Spill Bills Disputed

Emergency-response agencies should have
a fee schedule for hazardous spill cleanup
and be prepared to produce receipts.

(Reprinted from Best's Review Property/Casualty Edition 8/99)

By Richard Stewart

Fire departments and other taxpayer-funded emergency response
agencies are becoming bolder in their demands for reimbursement
from carriers involved in hazardous materials spills. The trend is
making transporters and their insurers increasingly nervous, said Tom
Moses, an environmental attorney and president of the Spill Center,
a third-party environmental claims management company serving the
transportation industry. Costs that these agencies seek to recover
are sometimes reasonable, sometimes not.
    Fire departments, empowered by local emergency service reim-
bursement ordinances, feel that they should be able to recoup all of
their costs from spill generators, but they don’t know how to charge
for the services,” said Moses. “Carriers and their insurance com-
panies think the bills they’re getting from these public agencies are
too high. They feel that some measure of fairness is required.”
Moses, who serves as an intermediary between Spill Center sub-
scribers and responding agencies seeking cost recovery, sees a
broadening disparity in claims. “In the 400 fire department invoices
we handled last year, we saw hourly charges for a pumper truck
ranging from $20 to $500. Charges for other equipment and ser-
vices also vary widely among fire departments.”

Doing It Right
At last fall’s 22nd annual Inland Spills Conference in Columbus,
Ohio, Moses discussed the most common problems on invoices for
emergency services. He offered his “Top 10 Things You Can Do
Right” to emergency response personnel participating in the con-
ference, which was sponsored by the Ohio Environmental Protection
Agency and the Spill Control Association of America.
    Fire departments can avoid problems when seeking reimburse-
ment if they follow a few guidelines. Invoices should be itemized
rather than simply showing a lump-sum charge for services rendered,”
Moses said. Documents that should accompany the invoice include:

    • the department’s fee schedule, listing equipment and
    associated costs;
    • copies of time records showing time in and time out;
    • an incident report with details of the response;
    • copies of bills for cleaning and equipment replacement;
    • a copy of the local ordinance or state law that authorizes
    the department to seek reimbursement;
    • the name and phone number of the person authorized to
    answer questions about the invoice.

     The Spill Center, based in Acton, Mass., makes requests for docu-
mentation on behalf of its subscribers, which include private fleets,
for-hire carriers, truck leasing companies and chemical and insurance
companies. “Our role is to get the invoice to the point where it can be
evaluated,” explained Moses.
    Insurance premiums often are calculated on the amount of money
paid out on behalf of the insured party, so it’s in the best interest of the
insured to determine the real costs and to make sure that they are driven
by law,” he added. “The best invoice is one that makes it easy for the
carrier to understand exactly what he is being charged for,” Moses
remarked. “Fire departments should be responsive and willing to explain
the invoice when somebody questions line items.” He encouraged fire-
fighters to ask their lawyer or prosecutor for help in determining which
costs they can legally recoup.

Formalized Billing
The Fairfield County (Ohio) Emergency Management Agency has
developed a set of forms and guidelines to help fire departments obtain
reimbursement after handling hazardous materials incidents. Agency
Director Dan Bolger, who also spoke at the Inland Spills Conference,
reported that the detailed billing process is an improvement both for the
departments seeking reimbursement and for the spill generators.
    “Probably the biggest gray area is deciding what is fair to charge for
equipment,” said Bolger, noting that his agency charges $150 an hour
for a medium-size pumper. “That doesn’t seem unreasonable when you
consider the typical $225 an hour portal-to-portal charge for a wrecker,”
he added.
    The law clearly states that cost recovery is appropriate for hazardous
materials incidents. “Our cost-recovery process uses simple forms
designed to easily track charges,” remarked Bolger. Charges are grouped
in four categories: personnel cost, itemized supplies, operational charges,
and replacement cost. A separate form is used to record costs in each
category.
    “Costs of on-duty personnel are not chargeable, but their overtime
and overtime of replacements called in as back-ups are chargeable,” he
explained. The invoices also include labor, benefits and insurance costs
for additional people called in to cover the incident.
    Other chargeable costs include items used exclusively for hazardous
material incidents that cannot or should not be reused, such as absorbent
pads, disposable protective suits, gloves and other equipment designed
for single use. Operational expenses to support the response, such as fuel,
water, cellular phone calls, computer database access costs and food, are
also chargeable under the agency’s cost-recovery program, noted Bolger.
A 15 percent administrative cost is added to the total bill.
    “There has to be a sense of fairness that goes through this process –
fairness by the local fire department and the other agencies involved with
cost recovery as well as by the insurance company and the trucking com-
pany,” he said. “We focus very heavily on training personnel to act as
hazmat coordinators at the scene and to determine the chargeable costs
for each incident. When our departments submit the data according to our
simple process, they usually get paid.”

Look Before You Pay
The waters are muddied for transporters because regulations authorizing
reimbursement vary from one jurisdiction to the next and because of the
cost-recovery confusion that exists among emergency responders,
according to Moses.
    “One thing is clear, however. Every invoice should be scrutinized and
every authorizing statute should be questioned to avoid paying more than
the law requires,” he said. “At the Spill Center, we look for questionable
line items and unreasonable or unauthorized charges on invoices.”
    The most common problem with emergency services invoices involves
incomplete documentation, according to Moses. “A $1200 charge for
cleaning firefighters’ turnout gear was included on one invoice, but the
department was unable to produce a paid bill from a cleaning or decon-
tamination service. To prevent overpayment, spill generators should
always ask to see receipts to back up the invoice, he said. For example,
if an invoice includes a charge for 150 man hours, the fire department
should be able to produce work logs showing time on and off or details
of work performed.
     Spill Center staff, which includes paralegals and environmental and
technical specialists, frequently see invoices seeking reimbursement for
an “unreasonable scope of work,” said Moses. “When half a dozen
fire departments respond to a minor fuel spill and each one invoices the
carrier for emergency services, that is beyond the reasonable scope of
response.” He noted that charges for damaged Level A suits in incidents
that do not call for the use of Level A are also common. A Level A suit
is also referred to as a vapor-protective suit or a suit that protects the
wearer from dangerous gases or vapors commonly encountered in
hazardous material spills.
    Unauthorized charges, such as line items that did not arise directly
from the loss, often turn up on invoices, Moses said. These include a
labor charge with a pro-rated benefits cost or an administrative over-
head charge, which might not be reimbursable under the ordinance.
    Math errors on invoices constitute the third most common problem
encountered at the Spill Center, which provides audits invoices for sub-
scribers. “Never assume the math is correct,” advised Moses. “We
audit invoices from clean-up contractors, fire departments, and a host
of other service providers. Many times the numbers just don’t add up.”
    Sometimes the emergency response agency is not even authorized to
seek reimbursement from the spill generator. “That’s why it is important
to ask for a copy of the emergency services reimbursement ordinance
or statute. We find that refusal to submit it usually means that the fire
department does not have the authorization,” he noted. “Or they might
be billing the spill generator under a mutual-aid law that only entitles
them to seek reimbursement from the municipality where the incident
occurred. Bottom line, the spill generator doesn’t have to pay.”
    While Moses does not encourage spill generators to refuse reimburse-
ment for reasonable charges, especially if the company has a terminal or
warehouse in the municipality served by the fire department, he recom-
mends that invoices be checked carefully to avoid paying more than is
 legally owed. AAny problem areas, such as costs not directly associated
with the loss, can be used to negotiate down the invoice amount,”
Moses said.


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