Fort Smith, Municipal League end workers’ comp conflict
by November 5, 2010 5:38 pm 58 views
There appears to be a resolution over what was a brewing squabble among the cities of Fort Smith and Little Rock and the Arkansas Municipal League.
In early October, the Fort Smith board of directors took umbrage with a proposal by the AML to pursue legislation that would force Fort Smith and Little Rock into a workers’ compensation insurance pool and away from the city’s self-funded system. Removal of an exemption would force the cities to consider joining a larger insurance pool, like the one managed by the AML.
Fort Smith Human Resources Director Richard Jones said moving from the self-funded plan could cost the city up to $200,000 more a year.
AML President Don Zimmerman said the league’s proposal “has been through all the processes” of the league and was discussed at the annual convention. He noted that several Fort Smith officials, including City Director Gary Campbell who presided over the league’s annual convention, were present when the league approved the plan.
Also, Zimmerman said Fort Smith’s workers’ comp costs are about $700,000 a year for about 900 employees. He compared that to about $500,000 a year for North Little Rock’s 1,000 employees who are not part of self-funded plan similar to that of Fort Smith.
However, a Nov. 3 meeting between AML and Fort Smith and Little Rock officials provided clarification to the issue, according to a memo from Jones to the Fort Smith board.
Jones noted the following in his memo:
“AML started the meeting by explaining that they had two very large claims that combined had exceeded 4 million dollars. AML thought the legislative change would allow Little Rock and Fort Smith to protect ourselves from a similar circumstance by pooling together with AML or purchasing coverage in another pool or by purchasing our coverage from an insurance company. Both Fort Smith and Little Rock explained that we would never be in that situation because we are required by statute to purchase stop loss coverage. The self funded specific stop loss threshold for public safety employees is $400,000 per claim and $350,000 for all others employees. AML’s workers compensation fund did not purchase reinsurance for their program during the period these claims occurred and had to pay the full cost of these two catastrophic claims.
“Little Rock and Fort Smith expressed our concern that this legislation specifically targeted only two cities and neither of our cities could support this legislation. Both our cities have created self-funded workers compensation programs that were performing very well in containing costs and managing our risk exposure.
“AML did not make any specific proposal for either of our cities workers compensation coverage’s for 2011. AML did indicate that their rates were being increased significantly for 2011 because of the two large claims referenced above, likely not less than our 2010 cost, which has been an unusually high year for Fort Smith. It is very unlikely that moving to the AML plan would not save Fort Smith any money.
“AML then proposed that they would work with their executive council to officially remove and not support the proposed legislation if Little Rock and Fort Smith would agree to consider AML’s workers compensation fund each year as we were going through our annual workers compensation renewals. Both Little Rock and Fort Smith agreed to this request and volunteered to send AML a letter to that effect.”