees that the Commutation Payment will be held in trust solely for the
benefit and payment of Claims.
2. Commutation of Claims. In consideration of the Commutation Payment and
the mutual promises and covenants herein, Fort Worth hereby agrees, effective on receipt of
the full amount of the Commutation Payment, to release, acquit, and forever discharge the
Company from any and all further payment obligations, adjustments, obligations, offsets,
actions, causes of action, claims, suits, debts, sums of money, premiums, return premiums,
Commutation Aereement for Policv 544-000168-8 2 of 8
unearned premiums, liabilities, losses, salvage, accounts, reckonings, bills, commissions,
covenants, contracts, agreements, promises, damages, judgments, expenses, and demands
whatsoever, whether known or unknown, in law or equity, in contract or in tort, arising out of
or related to any and all Claims under the Policies or any claims that were or could have been
made by Fort Worth, including, without limitation, claims for extra-contractual liability, bad
faith, breach of the covenant of good faith and fair dealing, or violation of any claim handling
statutes or regulations, including, without limitation, §541.001, et sect., Texas Insurance Code.
3. Scope of Commutation. It is the express intent of the Parties hereto that,
effective on payment of the amount of the Commutation Payment to Fort Worth, the
Commutation Agreement and releases set forth herein shall operate as a full and final settlement
of the Company's past,present,and future obligations under the Policies. The Parties expressly
agree that the scope of release of this Commutation Agreement includes all Claims under the
Policies, whether past, present, or future and whether or not presently known to Fort Worth or
the Company.
4. Release of Fort Worth. In consideration of the mutual promises and covenants
in this Commutation Agreement,the Company hereby acquits,releases and forever discharges
Fort Worth from any and all obligations,adjustments, offsets, actions, causes of action,claims,
suits, debts, sums of money, premiums, return premiums, unearned premiums, liabilities,
losses, salvage, accounts, reckonings, bills, commissions, covenants, contracts, agreements,
promises, damages, judgments, expenses, and demands whatsoever, whether known or
unknown, in law or equity, in contract or in tort, arising out of or related to the Policies.
5. Fort Worth Representations and Warranties. As a material inducement to
the Company to enter into this Commutation Agreement, Fort Worth makes the following
representations and warranties to the Company, each of which is true and correct as of the date
of signing this Commutation Agreement and shall be true and correct as of the Closing Date
and shall remain in force and effect following the Closing Date:
a. The agreement of the Company to enter into this Commutation Agreement is in
reliance on information supplied by Fort Worth. Fort Worth has not knowingly
withheld from the Company any facts, information, or documents material to
the valuation of any Claim, and none of the information, facts, or documents
supplied by Fort Worth to the Company pertaining to any Claim contained any
known errors or inaccurate information material to the valuation of any Claim.
b. Fort Worth has the full power and authority to execute,perform,and deliver this
Commutation Agreement on behalf of any and all entities that were or are
insured or otherwise entitled to coverage under the Policies.
C. Fort Worth expressly represents that it is not aware of any statute,regulation, or
rule of common law which prohibits Fort Worth from commuting the Policies.
6. The Company's Representations and Warranties. As a material inducement
to Fort Worth entering into this Commutation Agreement, the Company makes the following
representations and warranties to Fort Worth, each of which is true and correct as of the date
of signing this Commutation Agreement and shall be true and correct as of the Closing Date
and shall remain in force and effect following the Closing Date:
Commutation Aereement for Policv 544-000168-8 3 of 8
a. The Company has not knowingly withheld from Fort Worth any facts,
information, or documents material to the valuation of any Claim, and none of
the information, facts, or documents supplied by the Company to Fort Worth
pertaining to any Claim contained known errors or inaccurate information
material to the valuation of any Commuted Claim.
b. The Company has full power and authority to execute, perform,and deliver this
Agreement.
C. The Company warrants and represents that it is financially solvent and capable
of timely making the full Commutation Payment in accordance with the terms
of this agreement.
7. Assumption of Liability and Release.As a material inducement to the
Company entering into this Commutation Agreement, Fort Worth agrees that, following
execution of this Commutation Agreement and payment of the Commutation Amount,the City
shall (a) assume full liability and be solely responsible for any and all Payment Obligations
arising out of or related to any and all Claims under the Policies, or any claims that were or
could have been made in connection with the Policies and (b) release the Company from any
and all further liability with respect to such Payment Obligations. For purposes of this
provision, the term "Payment Obligations" shall include, but not be limited to, adjustments,
obligations, offsets, actions, causes of action, claims, suits, debts, sums of money, premiums,
return premiums, unearned premiums, liabilities, losses, salvage, accounts, reckonings, bills,
commissions, covenants, contracts, agreements, promises, damages,judgments, expenses, and
demands whatsoever, whether known or unknown, in law or equity, in contract or in tort,
arising out of or related to any and all Claims under the Policies, or any claims that were or
could have been made against North River.
8. Confidentiality. The Parties hereby agree that no direct or indirect use of
anything said or done in the course of the commutation negotiations shall be admissible or
otherwise be introduced into evidence in any lawsuit of any type, or in any other arbitral,
judicial, or administrative proceeding. Notwithstanding the foregoing, to the extent that either
Party produced to the other Party documents that were not prepared for purposes of the
commutation negotiations (by way of example and not limitation, medical records, loss runs,
and reinsurance reports), such production shall have no effect upon the admissibility of such
documents in any potential future litigation.As to such documents,the receiving Party shall be
permitted to argue that such documents are admissible evidence, and the producing Party shall
not be deemed to have waived any right to argue that such documents are protected by privilege
or other exclusion to admissibility.Notwithstanding the foregoing,nothing in this section shall
be interpreted to limit the right of any Party to introduce evidence in a proceeding to interpret
and/or enforce this Commutation Agreement.
9. Notices. Notices to be provided hereunder shall be sufficient if forwarded to
the other Party by hand-delivery or via U.S. Postal Service certified mail, postage prepaid, to
the address of the other Party shown below:
Susan Alanis, Assistant City Manager North River Insurance Company
City of Fort Worth c/o RiverStone Claims Management
1000 Throckmorton St. Attn: General Counsel
Fort Worth, Texas 76102 250 Commercial Street, Suite 5000
Commutation Agreement for Poliev 544-0001 68-8 4 of 8
(817) 392-8180 Manchester,NH 03101
With a copy to City Attorney's Office at same address.
10. Miscellaneous. This Commutation Agreement shall be binding upon the
Parties' successors and assigns in all respects. Each Party has participated fully in the review
and revision of this Commutation Agreement. Hence, no ambiguity herein shall be resolved
presumptively against any Party.The headings of paragraphs and sections in this Commutation
Agreement are for convenience only. The headings form no part of this Commutation
Agreement and shall not affect its interpretation,
11. Waiver.No waiver of a breach, failure, or right contained in or granted by the
provisions of this Commutation Agreement shall be effective unless it is in writing and signed
by the Party waiving the breach, failure, or right. No waiver of any breach, failure, or right
shall be deemed a waiver of any other breach, failure, or right, whether or not similar,nor shall
any waiver constitute a continuing waiver, unless a writing so specifies.
12. No Third-Party Beneficiaries, This Commutation Agreement is made solely
for the benefit of the Parties, and no other person or entity shall have or acquire any right by
virtue of this Commutation Agreement.
13. Cooperation.The Parties agree to cooperate fully in negotiation and execution
of other additional or supplemental documents and completion of other actions necessary or
appropriate to give full force and effect to the terms and intent of this Commutation Agreement.
14. Construction and Venue. This Commutation Agreement shall be governed,
construed, and interpreted in accordance with the laws of the State of Texas (without respect
to principles of conflict of laws). Should any action, whether real or asserted, at law or in
equity, arise out of the interpretation,execution,performance,or attempted performance of this
Commutation Agreement, venue for said action shall lie exclusively in Tarrant County, Texas.
15. Modification. This Commutation Agreement may not be amended or modified
at any time unless such amendment or modification is in writing and executed by both Parties.
16. Execution in Counterparts. This Commutation Agreement may be executed
in counterparts, each of which when so executed and delivered shall be considered an original,
but such counterparts shall together constitute one and the same instrument and agreement.
Any signature delivered by a party by facsimile or other electronic transmission (including
email transmission of a portable document file (pdf) or similar image) shall be deemed to be
an original signature hereto.
17. Severability. Should any part, term or provision of this Commutation
Agreement be decided, declared, or found by any court, administrative law judge, tribunal,
workers' compensation judge, administrative agency, or regulatory agency having jurisdiction
over either Party or this Commutation Agreement to be illegal or in conflict with any laws, or
otherwise be rendered unenforceable or ineffectual, the validity of the remaining parts, terms,
portions or provisions shall be deemed severable and shall not be affected thereby, providing
such remaining parts,terms, portions or provisions can be construed in substance to constitute
the agreement the Parties intended to enter into in the first instance. The Parties further agree
to negotiate to replace such void or unenforceable provision of this Commutation Agreement
Commutation Aereement for Policv 544-000168-8 5 of 8
with a valid and enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
18. Construction. The Parties further represent and warrant to each other that (i)
this Commutation Agreement and its reduction to final written form is the result of extensive
good faith negotiations between the Parties and, (ii) any statute or rule of construction that
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Commutation Agreement.
18. Signature Authority. Each individual signing this Commutation Agreement
hereby warrants that he or she has the legal authority to execute this Commutation Agreement
on behalf of his or her respective Party, and that such binding authority has been granted by
proper order, resolution, ordinance or other authorization of the entity. In addition, the signor
for the Company specifically represents and warrants that RiverStone Claim Management,
LLC has the authority to act on behalf of and to legally bind The North River Insurance
Company and its holding company, subsidiaries, predecessors, successors, assigns, officers,
directors, shareholders,employees,agents,attorneys,heirs,executors, and underwriting agents
with respect to the North River Policies. Each Party acknowledges that the other Party is fully
entitled to rely on this warranty and representation in entering into this Commutation
Agreement.
19. Entire Agreement. This Commutation Agreement contains the entire
agreement between the Parties hereto with regard to the subject matter hereof, and all prior
negotiation or discussions of any type are subsumed in this Commutation Agreement. By
execution of this Commutation Agreement, Each Party acknowledges that there is no other
agreement, oral or written, by and between the Parties.
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Commutation Aereement for Poliev 544-000168-8 6 of 8
IN WITNESS WHEREOF, Fort Worth and the Company have made and executed
this Commutation Agreement by their respective authorized officers as of the day and year
written below.
CITY OF FORT WORTH, TEXAS NORTH RIVER INSURANCE
COMPANY
g �
By: Susan Alanig By: " ' rr C
Its: Assistant City Manager Its: 1 g ct°lkd
Date: Date: >
CONTRACT AUTHORIZATION:
M&C: G-18626
Date: December 15, 2015
ATTEST:
Mary Kayser, City Secretary
APPROVED AS TO FORM AND LEGALITY:
Will Trevino, Assistant City Attorney
)
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Commutation Aereement for Policv 544-000168-8 7 of 8
IN WITNESS WHEREOF, Fort Worth and the Company have made and executed
this Commutation Agreement by their respective authorized officers as of the day and year
written below,
F
CITY OF FORT WORTH,TEXAS NORTH RIVER INSURANCE i
COMPANY
"
B; san Alanis
Its:""Assistant City Manager Its: ( GEc Ci�t£l1i�i
Date: ( e'- ,,. %' � °" .. Date:
t i vi,,
CONTRACT AUTHORIZATION:
M&C: G-18626
Date:December 15,2015
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th ��C�
ATTEST:
o' � f
ary kayse , rat
PR V D ASfTO F( , ITY:
I Tre 'no Assistant City Attorney
I 'FICIAL RECORD) �
FIT VIVOR`11'14�"Fx
Commutation Aareementfor Policv 544-000168-8 7 of 8
Schedule A
Released Policies
Policy 544-000168-8 effective 1/1/2003 to 1/1/2004
Commutation Agreement for Policv 544-000168-8 8 of 8
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 12/15/2015
DATE: Tuesday,December 15, 2015 REFERENCE NO.: G-18626
LOG NAME: 1416WCINSURANCE-3
SUBJECT:
Authorize Acceptance of a Settlement from Excess Insurer Riverstone Claims Management for Policy Year 2003
Workers' Compensation Claims in the Amount of$5,200,000.00 and Authorize Execution of Releases and
Agreements Necessary to Complete the Settlement(ALL COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize the City Manager to accept a settlement from excess
insurer Riverstone Claims Management for insurance Policy Year
2003 workers`compensation claims in the amount of$5,200,000 00, a
and '
2. Authorize the execution of Releases and Agreements necessary to
complete the;settlement:
DISCUSSION:
On January 14,2003,the City Council authorized?tlie purchase of an "`
E;.cess Workers'Compensation Insurance Policy,(Policy)for.the
I eriod January 1,2003 through December 31,2001.(M&C
C-19410). The Policy purchased vitas writtenbyNoith River:
Insurance company,(Crum&Eorster Insurance). The Policy—(No.;
544-000,168-8j.proviiled s#atutory.coverage for workers',
;compensation;-but with a self insured retention amount of - ;
$750,OQ0.00 per occurrence:
The.City,through,its:contracted third party;clai1 $;A" Mu1 m
l I
l , as
paid all:compensable workers'compensation elaiiiis,for policy yea ar
2003. Flowever, six open and active claims remain for payment of
orkers'compensation benefits to the,City
w
employees%elaimants :Only one claim is expected`to exceed the
n
$750,000.00retentro threshold 3
zj
The original excess insurer has been purchasedby Riverstone Clanns'_
,
Man age
ment{Riverstone)
Riverstone is changing ownership'and the new ownership has no
interest,in continuing this line of business. Accordingly,"Riverstone
has,offered$5,200,000.00 tosetile andbuy-out all claims, r policy
year 2003;;=The City's contracted insurance:Brokei of Record,
McGriff, Seibels and Williams of.Texas,reconiinends that the City
accept this
,se, ementas being�n the best interest of the City
Upon execution of the set#lenient,known as a Commutation
Agreement,the City will remainliable,for workers'compens#tion
benefits to which City eznploy'ees"mad lie entitled,as aril v,+hen such
benefits may.accrue.,
The placement and purchase of Exc-ss;W6rk is!Compensation
Insurance by the Cityis a service provided to the City under a
Professional Services Agreement with insurance broker,McOriff,
Seibels and Williarris of Texas:(City Secretary Contract No.43879)
FISCAL INFORMATION/CERTIFICATION:
The Financial Management Services Director certifies that there is no
adverse fiscal impact;to the acceptance of this settlement and"all funds
received shall:accrue to the'Risk Financing Fund, The Human: v
Resources Department will be responsible:for collection(cf Jud s due
the City.
FUND IDENTIFIERS WIN):
TO
Department Project Budget Reference#
Fund Account ProgramActivity Amount
ID ID Year (Chartfield 2)
60111 0147310 4850100 $5,200,000.00
FROM
FundDepartment ID Account Project ID Program ActivityBudget Year Reference Z) fi
Charteld Amount
CERTIFICATIONS:
Submitted for City Manager's Office by: Susan Alanis (8180)
Originating Department Head: Brian Dickerson (7783)
Additional Information Contact: Mark Barta (7790)
ATTACHMENTS
1. MC C-19410.pdf (CFw Internal)
2.Update FIDs.pdf (CFw Internal)