Auditing Spill-related Invoices Pays Off

anne Benefits

Any spill requiring environmental cleanup is an expensive proposition. But spill generators often pay more than they need to pay when they don’t closely examine invoices from cleanup contractors and emergency service providers, including fire departments seeking reimbursement.

“We find that fire departments and other taxpayer-funded emergency response agencies have become bolder in their demands for reimbursement from spill generators,” observes Tom Moses, president and founder of Spill Centerâ„¢, North America’s leader in spill support and environmental claims management.

“But not all line-item costs that these agencies seek to recover are reasonable or even authorized. Empowered by local emergency service reimbursement ordinances, these agencies feel that they should be able to recoup all of their costs from spill generators. But many are operating in unfamiliar territory,” notes Tom, a former U.S. EPA toxicologist who holds a law degree and a certificate in hazardous materials control and emergency response.

“In our invoice auditing for clients, we are seeing a broadening disparity in claims. For example, in the 400-plus fire department invoices we handled last year, we saw charges for a pumper truck ranging from $20 to $500 per hour. Charges for other equipment and services also varied widely among fire departments. Sometimes the department is not even authorized to seek reimbursement from the spill generator.”

Part of Spill Center’s service to clients – which include private fleets, for-hire carriers, truck leasing companies and chemical and insurance companies – involves making requests for documentation from fire departments and other agencies which seek reimbursement. Spill Center’s auditor requests the department’s fee schedule, copies of records showing time in and out, copies of bills for cleaning and equipment replacement – and a copy of the ordinance or law that authorizes the department to seek reimbursement.

“Our role is to get the invoice to the point where it can be evaluated properly. Insurance premiums often are calculated on the amount of money paid out on behalf of the insured party so it’s in the best interest of the insured – and the insurance company – to determine the real costs and to make sure that they are driven by law,” Tom explains.

Spill Center’s audit service is intended to provide a neutral and unbiased review of charges and documentation in order to ensure fairness and encourage free-market practices. The auditor provides the client with a recommendation based on a review of similar incidents and current industry standards for the region in which the spill occurs.

The most common problem with emergency services invoices involves incomplete documentation. A $1,200 charge for cleaning firefighters’ turnout gear was included on one invoice, but the department was unable to produce a paid bill from a cleaning or decontamination service. To prevent overpayment, spill generators should always ask to see receipts to back up the invoice. For example, if an invoice includes a charge for 150 man hours, the fire department should be able to produce work logs showing time on and off or details of work performed.

Spill Center staff, which includes paralegals and environmental and technical specialists, frequently see invoices seeking reimbursement for an “unreasonable scope of work.” In one incident, half a dozen fire departments responded to a minor fuel spill, and each one invoiced the carrier for emergency services. That is beyond the reasonable scope of response, according to Tom.

Charges for damaged Level A (vapor-protective) suits in incidents that do not call for the use of Level A are also common. Unauthorized charges, such as line items that did not arise directly from the loss, often turn up on invoices, too. These have been seen to include a labor charge with a pro-rated benefits cost or an administrative overhead charge, which might not be reimbursable under the ordinance.

Math errors on invoices constitute another common problem encountered during Spill Center audits. “Never assume the math is correct,” Tom advises. “Many times the numbers just don’t add up. That’s why invoices should be checked carefully. And remember, any costs not directly associated with the loss can be used to negotiate down the invoice amount,” he says.

We hope you found this information useful. To learn more about Spill Center spill support and environmental claims management services, visit our website: www.spillcenter.com. You are also welcome to call Tom Moses, directly at 978-568-1922 or e-mail him at tmoses@spillcenter.com.