AR-Settlement Authority/Liability Claims

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CITY OF COLTON AGENDA REPORT FOR CITY COUNCIL MEETING OF June 19, 2001 TO: Honorable Mayor and City Council FROM: Dennis Morris, Human Resource Directorz Joanne Knowles, Assistant Risk Manager SUBJECT: Adjustment of Settlement Authority: Liability Claims DATE: June 11, 2001 BACKGROUND: Currently the Human Resource Director has settlement authority of up to $15,000 to resolve liability claims that have been filed against the City and are determined to have adverse liability. This authority level, originally set, allowed staff to expeditiously settle many of the smaller claims filed against the City. However, due to the increased cost of losses regarding claims filed as a result of vehicle accidents, sewer overflow, and/or property damage the ability of staff to resolve claims quickly has diminished. In the past, if an adverse City claim occurred the ability of the adjuster to make full settlement authority in the field was possible, the claimant would accept a certain monetary payment for loss and would accept the responsibility of the restoration process (sewer backup) and or vehicle repair (auto loss). Early settlement eliminates the overhead expense to the City of hiring a contractor and/or vendor and eliminates staff s time overseeing the repair to completion. This also eliminates the opportunity for the claimant to litigate (litigation expense�Frequently, after time elapses, the claimant decides to litigate due to the influence of attorneys, family, friends, and deep pocket mentality. All sewer claims occurring inside the dwelling exceed $15,000; therefore, the risk management department must wait for the following closed session council meeting to obtain settlement authority. If the item is moved to the next meeting, this could stop restoration work for over a month. The ability to retain early claims settlement is imperative for claim expense reduction, to mitigate potential litigation, and to provide good public service to the claimant. Resource authority: Administrative Policy No. 5.02.010. DISCUSSION/ANALYSIS: With the increase of property damage repair (e.g., automotive repair, sewer restoration, personal property) and the state mandated cost of state workers' compensation claims: medical costs, temporary, and permanent disability payments, staff9 ability to expeditiously settle claims has decreased. We have calculated that the current value of the $15,000 settlement authority, when adjusted for CPI increase, since 1985, has increased twenty-four percent. In addition, the attached Adg 061901 Liability Claims Settle Auth.doc 06/11/01 Item #15