Residents irate over OMV, state collection agency’s tactics in collecting fines for insurance lapses

Louisiana’s Office of Motor Vehicles has raked in $22.5 million of the projected $444 million owed to the agency by residents with lapsed auto insurance, but a new batch of drivers are irate over fines that have now become the target of the state’s aggressive debt collection department.

Nearly four months after the OMV mailed 1.2 million letters to people allegedly driving without insurance — drawing flak for what many residents said was extortion — the agency is still keeping extended hours to handle calls that have become more desperate since the state’s newly formed Office of Debt Recovery gained jurisdiction over the fines Dec. 15.

The Office of Debt Recovery has the authority to extract money from people’s bank accounts, intercept tax refunds and recommend that a resident’s state-issued professional license be suspended, all tactics the state couldn’t employ before the office was created by the Legislature in 2013.

The OMV’s mailings were the first bulk effort to capitalize on the Office of Debt Recovery’s powers, and the one that attracted the most notice.

The OMV’s most recent mailing of 696,205 letters came on Nov. 13; some were repeats of the original million-plus missives in October, said OMV Deputy Commissioner Staci Hoyt.

The agency collected on 93,613 records — resulting in the $22.5 million collected as of Jan. 22 — while 31,812 files were cleared because they related to alleged fines that were not in fact owed, she said.

On Dec. 15, the Office of Debt Recovery took over 555,628 of the OMV’s files, representing nearly $292 million in OMV debt. Since that date, the Office of Debt Recovery has collected just over $5 million for the OMV, said Kizzy Payton, a spokeswoman for the state Department of Revenue, which oversees the Office of Debt Recovery.

So far, the agency has sent letters informing residents that their debts have been transferred to its office, but soon it will begin offsetting tax refunds, Payton said. It hasn’t recommended that anyone’s professional license be suspended yet, she said.

The state is facing a $1.9 billion budget deficit in the fiscal year that starts July 1.

Proponents of the collection service say it’s a good-faith effort to collect money owed to the government, and that Louisiana’s high auto insurance rates stem from the fact that so many of its residents fail to carry insurance as required by law.

But not everyone likes the state’s forceful approach.

“There’s this shadowy final debt office that you can’t contact anyone at directly, it seems,” said Nick Miller, a financial analyst who received a notice asking for what he said was a bogus $656 fine related to a vehicle he reinsured in Iowa after moving there last year from Louisiana.

“The only way of contacting them is by signing your name on a check and sending it to them,” Miller said.

Payton did not respond to a query about Miller’s statements.

Miller, who said he received only two notices from the OMV — not the three notices the OMV claims it sent to drivers, thus giving the debt a non-negotiable “final” status — only discovered the letters in the first place because he happened to visit his old home for the holidays, he said.

Other Louisianians, including John Boyer, Kristin Scott and Daniel Mayeaux, also said they had trouble clearing their records and received fewer than three notices from the OMV.

Miller said his attempt to cancel a debt he didn’t owe was a lesson in bureaucracy.

“I called the (OMV) number a few times. I got, ‘We’re experiencing unusually high call volumes, sorry.’ Disconnect, disconnect, disconnect,” he said. “Their narrative was just, ‘Well, we sent these out, and we didn’t hear from you, so you ignored us, and now it’s a final debt and nothing can be done about it.’ ”

Miller finally had his debt eliminated after his emails wound up in the inboxes of OMV higher-ups, including Hoyt’s.

Yet similar efforts by other drivers with minor infractions have translated to thousands of dollars in fines that apparently can’t be undone.

Melanie Cade, a 34-year-old Metairie resident who teaches first- and second-grade special education classes, said she paid her insurance three days late on one vehicle, and let insurance lapse on another automobile that sat in her driveway, unused, after it was damaged in a wreck.

Cade said she didn’t know she was supposed to turn in the license plate on the wrecked vehicle that wasn’t being driven. Her failure to do so caused the state to assume she was operating it without insurance. The violations mushroomed into a $2,650 fine she’s paying with the help of a 10 percent interest loan that won’t be paid off until 2022, she said.

“It just seems like a giant money grab,” Cade said. She unsuccessfully petitioned OMV supervisors to cancel the debt and asked to be put on a payment plan, but the agency refused, she said.

Cade said hearing the $2,650 figure made her cry at an OMV office.

“I have so many student loans to pay. I’m a special ed teacher for Jefferson Parish. I’m a public servant,” she said.

Hoyt, the OMV official, said the organization is trying to be responsive by keeping call lines open from 8 a.m. to 6 p.m. on weekdays and offering an insurance cancellation form on its website, expresslane.org.

Customers “need to just be aggressive,” she said, and should ask to speak with a supervisor if they feel their complaints are not being heard.

“I know I’ve personally dealt with probably thousands of files,” she said. “I take a lot of time to make sure I check every avenue. I can’t assure that all staff are doing that. If a person feels they’re just not getting the proper attention, (they should) ask for a supervisor.”

Hoyt said there is no specific supervisor people should contact.

Karen St. Germain, OMV’s newly appointed commissioner under Gov. John Bel Edwards, acknowledged the fracas over the OMV’s notices “was unnerving” but stopped short of saying the agency she inherited had fumbled the debt collection rollout. The department was simply following the law, she said.

St. Germain is handling media queries on her own, unlike former Commissioner Stephen Campbell, who had State Police Superintendent Mike Edmonson speak for him. “I don’t want anyone penalized that shouldn’t be,” St. Germain said.

Follow Maya Lau on Twitter, @mayalau.

More Stories