Showing posts with label Insurance. Show all posts
Showing posts with label Insurance. Show all posts

Thursday, April 27, 2017

Following the Money - and the Legislation - on Bail

The Senate Criminal Justice Committee voted in favor of bail reform this on SB 1338 by a 7-0 vote.  A vote in the House Criminal Jurisprudence Committee is still pending on the companion bill, HB 3011.

The bondsmen are concerned about the future of their businesses.  As they testified at both the Senate and House hearings, their “bread and butter” comes from charging money to misdemeanants.  They understand that granting pretrial release to low-risk, non-violent individuals who are charged with misdemeanors means that they can no longer collect all the money that has supported their businesses.  From a public policy perspective, however, if people are low-risk in terms of appearing for court and non-violent, then the courts are not justified in extracting these payments.  As the industry reps testified, there are so few felons who can afford the bail amounts set.  They need the low-level people to pay money in order to keep their doors open.  Bail bondsmen and women are generally decent, small-business people, and this comes through at the hearings.

The big money in this industry is made by the out-of-state corporations that fund the Texas bail bond lobbying group, BailPAC.  Not surprisingly, the industry is ramping up the scary propaganda.   BailPAC has long provided hefty campaign contributions to certain legislators.

Think “State Farm”:  the bail bond shops we see near courthouses in every county are the mom-and-pop shops that sell a product for the big out-of-state corporations.  And this is the most lucrative type of insurance product sold.  Over the years the industry has lobbied successfully for favorable legislation.  Today, even when people don’t show for court, the law provides for generous grace periods and exceptions so that the insurance companies almost never have to pay the counties for the bond amounts that we would expect to be forfeited.

Most of the time, people who fail to appear for court  eventually show up later on their own or when they encounter a police officer who learns that there is an outstanding warrant for their failure to appear. In various ways, as long as a person at some point returns to court--by whatever means--the bail bond insurance company will not have to pay.  Bounty hunters are almost never used.

And even when the insurance companies are ordered to pay, only a percentage of those bond revocation judgments are actually paid, as shown in investigations by the Houston Chronicle ($26 million owed in 2010) and Dallas Morning News ($35 million owed in 2011).  In Waco, the DA in 2011 adopted a policy allowing bondsmen to pay just a portion of bond revocations.

The corporations that reap the rewards of Texas’ current bail laws are:
Meanwhile, Texas’ poorest and sickest people—not to mention county taxpayers—pay the price for a system that punishes people who can't afford bail money.  The pending legislation would modernize Texas bail laws to make release decisions based on the actual risks rather than a system that releases people based on ability to pay.

Saturday, March 04, 2017

Blaming the victim on insurance mandates

Some debates over bad ideas never seem to die.

A Texas House Insurance Committee meeting Monday will feature a bill (HB 178) which would require impoundment of uninsured vehicles involved in accidents.

This bill isn't as problematic as its near cousins filed in recent sessions to impound any uninsured car, but it's a step in that direction.

The problem comes because SOOO many Texas drivers can't afford insurance. The number used to be one in four drivers were uninsured. After a decade of intense efforts to drive that ratio down, it's now one in seven.

But that's still a whopping 2.5 million people driving without insurance. Moreover, in a real sense the economy depends on them doing so to get to work, to shop, to get their kids to school. The state has zero interest in all that activity grinding to a halt.

As it does with immigration and so many other situations, Texas keeps unreasonable laws on the books then pretends to enforce them in narrow circumstances while ignoring that the fundamental premise underlying their actions is not tenable. We can't impound every car without insurance, and threatening to do so will likely boost the number of hit and run accidents, because people will fear automatically losing their cars.

Plus, like asset forfeiture, this will inevitably be abused by law enforcement agencies which will quickly come to see auctioning uninsured cars as a new, lucrative revenue stream. Giving government bureaucracies a profit motive to take people's stuff is a bad idea, however good the intentions are behind it. (The impounding agency gets to auction the car and keep the money if the driver cannot get insurance and reclaim the vehicle within 60 days.

Besides, if the uninsured driver has caused injury or property damage, taking away their vehicle means they can't get to their job every day to earn money. That's the best way I can think of to ensure they'll never be able to pay those debts.

This is an example where what sounds like a logical response may end up creating way more problems than it solves.

Grits considers such proposals to suffer from a lack of perspective and creative thinking. In the big picture, just like requiring private citizens to purchase health insurance under Obamacare couldn't possibly cover the entire market, neither can the government requirement that private citizens buy auto insurance. It's an identical situation: If you think Obamacare can't work, the same critique applies to car insurance.

If government thinks people need car insurance, Grits has long maintained that having drivers pay at the pump through gasoline taxes would be the best solution. Make it universal and something you can't avoid paying for if you drive. Then these debates can properly move on to blaming the government for high taxes and often-unnecessary mandates instead of blaming drivers/taxpayers for being unable to bear the burdens government has placed on them.

Tuesday, February 23, 2016

Counties seek to reduce risk from law-enforcement shootings, in-custody deaths

My grandfather, W.D. Henson, happened to be the first president of the Texas Association of Counties, so I enjoy checking in on the TAC once in a while, if only out of familial nostalgia, and this morning was rewarded with these timely articles from their County magazine which merit Grits readers' attention:
Moreover, check out these breakout sessions at an upcoming Texas Association of Counties risk management conference in Galveston:
Use of Force and Legal Issues
Speakers: Mr. Todd Brown, TI Training LE, LLC
Mr. Jack Ryan, Public Agency Training Council
Moderator: Mr. Darren Jackson, Law Enforcement Consultant, TAC
Community disturbances and allegations of excessive use of force by law enforcement personnel are a constant risk exposure for all law enforcement agencies. Two of the best forms of defense against these allegations include strong policies and training. During this session the participants will learn about available resources to TAC RMP members participating in the Law Enforcement Liability Program to help mitigate the risk exposure. These include the model policy service offered by the Public Agency Training Council and a new Resistance Response Training Simulator.

The Ferguson Effect: Law Enforcement Use of Force in a Post-Ferguson World
Speaker: Mr. Tom Brandt, Director, Fanning Harper Martinson Brandt & Kutchin, P.C.
Moderator: Mr. Stan Lewiecki, Claims Attorney, TAC
On Aug. 9, 2014, a 28-year-old police officer made a decision that would forever change his life and would soon become a watershed event for the entire country – he shot and killed an unarmed black teenager. The officer was Darren Wilson. The teenager was Michael Brown. The town was Ferguson, Mo. This session will explore the climate that surrounds the use of force by law enforcement since that tragic day in Ferguson. This session will focus on practical approaches to defending law enforcement officers who are accused of violating the 4th Amendment of the U.S. Constitution.

Body-Worn Cameras
Speaker: Mr. Jack Ryan, Public Agency Training Council
Moderator: Mr. Darren Jackson, Law Enforcement Consultant, TAC
This training will review the current Texas state law (Senate Bill 158) pertaining to body-worn cameras. The presentation will cover how this law affects policies and procedures, and how custom and practices must follow policy, procedures and training.

Defending In-Custody Deaths – Litigation Under the New Media Microscope
Speakers: Mr. Larry Simmons, Principal, Germer Attorneys at Law
Mr. Stan Lewiecki, Claims Attorney, TAC
Ms. Debbie Bonner, Claims Attorney, TAC
This session aims to educate TAC RMP members on recent developments regarding county jails and jail staff in-custody legal duties, managing in-custody risks and liabilities, media scrutiny and defending in-custody medical care and death claims.  

Handling Our Mentally Ill in Our Texas County Jails
Speakers: Mr. Robert Davis, Attorney, Flowers & Davis, PLLC
Hon. Maxey Cerliano, Gregg County Sheriff
Hon. Dennis Wilson, Limestone County Sheriff
Moderator: Mr. James MacMillan, Law Enforcement Consultant, TAC
The speakers will discuss the issue of handling the mentally ill in our county jails throughout Texas. This session will focus, in part, on the liability and exposure that counties across the state face in dealing with mentally ill offenders. The presenters will also discuss the best methods to try to avoid liability, the present status of the law, the relationships between state and county agencies in dealing with the mentally ill and possible legislative actions during the next legislative session. The presenters will also highlight the need to develop close working relationships between sheriffs, county judges, prosecutors, health care providers, and mental health and mental retardation organizations. The presenters will give a short synopsis of each of these areas and plan to devote half the session to answering attendees’ questions.
Grits can't afford to attend, regrettably, but I wish somebody would cover it. How local governments can mitigate the risk of police shootings, in-custody deaths and violating  the rights of the mentally ill are significant areas of interest for your correspondent. I know the conference is really about mitigating LIABILITY, not necessarily reducing the frequency of those problems. But the interests of insurance carriers coincide with reformers on many of these questions more than is frequently realized.

Grits was also interested to learn about the "model policy service offered by the Public Agency Training Council" for TAC " members participating in the Law Enforcement Liability Program." If the function of the policies are "to help mitigate the risk exposure," then they have an incentive to be promoting best practices to minimize the likelihood of unnecessary use of force. There have been recent suggestions from the Black Lives Matter movement and the Police Executive Research Forum on use of force policy best practices, so the content of such policies is presently disputed territory. It would be a particularly clever and potentially effective twist if reformers were able to enlist insurance carriers and risk managers as allies on that score.

Wednesday, September 09, 2015

Privately funded prosecutions at the Travis County DA

A joint investigation by the Austin Statesman and the Texas Tribune exposed a pay-to-prosecute arrangement between the Travis County DA and a private insurance company. Go here for details. A coupla thoughts come to mind:

There are numerous precedents for this sort of special treatment, nearly all of them problematic. Most recently, Texas prosecutors have begun to distance themselves from payday lending companies with whom they'd partnered for years to buck up their hot-check funds.

Historically, in the nation's early days there were no district attorneys - nor for that matter state nor federal penal codes - and prosecutions were private legal actions undertaken like any other civil case. Texas' court of inquiry procedure - creatively used to pursue exoneration (successfully) for Timothy Cole and (unsuccessfully) for Todd Willingham, and an indictment for Williamson County Judge Ken Anderson - is a vestigial holdover from this primitive practice of private prosecutions. Its formal, technical function is to determine whether there's probable cause to bring an indictment outside the grand jury process.

So there's precedent for this sort of arrangement, but it's a legal and historical anachronism. And doing it just for one company smacks of pay-to-play. Give the full article a read; this seems like a really bad look.

Tuesday, March 10, 2015

Bill would reduce surcharge amounts for insurance, DL compliance

A provision in HB 7 would reduce certain surcharges under Texas' Driver Responsibility Program. According to the Dallas News:
In the Driver Responsibility Program, Darby would reduce certain extra penalties.

Currently, a driver must pay steep fees — for three years — for not having auto insurance or driving without a valid driver’s license. Under his bill, they would be smaller fines, and they would end once a motorist showed he or she has coverage and valid license.
I'm unsure why the Dallas News says the surcharge would "end once a motorist showed he or she has coverage and a valid license." Looking at the text of the bill, it reduces surcharges if they get insurance or a license, but doesn't eliminate them. The legislation was announced at a press conference yesterday which can be viewed here.

As I read it, HB 7 would reduce the surcharge amount for failure to maintain liability insurance and for driving with an invalid license from $250 per year to $125 per year if the driver obtains insurance or gets a license renewal within 60 days. The surcharge for driving without a driver's license (as opposed to with an invalid one) would decline to $50 per year if the driver acquires a DL within 60 days.

This falls short of abolition but it's better than a sharp stick in the eye. Thank you to Reps. Darby, Otto, Turner, et. al. for suggesting the idea.

Sunday, October 06, 2013

DPS backs off S. Texas roadblocks after lame justifications debunked

Following up on a story highlighted on Grits last week, Jeremy Schwartz has a piece in the Austin Statesman today on the Texas Department of Public Safety's decision to install roadblocks in South Texas, a tactic Grits labeled "pure pretext stops." Titled, "Border area checkpoints raise question of intent," Schwartz's article says, "The tactic came as a surprise to many. State troopers hadn’t conducted such checkpoints since at least 1994, when a Texas court effectively prohibited most law enforcement roadblocks in the state."

Jeremy's report cast further doubt on the stated reasons for the tactics, debunking the notion (see the chart at right) that high numbers of vehicle crashes justified them:
In a release announcing the operation, DPS officials said the unusual measure was necessary in the Rio Grande Valley, in particular, because of “unsafe driving behaviors” and the “number of vehicle crashes” in the region. The agency set up numerous roadblocks in late September and early October as part of a wider law enforcement surge in the Rio Grande Valley.

But an American-Statesman analysis of Texas Department of Transportation data shows that the counties singled out by DPS — including Hidalgo and Cameron — have low crash rates compared with several other population centers in the state. Based on crashes per vehicle mile traveled, a statistic commonly used to calculate safety rates, the Rio Grande Valley trails far behind cities like Lubbock, Laredo, Houston and Midland, and has crash rates comparable to Central Texas and the Dallas area.
DPS has also tried to claim the roadblocks were necessary because of high rates of uninsured drivers in the area, but "according to the Texas Department of Insurance, Dallas, San Antonio and Houston all have significantly higher numbers of uninsured drivers than Hidalgo and Cameron counties," the Statesman reported.

Caught in this web of dubious excuses, "On Saturday, the San Antonio Express-News reported that DPS has stopped using the checkpoints and discontinued a broader enforcement push in the Valley." That's good news. It was a foolhardy and politically tone deaf move to ever launch them in the first place.

Tuesday, February 26, 2013

Sympathetic reception for bill allowing health insurance for exoneree dependents

This morning I was at the House Insurance Committee on behalf of the Innocence Project of Texas (IPOT) along with Tim Cole's brother, Cory Session, and seven exonerees who showed up to support HB 361 by Anchia. The bill expands a program through which exonerees could purchase the same health insurance as TDCJ employees, but which has been underutilized because their spouses and dependents weren't also eligible.

Only nine exonerees have enrolled in the program, Chairman John Smithee said when he laid out the bill on behalf of Rep. Anchia (who had been called back to attend business in his district). But exoneree Charles Chatman explained that that many of them instead were paying for health insurance for spouses and dependents and going without themselves. If they were allowed to cover immediate family members, the committee was told, more of them would participate. Several other exonerees repeated that theme and indeed, after the hearing a number of the fellows said they planned to sign up to get insurance through the program immediately if and when the bill passed.

The committee seemed receptive and sympathetic and several of them came up afterwards to shake hands and introduce themselves to the exonerees. With seeming unanimity from the dais, Chairman Smithee pledged to vote the bill out of committee next week.

Afterward we had a chance to visit with Appropriations Committee Chairman Jim Pitts outside the House chamber to thank him for the committee's recommendation to reinstate funds cut last session from innocence clinics at the four public Texas law schools. We asked him to do what he could as teh bill moved forward to expand clinic funding to allow them to hire additional support staff to manage the nearly 3,000 requests for assistance per year these clinics receive.

I can't tell you how proud I am of all the exonerees who continue to show up at the Legislature to lobby on innocence-related bills. This one benefited their families, of course, but for some it's the second time they've been to the capitol since session started and all of them told me they'd be back when the policy bills start to come up. It's incredibly humbling and a great honor to be able to work with and on behalf of such folks.

Committees begin to hear criminal justice bills

Texas legislative committees are finally beginning to consider bills, with the first criminal-justice related legislation up for hearings today and tomorrow.

This morning at 8:30 a.m., the House Insurance Committee will hear HB 361 by Anchia which would expand the ability of exonerees to purchase health insurance at state rates to their spouses and dependent children. Anyone with a family knows that having everyone covered under the same insurance policy makes lots of sense, and since exonerees are paying for the insurance out of their own pockets, there would be no fiscal impact. This is a small bill, but it's surely important to exonerees, a couple of whom I believe are coming to town to testify.

Later on, at 10:30 a.m. or after the full House adjourns, the Criminal Jurisprudence Committee will consider legislation for the the first time, though only three bills are up in their first session.

HB 61 by Guillen is an enhancement for arson, boosting penalties from a second to a first degree felony for setting fire to an agricultural facility or a state park. Readers already know how I feel about enhancements: If the prospect of a second degree felony won't deter someone, changing it to a higher penalty - that most offenders will never know was altered until they're charged - won't increase that deterrence. The bill's  "fiscal note" was deemed insignificant, though that's not really true. With prisoner health costs alone at more than $9 per day, any extra inmates incarcerated for longer stretches will cost the state more money in the long run.

HB 153 by Taylor alters definitions in the law banning sale of firearms to intoxicated persons, deleting a more general definition and adopting the same one used for drunk drivers, including a BAC level of .08. The change seems mostly nonsubstantive, though it slightly broadens the scope of firearm sale prohibition. It's unclear to me how gun sellers are supposed to know if someone's BAC is at .07 vs. .09.

HB 70 by Fletcher is perhaps the most substantive of the three, changing what attorneys refer to as "The Rule" to allow one, designated prosecution witness who may be in the courtroom while others testify. Traditionally, witnesses aren't supposed to be in the room so their testimony won't be tainted by what they hear from others. If the designated witness getting to attend the hearing is a police officer, that person would be forbidden from wearing their uniform in court. The defense side, of course, would not be afforded the same privilege. Houston defense attorney Paul Kennedy last session argued that the bill is "a solution for a problem that doesn't exist. The only purpose is to make it easier for the state to obtain convictions."

Tomorrow, the House Corrections Committee will hear bills for the first time. They too have just three bills on the agenda.

HB 144 by Raymond expands the scope of "mental examinations" of juvenile offenders to include diagnosing substance abuse.

HB 431 by Riddle (which seems like it ought to have a fiscal note, though as of this writing one hasn't been posted) would expand the categories of offenders ineligible for release under "mandatory supervision," a category which only includes offenders convicted many years ago before the Lege modified "mandatory supervision" to become (oxymoronically) "discretionary mandatory supervision" if the offense involved a child victim. That's already the case for the most serious offenses. Riddle's bill would expand the prohibition to second and third degree felonies, forcing TDCJ to incarcerate those individuals longer. Hard to see how that wouldn't have a budget impact.

HB 634 by Farias would require TDCJ to verify inmates' veteran status via lists held by the Health and Human Services Commission and assist them (presumably upon reentry) with applying for benefits for which they may be eligible from the federal Department of Veteran Affairs. The fiscal note says there would be one-time automation costs to perform this function but suggests the duties could be absorbed in the agency's current budget.

And of course I'd already mentioned that the House Transportation Committee today will consider bills related to banning texting and/or talking on a cell phone while driving.

The game is afoot!

Thursday, August 25, 2011

Mandating insurance doesn't mean broke consumers can afford it

Critics of Obamacare need only look at the failure of the state of Texas' mandate that drivers buy auto coverage to see what a wrong-headed approach it is to require individuals to purchase insurance by law. Reports the Dallas News (behind paywall):
More than one in five Texas motorists lack the insurance that state law requires and the ratio is virtually unchanged from a year ago, a blow to the state’s 3-year-old program to sharply reduce the number of uninsured drivers on the road.

In addition, Dallas County continues to have the largest percentage of uninsured drivers among the state’s six largest counties, with 24.1 percent of cars and trucks lacking insurance coverage. That figure is down slightly from a year ago, state figures show.

Although the TexasSure vehicle insurance verification program showed good results the first two years after it began in 2008, reducing the number of uninsured vehicles from 24.3 percent to 21.6 percent in 2010, new statistics compiled in July show that progress has stagnated.

That means about 4.2 million drivers have no insurance, and law-abiding motorists shell out nearly $1 billion a year to protect themselves from damage done by drivers without insurance, state officials say. 
It's no shock at all that no-insurance rates are going back up at the same time unemployment in Texas is rising. “I’m afraid insurance is down the list on necessities for many people,” Mark Hanna of the Insurance Council of Texas told the News. “A lot of people continue to drive around without insurance even though they know it’s against the law. But they’re willing to take their chances they won’t get caught.”

You can only mandate that people buy insurance in the private market if they have the money in their pocket to do so. If and when they don't, requiring insurance coverage - whether health insurance at the national level or auto insurance at the state level - is inevitably a doomed strategy, which is why this blog has long advocated a pay-at-the-pump approach to minimum liability coverage.

Monday, April 18, 2011

Really? An 'Arson Registry'? Must we?

Tomorrow's Senate Criminal Justice Committee agenda is chock-full of interesting bills, so I'll break up an analysis up into shorter posts instead of trying to plow trough them all at once. Let's start with a bafflingly unnecessary piece of legislation from state Sen. Mario Gallegos, SB 1191, which creates an elaborate arsonist registration program modeled after the Oh-isn't-that-so-successful-why-don't-we-copy-it sex-offender registry. Rep. Dan Huberty is carrying identical legislation in the House. What possible value does an arson registry have? I'm sure insurance indutry lobbyists or somebody will be able to articulate that at the hearing, but it's already possible to search people's criminal convictions and find out if they committed arson or any other type of crime.

The only big addition to that already public information is that the registry would include juvenile offenses, as well as online aliases and a variety of other data that seems to have no use for the general public, but which politicians can point to and say, "I'm doing something about this. See, now you can arm yourself with information," whatever that means. It's not hard to predict an arson registry will become a smaller-scale albatross for law-enforcement just like the sex-offender registry, mandating a misallocation of scarce resources. The Wall Street Journal recently quoted "Lt. Ruben Diaz, who heads the sex crimes unit at the Harris County sheriff's department, [who] said it was very rare to find the perpetrator of a new sex crime among those already in the registry." There's little doubt the same will be true for arsonists.

Setting aside the cartoonish futility of such registries, it's especially ironic the good senator is pushing this idea at a time when the Forensic Science Commission just suggested that the state fire marshal develop protocols to review old arson cases where negligent methods or flawed, since-updated science might have led to false convictions. The registry idea doesn't seem cognizant of that debate at all, gathering data on arson convictions not to assess potential innocence claims but to ostracize those convicted without having done so.

There are some legislative code words for "unfunded mandate" in the bill that might make counties sit up and take notice, creating a "Centralized registration authority," which is defined as "a mandatory countywide registration location." And presumably the Department of Public Safety will incur some costs from managing the statewide database, though LBB could always claim it's "insignificant."

Juveniles are defendants in about half of arson crimes. They typically don't all continue to set fires as adults, so I don't understand their long-term inclusion. Why not set a limit  - say, five years on the list then de-registered unless they commit another arson crime? How long should they really be subject to that requirement into adulthood? While I don't know much about the sociology of juvenile fire setters, who have been studied to death, from what I do know, there are different categories of juvenile fire fascination, quite a few accidental fires, and for most early intervention and fire education is more effective than piling on post facto punishment for youth. But of course, funding fire education would cost money in the state budget, whereas this bill passes costs along to counties, who must try to collect from registrants. The question of which juvenile arsonists merit registration, assuming there's any benefit to it at all, receives little nuanced attention in this bill. Registration is based solely on the crime someone was convicted of without applying any additional risk-assessment tool.

On the other side of the coin, the registry doesn't even pick up all alleged arsonists. I mentioned the other day that, in addition to those with criminal convictions for arson, there's an additional class of people who may have been harmed by junk arson forensics: People whose insurance claims were denied because insurance investigators determined the loss resulted from arson. For my part, I think any such review should include not just criminal cases but also insurance disputes where the company prevailed in denying claims based on arson where no criminal conviction was ever secured. There are a lot more arson investigators working for insurance companies than for law enforcement, an I'm guessing some subset of people with  denied claims, of what proportion I wouldn't hazard a guess, may be owed some money if old cases are ever vetted. (Whether as a function of siloing and tunnel-vision or as a testament to the power of the insurance lobby, that's a piece of the arson puzzle that nobody in official circles - either at the Forensic Science Commission or this bill - has addressed yet.)

A judge can choose not to require registration, but prosecutors are given leeway to appeal on the basis of "procedural errors" or "abuse of discretion" by the judge. From what I can tell, though I'm not completely sure after reading and re-reading the lengthy bill, registration requirements seem to terminate, mercifully, at the end of the defendant's community supervision or parole term. But for however long that is, it's the offender who must "pay ... all costs incurred by the [local probation] department in providing the notice." Even so, if there is a positive fiscal note on the bill when it comes out for the Departments of Public Safety and/or Criminal Justice, in the current budget environment that might be enough to kill this bad idea for the "wrong" reason, which is as good a reason as any as far as I'm concerned.

Thursday, October 14, 2010

Corpus Christi will begin insurance checkpoints, auction off uninsured vehicles

It sounds like a Soviet-era cliche - "Show me your papers, comrade, or we'll seize your property" - but Corpus Christi will begin setting up "insurance checkpoints" aimed at towing and ultimately auctioning off vehicles of the one in four divers in the city who don't carry auto insurance, reports the Caller-Times:
The police department got the green light from City Council on Tuesday to step up enforcement against uninsured drivers.

The council approved $180,000 from the city's general fund to help increase enforcement. Police Chief Troy Riggs said the department's plans call for hiring two more impound control officers, buying a new wrecker and doubling the number of auto auctions to 12 a year. Adding six auctions is expected to generate $510,000 a year, he said.

Police also will start giving offenders the maximum penalty: a citation with a fine between $175 and $350 for the first offense, plus an average cost of $280 to get the vehicle out of impound.

If violators don't pay up, their cars can be sold in as few as 30 days, officials said.
This seems like a straight-up revenue generation scheme. Towing uninsured vehicles is one thing, but I see little excuse for the rapid turnaround on auctioning them off - much less maximizing fines and tow charges - except bleeding drivers for money during lean budget times. A similar scheme in Dallas (though with a much less aggressive auctioning schedule) has failed to reduce the rate of uninsured drivers in that city.

Even more worrisome, the police chief plans "to set up insurance checkpoints on designated nights and tow uninsured vehicles." That seems like overkill to me, and perhaps just a cheap excuse to get around the ban on DWI checkpoints.

See related Grits posts:

Thursday, August 12, 2010

Correction: Insuring unlicensed drivers

Thanks to the reader who alerted me via email to an error I've been making fairly routinely when discussing the Driver Responsibility Program, including I fear in testimony earlier this week to the House Public Safety Committee. I've mentioned several times that insurance companies won't write policies to unlicensed drivers, arguing that when the state revoked licenses under the Driver Responsibility Program, it is increasing the number of uninsured drivers. But this reader forwarded me a scanned Greensheet advertisement promoting liability insurance for sale even if you don't have a driver's license. The ad was unclear and I've heard that statement so many different times from different sources, I was skeptical, so this fellow called the company, writing back a few hours later:
I just checked with the Baja agent to make sure the insurance available with “no license” applies to Texas registered cars in Texas. According to our conversation, if you tell the agent “no license” you can get this insurance. If you tell the agent you have a suspended license, they may put it down and there’ll be trouble with the state.
The part about "trouble with the state" still sounded like it might be illegal or somehow improper for those with licenses suspended because of the Driver Responsibility Program. So this morning I emailed Jerry Hagins at the Texas Department of Insurance Public Information Office who informed me:
A driver's license is not required, by statute, in order to purchase auto insurance, but practically speaking, most insurance companies require it in their underwriting guidelines. Some insurers may write a policy for an applicant with no DL but require that a Texas DL be obtained within a certain timeframe; or they may write a policy but add a surcharge; or they may write a policy if the applicant can verify driving experience via some other means. It may require a lot of shopping around to find an insurer who will write a policy to an applicant without a drivers license but it is permitted.
So there you have it. Most insurance companies won't cover you without a driver license, but with so many people out there with suspended licenses, clearly providers have arisen to service this risky submarket because of its shear volume and the potential for predatory pricing.

I'd never been under the impression, FWIW, that state law forbade such insurance products, I just couldn't imagine auto underwriters willing to write policies for people with licenses suspended for cause. My apologies for the error. Who'da thunk? I wonder if the rise of such insurance products is directly attributable to the advent of the Driver Responsibility Program and the proliferation of administrative license revocations as punishment?

Saturday, July 17, 2010

Draconian solutions fail to lower Dallas' uninsured rate

One reason I'm glad to see the proposed new rules for the Driver Responsibility Program is I've become utterly sick of phony, disingenuous non-solutions like the DRP being proposed for the problem of uninsured drivers. The issue has been around forever, voters are frustrated and edgy about it and because everyone drives, everyone's got a strong opinion.

Even so, actual real-world solutions remain elusive. The most draconian possible tactics have been tried and failed, often making the situation worse. The DRP attached huge, multi-year civil penalties to the violation which knocked 1.2 million people off the driver rolls, making them ineligible to even buy insurance. The state has created a massive, Big-Brotherish database of every active insurance policy, which has served only to document the problem, not reduce it. In Dallas and other Metroplex jurisdictions, drivers without insurance have their cars impounded. Name a radical, enforcement-only approach and it's been tried, usually in many places.

Terrence Stutz at the Dallas News reports that after years worth of git-tuff policies in Big D, 25% of Dallas-area drivers still have no auto insurance ("TexasSure program finds about 25% of vehicles uninsured in Dallas County," July 17). He reports:
It's a slight improvement over the last six months, but about 25 percent of all vehicles in Dallas County – 429,478 cars and trucks – remain uninsured, a new analysis by the state Department of Insurance shows.

Dallas County continues to have the highest percentage of uninsured drivers of the six largest urban counties in Texas. In Tarrant County, about 21 percent of vehicles had no insurance coverage.

The figures, pulled from the database of the TexasSure vehicle insurance verification program, also indicated that 3.7 million vehicles statewide – 21.6 percent of the total – lack basic liability coverage, a violation of a state law requiring insurance.

Though the numbers are high, they're an improvement from December 2009, when nearly 26 percent of vehicles in Dallas County and 22.2 percent statewide had no insurance coverage.

Department officials credited the TexasSure program with helping to reduce the percentages. 
It's absurd for anybody to be claiming credit for moving from 26-25% uninsured drivers - that's hardly a statistical blip!

Predictably, the comment section to Stutz's article quickly filled with calls for even more draconian measures (and also many calls for impounding vehicles, apparently not realizing Dallas already does that). But punishment alone cannot solve this problem. I replied in the comments:
The plain fact many commenters here ignore is that when 25% of drivers are uninsured, it would shut down the economy overnight to seize all their cars or otherwise stop them from driving. Sometimes reality must intervene during these absurd conversations.

Speaking of which, why do Republicans hate Obama's healthcare plan for making us buy insurance but don't mind the IDENTICAL, failed scheme for drivers? If government forces you to have insurance, we should just pay at the pump through gas taxes and be done with it so everyone must pay. A requirement in criminal law to buy private insurance has been a complete failure, just as it will be when implemented for healthcare.
I discussed during the 2008 election season why our experience with auto insurance made me agree with what was then (but not now) Barack Obama's criticism of Hillary Clinton's mandatory health insurance plan. She suggested requiring everyone to buy insurance along the Mitt Romney/Massachusetts model, but in Texas requiring everyone to buy auto insurance - and enforcing the requirement with criminal penalties, no less - has resulted in nearly one in four drivers uninsured. That's a failed policy.

Of course, once Obama got into office, Clinton's plan ended up being essentially what he passed! And in its wake, he was labeled every kind of Socialist, Communist, Big Government Liberal, you name it for requiring everyone to purchase health insurance. So somebody please explain to me: Why isn't it also "socialist" to require drivers to purchase private auto insurance? What's the difference?

Since no matter what you suggest these days it seems like one is labeled a "Socialist," let me offer up an actually socialist solution, but one that's at this point the only viable option if we honestly want every driver insured: Drivers should pay at the pump through the gas tax for minimum liability coverage and essentially "nationalize" that market. Doing so would immediately cover every driver and eliminate the need for each driver to have a separate insurance payment for minimum liability. Insurance companies could still deliver liability insurance just like some today participate in Medicare or Medicaid. And they could still sell extra coverage for one's own vehicle, etc., so there's a significant auto insurance market beyond selling minimum liability. But if it's going to be a requirement to purchase insurance - to the point where criminal penalties and property seizure result if you choose not to enter into a commercial transaction with a private insurer - it'd be a lot cheaper and easier for everyone to just make it mandatory and universal.

There, I said it. Let the red-baiting begin!

Confusion over Amnesty rules?
Incidentally, at the end of his story Stutz mentioned the new Driver Responsibility rules, but I think he misstated what's going on with the Amnesty program. He wrote:
Public safety commissioners outlined two changes they hope will improve compliance, including a reduction in the surcharge that must be paid by indigent people – those making less than $14,000 a year – to 10 percent of the total, not to exceed $250.

The other is an amnesty provision for those who have failed to make payments in the past. It will allow them to resume surcharge payments and have their driver's license reinstated if they pay 10 percent of what is owed, not to exceed $250. They still must pay the remainder of their surcharges to stay in compliance.
The way I read the Amnesty provisions, that's incorrect. As I understand it, "Each applicant eligible for amnesty will be required to pay 10% of the total amount of surcharges assessed, not to exceed $250." Then, "Once the department determines the applicant is eligible for amnesty, the department will rescind the suspension of driving privileges for each applicant that receives amnesty." After that, "Payment of the reduced amount must be received by the end of the amnesty period," and "If prior payment(s) exceeds the reduced payment, the driver will not be required to make a payment." However, "Any prior payments that exceed the reduced payment will not be processed for a refund." If you still had to pay the full amount, it wouldn't be much of an "amnesty," would it?

I'm not a lawyer but if there's anything suggesting those receiving amnesty "still must pay the remainder of their surcharges" beyond the $250, I'm not seeing it in the proposed rules.

The goal of the amnesty program is to reduce the massive backlog of folks who didn't pay and thus are for the most part now driving unlicensed and uninsured. That's particularly important among drunk drivers, who have the highest DRP surcharges but are also the folks you most want to make sure have auto insurance. There comes a point in the insurance debate when one must decide whether it's preferable to solve the problem or whether it's enough to punish and castigate everyone who fails to comply with the government's last failed solution(s). I'm pretty much sick of the latter approach.

Tuesday, May 18, 2010

Back to the Drawing Board: DPS rewriting Driver Responsibility rules

Thanks to Paul Watkins and Rebekah Hibbs for allowing me to participate yesterday in the DPS working group on the Driver Responsibility rules regarding indigency, amnesty and incentive programs. The discussion centered mostly on concepts; they didn't get down to drafting language. But if the rules that ultimately go to the Public Safety Commission (PSC) follow our discussion yesterday, they'll be a dramatic improvement IMO over what was discussed at the public hearing.

Without going into details that would violate the spirit of open participation at such a meeting, there was a consensus on adding amnesty and incentive programs to the indigency program suggested previously, as well as on simplifying the indigency application process modeled on methods commonly used in courts and hospitals.

"Amnesty" won't mean a full-blown waiver of fees, but paying some amount - I hope they settle on $250 with a payment plan option, so it's actually affordable - to allow people to get their driver's license reinstated and become reinsured. Much higher and I suspect you'd significantly lower the participation rate.

There was some discussion regarding whether DWIs should be included in amnesty and incentive programs, and I don't know which way the agency will go. Drunk drivers are unpopular and no politician ever lost an election larding extra punishments onto them. But from a practical perspective, the teaching hospital representative agreed, if that drunk continues to drive anyway, it's better if they're insured so if they're in an accident the hospital costs will be covered. Disallowing drunk drivers from the program would maximize the risk that harms they cause won't be covered by insurance. By contrast, letting them secure amnesty gives drunk drivers incentives for compliance with auto-insurance mandates. We're only talking about a small portion of those affected by the DRP: About 3% of surcharges are for DWI.

Another interesting discussion related to timing. Ms. Hibbs said that most defaulted drivers who pay off their fees do so between February and April each year, when people receive their tax refunds (which is kind of sad, when you think about it). Assuming rewritten rules go to the Public Safety Commission by July, which would be the earliest feasible date, DPS conceivably could roll out these programs by the end of the year. That would be perfect timing to do a public-ed program to market amnesty, in particular, to the 1.2 million defaulted drivers who owe back surcharges just as tax season arrives and they're most likely to pay. The vendor handling collections for DPS already is spending massive sums to contact drivers owing surcharges by mail and phone. If they use those tools to market the amnesty program, the state and trauma hospitals might actually see a significant one-time revenue boost next spring.

It pleased me greatly that hospital reps came to the meeting seemingly cognizant that the program had serious problems and ready to seek solutions. Ironically, enacting these rules could actually save the program if legislators who previously demanded its abolition think the agency fixed its problems. So there's an element of enlightened self-interest going on with their position, but however it came about I'm glad for it. Neither the representative from the Texas Hospital Association nor the teaching hospitals expressed opposition to the direction being discussed for the rules. The THA rep said her group would be taking a formal position on the subject in July.

We may learn more how DPS intends to implement these concepts when staff briefs the commission at their meeting later this week (see the agenda). My sense from yesterday's discussion was that revised rules will likely go back to the PSC sometime this summer.

Tuesday, November 17, 2009

Does rise in white-collar prosecutions stem from too-weak business regulation?

I've suggested before that white-collar crime prosecutions shouldn't be used as alternatives to industry regulation, but given how white-collar cases frequently play out in the real world, I can understand why that approach is politically and, to an extent, even practically justified.

Take the instance yesterday in which the state insurance regulator ruled that State Farm had overcharged its customers hundreds of millions of dollars over the last six years. Reports the Dallas News:

State Farm Insurance must repay its customers $310 million for charging them too much for homeowners coverage dating back to 2003, the state insurance commissioner ruled Monday.

The ruling by Insurance Commissioner Mike Geeslin, the latest in a years-long case, is for far less than the $1 billion that consumer advocates recommended, and one called it a "joke."...

Alex Winslow of Texas Watch, a leading consumer group on insurance issues, called Geeslin's ruling a "slap in the face," saying it cheats State Farm policyholders out of millions of dollars in excessive premiums.

"The commissioner has shirked his responsibility to Texas homeowners and proved that our current insurance market doesn't work," he said.

"Consumers had a right to expect a full and complete refund of all overcharges plus interest, and the commissioner chose to allow State Farm to pocket hundreds of millions of dollars rather than return that money to policyholders," he added.

A stronger regulatory system with teeth might have a) kept overcharges from happening in the first place or b) more completely compensated customers for the money State Farm charged them over the regulated rate. However, Texas' insurance commissioner is a political appointee and the big insurance companies in this state tend to get what they want, or most of it, from the political class - pretty much no matter which party is in power.

I know no more about this case than what's reported in the paper, but let's say it's true that State Farm overcharged its customers around $1 billion and now won't pay them back on the grounds that they'd go bankrupt. (The closing paragraph in the article says State Farm spent the money to pay back a loan to its parent company, so I don't see why that entity couldn't pay). Let's face it, if someone knowingly overcharges a customer then refuses to give the money back because they already spent it, that's tantamount to theft. And allegedly stealing a billion dollars is a big deal, even if it was stolen from thousands of ratepayers a few hundred dollars at a time.

To be clear, I don't think prosecuting insurance executives in rate disputes would benefit the ratepayers or, really, anyone at all. Historically American society hasn't dealt with that kind of corporate "theft" through the criminal justice system, which is designed to more effectively prosecute thefts by the poor - e.g., burglaries by druggies or the homeless guy for stealing copper wire from a construction site. Law enforcement isn't very effective at going after the guys who steal nine or ten-figure sums with a fountain pen instead of a gun, though in theory such offenses would merit life sentences in Texas (or 5-99) based on the amount of money stolen. Even when white-collar offenders are prosecuted and punished, rarely does that mean the crime victims get their money back.

The other option in such circumstances is civil litigation, but tort reform has made such large-scale class-action suits more difficult and less lucrative. Even when a suit can be pursued, attorneys regularly settle their cases for large fees but only symbolic compensation for the thousands of affected consumers - hardly a satisfying outcome.

In this case, reports the Dallas News, State Farm "was told to cut its rates 12 percent" in 2003. They "sued the state, and the case has been rolling around the courts since," but in the meantime they continued to charge customers the higher rates. So the company defied state regulators and knowingly continued to charge its customers more than state law allowed.

Regrettably, given a chance to order that they repay the full amount of the overcharge, Texas' one-man insurance regulatory body decided that State Farm needn't pay 70% of what they allegedly, improperly took. He had the chance to fix the problem on behalf of ratepayers, but instead created a situation where they apparently have no meaningful recourse through either civil or regulatory means to recoup 70% of what they were overcharged.

If ratepayers want justice, they clearly won't get it through the civil courts or state regulators - both have had their chance. So if they're not going to be fully compensated for what's taken from them, it's understandable why injured parties and the observing public would conclude that punishment in the criminal justice system is at least some justice if not the most preferable outcome, which would be recouping lost funds.

Such an environment of consumer/public frustration - where it appears government is incapable of fairly resolving middle-class disputes with corporate power - create a strong political motive for prosecutors to pursue white-collar crime cases, often over what used to be considered unfortunate, spectacular, but in the big capitalistic picture relatively routine, non-theft business losses.

There's a difference between a Bernie Madoff running an outright Ponzi scheme and a speculator who loses clients' money because the bubble they were hyping suddenly burst. (State Farm's case, to me, lies somewhere in the hazy middle on that spectrum.) And even Bernie Madoff should have been caught by regulators, it's just that the agencies in charge of oversight were lax, underfunded, incompetent and in some cases even corrupt.

In the wake of recent Wall Street debacles and bailouts, I'd harbored perhaps quixotic hopes that the coming months and years might find a more receptive environment for regulatory solutions regarding corporate misconduct, finding ways to resolve or (even better) prevent such imbroglios without the need for large-scale civil litigation, much less expensive, morally ambiguous white-collar criminal prosecutions aimed at satisfying an angry and vengeful public.

If state regulators and civil courts are too weak and disempowered to exact justice for consumers, it's only natural the public would turn to prosecutors for answers, since they wield enormous power - even if harshly punishing such "offenders" can't restore what's lost to victims. I'm just not sure who such an approach really benefits.

Tuesday, August 25, 2009

USAA cancels insurance due to spousal incarceration

A reader sent me this account via email and I thought it was worth sharing (excerpted to protect the writer's identity):
I don't know if you are familiar with USAA. It was originally the United States Army Automobile Association. It is now both an insurance and banking operation that is headquartered in San Antonio. They serve primarily the military and military veterans. My father was a career Naval officer and 40 year member of USAA. His membership qualified me as a member. I've been a member of USAA for nearly 13 years. I have nearly $50,000 in various bank and investment accounts with them. I have two credit cards with them, I have a mortgage with them. I have a car loan. I have previously paid off a mortgage to them, and numerous car loans. (I have very good credit, I'm no risk to them). Anyways, you have be member to be insured by them, etc.

Last week, I logged on to my accounts and decided to update my profile and add my wife. Just added her as a family member (spouse). This caused USAA to contact me (electronically) about updating my auto policies (I have two cars insured with them). I replied that my wife didn't currently reside with me and that she didn't even have a driver's license so they I couldn't add her to my auto policies if I wanted to. USAA then replied that they needed to know why she didn't have a driver's license (was it suspended, revoked, etc.) This kind of irked me, but I went ahead and replied that, although it was none of their business, she was, in fact, currently incarcerated.

I received the following message from USAA this afternoon:

Dear Mr. [Name deleted],

We appreciate your honesty in the matter. USAA has made a business decision not to offer or continue any property and casualty products for individuals with criminal activity, a felony conviction, or previous incarceration. We are of the opinion that this is demonstrative of behavior and judgment characteristics that present an increased and unacceptable risk of loss insured under our policies.

We will review your Automobile and Homeowner's policies as they come up for renewal.

Thank you,
Jeff Tryk
USAA

I called USAA to inquire exactly what "We will review our Automobile and Homeowner's policies as they come up for renewal." meant. I was that it meant that USAA would not renew my policies. Even though my wife did not live with me, or that I had asked them for any coverage for her, because she was now a "member of my household," they now longer wanted my business. Mind you now, they have a lien on one car, and hold my mortgage. They'll finance me, but won't insure the very property they've financed.

Needless to say, I was livid. ...

Here is a case of not only punishing someone for their crime they've already served their time for, now they are punishing me for falling in love with her. How is anyone who has ever been in prison, Texas or anywhere else, supposed to succeed in this world with policies like this confronting them?

I understand that a company has the right to set their own policies and procedures. But these policies just perpetuate failure for parolees. ...

Basically I think this policy sucks. For me and for my wife and anyone else to have something like this happen to them.
That's a pretty low blow, especially for a company that services veterans and their families. More than a few vets later have scrapes with the law, the Washington Post reported recently. Once they've paid their debt to society, though, it's counterproductive to shun them from routine, productive commerce.

I try to pretty much stay away from the national healthcare debate but I agree with Barack Obama on one thing - you really can't trust an insurance company to do the right thing.

Saturday, August 22, 2009

Public Safety Commission backs Driver Responsibility revamp

I must say, I've seldom been as pleased at being rejected as I was yesterday when the Texas Public Safety Commission formally voted to deny the Grits' peitition for rulemaking regarding creation of indigency, amnesty and incentive programs for the so-called "Driver Responsibility" fee. Instead the Commission voted to publish in the Texas Register new rules proposed by the Drivers License division that go a long way toward achieving our petition's goals.

DPS will soon propose its own version of an "Amnesty/Indigency Program" and an"Incentive Program" for the Driver Responsibility surcharge, which is a civil fee assessed on top of criminal fines and penalties that stretch out over three years. Drivers lose their license if they don't pay and there's no provision currently on the books for reducing fees. The new DPS rules would reorient the program so that it promotes drivers maintaining a license and insurance coverage instead of creating disincentives for compliance.

At the beginning of the day, right after I'd spoken to the Commission during the public comment period, Sen. Eliot Shapleigh addressed the panel, arriving with a staffer and Travis County Court-at-Law Judge Elizabeth Earle in tow. They showed the PSC data that 11% of drivers in El Paso and Austin had outstanding arrest warrants, largely as a result of high non-compliance rates in the Driver Responsibility program. Judge Earle told them surcharge-related cases were clogging up misdemeanor court dockets. Their presentation clearly made an impression, as commissioners referenced their remarks several times during their discusion of the proposed rules later in the day.

Indeed, I should mention that all of the commissioners present seemed quite engaged on the topic. Commissioner John Steen had actually called to speak with a rodeo clown from El Paso who was quoted in a recent newspaper article as having problems with surcharge. And Commissioner Barth on a different agenda item expressed reticence at revoking drivers licenses over petty fees because of problems they'd learned about with the DRP. (Instead of revoking drivers licenses for people whose checks bounce, she said at one point, a better solution would be to simply stop taking checks.) They've obviously been giving the issue a lot of thought.

I've not seen the formal rule language yet and it wasn't ready yesterday at the meeting: I was told all the i's hadn't been dotted and t's finally crossed, so the description that follows is from a Power Point presentation to the PSC, of which I was given a paper copy. According to that source and the description by Drivers License division chief Michael Kelley, here are the surcharge reductions proposed by DPS staff:

The Amnesty/Indigency Program only applies to two types of tickets. It will:
  • Reduce Point surcharge to a one-time fee of $50 if paid in full (reduced from $100 per year for three years)
  • Reduce No Driver License surcharge to a one-tme fee of $50 if paid in full (reduced form $100 per year for three years)
The Incentive Program covers the other offenses for which surcharges are assessed, the most common of which is failure to maintain liability insurance. For that offense, as well as Driving While License Invalid, here are the reduced surcharges under the new rule:
  • Reduce 1st No Insurance surcharge to a one-time fee of $50, to be paid in full with proof of insurance (reduced from $250 per year for three years)
  • Reduce subsequent No Insurance surcharge to $50 per year for three years, or $150 paid in full, with proof of insurance (reduced from $250 per year for three years)
  • Failure to maintain insurance for three years would result in the full surcharge being reassessed; this can be verified through Texas Sure.
Finally, the proposed Incentive program also applies to surcharges in DWI cases, but only in cases where offenders have completed a "Drug Court program." I'll confess to not understanding exactly what that means and look forward to seeing the formal rules to clarify. Perhaps they meant upon completion of a treatment program. While there are some specialized DWI courts in a few jurisdictions, most drug courts in Texas don't handle DWIs, which are misdemeanors on the first two offenses. Most drug offenses are felonies.

In any event, for people who completed a "Drug Court program," whatever that turns out to mean, first time DWI defendants can avoid a $1,000 per year, three-year fee by paying $500 one-time in full. Those with multiple DWIs or who had a BAC of 0.16 or higher willl see their surcharge reduced to $1,000 if they pay one-time in full, reduced from $1,500 to $2,000 per year over three years.

All these changes have something in common: They promote responsible behavior instead of impede it, encouraging drivers to maintain insurance and even participate in substance-abuse treatment while relieving an often-overwhelming financial burden. It's not what we'd asked for in the citizens' petition, but it's a thoughtful and bold approach to an entrenched problem that's in some ways an improvement over what we'd suggested. Kelley told the Commission the fiscal impact "should be a wash" because noncompliance rates were currently so high, but that the vendor would be able to track metrics to confirm that as the program rolled out.

Why the sudden shift in the agency's approach? Bottom line, DPS staff (rightly) believe the public is ignorant and confused about this program (a fact emphasized by a video shown by Sen. Shapleigh of a US soldier who lost his license while on duty overseas because of surcharges he didn't know about and couldn't afford). One DPS employee frustratedly told me they'd tried to get the Legislature to fund an education program to improve compliance since 2005, but couldn't get money to do it approved. So they've embraced the idea that it's better to get a one-time payment up front and gain leverage to ensure ongoing insurance coverage than to tolerate a 65% noncompliance rate that turns hundreds of thousands of people into illegal drivers.

The earliest the rules could be approved will be October, but they'll be retroactive to Sept 1, 2009 when they take effect. So that's fine going forward, but what about those already in the system caught in a "circle" of noncompliance, as the Kelley described it?

Thankfully, Commissioners Carin Barth, Tom Clowe and Chairman Allan Polunsky thought those folks needed to be included retroacitvely if it is legally possible. The General Counsel Stuart Platt said they'd been omitted because of unnamed "constitutional issues," but when Commissioner Barth pressed the point, mentioning that other "amnesty" programs were often retroactive, Platt told her they "can probably get around those" constitutional questions.

The commission ended up approving two motions: One of them directed staff to publish the proposed rules in the Texas Register and prepare for a public hearing. Another directed them to prepare a second rule that would make the same changes retroactively and publish it as well if the General Counsel thinks it passes constitutioanl muster. It was clear a majority on the Commission would very much like to make the changes retroactive if staff tells them that it's legally kosher.

The first of those motions by Commissioner Clowe also formally rejected Grits' petition, though it did so quite graciously, even thanking your correspondent by name, I was flattered to hear, for spurring the commission to take up the issue.

I want to thank the members of the Public Safety Commission in return, not to mention DPS Driver License division staff, for taking this issue on so diligently and thoughtfully when their General Counsel didn't belive it was legally required. (They've had authority to do this since 2007, he said, but he didn't believe they had to act now.)

Thanks also to everybody who helped work on the Grits petition. It had a significant effect even if the agency decided to go its own route on altering the program.

More on this next week when the rules are formally published and I have more details to share.

Tuesday, August 18, 2009

Punitive approach to economic crimes only makes problems worse

Readers may be interested in this press release (pdf) from DPS describing new traffic laws that take effect on September 1.

The release mentions an important bill that I'd somehow completely missed during the legislative session - HB 2012 by Vaught - which is likely to negatively impact counties' jail and indigent defense costs. The new law makes it "a Class B misdemeanor if a person drives with a suspended license and without insurance," but combined with Texas' so-called "Driver Responsibility" surcharge the new law will result in many more petty offenders entering county jails on a day to day basis.

There's a negative, symbiotic relationship between no-insurance and no-DL offenses, which are essentially economic crimes. A driver who can't afford insurance and receives a ticket is assessed a criminal fine and a steep civil surcharge. Failure to pay the surcharge results in suspension of a drivers license, and of course an insurance company then won't sell an unlicensed driver insurance. That's all well and good for drivers with sufficient means to pay their way out of this tangle. But for those who are uninsured because of they don't have the money, current laws create an aggressively slippery slope that's exacerbated by HB 2012.

We're talking about a lot of folks. About one in four Texas drivers have no insurance and 2.7 million Texans have had their driver license suspended because of the "Driver Responsibility" fee. But since there's little public transportation in Texas and most adults must drive to work, hundreds of thousands of Texans find themselves in violation of these statutes at any given time and must choose whether to violate the law or earn a living.

Inevitably many will choose to violate the law, having little practical choice. But with the passage of HB 2012, police officers will now be obligated to arrest such drivers and take them to jail, even in counties where jails are dangerously full. What's more, by making the offense a Class B misdemeanor, legislators have required counties to pay for indigent defendants' attorneys. The "fiscal note" on the bill says "No significant fiscal implication to units of local government," but honestly that's just a flat-out lie.

Meanwhile, more fines and surcharges will rack up for drivers, making it even less likely they will be able to purchase insurance, pay off their surcharges, reinstate their licenses, or take other steps to make themselves street legal. How much sense does that make?

Friday, July 03, 2009

DPS must change rules to give life to Driver Responsibility indigency program

UPDATE: This item contains factual errors which are detailed and corrected in this post.

One of the under-recognized achievements of the 81st Texas Legislature was the addition of two amendments by state Rep. Sylvester Turner to the Department of Public Safety's Sunset bill requiring the agency to implement an indigence program for its Orwellian-named Driver Responsibility surcharge. (See pp. 186-190 of the bill-pdf).

According to material from the vendor, MSB Government Services, presently 6% of Texas drivers are subject to "driver responsibility" surcharges, but reportedly 65-70% of total fees go unpaid--largely because you can't get blood from a stone even if you take its drivers license away.

The Sunset Bill requires DPS to create an "Indigence Program," something the agency previously had the authority to do but chose not to implement. The bill defines "indigence" at 125% of the federal poverty level, lists a number of public-assistance related benchmarks that automatically qualify a petitioner for the exception, then declares without equivocation that the "department shall waive all surcharges" for everyone deemed "indigent," a determination that's made under the bill by the convicting court.

Those who already owe surcharges would not qualify for the indigency program have to petition the convicting court and demonstrate their indigence through a variety of means outlined in the bill which regrettably does not take effect until 2011 (see the comments section for more background on the correction).

When the legislation finally takes effect two years from now,
the Sunset bill will effect a number of changes - most of them suggested by the collections vendor - to give people additional time to make more numerous, smaller payments so more people can afford them. A DRP surcharge of $500, for example, previously had to be broken up into at most 10 installment payments; under the Sunset bill an individual owing that amount could pay it off in 36 installments.

Also, DPS will no longer be able suspend someone's driver license after 30 days if they don't pay the surcharge. They will have to wait 105 days, or until more notice has been given (including a first-ever requirement that notices be forwarded to any address registered with the USPS). In addition, drivers will be able to get their DL suspension lifted simply by beginning to make installment payments, whereas previously it was suspended until they'd paid the surcharge in full.

It should be mentioned that, in addition to the now-required Indigence Program, the agency still has not implemented the "Amnesty" or "Incentive" programs authorized by Sen. Steve Ogden's SB 1723 in the 80th Legislature. Like the Indigence Program, which was also first authorized in that bill, SB 1723 gave DPS the option to implement amnesty and payment incentive programs precisely to avoid untenably high non-collection rates like we commonly see today. If DPS continues its failure to utilize the tools the Lege gave them to make the surcharge more fair, one can imagine addtional pressure from lawmakers in future sessions to mandate more of these heretofore optional programs.

As mentioned previously, the Public Safety Commission discussed none of these issues, including the newly mandated indigence program, when the Driver Responsibility fee came up at their meeting last month. Instead, commissioners were mostly concerned with boosting collections rates by potentially garnishing wages or placing liens on people's homes, a terrible idea to implement during the worst economic downturn since the Depression. Clearly they haven't received the message from the Lege that they need to be making these surcharges more consumer friendly, not ever-more hostile to the whopping 6% of Texas drivers who owe them.

RELATED:

Thursday, June 18, 2009

What Texas traffic enforcement can teach the national healthcare debate about "individual mandates"

To veer slightly off topic for a moment, I wanted to record an observation about the national health insurance debate presently going on in Congress, and in particular the move to create an "individual mandate" for the uninsured requiring them to purchase health insurance.

Texas and many other states have already tried "individual mandates" for auto insurance, and the results have been abysmal: About 25% of Texas drivers have no auto insurance (roughly the same percentage of people that currently lack health insurance).

When Texans are ticketed for no insurance, they face steep fines which, rather than encouraging compliance with the law, frequently sink the uninsured even further into a financial hole and make it less likely they'll be able to afford insurance. Yet, at the same time, the state invests virtually zilch in mass transit so as a practical matter, it's difficult bordering on impossible in many areas to work and survive without a car.

Thus the functional effect of an "individual mandate" policy is to criminalize poverty, or at least that's been the case with auto insurance. I'd hate to see a health insurance model follow down the same, failed path.