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Transportation Department Shuts Down 26 Bus Operators for Safety Violations

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Apex Bus station in New York's Chinatown, one of the companies shut down by the feds (photo via Yelp)

In what a Department of Transportation oversight agency has described as the “largest single safety crackdown” in its history, federal officials ordered the immediate shutdown of 26 bus operators that transported passengers along the I-95 corridor. The reason: they are “imminent hazards to public safety,” according to DOT.

The crackdown is the result of a year-long investigation into these small, poorly regulated bus companies following several high-profile crashes along the East Coast in early 2011. “These aggressive enforcement actions against unsafe bus companies send a clear signal:  If you put passengers’ safety at risk, we will shut you down,” said U.S. Transportation Secretary Ray LaHood.  “Safety is and will always be our highest priority.”

The leader of the DOT agency responsible for the shut down, the Federal Motor Carrier Safety Administration (FMCSA) had some strong words of his own. “The egregious acts of these carriers put the unsuspecting public at risk, and they must be removed from our highways immediately,” said FMCSA Administrator Anne S. Ferro. “With the help of multiple state law enforcement partners, we are putting every unsafe bus and truck company on notice to follow the safety laws or be shut down.”

The three main companies whose various operations have been shuttered are: Apex Bus, I-95 Coach, and New Century Travel, which oversaw a network of bus companies, according to DOT. The various companies included — one ticket seller, nine active bus companies, 13 companies already ordered out of service that were continuing to operate and three companies attempting to apply for operating authority — are based out of Georgia, Indiana, Maryland, New York, North Carolina and Pennsylvania.

We covered the outcry for better bus safety in May 2011 in our print publication, Risk Management. Here is an excerpt of that piece, written by Emily Holbrook, in full.

In New York, most people rely on mass transit. And for getting out of town, one of the most popular choices are the motorcoach buses that depart from Manhattan’s Chinatown. These “Chinatown buses” offer riders a cheap ticket out of town to destinations such as Boston, Philadelphia, Washington and various casinos in the area.

But these low-cost tour bus companies have a horrifying track record of safety. On March 12 that fact tragically came to light when a bus returning to Chinatown from the Mohegan Sun Casino in Connecticut overturned on a Bronx highway, killing 15 people and injuring 20. Just two days later, two people were killed in another accident involving a Chinatown bus returning to New York from Philadelphia. That bus line, Super Luxury Tours, has one of the worst driver safety ratings in the nation, according to a report from the U.S. Department of Transportation. Though Super Luxury Tours may be considered the bad seed of the tour bus industry, many motorcoach companies have a spotty safety record. In fact, the Advocates for Highway and Auto Safety reported 34 motorcoach crashes nationwide in 2010 that resulted in 46 deaths and injuries to 363 people.

These crashes have highlighted a long-standing concern over the safety of such discount coaches and, more specifically, the issue of driver fatigue, which is suspected in the Bronx crash. Currently, drivers are required to maintain handwritten logbooks to track the hours spent on the road. These have commonly become referred to as comic books, however, as many drivers allegedly falsify their records routinely.

Other concerns facing tour bus drivers are issues with licenses and medical evaluations. According to the American Bus Association, more than half of the deaths in bus accidents from 1999 to 2009 could have been prevented if the drivers involved had not been allowed behind the wheel.

In response to March’s back-to-back bus accidents, a sting was initiated by the Manhattan Traffic Task Force, which pulled over more than a dozen tour buses at a surprise checkpoint. Each of the buses failed the test when inspectors from the city’s transportation department found that nine drivers should not have been behind the wheel and 10 buses were deemed unfit for the road.

In a more sweeping move, Sen. Charles Schumer (D-NY) asked New York’s Department of Motor Vehicles to re-examine all drivers of low-cost tour buses for previous safety violations and suspended licenses. He believes if an audit had previously taken place, the March 13 crash would not have occurred. “The audit would have shown that the man behind the wheel shouldn’t have been behind the wheel, and he wouldn’t have been driving,” Schumer said.

In further action, Sen. Frank Lautenberg (D-NJ) penned a letter to U.S. Transportation Secretary Ray LaHood, saying he is “concerned that DOT is lagging behind in its progress on the Motorcoach Safety Action Plan.”

The plan, introduced back in 2007 after a motorcoach crash in Atlanta killed five members of the Bluffton University baseball team, stalled shortly after its origination. It eventually resurfaced again this January after a motorcoach accident in Ohio. Now, politicians are pushing for permanent legislation to improve tour bus safety standards.

The Motorcoach Enhanced Safety Act, co-sponsored by Schumer and Sen. Kirsten Gillibrand (D-NY), would, among other things, require buses to be less flammable and have safety belts, anti-ejection windows, tougher roofs that can withstand rollovers and increased fire resistance. The bill would also address the logbook issue by having electric, on-board recorders installed in each motorcoach.

It is not only the bus drivers or parent companies that are to blame for increased risk among buses. A recent report issued by the federal government regarding city transit buses states that it may have to rewrite safety rules due to passengers being heavier today that they were in the past. The Federal Transit Authority (FTA) proposes raising the assumed average weight per bus passenger from 150 pounds to 175 pounds, which means fewer people will be allowed to ride city buses. The changes are needed to “acknowledge the expanding girth of the average passenger,” said the FTA.

With steadily rising fuel prices, more and more people are turning to public transportation. Hopefully, for bus riders, that will not prove to be a risky decision.

Another Fatal Bus Crash Highlights an Expanding Industry’s Lack of Oversight

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Tragedy hit the highway again today as yet another commercial bus ride turned fatal. Four are dead and 50 have been taken to 11 area hospitals for injuries after a motorcoach headed for New York’s Chinatown from North Carolina ran off the highway and flipped upside down in Virginia on I-95, according to the Richmond Times-Dispatch (whose video above shows a helicopter leaving the scene of the accident).

Authorities have cited driver fatigue as the cause of the crash, which involved a 60-person bus owned by Charlotte-based Sky Express Inc., a company with a poor inspection history.

Sky Express Inc., has a troubled inspection history, according to the Federal Motor Carrier Safety Administration’s web site.

The company performed worse than 97 percent of all passenger bus companies within the last 12 months and 99.7 percent worse in the last 24 months in the “Driver Fitness” category, FMCSA  records show.

Additionally, the firm scored worse than 77.80 percent of all bus companies within the last 12 months and 86.2 percent worse in the last 24 months in the “fatigued driver” category, records shows.

Nothing will bring back the dead, but perhaps this latest tragedy will spur further outcry for better regulation of an industry that has been expanding in recent years without much oversight.

Emily highlighted this concern in last month’s issue of our own Risk Management magazine.

In New York, most people rely on mass transit. And for getting out of town, one of the most popular choices are the motorcoach buses that depart from Manhattan’s Chinatown. These “Chinatown buses” offer riders a cheap ticket out of town to destinations such as Boston, Philadelphia, Washington and various casinos in the area.

But these low-cost tour bus companies have a horrifying track record of safety. On March 12 that fact tragically came to light when a bus returning to Chinatown from the Mohegan Sun Casino in Connecticut overturned on a Bronx highway, killing 15 people and injuring 20. Just two days later, two people were killed in another accident involving a Chinatown bus returning to New York from Philadelphia. That bus line, Super Luxury Tours, has one of the worst driver safety ratings in the nation, according to a report from the U.S. Department of Transportation. Though Super Luxury Tours may be considered the bad seed of the tour bus industry, many motorcoach companies have a spotty safety record. In fact, the Advocates for Highway and Auto Safety reported 34 motorcoach crashes nationwide in 2010 that resulted in 46 deaths and injuries to 363 people.

As Emily goes on to write, in New York, Senator Chuck Schumer (D-NY) has called for an audit of all bus operators and, across the Hudson River, Senator Frank Lautenberg (D-NJ) has written to U.S. Transportation Secretary Ray LaHood, urging further legislative action from the federal level.

Thus far, two stalled-in-Congress bills have attempted to impose greater regulations: the Motor Coach Enhanced Safety Act and the Bus Uniform Standards and Enhanced Safety (BUSES) Act. Even after this latest crash, it is not certain that either will advance towards becoming law, at least in part due to prohibitive costs (including the $25 million Department of Transportation estimate it will cost to install seat belts in all buses) and industry opposition, as noted by The Carlson Law Firm PC.

At this point, it is unclear whether either of the two bus safety bills will make it into law. Past attempts to strengthen federal bus safety laws have been largely unsuccessful. The NTSB has been recommending changes to improve bus safety for years, but so far Congress has been unable to implement the vast majority of the recommendations into law.

Regardless of whether Congress is successful in passing tougher bus safety regulations this year, those who have been involved in a bus accident still have legal options available to them. This includes bringing a civil claim against the motor coach company and others for any injuries and other losses they have suffered. Some of the types of compensation that may be available in a bus injury claim include medical expenses, lost wages and other earnings, pain and suffering and other damages.

Stay tuned, I guess.

But considering Congress seems to have a lot more on its plate today than bus safety, maybe consider taking Amtrak.

State Farm Enters the Toyota Fiasco

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The hits just keep on coming for Toyota.

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On the heels of a $16 million government fine and the potential for billions of dollars in loses after pending litigation shakes out, State Farm has asked Toyota to pay them back for any claims related to the unintended acceleration fiasco. Other insurers, including Allstate, are expected to follow suit and Mark Bunim, an attorney with the mediation firm Closed Case, says these subrogation demands could eventually end up costing Toyota up to $30 million. But the ultimate determination will take some time.

“Someone has to go through each and every auto claim, and then try to make a determination if it involved unwarranted acceleration,” Bunim says. “It could take months.”

This is not the first time State Farm has been at the forefront of action regarding Toyota. Back in 2007, State Farm warned the automaker and the NHTSA about an increase in unintended acceleration reports involving Toyota vehicles. While this warning adds further fuel to the argument that both Toyota and regulators were asleep at the switch, Department of Transportation Secretary Ray LaHood pointed out on his blog that the NHTSA was looking into the problem as early as 2003.

The point is that our safety officials have been looking at this issue from all angles for quite some time.

So the idea that NHTSA is in the business of ignoring information–valuable or otherwise–from automobile insurers, safety organizations, or consumers is just plain wrong.

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Of course, this still doesn’t answer why it took them six years to act. Perhaps they were just being diligent.

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After Record Fine, Toyota Extends Car Discounts. But Will It Continue to Drive Sales?

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toyota recalls

For risk managers and others looking at the Toyota recalls as an ongoing lesson in corporate crisis response, seeing the daily headlines about the automaker’s woes is — both figuratively and literally — like watching a car crash.

Sure, in some ways, Toyota has handled the situation adequately, and its rebounding stock price and recent sales suggest that the immediate damage could have been worse. Then again, the company dragged its feet in addressing safety concerns publicly, and all the fines, recalls, class-action lawsuits, Congressional hearings and public scorn suggest that the long-term reputational damage could very well be lasting. This isn’t something that consumers will ever forget.

Especially not now.

Because on Monday, the National Highway Traffic Safety Administration hit Toyota with a record $16.4 million fine, which is more than an order of magnitude larger than the watchdog’s previous highest penalty, a $1 million slap on the wrist to GM for faulty windshield wipers. The $16.4 million figure is also the largest allowed under civil law, according to NHTSA.

Said Transportation Secretary Ray LaHood:

“We now have proof that Toyota failed to live up to its legal obligations,” said Secretary LaHood. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families. For those reasons, we are seeking the maximum penalty possible under current laws.”

On Forbes.com, Ned Douthat advises Toyota to just pay the fine rather than try to fight the regulator’s decision.

Now, Toyota is faced with the choice of contesting the fine in court or simply paying the fine in order to get the episode behind in.  In comparison to the potentially lengthy and expensive legal battle, the nominal $16.4 million fine may be an attractive option.  However, in paying the fine the prestige of the Toyota brand may be forever damaged, as they would be admitting fault in hiding a very serious safety issue in their vehicles and thus endangering millions of drivers.  The number of incidences of stuck accelerators is still relatively small, but the recalls have affected some 8.5 million vehicles.  Furthermore, if Toyota admits fault and accepts this fine, it may open the litigation flood gates to hundreds of class action and personal injury lawsuits related to the stuck accelerator issue.

Amanda Bronstod of Law.com delves deeper into the idea that accepting the fine as handed down will be troublesome for Toyota, as it factually “validates the legitimacy of our allegations that Toyota has been misleading the federal government and consumers.”

With that damned-if-you-do, damned-if-you-don’t decision looming, Toyota also announced on Tuesday that it would extend its sales discount program. The program was successful in March and finally gave the company some positive headlines, but at least one industry expert seems skeptical that even this price-cutting measure will continue to push vehicles under the once-impeccable-but-now-tainted Toyota banner.

Last month’s incentive program helped Toyota “scoop up bargain hunters and loyalists” to achieve a 41% gain in sales over March 2009, said James Bell, an analyst with auto information company Kelley Blue Book.

But the increase was not as robust as it might seem, as results were tempered by the low sales in the same month a year earlier, he said.

“The question now is how many of those bargain hunters and loyalists are left. You have a finite number of people in the auto market at any one time,” Bell said.

Historically, Toyota has been among the stingiest automakers when offering incentives, helped by its historically high resale values and a reputation for building reliable cars, he said.

Last week at the International Auto Show, a Toyota rep spoke on the situation, specifically noting his thoughts that “people don’t buy a car they don’t trust just because you give them a good price.”

We’ll see, I guess.

For more on the risk management angle of the Toyota troubles, check out our past coverage. Morgan also covered “Toyota’s Total Recall” in the April issue of Risk Management.