Is There A Difference?

Is there a difference between claims filing and claims management?

There most certainly is.

Claims Management Services: Many entities refer to themselves, or are referred to by others, as “third-party claim filers,” which implies that their services are limited simply to putting together and submitting claims. Financial Recovery Strategies (FRS), in stark contrast, coined the term “class action claims management” to aptly characterize the vast array of services that we perform in connection with managing each claim we submit on behalf of a client. It is our view that the “third-party claims filer” moniker invites the criticism articulated in the first sentence of the first installment of this column:

Why would a class member share with a third-party claims filer as much as 33% of its recovery when that class member may file its own claim and thus keep 100% of its recovery?

That mindset – that claims recovery is tantamount to claims filing – is misplaced when applied to FRS, which performs many valuable services to enhance its clients’ claim recovery values. FRS provides the following services, among others, for each claim it submits on behalf of each client:

  • FRS monitors federal and state class and multiparty actions pending across the U.S., and notifies its clients when we learn of settlements that may be valuable to them;
  • FRS enhances the likelihood that all of its clients’ eligible business units are included in the claim process. This involves, among other things, the following two distinct phases: In the first, FRS employs its proprietary processes to research the acquisitions and divestitures that its clients completed, as well as the locations of its facilities, and where purchases were transacted; in the second, FRS identifies whether any or all of them are “eligible” under the particular terminology of each class definition, including answering the following questions, among others:
    • Were the relevant goods or services purchased during the period (often referred to as the “class period” or, in governmental actions, as the “relevant period”) during which the defendants were alleged to have violated the law?
    • Where relevant to the definition, were the goods in question purchased for the claimant’s own use and not for resale?
    • If governmental entities are excluded, how is “governmental entity” defined: Are all federal, state, municipal, county and other entities excluded, or just some of them? And what about quasi-governmental entities?
    • In “direct” actions – in which a class member must have purchased directly from one or more of the defendants or their coconspirators – or in “indirect” actions – in which a class member must not have purchased directly from one or more of the defendants or their coconspirators, but, instead, must have purchased from an intermediary – does the claimant’s purchase activity qualify?
    • In certain class actions, particularly in indirect actions, where eligibility is restricted to certain states or other geographic subdivisions (e.g., some class definitions require a class member to be physically located within the defined geographic subdivisions; other definitions focus instead on the location of the transaction), does the claimant’s purchase activity qualify?
  • FRS provides advice on what, if any, documents need to be collected and maintained, and, when requested, FRS assists in that effort and will store the data and documentation until it is no longer needed;
  • When required documents are not available or are too burdensome to collect, FRS, relying upon its substantial class action settlement experience and expertise, develops innovative alternatives, and then negotiates to obtain claims administrator and class counsel approval of those alternatives;
  • FRS prepares, assembles and submits our clients’ claims, and manages them throughout the claims processing lifecycle, including working with our clients to address any concerns or questions that a claims administrator may have;
  • FRS provides updates as needed on the recovery process and all related developments; and
  • FRS audits its clients’ recoveries to assure that their checks have not been under calculated, sends clients their checks within 30 days, and follows up with them on any uncashed distribution checks.

You may ask how to determine whether a consultant is a claims filer or a claims manager. After all, most firms describe themselves in terms that will make them most attractive to potential clients. The answer is in the public domain. To learn the information you need, you must look past the puffery on websites, and delve into the substance: Does the consultant disclose its workforce, both the number of employees and their relevant experience? It’s hard to provide promised services if the claims filer lacks the personnel or if its personnel lack the requisite experience and expertise.

  • Does the consultant disclose its workforce, both the number of employees and their relevant experience? It’s hard to provide promised services if the claims filer lacks the personnel or if its personnel lack the requisite experience and expertise.
  • Does the consultant disclose and describe the services it will perform that will enhance claim values and expand the range of potential recoveries that may be available? It’s one thing for a claims filer to say that it will do so, but quite another to describe how it will do so.
  • Does the claims management consultant disclose its successes—examples of instances in which its value added procedures actually increased its clients’ claims? It is relatively easy for a claims filer to list some of the large recoveries it has obtained for its clients because those recoveries may simply be the result of a client with a large claim; it’s much more difficult to disclose those instances in which the claims management consultant added value.
  • Does the consultant disclose its code of ethics (or even have one)? Again, it’s nice for a claims filer to say that it follows appropriate ethical standards, but it’s another matter entirely to actually disclose the standards relevant to claims management and that it requires its employees to follow them.

The sad truth is that most potential clients and actual clients alike are unaware of whether a consultant is a claims filer or a claims manager. Thinking that all claims consultants provide the same level of service, those businesses succumb to the appeal of low-cost claims filers, and thus are likely to be leaving for others to take the recovery dollars to which they are entitled. As explained previously in the “Players” installment, clients, because there is no such thing as a free lunch, at most, get only the services for which they pay. Thus, paying less to a claims filer may often result in a lower net recovery – the recovery after paying the consultant – than the recovery that client would have obtained by retaining a claims manager.

Next Installment:
The next installment will describe the advantages afforded to claimants who retain claims management consultants rather than claims filers.

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