Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
SEPTEMBER 18, 2025
Subject
SUBJECT: PUBLIC LIABILITY/PROPERTY DAMAGE THIRD PARTY CLAIMS ADMINISTRATION SERVICES
Action
ACTION: APPROVE RECOMMENDATION
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to execute Modification No. 1 to Contract No. PS75821000, with Carl Warren & Company, LLC (CWC), to exercise the first, two-year option in the amount of $6,666,674, increasing the total contract value from $12,148,152 to $18,814,826, and to extend the period of performance from November 1, 2025, to October 31, 2027.
Issue
ISSUE
Consistent with the practice of many other public agencies, such as the County of Los Angeles, and the Los Angeles Unified School District, Metro uses the services of a Third-Party Administrator (TPA) to investigate, evaluate, and resolve a majority of third-party claims filed against Metro. Third-party claims generally arise out of bus and rail operations.
The contract’s four-year base period expires on October 31, 2025. To continue to process property liability and property damage claims timely and seamlessly, a contract modification is required to exercise the first, two-year option, extending the period of performance from November 1, 2025, to October 31, 2027.
Background
BACKGROUND
In September 2021, the Board awarded a four-year base term and two, two-year option term firm fixed price Contract No. PS75821000 to CWC to provide public liability (PL) and property damage (PD) third-party claims administration services.
Metro’s PL/PD Claims Program is administered through a blend of in-house and CWC (consisting of 26 individuals who provide claims adjusting support and subcontractor staff). In-house Risk Management staff handles the more severe injury claims, while CWC staff handles the more frequent, less severe claims. CWC’s subcontractor performs all field investigations and responds to accident scenes upon notification from Metro dispatch. Under this contract, CWC handles all claims valued at $100,000 or less, while Risk Management staff handles cases valued at more than $100,000.
Discussion
DISCUSSION
Metro receives an average of 2,700 new PL/PD claims annually and had 3,630 open claims as of June 1, 2025. Processing claims with an inventory of this size requires the issuance of approximately 1,200-plus payments monthly to claimants, attorneys, experts, and others. The expertise and infrastructure of a professional TPA in resolving these claims and litigation are essential for structuring a competitive and cost-effective program.
Subrogation of losses against a responsible third party is also a part of the services provided by the TPA. Over the last ten years, Metro has received total gross recoveries of $10.4 million from subrogation or cross-complaints, of which $3 million has been recovered to date under the base contract.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
This contract modification will positively impact the safety of Metro’s patrons and employees. Claims administration services address injuries or damage incurred by patrons and the public. As part of these services, there is an investigation into the cause of damage. Cases are evaluated by CWC and Risk Management staff with a focus on remediation and mitigation measures. Claims trending is monitored by Risk Management and reviewed with Corporate Safety, Operations, System Security and Law Enforcement, and other Metro departments, depending on the nature of the case. In addition, claims history is shared and evaluated by excess carriers, who provide best practice guidance to enhance Metro’s risk profile.
Financial_Impact
FINANCIAL IMPACT
The FY26 Budget includes $3,977,314 for PL/PD third-party claims administration services in cost center 0531, Non-departmental-Ops Risk Management, under Project 100018, PRMA-PLPD.
Since this is a multi-year contract, the Chief Risk, Corporate Safety, and Asset Management Officer will be accountable for budgeting the cost in future years.
Impact to Budget
The sources of funding for this action will come from federal, state and local funding sources that are eligible for bus and rail operations.
Equity_Platform
EQUITY PLATFORM
This contract modification benefits the claimants from the various Equity Focus Communities where Metro provides services and ensures that existing and future claims will continue to be processed and managed without interruption or impact to individual claimants.
Additionally, non-English speaking, visually impaired, and deaf claimants will have the same access to claim adjusters as other claimants since CWC utilizes various vendors that provide language translation and interpreting services. CWC’s current DBE participation is 21.46% which exceeds its participation commitment of 20%.
Vehicle_Miles_Traveled _Outcome
VEHICLE MILES TRAVELED OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
While this item does not directly encourage taking transit, sharing a ride, or using active transportation, it is a vital part of Metro operations, as it provides third-party claims administration services for injuries or property damage caused by Metro operations. Because the Metro Board has adopted an agency-wide VMT Reduction Target, and this item supports the agency's overall function, it is consistent with the goals of reducing VMT.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendation supports strategic plan goal # 5, “Provide responsive, accountable, and trustworthy governance within the LA Metro organization.” Responsible claims administration includes mitigating significant financial risks from third-party claims filed against Metro.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board may choose not to approve the recommendation and to self-administer Metro’s third-party claims inventory. However, this alternative is not recommended as Metro does not have sufficient resources to perform the work. This would require hiring approximately 30 FTEs.
Next_Steps
NEXT STEPS
Upon Board approval, staff will execute Modification No. 1 to Contract No. PS75821000 with CWC to exercise the first, two-year option to continue to provide third-party PL/PD third-party claims administration services and extend the period of performance through October 31, 2027.
Attachments
ATTACHMENTS
Attachment A – Procurement Summary
Attachment B – Contract Modification/Change Order Log
Attachment C – DEOD Summary
Prepared_by
Prepared by: Claudia Castillo del Muro, Executive Officer, Risk Management, (213) 922-4815
Carolina Coppolo, Deputy Chief Vendor/Contract Management Officer, (213) 922-4471
Reviewed_By
Reviewed by:
Kenneth Hernandez, Interim Chief Risk, Corporate Safety, and Asset Management Officer, (213) 922-2990
Digitally approved by Stephanie Wiggins, Chief Executive Officer