‘Crash fee’ part 2: Denver Fire Department’s plan
By Tillie Fong 
| September 23, 2009 | 7:01 AM
The Denver Fire Department is considering charging a fee for medical treatment it provides when responding to car wrecks on state highways. The fee would apply only to nonresidents who are found at fault in an accident. Part 1 of this story examined a similar fee charged by the North Washington Fire Protection District
Amid declining sales taxes and other sources of revenue, Denver is expecting a $120 million budget shortfall for 2010. As such, city agencies and departments have been asked to cut their budgets by 14 percent. Trims in safety services — police, fire, sheriff — were kept as low as possible.
This month, Denver firefighters agreed to delay their negotiated pay increases for 2010 and 2011 until December of each year, saving the city $7 million. The move also kept 54 firefighters from being laid off.
The Denver Fire Department expects to save $1.2 million next year by eliminating all recruit classes in 2010. But in the 2010 budget submitted last week by Mayor John Hickenlooper, DFD also plans to raise $1.1 million by charging a fee for providing medical treatment at accidents on state highways. Only nonresident drivers who are found to be at fault in the accident would be billed for the service.
The department’s budget this year is $102.1 million, and it has 916 uniformed and 41 civilian employees. DFD spokesman Joe Hart noted that in many instances, fire crews provide medical treatment at accident scenes.
“We provide basic life support, oxygen, but we don’t bill for our services,” he said.
The idea for a “crash fee” came from two private consultants — Revenue Rescue and Fire Recovery USA –that DFD brought in to help address the budget crisis.
Deputy Fire Chief Rex King said the figures for the expected fee revenue came from Fire Recovery USA, a rescue billing firm based in California.
The $1.1 million is derived from charging nonresident drivers a $600 fee in 4,200 accidents on state highways a year, with a collection rate of 60 percent.
King said he wasn’t sure how accurate the calculation is.
“I don’t know how they came up with those numbers, or how they came up with the accident rates,” he said. “Last year, Denver Fire responded to over 10,000 motor vehicle accidents, and I came up with 2,473 accidents that may have occurred on state highways.”
King also figured that a lower fee — $200 — would better match the cost of providing the service. And he speculated that the collection rate also might be lower than 60 percent if only at-fault nonresident drivers are assessed the fee.
“It would be difficult for the responding fire company to determine fault,” King said. “North Washington charges everybody.”
Running the numbers
According to Rick Benner, chief operating officer for Fire Recovery USA, the figures given to Denver were based on the company’s research.
“We did surveys and talked to fire departments and asked what their cost was in responding to various events,” he said. “We do recommend that the city and the fire departments do their own calcuations on what it costs them to respond to an incident. Many times they come up with numbers close to the ones that we recommend, and they adopt what we have found on a country-wide basis. It’s up to the the city to adopt a rate schedule.”
In some cases, the company does the analysis based on figures that the fire department provides.
“What we do is ask the department to give us the number of runs they did in the last two years, and we get an average for an estimate, and they can look at this and decide whether they want to pursue it,” he said. “It’s a basis for conversation.”
He said that Denver’s crash fee plan — charging only at-fault nonresidents — is a way to make the fee more acceptable to the public.
“It’s more palatable to have that person pay the bill rather than the taxpayer who did not cause the accident,” he said. “If you’re a nonresident and you get hit by a resident, you will not be billed. The biggest concern is, ‘It’s not my fault but I’m going to get billed.’ ”
DFD is looking to handle the billing process directly, much like North Washington does.
“My understanding is that we hand a bill to the people involved in the accident, and they turn it over to their insurance company, which will pay the city,” Hart said.
Benner said that in most accidents, it is fairly easy to tell who is at fault. But in the cases where it isn’t obvious, he said there is already a process in place to sort it out.
“The insurance companies have been negotiating who is at fault and who is not at fault for years. An adjuster determine who is at fault,” he said.
Insurance companies
Not surprisingly, insurance companies are cool to the idea of cities or fire departments charging a fee to respond to accidents.
“A lot of municipalities don’t understand that while it’s an easy fee to charge and they assume that insurance companies would foot the bill, insurance may or may not cover it,” said Carole Walker, executive director of the Rocky Mountain Insurance Information Association.
“It (imposing a crash fee) may have happened intermittantly before, but now with the budget crisis, it’s piling on,” she said. “The concern is we’re not aware of where they’re charging it. It’s going to be everywhere.”
Walker said that while Denver may single out nonresidents for its charge, Denver drivers may be impacted by similar charges imposed in other jurisdictions.
“We’re all commuters,” she said. “There are not really boundaries. I could live in Arvada but work in Denver. A lot of us don’t live in Denver but work in Denver. That’s a hefty fee for people to try to figure out how to pay.”
She said that if more jurisdictions start charging these fees, it likely will lead to higher insurance premiums.
“That (the crash fees) will have a long-term impact, if it involves every time that the fire department responds,” she said. “When their (insurance companies’) costs go up, premiums will go up.”
Walker said that cities and fire departments are being shortsighted in charging crash fees.
“Everyone is pinching pennies, and everyone is charging fees,” she said. “We’re all in the same boat. I can sympathize with municipalities, but it’s not something that consumers would want to be paying for.”
Part of the reason is that most residents are already paying for safety services in their community.
“That’s what we’re paying taxes for,” she said.
Consumer backlash has led to the ban of such fees in eight states, including Florida, and other states are considering similar bans.
DFD will submit its final budget to the City Council for consideration on Sept. 30. King said that at this point, it’s not even certain that the department will impose the crash fee.
“It’s just an idea; the research hasn’t been completed,” he said.
And the department wanted to look at different ideas to address the budget deficit.
“I quote the mayor — ‘Everything is on the table,’ ” King said. “It’s unfortunate that agencies like the Denver Fire Department are forced to consider these options.”
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