San Jose Poised to Outsource Entire Workers’ Comp Unit

San Jose may outsource the rest of its embattled workers’ compensation unit, which already relies on a third-party contractor to handle about half of all claims.

The proposal coming before the City Council on Tuesday would allocate $8.5 million for a one-year contract with Intercare Holdings Insurance Services. It would also require San Jose to find other jobs within the city for the four claims adjusters, office assistant and senior analyst that comprise the unit.

San Jose’s workers’ comp division has repeatedly come under fire for problems that largely stem from a lack of staffing. In 2016, the unit failed a state audit and had to pay about $300,000 in penalties for, among other things, improperly denying medical care to scores of firefighters.

Following the audit, the city fired its third-party contractor, Athens Administrators, and reassigned all but police claims to Intercare Holdings. Despite hiring a new contractor and making other adjustments to the in-house team, the city worries that it may not pass a follow-up state audit set for the end of this year.

If San Jose fails the upcoming audit, it could be on the hook for additional penalties. At worst, it could lost its ability to self-insure, which saves taxpayers millions of dollars.

“If the ability to self-insure were revoked, the city would be required to purchase workers’ compensation insurance from a private insurance company, and the cost of such insurance is difficult to estimate but are anticipated to be very high,” according to a memo signed by San Jose’s Acting Human Resources Director Jennifer Schembri and Budget Director Margaret McCahan.

Sources inside the workers’ comp unit say City Manager David Sykes walked into what was expected to be a routine start-of-the-week meeting to announce the planned outsourcing. He said he’d try to find the remaining staffers work within the city, but stopped short of assuring them that they’d earn a comparable salary.

Three permanent claims adjusters, four temporary adjusters, three clerical workers and a supervisor currently staff the unit, which, sources say, has been without a manager since Howard Stiskin abruptly quit in early April after being on the job for just five months.

Stiskin was the fourth manager since David Wong retired for a job with BART in fall of 2013. Three of those four managers quit without any notice, according to employees who worked under them.

More from the San Jose City Council agenda for June 19, 2018:

  • The city is vying for $50 million in credit to get its clean energy program off the ground by September this year.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the former news editor for San Jose Inside and Metro Silicon Valley. Follow her on Twitter at @jennwadsworth.


  1. wonderful, no wonder emails are not answered or phone calls not returned. Lawsuit pending. Thank you San Jose.

  2. The workers comp system in San Jose has been a disaster for years. These bafoons regulary deny MRI.s surgeries and Physical therapy. They are trained to DENY everything. Many desperately want to get back to work but often are forced to retire out early due to the feet dragging. This has been going on for over a decade. Absolutely unacceptable to the worker and to the taxpayers who are losing having to retire a worker as opposed to getting them well again.

  3. Your reporting is sorely misleading. Athens Administrators passed their workers’ compensation audit . This is public record, so you should have looked it up for yourself. It was the City’s self-administered program that failed their audit. The City failed their audit. Their TPA passed.

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