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The Towman's Friend

(A SURPRISING SOURCE MAY GET YOU PAID FOR BIG RECOVERIES)

By Jack Hessman

uring heavy-duty accident recoveries, it's quite common for the towing company to coordinate the movement of massive amounts of manpower and equipment to and from the accident scene. The use of subcontractors for roll-off containers, loaders, and the like is usually done through the towing company managing the scene.

While many towing companies will respond to a call for help from law enforcement with no guarantee of getting paid, subcontractors usually demand payment from the towing company. Even if the towing company doesn't get paid, the towing company is responsible for that payment to the sub.

To make matters worse, in order to get the subcontractor to drop their regular customers for the tower's emergency call-out, the sub typically charges the tower three to four times the going rate. This places a tremendous financial hardship on the towing company. Insurance companies who are quick to deny claims based on coverage and policy limits further complicate this matter.

A New Friend?

In the face of all this, however, the tower has a new and surprising friend, to whom I will introduce you. I'm no lawyer and I'm not attempting to give legal advice, and what I say here may or may not have merit and may not even be totally accurate, but I'll throw it out there. It's up to you to do your own research; all I invite you to do is think about what I say here.

Towing company owners should be familiar with 49 code of Federal Regulations (CFR) since we qualify as operators of commercial vehicles. Many view 49 CFR as a set of regulations that demand compliance but are overwhelmingly complicated. Just when we think we understand them, a trooper at a scale house gives us his new interpretation of the regulations. Been there, done that.

How ironic then that our biggest fear is also potentially our best friend. There is a little section in 49 CFR-part 387- that requires "minimum levels of financial responsibility." Every heavy-duty tower should become familiar with this section, including the MCS-90 (Endorsements for Motor Carries policies of insurance for public liability under Sections 29 and 30 of the Motor Carrier Act of 1980)

The MCS-90 is like a bond that ensures that trucking companies are "financially responsible." Its purpose is to provide a method for someone to collect damages for "public liability" (emphasis mine). If you obtain a judgment against someone with an MCS-90, the bond guarantees there are enough funds available to pay for damages subject, of course, to the requirements of 49 CFR.

To help in understanding the requirements of 49 CFR, Part 387, here are some definitions from the regs with the key words in bold:

• Accident: includes continuous or repeated exposure to the same conditions resulting in public liability which the insured neither expected nor intended.
• Property damage: means damage to or loss of use of tangible property.
• Public liability: liability for bodily injury or property damage.
• Motor carrier means a for-hire motor carrier. The term includes, but is not limited to, a motor carrier's agent, officer, or representative; an employee responsible for hiring, supervising, training, assigning, or dispatching a driver; or an employee concerned with the installation, inspection, and maintenance of motor vehicle equipment and/or accessories.

A Short Story

Our Company recently handled a recovery and, when we attempted to verify coverage, the insurance agent, who sold us the policy, indicated there was a lack of "physical damage" coverage. I said that I thought the recovery claim should be valid under the liability coverage. He informed me that he had been selling insurance for over 30 years and that I was "s_ _ _ out of luck."

That @#$%*& really made me mad, especially since I had incurred substantial "sublets," or subcontractor fees. I got on the internet and initiated a search using two words: "purpose" and "MCS-90." The results were amazing. Bingo! Law case after law case of payouts using the MCS-90!

While insurance policies have exclusions and a bunch of legal mumbo-jumbo, the MCS-90 is there to pay out for specific judgments meeting the criteria and definitions of 49 CFR 387. A review of cases indicated attempts to hold people accountable for "public liability." The parts I found intriguing were cases where the truck owner lacked adequate coverage but successful pay-outs of claims were achieved by going after the trailer owner (see Lynch v. Yob,

Based on this newfound information, I generated a letter to our state's insurance commissioner. I incorporated terms used in the definition section of part 387 as they apply to our industry. To be fair, I sent a copy to the insurance company before I would send the letter to the insurance commissioner. After all, agents sell insurance and typically don't make claim determinations. Here are parts of my letter, edited somewhat for publication and with the names changed:

Note: The words in bold type below are the key words you'll want to include with your argument if you ever write a letter. These are necessary to meet and establish the criteria needed for a successful claim against an MCS-90 as required in the 49 CFR.

The Letter

"I believe the undisputed facts are; the driver of XYZ Trucking's tractor-trailer negligently struck a parked passenger vehicle on the shoulder of [the area interstate]. After striking said vehicle, the tractor-trailer crashed through a guardrail and landed down an [approximately 75 foot] embankment, coming to rest in a damp, marshy area. Both fuel cells were destroyed, dispersing a large amount of diesel fuel around the crash site [potentially as much as 300 gallons], creating a hazmat incident.

"PDQ Towing & Recovery was contacted by the state police to recover the tractor trailer. The driver from XYZ Trucking signed an invoice authorizing the recovery as well as an environmental clean-up company [Acme Industries]. For reasons set forth in the recovery invoice #55555 (see attached), a staging area was established and both companies [PDQ and Acme] were present at approximately 9:00 a.m.

"The main contention is that an environmental incident occurred in a potentially sensitive area [wetlands] in which the tractor trailer was the source. ABC Insurance is attempting to deny the claim, alleging a lack of adequate coverage for physical damage. Our contention is this clean-up should be covered as part of the liability coverage and/or the MCS-90 certificate.

1. The tractor-trailer continued to leak both oil and antifreeze at the site. Restoration, mitigation and clean-up could not occur until the source was removed.

2. In addition to being a potential source of further contamination, the sheer presence of the tractor-trailer was an obstacle to the clean-up, i.e. digging up contaminated soil. Again, restoration, mitigation and clean-up could not occur until the casualty was removed.

3. Since the presence of the tractor-trailer prohibited any possible clean-up, further property damage was occurring as the contaminants (diesel fuel, oil, and antifreeze) seeped into the soil, i.e. causing further public harm.

4. Some of the services performed by PDQ Towing & Recovery, i.e., fence removal needed to be performed as part of the environmental clean-up in order to access the site. It is quite common for first responders to work collectively while managing incidents.

5. The location of the incident affected the operation, potentially causing further public harm and propertydamage.

6. The purpose of the MCS-90 is 'for loss of or damage to property of others, or, in the case of motor carries of property operating freight vehicles described in () 387.303 (b) (2) of this part, for environmental restoration' [emphasis added]. The recovery of the tractor-trailer is an essential and critical component to environmental restoration and therefore should be covered by the primary insurance and/or the MCS-90.

7. The presence of a wrecked tractor-trailer alongside an interstate is a distraction to motorists and a potential catalyst for secondary collisions. The casualty's presence also negatively impacts traffic flow, which causes further public harm. One could even argue that the congestion which occurs as a result of a major accident also has a detrimental effect on our environment, causing further public harm and property damage [not to mention that 18 percent of all fatalities on our interstates are the result of secondary collisions].

8. Statistically we know that a parked abandoned vehicle on the shoulder out of the travel lanes can negatively impact traffic flow by as much as four percent. Studies also suggest that by adding an occupant, tow truck, and/or state trooper, the same scenario [on the shoulder out of the travel lanes] can negatively impact traffic flow by as much as 18 percent. While the impact of the crash site of each major accident would have to be determined on its own merits, a valid argument can be made that there is a 'loss of use' of the highway for the citizens, causing further public harm and property damage. The federal Motor Carrier Safety Administration defines property damage as: 'damage to or loss of use of tangible property.' The highway is tangible property and anything that reduces traffic-flow capacity should be considered as 'loss of use.'

"Additionally, there is a dollar value associated with 'user cost' [user cost is loosely defined as the revenue lost to the motorists' inability to deliver goods and services, which sometimes reaches hundreds of thousands of dollars per minute when a major interstate is shut down]. While the interstate remained open, there is still a valid point made that public harm and damage is occurring every minute that a major collision is present in or alongside a roadway/interstate.

"Since the government is not in the towing and recovery business, the Federal Highway Administration's (FHWA) Incident Management requires the use of a 'public-private partnership' to effectively clear the roadways in a timely manner. As an agent for the government in this public/private partnership, [the tower's] ability to recover damages through the primary insurance carrier is paramount.

"The clear intent of the MCS-90 is that 'the insurer must pay up to policy limits any judgment against the insured for public liability resulting from negligent operation of a motor vehicle subject to the financial responsibility requirements of the MCA [Motor Carrier Act of 1980].'

'"For the reasons set forth, I ask the Insurance Commissioner to review this claim and make a determination that the recovery of the tractor-trailer be covered by the primary insurance carrier and/or the MCS-90 certificate issued by ABC Insurance."

A Source of Payment

I made many arguments in my letter. I believe that if any one of them is a valid argument qualifying under part 387, it's only matter of obtaining a judgment. Once the judgment is obtained, you may be able to follow the food chain- shipper, broker, trailer owner, truck owner, etc. - for a potential payment through an MCS-90. It's quite common for several small trucking companies with one or two trucks to operate under another company's authority or for multiple insurance policies to be involved with a tractor, trailer, and/or cargo.

The good thing is that the MCS-90 is there to provide available funds should you obtain a judgment. It appears that many exclusions and other legal mumbo-jumbo that routinely result in denial of coverage and not affected by the broad brush painted by the MCS-90.

I can think of several suits that we never filed because we felt that even if we obtained a judgment, we would never collect from the small one-truck company that had limited assets. Had I known about the MCS-90 years ago, we would have chased a few claims for payment. I will be anxious to hear from others in our industry, and perhaps some within the legal profession, to see if my position here has any merit. I'll let you know. Keep in mind that while this potentially could be a big win for our industry, we must factor in lawyers' and collection fees in our recovery invoices.

By the way, I was paid for the complete recovery. Any comments and/or suggestions can be made by email to (removed email address due to death of author)

(This article retyped and posted with approval from Towing and Recovery Footnotes, and can be found in Towing & Recovery Footnotes April 2005 Edition)