State Enabled Exaggeration & Fraud on an Industrial Scale

Highways England is in turmoil, the tail apparently wagging the dog …

We have no issue with Kier’s Asset Incident Watchmen (AIW’s).  It is what Kier’s management does with their charge rates that concerns us.  We use AIW’s as an example as they are common to all claims; first attendance, commonly 2 operatives and a van.

11/2019:

You may not be aware of the charging process, once the work is done, how this is billed, apportioned but the following occurs on the contracts which interests us:

  • where the costs are under £10,000 the contractor undertakes the repairs and recovers damages from the at-fault party or their insurer.
  • with larger repairs (over £10,000) Highways England pays the contractor and claims against the at-fault party or insurer

What neither Kier nor the Authority appears to have considered is someone taking the time to catalogue over and under threshold claims and compare the rates.  But this is what we have done and upon presenting the facts, Kier and the Authority have acted in unison to obstruct.

Asset Support Contracts (ASC) are being phased out, replaced with AD (Asset Delivery) which see HE pay all bills and responsible for recovery – we touch on this later but the Authority’s recovery rate is poor – £1 in every £5 currently

A brief history, from our ‘Damage to Crown Property’ (DCP) claims-handling perspective …

  • 2013 drivers, fleets, hauliers or insurers (Third Parties) were charged about £125 by EM Highways (now Kier Highways Ltd) for attendance at an emergency.
  • 2014 this became about £1500.
  • 07/2014, Kier acquired Area 9 and ISU’s became AIW’s …. attendance at an incident was charged:
    • £2,700 – 2 x AIW’s + vehicle plus:
    • £2,000 admin’

So, 07/2014, saw a £4,700 staring cost (pre-repair).  ‘Coincidentally’, about a year later, EM Highways sold to Kier.  How did this invoicing look on the books … could it have been a reason for the process?

We struggled for over a year to understand/stop this process that we called ‘1153’ http://www.englandhighways.co.uk/1153-the-figures/  Kier complained to our client’s, presumably wishing to have me removed from this line of business.

10/2015, our clients (insurers) having stuck by us, Kier abandoned their process but … the new one is an exaggeration in another guise and worse …

What we did not know then, because Kier and Highways England kept it secret, was that there was a contractually agreed process for billing Third Parties; a system that set out how TP’s were to be charged ‘no more than’.  Kier did not comply, Highways England did not note it was not being applied or turned a blind eye.  We stumbled upon the procedure 01/2017.

We were presented exaggerated claims but Kier told Third Parties and Courts the claims were in accordance with the contract.

Not only were the rates exaggerated, Kier also added a new, additional uplift, the ‘multipliers’.  Third Parties and Courts were told these increases were appropriate (they even documented the uplifts) and it is here that AIW’s, in particular, were ‘used’ to inflate claims …

Years of enquiries indicate AIW’s:

  • work shifts,
  • are paid a salary for doing so and
  • are not paid any more if they work outside of ‘office’ hours.
  • overtime is at a flat rate.

But, we have received multiple explanations from Kier management and ultimately they claimed:

  • AIW’s work 8am to 5pm
  • After 5pm of a weekday AIW’s are paid 1.5x wage
  • Of a weekend an AIW is paid 2x wage.

This was conveyed to a Court and is written in Kier’s ‘Insurers Guide’ seemingly intended to further trick Third Parties but seals their fate – it is ‘cast in stone’ (documented).  So astounded were we that we obtained 3 court transcripts.

This is just one aspect of the exaggeration.

An AIW is charged to Highways England at about £25/hour.  They should (contractually) be charged to Third Parties at about £30 / hour.

However, since 10/2015, AIW’s have been charged to Third Parties between £73 and £65 / hour – more recently in Area 6&8, the lower.  But add the multipliers these become over £100 / hour after 5pm of a weekday and at least £130 / hour of a weekend.

We are struggling to have Highway England address the issue, they would rather go on the attack though to date, I have successfully resisted their conduct:

  1. The ‘vexatious’ claim was dismissed by a Tribunal http://www.englandhighways.co.uk/highways-englands-permission-to-appeal-refused/
  2. Their new process I have caused to be ‘suspended’ https://highwaysengland.co.uk/thirdpartyclaims/ – the Authority’s reference to this being a ‘pilot’ is to save face.  I will post more shortly about this … Highways England have a problem; how do you ensure contractors still get their exaggerated rates when the process for meeting costs is changing, is being brought in-house (see below).

With regard to ‘1’, the Tribunal, having negated the Authority’s exemption and having not once (since the request in 2017) suggested the rates do not exist, presents Highways England a problem … we expect to be provided with the information sought – and have asked the ICO and Highways England for this http://www.englandhighways.co.uk/release-the-rates/

It is actually more serious ….

  • If the Authority successfully argue they have no ASC (Area Support Contract) rates since these commenced 5+ years ago, they are admitting to having no ‘price list’ against which to check any bill presented to them i.e. no means to substantiate any over-£10k invoice. This is scandalous – who enters such an agreement without a schedule of rates.  We are presenting this with the National Audit Office who also appear to have ‘overlooked’ the issue – despite DCP claims being an Authority ‘income’ stream.
  • If there is a schedule of rates … withholding is a s77 FoIA offence; ‘withholding’.  We have presented the allegation to the ICO …  they appear troubled as there has never been a successful prosecution since the Act commenced … in 2000!

So DCP rates are a dilemma for the Authority!  This is not helped by our participation in a Tribunal hearing 12/11/2019 – last week.  The Tribunal is currently deliberating whether the rates exist or not.  Watch this space!

Whilst exaggeration is fraud (generally speaking), claiming a cost you do not incur and misrepresenting that you do to sustain the claim before a Court, is clearer evidence of dishonesty and should be simple to prove… a straightforward ‘either/or’ situation:

  • Is an AIW paid an uplift:          Yes / No

If ‘no’:

  • Was an uplift claimed:            Yes / No

If the uplift is NOT paid but it stated to have been and claimed, the issue appears to be a fraud against the Third Party and ‘contempt of Court’ at the very least. As proceedings are being taken in the Authority’s name, we have alerted them to this and they have not stopped it.  We have documentary evidence of the conduct and handed this to the Authority  21/06/2017 at a meeting convened about the very subject – we also sent a lot of data to KPMG who were appointed to ‘audit’ (‘project Verde’) … odd, they were not the first auditor chosen … we question why they were selected.

Highways England are trying to change the process now but we believe this is because they have a problem – they are moving to AD contracts.  Instead of the contractor pursuing recovery of sub-£10k claims, the Authority will be handling them all.  As our concerns and arguments are sound, it is the Authority (not the contractor) who will soon need to present evidence to substantiate claims (they will not have their contractors to hide behind) and they desperately need a process that Third Parties will accept.

Highways England understand the issue but have enabled the process to continue.  This suggests the problem is far greater. We suspect they are compromised if only because they knew this was occurring and permitted it.

Something else troubles us and whilst it is a distraction from the above, it is linked …

In 2016, the Authority said Kier had a pain/gain share for damage to Crown property (DCP) works – so if Kier recovered more than £x a threshold figure), their monthly lump sum payment would reduce.  Highway England said no contractor had been subject to such a reduction.  With what we know, unless the threshold was unrealistically high, how could Kier not have achieved this?

So we asked about a specific claim, one we handled and sought the ‘Annex 19’ info.  Firstly, whilst the contract indicates HE should be receiving data monthly, the Authority say they are not and had to request it for the particular claim. This seemed odd, wrong.  Secondly, the figures were askew.

http://www.englandhighways.co.uk/false-information-supplied-to-highways-england/

We explained to HE that the figures were incorrect.  Their response was disinterest and a U-Turn … there is no pain gain and we received an apology for the misinformation in 2016.  To date they have not explained why Kier have given them false figures … why, if there is nothing to gain?

The only answer that comes to mind is that if Kier gave true figures, it would demonstrate they are profiteering on every claim … a couple of 1,000 claims/annum since 10/2015.  As for 07/2014 to 10/2015, they likely made £10million+ by dividing total costs by 1153 instead of 5400. 

NEWS:

For future updates regarding ‘NSORC’ rates please visit our new web site @ www.englandhighways.co.uk