Written By Attorneys Craig A. Cohen and Matthew J. Brasch
Note: This article is an interpretation of current law and is offered for informational purposes only.
This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
On February 18, 2008, a new law will take effect in Pennsylvania that prohibits municipalities from imposing emergency service fees on individuals involved in auto accidents. Pennsylvania House Bill 131 was passed by the General Assembly on December 12, 2007 and signed by Governor Ed Rendell on December 18, 2007. The measure creates a new statutory section that prohibits municipalities from seeking "reimbursement of costs or expenses incurred as a result of municipal police responding to a motor vehicle accident, including but not limited to, costs incurred for labor, materials, supplies or equipment used or provided in the response." 53 Pa. C.S.A. § 1392(a). The Act specifically does not prohibit the imposition of fees for furnishing police reports pursuant to Pennsylvania's Motor Vehicle Financial Responsibility Law, 75 Pa. C.S.A. § 3751.
The new law comes in response to attempts by local governments, at the urging of third party collection agencies, to increase revenues by sending a bill for police services to individuals involved in accidents. Prior to its approval, supporters of the proposed law argued that municipalities were effectively imposing an illegal double tax upon the person receiving the emergency service. This argument was based on the premise that generally, most individuals who become involved in motor vehicle accidents within a municipality are residents or employees of businesses there, and have already paid the municipality the appropriate tax to fund its police, fire and emergency medical services.
Supporters further argued that the true intent of municipalities who impose such charges is to inappropriately pass the cost of emergency services on to the individual's insurer. In fact, in reviewing examples of the ordinances that create the fees, it was found that many provide protections for "noninsured residents." Therefore, it was argued that the municipalities were attempting to pass on a traditional responsibility of local government to the insurance industry.
Another factor that may have encouraged the passage of the bill was that the emergency service fee practice was being encouraged by third party collection agencies who would then offer their services to handle the collections for a fee. In light of the increased demands placed on emergency services in the post-September 11 era, the concept of additional funding with little or no consequences on the citizens of the township may seem tempting to local leaders. However, there is no such thing as a free lunch.
A glaring example of how this scheme can backfire was seen in Radnor Township, Pennsylvania. In 2006, Radnor Township enacted a municipal fees collection ordinance and used a third party collection agency to recover charges from individuals who received police services after motor vehicle accidents. The ordinance specifically excluded Radnor residents from the charges, but failed to protect business owners and their employees in the Township. Reportedly, the third party collection agency that was retained to collect the fees became aggressive in its collection attempts, and, as a result, the Township received substantial negative publicity in the media. In reaction to the media attention, the Township repealed the ordinance in 2007.
With the enactment of the law, Pennsylvania joins Missouri as the first two states in the nation to take a stand on this issue. The approval of this Act is considered a success for the insurance industry and for individual policyholders in the Commonwealth of Pennsylvania.
