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Dangerous Curves: How Transit Companies Can Navigate Fed Safety Audits

March 4, 2016

by Barbara Darkes

Let trucking and bus companies, and shippers of hazardous materials, beware:  Federal safety audits can be hazardous to your company’s overall and financial health.

Recently, a safety-conscious property carrier called me to ask, “So what is this final meeting involving our compliance review going to be like?”

Thank goodness they called. Why didn’t they call earlier?

While you might think calling an attorney rings up costs you cannot afford, you often cannot afford not to call when facing compliance concerns.  What may seem like no big deal can quickly turn into civil penalties in the tens of thousands of dollars.

Safety audits and ratings have the noblest of intent:  to prevent crashes, to avoid other situations that can cause individuals harm, and to save lives. But they can also mean big money for trucking and bus companies, and shippers of hazardous materials, all making a good-faith effort to cooperate. The road to company closure is paved with good intentions.

A high-stakes environment

This high-stakes environment for carriers has evolved within the last six or seven years, when the Federal Motor Carrier Safety Administration (FMCSA) changed its enforcement strategies. The government scores transportation companies on compliance, safety, and accountability by constantly grading companies on their day-to-day compliance behaviors – results of roadside inspections, assessment of citations issued, and the list goes on.  This grading is remarkably different than the old way, which involved scoring based predominantly on the findings and results of the one or two weeks the Federal Motor Carrier Safety Administration spent on site at the company’s business, pouring through materials and talking to employees.  While the day-to-day monitoring may result in a focused compliance review that will take less time, the process is very similar and the results can be unexpectedly harsh, especially when the on-site person seems friendly and to only be looking out for the company’s best interest.

The FMCSA examines factors including:

  1. Unsafe driving, such as speeding or distracted driving;
  2. Hours of service compliance;
  3. Driver fitness flaws, such as poor training or lack of an updated medical qualification card;
  4. The use of drugs or alcohol;
  5. Vehicle maintenance issues, such as brake concerns;
  6. Hazardous-materials issues, such as noncompliance with signage requirements; and
  7. Crashes.

If infractions are found, the score goes up. If scores go high enough, the FMCSA will launch a focused or full compliance review. Companies can become the subject of targeted enforcement based on these ratings, meaning they can quickly end up in a compliance review without knowing it.

Don’t be lulled

Companies often believe cooperation will help them secure a better review. And, most Federal Motor Carrier Safety Administration personnel will approach focused investigations and compliance reviews in a friendly nature.  This often entices the company to over-cooperate and wait until it’s too late to get legal help.  By the time a Federal Motor Carrier Safety investigator contacts the company’s safety expert to review the compliance report, he has likely reviewed your files and talked to current and former employees.

Safety experts, senior management, and an attorney should all be present at a meeting involving review of the compliance review report.  The attorney can be a buffer, allowing your company to maintain a cooperative relationship while the attorney fights for your rights.

Often during a compliance review closeout meeting, investigators will bring a statement for the company to sign.  This statement typically represents admissions that everything in the compliance review is accurate. That statement can be the noose around the company’s neck. My legal advice to clients is often not to sign it, unless it is just an acknowledgment of receipt.  Most typically, however, it is an admission to the laundry list of alleged infractions the Federal Motor Carrier Safety Administration is claiming the company committee.  Let your attorney be “the bad actor” and tell you not to sign the statement.  Also, pay close attention to your options and timing for those options – timelines and responsiveness are much different in this arena.

A company emerges from a compliance review with one of four scores:  not rated, satisfactory, conditional, or unsatisfactory. An unsatisfactory rating can keep your trucks parked. You have rights to get your authority back, but you might only have 60 days to act. You may request that an impartial person look at the report and correct errors or request a safety rating change.

While a conditional rating might allow you to operate, it could prevent people from hiring you.  It is important to maintain or work to upgrade your rating to satisfactory. If you must defend yourself after a crash, a satisfactory rating is critical.  If someone brings a lawsuit against you, your compliance rating will be a big part of that litigation.

In the case of the company I helped, the report’s findings were a far cry from reality.  We compiled a detailed response to refute the investigator’s claims.  As a result, we were able to turn a safety rating of unsatisfactory to satisfactory.  We avoided a brush with a shutdown.

In addition to a compliance review, there can be a “notice of claim,” which involves a monetary claim for violations.  The penalties can reach into the hundreds of thousands of dollars. They can be negotiated down to less than you pay for attorney’s fees.  Many companies will not recognize the differentiation of the safety rating and the notice of claim; while both are based on the same or similar facts, they are fought separately.

When you receive any contact from the FMCSA, at that moment, call your attorney. The motoring public deserves safety — as do the truck and bus companies that share the road and the hazardous materials shippers helping to move product safely nationally and internationally.

Barbara Darkes is a Member at McNees Wallace & Nurick LLC.  She practices in the Automotive Dealer Group; the Litigation Group; and the Transportation, Distribution and Logistics Group.