Stretching the Limits in Billing

Q: I’m aware motor carriers have 18 months from time of shipment to begin a civil action (lawsuit) to recover transportation charges (49 U.S.C. Section 14705).

I believe there is also a provision that the carrier must have presented demand for such payment within 180 days that charges became due in order to invoke the 18-month provision for filing a civil legal action.

Can you confirm this?

A: You have it about half right.

Specifically, the relevant statute reads like this: “A (motor) carrier must issue any bill for charges in addition to those originally billed within 180 days of the receipt of the original bill (by the shipper) in order to have the right to collect such charges;” 49 U.S.C. Section 13710(a)(3)(A).

The half you’ve got right is the 180-day time period and the carrier’s need to bill within that time in order to have the right to collect. The half you don’t is the date from which the 180 days is measured and the specific type of charges involved.

When it comes to the carrier’s original bill for its freight charges, the law prescribes no time frame within which the carrier is obliged to present that bill. The only relevant time frame applicable to this bill, the carrier’s first one, is the 18-month limit of Section 14705(a); that limit governs even if the carrier hasn’t billed for the service at all.

To be sure, the Code of Federal Regulations does specify a time frame for carrier presentation of bills — seven days from the date the shipment was tendered to the carrier (on prepaid shipments) or was delivered (on collect shipments); 49 CFR Section 377.205. The rule is, however, toothless; there are no penalties or other consequences of any sort if the carrier’s late.

In other words, the carrier has unlimited time to come up with that initial freight bill, constrained only by that 18-month span in which it’s allowed to sue for unpaid charges. And the shipper has the same obligation to pay that bill regardless of whether it was presented promptly or delayed.

It’s only after the carrier has issued that first freight bill that the 180-day rule of Section 13710(a)(3)(A) comes into play.

Let’s say the carrier got that first bill wrong. It happens; long ago I heard estimates that as much as 25 percent of all carrier bills were erroneous in some way, and while computerization probably has dented this percentage considerably, it’s not proof against keypunch errors, etc.

Whatever the present-day number of initial billing errors, statistically half of them will constitute overcharges, in which case Section 13710(a)(3)(A) is still irrelevant. It’s the other half, where the carrier initially under bills, to which the statute has application.

Once the shipper receives that initial freight bill, the clock starts ticking. Unless the carrier spots its error and presents a corrected bill (or a balance-due bill) within the prescribed 180-day period, it loses its right to pursue the undercharges even if all has taken place within the 18-month period specified by Section 14705(a).

Thus, there may be two time limits at work on any given shipment: the 18-month period in which to sue for uncollected freight charges and the shorter 180-day period applicable to corrected bills or balance dues.

Congress came up with the second time limit in response to shippers’ expressions of frustration about then-prevalent problems associated with motor carrier bankruptcies and insolvencies. Back then (this was in the early 1990s), the so-called filed rate doctrine of the law obliged carriers to bill, and shippers to pay, based solely on tariffs on file with the former Interstate Commerce Commission.

Notwithstanding, carriers and shippers often agreed on “off-tariff” rates, which the carriers duly billed. Then the carrier would fold, post-bankruptcy auditors would come along, and shippers would receive ex post facto balance dues for the full tariff rate, often many months or even years after the initial bills had been paid.

Filed motor carrier tariffs, of course, are a thing of the long-distant past, and agreed rate deals are today entirely legal, so that’s now a moot issue. As with many statutes that continue to bedevil the social structure long past their original relevance, the 180-day limit for corrected or balance-due billings has long outlived its original purpose.

Still, it remains on the books, and is enforceable as a matter of law. The carrier that fails to identify undercharges and rebill for them within the stated time limit is barred from collecting those additional — though not the original — charges.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.
 

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