By: Michael H. Payne – The recession (which really is not over, despite what the economists have to say), has led to greater emphasis by the federal government on assuring prompt payment to government contractors. In fact, on September 14, 2011, the Office of Management and Budget (OMB) issued Memorandum 11-32, “Accelerating Payments to Small Business for Goods and Services.” That Memorandum established the Executive Branch policy “that, to the full extent permitted by law, agencies shall make their payments to small business contractors as soon as practicable, with the goal of making payments within 15 days” of receipt of relevant documents. In addition, a recent Memorandum (M 12-16) issued by the Office of Management and Budget, dated July 11, 2012, addresses the subject of “Providing Prompt Payment to Small Business Subcontractors,” and recognizes that accelerating payments to small business contractors would help those businesses by improving cash flow.

This 15-day payment policy is of no particular benefit to prime construction contractors who, pursuant to FAR 32.904(d)(i), are to receive payments in 14 days after the designated billing office receives a proper payment request, based on contracting officer approval of the estimated amount and value of work or services performed. Nor does it directly benefit construction subcontractors because the clause at FAR 52.232-27(c) obligates the prime contractor to pay the subcontractor for satisfactory performance under its subcontract not later than 7 days from receipt of payment from the government. The obvious prerequisite, of course, is that in order for subcontractors to receive prompt payment, the prime contractors they work for must also receive prompt payment from the government. In recognition of that fact, the Memorandum states “In particular, agencies should, to the full extent permitted by law, temporarily accelerate payments to all prime contractors, in order to allow them to provide prompt payments to small business subcontractors.”

Federal agencies should be reminded that the spirit and intent of this OMB “transitional” policy, which is only to be effective for one year, is that small businesses should receive payments as soon as possible. In reality, the most significant impediment to prompt payment is not the period between the approval of a proper invoice and the release of funds; it is the considerable time that often passes between the time that a contractor performs extra work, or requests payment, and the issuance of a change order or the approval of an invoice. Prompt payment requirements have often been thwarted by contracting officers who fail to negotiate change orders in a timely manner, fail to agree to reasonable prices in an attempt to strike a better bargain for the government, or who nitpick the contractor’s documentation and unreasonably declare that it is not “proper.” In order for OMB’s goal of accelerating payments to subcontractors to be achieved, contracting officers must also expedite the administrative approval process that precedes the approval of a proper invoice.

A court case decided by the Iowa Supreme Court at the end of June has some potentially significant implications for drivers who are injured in auto accidents.

In the case, Karen Robinson was seeking compensation from her insurer for medical expenses that arose nearly four years after the initial car accident took place. Robinson tried to get reimbursed for her medical expenses through the underinsured motorist (UIM) portion of her policy, but the court ended up upholding a portion of her car insurance contract that limited coverage to claims filed within two years of a crash. The central question in the case was how Robinson could have known within that two-year window that she would need significant medical attention another two years down the road.

How Underinsured Motorist Coverage Works

First, a breakdown of how UIM works. Anyone who purchases an auto insurance policy in Iowa gets UIM coverage unless they specifically reject it in writing. It pays the policyholder when he or she is the victim in a crash in which the responsible party doesn’t have enough coverage to pay for all the resulting damages.

Here’s an example: Driver A causes an accident, leaving Driver B with $100,000 worth of medical expenses. Since Driver A is responsible, his bodily injury liability insurance pays for Driver B’s medical costs. However, Driver A only has $75,000 worth of coverage, which doesn’t totally cover the damages. If Driver B has a UIM policy, then he could file a UIM claim with his own insurer for the remaining $25,000 worth of medical bills.

Coverage Conundrum

When Robinson got in her accident, she immediately filed a claim with the responsible party’s insurance company, State Farm. Robinson originally asked for $40,000, but State Farm ended up offering $20,000, both of which are sums well within the $100,000 worth of coverage that the policy provided. But negotiations between Robinson and State Farm broke down, and after three years there still was no settlement. Robinson later found out after surgery, however, that her condition was more serious than had been expected. After it came to light that she may have pain from the accident for the rest of her life, State Farm offered her the full $100,000 provided in the policy.

Following that, Robinson filed a claim under the UIM portion of her policy to get expenses above the $100,000 limit covered. But because the claim was filed well past the window outlined in the policy, her insurer denied it. So is UIM coverage worthless when it comes to latent conditions like Robinson’s? Not so, said the court.

According to the court, Robinson should have filed a UIM claim with her own insurer at the same time she filed a claim with the responsible party’s insurer, despite the fact that she didn’t know that her medical expenses would exceed the other driver’s policy limits. According to the opinion published by the court, this is a common practice in Iowa. The justices basically said that an insurer would likely put the claim on hold until the initial claim with the responsible party’s insurer was resolved.

So when it comes down to it, you don’t have to predict what all your future medical expenses may be in order to file a UIM claim. You can simply preemptively file one early on to avoid having to pay out of pocket for expenses that could get out of control.

The bottom line for Iowans: Consider filing a UIM claim with your own insurance provider when you file a bodily injury claim with the responsible driver’s insurer. It could prove to be an incredibly smart financial decision.

Last week we talked about how to fight a surcharge imposed by your Massachusetts car insurance company following an accident. In that article, we mentioned the state’s standards of fault, and how if your accident involved any of the details outlined in those standards, you’re likely to be considered responsible for the crash and see increased insurance rates. So what are those standards?

The standards of fault include about 20 situations in which Bay State residents are automatically assumed to be responsible for causing an accident. The only ways that you could keep insurance premiums down after getting into an accident that involved any of the circumstances described in the fault standards would be if you went to the appeals board and convinced them that the reality was otherwise, or if you just have a very forgiving insurer.

The situations included in the standards of fault appear to have been cut by nearly a third since they were first made law. Originally, there were 31 total situations, but that has been pared down to 19.

Here are some of the remaining crash-related instances where your presumption of innocence is thrown at the window:

—You hit a parked car.

—You rear-ended another car.

—You didn’t signal before turning or changing lanes and hit another car in the process.

—You crashed into another car while passing another vehicle or while getting out of your lane to pass another vehicle.

—You crashed into another car while you were driving on the wrong side of the road.

—You hit another car while backing up.

—You crashed into another car while exiting a parking space, parking lot, alley, or driveway.

—Your door was hit while you had it open.

—You left your car unattended and it rolled away, hitting another car.

—You got into an accident while failing to pull over for an emergency vehicle.

To see the rest of the standards of fault, check out the resource page on the state of Massachusetts’s website.

Of course, not all of these scenarios will lead to a surcharge 100 percent of the time. In fact, the majority of people who go to appeal surcharges end up getting them overturned, according to a report from the New England Center for Investigative Reporting. That report cited Insurance Board of Appeals data showing that they find a whopping 70 percent of drivers who appeal their cases are actually less than 50 percent responsible for the crash. Those are pretty good odds for Bay State drivers.

State data are showing that the number of uninsured drivers in Texas has dropped significantly in 2012. But how much of that trend can be attributed to greater compliance with mandatory car insurance laws, and how much of it can be chalked up to data fluctuations?

In October 2008, Texas law enforcement and state officials got their first access to a new state-run database, called TexasSure, that was constructed to help crack down on the problem of uninsured drivers on the state’s roads. TexasSure worked by taking vehicle registration data and matching it up with insurance records provided by the state’s coverage providers. If a car has matching registration information in the database but no matching policy info, officials assume that it is uninsured, and the vehicle owner may end up getting a letter in the mail asking him or her to verify that the car is in fact covered by an active policy.

The first publicly available data from the program was released in November 2009. It showed that there were about 4.13 million unmatched registrants—22 percent of all registrants. But by the end of May 2012, the total number of unmatched registrants came in at about 2.58 million—about 13 percent of all registrations. So was the drop of 9 percentage points attributed to stepped-up enforcement and greater public awareness of the implications of driving uninsured?

That’s likely to have had something to do with it, but what shouldn’t be overlooked is the fact that between November 2011 and February 2012 the database got a major facelift that weeded out what appears to be a significant amount of obsolete data. This helped clean up the database and wipe out a significant number of erroneous records, according to The Associated Press.

“A main source of erroneous information involved drivers who sold or traded their cars, with those vehicles being shown in the TexasSure database as registered to the original owners but without any insurance coverage,” the AP reported.

Jerry Hagins, a spokesman for state insurance regulators, told the AP that his office couldn’t quantify how much of the decline should be attributed to the data cleanup and how much should be attributed to more drivers being insured.

Now, to give Texas officials credit, there may very well have been enforcement and compliance developments that contributed to the higher rate of matched registrants. A handful of cities have started launching insurance checkpoint campaigns to catch motorists trying to skirt the system, and the database cleanup would help get mailed uninsured notices to the right people.

But going from a 19.93 percent unmatched rate before the cleanup to a 15.23 percent rate after makes it seem like the cleanup had a lot to do with it—especially considering the fact that the rate had hovered between 22.16 percent and 19.71 percent for the 2.5 years before the data fix.

Another factor making it difficult to assess the true uninsured rate is the fact that the number of total registrations can fluctuate pretty significantly between data periods. For example, in the three times the state released TexasSure data between November 2011 and May 2012, the total number of registrations dropped from 19.41 million down to 18.39 million and then shot back up to 19.76 million.

But regardless of whether the uninsured motorist rate in Texas can truly be measured accurately, the important takeaway for drivers in the Lone Star State is that they should never get behind the wheel without car insurance in Texas. The reason officials require residents to carry coverage is if they cause an accident, they need to be able to pay for all the damages they cause, and purchasing auto insurance is the easiest way to do that. If drivers don’t purchase coverage and get caught on the road, they could have to pay between $175 and $350 in court fines for a first offense. Penalties for further offenses can result in court fines of up to $1,000, license suspension, and vehicle impoundment, according to a guide from Texas regulators.

A new calculator feature produced by the Insurance Institute for Highway Safety (IIHS) that attempts to quantify the benefits states could see from developing stricter teen-licensing laws estimates that South Dakota has the most to gain from beefing up new-driver restrictions. According to the IIHS calculator, the rates at which 16- and 17-year-old South Dakotans file collision claims could be cut by 37 percent and the rate at which they are involved in fatal accidents could drop by a whopping 63 percent if they matched their graduated driver licensing laws with the best in the country.

Graduated driver licensing laws—also known as GDLs—implement a tiered licensing system in which the youngest, least-experienced drivers have the greatest restrictions. Over the course of a few years, those restrictions ease up. GDLs usually have the following generic restrictions:

—Minimum permit age

—Minimum permit holding period

—Minimum number of supervised driving hours

—Minimum age of licensure

—Restrictions on driving at night and with young passengers

Beginning South Dakota drivers are required to be only 14 years old to get a permit (the IIHS ideal is 16), do not need to put in any practice hours (ideal is 65), need to be at least 14 years and 3 months old to get a license (ideal is 17 years), and must be off the road by 10 p.m. (ideal is 8 p.m.), according to the IIHS. The license law also has no passenger restrictions for beginning drivers (the ideal is to allow no non-family passengers until full licensure).

According to the calculator, fatal crashes could be cut by nearly half if the state just bumped up its permit and licensing ages to match the IIHS ideal.

Maryland’s GDL Laws Closest to Ideal

Meanwhile, Maryland came out as the state that’s closest to the IIHS’s ideal. Maryland has a minimum permit age of 15 years and 9 months, minimum 60 practice hours, a minimum license age of 16.5 years, nighttime driving restrictions from midnight to 5 a.m., and a ban on all passengers under 18 for the first five months of having a license.

Still, if Maryland changed its licensing requirements to match the IIHS ideal, the IIHS estimates it could see for 16- and 17-year-olds a 9 percent reduction in the collision claims rate and a 19 percent reduction in the fatal crash rate.

Extensive GDL Laws Have Good Track Record

One of the biggest, most well-documented GDL success stories is Maryland’s neighbor, Delaware, which has similar restrictions.

In 2010, the University of Delaware ran an analysis of the state’s GDL law, which was implemented in 1999. In the years before implementation, the crash rate for 16-year-old drivers was holding relatively steady. But between 1999 and 2000, the 16-year-old crash rate dropped dramatically, by nearly 38 percent. And by 2008, the youngest drivers’ crash rates had fallen 64 percent from their 1999 levels.

Crash rates for 17- and 18-year-olds, however, held relatively steady, dropping only by about 14 percent between 1999 and 2008.

Another report, published by National Institutes of Health, found that the “proportion of hospitalizations, injuries, crashes involving property damage, and total number of crashes involving registered 16- and 17-year-old drivers after GDL each decreased by at least 30 percent.”

auto insurance Implications

Young drivers have to pay more for auto insurance to cover their increased risk of filing a claim, and even the cheapest insurance available to young drivers is still expensive. A particular 16-year-old could be the most-careful driver in the nation, but he or she still hasn’t established a meaningful record of clean driving. So to an insurance company, the same precautions have to be taken as if it were any other driver in the same statistical situation.

If more states step up their GDL laws, it’s possible that crash rates for the youngest drivers could fall dramatically, as they did in Delaware. If that were the case, those GDL laws could be the best thing for young drivers’ wallets as well as their health.

A Washington State man was recently charged with a crime for trying to collect $20,000 worth of compensation from a car insurance company for his cat’s crash-related death that occurred back in 2009. The catch: the cat allegedly never existed, according to the state.

The Washington State Office of the Insurance Commissioner said in a press release that the insurance carrier that received the claim, PEMCO, realized something was amiss after doing a Google image search for cats and finding images plastered all over the Web that were identical to one the man had submitted as evidence of his cat’s existence. A report from The Associated Press said that one of the photos the man had submitted was actually the first image that showed up on a Google image search for “white cat” and is also on the “Cat” Wikipedia page.

The man said that his cat, Tom, had cost $1,000 and had “been like a son to him,” which he felt warranted the $20,000 claims payment. PEMCO saw the situation differently and had originally offered him $50. After finding out that the cat never existed, they canceled the check.

Advice for Pet Owners with Legitimate Claims

While the Washington man didn’t actually have a pet in the car that was injured when he got into an accident, such a situation may be a reality for some unfortunate pet owners out there. And what they may not know is that their loss may be covered by auto insurance—either their own or the other driver’s.

If another driver crashes into you while you’ve got a pet in the car, any compensation for the loss (monetary or sentimental) could be covered by his or her property damage liability coverage.

If you cause the crash, however, it will only be covered if you’ve bought pet injury coverage or if your insurer automatically includes it. Collision coverage purchased through Progressive, for example, includes up to $1,000 worth of insurance for vet bills if the treatment is related to a car crash. Farmers similarly provides up to $600 worth of coverage when a policyholder purchases both comprehensive and collision in select states. Other insurers will add coverage for a small premium. Ask about your options when getting car insurance quotes during the shopping process, and ask about the details of what pet injury coverage does and doesn’t provide compensation for.

The hit 1990s TV show “Seinfeld” taught us a lot of things over the course of its nine seasons: When you’re ordering from the Soup Nazi, don’t try to make small talk. If you see a fat man getting mugged, don’t just stand there and videotape it. If you spot Sue Ellen Mischke walking down the street in nothing but a bra and a blazer, keep your eyes on the road. The list of lessons with virtually no practical application goes on and on.

But if you watch closely, you’ll see that there were a couple times when the show about nothing did inadvertently teach us some relatively practical lessons about a subject that all of us have to deal with at one point or another: auto insurance. Here’s the first lesson in a five-part series.

Lesson 1: Read your rental contract, or at least get familiar with some of the particulars

In Episode 28, “The Alternate Side,” Jerry’s car gets stolen after the neighborhood car parker, Sid, forgets the keys inside. Jerry doesn’t get the car back, and he has to pick up a rental to get around town.

A few days later, George fills in for Sid, moving parked cars from one side of the street to the other so that they don’t rack up parking tickets, and Jerry’s rental is one of the cars he’s moving. Discombobulated by the commotion caused by a movie shoot down the street and the general burden of having any sort of adult responsibility, George gets overwhelmed and ends up crashing Jerry’s rental.

Although he purchased car insurance for the rental, Jerry gets a surprise when he goes back to the rental agency.

Agent: Sir, the estimate on the damage to your car is $2,868.

Jerry: Hmm, well, I got the insurance and everything, so …

Agent: Yes, now, uh, in your report you said that you were not the driver of the car at the time of the accident.

Jerry: That is right, somebody else was driving.

Agent: All right, well, sir, you’re only covered for when you’re driving the car.

Jerry: Uh huh—What’s that?

Agent: You’re not covered for other drivers.

Jerry argues that the agent’s business is “based on other drivers. It’s a rented car. That’s who’s driving it: other drivers.” But his argument falls short. It’s not covered by the insurance, and there’s nothing he can do about it.

The agent tells him he should have read the agreement, which is true. But Jerry points out that those rental agreements can often be heavy tomes of burdensome legalese, which is also true. “It’s like the Declaration of Independence. Who’s gonna read that?”

While both have good points, it probably would’ve been prudent for Jerry to at least ask about some of the particulars of the extra insurance that he bought if he knew someone else would be driving it. And since the rental contract would be the determining factor in whether or not you’re covered, you should ask about information like this when renting a car.

In some states, insurance policies are required to automatically include coverage for rental vehicles. For example, all Minnesota liability policies include at least $35,000 worth of coverage for drivers insured under the policy when they’re behind the wheel of a rental, according to a consumer guide issued by the state. This isn’t the situation in every state, though, so you should ask your insurance agent before making any assumptions (including assuming that other people will be covered for the rental).

Bottom Line: At least find out who is covered under your rental policy.

On Monday, insurance giant Progressive announced that, judging by the huge amount of data it has collected from policyholders using its Snapshot device, real information collected about a person’s driving behavior appears to be by far the best predictor of how much it will cost to insure him or her. And if the company is able to successfully defend its usage-based insurance patents, that may mean it’s in a position to see its customer base dramatically improve in both quantity and quality.

The company’s Snapshot program is a discount program in which enrollees plug a data-collection device into their vehicles and let Progressive track their driving behavior—like instances of hard braking and rapid acceleration, the number of miles put in behind the wheel, etc.—in order to determine whether they exhibit safe driving tendencies and deserve a discount. According to the insurer, about 70 percent of drivers who try Snapshot end up being eligible for a discount, although they didn’t say the size of the average discount. It can go up to 30 percent.

Progressive says in its new analysis that before driving behavior was factored into the equation, looking at the number of driving-record points that a person had was the No. 1 way to predict how much the insurer would have to pay out in claims for that particular driver. But actual driving data, the company now says, “is more than twice as powerful” as points in forecasting a person’s claims activity.

And these conclusions aren’t being drawn from a small data set. Progressive first introduced usage-based programs to policyholders in just three states in 2004, but it is now available in 42 states and the District of Columbia, which has left the company has about 5 billion miles’ worth of data culled from about 1 million policies to back up its rating structure.

By Wooing New Snapshot Customers, Progressive Improves Customer Base in a Couple Ways

Progressive made another big announcement on Monday aimed at getting Americans to try out its data collection program: regardless of who their current insurer is, drivers in every state with access to Snapshot can now take a 30-day test run with the device to see how much they could potentially save by switching to Progressive’s usage-based system.

That’s a pretty shrewd move on Progressive’s part. The company says it already has about 8.88 million active personal auto insurance policies as of May 2012, with an 8 percent share of the total personal car insurance market. And that share could grow if drivers insured with other top insurance companies realize they could be getting better rates from Progressive.

The long-term implications of this paint a very rosy picture for Progressive’s future. If safe drivers take Snapshot for a spin and find out that they could be getting significant savings based on their good behavior behind the wheel, they might jump ship to join Flo and her team. That means more customers for Progressive and fewer customers for the other guys.

But it wouldn’t simply mean more drivers joining Progressive. It would mean more good drivers joining Progressive, since the customers most likely to make the switch after giving Snapshot a test drive would be the ones who displayed the best driving habits and therefore got the best savings. So that could mean Progressive having a growing customer base of good drivers who file fewer claims, which means more of the premiums collected by the insurer stay with the insurer. Meanwhile, the people who test out Snapshot and find that their behaviors aren’t good enough to warrant a discount stay with the other guys, meaning the percentage of policyholders who are not so hot grows at those companies, and they have to devote more of the money they collect in premiums to paying and processing claims.

Progressive and Its Patents

This scenario, though, is dependent on Progressive having and maintaining exclusive access to usage-based rating structures. Snapshot won’t necessarily ensure success for Progressive if all the other guys get their own Snapshot-like auto insurance discount programs with similar effectiveness and adoption rates.

But aside from the fact that Progressive Insurance already has a couple years’ worth of a head start on the other major insurers, it also has a handful of patents related to usage-based pricing models. A 2008 paper on pay-as-you-drive insurance from the Brookings Institution said Progressive has four major patents that could prohibit, or at least impede, other insurers’ adoption of usage-based pricing. According to the report’s authors, at least three of the four patents “involve a ‘monitoring system for determining and communicating the cost of insurance.’” For example, they quote the following section from one of the company’s patents: “A process for acquiring and recording vehicle insurance related data during a time period via an on-board computer and recording system for adjusting an insurance cost.”

The Brookings Institution said there may be some weaknesses to Progressive’s patents, however, and that other insurance providers may ultimately end up being able to use the technology. But it could be a hard-fought battle, they say, and we could see that battle playing out sooner rather than later. In May, Progressive submitted a complaint to a U.S. district court saying that it is “suffering from the effects” of patent infringement, and mentions State Farm’s Drive Safe & Save program and The Hartford’s TrueLane program directly in the complaint. How that complaint is handled could have serious implications down the road.

At the end of June, an Indiana U.S. district court ruled that a father’s repeated verbal warnings to his daughter about not letting anyone else drive her car were strong enough to allow his insurer to deny coverage for an accident that occurred while her boyfriend was driving. The case has implications for insurers as well as parents who want to control their liability when their children are in possession of their insured car.

The case was brought by Allstate Insurance against the Agoston family (which owned the car that was insured by Allstate), Michael Hahn (the boyfriend of Sarah Agoston who ended up causing the crash), and Samantha Smythe (who was riding in the car at the time of the accident and was “seriously injured”). The court ruled Allstate did not have to pay for damages caused in the accident because Hahn was at the wheel, not one of the insured drivers under the policy.

Case Background

More than three years before the accident, when Sarah Agoston turned 16 and started driving, her father, Vincent Agoston, repeatedly warned her that she was to allow no one else to drive their cars. Court documents indicate that he reminded her of this restriction repeatedly.

But when Sarah started dating Hahn, who lacked a valid license, he would continually insist on driving, and she eventually gave in, allowing him to drive the car. She did this without letting her parents know about the existence of Hahn, much less the fact that she was allowing him to drive the car. After a party at Sarah’s apartment one night in March 2010, she gave in again and let him drive the car with she and Smythe riding as passengers. The court documents say that the group of friends at Sarah’s apartment that night had consumed alcohol and pills, and while on the way to a friend’s house, Hahn crashed the car. The accident was serious, with Hahn having to be transported by lifeline to the hospital.

Smythe ended up seeking compensation from Hahn, the Agostons, and American Commerce Insurance for her medical expenses. (The court documents do not explain who was insured by American Commerce, however.) And at the same time, Allstate filed this case, arguing that it did not have to provide compensation since Hahn was the one in the driver’s seat. Ultimately, the court agreed.

Why the Accident Was Not Covered

Whether someone else who drives your car will be covered by your insurance policy is one of the most common auto insurance claims questions that get asked. And, usually, they would be covered as long as they had your permission. But since Sarah’s parents had explicitly restricted her ability to let others drive the car, that general principle did not apply in this case, the court said. In the court’s decision, it cited a handful of cases in which coverage was negated because individuals who had borrowed a car under specific restrictions had lent the car out in spite of those restrictions. Sarah, after all, wasn’t the actual policyholder; her parents were.

Sarah’s parents “expressly prohibited anyone but Sarah from driving the vehicle, and Sarah had been continually reminded of this,” the court wrote. “Because of this restriction, Sarah herself did not have the right to grant anyone else permission to use the vehicle.”

When addressing the argument submitted by Smythe that Allstate had to cover the accident because Sarah’s parents had not listed Hahn as an excluded driver, the court said that her parents had made the rule so clear that it was “not necessary to explicitly list excluded drivers in the policy to make this restriction effective.”

This is only one case, though, and other incidents may have crucial details that affect who is covered. When you’re unsure, it’s always best to contact your insurer and go over who’d be covered in the event of an accident.

A bureaucratic mess that a 24-year-old Oregon man found himself tangled up in last month should serve as a warning to drivers who are thinking about letting their policies lapse in order to temporarily save on car insurance. In an age of coverage verification programs, things aren’t always so easy.

According to a report from the Blue Mountain Eagle newspaper in Grant County, Ore., the trouble started when Nolin Page’s 88-year-old grandmother added him to the title on her pickup truck. She did it so that he would come into possession of the car when she passed away. When winter came, Nolin’s grandmother let the insurance on the vehicle lapse. She made a habit of avoiding driving on ice and snow and figured she might as well not pay for premiums on a car that she was keeping off the road.

But after Nolin’s grandmother dropped the coverage, her pickup just happened to be selected for a random insurance checkup from the DMV. The state’s DMV selects a handful of registered vehicles each month and mails out notices to their owners asking them to provide their insurer’s name and their policy number. After the DMV gets a response, they verify the coverage with the insurer. If there’s no response from the vehicle owner, his or her license gets suspended.

The DMV sent letters both to Nolin and his grandmother. The grandmother didn’t respond, and neither did Nolin, who was going to school in Idaho at the time.  Pretty soon, Nolin was notified that he would lose his license in 30 days if he didn’t provide proof of insurance coverage. When they went to their insurance agent, who called the DMV, it appeared the only course of action would be for Nolin to lose his license, reapply, and then provide an SR-22, which would require him to prove compliance with the mandatory insurance law for the next three years. The SR-22 is a requirement for drivers who are identified through DMV verifications as not having coverage.

Ultimately, Nolin did not have to lose his license and file an SR-22. When the DMV wouldn’t budge on its plan to suspend Nolin’s license, the family reached out to their local legislator, who smoothed the matter over.

Avoid Sticky Insurance Verification Situations

Even though Nolin ended up keeping his license, they could have avoided the whole mess.

In Oregon and most other states, all registered vehicles must be insured at all times. If Grandma Page had discussed with her insurance agent the fact that she was planning on letting coverage lapse, the agent likely would have let her know that she’d be breaking the law by keeping the car registered and uninsured.

The situation also most likely could have been made a little less sticky if Nolin’s grandmother would have simply replied to the DMV explaining that she had let insurance lapse because she was keeping it off the road for a few months. That might not have necessarily gotten her off the hook, but it may have helped them avoid the prospect of having Nolin’s license canceled.

So the bottom line of all this? Take insurance-verification requests seriously and respond to them promptly. With the proliferation of online verification programs across the country, snafus like this one are likely to become more and more common.

We have been watching the basement renovation project at http://www.youtube.com/watch?v=Zt8Q3XIS1DE

This project came about after the existing basement room walls collapsed after several years of heavy rain. Above the south wall looking at the right side of the video supported an existing outside concrete deck that had several large cracks which eventually allowed the rain water to seep into the basement.

A similar problem happened on the north wall. The rain eventually pushed the dirt from underneath the footings (left side of the video). Since then we have shored up the south wall with 900 feet of re-bar plus 30 yards of concrete. The south wall seems to be watertight and now we are working to shore up the east and north walls.

In addition we are re-setting the support posts since they originally were attached to a 2-3 inch slab. Instead these new posts will have a pad of 3ft x 3ft with a key of 2ft x 3ft and re-bar will then run from the notched out footing (key) up through the poured posts which should show up in the next video uploaded.

Be careful what you ask for, or, in the context of federal government contracting, be careful how you ask and how the government responds. If you’re not careful, you may get what you ask for, but lose a contract. That’s the lesson learned in NCI Information Systems, Inc.

In NCI Information Systems, Inc., the Department of Defense, U.S. Transportation Command (“USTRANSCOM”) issued an RFP, seeking IT administrative and management support services. The RFP incorporated FAR § 52.215-1(c)(3)(i), which states that if no time is specified in the solicitation, the deadline for receipt is 4:30 p.m., local time on the date identified.

Following the initial submittal of proposals, discussions ensued. After three rounds of discussions, the agency requested that those companies remaining in contention for award submit final proposal revisions “by close of business on 31 August 2011.” It did not specify what time constituted “close of business.” The agency’s failure to specify a time created some confusion, because USTRANSCOM employees work flextime schedules, with different hours on different days. Because of this, its office would “close” at different times on different days.

Knowing this, on August 31, at 4:21 p.m., Harris IT Services (“Harris”), one of the prospective contractors, sent an e-mail to the Contracting Officer, asking whether the government would extend “close of business” until after 4:30 PM CST. The Contracting Officer responded to Harris stating: “[u]ntil 5:00 PM Central Time is acceptable as meeting the close of business deadline.” Harris’ final proposal revisions reached the agency’s central server at 4:57 p.m. CST and arrived at the Contracting Officer’s computer at 4:59 p.m. CST on August 31. Harris was ultimately awarded the contract.

Thereafter, a protest was initiated by a competitor, NCI Information Systems, Inc., which claimed that Harris was ineligible for award because its final proposal revisions were untimely. Specifically, NCI argued that the agency set the due date for Final proposal revisions as the close of business on August 31, and that because the Contracting Officer’s notice did not provide a specific time, the time for receipt of FPRs was 4:30 p.m. pursuant to FAR § 52.215-1(c)(3)(i). The GAO agreed.

Though Harris argued that “close of business” should be interpreted as “any time prior to when the office closed for the day . . . so long as an employee remained in the office during that employee’s regularly scheduled duty hours,” the GAO declined to adopt such a rule. It reasoned that “[a]doption of such a rule would result in confusion and a lack of uniformity.” Instead, the GAO held that where an agency, such as USTRANSCOM, lacks official working hours, FAR § 52.215-1(c)(3)(i) will govern, and 4:30 p.m. local time will be considered to be the close of business. The GAO was not persuaded by Harris’ argument concerning the Contracting Officer’s extension of the time for submission, concluding that “an offeror acts unreasonably when it relies on the informal advice of a contracting officer rather than following the solicitation’s instructions.” Accordingly, the protest was sustained, and Harris was divested of its contract.

The lesson is not to rely on informal advice from a Contracting Officer, even if it is in writing. If the advice you receive was not given to all potential bidders, or incorporated into a formal modification of some kind, the terms of the most recent instructions provided to all will govern, despite what the Contracting Officer told you.

From August 2, 2002 until July 14, 2004, Todd Construction, a general contractor located in Oklahoma, was awarded five indefinite delivery/indefinite quantity (ID/IQ) contracts by the Savannah District of the Corps of Engineers for design and construction of projects in Georgia, North Carolina, and South Carolina. Each contract was for a period of up to three years and together the task orders issued under the contracts could have added up to $65,000,000. On two of the task orders, each of which was for less than $500,000, Todd received unsatisfactory performance evaluations; it challenged those ratings.

Back in 2008, we reported (see our earlier blog article) about a decision by the U.S. Court of Federal Claims, Todd Construction, L.P. v. U.S., 85 Fed.Cl. 34, 2008, where the Court held that it had jurisdiction to hear a challenge to a performance rating. In that case, Todd submitted a CDA claim asserting that it received an erroneous performance evaluation. The Court concluded that the challenge constituted a “claim” within the meaning of the Contract Disputes Act, thereby giving the Court jurisdiction of what amounted to a non-monetary dispute.

In the years that followed, Todd proceeded on a legal odyssey in what came to be known as Todd I, Todd II, and Todd III. Todd’s counsel battled with government attorneys in written brief and after written brief over nuances regarding one’s ability to challenge a performance evaluation. In 2009, the Court issued Todd II, finding that plaintiff’s must “do more than recite the elements of a cause of action; they must make sufficient factual allegations to ‘raise a right to relief above the speculative level.’” Todd v. U.S., 88 Fed.Cl. 235 (2009). The Court then granted Todd the opportunity to amend its pleadings. In Todd III, decided in 2010, the Court of Federal Claims concluded that, even after revising its complaint, Todd failed to state a claim upon which relief could be granted, and dismissed Todd’s challenge of its rating. The Court also found that Todd lacked standing to bring the action because there was no discernable injury from the alleged errors in the evaluation. Todd v. U.S., 94 Fed.Cl. 100 (2010).

Once Todd’s journey in the Court of Federal Claims came to an end, Todd had two choices: abandon pursuit of its claim or appeal the decision to the United States Court of Appeals for the Federal Circuit. Todd chose to appeal. On August 29, 2011, the Circuit Court issued its decision. The Circuit Court agreed with the lower court’s finding that, in the absence of a showing of prejudice or injury in fact, Todd lacked standing to challenge the alleged procedural violations in the agency’s evaluation. Furthermore, the Court of Appeals agreed with the lower court’s dismissal of the case for failure to state a claim. Todd Const. L.P. v. U.S., 656 F.3d 1306, C.A.Fed. 2011. The Court noted that the complaint did not “state a claim to relief that is plausible on its face,” and that Todd failed to “plead factual content that allows a court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” The Court of Appeals did confirm the jurisdiction of the Court of Federal Claims to hear challenges of performance ratings since, it concluded, the ratings are “related to” the contract and the challenge is a claim under the Contract Disputes Act.

So, on a contract that was performed between 2003 and 2005, concerning a performance evaluation issued on July 23, 2006, that was challenged in a claim submitted in August, 2006, which was denied in a Contracting Officer’s decision dated April 25, 2007, that was the subject matter of the Complaint filed on May 25, 2007, Todd learned on August 29, 2011, that the merits of the government’s evaluation of its performance would go unchallenged and unreviewed. Although Todd could appeal to the Supreme Court of the United States, there is no indication that Todd pursued the matter any further.

Decisions of the Court of Appeals for the Federal Circuit are precedent for both the Court of Federal Claims and the boards of contract appeals. Going forward, therefore, contractors can expect that both the boards and the Court will hear challenges of adverse performance ratings. However, in order to avoid the negative result suffered by Todd, contractors must plead the facts specifically and in detail, and identify individually which ratings are arbitrary and capricious and why they are erroneous. Contractors must also allege what the ratings should have been and that the outcome would have been different if the errors had not been made. In order to avoid dismissal based on standing, contractors must be ready to provide evidence that the negative rating has caused injury, or has prejudiced the contractor.

Based upon the above, contractors should consult with a professional to the extent that they wish to challenge a performance rating to assure themselves that the prerequisites of Todd I, II and III have been met.

Joseph A. Hackenbracht is a Partner in the firm and a member of the Federal Contracting Practice Group.

Last year, after over a decade of discussion, the Small Business Administration (SBA) finally implemented a federal contracting program specifically designed to assist small businesses owned by women. This program authorizes contracting officers to set aside federal contracts for eligible WOSBs (woman-owned small businesses) and EDWOSBs (economically disadvantaged women-owned small businesses). As we previously discussed, this program became officially effective on February 4, 2011 and was scheduled for gradual implementation over a period of months. It was expected to assist federal agencies in achieving the previously existing statutory procurement goal of awarding five percent (5%) of federal contracting dollars to WOSBs.

A year after going into affect, it is clear that the program is off to a slow start. Only about 10,000 WOSBs have been self-certified via the WOSB Program Repository, though there are certainly many more businesses out there that meet the eligibility criteria. If you are one of those businesses, you could be missing out on huge opportunities. As such, it is important for you to determine whether you meet the eligibility criteria for participation in the program.

What are those criteria, you ask? As a threshold matter, the business must be considered “small” in its primary industry in accordance with SBA’s size standards for that industry. In addition, to be considered an eligible WOSB or EDWOSB, a firm must be at least 51% owned and controlled by one or more women, or economically disadvantaged women. 13 C.F.R. 127.200. “Ownership” must be direct; it cannot be through an affiliate or association with others. 13 C.F.R. 127.201. The SBA defines “control” as a situation where the business owner has long-term decision-making and the day-to-day, full-time management and administration responsibilities for business operations. 13 C.F.R. 127.202.

In order to avoid abuse of the program by companies not truly owned and controlled by women, the SBA has enacted additional safeguards. Specifically, the woman owners must have managerial experience of the extent and complexity needed to run the company. The woman manager need not have the technical expertise or possess a required license (if applicable), if she can demonstrate that she has ultimate managerial and supervisory control over those who possess the required licenses or technical expertise. However, the SBA has stated that if a man possesses the required license and has an equity interest in the firm, he may be found to control the concern. 13 C.F.R. 127.202.

For those businesses that meet the requirements above, the WOSB and EDWOSB programs offer huge advantages. Five percent of all federal spending is the procurement goal for WOSB/EDWOSBs, and there is also a five percent subcontracting goal to WOSBs. With only about 10,000 businesses out there registered to compete, your chances of securing a government contract are vastly improved if you and eligible and participate in the program. In addition, there is no term limit to the WOSB and EDWOSB programs, and mentor-protégé programs are available.

In short, if you meet the program requirements, you should get registered for participation in the program as soon as possible. In the alternative, if you are thinking of starting a business that might be eligible, don’t wait! The SBA has not set forth a minimum amount of time the firm must be in business; therefore, a woman may establish a business, meet the requirements, self-certify, and win a government contract under this program in a short period of time.

Once you have determined that your business is eligible, registration in the program is rather easy. First, in preparation for registration/certification, businesses should become familiar with the WOSB Program’s Compliance Guide. The next step is to register the business in the Central Contracting Registry (CCR) or in the System for Award Management (SAM) (the government’s new registration system previously discussed here), once it is implemented. Then, log onto the SBA’s General Login System (GLS), and access the WOSB Program repository. Upload/categorize all required documents (a complete list of required documents can be found in the WOSB Program’s Compliance Guide). Then, complete the applicable certification form(s) available on the SBA website and register the business’s status as either a WOSB or EDWOSB, through either the Online Representations and Certifications Application (ORCA), or SAM. Lastly, get out there and start bidding!

When it comes to problem-solving, we are often encouraged to “think outside the box.” The idea is to be creative; to look beyond the norm. Well, when it comes to certifying a claim, you’re probably better off simply doing what the FAR tells you to do. The Civilian Board of Contract Appeals made this point clear in URS Energy & Construction v. Dept. of Energy.

As most contractors are aware, all claims over $100,000 must be accompanied by a certification. FAR § 33.207(a). FAR §33.207(c) sets forth the exact language that such a certification must contain. That language is as follows:

“I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the Contractor believes the Government is liable; and that I am duly authorized to certify on behalf of the Contractor.”

In URS Energy & Construction, the contractor certified its claim to the Department of Energy using language that differed from the FAR:

“I certify that this invoice is correct and in accordance with the terms of the contract and that the costs incurred herein have been incurred, represent the payments made by the Contractor except as otherwise authorized in the payments provision of the contract, and properly reflect the work performed.”

The government asked the CBCA to dismiss the contractor’s claim on the basis that the certification used was defective, thereby depriving the CBCA of subject matter jurisdiction over the claim.

In ruling on the motion, the CBCA noted that “technical” defects in a certification can be cured; however, “[i]f the certification is made with intentional, reckless or negligent disregard for the applicable regulation, it is not correctable.” The CBCA found that the contractor’s claim was made with “intentional, reckless or negligent disregard” because the contractor wholly failed to include a certification that “the claim is made in good faith,” or that “the supporting data [was] accurate and complete to the best of [the contractor’s] knowledge and belief.” Moreover, the certification failed to include a statement that the person signing the certification was duly authorized to certify the claim on behalf of the contractor. Accordingly, the CBCA dismissed the case.

The lesson: certifying a claim is not the time to be creative. The language in FAR §33.207(c) must be reviewed carefully and, unless there is very good reason to diverge from what is identified therein, you are better off simply incorporating it verbatim into your claim. If you cannot attest to those issues required by the FAR, you should think twice about filing a claim at all, for submitting a defective certification, which is true, is far better than submitting a false certification. That is something you should avoid at all costs.

Advancements in modern technology have changed many aspects of everyday life, which may soon include how we provide proof of auto insurance. As many motorists already know, vehicle owners in almost every state are required to purchase a minimum amount of coverage to legally drive. To demonstrate that they have met these requirements, drivers need to provide adequate policy verification. One common problem, however, is that people often forget to update their records or keep the necessary documents in their automobile.

If drivers are unable to prove that they are sufficiently insured, they may face a number of consequences. Most commonly, offending motorists could be assessed a fine, their vehicle could be impounded, or they could lose their driving privileges. One solution that several states have begun to pursue is to allow vehicle owners to get proof of insurance online and display it on a mobile electronic device. This includes increasingly popular smartphones and tablets.

States That Allow Digital Proof

One of the first states to allow electronic verification was Idaho, where SB 1319 was recently approved in March. The passing of this bill means that, starting July 1, 2012, residents will be able provide their mandatory proof of liability insurance either in paper form or digital format.

Around the same time, Arizona also passed HB 2677, which allows residents to make the same electronic verifications.

Other states, such as Louisiana and California, are working to pass legislation that would allow motorists to have the same conveniences. As of June 2012, legislators in Louisiana have passed HB 1130, which now awaits approval from Gov. Bobby Jindal. This would allow policyholders to present digitized images of their policy during traffic stops.

Electronic Proof of Insurance Not Accepted by Everyone

Although a handful of states have begun embracing technology and looking for ways to help motorists avoid the consequences of driving without policy verification, using a mobile electronic device will not work everywhere. For example, the Florida Department of Highway Safety and Motor Vehicles has announced that electronic notification will not be accepted by the Highway Patrol. However, like many other states, legislation may soon be on its way.

auto insurance discounts can be an excellent way for policyholders to cut coverage costs, but are all drivers receiving the right reductions? On March 29, a federal court in Pennsylvania found that several insurers in the state had been wrongly withholding state-mandated discounts for motorists whose cars had been equipped passive antitheft devices. Other Pennsylvanians with such devices may want to review their policies to make sure they’re getting the proper premium breaks.

In the case, suing policyholders believed that they were wrongfully denied a mandated comprehensive insurance coverage discount of at least 10 percent for having a passive security system installed in their vehicle. The district court agreed with them, concluding that these rate reductions are to be applied even without a policyholder’s request, leaving little wiggle room for insurers. Fortunately, not all savings require a multicompany legal battle.

It’s common for insurance companies to reduce the cost of a motorist’s comprehensive coverage for a vehicle equipped with an antitheft device, because these tools help to protect the insurer’s investment. If a car is outfitted with a passive disabling system and a GPS tracking device, the automobile in question is much more likely to be recovered. Because of these advantages, some states require insurers to give antitheft discounts, while in others insurers offer them voluntarily.

When rate reductions are mandated, however, it’s important for residents to take advantage. Rhode Island is one of the many states that also requires auto insurance coverage providers to issue premium reductions for insured drivers who own vehicles equipped with antitheft devices. This reduction can vary depending on the type of device, which was a major point of contention in the Pennsylvania case.

Rhode Island regulations spell out which types of devices get what levels of discounts in that state, with the types broken down into four main categories:

Alarm only: Audible devices that sound for at least three minutes and can be heard from 300 feet away (minimum 5 percent discount)

Active disabling: Devices that make the car’s starting system inoperative and must be activated by the driver manually (minimum 5 percent discount)

Passive disabling: Same as active disabling, but does not require the driver to manually activate it (minimum 15 percent discount)

Vehicle recovery system: Electronic device attached to the vehicle that is activated when the car’s stolen and provides information to law enforcement or a private party on the vehicle’s location (minimum 25 percent discount)

In Rhode Island, having more than one of these devices can get the policyholder savings on comprehensive coverage of at least up to 35 percent. Even though these are state requirements, individual insurers may choose to offer additional savings as well. Other states’ device descriptions and minimum discounts will vary from Rhode Island’s.

Drivers who have equipped their cars with antitheft devices may want to check with their insurers to see if they are getting any appropriate discounts. And policyholders who are thinking about getting an antitheft device could maximize their savings by asking their insurer which type will yield the greatest premium break.

Becoming a licensed driver as a teenager can be an empowering experience. However, suddenly being able to drive may also mean becoming the neighborhood taxi. But before young motorists let their friends pile into their car, they should fully understand the risks associated with driving with passengers their age. There is an alarmingly higher chance of being involved in an accident when there are more teens in the car, and that can mean not only higher insurance rates but also the potential for injury.

Numerous studies have shown that drivers between the age of 16 and 19 are especially prone to distraction while driving. Smartphones and social networking apps like Facebook and Twitter only add to the number of distractions that younger motorists face. When another teen is added to a vehicle, however, this risk increases. The fatality risk for drivers between 16 and 17 is 3.6 times higher when there are other people in the car, according to the California DMV. This risk also increases for each additional passenger.

Filling a car with friends for a joyride is rarely worth the risk. The Insurance Institute for Highway Safety (IIHS) pointed out in testimony to Maryland legislators that 16- and 17-year-old drivers’ fatal crash rate nearly triples when three or more passengers are in the car compared with when there are no passengers present.

“The reason is obvious,” the IIHS stated. “Teenage passengers create distractions for drivers who are inexperienced to start with and who need to be paying full attention to the driving task.”

Other IIHS studies have shown that young drivers who have other teens in the car can get peer-pressured into taking unnecessary risks.

Unfortunately for newly licensed teens, insurance companies are well aware of younger drivers’ crash statistics and charge accordingly. Having a greater accident potential means being a high risk driver, and people who likely to file a claim are met with steeper premiums. One trend that could help combat high crash rates and prices of auto insurance for teenagers is the increasing prevalence of graduated driver licensing programs (GDLs).

Graduated Driver Licensing Programs and Passenger Restrictions

In many states, young drivers under 18 are required to follow GDL restrictions before becoming officially licensed. These restrictions include a minimum permit age, a minimum number of practice hours, limitations on nighttime driving, and a restriction on the number of passengers allowed in the car. Studies conducted by the IIHS have shown that states with stricter guidelines have an estimated 20 percent fewer collision claims for 16 year olds.

The GDL laws in 16 states require that beginning drivers have no teen passengers in the car, and still others set the limit at one or two. Six states still have no passenger restrictions, however.

Even in states with looser GDL requirements, younger drivers can decrease their accident potential if they self-impose a few limitations. For example, young drivers in Florida have no restrictions on the number of passengers they can carry. But, according to the IIHS, by not allowing any passengers in the automobile, collision potential would drop statewide by an estimated 5 percent, and fatal accident potential would drop by roughly 21 percent.

All motorists in Tennessee are required to purchase vehicle coverage to legally drive, but a lack of enforcement has helped make the state’s percentage of uninsured drivers one of the highest in the country. The Insurance Research Council estimates that in 2009 roughly 24 percent of motorists in the Volunteer State had not met the mandatory financial responsibility requirements. Based on these figures, nearly 1 out of every 4 drivers in the state are without protection.

In an attempt to rectify this problem, Senator Bo Watson has introduced SB 2292, which proposes the creation of an electronic insurance verification system in Tennessee, similar to systems found in Texas and Montana. If passed, coverage providers will work diligently with state departments and local authorities to create an electronic database where county clerks and law enforcement officers can quickly and easily verify whether or not a motorist is insured.

With this system in place, state officials would verify whether vehicle owners have purchased auto insurance in Tennessee in order to register or renew registration on their automobile. These digital records would be automatically updated by insurers whenever any changes are made to a person’s policy, which includes cancellation. Additionally, this system could be used by law enforcement officers in lieu of other types of policy verification, like an insurance card or binder.

What SB 2292 Could Mean for Tennessee Residents

State legislators who support SB 2292 hope that passing this bill would significantly decrease the number of uninsured drivers in Tennessee. For residents who insist on driving without sufficient protection, this system could mean stricter enforcement. If residents are caught driving without liability insurance, they could be convicted of a Class C misdemeanor and fined up to $100, they may lose their driving privileges, and a STOP will be placed on their automobile preventing registration renewal.

After the passing of HB 2466 in April 2012, convictions for driving while uninsured have also gotten harsher. This bill stipulates that any drivers who are involved in an accident that results in serious bodily injury or death, and who are unable to provide proof of insurance, are to be arrested instead of receiving a citation. If SB 2292 is passed, these two bills could make a significant blow to uninsured-driver statistics in Tennessee.

For the average law-abiding motorist, however, this system could translate into greater convenience and a lower chance of being involved in an accident with an uninsured driver. Additionally, one positive assumption made by the Tennessee General Assembly Fiscal Review Committee is that the introduction of this system would encourage over 400,000 uninsured motorists to purchase protection. If so, this could lead to an extra $3.36 million in annual tax revenue, based on the current 2.5 percent tax on gross premiums.

When policyholders are injured in an automobile accident, they expect their insurer to honor their contractual obligation and pay the claim. However, thanks to computerized claims systems, there is a chance that injured drivers won’t get their full payout, according to a new report from the Consumer Federation of America (CFA).

Insurance companies handle countless claims every year that all require time, man power, and money to process. To help save time and cut costs, many producers rely on automated programs to tackle these payouts. The problem, according to CFA, is that programs like Colossus can be easily manipulated to lowball claim payouts made to injured consumers.

In a new report released in June, the CFA focuses on flaws integrated into Colossus, a commonly used software product produced by Computer Sciences Corporation. Researchers found that this software could be adjusted to allow insurers to increase their profits by reducing the amount paid to customers who file bodily injury liability claims.

Insurers integrate Colossus into their system by allowing the software to sample multiple claims so that an average payout can be determined for a variety of situations. Once this software is able to produce an estimated settlement value, producers make adjustments to these calculations. However, these adjustments often favor the coverage provider, the CFA alleges, producing settlements that are lower than a consumer would typically receive. After Colossus has been extensively fine-tuned to produce accurate settlements, it can be used to automatically determine claim values.

Unfortunately, the CFA found that insurance companies are able to manipulate this software in a number of ways. For example, producers could omit higher-cost claims from the tuning sample to produce lower results, or leave out information about the likelihood of a customer requiring future medical attention after an accident. By making these minor alternations, insurers can covertly reduce the average amount that the company pays in bodily injury claims.

CFA Calls for Wider Investigation

In an effort to save time and money, many different policy providers employ these systems to handle insurance settlements. To combat the abuse of this software, however, the CFA has urged the National Association of Insurance Commissioners (NAIC) to closely examine these practices. Additionally, the CFA recommends that insurers notify consumers in writing when a claim has been assessed by a computerized system.

Consumers who may be wary of these automated payout systems may want to ask whether a company uses such software while making an auto insurance comparison. Contacting a company directly and speaking with a knowledgeable representative could help drivers better understand the widespread use of these systems.

Financial responsibility is an important part of being a vehicle owner because drivers need to be able to pay for other people’s damages that they are responsible for. In Louisiana, motorists are required to meet minimum insurance requirements before they can legally operate a motor vehicle, but sometimes uninsured motorists choose to drive regardless. Starting on Aug. 1, however, uninsured drivers in Louisiana will face greater consequences if they are caught behind the wheel without insurance.

Louisiana Gov. Bobby Jindal recently signed HB 1053 into law allowing state authorities to impound the car of a motorist caught driving uninsured after the first offense. This bill was designed to repeal a previous law that prevented law enforcement officers from towing a vehicle unless it presented an imminent danger to the public.

In addition to the new penalty that take effect in August, drivers in the Pelican State who are convicted of operating a motor vehicle without car insurance face fines ranging from $75 to $100 for first-time offenders, $100 to $250 for a second conviction, and up to $700 for any subsequent conviction, according to state regulators. This is in addition to the cost of having a vehicle towed and impounded, which can easily cost motorists a considerable amount of money.

Louisiana’s ‘No Pay, Play’ Law

If an uninsured motorist is involved in an accident, they are also at the mercy of Louisiana’s “No Pay, No Play” policy. With these restrictions in place, drivers who do not invest in vehicle coverage will be unable to collect the first $25,000 in property damages and the first $15,000 in crash-related medical bills regardless of who is responsible for the accident. Because of these limitations, getting in an accident without proper protection could have significant financial repercussions, even if the motorist in question is not responsible for the collision.

An Estimated 1 in 7 Louisianans Are Uninsured

These reason why these restrictions and consequences are in place is to discourage motorists from driving uninsured. By creating harsher penalties, Gov. Jindal hopes to decrease the estimated 13 percent of motorists who drive without car insurance. The potential repercussions of operating a motor vehicle without first purchasing a policy outweigh the cost of maintaining a plan.

Residents of the Pelican State can easily search for a cost-effective policy by gathering multiple auto insurance quotes online and choosing an affordable plan. Making the effort to shop around and legally meeting Louisiana coverage requirements can help residents stay financially protected while behind the wheel and help drivers avoid the escalating consequences that come from driving while uninsured.

When motorists file a claim, they expect their coverage provider to meet all of its contractual obligations. However, for some Colorado vehicle owners, this doesn’t always ring true. The state’s Division of Insurance received more than 4,200 complaints during the 2010-11 fiscal year, and the reason for these grievances range from denial of claims to discrepancies over premiums. Of the official complaints that were made between July 2010 and July 2011, more than 50 percent were related to auto insurance.

Making complaints to the Division allows policyholders to rectify mistakes made by insurers, and compiled complaint data provides other residents with useful insight into how well specific companies handle claims. The grievances that were made during FY 2010-11 resulted in more than $11.7 million in recovered benefits and a wealth of valuable information.

The influx of claims that led to many of the mistakes during the previous fiscal year has been largely accredited to poor weather that has been brewing in the Centennial State, giving drivers all the more reason to investigate the quality of their insurer before purchasing a policy to avoid filing any complaints in the future.

Summer months in Colorado are often accompanied by sudden storms, hail, and heavy rain that can do serious damage to automobiles. These losses are typically covered by a person’s comprehensive coverage, but in order to make an accurate claim and avoid any disputes, the Rocky Mountain Insurance Information Association encourages residents to make accurate records of all damages, which include pictures, detailed inventories, and repair estimates. But despite a vehicle owner’s best efforts, sometimes mistakes are still made by insurers, and complaints will have to be filed.

Avoid Complications by Researching Complaint Information

When vehicle owners buy Colorado auto insurance, they usually compare an assortment of quotes in order to get the lowest possible price. But while shopping around, drivers are also encouraged to research the service quality of any candidates as well. If residents know that a specific provider has a history of complaints for wrongfully denying claims or unfairly applying surcharges, they may think twice about purchasing a policy from them.

Luckily, motorists in the Centennial State can investigate the consumer complaint index provided by the Division of Insurance. This database keeps track of the number of grievances each insurer accumulates in a given year in relation to the policies that they issue to produce a complaint ratio. With this information, drivers can see which producers had the highest concentration of unsatisfied customers and avoid potential confrontations in the future.

Most people need auto insurance to legally drive, and many motorists buy the first policy they find and only interact with their insurer if they’re involved in an accident. The problem with this method is that it can lead to unnecessarily high premiums and complications after filing a claim. Taking the time to periodically ask your insurer a few questions about your policy can have some significant benefits. Here are just a few that can be answered in a matter of minutes:

Could I Be Getting Cheaper Coverage?

Over time, driving records, coverage needs, and vehicle values change. Depending on the situation, these changes can sometimes amount to significantly cheaper premiums. The DUI conviction or the at-fault accident on your driving record from three years ago may no longer be applicable, and that expensive new car that you purchased at the same time as your insurance policy has seen better days. People who annually contact their insurer to update their plans often have a better chance of avoiding unnecessary coverages and other expenses that may no longer be applicable.

Sometimes insurers’ pricing structures change without notice, and some insurers put the burden on the policyholder to call and get re-rated, according to the story of one man published in The New York Times. In that report, an Arizona driver, Thomas Mitchell, had his premiums cut in half after his insurer changed its underwriting guidelines. But the only reason Mitchell saw the premium decrease was that he called his insurer to ask about pricing when he got a better offer from another company. If he hadn’t taken the initiative to ask whether cheaper coverage was available from his insurance provider, he’d still be paying $2,500 a year instead of $1,207, his new premium.

How High Will My Insurance Rates Go Up After an Accident?

After being involved in an accident, policyholders can usually count on their premiums to go up, but by how much? Taking the time to ask auto insurance claims questions can help drivers avoid being blindsided by charges after filing a claim. When buying a policy, it may be good to get a ballpark estimate on possible surcharges for citations, moving violations, and automobile accidents. Companies often will have unique charges that are applied after specific events, while others may be more forgiving.

In some states, however, charges are mandated by law. Motorists who get into accidents in North Carolina, for example, are subject to increases outlined in the Safe Driver Incentive Plan (SDIP), which is designed to institute uniform increases after accidents and traffic violations. For example, with the SDIP, a driver who causes an accident that results in $1,800 or less in total damages will get one point on his or her record, which brings with it a 30 percent increase. If he or she were to get a ticket for aggressive driving, an 8-point violation, premiums would increase by 195 percent from the original rate. The SDIP point and rate-increase schedule can be found in the state’s consumer guide to automobile insurance.

What Discounts Can You Offer Me?

Discounts can be one of the best ways for drivers to save on auto insurance, but people often need to ask about these savings. Because vehicle coverage is a competitive market, insurers are constantly on the lookout for new ways to attract customers, making special offers a common commodity. In states like Connecticut, some savings are mandated. For example, drivers in that state who are age 60 or older are entitled to a minimum 5 percent premium reduction if they complete a DMV-approved accident prevention course. Other states may have mandated discounts for equipping the insured car with antitheft devices. If a driver has any of these devices active on the car, it’s on him or her to let the insurer know about it so that the appropriate discount will be applied.

By: Edward T. DeLisle & Maria L. Panichelli

In a recent opinion, SDVOSB Appeal of Rush-Link One Joint Venture, SBA No. VET-228 (2012), the United States Small Business Administration (“SBA”) Office of Hearings and Appeals (“OHA”) used two 8(a) program regulations, namely 13 C.F.R. § 124.106(g) and 13 C.F.R. § 124.3, to determine whether a joint-venture met the eligibility requirements for the Service-Disabled Veteran Owned (SDVO) Small Business Program. Specifically, the OHA found that the joint-venture was not eligible for participation in the program; certain loans from minority owners imposed impermissible restrictions on the service-disabled veteran/majority-owner’s ownership.

Rush-Link One Joint-Venture (“Rush-Link”) was a joint-venture between Link Contracting, Inc. (Link), which held a 51% interest in the joint-venture, and Rush Construction, Inc. (Rush). Following the award of a SDVO set-aside contract to Rush-Link, a competitor challenged the joint-venture’s eligibility for the SDVO program.

For a small business concern to qualify as an eligible SDVO, a service-disabled veteran must directly and unconditionally “own” at least 51% of the firm. 13 C.F.R. § 125.9. The service-disabled veteran also must “control” both the long-term decision-making and the day-today management of the firm. 13 C.F.R. § 125.10(a). For a joint-venture to be SDVO-eligible, the joint-venture agreement must contain a provision designating an SDVO participant as the managing venturer, and designating an employee of the managing venturer as the project manager. 13 C.F.R. § 125.15(b)(2)(ii).

Applying these provisions to Rush-Link, the SBA Director for Government Contracting (“DGC”) concluded that Mr. George A. Carpenter, the president and 55%-owner of Link, was a service-disabled veteran. However, he found that Carpenter did not “own” Link within the meaning of the SDVO Program regulations, based on the existence of several promissory notes that divested Carpenter of certain ownership rights. More specifically, the terms of these promissory notes – given to three minority-owners of Link in exchange for critical loans provided to the company – restricted Carpenter’s ability to transfer his interest or receive dividends or distributions. Therefore, in reliance upon 13 C.F.R. § 124.106(g), which states that a person “controls” a company if he or she “provides critical financing” to the company or exercises control “through loan arrangements,” the DGC concluded that Carpenter’s ownership was impermissibly restricted by the promissory notes. The DGC reached this conclusion, even though 13 C.F.R. § 124.106(g) is an 8(a) regulation intended to govern small-disadvantaged businesses, and is not part of the regulations governing the SDVO program.

On appeal, Link cited 13 C.F.R. § 124.3, another 8(a) regulation, for the proposition that “ordinary” loans following “normal commercial practices” should not be the basis for finding that a small business owner does not control his or her company. The OHA acknowledged this was correct, but concluded that the loans in question here were “commercially irregular” because the holders of the promissory notes were not banks or other commercial lenders, but minority owners of the company itself. Based on this conclusion, the OHA determined that the promissory notes impermissibly restricted Carpenter’s ownership, and that Link was therefore not an eligible SDVO business. The necessary result of such a finding was that the joint-venture between Link and Rush (which is not itself a SDVO business) was also ineligible for the SDVO program pursuant to 13 C.F.R. § 125.15(b)(2)(ii).

Oddly, neither the DGC nor the OHA addressed the propriety of using 8(a) regulations to determine eligibility under the SDVO program. Therefore, going forward, participants in all the various SBA small business set-aside programs should be aware, not only that loans that result in restrictions on ownership rights might invalidate “ownership” for the purposes of eligibility, but also that regulations may be utilized and interpreted across programs to determine a business’ eligibility.

In addition to the above, SDVOSB Appeal of Rush-Link One Joint Venture, SBA No. VET-228 (2012) provided some interesting insights concerning how a company’s internal corporate structure might affect the “control” requirements relating to SDVO eligibility under 13 C.F.R. § 125.10(a). Stay tuned for an update on what an SDVO should and should not include in its corporate governance documents.

By: Joseph A. Hackenbracht

For many years, the boards of contract appeals have considered challenges to performance evaluations and declined, for various reasons, to hear those cases. Then, in 2008, the U.S. Court of Federal Claims held that it possessed jurisdiction to address a contractor’s challenge of the performance rating it had been given by the Corps of Engineers. Todd Construction Company, Inc. v. U.S., 85 Fed.Cl. 34, 2008. (see our earlier blog article) Todd had submitted a “claim” pursuant to the Contract Disputes Act (CDA) challenging its performance rating and the Court concluded that submission of the claim satisfied its “jurisdictional prerequisite.”

In 2010, after the Todd decision was issued by the Court of Federal Claims, the Armed Services Board of Contract Appeals decided that it also could address challenges to performance ratings based on the board’s jurisdiction to determine the rights and obligations of parties under the terms and conditions of their contract. Appeal of Versar, Inc., ASBCA No. 56857, 10-1 BCA ¶ 34437, May 6, 2010. Also in 2010, in a case where the contractor submitted a CDA claim challenging the performance rating, the Board held that under the CDA, it has jurisdiction to “decide any appeal” involving a claim “relating to a contract.” Appeal of Colonna’s Shipyard, Inc., ASBCA No. 56940, 10-2 BCA ¶ 34494, June 24, 2010.

Last month, the Board issued a follow-up decision in Versar addressing the merits of claimant’s position that its performance rating was issued in error. The Board found that Versar had failed to show that its performance rating was arbitrary and capricious, the requisite standard, and, therefore, denied Versar’s claim. In so doing, the Board stated that “bare or insufficient allegations cannot sustain a claim that the government issued an unjustified performance rating.”Appeals of Versar, Inc., ASBCA Nos. 56857 et al., 2012 WL 1579539, April 23, 2012. In its discussion, the Board referenced a decision of the United States Court of Appeals for the Federal Circuit, Todd Const. L.P. v. U.S., 656 F.3d 1306, C.A. Fed. 2011, where the Circuit Court affirmed the decision of the Court of Federal Claims to dismiss a challenge to a performance rating on the basis that the contractor failed to state a claim upon which relief could be granted. In its decision, the Circuit Court affirmed the lower court’s determination that it had jurisdiction to hear cases involving challenges of performance ratings issued by the government.

Decisions of the Court of Appeals for the Federal Circuit are precedent for both the Court of Federal Claims and the boards of contract appeals. Going forward, therefore, contractors can expect that both the boards and the Court of Federal Claims will address challenges of performance ratings in accordance with the Circuit Court’s decision in Todd Const. L.P. v. United States. Contractors can be encouraged that it is now settled that both the boards and the court have jurisdiction to hear challenges of adverse performance ratings.

Upon receipt of an unacceptable performance rating, a contractor should submit a claim under the Contract Disputes Act challenging the rating as arbitrary and capricious. The contractor needs to raise specific objections to individual ratings and demonstrate the errors in the government’s evaluation. After receiving a decision, or in the event a decision is not issued, the contractor should file an action in either the appropriate board of contract appeals or the Court of Federal Claims.

Contractors must be prepared to plead the facts specifically and in detail, and identify individually, which ratings are arbitrary and capricious and why they are erroneous. Contractors also need to be sure to allege what the ratings should have been and that the outcome would have been different if the errors had not been made. In order to avoid dismissal based on standing, it may also be necessary to establish that the negative rating has caused injury, and has prejudiced the contractor. One way to demonstrate the prejudice and injury may be to present facts that the negative rating resulted in the contractor not receiving a contract.

As the ASBCA noted in Versar, the contractor did not provide the board with “specifics of the rating, ratings process, categories, and details,” as well as evidence of what the rating should have been. If contractors want the court to step into the fray, they must furnish the court with the specifics to establish that the government’s evaluations are erroneous and the subsequent ratings are arbitrary and capricious. Unsupported allegations and conclusory statements will not win the day.