How To File on a Broker's Bond -

What is the process for a claim to be filed against a broker?

Claimants (carriers, shippers, and/or authorized third parties) first need to supply some basic information: the MC # of the broker, your carrier’s MC # and contact information, the dollar amount owed, the date the load was picked up, and the commodity hauled. Within 24 hours, a claim application will be provided to a qualified claimant. The claim application must include the required supporting documentation: rate confirmation, bill of lading, and carrier’s invoice for each load. In 95% of the claim inquiries, the broker pays the claimant after being informed a claim has been filed against their trust. If pending claims total more than the surety instrument, or if the broker stops communicating, or if the broker stops providing timely payments to the claimant, the Trustee will issue a "Notice of Cancellation". The FMCSA allows brokers to operate for an additional 30 days after a Notice of Cancellation has been issued. Claims are normally accepted against a cancelled broker’s trust account for 60 days after their effective cancellation date with the FMCSA. If a broker is not reinstated and their claims continue to multiply, trust payouts will not be made until all claimants have had an opportunity to file. When the time arrives for a trust payout, it will be determined which type of payout is most suitable given the volume of claims.
　
Types of payouts:
1. Full claim payout – claims did not exceed the trust and all valid claims are paid in full.
　
2. Pro rata payout – each valid claim is paid a pro-rata percentage of what they are owed.
　
3. Date of load payout – the earliest load dates are paid in full until the trust is exhausted.

　
Are there instances when a claimant cannot collect from a BMC-85 Trust Account?

There are several categories of exemptions from federal economic regulation by the FMCSA. There are also certain categories of invalid claims:

Exemptions-
1. The movement which occasioned your claim involved exempt commodities, such as agricultural products, horticultural products, dairy products, poultry or enumerated non-manufactured goods.
　
2. It was an Intrastate movement and therefore not subject to Interstate Commerce regulation.
　
3. Transportation involving prior or subsequent movements by rail (intermodal) or movements under terms of an airbill.
　
4. Additional items incidental to the actual movement (e.g. trucks ordered not used, lumper or pallet fees).
　
Invalid-
1. The movement which occasioned the claim did not occur within the effective term of the BMC-85 filing.
　
2. A failure to establish legal liability (e.g. sufficient documentation to establish a contract existed between the broker and carrier was not provided).
　
3. The trust has been exhausted.
　
Claimant’s attorneys may insist that "federal regulations" require that the trustee pay their claims immediately; while other claimant attorneys insist that "federal regulations" require the trustee defer payment until their client has had an opportunity to obtain a judgment against the broker. While it is understood that each claimant would like to be paid immediately, the trustee has a fiduciary responsibility to handle all claimants equally and professionally, with established guidelines in administering claims that are fair to the majority.
　
What is the difference between a bond and a trust agreement?

The FMCSA requires a $10,000 surety instrument be filed for a transportation broker’s license. Both the BMC-84 ("bond") and the BMC-85 ("trust agreement") fulfill this requirement. The basic difference between the two is that a BMC-84 is issued by an insurance company while a BMC-85 is issued by a financial institution. An insurance adjuster may see thousands of claims per year but only a handful of those claims will involve a BMC-84. The claims adjuster’s lack of experience in BMC-84 claims, total volume of other claims and lack of accountability to the policy holder because of their discretion over the corpus of the bond inevitably leads to claims being paid too quickly and to the detriment of both the broker and other valid claimants. Proper investigation and adherence to the principles of good faith and fair dealing insure fraudulent claims do not get paid and monies remain available to pay valid claims.
　
Does pursuing a claim against a trust agreement mean forgoing other avenues of recovery?

It is often not possible for Trustees to distribute funds to all valid claims against a $10,000 federal surety instrument. Claimants often seek multiple options for recovery. In some instances, carriers unable to collect the full amount of freight charges from the surety instrument can proceed collaterally against the underlying shipper or consignee. You should contact legal counsel in your State to determine if that option is available in your circumstances.