Jim:” Hi Christine! “
Christine:” Hi Jim. Good morning. “
Jim:” 101 continues. You’re gonna bring me up to date with all the great stuff you’re doing because you’ve expanded your allocation to be audit and recovery. “
Christine:” Yes, we have and we’re very excited about this part of Vendor Cost Control. I’m just gonna jump right in. “
Jim:” Yeah, please. “
Christine:” Okay, so what is Auto-Recovery File, and what is the purpose of the project? Well, JDi was retained by a leading defense firm who was lead counsel for a primary insurance company to provide reporting of allocation of fees and costs in the defense of a construction defect matter.
The completed matter, involved defense, fees, and costs of approximately $7million. And the purpose of JDi‘s involvement was to provide a completed accounting of invoices, as well as to determine which carrier had not paid their full share and which carrier had overpaid their allocated share amount. “
Jim:” So you applied to JDi allocation procedure but instead to an audit redistribution. “
Christine:” That is correct. “
Jim:” Cool, tell me about that. “
Christine:” So we expected to arrive in leads format, but instead we received the invoices in a CD-ROM containing 13 subfolders and all the invoices arrived in PDF format. “
Jim:” That’s a lot of work. “
Christine:” It is. So our workflow began with the extraction process of 206 invoices. After extracting all invoices data entry, then entered all those invoices. The total dollar amount equaled $6.2million in defense fees and costs. “
Jim:” So that’s what you discovered as the actual fees and costs. “
Christine:” That is correct. That is correct. Now after the invoice entry process was completed, we then started our reconciliation process. We had excepted $7million in invoices per our prior communication with lead council. However, we had only arrived at $6.2 million, we then went back to the original subfolders of invoices and compiled a complete invoice inventory.
We found that over 25expert invoices had been submitted more than once, we also found that one main expert on the matter used an outside subcontractor for numerous projects and included the subcontractor fees in their expert invoices. This led to the main expert invoices and the subcontractor backup invoices being count separately as standalone invoices, which is not correct.
This issue, as well as the submission of duplicate billings, explains the law firm’s assumptions that this case contained a higher amount of defense fees and costs than actually occurred. “
Jim:” So both, vendor and the lawyer submitted the same invoice, that’s how it got double-counted. “
Christine:” That is correct. Now, with the entry process completed and verified by the invoice inventory, we then completed the carrier allocation matrix. What is the matrix? This is a list of participating carriers as well as their named insureds with tender dates and cutoff dates. After the matrix was completed we then started our reconciliation of all payments with all the vendors and carriers. Then preliminary reports were sent to the law firm and insurance company for review. “
Jim:” So then we step in and we do the recovery or they do it themselves or I guess it’s an optional opportunity. “
Christine:” It is correct. JDi can do that or the insurance company can now do it. Which brings me to our conclusion. The final allocation summary showing each carrier share amounts amount paid and credit balance due based on equal shares, tender dates, and end dates that were submitted back to the leads council and the lead insurance company for review. We informed the council that the actual fees and costs based on the invoices submitted at $6.2 million, approximately $800’000 less than assumed by the council with the original $7million figure. “
Jim:” So you really reduced the cost of the case by $800’000. “
Christine:” We did. So with our findings, we verified over $6.2 million in invoices and completed a total share of evaluation for each of the participating carriers. The leading insurance company as we talked about before or JDi can now use the findings to pursue carriers. The client and the lead insurance company now have all the tools available to recover their $159’000 overpayment and send final billings to the participating carriers or JDI can do that. “
Jim:” Wow. So it’s not a lot different than what we normally do, it’s just that we came in after the fact and we performed an audit. Wow, that’s terrific. “
Christine:” It’s exciting and it is new stuff for our clients but we have been doing this for several years now. “
Jim:” Wow, great. I understand you got a couple of more cases because of your success. “
Christine:” We do, we do. So keep them coming. “
Jim:” Alright, so thanks, Christine. We really appreciate the bringing us up to date. “
Christine:” Thank you, Jim. And remember to check out more of our videos on our VCC construction defect series 101. Please check them out on our YouTube page, Linkedin, and other various areas. Or you can click on my calendar and schedule one on one with me. “
