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Home My WebLink AboutPR 11756:TEXAS MUNICIPAL LEAGUEINTER OFFICE MEMO To: Mayor, City Council & City Manager From: Mark T. Sokolow, City Attorney ~ Subject: P. R. No. 11756 Council Meeting April Date: April 25, 2002 Attached is P.R. No. 11756 authorizing the City Manager and the City Attorney to retain the Texas Municipal League {"TML") to actively pursue and recover on worker's compensatory and other subrogation liens. 30, 2002 MTS/ts Attachment: P. R. No. 11756 cc: Harvey Robinson, Director of Human Resources Lisa Colten, Safety & Risk Management Coordinator P. R. No. 11756 04/25/02 ts RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER AND THE CITY ATTORNEY TO RETAIN THE TEXAS MUNICIPAL LEAGUE ("TML") TO ACTIVELY PURSUE AND RECOVER ON WORKER'S COMPENSATORY AND OTHER SUBROGATION LIENS WHEREAS, the City of Port Arthur deems it in the best interests of the citizens of Port Arthur to retain the Texas Municipal League (~TML") to actively pursue and recover worker's compensatory liens and other subrogation liens, as described in Exhibit "A" and "B". NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR, TEXAS: Section 1. That the facts and opinions in the preamble are true and correct. Section 2. That the City council authorize the City Manager and the City Attorney to retain the Texas Municipal League (~TML") to actively pursue and recover on worker's compensatory liens and other subrogation liens, as described in Exhibit ~A" and ~B". Section 3. That a copy of the caption of this Resolution be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this __ day of , A.D., 2002, Council of the City of Port vote: AYES: Mayor Councilmembers at a Regular Meeting of the City Arthur, Texas, by the following ; NOES: ATTEST: MAYOR ACTING CITY SECRETARY APPROVED AS TO FORM: CITY ATTOP~NEY APPROVED FOR ADMINISTRATION: CITY MANAGER EXHIBIT "A" December 5, 2001 Mark Sokolow, City Attorney City of Port Arthur P. O. Box 1089 Port Arthur, Texas 77641-1089 Via Facsimile (409)983-8291 and Regular Mail Re: Subrogation Services Dear Mr. Sololow: I was happy to discuss the possibility of pursuing subrogation on behalf of the City of Port Arthur when we spoke on November 14, 2001. Since the city is one of only a few of TML-IRP's administrative services only members, I had to talk with your underwriters and research your coverage documents to determine how we would handle your subrogation claims. An explanation follows as to how we would pursue subrogation on behalf of the City of Port Arthur, if you choose to have us perform this service. We would pursue subrogation on behalf of the City for all claims, both pre- litigation and litigation, from a defined date forward. The City of Port Arthur would retain settlement authority on all files but TML-IRP legal staff would make all other decisions. If a disagreement regarding strategy, settlement authority or the incurring of expenses should arise in the course of handling a particular file, either party would have the right to turn over or request the return of the file to Port Arthur for further pursuit. Once recovery has been obtained on a file, the recovery would be reduced by attorneys' fees paid to the claimant's attorney (up to one-third (i/3) of the total lien), certain expenses incurred in pursuing the recovery (travel expenses, deposition costs, mediation fees, court costs and expert witness fees), and a twenty percent (20%) subrogation fee to TML-IRP. The net recovery would be returned to the city. An example of this calculation is as follows: Total benefits paid to injured worker (lien): Attorneys' fees paid to injured worker's attorney: (1/3 of lien) Expenses incurred in pursuit of recovery: Sub-total 20% TML-IRP fee $30,000 $10,000 $ 2,000 $18,000 $ 3,600 Net Recovery to Port Arthur $14,400 TEXAS MUNICIPAL LEAGUE INTERGOVERNMENTAL RISK POOL 1821 Rutherford Lane, First Floor · Austin, Texas 78754 · (512) 491-2300 · (800) 537-6655 Texas Only P.O. Box 149194 · Austin, Texas 78714-9194 Page 2 City of Port Arthur December 5, 2001 Of course we would endeavor to keep the attorney's fees paid to outside attorneys as low as possible in order to maximize the city's recovery, but one-third is the maximum allowed by law and the realistic figure to consider. If you have any questions or need additional information, please contact me. I look forward to working with you. Sincerely, CCi Judith S. Rawls, First Assistant City Attorney Harvey Robinson, Director of Human Resources Lisa Colten, Safety and Risk Management Coordinator Mike Bratcher, TMLIRP Workers' Compensation EXHIBIT "B" 04/25/02 THU 02:02 FAX 512 491 Z48~ TML IRE - April 25, 2002 Mark Sokolow, City Attorney City ofPoxl A~hur P. O. Box 1089 Port Pdxhur, Texas 77641-1089 Via Fa~imile ~409)983-8291 and Regular Ma~ Re: Workers' Compensation Subrogation Services Dear Mr. Sokolow: This letter will serve as an addendum to my December 5, 2001, letter regarding the handling of Port Arthur's workers' compensation subrogation. I believe tliere are several points that I need to clarify for the city's consideration of Texas Municipal League Intergovernmental Risk Pool's subrogation program. Currently there are 1,874 members of the workers' compensation fund admini,~ered by TML-IRP. The Legal/Subro Department handles subrogation for all 1,874 members except for the City of Port Arthur. We have approximately 700 open files at this time, 600 pre-litigation -- 100 in litigation. The department has two legal assqstants who handle the pre*litigation files, with attom~ supervision, until the file settles or goes into litigation. Once the file is in litigation one of two paralegals and an attorney handle the file. It' you choose to have TML-IRP pursue subrogation on Port ?a-thur's behalf, our department would review all new workers' compensation files with subrogation potential (as identified by the workers' compensation supervisor for your area.) This ensures that the appropriate files reach our department as soon as possible. The file will be assig~gd to a pre-litigation legal assistant who will put the liable third parties on notice, gather intbnnafion regarding the injury, provide medical and indemnity payments information to the third party (or their insurance carrier), and work toward settlement of the claim. If settlement is not poss~le or the statate of limitation nears, a decision regarding fding a lawsuit to effectuate recovery will be made by one of the anorneys. Under the right circumstances, we will file suit in the name of the city only Efthe clahnant is not pursuing recovecg through his own attorney. Filing the lawsuit in the name of Port Arthur ouly or filing an intervention if the claimant's attorney has fil~d suit will then move the file to the litigation .~ction of our depa.xment. 1821 Ruflgdbrd La, g, First laloor - Ausgn, T~xas 78754 · (512) 491-2~00 - (800) 537-6655 T~xas Ordy P-O. Box 149194 - Anscln, Texas 78714-9194 o4/25/o2 TItU o2:o2 FAX $12 491 2481 T~L IRP - ACSTf~ IRF ~UUJ Sokolow, Mark April 25, 2OO2 Page 2 of 3 A fee is charged to the city only if recovery is made on a file. Tha~ fee would be tweaaty percent (20°/°) of the net recovery. The net recovery is determined by taking the amount of the lien recovered, minus the claimant's attorney's tees and our expenses incurred in pursuit of the matter, Twenty percetn (20%) of the net figure is then recovered by TML-IRP as the cost of the program. If there is no recovery, the city is not required to reimburse TML-IRP the expenses incurred in pursuing the claim. Claimant's attorney fees should not exceed one-third (1/3) of' the lien (as the statute dictates) and we endeavor to pay as little as possible to outside attorneys in f~es. This a~ times requh'es taking the issue of fees to the judge for determinatiou, ff the claimant is not involved in the recovery or has no attorney, then no fees are paid, h~creasing the net to the city. The example in my December 5, 2001, letter is the wor~- case scenario of paying the full one-third to claimant's cotmsel. 1 have taken that example and applied several different settlement scenarios below: Example One: Total lien recovered Full 1/3 attorney's fees paid Expenses incun-ed in pursuit of recovery Sub-total 20% to TML-II~.P Net recovery to Port Arthur $30,000 $I0,000 $ 2,000 $18,000 $ 3,60O $14,400 Example Two: Total lien recovered No attorney's fees because claimant not involved: Expenses incurred in pursuit of recovery: Sub-total 20% to TML-I~P Net recovery to Port Arthur £xample Tkree: Total lien recovered Reduced fees paid due to our involvement: Expenses incurred in pursuit of recovery: Sub-total 20% to TML-IRP Net recovery to Port Arthur $30,000 $ 2,000 $28,000 $ 5,600 $2,2,4O0 $30,000 $ 4.000 $ 2,0O0 $24,000 $ 4,800 $19,200 04/25/02 THU 02:02 FA~ 512 491 2481 TML IRP - AUSTI~ IRF ~o04 $okolow, M~k April 25.2002 Page 3 of 3 Example Four Total lien recovered Expenses incurred in pursuit of recovery: 20% to TML-IRP Net owed to T3rlL-Ilt.P for expenses $ 2,000 $---0--- $---0--- I hope these examples and my clarification helps explain the subrogation services the Legal Depaament at TML-IKP can prosAde to Port Arthur. If you have any questions or need additional information> please contact me. I look forward to working with you. Sincerely. Kristi L. Holt