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Home My WebLink AboutResolution - 2009-R0342 - Claim Service Agreement - Alternative Service Concepts LLC - 08/27/2009Resolution No. 2009-RO342 August 27, 2009 Item No. 5.10 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock, a Claire; Service Agreement with Alternative Service Concepts, LLC for services with respect to the investigation and payment of insurance claims, and related documents. Said Agreement is attached hereto and incorporated herein as part of this Resolution. Passed by the City Council this 27th day of August , 2009. �� .� TOM MARTIN, MAYOR ATTEST: ebec a Garza, City Secretary APPP,OVED AS TO CONTENT: Leisa HutcSeson, Director of Risk Management O ite, Assistant City Attorney res -Alternative Service Concepts, LLC 8.19.09 ® i Alternative Service Concepts, LLC Resolution No. 2009-RO342 CLAIMS SERVICE CONTRACT THIS AGREEMENT is made and entered into with an effective October 1, 2009 between ALTERNATIVE SERVICE CONCEPTS, LLC, formed in Delaware, with principal offices at 2501 McGavock Pike, Suite 802, P.O. Box 305148 Nashville, Tennessee 37214-1213, hereinafter referred to as "ASC", and the City of Lubbock, Texas, hereinafter referred to as "Client". WITNESS: WHEREAS, "ASC" is in the claims service business; and WHEREAS, "Client" desires to contract with "ASC" as its claims service company to service the liability claims of "Client's" arising out of their municipal operations. NOW, THEREFORE, "ASC" and "Client" contract as follows: "ASC" AGREES: In addition to providing all services set forth in Exhibit "A", "ASC's" response to Request for Proposal 09-077-MA, to: 1. (a) To review all claims and/or losses reported during the term of this Contract which involve general liability, automobile liability and other liability claims against "Client" in accordance with Option II of the pricing in Exhibit B, which Exhibit shall replace the pricing schedule set forth in ASC's response to Request for Proposal 09-077-MA. (b) To investigate, adjust, settle or resist all such losses and/or claims within the agreed discretionary settlement authority limit of One Thousand and No/100 Dollars ($1,000). (c) To investigate, adjust and seek authority from the "Client" to settle or resist all such losses and/or claims as are in excess of the agreed discretionary settlement authority limit of One Thousand and No/100 Dollars ($1,000) (d) To report excess claims to "Client's" excess carrier only if "Client" fulfills its obligations under "Client Agrees" Section, 4c. 2. To accept claims from "Client" on "Client's" claim form. 3. To establish claim and/or loss files for each reported claim and/or loss. Such files shall be the exclusive property of "Client". Such files are available for review by "Client" at any reasonable time, with reasonable notice. 4. To respond timely to all requests made by "Client" in accordance with the Texas Open Records laws or any other applicable law. CityofLubbock/0809 Page 1 07618 ASC Alternative Service Concepts, LLC 5. To maintain Automobile Liability, Errors and Omissions, Fidelity, General Liability, and Workers' Compensation insurance coverage in accordance with Exhibit "A" Response to RFP 09-077-MA. 6. To maintain appropriate licensing in accordance with the State of Texas Department of Insurance. 7. To indemnify, defend and hold harmless "Client" its agents, representatives, elected officials, officers and employees with respect to any claims asserted as a result of any errors, omissions, torts, intentional torts or other negligence on the part of "ASC" and/or its employees, unless the complained of actions of "ASC" were taken at the specific direction of "Client". 8. To establish a bank account (the "Loss Fund Account") to be funded by the "Client" and to issue its checks for the payment by "ASC" of claims and "Allocated Loss Expenses" associated with claims for which "ASC" is providing Claims Adjusting Services. "CLIENT" AGREES: 1. To pay "ASC" fees in accordance with the Fee Schedule attached as Exhibit "B" to this Contract. Client elects Option II for claim pricing. 2. To pay "ASC" within thirty (30) days of the effective date of all invoices. All past due invoices are subject to an interest penalty of one and one-half percent (1 1/2%) per month. In the event "ASC" brings any action or proceeding to recover any part or all of an outstanding indebtedness, "ASC" shall be entitled to recover as additional damages any reasonable attorney fees not to exceed twenty percent (20%) of the outstanding indebtedness. 3. (a) To pay all Allocated Loss Expenses in addition to the claim service fee to be paid to "ASC" as prescribed in this Contract, so long as the allocated expense has been authorized in writing, in advance, by the "Client". (b) "Allocated Loss Expenses" shall include but not be limited to attorneys' fees; eligible experts' fees (i.e. engineering, physicians, chemists, etc.); fees for independent medical examinations; witnesses' fees; witnesses' travel expenses; court reporters' fees; transcript fees; the cost of obtaining public records; commercial photographers' fees; automobile appraisal or property appraisal fees; all outside investigation expense items; extraordinary travel expenses incurred by "ASC" at the request of "Client".. CityofLubbock/0809 Page 2 07618 ASC Alternative Service Concepts, LLC (c) To provide "ASC" with complete copies of all excess policies which apply to the claims reported during the Contract period. 4. To relinquish authority to "ASC" in all matters relating to claims service within the agreed discretionary settlement authority limit of One Thousand and no/100 Dollars ($1,000), however, the "Client's" Director of Risk Management will be notified prior to denying any claim on behalf of the "Client". 5. (a) In the event, "ASC", acting at the specific direction of "Client", becomes liable to any third party, "Client" agrees to indemnify, defend and hold "ASC" and/or its employees harmless, to the extent allowed by law. (b) If "ASC" or any of its employees are named as defendant in any action (i) where the plaintiff's cause of action involves a claim hereunder and (ii) where there are not allegations of errors, omissions, torts, intentional torts or other negligence on the part of "ASC", to the extent allowed by law, "Client" will assume the defense of the action on behalf of "ASC" and/or its employees and further indemnify and hold "ASC" and/or its employees harmless from any judgment rendered as a result of such action. 6. To fund the "Loss Fund Account" in a timely manner so that "ASC" may make timely payments on claims and "Allocated Loss Expenses". "ASC" AND "CLIENT" MUTUALLY AGREE AS FOLLOWS: 1. The term of this Contract is continuous from its effective date for one (1) year with an option to renew for two (2) additional one (1) year terms. This Contract may be terminated by either "ASC" or "Client" with cause by providing ninety (90) days' prior written notice by certified mail. (b) In the event that this Contract terminates or expires for any reason "Client" shall have the option: (i) to have "ASC" continue adjusting open files which have been reported for an additional fee based on the prevailing annual rate after the claim has been open for six (6) months, or (ii) to have "ASC" return the files to the client. 2. This Contract covers Claim Service for "Client" in the United States of America. 3 In the event any one or more of the provisions of this Contract shall be determined to be invalid or unenforceable by any court or other appropriate authority, the CityofLubbock/0809 Page 3 07618 ASC Alternative Service Concepts, LLC remainder of this Contract shall continue in full force and effect, as if said invalid and unenforceable portion had not been included in this Contract. 4. This Contract shall be construed and interpreted in accordance with the laws of the state of Texas. Venue shall reside in Lubbock County, Texas. 5. This Contract and attachments represents the entire understanding of "ASC" and "Client" and supersedes all prior oral and written communications between "ASC" and "Client" as to the subject matter. Neither this Contract nor any provisions of it may be amended, modified or waived except in writing signed by a duly authorized representative of "ASC" and "Client". 6. The failure or delay of either "ASC" or "Client" to take action with respect to any failure of the other party to observe or perform any of the terms or provisions of this Contract, or with respect to any default hereunder by such other party, shall not be construed as a waiver or operate as a waiver of any rights or remedies of either "ASC" or "Client" or operate to deprive either "ASC" or "Client" of its right to institute and maintain any action or proceeding which it may deem necessary to protect, assert or enforce any such rights or remedies. 7. During the term of this Contract, "ASC" will store, at its expense, closed files for a period of three (3) years from the date of closure or the date of the last payment of benefits, or the retention requirements of "Client's" carrier, whichever is latest. After this period, files will be returned to "Client". IN WITNESS WHEREOF, "ASC" and "Client" have caused this Contract to be executed by the person authorized to act in their respective names. CITY OF LUBBOCK Tom Martin, Mayor ATTEST: Rebecca Garza, City Secret Alternative Service Concepts, LLC. Robert Bennett, Chief Executive Officer CityofLubbock/0809 Page 4 07618 ASC Alternative Service Concepts, LLC F1901 100IT14 BF."Im 001300 lklyffwk Leisa Hutcheson, Director of Risk Management APPROVED AS TO FORM: CityofLubbock/0809 Page 5 07618 ASC Alternative Service Concepts, LLC Resolution No. 2009—RO342 Exhibit "B" Alternative Service Concepts, LLC City of Lubbock, TX Two -Year Claims Handling October 1, 2009 to September 30, 2011 New Claims Service Automobile Liability Number Of Claimants Per 52 Per -Claimant Fee $455 0• $ 23,660.00 $ 23,660.00 General Liability 225 $285 $ 64,125.00 $ 64,125.00 Other Liability (Police, Employment, Public Officials) 25 $600 $ 15,000.00 $ 15,000.00 Litigated Claims Included Included Catastrophic Claims' $85 Per Hour $85 Per Hour Minimum & Deposit Claims Fee $102,785.00 $102,785.00 Data Conversion from Prior Administrator One-time $ 2,500.00 Banking Maintenance Fee Annually $ 2,500.00 $ 2,500.00 On -Line Access (Two Users) No Charge No Charge Additional Users $30/User/Month $30/User/Month Account Administration Fee $ 12,500.00 $ 12,500.00 Total Minimum & Deposit Claims Fee $120,285.00 $117,785.00 MMSEA • *Pass Through 1 time Implementation Fee...........................................$1,000 • *Annual Transmission Fees (includes query & submissions)................$2,000 *Actual costs will be passed through to the client; current estimate is $920 - $1,000 implementation and $1920 - $2,000 annual. Actual cost will be billed to the clients when (1) implementation begins and (2) the first quarter of transmission. Claims will be handled for two years from the date the loss is reported to ASC with no additional per -claim fees. Any claim remaining open after 24 months will be subject to an annual maintenance fee of $500 plus administration fees. Fees are based on claims volume provided. At the conclusion of the contract, any claims that exceed the claim count stated above will be invoiced at the quoted per -claim rate. t Any event resulting in 10 or more claimants in one incident and/or property losses will be treated as a catastrophe. CityofLubbock/0809 Page 6 07618 ASC Alternative Service Concepts, LLC ASC's annual minimum claims fee is $102,785. All claims handled by ASC will be credited towards the minimum fee by multiplying the actual number of claims by the fee per claimant. If the fee for the actual number of claims is more than $102,785 ASC will invoice the client for the difference between the actual fee and $102,785. The administration fee includes: • Account Setup • New Claim Setup • Client Meetings • Excess Reporting • State Reporting • Claim file storage • System Fees Subrogation pursuit and Recovery 15% of Recovery Allocated Expenses NOTE: Field Investigation below will be billed at the following rate: $95 per hour, $.54/mile and $2.00 per color photograph Allocated expenses will be charged to the claim file and include fees for: • Legal services • State -mandated EDI • Court reporters • Professional photographs • Official documents and transcripts • Experts' / rehabilitation services • Architects, contractors, engineers, chemists • Police, fire, coroner, weather reports • Accident reconstruction • Property damage appraisals • Subrogation collection cost payable to third party • Extraordinary travel at client's request • Medical records • IMEs, MRIs, etc. • Managed care • Medical bill review • Index Bureau reporting • Outside investigation • Surveillance • Medicare Set Aside Fees • Any other expense requiring client approval CityofLubbock/0809 Page 7 07618 ASC Alternative Service Concepts, LLC Managed Care Pricing Only applies for Auto Bodily Injury / General Bodily Injury Medical Bill Review....................................................$8.50 per bill Network Access........................................................28% of Savings Pharmacy.............................................AWP minus 5% plus $3.00 dispensing fee Telephonic Case Management ..................................... Nurse: $95/open claim/month .......................................................................Physician: $165/open claim/month Utilization Review ......................................................Nurse: $115/review .....................................................Physician: $275/review ($330/expanded review) Field Medical Case Management.................................$89 Per Hour Claims Handling at Contract Conclusion At the conclusion of the contract, the following options are available for continued handling of open claims: • Annual per -claimant fee at ASC's prevailing rates • Claims returned to client 2 Pricing for additional managed care services is available upon request. CityofLubbock/l009 Page 8 07618 Resolution No. 2009-RO342 REQUEST FOR PROPOSAL No. 09-077-MA Liability Claims Services 4� Timely Incident Reporting Effective Claims Management Targeted Treatment Plans ' Incident Plans ORIGINAL Return -To -Work Presented by: Kevin Marrs Senior Marketing Analyst 1213 Cherry Brook Way Flower Mound, Texas 75028 972-906-9156 kevin.marrs@ascrisk.com The terms set forth in this proposal are valid for a period of Sixty (60) days from the date of the proposal. After Sixty (60) days, the terms are subject to change. I I i - - Alternative Service Concepts, u.c Table of Contents mommomommomommmoniiillimwsc Page Number i) Cover Letter ii) Methodology iii) Statement Of Qualifications iv) Public Entity Experience v) Principals vi) Subcontractors vii) Organizational Structure viii) Assurances ix) Errors & Omissions x) Conflict of Interest Statement xi) Resource Allocation Questionnaire References Exhibit "A" Pricing Addendums Attachments Authorized Signature Page Insurance Requirement Affidavit Bid Proposal Notice Questionnaire Appendix ASC Office Space Lease Information ASC Claims Handling Guidelines ASC Sample Contract Client Report Samples ASC Financial Capacity Insurance Certification Conflict of Interest Form MMSEA Management 3 4 6 7 8 11 12 14 15 16 17 18 36 38 41 44 45 ER, Alternative Service Concepts, «c 2 Cover Letter ASC July 30, 2009 City Of Lubbock Purchasing & Contract Management 1625131h Street, Room 204 Lubbock, TX 79401 Dear Honorable Mayor and Esteemed City Council Members: Thank you for extending Alternative Service Concepts, LLC (ASC) the opportunity to respond to your request for Liability Claims Services for the City of Lubbock Texas (City). Our organization has been committed to delivering high quality public sector claims administration services to clients throughout the State of Texas for more than 30 years. ASC is an integrity -based company delivering full -service claims management expertise and customized solutions to our partners. It is this proven philosophy that has allowed us to grow to more than 20 national offices representing more than 100 public and private sector clients. Clients such as the City of Plano recognize the flexibility ASC can offer when developing a customized claim program that benefits individual entities. Our management offers the City more than 30 years of professional experience and a comprehensive range of services and attributes, including: a highly experienced professional staff; claims programs tailored to the City's specific needs; transparent pricing with no hidden fees; individualized, measurable performance standards based on quality reviews; quality checks and balances for all functions; a technologically advanced claims system, and customized, internet-ena bled report creation on demand. Thank you again for the opportunity to present our claims administration proposal. Please contact me if you have questions or require additional information. We look forward to working with the City of Lubbock. Sincerely, ZZZ, /��_ Kevin Marrs National Account Executive -- Alternative Service Concepts, LLC 3 Our winning methodology is multi -layered. Key methods that offer results include: client/claimant/business partner communication, ASC staff accessibility and responsibility, and timely and accurate data conversion. Communication Communication is a key action towards ensuring a complete and smooth transition. The implementation begins with a kick-off meeting. At this meeting, the scope is defined and the project plan is discussed in detail. Multiple parties will need to be contacted and time needs to be devoted to meet their individual expectations. These parties include: department heads; defense counsel, and other business partner service providers. Regular ongoing communication among all stakeholders is crucial towards making the implementation a success. Accessibility Accessibility is a second key action towards ensuring a complete and smooth transition. Both City and ASC staff must remain accessible throughout implementation to fulfill a number of successful transition actions: identify banking and accounting requirements; organize reporting structure, report types and frequency, and train on RMIS system capabilities and benefits. Accessibility and defined goals are the keys to any implementation. We recognize that any implementation requires face-to-face meetings. Conversion The most important and time consuming action towards ensuring a complete and smooth transition is claims data conversion. This requires continuous sorting and conversion of data elements from the prior TPA or historical data taken from an internal system. The following page shows a sample approximation schedule of implementation established for a new ASC client. — Alternative Service Concepts, uc 4 NumberTask _ Start EAd qurattoit _' October - _ > -Site Kickoff Meeting With Key _ :_--- lomzoo9 a -t - Iorl/2oo9 Client Personnel _ I I'1 vc Ju cs 1011/20,09 1O131?C4'.3 2 _ .,r i s •' s -• ..._x i I 1 € I t` ..- t, _t..-. 1 € I . 5.-. 1 ( $ 1 {... _. R-Kr (7a vr. mfw*=Cnd, For ?1�M St +irtl 10/112009 101312009 2 ri/, 2:.9 1.3 _uS Ye it Cl-:f)a•aSw R—evr IO.I000i ;0: ri 20.t9 -1 - Fall lklrL 0Wdh 6$j,Cmnct5 u�,rusc ReP t.�erwra€wn •�rrar�ge Settierrerl nwi>rrrv'evek C- ;5 C Joinn 2 Make Gunge Of Service Contact 10/5/2CO9 lorgl20G5 �_�.. With All appropriate Parties I F { 2.2 Clamant, 10i5/2009 2.3 CI ant A:LOn>L"y(S; 10/6/2009 100/2009 I- 1 2A Otl -P-avid"', 10/6/2009 10/2/2009 t 3 Las: Wnd(ng/0anking Arrangements tOr7/2C69 10/L3R000 4 1 3.1 b ao .sb 1sY ran FunC & agrnxs, 10/7/2009 l0/Qf2fx'N Oi lCCW 1 9 R _¢dU25 ff 31 1�1 le e (•ral�n n7 S. S . - I0791I009 ID/I il,'CPC 2 i lam J+ f I int n, I - 'ores = - j -. j T-_�.. —- 4 Systerns & Loss Report Set-up 10//,r2W9 10/1a;2C,9 -l.l Ic, . 14 1611 "'6 O1 €. _. If r I1 ItdC�Qq .._ .- 1.5 Cn -;, ec U — ass R; ns5 Fl10 Data Tra..ftlw /Conversion 1Q- S, 2009 I Ui31., 20;- - - a - - -- -- - — -- �5.1— R.t e've &Sort frr lnln A5GA5Vstem 10/SR009 10/31/2009 20 j 5 !_ P,egn Run( C im Ad to o SW ?�:191dt1 r Hy ALL Ca 5 1D,'�/2(b9 10r?1;?0n ?0 5.3 1fa 10/5/2009 10/31r2CC13 accuracy ZO 5A StoM All C'.oseo Flies A'aOahel rally— 1001/ 2009 10/=1:70U9_ 5 ASC will assemble an implementation team responsible for transitioning your program as seamlessly as possible. This team is composed of senior management, the Business Systems Group (BSG), your assistant VP, and account/sales director. We prefer 30 to 60 days. However, this timeframe is seldom realistic. We can implement a new program in as few as two weeks, with most implementation timeframes averaging three to four weeks. ASCs Business Support Group (BSG) consists of six individuals dedicated to meeting the technical requirements of our new clients. The outcome is a successful implementation. 01 Alternative Service Concepts, «c 5 'Statement Of lificationsommmmmmommm ASC is quickly becoming the TPA of choice among the public entity sector today. The public sector has been a significant focus for ASC and its predecessor for more than 30 year and we are certain that the City of Lubbock's program can be customized to achieve maximum risk management results. Today, approximately 65% of our business is related to public entities. Cities, counties, school districts, housing authorities, and utilities are among our established client base. This is an absolute testimony to our dedication and knowledge of government and the expertise you will receive from a TPA dedicated to rapid response and detailed follow-up. blt.�iq Many ASC public sector clients elect the establishment of a local office to meet their specific needs. To staff the City of Lubbock's unit, ASC will select a claims professional who is designated to understanding your business by managing your liability claims program. The key benefit of a local adjuster to the City of Lubbock is availability. Having a local ASC presence allows the adjuster to attend City staff 'meetings, work with loss control consultants, and interface with City employees. Your ASC adjuster will also be available to participate in board meetings or serve in other advisory capacities to the City. An example of a successful implementation and continued working relationship is with the City of Plano Texas. ASC began its relationship with the City of Plano.in April of 2007. The City was looking for a TPA that could reduce their overall cost and be flexible and responsive enough to provide systems that met their complex reporting needs. The reporting qualifications were extremely important to the City of Plano. They not only needed standard reporting across departments, but also needed a system that continually maintained the ongoing Texas compliance changes. Our system platform (STARS) met all their reporting/compliance needs. The City wanted to contract with a partner that could provide high quality personalized service. They wanted ASC to make face-to-face contact with claimants, and requested that our adjuster go on field investigations. Since April 2007, we have successfully administered the City's program. Our contact at the City of Plano is: • Darrell Edwards, Risk Manager 1520 K Avenue Plano, Texas 75074 Ph: (972) 941-7113 Fax: (972) 941-7459 Email: darrelle(cpplano.eov ASC prides itself on customizing solutions that meet each individual clients need. Alternative Service Concepts, LLC 6 Public Entity Experience moommommosommomAsc Alternative Service Concepts, LLC (ASC) is a management -owned property and casualty and workers' compensation third party claims administrator. For more than 30 years, our organization has been serving Texas clients. Our experience extends more than 30 years. Management is actively involved in the day-to-day operations of the organization. Our dedication to employers in the State has awarded us with offices in Duncanville and Plano. We hope to add a third office in Lubbock based on your review and acceptance of our proposal. Please see appendix for lease information. ASC's sole function is multi -line claims administration and independent audits. Today, ASC has over 30 years' experience administering P&C claims for many public entity employers throughout the country. Roughly 30% of our book of business consists of liability claims. Our comprehensive coverages include: Property & Casualty Claims Management; General Liability Claims; Auto Liability Claims; Professional Liability Claims; Product Liability Claims; Law Enforcement Liability Claims; Property & Inland Marine Claims; Educators' Legal Liability; Public Officials Errors & Omissions Claims, Workers' Compensation Claims, and Crime Claims. ASC's ability to manage third party claims for both liability and workers' compensation claims is an advantage for public entities seeking a one -stop shop for claims services. Alternative Service Concepts, «c 7 s �gsa ; ASC Plan For The City Of Lubbock ASC proposes to administer the City of Lubbock's liability claims with one adjuster to be located in Lubbock, Texas for best claims administration. Below you will rind a letter of intent to secure space immediately upon contract award. City of Lubbock/ASC Unit Location* 10907 QUAKER STREET LUBBOCK, TX 79424 Alternative Service Concepts, LLC June 17, 2009 Innovative Healthcare Management Consulting 10907 Quaker Street Lubbock, TX 79424 Re: Notice of Intent Dear SIR: ♦4S`1 14 � m • ASC Offices ASC Proposed Lubbock Office The purpose of this letter is to create a binding commitment to establish and maintain a claims service operation within the City of Lubbock. As a condition of being a qualified bidder for the claim services for the City of Lubbock, ASC has identified space at 10907 Quaker Street, Lubbock, TX 79424 and have negotiated a proposed lease* (Attached as Exhibit A). If ASC is the successful bidder it will execute the lease and agree to have it attached to the claim service contract as a warranty. If ASC does not maintain a claim office with a claim staff within the City of Lubbock, ASC will refund to the City any fees paid during such time period that ASC does not maintain a claim office and claim staff within the City of Lubbock. We look forward to your response to this letter and moving forward with this opportunity. Sincerely, Glenn Backus Senior Vice President Alternative Service Concepts, LLC *Please see the appendix for lease agreement. Alternative Service Concepts, LLC �8 _ln addition to our City of Lubbock claim adjuster, ASC's Dallas/Fort Worth (DFW) area office can provide backup support to the City including: administrative support and backup adjusters. Our DFW backup support staff is knowledgeable and licensed in property & casualty claims administration for clients with operations in the State of Texas. Jim Revis, Claim Supervisor, brings more than 36 years of multi -line claims handling experience in the State of Texas. In the event of claims overflow or a local catastrophe, this office has the know-how and flexibility to administer claims for the City without interruption. Assigned Staff Each Texas office and our staff members are under the review of a Regional Manager that reports directly to Senior Management. The City of Lubbock's Account Manager will be Ms. Tommie Biggers. Ms. Biggers is responsible for meeting all ASC standards including: All • Monitoring efficiency benchmarks • Monitoring reportable files • Ensuring specified number of files per adjuster are audited by the manager/supervisor • Coordinating with senior management to perform quality audits on each local office • Approving payments/reserves within authority levels • Conducting performance reviews • Approving staffing justifications • Assisting field claims offices with client relationships and stewardship reports • MMSE Management In addition to Ms Biggers, ASC will hire a claim adjuster to administer the City's account. We have a qualified claim adjuster who will be the principal ASC contact for the City of Lubbock's account. Please see her full resume later in this proposal. Technical Staff Other ASC personnel actively involved with the City of Lubbock include our technical team to assist through implementation and ongoing client assistance over the course of the contract relationship. Yrs in Name Position Duties Current Yrs in Other Position Positions BSG Manager (Business Systems Group) System Support and Training Five Nine Candy Faulkner Ms. Faulkner is domiciled at ASC's Nashville, Tennessee headquarters. Candy manages a staff responsible for implementation transition, systems output, field office support, MMSE Management, client support (report generation, customization, systems training, etc.), and methods and procedure guidelines. - Alternative Service ConceptS, LLc 1119 ----Assisting Ms. Faulkner with these ongoing services to the City of Lubbock are: Yrs in Yrs in Name Position Duties Current Other Position Positions BSG Senior Coordinator Risk Management Training 23 23 Judy Ross Keith Layne BSG Project Leader Support and Maintain all IT Six 17 BSG Coordinator IT Customer Service/MMSE Three 18 Account Manager Designee Ann Massey Sales Director The City of Lubbock's Sales Director will be Mr. Kevin Marrs. Born and raised in Amarillo, Mr. Marrs currently serves as a National Account Executive for ASC. He joined ASC in 2006. Mr. Marrs is responsible for the following: • Identifying new sales opportunities for company lines of business • Developing, implementing, and monitoring marketing strategies • Broadening company visibility and market share • Developing and delivering strategic sales presentations • Responsible for negotiating all contracts relative to new clients Mr. Marrs earned a Bachelor of Business Administration Degree from West Texas A&M University in Canyon, Texas with a major in Business Administration and a concentration in Marketing. NO Alternative Service Concepts, LLC �� 10 -Subcontractors ASC ASC selects best -of -class partners based on their need throughout the claims process. The use of a business partner's service is at the discretion of the adjuster. When using the services of a business partner, the adjuster audits bills and terminates services when the task is complete or service becomes ineffective. We choose our business partners based on background, qualifications, and experience. Often, ASC will incorporate vendors into our Stewardship process, making sure that all partners are working together to meet the needs of our clients. If a business partner is not working out, ASC will not hesitate to replace that partner with another more suitable to the needs of the City. The choice for vendor is always the City's decision. Some of the business partner's services we anticipate using for a P&C claim are: • Fraud Investigation/Surveillance Services GlobalOptions Fraud & SIU unit of GlobalOptions Group uses its resources and capabilities to battle fraud on behalf of ASC, national insurance carriers, FORTUNE 500 companies, law firms and the public sector. GlobalOptions is our first choice for surveillance required on P&C claim investigations. • Structured Settlement Services Ringler Associates and their brokers provide ASC client injured parties and their attorneys with structured settlement services. Ringler Associates is our first choice for achieving structured settlement results. • Medicare Set -Asides ASC, in coordination with our systems partner CS STARS, partners with Gould & Lamb for Medicare Secondary Payer (MSP) and Mandatory Insurer Reporting" (SCHIP) compliance. Gould & Lamb's multi- disciplinary approach provides ASC clients with assurance that they are receiving the lowest defensible future cost projection on their claim. Please see more detail in the appendix. - Alternative Service Concepts, u.c organizational Structure EmEmmomommommommAsc The most important component of our service organization is our personnel. Our seasoned professionals possess the expertise required to support a sophisticated claims management program. Our success is attributable to our staff's ability to understand each client's unique needs and apply their experience to reach the most effective solutions. The following ASC employees will be assigned to the City of Lubbock's P&C claims account: Senior Management Staff Involvement Ms. Sharon Prosser currently holds the position of Chief Operations Officer in ASC's corporate office. In this capacity, she is responsible for the overall day-to-day operation of ASC's local claims offices to identify the best methods of operation for consistency and efficiency in all locations. In this capacity, AVP's report -up to her; this includes Ms. Tommie Biggers. Account Manager/AVP Staff Ms. Tommie Biggers currently serves as assistant vice president for ASC. She joined the organization in 1995. Prior to joining ASC, Ms. Biggers served with Midwest City -Del City Schools in Oklahoma for 21 years, 11 of which were served as risk manager. While with Midwest City -Del City Schools, she administered self-insurance unemployment compensation and workers' compensation programs. She also handled all insurance -related functions including workers' compensation, property, liability, unemployment, and litigation. In 1988, Ms. Biggers established and administered the Self -Insured Workers' Compensation Program for the school district where she handled all facets of claims adjusting including investigation, reserving, payments, and litigation. Ms. Biggers currently oversees claims for two school districts in Texas and for the City of Plano. i Ms. Biggers attended Rose State College in Midwest City, Oklahoma and Oklahoma City Community College. She has completed numerous courses offered by the Insurance Institute of America and frequently attends seminars and continuing education courses sponsored by various organizations. Memberships and Professional Designations Multi -Line Adjuster's License in Oklahoma and Texas Resident General Agent's License Member Oklahoma Claims Association Member Oklahoma City Claims Association Member Central. Oklahoma Chapter of RIMS Member Texas School Risk Manager's Association (TXRMA) Adjusting Staff In addition to the AVP named above, ASC will hire a claim adjuster to administer the City's account. We have identified a qualified claim adjuster who will be the principal ASC contact for the City of Lubbock's account. Please see her resume on the following page. -- Alternative Service Concepts, LLC 12 Claim Adjuster Candidate Lubbock, Texas Objective To apply my knowledge and experience within the insurance industry Education Bachelor of Science of Occupational Education — Business Administration — Wayland Baptist University May 2009 Special Qualifications ■ Texas Property Casualty Adjusters License 1996 ■ CCC and Ultramate Auto Estimating software ■ Lotus and Microsoft business software ■ Insurance rating software Experience Claims Adjuster, Local Adjusting Firm, Inc. Lubbock, Texas October 2003 — Present ■ Responsible for the investigation through contacting of department managers, employees and claimants, obtaining recorded statements and determining coverage for client's self -insured general and auto liability. ■ Responsible for the loss adjustment communicated to the Risk Manager with the client. ■ Responsible for the investigation of multi -line claims for insurance companies. Claims Representative/Casualty Representative, Progressive Insurance Companies, Lubbock, Texas September 1988-August 2003 ■ Responsible for the investigation through contacting of insured and claimants, obtaining recorded statements, locating and inspection of vehicle to resolve auto liability claims. ■ Assist with the loss adjustment costs through the monitoring of auto rentals. ■ Negotiated and settlement of attorney represented claims ■ Management of litigation claims with direct contact with company defense attorneys and plaintiff attorneys ■ Attended mediations, depositions and trials ■ Responsible for complex coverage and liability claims ■ Assist in the coaching and training of new employees References Available upon request -- Alternative Service ConceptS, «c Alternative Service Concepts, LLC 14 --Errors & Omissions ASC ASC takes a proactive approach to prevent errors and promptly recognize and rectify any inconvenience caused by errors. Should ASC or the client discover an error, ASC takes immediate steps to determine the root cause, !, implement corrective measures to reverse the effects of the error, and enforce preventive measures to ensure against future errors. The senior vice president of quality and compliance is directly involved with the carrier and reports to the board of directors on all E&O claims. Currently, ASC is insured for up to $10,000,000 million aggregate for Errors & Omissions/Professional Liability. ASC E&O insurance has never been cancelled or non -renewed due to never having an E&O claim filed against us. I I Alternative Service Concepts, LLc 15 - Alternative Service Concepts, u.c 16 Resource Allocation ASC ASC chooses to partner with best -of -class business partners in their respective field of practice, as mentioned earlier in this proposal. Our management believes that the best service to meet our client's needs come from those companies with a proven background including overall qualifications and demonstrated experience. ASC is a strong advocate for client choice and use of any client recommended business partner is primary. ASC has supported local area business to comply with request for proposals in the past. We are strong advocates of supporting local area business when requested by our clients. For example, we have partnered with local office supply companies and computer/data service equipment providers for clients such as Metropolitan Government of Nashville & Davidson County and The Timbermen Fund, located in Winnfield, Louisiana. Whenever local external services are required, ASC uses them judiciously and with the full knowledge and approval of our clients. These types of business partners include: • Legal Services • Court Reporters • Professional Photographs • Experts' / Rehabilitation Services • Architects, Contractors, Engineers, Chemists • Accident Reconstruction • Property Damage Appraisals • Subrogation Collection Cost Payable To Third Party • Managed Care • Medical Bill Review • Index Bureau Reporting • Outside Investigation • Surveillance • Office Supplies • Office Equipment (electronic) • Interior Design Services • Any Other Expense Requiring Client Approval �I Alternative Service Concepts, ILC 17 4 Questionnaire ASC YES ` NO' °lo "COMMENT 1. CLAIM- HANDLIN� 0 Does your company carry Professional j Liability Insurance in the aggregate amount of $1,000,000 that Yes. ASC holds Professional Liability Insurance/E&O in the aggregate would apply to this amount of $10,000,000. Please see appendix for certificate. activity? i If so, please provide current certificate of insurance. �I Are you a member of C. the Claim Index Bureau Reporting Yes. ASC is a member of the Index Bureau. System? i Alternative Service ConceptS, u.0 18 D- Yes. ASC has a formal quality control program in operation. ASC's quality and professional standards unit is responsible for the design and implementation of service standards to maintain high quality service and ensure claims move smoothly toward resolution. ASC's quality control specialists have an average of 23 years of industry experience. They provide close monitoring of the claims process to maintain a consistent approach to claims handling throughout ASC. These specialists monitor local offices and work with management to ensure the continued delivery of superior claims service. Each local office is physically audited on an annual basis to review: • Office administration procedures • Compliance with ASC quality claim handling procedural guidelines • Compliance with special procedures for particular clients • Reserving practices • Relationships with clients/defense attorneys/medical providers Files are examined to confirm compliance with: • Recognized industry standards • The terms of individual service contracts • Carrier reporting criteria Does your company have aFormal The audit forms a basis for required action plans that are implemented Quality Control by local personnel and monitored by corporate senior management. program in place? Explain. Action plans are modified on an ongoing basis and become the standard for successive audits. Files are selected for audit based on: • Line of coverage • Assigned adjuster • Litigated status • Total incurred • Age of claim • Any unusual circumstance alerting the auditor that further examination is indicated Alternative Service Concepts, u.c 11119 ri E. Yes. ASC offers an automated claims reporting system by way of our website www.ascrisk.com/online claims reporting at no cost. OuHna C7nini Rrrorft Does your company have an Automated Claim Reporting System? Click here to re port a Work Com .Clahn - - —�' --p-- If so, can the client have access? access? If so, how much. Click hale to rea Autom obile mobile Loss Claim Click hereto report a General LlaWtH ,claim Click hereto iepoit a Proneily Loss Claim F. Does your company have a24-hour Yes. ASC provides a 24/7/365 toll free number for emergency emergency number response. The service contacts the adjuster to respond immediately. with an ASC maintains relationships with Crawford and other independent adjuster that can respond in 30 adjusters to respond to an afterhour's catastrophe. minutes or less? G. Can Loss Runs be provided monthly in an electronic Yes. Loss runs and check registers are both standard ASC reports format compatible to generated monthly in Microsoft Excel and other formats. Please see Microsoft Excel? Is the appendix for a sample loss run report. there an additional cost for this? i - Alternative Service Concepts, u.c 20 y H. Does your company have the ability to act as the Account Yes. The Assistant Vice President over the City of Lubbock account, Ms. Tommie Biggers would be designated as the Account Manager. Ann Massey of our Business Systems Group would be the Account Manager Designee. Once the City of Lubbock completes the initial RRE process and designates the Account Manager, the Assistant Vice President will complete the set-up process in COBC. Manager and Account Designee under Section I I I of the MMSE Please see the appendix for detailed MMSEA compliance information. Act of 2007? If not, who will you contract with? What will the additional cost be to the City? 1. Yes. Does your company have the ability to act ASC and CS STARS have chosen Gould & Lamb as a strategic partner to as the Reporting Agent under Section 111 of assist with the query and submission processes for Section 111. In the MMSE Act of order to make this happen, ASCs system will integrate with Gould & 2007? If not, who will Lamb's Medicare Set -Aside proprietary software making ASC the you contract with? What will the reporting agent for the City of Lubbock. additional cost be to the City? Please see the appendix for detailed MMSEA compliance information. MMSEA — * Pass Through 1 time Implementation Fee ........................................... $1,000 * Annual Transmission Fees (includes query & submissions) ................. $2,000 *actual costs will be passed through to the client; current estimate is $920 - $1,000 implementation and $1920 - $2,000 annual. Actual cost will be billed to the clients when (1) implementation begins and (2) the first quarter of transmission. : L Alternative Service Concepts, LLC 21 NO % COMMENTS'' 2.` ':STAFFING AND -- TI A IN ' _ A. Yes. The in-house training program for ASC's claims staff is an ongoing process. Continuous training of our personnel is a benefit to the City of Lubbock because it shows a commitment to stay abreast of changes in legislation and litigation trends that affect our claims administration process and outcomes. To start with, each new employee completes a formal and thorough orientation to ASC's procedures and expectations within weeks of hiring. Moving forward, ASC's senior management encourages membership in local professional associations and claims groups to remain abreast of changes in legislation and litigation trends. Each local ASC office also subscribes to newsletters, and ASC personnel attend regular seminars and Doesindustry have an in-house or have an in -your house or workshops to remain current on the latest legislation and its impact on the ongoing training claims process. program for claims personnel? Explain. Currently, ASC subscribes to the AIA Claims Administration Digest and the ALFA State By State Workers' Compensation Analysis. In addition, the manager in each field office is responsible for disseminating information concerning changes in the jurisdiction covered by their office. ASC is committed to fully paid continuing education for its professionals. We believe it is important that all staff involved remain current on their licensure and each adjuster participate in work -related courses and professional designations. Employees are encouraged and compensated to secure their Associate in Claims (AIC) and CPCU designations. B. Yes. The TPA industry was introduced to Section 111 of the Medicare, Medicaid, & SCHIP Extension Act (MMSEA) which presents Mandatory Insurance Reporting (MIR) through electronic data interface with the Center for Medicare/Medicaid Services (CMS). In an effort to immediately comply, ASC has taken the prompt action to have staff and clients participate in several past and ongoing conference calls and webinars with our claims Does n in-hyour ouse have an in-house or or system provider and MMSEA consultant. In addition to electronic seminars, ongoing training we have brought all national managers into headquarters for in-depth program regarding training and analysis. We continue to keep our staff, clients, partners and MMSE? Explain. prospective clients aware of updates through frequent e-mail newsletters. Please see the appendix for detailed MMSEA compliance information. Alternative Service ConceptS, LLc 22 s what is your average' ASC maintains an industry average number of claims per line of business. case load per adjuster per line of business? They are 140 to 160 Liability Claims per Adjuster. C. Please indicate the mix of claims that your adjusters handle. For example, does your Liability adjuster ASC is proposing an experienced adjuster to handle all claims reported by handle a mix of cases the City. that would include both minor and serious claims? With serious/catastrophic claims, the claim is immediately reviewed by the claims supervisor to determine the extent of additional resources required to manage the claim. Numerous resources are available through ASC's corporate headquarters. Senior management personnel and quality control specialists are contacted for assistance in developing a strategy for handling ❑ General and Other Liabilitythe catastrophic claim and providing additional expertise as required. Experienced personnel, including medical professionals, from ASC's nationwide network of local offices and vendor partners, are available to provide assistance. The dedicated business support team is available to address systems issues and customize reports to meet specific needs. ❑ Automobile Liability Yes. ASC's benchmark is 150; however, caseloads for General Liability may be higher based on the complexity of each claim. Caseloads and quality control are monitored and measured monthly D. through ASC's computer -based efficiency program to ensure adherence to client specifications and ASC's corporate standards. All data are categorized Does your company by office, client, and adjuster. The efficiency program enables ASC to have caseload guidelines? If so, what promptly detect and correct any areas of concern and assure are they by line of proper caseloads and efficiency in the administration of claims. business? ❑ General and Other Liability ❑ Automobile Liability Are they adhered to? Alternative Service Concepts, «c 1:1I 23 YES NO % ' COMMENTS' E. What is your average turnover rate for supervisors? 1% E. What is your average turnover rate for adjusters? 5% F. What is your average turnover rate companywide? 10% G. Can we designate key adjusters Yes. We will work closely with the City to choose your key adjuster. to handle our losses? If at any time during the course of the agreement you are not happy with your adjusting service, ASC will work with you to find an alternative. H. Can we designate key supervisors to handle our Yes. If at any time during the course of the agreement you are not losses? happy with your supervisory service, ASC will work with you to find an alternative. A Alternative Service ConceptS, LLC 24 YES NO 1% COMMENTS 3.CONTACT PERSONNEL A. Will your company provide a key person to: Yes. ASC will be staffing the City of Lubbock with one General Liability/Auto Liability claim adjuster. Each ASC claim adjuster is selected for a particular area of expertise, as well as a strong, overall claims handling background. Claims are assigned to adjusters based upon their area of specialty. Major responsibilities of the City's claim adjuster includes: * Serving as a liaison with the City 9 Investigating claims 11 Assist in claim problem e Evaluating coverage, exposures, and settlement values resolution? * Establishing and maintaining appropriate reserves * Monitoring medical treatment * Reviewing and approving bills 9 Ensuring appropriate Texas notice and reporting requirements are met * Overseeing subrogation and collection issues e Reporting findings and conclusions e Working with all parties to move claims to timely resolution * Negotiating and concluding claims 0 Coordinate activities? There are no additional fees. Is there an addition fee? If so, how much? C. Will the contact person have the: 0 Augestto implement Ci chanhorirequestedty by the ty Yes. The City's adjuster will be able to effectively implement Risk Management changes requested by the City Risk Management group. This is a major responsibility of every ASC adjuster. 0 Authority to meet with City of Lubbock Risk The City of Lubbock's dedicated adjuster will be available to meet Management quarterly to four times a year, once per quarter to review outstanding issues discuss outstanding problems and review past claims. The benefit of a dedicated adjuster to the and issues? City is frequent availability. 13 Is there a charge for these activities? If so, how much? There are no additional fees. Alternative Service ConceptS, LLC 25 zSK 5. specirica►ty, wnat are considered allocated A sample listing of allocated expenses charged to the claim file are: expense? Please list. • Legal Services e State -Mandated EDI • Court Reporters • Professional Photographs • Official Documents And Transcripts • Experts' / Rehabilitation Services • Architects, Contractors, Engineers, Chemists • Police, Fire, Coroner, Weather Reports • Accident Reconstruction • Property Damage Appraisals • Subrogation Collection Cost Payable To Third Party • Extraordinary Travel At Client's Request • Medical Records e Managed Care • Medical Bill Review (subcontractor) • Index Bureau Reporting • Outside Investigation • Surveillance • Any Other Expense Requiring Client Approval 3 Alternative Service ConceptS, uc �) 26 ES NO % COMMENTS 5. CLAIM MANAGEMENT A. Does your company have written claim handling standards for: Yes. ASC's Claims Handling Guidelines are followed by each ASC adjuster. ❑ General and Other Liability These guidelines cover everything claims related including: reserves; coverage; contact; investigation; documentation; diary; litigation ❑ Automobile management; follow-up; supervision, and excess reporting. Please see Liability the appendix forASC's Claims Handling Guidelines. If so, please forward a copy. Yes. Recorded statements are taken as necessary. ❑ Are recorded statements taken? Diary maximum is 90 days. ❑ What is the maximum diary allowed? Alternative Service Concepts, uc ; 27 i A9 vo YE No % COMMENTS & CLAIM HANDLING A Are claims handled by telephone or field adjuster? ASC will agree to use the City's guidelines for telephone claims handling and/or field adjuster claims handling. B. Is there additional costs for field Yes. Your designated adjuster is available at an estimate cost of $95 per adjusters? If so, what is the unit hour, $.54/mile and $2.00 per color photograph. used? What is the cost per unit? C. Will all claimants and the City Risk Management contacts be made within 24-hours from the date notice received? Yes. Immediate and ongoing contact with all concerned parties facilitates effective and efficient claims control. ASC's Claims Handling Guidelines require that within 24 hours of receipt of a liability claim, contact be made with the City and all claimants. 24 hour contact is an integral part of our claims handling philosophy to ensure claims are managed appropriately and to maintain litigation at a minimum. Alternative Service Conets, LLC Does your company Yes. Recorded statements are taken when: have written claim handling standards . Requested by the City that include: • An allegation of bodily injury is presented ❑ when recorded • An allegation of a violation of civil rights is presented statements taken? a Claims involving property damage exceeding $10 Thousand ❑ What is the maximum allowable A complete investigation to make reasonable determination of diary? liability/exposure must be made within 14 days (including all relevant statements). For details, please see the appendix for ASC's Claims Handling ❑Action plans being Guidelines under "Investigation". developed and followed on files? Action plans contain an outline for resolution of the claim. At each diary date, adjusters are required to prepare an updated and revised strategy outlining specific steps for claims resolution. The diary is based on the characteristics of the individual claim —a maximum of 30 days on fully active investigations and a maximum of 90 days on mature claims. ASC offers an employee incentive program designed to enhance efficiency and productivity in claims file management. The program features financial incentives for claims professionals who exhibit superior performance in the reduction and control of open file inventory. Each professional is reviewed on a quarterly basis, and incentives are offered for individuals who score 90 percent or greater on the following benchmarks: Adjuster Scorecard Alternative Service Concepts, u.c 29 t 0 YE " 90 " % : COIVIME NTS" 5 . ?. 49SERVIN A What is your Adjusters perform a realistic, individualized analysis on each claim to determine reserving philosophy. philosophy? the proper reserve. Initial reserves are established in accordance with the anticipated ultimate value of the claim based on the investigation to date. ASC's claims handling standards require that initial reserves be set within 10 business days of receipt of a new claim or prior to month end, whichever occurs first. Adjusters then have 30 days to gather additional information to facilitate the establishment of permanent reserves. Life care medical plans are included in the reserves. Each adjuster has a specified reserve authority that is outlined in the claims management guidelines. A 30-day diary is required on all active lost time claims. The adjuster addresses reserve adequacy at each diary or whenever significant changes occur. Adjustments are made promptly when the posture of a claim changes. With each increase or decrease in reserves, adjusters document reserve rationale in the electronic file notes. A reserve adjustment sheet is completed on every initial and subsequent reserve. The claims system contains reserve worksheets for each line of coverage. The reserve worksheet performs the calculations necessary to total the reserve set by section. Supervisors maintain diaries on claims with aggregate reserves in excess of adjusters' authority and routinely review files that reach a level where they are reportable to the excess carrier. Supervisors review reserves and reserve rationale regularly. Additionally, systemized file audits are conducted monthly. Reserve accuracy is a major component of the efficiency evaluation process. ASC's claim system contains pre-set reserve authority levels and triggers to ensure reserves are appropriately set and reviewed by supervisors. ASC's reserving philosophy is to be realistic, based on investigation and information available, and to reserve at probable exposure. B. Who is responsible for The adjuster is responsible for establishing reserves up to their maximum establishing reserves? authority. C. How soon are initial reserves set? ASC's claims handling standards require that initial reserves be set within 10 business days of receipt of a new claim or prior to month end, whichever occurs first. Alternative Service ConceptS, LLc 30 Yes. A reserve analysis is inputted into the system notes. Is a reserve analysis contained in 7-60� every file? )L II{14` � ��[r,��a'fd__3r:r{'j fas�+L�:� Allooh Olpw� dim iProjd(.�ry(.��f`LLo�w �- ae�. I adeE,�w Btmec [�tY�aw+ � l$INdr i ®I� Please X Q�§emMep�e I psw. ONew �ew�§.f ®tuu,u i t�fw provide a sample. p aAUDn s wAsreDos, 0a SUFv�ADDM REEEpNCRMT0200KWIEN K THE C�MNT DEMWD,fH¢N tNPATFFATTORNEY l O40EMALTO DItlTP290 11AVE{ - 9 �SUFVRe 8YF 13�IDfEMSAU 1'Vps4� 4647LEYBAl1'. I- y�`IFIEWit, E�bONN Nf2t.. , ;-, ,., .,�.,_. T �` , `=�P,�' t -• `:ACTI011F� 1 TWINEt¢r§ 1KR Oro= OH I- IA{SEtj1O MDiIF,_t6 40010aNOJRUtd.STAND 'A �U,p - lie T r'AT WINE, Mf lEy r FNNKR§ HH#I NMIO TOIREUPPERPARTOPTHE RSIkTKNA14BED _ 27.i707 27ri0tiOe�0- �CIA0I DY. pfO DFOR HIHIGATION ANR Hi)YDR Sof9P,JOlWHE4 R 0AMlEPIJTAtEs _ eALf01N1,, dry/NINE'l �DIGTED PO}¢IBIEc' - - ., . 3�. 2I.M71 _ 21.DOi71 Dowd aRE§ (rye SK OF¢ 1 5�3RGERYVATO 1�{C"f DP T01110HTOr01lG8 ORD�RIOW 7,lGtlf]oud- i !A[TIONF Ii-IRI TR7;SUFOKRYONJ�I,ENM10 §NE WID REI'�3 7ANPUff,T10N DVYAbVANCEiAFNi: 7p9B17; _ �CUITAT', D H `- 12D 110 Lkwd �AC<0>fi F.. SHE UN0 1VEf0T { §DEDrLOPON NE fliW(115t:DANGl1 1[IK DOCTOR, - -___ ICY§t IWA E47N Uund �CAWION TRE7tTE0VjITH C110N � � 7211- z1T (lewd WN SHEUNOERW%EN'FPTANOHAO;4 tOUNSEISIfs SESSION O(1E i6,Ci §4QT STF IOIIER NE11 - II&ZI 176,23aDed �CAPTgN HANDAND HAVING PROBUENS -: s -. 950D 9.[0O17owd �REiuRNI�gJ ME44AF�E 22E�21000F Vl IpI TNE'f§§Ag5l0ri FIA R,!}FJERA}1D.000PIE CTIBE l i y3 ��-PNOTOS Oit NWOtE 77�pp LNOE §4��000D P,ECQ,4E11Y HEYNOTT EEAMEIY 1 �'��NER OTNERJERSANDIVRJ '�'R"'1" `� - TIP PWNiNfAU.E¢E§SNEWANTEO TO GO TOtOLLE0E0NAVOLLEYBMI§CNOIARSftl�TMi KALLEGEQ - NI THE piWdl¢PACKAGE BUT 1011TNLLY CRECKED1NTN i{E tOACNANDWNLE THE 00LKAG¢ODf PIAY�f,R�bNE KMOST UKE6YAGOS�EN000N,�IAtEfliO¢EA§Wb1AliSNO' -t '�' Mare '" OMATE 00MOflEPORJANA�EiDCE3S,(1EPO�I11�iQUE4T0JGAlITHORITY E. How often are reserves reviewed? Reserves are reviewed at each diary or when significant changes occur. I - Alternative Service Concepts, u.c 31 YES NO % COMMENTS' 8: REPORTING A. Captioned reports are completed on claims files at the adjuster level or in accordance with the carrier's policy provisions, i.e. catastrophic injury reported within 24 hours, at 30 days, and thereafter every 90 days. Captioned reports to the City's excess carrier are filed at 33%-50% of SIR Are completed onfiles?ed I completed on files? If depending on non -catastrophic claims within 30 days of reserve so, evaluation indicating the reporting level will be reached or exceeded. The ❑ At what level? initial report (if not a catastrophic injury) is sent within 30 days from ❑ How often? receipt of loss and every 90 days thereafter unless there is a significant ❑ provide sample change in the claim. Please see the appendix for a sample caption report. B. Captioned reports can be sent to the City if required. The initial report is sent at 30 days and then every 90 days thereafter unless there is a Are senttocaptioned sent to client? tionedreports significant change in the claim. To insurance carrier if Captioned reports may also be sent to the City's insurance carrier as often required? If so, how as you prefer and at no additional cost. often? Is there a fee? If so, how much? Yes. ASC maintains a litigation calendar for our clients where we track all cases going to trial, arbitration, mediation, and settlement conferences. This tool allows the adjuster to notify you in advance of the hearing or trial. The litigation calendar keeps track of important actions such as meeting with the defense attorneys in advance of these dates to ensure that all issues have been addressed with them and the client before the actual date of the event. We meet with these attorneys on a regular basis to Are clients notified C. timely and in writing of review procedures, and we can transmit an attorney referral letter each hearings and trails? time a case goes into litigation. This letter provides direction to the attorney regarding specifically what he/she is authorized to do. We also provide parameters for reporting and billing and review all legal bills for accuracy. ASC controls the actions of defense attorneys through resolution of the case. Claims are not abandoned to attorneys for settlement. In addition to the litigation calendar, ASC's system has a litigation management screen. When this screen is completed, the City will be able to review and run reports. Alternative Service ConceptS, LLC 32 II D. Will the City Risk Manager be kept apprised of all claims as they deem necessary? Yes. Follow-up is crucial and our adjusters are proactive with their actions and timely reactive in their responses. The City of Lubbock will benefit from a local ASC adjuster who is flexible in meeting with you one-on-one and readily available by telephone and e-mail. In addition to your local adjuster's availability, the City may stay apprised of all claims via the ASC on-line claims review tool in STARS. E. Are files actively The supervisor reviews every file at 30 days and determines whether to supervised? If so: continue to carry the claim on his/her diary. The determination is made ❑ How often? based on the circumstances of the claim and the expertise of the adjuster. ❑ What reserve Circumstances that trigger continued supervision include: level? • All catastrophic cases • Questionable claims • All excess reportable claims • All high dollar claims Authority Levels: Claim adjusters have up to $5,000. Supervisors are involved based on reserve levels agreed upon with the City at implementation time. F. Are files supervised by both branch and regional personnel? Yes. In addition to supervisor file review, our quality control specialist team does periodic electronic and annual on -site file review. Alternative Service Concepts, LLC ' 33 a YES O° % 'COMMENTS 9: CLAIMITILE. REVIEWS A. Does your company allow claim file Yes. ASC acknowledges that the information we gather in managing claims is reviews? our clients' property; therefore, we are open to your review or we will work with you to review selected files. There are no costs associated with claim file If so, is there an review. additional cost? What is the cost? B. Does your Yes. We are happy to work with City representatives to conduct appropriate company allow physical audits of audits. ASC encourages the City to hire an independent auditor for claim file claim files? analysis. We will provide the claims data in hard copy and/or electronically as needed. Our only requirement is that we are given sufficient notice of the impending audit so that we can make full accommodation for the auditors. __-_ Alternative Service ConceptS, uc 34 YES NO %d COMMENTS 10. STRUCTURED SETTLEMENTS A. Does your company utilize structured settlements? Yes. Three to five percent of cases in our book of business have been resolved by structured settlement. B. Yes. ASC takes the following criteria into account when considering a Have you established structure: guidelines when considering this approach to • Cases involving permanent injury, long-term needs, and/or continuous settlement? If so, medical care please provide a copy of these guidelines. . Death cases involving surviving spouse and/or children • Cases involving minors where deferred payments are a potential issue • Severe injuries or mental incompetence • Cases involving high settlement values C. Are there separate ASC utilizes the services of an outside vendor for structured settlements. costs associated with this service? If so, The cost is treated as a pass -through expense at the vendor's prevailing p g P p g please provide your rate. Should the client have a preferred vendor, ASC utilizes their vendor. pricing structure - - Alternative Service ConceptS, u.c !, 35 III No Text References ASC P: 956-523-4144/ F: 956-523-5012 Contract Period: effective October 2008 Scope of Work: workers' compensation claims; P&C i Government/Company Name: Katy ISD Address: 6301 South Stadium Lane, Katy, TX 77492 Contact Person and Title: Mike Robinson, Risk Manager Phone/Fax: P: 281-396-2251/ F: 281-644-1900 Contract Period: effective April 2003 Scope of Work: P&C claims -- Alternative Service Concepts, LLC 36 Government/CompanyName: City of Plano Address: 1520 K Ave, Plano, TX 75074 Contact Person and Title: Mr. Darrell Edwards, Risk Manager i Phone/Fax: P: 972-941-7113/F: 972-941-7459 j Contract Period: effective April 2008 Scope of Work: workers' compensation claims; P&C -- Alternative Service Concepts, LLC 37 Resolution No. 2009-RO342 Exhibit "A" ASC EXHIBIT A CLAIMS REPORTING REQUIREMENTS An individual authorized to bind the COMPANY must sign off on the following requirements. ("You" in the text below refers to the Offeror; "We" refers to the City's Excess Insurer.) 1. You must give us prompt notice of any accident which may result in a claim or suit seeking an amount for loss in excess of the City's "bodily injury by accident" retention. The notice must be no later than 30 calendar days from the date you are notified of such accident. The notice should include: a. How, when and where the accident took place; b. The names and addresses of any injured persons and witnesses; and C. Complete details of the injury or death. JJ 2. You must furnish us with: a. A monthly report which provides the following information (by claim year) for each claim or suit which was outstanding, opened, revised or closed during the previous month: the identify of the claimants or injured parties; the dates, places, description and cause of injuries; the amounts of reserves for such claim or suit; claims expenses (both paid and outstanding) and payments of claims; judgments or settlements. This report must be furnished not later than the 1 oth day after the end of each month. b. Written notification of each claim or suit which has, should have, or is likely to have; without regard to liability, a reserve equal to or exceeding fifty percent (50%) of theCity's retention. Written notice must be provided as soon as possible, but no later than fifteen (15) calendar days from the date you have sufficient knowledge of facts surrounding such claim or suit which could put the City on notice that such reserve or payment is indicated. Complete files on such claim or suit must be given to us within thirty (30) calendar days from the date we request such files. C. Written notification of each claim or suit which involves serious injury. This notice must be provided as soon as possible, no later than then (10) business days from the date you have knowledge of such claim or suit. Serious injuries include, but are not limited to: (1) Cord Injury— paraplegia, quadriplegia; (2) Amputations — requiring prosthesis; (3) Brian damage affecting mentality or central nervous system — such as permanent disorientation, behavior disorder, personality change, seizures, motor deficit, inability to speak (Aphasia), hemiplegic or unconsciousness (Comatose); (4) Blindness; (5) Burns— involving over 10% of body with third degree or 30% with second degree; (6) Multiple fractures — involving more than one member or non -union of any part of the body; i (7) Fracture of both heel bones (Fractured or Bilateral OS Calcis); --- Alternative Service Concepts, «c 38 (8) Nerve damage causing paralysis and loss of sensation in arm and hand (Brachial Plexus w Nerve Damage); (9) Massive internal injuries affecting body organs; i (10) Injury to nerve at base of spinal canal (Cauda Equina) or any other back injury resulting in incontinence of bowel or bladder; (11) Fatalities; (12) Any claim or suit not specified above that presents an unusual exposure to the coverage. Examples include: sexual molestation, AIDS, rape, class actions and bad faith allegations; or (13) Any other serious injury which may involve our liability.` i d. Individual written loss reports of all serious injuries must be given to us within thirty (30) calendar days from the date you have knowledge of any claim or suit which involves serious injuries. This report must contain the facts surrounding the claim or suit, a description of injuries, suggested reserves, recommendations for future claims handling. �GrL� t 1� 1 3. You must: a. Immediately send us and the City copies or any demands, notice, summonses or legal papers received in connection with the claim or "suit" or action involving a sum in excess of the City's retention; i b. Authorize us to obtain records and other information; C. Assist us, the City Attorney or others to furnish us with information we may request to evaluate the "accident"; and d. Fairly evaluate the value to settle the claim or "suit" within the City's retention. aiI 4MTt— Alternative Service Concepts, u.c 39 SUSPENSION AND DEBARMENT CERTIFICATION Federal Law (A 102 Common Rule and OMB Circular A 110) prohibits non -Federal entities from contracting with or making sub -awards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include procurement contracts for goods or services equal to or in excess of $25,000 and all non -procurement transactions (e.g., sub -awards to sub -recipients). Contractors receiving individual awards of $25,000 or more and all sub -recipients must certify that their organization and its principals are not suspended or debarred by a Federal agency. Before an award of $25,000 or more can be made to your firm, you must certify that your organization and its principals are not suspended or debarred by a Federal agency. I, the undersigned agent for the firm named below, certify that neither this firm nor its principals are suspended or debarred by a Federal agency. COMPANY NAME: Alternative Service Concepts, LLC Date Signed: 7/29/2009 Printed name of company official signing above: Robert Bennett i i - - Alternative Service Concepts, u.c 40 Pricing ASC Pricing Based on Estimated Number of Annual Claims • Automobile Claims 52 • General and Other Liability Claims 250 TYPE OF CLAIM PRICING Option I Option II Option III Option IV $26,000 Flat $23,920 Two Year $24,180 Flat Fixed — Automobile Liability Fixed —Life of - Claim Service Life of Contract Claim Based on 52 Based on 52 Based on 52 N/A Auto Claims Auto Claims Auto Claims ($500 per claim) ($460 per claim) ($465 per claim) $90,000 Flat $66,375 Two Year $79,875 Flat Fixed — General Liability Fixed —Life of —Claim Service Life of Contract Claim Based on 225 Based on 225 Based on 225 N/A General Liability General Liability General liability ($400 per claim) ($295 per claim) ($355 per claim) $20,125 Flat $15,250 Two Year $20,125 Flat Fixed — Other Liability (Police, Fixed — Life of —Claim Service Life of Contract Employment, Public Officials) Claim Based on 25 Based on 25 Based on 25 N/A Other Liability Other Liability Other Liability ($805 per claim) ($610 per claim) ($805 per claim) Litigated Claims $550 per claim $550 per claim Admin Fee (annual fee) $17,500 $12,500 $15,000 N/A Total $153,625 $118,045 $139,180 N/A Catastrophic Claims (10 or more claimants and/or N/A $85 per hour $85 per hour $85 per hour property losses over $50,000) MMSE Administration and Mandatory Reporting See Below See Below See Below N/A Open Claims (More than 24 $500 per claim months) Option I — Flat Fixed Fee for Life of the Claim Option II — Fee for Two Year Claim Service Option III — Flat Fixed Fee for Contract Period Option IV — Other Pricing Structure You Care to Submit -- Alternative Service Concepts, u.c 41 Ongoing Annual Charge • On -Line Computer Services........................................................................ RMIS: two users included, each add'I $30/user/month One Time Charge • Data Conversion from previous TPA - $2,500 one time charge. MMSEA • *Pass Through 1 time Implementation Fee..........................................$1,000 • *Annual Transmission Fees (includes query & submissions)................$2,000 *Actual costs will be passed through to the client; current estimate is $920 - $1,000 implementation and $1920 - $2,000 annual. Actual cost will be billed to the clients when (1) implementation begins and (2) the first quarter of transmission. i Run in Charge ASC typically prices run-in claims on an annual basis; however, we offer tremendous flexibility with regards to run- in claims, i.e. reduced handling rates/terms, claim closing projects with ASC partners, etc. Additionally, any claim that closes within 120 days of contract award will not incur a charge. i We would like the opportunity to discuss our flexibility with regards to run-in before quoting a firm price. Please see our maximum charge below which may be adjusted based on the scope of run-in handling. • Run -In is priced for the first year at $350 per claimant, per year open. Managed Care Pricing Only applles for Auto Bodily Injury/General Bodily Injury I Network Access 28% of savings Pharmacy AWP minus 5% plus $3.00 dispensing fee Telephonic Case Management Nurse: $95/open claim/month Physician: $165/open claim/month Utilization Review Nurse: $115/review Physician: $275/review ($330/expanded review) Medical Bill Review 1 8.50% per bill Subrogation Pursuit and Recovery 15% of Recovery -- Alternative Service Concepts, uc 42 y .Bankine Should the City of Lubbock wish for ASC to manage the claims payment account, a setup fee and annual support fee will apply. Bank Management (If Requested) $2,500 annually Allocated Expenses : NOTE: Field Investigation below will be billed at the following rate: $95 per hour, $.54/mile and $2.00 per color photograph Allocated expenses will be charged to the claim file and include fees for: • Legal services • State -mandated EDI • Court reporters • Professional photographs • Official documents and transcripts • Experts' / rehabilitation services • Architects, contractors, engineers, chemists • Police, fire, coroner, weather reports • Accident reconstruction • Field Investigation • Property damage appraisals • Subrogation collection cost payable to third party • Extraordinary travel at client's request • Medical records • IMEs, MRIs, etc. • Managed care • Medical bill review • Index Bureau reporting • Surveillance • Any other expense requiring client approval Alternative Service ConceptS, LLc 43 'Addendum ASC None to date. Alternative Service Concepts, LLC 44 'Attachments ASC Alternative Service Concepts, LLC 45 0 - Authorized Signature Page SUBMIT TO: CITY OF LUBBOCK v F Purchasing & Contract Mana¢ement CITY OF LUBBOCK, TEXAS 1625 13 Street, Rm 204 (( Lubbock, Ts 79401-3830 AINI EQUAL REQUEST FOR CONTACT PERSON: 31arta Alvarez OPPORTUNITY EMPLOYER PROPOSAL TEL: 806.775.2167 09-077-MA FAX: 806.775.2164 hup:.Upurchasing.ci.lubbock-mus Title: SUBMITTAL DEADLINE: Liabilih- Claims Services Juh' 30, 2009 3:00 P-NI CST PRE PROPOSAL DATE, TIME AND LOCATION. 10:00 a.m. Juh- Am pioposah received after the u=* and date Iisied abovo, reprdless 23, 2009, in Purchasing Conference Room 204, Lubbock,' of the mode ofddh-*n,siullberetimedumapaned. Texas. RESPONDENT NAME: Alternative Service Concepts, LLC IFRETURNINGASA WORESPONSE".PLEASESTATERE--kSON. MAILING ADDRESS: 2501 McGavock Pike, Ste 802 (Headquarters) CITY — STATE — ZIP: THE CITY OF LUBBOCK RESERVES THE RIGHT TO ACCEPT OR REJECT Nashville TN 37214 ANY AND ALL PROPOSALS IN WHOLE OR Iti ?ART AND I AArE ANY INFORhLA= IN THE COhIPETIITVE PROPOSAL PROCESS. FURTHER TELEPHONE ATO: 615-360-2800 THE = RESERVES THE RIGHT TO EN= INTO ANY CONTRACr DEEMED TO BE IN THE BEST NTEREST OF THE CITY. r \O' 615-360-1343 IT IS THE INTENT AVD PURPOSE OF THE CITY OF LLMBOCK THAT THIS REQL-FST PERMITS COMPETITIVE. PROPOSALS. IT IS THE OFFEROR'S RESPONSIBILITY TO ADVISE THE CTIY OF LUBBOCK PURCHASING E-MAIL kevin.nlarrs@ascrisk.com (Texas Account Mgr.) MANAGER IF ANY LANGUAGE. REQUIRF-MEN-TS, ETC., OR ANY COMBINATIONS THEREOF, INADVERTENTLY RESTRICTS OR LIMIT'S FEDERAL TAX ID NO. OR SOCIAL SECURITY NO. THE REQLIREMENTS STATED IN THIS RFP TO A SINGLE SOURCE. SUCH NOTIFICATION MUST BE SUBMITTED IN WRITING AND MUST BE #43-1954328 RECEIVED BY THE PURCHASING MANAGER NO LATER THAN FIVE (5) BUSINESS DAYS PRIOR TO THE ABOVE SUBMITTAL DEADLNE, THE OFFEROR HEREBY AC o-Not m)GES RECEIPT OF A -ND AGREES rn BID LS BASED o� \Y ADDENDA POSTED O\ BIDSYNC.001I The City of Lubbock Charter states that no officer or employee of the City can benefit from any contract, job, work or service for the municipality or be interested in the sale to the City of any supplies, equipment, material or articles purchased. Will any officer or employee of the City, or member of their immediate family, benefit from the award of this proposal to the above firm? YES NO IN COMPLIANCE WITH THIS SOLICITATION, THE UNDERSIGNED OFFEROR HAVING EXAMINED THE REQUEST FOR PROPOSAL, AND BEING FAMILIAR WITH THE CONDITIONS TO BE MET, HEREBY SUBMITS THE FOLLOWING. AN INDIVIDUAL AUTHORIZED TO BIND THE COMPANY MUST SIGN THE FOLLOWING SECTION. FAILURE TO EXECUTE THIS PORTION MAY RESULT IN PROPOSAL REJECTION. By my signature I certify that this offer is made without prior understanding, agreement, or connection with any corporation, firm, business entity, or person submitting an offer for the same materials, supplies, equipment, or service(s), and is in all respects fair and without collusion or fiaud. I further agree that if the offer is accepted, the offeror will convey, sell, assign, or transfer to the City of Lubbock all right, title, and interest in and to all causes of action it may now or hereafter acquire under the Anti-trust laws of the United States and the State of Texas for price fixing relating to the particular comrnodity(s) or service (s) purchased or acquired by the City of Lubbock. At the City's discretion, such assigwgnt phall b%made a5i;i;become effectiyeat the time the City tenders final payment to the vendor. Authorized Signature Title Robert Bennett 7/30/09 Print/Type Name Date THIS FORM MUST BE COMPLETED AND RETURNED WITH YOUR RESPONSE. R -- Alternative Service Concepts, u.0 46 Insurance Requirement Affidavit i CITY OF LUBBOCK INSURANCE REQUIREMENT AFFIDAVIT I, the undersigned Offeror, certify that the insurance requirements contained in this proposal document have been reviewed by me with the below identified Insurance Agent/Broker. If I am awarded this contract by the City of Lubbock, I will be able to, within ten (10) business days after being notified of such award by the City of Lubbock, fiunish a valid insurance certificate to the City meeting all of the requirements defined in this proposal. If this time requirement is not met, the City has the right to reject the offeror's proposal and award the contract to another Proposer. Proposer Proposer ' i PROPOSER'S FIRM NAME: Alternative Service Concepts, LLC i PROPOSER'S FIRM ADDRESS: 2501 McGavock Pike, Suite 802, Nashville, TN 37214 (Headquarters) Name of Agent/Broker. i Agent / Broker (Signature) Address of Agent/Broker. City/State/Zip: Agent/Broker Telephone Number: ( ) j Date:7/29/2009 If you have any questions concerning these requirements, please contact the Purchasing Department for the City of Lubbock at (806) 775-2572. - Alternative Service Concepts, LLC 47 -Bid Proposal Notice Questionnaire i Purchasing Department & Contract Management =f In an effort to better serve our suppliers, the City of Lubbock Purchasing Department is conducting the following survey. We appreciate the time and effort expended to submit your offer. Please take an additional moment to complete the information below. If you have any questions or need more information, please call (806)775-2572. City of Lubbock RFP # 09-077-MA HOW DID YOURECEIVE NOTICE OF THIS REQUEST FOR BID OR PROPOSAL? Lubbock Avalanche Journal? No The Daily Commercial Record? No From Plan Room or other type of service? No Did you access the City of Lubbock website to search for bids? No Facsimile or email from RFP Depot.com No Did you download from your home computer? No Did you download from your company computer? Yes Requested a copy from Lubbock Purchasing Department No Are you a member of Bidsync? Yes Other: Alternative Service ConceptS, u.c 48 -- Alternative Service Concepts, u.c 49 -ASC Office Space Lease Information Texas Commercial Lease Agreement This Commercial. Lease Agreement ("Lease") is made and effective October 1, 2009 by and between Innovative Healthcare Management Consulting ("Landlord") and Alternative Service Concepts, LLC ("Tenant"). Landlord is the owner of land and improvements commonly known and numbered as 16907 QUAKER STREET, LUBBOCK, TX 79424. Landlord makes available for lease the Building designated as: Landlord desires to lease the Leased Premises to Tenant, and Tenant desires to lease the Leased Premises from Landlord for the term, at the rental and upon the covenants, conditions and provisions herein set forth. THEREFORE, in consideration of the mutual promises herein, contained and other good and valuable consideration, it is agreed: 1. Term. A. Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby leases the same from Landlord, for an "Initial Term" beginning October 1, 2009 and ending September 30, 2010. Landlord shall use its best efforts to give Tenant possession as nearly as possible at the beginning of the Lease term. If Landlord is unable to timely provide the Leased Premises, rent shall abate for the period of delay. Tenant shall make no other claim against Landlord for any such delay. 2. Rental. A. Tenant shall pay to Landlord during the Initial Term rental of $9,000.00 per year, payable in installments of $750.00 per month. Each installment payment shall be due in advance on the first day of each calendar month during the lease term to Landlord at INNOVATIVE HEALTHCARE MANAGEMENT CONSULTING 10907 QUAKER STREET LUBBOCK, TX 79424 or at such other place designated by written notice from Landlord or Tenant. The rental payment amount for any partial calendar months included in the lease term shall be prorated on a daily basis. Tenant shall also pay to Landlord a "Security Deposit" in the amount of $750.00. 3. Use Notwithstanding the forgoing, Tenant shall not use the Leased Premises for the purposes of storing, manufacturing or selling any explosives, flammables or other inherently dangerous substance, chemical, thing or device. IN - Alternative Service ConceptS, LLC 50 -I. Repairs. During the Lease term, Tenant shall make, at Tenant's expense, all necessary repairs to the Leased Premises. Repairs shall include such items as routine repairs of floors, walls, ceilings, and other parts of the Leased Premises damaged or worn through normal occupancy, except for major mechanical systems or the roof, subject to the obligations of the parties otherwise set forth in this Lease. 5. Alterations and Improvements. Tenant, at Tenant's expense, shall have the right following Landlord's consent to remodel, redecorate, and make additions, improvements and replacements of and to all or any part of the Leased Premises from time to time as Tenant may deem desirable, provided the same are made in a workmanlike manner and utilizing good quality materials. Tenant shall have the right to place and install personal property, trade fixtures, equipment and other temporary installations in and upon the Leased Premises, and fasten the same to the premises. All personal property, equipment, machinery, trade fixtures and temporary installations, whether acquired by Tenant at the commencement of the Lease term or placed or installed on the Leased Premises by Tenant thereafter, shall remain Tenant's property free and clear of any claim by Landlord. Tenant shall have the right to remove the same at any time during the term of this Lease provided that all damage to the Leased Premises caused by such removal shall be repaired by Tenant at Tenant's expense. 6. Property Taxes. Landlord shall pay, prior to delinquency, all general real estate taxes and installments of special assessments j coming due during the Lease term on the Leased Premises, and all personal property taxes with respect to Landlord's personal property, if any, on the Leased Premises. Tenant shall be responsible for paying all personal property taxes with respect to Tenant's personal property at the Leased Premises. 7. Insurance. A. If the Leased Premises or any other part of the Building is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant's agents, employees or invitees, rent shall not be diminished or abated while such damages are under repair, and Tenant shall be responsible for the costs of repair not covered by insurance. B. Landlord shall maintain fire and extended coverage insurance on the Building and the Leased Premises in such amounts as Landlord shall deem appropriate. Tenant shall be responsible, at its expense, for fire and extended coverage insurance on all of its personal property, including removable trade fixtures, located in the Leased Premises. C. Tenant and Landlord shall, each at its own expense, maintain a policy or policies of comprehensive general liability insurance with respect to the respective activities of each in the Building with the premiums thereon fully paid on or before due date, issued by and binding upon some insurance company approved by Landlord, such insurance to afford minimum protection of not less than $1,000,000 combined single limit coverage of bodily injury, property damage or combination thereof. Landlord shall be listed as an additional insured on Tenant's policy or policies of comprehensive general liability insurance, and Tenant shall provide Landlord with current Certificates of Insurance evidencing Tenant's compliance with this Paragraph. Tenant shall obtain the agreement of Tenant's insurers to - Alternative Service ConceptS, LLc 51 -notify Landlord that a policy is due to expire at least (10) days prior to such expiration, Landlord shall not be required to maintain insurance against thefts within the Leased Premises or the Building. 8. Utilities. Tenant shall pay all charges for water, sewer, gas, electricity, telephone and other services and utilities used by Tenant on the Leased Premises during the term of this Lease unless otherwise expressly agreed in writing by Landlord. In the event that any utility or service provided to the Leased Premises is not separately metered, Landlord shall pay the amount due and separately invoice Tenant for Tenant's pro rata share of the charges. Tenant shall pay such amounts within fifteen (15) days of invoice. Tenant acknowledges that the Leased Premises are designed to provide standard office use electrical facilities and standard office lighting. Tenant shall not use any equipment or devices that utilizes excessive electrical energy or which may, in Landlord's reasonable opinion, overload the wiring or interfere with electrical services to other tenants. 9. Signs. Following Landlord's consent, Tenant shall have the right to place on the Leased Premises, at locations selected by Tenant, any signs which are permitted by applicable zoning ordinances and private restrictions. Landlord may refuse consent to any proposed signage that is in Landlord's opinion too large, deceptive, unattractive or otherwise inconsistent with or inappropriate to the Leased Premises or use of any other tenant. Landlord shall assist and cooperate with Tenant in obtaining any necessary permission from governmental authorities or adjoining owners and occupants for Tenant to place or construct the foregoing signs. Tenant shall repair all damage to the Leased Premises resulting from the removal of signs installed by Tenant. 10. Entry. Landlord shall have the right to enter upon the Leased Premises at reasonable hours to inspect the same, provided Landlord shall not thereby unreasonably interfere with Tenant's business on the Leased Premises. 11. Parking. During the term of this Lease, Tenant shall have the non-exclusive use in common with Landlord, other tenants of the Building, their guests and invitees, of the non -reserved common automobile parking areas, driveways, and footways, subject to rules and regulations for the use thereof as prescribed from time to time by Landlord. Landlord reserves the right to designate parking areas within the Building or in reasonable proximity thereto, for Tenant and Tenant's agents and employees. Tenant shall provide Landlord with a list of all license numbers for the cars owned by Tenant, its agents and employees. 12.Buildin2 Rules. Tenant will comply with the rules of the Building adopted and altered by Landlord from time to time and will cause all of its agents, employees, invitees and visitors to do so; all changes to such rules will be sent by Landlord to Tenant in writing. The initial rules for the Building are attached hereto as Exhibit "A" and incorporated herein for all purposes. - - Alternative Service ConceptS, LLc it 52 13. Damage and Destruction. Subject to Section 8 A. above, if the Leased Premises or any part thereof or any appurtenance thereto is so damaged by fire, casualty or structural defects that the same cannot be used for Tenant's purposes, then Tenant shall have the right within ninety (90) days following damage to elect by notice to Landlord to terminate this Lease as of the date of such damage. In the event of minor damage to any part of the Leased Premises, and if such damage does not render the Leased Premises unusable for Tenant's purposes, Landlord shall promptly repair such damage at the cost of the Landlord. In making the repairs called for in this paragraph, Landlord shall not be liable for any delays resulting from strikes, governmental restrictions, inability to obtain necessary materials or labor or other matters which are beyond the reasonable control of Landlord. Tenant shall be relieved from paying rent and other charges during any portion of the Lease term that the Leased Premises are inoperable or unfit for occupancy, or use, in whole or in part, for Tenant's purposes. Rentals and other charges paid in advance for any such periods shall be credited on the next ensuing payments, if any, but if no further payments are to be made, any such advance payments shall be refunded to Tenant. The provisions of this paragraph extend not only to the matters aforesaid, but also to any occurrence which is beyond Tenant's reasonable control and which renders the Leased Premises, or any appurtenance thereto, inoperable or unfit for occupancy or use, in whole or in part, for Tenant's purposes. 14. Default. If default shall at any time be made by Tenant in the payment of rent when due to Landlord as herein provided, and if said default shall continue for fifteen (15) days after written notice thereof shall have been given to Tenant by Landlord, or if default shall be made in any of the other covenants or conditions to be kept, observed and performed by Tenant, and such default shall continue for thirty (30) days after notice thereof in writing to Tenant by Landlord without correction thereof then having been commenced and thereafter diligently prosecuted, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the Leased Premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages. 15. Quiet Possession. Landlord covenants and warrants that upon performance by Tenant of its obligations hereunder, Landlord will keep and maintain Tenant in exclusive, quiet, peaceable and undisturbed and uninterrupted possession of the Leased Premises during the term of this Lease. 16. Condemnation. If any legally, constituted authority condemns the Building or such part thereof which shall make the Leased Premises unsuitable for leasing, this Lease shall cease when the public authority takes possession, and Landlord and Tenant shall account for rental as of that date. Such termination shall be without prejudice to the rights of either party to recover compensation from the condemning authority for any loss or damage caused by the condemnation. Neither party shall have any rights in or to any award made to the other by the condemning authority. __ Alternative Seance ConceptS, LLC � 53 -1-7. Subordination. Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust or other lien presently existing or hereafter arising upon the Leased Premises, or upon the Building and to any renewals, refinancing and extensions thereof, but Tenant agrees that any such mortgagee shall have the right at any time to subordinate such mortgage, deed of trust or other lien to this Lease on such terms and subject to such conditions as such mortgagee may deem appropriate in its discretion. Landlord is hereby irrevocably vested with full power and authority to subordinate this Lease to any mortgage, deed of trust or other lien now existing or hereafter placed upon the Leased Premises of the Building, and Tenant agrees upon demand to execute such further instruments subordinating this Lease or attorning to the holder of any such liens as Landlord may request. In the event that Tenant should fail to execute any instrument of subordination herein require d to be executed by Tenant promptly as requested, Tenant hereby irrevocably constitutes Landlord as its attorney -in -fact to execute such instrument in Tenant's name, place and stead, it being agreed that such power is one coupled with an interest. Tenant agrees that it will from time to time upon request by Landlord execute and deliver to such persons as Landlord shall request a statement in recordable form certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as so modified), stating the dates to which rent and other charges payable under this Lease have been paid, stating that Landlord is not in default hereunder (or if Tenant alleges a default stating the nature of such alleged default) and further stating such other matters as Landlord s shall reasonably require. It 18. Security Deposit. The Security Deposit shall be held by Landlord without liability for interest and as security for the performance by Tenant of Tenant's covenants and obligations under this Lease, it being expressly understood that the Security Deposit shall not be considered an advance payment of rental or a measure of Landlord's damages in case of default by Tenant. Unless otherwise provided by mandatory non-waivable law or regulation, Landlord may commingle the Security Deposit with Landlord's other funds. Landlord may, from time to time, without prejudice to any other remedy, use the Security Deposit to the extent necessary to make good any arrearages of rent or to satisfy any other covenant or obligation of Tenant hereunder. Following any such application of the Security Deposit, Tenant shall pay to Landlord on demand the amount so applied in order to restore the Security Deposit to its original amount. If Tenant is not in default at the termination of this Lease, the balance of the Security Deposit remaining after any such application shall be returned by Landlord to Tenant. If Landlord transfers its interest in the Premises during the term of this Lease, Landlord may assign the Security Deposit to the transferee and thereafter shall have no further liability for the return of such Security Deposit. 19. Notice. Any notice required or permitted under this Lease shall be deemed sufficiently given or served if sent by United States certified mail, return receipt requested, addressed as follows: Alternative Service ConceptS, u.c 54 If to Landlord to: INNOVATIVE HEALTHCARE MANAGEMENT CONSULTING 10907 QUAKER STREET LUBBOCK, TX 79424 If to Tenant to: ALTERNATIVE SERVICE CONCEPTS 2501 MCGAVOCK PIKE, SUITE 802 NASHVILLE, TN 37214 Landlord and Tenant shall each have the right from time to time to change the place notice is to be given under this paragraph by written notice thereof to the other party. 20. Brokers. Tenant represents that Tenant was not shown the Premises by any real estate broker or agent and that Tenant has not otherwise engaged in, any activity which could form the basis for a claim for real estate commission, brokerage fee, finder's fee or other similar charge, in connection with this Lease. 21. Waiver. No waiver of any default of Landlord or Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition. 22. Memorandum of Lease. The parties hereto contemplate that this Lease should not and shall not be filed for record, but in lieu thereof, at the request of either party, Landlord and Tenant shall execute a Memorandum of Lease to be recorded for the purpose of giving record notice of the appropriate provisions of this Lease. 23. Headings. The headings used in this Lease are for convenience of the parties only and shall not be considered in interpreting the meaning of any provision of this Lease. 24. Successors. The provisions of this Lease shall extend to and be binding upon Landlord and Tenant and their respective legal representatives, successors and assigns. Alternative Service ConceptS, «c j ss I, 25. Consent. Landlord shall not unreasonably withhold or delay its consent with respect to any matter for which Landlord's consent is required or desirable under this Lease. 26. Performance. If there is a default with respect to any of Landlord's covenants, warranties or representations under this Lease, and if the default continues more than fifteen (15) days after notice in writing from Tenant to Landlord specifying the default, Tenant may, at its option and without affecting any other remedy hereunder, cure such default and deduct the cost thereof from the next accruing installment or installments of rent payable hereunder until Tenant shall have been fully reimbursed for such expenditures, together with interest thereon at a rate equal to the lessor of twelve percent (12%) per annum or the then highest lawful rate. If this Lease terminates prior to Tenant's receiving full reimbursement, Landlord shall pay the unreimbursed balance plus accrued interest to Tenant on demand. 27. Compliance with Law. Tenant shall comply with all laws, orders, ordinances and other public requirements now or hereafter pertaining to Tenant's use of the Leased Premises. Landlord shall comply with all laws, orders, ordinances and other public requirements now or hereafter affecting the Leased Premises. 28. Final Agreement. This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only by a further writing that is duly executed by both parties. 29. Governing Law. This Agreement shall be governed, construed and interpreted by, through and under the Laws of the State of Texas. [Landlord] Signature Block IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first [Tenant] Signature Block Alternative Service ConceptS, LLc , 56 r� ASC Best Claims Practice Guidelines RESERVES A TIMELINESS: 1 The initial reserve must be set within 10 days of the receipt of the claim by ASC and before the end of the month, whichever comes first. 2 The reserves must be adjusted promptly, or - at minimum - within 30 days of the date the claim handler knew, or should have known, of a change in the realistic practical exposure of the claim. B ADEQUACY 1 Reserve adjustments must be adequate based on information known and/or available, or reasonably expected, at the time of the evaluation. 2 ASC's reserving philosophy is to reserve for realistic, practical, ultimate exposure. This means neither worse, nor best, case scenario but the realistic value based on injury, damages, liability, jurisdiction, and other influencing factors. a Any requested variance from this philosophy must be supported by the client Account Profile/Claim Management Guidelines or the carrier's claim handling requirements. 3 Stairstepping of the reserves must be avoided Each reserve evaluation must consider the realistic ultimate exposure rather than reserving for the "absolute known" exposure on the date of the evaluation. All parts of the reserve must be considered (loss/expense, indemnity/medical/expense) at each evaluation. 4. All reserve evaluations must be documented in the electronic claim file. This documentation must include the various aspects of exposure such as: liability/compensability, injury/damages, permanency, specials/medical/indemnity, legal/other expense. C EXCEPTIONS All exceptions to A & B above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. COVERAGE A DOCUMENTED Coverage must be documented as to the carrier name, policy number, SIR/Deductible, limits, line of business, if a pool - the date the member joined, and carrier's position to the client (i.e. primary, first layer excess, etch). Further documentation must be include if applicable, for example: 1 Claims Made If the applicable policy is Claims Made the documentation must include the retro date, date the claim was made against the client, date the claim was reported to ASC, and any applicable extended reporting period 2 Automobile Description of the vehicle, verification if scheduled, applicable first party coverage, and any first or third party deductible. 3 Property Description of the covered property, verification if scheduled, ACV/RCV, and any applicable first party deductible. B CORRECTLY APPLIED Coverage must be applied correctly to the loss; (i.e. an Automobile Liability policy should not be applied to an E&O claim). C ISSUES ADDRESSED Issues of coverage must be recognized and documented in the electronic file notes. Alternative Service ConceptS, LLC 57 F,i IV 1 Coverage issues must be directed to the carrier in a timely manner. 2 ASC issues Reservations of Rights, Non -Waiver Agreements, Disclaimers, or Excess letters ONLY WITH the prior written approval of the applicable carrier. 3 Reservation of Rights letters, Non -Waiver Agreements, Disclaimers, or Excess letters issued by the carrier must be explained to the client in a timely manner. 4 Coverage issues must be followed by the adjuster until resolved D EXCEPTIONS All exceptions to A, B, & C above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. CONTACT A All client specific requirements, as documented in the client Account Profile/Claim Management Guidelines must be met. B CONTACT REQUIREMENTS 1 24 Hours a Client/Employer b Claimant c Client/Employer Location 2 3 Working Days a Medical Provider b Witnesses 3 Exceptions: a Workers' Compensation Medical Only Claims b First Party claims with exposure of under $1,000. c 24 hour contact is required on a & b above upon knowledge of (1) potential subrogation (2) questionable compensability (3) potential lost time or permanent impairment 4 Contact efforts must be meaningful with reasonable follow-up on unsuccessful attempts. C EXCEPTIONS All exceptions to A & B above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. INVESTIGATION A TIMELINESS 1 Initial Investigation The amount of time lapsed between receipt of the claim by ASC and completion of the investigation must be appropriate to the peculiarities of the particular claim. 2 Subsequent Investigation Must be completed within 30 days, or a reasonable time, from the date the need for further investigation was, or should have been, recognized. B ADEQUACY 1 Recorded or Written/Signed Statements Statements must be obtained from all key parties to the claim involving: a Claims with disputed facts, liability, or compensability. b Workers' Compensation claims involving 4 or more weeks of lost time or any permanent impariment/disability. c Reportable claims (carrier or client) Alternative Service ConceptS, «c 58 I�� (1) Refer to the carrier's Claim Handling Requirements and/or the client Account Profile/Claim Management Guidelines. 2 Index & OFAC a Index (1) Unless specifically documented in the client Account Profile/Claim Management Guidelines and not over -ruled by the carrier's Claim Handling Requirements, all bodily injury claims, excluding Medical Only Workers' Compensation must be indexed. (a) Immediately upon receipt of adequate information and (b) every 6 months thereafter that the claim remains open. (2) Requests for additional information must be made on any positive index response. b OFAC See separate section of the manual on OFAC requirements. (1) All payees must be indexed prior to issuance of the initial payment and, if still receiving payments, each 6 months thereafter. 3 Statutory and jurisdictional requirements concerning investigation must be met. a MSA - Medicare Set Aside must be considered on all claims that MAY meet Federal requirements. 4 All aspects of liability/compensability must be investigated. 5 Subrogation a Subrogation potential must be addressed in all files, including (1) Contractual liability (2) Vicarious liability (3) Automobile, Products, Professional and General Liability b Subrogation may not be waived, or discounted, without the express permission of the client and/or carrier. 6 Police/Sherrill department reports must be obtained on all claims in which the police were contacted. If the police did not respond a copy of the incident report should be obtained. 7 Fire department reports must be obtained on all first party property losses involving a fire. 8 Scene investigations must be conducted based on the needs of the particular claim. Scene investigations should include photographs, diagrams, measurements, etc. 9 If the accident involved a product, the item must be identified, examined, photographed, protected, and it's history determined. a Potential products claim include any accident involving machinery or a vehicle with alleged failure of brakes, tires, steering, etc. b Once potential products liability subrogation is verified the chain of custody must be established. Use of defense counsel and/or experts should be considered to assist in protecting the product. 10 Damages/Injuries a Bodily Injury investigations must include (1) Signed medical authorization if possible. (2) Medical reports & bills (a) These should be originals whenever possible. Any photocopies received should be verified. (3) Medical history (4) Loss of Wages (a) On Workers' Compensation the jurisdictional wage statement requirement must be met. (b) Education & work history should be obtained on all serious injuries. (5) Special damages must be investigated and evaluated. Alternative Service ConceptS, LLC ;, 59 { b Third Party Property Damage investigations must include (1) Ownership (2) Full description of the damaged property (auto, real, or other), including its age and condition. (a) Actual cash value and, if applicable, replacement cost value. (b) Salvage value (3) Repair costs (4) Property damage should be inspected and appraised as warranted by the facts of the accident and the alleged value of the damage. (5) Loss of use & any diminution of value as applicable. c First Party Auto Collision & Comprehensive claims should include items listed in b above as required by the coverage provided. d First Party Property (building or contents) investigations must include (1) A comparison description from any schedule in the policy against the actual building/contents. (2) Full description of the covered building (i.e. construction, square footage, date purchased) and the make, model, age, etc. of any scheduled equipment or contents. (3) Ownership/insurable interest (4) Actual Cash Value and Replacement Cost Value as required by the coverage. (5) Statement of Loss (6) Proof of Loss C SPECIAL INVESTIGATION - QUESTIONABLE FRAUD CLAIMS Any information developed by the investigation that indicates the claim may arise from fraud or conspiracy to defraud must be reported within 24 hours to the client, the carrier, and the Field Claim Manager. The American Heritage Dictionary defines fraud & conspiracy as follows: fraud (fr6d) n. 1. A deception deliberately practiced in order to secure unfair or unlawful gain. 2. A piece of trickery; a trick. 3.a. One that defrauds; a cheat. b. One who assumes a false pose; an impostor. conspir-acy (k... n-spir"..: sj) n., pl. conspiracies. 1. An agreement to perform together an illegal, wrongful, or subversive act. 2. A group of conspirators. 3. Law. An agreement between two or more persons to commit a crime or accomplish a legal purpose through illegal action. 4. A joining or acting together, as if by sinister design. 1 See separate section of the manual on Fraud/Special Investigation D EXCEPTIONS All exceptions to A & B above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. No exceptions are allowed for C - Special Investigation/Fraud V DOCUMENTATION Required "Notes Captions" must be used on all applicable notes on all claims in all accounts. (See separate section on Notes - Glossary.) A TIMELINESS Documentation should be entered in the electronic file notes as soon as the activity is completed or as soon as practicable thereafter - preferably within 24 hours. B ADEQUACY Documentation must be adequate to provide the reader with what was done, by whom, when, to what result, the thinking or analysis of the results/information by the writer, and the basis for any decision. 1 The electronic file must contain documentation of: a All activity on the file by the adjuster or supervisor. - Alternative Service ConceptS, LLC !I 60 t� b Succinct summaries of investigative, medical, and legal reports/correspondence/documents. c All demands, offers, and negotiations. d Plans of Action Plans of action must contain meaningful information on what the adjuster/supervisor will do, by when, to move the claim toward conclusion. Cursory, redundant ("rubber stamped"), or meaningless comments are unacceptable. e Where the file contains "suffixed" or "trailer" claims, documentation should be placed in the notes on the lead file (based on suffix number or severity). The remaining claims must contain notations giving the style and claim number of the claim bearing the major documentation. 2 Payments All payments should include a succinct description of the service, benefit, or settlement being paid in the narrative of the check or check stub. a The correct applicable dates must be shown in the "From" & "To/Through" fields. b Generalizations such as "Services Rendered", "Fees to Date", "Full & Final Settlement of All Claims" are unacceptable. (1) Expense checks for attorneys, experts, appraisers, etc should show the type of service rendered, and the correct dates of service in the "From" & "To" fields. (2) Loss payments (P&C Claims) must show the nature of the payment, i.e. "Full & Final Payment Property Damage", "Full for Loss of Use", "Full for ACV Building", etc. (3) Workers' Compensation indemnity payments must show the type of benefit (permanent partial, death, temporary total, etc.) and the dates covered by the benefits. (4) Workers' Compensation Medical Benefits - Manually Entered Medical benefit payments manually entered must contain adequate information describing the benefit being paid, i.e. "Mileage Reimbursement xxx Miles @ $.xxx", etc. (5) Workers' Compensation Medical Benefits - MBR electronic data feed Medical Bill Review vendor's data feeds include the EOB/EOR which is printed as a part of the check stub showing the CPT/Procedure code. C EXCEPTIONS All exceptions to A & B above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. VI DIARY A FUTURE DIARY DATE All Open files must carry an open diary date for the adjuster/supervisor primarily responsible for handling the claim. B CURRENT DIARY Diary must be worked on a timely basis. To be considered current diary must be worked within 10 business days of the diary date. C PLAN OF ACTION To be considered "worked" each diary must include the status/results of the prior action plan and an action plan for the next diary period. D ADEQUATE SPAN Diary on open files must be within 30 calendar days of the prior diary unless the file bears one of the following sub -status codes: 1 SE = 120 day diary span a SE on NV Medical Only may carry a span of 365 days due to statutory requirements. AN Alternative Service CenceptS, LI_C , 61 i� 2 LI = 90 day diary span 3 OCC = 90 day diary span E EXCEPTIONS All exceptions to A through D above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. VII LITIGATION MANAGEMENT' Any legal action requiring (1) an answer filed with the judicial or jurisdictional body or (2) the appearance of defense counsel is considered to be "litigation". A REVIEW & ANALYSIS 1 The file must contain the adjuster's thoughts and analysis of the legal action including the soundness of the allegation, any pertinent knowledge of the jurisdiction, and the degree of (and basis for) the client's exposure. 2 The file must contain the adjuster's thoughts and analysis of what further action must be taken, by whom, to establish further, or diminish, the client's exposure. B TIMELY REFERRAL TO DEFENSE COUNSEL 1 The legal action must be referred to defense counsel within 24 hours (1 business day) of receipt of the action by ASC unless: a An more urgent time frame is required based on the date an answer is due, or b The adjuster has obtained written agreement to a waiver of the answer date from the plaintiff attorney. C PROPER REFERRAL TO DEFENSE COUNSEL See also Litigation Management Referral To Defense Counsel. 1 Applicable carrier and/or client attorney selection requirements must be met. 2 Referral to defense counsel must be a formal letter containing the required information or a cover letter with completed format of required information. 3 A copy of Defense Counsel Reporting & Billing Requirements must be sent with each referral. Any modification due to more stringent requirements by the client/carrier should be outlined in the referral or on the Requirements form. 4 All Referrals must contain the following required wording: This referral is made on behalf of our captioned client/insured. The client and/or their carrier is solely responsible for all fees, charges, and disbursements. ASC has been authorized to review and process the legal expenses and we ask that your bills be forwarded direct to our office. A copy of the reporting and billing requirements are attached. Should you not comply with these requirements ASC will be forced to: 1 apply to the client and/or carrier to appoint other counsel, or 2 advise the client and/or carrier that ASC will be unable to continue to handle this claim. D LITIGATION SCREENS COMPLETED The Litigation Screens in the claim system must be completed as fully as possible and updated as information is developed. 141 1 The sub -status code for Litigation ("LI") must be posted in the system on the Sub -Status Screen E ABANDONMENT TO DEFENSE COUNSEL - Law.Com defines Abandonment as: "n. the act of intentionally and permanently giving up, surrendering, deserting or relinquishing......" 1 The adjuster must continue to be actively involved in the investigation, direction, and management of both the claim and the legal action. ON Alternative Service ConceptS, LLC 62 i a The adjuster must direct, consult, and approve the actions of defense counsel. b The adjuster must not allow or expect defense counsel to fulfill the adjuster's responsibilities in the investigation and/or handling of the claim, communication with the client and/or carrier, evaluation of exposure, or in negotiation. F CLIENT APPRISED The adjuster must keep the client apprised of the status of the action, of the evaluation of exposure (loss and expense), further activities projected, and expectations as to results of current activities as well as depositions, settlement conferences, mediations, trial dates, etc. G PRE-TRIAL REPORT See also Litigation Management Adjuster's Pre-trial Report for information required in the report - whether from defense counsel or adjuster. 1 The adjuster's pre-trial report must be submitted no later than 60 days prior to trial. If defense counsel submits a pre-trial report the file must contain the adjuster's review & analysis of the case. 2 Fronted or Carrier Accounts The adjuster must review the carrier Claim Handling Requirements. Most carrier require that all cases are reportable 60 days before trial whether another reporting criteria applies or not. a Reporting to the carrier should include the Captioned Report and defense counsel's pre-trial report. The adjuster may attach the adjuster's pre-trial report or include his/her analysis in the body of the captioned report. b Note that "reportable at 60 days" means the report should be in the carrier's office no later than 60 days before trial. c This reporting requirement applies even in cases where the adjuster sees no probability of an adverse judgment. H DEFENSE COUNSEL REPORTING & BILLING See also Litigation Management - Defense Counsel Reporting/Billing Requirements 1 Defense counsel reporting & billing must meet the requirement outlined in Litigation Management - Defense Counsel Reporting/Billing Requirements and/or the client/carrier requirements if more stringent. a The adjuster must take action to insure proper & timely reporting and billing by defense counsel, including notification of their Field Claim Manager and/or client/carrier if counsel fails to cooperate. b Defense counsel reporting includes submission of a defense budget - and updating that budget as warranted by development of the case. (1) All budgets must be approved by the adjuster. c All legal bills must be reviewed and approved by the adjuster prior to payment. (1) Fees & expenditures must be supported by documentation received from counsel, i.e. deposition summaries, medical records, etc. (2) Bills must be in -line with the current defense budget. 2 If defense counsel fails to report or bill within 14 calendar days of the date due, the adjuster must contact the attorney and client (and/or applicable carrier) to advise we are seeking to move the file to another counsel. If the client is unwilling to support ASC in this position we must advise the client and/or the applicable carrier that we will be unable to continue handling the claim. EXCEPTIONS All exceptions to A through H above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. " VIII FOLLOW-UP AND/OR CONTROL A PROACTIVE Alternative Service ConceptS, LLC 63 I I The adjuster must take the initiative in pursuing the information and promptly taking the action needed to move the claim toward conclusion. a Follow-up must be timely and meaningful. b Follow-up must not be set for the next diary date by rote and without the needed activity by the adjuster. c Offers should be initiated rather than waiting for a demand. d Alternatives must be considered - return to light work, return to different work, alternative repairs, structured settlements, etc. B TIMELY PAYMENT Payments must be made promptly, in general within 5 working days of receipt of all needed information or agreement to pay. 1 Any bill submitted for payment must bear written approval (initials or signature & date) of the adjuster or supervisor. 2 Workers' Compensation benefits (indemnity, medical, and other) payments must be made within the applicable statutory time requirements. 3 P&C loss payments must be made within 5 working days of agreement. 4 All legal and other expense must be paid within 5 working days of receipt of adequate information. C MEDICAL MANAGEMENT 1 Workers' Compensation a All medical bills and reports must be reviewed by the adjuster for relatedness/causation to the alleged injury. (1) Pre-existing conditions, and their impact on the alleged injury, must be considered and addressed. b All medical bills must be subjected to bill review as required by statute and/or client's Account Profile/Claim Management Guidelines. c The use of a panel of doctors must be considered as allowed by statute. d Independent medical exams must be considered based on the needs of the claim and any statutory provisions. e Medical Case Management, Medical Rehabilitation, and Vocation Rehabilitation must be considered based on the needs of the claim and any statutory provisions. 2 P&C All medical reports, records, and bills must be reviewed for relatedness & appropriateness. D RESPONSIVENESS 1 All communications from the client, employer, claimant, carrier, attorney, defense counsel, physician, claim supervisor, or other party on a claim must be responded to in a timely, thorough, and professional manner. (a) Complaints - See separate section of ASC Manual under Office Administration. 2 All requests for specific, or general, activity on a claim must receive a timely response. 3 All correspondence to parties outside ASC must be on letterhead, company fax template, or e-mail. Handwritten communications are unacceptable. F TIMELY DENIAL 1 Workers' Compensation Denials of compensability must comply with the applicable statute. 2 P&C Denial of liability must be issued within 2 working days of knowledge that the claim should be denied. ' 3 Coverage ASC does not issue disclaimers or denials of coverage without the prior written approval of the carrier. Alternative Service ConceptS, LLC 64 G EXCEPTIONS All exceptions to A through F above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. IX SUPERVISION A PROMPT ASSIGNMENT If the supervisor is involved in assigning new intake claims to the adjuster, the assignment must be made on the date the claim was received by ASC. B INSTRUCTIONS & GUIDANCE Initial & follow-up instructions & guidance to the adjuster must be based on the particular claim and the expertise of the assigned adjuster rather than cursory or "rubber stamped". 1 On internal audits inadequate investigation, handling, or reporting by the adjuster will equate with inadequate supervision. C RESPONSIVENESS The supervisor must be responsive to the adjuster and the needs of the claim. D DIARY The supervisor's diary must be appropriate to the particular claim and the expertise of the adjuster. E FOLLOW-UP The supervisor must follow-up in timely manner on specific instructions or requests as required by the seriousness of the claim and the propensities of the adjuster. F EXCEPTIONS All exceptions to A through E above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. X SPECIAL AND/OR EXCESS REPORTING A RECOGNIZED Reporting criteria based on client and carrier guidelines must be recognized. 1 See the Carrier Requirements and client Account Profile/Claim Management Guidelines contained in separate sections of the ASC Manual. (a) Not all excess carriers require reporting at 50% of deductible/SIR - some are lower, i.e. Zurich requires reporting at $100,000 or 50% of SIR whichever is less. Note: The financial trigger for excess reporting is based on the total incurred -of the occurrence andor all related claims. (b) ASC's requirements on reporting criteria must be followed on all claims on accounts where the contract requires reporting to the carrier. Each excess carrier has a list of non -financial criteria for captioned reports, i.e. fatalities, asbestos, deafness of greater than 50%, etc. ASC's reporting criteria area combination of the criteria of all carriers and must be followed for all initial reports. 2 Each claim open 120 days or more must be review for excess reporting. 3 When reported the sub -status codes must be changed to show that the claim was reported and the date reported. 4 The sub -status codes default to "N" for "No" with blank dates on the date fields. Once the file is reviewed for excess reporting, or has been reported, the appropriate fields must be changed. The fields are: (a) Reviewed for excess = ("y" for "yes" or leave "N" for "no") (b) Date revd for excess (date the claim was reviewed for excess) (c) Excess reportable (does the file meet criteria or incurred amount for reporting = "y" for "yes" or leave "N" for "no") (d) Excess reported (the claim has been reported to the carrier) Alternative Service ConceptS, LLC j 65 (e) Rein/Exc rptd date (the date the claim was reported) B TIMELY Reports must be prepared and in the hands of the client and/or carrier within the required timeframe. 1 Captioned initial report within 30 days of receipt of claim by ASC and/or receipt of information of exposure/injury subject to the reporting criteria. Subsequent reports are due each 90 days thereafter unless otherwise stipulated by the client/carrier. 2 All fatality claims must be reported within 24 hours of receipt of notice of the fatality by ASC. This may be in the form of an "initial notice" memo or e-mail giving available information and then followed by a captioned report within 30 days (or as stipulated by the carrier/client). C PROPER FORMAT Unless the client/carrier requires a different format the ASC standard Captioned Report format must be used. 1 Captioned reports must offer information of substance and address all known issues. 2 Captioned reports must be professional in content and appearance. D EXCESS LETTER A formal letter must be sent to the client advising them to place all carriers with potential coverage for the claim on notice in any claim 1 With an unspecified demand 2 With a demand over the layer handled by ASC 3 In all continuous trigger or repeated exposure claims E EXCEPTIONS All exceptions to A through D above must be documented in the file notes and/or the client Account Profile/Claim Management Guidelines or applicable carrier claim handling requirements. Alternative Service ConceptS, LLC 66 i� ASC Sample Contract CLAIMS SERVICE CONTRACT THIS AGREEMENT is made and entered into with an effective date of MONTH DAY, YEAR between ALTERNATIVE SERVICE CONCEPTS, LLC, a Delaware Corporation, with principal offices at 2501 McGavock Pike, Suite 802, P.O. Box 305148, Nashville, Tennessee 37230-5148, hereinafter referred to as "ASC", and e with principal offices in CITY, STATE, hereinafter referred to as " Client". WITNESS: i WHEREAS, "ASC" is in the claims service business; and WHEREAS, "Client" desires to contract with "ASC" as its claims service company to service the MKI1® n claims of "Client's" arising out of their facilities located in CITY AND/OR STATE. NOW, THEREFORE, "ASC" and "Client" contract as follows: "ASC" AGREES: 1. (a) To review all claims and/or losses reported during the term of this Contract which involve (. 1 RA_ claims against "Client". (b) To investigate, adjust, settle or resist all such losses and/or claims within the agreed discretionary i settlement authority limit of Dollars. (c) To investigate, adjust, settle or resist all such losses and/or claims as are in excess of the agreed discretionary settlement authority limit of @#1W Dollars only with specific prior approval of "Client." 2. To furnish all claim forms necessary for proper claims administration. 3. To establish claim and/or loss files for each reported claim and/or loss. Such files shall be the exclusive property of "Client." Such files are available for review by "Client" at any reasonable time, with notice. 4. To maintain adequate General Liability, Automobile Liability, Workers' Compensation, Fidelity Bond, and Errors and Omissions insurance coverage. 5. To indemnify, defend, and hold harmless "Client" with respect to any claims asserted as a result of any errors, omissions, torts, intentional torts, or other negligence on the part of "ASC" and/or its employees, unless the complained of actions of "ASC" were taken at the specific direction of "Client." "CLIENT" AGREES: 1. To make funds available that "ASC" may draw from at any time and from time to time for claim and/or loss payments and for associated allocated expense with the prior approval of "Client." 2. To pay "ASC" fees in accordance with the Fee Schedule attached to this Contract. 3. To pay "ASC" within thirty (30) days of the effective date of all invoices. All past due invoices are subject to an interest penalty of one and one-half percent (1'/2%) per month. In the event "ASC" brings any action or proceeding to recover any part or all of an outstanding indebtedness, "ASC" shall be entitled to recover as additional damages reasonable attorney fees not to exceed twenty percent (20%) of the outstanding indebtedness. ( 4. (a) To pay all Allocated Loss Expense in addition to the claim service fee to be paid to "ASC" as prescribed in i this Contract. i -- Alternative Service Concepts, «c 67 (b) "Allocated Loss Expense" shall include but not be limited to attorneys' fees; commercial photographers' fees; experts' fees (i.e. engineering, physicians, chemists, etc.); fees for independent medical examinations; witnesses' travel expense; extraordinary travel expense incurred by "ASC" at the request of "Client"; court reporters' fees; transcript fees; the cost of obtaining public records; witnesses' fees; medical cost containment services, such as utilization review, preadmission authorization, hospital bill audit, provider bill audit, and medical case management; automobile appraisal or property appraisal fees; all outside expense items; and any other similar fee, cost or expense associated with the investigation, negotiation, settlement, or defense of any claim hereunder or as required for the collection of subrogation on behalf of "Client." To relinquish authority to "ASC" in all matters relating to claims service within the agreed discretionary settlement authority limit of Dollars. (a) In the event, "ASC," acting at the specific direction of "Client," becomes liable to any third party, "Client" agrees to indemnify, defend, and hold "ASC" and/or its employees harmless. (b) If "ASC" or any of its employees are named as defendant in any action (i) where the plaintiffs cause of action involves a claim hereunder and (ii) where there are not allegations of errors, omissions, torts, intentional torts, or other negligence on the part of "ASC," "Client" will assume the defense of the action on behalf of "ASC" and/or its employees and indemnify and hold "ASC" and/or its employees harmless from any judgment rendered as a result of such action. "ASC" AND "CLIENT" MUTUALLY AGREE AS FOLLOWS: 1. The term of this Contract is continuous from its effective date for one (1) year. This Contract may be terminated by either "ASC" or "Client" with cause by providing sixty (60) days' prior written notice by certified mail. 2. This Contract covers Claim Service for "Client" in the United States of America. 3. Gross receipts tax or assessments in those states or jurisdictions where levied shall be in addition to the service fee. 4. In the event any one or more of the provisions of this Contract shall be determined to be invalid or unenforceable by any court or other appropriate authority, the remainder of this Contract shall continue in full force and effect, as if said invalid and unenforceable portion had not been included in this Contract. 5. This Contract shall be construed and interpreted in accordance with the laws of the state of HEADQUARTERED (CLIENT'S) STATE. 6. This Contract represents the entire understanding of "ASC" and "Client" and supersedes all prior oral and written communications between "ASC" and "Client" as to the subject matter. Neither this Contract nor any provisions of it may be amended, modified, or waived except in writing signed by a duly authorized representative of "ASC" and "Client." 7. The failure or delay of either "ASC" or "Client" to take action with respect to any failure of the other party to observe or perform any of the terms or provisions of this Contract, or with respect to any default hereunder by such other party, shall not be construed as a waiver or operate as a waiver of any rights or remedies of either "ASC" or "Client" or operate to deprive either "ASC" or "Client" of its right to institute and maintain any action or proceeding which it may deem necessary to protect, assert, or enforce any such rights or remedies. 8. To not employ a person who has been employed by the other party at any time during the term of this Contract, unless the person to be employed shall not have been employed by the other party during the immediately preceding six (6) months or unless the hiring party shall have the other party's prior written consent. This Alternative Service ConceptS, «C 68 provision shall survive the termination of this Contract for a period of one (1) year. 9. During the term of this Contract, "ASC" will store, at its expense, closed files for a period of three (3) years from the date of closure or the date of the last compensation, whichever is latest. After this period, files will either be returned to "Client" or stored by "ASC" at "Client's" option and expense. If stored by "ASC," "Client" will be charged a one-time inventory fee and monthly storage fees at "ASC's" outside vendor's then prevailing rates. 10. This Contract is binding on any and all successors to the parties and assignable, in whole or any part, only with the written consent of the non -assigning party. I IN WITNESS WHEREOF, "ASC" and "Client" have caused this Contract to be executed by the person authorized to act in their respective names. i ALTERNATIVE SERVICE CONCEPTS, LLC WITNESS: BY: TITLE: CEO DATE: WITNESS: BY: TITLE: DATE: i i Alternative Service Concepts, LLC 69 L rr V) Alternative Service Concepts CD Iq Three Line Claim STARS 3 MeWbihoss Expense IndIpd *d. odola Legal Voc Rehab ASC Gros trit X ------------------------------------------------- -------------- ----------------------------------------------------- M U) W, Numb., 0_t N.. Coverage inured incurred incurred T.Curfa lr,: ured incurred houmd kuwmd: Na CD -OCaton Qat*�V_oss Za9*Req;ired7,,.Aza;a;us -aid Fird Plaid Palo paid Palo Paid PaW: Iq _-Csviplm 1 Causer Cwar Cods, (D CD 0Policy Eff Date: 7MQ000 "I =209.00-00248 E0 10,00azo 8,392.00 0.00 0.00 O.W 60,000.00 0,00 78,392.0 31112001 8111.1001 Open 0.00 8,390.67 0.00 0.03 0.03 56,147.23 0'.00 64,537.90 9; E_209 �CcUNTY AC 11.00 0.00 0.00 O.Cla 0.= 0.00 OZO 0.0 11512001 V 1 ,V2001 1 /V2DO4 0.00 UO 0.00 0.00 0.0 0.00 0.00 0.00 6209 GL 100 0.00 0.00 O.Oc O.M 0.00 0.00 01.00 VIN2001 21!r_0011 1110-004 0.00 0.00 0.00 Q.OV 0.00 0.00 0.00 0.00 6209 EMS RC 2,49S.00 0.00 0.00 0.01C 0.00 0.00 0.00 :2,419500 W11111-1001 21-17,'2001 111,12004 2,495.00 0.00 0.00 0.00 0.00 0.00 0.00 2,495.0E 1 EO 0.00 28,705." 0.00 OXI 0.00 24,640.69 0.00 53,246.6e 1,2412001 813012001 1I'd2004 0.00 28,706,99 0.00 OXI O.M 24,540.69 0.00 53,246.6e E209 Pl. 0.00 633.00 0.00 0.00 O.Im 0.00 0.00 533.00 Z)V2=1 ZV2001 liInOO4 .1.00 S33.0,0 0.00 0.00 O.M 0.00 0.00 533.00 91 $209 :209.00.00227 -C CEP AC 0,00 149A0 2.901.68 0.00 0.30 0.00 0.00 3,050.6E 0020 211212001 212111,2001 1.1,'2004 0.00 149.00 2.901.68 0.01 0.00 0.00 0.00 3,050.68 sa 6209 DEPT AC UO I06.10 11,470.00 0111: O.M 0.00 0.00 11,576.10 212V2001 11 U2004 C.00 106.la 11,470.00 0.00 0.00 0.00 0.00 11,578.4 6209 Z"09-00-002" -Z-' AL 0.00 0.00 821.47 0.00 O.G%l 0.00 0.00 621.47 OCCs 171,200 1 X_1=200i I IV200_1 0.00 0.003 e21.47 0.00 O.I= 0.0,l 01.00 621.A7 6209 u %g ""Naw ",�w"",, "Wall 4ffi%ft 1% OV 061" r-a tr0� y Z 0 CD t#! r Alternative Service Concepts Loss Experience Policy Year Ili 2005 PwicyPonod: 37 V2005-3/3012000 Mom 2$ Valued as of 15U2007 Loss Ratio Aggregate Excess Total licurred S2,335 273.34 Total Payments S2,121,431.47 .ess 0ocu,rence Nou.iVe $4.000.00 Less Nonspecific Pecovenes S4.257.25 Subtota, S2,331,273.34 Net Paymerrs S2.117.174.22 '.ess Excess of Specific P.e:em,or $1,177,857.62 Less Cccurrer de 0edu:t:ble. Fad 54,000.00 Tbaal AgGMam &oenerce S752,415.71 Less Specific Excess Paid $1,572,240.54 Total Payments Subject to Aggregate Excess 5540,933.8E Plus iBIsR Reserve $340,41d.57 Total S i.093,832.38 Less Total toss Fund S2.150.000.00 Total Paymens Excess of Lass Fund $0.00 Pro -Rated Loss Furd S2,150,000.00 Less Reinmrsements S0.00 LOSS RATIO 5 1 % Toml Amount Payable 50.m Wednesday, March 07,200 STARS �4r1 1" 3:06:15PM 1 m „rt;,, �{ v 4:14i.. K;: i P r t s. y�,,, uo,,n, i•i., aar ,ur. ,.e J r,Ni�?'.9d'�ik,r.;. ,2>`'•.�:4�ro.. Sol, dirt,. '��, NH�(Nk`;.�. Gar��,�„,:, �{u�,fclnrLtk2..E�S',,,., �dwa7.;d'�;r'�:1�,!�,1ts^,; ,;v:,t1��:v,�iU�4�ktir";,.. •,rawtr}nd'4�w"ri,; �"vi1'LF'�rlyptJ:;: "'w:ve�i� tA7,,�t,�a,. ;�;��ul�.�a��'a,'"w°�"m. '��,.4N°�:'41�,. 1• Alternative Service Concepts n Occurrence Deductible M am M Fcoicy Year: 1907 (D Po4cy Period: 3:311I697-2501%0 Month 116 CL VaWea as op. 1131.12CO7 E Cat Location Loss Total Total Paid Oustanding Occurrence Number Claim Number Claimant Name Number Status Date Coverage Incurred Deductible Deductible Deductible Deductible Cs M a CITY 3310 237 F 5/1011997 AC $3,CeI.41 $530 $EOO.00 i'd"6-6 SiCb._B 0 -21347-0029 LA7 CNYA 53t0 227 F 511511997 AL 31.M.73 $530 $500.00 SOXIO S503.0 -21347-0072 CITY-, 41313 227 F 70111967 AC $9.e85.14 $500 $500.00 SOZO $50100 w CITY- 8313 227 F 7,1181I997 AC $211.0 $100 $211.95 $0.00 S2 t 1.95 a Ciri'OF� 33113 227 F V181I997 AC 5511.99 S500 UIZOM $0.00 MOM -2 13- ?-- -OC I I I CITY OF� 5310 227 F 8,1241, 997 AC SSMOM $100 $500.00 SOM MOM 13 -3i C�TYOF�310 3 2 2 7 F AC S5,609.79 U1100 Do SOAR SWIM -213-17'661 CITY 3310 227 F 9.23jI997 AC S1.206.02 $500 $500.00 SOAR s5c0.00 -210-a7.00133 iANOREVVJ. ssio 227 F lX231l9a7 AL $100 $500.33 $0.00 S500.00 -31347-Oc135 -31 --tTy OF� 3313 237 F 119311297 AC S 1.44S.!4 $100 $E.00.03 SOM S5CO on -21347-OC148 -3* CITY 5313 237 F 1 2,'G 1, r, 07 AC SUI.I.Ca $530 $500.00 MOO S503.00 -31347.0052 i CAR, -A 5313 237 F 12128.110a7 AL $05.859.52 $5130 $EGO. 00 $0.00 $500.00 -213-a7.00159 -31 -^ITYOF 53*13 227 F V2111698 AC $7,234.0 $500 $600.03 S3.00 SWIM -210-9--0061 _ANtJTE 8313 227 F =1998 AL $29.7577.38 $500 $600.30 $0.00 S500.00 =111D -97-0071 -3! --;T-Y� 5 -,3 S 237 F 3MI99S AC $5,V5.03 $500 MOM $0.00 WOOD -21347-0VTO -3' TY , IF 1313 23' F 1,2511 99a RB S- "C41.25 $250 $290.00 $0.00 SM-CO 'orals for Lao* 3310 227 5192-005.83 VIM S7.401.95 SOM S7.4C1.25 -orals for Cato: SUUMERa S0.03 so $0.0 SOM $0.00 Per od Tcta,s 22e 13 217.79 $7,75C $7.481.95 SO'OO S7,4e1.95 `Witcutescaf. y. Ma,ch 07.200 STE A R S 2:4S.19PM loom, QW, 4*14 11�100 "'g OJ Alternative Service Concepts (D V Valued as of SM012000 Claims with Total Incurred greater than $100K Mcculig"s Exptnse Infte, pitzcwq Dec'xtbla L=01 Vc; Rdkib ASC N4 Im ------------ ...... * ------- ............................................................... ...................... kllwftyla tmlex'a tr=rrag lneurrd I-L-.00 [rcwrQd 1r44Wff4 i=rrod': M L"XID Paid P.6d 13W Pad Pad Paid Paid Paid: M M C.Ujf'o Camer Ccat 0 ■ Peno-d: POLICY YEAR 2006 CW:5 06,01161 -1 1 PERCE. FUCKIEn Vic I M000.03, 15.DMOO )7t7B3.0KZ OM 0-00 I'SDO-00 0.00 :44'261M 7j25 tcoc 12WO 7r.'R - Open 91.388,022 12.106.97 16,801 %L 0.00 0.00 0,00 0.00 120.221% 23 29 6DO6 --LD?04,01164 -01 NEWMA%%. SW,.R0N 76,000.00 7,500.00 37.44120 O.Do 0.00 66000 0.00 120'591.30 7Q16!-1006 M,7II1036 Coen 73.S37.30 6,927AD 27.0115.62 0.0 0.00 110.00 0.00 106.604.32 2. 6006 ZI MIX K "VC ea"'WA3 I0,000.00 I -, 1tQDE'e'- 0.010 0.00 75ra00 0.00 --,(12.56&79 "I'll-61=206 7rj ij2we Ooen EO.827.* 4,737.02 30.6711t 1 0.00 0.00 0.00 0.00 95,137.96 56 600E -011i1-05.01190 -ni PRUIT7. SHEsME L 70,000.00 14,M'10.00 137,014,44 0.00 0.00 6;000.00 D.DD 247,014.44 8000Le Open ea.W.Ce 12,4-17.14 1 7.Qi4 G4 O.DD 0.00 3.298A 1 0.00 �41,30&42 27 13OD6 .01 G00010.11M S7, MART,% '.NC 55400.00 25,000.0C 158,Wal= 11.00 OLD 2.000,00 0.00 270,140.86 �IC- I e-I 9(7rD,% Open 19.8 M-39 111CAM ZA 0.00 0.00 1.671.76 DAD 2,29,051." ";7 .3ox .:,I <ING JR BILLY J WC �,000.00 4,5MOO 69'w: al 0.03 COO 750. Go 0.00 120122251 10"U0006 Coen 12.47-1.64 2.91(1.95 ft972-e 1 0.00 OAO 64160 0.00 105,9DO.80 its 600E :�-E'VXLDS, -0REMY'.1 LVC 0 cc 0.00 197,105 O.Do coo 7'233:!9 0.00 _704,347.29 10'*'7V0OC8 10,21V3O06 Coen 0.00 O.M 6S.867A2 0.0 0.00 7,23s.23 0.()D 63'096.71 46 15006 -Ol ','MiTEC JAMES R. 75,00D.00 20,000.00 45,51C :7 0.00 -300 1,75532 D'GD 142.29a.59 -2 11114:2ME 11,16.12D7e open E,9.767.59 18,6-10.35 45,51Z.27 0.07 0.00 1,7652-) 0.00 86 600i -0-41�5-0 -01 C.,Avi,', A�-RON Vic 3. Ili$ 51, 2,431 n. 7.5,OZ: OAD 000 54 2 M 0.00 101,*� 17 MA� 1,1114r-WE 1Z'151=0B 94?='d 2,431M 75'0Z-'..'z 0.D0 0.00 542M 0.00 101.15IJ7 74 60"1 TARSKpuO Tueaday, Sepember 3C. :008 S:41.�-SWA M W&1114 IMM I "'M I "ift, "'Nlilaw �fivo Zlk Alternative Service Concepts Valued as of 8131/2008 Layered Loss Summary .......................................... ----------------------------- .................... Total ......................... SIR ............. Limit Excess --------------- ------------------------- Claim inured Incurred Claim Inowreo Claim Inewreo: Period count Pa,d Paid Count Paid Count Paid 711120^.,/ - &XV22^05 1,997 1 1,50SM55 0.00 1,650 11,505,800.55 0 0.00 9,282,M.20 0.00 9,282,630.20 0.00 7 120,aS 2t= 15,402,994.65 0.00 1,873 15,401994.65 0 0.00 11,946,353.79 0.00 11,948,356.79 0.00 711120C= - &30r2X7 2,671 16,438,081.09 0.00 2,035 16,438,081.09 0 0.00 10,556,C,99.27 0.00 10,558,099.27 0.00 711;20N 613CV10.9 2,882 12,654,0,82.72 0.00 1,834 12,654,082.72 0 0.00 6,335,118.38 0.00 6,335r 118.38 OW 7� ij20^48 295 1,355,-0.15 0.00 270 1,355,440.15 0 0.00 ,76,1151.33 0.00 176,75133 0.00 ........................................................... Grand Totals: 10,073 Claims, .................................................................................................................................. -97 STARS R'cpofl Tuesday, September 30, 2008 8.41:30AM wo 0 �1�1 "at "$ %"' 14111 '42'14MOQI'� "W"Oa I Wa 1%, � I 'W'' 4 I 'N 111� 01111 , � " �Jger Lag Time Report Claini Number tD CD Claimant Naine For claims reported the month of July 2008 Date OfLoss Date RptdTo Insured Date Reported ToAsc Lag Time From Date of Loss To ASC Status P209-08-0370 -0-1 FLOYD, KEITH 7,12212008 712212008 7,SV2008 9 0 P2C9-08-036092 -01 COFFEE COUNTY H"NY DEPT 7124i2008 7,12912008 5 0 P2C9-08-03692 -02 COFFEE COUNTY HIGHWAY DEPARTMENT 7,12412008 712412008 7,12912008 5 0 P20-08-03661 -0-1 CUMBERLAND COUNTY 7/4;2008 711 E12008 12 0 P20-08-0366331 -02 CUMBERLAND COUNTY 71412008 714,12008 711612008 12 F P2C,9-08-03659 -01 HAYNES,VVANDA V1412008 7/1412008 7115:20138 1 0 P21AD-08-03689 -01 LINEBALL, SANDRA 7,12512008 712512008 712812008 3 0 P2C9-08-037C0 -01 STRAWN. MACK 7/1712008 711712008 7/3012008 13 0 P2C9-08-03686 -01 FAYETTE COUNTY ANIMAL RESCUE 712512008 7j'2512008 T12512008 0 0 P2C,9-08-03677 -01 FENTRESS COUNTY 711012008 712312008 13 0 P2C9-08-03697 -0-1 FARLEY, PATSY 7/15;2008 711512008 712912008 14 0 P2C9-08-03698 -01 FENTRESS COUNTY 711512008 711512008 7/2912008 14 0 P2C9-08-03643 -01 GISSON COUNTY 71E42008 715,2008 2 F P2"A-08-03624 -02 GGSON COUNTY SHERIFF 712412008 7125.122008 1 F P2C9-08-03684 -01 PATTERSON. HOPE 7124,12008 712412008 7t2512008 1 0 P20-08-036P4 -03 PATTERSON, HOPE 712412008 7124.2008 7;2E12008 1 0 P2C9-08-03540 -01 GILES CO. 71112008 71712008 7170008 6 0 P2C9-08-03543 -02 GILES CO. 7,1712008 71712008 717,12008 0 F P2C9-08-037C6 -01 GCEMS 7012018 71211'2008 7131.,'2008 10 0 P2C9-08-03651 -0-1 GRUNDY COUNTY BOE 713,12008 719J2008 6 0 P2C9-08-036E1 -02 GRUNDY COUNTY BOE V-112008 702008 71K-512008 6 0 P2C9-08-031644 -02 GRUNDY COUNTY 7115512008 71512008 71(V2008 3 0 P2C9-08-03644 -01 GRUNDY COUNTY 71512008 7,1812008 3 0 P2C,9-08-036-1, -01 HARDEMAN COUNTY 71712008 7f8-2008 1 0 P2,09-08-03641 -02 HARDEMAN COUNTY 71712008 7fl12008 7/0112008 1 0 P249-08-03676 -01 V. M. =- T A L Vi 012008 711012008 7,122+2008 12 0 P2C9-08-03686 -0-1 JOHNSON COUNTY 701-2008 7/2512008 7.12512008 2 0 P2C9-08-03686 -02 JOHNSON COUNTY 7:23-2008 7125.2008 7,12512008 2 0 P2C9-08-03674 -01 CH17TAM. ROBERT 762008 7/8.r2008 712212008 14 0 P2C9--38-03690 -0-1 NIACON COUNTY 7110121008 7110,12008 7128.-2008 18 0 P2C9-08-03548 -01 BOLTON, TIFFANY 71812008 71112008 T1912008 1 0 P2C9-08-036159 -01 TEMPO AUTO SALES 711612008 7/161'2008 711 T-12008 1 0 P.22' 9 -0 8 -0 3 67 3 -01 MADISON COUNTY 7/16127008 7.12112008 5 0 P2"A'-08-036724 -04 BROWN. SHERRI 711612008 71I612C08 7t2112008 5 0 P21A'-08-03673 -02 MADiSON COUNTY SHERIFF 71'1612008 7116122008 7121.12008 5 F P2109-08-03073 -03 HJTCH=-RSON,BARRY 7/1 612008 7116.12008 712112008 5 0 P2C9-A^-03R7E; -02 MADISON COUNTY 7113,12008 711312008 7,23.008 10 0 P2C9-08-03678 -01 MADISON COUNTY V1312008 7123,008 10 0 P20-08-03620 -01 MADISON COUNTY 7t912008 7Q4122008 15 0 OMg0Mimw 0 im Alternative Service Concepts OJ M Valued as of St W Category Injury Report Monthly 2. r Ctairn NUIU;er Claimant Name Date Of Loss Body Part Nature Of IniLr, Cause Source '0013 ^1 C -,1.04518 FER-AIIN, JOHNATHAN er-P-008 Chest (Ribs, Sternum, Fracture FaIVSIip On Same Levei SLIP AND FALL .01 Soft rr sue) 0006-0a-0451S FERGUSON, LONNIE 81412008 Heart AN Other Other OTHER -01 C006-^ -045211 RUSSELL, TRACY L 81512008 Knee Sprain StfikelStep GROUND -01 misceflaneous (OUTDOORS) C006-.^2-0452t GILLIAM- DARREN J 8ieq2008 Upper Arm (Clavde and Laceration Cur/Puncture Broken GLASS ITEMS -0'i scapula) Glass C0064!-045'25 LUTTRELL, HERMAN D 81412008 Multiple Body Parts Contusion StrikeJStep GROUND -01 Misceflansous (OUTDOORS) C006-08-04529 WIGGINS. ROBERT E W-1008 Lorwer Back (Lumbar & Strain Strantinj Miscellaneous TRANSFER& -01 Lunt%osacraf) HANDLING MECHANISMS -306-.^ ? -045a,2 WILLIS. COLAND eis'2008 Finger(s) Laceration Caught InlBetween ROUGH, SHARP OR -01 MacWne HEAVY OBJECTS C0013-2?-04531 DALE, ZZAC>,,ARIAH 81110138 Chest (Ribs, Sternum, Angina Pectoris (heart Other Than Phy Cause LAIN ENFORCEMENT -01 Soft T-Lssue) Disease) of Injury ACTIVITIES C006-^?-04532 GRANCBERRY, LEE &Z2008 Lower Leg Heat Prostration Burn/Sc" Contact wi METAL ITEMS .01 Hot Object (PLATESIRODSIETC.) C0013---?-04533 ?-,O?.1ARC, CCNME Ve.008 Ankle Fracture Far/Slip - SLIP AND FALL -01 LadderiScaffolding C0013-:?-0411?4 STEAART, RITA 841n2008 Elbow Fracture Fall/Slip - Llquid;Grease SLIP AND FALL -0" spill C008-^.?-04636 CALLAHAN, RODNEY 8,1712003 Knee Contusion CuVPunclure SLIP AND FALL -01 MtsceflaneDus C0-364-041132 FLETCHER. DAVID 81612008 Knee Strain FaIYSlip From different GROUND -131 Level (OUTDOORS) PETTIT, LINDA W 1:2008 Hand Carpal Tunnel Strainqnj Holding or OTHER -W Syndrome Carrying C0064?-04645 CROOK, TONY 8YM008 MufripBody Pans Dermatits Absorbdon.'Ingestion1nh OTHER .0) aiation C006-^Z?-04647 COLLIER,,'EFF.-EY 819J2008 Wnst Strain Strain,"Inj Lffing LIFTING .01 1,'006-^.?-04649 DAVIS JR, JAMES S!V20136 Elbow Strain Strainfinj 1.1ting LIFTING -01 1-0063---04551 SCOTT JEFFERY L 1112,12008 Shoulders Strain Strain.(Inj Miscellaneous MISCELLANEOUS -01 0006-2 ?-04563 SPI'VEY, %A LERIE 811312008 Elbow Inflammation Strainflnj Mscellaneous LIFTING -0 1 C r„ARWAAN, MONTY 8114.12008 Finger(s) Puncture Cut/Puncture NEEDLE STICK -01 Miscedaneous C00634^1-114115e SIMS, JOE 8114.008 Muitiple Body Paris Fracture VeWAir CoNsionwi VEHICLES, -01 Fixed Object COMMERCIAL -1- Tuesday,Septembei IN ' 'Nurek", "IS "WINON WWA 10.011 i",'PAM, kl"NGXW Alternative Service Concepts > M Reserve Change Report .................................. m ---------------- ........................ ASC: Grss Inc ------------------------ f.4. --------- --- - -. --- - -. - -.:: -------------- -------------- .............. rCD ------------_--------- -: .......... �'.Sv..i...dei ........... mferemm....e . ... % Clami N.m oer Claimant Date Of Loss Incurred ir=mw tnourred Ircurrea fu Des.ript on 1 Coverage staws Paid Status Paid paid: Paid -'0013-07m04511 1 CROSS, JOHN 911612007 Open 0.00 Opell 6,000-00 6,OM.00 0.00 M INC 0.00 0.00 0.00 0.00 0 CD :-006-07-C4559 -:I RODGERS, LARRY 511612007 NIA 0.00 Open 231.64' 231.62 0.00 'NC 0.00 103.08 103.08 0.00 Ci COO( 0844513 --.1 EARLS, FEATHER 512412008 Open 0.00 Open 2,500.00 2,500.00 0.00 INC 0.001 111.10 111.10 0.00 C006-08-:415 IS 41 VVILLIANISr mENRY 71291200.3 Ow 0.00 C.-en 1,800m I'800.00 0.00 INC 0.00 334.54 334.54 0.00 C000-08-n-45113 -.^I RAYNOR, CALVIN 7;I6V2008 M,A 0.00 C.-en 1,320.00 1,320.00 0.00 WC 0.00 359A9 359.49 0.00 COO[ 08-:L517 -21 M,,NCY, JAY 713012008 NIA 0.00 Open 990.00 990.00 0.00 VVC 0.00 0.00 0.00 0.00 I ERVVIN, JCHNATHAN EII212KI03 WA 0.00 Open 5,41124 5,412.24 0.00 IVAIC 0.00 1,385.90 1,385.90 0.00 :-:106-08-C'4520 I PRICE. JASON 7/23L1008 NIA 0.00 Open 27,440.16 27,444.1fi 0.00 INC OM 0.00 0.00 0.00 -STARS Tuesday, September 30, 200S A9.14,44AM 1�1,�+ "I"'Ir INMM VAUNIM, VNIUMM WAIMMI&I IMM49M. quaw4w, MAWMN& WIMMM141 '"AWAAMA, N"" Alternative Service Concepts CD IR County Valued as of 9/3012008 rt STARS Block total for Location (Level B): 022120 - 022120 - TAX COLLECTOR co.m. med."byloss Ind/rd Expense Recovery Deductible Lou Rehab ASC Net Inc ASC Net Inc CD cw= 7 M29.02 0.00 149.50 0.00 C.00 0.00 0.00 6.778.52 6,778.52 Open Claims CD i 0.00 0.00 0.00 0.00 C.00 OM 0.00 0.00 0.00 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 G.0c 0.00 0,00 OM 0.0 0 ZeDoenec 8 6,629.02 0.00 149.50 0.00 0.00 0.00 0.00 6,778.52 6,778.52 r- 7 6,629.02 0.00 149.50 0.00 C.00 0.00 0.00 6,778.52 6,778-52 Location (Level B): 023200 - 023200 - CLERK OF THE COURT Policy Eff Date: None Block total for Policy Eff Date: None cent Medibgloss Malod Expense Recovery Deductible Lectal vac Rehab ASC Net Inc ASC Net Inc CtGced cwmv 211 14,101.77 0.00 549.00 0.00 0.00 250.00 0.00 14,900.77 14,900,77 Oxen Gaimr 0.00 0.00 0'00 0.00 C.0C 0.00 0.00 0,00 0.00 0 O.Do 0.00 O.Go 0.00 C.0C 0.00 0.00 0.00 OM ..:su,ndi%� 0.00 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.010 =*z,nnic 0 07.1 Va.'.-ra 22 14.101.77 0.00 549.0 0.00 C.00 250.00 0.00 14,900.77 14,9M.77 21 14,101.77 0.00 549.00 0.00 C.00 250.110 0.00 14,900.77 14,900.77 STARS ,,.pw, 4 Wednesday, October 22, 2008 12:03:43PM IWARIPOW %waffiftat, V400MV01 MWMIMM411 'WIMWAMMb 'WMWIWMu' wop"AWAM Qmw"AM6 -4"IWAWI,100WAM, Summary of Standard Report Templates • Template Group Template and Description Claim -Detail • Aggregate Erosion - Details losses that have eroded the policy aggregate and shows the remaining aggregate amounts • Claim Abstract - Provides one -page of information for each claim • Occurrence Abstract - Provides one page of information for each occurrence i • One -Line Claim - Provides one row of basic claim information for each claim • One -Line Occurrence - Provides one row of basic occurrence information for each occurrence • Two -Line Claim - Provides two rows of extensive claim information for each claim • Three Line Claim - Provides three rows of extensive claim information for each claim Claim -Analysis • Block Total Analysis - Provides detailed financial bucket information by claim status • Closed Claim Reserve - Examines claim reserve difference —from the first transaction to the closing date —for individual closed claims • Duplicates - Reveals duplicate entries for the same claim • Incurred Comparison - Breaks down the incurred cost for individual claims by financial buckets • Layered Loss Analysis - Examines individual claims and layers losses into groups (SIR/Deductible, Limit, and Excess) by policy period • Open Claim Reserve - Examines claim reserve difference —from the first transaction to the current paid -to date —for individual open claims • Paid Comparison - Breaks down the paid cost for individual claims by financial buckets • Repeaters - Reveals claimants associated with multiple claims • Valuation Comparison - Compares the incurred and paid costs of individual claims at two specific dates Claim -Summary • Benchmark - Compares an organization's workers' compensation statistics against benchmarks to help identify key cost drivers • Claim - Summarizes claim financial information • Closed Claim Reserve - Summarizes claim reserve difference —from the first transaction to the closing date —for closed claims -- Alternative Service G nce tS, LLC 79 I ....... _.. • Incurred Comparison - Summarizes the incurred cost of claims by financial buckets • Layered Loss Summary - Summarizes and layers losses into groups (SIR/Deductible, Limit, and Excess) for a specific policy period • Medical vs. Indemnity - Summarizes the percentage of medical cases versus lost work days cases • Multiple Period Valuation - Compares loss information over multiple periods valued at the end of each period • Occurrence - Identical to the claim template, but summarizes by occurrence rather than by claim • Open Claim Reserve - Summarizes reserve difference —from the first transaction to the current paid -to - date —for open claims • Paid Comparison - Summarizes the paid cost for individual claims by financial buckets • Top 10 Claim Summary - Summarizes claim information for the top ten entries of a specific group (cause, carrier, location, etc.) • Total Cost of Risk - Combines developed losses, insurance premiums, claim handling expenses, taxes, and other expenses to calculate an organization's total cost of risk • Update - Shows summary and detail information about the STARS database after an update, including new claims, closed claims, reopened claims, claims not on file, claims with undefined location codes, new payments, and reserve changes i • Valuation Comparison - Summarizes the incurred and paid costs of claims at two specific dates Transaction • Financial Transaction Detail - Details transaction information for individual claims • Financial Transaction Summary - Summarizes transactions by individual financial buckets • Payment Two -Line - Details payments made between two user -specified dates Location • Location Abstract - Provides detailed information about individual locations • Location at a Glance - Provides integrated information on a specific location, including premium history, loss history, a list of large open claims, analysis on top loss causes, and exposure information • Location List - Presents a hierarchy for individual locations • Recommendation Management — Provides outstanding recommendations by location and tracks their inspection dates, priorities, types, and status Values • Loss Ratio (Summary) - Compares summarized claim loss data to values data • Multiple Values - Lists up to five values by date - Alternative Service GenceptS, LLC 80 • Multiple Values (Summary) - Summarizes up to five values by date • Multiple Values Ledger - Lists up to ten values by date and prints on legal -sized paper • Top 10 Multiple Values (Summary) - Summarizes values for the top ten entries of a given group (such as location or calendar year) • Fast Top Multiple Values (Summary) - Same report as the Top 10 Multiple Values (Summary); however, Fast report has been enabled, thereby eliminating the ability to "drill down" with this report • Value Comparison - Compares values between two specific dates, generating the difference over time and the ratio • Value Listing - Lists the actual and estimated amounts for a specific value • Values by Date - Lists a value for up to five specific dates COPE • COPE Abstract - Provides an overview of the physical features of specific construction sites • Construction Detail - Details the physical features of various construction sites by location • Exposure Detail - Details loss expectancy due to occurrence for specific construction sites • Loss Expectancy Detail - Details individual, as well as total, loss expectancy values and percentages for specific construction sites • Occupancy Detail - Details occupancy status and percentages for specific sites • Protection Detail - Details protection information (alarms, security guards, sprinkler system, etc.) for specific sites Recommendation • Recommendation Detail W/LE (Loss Expectancy) - Presents recommendation details in relation to expected losses • Recommendation Detail - Presents structural and financial recommendation details • Recommendation Summary - Summarizes recommendations and responses Policy • Policy Detail - Details information for individual policies i • Policy Abstract - Provides one page of information for each policy • Policy Erosion by Claim - Rebuilds policy erosion data for selected claims • Policy Erosion by Policy - Rebuilds policy erosion data for selected policies, and processes all related claims Premium Alternative Service ConceptS, u.c j 81 • Premium Loss Ratio - Compares the amounts paid on premiums to claim exposure • Premium Summary - Provides totals by financial bucket for selected premiums, and includes two separate premium formulas Rolodex • Rolodex Abstract - Provides a detailed listing of rolodex entries Diary/Notes t • Long Form - Presents detailed information for individual diary entries attached to specific claims Check • Check Detail - Details account, invoice, and status information for individual checks Codes • Code Listing - Presents codes and their descriptions, grouped by type Other • Cost Allocation - Calculates a loss -sensitive cost allocation based on location -by -location information about costs, loss frequency, loss limits and exposures • Audit Trail Detail - Processes and displays a list of documents and document actions that were performed by the system users you select • User Security/User Security (Expand) —Allows system administrators to review all security settings. User Security (Expand) displays all details, while User Security is a summary report that allows the administrator to drill down to details (making it easier to navigate) -- Alternative Service ConceptS, uc 82 Sample Caption Report DATE: TO: FROM: RE: Trial Date: Insured: Claimant: Date of Loss: Policy No.: Effective Dates: Limits: Coverage Code: SIR ASC Claim Number: Nature of Report: Claim No.: RESERVES: As Of Date Indemnity Prior Total Incurred 10/24/2007 CURRENT TOTAL INCURRED Current Total Paid Amount Paid During Current Month CURRENT OUTSTANDING Expense Indemnity Expense $20,000.00 RESERVE 10/24/2007 $ - $ 20,000.00 TOTAL Indemnity Expense $ - $ 20,000.00 $ - $ - $ 20,000.00 FACTS: Suit was our first notice of the claim. The claimant purchased property in Mission, TX with the intent to use the property for business purposes. He purchased the property around February 4, 2005. From the early 1950s until 1967, ......... operated a pesticide formulating facility at the property in question. During this period, they purchased technical grade pesticides from the defendants. The defendants delivered the chemicals to the facility via trucks and/or railroad cars. The products delivered were in liquid form, dry flakes, powders and/or solids. In mixing the pesticides, fumes and dust were created which allegedly contaminated the land. There were also numerous chemical spills that occurred and these spills further contaminated the property according to the Complaint. Around 1967, ...... through a court -appointed receiver took possession of the ........ facility and operated the plants. As recently as September of 2006, the Environmental Protection Agency (EPA) found the plaintiff's property was contaminated from pesticide formulating activities that occurred on the property under ........ decades before the plaintiff purchased the property. The EPA has determined that the cleanup costs will be in excess of $8 million dollars. The EPA has found that solely Alternative Service Concept§, LLC j 83 as a result of his purchase of the property, the plaintiff is a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) for the cleanup of the site. COVERAGE: We are using the policy at the time that ...... became part of ASC CLIENT. That number is #. This was written by ...... Insurance. The effective dates are 4/1/01-7/1/01 and the date of loss of 4/1/01 falls in this time frame. That date of loss is the date that ....... became part of ASC CLIENT program. There is an SIR in the amount of $200,000. The exposure periods that are alleged for this case took place between 1950-1967. This is before the time that they joined ASC CLIENT so there may be other carriers that need to be placed on notice. Named with blank and Company is reviewing prior coverages and putting prior carriers on notice. LIABILITY: There are multiple defendants and suit was just filed so we cannot determine liability at this time. RESERVE RATIONALE: I have set $20,000 in legal reserve. I do not recommend placing a reserve on the property damage section of this claim at this time. STATUS 3/28/07: 1 was able to get a status from our attorney. He advised that ...... was dismissed from this litigation because the plaintiff purchased the property and deed and was aware of some of the problems with the contamination of this land. The judge dismissed all parties that the claimant had prior notice of at the time of the purchase........ was one of the parties. The suit is ongoing but ....... will not be involved. Once legal bills and coverages determined, vouchers can be issued and the file can be closed. FURTHER ACTIVITY NEEDED: Obtain legal bills and process under the SIR. Coverage has not been addressed but this file can be closed once bills processed. NEXT REPORTING DATE: Since insured has been dismissed, I do not feel we need to report this further as we will be closing once legal is paid. Adjuster Name Here Alternative Service ConceptS, LLc 84 Sample Stewardship Report Total Claims by Policy Year 03/31 /2003 - 01 /15/2009 Total Claims Police Year 4 - i • a 0 55 0331.12003 — 033012004 031311'2004 — 0313012005 0 63 0331,12005 — 033012006 0 82 03/3112006 — 03:3012007 1 56 03'31 20V — 03 30t2009 4 65 0313L'2005 — 01.1512009 6 ?6 Alternative Service Concepts, «c 85 A Average Paid to Date by Policy Year 03/31 /2003 - 01 /15/2009 Average Paid to Date Polies` Year $196 S2,013 03/31/2003 - 03130L004 03/31/2004 - 03f30t2005 $636 $1.297 03r'31;2005 - 03.3012006 $17,759 S1.090 03l3112006 - 03. 3012007 $469 S1.828 03131i2007 - 03.3012008 $0 S1.907 03/31 )00S - 0V1512009 $0 $924 S 18,000 S18,000 S 14,000 S 12,000 S 10,006 S8,000 S8.000 S4,000 S2.000 t SO 03/3112003 - 0313112004 - 0313112005 - 03I3112008 - 0313112007 - 03131/2008 - 03'3012004 03}3012005 M3012008 03/3012007 03J3012008 01115/2004 •Badly [rw-,p ■Prcrer:)r Damage - Alternative Service Concepts, uc 86 Legal Expenses Paid to Gate by Policy Year 03/31/2003 - 01/15/2009 Legal Expenses paid to Date Police Year 03,131E 2003 - 03, 301200 # $3,452 03/3112004 - 03130,2005 $34,936 03:13 U2005 - 03130i2006 $130.566 03/31/2006 - 033012007 $0 03131f2007 - 03130/2008 $0 03,3112008 - 01!15 2009 $0 Paid 5140,000 $120.DD0 $100,000 $80,000 $60,000 $40.000 $20,000 50 AO A�Adl%9V 03i31f2003D24li2004D3131 1200E03,131)200603P31f200Ti313 i1200 03i3�2004]3130/200a�0313CU20G803�?�J� 2 D 0 i43r30; 200 9D 111 �J2000 ■legal Pala - Alternative Service Concepts, uc 87 Litigated Claims by Policy Year 03/31/2903 - 91/15/2009 Lritizated Claims 0331,12003 - 0330t2004 2 53 03 /3112004 - 033012005 3 60 1 03,3V2005 - 033r30'2006 4 78 0313112006 - 01"3012007 0 57 03#'3V2007 - 03/30/2008 0 69 03/3112008 - 01 15/2009 0 32 - - Alternative Service Concepts, u.c 88 Lag Time Average - by Location 03/31 /2003 - 01 /15/2009 igh School 409 High 139 nior High 106 Junior High 102 r Elementary 9? adding Elementary Annex meniary z Elementary Elementary 79 74 ?1 53 53 48 r High 39 38 lemeniary Aerations lementary on Center 32 30 21 10 I Campus 9 High tary rtation Complex 6 iernentary menta ry 4 3 Elementary entary High 3 2 2 I - Alternative Service Concepts, u.c 89 Lag Time Average - by Location 03/31/2003 - 01/15/2009 Open Claims - by Incurred Value 03/31 /2003 - 01115/2009 I " I - Alternative Service Concepts, «c 90 Percentage of Claims by Coverage 03/31/2003 - 01/15/2009 Auto Liabity (AL) 213 Auto PD - Collision (AG) 91 General Liability (GL) 33 Auto PO - Comprehensive (All 1 Errors and Omissions (EO) 11 Property (PR) 5 Incident (1C) 2 Errcrs and Omissions Auto P Ccmprehen<. 4% General Lia 0 Am% zs4 lAL) 59% Alternative Service Concepts, uc 91 Historical Data 03/31 /2003 - 01 / 15/2009 Nbr of Claims 6aj-y lrrury 11 1.3 9 8 s, 2 Prop", Darrvge 44 53 73 51, 84 30 Tmal Total Incurred Cw0y Irt%q Prop-y Da—p Tots! Total Paid �ge Y �+Y Property Dan a Total i Average lneurred Bony Ltiury Prouty Damage Tom( average Open Claims SO" " Pmpeny Damage Torat 4 f 1 1 , 1 VIM $88.581 Wan $83.740 $1,69.834 WO—W $2.613 $04.2M $7.5M $149.222 f2500 $44.974 0.73d $75.109 .3 7.051 MUM $47,474 M153 $aaml $8.313 M.745 $119.834 $ UPA $2.613 103238 SO MUM S0 $27.722 1 17jo3NfFAW--ffrTVW SI95.72 32013.21 $838.34 31W06 317.750.29 51080.24 VM.83 S1.247.S1 St.f1.0` .CO 32331.81 51.210M $1.490-13 1.192 f . 1 $1.702.65 l#11781 103WIRFMITIUM 0 0 0 0 0 0 0 1 1 3 1 1 €:y -- Alternative Service Concepts, uc N 92 Summary by Location 03/31/2003 - 01/15/2009 Boding 21 3 3 1043.4 0.44 3 =129.44 $ Elementary 0 $ 0 $ h High 0 on Center r Elementary 172 1 3 24-3,237.49 1,529.58 Elementary 1 0 5 3M54 lar High Elerr*ntary 2 0 1 0 ry al Campus Campus 2 3 0 5 1,44 1.02 0 $ 1 1 s Operations s 1 s e3.74&31 Elementary lernentanj High 2 0 4.540.40 1 0 0 S 12,212.92 or High High School 1500.33 ry Elementary 1 0 $ - 15 1 3 35,700.41 Elementary 1 p s - ok Junior High er Elerrentary entane Complex Elementary lic, "h I 0 $ 2 0 3 1:0.000.03 1 - 0 953.78 4 0 S 22,467.15 1 0 $ 1 0 $ - rtation 65 1 4 1 s 102,310.02 TOTAL 358 11 $706,490.11 Alternative Service Concepts, LLC Financial Capacity Statements Alternative Service Concepts, LLC has attached its latest independent auditor's report, and recent bank standing letters on the following pages: ALTERNATIVE SERVICE CONCEPTS, L.L.C. AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007 Alternative Service ConceptS, LLC i 94 it FGM � LLC. Certit'eati Putrlf [ Atcousitanas aie.Sorrrrr aadiansultants Page l litj4�rik Srrlrrxrmu"' INDEPENDENT AUDITOR'S REPORT Board of Directors anti Members Aiternative Service Cuneepts, L.L.C. We have audited the accompanying consolidated balance sheets of Alternative Service Concepts, L.L.G. and Subsidiary as of L)tcember 31, 200S and 2007, and the related consolidated statements of income and, members' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management, Our responsibility is to express an opinion on these consolidated financial statements based an our audits. We conducted our audits in accordance with auditing standards generally accepted in the united States Thosc standards require that %vc plan and p4rt'omt the audit to obtain reasamahlc assurance about wheAct the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, An ttrtdit also includes assessing the accounting principles used and significant estimates made by ttnanagement, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above presents fairly, in all material respects, the financial positron of Alternative Service Concepts, L.L,C. and Subsidiary as of December 31, 2009 and 2007, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States, �. c Bannuckburn, Illinois February ?d, 2009 z�ar takesrae Crtve 3r � fin:t; Ssnnndbuio, t L C : 5 347 574 t�£c0 V �1'57 374 ^sao f Alternative Service ConcepLb, «c ; 9s Ii AI.'I ERNATIV E SERVICE CONCEPTS; L.L C. AND SUBSIDIARY CONSOLIDATED BALANCE SLEETS DECEMBER 31, 2008 AND 2007 ASSETS 2008 '2007 CURRENT ASSETS Cash and cash equivalents S 393,103 S 1,1332,499 Cash and cash cNuivalents • Esero« 352,457 347,482 Certificate of deposit - Restricted 200,000 200,000 Accounts receivable (net of allowance for doubtful accounts of$155,000 in 2008 and 2007) 1,665,394 t,740,.399 Prepaid expenses 192,489 232875 Other 1,521 1, 6 3,004,964 4,354,421 PROPERTY AND EQUIPMENT 1,372.372 1.194,593 Less: Accumulated depreciation 1 077,2411 953,415 95.131 241,168 OTHER ASSETS 1 ntangihle assets (net of accumulated araaartiatiort of S486,578 in 2008 and $310,800 in 2007) 1,800,966 1,232,499 Gctdwill L922.763 2,922,763 Security deposits 37,231 28,592 5,760,960 5,183,854 S 9,061,055 5 9,779,443 Tlx: ar nnrsaaz+v n news u.w a- integral cart at these stascrr�enrs d Alternative Service Concepts, LLC i 96 Page, 2 LIABILITIES ANO MEMUF,RS' EQUITY 2008 -7007 CURRENT LIABILITIES Current portion of note payable - Bank g 1 4,744 $ 166,477 Current portion of note payable- Seller 5ftoo0 912,400 Accounts payable 380,169 393,884 Unearned revenue 739,994 1,789,9% Current portion of deferred income 396,627 401,359 Due to members 108,250 101,90D Accrued payroll and related expenses $oo";53 611.125 Accrued expenses 565,420 356,623 3,655,657 4,713,763 LONG-TERM LIABILITIES Nute payable - Bank t�7ti,693 111o,67t3 Note payable • Seller 500.000 Deferred income 588,M3 517,670 1,265,211 .1,828,348 4,920,869 6,562,111 MFMBERS'EQUITY 4,kta,197 3217,332 S 9,061,055 S 9,779,443 Alternative Service Concepts, LLc 1� 97 I, Pagel ALTERNATIVE SERVICE CONCEPTS, L.L.C. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME. AND MEMBERS' EQUITY YEARS EN DED DECLMIJER 31,20011 AND 2007 2008 2007 Percent of Percent of Amount Revenues Amount Revenuts REVENUES 5 15,155,782 100.00 % 14,032,248 W0100 % DIRECT EXPENSES 10,606.456 69.98 9,675,241 68.95 GROSS PROFIT 4,549,326 30.02 4,157,007 3 LOS SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,1 13,637 19.22 4930,999 20-99 OPERATING INCOME 10.80_ t,416, 108 1016 OTHER INCOME (EXPENSE) Inicrest ircome 23,952 16 -10,133 2i Imerest expense 64,423) r d3) 81,339) 39) _40,473) 17) 41,006) i .30) INCOME BEFORE STATE INCOME TAXES 1,595,216 10.53 %385,102 9,86 STATE INCOME TAXES 69-166 ..46 W000 .48 NET INCOME 1,525,850 10.07 % 1,317,102 9.39 % MEMBERS'EQ1,31TY Beginningofycar 3,217,332 2,174,230 DiSITibUtILIMS. nd A 602,995) I 874,000) End of year 5 4,140,137 S 3.217,332 Tlw accompanying notes are an integral part orihrsestatcricw, I Alternative Service ConceptS, LLC 98 ALTERNATIVE SERVICE CONCEPTS, LL.C, AND SILMS11DIARY Page 4 CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED- DECEMBER 31,2008 AND 2007 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Not income S 1,525,850 S 1,3171.102 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and atinoTtization 3 1. 0,546 307,754 Loss gain) on sale o r property And equipment ipinent 487 7491 Sw ight-line rent 67,247 56,978 Changes in operating assas and liabilities: Cash and cash equivalents - Escrow 4,975) 119,419 Accounts receivable 75,005 370.017 Prepaid expenses 159,514) -.-i3,728} Other amcts 9,094) 6,261 Accounts payable 13,7t5) 264326) IJneamcd TeVC11tte 1,050,002) 682,4177 Deferred income ,1 '6Il - - la I 5A 14) Due Io lucintlevs 6,350 Accrued expenses 102,837) 11,106), Net Cash Provided By Operating Aetivitics 701,460 1-576,065 CASH FLOWS FROM INVESTING ACTIVI"FS PTMCC45 from sale of property and equipment 1,430 2,000 Cash used for acquisition (Note 11) 114,337) Purchases of property and equipment r 126,841) 72,705) Net Cash Used In Investing Activitics 499,748) 7G,7 0-5) CASH FLOWS FROM FINANCING ACTIVITIES - Payments on note payable - Bank t 125.713) r, 159777) Payments on note payable - Seller 912,400) Distributions 602,99-5) $74,0001 Net Cash Used In Financing Activities 1,033777) NET CHANGE IN CASH AND CASH EQUIVAIF NTS r 1,439096) 1,471,583 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 1,831,499 360,416 CASH AND CASH EQUIVALENTS - END OF YEAR S 393,103 S I "Q12,499 SUPPLEMENTAL DISCLOSCRES OF CASH FLOW INFORMATION State income taxes paid '7000 S 68,000 Interest Laid $ fia,Silty 5 81,001) The aecanipanyirlg nt*hs ar,; -aii ina%�Lritl part these t3:cm n e ts Alternative Service ConceptS, LLC Page 9 ALTERNATIVE SERVICE CONCEPTS, L L.C. AND SUBSIDIARY NOTES TO THE CONSOLiDATED FINANCIAL STATEMENTS NOTE I — DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Descr4alon of Bashres& Alternative Service Concepts, LL.C. and Subsidiary (the "Company") provide third -party administration and claims handling services in the property and casualty insurance fields, including workers' compensation (indemnity and medical only claims), auto and general liability claims. The Company is headquarteted in Nashville, Tennessee and maintains ogees throughout the United States. Bests of Presentation. These consolidated financial statements include the accounts of Alternative Service Concepts, L.L_C, and its wholly -owned subsidiary, Alternative Service Concepts of Tennessee, L.L.C. All significant intercompany balances and transactions have been eliminated in consolidat ion. ,4fanagementl F,st&notes and Asstimptlolm The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the united States requires management to make estimates and assumptions Chat affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from Those estimates. Cash find Cash Equivalenm The Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents. The Company regularly maintains cash balances that exceed Federal Depository Insurance Corporation limits. Crash and Cash Cgnivaleirts -Escrow. ']'he Company maintains an escrow- account that represents, cash deposits from cusloaners in connection .with deferred income (flute 6). Casts is releitred from escroxv only upon the Company's perfirrmance under certain contracts and appsoval from customers, Certfeate of Deposit - Restricted, One of the Company's customers requires a IetteT of credit in conjunction with their contract. As collateral for the letter of credit, the Company's batik requires the Company to maintain a $200,000 certificate of deposit. Accoun►s Receivable and Allowancefor UoabtfaPAccoanis, Accounts receivable are un-collateralized customer obligations due tinnier normal trade lenrts granted by the Company on the basis of each customer's own creditworthiness. The carrying amount cif accounts receivable is reduced by a valuation allowance that reflects management's best estimate of amounts that will not be collected. Management individually reviews past -due accounts receivable balances and based on an assessment of each customer's current creditworthiness, estimates the portion, ifany that will not be collected. Additionally, management assesses the remaining balance of accounts receivable based on past experience and an assessment of future economic conditions to determine its best estimate of the portion that will not be collected. Ihoperty and Equipment. Property and equipment is stated at cost. Depreciation is provided on straight-line and accelerated methods over the estimated useful lives of the assets. Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be rcca}verable. There were no €mpainuent charges for the years ended December 31, 2008 and 2007. Goodwill and Other intangibles, Goodwill assoc isted with acquisitions is not to lie amortized, but instead will be assessed fur impairment at least annually_ Other intangibles, primarily customer lists, are amortized over 10-1 S 1,eats. The Company continually reviews goodwill and otter intangibles to evaluate c+briber changes have occurred that would suggest such assets might be impaired. li'circumstances sug%cst that the remaining estimated useful life require, revision, or that the associated costs are not recoWrable, the carrying value is red uccd to fair value. There vecre no impairment chard<s for the years ended December 31, 10G9 and 2,0 { C:unf inuedi Alternative Service ConceptS, LLC 100 l ALTERNATIVE SERVICE CONCEPCONCEPTS.L I..C. AND SUBSIDIARY Page b NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE: 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded) Revenue Recognition. Revenues from fixed-fec corvtracts are recognized over the life of the contract, Certain contracts have a provision whereby contract adjustments are made based on actual claims processed versus estimated claims billed. These adjustments are recorded when calculated, which is generally upon completion of the contract. Management believes that any adjustment would not have a material effect on Chew consolidated financial statements, Revenues from time and expense contracts are recognized as the work is performed. Direct costs as well as selling, general, and administrative costs are charged to expense as incurred, Unearned revenue represents customer deposits r+eccived on approved contacts for future services to be performed and the revenue is recognized as earned over the contract period. Income lkxm The Company is taxed as a partnership, Accordingly, the Company's atennbers are personally responsible for income taxes oft the Company's taxable income, and therefore no provision for income taxes has been made in these consolidated financial statements, The Company is responsible for cenain other state income taxes. The Company will make a distribution to its members in 2009 in connection with such members' respective income tax liabilities incurred for 2009 as a tesult of the Company`s partnership income tax status, NOTE 2 - PROPERTY AND EQUIPMENT The major classes of property and equipment and their estimated useful lives used in the computation of depreciation are as fallows: Estimated Useful Life 2008 2007 (Years Computer equipment and software S 91%445 S 864,129 3-5 I=umiture and fixtures 303,051 229,945 , Leasehold improvements 4,028 736 3-7 Telephone equipment 79,052 471179 5 Office equipment 66,796 5,1694 5 S 1,372,372 S 1,194,533 ;VOTE: 3 - LINES OF CREDIT The Company has a S950,000 line of credit hearing interest at the LIBOR rate (0.45% as of December 3), 2008) plus 1.97%, expiring May 5, 2013. The litre of credit and bank note payable (Note 4) are collateralized by all ['omptay assets. 'Phis facility also requires the Company to maintain certain financial covenants including a ininimum fixed charge coverage ratio. ,Ai cif December _31, 21009, the Company was in compliance with these covenants. There bete no amounts outstanding on ihi line of credit as of December 31, 2008 and 2007. The Company has a temporary $250,00 line of credit bearing interest at the prime rate (33.9,55% as of December 31, 200-3), expiring March 25, 2009 This line of credit is collateralized by all Company assets. 'I his facihty also requires the Company to maintain certain financial covenants including a minimum fixed charge coverage ratio As of 13eccmt,:r 31, 20t78. Ihe C ompany was in compliance; with these covenants. There rcere no amounts outstanding on this line of credit as of December 31, 2009 and 2007. Alternative Service Concepts, LLc 101 ALTERNATIVE SERVICE CONCEPTS, I„L.,C AND SUBSIDIARY Page 7 NOTES TO THE CONSOLiDATED FINANCIAL STATEMENTS (Continued) NOTE 4—NOTE PAYABLE - BANK The Company has a $950,000 term loan, hearing interest at the LIBOR rate, the proceeds of which were used to retire a previous loan. In connection with the above borrowing, the Company entered into an interest fate swap agreement. Under the temis of this agreement, the Company is to pay the variable rate and receive a 5.72%fixed rate in return, The purpose of the swap was to effectively fix the variable interest rate attached to the borrowings. As of December 31, 2008, the estimated fair market value liability of the swap was approximately $45,000, Payments on this loan consist of principal and interest payments of approximately $16,000 per month, with a final payment due April 2013. Future minimum principal payments are as follows ac of Deccmber 31, 2008: Year Fnding December 31, Amount 200 S 174,744 2010 185,006 2011 193,810 2012 207,373 20t3 98,449 $ $51,442 MOTE 9 —NOTE PAYABLE - SEi..LER The Company obtained a non•fnteresi bearing note from the sellers in connection with the redemption of certain membership interests in 2006. The Company paid $912,400 in April 2008, and a subsequent S300,000 payment will be made in April 2009. These payments are required provided the Company has "Excess Cash", as defined in the Redemption Agreement, available to make such payment. In the event payment is not made, the amount of payment will be deterred until such time that the Company has "FAccu. Cash" available, but no later than April 2009, NOTE G R SIGNIFICANT ESTIMATES - DEFERRED INCOME Deferred income represents obligations of certain lone -tern contracts that require the processing of claims until such claims are resolved or concluded. The income from such contracts is recognized over the period during which the claims are estimated to be processed. The deferred income is considered to be a significant esihttate because it is at Ieast reasnnabiy passible that a material change in the estimate will occur within one year following year end, NOTTE 7 — COMM ITM ENTS Lease.Agreemenm The Company has non -cancelable operating leases for office spate throughout the United Siates that expire in Various times through March 2016- Monthly haw rentals are required as +yell as. the Company's pro-rata share of certain opwrating expenses and real estate taxes. (Continued) 14 Alternative Service ConceptS, u.c 11 102 ALTERNATIVE SF,RVICF, CONCEPTS, L,L.C, AND SUBSIDIARY Page $ NOTES TO THE CONSOLIDATED FINANCIAL STATFMFNTS (Continued) ,NOTE 7 — COMMITMENTS (Concluded) Approximate future minimum lease payments under such leases are as follows, Year Ending December 31, Amount 2009 S 661,635 2010 596,675 2011 4",5,716 1012 348,594 2013 330,598 1'hereaftcr S90,301 S 3,003,519 One of the Company's leases provides for escalating monthly rent. The Company records monthly rent expense equal rs the total payments due over the lease term, divided by the number of manihs of the lease term. Accordingly, the difference behveen rent expense recorded and the amount paid is charged to operations, of which $-0- and $67,241 was accrued as of December 31, 2008 and 2007. respectively. Total rent expense including maintenance, insaiance, and real estate taxes for the vcats ended December 31, 2008 and 2007 was approximately S667.000 and $590,000, respectively. Redrrmenl Plan, The Company itfaintairts a prufvt sharing plan with a 401(k) provision, which covers all employees in certain job categories who have met specific length -of setvlce and minimum -age requirements_ The Company's contributions to the plan are discretionary and are determined annually by the Board of Directors. Such contributions were approximately $t62,000 and $155.000 for the years ended December 31, 2009 and 2007, respectively. Carninlssian Plan. The Company provides ail incentive available to all employees for new business acquired, In order for an employee to qualify for a commission under the plan, the revenue generaied must be in excess of certain defined targets. Total commission expense under this plan was approximately 513,000 and S160,000 for the years ended December 31. 2009 and 2007, respectively, File lnvetrrmy Incentive Plan, 1'he Company maiintains an inccntive plan available to 1) claims adjusters tar achieving specific efficiency and productivity. in claims file management, and 2) support staffthat assist file technicians in the reduction and control of open file inventory by exhibiting superior efficiency, productivity and quality in file management. Total borrus expense under this plan was approximately $93,000 and $86,000 for Cite yours ended I.Iecember 31, 2008 and 2007, respectively. Severance Plan, The Company provide, a severance plart available to all employees. In order for an employee to qualify fur severance under the plan, the Company :could have to eliminate their position. Total severance expense under this plait w,ts approximately $95,000 and $114,000 for the years ended December 31, 2008 and 2007, respectively. .S'uftware Rental Agreement Effective Ocwher 31 2006, the Company entered into a five-ytar softwyre rental and support agreement that expires on October 11. 10 11 and rewires monthly fees of approximately S43,000. Totai expense under this agreement +ti•as approximately :b540,000 for each of the years ended December 31, 2008 and r00 Alternative Service Concepths, LLc 103 ALTERNATIVE SERVICE CONCEPTS, L.L,C. AND SUBSIDIARY Page 9 NOrlrESS TO THE CONSOLIDATED FINANCIAL, STATEMENTS (Continued) NOTE 8 —SIGNIFICANT CUSTOMERS One customer accounted for approximately $3,499,000 or 23% of revenues, and approximately S323,000 or 19`A of accounts receivable, as of and for the year ended December 3I, 2008. One customer accounted for approximately $2,800,00{1 or 20% of revenues, and approximately $525,000 or 30%of accounts receivable, as of and for the year ended December 31, 2007. NOTE 9—SIGNIFICANT TERMS OF THE OPERATING AGREEMENT The Company operates under tire Second Amended and Restated Operating Agreement of Alternative Service Concepts, I..I..C. (thc "Agreement"), dated January 1, 2006. In accordance with the Agreement, the Company has three classes of members: Class A members, Class B members and Class C members. Cass A members have all voting rights and are allocated all operating profits and losses of the Company in accordance with their respective Class A Percentage interest, as defined in the Agreement. Distributions are made at the discretion of the Board of Directors, subject to the provisions of the bank debt, which limits distributions for tax liabilities only. Currently there are no Class 8 or Class C members, The Company will continue indefinitely, unless sooner terminated pursuant to the provisions of the Agreement. NOTE 10—CONI7NGENC:IE;S In the ordinary course of business, there may be various claims or lawsuits brought by or against the Company, Management is not aware of any ctalms +or lawsuits, other than those disclosed below, that could materially affect the financial position, results of operation, or liquidity of the Company, The Company was a co-deferrdant in a lawsuit for alleged declaratory relief, breach of contract, and negligence, During 2006, the Company settled this case for $135,000. All amounts have been paid by the Company as of December 31, 2007. 11te Company is a co-defernJant in a lawsuit for allescd breach of contract and claims for indemnity and violations ofcenain Kentucky statutes, The Company has responded by denying liability and stating numerous affirmative defenses, The Company`s legal counsel is unable to predict the probability of an unfavorable outcome; however the Company is covered under their insurance for any amount over $100,000, including legal costs_ As of December 31, 2008 the Company accrued $15,000 of expenses related to this case, which represcros the remaining obligation of the Company as cif December 3l, 2008_ The Company intends to vigorously defend its position_ The Company is a co-deferidant in a lawsuit far alleged negligence, During 2008, the Company concluded this case for approximately 51,000,000, sMiich includes legal costs, ofwltich the insurance company covered S900,0GO. Ail amounts have been paid by the Company as of December 31, 2008. The Company is a co-defendant in a lawsuit for alleged negligence. The Company has responded by denying liability and stating numerous affirmative defenses. Tlie Company's legal counsel is unable to predict the probability ofan unfavorable outcome; however the Coml%my is covered under their insurance for arty amount over $100,000, including legal costs. As of December 31, 20GS, the Company accrued $30,000 of expenses related to this case, which represents the remaining obligation of the Cornpany as of Doceniber 31, 2008. The Company intends to vigorously defend its position, (Continued) Alternative Service ConceptS, u.0 104 I, Page 10 ALTERNATIVE SERVICE CONCEPTS, L.L.C. AND SUBSIDIARY NOTES TO THE CONSOLIDATED FINANCIAL, STATEMENTS (Concluded) NOTE 10 — CONtiTINGENCIES (Cuncluded) The Company is a co-defendant in a lawsuit fbr alleged negligence. The Company has responded by denying liability and stating numerous affmative defenses. The Company's legal counsel is unable to predict the probability of an unfavorable outcome; however time Company is covered under their insurance for any amount over $100,000, including legal costs, During 2008, the Company accrued $42,000 of legal expenses related to this case as it is the Company's belief that this amount represents the maximum exposure to the Company. The Company intends to vigorously defend its position, The Company is a co-defendant in a lawsuit for alleged negligence, The Company has responded by denying liability and stating numerous affirmative defenses. The Company's legal counsel is unable to predict time probability of an unfavorable outcome; however the Company is covered under their insurance for any amount over $100,000, including legal costs. During, 2008, the Company accrued S50,000 of legal expenses related to this case as it is the Company's belief that this amount represents the maximum exposure to time Company. The Company intends to vigorously defend its position. NOTE It —ACQUISITION Effective July 15, 2008, the Cottmpany purchased cenain fixed assets and customer fists at' Unisourcc Administrators, LLC ("Unisourcc") for $200,000 in cash plus the assumption of liabilities of approximately S2,20:000 and transaction fees of approximately 5175,000. Additionally, the Company entered into an earn -out agreement with Unisource whereby the Company would be tesponsible to pay theist a 5% oununission each of the following, 2 years based on renewed centractt, as detincd. As of Dccernher 31, 1_008, the Company acoued approximately 3212,000 related to management's estimate of commissions to be paid in accordance with the earn -out provision. in con)unctian with this provision, the Company rsray offset $60,000 of the assumed liability with the first commission payment. NOTE 12 —RECENT ACCOUNTING PRONOUNr`EME+ITS In June 2006, the FASH issued FIN No. 49 Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 ("FIN 48"). This interpretation c iarifies the accounting and financial statement reporting for uncertainty in income taxes recognised by prescribing a recognition threshold and measurement attribute fora tax position taken or expected to be taken in a tax return. The interpretation was originally effective for fiscal years beginning after December 15, 2006. In November 2008, the FASB de€erred the effective date of this pronouncement to annual periods beginning after December 15, 2008. Management has not yet completed its analysis of the effects of this interpretation and has not determined if the adoption of FIN Ott will have a material impact on the Company's cnnsotidated financial statements: na Alternative Service ConceptS, LLC 105 �f� Pinnacie KATIONAI BANK January 12,2009 Ms. Carolyn V. Adkins 1101 Kermit Drive Nashville, TN 37217 Dear Ms. Adkins: Alternative Service Concepts (ASC) has been a client in good standing with Pinnacle National Bank since early 2005. In addition, the bank values our working relationship with the professionals at ASC. Sincerely, CHASE AEL Mac Johnston Elvin Sohwer Senior Vice President A-1.1-1 Vies rm an. ConKnn,oal Clknt Senioes January 15, 2309 Ms Carolyn Adkins Alternative Service Concepts LLC 1101 Kermit br. Sute 800 Nashville, TN 372f7 'r bear Ms. Adlans: 211 Cwnma« S— Aliernative Service Conxpts LLC `4s been a client in good sanding wiih RMorgan Chose &nk• KA SLgr, 300 since late 2003. We calla our relwionship wi-h A24C and enjoy very much working with -he N.hriila TN 37201 rcfessianal staff at ASC. 615 744 3700 P 61i 744 3M wwrcmypinnrlemm Sir—lr, y El:ia Scwler, Aatistort Via Presidem JPl .M-Cha Pank \A _16W J.'.scn i.'i.c .:x . fi t:2.4 ice_-c .25ud_ dva %AWmn<f :can sa» : a rc.. n: ate:: +.�>Vr. r.rr--:�Ax Via•., ♦ n Alternative Service ConceptS, LLC i 106 III f This is ASC's `` � Certificate of CERTIFICATE OF LIABILITY INSURANCEPgg® o�i zizoo9' 1 Of 3 Insurance. PRoMMA LL 877-945-7378 THIS CERTIFICATE IS ISSUED AS A NATTER OF INFORMATtOF ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE This certificate Willis HU HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OF 26 Century Blvd. ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW roves a Of type P. 0. aoz 305191 p Nashville, TY 372105193 INSURERS AFFORDING COVERAGE NAICEI Insurance; EtiL9iE0 Altsrnotivo Svrvica Conovpts LLC MWAIA& Hartford Vvd—riters Insurapev Cesp—y 13010440 underwriter; 1101 [emit Drives suit. 100 'am HFA0. Sntinel Inspranee Company, Ltd. 11000-0 amount/limit; Nsabvillo, 'f17 372170 a16UR@nC:Hart1ord-Casua2ty Insuraeen Cospmy 29424-00 :"WF Ap: asrtford Insurance Rnkt2S46 29424-07 terms, and INBUPSRE:Ansrioan Int—tional Specialty Lines In 26883-oO COVERAGES policy number for your information. THE POLICIES OF INSUAANCE LISTED BELOW HAVE BEEN ISSUED TO THE PISUFIM NAMED ABOVE FOR THE POLICY PERIOD INDICATED. WTN6HSTAND0H7 ANY REOUIREhIENT, TEW OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE WAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLRIES. AGGREGATE LaARS SHOVM WAY HAVE BEEN REDUCED BY PADCLAMS. l WPE0P&MRANCE POLICYHWQER PaUCY 7Iw LMRs A GonnaLUaaITY 20UUNPN2024 3/10/2009 3/10/2010 EAtxoCU1RREICE s �.000.000_ COW MR0MGEhRML0QAfrY CLNVSVAOE OCCUR ETb�, ,♦'tGD V,aDEnP A w S00 P-=PSONM.6ADvaLRmY I3 1,000.000 _ OEM PRCrA'S. CCI U'*P ASS- - AGam-OATELOMT Mts Pen: F000Y P 100 B f A40TOY0111"L9A9ILRY _. n.NYAtIrD LLOWNEOAUTOS 20UUNPN2024 0 3/10/2009 3/10/2010 ODL�.t1�31A0LE LalIr P:e4mw0 ._------ 6QDLYLvraY s 1,000,000 --------- f s 800E-Y 11tAlAY "Amdevi f` t ";woAVros NCN OWNFbAUTOs 1 - PFO1ER7YDAMMW s D'etxr<fem, —_ DAMOELNffil, �� I AUTO OtIY EAAMX'G QTMtRiHAN EAACC AV70 ONLY. Apo f S C excmorw0e9LLAUABUTr OCCUR F] CLAM MADE 20HRMWO054 3/10/2009 3/10/2010 tEAcnxwaISOM s noes_ ACQAE� GATE y 10,000,000 ;s -- T----- is 0MUCTOte RETENTION s S D E !"`oug"GO""t"ATOX YIN -. AND EWPLOYERW LUMLRY ANYPROPP18TOWMT.CVmE(-�j rYiICEIiMEMSE�E)op.UGEOT l".I HPMn ��r� Ion®+6rrors A Oalssioas01619675.1 20WEP00162 3/10/2009 I 10 20 9 3/10/2010 13 1 2010 - Ylgy�� __-_,pg LLF�1cNACC,ci�vr - --- OA.CC1--A5G•EA ENPIDYEE ,_ _ _ -- t _L,_000. D40 �_�Q, OLIO t iEA.DI5eA6E-PoLfCYUWr L 11000,000 1 Claimr Nads KLvc Pmrvesional Liab �3rd Party Adninistmtors E10.000.000 Per Wrongful Act 010, 000. 000 AggregM 0 r' CESCNPPON OF OPERATIOHSILOCATIONSI VOMCLESIFJCCLUSIONS ADOW BY CNOORSEL*NrlSPECIAL PROV15t011S See Attached 8HOULDANY OF THE A90Yt CESCIVeE0 POUC" aE C NC m 86CRE 7REEXPEN;ION OATCTHEREOP.TMISMXMLNSORERWa1.XLVMiZM3fKf L 30 CAYawnlrrm NOTICE' 10 THE CEanrtCATE HOLOLR NANEO 10 THE LtF%*X J1I1 XdC0E VANt&L 0v3arviov Conoepts LLC 11 1101 Ko—Kermit Ilrive Hi10mIYd6BHID3I81391rIGINUmalSIUtAIdI91LNxii�Oitl gO9X i80XH9D9X AVn1D PRFTSE7TATNE suite 800 ,tashvillo, TN 37217 .c n..�<nv wTaysra 11 4vaxs<oxAAOt '�pA: oyyv yy l:Dirt 1eL54Ss! WIUss-LWU AUUHU I:UHPUNA I IVN. All NgmS rOSLYVed. The ACORD name and logo are registered marks of ACORD Alternative Service Concepts, uc 107 CONFLICT OF INTEREST QUESTIONNAIRE FORM CIQ For vendor or other person doing business with local governmental entity This questionnaire reflects changes made to the law by H.B. 1491, 80th Leg., Regular Session. OFFICELISEONLY This questionnaire is being filed in accordance with Chapter 176, Local GovernmentCode Date ReceNed by a person who has a business relationship as defined by Section 176.001 (1-a) with a local governmental entityandthe person meets requirements under Section 176.006(a). Bylaw this questionnaire must be filed with the records adm inistrator of the local governmental entity notlater than the 7th business day after the datethe person becomesaware of facts that require the statement to be flied. See Section 176.006, Local Government Code. A person commits an offense if the person knowingly violates Section 176.006, Local Government Code. An offense under this section is a Class C misdemeanor. 1 Name of person who has a business relationship with local governmental entity. Check this box ifyou are filing an update toa previousiyfiled questionnaire. El 2 (The law requires that you file an updated completed questionnaire with the appropriate filing authority not later than the 7th business day after the date the originally filed questionnaire beoomes incomplete or inaccurate.) 3 Name of local government officer with whom filerhas employment or business relationship. Name of Officer This section (item 3 including subparts A. B. C & D) must be completed for each officer with whom the filer has an employment or other business relationship as defined by Section 176.001(1-a), Local Government Code. Attach additional pages to this Form CIO as necessary. A. Is the local government officer named in this section receiving or likely to receive taxable income, other than investment income, from the filer of the questionnaire? Yes � No B. Is the filer of the questionnaire receiving or likely to receive taxable income, other than investment income, from or at the direction of the local government officer named in this section AND the taxable income is not received from the local governmental entity? aYes No C. Is the filer of this questionnaire employed by a corporation or other business entity with respect to which the local government officer serves as an officer or director, or holds an ownership of 10 percent or more? Yes �No D. Describe each employment or business relationship with the local government officer named in this section. 4 Signature of person doing business with the governmental entity Date Adopted 06 M2007 Alternative Service ConceptS, LLC !II 108 9 MMSEA Management CMS — Medicare Mandatory Insurer Reporting — Section 111 Overview: New CMS Reporting Requirements Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) adds new mandatory reporting requirements for liability insurance (including self-insurance), no-fault insurance, and Workers' Compensation. Under this act, bodily injury claims filed by Medicare -eligible claimants must be reported to the Department of Health and Human Services Center for Medicare and Medicaid Services (CMS). An overview and supporting documents for this mandatory insurer reporting requirement can be found at the CMS website: http://www.cros.hhs.gov/MandatorylnsRep/ • Who Must Report: "an applicable plan.", The term 'applicable plan' means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement: (i) Liability insurance (including self-insurance). (ii) No fault insurance. (iii) workers' compensation laws or plans." What Must Be Reported: The identity of a Medicare .beneficiary, whose illness, injury, incident, or accident was at issue as well as such other information specified by the Secretary to enable an appropriate determination concerning coordination of benefits, including any applicable recovery claim. • When/How Reporting Must be Done: o In a form and manner, including frequency, specified by the Secretary. o Information shall be submitted within a time specified by the Secretary after the claim is resolved through a settlement, judgment, award, or other payment (regardless of whether or not there is a determination or admission of liability). ASC through our system service provider CS STARS provides tools and procedures to meet this requirement. MMSEA fees are: A pass through one time implementation fee of $1,000 and an annual transmission fees (includes query & submissions) of $2,000. Actual costs will be passed through to the City; current estimate is $920 - $1,000 implementation and $1920 - $2,000 annual. Actual cost will be billed to the City when (1) implementation begins and (2) the first quarter of transmission. The ASC/CS STARS process will include mapping of client data to the CMS file format, CMS claims reporting, CMS acknowledgement and error rejection/correction processes, and accommodation for CMS requirements for Medicare eligibility identification. * Required CMS data elements are included as an attachment to this document. Alternative Service ConceptS, u.c 1 109 3 I,3 ASC/CS STARS System Snap Shot System Process CS STARS has chosen Gould & Lamb as their strategic partner after an extensive selection process. Gould'& lamb is a national firm specializing in Medicare Set -Aside and has developed proprietary software to assist with the query and submission processes for Section 111. ASC's data will be exported to Gould & Lamb weekly where it will be checked for potential errors prior to transmission to CMS. Queries will be filed monthly on all newly reported j and all open claims. A query response will be automatically imported into CS Stars for access in the claim file. Data submission on any eligible claimant will be transmitted by Gould & Lamb when triggered by the payment of "Total Payment Obligation to the Claimant" ("TPOC") or the start or end of "Ongoing Responsibility for Medical Payments" ("ORM"). Copies of the full audit trail on each query and each submission will be maintained in Stars and at Gould & Lamb. See test screen shot below. Programming has been completed in Stars of the required data elements (see data elements section) for query and submission. The data elements peculiar to MMSEA, i.e. other than standard information such as claimant name, address, date of birth, etc. contained in the base claim data, will be contained in a separate screen dedicated to MMSEA. 1- Alternative Service Concepts, LILC 110 CMS Reporting Timeline Following is a high-level timeline of client considerations and CMS milestones: The Centers for Medicare and Medicaid Services (CMS) announced the timeline for implementing the Section 111 reporting requirements of MMSEA has been extended. The revised timeline is listed below: • 05/01/2009 to 09/30/2009 - Registration (previous deadline was 06/30/09) • 7/1/2009 to 3/31/2010 - Medicare eligibility file testing may begin only once RRE registration is complete. • 01/01/2010 to 03/31/2010 - Claim Input file Testing • 04/01/2010 to 06/30/2010 All liability/no fault/workers' compensation Reporting Entities and their reporting partners will submit their first production files based off a pre -determined schedule set forth by CMS Alternative Service Concepts, u.c 'Il 111 ASC / CS STARS CMS Reporting Diagram The ASC / CS STARS solution will support requirements through each step of the CMS reporting process. This includes tools to assist in transforming data into a format that will be accepted by CMS as well as tools to facilitate the export and transmission processes. Mapped Data sent to Clearinghouse, Responses Returned CS STARS CMS Clearinghouse 0 CMS Claims Database EDI Clearninghouse Claim Data to CMS Responses Returned Check to CMS sponses Retun Alternative Service Concepts, «c 112 Resolution No. 2009—RO342 f Overview of CMS Data Element Requirements This overview of CMS reporting data is based on the most recent MMSEA 111 NGHP Interim FileLayout:http://www.cros.hhs.aov/MandatorvinsRep/`Downloads/NGHPUserGuideO3l6O9.odf ■ First Name ■ SSN ■ Gender ■ Middle Initial 2 HICN (Health Insurance Claim Number) Date of Birth • Last Name Comments: If the SSN is not available, then the HICN must be populated. ■ CMS Date of Incident (DOI) ■ Alleged Cause of Injury, Incident, or • Product Liability Indicator ■ Industry Date of Incident Illness Product Generic Name ■ State of Venue ICD-9 Diagnosis Code (19) 0 Product Brand Name ■ Description of Illness/Injury Product Manufacturer ■ Product Alleged Harm Comments: Description of lllness/Injury is required through December 31, 2010, if no Alleged Cause of illness/Injury Code or no ICD-9 Diagnosis Code 1 provided. Se�fElnsuraryce I0.0 atla'ri t u.� ■ Self Insured Indicator 8 Policyholder Last Name a DBA Name ■ Self Insured Type n Policyholder First Name a Legal Name ■ Plan Insurance Type ■ TIN (Tax ID Number) ■ TIN Site ID • Policy Number ■ Claim Number • Injured Party Representative Indicator ■ Representative Last Name Representative First Name ORM (Ongoing - -- - Responsibility for Medicals) Indicator ■ ORM Termination Date ■ Plan Contact Department Name ■ Plan Contact Last Name ■ Plan Contact First Name ■ Plan Contact Phone • Plan Contact Phone Extension • Representative Firm Name ■ Representative TIN • Representative Address Line 1 • Representative Address Line 2 ■ TPOC (Total Payment Obligation to the claimant) Start Date ■ TPOC Amount • No -Fault Insurance Arrangement Indicator ■ Exhaust Date for Total Amount for No -Fault Insurance ■ Representative City ■ Representative State • Representative Mail Zip Code • Representative Phone 3 � ati�ott ■ Funding Delayed Beyond TPOC Start Date ■ TIN v TIN/Site ID Mailing Address Line 1 TIN/Site ID State • TIN Site ID TIN/Site ID Mailing Address Line 2 TIN/Site ID Zip ■ TIN/Site ID Mailing Name TIN/Site/ID City Comments: Required for each combination of TIN and TIN Site ID from the Plan Information section above. i -- Alternative Service Concepts, Luc 113