Most of our readers and clients are fairly certain their warranty compliance is acceptable, if not stellar. In most cases, an independent review would probably bear that out, but warranty rules can be a virtual minefield.
Let’s take add-ons for instance, we’ve often addressed claim coding and how unrelated failures found in the shop are considered add-ons.
Scenario 1: An example could be the customer who comes in with a concern of a “Fluid leaking under vehicle.” On inspection your technician finds an oil pan gasket and valve cover leak.
The proper procedure, of course, would to have it inspected and approved by service management as an add-on repair (this could be either the oil pan gasket or valve cover repair), as GM policy has always been:
“A single line of Repair Case Information Data on the Warranty Claim will, unless otherwise instructed, include all parts, labor and any net amount required to complete repairs resulting from a single failure. Multiple Repair Cases from the same RO must be submitted as separate lines of the Repair Case Information Data.”
Granted, this statement comes from the old WINS Claim Processing Manual (Article IV, item B), but the process has never changed and is an industry standard to identify all repair costs associated with a single failure.
Scenario 2: A water pump fails and causes an overheating condition that damaged a cylinder head gasket. GM, or any other manufacturer, wants to understand exactly what the water pump failure cost, which would include the consequential damage to the head gasket.
In this instance, the claim would be coded to the water pump, with the additional parts and labor submitted on the same job line, with appropriate approval for Other Labor Hours and Excessive Parts.
If these repairs are coded as separate job lines, there is no way to quickly associate the failures as being related and hold the water pump manufacturer responsible for the entire cost of the repair.
Where Problems Can Arise
Even though we’ve described proper procedure in both scenarios, as we’ve seen recently, an auditor might wrongly view things from a different perspective. Not only that, but your H-Route rep could direct you to manipulate the claim in a manner that would not follow procedure.
With Scenario #1, we’ve seen an auditor take issue with the service manager’s approval not including the words “saw,” or “verified” when approving an add-on repair.
To be clear, policy does require service management to “see,” or “verify” the failure, however, there is no requirement that add-on approvals contain these specific words, as it states under Article 22.214.171.124:
“Any warranty/policy concern not expressed by the customer must be first inspected and verified by the service manager before it is added to the job card, multi-point inspection form, or other supporting documentation. If the service manager determines that the additional repair is necessary, he/she must document the date, time,
explanation and signature on the job card prior to the work being performed and prior to the customer being notified that additional work is necessary. Multiple additional concerns must each contain this approval. The explanation must specifically describe what the service manager saw or verified upon inspection or road test. The added repair work must state ‘added operation’ on the job card.”
As you can see, the only thing an approval “must state” is “Added operation,” along with the date, time, explanation and signature. Nonetheless, we have known auditors to essentially deny a manager actually “saw,” or “verified” a needed add-on repair because the approval did not contain one of these two words.
In yet another way we’ve seen add-on repairs go south, there are occasions where the H-Route rep instructs dealers to combine unrelated job lines into a one-line claim, by submitting the unrelated repair time as Other Labor Hours.
In defense of H-Route reps, they’re well aware of the effect of Repeat/Related Repairs on Differential Points and submitting unrelated repairs as one-line claims is a way to circumvent that.
This is not the proper process and they’re more than likely just trying to simplify the submission and avoid Differential Points for their dealers, but may be inadvertently setting you up for a debit.
You see, an auditor may view this as being a properly approved add-on repair, but when it gets submitted as OLH instead, you are now missing straight time approval.
From a dealer’s standpoint, you probably know that’s the wrong way for the claim to be submitted, but here you have the person paying your claim telling you to do it a certain way and you go along. What else can you do?
Scenario #2 can be just as perilous. As we know, GM does not require time recording for established labor operations, with the exception of transmission claims.
While some GM dealers do time record everything, many will only time record for OLH and transmission repairs.
In this case, there are established labor times for both the water pump and head gasket, so if you’re not time recording every individual repair it may be you won’t have a time record for the consequential damage to the head gasket.
Common sense says you are justified using the established time (less any potential overlaps) for the head gasket and submitting that as Other Labor Hours, with approval.
But yet, common sense isn’t so common with some auditors, particularly when they have little real-world knowledge of how the submission side logistics work.
As nutty as all this may sound, rest assured it happens and debits have resulted. Even if you’ve been audited in the past and made adjustments to your process, a different auditor may turn the tables and come up with a whole new set of “rules,” even if they don’t exist.
On one level, GM has created a Catch 22 by not requiring dealers to time record each individual repair. While we hate to admit it, that’s the best way to minimize exposure in most cases, although it won’t do you a bit of good if you’ve done everything by the book and are instructed to submit it differently by your H-Route rep.
In that situation, we urge you to either get something in writing, or make notes on the repair order to explain why you submitted it differently.
Even if you’re 100% in the right, there’s no guarantee a specific auditor will be able to—or even have the desire to—reason it out.