Cost Recovery for Fire-Based Emergency Response Services

Cost recovery for fire-based emergency response services is becoming a more familiar concept for cities, counties and their fire departments. Fire-based billing for emergency medical services is already an SOP for many fire departments, and a variety of companies can assist them with billing the individuals who receive the medical services.

Newer to the fire service is the concept of cost recovery for emergency response to multiple-vehicle accidents. At-fault drivers’ insurance providers are billed by cities and counties for the fire department services they incur. Cost recovery is a viable option as cities and counties experience a decrease in their tax bases. They need options to offset the costs of the demand for emergency response by their fire departments. There continues to be a demand for timely and high-quality emergency responses even when budgets are shrinking.

Ordinances Support Cost Recovery

Many fire departments provide emergency services along major interstate freeways or other high traffic areas. A high proportion of the motor vehicle accidents to which they respond involve drivers who are non-residents and not part of the fire department’s tax base. For this reason, the cities and counties are realizing it is reasonable for them to file claims against the at-fault driver to help cover the cost of the response.

Although the process may vary depending upon the applicable state law, generally the fire department’s city or county will adopt an ordinance that sets forth the terms of their cost recovery program. The ordinance is adopted by the city or county, and the fire department then has the authority to file claims for their emergency response services.

Citizens Accept Cost Recovery When They Understand Its Purpose

When citizens first hear about motor vehicle emergency response fees, they may oppose the concept. They become more accepting when they understand that only at-fault, nonresident drivers will be responsible for the claim -- not every driver involved in an accident.

They are usually concerned about the impact the emergency response claims will have on their insurance rates. For most at-fault drivers, the emergency response fee is less than $450. It is reasonable to assume most of the cost of the emergency response fee will be passed on to the at-fault drivers in the form of higher premiums. While it is possible a portion of the insurance companies increased costs will be spread to all policy holders, it is more likely the relatively small emergency response fee will mostly be paid by at-fault drivers.

From the fire department’s perspective, however, making numerous emergency response calls, including those caused by nonresident drivers, can become quite a burden upon its resources. Taken in total, the calls can strain the city and county emergency response resources.

As citizens begin to understand the nominal size of the emergency response fee and probable minimal impact on their insurance premiums, they generally become more accepting of the concept. Finally, when citizens realize filing claims for emergency response fees is the only acceptable alternative for many fire departments, they come to accept the policy.

Countering the Opponents’ Arguments

Cost recovery is not “double taxation” as some opponents have claimed. In situations where only non-residents are being billed, there is no out-of-pocket expense to taxpayers. Also, cost recovery is not a tax; it is comparable to a user fee. The at-fault, nonresident driver has used the city and county emergency response services. In fact, all costs recovered are a direct benefit to the taxpayer and the community served by the local fire department.

Opponents of cost recovery also claim that insured drivers are being discriminated against because uninsured drivers generally will not have to pay for emergency response fees. However, uninsured drivers run the risk of great financial exposure from driving without insurance and, in most states, are at risk of having their car impounded, losing their driving privileges or both. Most prudent drivers will not feel they are being discriminated against because they have already made the decision to secure insurance to protect themselves and their families in case of an accident.

Conclusion

Cost recovery is a reasonable option in a time when communities are facing the possibility of raising taxes to cover the actual costs, or lowering the services provided by the fire department – for example, by increasing response times.

For more information, see original IAFC Article here.

Posted 01-25-11