HomeMy WebLinkAboutES09-352 - Original - Premera Blue Cross - Administrative Service Contract - 01/01/2009 Records Manva"'gemen'l
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CONTRACT COVER SHEET
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to City Clerks Office. All portions are to be completed.
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Contract Effective Date: 01 -U[ - a-OU Termination Date: I a `w l --aCUCJ`j
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S:Publlc\Records Management\Forms\ContractCover\adcc7832 1 11/08
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ADMINISTRATIVE SERVICE CONTRACT
BETWEEN
PREMERA BLUE CROSS
AND
CITY OF KENT
EFFECTIVE JANUARY 1, 2009 THROUGH DECEMBER 31, 2009
(The "Contract Period")
This Contract is effective by and between the group named above (hereinafter referred to as the"Plan Sponsor"),
and Premera Blue Cross (hereinafter referred to as the "Claims Administrator" or"we," "us," or"our")
WHEREAS, the Plan Sponsor has established an employee benefit plan (hereinafter referred to as the"Plan")
which provides for payment of certain welfare benefits to and for certain eligible individuals as defined in writing
by the Plan Sponsor, such individuals being hereinafter referred to as"Members", and,
WHEREAS, the Plan Sponsor has chosen to self-insure the benefit program(s) provided under the Plan, and
WHEREAS, the Plan Sponsor desires to engage the services of the Claims Administrator to provide
administrative services for the Plan,
NOW THEREFORE, in consideration of the mutual covenants and conditions as contained herein the parties
hereto agree to the provisions in this Contract, including any Attachments and endorsements thereto The parties
below have signed as duly authorized officers and have hereby executed this Contract If this Contract is not
signed and returned to the Claims Administrator within sixty (60) days of its delivery to the Plan Sponsor or its
agent, the Claims Administrator will assume the Plan Sponsor's concurrence and the Plan Sponsor will be bound
by its terms
IN WITNESS WHEREOF the parties hereto sign their names as duly authorized officers and have executed this
Contract
CITY OF KENT
BY DATE
IZ
Title
ADDRESS
PREMERA BLUE CROSS
BY DATE January 14, 2009
H.R. Brereton Barlow
President and Chief Executive Officer
P O Box 327
Seattle, WA 98111-0327
City of Kent 1 January 1,2009
1018212
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TABLE OF CONTENTS
1. DEFINITIONS..........................................................................................................................4
2. DUTIES AND RESPONSIBILITIES OF THE PLAN SPONSOR.............................................4
21 Documentation 4
22 Plan Sponsor's Fiduciary Authority 4
23 Defense of the Plan 4
24 Administrative Duties 4
25 Taxes, Assessments, and Fees 5
26 Compliance With Law 5
27 Appeals 5
28 Funding 5
3. DUTIES AND RESPONSIBILITIES OF THE CLAIMS ADMINISTRATOR.............................6
31 Administrative Duties 6
3 2 Appeals 6
33 Claims Processing 6
34 Funding Support 7
35 Annual Accounting 7
4. LIMITS OF THE CLAIMS ADMINISTRATOR'S RESPONSIBILITY.......................................7
41 Recoveries 7
4 2 Independent Contractor 7
4 3 Limits of Liability 7
6. FEES OF THE CLAIMS ADMINISTRATOR............................................................................8
51 Payment Time Limits 8
5 2 Late Payments 8
5 3 Customization Fees 8
6. AUDIT......................................................................................................................................8
7. SUBROGATION......................................................................................................................9
8. TERM OF CONTRACT............................................................................................................9
8 1 Contract Period 9
8 2 Changes to Fees 9
9. TERMINATION........................................................................................................................9
9 1 Termination With Notice 9
9 2 Contract Period Expiration 10
9 3 Termination Due to Insolvency 10
City of Kent 2 January 1,2009
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94 Termination Due to Inability to Perform 10
95 Termination For Nonpayment 10
96 Plan Sponsor Liability Upon Termination 10
97 Final Accounting 10
98 Claims Runout 10
10. DISCLOSURE.....................................................................................................................11
11. OTHER PROVISIONS.........................................................................................................11
11 1 Choice of Law 11
11 2 Proprietary Information 11
11 3 Parties To The Contract 11
114 Notice 12
11 5 Integration 12
116 Assignment 12
12. ATTACHMENTS TO THE ADMINISTRATIVE SERVICE CONTRACT..............................12
ATTACHMENT A — BLUECARD® PROGRAM......................................................................... 13
Liability Calculation Method Per Claim 13
BlueCard Worldwide 14
BlueCard Fees and Compensation - Overview 14
Access Fees 14
How Access Fees Affect The Plan 14
ATTACHMENT B—CENSUS INFORMATION..........................................................................16
ATTACHMENT C — REPORTING..............................................................................................16
ATTACHMENT D— FEES OF THE CLAIMS ADMINISTRATOR..............................................17
Administration Fees 17
Brokerage Fees and Commissions (included in Administration Fee) 17
Additional Fees Error! Bookmark not defined.
Claims Runout Processing Fee 17
Care Facilitation 17
Extended Post-Payment Recovery Services 18
ATTACHMENT E— BUSINESS ASSOCIATE AGREEMENT...................................................19
ATTACHMENT F—CARE FACILITATION................................................................................20
ATTACHMENT G —EXTENDED POST-PAYMENT RECOVERY SERVICES..........................21
ATTACHMENT H — DISEASE MANAGEMENT.........................................................................23
Appendix 1 Program Selection 24
City of Kent 3 January 1,2009
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1. DEFINITIONS
Adverse Benefit Determination Any of the following a denial, reduction, or termination of, or a failure to
provide or make payment (in whole or in part) for, a benefit, including payment that is based on a determination of
the eligibility of a Member to participate in the Plan This includes any denials, reductions, or failures to provide or
make payment resulting from the application of utilization review or limitations on experimental and investigational
services, medical necessity, or appropriateness of care
Contract Period The period shown on the Face Page of this Contract The Contract Period begins at 12 01
a m on the starting date shown on the Face Page and ends at midnight on the ending date shown on the Face
Page
Effective Date The date this Contract takes effect(the first day of the Contract Period) The Effective Date is
shown on the Face Page of this Contract
Member A Subscriber or dependent who is eligible for coverage as stated in the Plan and who is enrolled as
required in the Plan
Plan The employee benefit plan established and maintained by the Plan Sponsor that is being administered
under this Contract
Subscriber A person who is eligible for coverage under the plan by virtue of an employee-employer relationship
or other relationship between the person and the Plan Sponsor, and who is enrolled as required in the Plan
2. DUTIES AND RESPONSIBILITIES OF THE PLAN SPONSOR
2.1. Documentation
The Plan Sponsor shall provide the Claims Administrator with a copy of any documents describing the benefit
program(s)that the Claims Administrator needs to rely upon in performing its responsibilities under this Contract
2.2. Plan Sponsor's Fiduciary Authority
The Plan Sponsor shall have final discretionary authority to determine the benefit provisions and to construe and
interpret the terms of the Plan
The Plan Sponsor shall have final discretionary authority to determine eligibility for benefits and the amount to be
paid by the Plan
2.3. Defense of the Plan
The Plan Sponsor shall be responsible for defending any legal action brought against the Plan, including a claim
for benefits by or on behalf of any individual or entity, including but not limited to any Member or former Member,
any fiduciary or other party This responsibility includes the selection and payment of counsel The Plan Sponsor
shall not settle any legal action or claim without the prior consent of the Claims Administrator if the action or claim
could result in the Claims Administrator being liable, including for example, any liability for contribution to or
indemnification of the Plan Sponsor or other third party either directly or indirectly
2.4. Administrative Duties
Unless specifically delegated to the Claims Administrator by this Contract, the Plan Sponsor shall be responsible
for the proper administration of the Plan including the following
a The Plan Sponsor shall provide the Claims Administrator a complete and accurate list of all individuals
eligible for benefits under the benefit program(s) and to update those lists monthly The Claims
Administrator shall be entitled to rely on the most recent list until it receives documentation of any change
thereto
City of Kent 4 January 1,2009
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b The Plan Sponsor shall distribute to all eligible Members all appropriate and necessary materials and
documents, including but not limited to benefit program booklets, summary plan descriptions, material
modifications, enrollment applications and notices required by law or that are necessary for the operation
of the Plan
c. The Plan Sponsor shall provide the Claims Administrator with any additional information necessary to
perform its functions under this Contract as may be requested by the Claims Administrator from time to
time
d If the Plan Sponsor writes or revises its benefit booklet, the Claims Administrator must review and
approve in advance the draft of the benefit booklet that is printed and distributed to Members The Plan
Sponsor must also include BlueCard disclosure language approved by the Blue Cross Blue Shield
Association in its booklet
2.5. Taxes, Assessments, and Fees
The Plan Sponsor shall be responsible for all taxes, assessments and fees levied by any local, state or federal
authority in connection with the Claims Administrator's duties pursuant to this Contract
2.6. Compliance With Law
• The Plan Sponsor shall be responsible for the Plan's continuing compliance with all applicable federal,
state and local laws and regulations, as currently amended These include but are not limited to
• The Internal Revenue Code
• The Health Insurance Portability and Accountability Act of 1996 (HIPAA)
• The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
• Law and regulations governing the treatment and benefits of members covered by Medicare
The Plan Sponsor, and not the Claims Administrator, is the"plan administrator"and the"plan sponsor"for
purposes of all federal laws that apply to the Plan Sponsor and impose duties or obligations on such
entities The Plan Sponsor shall be responsible for determining whether it is subject to COBRA and, if so,
for notifying Members of their COBRA rights both initially and upon the occurrence of a qualifying event,
for calculating and collecting premiums for COBRA continuation of coverage and for promptly notifying
the Claims Administrator when an individual is no longer eligible for COBRA continuation of coverage If
the Plan Sponsor is subject to ERISA, the Plan Sponsor is responsible to prepare and maintain its ERISA
plan document
• If the Plan Sponsor elects to opt out of compliance with certain federal mandates as allowed by HIPAA,
the Plan Sponsor is responsible to file its opt-out with federal regulators for each contract period and to
notify Members of the opt-out in accordance with federal law and regulations then in effect The Plan
Sponsor agrees to hold the Claims Administrator and the Network harmless for any and all
consequences arising from the Plan Sponsor's failure to file an opt-out as required by law for a given
contract period, errors in the opt-out filing, or failure to notify a Member as required by federal law
2.7. Appeals
If an adverse decision is made in the Claims Administrator's second level of review, the Plan Sponsor shall offer
the Member a review by an Independent Review Organization (IRO) The Plan Sponsor shall pay all costs of the
IRO review
2.8. Funding
The Plan Sponsor shall be solely liable for all benefits payable to members under the Plan that are subject to this
Contract The Plan Sponsor agrees to the following
a Provision Of Funds The Plan Sponsor shall maintain adequate funds from which the total cost of all
claims for each preceding week will be paid to the Claims Administrator by wire transfer Funds must be
provided within forty-eight(48) hours of phone notification by the Claims Administrator to a person
designated by the Plan Sponsor
City of Kent 5 January 1,2009
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b Late Payments If timely payment for the claims is not received by the Claims Administrator, the Plan
Sponsor shall pay the Claims Administrator a daily late charge This late charge is calculated from the
first day following the forty-eight(48) hour period stated above This late charge is based on the average
monthly prime rate posted by Bank of America/Nations Bank during the Contract Period, plus two (2)
percent on the amount of the late payments for the number of days late Late charges are due at the end
of the Contract Period as part of the annual accounting or, if earlier, upon termination of the Contract
c Notices Notices required by this subsection and subsection 3 4 shall be by fax, e-mail, or telephone, as
agreed upon in writing by the Plan Sponsor and the Claims Administrator
3. DUTIES AND RESPONSIBILITIES OF THE CLAIMS ADMINISTRATOR
3.1. Administrative Duties
The Claims Administrator agrees to perform the following administrative services for the Plan Sponsor The
Claims Administrator shall
a assist in the preparation and printing of the benefit program booklets, identification cards, and other
materials necessary for the operation of the Plan, and distribute identification cards to Members The
Claims Administrator shall be responsible to include approved BlueCard program disclosure language in
the booklets it prepares If the Plan Sponsor prepares its own booklets, the Claims Administrator shall
provide approved language to the Plan Sponsor for inclusion in the booklets,
b perform reasonable internal audits as stated in section 6 of this Contract ,
c answer inquiries from the Plan Sponsor, Members, and service providers regarding the terms of the Plan,
although final authority for construing the terms of the Plan's eligibility and benefit provisions is the Plan
Sponsor's,
d prepare and provide the Plan Sponsor with reports of the operations of the Plan in accordance with
"Attachment C—Reporting",
e coordinate with any stop-loss insurance carrier,
f when "preferred provider"or"network provider" benefits are provided, maintain a network of hospital and
professional providers, paid claims will reflect any applicable provider discounts,
g perform care facilitation services as identified in "Attachment F—Care Facilitation "
h provide a Certificate of Group Health Coverage to Members when their coverage under this Plan
terminates or upon their request within 24 months of termination
3.2. Appeals
a The Claims Administrator shall review and respond to the initial appeals of Adverse Benefit
Determinations (see section 1) as described in the benefit booklet provided by the Claims Administrator
for this Plan
b The Claims Administrator shall also provide a second review of adverse appeal decisions made after its
initial review This review will be conducted as described in the benefit booklet provided by the Claims
Administrator for this Plan
c If an adverse decision is made in the Claims Administrator's second level of review, the Claims
Administrator also agrees to facilitate a review of the appeal by an Independent Review Organization
(IRO) on behalf of the Plan Sponsor The Claims Administrator will submit all documentation regarding
the appeal to the IRO and work with the IRO as needed to complete its review The Claims administrator
shall pass all costs of the IRO review on to the Plan Sponsor
3.3. Claims Processing
The Claims Administrator shall process all eligible claims incurred after the Effective Date of this Contract which
are properly submitted in accordance with the procedures set forth in the Plan Sponsor's benefit booklet
City of Kent 6 January 1,2009
1018212
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The Claims Administrator shall make reasonable efforts to determine that a claim is covered under the terms of
the Plan as described in the benefit booklet, to apply the coordination of benefits provisions, identify subrogation
claims, and make reasonable efforts to recover subrogated amounts administratively as stated in section 7 of this
Contract, and prepare and distribute benefit payments to Members and/or service providers
3.4. Funding Support
The Claims Administrator shall follow the steps below to facilitate the Plan Sponsor's funding of its Plan
a Claim payment checks will be issued on the Claims Administrator's check stock However, as stated in
subsection 2 8 above, the responsibility for funding benefits is the Plan Sponsor's and the Claims
Administrator is not acting as an insurer
b The Claims Administrator shall notify the Plan Sponsor weekly by telephone or electronic medium of the
amount due for the prior week's claims
3.5. Annual Accounting
Within 120 days of the end of the Contract Period,we shall perform an annual accounting of claims activity and
report to the Plan Sponsor
4. LIMITS OF THE CLAIMS ADMINISTRATOR'S RESPONSIBILITY
It is recognized and understood by the Plan Sponsor that the Claims Administrator is not an insurer and that the
Claims Administrator's sole function is to provide claims administration services and the Claims Administrator
shall have no liability for the funding of benefits
The Claims Administrator is empowered to act on behalf of the Plan Sponsor in connection with the Plan only as
expressly stated in this Contract or as mutually agreed to in writing by the Claims Administrator and the Plan
Sponsor
This Contract is between the Claims Administrator and the Plan Sponsor and does not create any legal
relationship between the Claims Administrator and any Member or any other individual
4.1. Recoveries
If, during the course of an audit performed internally by the Claims Administrator as described in subsection 3 1 b
above or by the Plan Sponsor pursuant to section 6 below, any error is discovered, the Claims Administrator shall
use reasonable efforts to recover any loss resulting from such error
The Plan Sponsor does not cover Foot Orthotics for any diagnosis, which includes but is not limited to diabetes or
corrective purposes The Claims Administrator agrees to reimburse the Plan Sponsor any Foot Orthotics claim
payment made in error throughout the duration of this agreement unless such payment is recovered as stated in
this subsection 4 1
4.2. Independent Contractor
The Claims Administrator is an independent contractor with respect to the services being performed pursuant to
this Contract and shall not for any purpose be deemed an employee of the Plan Sponsor
4.3. Limits of Liability
It is recognized by the parties that errors may occur and it is agreed that the Claims Administrator will not be held
liable for such errors unless they resulted from its gross negligence or willful misconduct The Plan Sponsor
agrees to defend, indemnify, and hold harmless the Claims Administrator from all claims, damages, liabilities,
losses, and expenses arising out of the Claims Administrator's performance of administration services under the
terms of this Contract, so long as they did not arise out of the Claims Administrator's gross negligence or willful
misconduct
City of Kent 7 January 1,2009
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5. FEES OF THE CLAIMS ADMINISTRATOR
5.1. Payment Time Limits
By the first of each month, The Plan Sponsor shall pay the Claims Administrator in accordance with the fee
schedule set forth in "Attachment D—Fees Of The Claims Administrator"that is incorporated herein by reference
5.2. Late Payments
a If, for any reason whatsoever, the Plan Sponsor fads to make a timely payment required under this
Contract by the tenth day of the month in which payment is due, the Claims Administrator may suspend
performance of services to the Plan Sponsor, including processing and payment of claims, until such time
as the Plan Sponsor makes the required payment, including interest as set forth in b below
b In the event of late payment, the Claims Administrator may terminate this Contract pursuant to subsection
9 5 below Acceptance of late payments by the Claims Administrator shall not constitute a waiver of its
right to cancel this Contract due to delinquent or nonpayment of fees
c The Claims Administrator will charge interest to the Plan Sponsor on all payments received after the tenth
day of the month in which they are due, including amounts paid to reinstate this Contract after termination
pursuant to subsection 9 5 below, at the average prime rate posted by Bank of America/Nations Bank
during the Contract Period plus two(2) percent on the amount of the late payments for the number of
days late Interest will be in addition to any other amounts payable under this Contract
5.3. Customization Fees
The Plan Sponsor shall pay the Claims Administrator a"customization fee"when the Plan Sponsor requests
either of the following
a A plan benefit configuration that the Claims Administrator has not determined to be standard for the plan
type Customization fees for nonstandard plan benefits assessed at this Contract's Effective Date are
listed in "Attachment D— Fees Of The Claims Administrator"
b An off-anniversary benefit change, regardless of whether the desired benefit is standard for the plan type
The customization fee for each off-anniversary change shall be$2,000 Customization fees for off-
anniversary changes shall be invoiced separately to the Plan Sponsor
For purposes of customization fees, "benefits" include eligibility, termination, continuation and benefit
payment provisions, benefit terms, limitations, and exclusions, funding arrangement changes, and any
other standard provisions of the Plan Fees are computed based on current administrative costs to
implement and administer the benefit
Customization fees for custom benefits that take effect on the Effective Date shown on the Face Page of
this Contract are due and payable prior to that Effective Date Customization fees for off-anniversary
benefit changes are due and payable prior to the effective date of the change
6. AUDIT
Within thirty (30) days of written notice from the Plan Sponsor, the Claims Administrator shall allow an authorized
agent of the Plan Sponsor to inspect or audit all records and files maintained by the Claims Administrator which
are directly pertinent to the administration of the Plan for the current or most recently ended contract period
Such documents shall be made available at the administrative office of the Claims Administrator during normal
business hours The Plan Sponsor shall be liable for any and all fees charged by the auditor All audits shall be
subject to the Claims Administrator's audit policies and procedures then in effect To the extent that the Plan
Sponsor requests data and reports that are beyond the scope of the Claim Administrator's audit policies and
procedures, the Plan Sponsor shall reimburse the Claims Administrator for the additional administrative costs
incurred in producing such data and reports
City of Kent 8 January 1,2009
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Any agent or auditor who has access to the records and files maintained by the Claims Administrator shall agree
not to disclose any proprietary or confidential information used in the business of the Claims Administrator
7. SUBROGATION
The Claims Administrator shall make reasonable efforts to pursue subrogation claims administratively on behalf
of the Plan However, the Claims Administrator shall have no affirmative duty to pursue subrogation claims
beyond those specified in subsection 3 3 above The Plan Sponsor shall have the sole discretion to bring any
legal claim or action to enforce the Plan's subrogation provisions The Claims Administrator will cooperate with
the Plan Sponsor in the event the Plan Sponsor brings any legal action to enforce the subrogation provisions of
the Plan Any costs and attorneys'fees incurred in pursuing such subrogation claims shall be the responsibility of
the Plan Sponsor
8. TERM OF CONTRACT
8.1. Contract Period
The term of this Contract shall be the Contract Period shown on the Face Page of this Contract
Except as stated otherwise in subsection 9 3 below, the terms and conditions of this Contract and the fee
schedule set forth in "Attachment D—Fees Of The Claims Administrator" are established for the Contract Period
8.2. Changes to Fees
The Plan Sponsor acknowledges that the fee schedule set forth in "Attachment D—Fees Of The Claims
Administrator" and the services provided for in this Contract are based upon the terms of the Plan and the
enrollment as they exist on the Effective Date of this Contract Any substantial changes, whether required by law
or otherwise, in the terms and provisions of the Plan or in enrollment may require that the Claims Administrator
incur additional expenses The parties agree that any substantial change, as determined by the Claims
Administrator, shall result in the alteration of the fee schedule, even if the alteration is during the Contract Period
The phrase "any substantial change" shall include but not be limited to
a a fluctuation of ten (10) percent or more in the number of Members as set forth on the census information
included in "Attachment B—Census Information" which is herein incorporated by reference and made a
part of this Contract,
b the addition of benefit program(s) or any change in the terms of the Plan's eligibility rules, benefit
provisions or record keeping rules that would increase administration costs by more than $10,000,
c any change in claims administrative services, benefits or eligibility required by law that would increase
administration costs by more than $10,000,
d any change in administrative procedures from those in force at the inception of this Contract that is
agreed upon by the parties,
e any additional services which the Claims Administrator undertakes to perform at the request of the Plan
Sponsor which are not specified in this Contract such as the handling of mailings or preparation of
statistical reports and surveys not specified in the Claims Administrator's standard Employer Group
Reporting set
9. TERMINATION
9.1. Termination With Notice
The Plan Sponsor may terminate this Contract at any time by giving the Claims Administrator thirty(30) days
written notice
City of Kent 9 January 1,2009
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9.2. Contract Period Expiration
This Contract will terminate on the last day of the Contract Period or the last day of any extension of the Contract
Period granted by the Plan Administrator
9.3. Termination Due to Insolvency
Either party may terminate this Contract effective immediately by giving written notice to the other if a party
becomes insolvent, makes a general assignment for the benefit of creditors, files a voluntary petition of
bankruptcy, suffers or permits the appointment of a receiver for its business or assets, or becomes subject to any
proceeding under any bankruptcy or insolvency law,whether foreign or domestic A party is insolvent if it has
ceased to pay its debts in the ordinary course of business, cannot pay its debts as they become due, or the sum
of its debts is greater than the value of its property at a fair valuation
9.4. Termination Due to Inability to Perform
If loss of services is caused by, or either party is unable to perform any of its obligations under this Contract, or to
enjoy any of its benefits because of natural disaster, action or decrees of governmental bodies or communication
failure not the fault of the affected party, such loss or inability to perform shall not be deemed a breach The party
who has been so affected shall immediately give notice to the other party and shall do everything possible to
resume performance Upon receipt of such notice, all obligations under this Contract shall be immediately
suspended If the period of nonperformance exceeds thirty(30) days from the receipt of such notice, the party
whose performance has not been so affected may, as its sole remedy, terminate this Contract by written notice to
the other party effective immediately In the event of such termination, the Plan Sponsor shall remain liable to the
Claims Administrator for all payments due, together with interest thereon as provided for in subsection 5 2 c
above
9.5. Termination For Nonpayment
The Claims Administrator may, at its sole discretion, terminate this Contract if the period of nonpayment exceeds
thirty (30) days from the date the payment becomes delinquent as outline in section 5 2 c
9.6. Plan Sponsor Liability Upon Termination
In the event this Contract is terminated prior to the end of the Contract Period, the Plan Sponsor shall remain
liable to the Claims Administrator for all delinquent sums together with interest thereon as provided for in
subsection 5 2 c above Furthermore, the Claims Administrator will have incurred fixed costs which, but for the
termination,would have been recouped over the course of the Contract Period Therefore, in the event that the
Contract terminates pursuant to subsections 9 1 or 9 5 above, the Plan Sponsor shall also pay the Claims
Administrator as liquidated damages, and not as a penalty, an amount equal to two (2) months administration
fees This monthly fee shall be determined by multiplying the rate set forth in "Attachment D—Fees Of The
Claims Administrator," multiplied by the average number of Members covered by the Plan for the immediately
preceding six(6) month period or such shorter period if this Contract has not been in effect for a period of six (6)
months The Plan Sponsor shall remain liable for claims incurred during the Contract Period but not paid during
the Contract Period and for the claims run-out processing fee set forth in the"Fees Of The Claims Administrator"
attachment
9.7. Final Accounting
Within one hundred twenty(120) days of termination by either party, the Claims Administrator shall deliver to the
Plan Sponsor an interim accounting Within fifteen (15) months of termination the Claims Administrator shall
deliver to the Plan Sponsor a complete and final accounting of the status of the Plan
At the expense of the Plan Sponsor, the Claims Administrator shall make available a record of deductibles and
coinsurance levels for each Member and deliver this information to the Plan Sponsor or its authorized agent
9.8. Claims Runout
The Plan Sponsor continues to be solely liable for claims received by the Claims Administrator after the Contract
terminates For the fifteen (1 5)-monthperiod following termination of this Contract, the Claims Administrator shall
continue to process eligible claims incurred prior to termination, or adjustments to claims incurred prior to
termination, that the Claims Administrator receives no more than twelve (12) months after the date of termination
at the claims run-out processing fee rate set forth in "Attachment D —Fees Of The Claims Administrator"
City of Kent 10 January 1,2009
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The runout processing charge will be due in full with the first request for claims reimbursement made during the
runout period
If the Claims Administrator receives claims for Plan benefits more than twelve (12) months after the date this
Contract terminates, Claims Administrator shall deny those claims If the Plan Sponsor wants to negotiate a
different arrangement, the Plan Sponsor must contact the Claims Administrator no later than the start of the
fourteenth month after the date this Contract terminates
This"Claims Runout" provision shall survive termination of this Contract
10. DISCLOSURE
It is recognized and understood by the Plan Sponsor that the Claims Administrator is subject to all laws and
regulations applicable to Claims Administrators and health care service contractors
It is also recognized and understood by the Plan Sponsor that the Claims Administrator is not acting as an insurer
and also is not providing stop-loss insurance
11. OTHER PROVISIONS
11.1. Choice of Law
The validity, interpretation, and performance of this Contract shall be controlled by and construed under the laws
of the state of Washington, unless federal law applies Any and all disputes concerning this Contract shall be
resolved in King County Superior Court or federal court as appropriate
11.2. Proprietary Information
The Claims Administrator reserves the right to, the control of, and the use of the words"Premera Blue Cross",
"MSC Incorporated as Premera Blue Cross" and all symbols, trademarks and service marks existing or hereafter
established The Plan Sponsor shall not use such words, symbols, trademarks or service marks in advertising,
promotional materials, materials supplied to Members or otherwise without the Claims Administrator's prior written
consent which shall not be unreasonably withheld
The Claims Administrator's provider reimbursement information is proprietary and confidential to the Claims
Administrator and will not be disclosed to the Plan Sponsor unless and until a separate Confidentiality Agreement
is executed by the parties For the purposes of this section, "provider reimbursement information" means data
containing directly or indirectly (a) diagnostic, procedures or other code sets, and (b) billed amount, allowed
amount, paid amount or any other financial information for network and non-network hospitals, clinics, physicians,
other health care professionals, pharmacies and any other type of facility Such data may or may not specifically
identify providers No other provision of this Contract or any other agreement or understanding between the
parties shall supersede this provision
11.3. Parties To The Contract
The Plan Sponsor hereby expressly acknowledges, on behalf of itself and all of its Members, its understanding
that this Administrative Service Contract constitutes a Contract solely between the Plan Sponsor and the Claims
Administrator, that the Claims Administrator is an independent corporation operating under a license with the Blue
Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield Plans (the
"Association") permitting the Claims Administrator to use the Blue Cross Service Mark in the States of
Washington and Alaska, and that the Claims Administrator is not contracting as the agent of the Association.
The Plan Sponsor further acknowledges and agrees that it has not entered into this Administrative Service
Contract based upon representations by any person other than the Claims Administrator, and that no person,
entity or organization other than the Claims Administrator shall be held accountable or liable to the Plan Sponsor
for any of the Claims Administrator's obligations to the Plan Sponsor created under this Administrative Service
City of Kent 11 January 1,2009
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Contract This provision shall not create any additional obligations whatsoever on the Claims Administrator's part
other than those obligations created under other provisions of this Administrative Service Contract
11.4. Notice
Except for the notice given pursuant to the "Funding" subsection of section 2, any notice required or permitted to
be given by this Contract shall be in writing and shall be deemed delivered three (3) days after deposit in the
United States mail, postage fully prepaid, return receipt requested, and addressed to the other party at the
address as shown on the face page of this Contract or such other address provided in writing by the parties
11.5. Integration
This Contract, including any appendices or attachments incorporated herein by reference, embodies the entire
Contract and understanding of the parties and supersedes all prior oral and written communications between
them Only a writing signed by both parties hereto hereof may modify the terms
11.6. Assignment
Neither party shall assign this Contract or any of its duties or responsibilities hereunder without the prior written
approval of the other
12. ATTACHMENTS TO THE ADMINISTRATIVE SERVICE CONTRACT
The following attach to and become part of the body of this Contract and they are herein incorporated by
reference
ATTACHMENT A — BLUECARD® PROGRAM
ATTACHMENT B—CENSUS INFORMATION
ATTACHMENT C—REPORTING
ATTACHMENT D—FEES OF THE CLAIMS ADMINISTRATOR
ATTACHMENT E—BUSINESS ASSOCIATE AGREEMENT
ATTACHMENT F—CARE FACILITATION
ATTACHMENT G —EXTENDED POST-PAYMENT RECOVERY SERVICES
ATTACHMENT H —DISEASE MANAGEMENT
City of Kent 12 January 1,2009
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ATTACHMENT A — BLUECARDO PROGRAM
Premera Blue Cross, like all Blue Cross and/or Blue Shield Licensees, participates in a program called
"BlueCard " Whenever Members access health care services in Clark County, Washington or outside
Washington and Alaska, the claim for those services may be processed through BlueCard and presented to us
for payment Payment is made according to the terms and limitations of your plan document and network access
rules in the BlueCard Policies then in effect Under BlueCard, when Members receive covered services within the
area served by another Blue Cross and/or Blue Shield Licensee (called the"Host Blue" in this section), Premera
Blue Cross remains responsible for fulfilling our obligations under this contract The Host Blue will only be
responsible for such services as contracting with providers and handling all interaction with contracting providers
The Host Blue must perform these duties in accordance with applicable BlueCard Policies The financial terms of
BlueCard are described generally below
Liability Calculation Method Per Claim
The amount the Member pays for covered services obtained in Clark County, Washington or outside Washington
and Alaska through BlueCard is calculated on the lower of 1) the billed charges for the covered services, or 2)
the"negotiated price"that the Host Blue passes on to Premera Blue Cross for the covered services
Most often, the Plan Sponsor's liability for covered services processed through BlueCard is calculated on the
same amount on which the Member's liability is calculated However, in rare cases required by the Host Blue's
contract with the provider, the Plan Sponsor's liability will be calculated on the Host Blue's negotiated price even
when that price exceeds the billed charge
The methods used to determine the negotiated price will vary among Host Blues according to the terms of their
provider contracts Often, the negotiated price will consist of a simple discount, which reflects the actual price
allowed as payable by the Host Blue But, sometimes, it is an estimated price that factors in the Host Blue's
expected settlements, withholds, any other contingent payment arrangements and non-claims transactions with
the Member's health care provider or with a specified group of providers The negotiated price may also be a
discount from billed charges that reflects an average expected savings with the Member's health care provider or
a specified group of providers The price that reflects average savings may result in greater variation above or
below the actual price than will the estimated price In accordance with national BlueCard policy, these estimated
or average prices will also be adjusted from time to time to correct for overestimation or underestimation of past
prices However, the amount on which the Member's and the Plan Sponsor's payments are based remains the
final price for the covered services billed on that claim
In addition, if the Host Blue's negotiated price is an estimated or average price, as described above, some portion
of the amount the Plan Sponsor pays may be held in a variance account by the Host Blue, pending settlement
with its contracting providers Because all amounts paid are final, any funds held in a variance account do not
belong to the Plan Sponsor and are eventually exhausted by provider settlements and through prospective
adjustments to the negotiated prices
Some states may mandate a surcharge or a method of calculating what Members must pay on a claim that differs
from BlueCard's usual method noted above and is not pre-empted by federal law If such a mandate is in force
on the date the Member received care in that state, the amounts the Member and the Plan Sponsor must pay for
any covered services will be calculated using the methods required by that state's mandate Such methods might
not reflect the entire savings expected on a particular claim
The calculation methods described above in this section do not apply to BlueCard Worldwide claims
Under BlueCard, recoveries from a Host Blue or from contracting providers of a Host Blue can arise in several
ways Examples are antifraud and abuse audits, provider/hospital audits, credit balance audits, utilization review
refunds, and unsolicited refunds In some cases, the Host Blue will engage third parties to assist in discovery or
collection of recovery amounts The fees of such a third party are netted against the recovery Recovery
amounts, net of any fees, will be applied in accordance with applicable BlueCard Policies,which generally require
correction on a claim-by-claim or prospective basis
City of Kent 13 January 1,2009
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BlueCard Worldwide®
If Members are outside the United States, the Commonwealth of Puerto Rico, Jamaica and the British and U S
Virgin Islands, they may be able to take advantage of BlueCard Worldwide BlueCard Worldwide is unlike the
national BlueCard program in certain ways For instance, although BlueCard Worldwide provides a network of
contracting hospitals, it offers only referrals to doctors When receiving care from doctors, Members will have to
submit claim forms on their own behalf to obtain reimbursement for the services provided through BlueCard
Worldwide
BlueCard Fees and Compensation - Overview
The Plan Sponsor understands and agrees to the following
a To pay certain fees and compensation to us which we are obligated under BlueCard to pay to the Host
Blue, to the Blue Cross and Blue Shield Association, or to the BlueCard vendors These fees are billed to
the Plan Sponsor as shown in "Attachment D—Fees Of The Claims Administrator"
b That fees and compensation under BlueCard may be revised from time to time without the Plan
Sponsor's prior approval in accordance with the Blue Cross and Blue Shield Association's standard
provisions for revising fees and compensation under BlueCard
Some of these fees and compensation are charged each time a claim is processed through BlueCard Examples
of these are access fees (see"Access Fees"and "How Access Fees Affect The Plan" below), administrative
expense allowance fees, Central Financial Agency Fees, and ITS Transaction Fees Also, some of these claim-
based fees, such as the access fee and the administrative expense allowance fee, may be passed on to the Plan
Sponsor as an additional claim liability
Fees not charged for each claim are an 800 number fee and a fee for providing provider directories
Access Fees
Host Blues may charge the Claims Administrator an access fee for making their discounted rates and the
resulting savings available on claims incurred by the Plan Sponsor's Members Access fees are based on the
difference between the amount paid by the Host Blue and the amount this Plan would have paid if it had dealt
with the out-of-area provider directly The access fee, if one is charged, may equal up to 10 percent of the Host
Licensee's discount/differential savings, but may not exceed $2,000 per claim The access fee may be charged
only if the Host Blue's arrangement with the provider prohibits billing Members for amounts in excess of the
discounted rate However, providers may bill for deductibles, coinsurance, amounts in excess of stated benefit
maximums, and charges for noncovered services In the event a participating provider discount cannot be
passed along to the Member, no discount or access fee will apply
How Access Fees Affect The Plan
When the Claims Administrator is charged an access fee, it will be charged to the Plan Sponsor as a claims
expense If the Claims Administrator receives an access fee credit, it will be given to the Plan Sponsor as a
claims expense credit Access fees are considered a claims expense because they represent claims dollars the
Plan Sponsor is unable to avoid paying
Instances may occur in which the Claims Administrator does not pay a claim (or pays only a small amount)
because the amounts eligible for payment were applied to the deductible and/or coinsurance In these instances,
the Claims Administrator will pay the access fee and pass it along to the Plan Sponsor as a claims expense even
though little or none of the claim was paid
City of Kent 14 January 1,2009
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ATTACHMENT B - CENSUS INFORMATION
Administration Fees, effective January 1, 2009, are based on the following
Number of Active and Retired Members:
Employee Spouse Children
Active 778 508 843
Retirees 68 14 0
Number of COBRA Members:
Employee Spouse Children
COBRA 7 5 6
Other Carriers Offered: Group Health Cooperative
City of Kent 15 January 1,2009
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ATTACHMENT C - REPORTING
A standard package of reports covering the Contract Period will be provided to the Plan Sponsor within the fees
set forth in "Attachment D—Fees Of The Claims Administrator" The reports will cover
• Earned premium
• Paid claims
• Census data
• Claims summaries by
• Provider type
• Service type
• Coverage type
Please note that reports,format, and content may be modified from time to time as needed
City of Kent 16 January 1,2009
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ATTACHMENT D - FEES OF THE CLAIMS ADMINISTRATOR
Pursuant to the Administrative Service Contract, the Plan Sponsor shall pay the Claims Administrator the fees, as
set forth below, for administrative services
Administration Fees:
Multi-Year Administration Fee Agreement
2009 2010 2011
Medical Fee(includes Washington Business &Occupation tax) $48 59 $51 53 $53 55
Network Management Fee $6 60 $6 86 $7 13
Total $55 19 $58 39 $60 68
Note 2010 and 2011 total administration fees stated above reflect a $1 00 charge due to stop loss coverage not
being carried by LifeWise Assurance Company In the event stop loss is purchased through LifeWise Assurance
Company in 2010 or 2011, the stated fee will be reduced by$1 00 for the applicable year
Disease Management Program Fees (not included in Administration Fee):
$6 41 PMPM
Brokerage Fees and Commissions (not included in Administration Fee):
(Medical) $2 00 PEPM
Claims Runout Processing Fee:
The charge for processing runout claims is an amount equal to the active administration fee at the time of
termination, times the average number of subscribers for the 3-month period preceding the termination date,
times two
BlueCard Fee Amount:
BlueCard Fees are tracked and billed as part of the annual accounting for the Contract Period
Care Facilitation:
Included in Administration Fee See"Attachment F—Care Facilitation"for an overview of services provided
City of Kent 17 January 1,2009
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Extended Post-Payment Recovery Services:
Claims Administrator will perform the services listed below on a pay-for-performance, contingent fee ("Contingent
Fee") basis, which shall be calculated as a percentage of the gross amount recovered with respect to any
particular claim See"Attachment G — Extended Post-Payment Recovery Services"for an overview of services
provided
Post Payment Recovery
Contingent Fee
Category
Coordination of Benefits 20%
Subrogation 20% unless claim requires engagement of outside
counsel, in which case the Contingent Fee amount
shall be 35%
Provider Billing Errors 20%
Credit Balance 20%
Hospital Billing and Chart Review 20%
a The Plan Sponsor may terminate the Calypso extended services section of this agreement at any point
throughout the contract period within 30 days written notice to the Claims Administrator
b The Plan Sponsor can request that any subrogation case the Claims Administrator is pursuing on their
behalf be dropped immediately with written notice from the Plan Sponsor
c Continue Calypso Extended Recovery Services but reduce recovery fee to 20%
d Remove Medicare COB and Other Insurance recoveries from the Extended Services Category on the
basis, City of Kent works with Premera to provide accurate eligibility information on their Retiree
population and capturing other coverage information from all City of Kent employees
e Place a cap of$15,000 per claim which will only apply to the subrogation claims, with the caveat if claim
has to go outside the typical recovery services and requires that legal council be involved, Premera can
charge City of Kent for those related fees Premera has agreed to give City of Kent the option to approve
claims that are referred out to legal council
City of Kent 18 January 1,2009
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ATTACHMENT E - BUSINESS ASSOCIATE AGREEMENT
The Plan Sponsor should keep its signed business associate agreement behind this page
City of Kent 19 January 1,2009
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ATTACHMENT F - CARE FACILITATION
Claims Administrator agrees to provide the following care facilitation programs for the fees shown in "Attachment
D—Fees Of The Claims Administrator"
Service Description
Care Management
Prospective and retrospective review for medical
Clinical review necessity, appropriate application of benefits Prospective
review is not mandatory for provision of benefits
Voluntary program to provide cost-effective alternatives for
Case management care of complex or catastrophic conditions This service
also educates members and assists members and
providers in managing breast & lung cancer
Includes preventive care programs for members
Health Awareness Education immunization reminders, cancer screening reminders, and
health education and information
Includes provision of evidence-based clinical practice and
Quality Programs preventive care guidelines to members and providers,
chart tools, and quality of care program activities
Prescription drug formulary Development of formulary and access to providers and
promotion members on-line
Physician-based pharmacy Physician education on cost-effective prescribing
management
ePocrates Software to provide physicians with up-to-date drug and
plan formulary information
Education for members using multiple drugs to review
Polypharmacy prescriptions with their providers to decrease incidences of
adverse drug interactions
Follow-up with members and physicians to minimize
Point-of-sale Pharmacy inappropriate or excessive drug therapies identified when
drugs are dispensed
Demand Management Round-the-clock access for members to RNs to answer
questions about health care
City of Kent 20 January 1,2009
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ATTACHMENT G - EXTENDED POST-PAYMENT RECOVERY SERVICES
Claims Administrator shall provide a set of Extended Post Payment Recovery Services to the Plan Sponsor as
described below Claims Administrator will perform these services on a pay-for-performance, contingent fee
("Contingent Fee") basis, which shall be calculated as a percentage of the gross amount recovered with respect
to any particular claim Contingent Fees are shown in "Attachment D— Fees Of The Claims Administrator"
Post Payment Recovery
Explanation of Services
Category
Claims Administrator's investigators and auditors will work to identify
and pursue overpayments due to member's missing or inaccurate COB
information Claims Administrator utilizes questionnaires and
Coordination of Benefits interviews with providers, employers and members to determine if Plan
Sponsor is the primary or secondary insurer
Claims Administrator's investigators, auditors and attorneys identify and
pursue overpayments due to Subrogation opportunities Claims
Administrator's research to obtain accurate subrogation information and
determine group's subrogation rights include questionnaires and
interviews with providers, employers and members as well as a review
of medical records For verified overpayments Claims Administrator
Subrogation manages attorney and member notification, files necessary liens,
coordinates case documentation, and provides representation for
arbitration hearings
The Plan Sponsor will be pre-notified of Claims Administrator's intent to
file suit and retains the right to authorize or deny any legal action
Claims Administrator's post-payment editing programs and
investigators and auditors perform additional screens and tests where
billing information is inconsistent with agelservices rendered or where
Provider Billing Errors there appears to be up-coding or unbundling of services A recovery
process is then employed to request and recover verified
overpayments
This service requires an on-site review of the provider's financial
records and discussions with their staff Credit balances are verified as
owed to Plan Sponsor and the source of the credit is determined The
Credit Balance credit is reviewed with the provider and approved for payment back to
Claims Administrator or the Plan Sponsor
This service requires an on-site review of the member's medical charts
Hospital Billing and Chart and interviews with provider staff by registered nurses Calypso out-
Review sources the on-site review work to an independent vendor who ensures
that
City of Kent 21 January 1,2009
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Post Payment Recovery Explanation of Services
Category
• Service is consistent with diagnosis and billing is consistent
with services
• There has been no unbundling of services, diagnosis up-coding
or billing maximization
• Services rendered were prescribed by the physician and the
doctor's notes were signed
• Standardized billing and payment policies were used
Calypso provides support for this vendor's efforts as well as processes
all recoveries
City of Kent 22 January 1,2009
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ATTACHMENT H — DISEASE MANAGEMENT
Claims Administrator agrees to make available to the Group certain Disease Management Services provided by
Healthways, Inc ("ANSI") as more particularly described in Appendix 1 attached hereto and incorporated herein
(the "Services') Under its agreement with the Claims Administrator, AHSI, in its sole and absolute discretion,
may upgrade or otherwise modify its Services
Information and Data.
• Initial Information. For Groups who have had Administrative Services provided by the Claims Administrator
for a period of 36 months or longer, the Claims Administrator will provide to AHSI on Group's behalf, a claims
and eligibility data set determined necessary by AHSI and the Claims Administrator in mutually agreeable
electronic format, for all Eligible Members for the prior thirty-six (36) months from anticipated Effective Date,
or the period for which data is available, whichever is shorter This data shall be provided 90 days prior to the
Group Effective Date through the date such file is produced
For Groups for whom the Claims Administrator does not have such data as determined necessary by AHSI
and the Claims Administrator for the prior thirty-six(36) month period, the Group will attempt to obtain such
data from the Group's previous health plan(s), 90 days prior to the Group Effective Date AHSI and the
Claims Administrator will cooperate with Group's effort in obtaining such data All such data shall be provided
by the Group directly to AHSI in a mutually agreeable electronic format In the event AHSI charges the
Claims Administrator for accepting such data, the Claims Administrator shall be entitled to pass such costs
through to the Group
• Failure or Inability to Provide Data The Parties recognize that the provision of data referenced above is
critical to the success of the disease management services Therefore, the Group agrees that its failure to
provide all data referenced above in a timely fashion may, at the Claims Administrator's option, affect the
terms, range and availability of Services available to the Group In the event that at least twenty-four(24)
months of historical data is not available, then the Claims Administrator shall adjust reporting and
measurement requirements for such Group
General Provisions
• The parties understand, acknowledge and agree that the services provided to the Group hereunder are
designed for application generally to the entire population of Group members eligible for such services and
not for application to each and every such member Neither the Claims Administrator nor AHSI represent or
warrant that the services provided pursuant to this Attachment will be applied or made with respect to each
and every eligible member The Claims Administrator and AHSI will, however, use commercially reasonable
efforts in their attempt to apply such services so that as many eligible members receive such services as
appropriate and practicable
• Severability In the event that any provision hereof is found invalid or unenforceable pursuant to judicial
decree or decision, the remainder of this Attachment shall remain valid and enforceable according to its
terms
City of Kent 23 January 1,2009
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Appendix 1
Program Selection
Elected Package
Package C (Enhanced)
Diabetes, Heart Failure, Coronary Artery Disease, Chronic Obstructive Pulmonary Disease,Asthma, Impact
Conditions
City of Kent 24 January 1,2009
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REQUEST FOR MAYOR'S ,SIGNATURE
KENT Please FIII in All Applicable Boxes
WASHINGTON
Routing Information (ALL REQUESTS MUST FIRST BE ROUTED THROUGH THE LAW DEPARTMENT)
Originator. (6 zLJL Phone (Originator): �Q—QQ
Date Sent: a�l _ Qc'j Date Required:
Return Signed Document to. CONTRACT TERMINATION DATE: a l W
VENDOR NAME: m.��� i DATE OF COUNCIL APPROVAL--_- 2/
Brief Explanation of Document:
aPriq ,T-
(11 All Contracts Must Be Routed Through the Law Department
(This Area to be Completed By the Law Department)
Received: C
Approval of City Attorney:
�
City Attorney Comments:
Date Forwarded to M or: &6�
Shaded Areas o omp eted by Administration Staff
Recommendations & Comments-
---
Disposition:
Date Returned: .
Iage5870 2/04