BMV admits to more than $100 million in overcharges
By Tim Evans and Kristine Guerra, IndyStar
INDIANAPOLIS, Ind. (Oct. 12, 2015)– The Indiana Bureau of Motor Vehicles recently admitted for the first time in court documents to overcharging Hoosier motorists for 112 more services, bringing the total amount of overcharges revealed since a 2013 lawsuit to more than $100 million, according to the attorney representing BMV customers.
Our partners at the Indianapolis Star report overcharges on the 112 fees amount to $49 million, according to a document filed in September in a class action lawsuit against the BMV in Marion Superior Court by Indianapolis attorney Irwin Levin of the law firm of Cohen & Malad.
The $49 million tally — based on the state’s response to a request for fee data — comes after the troubled agency previously admitted overcharging motorists about $30 million for drivers license fees, about $29 million in excise tax fees and about $2 million in other fees for miscellaneous transaction.
Indianapolis attorney Carl Hayes of Bingham Greenebaum Doll, who was hired to represent the state agency in the lawsuit, downplayed the significance of the new information provided by the state. He also questioned the validity of Levin’s $49 million calculation for the overcharges the state acknowledged in a document filed Sept. 22 in the case.
“I don’t consider this to be particularly newsworthy,” said Hayes. “What needs to be said is that it is not new, that we’ve acknowledged erroneous charges. That’s been going on for two years.”
But Levin said only “a small percentage” of the 112 fees the agency admitted to overcharging for were previously acknowledged or covered by earlier refunds.
Of the 112 fees that the BMV admitted in the new document, 44 involve vehicle registrations, a majority of which are for trucks, farm tractors, semi-trailers, buses and motorcycles. About a dozen others involve license fees for commercial drivers, chauffeurs and motorcycle endorsements. The remaining are for license plate fees and vehicle titles.
A majority of the overcharges, according to court records, spanned several years, with many of the registration fees occurring from January 2002 to November 2008. A few of the overcharges in driver’s license fees are from November 2008 to September 2013.
The lawsuit filed by Levin alleged the BMV had overcharged for a total of 147 fees, but the BMV in September denied overcharges for 35 other fees questioned by the lawsuit. The BMV, however, did not provide justification to substantiate those fees, as requested by the lawsuit.
The BMV, according to court documents, argued the request would require “the disclosure of attorney work product and trial preparation materials,
including the mental impressions, conclusions, opinions and legal theories of the BMV’s attorneys” and that it is “vague, ambiguous, and unduly burdensome.” Levin said he disagrees with the claimed exemption and has asked the court to order the BMV to provide the information.
Almost half of the 35 fees the BMV contends are accurate involved vehicle registrations, particularly those that involve trucks, semi-trailers and special machinery. Nearly a dozen came from fees for commercial driver’s licenses and learner’s permits.
In other developments, the case was certified for class action last month and Marion Superior Judge John Hanley ordered both sides to attempt to resolve differences in a mediation session scheduled for Monday Class-action status means the lawsuit now represents all Hoosiers affected by the overcharges.
The BMV’s overcharges first came to light following another lawsuit filed by Levin in 2013. That lawsuit, which the state settled a few months later for about $30 million, focused exclusively on driver license fees charged since 2007.
After the lawsuit was filed, an outside audit revealed the agency had overcharged customers on several other fees and the state announced it would refund about $8 million. The review, which the BMV has so far refused to make public, also found the agency had undercharged on many other fees.
Earlier this year, Hayes, the private attorney representing the BMV, said that between 2006 and 2013 erroneous undercharges “total approximately $140 million.” Hayes and state officials have said the BMV will not attempt to recover the money lost due to the undercharges.
The new information on overcharges was filed shortly before BMV officials explained their reforms and plans for next year’s legislature to the General Assembly’s Interim Committee on Roads and Infrastructure.
Significant reforms are underway, agency officials said at that meeting Thursday, but noted those will likely take several years to carry out and won’t come from “quick fixes” to the agency.
“These are not easy tasks and are not going to be quick fixes that are going to happen just this year,” BMV chief of staff Peter Lacy told a bipartisan committee of House and Senate lawmakers.
Agency officials went before lawmakers to explain actions they have taken since a scathing audit in May found motorists had been overcharged more than $60 million in fees since 2013. The report said the agency lacked oversight, used a complex fee schedule that led to inconsistent charges for the same transactions and may have overcharged motorists more than previously disclosed.
The BMV is responsible for administering 1,200 different fees and taxes, and the audit said that those fees did not always match with names listed in state code, requiring judgment and creating a risk of error by workers.
Several months before the audit, amid a steady drip of revelations about overcharges and a settlement in a class-action lawsuit that raised serious questions about the competency of top-level BMV managers, Republican Gov. Mike Pence appointed Kent Abernathy to be commissioner of the agency.
Current management at the BMV has made significant progress and started to make many requested changes, said Democrat Rep. Dan Forestal, a critic of the agency, said.
BMV officials told the committee that a newly created internal auditing team will continually investigate problems, and any that are found will be reported to the state auditor, legislature and the governor. They have also created the “prideline” — a direct pipeline for agency workers to report problems to managers.
Additionally, lawmakers say they intend to take next session to overhaul the complex and confusing sections of state code that govern the BMV fees. There are also plans to streamline the agency’s bureaucracy and categories of licenses that are issued, as well as improve the technology used for the BMV’s operating system.
Levin said the agency’s new plans sound good, but aren’t always reflected in its response to the lawsuit.
“They made a big thing about how they had to change their culture and be transformative,” he said. “If you want to be transformative, you can’t do it by saying we won’t cheat you anymore. To be transformative would be to say, we cheated you and we’re going to give you back your money.”
IndyStar reporter Tony Cook and the Associated Press contributed to this story.