Mitigation and Repair Guidelines
In early 2019, TJMC was approached by Self Insured Schools of California (SISC) to develop guidelines for its insured Districts. SISC is one of the largest public-school insurance pools in the United States. SISC needed assistance helping its Districts in navigating the Department of Industrial Relations (DIR) Compliance, as well as the proper method of letting contracts, particular to restoration of insurance losses. The guidelines were particularly focused on the navigation of selecting, contracting, evaluating, and submitting costs for claims for property damages.
While no two property losses are alike, there were basic steps and requirements in the overall process in making sure that the District is complying with applicable laws and determining fair and reasonable costs for their loss repair. Restoration contractors, particularly smaller ones, use proprietary software to develop estimated costs and billing for the remediation industry. This software did not provide for prevailing wage rates and was often manipulated by the contractor to guess what is appropriate and/or increase margins to cover costs. In many cases, the contractor had increased its rates to the point of being unreasonable.
The larger restoration contractors had generally developed their own billing forms, rates and practices, that they had the insureds agree to in a work order prior to services. Unfortunately, Districts under duress of a loss would not look at these published rates for reasonableness prior to agreeing to services, and they often relied on the carrier to evaluate/negotiate costs after the work had been performed.
As a result, TJMC developed a statewide guideline broken down into three sections. They were:
- Section I – General Department of Industrial Relations (DIR) Compliance
- Section II – General Recommendations
- Section III – General Acceptable Time and Materials Rates
After publishing the guidelines in June of 2019, they became widely accepted by the SISC insured school districts.
Smoke Contamination School Fire Loss
A large fire in Southen Califonia that consumed over 25,000 acres of chaparral, short grass, and brush discharged ash and soot over areas of a community, including several campuses in a large School District. The District used some of the campuses as evacuation centers, as well as staging areas for fire apparatus. The District elected to clean all its campuses and administrative facilities, regardless of location, for fire residue both inside and out. The District retained the services of several restoration contractors to perform the cleaning services on a time and materials basis over a roughly five-day period. The District incurred an astounding 12 million dollars in costs for cleaning during that short period.
TJMC Consulting (TJMC) was retained on behalf of several insurance carriers, to assess the necessity of the cleaning services, and audit costs for reasonableness at all the District’s campuses and various administrative centers. Early in its evaluation, TJMC found several issues about necessity and costs. At issue at the time of the loss were:
- Prevailing wage rate issues and designations for each contractor
- Unnecessary and unsupported contractor costs
- Contractor billing practice issues
- Sampling and analysis for soot issues
- Unnecessary cleaning of campuses
- Duplicative cleaning of campuses
Over the next year, TJMC developed an exhaustive 660-page audit of the billing practices and reports outlining each of the issues raised above. We worked closely with the District, carriers, and contractors to determine proper prevailing wage rates, resolve outstanding billing issues, obtain the necessary support, and to negotiate costs and markups. As a result, TJMC was able to reduce the overall costs of the cleanup by more than three million dollars.