Two days before statewide elections, Louisiana Insurance Commissioner Jim Donelon, who refused to involve himself in the State Office of Group Benefits controversy because, he insisted, the state employee health insurance was not insurance, has suddenly become a consumer advocate over those delinquent fee letters sent out by the Office of Motor Vehicles (OMV) on Oct. 13.
Never mind that OGB provides health insurance to about 230,000 state employees, retirees and dependents and never mind that it was taken over by Blue Cross Blue Shield of Louisiana (a major contributor to Donelon’s campaigns).
Never mind that the Louisiana Department of Insurance approved the purchase of two insurance companies in 2013 by an individual who had little industry experience and never mind that both companies were seized by regulators within a year when it was learned that Alexander Chatfield Burns allegedly siphoned hundreds of millions of dollars in stocks and bonds off the company’s books, replacing them with worthless assets.
Never mind that in 2012 Donelon put former state legislator Noble Ellington on the payroll as a $150,000 per year as the department’s number-two man despite Ellington’s glaring lack of experience in insurance.
Never mind that Donelon did little to rein in auto insurance companies that were trying to steer auto repairs to favored body shops that were accused of doing unsafe work and providing after-market parts.
Never mind that Donelon has been the beneficiary of more than $4.5 million in campaign contributions from insurance companies and insurance defense attorneys since 2006.
That was then. This is now and now is only two days before Donelon is to face a challenge from three opponents in Saturday’s election. So of course, he wades into the controversy over those 1.2 million delinquent notices sent out to motorists that OMV claims owe fines for various offenses dating as far back as 1986 (29 years if you’re doing the math).
LouisianaVoice first wrote about this back on Sept. 29 when we observed that none of the $11 million earmarked to pay for state police pay raises through the “enhanced debt collection efforts” by OMV has been submitted to the state general fund.
That was first made known in a confidential report prepared for legislators obtained by LouisianaVoice.
House Bill 638 by State Rep. Barry Ivey (R-Baton Rouge) was enacted and signed into law by Bobby Jindal as Act 414. HB 638 provided that the Department of Public Safety (DPS) collect certain fees “associated with the suspension of an operator’s license” which were related to auto liability insurance requirements. The fees become delinquent after 60 days and are referred to the Office of Debt Recovery.
The bill earmarked $25 million from the Debt Recovery Fund for use by the Office of State Police. But none of that money has yet to go to the general fund, prompting concern by legislators and resulting in the report.
Legislative watchdog and resident curmudgeon C.B. Forgotston way back on Jan. 16 of this year questioned the constitutionality of an earlier bill by Ivey, HB 872, passed during the 2014 regular legislative session which added a $75 fee for the reinstatement of a driver’s lapsed auto liability insurance. HB 872 was to generate about $53 million per year with $42 million earmarked for the general operations of DPS, $7 million to housing parolees and $1 million to district attorneys.
Forgotston said HB 872 was called a “fee,” but in actuality, is an unconstitutionally-passed “tax.” The reason for its being unconstitutional is the Louisiana State Constitution of 1974 which says “No measure levying or authorizing a new tax by the state or by any statewide political subdivision whose boundaries are coterminous with the state; increasing an existing tax by the state or by any statewide political subdivision whose boundaries are coterminous with the state; or legislating with regard to tax exemptions, exclusions, deductions or credits shall be introduced or enacted during a regular session held in an even-numbered year.” http://senate.la.gov/Documents/Constitution/Article3.htm
But in the make-believe world of Jindal politics, the Office of Group Benefits is not insurance and a fee is not a tax. That ranks right up there with Bill Clinton’s “It depends on what your definition of is is.”
But back to HB 638 (ACT 414). Just in case you need a reminder just two days before the election, that bill passed unanimously in the House and with just one dissenting vote in the Senate (State Sen. Karen Carter Peterson voted no). Here are the links to the votes of the two chambers just in case you need a handy guide before casting your ballot on Saturday:
And now on the eve of many of those same legislators’ re-election efforts, the bill is creating pure havoc throughout the state.
Why?
Well, consider this. If you had a vehicle you purchased in 1976, say, and you traded it in in 1987. You would have cancelled your insurance and license plate on that vehicle and transferred everything to your new vehicle. But suppose by some clerical error, OMV did not get the word that you sold or traded that old vehicle and suddenly, on Oct. 13 of this year, a delinquent notice went out to you because you have not had insurance on your 1976 vehicle for 28 years. The onus is on you to prove that you had a legitimate reason for not insuring that vehicle or face a fine of $500—or more.
Donelon said, correctly, that the average citizen most likely does not have documentation to prove he or she had insurance because no one keeps proof of insurance from a decade or more ago.
So now you have your notice and you know it’s in error so naturally, you try to call OMV only to encounter what seems to be a permanent busy signal. And if you happen to get through, your call is dropped.
And let’s not forget that Jindal, in his maniacal obsession to privatize everything in state government, contracted out many of the OMV services and laid off scores of OMV employees, so good luck with trying to reach someone to help you.
Many of the 1.2 million who received the letters (at a cost to taxpayers of about $500,000) are claiming that they are accused of offenses that are nothing more than paperwork errors and State Police Superintendent Mike Edmonson is now saying OMV will not pursue any delinquent fines older than 2006 for which OMV does not have proper documentation.
We at LouisianaVoice are of the opinion that any violation allowed to lie dormant by OMV for more than one year with no effort to collect same should be dismissed. Certainly after three years. After all, in Louisiana, if you wait for more than 12 months after being wronged, your case has prescribed and you are unable to file a lawsuit.
That’s 20 years, or 69 percent right off the top of the anticipated $53 million in additional revenue the Jindal administration so desperately needed to patch over holes in the state budget. Edmonson also said the fact that $11 million of that $53 million was to fund pay increases for state troopers had nothing to do with the notices mailed out on Oct. 13.
Donelon, who regulates the insurance industry in Louisiana, OGB notwithstanding, suggested that drivers should not trust OMV records and should call the governor’s office with grievances.
Would that be the governor’s office have an Iowa area code, by any chance?
One reader had a slightly different experience. Here is her account as related to LouisianaVoice in a recent email:
My husband just recently retired 20 years of service in the Army, and we’ve been under contract to buy a home for the first time, in Sulphur. I’m a La native, so we’ve decided to settle here.
Today, we had to switch our insurance companies because the one we’ve had together since married in 2006, and he’s had for many years even before that, has decided in their policy that simply residing in Louisiana means that our insurance must be raised because I suppose something about this State is more risky than Texas, Kentucky, Alabama, or Georgia (all of the states we’ve resided in that our insurance remained unchanged).
Which brings me around to what I have to say. I’d like to explain how I turned a $200 oops into a $566 OMG today.
While attempting to change insurance companies, they ran my driver’s license. Standard.
My license came back as suspended. Later, at the DMV, I was informed not only was my license suspended, but there had been issued a bench warrant for my arrest.
It was a seat belt ticket I got four years ago, and speeding ticket I received one year ago. I forgot to pay it. Over my driving career (I’m 39 years old and I’ve owned 2 Corvettes), I’ve gotten more than one speeding ticket, and more than once, I’ve forgotten to pay it.
However, this was my first in the state of Louisiana, as I’ve lived in Texas for the majority of my adulthood, and the rest in the previous states mentioned. I never received a notice in the mail, warning me of an impending suspension of my license, nor did I receive any notice or warning that a warrant was being issued for my arrest. ALL of which I have received from Texas, giving me an opportunity to address it. I mentioned that fact to the lady at the DA’s office when I arrived to deal with it, and she informed me that “they don’t notify anyone for these things.” So, my license was suspended, and there was a warrant for my arrest, yet the State makes no effort prior to this result, as Texas does, to notify me? No.
They don’t.
I had a moment of terrible dread and relief at the same time. I found out because I was changing insurance companies and they told me.
I looked up the consequences for driving with a suspended license, had I found out by being pulled over, and they are very harsh. It carries a minimum fine of $300, up to $7500 and seven days jail time. All because I forgot to pay a speeding ticket.
After paying the ticket, I returned to the OMV, where I had to pay another $102 to “unsuspend” my license, because paying the ticket + late fine wasn’t enough for the State to teach me a lesson.
While I waited in line, it occurred to me the terrible impact this could have on so many Louisiana families and college students. It seems unrealistic that no one would ever forget to pay a ticket, or even that it would be rare. I wondered if something so simple could be common, but with such crazy, harsh financial consequences, especially if jailed. Suddenly, a DMV employee came out and made the announcement that they were severely understaffed—thanks to Bobby Jindal’s cutbacks (I had already been waiting almost 2 hours at this point) and began to group all of us based on our issues.
Needless to say, I wasn’t surprised that a great many of the people there ended up in the same group as me, dealing with the very same problem. A very expensive problem. A problem that likely could have been prevented for most if not all of us, with a simple notice in the mail.
For me, the total was over $500 to get my license reinstated and ticket paid. There were at least 20 people in line with me. I estimate the OMV likely collected a minimum of $10,000 in about three hours, just from my line. Nearly $30,000 in an average eight-hour work day in fines just from suspended licenses for the most undeserving of reasons from the most vulnerable class of people, yet still were “understaffed” to ridiculousness and a majority of the people I was in line with would probably love to have a job there. That’s $150,000 a week! $600,000 a month! $7.2 million a year!
I have no clue where all of this money goes, or what it pays for, since clearly it isn’t on staffing. The debit card reader wasn’t working so I was forced to an ATM and the clerk I was with struggled endlessly with her computer mouse and what I believed to be serious system lag, so equipment certainly isn’t eating funds.
Maybe this all seems trivial, but truly, it didn’t seem trivial to anyone I was in line with. There was sadness, fear, and dread on the faces of all of them. It was really heartbreaking, and worse, I feel like it likely could have all been prevented with a simple notice in the mail. People are given around 60 days to pay a ticket in Louisiana. It is as though the state counts on many of them being forgotten, and without notice, having their license suspended, and likely many of them discovering this and getting a memory jog by being pulled over for something insignificant, and being put in handcuffs, with a massive fine they can’t pay, and seven days in jail.
I am fortunate enough to be able to pay it and still eat, but I think the look on all of those people’s faces in line with me at the OMV will keep me up tonight. It’s already nearly 1 am, and I’m still bothered by it.
I can’t help but wonder how many people in Louisiana, living their lives, taking care of children, going to work, etc., forget to pay a speeding ticket, and it’s the one thing that knocks them into a hole they can’t get out of; but they check their mail every day.
I’ve been in a lot of places over the last 20 years. Texas to Wisconsin to Connecticut to Georgia to Louisiana. I see more people struggling here than anywhere else I’ve been in the U.S.
I can’t help but think this no-notice high penalty cost system is contributing to bleeding the average Louisianan driving to work and back, to death. Maybe it’s nothing. I think it’s something. Something that must effect the lives of a lot of people.
If a simple notice in the mail could save Louisiana citizens and families $7.2 million a year, I think a lot of people would like to know why it isn’t done.
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