PMA Companies Centralizes Bill Review and Lowers Legal Costs

Focusing on Litigation Management

Philadelphia-based PMA Companies provides workers’ compensation and related commercial insurance products throughout the United States. The company manages a wide range of claims and issues, especially litigated matters, which requires partnering with as many as 300 outside law firms. Litigation costs represent a significant percentage of claims expenses, and the company was interested in ways to improve claims efficiency and the process with external partners.

PMA Companies’ competitive differentiation is centered on delivering best-in-class service and tangible value to clients, and the effective management of client claims to achieve the best outcome is a key differentiator. As such, the company was interested in improving its claims litigation process and ensuring that legal costs complied with defense counsel guidelines.

To that end, several initiatives were undertaken to strengthen litigation management, including:

• Review and establishment of updated defense counsel guidelines used for claims legal billing
• New centralized process established to review and manage invoices from outside law firms
• Implementation of CSC’s Legal Solutions Suite^® software to help PMA automate the bill review process and more effectively ensure that invoices are compliant with defense counsel guidelines
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Consistently Reducing Legal Costs

As a result, PMA Companies fundamentally improved its program and is consistently reducing legal costs.

“We have achieved very positive results from these initiatives. Outside law firms have a better understanding of our billing guidelines and consistently communicate status and litigation action plans to the PMA claims staff,” said Scott Harrar, assistant vice president of claims at PMA Companies. “There’s a more uniform approach to the adherence to our defense counsel guidelines and the whole process is much more effective.”

In rolling out the new system, PMA’s outside law firms were trained on how to submit invoices over the Web using Legal Solutions Suite, which standardizes the format for incoming bills. The system’s analysis tools review each bill and identify any non-compliant charges outside of the company’s guidelines.

The software helped PMA reduce legal expenses by uncovering a wide range of billing issues, including duplicate charges across multiple invoices, incorrect hourly billing rates, non-approved travel expenses and unauthorized legal research.

Centralizing the Billing Process

With the new software in place, PMA then centralized the bill review process. Traditionally, the company’s adjusters maintained relationships with outside legal firms and were responsible for reviewing each individual bill.

While there were reductions in the invoices submitted through Legal Solutions Suite, the company felt the program could be more effective if the bill review function was centralized. This way it became a specialized area with objective standards applied to bill review.

“If a law firm helped achieve a great outcome on a particular claim, the adjuster might not want to make an issue over 2 hours of non-compliant billed time,” Harrar said. “So, by centralizing the bill review process, we have found great benefit in removing subjective, individual standards from the legal billing and analysis process.”

Confronting Overcharges

Almost immediately, the new software coupled with the new centralized process was extremely effective. Non-compliant bills were much more easily identified, and billing practices that needed correcting were uncovered.

Using the software’s analysis tools, Harrar said, PMA Companies has been able to make more informed decisions with respect to its relationships with outside legal firms. In cases where law firms fail to comply with PMA’s defense counsel guidelines, the company holds stewardship meetings with the attorneys to review findings, and works with them to reduce non-compliant billing issues.

“We hear from many law firms who want to do more business with us,” Harrar said. ”We can now objectively and more effectively analyze how outside legal firms work with us and deliver the value we expect.”

The implementation of Legal Solutions Suite software, coupled with the process changes PMA made, has been so successful that the company now plans to introduce the initiatives to other areas such as general liability, auto claims and third-party administrator claims services.

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