Tonight, the East Contra Costa Fire Protection District will discuss the idea of bill for certain District services for non-residents.
According to the staff report, Fire Recovery USA is recommending that under new California Law proposition 26, that both residents and non-residents be billed for services.
For example, during a car accident the company takes information from its on duty engine crews that were on scene and also gets results from law enforcement of the traffic investigation to determine who’s at fault. It then submits a bill to the party at fault for payment. When the company receives payment from the responsible party, they deduct a 20% fee for their services and then pay the agency the balance of the 80%.
According to the staff report, the staff is recommending this proposal be placed on hold until the start of fiscal year 2014/15.
Tonight at 6:30:00 pm
Location: Oakley City Hall at 3231 Main Street, Oakley
Via the Staff Report
At the October 7 Board of Directors meeting, the Board requested additional information regarding the process and requested that the numbers of responses be updated.
Using the timeline of October 1, 2012 through September 30, 2013 the district responded to a total of 381 vehicle accidents and utilized 25 medical helicopters.
One of the vendors providing information to the District is Fire Recovery USA (Roseville, CA), which currently has 71 agencies throughout California using their services, including three in Contra Costa County (City of Pinole, Moraga-Orinda Fire Protection District, and Rodeo-Hercules Fire Protection District). Rodeo-Hercules and Pinole have been billing for such services for the past five years with success and without any litigation. Rodeo-Hercules advised they have had only one hardship request during their success with program. Both agencies have also had success with cost recovery; however they both have small numbers of auto accidents that are sent for cost recovery.
In efforts to answer Directors’ questions from the last meeting, staff has obtained the following information (mostly from the vendor Fire Recover USA):
Who is billed, the insurance company or the individual?
Fire Recovery USA recommends under the new California law proposition 26 that both residents and nonresidents be billed for responses.
If the responsible party has insurance, then the vast amount of recovery funds is paid by responsible insurance policy. With this being said, Fire Recovery USA strongly recommends that the board allow them to file claims against responsible individuals for several reasons:
- If the responsible party has insurance coverage and the claim is initially denied (typical), the agency can go to the individual to help “persuade” their insurance company to pay 25936004.1 the claim. If the agency does not pursue this option, the insurance company can advise the responsible party to ignore the claim, knowing most likely nothing will happen.
- Once the word spreads that an agency doesn’t bill the responsible party, the recovery rate will quickly drop as denials increase.
- Since Fire Recovery USA is not a collection agency, an agency can’t attach wages, take individuals to small claims court, etc.
On non-payment, is a claim sent to a collection agency for payment?
Fire Recovery USA is not a collection agency, so it would be the District’s decision whether to set up an account with a collection agency. Fire Recovery USA has worked with collection agencies for other districts. The district would need to decide which cases would then need to be pursued by a collection agency.
Can individuals have a hardship appeal?
Fire Recovery USA recommends that the district implement an appeal process and will assist in establishing the policy and parameters for this process.
Does Fire Recovery USA have any fire departments/districts in litigation over fees or billing for services?
Fire Recovery USA states that it has been billing for fire department cost recovery for over six years with close to 400 clients nationwide in 36 states. They have submitted thousands of claims and recovered millions of dollars and have never been involved with litigation. Billing for cost recovery is legal in all states (although some states have more restrictive rules than others), is recommended by FEMA, and has been used by fire departments for over 25 years.
Have any agencies removed themselves from Fire Recovery USA’s services?
Yes, local laws and ordinances have been adopted that have forced fire departments to cease cost recovery billing.
- City of Roseville, billing ordinance was repealed. Fire Recovery USA had a successful billing for Roseville with a 19% higher collection rate than originally anticipated.
- City of Woodland, billing ordinance was repealed. Fire Recovery USA had exceeded expectations with a 23% higher collection rate than originally anticipated. During a requested audit prior to cancellation, Fire Recovery USA reconciled within one dollar on an over $56,000 bill.
- City of Oceanside, billing ordinance was repealed.
- Sacramento Metropolitan Fire District, contract was rebidded yearly and Fire Recovery USA did not receive the contract for 2013 as it was not the lowest bidder.35936004.1
How does the cost recovery system with Fire Recovery USA work?
Fire Recovery USA takes report information from its on duty engine crews that were on scene of the traffic collision, gets the results from law enforcement of the traffic investigation to determine who’s at fault, and then submits a bill to the party at fault for payment. When Fire Recovery USA receives payment from the responsible party, they deduct a 20% fee for their services and then pay the agency the balance of the 80%.
How does the information get to Fire Recovery USA to start the cost recovery process?
After the engine companies have attained all the information on scene, there are two ways information can be submitted to Fire Recovery USA. First, it can be entered into the Fire Recovery USA network by Agency staff (which on average takes 3 to 5 minutes) or it can be faxed to their office for processing.
False alarm billing for fire alarms:
The District is currently billing for false alarms through our agreement with Contra Costa Fire Protection District Prevention Bureau. The funds received for false alarm recovery are placed in an account that helps pay for our fire investigation services. The District currently follows Contra Costa fire’s false alarm policy.
District legal counsel has reviewed the cost recovery billing proposal, particularly in light of Proposition 26, which was enacted by the voters at the November 2010 general election.
Proposition 26 expansively redefines “taxes” to include what heretofore had been considered fees, with the result that such “taxes” must now be enacted by a two-thirds vote of the electorate. Because Proposition 26 was adopted very recently, there is legal uncertainty with regard to its application. This uncertainty extends to the proposed cost recovery fees. Such fees may not be subject to a two-thirds vote of the electorate. However, there is a potential that adoption of these fees could result in a costly challenge, and it is yet unclear whether the District would prevail in such a case. Legal counsel has recommended that the District postpone this proposal until it is certain whether Proposition 26 applies to cost recovery fees.
Currently, the Board is looking at several revenue enhancing projects, including the proposed parcel tax for June 2014, which has the potential to substantially increase the District’s revenue. Based on the current workload of staff, the relatively low level of benefits received from this proposed revenue enhancement, and the legal uncertainties regarding the application of Proposition 26, staff recommends that this proposal be placed on hold until the start of next fiscal year 2014/15