Setting Time Limits for Claims

Setting Time Limits for Claims

Copyright 2007, Traffic World, Inc.

Q:

I have a question regarding undercharge claims.

We''re a motor carrier. We have a customer under contract where the section governing undercharge claims states:

"The time limit for filing and recovery of overcharge and/or undercharge claims on shipments moved pursuant to this agreement shall be 180 days from the date of receipt of the relevant invoice. Clerical errors, mathematical errors, extension errors and duplicate payments may be corrected during this time frame. All overcharges and duplicate payments shall be processed by the carrier in accordance with 49 CFR Part 378."

We sent invoices with total charges that were incorrect. The customer short paid.

We then sent balance due notices for the rest of the total charges, never changing the original rates. The customer then paid the balance due.

The customer''s freight bill auditor is filing for overcharges and insisting that the relevant date is the date of the balance due and using that date for the 180 days.

We declined based on the original freight bill date as this was over 180 days.

Please give me your opinion.

A:

Well, your question seems incomplete to me and I''m not quite sure what''s going on. So I''ll try to cover all the bases.

Your contract rule says that (a) the shipper has to file overcharge claims within 180 days of the original freight bill in order to collect them, and (b) you, the carrier, must likewise present undercharge claims - balance due bills - within that same time frame as measured from the same date.

This is a somewhat truncated and slightly expanded version of the language of 49 U.S.C. ? 13710(a)(3), which I''ll assume is what you meant to follow. The expansion - to duplicate payments, which aren''t covered by the statute, and "clerical errors," which are debatable - isn''t relevant here; but the truncation may be, as I''ll explain.

Both your contract and the underlying law are in agreement that your balance dues had to show up on the shipper''s doorstep within 180 days of the original bills. If that''s your issue, reference to a calendar should settle it quickly; if you didn''t present your balance dues timely then the auditor is correct in demanding a refund, and if you did it isn''t.

I suspect, though, that the question here is whether the balance dues were correct, with the auditor saying they weren''t and claiming overcharges beyond 180 days from the original bills but within 180 days from the balance dues. That''s where the truncated language of your contract comes into play.

Here''s how the statute reads in full on this point:

"If a shipper seeks to contest the charges originally billed or additional charges subsequently billed ? [it] must contest the original bill or subsequent bill within 180 days of receipt of the bill in order to have the right to contest such charges." 49 U.S.C. 13710(a)(3)(B); emphasis added.

Your balance dues were "subsequent bills" within the meaning of the foregoing language. Thus, under the law you set up a new trigger point for the 180-day time limit when you presented those balance dues, though only to the extent of what the balance dues added to the bottom line.

Indeed, your contract language appears to support this, albeit a little less clearly, with its reference to "the relevant invoice." And given the basic similarity of the law and your contract, I think most courts would agree.

So here''s where it''s at. If and to the extent that the auditor''s claims are based on a dispute over charges specified in the balance dues but not the original invoices, it has 180 days from the balance due date.

On the other hand you say your customer short-paid your original bills. If instead the auditor''s claims are based on an argument that the short payment was correct, the mere fact that you later presented balance dues claiming other, additional charges doesn''t extend the time limit; that remains 180 days from the original bills in which you first demanded the charges that were short-paid.

Clear enough? It''s the date on which you first billed for a particular charge that matters as to that charge. The fact that you later nagged the shipper for the same originally billed charge isn''t material and doesn''t extend the time; only claims based on charges you added in your balance dues, which weren''t on the original, get the benefit of the extended time limit starting from the date of the balance dues.

In other words, the idea is to put a cap on the time for audit of each line item of a given bill. You can''t sneak in additional charges at the last minute with little or no time for post-audit; the shipper still has 180 days from that bill to claim for the added elements. But neither do your balance dues extend the time for review of originally billed 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 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.