CBRM tow truck bylaw on hold over fraud concerns

Insurance and towing industry officials are raising the spectre of fraud and corruption — and higher insurance premiums for consumers — while weighing in on opposite sides of a proposed tow truck bylaw in Cape Breton Regional Municipality.

In a letter to CBRM, the Insurance Bureau of Canada says it favours a bylaw because the unregulated towing industry is a "feeding ground for the unscrupulous" that includes "kickbacks ... and secret payments" that inflate insurance costs.

Seven towing company operators signed a letter to CBRM saying they are against provisions in the draft bylaw and "should not have to pay people off or feel like you need to sleep with anyone to get ahead."

However, in interviews, both sides backed away from specific allegations of fraud and corruption in CBRM.

Concerns around fees

Ronnie Smith, owner of R. Smith's Towing, said the proposed municipal bylaw sets fees that are too low for towing vehicles from accident scenes and will put operators out of work.

He signed the letter alleging payoffs in the industry, but said in an interview that he has no evidence.

Ontario recently introduced regulations because of corruption, including fraud and deaths, in the towing industry in Toronto.

Smith said that news is colouring people's opinions of the towing industry in Cape Breton.

"There's never, never been any payments or anything else in the CBRM that I know of," he said. "Nobody's ever come to us. I know they're matching us up with Ontario, and that's wrong and they paint us with the same brush."

However, Smith said, police at accident scenes have awarded towing jobs to companies that were not included in past tenders for work and that has led to problems.

"There's things that go on and some police officers are aware of it, that they really shouldn't be doing, but they do," he said.

CBRM's draft bylaw contains a long list of regulations including those affecting tow companies, their vehicles and drivers.

The operators oppose many of those, but they are also upset over what they are low fees for towing and storage.

Cape Breton regional police requested the bylaw last year, saying it is needed immediately because of double billing, overcharging for towing and storage fees and extra administrative costs.

In June 2020, Staff Sgt. Joe Farrell told council that Cape Breton has some of the highest insurance rates in the province and the bylaw was needed "to avoid accident chasing and price gouging."

He said police were paying $45 for a tow at an accident scene, but then operators were charging "up to $1,500" for a tow from the storage compound to the body shop.

In an interview, Staff Sgt. Bill Turner said inflated towing or storage fees could be a form of fraud, but police have not received any official complaints about that.

For example, he said, an insurance company called him once to ask about an accident scene where the tow company was charging for traffic control.

No police complaints

Turner said he checked and traffic control had been done by police. In that case, the insurance company simply struck that fee off the bill.

"If they [had have] made a formal complaint, then we would have investigated it and possibly laid charges," he said.

Turner said officers may have been awarding tow jobs to a favourite company in the last year or so, since the tender system was abandoned.

But he said police have no control over most of the tow jobs at accident scenes because those involved can choose whichever company they like.

Accident chasing

Turner said before police got encrypted radios about five years ago, tow companies raced to the scene of an accident and sometimes arrived before police, fire or ambulance responders.

He said there were times firefighters had to ask tow truck operators to get out of the way because they were trying to get business by talking to people who were still trapped in their vehicles.

Turner said a bylaw with a fair system for allocating tow jobs and fair rates would help everyone and could help lower insurance rates.

The Roadside Responders Association, which represents tow truck operators in Nova Scotia, also opposes the proposed bylaw.

In an email to CBRM last year, Heather Llewellyn, the group's executive director, said multibillion-dollar insurance companies are trying to flex their muscle on the tow truck industry.

"The war between insurance companies and tow truck operators working in CBRM has greatly affected our members across Nova Scotia," Llewellyn said.

In one case, a Nova Scotia tow truck operator with no insurance claims for 12 years was faced with an increase in premiums for four trucks that went from $17,000 a year to $67,000, forcing the company to idle three of its trucks and lay off staff, she said.

In a recent letter to CBRM in support of the proposed bylaw, Insurance Bureau of Canada vice-president Amanda Dean said most tow truck operators are fair, but the same can't be said for other jurisdictions.

"Increasingly, across Canada and the United States, the scene of a vehicle collision is no longer about helping individuals in need. It is about the cascading opportunities arising from that first tow; kickbacks, referral fees, and secret payments that all work to inflate insurance claims."

In an interview, Dean said there is no evidence of that in CBRM, but that doesn't mean it's not happening.

"In my letter, I did not allude to the fact that there's kickbacks and things going on in CBRM," she said. "There could be. There might not be.

"But what the insurance industry has observed in North America is that when towing and storage becomes a bit of an issue, there is opportunity for kickbacks to occur."

Expensive invoices, no explanations

She said it is not uncommon in Nova Scotia for motorists to receive "very expensive invoices with little to no explanation or detail for towing or storage fees.

"We've all seen the stories coming from Ontario, but we shouldn't be naive enough to think that there's not fraud happening within our own province."

Dean said the Nova Scotia government is working on provincewide regulations, but there is no timeline for their implementation.

In the meantime, CBRM is showing leadership by drawing up its own regulations, she said.

"Good on CBRM for taking the first step and taking a look at what's happening within their municipality," Dean said.

The municipality's draft bylaw has been in preparation for a year.

It got first reading in June 2020 and was then sent to the province for approval. It came back with changes and, in January, council was ready to give it another reading, but decided to hold off when tow truck operators called for more consultation.

The draft bylaw was also on the agenda for this week's council meeting, but Mayor Amanda McDougall again pulled it off the table after towing operators protested with a parade of trucks on Tuesday.

The mayor said still more consultation is needed.

"Heard the horns. Saw the trucks. I understand that there's a great deal of frustration so ... if there's an opportunity to I guess be that mediator and offer advice and then put in place a fair process in terms of a bylaw, that's what we're going to have to do," she said.

But allegations of corruption are also a concern, McDougall said. 

"There's some pretty hefty allegations on both ends and ... if there needs to be a break, a pause, an opportunity to continue conversations and make sure all the facts are out there, that's always a good way to go."

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