IN THE UNITED STATES PATENT TRIAL AND APPEAL BOARD
`
`In re CBM Review of:
`
`U.S. Patent 7,958,024
`
`Issued: June 7, 2011
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`Inventor: David Chao et al.
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`Application No. 09/810,012
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`Filed: March 15, 2001
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`For: METHODANDAPPARATUS
`FOR PROCESSING SALES
`TRANSACTION DATA
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`U.S. Class: 705
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`Group Art Unit: 3691
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`Confirmation No. 7510
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`FILED ELECTRONICALLY
`PER 37 C.P.R.§ 42.6(B)(1)
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`Mail Stop Patent Board
`~~-~-~~~~~~~-~-Patent Trial a11d AppeaLBoard ---~--~~-~-~~~~--~--~~-~-~~~ -~~--~~--~~~-~~~--~~~----~-~~~-~
`U.S.P.T.O.
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`DECLARATION OF JANIS MCGUFFEY IN SUPPORT OF PETITION
`FOR COVERED BUSINESS METHOD PATENT REVIEW OF
`U.S. PATENT NO. 7,958,024
`
`Callidus Ex. I 0 I 2
`CBM20I4-00I 18
`(Callidus v. Versata)
`
`I
`Ex. 1012 01/15
`
`

`
`I.
`
`BACKGROUND AND QUALIFICATIONS
`1.
`My Name is Janis McGuffey. I am currently the Assistant Vice
`President of Application Services for USHealth Group Administrators, LLC
`located in Fort Worth, Texas.
`2.
`I am over the age of eighteen and otherwise competent to make this
`declaration. I make this declaration from my personal knowledge and if called to
`testify to the contents of it, could and would do so competently.
`3.
`I have been retained as an expert litigation consultant on behalf of
`Callidus Software Inc.
`4.
`I am being compensated for my time at my standard consulting rate,
`which is $225 per hour. My compensation does not depend in any way on the
`outcome of this proceeding.
`5.
`In preparing this Declaration, I have reviewed US Patent No.
`7,908,304 dated March 15, 2011, US Patent No. 7,958,024 dated June 7, 2011, and
`US Patent No. 7,904,326 dated March 8, 2011.
`6.
`I have worked in the life and health insurance industry since 1995 and
`have worked for companies selling a variety of financial services products. A copy
`of my resume is attached as Exhibit A. In September 1995, I started at States
`General Life Insurance Company (“States General”) in Fort Worth, Texas as a data
`entry processor in the New Business department. Within my first six months, I had
`learned every position within the department and was promoted to Team Leader.
`Less than eight months later, I was promoted to System Analyst in the Information
`Technologies (IT) department and, shortly after that, I was promoted to Senior
`System Analyst, also in the IT department. As a Senior System Analyst, my job
`responsibilities included product administration support, quality control testing,
`researching reported issues and fixing system bugs.
`
`
`
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`At States General, we marketed life and health insurance products for
`7.
`a single agency, Cashion Insurance Agency. We processed new business, provided
`agency support services, which included maintaining state licenses and issuing
`company appointments for all agents, processed agent commission payments and
`insurance claims, provided customer service, and collected premiums. States
`General was organized into several departments including Agency Services,
`Premium Accounting, New Business, Policy Owner Services, Claims, and IT. At
`the time, each department used two systems from Genelco Software Solutions
`called Life Support Plus (LSP) and Health Claims Plus (HCP) to manage
`commission hierarchies, perform license validation, calculated commission
`amounts, and evaluate agent debt management to generate commission checks.
`Genelco’s LSP was a life insurance product and HCP was a health insurance
`product. As a System Analyst and Senior System Analyst, I became familiar with
`each department’s use of both LSP and HCP and their required business processes
`for day-to-day operations.
`8.
`In May 1998, I accepted a position with Ascent Management (now
`USHealth Group Administrators, LLC). Ascent was a management company for
`insurance companies in Fort Worth, Texas. At Ascent, we administered life and
`health insurance policies for multiple insurance companies. Our primary clients
`were National Foundation Life and Freedom Life Insurance Company of America.
`Our services included issuance of new policies, calculating agent commissions,
`processing agent commission checks, maintaining agent state licenses, issuing
`agent company appointments, billing and collection of premiums and dues,
`providing customer service, claims services, and payments, as well as filing and
`determining policy pricing.
`9.
`I began at Ascent as a Senior Actuarial Analyst in the Actuarial
`department. As a Senior Actuarial Analyst, I was responsible for reviewing our
`
`
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`state filings that sought premium rate increases. If the state approved our proposed
`rate increase, my job was to enter the approved rates into a system called the
`PCMS system. When I arrived at Ascent, the PCMS system was used for policy
`administration for the services listed in Paragraph 8.
`10.
`In October 1998, I was selected to be on a team — called the “model
`office” — that was tasked with replacing the PCMS system. As a result, I moved
`to the model office department as a subject matter expert for the Actuarial
`Department. During my time in the model office, I worked with a software vendor
`and our senior management to identify our requirements for full system
`replacement. The replacement system we chose was LSP and HCP, developed by
`Genelco. We fully deployed LSP and HCP (the same systems that we had used at
`States General) in early 2000. At that time, I was promoted to Business Lead
`within the IT department.
`11.
`In December 2000, I left Ascent and accepted a position with Genelco
`in St. Louis, Missouri as a Senior Software Trainer and Consultant. My
`responsibilities included training new clients on LSP and working with existing
`clients to enhance their implementations of LSP. During my time at Genelco, my
`role expanded to include quality control support for new system releases, business
`analyst evaluations for programmers, and sales support for new client prospects.
`12.
`In December 2000, Genelco had more than 300 clients both nationally
`and internationally, including startup companies in need of a system to administer
`insurance policy services (e.g., new policy sales, agent licensing and appointment
`tracking, premium collections, and claims processing) as well as more established
`companies looking to convert from other systems to Genelco’s products.
`13.
`In September 2005, I took a position at ACA Assurance (ACA), a
`small French Catholic fraternity in Manchester, New Hampshire. As ACA was
`also using Genelco’s LSP product, I took a position as the Vice President of
`
`
`
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`Genelco Operations. At ACA, we sold life insurance and annuities products
`through direct marketing channels. Our services included issuance of new policies,
`calculating agent commissions and processing commission payments (checks and
`direct deposits), maintaining agent licenses and issuing agent appointments, billing
`and collecting premiums and dues, customer service, claims services and
`payments. My roles and responsibilities as Vice President of Genelco Operations
`included monitoring and auditing all processes at ACA that involved the LSP
`system. I was also responsible for the employees and processes for the New
`Business, Agency, and Customer Services departments.
`14.
`In June 2008, I left ACA and took a position at USHealth Group
`Administrators, LLC (“USHealth”) in Fort Worth, Texas as a Senior Business
`Analyst (Ascent Management, one of my former employers, changed its name to
`USHealth Group Administrators, LLC around 1995). Like Ascent, USHealth
`administered life and health insurance products for multiple insurance companies.
`USHealth’s primary clients and services are the same as those listed in Paragraph
`8.
`
`15. When I rejoined USHealth as a Senior Business Analyst, my primary
`role was to implement a new rating software system called Ratabase developed by
`CGI. My job was to determine what business requirements were necessary for the
`Ratabase system to calculate insurance premiums for both newly issued policies as
`well as policy renewals.
`16.
`For the past three years, I have served as an Officer in USHealth’s IT
`department for Application Services. My responsibilities include monitoring and
`evaluating LSP and HCP systems for best performance practices. I currently
`manage eight employees — five System Programmers, two Business Analysts, and
`one Quality Control Specialist. In monitoring LSP and HCP systems, I ensure that
`these systems comply with state and federal regulations at all times. For example,
`
`
`
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`it is my responsibility to ensure that LSP is checking that all agents are fully
`licensed and appointed in each state in which they sell policies, generating reports
`to assist Agency Services to maintain license and appointment records, and
`preventing submitted insurance applications from being issued if the agent does not
`have a current license or appointment.
`17. USHealth also administers commissions for USHealth Advisors.
`USHealth Advisors hires agents to sell new business for insurance companies. All
`agents must be licensed and appointed with each insurance company in order to
`submit new business. The Agency Services department/group is in charge of
`verifying compliance. Specifically, an individual employee in the Agency
`Services team is required to manually search websites for each state in which an
`agent claims to be licensed and confirm the agent’s effective and renewal license
`dates. If verified, the agent’s license information is then forwarded to a separate
`employee in Agency Services. That employee will appoint the agent in each state
`and confirm the effective date and set the renewal date for the agent’s appointment.
`After this is complete, the agent profile is entered into the LSP system. In IT, we
`are responsible for the accuracy of the data used for each daily, weekly, and
`monthly commission compensation cycle. This includes, but is not limited to,
`tracking and validating the effective date and expiration date for an agent’s
`licenses and appointments, as well as agent address changes.
`II.
`CALCULATING COMMISSIONS MANUALLY
`18.
`From 1995 to 1998, while at States General, I had personal experience
`with manually processing transactions and calculating commissions for the sale of
`various insurance products and services. In my role as a New Business data entry
`processor, I had a system to manually manage information about sales transactions
`and agents.
`
`
`
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`

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`First, I would obtain transaction information by collecting the agent’s
`19.
`transmittal and the insurance application signed by the applicant for insurance (i.e.,
`the prospective insured). These documents would list the agent’s name, number,
`the applicant’s personal data, along with the type of product for which the
`applicant was seeking insurance coverage, the signature date and the state in which
`the application was signed by the agent and the applicant.
`20.
`Second, I would validate the transactions I obtained above by
`checking, for example, to see if the application was signed by the applicant for
`insurance, if it was signed in a state in which States General does business, if the
`application was signed by the agent, if the health questionnaire was fully answered,
`and if the form of payment was complete. If the transaction was not completely
`verified or cleared, I would not process that transaction further for purposes of
`calculating compensation and, instead, would put those applications in one stack
`on my desk. If the transaction was verified or cleared, I would put those
`applications in a separate pile, assign them an application number, and proceed to
`the next step.
`21.
`Third, I determined whether the agent conformed to a specific
`constraint, regulation, or law. For example, in order for an insurance agent to sell
`life and health insurance policies in the United States, state governments and/or
`other government organizations would require that the agent first be licensed in
`each state in which he or she was going to write new business. Also, the agent
`must be appointed (or approved) by an insurance company to sell their insurance
`policies. Thus, I was aware of the regulations or requirements by which I would
`determine whether an agent was in compliance and, if so, eligible to receive
`compensation. At the time, States General worked with an outside actuarial firm to
`prepare and update a memorandum — called the actuarial memorandum — that
`would detail the requirements for sale of various products and services. Once I
`
`
`
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`

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`identified the applicable rules or regulations, I would verify that an agent was
`eligible to write business (i.e., sell a policy) in a certain state. Specifically, I would
`obtain this credential information stored in a typed chart that was maintained by an
`employee in the Agency Services department. This paper chart included the
`agent’s name, the states in which he or she was licensed, and the effective/expiry
`dates of that license. Even if the agent was in fact licensed to write business in a
`particular state (e.g., Texas), I would separately validate the transaction by
`ensuring that the application was signed in the same state.
`22. At this point, I would have my preliminary results, which included in
`one pile of transactions that were not verified, one pile of transactions that were
`verified, but not written by a licensed agent, and one pile of transactions that were
`verified and written by a licensed agent. For any validated transactions from
`determined eligible agents, I would manually compute the agent’s commission rate
`based on a schedule of commission rates. In order to verify that I was calculating a
`commission using the correct commission rate, I would manually review a paper
`spreadsheet of the rate schedule that was maintained by an employee in the Agency
`Services department. Using this spreadsheet, I looked up the type of product sold
`and filled out a transmittal form to determine the commission amount payable to
`the agent. I would manually fill out the transmittal form with the product rate,
`premium amounts, commissionable premium amounts, take into account net pay
`by subtracting any fees and/or dues not be included in premiums, and determine
`the commission amount payable to the agent.
`23. Next, I would then compare my manually calculated results with the
`results that the Genelco system generated. I did this because, when I was hired, the
`Genelco system had just been recently implemented at States General and the New
`Business and Agency Services departments wanted me to verify that the system
`was working correctly. Even outside of my role as a New Business data entry
`
`
`
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`processor, I often repeated this process when I became a Senior System Analyst as
`part of quality assurance testing and evaluating modifications to the Genelco
`systems.
`Each of the steps above could be done for a single transaction, but in
`24.
`order to efficiently manage our time and resources, we often batch processed
`multiple transactions at a time, doing each step for all of the transactions before
`moving on to the next step.
`25.
`Finally, we executed payment. The commission payments were
`generated on a physical check, approved by the Agency Services Manager, and
`signed by the Chief Financial Officer prior to being mailed directly to the agent
`each Friday.
`26.
`From May 1998 to December 2000, while at Ascent Management, I
`had personal experience with manually processing transactions for the sale of
`various insurance products and services that required manually calculating
`commissions. Employees (including myself) would manually process sales
`transaction data and calculate commissions. At the time, manual calculations were
`performed for the annuities business because that business segment was relatively
`small and, therefore, it was more efficient to process and calculate commissions
`and compensation manually rather than use Genelco’s software.
`27. At the end of each month, employees would reconcile a premium
`payment back to the agent using a paper document called a “premium accounting
`report” and an Excel spreadsheet (either printed out or displayed on a computer
`screen) listing the agent’s name, address, and commission rate by product line.
`The premium accounting report listed transactions which showed the date the
`premium payment was received, the policy number for which the payment was
`being made, the product code that specified which type of policy the insured had
`purchased, the agent’s identifying number, and the premium amount. Using this
`
`
`
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`
`information, an employee would manually calculate the agent’s commission
`amount by taking the commissionable premium (minus any fees/dues) multiplied
`by the product commission rate. An employee would also check to see whether the
`agent was properly licensed using the same method as described in Paragraph 21.
`If an agent was properly licensed, the employee would request that a manual check
`be prepared via an intercompany transmittal form. A paper check for the approved
`amount would be mailed directly to the agent. This same manual process occurred
`for other business segments when we conducted quality assurance testing on
`Genelco’s systems.
`28.
`Similarly, while employed at Genelco from December 2000 to
`September 2005, I learned many methodologies for performing manual
`commission calculations including defining a commission bonus, flat dollar rate
`calculations, and percentage of premium calculations. I also learned how different
`companies tracked and validated licenses and appointments for their agents when
`calculating compensation. Many of Genelco’s clients were in the process of
`converting from manual processes for these validations and compensation
`calculations to a more automated process. Even as that conversion took place,
`some clients deliberately chose to keep their manual processes in place for certain
`blocks of business while implementing a software solution for other lines of
`business for efficiency and validation reasons.
`29.
`For example, while at Genelco, I would often see existing or
`prospective clients manually validate license and/or appointment information
`before calculating compensation. These clients would typically use a typed chart
`listing agent names, agent ID numbers, the state(s) in which the agent was licensed
`and/or appointed to do business, and the effective dates and expiration dates for
`such licenses. An employee would compare the information on this chart with the
`information on the application submitted for a policy. The employee would
`
`
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`confirm that the agent’s name matched, that the state of the transaction matched
`the state in which the agent was licensed and/or appointed, and that the agent was
`licensed and/or appointed on the date the application for insurance was signed (i.e.,
`the transaction date). If the agent was properly licensed and appointed, their
`commission would be calculated. If the agent was not properly licensed and/or
`appointed to do business for particular transactions, commissions would usually
`not be calculated. If a commission amount was calculated for an unlicensed or
`unappointed agent, no commission would be paid out for that transaction. If, on
`the other hand, the agent was verified as licensed and appointed, the agent would
`be paid.
`From September 2005 to the present, during both my employment at
`30.
`ACA and at USHealth, I have regularly calculated commissions manually for
`quality control, issue (problem) tracking, and to conduct internal audit
`verifications. As part of such processes, I validate a sales agent’s eligibility to
`receive commissions for sales made and I work with the states in which my
`company is licensed to do business to ensure full compliance with any applicable
`laws or regulations.
`\\
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`
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`31. All of the manual compensation calculations I have described above
`
`apply not only to commissions for sales agents, but also apply to the manual
`
`calculation of commission overrides for managers and/or others in a hierarchy.
`
`I declare under penalty of perjury that the foregoing is true and correct.
`
`Executed at Fort Worth, Texas, this jflfiday of Q8 LgfiT
`
`, 2013.
`
`‘
`
`G,
`
`%M..,.J ~7%H%%;
`
`Jani
`
`cGuffey
`
`12
`
`EX.101212/15
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`

`
`Exhibit A
`
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`

`
`1 7 2 S M O K E Y T E R R A C E L A N E • W E A T H E R F O R D , T E X A S 7 6 0 8 5
`P H O N E 9 4 0 - 3 9 1 - 2 6 8 8 • E - M A I L J A N I S M C G U F F E Y @ H O T M A I L . C O M
`
`J A N I S M C G U F F E Y
`
`OBJECTIVE
`
`
`Secure a position with an energetic company interested in a proactive
`leader with proven
`team experience, customer oriented, excellent
`communication skills, training skills, budget administration experience, and
`a strong desire for growth.
`
`
`PROFESSIONAL EXPERIENCE
`
`
`June 2008 – Present USHealth Group Admin. LLC Fort Worth, TX
`Sr. Business Analyst to Asst. Vice President Application Services
`(cid:132) Rejoined (Ascent Management) as Sr. Business Analyst for a new rating
`system implementation
`(cid:132) Collected business requirements for the Ratabase rating software
`(cid:132) Managed LSP system modifications for Ratabase including working with
`the offshore and internal programmers to ensure timely delivery.
`(cid:132) After 18 months I was promoted to Asst. Vice President where I am
`responsible for 5 RGP programmers, 2 Business Analysts, and 1 Quality
`Control Specialist for all LSP and HCP system enhancements
`(cid:132) Completed the 5010 implementation required by Federal regulations
`(cid:132) Responsible for technical changes required to maintain the LSP and
`HCP systems of record.
`(cid:132) Responsible for contract negations with current vendors
`(cid:132) Responsible for maintaining both LSP and HCP systems in full
`compliance with State and Federal rules and regulations.
`
`
`Sept 2005 – May 2008 ACA Assurance Manchester, NH
`Vice President Genelco Operations
`(cid:132) Provided training for employees complete with training materials
`(cid:132) Writing business requirements for modifications with Quality Assurance
`testing.
`(cid:132) Managed the Operations departments which included New Business,
`Policy Owner Services, and Agency.
`(cid:132) Reduced pending applications from over 900 to less than 40
`(cid:132) Reduced suspense from over $750,000 to $35,000
`(cid:132) Implemented an electronic filing for agent licenses
`(cid:132) Utilized problem solving skills for policy data corrections from a
`previous conversion.
`
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`
`
`
`

`
`St. Louis, MO
`
`Dec 2000- Sept 2005 IBM Global Services
`Senior Training Specialist
`(cid:132) Trained new and existing clients on Life+, Ledger+, and LifeView
`software packages. This included start up businesses as well as
`Refresher and Upgrade training.
`(cid:132) Provided consulting services for clients on how to utilize their software
`more effectively.
`(cid:132) Provided Sales support, demonstrating on all software packages.
`(cid:132) Presented at the Genelco User Conferences held in St. Louis
`(cid:132) Actively lead clients with manual conversations.
`(cid:132) Write and maintain training materials.
`(cid:132) Perform quality assurance testing for new releases.
`
`Fort Worth, TX
`July 1998 – Nov 2000 Ascent Management
`Ascent Management is currently known USHealth Group Admin. LLC
`Sr. Actuarial Analyst to Business Lead
`(cid:132) Implementing state approved rate increases into the PMCS systems
`(cid:132) Research, development, and planning for a system replacement from a
`mainframe system to an AS/400.
`(cid:132) Responsible for leading the policy research team, completed ahead of
`schedule.
`(cid:132) Implemented training course for all levels of personnel from data entry
`processors to vice Presidents instructing all departments.
`(cid:132) Implemented training course for new recruits — speeding profitability.
`(cid:132) Directed and assisted with issues in production on the AS/400, utilizing
`HELPSTAR 2000 software.
`(cid:132) Developed business specifications for system enhancements.
`
`Jan 1996 to July 1998 States General Life Insurance Co Fort Worth, TX
`New Business Processor to Sr. System Analyst
`(cid:132) Entering qualified New Business applications into the LSP system
`(cid:132) Issuing New Business policies
`(cid:132) Generating system requests for programmers including unit testing
`(cid:132) Problem solving for all departments using LSP and HCP systems
`(cid:132) Adding new products to the LSP system for processing
`(cid:132) Unit Leader for the New Business department responsibilities included
`managing application input, issue and settlement of policies. Verified
`withdrawn and declined refund checks. Fielded agent inquiries and
`applicant calls for status and/or field support questions.
`
`
`
`Cleburne, Texas
`1988 Cleburne Baptist Academy
`1989 Missouri Valley College Marshall, MO
`Loma – Associate in Customer Service (ACS) designation
`
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`
`EDUCATION