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Avoiding Negligent Carrier Selection
Damned If You Do, Damned If You Don’t
Damned If You Do, Damned If You Don’t
Taken from Commercial Carrier Journal, July 4, 2022
“When developing a broker’s carrier selection policy, it is important to understand that a broker has a “general duty of care when it hires trucking companies to deliver goods”; a broker’s standard of care “is the ordinary and reasonable prudent person standard”; and a broker may be “liable based on a theory of negligent hiring for failure to perform due diligence prior to hiring” a motor carrier.
Therefore, when developing a carrier section policy, a broker must perform some level of due diligence, which is to include at least confirming a motor carrier maintains active Common or Contract operating authority, does not maintain an Unsatisfactory safety rating and has proof of financial responsibility (generally satisfied by maintaining a compliant auto liability insurance policy) in an amount required by applicable law.
Beyond those minimum requirements – while many contingent auto and truck broker liability insurers require a broker to prohibit or otherwise restrict the use of motor carriers maintaining (i) a conditional safety rating or (ii) one or more of the Behavioral Analysis and Safety Improvement Categories (BASICs) in a value above the intervention thresholds to secure coverage – there remains a deep divide among industry stakeholders regarding if and how to use such information.
Whether to use such data is a company decision that must be maintained with consistency. At the heart of the matter, is whether the BASIC scores are reliable and whether it is appropriate in the first place for a broker to use such information in its selection policies. The Middle District of Louisiana found, “the record evidence establishes that BASIC scores are not indicative of motor carrier safety. Further, in accordance with the FAST Act of 2015, the actual BASIC scores and their corresponding alerts have been removed from public view.
This resulted in the FMCSA posting the following disclaimers about the use of SMS data and information:
• FAST Act of 2015 – Readers should not draw conclusions about a carrier’s overall safety condition simply based on the data displayed in this system. Unless a motor carrier has received an Unsatisfactory safety rating under part 385 of title 49, Code of Federal Regulations, or has otherwise been ordered to discontinue operations by the Federal Motor Carrier Safety Administration, it is authorized to operate on the Nation’s roadways.
• Safety Measurement System – The data in the Safety Measurement System (SMS) is performance data used by the Agency and Enforcement Community. A ⚠ symbol, based on that data, indicates that FMCSA may prioritize a motor carrier for further monitoring.
The ⚠ symbol is not intended to imply any federal safety rating of the carrier pursuant to 49 USC 31144. Readers should not draw conclusions about a carrier’s overall safety condition simply based on the data displayed in this system. Unless a motor carrier in the SMS has received an Unsatisfactory safety rating pursuant to 49 CFR Part 385, or has otherwise been ordered to discontinue operations by the FMCSA, it is authorized to operate on the nation’s roadways.
Keeping score
Unfortunately, what remains public within the Safety Measurement System are the specific, individual violations in five of the seven BASICs (unsafe driving, hours of service compliance, vehicle maintenance, controlled substances and alcohol and driver fitness), which leaves brokers in the impossible and unreasonable position to decipher safety data and determine a carrier’s fitness when the very governmental body maintaining oversight over all such information failed to accomplish the same”.