Avoiding Risks with Third-Party Claims Filers

Claims filing services, or third-party filers, can increase class participation and drive valid claims during the class action claims administration process. However, third-party filers sometimes engage in practices that lead to unnecessary work for the settlement administrator and create many challenges and even obstacles that attorneys should be aware of to avoid spending additional, unwarranted time and money.

What is a third-party filer?

A third-party filer, or claims filing service, is a company that seeks out class members and files claims on their behalf. Their presence is usually greater during securities cases, where claims processes are more complex, and the potential recoveries are higher. Once the distribution occurs, third-party filers receive a percentage of their clients’ reward.

Third-party filers can act as an additional megaphone during class notice, gathering class members and compiling the information necessary to file successful claims. These companies can also lighten the volume of individual class members contacting a settlement administrator with process questions, which could be beneficial in decreasing the administration timeline.

What are the risks and how do you mitigate?

With over 50 years of claims administration experience, our team has identified reputable third-party filers that follow proper protocol when filing on behalf of class members. Through this experience, our team developed best practices when dealing with third-party filers.

The nature of third-party filing can bring on delays and unnecessary costs, and these obstacles should be considered when selecting a settlement administrator during the RFP process. Often, these filers file claims past the deadline or file incomplete “placeholder” claims with the promise of completing the claim in the future.

Third-party filers who present claims that are incomplete or erroneous at the time of filing are immediately notified of the steps necessary to correct the issue(s). If the issue persists, third-party filers are again notified during the deficiency and rejection phase of the case. Filers are given a set timeframe to correct these issues, usually 30 days; failure to provide the correct information can, and often does, result in rejection of the claim(s). Although every effort is made to capture claims timely and completely, third-party filers often continue filing claims long after the claim filing deadline has passed. Our team processes all late claims and logs them with the reasons provided by the filers (if any), then presents this information to counsel during the final report process.

The most problematic practices involve unauthorized claims, when third-party filers sign claims on behalf of class members who have already filed a claim on behalf of themselves. Kroll Settlement Administration uses proprietary, in-house software to quickly identify duplicate claims and protect the integrity of the data. Our team notifies third-party filers of the duplicate claim, and subsequent rejection of their claim.

Our team works with counsel every step of the way to navigate the challenge that can arise with third-party filers.