Recent developments illustrate a number of existing and developing theories of law whereby a shipper may be held liable for damages caused by a carrier it selects to transport its freight. Because a property broker may in many situations have similar factual attributes to that of an actual shipper (e.g., control of carrier selection, pick-up and delivery time specifications, cargo loading and securement specifications, etc.), a property broker should be conscious of these developing theories of liability and implement processes and procedures to safeguard against a finding of negligence on its part with respect to any given movement of cargo.
Possible safeguards include (i) separation of property brokerage operations in an entity separate from any motor carrier or other transportation operations; (ii)development of responsible carrier selection guidelines to govern and document the broker’s carrier qualification procedures; and (iii) clear delineation within contracts between both the broker and the shipper, and the broker and the carrier of responsibilities of the aspects of a cargo move and the insurance and indemnification responsibilities of the parties.
Rhode Island has passed a law that prohibits texting on cell phones while driving, making Rhode Island the 19th state to enact such a law. Drivers caught in the act of texting face a $85 fine for the first offense, followed by a $100 fine for the second. For the third account, offenders will have to shell out $125.
The SDDC on October 29 announced a new unified rules publication, MFTURP-1, with an effective date of October 26, combining the rules for motor, rail, water, pipeline, and tank-truck carriers. The new publication replaces several prior publications, including the MFTRP-1 publications, as noted in Customer/Carrier Advisory CA-09-10/29-0232. The publication and the announcement are available on the SDDC’s web site.
The Federal Motor Carrier Safety Administration (”FMCSA”) may be looking to impose tougher restrictions on driver physical qualifications. The FMCSA is working on a proposal to update rules related to a number of issues based on recommendations from medical experts (e.g., cardiovascular disease, sleep disorders, etc.). The contemplated changes could have a major impact on the trucking industry because, while they might lead to increased safety, stricter health standards could also reduce the number of qualified drivers and add to the already complex and expensive task of hiring and managing drivers. The process is in the early stages and a final rule is probably still a couple of years away.
The US Government Accountability Office recently issued a report outlining perceived issues relating to employee misclassification. The report focused on misclassification within the federal Department of Labor and Internal Revenue Service and included six recommendations for executive action by the DOL and IRS.
The GAO’s recommendations for executive action included:
- increase DOL’s focus on misclassification of employees during targeted investigations
- encourage sharing of information regarding misclassification between the DOL’s wage and hour division and OSHA (also within the DOL), and that cases outside of DOL’s jurisdiction should be referred to the relevant agency
- establish a joint interagency effort between the DOL, IRS, and other federal and state agencies to address the misclassification of employees as independent contractors
- conduct worker outreach efforts, including the development of a standardized document on worker classification
- create an IRS forum to regularly collaborate with states to identify and address data sharing efforts relating to the QETP initiative
- extend the IRS Classification Settlement Program to include employers that volunteer to prospectively reclassify employees. Additionally, the report included discussion of limiting the “industry practice” prong of the reasonable basis test to establish Section 530 safe harbor.
Additional legislation relating to this report may yet be introduced in the 111th Congress.
The Advocates for Highway and Auto Safety has filed a petition with the U.S. Department of Transportation, calling on the Federal Motor Carrier Safety Administration (”FMCSA”) to implement a rulemaking that would restrict the use of “unsafe electronic devices” (including cell phones) by drivers of commercial vehicles, such as tractor-trailers, motorcoach buses, and large vans. The petition asks the FMCSA to immediately open a rulemaking proceeding to determine the safety of electronic devices used by drivers operating commercial vehicles and to make it so that those drivers that use a prohibited or restricted device while operating a commercial vehicle will be issued an Out-of-Service order.
The last sentence of the entry is updated to reflect an extension of the comment period. UCR fees to go up in 2010 Updated September 23, 2009 admin
The September 3, 2009 Federal Register (74 Fed. Reg. 45583) contains the FMCSA’s proposal for UCR fees for the year 2010. It appears the fees would more than double for all categories, though there is a tweak for the smallest carriers-the minimum would apply to carriers with up to two (previously one) CMV. The proposed minimum would rise from $39 to $87 and the maximum would go from $37,500 to $83,412. Comments were originally due by September 18, 2009; the FMCSA has extended that deadline to September 28, 2009 (see 74 Fed. Reg. 47911, Sept. 18, 2009).
The September 3, 2009 Federal Register (74 Fed. Reg. 45583) contains the FMCSA’s proposal for UCR fees for the year 2010. It appears the fees would more than double for all categories, though there is a tweak for the smallest carriers–the minimum would apply to carriers with up to two (previously one) CMV. The proposed minimum would rise from $39 to $87 and the maximum would go from $37,500 to $83,412. Comments were due by September 18, 2009.
Earlier this month, Sen. Susan Collins (R-ME) included a provision in the FY 2010 Transportation-HUD Appropriations Bill that would enable Maine to conduct a one-year pilot program aimed at testing the impact of allowing 100,000-pound, six-axle single-trailer trucks to access Maine’s interstate highway network. The proposal was met by sharp opposition from groups concerned about its potential effects on road and bridge safety.
Congress is cracking down on the Pipeline and Hazardous Materials Safety Administration (”PHMSA”), following a report by the House Transportation and Infrastructure Committee that found the agency was granting special permits without reviewing applicants’ safety histories. Special permits and approvals exempt applicants from certain hazardous materials regulations. Currently, PHMSA does not consider or look at applicants’ incident and enforcement histories when granting exemptions. While the agency does evaluate the safety of the action, process or package that the applicant is requesting, it does not look at the company’s prior incidents. That could be changing however. In August, PHMSA came up with several ways to address the problems, including revising policy and procedures for safety documentation evaluations and developing standard operating policies and procedures for the special permits program, among others.
Effective November 1, 2009, New York State will join 18 other states by banning the use of handheld devices for reading, typing and sending text messages while driving. Text messaging while driving is already banned in Alaska, California, Connecticut, Louisiana, Minnesota, New Jersey, Tennessee, Utah, Virginia, Washington and the District of Columbia. Other states, including Arkansas, Colorado, Illinois, New Hampshire, North Carolina and Oregon, have similar legislation in place to go into effect on January 1, 2010.
In September of 2008, Ohio enacted a law into its workers’ compensation act that allows an Ohio employer to separate its payroll into Ohio and non-Ohio payroll (using the U-131 reporting form) and then (subject to audit) the Ohio monopolistic fund will assess premium for workers’ compensation coverage for only Ohio employees. This new law is advantageous to trucking companies with operations based both inside and out of Ohio. The law has various other requirements such as proof that the non-Ohio payroll/employees are covered under an “other states” workers’ compensation policy.
Illinois joins 15 other states with anti-indemnification statutes specific to motor carrier agreements by enacting 625 ILCS 5/18c-4105. The law, signed on August 27, 2009 takes effect immediately. As a result, any agreement that indemnifies the promisee/indemnitee from liability for loss or damage resulting from the promisee’s/indemnitee’s negligence or intentional acts is unenforceable in Illinois.
Illinois joins 15 other states with anti-indemnification statutes specific to motor carrier agreements by enacting 625 ILCS 5/18c-4105. The law, signed on August 27, 2009 takes effect immediately. As a result, any agreement that indemnifies the promisee/indemnitee from liability for loss or damage resulting from the promisee’s/indemnitee’s negligence or intentional acts is unenforceable in Illinois.
The Northern District of Ohio recently issued a decision clarifying the impact of logo liability on insurance coverage under Ohio law. The case, Carolina Cas. Ins. Co. v. Panther II Transp., Inc., No. 1:08 CV 1380 (N.D. Ohio), involved a coverage dispute between a carrier’s auto liability insurer (Zurich) and the driver’s bobtail liability insurer (Carolina Casualty). At issue was the applicability of Wyckoff Trucking, Inc. v. Marsh Bros. Trucking Serv., Inc., 569 N.E.2d 1049, 1054 (Ohio 1991), which established logo liability in Ohio. Carolina Casualty argued that Wyckoff not only fixes liability on the carrier in cases of logo liability, but also obligates the carrier’s auto insurer to assume liability for defending and indemnifying any losses resulting from the accident. The Panther II court rejected this contention, holding that, at least for purposes of Ohio law, logo liability does not decide the respective obligations of the competing insurers. In other words, even if the carrier is liable to the public as a matter of law, it can still seek indemnity under the bobtail policy. Other courts (both in Ohio and elsewhere) had reached the opposite conclusion; namely, that logo liability fixes liability on the carrier and ipso facto binds the carrier’s insurer to providing coverage. The Panther II court refused to follow those cases and noted that, in doing so, it was weighing in on an unresolved issue of Ohio law (and one that remains open or at least muddy in several other states).
The Panther II decision affords carriers an argument that, even in cases where logo liability operates to render the carrier liable to an injured motorist as a matter of law, an applicable bobtail policy may still provide primary coverage for the accident. Thus, at least in Ohio, before a carrier’s auto liability insurer throws in the towel on coverage where logo liability is involved, it is important to review the terms of any applicable bobtail policy and determine whether the carrier and auto liability insurer have an argument that the bobtail policy should provide primary coverage, logo liability notwithstanding.
The court’s order is available at 2009 WL 2432339 and 2009 U.S. Dist. LEXIS 69875.
Pursuant to legislation adopted in 2008, the Defense Department in late July published an immediately effective interim amendment to the Defense Federal Acquisition Regulation, mandating a fuel surcharge pass-through clause in Defense Department transportation contracts and solicitations. Under the interim rule, this clause is to be inserted in “solicitations and contracts for carriage in which a motor carrier, broker, or freight forwarder will provide or arrange truck transportation services that provide for a fuel-related adjustment.” The rule includes a “flow-down” requirement, thus applying to carriers serving Defense Department contractors and subcontractors–including brokers and forwarders, who are required to pass fuel surcharges on to the motor carrier.
The Surface Deployment and Distribution Command has already included the pass-through requirement in its international and domestic household goods moving solicitations for the next rate cycles beginning October 1 and November 1, 2009, respectively. Other carriers should carefully review further announcements and solicitations from the defense agencies on the subject. Carriers, brokers, and forwarders should begin review and revision of their agreements with contractors and other motor carriers, forwarders, and brokers as necessary to ensure compliance. Those who pay flat per-mile or “adjusted” or “imputed” fuel surcharges, or who pass through less than 100% of the surcharge as shown on the government invoice, should pay special attention to these requirements.
Comments on the interim rule will be accepted until September 28, 2009. These new requirements relate only to Defense Department shipments, though legislative efforts to expand pass-through requirements are not unexpected.
The mandatory reporting date of the Medicare Secondary Payer Act (”MSP”) has been extended another six months to January 1, 2010. Previously only enforced in workers’ compensation matters, the Medicare Medicaid and SCHIP Extension Act of 2007 broadened its reporting requirements to include payments (settlements or judgments) made by anyone to certain claimants.
For those unfamiliar with the MSP, the act is designed to prevent burdening Medicare and Medicaid with the cost of treating injured people who collect damages for their injuries. If a claimant collects damages, neither Medicare nor Medicaid will be the primary payer for treatment of those injuries. When settling a case or paying a judgment, a “Final Settlement Document” must be submitted to Medicare. The process includes satisfying any outstanding Medicare liens, and may also require establishing a Medicare Set-Aside Allocation (”MSA”), an approved amount set aside to fund the cost of any future treatment for the injuries sustained by the claimant.
Insurance carriers will likely have studied these issues and understand the complicated procedure which will shield them from penalties and other liabilities which could befall them in the future for failure to comply with the MSP. Many motor carriers may not have the same resources. Before you pay, make sure you satisfy all of the MSP requirements.
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