Some Pennsylvania lawmakers are pursuing legislation that would allow volunteer fire companies to bill those liable for an emergency response for the cost of that response.
The legislation, House Bill 759, is intended to codify the ability of local fire departments to seek compensation from the insurance companies whose policies cover the vehicles or buildings that were involved in an emergency service.
But the insurance industry says the bill’s language has holes and could lead to some legally dubious unintended consequences — particularly when it comes to the suggestion that fire companies would choose whether to seek reimbursement based on whether or not the person involved in the incident has insurance.
The measure was presented in the state House Veterans Affairs and Emergency Preparedness Committee this week as one of several ideas to help local volunteer fire companies with funding and staffing shortfalls.
“We have a commitment from our leaders that these bills will be taken seriously and come to the floor for a vote,” said Rep. Stephen Barrar, the committee chairman.
Much of the committee hearing on Tuesday involved the testimony of volunteer fire leaders from across Pennsylvania – all of whom agreed that a string of costly responses could put fire companies’ already tenuous finances further into the red.
The idea of HB759 is to make it easier for volunteer fire companies to recoup costs from insurance companies who may be covering the vehicle, building, or other piece of property that caught fire or was otherwise the subject of the emergency response.
“This is designed for a specific purpose, being that when a policy holder is paying for a carrier [for coverage], the local fire companies have the ability to file that claim for what is already being paid for,” said Rep. Cris Dush, the bill’s prime sponsor.
The reimbursement cannot include labor costs, but would include costs for supplies such as fuel for trucks, oxygen, and other firefighting supplies that can be rapidly consumed in a major incident.
Liability
Fire companies can currently attempt to bill a property’s insurer, but many insurance companies will refuse to pay, absent some legal proof that the fire company is a designated by a government entity as a provider of public services.
“A lot of times [the fire companies] are being asked to have an ordinance form their municipality that is ‘authorizing’ them to bill,” said Scott Ryno of Cornerstone Adminisystems, which does billing and financial consulting for emergency services providers.
SB759 would codify the authority of fire companies to seek reimbursement, something which Ryno said would help to streamline the procedure of billing insurance companies — whom Dush accused of “slow-walking” claims from volunteer fire companies due to the legal ambiguities involved.
But Sam Marshall, director of the Insurance Federation of Pennsylvania, contested that this was an issue, and that the legislation would actually fix much.
While the companies he represents would have no problem paying out a claim if liability does exist, the issue is that most insurance policies don’t cover liability for fire department costs, Marshall said.
“The real problem is the policy itself doesn’t cover the service being billed for,” Marshall said.
“You could revise this bill so it’s a mandate that all [insurance] polices in the Commonwealth of Pennsylvania cover services provided by volunteer fire services,” Marshall suggested, but the bill as it is currently does not do that.
Several of the fire companies, as well as Dush, suggested that the new law would be used to seek compensation only from insurance companies and not from individual property owners whose homes or vehicles had been damaged.
The bill’s language states that “a person involved in an emergency that necessitates an official dispatch of a fire company shall be liable for the actual and reasonable response costs,” unless that person has already paid for fire services via a municipal fire tax or a “subscription” of a rate to be determined by the fire company.
The bill’s language then goes on to lay out procedures for seeking reimbursement from an insurance company, but not necessarily from an individual.
Dush said that billing insurance companies was clearly the focus of the legislation, and that he didn’t expect fire companies to use the language to go after individuals who had suffered property damage.
“The fire companies are not going to charge for stuff like that because it looks bad on them,” he said. “There’s no way we’re going to get that kind of bad publicity. I don’t foresee fire companies using it for something like that.”
But Marshall said such assertions are problematic, given that fire companies must go after individuals in order for insurance to function.
“It goes to the question of if your municipality is holding you personally responsible,” Marshall said. “We cover the liability of our policy holder. If our policy holder isn’t’ liable, we don’t assume responsibility.”
If pursing reimbursement was done based on whether or not a person’s affected property was insured, “that kind of uneven enforcement would be a problem,” Marshall said.
Laws governing the ability of emergency responders to operate as fee-for-service enterprises vary across the nation. But in Pennsylvania, at least one precedent exists indicating that such services are to be considered public responsibilities paid for via tax dollars and not per-service fees – Act 69 of 2007, which Marshall noted in his testimony, prohibits police departments from charging for responses to motor vehicle accidents.
Funding
The legislators involved in Tuesday’s hearing agreed that insurance reimbursements under HB 759 were not intended to replace the need for a more consistent source of funding for volunteer fire departments.
“I would suggest that the purpose of this bill is not for a stable source of revenue for these fire companies,” said Rep. Matt Gabler, but it will help them cover the expense of major incidents.
The question then is what else the state can do to help stabilize the situation.
As detailed in the state report initiated last year by Senate Resolution 6, volunteer fire companies are facing severe personnel shortfalls, with the number of volunteer firefighters in the state having dropped from over 300,000 in the 1970s to 38,000 in 2018, according to SR6 data.
Declining manpower has gone hand-in-hand with financial problems. More and more companies have sought to hire paid personnel to supplement their waning volunteer rosters, and those volunteers that are left have to shoulder an increasing share of the fundraising burden.
“I think the biggest thing you’ve heard is the guys don’t want to be fundraising,” said Eamon Brazunas, fire chief of the Berwyn Fire Company in Chester County.
The company has run net negative operating budgets for the past five years, Brazunas said, amidst increasing need for paid personnel.
Some municipalities have implemented fire taxes, typically a property tax carve-out, to help the fire companies that cover their area. The state also provides assistance via the Volunteer Firefighter Relief Association, a program the state funds with a two percent tax on premiums for casualty and fire insurance sold by out-of-state companies.
The state Auditor General’s office paid out $55.1 million in VFRA funding last fiscal year, and roughly $30 million worth of grants for training and equipment are available from the state as well, per the SR6 report. But with 2,462 fire companies in Pennsylvania and roughly 90 percent of them volunteer, according to SR6 data, state support remains relatively limited.
The fire company in Throop, Lackawanna County, is still heavily dependent on selling 1,600 pounds of chicken wings during its Super Bowl Sunday fundraiser, fire chief Andy Hegedus told legislators.
“We’re raising money to pay the utility bills and keep the doors open,” Hegedus said, let alone pay for equipment replacement and other capital expenses.
The company uses its state VFRA money for a life insurance benefit to volunteers, but even that is fading.
“This year, if we don’t get a bump, we’ll be upside-down on our policy,” Hegedus said.
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