¨ The "claims issue" has continually been a contentious issue for all of the moving industry, not just the military movers. When household goods are moved between any two points, it is inevitable that there will be the possibility of some damage to the goods - even if just rearranging a living room.

¨ The current military claims system is broken and, as designed, tolerates fraud and abuse. Such tolerance cost the carrier, government, and tax payer millions of dollars in unnecessary claims payment.

¨ Moving military household goods is particularly difficult because of the dynamics of the parties involved. Not only are there multiple administrative layers to address, but the nature of military household moves is fundamentally different than commercial moves. Most military moves are handled three times whereas a commercial move is usually handled once. In most commercial moves, a carrier picks up the shipment from one location and delivers it to a second location immediately after the pickup.

¨ In the majority of military moves, the carrier picks up the shipment and delivers it to storage. Then the shipment is moved from storage to the military member's residence. The time span from the first pick up to the final delivery could be two to four years. Thus, because there are more moves and a greater time in which the household goods are not in a permanent location, the likelihood of damage is greater in the military environment.

¨ It should be pointed out that there is no difference between military and commercial practices with respect to the transportation equipment and vans, personnel and packing materials and techniques.

¨ There is a large perception problem about moving companies among the members of the military. This perception is even reflected in the training materials developed by DoD. The perception is that the moving industry is largely unprofessional and will try to take advantage of military families in the relocation process. The training procedures even encourage military families to file claims.

¨ The ability to abuse the claims system is surprisingly simple. There are few if any checks and balances on the military's capability to negotiate claims procedures with movers and forwarders. There are no audit trails that are maintained demonstrating the amount of money the government pays to military families relative to their moves.

¨ When the carrier's liability for claims charges was $.60 per pound per article, the potential cost was not especially onerous. However, as the carrier's liability has increased, so has the industry's unwillingness to accept the DoD's claims procedures.

1. The shipper (i.e., the military family) files his claim with DoD upon delivery of his household goods.

2. DoD pays the shipper and then files a subrogation claim against the responsible carrier.

3. The carrier either denies responsibility or offers a settlement amount to the DoD.

4. If the DoD does not accept that amount offered by the carrier or will not accept the carrier's denial of responsibility, the DoD offsets the claim against the carrier without any further review or appeal. Essentially, the Federal government deducts the money directly from the carrier's bank account without due process.

5. Once the Government offsets the carrier's account for the money, the carrier then must formally request a refund to the appropriate service's higher headquarters' office. It can take anywhere from one to three years to receive an answer to a carrier's request for a refund.

6. Rarely does the service's higher headquarters agree with the carrier's request for a refund. When it does, a refund check is forwarded directly to the carrier. However, there is no interest on offset monies paid by the Government. If the higher headquarters rule that the money was correctly offset from the carrier and that no refund is due, the carrier then has the option of filing an appeal with the General Accounting Office (GAO). To do so, the carrier must write a formal appeal and forward it first to the appropriate service's higher headquarters. The service headquarters must write their own report to go along with the carrier's appeal and then forward it all to the GAO. Once the package gets to GAO, it can take several years for GAO to review and respond.

7) The overall time frame for the process can be anywhere from three to six years.

A recent example was when the government demanded that a carrier pay for a claimed missing VCR. The VCR was not listed anywhere on the inventory as being received by the carrier for shipping. The shipper claimed it was packed in a box marked, "Fertilizer" on the inventory. This didn't seem reasonable to the carrier, so the claim was denied. The DoD offsets the carrier's account for the amount of a new VCR. The carrier never recovered the money from the government.

Recently, a carrier got a rebuttal back from the DoD on a missing CD claim. The carrier denied the liability for the CDs because they were not listed on the inventory.

The DoD responded that "... even though they were not listed on the inventory, it is reasonable to assume that they were packed in the box marked 'telephone and answering machine', so you must pay or we will offset your account". From the carrier's prospective, there is nothing reasonable about the claim or the right of the government to offset their account for such a claim.

The Government Currently Requires Carriers to Pay for

Pre-existing Damage.

Most service members move around at least once every two years. It is industry's contention that some members claim the same damage to the same items each time they move because:

a. They are not obligated to get the repairs done that they are paid for by the carrier, so some pocket the money and wait until the next time they move so they can claim the same damage.

b. In such cases where there is a suspicion of this, industry has requested from the service's higher headquarters a copy of a shipper's last claimed filed and have been repeatedly refused access to such documents. (the government doesn't track these claims).

c. The industry has noticed a current trend in claims payments by the Government. The payment to the shipper is becoming increasingly liberal while the treatment of the carrier by the government is becoming more dictatorial.

d. The severity of the claims situation can not be explained in such a limited forum. However, industry has vast amounts of complete documentation (actual loss and damage claims) to support these complex allegations. It is actually a lot easier to simply review the actual claims documents one by one to get a real understanding of the issues.