Fire Response Billing
Frequently Asked Questions (FAQ)
What services will the Fire Department bill for?
The Fire Department will bill to recover response costs to motor vehicle accidents, vehicle fires, hazardous materials releases, stand-by for bomb threats, pipeline ruptures (i.e., gas, sewer, septic, water), arson investigations and structure fires.
Are you billing for medical emergencies?
No. While 67-70% of the Woodland Fire Department’s call volume is responding to emergency medical calls to provide basic life support (BLS), insurance companies do not pay for BLS services. Since the cost-recovery program we have implemented bills insurance companies rather than individuals, we will not bill for an emergency medical response.
Who is doing the billing?
The City of Woodland has entered into a service agreement with a private billing service called Fire Recovery, USA who specializes in fire department fee recovery throughout the country. This was done because Fire Recovery USA has an established relationship with the insurance industry, an acceptable rate of return for recovering costs, and charges a reasonable rate for this service. We determined that there was no way that our existing administrative staff could have taken on this additional work and been as successful in fee recovery as an established company already doing it.
Who will be billed?
The insurance company of the person, or party, responsible for the emergency will be billed for the Fire Department response. If the person responsible has no insurance, then no reimbursement or payment will be pursued.
How does the billing occur?
The Fire Department will respond to the emergency call and take the appropriate actions to protect life or property. Fire personnel will then collect the identification and insurance information of the person, or parties, involved. When the firefighters return to the station this information, along with the details of the call and fire department actions, is entered onto an online form. The Battalion Chief on each shift will review the information and if he/she finds it correct and accurate, will submit this information to Fire Recovery USA, a third-party billing company. Fire Recovery USA will submit the bill to the insurance companies and pursue payment from the company representing the person or party responsible for the emergency (i.e., at-fault driver of a traffic accident)
Why is the Woodland Fire Department doing this?
To maintain the Fire Department’s current level of service including equipment and staffing. The City of Woodland needed to reduce General Fund expenditures for this fiscal year (beginning July 1, 2009) by approximately $7 million. This was due to a number of economic factors including a reduction in sales and property taxes. Tax revenues are the primary funding source to the Woodland General Fund which is also the primary funding source for the Fire and Police Departments. Tax revenues have been virtually flat since 2005 only generating approximately $20 million per year while the combined cost for the Fire and Police Departments exceed $23 million per year. The City can no longer provide the same level of service in all departments without drastic cuts, finding new revenue sources, or both.
The Woodland Fire Department has been forced to do both. We have seen the elimination of one Deputy Fire Chief and nine Firefighter positions since 2007 through declining revenues. The Fire Department has cut every program back to the bare minimum and further cuts would require further reductions in staffing. We are operating near our minimum staffing level of 3 firefighters on each of our 4 fire engines and anticipate we will be at our minimum by the end of 2009. Three firefighters on each engine is as low as we can go without placing the public and firefighters at risk. We have had to accept staffing reductions and adopt fire response cost-recovery billing both as a way to keep our department funded at this current minimum-staffing level because any further reductions in our budget would have to come from lay-offs and we can’t afford to lose any more staffing.
How did this process get approved or adopted?
This program was first introduced to the Woodland City Council back in October 2008 during a City Council meeting at the Community and Senior Center as a concept that the Fire Department was considering. As the economic and financial situation for the City worsened, it was presented to the Council on March 31, and again May 26 at public session as one of many “options” that was being investigated to help fund the Fire Department. No concerns were raised or public comment generated at any of those Council meetings. On June 2, the Woodland City Council unanimously adopted “Urgency Ordinance 1506” allowing the Fire Department to recover response costs through Fire Recovery USA, a third-party billing service.
What authority does the City of Woodland, or the Fire Department, have to bill for these services?
Ordinance 1506 adopted on June 2, 2009 by the Woodland City Council adds new sections 9-12 and 9-13 to Chapter 9 of the Woodland Municipal Code, to read as follows:
“9-12 Authorization for User Fees.
The City of Woodland may establish and impose user fees for services provided by the Woodland Fire Department in responding to the scene of any incident, including but not limited to motor vehicle accidents, structure fires, and hazardous materials spills. The fees shall vary based on the type and amount of services provided, and shall take account the cost of personnel, supplies, and equipment present or used at the scene. The fees shall be reasonable and shall not exceed the City’s actual costs of providing services to any accident for which fees are imposed.
9-13 Collection and Use of User Fees.
Applicable fees established pursuant to Section 9-12 shall be billed to the insurance carrier providing automobile insurance coverage for each driver in an accident for which services are rendered, and may be billed to the insurance carrier providing insurance coverage for any real property involved in a fire or providing other insurance coverage which may cover an incident in connection with which the Woodland Fire Department provides services. The City may contract with a third-party service provider for the billing and/or collection of such fees. All revenue collected from such fees shall be placed in the City’s general Fund and may be used for any lawful purpose.”
We already pay taxes for the City of Woodland to provide essential services and public safety. Shouldn’t fire protection already be funded by those taxes?
It is true that public safety is a primary function of government as is providing water, sewer, sewage treatment, and many other critical functions throughout the City. Tax revenues are the primary funding source to the Woodland General Fund which is also the primary funding source for the Fire and Police Departments. Tax revenues have been virtually flat since 2005 only generating approximately $20 million per year while the combined cost for the Fire and Police Departments exceed $23 million per year.
In addition to these public safety functions, many members of the community have also voiced their support for the library, the Community and Senior Center, the public pools, and the parks and recreation programs during public hearings on the budget on March 31, 2009 and May 26, 2009 and as far back as October 2008. There are many very important services that the City provides, but the revenues are no longer capable of supporting them all.
Isn’t this considered double-dipping or a double-tax?
Those that live and shop in Woodland pay taxes and those taxes help to fund the Fire Department’s operation, but it is not enough. As stated previously, the combined cost of the Fire and Police Departments is $23 million while Woodland collects only $20 million in tax income. Fees, fines, grants and other sources make up the difference. By billing the insurance company representing the person responsible for the emergency for the use of our services, this becomes a fee for service. Without the ability to collect fees for some services, public safety services would need to be reduced to levels that would be unsafe for the community, including residents, property owners, firefighters and police officers.
As revenues decrease, or fail to keep up with operating costs, what are the options that the City of Woodland has to maintain the Fire Department’s funding?
- Lower the service provided by reducing staffing
- Increase taxes to cover the actual costs of operation
- Bill those individuals that use our services their fair share of the service
- Bill the insurance companies of those using our services their fair share of the service
None of the options above are a simple or popular solution.
Reducing services and staffing reduces the Fire Department’s ability to save life and property which is our primary mission and the service the community expects and deserves. This could mean taking fire engines out of service when staffing falls below our 3-person minimum. Our fire stations and fire engines are strategically located throughout town to enable us to respond rapidly to emergency calls. Taking a fire engine out of service and closing a fire station for a day would eliminate our ability to respond rapidly to an emergency in that neighborhood. On a fire call, for example, having one less fire engine available means less firefighters will respond to a residential structure fire where the rapid deployment of firefighters enables us to enter the burning structure quickly, locate and remove trapped occupants, and extinguish the fire. Trying to accomplish all of the tasks associated with fighting a structure fire (legally mandated and otherwise), with fewer firefighters, puts our firefighters at increased risk as well and if they get injured on the scene, it makes it even harder for us to be successful in fighting that fire and saving lives and property.
Reducing staffing and available fire engines also negatively impacts the insurance rating of the community as set by the Insurance Services Office (ISO). Your fire insurance premium is based on the ISO rating of the community in which you live. If our staffing decreases and our ability to provide a structure fire response is reduced, then our ISO rating will go up (lower is better) which could cause your insurance premium to also go up.
Increasing taxes is a very unpopular option because this negatively impacts everyone who lives in Woodland, and most of these people will never use the Fire Department or our services in their lifetime. This also means that the emergency service we provide to those that don’t live in Woodland (i.e., someone visiting town) will continue to be funded by those who do.
Some fire departments in California are billing individuals directly for response services, but we chose not to. First of all, our research suggests that the rate of return is lower, and secondly, we feared that a high rate of the return would come from the elderly population, on fixed income, who would feel compelled to “help those nice firefighters” and that isn’t a group we want to target.
To bill only insurance companies allows us to target the negligent party creating the emergency situation without charging them directly. This process has a much higher collection rate and charges the fee against an insurance policy that, in many cases, covers these costs with no adverse affect to the policyholder. This process will allow us to recover some of our response costs so that we remain staffed and equipped to respond to anyone who needs our help which benefits everyone in the community.
Won’t my insurance premiums go up if my insurance receives a fire department response bill?
There are a variety of factors that influence a premium increase and you may, or may not, see an increase in your premium. You must understand that this could only occur if you are negligent and at-fault for the emergency. If you are not at-fault, then your insurance company should not increase your premium.
In a motor vehicle accident, for example, your insurance company will consider factors such as the points assessed against you by DMV for the vehicle code violation you committed causing the accident, the total dollar amount of the property damage, and whether or not there was bodily injury. The more severe the accident, then the higher the chances are that your premium will increase. Bodily injury automatically triggers the loss of your California Good Driver Discount, by law, if you previously benefited from that discount and that will cause your premium to increase.
As for whether the Fire Department’s response bill to a motor vehicle accident will cause a premium increase, it is important to note that the insurance company may get many bills related to an accident. For example, they may receive medical bills, a bill from the ambulance company, a bill from the tow company, and a bill from the auto-body repair shop. A bill for $435 for the Fire Department to respond to check for injuries, to treat injuries as needed, to secure the scene to prevent further injury, to check for and possibly remove hazardous fluids from the roadway, and to provide traffic control to protect those involved and other emergency responders is probably not going to be the bill that causes premiums to go up. The fact that you caused the accident, or the “event”, that causes the insurance company to pay the bills for all parties involved will probably be the trigger for a premium increase rather than any one bill.
In a structure fire, for example, most insurance policies have money embedded in the policy to pay for a Fire Department response ranging from $500 - $1,000, yet most fire departments do not know this and never bill for this cost recovery. You, the policy holder, pay for this level of coverage in your annual premium and have probably been paying for this coverage for years without ever using this coverage, or in many cases, even knowing about it. We are merely charging our response costs against that money earmarked for that very purpose. Because the insurance company has that fee in each policy, the fact that you have a fire in your home or business and the Fire Department bills against it should not cause an increase in your premium. Remember, the quicker we respond, and the more effective we are at quickly extinguishing any fire, the lower the damage claims will be to the insurance company. Lesser damage also means less emotional and financial impact to you and your family if the fire occurs at home, or a lesser impact on productivity to you and your fellow employees for a fire that occurs at work.
As for the concern that response billing will cause insurance rates to increase industry-wide, you must understand that an industry-wide rate adjustment or increase can only be approved by the California Insurance Commissioner and this review only occurs annually. It is important to know that there have been fire departments in California billing to recover response costs for many years, particularly Cal-Fire (previously the California Department of Forestry and Fire Protection) and so this is not new in the State.
Won’t people just stop calling the Fire Department to avoid these costs?
There are many possible outcomes from this program. Some people may refuse to call us, some may call but then “take it out on the firefighters” that are there to help them, some may offer to pay the Fire Department direct rather then see a bill submitted to their insurance company, some may actually see some satisfaction knowing they are covered and putting their coverage to use, and many will probably never give it a second thought. Unfortunately we have no control over which outcome people take. We do, of course, hope that people do call us for help because the alternative could result in the further aggravation of an injury from a traffic accident, further damage to property and impact to life from a hazardous materials spill, or further property damage occurring from not calling us for a fire in a structure. In each of these cases, the result of not calling us for an emergency could result in greater personal injury or property damage well above the cost of the Fire Department’s response fee.
Our contact with other fire departments doing response billing has given us no indication they are seeing any drop in their calls for service after implementing this type of program.
What Public Notification Was Given on This Process?
The City expended significant time and effort discussing the consideration of the emergency response fees. Consideration of these fees actually began with a Council workshop on October 28, 2008 as part of the development of the Fiscal Year 2009-10 budget and included workshops on March 31 and May 26 prior to the Council adoption of the budget on June 16. Public meetings to discuss the fiscal challenges associated with the budget were held with the Chamber of Commerce on April 9 and April 21, the Library Board on April 20, the Parks and Recreation Commission and Commission on Aging on April 27 and the Woodland Sunrise Rotary Club on April 16. The implementation of emergency response fees was discussed specifically in the power point presentation made by City Manager Mark Deven during each of those meetings and no one raised an issue, nor were there any issues raised in response to the Public Hearing on June 2 when this fee was approved by Council after it had been properly noticed by law.
During the City Council’s budget meetings on March 31, May 26 and June 16 approximately 250 people were in attendance and the message was clear. While public safety is a priority, Woodland residents definitely valued the Library, Senior Center, youth programs, swimming pools and similar services. Over 50 separate strategies were discussed to address a nearly $7 million General Fund deficit, including the implementation of the program to recover a portion of the emergency response fees. Despite the large presence of Woodland residents, no one raised objections to the emergency response fees. It is possible that the magnitude of the budget deficit justified some consideration of this strategy in the minds of those attending at these meetings. It is also important to note that the $167,000 that we expect to generate amounts to only 2% of the Fire Department $9 million budget.