Million Dollar Carrier Caught Hiding Bad Safety Score

Running a trucking company can be complicated, especially when it comes to complying with federal and state regulations.

The desire to drive more loads, reduce costs, and increase profitability in times of a freight recession can turn carriers to manipulate driver files and break rules.

But the cost of doing so is very high.

A Conditional safety rating can negatively impact your business and if you fail to correct the underlying violations, you could receive an unsatisfactory in your next compliance review.

Let’s take a look at what happened recently to one such company.

NY carrier gets caught trying to hide bad safety score

On June 21, 2024, in the U.S. District Court for the Western District of New York, Tony Kirik was found guilty, following a 3-week jury trial, of conspiracy, false documents, false statements, falsification of records, and concealment of material facts.

Kirik, owner of Rochester, New York-based trucking businesses Orange Transportation Services, Inc. (OTS), and Dallas Logistics, Inc. (DLI), which had millions of dollars in revenue, conspired with others to devise a scheme to defraud the FMCSA.

Specifically, the co-conspirators attempted to conceal from FMCSA that Kirik owned and managed DLI, which had received a “conditional” FMCSA safety rating. A conditional rating means that a trucking company did not have adequate safety management controls in place to meet the safety fitness standard.

By obtaining a more favorable safety rating and concealing these affiliations, DLI lowered its insurance premium expenses and increased its revenue from customers, some of whom were unwilling to use a motor carrier with a conditional safety rating.

To dupe the FMSCA, Kirik created companies under family members’ names to make it look like the new companies were independent and not associated with the existing business that had received negative safety ratings. The new companies were extensions of the prior company, which Kirik was required to disclose but didn’t.

While slightly different, this is like “chameleon carriers” who drop a bad DOT Number for a new clean record, hiding themselves from their past negative record.

To further the scheme, Kirik also submitted forms to FMCSA which falsely represented that DLI’s principal address was in Dallas, Texas, amongst other false addresses.

How to prevent the underlying problem this carrier faced

Conditional carriers can immediately see less work from brokers, or even be restricted from future loads, while more long-term effects are higher rates for insurance at renewal and new driver prospects may completely avoid applying for a job with your company.

To keep getting loads and not get dropped by your freight broker for a conditional safety rating, carriers have two options: Request a safety rating upgrade and create a corrective action plan (CAP); and establish proactive safety management tools.

Request a safety rating upgrade and create a corrective action plan (CAP):

A Safety Rating Upgrade is the process of correcting your Conditional or Unsatisfactory Safety Rating by literally upgrading your rating back to Satisfactory.

If a carrier fails a safety audit, the FMCSA will provide the carrier with written documentation detailing the violations that caused the carrier to fail and the requirements for developing a corrective action plan (CAP).

It is crucial to create a corrective action plan before your new DOT safety rating goes into effect 60 days after the rating downgrade letter. If you have a CAP and show brokers proof of the CAP, you can still get broker loads.

If you already have a conditional and are requesting a safety rating upgrade, just remember that it can take up to 4 months before your corrective action plan is reviewed and upgraded due to your state process, internal staffing issues, etc.

These corrective action plans are complicated and take a lot of work to be completed as the CAP must explain the actions the carrier will take to address the violations identified. This is the information brokers want to see to make sure you are a responsible carrier.

Establish proactive safety management tools:

While not all companies are built and operated the same, compliance to regulations are still critical for your company.

As a carrier governed by FMCSA regulations, it is not good practice to wait until you get audited by the FMCSA, but rather to be ready at all times.

Proactive Safety Management or PSM means you and your company are working hard to be safe and compliant and stay ahead of the FMCSA. If you ever have to deal with litigation after an accident, you will quickly find that the bare minimum in compliance is not enough to protect your company.

In other words, passive safety programs are inadequate and can lead to increased fines and fleet risk, especially when it comes with DOT compliance and driver management.

Carriers being proactive will put them in a better position to mitigate risk, improve efficiencies, and reduce costs, be more organized, and have a measured plan to lower motor carrier Safety Measurement System (SMS) scores.

Not only will proactive safety help your fleet with DOT compliance, but it is proven to lower insurance premiums as you will have documented ways to show a reduction in risk.

Are you ready to be proactive?

At CNS, our DOT Compliance Programs focus on Proactive Safety Management (PSM), a mindset that will ensure your fleet’s safety and compliance is always in order and ahead of the FMCSA.

When partnering with a third-party program, your fleet has a team of experts that costs much less than hiring a safety director or team and can receive constant monitoring to keep your operation FMCSA compliant. Driver management will be simplified and the driver hiring process will shorten.

While data and paper management can be crucial, using a third-party partner will help you be prepared for audit representation, provide document storage, and offer up-to-date company policies and handbook of FMCSA rules and regulation changes.

Our PSM Motor Carrier Program includes:

• ELD management
• Driver Qualification File Management
• New driver on-boarding
• Driver safety meetings
• CSA score management
• Policies and handbooks
• Vehicle maintenance
• and more