Monday, June 8, 2009
The North County Fire Protection District will begin billing drivers for responding to automobile accidents. We'll find out why local public agencies are turning to an accident response fee to offset funding from the state.
DOUG MYRLAND (Host): I'm Doug Myrland sitting in for Maureen Cavanaugh, and you're listening to These Days. And in this part of the program, we'll be talking about accident response fees and, specifically, the implementation of such a fee in the north county. And we have two guests, one guest, joining us in the studio, John Buchanan, who's the public information officer for the North County Fire Protection District. Good morning, John.
JOHN BUCHANAN (Public Information Officer, North County Fire Protection District, San Diego County): Good morning, Doug.
MYRLAND: Glad you could be with us here. And also joining us by phone is Sam Sorich. He's the president of the Association of California Insurance Companies. Thanks for being with us, Sam.
SAM SORICH (President, Association of California Insurance Companies): Good morning.
MYRLAND: We are also inviting all of our listeners to join in the conversation. Should drivers in car accidents be billed from the fire department for responding to a 911 call? And whose responsibility is it to pay for emergency response when the state's slashing money to local governments? We'd like to hear your thoughts on this, so give us a call at 1-888-895-5727 and we'll invite you to join the conversation a little bit later. But, John, I want to start with you because, lucky you, you're the public information officer for the fire district in San Diego County that decided to implement one of these fees. Tell us about some of the thinking that went behind deciding to impose an accident response fee and give us your talking points about why this is a healthy and good thing for your fire district.
BUCHANAN: Well, people think this is a relatively new thing. It's not. There are thousands of departments around the country that have been doing this for many years. In fact, in San Diego County, we've been doing it but just haven't been doing it for accidents, or crashes is what I like to say, because accidents are something that's totally an accident. And so if you – For instance, if you were to intentionally start a brush fire, we're able to do a cost recovery program on that, same thing with a hazardous materials spill. So that's how this – We've been doing this for many, many years.
MYRLAND: And you implemented it on crashes, on – with primarily automobile crashes. When did that implementation take place?
BUCHANAN: We're actually going to start it this month.
MYRLAND: Right. And you have a fire district that we know is in the north county but can you give me just an idea of where some of the dividing lines are? Where your districts (sic) begins and ends?
BUCHANAN: The areas that we cover are Fallbrook, Bonsall and Rainbow.
BUCHANAN: I mean, do you want geographic locations?
MYRLAND: No, no, that's fine. And if you think about driving up Interstate 15…
BUCHANAN: Yes, we cover…
MYRLAND: …about the time you get to Lawrence Welk Village.
BUCHANAN: Past Lawrence Welk, there's a big bridge that spans over, the Lilac Bridge.
BUCHANAN: We're just a little further north than that.
MYRLAND: Okay, I think that – I think that gives everybody kind of an idea of where the district is.
BUCHANAN: And we go all the way to Riverside County there.
MYRLAND: Okay. Sam Sorich with the Association of California Insurance Companies, I'm assuming that the Insurance Association isn't real pleased about this.
SORICH: We are opposed to the concept for essentially three reasons. First, we think it's just bad public policy to force citizens to pay for accident responses when, in fact, they are already paying taxes to cover the – that type of activity. And, secondly, many of these systems purport to tell the citizens that you don't have to worry about it, your insurance policy will pay for these fees. Well, the fact is that many policies do not pay for these fees and, frankly, this does create a difficulty for us insurers when we have to tell our policyholders that these fees are not covered and they're going to have to pay for it themselves. And then finally, if the policy does cover these fees, we are going to have to increase our insurance rates, that's something we don't want to do. We want to keep insurance as affordable as possible and these fees, if they are part of the insurance coverage, are going to drive up insurance costs.
MYRLAND: John, I want to turn to you and talk a little bit more about the details of these fees. Typically, how much is this bill going to be? What are we talking about if I'm in a car crash and somebody, a fire truck, responds?
BUCHANAN: Well, it's all going to vary depending upon the crash and the cleanup. It's going to be anywhere from three hundred – I'm sorry, $435.00 to $2100.00, depending upon the severity of the incident.
MYRLAND: And then, physically, how do you do this? Do you have to pick who's in – who was at fault in the accident?
BUCHANAN: No, we don't actually pick. We just go around and we'll gather the information for the recovery costs from the different drivers and then we turn it over to a recovery agency and then they, in turn, with the insurance companies – We don't determine who's at fault. The insurance companies, always, they're the ones who will actually determine who's at fault.
MYRLAND: And this recovery agency is a third party.
MYRLAND: I suppose a pejorative way to talk about it would be sort of like the red light camera company, which isn't really part of the city, but they sort of collect fees by helping to enforce these crash taxes.
BUCHANAN: We're called – I mean, crash tax is what the newspaper gave it; it's actually a recovery cost, not a tax per se.
MYRLAND: And, Sam, you obviously have had some experience in other state – I mean, you're the California Association of…
MYRLAND: …Insurance Companies but this experience has happened in other states. What – Can you talk about the billing process from the point of view of the insurance company.
SORICH: Yes, over the last few years a number of these third party vendors have gone out and marketed their services to local governments and the vendors, in turn, as was mentioned, go ahead and bill insurance companies. It has not been well received in a number of states. Since this activity has become more active, six states have passed laws outlawing these types of systems, these fee systems. And Florida, the Florida legislature recently passed a bill—it's on the governor's desk and the governor of Florida is trying to decide whether or not to sign it—so the public reception of these schemes has not been favorable.
MYRLAND: John, obviously nobody wants to get another bill and nobody wants their insurance rates to go up but you are obviously instituting these fees because you're having trouble raising revenue from other sources. Can you talk a little bit about that, about the discussion that took place in your fire district about why you needed to go forward with this?
BUCHANAN: Well, the – Let's go back a little bit. The citizens or the person who's involved in the crash or the incident, they're not particularly going to get a bill. We're going to get the information and send it to the insurance companies because in the majority of the insurance policies, it says the insured will be covered by – will be covered by any recovery costs incurred by the fire department or police department. Now, going back to your question about the – We have lost approximately $400,000.00 in our budget just in the last few months. And so we're trying to do a number of things by surviving with that. We're – have lost four positions where we're not hiring for that, and people are wanting to maintain the same level of service. So with us trying to recoup approximately $140,000.00, it's just kind of a drop in the bucket.
MYRLAND: Now if I'm not insured, what happens? Do I get a bill personally?
BUCHANAN: No, because we're only sending it to the insurance companies. From what I understand through law enforcements (sic), that if you don't have auto insurance in the state of California, the governing police agency has the right to impound people's cars if you're not insured, so you are being penalized.
MYRLAND: And what happens if your insurance policy doesn't cover it?
BUCHANAN: Then they probably will not – they won't – it's not covered because it's not written in there. I know it's covered in my insurance policy because I looked it up.
MYRLAND: But then the individual would be ultimately responsible.
BUCHANAN: No, no. No bill is going to go to the individual. If it's written in their policy and covered by their policy, then it will be covered.
MYRLAND: I – Sam, I want to talk about that.
MYRLAND: It seems like the – most of us haven't read our insurance policy that carefully to see if this might be covered. Where – what is – is this typically in every insurance policy or does it vary from carrier to carrier?
SORICH: It does vary. What a policy covers here in California is liability, so what you're purchasing when you buy an insurance policy is a liability policy that covers you for injuries that you cause when you're driving or damage to property. You can also buy collision and comprehensive coverage for your own car but what we're talking about here is a person's liability for property damage. The policy does cover property damage. So let's say a person has been in an accident and damages a pole or because of the accident there's some spill on the roadway and the road has been damaged, probably that sort of damage will be covered by the policy but the mere fact that the fire truck went out to the scene of the accident and didn't – wasn’t engaged in any physical damage or property damage, the policy is probably not going to cover that incident. And I think the ordinance that was passed in the north county, I think, sends a very bad message. The message is, if you buy insurance, your insurance is going to cover it but if you disobey the law and don't buy insurance, well, you're going to walk away scot free. I think that's a very bad public policy.
MYRLAND: Now that's Sam Sorich. He's the president of the Association of California Insurance Companies. And we're also joined by John Buchanan, who's the public information officer for the North County Fire Protection District. And we hope that we'll be joined by you with your input and calls and questions at 1-888-895-5727. We do want to go to Jordan in Encinitas who wants to make a comment or ask a question. Jordan, thanks for being with us.
JORDAN (Caller, Encinitas): Yes, hi. This goes to the fire chief. I think that they should be charging – Rather than the public in this issue, I think they should be charging the private Brinks companies and all these other companies that charge the public for the security but yet you guys don't charge them, from what I know, for every time you guys have calls and eight out of ten of those are even false calls. So there's a lot of money to be generated with all these false calls to these private companies more than, I think, car accidents. I'll take my comment off the air. Thank you.
MYRLAND: Well, thanks, Jordan. And, John, maybe you can address the underlying question there, which is is it always a public agency that shows up? Are some of these people who show up at the scene of the accident not part of the public agency but rather private responders or…?
BUCHANAN: No, in our area, it's all a public agency.
MYRLAND: Okay. I also want to invite Diane in Cardiff to join us. Diane, you're on the air with us.
DIANE (Caller, Cardiff): Good morning.
MYRLAND: Good morning.
DIANE: I'm a firefighter. I work for the City of Hemet. And we're also just beginning a cost recovery program that sounds similar to what North County is doing. The insurance person talked about how taxes pay for fire service and, yes, they do, he's correct, except that the taxes really are the basis of basic fire and EMS coverage. Over the years, fire departments have taken on everything that doesn't fall into another category so, obviously, we don't respond to violent crimes like the police but we respond to water leaks, and I think the previous caller was talking about false medical calls or fire alarm calls. We respond to so many things that don't have – didn't, I guess, define the very basic of what fire department used to do, and we're not being reimbursed or – or those are not reimbursable charges. In Hemet, in December we closed one fire station. We will be laying off nine people in July. And that's what happens when you don't have some sort of extra cost recovery system. We can't continue to do more with the same amount of money and while taxes do, you know – we're supplying that fire and EMS protection from tax money, if we continue to be expected to do more without more revenue stream then we're going to be able to do less of the fire and EMS like we are in Fallbrook – or, in Hemet.
MYRLAND: Diane, thanks very much for your comment and your information. John?
BUCHANAN: There – She brought up one really good point. In our area, we go on many, many snake calls a day where we actually go into people's, either, yards, houses or garages, just to go and take care of the snake situation. That's just – comes under other related duties. We don't bill for that; it's just a public service that we do. Another point is that when people – I cover the I-15 corridor and many of the people traveling through that aren't residents in Fallbrook, so they're not paying taxes so if we go there, they're pretty much getting a free service. So this is just something to help with us that will help us with our services later on (sic).
MYRLAND: Let's talk for a minute about the expanded role of fire protection services and responding to calls about snakes and I'm – I think that – is that a set of decisions that's been made over the years? Or is it because of increased population? What's caused this sort of fundamental change in the duties and responsibilities of fire districts?
BUCHANAN: Well, it goes way back to who knows how long, but it goes with the person that sees the cat in the tree and it's been up there for a couple of hours and so people are worried about that. And so we still, again, go out on many cats in the trees or even up on the power pole, and so it's just a public service that we do for the people, and the snake calls, you know, you don't know if it's going to be a rattlesnake or what, so that could be a – an incident where it could cause…
MYRLAND: And I want to turn to Sam Sorich…
MYRLAND: …who's the president of the Association of the California Insurance Companies (sic), and talk to him about the insurance implications of all of this. But we do need to take a quick break. We'll be back and we'll take your calls and we'll speak to Sam Sorich right after this break.
[ break ]
MYRLAND: You're listening to These Days in San Diego. I'm Doug Myrland, sitting in for Maureen Cavanaugh. I have a couple of guests. One on the phone is Sam Sorich. He's the president of the Association of California Insurance Companies. In the studio with us is John Buchanan. He's a public information officer for the North County Fire Protection District. And we're talking about accident response fees and the implementation thereof, particularly in the North County Fire District. And just before the break, we were talking about the expanded roles of fire departments and the increasing demands on various kinds of services from them, and I wanted to give Sam Sorich a chance to weigh in from an insurance perspective about paying for all those extra services.
SORICH: Yes, Doug, again, I would just observe that insurance policies vary and there is no guarantee that an insurance policy will pay for these costs. Essentially, an insurance policy is a contract and insurance companies are required to follow the terms of the contract, and many of those contracts do not cover these costs. In instances where the policy would cover a fee, that has implications for the individual and consumers generally. For the individual, if the policy pays for this property damage, that – what that means for the individual is that the individual may lose the good driver discount that he or she already qualifies for according to the Department of Insurance Regulations. If you're involved in an accident, you're primarily at fault, and the property damage exceeds a threshold, then you are likely to lose your good driver discount. And for consumers generally, we insurance companies have to cover our costs and if this is an additional cost, we have to build it into our rates and increase the price of our product, something we do not want to do.
MYRLAND: So, John, you are talking about increased costs for fire protection, Sam is talking about perhaps people's insurance rates going up, what's really causing this pressure on your budget? Where are these budget cuts coming from that are causing you to turn to this other solution?
BUCHANAN: Pretty much from the state. We get our monies through property taxes, though, so that's why we're not – we don't get our money from sales tax so people, they're turning in and contesting the cost of – or, the price of their home, so that's what's driving down our budget is that people are realizing that their houses aren't worth as much as what they were three or four years ago, so they're turning in paperwork to contest the price of their house so that's bringing the budgets down for us.
MYRLAND: Now, we talked a little earlier in the program about the process of billing and the fact that there's a third party involved who – you know, you basically have them as a vendor who handles the – collecting this fee from the insurance companies. How much money are they being paid to provide that service? I mean, it seems like we've introduced another third – for-profit third party into the picture here. How does that work?
BUCHANAN: Well, they're going to get somewhat of a percentage and I don't know what that percentage is. It's going to be based on, you know, the different levels of service of what we are going to do a cost recovery on.
MYRLAND: And, Sam, is this process that we've described here, going on in California, is that specifically what's been made not legal in several other states? Has the insurance industry sort of helped pass this legislation to prevent third parties from providing this service or…?
SORICH: To some extent but, really, in the six states that have outlawed these types of fee systems, it's really been consumers generally that – The public just does not like this idea. They don't like the idea that they're already paying taxes and this is an additional fee, and they also don't like the idea of driving through a state and coming into a community that has this fee and being forced to pay the fee whereas the residents of that community, when they drive to other places in the state, they can be in an accident and they are not charged. So there's a fundamental unfairness. And so in the states that have outlawed this, it really hasn't been the insurance industry leading the charge, it's really just been the public – the lack of public acceptance for these schemes.
MYRLAND: We have another caller on the line. Bruce in Del Mar has a comment. Bruce, you're on the program.
BRUCE (Caller, Del Mar): …taking the call, and I appreciate the dialogue. It's a good, stimulating dialogue. My question is, if any, you know, public funded services begin to move toward a business model that is a fee-for-service, really doesn't that open up the broader dialogue about the overall privatization of what has historically been a public provided good or a public service in that you are now saying that, you know, for each of the services rendered, it's going to cost you x-dollars. That sounds, to me, a lot like the private dialogue you would have with a private service provider, whether that's, you know, for-hire security, for-hire emergency response services, and so I think the thing I'm most concerned about all of this is it's starting to suggest the business model that, to me, looks a whole lot more like what you'd find coming from the private sector. And I'll take the comments off the air. Thanks.
MYRLAND: Thanks, Bruce. And, John, I think that question is right to the point and it must have been a discussion you had from a public policy point of view in your own fire district before you implemented the fee, right?
BUCHANAN: Yes, but we're – I think people are not realizing that if there are six cars in a crash, all six parties aren't – the insurance companies aren't going to be billed. It's just the individual who was the at-fault driver. Maybe this might help people become more cognizant, and distracted driving is the number one cause for car crashes in the country today. So there – we're trying to just help dip in the bucket and if we're paying for this in our insurance, which I am, there isn't an issue.
MYRLAND: Now I don't want to get too philosophical here but, still, there is a fundamental change going on here from looking at the services that your fire district provides as purely a public service, you know, equal access to everybody. Your role is to make things better, not to be picking and choosing who pays. And so there's a fundamental policy change here now involving that – are you – but you think your district is totally comfortable with that.
BUCHANAN: Well, the big thing is what everybody wants is to maintain the same level of service and this is just a way we can try to help maintain, as Diane, I believe was what her name was, from Hemet, saying that they're laying eleven – or, nine people off, so we're trying to avoid that and also maintain the same level of service and not having any blackouts of fire stations.
MYRLAND: Fair enough. Michelle in Escondido is on the line and, Michelle, I want to ask you to join the conversation.
MICHELLE (Caller, Escondido): Okay.
MYRLAND: Good morning.
MICHELLE: Okay. I'm just wondering, you know, I always see at accidents, at the scene of accidents, I see a full court press of the fire trucks and response vehicles. I'm just wondering if there is a business analysis of finding maybe lighter response vehicles, having a little bit better determination of what the need is on the scene, and trying to find a less expensive way to respond to crashes and problems.
MYRLAND: Michelle, I'm really glad you asked that because all of us have driven by an accident and it's a little fender bender and we see two fire trucks and three police cars, and – and, John, are appearances deceiving or what?
BUCHANAN: Well, we treat everything as if it's the worst possible scenario so depending upon where the crash has happened, whether it's a highway or like a pedest – like a little roadway, on the highway here, you're going to get a large response because we don't know, we can't see when we get the dispatch of how bad it is. We only hear things. It's all third party. And so when we are dispatched, we're going to send two fire trucks because if we have to do a cut and rescue, tear the car apart just to try to get to the people, and sometimes it takes 45 minutes to an hour and a half to pull some people out, and try to get there, to the trauma center, in the golden hour, so we treat everybody as if the worst possible thing could happen, and then many times when the first fire truck shows up, they realize we – one fire truck can handle this, so that's in my area. And so then they will send the other ones away unless there's some type of traffic control, and so she spoke about the, you know, the fire – the heavy response but, you know, when you have twenty tons protecting the roadways and blocking us, so that's on, you know, Highway 15. People – There's been many times in Riverside – or, in Temecula to where a car that wasn't paying attention went right through the scene, so that's help – those fire trucks are going to help protect us on the scene.
MYRLAND: Sam, did you want to weigh in here?
SORICH: Well, I – Yeah. I would observe that it's difficult to see how a typical insurance policy would cover the mere fact that a truck showed up at the scene. There – As I mentioned before, in that situation there really is no property damage and that's what we cover, we cover damage to property. Our policy does not cover the fact that a fire truck came to the scene, so I think, really, what the district has been indicated by its vendor is that they were going to get a lot of money from passing this ordinance. I think they may be disappointed because the insurance coverage in many of these situations is just not going to be there and it's probably going to have to be the individual that ends up paying this.
MYRLAND: And, John, you were saying that it's about a hundred and forty thousand, hundred and fifty thousand dollars?
BUCHANAN: About a hundred and forty thousand. Part of the cost is when we do go on the scenes, we have to pick up antifreeze, oil and gasoline and so some people are thinking that we should absorb the cost for disposal of that.
MYRLAND: In the minute or so that we have left, I want to jump back to Sam for a minute because there is some legislation pending in California. It's AB-1004…
MYRLAND: …to ban the accident response fees. And I think I know the answer to this question, but what's your position on that bill?
SORICH: We are in favor of the legislature taking a look at what local units of government are doing in this arena, so we are supportive of the efforts behind the bill. The bill, however, has been stalled in the Assembly. The bills had to get out of their – out of the Assembly last Friday. This bill did not advance so it's being held and going to be given further consideration, so we may see some legislation go forward next year. It's unlikely we're going to see any legislation this year. But we think the – this is an appropriate thing for the state to step in and to look at the fairness of these systems.
MYRLAND: Okay, and, John, you quickly have the last word here.
BUCHANAN: There's just one thing I would like to say, is that people are saying that they're paying taxes for this service, we also pay taxes for like different parks and recreation areas such as like, you know, Yosemite. We all pay into that but yet if you want to go up and go to the campsite, we're going to pay a fee to use the campsite. So it's kind of along the same lines as what we're doing.
MYRLAND: Okay, well thank you very much. John Buchanan, public information officer for the North County Fire Protection District, and Sam Sorich, president of the Association of California Insurance Companies. I thank you both for taking the time to come in and help us explore this issue.