NEWS

Indiana BMV suit on overcharges heads to mediation

Tim Evans
tim.evans@indystar.com

A second class-action lawsuit alleging the Indiana Bureau of Motor Vehicles overcharged Hoosier motorists millions of dollars is headed toward mediation.

In a similar lawsuit filed in 2013, the BMV agreed to refund $30 million to drivers it overcharged for operator's licenses — and also acknowledged it had overcharged Hoosiers an additional $29 million due to mistakes in calculating motor vehicle excise taxes.

The BMV is repaying those overcharges through refunds and credits.

The second lawsuit, also filed in 2013, alleges the BMV owes motorists for even more overcharges — possibly as much as $38 million more. The excessive fees, the lawsuit contends, may go as far back as 2002.

A joint notice of mediation in that lawsuit was filed Wednesday by attorneys for the BMV and motorists challenging the alleged overcharges.

John L. Krauss, an adjunct professor at the Indiana University Robert H. McKinney School of Law in Indianapolis, said he could not comment on specifics of the BMV case. In general, he said, a move to mediations is "a healthy sign" but does not guarantee a settlement is imminent.

"It is a sign that the parties would like to sit down and try to craft some possible options and see if any of them would be acceptable to both sides," Krauss said.

Refunds, accounting sought

Krauss added that mediation is a voluntary process and any potential settlement agreement would have to be approved by the court.

The case had been set for a bench trial June 1 before Marion Superior Judge James Osborn, but that trial date was vacated after the mediation notice was filed.

A BMV spokesman directed The Star to Indianapolis attorney Carl Hayes, who is defending the agency in the lawsuit, for comment.

"We're always interested in any solution that makes sense for the taxpayers of Indiana," said Hayes, who is with the law firm Bingham Greenebaum Doll.

Scott Gilchrist, an attorney with Cohen & Malad, the Indianapolis law firm that filed the lawsuit in October 2013, said his policy is to not comment on cases scheduled for mediation.

The pending lawsuit asks the BMV to refund millions for overcharges on a variety of fees and services. It also asks for a full accounting of all overcharges and access to public records that could reveal how long BMV had known about the overcharges.

Agency shakeup

The latest action in the case comes a month after Gov. Mike Pence announced a major leadership shakeup at the BMV — and that the troubled agency revealed yet another $2 million in mistaken taxes and fees.

Pence named Kent Abernathy, formerly chief of staff at the Indiana Department of Environmental Management, to replace BMV Commissioner Don Snemis. Snemis was moved to a new position as special counsel for program integrity at the state's Family and Social Services Administration.

The leadership change came as the BMV acknowledged overcharging nearly 30,000 customers a total of about $2 million over six years. The mistaken charges involved delinquent fees for mobile and manufactured home titles, reinstatement fees paid by people who later proved they had insurance and other miscellaneous taxes and fees.

The BMV plans to issue refunds or credits to affected customers.

In announcing the appointment of Abernathy last month, Pence warned that an ongoing BMV review by accounting firm BKD could trigger additional refunds in the future.

"I want to emphasize," the governor said, "there will likely be more to come."

Beyond the leadership change, Pence announced a number of other steps his administration is taking in an effort to fix the BMV's financial mistakes. The changes include creating an internal BMV audit group made up of BMV employees, auditors from the State Board of Accounts and representatives from the state technology department.

Star reporter Tony Cook contributed to this story. Call Star reporter Tim Evans at (317) 444-6204. Follow him on Twitter: @starwatchtim.