Josh Ehmke

Today we’re here with Josh Ehmke and Jeremy Traasdahl from One Claim Solution. And we’re going to be going over the history of OCS, as we call it, and kind of where it was born, how it originated, and some of the fun experiences we’ve had along the way. So, like I said, my name is Josh Ehmke, and Jeremy and I started OCS in January of 2016.

I had actually been in the industry a couple years before then. I was general counsel for an air ambulance billing company here in Arizona, doing large, fixed-wing air ambulance flights and doing medical insurance billing type stuff, which was cool. It kind of opened my eyes to a new way to practice law. And that is essentially where the concept of OCS, or at least the restoration insurance billing type of concept, came about.

I had a buddy in the industry that had a restoration company who knew that we were, that I was doing insurance billing stuff and said, ‘Hey, Josh, I’ve got this claim. Can you help us out on it?’ And I said, ‘Yeah, I’ll give it a shot.’ Sent a letter, and immediately got a payment back from an insurance company and it just kind of made me think, what’s going on here?

And I talked to the guy and he’s like, ‘so that worked.’ I said, ‘that worked, and let me try it on a couple more.’ [I had] the same type of success, and the more I looked into it, trying to figure out what was going on in the industry, there wasn’t a lot going on as far as anybody out there helping these contractors get paid.

And so it became a solution for us to try to solve, and I spent about a year doing insurance claims kind of on the side and building up a little bit of a nest egg, to try to branch out and start an insurance billing company of my own – and not in the air ambulance world but in the property insurance world.

And so that’s what I did. And in January of 2016, I went and talked to Jeremy, who was my neighbor at the time, our kids met – or, well, I guess Jeremy met my kid in kind of a funny way.

Jeremy Traasdahl

I’ll go ahead and tell that story. Yeah, so I’m just out picking weeds in my new house… You know, I was a young newlywed and I don’t even know if I had – I don’t even think I had my kids at the time. It was just me and my wife, and I was out pulling weeds in my front yard. And this random kid comes over – and I didn’t have a ton of interactions with kids at that time, because I had none – and he goes, ‘hey, what’s your name?’ And I’m like, ‘my name’s Jeremy’. And he goes, ‘you have a lot of weeds.’ I am like, ‘thank you, kid. Who are you?’ and ‘that’s why I’m out here, you know, pulling weeds.’ Anyway, he told me where he lived, and I ended up meeting his parents later, and that was Josh. At the time, I was working for Pepsi as a key account manager, doing sales and trying to get Frito-Lay product on floors to sell.

And so that’s what I was doing at the time. Josh and I grew a friendship at that point as neighbors, and he had just recently started in the industry. And conceptually, it made a ton of sense because there’s medical billing agencies out in the medical world, right? And in the property and casualty world, the contractors are there to do the work, and they’re there to help people get their houses dried out, put back together, and nobody was there on their behalf to go negotiate their invoices with these profit centers of these insurance carriers.

So, adjusters are trained – it’s all they do, they’re desk adjusters – they are trained to all day, every day, sit there and work on behalf of the insurance carrier. And the contractors had to not only perform the work, but then had to worry about going and getting paid for that work. And so when you came to me with the concept of, ‘hey, this seems like doctors wouldn’t be worrying about getting their own bills paid, they want to just see patients all day’, then contractors felt similar, just in a different industry where it’s like they need to just go be putting people’s houses back together, and we’ll worry about going to get you paid.

Josh Ehmke

Yeah. And like we said, you know, I’d been doing it for a year and a half, maybe two years before this. So the concept was vetted a little bit to where it was like, ‘hey, this is kind of working, and here’s some things that we can do to improve on what I’ve been doing.’ And [I was] super impressed with Jeremy’s work ethic, with what he was doing in that certain time of his life, and then how quickly he had kind of climbed the ranks at his company. I was super impressed with who he was as a person, and that work ethic.

It just made sense to partner up with somebody like that who was out there, you know, grinding every day, trying to do the same thing I was doing. And that’s kind of where it originated. There were some problems that were kind of unique to this industry that we set out pretty early on to try to solve Typically, what we were seeing was contractors had historically been walking away from balances – you know, they would do the job, put together the invoice, submit it to the carrier, and whatever the carrier would pay, the contractor would just kind of take that and say, ‘all right, we’ll go on to the next job’.

There were a few reasons for that, as we came to find out. You know, contractors depend very heavily upon internet reviews and word of mouth, and so if they were to go back and balance bill homeowners, that created some challenges for them. Not a lot of contractors were willing to do that. And to have that type of a reputation, there’s really no way for them to hold the insurance companies accountable, either.

Jeremy Traasdahl

I was just going to just jump in and say, again, by concept, these water bills are $5,000 to $9,000 on average, right? And so the carriers are often willing to pay some of that, they’re willing to pay something. But let’s say they pay $5,000 and it’s a $7,000 bill, or they pay $6,000 on a $9,000 bill, with the balance of $2,000 or $3,000.

It’s really hard to go pursue that, whether it’s through an alternative dispute resolution, whether it’s through an appraisal process, whether it’s through litigation – there’s really nothing that made financial, fiscal sense for them to go after a $2,000 or $3,000 balance. Well, if a contractor is doing 10 jobs, 15 jobs a week or a month, then those accumulated balances now become real problematic if you’re not willing to go do something about it.

That’s a lot of money that you’re leaving on the table. And I think in order to get cash flow –  because, as you said, the most important thing for these contractors is just cash flow – in order to do that, they’re often times saying, ‘okay, well, I’ll just accept $5,000 of my $8,000 bill if you just will pay me immediately, or pay me fast.’ Because these contractors have bills to pay, they have their payroll to make, and they oftentimes they have already waited 30, 40, 50, 60 days to even get that check. And so that just is a problem in the industry that we saw, that we were looking to go solve.

Josh Ehmke

When I got involved in the industry, one of the problems that I immediately recognized was that maybe it wasn’t necessarily a problem so much as it was an opportunity, with insurance companies’ use of Xactimate, which is an estimating software that every restoration contractor knows about. And so that was one of our key things that we focused on at the beginning, was trying to learn as much as we possibly could about Xactimate. 

Where are these prices coming from? How are they set? And come to find out, it was, you know, Xactimate is a phenomenal tool. It’s a fantastic tool to help contractors in the industry. But really, that’s where it came down to – is that’s all it is, a tool. And where things were starting to go wrong was insurance companies using this published price list to dictate and control exactly how much a contractor could charge, regardless of the quality of the contractor, regardless of the history or any of the things that contractor does differently than your average [contractor] that’s operating out of a garage.

Jeremy Traasdahl

Yeah, like whether or not the contractor runs background checks on their people, whether or not the contractor is IICRC-certified, whether or not the contractor is licensed, whether or not they like Xactimate, we’ll say, ‘this is what would be paid out on this loss, based on the Xactimate published price list’.

Now, Xactimate, as you know… they’ll be the first to say, ‘that’s not how it’s supposed to be used.’ Of course, it’s supposed to be the agreement between the contractor and the homeowner, and that pricing structure, because that’s the way it’s intended to be used. But at the same time, it was, at that point, being misused oftentimes by insurance carriers or an insurance adjuster saying that, ‘this is the only fair and reasonable [amount]’, or ‘this is the amount that should be paid for this loss’.

It just didn’t make a ton of sense, because to me, there’s contractors who are really, really good at their jobs, and do all the things for their employees that they should be doing, that are operating within the regulatory agencies that they’re supposed to be operating in, and they were being paid the same amount as somebody who’s maybe not doing all of that.

Josh Ehmke

That’s right, that’s right. So these are just a few of the issues or problems, the challenges that we saw in this industry. And, so being able to have that medical billing background, and having that experience and trying to solve some of those problems on that side, it really helped because, you know, the first problem or challenge we identified was these balances and not having to pursue the homeowner directly or the policyholder directly, because that’s just not a route that that contractors wanted to take a whole lot.

And so, in the medical world, something that is very common is the assignment of benefits. Any time that a patient… You go into a hospital or doctor’s office, before you can even be seen and treated, you have to sign a bunch of forms. One of which is the assignment of benefits, which allows the doctor’s office or the hospital to work directly with your health insurance company to receive payment.

And that wasn’t something that was really being used a whole lot in this industry at the time, back in 2014, 2015, when I first got involved. So that was one of the first things we really set out to do, was start implementing the assignment of benefits here, because it really is such a valuable tool for contractors to be able to use.

There’s a reason that hospitals and doctors’ offices use this in their everyday billing practices. You know, how often have you ever seen a bill come to you from your health insurance company? I’ve never seen it. You know, I’ve never gotten the check from the health insurance company. It’s always gone straight to the provider, which is great.

That’s what keeps our economy moving. One of the challenges with that in our industry is homeowners or policyholders receiving the check directly from the insurance company. And man, that check always seems to come at the best possible time for the policyholder. Their truck just broke, or they’ve really been needing to take the family on a vacation for quite a while, and now they finally have some funds, and they do that. And then they turn around to the contractor and say, ‘hey, tough luck, I can make payments, or you can try to come after me. I dare you to, because I have nothing.’ And so oftentimes policyholders will spend that money, because they didn’t have it in the first place.

And so that was a challenge – how do we keep that check from going to the policyholder in this industry, and make it more similar to what happened in the medical world?

Jeremy Traasdahl

Yeah. And I would just add, I don’t even think all of the property owners have ill intent, even when they’re receiving that check. But sometimes that check comes in, it’s really ambiguous – what it’s for, right? Like they misappropriate funds to the insurer to rebuild part of their claim, right? And so they’re like, ‘oh, I get to upgrade my countertop because man, I got this massive check.’ And what they didn’t realize is that was for the contractor who did the water mitigation work, or the emergency service work. And because the carriers don’t explain it to them, they could just misappropriate the funds. It’s just easier with the funds are going to the person who performed the services.

Josh Ehmke

That’s right, a lot of those problems are solved when the money just doesn’t go to the policyholder to begin with, and it goes to the service provider – that’s right. So, being able to have that background, we were able to really work hard and fight for the contractors, to be able to benefit from the assignment of benefits the same way that medical providers do. And so that’s been something we’ve been super vigilant about fighting for.

It’s a very, very valuable tool. And we’ve got quite the history in what we’ve been able to do for contractors over the last, you know, eight years, in really helping them implement that assignment.

Jeremy Traasdahl

Yeah, the first things you did was just diligence, [verifying] the concept legally, right? You’re like, ‘hey, this is how it’s done over here, let’s see if there’s any applicable laws already here in the state we were currently residing.’ And then we went state by state to find out what the laws were regarding property and casualty insurance, [with] assignment of benefits. And then, obviously throughout the history of OCS, we’ve been challenged, and the contractors have been challenged on the validity of their assignment.

You should speak to at least like in 2018. That would have been two years after we had established our company, and then we had our first challenge against one of the carriers.

Josh Ehmke

Yeah, absolutely. So, you know, we talked about the challenge of contractors not wanting to balance bill homeowners, right? And so one of the solutions with that was, well, let’s keep the policyholder out of it.

With the assignment of benefits, we can keep that argument between the contractor and the insurance company. The insurance company’s low-paying the claim, or maybe they don’t understand it, or they’re not agreeing with the justifications as to why, and so there’s accountability there. Through the assignment, we’re able to go straight back to the carrier and say, ‘hey, we challenge your payment. We don’t believe that you paid a fair and reasonable amount on this loss.’ And one of the early ways that we sought about doing that was through litigation. We were very heavily involved in litigation in the early stages of OCS, challenging the insurance companies on these partial payments. It was quite time consuming.

I think at one point I had over 300 pending lawsuits at one time. And earlier on, it was a challenge because the carriers would fight us on that and say, ‘well, you don’t have the standing, you don’t have the ability to file this lawsuit against us. You’re not our policy holder. And under the assignment of benefits, you don’t have the right to challenge our payment.’

Based on case law, in the state we started in, that was 40-plus years old, and we felt, actually, ‘we are able to do this.’ So we challenged insurance carriers on this, and we won at the lower court here. The carrier ended up choosing to appeal it, so we went to the Court of Appeals on that. And that was a wild ride… We got a very favorable ruling at the Court of Appeals saying, actually, yes, under the assignment of benefits, the contractor does stand in the shoes of the policyholder, they do have the right to challenge these low payments and to receive a fair payment for what they’ve done. That really changed the landscape very heavily.

At that time, it was a huge win for us at OCS. A lot of different places started kind of jumping on board, different states kind of following suit. One of the things that we learned through that process is there tends to be some negative connotation attached to, and associated with, the assignment of benefits… Not just from the carrier side of things, but even contractors sometimes have a negative view of the assignment and what it what it does. 

Which is tough, because when both carriers and homeowners really understand what the assignment does, and contractors understand what the assignment does, it really does drive the economy. It brings accountability to the whole situation. There are times that we saw where the assignment was absolutely being abused, and it became very onerous for insurance companies to deal with the assignment the way that certain states were using it.

And that just really wasn’t the case in Arizona, where we started. We couldn’t do the same things that were happening elsewhere. But the assignment is so essential for a contractor to be able to use that. It really does help them be able to bring that accountability to the whole process and protect their payment. So that was one of the big wins for us in solving a challenge in the industry.

Jeremy Traasdahl

Yeah, it just makes a lot of sense too, because it just keeps the negotiation between two people, two parties who actually know what the value of a loss would be, right? If I’m a homeowner and I have a property loss, oftentimes homeowners have none of those in their lifetime, you know, and if they do happen to have a water loss, which is a terrible experience, they’ve never gone through it before.

And so then if I was to get a check for the amount of work that was done in my house, I would have zero idea what the machinery in my house that was used cost. I’d have zero idea what it would actually take to run a restoration business. And so I would be like, ‘they could pay me $1,000 or $10,000’, and I’d be like, ‘I have no idea if I was underpaid or overpaid.’ Because they’ve never experienced that, somebody who’s got zero construction background.

You know, I would have no idea if I just got the right amount of money. And in this scenario, where there’s an assignment of benefits, that allows the contractor to say, ‘hey, this is why we did x, why we did y, this is why it needed to be done, and this is why it should be paid.’ Then the carrier can determine whether or not they are in agreement with whether or not it should be paid, and the accountability and onus is between them, not a homeowner who has frankly, just really limited exposure to something like this.

Josh Ehmke

That’s right, that’s right. And we found that the carriers actually really preferred it that way, where they kept the arguing or the justifying between the carrier and the policyholder directly, because the policyholder didn’t know anything about what was done.

And so whatever the carrier would pay, the policyholder would just automatically believe, ‘well, that’s all I’m owed under my policy; just like in the medical world, that’s all my policy covered, so I’m stuck with the balance.’ And contractors just, you know, oftentimes wouldn’t pursue those balances from homeowners. But with the assignment, it allows that contractor, like you’re saying, to really bring the knowledge of what was done, and why it was done, to the whole billing process and the whole claims adjusting process, which is really fantastic for the contractors.

The accountability is uncomfortable for everybody. But sometimes carriers can tend to feel a little uncomfortable with that accountability, too. So there’s been different challenges that we’ve been able to kind of tackle head on.

Jeremy Traasdahl

Yeah. One of the things I think that, as we grew, was, I would say, a bit surprising to me, is just the human aspect of running a business, and the retention, and the training and development of our people who are doing the work, doing the negotiating, and doing the justifying and doing that. And so they have to be really, really well trained, because frankly, on the other side of the telephone or on the other side of the email are people who are well-trained adjusters, you know, that are doing the same thing.

And so to keep our business, just OCS, to what I felt like was cutting-edge, the best of the best on behalf of the contractors, it became a challenge of just trying to retain and trying to train all these people. 

And then if I look, as a contractor, the justifying of a bill is frankly ancillary to my core business. My core business is to go do construction work, to go do restoration work, to go actually help homeowners in a time of need. And man, I couldn’t even fathom being able to successfully do this whole other side of the business, which is keeping the contract – or keeping the carriers, keeping up with the new IIRC s-500 every two or three years when it comes out – to keep all of our negotiating partners at the top of their game, with all of the regulations per state, with the OSHA regulations, with the standards in the s-500, with their the billing methodologies of the s-500. 

Like if I was a contractor and I had… It’s almost like running two businesses. It’s like I’ve got to run my justifying and negotiating accounts receivable business, and then I got to run my construction business, right? And for me, it’s challenging enough to just do this, this one side of the business and to do it well. And to me, it just made it a no-brainer. If I’m a contractor to say, ‘man, if I could just outsource that for me,’ what made a lot of sense is being able to outsource that part of the business where I can know that once I’ve written my invoice, I can send it off and there will be money coming in.

As we said, cash flow is king for these restoration contractors. They can send it to us and they can know that we’ll get it paid faster, right? We don’t have to look at it. We don’t have to see it. We know that when it comes in, it’ll be faster, and it will be for every penny that we should have been owed, or at least to the best of OCS’s ability – which is going to just, frankly, be better than my own internal ability as a contractor to do it.

Because I know that if anyone can go get you paid, OCS can go get you paid because they’re going to have a team dedicated. Not only availability-wise, right? Oftentimes these contractors are on a job and maybe they can’t talk about a job they did three weeks ago on a house because they’re working on a current job. But our people are always here. We’re always available via telephone and email, and we’re just going to be really well trained in all the justifications and regulatory agencies and regulatory bodies, such as OSHA and the IICRC. And we’re just going to know, per state, how to handle those invoices best.

Josh Ehmke

That’s right. And one of the things you touched on, that I think is absolutely imperative, is the availability. When an adjuster is working on a file, they’re working on it right now. They’re willing to wrap it up. And so being able to take that call or respond to that email quickly is a huge key to what OCS brings to the table on that end. We do have that availability. We are not on a roof, we are not knee deep in muck, trudging through that kind of stuff, trying to dry it out – we’re here to be able to handle that insurance side of the work.

That availability is huge. To be able to outsource that, and outsource it in a way that they’re like, ‘Jeremy, like you said, dude, you’re getting it faster anyways, and oftentimes more of it…’ That’s key to contractor success, to be able to take that on. And that’s something that OCS has historically proven to be able to do time and time again for every contractor we’ve ever billed for.

Jeremy Traasdahl

Thank you for watching, listening to our podcast. If you have further questions or wanted more information, feel free to visit us at our website at www.oneclaimsolution.com