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HomeMy WebLinkAboutContract 47365 (2)DEC 23 2,00 CITY SECRETAW 4,72,„c CONTRACT NO. "A".3 ���� EXCESS POLICY COMMUTATION AGREEMENT l �f OF FORT t CITY SECRETARY 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. __ OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX Commutation Agreement for Policy 544-000168-8 1 of 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 Foit 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 Policy 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 seq., 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 Policy 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 othei 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 othei Party shown below: Susan Alanis, Assistant City Manager City of Fort Worth 1000 Throckmorton St Fort Worth, Texas 76102 North River Insurance Company c/o RiverStone Claims Management Attn: General Counsel 250 Commercial Street, Suite 5000 Commutation Aereement for Policy 544-000168-8 4of8 (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 bleach, 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) of 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 Policy 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. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LP FT BLANK] Commutation Agreement for Policy 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 By: Susan Alanis Its: Assistant City Manager 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 NORTH RIVER INSURANCE COMPANY By: Its: Date: vU (Itt 4 rns -C l P 1?-1(2-49-0/ OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX mad" l.CA ecta th co Nei acl.4Lr Mcrilit- R vim - Commutation Agreement for Policy 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. CITY OF FORT WORTH, TEXAS niza AAA a B ` : san Alanis Its: Assistant City Manager Date: r r 901 c CONTRACT AUTHORIZATION: M&C: G-18626 Date: December 15, 2015 ATTEST: PRO' . D AS TO FC �..�� . .F,-'mot;. Vi"- k tENtS C • IA caers( I Tre 'no Assistant City Attorney NORTH RIVER INS UR ANCE COMPANY By: Its: Date: (J/n VIZ M P oi deal-Attila ow tug- A (Nicer- k trait- g AI, • OFFICIAL RECORD CITY SECRETARY Ft WORTH, TX • • 4 1 , 1. 1 _ Commutation Agreement for Policy 544-O00168-8 7 of 8 Schedule A Released Policies Policy 544-000168-8 effective 1/1/2003 to 1/1/2004 Commutation Agreement for Policy 544-000168-8 8 of 8 City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION Approved on 12/15/2015 DATE: LOG NAME: 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) Tuesday, December 15, 2015 1416WCINSURANCE-3 RECOMMENDATION: It is recommended that the City Council: REFERENCE NO.: G-18626 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; and 2. Authorize the execution of Releases and Agreements necessary to complete the settlement. DISCIJSSION: On January 14, 2003, the City Council authorized the purchase of an Excess Workers' Compensation Insurance Policy (Policy) for the policy period January 1 2003 through December 31, 2003 (M&C C-19410). The Policy purchased was written by North River Insurance Company (Crum & Forster Insurance). The Policy (No. 54/1-000168-8) provided statutory coverage for workers' compensation, but with a self —insured retention amount of $750,000.00 per occurrence The City, through its contracted third party claims administrators, has paid all compensable workers' compensation claims for policy year 2003. However, six open and active claims remain for payment of workers compensation benefits to the City employees/claimants. Only one claim is expected to exceed the $750,000.00 retention threshold. The original excess insurer has been purchased by Riverstone Claims Management (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 to settle and buy—out all claims for policy year 2003. The City s contracted insurance Brokei of Record, McGnff, Seibels and Wilh.ms of Texas, recommends that the City accept this settlement as being in the best interest of the City. Upon execution of the settlement, known as a Commutation Agreement, the City will remain liable for workers' compensation benefits to which City employees may be entitled, as and when such benefits may accrue. The placement and purchase of Excess Workers' Compensation Insurance by the City is a service provided to the City under a Professional Services Agreement with insui ance broker McGriff, Seibels and Williams 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 Resources Department will be responsible for collection of funds due the City. FUND IDENTIFIERS (FIDs': TO Department Project Budget Reference # Fund Account ProgramActivity Year Amount ID ID (Chartfield 2) 60111 0147310 4850100 $5,200,000.00 FROM Fund Department IDAccountProject IDProgramActivityBudget Year Reference 2) Chartfield Amount CERTIFICATIONS: Submitted for City Manager's Office by: Originating Department Head: Additional Information Contact: ATTACHMENTS 1. MC C-19410.ndf (CFW Internal) 2. Update FIDs pdf (CFW Internal) Susan Alanis (8180) Brian Dickerson (7783) Mark Barta (7790)