Desk audits: A return to the “bad old days”
Repairers’ concern with the rise of third party firms that perform “desk audits” of collision repair center charges was one of the chief concerns. The majority of repairers have probably had a run-in with an audit company. For too many, it is a daily fact of life. If the many repairers I have spoken to about this issue are any indication, that experience was certainly a bad one. The concept of auditing repair shop charges is understandable. An insurer is paying thousands of dollars to settle a claim. It’s easy to see why an audit may help spot errors and even fraud. The vast amount of reinspection work performed by insurers every day is, in fact, a type of audit. But, the desk audit is its own creature, and the practice raises myriad legal and ethical issues for the insurance industry.Imagine for a minute the following scenario:A frequent customer has brought in a car for you to repair after an off-road adventure. Nothing major—replace a fender, repair the door. Easy stuff. You give a copy of your estimate to the insurance company rep, reach an agreed price and order the parts. A few days later, you’re just about to start the job and you get a fax or phone call from a clerk at a firm contracted by the insurer to audit its claims. The auditor explains that the judgment time you wrote for the door repair is too high based upon his or her experience, and that auditor wants to take an hour off of the estimated repair time. Now, your blood pressure begins to rise. But you’ve been through this before and you quickly shuffle off the aggravation because the time you spend arguing could easily outweigh the hour charge. Unfortunately, while the vehicle is in for repairs, you notice some additional damage. Again, nothing major—just a bracket or two that can be delivered in a couple of hours. You send a supplement back to the insurer, get the parts ordered and the car is delivered on time.
You think everything went well except for that call from the auditor. Well, guess what? The auditor faxes you a copy of his or her take on the supplement. You look, scratch your head for a couple of seconds… no change to the parts… hmmm.Guess what? The auditor took another hour off of the repair labor on the door. Sound far-fetched? Hardly. This is a scenario related to me by a repairer I’ve known for more than a decade.Sound ethical? First, let me say that I’m not a specialist on ethics. At a minimum, I use that “Can I sleep at night if I do this?” scenario when evaluating the very few ethical dilemmas I face. But honestly, I couldn’t sleep if I tried this tactic to reduce an insurance claim. Give the auditor the benefit of the doubt. You were unconsciously greedy when you wrote the first estimate. You made a simple mistake… Sure, take off an hour. But, audit it again and take some more time from the same repair operation? If the method employed by desk auditors has any statistical validity or research behind it, he or she should’ve caught the two hours in the first place. No?Repairers of a certain age will tell you that this is nothing new. Many deem the practice of desk audits as a return to the “bad old days” before the repair industry supported and helped to pass laws regulating the claims process, as well as instituting appraiser licensing in many states to eliminate such behavior. State law varies widely. At best, desk auditing firms are just misusing the word “audit” to describe what they do. If it was truly an audit, they would probably find missing labor operations that needed to be added to the repair. I haven’t heard of that happening yet.
At worst, many repairers are concerned that these firms may be breaking state laws regulating the claims process and any applicable licensing requirements. Either way, the repair industry must address the issue, determine the applicable law and seek relief.
Many insurers are quick to point toward the ethical problems in a minority of repair shops to justify intense scrutiny of repair center charges. They should also be concerned about the ethical problems that may exist in their own industry.
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