The longtime vendor, Stoneridge Recoveries, is being investigated for insurance fraud
POSTED: 1:30 a.m. HST, Apr 13, 2011
LAST UPDATED: 1:35 a.m. HST, Apr 13, 2011
With a state criminal probe serving as a backdrop, the city expects to solicit new proposals this month to select an exclusive vendor for what is Oahu's busiest and most lucrative towing zone.
The current vendor, Stoneridge Recoveries, is the target of an ongoing insurance fraud investigation pertaining to its pricing practices. Some auto insurers have said questionable billing practices led to inflated bills for some motorists.
Stoneridge has been the subject of numerous consumer complaints over the eight years it has held the contract on a month-to-month basis.
Even as the state investigation proceeds, Mark Kawata, an attorney for Stoneridge, said the company's own internal investigation, also launched last year, found instances in which employees made billing mistakes and that customers have been reimbursed for the overcharges.
Kawata was not able to give an indication of the magnitude of the problem, but said the company has since reviewed billing procedures with its employees to prevent similar mistakes from happening.
Asked late yesterday afternoon whether the pending state investigation or Stoneridge's controversial history would preclude the company from bidding on the new contract, city spokeswoman Louise Kim McCoy said she was unable to get an answer.
But Kawata said he expects his client to submit a bid and doesn't anticipate the state investigation — which could last months — to have an effect.
The Star-Advertiser disclosed the investigation in December and detailed the many complaints lodged by consumers, insurance carriers and others since Stoneridge became the city's exclusive vendor for police-initiated tows in the region stretching from downtown to Makapuu. The company averages about 10,000 tows in that area each year.
AMONG other things, the newspaper revealed that Stoneridge had saved nearly $500,000 since 2003 by paying the city nearly $8,000 per month less than what the company originally bid for a five-year deal. When none of the three bidders were awarded the long-term contract, Stoneridge, which was the high bidder at $21,000 a month, filed a legal challenge. That challenge wasn't resolved until an appeals court ruled in the city's favor last May.
While the litigation proceeded, the city awarded Stoneridge the month-to-month "emergency" deal at the same $13,380 rate that was charged the previous vendor.
McCoy, in a statement yesterday, said the city and Stoneridge reached an agreement that increased the company's monthly fee to $21,000 effective Jan. 10 while the city continued its investigation.
"The city has been keeping Stoneridge tightly accountable during this transition period and has not received any new complaints," she said.
McCoy said the city has proceeded carefully in preparing a new solicitation to address concerns raised over the past eight years and during the prolonged litigation.
Kawata has defended Stoneridge's performance, especially in recent years, and said the number of complaints has been relatively low given the huge volume of tows.