AGENDA April 8, 2008€¦ · agenda april 8, 2008 . county administrator. susan s. murani5hi . donna linton . county administrator . assistant county administrator . march 20, 2008

AGENDA April 8, 2008

COUNTY ADMINISTRATOR

SUSAN S. MURANI5HI DONNA LINTON COUNTY ADMINISTRATOR ASSISTANT COUNTY ADMINISTRATOR

March 20, 2008

Honorable Board of Supervisors County of Alameda 1221 Oak Street, Suite 536 Oakland, CA 94612-4305

Dear Board Members:

SUBJECT: APPROVE A CONTRACT (CONTRACT #2649) WITH DAVID DONN CONSULTING, INCORPORATED TO PROVIDE WORKERS' COMPENSATION MANAGED CARE CONSULTING AND PERFORMANCE MONITORn~G

SERVICES

RECOMMENDATION: A. Execute an agreement with David Donn Consulting, Inc. (David A. Donn, President, San

Francisco, CA) for Workers' Compensation Managed Care Vendor Selection and Performance Monitoring and Evaluation Consulting Services in an amount not to exceed $75,000, plus approximately 24% of estimated medical claim savings of $2,000,000 generated through his services over a three-year period, for an estimated performance fee of $480,000. The term of the contract shall be three and one-half years beginning on approximately April 8, 2008 and ending on approximately December 31,2011 with an option to renew for an additional two-year term.

B. Approve a two-year extension of the SLEB waiver (SLEB Waiver # 85) granted by GSA, to conform to the period of this contract.

DISCUSSION/SUMMARY: In April 2004 the State Legislature passed SB 899, reforming the workers' compensation system. SB 899 mandated numerous changes to the workers' compensation system to contain escalating medical care costs through the development of a managed care program comprised of medical bill review, utilization review, and medical case management services. Due to the relative newness of these reforms, a standardized process for evaluating and monitoring these services has not yet developed in the public domain.

In order for the County to be able to select a quality managed care provider, negotiate a contract, and verify the performance, the County must utilize the services of an expert. The expert must be knowledgeable in the Labor Code, managed care services (bill review, utilization review, and medical case management), managed care vendors, and service agreements. In addition, the expert must have the

125 - 12'" STREET. 3"" FLOOR' OAKLAND, CALIFORNIA 94607. (510) 272-6920

FAX (510) 272-6815

Honorable Board of Supervisors Page 2 March 20, 2008

technical ability and support staff to be able to monitor the vendor's performance on an ongoing basis to ensure compliance with the service agreements.

The RMU has identified David Donn Consulting, Inc. (DDC) as an expert in this area. DDC, Inc currently provides workers' compensation and performance monitoring services to several public entities including AC Transit, San Francisco Municipal Transit Agency (MUNI), CSAC-EIA, and the County of Merced.

DDC is being retained by the CAO-Risk Management Unit to:

• Assist the County in the managed care RFP process, including developing RFP performance and evaluation criteria, appearing at bidders conferences, assisting in vendor selection, and developing contract provisions for managed care vendors, and negotiating performance levels for the successful vendors.

• Manage the transition of the workers' compensation program from the current vendors, including developing electronic data interfaces between the new TPA and managed care vendors and the County, developing workflows between the TPA, the managed care vendors, and the County, as needed.

• Monitor the vendor's financial and operational performance on an ongoing basis using its proprietary DDC Model, providing monthly performance reports to the County.

RMU estimates that it will reduce the County's workers' compensation medical expenses by approximately $500,000 per year, through the use of DDC, net of the cost of DDC services. The performance based fee for these services will be 24% of savings generated the first year; 23% the second year, and 22% the third year and will be paid from reduced medical claim costs resulting from these services.

SELECTION CRITERIA/PROCESS:

The RMU conducted a search of the SLEB listings, telephone book Yellow Pages, and the Internet and could not identify any vendors that provide similar services or have similar qualifications. The General Services Agency (GSA) Purchasing Department reviewed the Sole Source application, conducted its own search, contacted several local agencies, and concluded that the services provided David Donn Consulting, Inc. comply with the County Sole Source Policy in that only a single source is available and/or valid sole source exceptions to the competitive process exist. It then posted on the County Website on March 4, 2008, an Advance Notice of Sole Source Procurement for 10 business days and no responses were received. Due to the County's requirements and the proprietary nature of the services provided by the vendor it was determined to be in the best interest of the County to proceed with a sole source procurement with David Donn Consulting, Inc.

In addition, the Business Outreach and Compliance Office reviewed the Request for Authorization to Use Non-SLEB Contractor/Subcontractor. It concurred that a SLEB waiver appears appropriate.

Honorable Board of Supervisors Page 3 March 20,2008

FUNDING:

The service agreement is composed of two parts: vendor selection and vendor performance monitoring and evaluation. The cost for the vendor selection service is $75,000 and is included in the FY 2008 Workers' Compensation budget and in the FY 2009 requested MOE budget. The cost for the vendor performance service is a variable percentage of additional savings and will be funded out of reduced medical claim costs to the County. There is no increase in net County cost as a result ofthis action.

Very truly yours,

Susan S. Muranishi, County Administrator County Administrator's Office

Attachment

cc: Patrick O'Connell, Auditor-Controller Richard E. Winnie, County Counsel Barbara Lubben, Director ofRisk Management

--------Contract No.

COUNTY OF ALAMEDA STANDARD SERVICES AGREEMENT

This Agreement, dated as of March 19,2008, is by and between the County of Alameda, hereinafter referred to as the "County", and David Donn Consulting, Inc., hereinafter referred to as the "Contractor".

WITNESSETH

Whereas, County desires to obtain workers' compensation managed care consulting services to assist in the vendor selection process and to monitor and evaluate vendor performance on an ongoing basis. These services are more fully described in Exhibit A hereto ("Definition of Services"); and

Whereas, Contractor is professionally qualified to provide such services and is willing to provide same to County; and

Now, therefore it is agreed that County does hereby retain Contractor to provide managed care consulting services to assist in the vendor selection process and to monitor and evaluate vendor performance on an ongoing basis, and Contractor accepts such engagement, on the General Terms and Conditions hereinafter specified in this Agreement, the Additional Provisions attached hereto, and the following described exhibits, all ofwhich are incorporated into this Agreement by this reference:

Exhibit A Definition of Services Exhibit B Payment Terms Exhibit C Insurance Requirements ExhibitD Debarment and Suspension Certification Exhibit E Contract Compliance Reporting Requirements

The term of this Agreement shall be from April 8, 2008 through December 31, 2011. 1. Managed Care Vendor Selection Process

a. Start date: April 8, 2008 b. RFP development completed by: April 9, 2008 c. Bidder evaluation and selection completed by: June 20, 2008 d. Recommendation to the County Administrator Office completed by: June 27,

2008 2. Vendor Performance Monitoring and Compliance Process

a. Start date: January 1,2009 b. Termination date: December 31,2011

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Contract No.

The compensation payable to Contractor hereunder shall not exceed: 1. For the vendor selection process: Seventy-five thousand dollars ($75,000.00) 2. For the vendor perfonnance monitor and evaluation process which are achieved

through savings realized by the County and therefore at no additional cost to the County under this Agreement: a. In the first year of the process, 24% of the Financial Improvement achieved in

excess of current levels as defined in Exhibit B. b. In the second year of the process, 23% of the Financial Improvement achieved

in excess of current levels as defined in Exhibit B. c. In the third year of the process, 22% of the Financial Improvement achieved in

excess of current levels as defined in Exhibit B. d. Annual savings are estimated at $573,000 but may vary for the term of this

Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

COUNTY OF ALAMEDA CONTRACTOR/COMPANY NAME

By: _ BY:CA!:~-Signature

~NJ;J... ~\\,,~Name: Name: (Printed) (Printed)

Title: President of the Board of Supervisors Title: \>(th', ck¥.t

Date: "'N,.o_t _

By signing above, signatory warrants and represents that he/she executed this Agreement in his/her authorized capacity and that by his/her signature on this Agreement, he/she or the entity upon behalf of which he/she acted, executed this Agreement

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Contract No. _

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

COUNTY OF ALAMEDA CONTRACTOR/COMPANY NAME

By: _ Signature

Name:(Printed)

Title: ;=....P.=ur::....;:c=h=a=si=nQ.g-=-A=<;g;o..::e=n.=....t _

Date:

By: LA il,-kbSignature

Name: \)CMI,l ~Ow\'" ----'-----------

(Printed)

Title:--------'----=-..:...---=--:....:------

Date: ~ tJ_oq, _

By signing above, signatory warrants and represents that he/she executed this Agreement in his/her authorized capacity and that by his/her signature on this Agreement, he/she or the entity upon behalf of which he/she acted, executed this Agreement.

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GENERAL TERMS AND CONDITIONS

1. INDEPENDENT CONTRACTOR: No relationship of employer and employee is created by this Agreement; it being understood and agreed that Contractor is an independent contractor. Contractor is not the agent or employee of the County in any capacity whatsoever, and County shall not be liable for any acts or omissions by Contractor nor for any obligations or liabilities incurred by Contractor.

Contractor shall have no claim under this Agreement or otherwise, for seniority, vacation time, vacation pay, sick leave, personal time off, overtime, health insurance medical care, hospital care, retirement benefits, social security, disability, Workers' Compensation, or unemployment insurance benefits, civil service protection, or employee benefits of any kind.

Contractor shall be solely liable for and obligated to pay directly all applicable payroll taxes (including federal and state income taxes) or contributions for unemployment insurance or old age pensions or annuities which are imposed by any governmental entity in connection with the labor used or which are measured by wages, salaries or other remuneration paid to its officers, agents or employees and agrees to indemnify and hold County harmless from any and all liability which County may incur because of Contractor's failure to pay such amounts.

In carrying out the work contemplated herein, Contractor shall comply with all applicable federal and state workers' compensation and liability laws and regulations with respect to the officers, agents and/or employees conducting and participating in the work; and agrees that such officers, agents, and/or employees will be considered as independent contractors and shall not be treated or considered in any way as officers, agents and/or employees of County.

Contractor does, by this Agreement, agree to perform his/her said work and functions at all times in strict accordance with currently approved methods and practices in his/her field and that the sole interest of County is to insure that said service shall be performed and rendered in a competent, efficient, timely and satisfactory manner and in accordance with the standards required by the County agency concerned.

Notwithstanding the foregoing, if the County determines that pursuant to state and federal law Contractor is an employee for purposes of income tax withholding, County may upon two week's notice to Contractor, withhold from payments to Contractor hereunder federal and state income taxes and pay said sums to the federal and state governments

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INDEMNIFICATION: To the fullest extent permitted by law, Contractor shall hold harmless, defend and indemnify the County of Alameda, its Board of Supervisors, employees and agents from and against any and all claims, losses, damages, liabilities and expenses, including but not limited to attorneys' fees, arising out of or resulting from the performance of services under this Agreement, provided that any such claim, loss, damage, liability or expense is attributable to bodily injury, sickness, disease, death or to injury to or destruction of property, including the loss therefrom, or to any violation of federal, state or municipal law or regulation, which arises out of or is any way connected with the performance of this agreement (collectively "Liabilities") except where such Liabilities are caused solely by the negligence or willful misconduct of any indemnitee. The County may participate in the defense of any such claim without relieving Contractor of any obligation hereunder.

In the event that Contractor or any employee, agent, or subcontractor of Contractor providing services under this Agreement is determined by a court of competent jurisdiction or the Alameda County Employees' Retirement Association (ACERA) or California Public Employees' Retirement System (PERS) to be eligible for enrollment in ACERA and PERS as an employee of County, Contractor shall indemnify, defend, and hold harmless County for the payment of any employee and/or employer contributions for ACERA and PERS benefits on behalf of Contractor or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of County.

2. INSURANCE AND BOND: Contractor shall at all times during the term of the Agreement with the County maintain in force those insurance policies and bonds as designated in the attached Exhibit C, and will comply with all those requirements as stated therein.

3. PREVAILING WAGES: Pursuant to Labor Code Sections 1770 et seq., Contractor shall pay to persons performing labor in and about Work provided for in Contract not less than the general prevailing rate ofper diem wages for work of a similar character in the locality in which the Work is performed, and not less than the general prevailing rate of per diem wages for legal holiday and overtime work in said locality, which per diem wages shall not be less than the stipulated rates contained in a schedule thereof which has been ascertained and determined by the Director of the State Department of Industrial Relations to be the general prevailing rate ofper diem wages for each craft or type of workman or mechanic needed to execute this contract.

4. WORKERS' COMPENSATION: Contractor shall provide Workers' Compensation insurance, as applicable, at Contractor's own cost and expense and

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further, neither the Contractor nor its carrier shall be entitled to recover from County any costs, settlements, or expenses of Workers' Compensation claims arising out of this Agreement.

5. CONFORMITY WITH LAW AND SAFETY:

a. In performing services under this Agreement, Contractor shall observe and comply with all applicable laws, ordinances, codes and regulations of governmental agencies, including federal, state, municipal, and local governing bodies, having jurisdiction over the scope of services, including all applicable provisions of the California Occupational Safety and Health Act. Contractor shall indemnify and hold the County harmless from any and all liability, fines, penalties and consequences from any of Contractor's failures to comply with such laws, ordinances, codes and regulations.

b. Accidents: If a death, serious personal injury or substantial property damage occurs in connection with Contractor's performance of this Agreement, Contractor shall immediately notify the Alameda County Risk Manager's Office by telephone. Contractor shall promptly submit to County a written report, in such form as may be required by County of all accidents, which occur in connection with this Agreement. This report must include the following information: (l) name and address of the injured or deceased person(s); (2) name and address of Contractor's subContractor, if any; (3) name and address of Contractor's liability insurance carrier; and (4) a detailed description of the accident and whether any of County's equipment, tools, material, or staff was involved.

c. Contractor further agrees to take all reasonable steps to preserve all physical evidence and information which may be relevant to the circumstances surrounding a potential claim, while maintaining public safety, and to grant to the County the opportunity to review and inspect such evidence, including the scene of the accident.

6. DEBARMENT AND SUSPENSION CERTIFICATION: (Applicable to all agreements funded in part or whole with federal funds and contracts over $25,000).

a. By signing this agreement and Exhibit D, Debarment and Suspension Certification, Contractor/Grantee agrees to comply with applicable federal suspension and debarment regulations, including but not limited to 7 Code of Federal Regulations (CFR) 3016.35, 28 CFR 66.35,29 CFR 97.35,34 CFR 80.35, 45 CFR 92.35 and Executive Order 12549.

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b. By signing this agreement, Contractor certifies to the best of its knowledge and belief, that it and its principals:

(1) Are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntary excluded by any federal department or agency;

(2) Shall not knowingly enter into any covered transaction with a person who is proposed for debarment under federal regulations, debarred, suspended, declared ineligible, or voluntarily excluded from participation in such transaction.

7. PAYNIENT: For services performed in accordance with this Agreement, payment shall be made to Contractor as provided in Exhibit B hereto.

8. TRAVEL EXPENSES: Contractor shall not be allowed or paid travel expenses unless set forth in this Agreement.

9. TAXES: Payment of all applicable federal, state, and local taxes shall be the sole responsibility of the Contractor.

10. OWNERSHIP OF DOCUMENTS: Contractor hereby assigns to the County and its assignees all copyright and other use rights in any and all proposals, plans, specification, designs, drawings, sketches, renderings, models, reports and related documents (including computerized or electronic copies) respecting in any way the subject matter of this Agreement, whether prepared by the County, the Contractor, the Contractor's sub-Contractors or third parties at the request of the Contractor (collectively, "Documents and Materials"). This explicitly includes the electronic copies of all above stated documentation.

Contractor also hereby assigns to the County and its assignees all copyright and other use rights in any Documents and Materials including electronic copies stored in Contractor's Information System, respecting in any way the subject matter of this Agreement.

Contractor shall be permitted to retain copies, including reproducible copies and computerized copies, of said Documents and Materials. Contractor agrees to take such further steps as may be reasonably requested by County to implement the aforesaid assignment. If for any reason said assignment is not effective, Contractor hereby grants the County and any assignee of the County an express royalty - free license to retain and use said Documents and Materials. The County's rights under this paragraph shall apply regardless of the degree of completion of the Documents and Materials and whether or not Contractor's

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services as set forth in Exhibit "A" of this Agreement have been fully performed or paid for.

In Contractor's contracts with other Contractors, Contractor shall expressly obligate its Sub-Contractors to grant the County the aforesaid assignment and license rights as to that Contractor's Documents and Materials. Contractor agrees to defend, indemnify and hold the County harmless from any damage caused by a failure of the Contractor to obtain such rights from its Contractors and/or SubContractors.

Contractor shall pay all royalties and license fees which may be due for any patented or copyrighted materials, methods or systems selected by the Contractor and incorporated into the work as set forth in Exhibit "A", and shall defend, indemnify and hold the County harmless from any claims for infringement of patent or copyright arising out of such selection. The County's rights under this Paragraph 11 shall not extend to any computer software used to create such Documents and Materials.

11. CONFLICT OF INTEREST; CONFIDENTIALITY: The Contractor covenants that it presently has no interest, and shall not have any interest, direct or indirect, which would conflict in any manner with the performance of services required under this Agreement. Without limitation, Contractor represents to and agrees with the County that Contractor has no present, and will have no future, conflict of interest between providing the County services hereunder and any other person or entity (including but not limited to any federal or state wildlife, environmental or regulatory agency) which has any interest adverse or potentially adverse to the County, as determined in the reasonable judgment of the Board of Supervisors of the County.

The Contractor agrees that any information, whether proprietary or not, made known to or discovered by it during the performance of or in connection with this Agreement for the County will be kept confidential and not be disclosed to any other person. The Contractor agrees to immediately notify the County by notices provided in accordance with Paragraph 13 of this Agreement, if it is requested to disclose any information made known to or discovered by it during the performance of or in connection with this Agreement. These conflict of interest and future service provisions and limitations shall remain fully effective five (5) years after termination of services to the County hereunder.

12. NOTICES: All notices, requests, demands, or other communications under this Agreement shall be in writing. Notices shall be given for all purposes as follows:

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Personal delivery: When personally delivered to the recipient, notices are effective on delivery.

First Class Mail: When mailed first class to the last address of the recipient known to the party giving notice, notice is effective three (3) mail delivery days after deposit in a United States Postal Service office or mailbox. Certified Mail: When mailed certified mail, return receipt requested, notice is effective on receipt, if delivery is confirmed by a return receipt.

Overnight Delivery: When delivered by overnight delivery (Federal Express/Airborne/United Parcel Service/DHL WorldWide Express) with charges prepaid or charged to the sender's account, notice is effective on delivery, if delivery is confirmed by the delivery service. Telex or facsimile transmission: When sent by telex or facsimile to the last telex or facsimile number of the recipient known to the party giving notice, notice is effective on receipt, provided that (a) a duplicate copy of the notice is promptly given by first-class or certified mail or by overnight delivery, or (b) the receiving party delivers a written confirmation of receipt. Any notice given by telex or facsimile shall be deemed received on the next business day if it is received after 5:00 p.m. (recipient's time) or on a non-business day.

Addresses for purpose of giving notice are as follows:

To County: COUNTY OF ALAMEDA Risk Management Unit 125-1ih Street, 3rd Floor Oakland, CA 94607 Attn: Barbara M. Lubben

To Contractor: David Donn Consulting, Inc. 1255 Post Street, Suite 733 San Francisco, CA 94109 Attn: David Donn

Any correctly addressed notice that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities, messenger, or overnight delivery service.

Any party may change its address or telex or facsimile number by giving the other party notice of the change in any manner permitted by this Agreement.

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13. USE OF COUNTY PROPERTY: Contractor shall not use County property (including equipment, instruments and supplies) or personnel for any purpose other than in the performance of his/her obligations under this Agreement.

14. EQUAL EMPLOYMENT OPPORTUNITY PRACTICES PROVISIONS: Contractor assures that he/she/it will comply with Title VII of the Civil Rights Act of 1964 and that no person shall, on the grounds ofrace, creed, color, disability, sex, sexual orientation, national origin, age, religion, Vietnam era Veteran's status, political affiliation, or any other non-merit factor, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under this Agreement.

a. Contractor shall, in all solicitations or advertisements for applicants for employment placed as a result of this Agreement, state that it is an "Equal Opportunity Employer" or that all qualified applicants will receive consideration for employment without regard to their race, creed, color, disability, sex, sexual orientation, national origin, age, religion, Vietnam era Veteran's status, political affiliation, or any other non-merit factor.

b. Contractor shall, if requested to so do by the County, certifY that it has not, in the performance of this Agreement, discriminated against applicants or employees because of their race, creed, color, disability, sex, sexual orientation, national origin, age, religion, Vietnam era Veteran's status, political affiliation, or any other non-merit factor.

c. If requested to do so by the County, Contractor shall provide the County with access to copies of all of its records pertaining or relating to its employment practices, except to the extent such records or portions of such records are confidential or privileged under state or federal law.

d. Contractor shall recruit vigorously and encourage minority - and womenowned businesses to bid its subcontracts.

e. Nothing contained in this Agreement shall be construed in any manner so as to require or permit any act, which is prohibited by law.

f. The Contractor shall include the provisions set forth in paragraphs A through E (above) in each of its subcontracts.

15. DRUG-FREE WORKPLACE: Contractor and Contractor's employees shall comply with the County's policy of maintaining a drug-free workplace. Neither Contractor nor Contractor's employees shall unlawfully manufacture, distribute, dispense, possess or use controlled substances, as defined in 21 U.S. Code § 812,

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including, but not limited to, marijuana, heroin, cocaine, and amphetamines, at any County facility or work site. If Contractor or any employee of Contractor is convicted or pleads nolo contendere to a criminal drug statute violation occurring at a County facility or work site, the Contractor within five days thereafter shall notify the head of the County department/agency for which the contract services are perfonned. Violation of this provision shall constitute a material breach of this Agreement

16. AUDITS; ACCESS TO RECORDS: The Contractor shall make available to the County, its authorized agents, officers, or employees, for examination any and all ledgers, books of accounts, invoices, vouchers, cancelled checks, and other records or documents evidencing or relating to the expenditures and disbursements charged to the County, and shall furnish to the County, its authorized agents, officers or employees such other evidence or infonnation as the County may require with regard to any such expenditure or disbursement charged by the Contractor.

The Contractor shall maintain full and adequate records in accordance with County requirements to show the actual costs incurred by the Contractor in the perfonnance of this Agreement. If such books and records are not kept and maintained by Contractor within the County of Alameda, California, Contractor shall, upon request of the County, make such books and records available to the County for inspection at a location within County or Contractor shall pay to the County the reasonable, and necessary costs incurred by the County in inspecting Contractor's books and records, including, but not limited to, travel, lodging and subsistence costs. Contractor shall provide such assistance as may be reasonably required in the course of such inspection. The County further reserves the right to examine and reexamine said books, records and data during the three (3) year period following termination of this Agreement or completion of all work hereunder, as evidenced in writing by the County, and the Contractor shall in no event dispose of, destroy, alter, or mutilate said books, records, accounts, and data in any manner whatsoever for three (3) years after the County makes the final or last payment or within three (3) years after any pending issues between the County and Contractor with respect to this Agreement are closed, whichever is later.

17. DOCUMENTS AND MATERIALS: Contractor shall maintain and make available to County for its inspection and use during the term of this Agreement, all Documents and Materials, as defined in Paragraph 11 of this Agreement. Contractor's obligations under the preceding sentence shall continue for three (3) years following termination or expiration of this Agreement or the completion of all work hereunder (as evidenced in writing by County), and Contractor shall in no event dispose of, destroy, alter or mutilate said Documents and Materials, for three (3) years following the County's last payment to Contractor under this Agreement.

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18. TIME OF ESSENCE: Time is of the essence in respect to all provisions of this Agreement that specify a time for performance; provided, however, that the foregoing shall not be construed to limit or deprive a party of the benefits of any grace or use period allowed in this Agreement.

19. TERMINATION: The County has and reserves the right to suspend, terminate or abandon the execution of any work by the Contractor without cause at any time upon giving to the Contractor prior written notice. In the event that the County should abandon, terminate or suspend the Contractor's work, the Contractor shall be entitled to payment for services provided hereunder prior to the effective date of said suspension, termination or abandonment. Said payment shall be computed in accordance with Exhibit B hereto, provided that the maximum amount payable to Contractor for its Workers' Compensation managed care consulting: services to assist in the vendor selection process and to monitor and evaluate vendor performance on an ongoing basis shall not exceed $75,000 for the vendor selection process service and the applicable percentage of the variable savings sharing provided hereunder prior to the effective date of said suspension, termination or abandonment.

20. SMALL LOCAL AND EMERGING BUSINESS PARTICIPATION: Contractor shall subcontract with company name (street address, city, state,; Principal, name), for services to be provided under this Agreement in an amount of at least twenty percent (20%) (or adjust percentage ifmore than or less than) of the contract value ofthis Agreement in accordance with County's Small and Emerging Local Business proVISIOn.

Participation of a small and/or emerging local business must be maintained for the term of this contract. Contractor shall not substitute the small and/or emerging local businesses) listed in this agreement without prior written approval from the County. County will be under no obligation to pay contractor for the percent committed to a small and/or local business if the work is not performed or not performed by the listed small and/or emerging local business. Said requests to substitute a small and/or emerging local business shall be submitted in writing to the County Purchasing Department, ATTN: Purchasing Manager, 1401 Lakeside Drive, 9th Floor, Oakland, CA 94612.

Contractor shall provide SLEB utilization reports when invoicing the County utilizing the Alameda County Compliance System. Contractor and Contractor's small and/or emerging local businesses participating as subcontractors on the awarded contract are required to use the County web-based compliance system as described in Exhibit E (Contract Compliance Reporting Requirements) to report

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and validate payments made by Prime Contractors to the certified small and/or emerging local businesses. It is the Contractor's responsibility to ensure that they

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and their subcontractors are registered and trained as required to utilize the Alameda County Contract Compliance System.

Contact the County Business Outreach and Contract Compliance Office at 1401 Lakeside Drive, 10th Floor, Oakland, CA, (510) 208-9617 if you have any other questions regarding utilization of the Alameda County Contract Compliance System.

SMALL, LOCAL AND EMERGING BUSINESS PARTICIPATION: Contractor has been certified by the County as a small or emerging local business. As a result, there is no requirement to subcontract with another business in order to satisfy the County's Small and Emerging Locally owned Business provision. However, should Contractor's status as a certified small or emerging local business change at any time during the term of this Agreement, Contractor shall comply with the County's Small and Emerging Local Business provision.

21. FIRST SOURCE PROGRAM: For contracts over $100,000, Contractor shall provide County ten (10) working days to refer to Contractor, potential candidates to be considered by Contractor to fill any new or vacant positions that are necessary to fulfill their contractual obligations to the County that Contractor has available during the contract term before advertising to the general public.

22. CHOICE OF LAW: This Agreement shall be governed by the laws of the State of California.

23 . WAIVER: No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right or remedy. No waiver of any breach, failure, right or remedy shall be deemed a waiver of any other breach, failure, right or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies.

24. ENTIRE AGREENIENT: This Agreement, including all attachments, exhibits, and any other documents specifically incorporated into this Agreement, shall constitute the entire agreement between County and Contractor relating to the subject matter of this Agreement. As used herein, Agreement refers to and includes any documents incorporated herein by reference and any exhibits or attachments. This Agreement supersedes and merges all previous understandings, and all other agreements, written or oral, between the parties and sets forth the entire understanding of the parties regarding the subject matter thereof. The Agreement may not be modified except by a written document signed by both parties.

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25. HEADINGS herein are for convenience of reference only and shall in no way affect interpretation of the Agreement.

26. ADVERTISING OR PUBLICITY: Contractor shall not use the name of County, its officers, directors, employees or agents, in advertising or publicity releases or otherwise without securing the prior written consent of County in each instance;

27. MODIFICATION OF AGREEMENT: This Agreement may be supplemented, amended or modified only by the mutual agreement of the parties. No supplement, amendment or modification of this Agreement shall be binding unless it is in writing and signed by authorized representatives of both parties.

28. ASSURANCE OF PERFORMANCE: If at any time County believes Contractor may not be adequately performing its obligations under this Agreement or that Contractor may fail to complete the Services as required by this Agreement, County may request from Contractor prompt written assurances of performance and a written plan acceptable to County, to correct the observed deficiencies in Contractor's performance. Contractor shall provide such written assurances and written plan within ten (10) calendar days of its receipt of County's request and shall thereafter diligently commence and fully perform such written plan. Contractor acknowledges and agrees that any failure to provide such written assurances and written plan within the required time is a material breach under this Agreement.

29. SUBCONTRACTING/ASSIGNMENT: Contractor shall not subcontract, assign or delegate any portion of this Agreement or any duties or obligations hereunder without the County's prior written approval.

a. Neither party shall, on the basis of this Agreement, contract on behalf of or in the name of the other party. Any agreement that violates this Section shall confer no rights on any party and shall be null and void.

b. Contractor shall use the subcontractors identified in Exhibit A and shall not substitute subcontractors without County's prior written approval.

c. Contractor shall remain fully responsible for compliance by its subcontractors with all the terms of this Agreement, regardless of the terms of any agreement between Contractor and its subcontractors.

30. SURVIVAL: The obligations of this Agreement, which by their nature would continue beyond the termination on expiration of the Agreement, including without limitation, the obligations regarding Indemnification (Paragraph 2),

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Ownership of Documents (Paragraph 11), and Conflict of Interest (Paragraph 12), shall survive termination or expiration.

31. SEVERABILITY: If a court of competent jurisdiction holds any provision of this Agreement to be illegal, unenforceable, or invalid in whole or in part for any reason, the validity and enforceability of the remaining provisions, or portions of them, will not be affected, unless an essential purpose of this Agreement would be defeated by the loss of the illegal, unenforceable, or invalid provision.

32. PATENT AND COPYRIGHT INDEMNITY: Contractor represents that it knows ofno allegations, claims, or threatened claims that the materials, services, hardware or software ("Contractor Products") provided to County under this Agreement infringe any patent, copyright or other proprietary right. Contractor shall defend, indemnify and hold harmless County of, from and against all losses, claims, damages, liabilities, costs expenses and amounts (collectively, "Losses") arising out of or in connection with an assertion that any Contractor Products or the use thereof, infringe any patent, copyright or other proprietary right of any third party. County will: (1) notify Contractor promptly of such claim, suit or assertion; (2) permit Contractor to defend, compromise, or settle the claim; and, (3) provide, on a reasonable basis, information to enable Contractor to do so. Contractor shall not agree without County's prior written consent, to any settlement, which would require County to pay money or perform some affirmative act in order to continue using the Contractor Products.

e. If Contractor is obligated to defend County pursuant to this Section 33 and fails to do so after reasonable notice from County, County may defend itself and/or settle such proceeding, and Contractor shall pay to County any and all losses, damages and expenses (including attorney's fees and costs) incurred in relationship with County's defense and/or settlement of such proceeding.

f. In the case of any such claim of infringement, Contractor shall either, at its option, (1) procure for County the right to continue using the Contractor Products; or (2) replace or modify the Contractor Products so that that they become non-infringing, but equivalent in functionality and performance.

g. Notwithstanding this Section 33, County retains the right and ability to defend itself, at its own expense, against any claims that Contractor Products infringe any patent, copyright, or other intellectual property right.

33. OTHER AGENCIES: Other tax supported agencies within the State of California who have not contracted for their own requirements may desire to participate in this contract. The Contractor is requested to service these agencies and will be

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given the opportunity to accept or reject the additional requirements. If the Contractor elects to supply other agencies, orders will be placed directly by the agency and payments made directly by the agency.

34. SIGNATORY: By signing this agreement, signatory warrants and represents that he/she executed this Agreement in his/her authorized capacity and that by his/her signature on this Agreement, he/she or the entity upon behalf of which he/she acted, executed this Agreement

[END OF GENERAL TERMS AND CONDITIONS]

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ADDITIONAL PROVISIONS

Contractor and County agree that the Additional Provisions shall supersede the General Terms and Conditions of this Agreement to the extent that they are in conflict. As designated herein, some provisions of the General Terms and Conditions are either waived or replaced entirely by the Additional Provisions.

1. Section 1 of the General Terms and Conditions, fifth paragraph is amended to read as follows:

Contractor does, and by this Agreement, agree to perform the work and functions more fully described in Exhibit A, at all times in strict accordance with its methods and practices to the best of Contractor's abilities and insure that said services shall be performed and rendered in a competent, efficient, timely and satisfactory manner and in accordance with the standards set forth in Exhibit A.

2. Section 2 of the General Terms and Conditions, paragraph 1 ("Indemnification") is modified to add the following two paragraphs:

INDEMNIFICATION: To the fullest extent permitted by law, Contractor shall hold harmless, defend and indemnify the County of Alameda, its Board of Supervisors, employees and agents from and against any and all third party claims, losses, damages, liabilities and expenses, including but not limited to attorneys' fees, arising out of or resulting from the performance of the services under this Agreement, regardless of whether such claim, loss damage, liability, and expense is brought jointly or individually against the County or the Contractor and further provided that any such claim, loss, damage, liability or expense is attributable to bodily injury, sickness, disease, death or to injury or to destruction of property, including loss therefrom, or to any violation of federal, state or municipal law or regulation, which arises out of or is in any way connected with the performance of this Agreement all arising from a third party claim brought against the County (collectively "Liabilities") except where such Liabilities are caused by the sole negligence or willful misconduct of any indemnitee. County shall promptly notify Contractor of any such Liabilities and the County may appoint its own counsel at its own expense and may participate in defense of such claim(s) against the County, without relieving the Contractor of any obligation hereunder.

County shall hold harmless, defend and indemnify the Contractor, its members, directors, officers, employees and agents from and against any and all third party claims, losses, damages, liabilities and expenses, including but not limited to attorneys' fees, arising out of or resulting from any County obligations under this

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Agreement, provided that any such claim, loss, damage, liability or expense is attributable to bodily injury, sickness, disease, death or to injury to or destruction of property, including the loss therefrom, or to any violation of federal, state or municipal law or regulation, which arises out of or is any way connected with the performance of this agreement (collectively "Liabilities") except where such Liabilities are caused solely by the negligence or willful misconduct of any indemnitee. County shall promptly notify Contractor of any such Liabilities and the County may appoint its own counsel at its own expense and may participate in defense of such claim(s) against the County, without relieving the Contractor of any obligation hereunder.

3. Section 6(a) of the General Terms and Conditions ("Conformity with Law and Safety") shall be deleted in its entirety and replaced with the following:

In performing services under this Agreement, Contractor shall observe and comply with all applicable laws, ordinances, codes and regulations of governmental agencies, including federal, state, municipal, and local governing bodies, having jurisdiction over the scope of services, including all applicable provisions of the California Occupational Safety and Health Act provided that in the event Contractor has not complied with any such law, Contractors' sole and exclusive liability to County and County's sole and exclusive remedy shall be that Contractor promptly attempt to cure such non-compliance and if Contractor cannot timely cure or is unable to cure then either party may terminate this Agreement without further liability or obligation to other party. Contractor shall indemnify and hold the County harmless from any and all liability, fines, penalties and consequences solely from any of Contractor's failures to comply with such laws, ordinances, codes and regulations.

4. Section 11 of the General Terms and Conditions ("Ownership of Documents") shall be amended as follows:

(1) The first sentence of Section 11 shall be deleted and replaced with the following:

Contractor retains ownership of any and all proposals, plans, specification, designs, drawings, sketches, renderings, models, reports and related documents (including computerized or electronic copies) respecting in any way the subject matter of this Agreement, whether prepared by, the Contractor, the Contractor's sub-Contractors or third parties at the request of the Contractor (collectively, "Documents and Materials").

(2) The following paragraph shall be deleted in its entirety:

Contractor also hereby assigns to the County and its assignees all copyright and other use rights in any Documents and Materials including electronic copies stored in

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Contractor's Information System, respecting in any way the subject matter of this Agreement.

(3) The third paragraph of Section 11 shall be deleted and replaced as follows:

Contractor shall be permitted to retain ownership of originals copies, including reproducible copies and computerized copies, of said Documents and Materials. Contractor hereby grants the County and any assignee of the County an express royalty - free license to retain and use said Documents and Materials for the Term of this Agreement. The County's rights under this paragraph shall apply regardless of the degree of completion of the Documents and Materials and whether or not Contractor's services as set forth in Exhibit A of this Agreement have been fully performed or paid for during the Term of this Agreement.

(4) The fourth paragraph of Section 11 shall be deleted and replaced as follows:

In Contractor's contracts with other Contractors, Contractor shall expressly obligate its Sub-Contractors to grant the County the aforesaid license rights as to that Contractor's Documents and Materials. Contractor agrees to defend, indemnify and hold the County harmless from any damage caused by a failure of the Contractor to obtain such rights from its Contractors and/or Sub-Contractors.

(5) The final paragraph of Section 11 shall be deleted and replaced with the following:

Contractor may pay all royalties and license fees which may be due for any patented or copyrighted materials, methods or systems selected by the Contractor and incorporated into the work as set forth in Exhibit "A" and shall defend, indemnify and hold the County harmless from any claims for infringement of patent or copyright arising out of such selection. The County's rights under this Paragraph 11 shall not extend to any non-Contractor created computer software used to create such Documents and Materials. In the event Contractor does not pay royalties or license fees at its option it may modify its Documents and Materials so as not to utilize materials for which royalties or license fees are due so long as such modification does not materially impact the services provided and if Contractor is unable to do so, either party may terminate the Agreement.

(6) The following additional language shall be added to end Section 11:

County acknowledges that Contractor is in the business of consulting in the managed care industry and has developed expertise, tools and techniques that Contractor uses and will continue to use with other clients and customers and nothing prevents or prohibits Contractor or is intended to prevent or prohibit Contractor (or require Contractor to notify or compensate County) from drawing upon, utilizing or offering

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consulting services to any other party or utilizing the Intellectual Property Rights that Contractor has developed and may further develop through, and any information or material retained by Contractors' employees, subcontractors or agent while performing the services set forth in this Agreement; provided that Contractor shall not utilize the Confidential Information of County or any County or County identifiable data for such services.

5. Section 12 of the General Terms and Conditions ("Conflict of Interest; Confidentiality"), first paragraph, shall be revised to strike the following terms from the provision:

"as determined in the reasonable judgment of the Board of Supervisors of the County."

6. Section 19 of the General Terms and Conditions ("Time of Essence") shall be amended so that the following language is added to the end:

Notwithstanding the forgoing, for any delay caused by County that prevents Contractor from performing its services to County, County shall not hold Contractor responsible for such delay.

7. Section 20 of the General Terms and Conditions ("Termination") shall be deleted in its entirety and replaced as follows:

TERMINATION: The County has and reserves the right to suspend, terminate or abandon the execution of any work by the Contractor without cause at any time upon giving to the Contractor prior written notice. In the event that the County should abandon, terminate or suspend the Contractor's work, the Contractor shall be entitled to full payment for services provided hereunder prior to the effective date of said suspension, termination or abandonment. Said payment shall be computed in accordance with Exhibit B hereto, provided that the maximum amount payable to Contractor for its Workers' Compensation managed care consulting: services to assist in the vendor selection process and to monitor and evaluate vendor performance on an ongoing basis shall not exceed $75,000 for the vendor selection process service and the earned and incurred applicable percentage of the variable Financial Improvement sharing provided hereunder prior to the effective date of said suspension, termination or abandonment. Termination shall not excuse, obviate or suspend any payment obligation of County to Contractor and non payment by County to Contractor shall entitle the Contractor to be freed from any ongoing obligation imposed under Exhibit A.

8. Section 21 of the General Terms and Conditions ("Small Local and Emerging Business Participation") shall be entirely deleted.

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9. Section 27 of the General Terms and Conditions ("Advertising or Publicity") shall be amended to add the following language to the end:

, provided that County hereby consents and agrees that Contractor may refer to County as an existing customer.

10. The following language shall be inserted at the beginning of Section 30 of the General Terms and Conditions ("Subcontracting/Assignment"):

Except as specified under Exhibit A of this Agreement,

11. Section 33 of the General Terms and Conditions ("Patent and Copyright Indemnity") shall be deleted in its entirety and replaced as follows:

PATENT AND COPYRIGHT INDEMNITY: Contractor represents that it knows of no allegations, claims, or threatened claims that the materials, services, hardware or software ("Contractor Products") provided to County under this Agreement infringe any patent, copyright or other proprietary right. Contractor shall defend, indemnify and hold harmless County of, from and against all losses, claims, damages, liabilities, costs expenses and amounts (collectively, "Losses") brought by a third party against the County and arising out of or in connection with an assertion that any Contractor Products or the use thereof, infringe any patent, copyright or other proprietary right of any third party. County will: (1) notify Contractor promptly of such claim, suit or assertion; (2) permit Contractor to defend, compromise, or settle the claim; and, (3) provide, on a reasonable basis, information to enable Contractor to do so. Contractor shall not agree without County's prior written consent, to any settlement, which would require County to pay money or perform some affirmative act in order to continue using the Contractor Products. Contractor shall have no obligation to indemnify County as set forth above for any Losses to the County arising from County's modification of Contractor Products or County's combination of Contractor Products with any County information or material without Contractor's express written authorization.

The foregoing, as well as section 11 and 20 of the General Terms and Conditions of this Agreement, as modified above, sets forth County's exclusive remedy and Contractor's exclusive obligations for violation of this section 33.

12. Contractor's DDC Model The Contractor has developed a "DDC Model" which is a proprietary program used to monitor and evaluate the performance of the managed care vendors. Subject to the terms and conditions of this Agreement, the Contractor hereby grants to the County a limited, non-exclusive, royalty-free license to use directly and on its behalf its

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contractor(s) authorized service provider the Contractor's DDC Model in conjunction with the services provided by the Contractor under this Agreement. The County agrees that it shall not modify, distribute, reverse engineer, lease, license, or otherwise transfer any rights to the Contractor's DDC Model to any third party, other than the aforesaid contractor(s) without the Contractor's prior written consent. The Contractor retains all rights to the DDC Model. All rights not expressly granted under this Agreement are reserved. County agrees and acknowledges that Contractor's right to the DDC Model cannot be adequately protected by monetary compensation and that Contractor may seek injunctive relief, if it deems necessary.

13. Joint Accountabilities The County contracts with the Contractor as its workers' compensation managed care consultant. Upon the Board of Supervisor's approval of this Agreement, the County will send a letter to its current service providers announcing its retention of the Contractor. Said letter will be written in a manner and reviewed by County's counsel in a manner that will not interfere with any existing contractual relationships between the County and its current contractors.

The Contractor is responsible for coordinating any internal strategy meetings regarding the managed care program, and coordinating all meetings with outside service providers. The Contractor will ensure minimal disruption in work procedures and adhere to all schedules. The Contractor will provide updates and progress reports at the County's request and will immediately inform the County of any peripheral issues that emerge which merit the County's attention.

The County and the Contractor shall reasonably inform each other of any developments that may impact this Agreement.

14. DISCLAIMER OF WARRANTY. EXCEPT AS EXPRESSLY SET FORTH IN EXHIBIT A, CONTRACTOR EXPRESSLY DISCLAIMS ANY AND ALL EXPRESS AND IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY, NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE. ALL SERVICES ARE DEEMED ACCEPTED 30 DAYS FROM DELIVERY UNLESS THE COUNTY PROVIDES WRITTEN NOTICE WITHIN 30 DAYS OF DELIVERY THAT THE SERVICES ARE UNACCEPTABLE.

15. Limitation of Liability to County for Its Business Losses The County agrees that the Contractor's liability to the County for the County's Business Losses under this Agreement for damages caused directly to the County, regardless of the form of action, shall not exceed the total compensation paid to Contractor under this Agreement. This limitation does not include any and all provisions for Indemnification under this General Terms and Conditions of this

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Agreement or as modified in these Additional Provisions. The Contractor will not be liable to the County beyond the total compensation paid to the Contractor for any special, indirect, incidental or consequential damages of any character, including, without limitation, damages for loss of goodwill, work stoppage, loss of data, or any loss ofprofits. Business Losses are defined as those losses which result directly from the services described in Exhibit A and provided to the County for its Workers Compensation program.

16. Confidentiality The County acknowledges that it may be furnished or may otherwise receive or have access to the Contractor's Proprietary Information (defined below). The County agrees to protect the confidentiality of the Contractor's Proprietary Information and all physical forms thereof, whether disclosed to the County before or after this Agreement is executed. County shall not disclose or disseminate Contractor's Proprietary Information to any person or party not involved with this Agreement without Contractor's written consent. County shall not use the Proprietary Information for any purpose beyond contemplated under this Agreement. Upon the request of the Contractor or upon termination of this Agreement, County shall return to Contractor all physical copies of the Proprietary Information provided by the Contractor to the County or otherwise identified by the Contractor that the County has in its possession.

For purposes of this Agreement, "Proprietary Information" shall mean any proprietary business, technical and financial information of the Contractor clearly marks as "Proprietary Information" and is related to its materials, documentation, inventions, know-how, ideas, products, trade secrets, vendors, customers and markets, business plans and opportunities, [mances, the Contractor's DDC Model, and all other proprietary or information marked confidential and directly related to Contractor's business or affairs. Proprietary Information shall not include any information which: (a) is known to County at the time of disclosure; (b) has become publicly known through no wrongful act of County; (c) has been rightfully received by County from a third party without restriction on disclosure and without breach of any agreement with the Contractor; (d) has been independently developed by County, as evidenced by appropriate documentation; or (e) has been approved for release by the Contractor. Notwithstanding the foregoing, County may disclose the Contractor's Proprietary Information if such information is required to be disclosed pursuant to the California Public Records Act or the Federal Freedom of Information Act, subject to the limitations for the disclosure of trade secrets. If such request under the Act(s) is made, the County will notify the Contractor and provide Contractor the opportunity to oppose such release and ifthe Contractor approves of the release of the information the Contractor shall indemnify the County from all damages and attorneys fees and defend any claims or legal actions for such information under the Act(s). The Contractor recognizes that this Agreement is subject to disclosure under the Acts specified above and must be disclosed upon request.

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In connection with this Agreement, Contractor may learn or develop proprietary techniques and confidential information ("Confidential Information") that belong to County or its Managed Care contractors as detailed in Exhibit A of this Agreement and have great value in County business. Confidential Information includes all information that has or could have commercial value or other use in the business in which County is engaged, or in which it contemplates engaging, and all information the unauthorized disclosure of, which could be detrimental to the interests of County, whether or not this information is explicitly identified as Confidential Information. Contractor agrees that at all times during and after its engagement with County, Contractor will not disclose to any third party, or make any use of, Confidential Information of County except as is strictly required to perform its obligations under this Agreement. Contractor further agrees not to remove any Confidential Information from any County premises without the prior written approval of County. Nothing in this Agreement shall restrict the County from complying with the California Public Records Act and the Federal Freedom of Information Act.

17. Equitable Relief The parties hereto acknowledge and agree that compliance with their obligations under this Agreement is necessary to protect the business, goodwill and proprietary interests of the parties, and that the breach of such obligations may give rise to irreparable injury to either party that cannot be adequately compensated with monetary damages. The parties agree therefore that either shall be entitled to seek injunctive relief against the breach or threatened breach of the other party and/or specific performance, without posting a bond, in addition to any other legal or equitable relief.

18. Dispute Resolution The parties may attempt to resolve any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity of this Agreement (the "Claim") through good faith informal negotiation between the principals of County and Contractor. If the parties are unable to reach a resolution within thirty (30) days of engaging in good faith negotiations, the Claim shall be determined, except as provided below, by arbitration in San Francisco, California, before one arbitrator. The arbitration shall be administered by the American Arbitration Association pursuant to its rules and procedures. Judgment on the Award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. The arbitrator may, in the Award, allocate all or part of the costs of the arbitration, excluding the fees of the arbitrator and excluding attorney's fees. Nothing in this provision shall restrict the County or the Contractor from the remedies provided under this Agreement, including termination of the Agreement, as provided in section 30 of the General Terms and Conditions.

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Contract No. _

County Counsel Signature: -/L---~~.~~~~::=s.:~7'''''''---=--

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EXHIBIT A DEFINITION OF SERVICES

1. Contractor shall provide Workers' Compensation Managed Care Consulting: Vendor Selection Process and Vendor Performance Monitor and Evaluation Services as described below:

a. Managed Care Vendor Selection Process. • Contractor shall draft and incorporate into County Request for Proposal (RFP)

template a RFP to competitively bid the County's Workers' Compensation Managed Care Program. Since the managed care program is an integral component of the Workers' Compensation Administration process, the Contractor shall review and modify the County's RFP for Workers' Compensation Third Party Administration service so that the two RFPs are compatible. The RFP for the Managed Care Program shall include, but not be limited to, the following: bill review, utilization review/peer review, preferred provider organization, pharmacy benefit management, and medical case management

• The Contractor shall provide comprehensive consulting related to bid process including, but not limited to, • documenting the entire bid process • developing scoring procedures and worksheets, and candidate evaluation

summaries using County-approved criteria • participating in the bidder's conferences • participating in the proposal evaluation process • participating in the oral interview process • identifying the most financially and operationally sound vendor that will be

approved by the Board of Supervisor • facilitating the negotiation of a service agreement between the successful

vendor(s) and the County. Contractor does not provide legal advice, and Contractor's advice and services with respect to negotiation of vendor service agreement(s) is limited to business elements of such vendor service agreement(s).

b. Managed Care Vendor Performance: Monitor and Evaluation Service. i. Contractor shall work directly with the managed care vendors as the County's

agent during the entire term ofthis Agreement. Contractor shall conduct monthly audits and apply its proprietary procedures and techniques to effectively monitor and evaluate the managed care vendor's performance so as to maximize the Managed Care Program's performance. The Managed Care Program consists of: • "Repricing" of medical bills. Repricing is the reduction ofgross medical

charges to the state Official Medical Fee Schedule and further reduction

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through PPO networks, and negotiation between the vendor and the medical provider.

• Control of "Medical Case Management" services. Medical case management is the controlled use of medical services in accordance with ACOEM Guidelines or other standards. This is handled through Utilization Review ("UR") including physician consultation, Telephonic Case Management ("TCM"), and Field Case Management ("FCM")

• Reduction in fees charged by managed care vendors

11. Contractor shall provide the County with monthly Program reports identifYing areas of under-performance by the vendor and implementing corrective actions to ensure compliance with contract terms, fee discrepancies, and savings calculation errors.

c. Other Services. • Contractor may make improvements to rates for other services • Contractor may recapture inappropriately charged fees • Contractor may recapture overpricing by prior managed care vendors and

medical providers

d. The County and the Contractor shall establish baselines and performance goals for each area of managed care using verified date from the County third party administrator for the period beginning January 1,2007 through December 31,2007.

The estimated total annual improvement goal is estimated at $572,894 through: i. Repricing savings: $455,059 ii. Utilization Review fee reduction: $66,235 iii. Bill ReviewlPPO fee reduction: $6,153 IV. Field Case Management fee reduction: $45,448

2. Contractor project team will consist ofthe following Key Personnel and subcontractors, as applicable during the contract term:

David Donn, President Court Orsborn, Director ofResearch Michael Hsiao, Research Associate Various subcontractors employed to review County medical bills for purposes of

validating the official reviews performed by County's Repricing vendorCs) .

Except as specified above, Contractor agrees that it shall not transfer or reassign the individuals identified above as Key Personnel or substitute subcontractors without the express written agreement of County, which agreement shall not be unreasonably

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Contract No. _

withheld. Should such individual or individuals in the employ of Contractor no longer be employed by Contractor during the term of this Agreement, Contractor shall make a good faith effort to present to County an individual with greater or equal qualifications as a replacement subject to County's approval, which approval shall not be unreasonably withheld.

3. The approval by the County of any requested change shall not release Contractor from its remaining obligations under this Agreement.

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Contract No. _

EXHIBITB PAYMENT TERMS

1. County will pay Contractor upon successful completion and acceptance of the following services listed below, within thirty (30) days, upon receipt of invoice. All services are deemed accepted 30 days from delivery unless the County provides written notice within 30 days of delivery that services are unacceptable.

a. Managed Care Vendor Selection Process. County shall pay the Contractor a total of $75,000.00 according to the following schedule:

i. First installment: $18,750 within 30 days of the execution date of this Agreement 11. Second installment: $18,750 within 60 days of the execution date of this

Agreement 111. Third installment: $18,750 within 90 days of the execution date of this

Agreement IV. Fourth installment: $18,750 within 120 days of the execution date of this

Agreement

b. Managed Care Vendor Performance and Evaluation Process i. The County and the Contractor shall establish mutually acceptable performance

baselines of the managed care program for the period January 1,2007 through December 31, 2007.

11. County shall pay the Contractor a tiered rate of the Financial Improvement achieved through its services following the implementation of this Managed Care Vendor Performance and Evaluations Process under this Agreement for repricing savings, recapture of managed care fee overcharges, and fee improvements. The tiered rates are: 24% for the first year, 23% for the second year, and 22% for the third year.

lll. The Financial Improvement is: 1. Repricing savings improvement is calculated as the difference between the

baseline period gross savings percent and the gross savings percent achieved by the Contractor recommended Repricing vendor from the commencement of Repricing services implemented for County as a result of Contractor's services, multiplied by the gross medical charges processed by the County's Repricing vendor from the commencement of Repricing services implemented for County as a result of Contractor's services.

2. Recaptured fees for overcharges are fees actually reimbursed to the County by the managed care vendor.

3. Fee improvements are calculated as the differences between the baseline average rate for each type of services and the average rate for each type of services charged by the County's managed care vendors from the commencement of Repricing services implemented for County as a result of Contractor's services, multiplied by the respective units against which these rates are assessed that are processed by the County's managed care vendors.

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Contract No. _

4. Contractor guarantees that the savings achieved in the implementation of this Process and in the irst year of this Agreement will exceed the Vendor Selection Process fee of $75,000. If the total Program improvement falls short, the Contractor shall refund 100% of the difference between $75,000 and the actual savings to the County.

5. Financial Improvement is measured and billed monthly by Contractor. In any month where the total savings and fee improvement is negative or zero, the County will owe nothing to the Contractor for performance fee improvements.

6. In any month were the total savings and fee improvement is negative, that amount is carried over into the next month and will offset any payment based on the next month's savings.

7. Performance fees are assessed and billed monthly based on the improved performance results through the services of the Contractor. Upon expiration or termination of this Agreement, the County shall, within 30 days from the date of termination, pay the remaining balance of the managed care vendor selection process fees and performance fees owed through the date of termination for the services provided.

8. The total payment for compensation to the Contractor under this Agreement as set forth above is inclusive including all taxes, other charges or any other costs incurred by Contractor

2. Invoices will be approved by the County's Director of Risk Management / designee.

3. Upon award of this Agreement by County, County and Contractor shall forthwith jointly create a schedule governing the timely performance of Contractor's services hereunder. The agreed upon schedule shall be incorporated into this Agreement upon its adoption by the Contractor and County Risk Management and thereafter Contractor shall perform all services under this Agreement in conformance with the schedule. Contractor shall not be entitled to payment under this Agreement until the completion of a schedule acceptable to the County Risk Management.

4. Upon notice to proceed from County, Contractor shall perform in accordance with the following:

a. Managed Care Vendor Selection Process 1. Start date: April 8, 2008

11. RFP development completed by: April 9, 2008 Ill. Bidder evaluation and selection completed by: June 20, 2008 IV. Recommendation to the County Administrator Office completed by: June 27,

2008

b. Monitoring / Compliance i. Start date: January 1,2009

ii. Termination date: December 31,2011

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EXHIBIT C INSURANCE REQUIREMENTS

Without limiting any other obligation or liability under this Agreement, the Contractor, at its sole cost and expense, shall secure and keep in force during the entire term of the Agreement or longer, as may be specified below, the following insurance coverage, limits and endorsements:

A Commercial General Liability Premises Liability; Products and Completed Operations; Contractual Liability; Personal Injury and Advertisin Liability

$1,000,000 per occurrence (CSL) Bodily Injury and Property Damage

B Commercial or Business Automobile Liability All owned vehicles, hired or leased vehicles, non-owned, borrowed and permissive uses. Personal Automobile Liability is acceptable for individual contractors with no transportation or haulin related activities

$1,000,000 per occurrence (CSL) Any Auto Bodily Injury and Property Damage

C Workers' Compensation (WC) and Employers Liability (EL) Re uired for all contractors with em 10 ees

WC: Statutory Limits EL: $100,000 per accident for bodily injury or disease

D Professional Liability/Errors & Omissions Includes endorsements of contractual liability

$1,000,000 per occurrence $2,000,000 project aggre ate

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E Endorsements and Conditions: 1. ADDITIONAL INSURED: All insurance required above with the exception of Professional Liability, Personal

Automobile Liability, Workers' Compensation and Employers Liability, shall be endorsed to name as additional insured: County of Alameda, its Board of Supervisors, the individual members thereof, and all County officers, agents, employees and representatives.

2. DURATION OF COVERAGE: All required insurance shall be maintained during the entire term of the Agreement with the following exception: Insurance policies and coverage(s) written on a claims-made basis shall be maintained during the entire term of the Agreement and until 3 years following termination and acceptance of all work provided under the Agreement, with the retroactive date of said insurance (as may be applicable) concurrent with the commencement of activities pursuant to this Agreement.

3. REDUCTION OR LIMIT OF OBLIGATION: All insurance policies shall be primary insurance to any insurance available to the Indemnified Parties and Additionallnsured(s). Pursuant to the provisions of this Agreement, insurance effected or procured by the Contractor shall not reduce or limit Contractor's contractual obligation to indemnify and defend the Indemnified Parties.

4. INSURER FINANCIAL RATING: Insurance shall be maintained through an insurer with a minimum A.M. Best Rating of A- or better, with deductible amounts acceptable to the County. Acceptance of Contractor's insurance by County shall not relieve or decrease the liability of Contractor hereunder. Any deductible or self-insured retention amount or other similar obligation under the policies shall be the sole responsibility of the Contractor. Any deductible or self-insured retention amount or other similar obligation under the policies shall be the sole responsibility of the Contractor.

5. SUBCONTRACTORS: Contractor shall include all subcontractors as an insured (covered party) under its policies or shall furnish separate certificates and endorsements for each subcontractor. All coverage for subcontractors shall be subject to all of the requirements stated herein.

6. JOINT VENTURES: If Contractor is an association, partnership or other joint business venture, required insurance shall be provided by anyone of the following methods: - Separate insurance policies issued for each individual entity, with each entity included as a "Named

Insured (covered party), or at minimum named as an "Additional Insured" on the other's policies. - Joint insurance program with the association, partnership or other joint business venture included as a

"Named Insured.

7. CANCELLATION OF INSURANCE: All required insurance shall be endorsed to provide thirty (30) days advance written notice to the County of cancellation.

8. CERTIFICATE OF INSURANCE: Before commencing operations under this Agreement, Contractor shall provide Certificate(s) of Insurance and applicable insurance endorsements, in form and satisfactory to County, evidencing that all required insurance coverage is in effect. The County reserves the rights to require the Contractor to provide complete, certified copies of all required insurance policies. The require certificate(s) and endorsements must be sent to:

- DepartmenUAgency issuing the contract - With acopy to Risk Management Unit (125 - 12th Street, 3rd Floor, Oakland, CA 94607)

Certificate C-2 Form 2001-1 (Rev. 03/15/06)

Contract No. _

EXHIBIT D

COUNTY OF ALAMEDA DEBARMENT AND SUSPENSION CERTIFICATION

(Applicable to all agreements funded in part or whole with federal funds and contracts over $25,000).

The contractor, under penalty of perjury, certifies that, except as noted below, contractor, its principals, and any named and unnamed subcontractor:

• Is not currently under suspension, debarment, voluntary exclusion, or

determination of ineligibility by any federal agency;

• Has not been suspended, debarred, voluntarily excluded or determined

ineligible by any federal agency within the past three years;

• Does not have a proposed debarment pending; and

• Has not been indicted, convicted, or had a civil judgment rendered against it by

a court of competent jurisdiction in any matter involving fraud or official

misconduct within the past three years.

If there are any exceptions to this certification, insert the exceptions in the following space.

Exceptions will not necessary result in denial of award, but will be considered in determining contractor responsibility. For any exception noted above, indicate below to whom it applies, initiating agency, and dates of action.

Notes: Providing false information may result in criminal prosecution or administrative sanctions. The above certification is part of the Standard Services Agreement. Signing this Standard Services Agreement on the signature portion thereof shall also constitute signature of this Certification.

CONTRACTOR: \)PN\.l \)Ow\~ ~lN\+"\'Jr'-'~-~-(.,-' _

PRINCIPAL: ~ TITLE: "j?r""'J...,.\tfSIGNATURE\...~ __4~I,-----ot _DATE:

Contract No.-------

EXHIBITE

COUNTY OF ALAMEDA CONTRACT COMPLIANCE REPORTING REQUIREMENTS

Upon receipt of signed contract documents, prime contractor shall immediately enter/assign subcontractors in the System, confirm payments received from the County within 5 business days in the System, immediately enter payments made to subcontractors and ensure that subcontractors confirm they received payments within 5 business days in the System. Subcontractors shall confirm their payments received from the prime contractor within 5 business days in the System.

Alameda County Contract Compliance System training and ongoing support are provided at no charge to contractors and participating sub-contractors awarded a contract as a result of this bid process for this project. Contractors having contracts with the County which have a start date on or after July I, 2007 should schedule a representative from their office/company, along with each of their subcontractors, to attend training. The training schedule may be viewed online at http://www.elationsys.com/elationsys/sLipport 1.htm or call Elation Systems at (510) 764-1870. A special access code will be provided to contractors and subcontractors participating in this contract awarded to allow use of the System free of charge.

It is the Contractor's responsibility to ensure that they and their subcontractors are registered and trained as required to utilize the Alameda County Contract Compliance System. Training sessions are approximately one hour and will be held periodically in a number of locations throughout Alameda County.

------------

QUESTIONNAIRE FOR DETERMINING THE WITHHOLDING STATUS

INSTRUCTIONS: This questionnaire is to be completed by the County department for services contracts and must be included as part of the contract package submitted to Human Resource Services Department (HRSD). Be sure to answer all of the questions in Sections I and II and to complete the certifications on page 2. Sections III and IV contain supplemental questions to be answered for contractors in certain service categories.

CONTRACTOR NAME: David Donn Consulting, Inc. DEPT #: CAO-RMU

TITLE/SERVICE: President / Workers' Compensation Managed Care Consulting: Vendor Selection Process and Vendor Performance Monitoring and Evaluation

DEPT. CONTACT: =M=ic=h=ae=l--=C=h=ano.=...-- PHONE: (510) 272-6429

YES NOI. INFORMATION ABOUT THE CONTRACTOR

1. Is the contractor a corporation or partnership? ( x) ( )

2. Does the contractor have the right per the contract to hire others to ( x) ( ) do the work agreed to in the contract?

If the answer to BOTH questions is YES, provide the employer ID number here: 030373997. No other questions need to be answered. Withholding is not required.

If the answer to question 1 is NO and 2 is YES, provide the individual social security number here: No other questions need to be answered. Withholding is not required.

If the answer to question 2 is NO, continue to Section II.

II. RELATIONSHIP OF THE PARTIES YES NO

1. Does the County have the right to control the way in which the work ( ) ( ) will be done, i.e., will the County be able to specify the sequence of steps or the processes to be followed if it chooses to do so?

2. Is the contractor restricted from performing similar services for other ( ) ( ) businesses while he is working for the County?

3. Will the contractor be working for more than 50% of the time for the ( ) ( ) County (50% = 20 hrs/wk; 80 hrs/mo)?

4. Is the relationship between the County and the contractor intended to ( ) ( ) be ongoing?

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III. FOR CONSULTANTS, PROJECT MANAGERS, PROJECT COORDINATORS

1. Is the contractor being hired for a period of time rather than for a specific project?

( ) ( )

2. Will payment be based on a wage or salary (as opposed to a commission or lump sum)?

( ) ( )

IV. FOR PHYSICIANS, PSYCHIATRISTS, DENTISTS, PSYCHOLOGISTS

1. Will the agreement be with an individual who does not have an outside practice?

() ( )

I.a. Will the contractor work more than an average of ten hours per week? ( ) ( )

IF THE ANSWER TO 1.a IS YES, ANSWER QUESTIONS 1.b.

l.a. Will the County provide more than 20% of the contractor's income?

2. If the answer to either question 1.a, or if required, question 1.b is NO, the entire answer is NO.

( ) ( )

A "yes" answer to any of the questions in Section II, or, if applicable, Sections III or IV constitutes justification for paying the contractor through the payroll system as an "employee for withholding purposes."

CERTIFICATIONS:

I hereby certify that the answers to the above questions accurately reflect the anticipated working relationship for this contract.

&.&./4Lt IA ~2kJ £IIL{ Agency/Department Head o~eslg~~/

,___4_1d_ _o't fDate Date

HRSD APPROVAL REQUIRED FOR ALL STANDARD SERVICES AGREEMENTS: Signature: Date: _ Title:

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