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The National Association of Insurance Commissioners (NAIC) today released a press statement defending its members from insurer criticisms of slow administrative filing processes. Kansas Insurance Commissioner and President of NAIC, Sandy Praeger, refuted the criticism from “high-paid insurance lobbyists” and noted the irony of insurance representatives complaining of slow action on the part of the state insurance regulators.

“It is ironic that as they complain about process delays, consumers tell us that some insurance companies are slow to pay claims. In fact, 60 percent of consumer complaints reported to the NAIC by states are the result of claims handling problems caused by insurance companies. A large majority of them due to slow claims payment processes or outright denials.”

Commissioner Praeger had some other searing comments for the insurance industry, and noted that slow approval often lay with insurers’ failures to comply with state laws or to offer sound products.

“Insurance products are often complicated. They contain separate premium rates for every zip code, application forms with confusing questions, and an abundance of advertising materials promising everything from peace of mind to health and wealth,” said Praeger. “When insurers carefully review their requirements and submit good applications, the approval process is very fast. When companies fail to comply with state laws or offer questionable products, it takes time to review and correct their work to make sure that products deliver the benefits promised to consumers.”

“State regulators invest heavily in tools like SERFF to provide the industry the speed-to-market that companies need to compete,” said Praeger. “It is time for the industry to address speed-of-payment to consumers.”

Consumers will be cheering statements such as these, especially because some insurers take considerable time investigating claims or simply tell consumers, “We don’t pay for that.” Given the fact that state laws have rendered all drivers on the roads a captive market for insurers, consumers have every right to expect strict accountability of insurers by state insurance regulators. NAIC would serve consumers well if it started looking into actual grass-roots-level claims handling practices of insurers. I have little doubt regulators would be troubled by what they might find.

Technorati Tags: insurance, consumer, consumer protection, insurance commissioner, NAIC, lobbyist

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“Chicago — Choosing the best body shop to repair
your car is never an easy decision. Now, some customers complain that
some insurance companies are steering them to body shops that might not
be best for their cars. Larry Yellen has this investigation.”

MyFox Chicago | Are Insurance Companies Steering Car Owners to Bad Body Shops?

In many instances the answer to that question is, “Yes”.

Take a look at the story that aired on Chicago’s Fox News Station on February 26, 2008. The insurance industry spokesperson states that a consumer always has the right to choose the body shop and that the insurance companies have essentially “vetted” the body shops for the quality of their work. What she doesn’t say is the insurance company will hound you to death as a consumer to take your vehicle to a “preferred” shop for repair, and will try to achieve that by having the claim representative say things like, “we can’t guarantee the repairs”; “it will take two weeks for an adjuster to even look at your car”; or “that shop charges too much and you will have to pay out-of-pocket for repairs.” What the industry representative doesn’t tell us is that we have the right to choose any body shop we want, AND have the insurer pay for the repairs, AND not be pressured by the insurer about which shop we chose.

What she also doesn’t say is that insurers don’t actually go out and look at the repair work each shop performs, nor ensure they have the proper equipment, training, education, and materials to safely and properly fix each vehicle. Instead, insurers simply rely on the statements in the “direct repair program” document the insurer forces collision shops to sign that says the shops “warrant” to the insurer they have the necessary equipment, personnel, experience, etc. to properly repair vehicles. Many DRP shop owners with whom I’ve discussed the various insurer networks have frankly told me they never read the document before they signed it. They just knew if they didn’t sign the document and join the insurer’s network, they should close the doors to their businesses now. In other words, they don’t even know or care what they agreed to — as long as they have work and can keep their businesses open. As a result, many of these shops owners would have agreed to have Big Foot or pink elephants doing the repairs if that’s what they had to say to get on the insurer’s program.

Technorati Tags: collision repair, car accident, insurance, repair network, consumers

Yesterday, the U.S. Supreme Court denied Allstate Insurance Company’s last chance to override a Texas law that prohibits insurance companies from owning collision repair shops.  Docket for 07-775

Allstate, and its wholly-owned subsidiary Sterling Collision Centers, Inc. (OK, I’m being lazy — Sterling is actually a wholly-owned subsidiary of Allstate Non-Insurance Holdings, Inc. — which is an indirect affiliate of Allstate) have been fighting with Texas since 2003 over the enactment of Tex. Occ. Code § 2307.002 that states “an insurer may not own or acquire an interest in a repair facility.”  The Texas Legislature enacted the statute because of grave concerns involved with the inherent conflict of interest present when an insurer collects premiums and provides the collision service to the policyholders as well.

Allstate and Sterling have been fighting tooth and nail to have the Texas statute declared unconstitutional — without riveting success — and despite having pulled out Allstate’s moldy wallet to spring for the likes of Kirkland & Ellis (the Washington, D.C. office, no less) and Mr. Pricey himself, Ken Starr.  Yes, Ken Starr of Monica Lew… well, probably the less said, the better.

The district court decision found that Allstate actively referred unsuspecting claimants to its Sterling shops — even when those shops were providing poor service and some were given failing marks by Allstate’s own surveys.   Yet, Allstate had a financial interest in making Sterling profitable, so claims representatives continued to shove insureds and third parties to the Sterling shops, many of whom naively patronized the collision repair facilities on Allstate’s recommendation.  As a result, the court had no trouble appreciating the Texas Legislature’s concerns and desire to protect consumers.

Allstate claimed that the statute violated the Dormant Commerce Clause of The U.S. Constitution.  I know, I know, lawyers everywhere are now dusting off their Con. Law textbooks — except for the 11 of you legal geeks who actually dwell on the DCC and use it daily (I’ll bet you have pocket protectors).  Allstate/Sterling’s argument was that the Texas statute had a negative impact on interstate commerce because it discriminated against large insurers and chains of collision repair facilities in favor of local ones, and was passed to accomplish that discriminatory goal. 

Needless to say, there are many sexier issues being presented to the Justices than the DCC, so it was always likely that our highest court would pass on this one.  But, you just never know with the Big Black Robes.  The bottom line, however, is that the U.S. Supreme Court “just said, NO” to Allstate and Sterling.  Now Texas can go back to doing what it does best:  producing oil so, hopefully, our gas prices will go down.

The Automotive Service Association (ASA) deserves a big round of applause for all of its efforts in supporting the Texas Attorney General and by its action intervening in the case on his side from the beginning.  Most people probably don’t know that the Texas A.G.’s office didn’t even file a Brief in response opposing the the Petition for Certiorari.  (I don’t mean that critically, just stating facts.)  Fortunately, ASA did — and the organization deserves considerable credit for its efforts and all the money spent to help support a law keeping insurers out of the repair business and keeping collision repair businesses focused on serving the interests of its true customer, the consumer.

Technorati Tags: insurance, collision repair, Allstate, Texas, law, Supreme Court

In yet another shocking display of hubris, Allstate Insurance Co. — you know, “the good hands people” — defied the Florida Insurance Commissioner’s subpoena to produce documents pertaining to the insurer’s relationships with insurance trade associations, risk modeling companies, and others. Mind you, the Florida insurance agency asked to see these documents as part of its determination as to whether Allstate should be permitted to raise its rates. That’s right. Allstate started this by asking for higher premiums, but it wants those higher premiums without anyone looking into its relationships with others. One could say that Allstate just wants the State of Florida to “take its word” for the fact that it really needs more money.

When Allstate failed to comply with the State’s subpoena, the Insurance Commissioner pulled Allstate’s license to write new policies in Florida. Whack! This penalty adds to the list of defiant acts taken recently by the insurer. In the State of Missouri, a court fined Allstate $25,000 a day for refusing to produce a copy of the McKenzie & Company report that is the subject of the book, “From Good Hands to Boxing Gloves”. Allstate was ordered by a Missouri court to produce the report in a pending case. Allstate flatly refused. The court held Allstate in contempt and ordered the $25,000 per day fine until the insurer produces the report. So far, the fine continues to accrue.

It should be plain to everyone that an insurer as arrogant as Allstate, one that has no qualms about defying legitimate orders from government entities and courts, will have no difficulty treating its insureds with contempt as well. If you think you are likely to receive a fair claim settlement from this insurer, think again. We, as consumers, are fleas to such an insurer, incapable of inflicting any real pain to it. If $25,000 per day fines or the inability to write new policies don’t affect the company’s behavior, consumers have no chance at all.

This is just another good example of why this country needs meaningful insurance reform and a repeal of the McCarran-Ferguson Act exempting insurers from the application of the federal antitrust and other laws.

CollisionWeek News - Florida Pulls Allstate’s License to Write New Auto Policies

Although losing twice before in a Texas district court and before a 5th Circuit appellate court, Allstate Insurance and Ken Starr are hoping to convince the U.S. Supreme Court to take review of the Constitutionality of the Texas statute prohibiting insurance companies from owning collision repair shops.

Although Federal District Judge Ed Kinkeade wrote a compelling and well-reasoned decision identifying the inherent conflict of interest involved with insurers owning body shops, which was affirmed by the 5th Circuit, Allstate didn’t like the answer.  Making some of those moth-eaten arguments most of us haven’t seen since law school, Allstate will once again argue that the Texas law violates the Dormant Commerce Clause of The Constitution.

 Well, maybe Mr. Starr will fair better back in Washington, D.C. where his “starr” quality may have more appeal.

Allstate v. Abbott, U.S. Suprme Court Docket

Senate OKs CAFE hike - Automotive News

With the current legislative session running out of time, the Senate finally approved the increased CAFE standards that the House has already voted on and passed. All we need now for the new CAFE increases — moving vehicle fuel efficiency up to 35 miles per hour by 2020 — to go into effect, is for the President to sign the bill. Some of Senators supporting passage of the higher CAFE standards declared this to be a victory for the U.S. Perhaps I am just being cynical, but it’s a victory that came 20 years too late.

When I drove the Hummer H2, as much as I liked the vehicle, I cringed because of the wasteful consumption in which I wallowed. I want Hummers to be the most fuel efficient vehicles on the market, because they are comfortable, stable, and so much fun to drive. But I want to feel good about myself driving one, too. So, my challenge to you, AM General, is to make any future Hummer the most fuel efficient vehicle available in its class, and let my dream come true.

If you are or have been a party claiming diminished value against a Progressive insured in Connecticut, you might have been put off by a misleading statement by a Progressive claims representative. One such claimant’s attorney was told blatantly that the Connecticut Insurance Department refuses to allow insurers to offer diminished value coverage, and, therefore, no diminished value claims can be paid. CT Diminished Value Correspondence

Say, what?

Here is “Claims Specialist” Heather Hinckley’s July 9, 2007 response to a third party claimant’s demand for the inherent diminished value suffered as a result of a Progressive insured’s negligence:

At this time, the State of Connecticut, Department of Insurance does not allow Progressive Insurance or any other company to sell Diminished Value coverage for a vehicle. As the State doesn’t allow sales of the Diminished Value coverage, we are not able to afford Diminished value coverage. For these reasons, but not limited thereto, Progressive Insurance must respectfully deny your claim for damages. I am sorry that I could not advise you more favorably regarding this matter, but trust that you will understand our position.

Counsel for the claimant took the issue up with the Connecticut Insurance Department, which responded on September 26, 2007 stating that:

Heather Hinckley of Progressive Insurance has responded that the Connecticut Insurance Department does not allow diminished value coverage to be sold and therefore claims for diminished value cannot be made in Connecticut. In response to Ms. Hinckley’s assertion this is not correct. The Connecticut Insurance Department does not prevent claims made for diminished value and an insurer can request to include provisions of diminished value in their policy.

The CID also included a letter from a Progressive Claims Manager responding to the complaint that said:

I am writing in reply to your inquiry dated Aug. 21, 2007. I reviewed the complaint as well as the claim file and am able to provide you with the following information.

The letter sent by Heather Hinckley dated July 9, 2007, is incorrect.

Well that’s nice. Glad we got that all cleared up.

Of course, several questions remain. Has the Connecticut Insurance Department taken any action to ensure this misstatement of Connecticut law/regulation does not occur again? Has Progressive taken any action to make certain that its employees do not make this misstatement of Connecticut law/regulation again? But the one that has me really wondering is whether Heather Hinckley is still a “claims specialist” or whether she’s been knocked down to “claims representative”, “file clerk”, or “doughnut person”? After all, inquiring minds want to know.

It also bothers me that someone labeled a “claims specialist” by an insurance company can’t tell the difference between what is owed to an insured (first party) and what is owed to someone making a claim against an insured (third party). Ms. Hinckley’s comment about Progressive not offering “diminished value coverage” has nothing to do with a third party claim. The only portion of the policy any third party cares about is the section that tells the insured, “We’ll pay for anything for which you become liable up to the policy limits” (excepting, of course, intentional torts). How much of a specialist is a claims specialist who can’t tell the difference between a first party and third party claim? That’s covered in Insurance 101.

Probably, the most pertinent question is how many other people accepted the Hinckley line about diminished value not being permitted to be paid and simply went away? Well, Connecticut, your Insurance Department has spoken. Demand your diminished value. It’s really not illegal after all.

Welcome to AutoRepairLegal.com

Collision Repairers and Consumers should all know about the launching of AutoRepairLegal.com, a website enabling people to peruse the laws and regulations of a particular state, and to submit information for upload.

Auto Body Association Protest
	03-28-07 | Members of the Auto Body Association of Connecticut protested at the State Capitol in Hartford in support of legislation to tighten the law against auto insurers steering drivers to specific repair shops. Videographer Alan Chaniewski          Video, as requested.  This video only plays with Windows Media Player.  Click below to download.
You’ll need a version of Windows Media Player 7 or higher to view the video. If you need to download it, go to http://www.microsoft.com/windows/mediaplayer/en/default.asptarget=_blank The video player is supported by Microsoft IE 5.0 and above.

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 Don’t look now, but there is a convoy of tow trucks in Connecticut’s capitol.

Frustrated with the fact that they have to pay annual licensing fees, comply with regulations of the Department of Motor Vehicles, maintain expensive insurance policies, and pay high rates of workers’ compensation to operate their businesses, while employees of Progressive’s Concierge facility in the Hartford area admittedly disassemble customers’ vehicles without a repair license, members of Connecticut’s repair and towing industries are taking their fight to Progressive’s doorstep.

And their message is clear.  Stop letting Progressive compete without making it comply with the repair licensing laws. 

Attorney General, Richard Blumenthal, is on board with the repairers and tow companies.  Literally.  Blumenthal is scheduled to give a press conference from one of the tow trucks.  After the press conference, the convoy is headed to Progressive’s Concierge facility in Newington, Connecticut — which Progressive’s website identifies as its Hartford Concierge facility. 

Unable to face the rumble, Progressive is reportedly shutting down that facility for the day.

Good Samaritan law may not apply - USATODAY.com

A colleague forwarding this story said:

In Germany you are required by law to stop and help to the best of your abilities.  In the US apparently you don’t and now after reading this, I’d definitely think twice or three times before I even consider about helping anybody.

And we wonder why people in the U.S. hesitate to stop and give help to others?

As if buying a car is not complicated enough, at least one BMW dealer in California has added yet another layer of complication to the activity.  A well-spoken blogger in California wrote about her attempted car buying experience that culminated in a “No Sale” all because the dealership refused to sell her the vehicle unless she first provided her right thumbprint.

In her quest to purchase a BMW X3 (a nice vehicle, I might add), Lorna furnished her driver’s license and marriage certificate (her name had changed), and her credit report was run by the dealership — although she asserts it was done without her knowledge.  I’m not suggesting this is untrue, but she must have supplied her social security number on the purchase application (the forms usually have a pre-printed section requiring one to fill out that information) or the dealership would have had to have obtained her SSN somehow to run the credit history.  Perhaps California is a state that still has a driver’s social security number stamped on its face.  (I have always been puzzled by the fact that Departments of Motor Vehicles and state universities thought it was a great idea to use one’s SSN as a driver’s license or student identification number.  They simply helped create the identity theft debacle now at hand.)

Nonetheless, Lorna, of lornamatic.com, discovered that the BMW dealership refused to sell her the X3 unless she voluntarily provided her right thumbprint and authorized the dealership to obtain her DMV Driver’s License Record — which, of course, would contain a copy of her right thumbprint that she had to supply to the California DMV to obtain her driver’s license.  Lorna was doubly surprised to find that the dealership intended to keep the copies of her personal information, but the personnel there were unable to provide her with information regarding the company’s privacy policy and data security procedures.

I was intrigued by Lorna’s experience, so I took a look to see what I could find about California’s laws on the subject.  Here’s what I discovered:

1. The California Constitution, Article I, Section 1, ensures citizens of that State a right to privacy.
2. California has enacted its Information Practices Act to provide protection from the dissemination of personal information.  Cal Civ Code § 1798.81.5, however, does not apply to activities taken by “(4) An entity that obtains information under an agreement pursuant to Article 3 (commencing with Section 1800) of Chapter 1 of Division 2 of the Vehicle Code and is subject to the confidentiality requirements of the Vehicle Code.”
3. Cal Veh Code § 1808.5 states that, “Except as provided in Section 22511.58, all records of the department relating to the physical or mental condition of any person, …are confidential and not open to public inspection.”
4. Perkey v. DMV, 42 Cal. 3d 185; 721 P.2d 50; 228 Cal. Rptr. 169 (1984) held that the California DMV could properly require the provision of a thumbprint as a prerequisite to obtaining a driver’s license, but that the the thumbprint was confidential pursuant to the California Vehicle Code and the Information Practices Act. 

While in the past this provision has generally been applied to protect the confidentiality of what might ordinarily be termed “medical” information — such as information relating to an applicant’s eyesight (see 55 Ops.Cal.Atty.Gen. 122 (1972); 26 Ops.Cal.Atty.Gen. 136 (1955)) — a reasonable interpretation of the provision affords protection of that portion of a driver’s license application that reveals the applicant’s fingerprint.

Such an interpretation does not conflict with the statutory language because a fingerprint clearly relates to the “physical condition” of the applicant. Also, it furthers the general underlying purpose of the provision, which is to protect the confidentiality of information revealed by a driver’s license application where exposure will improperly infringe the applicant’s privacy rights.

Id. at 194, 721 P.2d at 55, 228 Cal. Rptr. at 174.

So, now we know that her thumbprint could not be obtained by the dealership from the DMV indiscriminately, the operative question is whether she can consent to the release of that personal information.  It seems highly likely that she can, which again raises a question as to the dealer’s personal information data privacy and security policy.  Clearly the dealer has an obligation to protect the information Lorna provided to it as a requirment of the Information Practices Act.  Had the dealer obtained information about her from the DMV, then the dealer would have to maintain the information securely as a requirement of the Vehicle Code.

These, of course, are only my observations and I would welcome any additional information or thoughts from my colleagues who practice in California.  Lorna’s experience is just a little too much like living in a totalitarian regime for my taste.  After all, if we weren’t so busy collecting all of this information about people, we wouldn’t be able to use it to pose as the upstanding citizen that the data collection says we are.  Don’t forget, Big Brother is watching you.Š

Every new lawyer who has ever worked in a firm knows the terror of potentially writing a memorandum, brief, or making some representation of the status of a statute or case that is relied upon by others that turns out to be — well — wrong.  I’m not talking of distinctions or hair-splitting about the case; I’m talking about cases that have been overturned, vacated, or heavily discredited and statutes that have been repealed or superseded.  That’s a new lawyer’s nightmare and, for the obsessive-compulsive in the rest of us, that concern never quite goes away.

Apparently, that concern didn’t register with insurance representatives lobbying Connecticut’s Insurance and Real Estate Legislative Committee when they argued the Committee should not approve legislation drafted by the State’s Attorney General, Richard Blumenthal, to make the State’s “steering” law stricter.  Three different insurance representatives told the Committee that a New York statute N.Y. Ins. Law § 2610 with similar language had been stricken as an unconstitutional violation of insurers’ right to commercial speech.  What each of them neglected to tell the Committee, however, is that the District Court decision making that statement had been vacated, and, after several appellate court decisions, on remand the District Court had issued a different opinion refusing to enjoin the NY Department of Insurance from enforcing the statute, refusing to rule on the insurers’ First Amendment claims, and dismissing the lawsuit.

Even more troubling, the District Court’s new opinion reiterated the Second Circuit’s finding that insurers could not challenge the NY statute on facial grounds, indicating that the court’s original finding of a constitutional violation regarding the statute itself was in error.

The Second Circuit explicitly rejected a facial challenge to § 2610(b). That court noted, “to the extent that the parties [] present a facial challenge to § 2610(b), it is an ‘overbreadth’ challenge, and such a challenge cannot lie with respect to a regulation of commercial speech.” Allstate II, 261 F.3d at 153

Allstate Ins. Co. v. Serio, 2003 U.S. Dist. LEXIS 13541 (D.N.Y. 2003)

In other words, the insurance representatives’ statements were gross misrepresentations of the status of (existing) New York law. 

I guess I’m shocked because I wouldn’t dream of stating something to a government entity – certainly not something as damning as a violation of The Constitution — without checking, rechecking, and re-rechecking to make absolutely certain it was true.  But, when no one holds you accountable, I guess you feel that sloppy information presentation is perfectly acceptable.  If this is any demonstration of how well state regulated insurance operates, insurers can kiss the McCarran-Ferguson Act goodbye. 

Anyway, after all of these legal decisions, the NY Department of Insurance issued Circular 14 on December 4, 2003 plainly stating that the steering law was in effect and that it would be enforced per the interpretation of the NY Court of Appeals’ decision.  Seven months later in June of 2004, the NY DOI’s General Counsel issued an opinion that insurers would be in violation of the steering statute if they informed claimants their vehicles could only be repaired at a facility certified by the claimants’ auto manufacturers.

Yeah, that’s really a statute that was struck down for its unconsitutional language. 

The Allstate v. Serio cases, NY DOI Circulars, and NY DOI Opinion can be accessed via links below:

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NAMIC, the National Association of Mutual Insurance Companies, issued a “Statement for the record to the Senate Committee on the Judiciary regarding The McCarran-Ferguson Act” protesting any repeal or limitation of the MFA”.  According to NAMIC’s website, the organization identified saving the MFA as its top issue of 2007.

I sometimes hear that insurers actually favor a repeal of the McCarran-Ferguson Act.  Here, for the record is NAMIC’s position on the issue.

NAMIC POSITION…NAMIC opposes any changes to or repeal of the existing antitrust exemptions afforded under the McCarran-Ferguson Act. Congress should be wary of the unintended consequences of changes to the current limited antitrust exemption. Any change that precludes, restricts, or even merely discourages the production and exchange of advisory loss costs and supplementary rating information could place smaller and regional firms at a distinct disadvantage, increase consumer costs, reduce consumer choice, and seriously undermine competition. There is no credible evidence that the cost, availability, or quality of insurance products would be enhanced if the McCarran-Ferguson limited antitrust exemptions were repealed or modified. Any change in the existing antitrust regime and repeal or modification to the current limitations could decrease market stability, reduce affordability and availability of products, stifle innovation and expansion, diminish industry efficiency, and, ultimately, inhibit rather than increase competition in the insurance marketplace.

Apparently, Insurers are surprised that the MFA is under attack, The Washington Post reported at the end of last month.

The insurance industry is one of Washington’s fiercest and best-funded lobbies, so it rarely gets surprised. But last week several industry representatives privately acknowledged amazement that their most important federal benefit — an antitrust exemption — is in danger. 

Well, hello.  Where have they been since November of 2002 when the Antitrust Modernization Commission was formed?  Having attended meetings of the Commission and submitted comments on the need to repeal the MFA, I know first-hand that insurers were oblivious to the threat.  Ironically, when attorneys representing insurers and journalists writing on the industry started looking into the AMC’s interest in the MFA, they called me.  Nonetheless, the fact that an industry that has one of “Washington’s fiercest and best-funded lobbies” completely ignored the AMC shows a certain level of arrogance or stupidity that is difficult to believe.

Yet, now, the insurers are up-in-arms about Senate Bill 618 and the companion house bill submitted last month.  According to The Washington Post:

The National Association of Mutual Insurance Companies has already created a “war room” that is targeting the districts and states of lawmakers who might be sympathetic or persuadable. It is hunting for insurers with employees in those places whom they can train to lobby their elected representatives. A broad coalition of insurance lobbies is also in the offing. 

I wonder if those employees will continue to receive their insurance company salaries while they are lobbying their elected representatives and whether those salaries will be included in and reported as money spent to lobby Congress. 

NAMIC Statement for the record to the Senate Committee on the Judiciary regarding The McCarran-Ferguson Act

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Yesterday, Business Insurance reported that Mississippi’s Attorney General, Jim Hood, urged Congress to repeal the insurance industry’s exemption to the application of the federal antitrust laws.  Apparently, AG Hood testified before the House Financial Services Committee’s Oversight and Investigations Subcommittee and accused insurers of trying to intimidate the state’s justice system.

Well, that wouldn’t exactly be news, as California’s former Insurance Commissioner, and now Lieutenant Governor, John Garamendi, issued press releases about how insurers threatened to pour money into a campaign to defeat his bid for the position of Lt. Governor if he insisted on implementing laws and regulations approved by California’s voters that insurers disliked.

Garamendi issued a May 8, 2006 press release from the DOI’s office declaring:

Let me make it clear, I will not be intimidated – not even by the political clout of a $120 billion industry that is willing to go to any length to get its way. This action by the special interest insurance lobby is pure blackmail and extortion, an attempt to stop me from issuing new regulations that will finally implement the will of the voters as expressed in Prop. 103 in 1988.

Garamendi went so far as to take steps to initiate an investigation into the insurance industry’s attempt to blackmail him.  In his letter to the FBI, the U.S. Attorney General’s Office, and the California Attorney General’s Office, Garamendi stated that insurers had previously voiced their displeasure about the implementation of certain auto insurance pricing regulations in a proper manner.

But things changed dramatically on April 24 [2006]. On that day the insurance industry veered dangerously off track in its efforts, and I firmly believe that its leaders have attempted blackmail and extortion against me.

Naming names, Garamendi’s press release of May 9, 2006 said that, “It has now been reported that State Farm, Farmers, Allstate, Safeco, 21st Century Insurance, and others are financing this campaign.”  Ouch.

John Garamendi also issued the following concern and warning to his correspondents about future actions of the insurance industry.

 While this threat was unsuccessful, I believe it is now my responsibility to stand up to this powerful special interest group and set in stone that they cannot engage in, much less succeed with such tactics. This is a serious threat not only to me, but also to the Insurance Commissioners who follow. They, and all other regulators, must be allowed to protect the consumers of California and carry out the laws of the State and people in an atmosphere free of coercion, blackmail and extortion.

Ouch, indeed.

Life is a highway.   Yes, it certainly is, and because of that, the law and cars seem like such a natural fit.  After all, you have rule framework for driving a car on any given highway – just like you have rule framework for being a citizen, living in a given place, and pursuing happiness.  The actual and metaphoric highways mesh.

Satisfaction Surveys are Just Big Lies:

Stephanie West Allen at the idealawg posts an insightful look at consumers’ responses to satisfaction surveys.  Do clients tell the truth when surveyed about satisfaction? The brain knows and it might be telling.   The study West Allen cites to notes that people often fail to tell the truth when responding to satisfaction surveys.  There is an interesting adjunct to West Allen’s post which is the issue that our bodies and brains often know and react to things long before our conscience knows anything. Anyone who has read Malcolm Gladwell’s “Blink” knows that the adaptive unconscious is usually far out in front of our laggard conscious minds when it comes to making determinations on anything.  Therefore, the question that arises about people’s responses to satisfaction surveys is whether they are intentional or unintentional falsehoods.

Which brings me to a very important issue.  Automotive News($) published a recent J.D. Powers survey involving only 5,752 consumers who had been involved in collisions and addressed their satisfaction about the repair experience.  The survey results suggest that people are happier with the collision repair experience when using insurer “direct repair program” shops or when they have received a referral from an insurer.  Part of the rationale given in the story in Automotive News for why consumers feel better about insurer recommended repair shops is that insurers investigate them and insist that they have the latest model equipment and best-trained technicians.  Holy cats, is that a sell job, because it is absolutely untrue.

While insurers put things in these direct repair program documents that say a repairer has to have the right equipment and training, that’s all for show in the event the AG’s office or some other consumer protection group gets hold of them.  The bottom line is the insurers could absolutely care less if you are using chains behind your repair garage to pull vehicles’ unibodies into alignment.  Insurers only care about getting a repair job done as cheaply as possible, and, often, if they can twist the repairer to perform an unsafe, but cheap, repair, they do it.  I would love to tell lawyers how many times I have seen insurance company representatives write an estimate of repair that calls for the “clipping” of the vehicle.  Clipping is the industry slang for “cutting the car in half horizontally, throwing away the damaged half and welding a salvage yard total-loss half onto the consumer’s vehicle, and handing the customer the keys.”  Ta-da!  And guess, what folks?  In the vast majority of states, that practice is not illegal.  Unsafe?  You bet.  Illegal?  No.  And the insurers’ attitudes about practices like these?  “No one says we can’t do it, and if it’s going to save us a buck, we’re going to do it.”  and my personal favorite, “We don’t repair cars, we just pay to have cars repaired.” – even though insurers dictate how vehicles are to be repaired to collision repair shops every day of the week.  If you are a collision repair shop that stands up for the consumer, insurers make your life a living hell.  And, they make the lives of consumers who try to patronize the responsible collision repair facilities hell as well.

You can see, therefore, the complete lack of value of the J.D. Powers survey.  The only reason those customers are satisfied with the insurer’s recommendation is because the insurers tend to leave shops in their “networks” alone and don’t play games with them by browbeating their customers, refusing to pay for necessary repairs, deliberately delaying sending an adjuster to review the damage for two or more weeks, and other lovely games.  And why do they leave the network shops alone?  Because those collision repair shops have signed documents that trade away many rights of the customers (unbeknownst to the customers), agree to use inferior parts, use salvage parts (including salvage airbags), and agree to fully indemnify the auto liability carrier for anything (negligence, intentional acts, diminished value, attorney fees, titling problems — oh yes, some of those clips are “front end” clips.  That means the VIN on your dashboard is a salvage vehicle VIN and no longer matches the registration or title of your car.)  Anyone who takes the insurer’s recommendation for a collision repair shop is asking for trouble.

Along those lines, Eric Turkewitz of the New York Personal Injury Law Blog posts about Anderson Cooper’sstory on Allstate Insurance and its aversion to actually paying claims   No, really?

John Shortell of the BodyShop Solutions blog has an enlightening post called More From Inside Nationwide.  A Manifesto That Threatens Termination for Appraisers Who Fail to Get With The Program about the realities of how insurers treat consumers, collision repair facilities, and their own employees.  Shortell even posts an email from a person identified as Paul J. Connell, Materials Damage Claims Associate Director ratcheting up the pressure on claims personnel and body shops.  Anyone who practices in the personal injury area will find Shortell’s post eye-opening.  As a final thought, PI lawyers, are you aware that many insurers use the cost to repair the vehicle as the basis upon which they offer soft tissue bodily injury claims settlements? So, you can see the additional incentive insurers have to keep repair costs as low as possible. 

Accidents:

In my day, babysitters earned about a dollar an hour.  No one paid social security, worker’s comp., or insurance – but that’s probably changed.  And if it hasn’t, maybe it should.  The Orange County Personal Injury Lawyer blawg recounts a sad tale of a babysitter who hit another car killing someone while picking up his employers’ youngest child from school.  Needless to say, the decedent’s family sued the babysitter but also sued the parents/employers.  Vicarious liability isn’t anything new, but how many times do even lawyer parents, desperate for a night out, stop to think, “what are the potential ramifications of this employment activity?”

David Giacalone has some meaningful information for people involved in accidents who want to handle the matter without the assistance (and cost) of an attorney.    DG must have a great sense of humor as the blawg is titled:  “shlep - the Self-Help Law ExPress”.  He also has an excellent post on how consumers can protect themselves in a used car purchase.  Although, Giacalone’s post contains much useful information for buying vehicles, the gigantic problem with the whole used car world is that there are NO standards dictating how vehicles are permitted to be repaired and NO used motor vehicle standards dictating “lifecycle motor vehicle safety” throughout a vehicle’s lifetime.

 J. Craig Williams from May it Please The Court reminds us that if you ski and get hurt, nurse your wounds and go home.  Assumption of risk is still the word of the day on the slopes, and suing the ski resort just makes you look stupid as well as clumsy.

Just Pull over and Keep Your Mouth Shut:

Carpundit says it like it is, and I just love that.  CP reminds sassy Harvard Law students that, in fact, Big Daddy Brother does have jurisdiction over any punk on the road and it really doesn’t matter if it’s a state road or a local one.  CP’s tip of the day for drivers: “when you see the blue lights flashing, pull safely to the right shoulder and come to a complete stop.  In the words of Chris Rock, If the police have to come and get you, they’re bringing an ass kicking with them.”   Jamie Spencer does a neat job of digging through the law to find out if a client committed a traffic violation by performing a U-turn at a location posted only “No Left Turn”.  I have to admit, trying to piece together state law and local ordinance is often a nightmare, and it makes for some wacky results.  This is an interesting read over at the Austin DWI Lawyer blawg.

Go Green!   The Green Business News brings us news about recent enactment of laws in the U.K. that require vehicle manufacturers to pay for the safe and environmentally appropriate disposal of motor vehicles. Autoblog reports that the President has finally drafted some fuel economy legislation which would allow regulators to demand higher mileage standards from automakers.

Government Officials We Think Have Drive or Have Job Openings

 The AutoProhpet lauds Michigan AG, Mike Cox, for doing what every state should do — ban those stupid (and inaccurate) red-light camaras.  Boy, talk about a total walk around the hearsay rule.

The Antitrust Review points out a bunch of job openings in that easy-to-parse-through land of antitrust law.  In addition to which, the AR tells us that the European Court has upheld a Beer Cartel Fine.  Look, if the U.S. can finally “free the grapes” and let wineries ship directly to consumers, then I think the European consumers should be entitled to “free the hops.”

Revelations (Oh, my goodness, it’s just what I wanted):

GAL of the Greatest American Lawyer has toyed with revealing his (and I do believe it is a “his”, although GAL may be more of a hint than one might imagine!) anonymous self.    There was even a contest, closed yesterday, winners to be announced early this week.  GAL begged not to be outted by those in the know until post-revelation.  OK, I’ll give you all a real heads-up.  It’s me!  Why do you think I’m hosting this blawg review?

Also, anyone interested in what interests gay people in the world of automobiles must visit Gaywheels.com which bills itself as the “gay-friendly automotive resource”.  The Truth About Cars has a fun dish on some woes at ToMoCo (you know, Toyota Motor Co.) involving “memogate“.

Vorsicht bei der Abfahrt  (Danger, Will Robinson, Danger!)

Overlawyered keeps us up-to-date with warning labels the whole family can enjoy, while Jonathan B. Wilson comments on a Georgia Social Networking Bill designed to keep minors safe.

Joe Sherlock of The View From Behind The Windshield warns about property loss damage that can occur to your car just by going through an automated car wash.

Nicole Black of Sui Generis–a New York law blog warns of issues involving ethical issues involving NY’s lawyer advertising rules and their application to a home office. Diane Levin of Death and Taxes Blog talks about her thoughts on Associate Salaries.

Heresy (I prefer to take the bus, thank you very much):

“Blessed are the few of words, for they will be welcome anywhere.”  Lawyers talk too much (just look at this Blawg Review!)  If you don’t think so, marry one.  Imagine if other professions bored spouses and friends with the minutiae of earning their daily bread, e.g. “Then I typed the letter “q”, then a “u” . . .” or “I put the strands of DNA, that I had previously teased from the extracting solution, into a test tube . . .”  Honestly, how does the rest of the world stand us?  But now I have a hero.  His name is Donald A. Van Sullehem.  And courtesy of the (new) legal writer,  Here is his elegant response to a brief, and one which, if I weren’t so much of a coward, I would have written in some of my own cases.

Brief in Opposition to Plaintiff’s Motion for Reinstatement
Plaintiff has got to be kidding.
Respectfully submitted, Simpson & Moran, By Donald A. Van Sullehem, Attorneys for Defendant, Birmingham, Mich.

Basquette talks about why blogging isn’t for everyone in put down the blog and step away from the computer, ma’am… and Charles H. Green emphasizes the power and beauty of silence at the Trust Matters blawg.

By a whisker (as in, “I just missed that guy by a”):

Julian Ku discussed the hang-up concerning the words “annihilation” versus “genocide” in the debate over the mass killings of Armenians during the Ottoman regime in Turkey.  Ken Adams of AdamsDrafting really splits hairs over the use of the words “termination” or “expiration” in contract drafting. 

Warm and out of the wind (if it’s a convertible, the top is up):

The Wired GC takes aim at the Government Accountability Office for being miffed that the DHS counsel wants to review documents before production and be present at employee depositions. Stephen M. Nipper of The Invent Blog gives us the happy news that PayPal is trying to compete with Google’s new “Checkout” program by offering a $15 rebate on goods purchased from participating retailers.  Luckily for us, some of those retailers include purveyors of law books and legal aids.  Where the heck were these companies when I was in law school paying full bore for every book I had to use?   Sox First continues to report that Citigroup has its hands full trying to defend itself against the allegations of the Australian Securities and Investment Commission that it engaged in insider trading and failed to manage conflicts of interest.

Grievances (Why the hell didn’t you fill up before we left?):

J. Daniel Hull of What About Clients?™ flares about whether lawyers are delivering real services to clients in an economy that now seems exclusively about selling services on a global level.  Hull’s comments immediately reminded me of a fascinating discussion my friend Leon Polott of 5iTech and I had when we were the Chair and Vice Chair respectively of the Cleveland Bar Association’s International Law Section.  At the time, Leon and I discussed the client zealous representation and potential ethical issues arising from the ever-present (and in use) bottle of Vodka on the meeting table in a Russian negotiation.  At what point should there be a different code of conduct and professional responsibility for lawyers representing clients internationally?   

S. Alan Childress points out the grandstanding, childish, and jerry-springerish activities that some judges have begun to exhibit in their occupation of the bench. While paid participants in the legal world continue to pay lip-service to concepts of professionalism and collegiality, the migration of the practice of law to the business of law rewards those who can draw the most dollars by their outlandish behavior.

My own grievance, of course, is that issues I care about are once again being upstaged by that minx, Anna Nicole Smith (aka Vicky Lynn Marshall).  It’s bad enough that the U.S. Supreme Court deemed her dispute over her ancient deceased billionaire husband’s estate to be more review-worthy than a genuine issue over the denial of due process and question of the propriety of a state supreme court justice casting the deciding vote overturning a billion dollar consumer judgment against one of his supporters, State Farm.  Now, the week I am hosting blawg review, she dies, leaving questions about the cause of death, the paternity of her new baby, and the quagmire of her former husband’s estate and her own.  As a former probate, trust, and estate trial lawyer the latter is undeniably appealing to me.  Nonetheless, couldn’t ANS/VLM have done this on someone else’s watch?  I think I will have to take this personally.

Tune in Next Week

Blawg Review has information about next week’s host, and instructions how to get your blawg posts reviewed in upcoming issues.
 

Consumers living in Connecticut are truly getting their money’s worth in Attorney General, Richard Blumenthal.  Not only does he do his job as Attorney General, which he clearly performs with genuine passion for protecting the public, but now he is doing the Insurance Department’s as well.

 Today, the AG’s office issued this press release Attorney General Drafts Stronger Law Prohibiting Insurers From Steering Consumers To Select Auto Repair Shops and the AG held a press conference to announce changes he wants to see to the toothless and unenforced current version of the anti-steering law.  The current law simply prohibits insurers from “requiring” car owners to take their vehicles to particular repair facilities.  AG Blumenthal’s version would prevent insurers from even requesting that claimants patronize select shops and prevent them from using some not-so-subtle word-track to shove claimants toward shops that have signed agreements with insurers.  (Those agreements deserve some scrutiny by the AG themselves given that they are designed to benefit the insurer and often include terms that work against the repair customer — all unbeknownst to that customer; but right now, I think the AG has earned a well-deserved respite.) 

What word-tracks am I talking about?  Well, if you recently had a motor vehicle accident (it doesn’t really matter which state), you probably heard something like these well-rehearsed, telemarketing-type, word-tracks: 

 ”Well, you can take your vehicle to any shop you want, but X insurance company can only guarantee the repairs if you take it to one of our preferred facilitites.” or maybe you got:

“You can take your car to that shop, if you really want to, but we won’t be able to send an adjuster out to do a damage estimate for at least two weeks.  But if you take it to shops X, Y, or Z, they will be able to start on your repairs tomorrow.” (One of my typical responses to this is, “I guess you need to take some of those record profits insurers are always declaring and invest some of it into customer service areas by hiring additional adjusters.”)  or perhaps:

“Shop A is very difficult to work with.  We can’t ever get an agreed price from them, so you’ll have to pay a lot of money for the repair out of your own pocket.”

When the existing version of the anti-steering statute was being considered by the Legislature, it was voted positively out of the Transportation Committee with the inclusion of this language that insurers “also cannot intimidate, coerce, threaten, or provide an incentive or inducement to influence the use of a specific service or product.”  (OLR Bill Analysis, sHB 5793, October 1, 1992, Transportation Committee).  All of the intimidation, coercion, incentive, or threat language got excised from the bill during its trip through th Insurance and Real Estate Committee, and Connecticut ended up with an anti-steering bill, the spirit of which insurers routinely violate.

Of course, the Connecticut Insurance Department doesn’t see a problem with the coercive tactics insurers use to promote their direct repair programs — which include terms and conditions that actually harm consumers.  It has to make one wonder what the CID does to earn its keep.  After all, if the AG is doing both his job and the Insurance Department’s, who needs the CID?  Perhaps the citizens of Connecticut deserve a little rate decrease of their own.  If the CID gets cancelled now, CT citizens might get some premium back.  If nothing else, they at least won’t have the CID obstructing every attempt made by citizens, groups, and, yes, even the Attorney General to get information about insurer practices and enforcement action for alleged insurer violations of the State’s laws and regulations.

I was looking for some specific information on vehicle identification numbers today via the net, and found something astonishing in the Department of Justice’s Freedom of Information Act Reading Room. Under the “Title 9″ heading, DOJ actually has a subheading called the “Criminal Resource Manual“. Now, doesn’t that just sound like a Sopranos’ “How to be a Wise Guy” instruction booklet? It wasn’t something I ever expected to find at the DOJ, in relation to VINs, and certainly not in the FOIA reading room. Go figure.

Illinois is considering SB 1839 which would ammend the Illinois Vehicle Code to require the State’s Department of Transportation to supply vehicle-specific accident data for vehicle history reports. Of course, this bill has its limitations because it only requires the reporting of police-reported accidents. But, that’s better than nothing — which is what Illinois has now.

Now if the coalition that is supporting this bill really wanted to get serious, they would ask the legislature to require the disclosure of insurance claim related information as well.

After an 8 month respite, the California Legislature is once again being asked to consider an act that would effectively declare certified aftermarket parts to be equal to the parts originally installed on the vehicle when manufactured. Sheesh, the topic that never ends.

AB 1163 Assembly Bill - Status

The California Certified Aftermarket Parts Bill (AB 1163) is again rearing its ugly head. 1163, which had barely any support last year (and there is a good reason for that, too — it’s a lousy bill) is once again on the hearing schedule for consideration by the Businesses and Professions Committee.

Didn’t we point out enough foolish and undesirable things about this bill last time to make it go away permanently? Obviously, not.

Plaintiffs in Avery v. State Farm have asked the Illinois Supreme Court to reconsider its August 18, 2005 decision overturning the $1 billion+ jury verdict. The basis for the rehearing request is Plaintiffs’ contention they were denied due process by the participation of Justice Lloyd Karmeier in the decision. Karmeier is a newly elected Justice who was purportedly well-funded by State Farm (directly and indirectly) in his campaign. Among other contributions that Plaintiffs say can be traced to State Farm, its employees, and its counsel, Plaintiffs cite to a JUSTPAC contribution of over $1.1 million. According to Plaintiffs, JUSTPAC is an organization founded by State Farm lobbyist and attorney, Bill Shepherd.

Plaintiffs had asked Karmeier to recuse himself from participating in the Avery decision prior to its release, but the new Justice refused. Instead, he cast the deciding vote, giving State Farm cause to heave a big sigh of relief.

Justice Karmeier’s decision to participate in the opinion was certainly a foolish one. Ethically, lawyers and judges are charged with the obligation to avoid “even the appearance of impropriety” and we must tread carefully in our comments and actions to ensure we do not undermine the public’s faith in the judicial system. What could possibly create the appearance of impropriety more than a justice participating in a decision overturning his alleged benefactor’s obligation to pay over a billion dollars to consumers? Additionally, what could possibly undermine the public’s faith in the judicial system more than the suggestion that justice is for sale, as long as you can pay enough?

Perhaps if the Illinois Supreme Court decision overturning Avery were scholarly and well-reasoned, there would be much less ammunition for Plaintiffs. As it stands, however, the Illinois high court turned out an extremely shoddy product that has more holes than swiss cheese, and to be given such a poor result — after waiting years for the decision and conveniently not before Justice Karmeier was elected — raises serious questions about the propriety of the opinion.

I have commented on this opinion here and here and just wanted to add another tidbit that relates to the IL high court’s idea that “like, kind, and quality” doesn’t mean equal to the original equipment manufacture parts. I stumbled across this and was amused to find that even according to insure.com, Illinois law requires “[n]on-OEM parts must be of ‘like kind and quality’ to OEM parts.” It just has to make one wonder if the Illinois Supreme Court even knows its own State’s law.

HT Collision Week

Insure.com Car Insurance - Official site.

Katrina has now passed but in her wake she left a good deal of damage. With cities like New Orleans under water, you can bet that we will see a tidal wave of flood cars in the next six months. Unfortunately, most states do not require flood cars to be salvaged, and many states do not have a title brand for a vehicle involved in a flood.

As always, the RiskProf is on top of the insurance issues and notes that auto insurance prices are predicted to increase in the aftermath of Katrina. Just think of all those flooded personal and fleet cars that will affect claims payouts. According to a story from The USA Today, quoting a senior VP of Eqecat, “There will be tens of thousands of cars with flood damage”, and the problem estimating auto claims “is that cars move.” And there, of course, is the rub.

We won’t know for some time what the auto insurance-related costs of this storm will be. However, we are unlikely ever to know what the real cost to consumers is because many of those affected vehicles will be sold without any disclosure or indication on the title that they are flood vehicles. As a result, the problems, expense, and misery will be passed on to others who have no connection with Katrina.

How can this happen? Easily. Initially, understand that vehicles typically only receive a “flood” brand when they are salvaged. That means that the vehicle has to be first declared a total loss and the flood designation will only indicate that it was totaled as a result of water damage as opposed to collision or other cause. Yet, there will be thousands of cars that were flooded but will not be declared a total loss. Most of those vehicles will escape having their titles branded to indicate that, while not declared a total loss, they were immersed in water to some significant degree.

I have spent over a week trying to get in touch with the Lousiana Department of Public Safety because the State’s branding requirements are unclear. Even though located in Baton Rouge, the agency is unavailable due to the storm — I couldn’t even get a telephone connection. Here are some of the things I discovered from my own research, however. A vehicle is “salvaged” when it is declared a total loss by an insurance settlement.
La. R.S. 32:702 (2005) says, in part:

(10) The term “salvage title” shall mean a certificate used to evidence the declaration in an insurance settlement that a motor vehicle is a “total loss” motor vehicle as provided in this Chapter, to be prescribed and distributed by the office of motor vehicles, to an insurance company, its authorized agent, or the owner of a “total loss” motor vehicle.

(11) The term “total loss” means a motor vehicle which has sustained damages equivalent to seventy-five percent or more of the market value as determined by the most current National Automobile Dealers Association Handbook. However, a motor vehicle that sustains cosmetic damages caused by hail equivalent to seventy-five percent or more of its market value as a result of costs for repairs to items such as windshields, windows, and rear glass, exterior paint and paint materials, and body damage such as dents shall not be deemed a “total loss” and salvaged; however, such vehicles shall be issued a branded title indicating the vehicle has sustained hail damage.

The good news is that Louisiana law also requires disclosure of water damage to the buyer when selling a vehicle, but it does not appear to require the vehicle’s title be branded if it has sustained water damage, even if not declared a total loss:

La. R.S. 32:774.2 (2005)

§ 32:774.2. Sale of used water-damaged vehicles

A. No used motor vehicle dealer, nor any person or entity, shall sell, transfer, or convey any used motor vehicle to any person without notifying the buyer or receiver of the vehicle in writing of the extent of any water damage from flooding which occurred to the vehicle prior to the transaction.

B. If a sale, transfer, or conveyance of a used motor vehicle occurs in violation of Subsection A, the person receiving ownership and title to the vehicle who is not otherwise aware of the damage at the time of the transaction may bring an action to set aside the transaction within one year from the date of the transaction and receive all monies or other property given as consideration for the vehicle less a reasonable assessment for miles driven.

Problematically, there is no interpretation of this law to tell us whether it applies a strict liability or a knowledge standard. In other words, if you are a seller who has no idea the vehicle had water damage, are you liable for the transaction even though you acted honestly and in good faith? The law also doesn’t define “water damage”, so what amount of water and which part of the vehicle exposed constitutes “water damage”?

Mississippi, on the other hand, does not have a separate statutory requirement that water damage must be disclosed to buyers. The State does require insurance total losses to be retitled as a salvage vehicle. Miss. Code Ann. §63-21-33 (2005)

Mississippi law adds an interesting twist to these flood issues. MS is one of the states that titles mobile or manufacturered homes with a personal property certificate of title, not as real estate. Miss. Code Ann. §63-21-40 (2005). As a result, the State requires mobile home titles to be reissued as salvage certificates of title when a total loss claim is paid.

This is one of those times when having a Uniform Certificate of Title Act with uniform title branding laws would be extremely beneficial. Oh, and don’t forget. Whether the insurance company totals your vehicle or not, the auto maker will void your manufacturer’s warranty anyway. Good luck, too, getting your car fixed under any “extended warranty”. They typically have exclusions for changes in the vehicle as well.

The National Conference of Commissioners on Uniform State Laws (NCCUSL) has approved the Uniform Certificate of Title Act. NCCUSL, for those who are not familiar with this organization, are the fine people who brought us the Uniform Commercial Code — and many other laws designed to bring uniformity to state mandates.

The Uniform Certificate of Title Act (UCOTA) is designed to provide consistency in titling appearance and practices among states and to alleviate instances of title fraud. Unfortunately, the one thing it does not provide is mandatory title branding for damage, flood, fire, theft, salvage, etc. The Act briefly addresses title branding to require that brands from other states be carried forward.

During the drafting phase, consumer groups took issue with the lack of specific title branding provisions. However, the drafting committee believed that the title branding issue was too diverse and contentious to be included as part of the UCOTA. Drafting committee chair Leon McCorkle, Jr. suggested that the title branding issue might warrant a uniform law and drafting committee of its own.

I take my hat off to the commissioners. Picture a room absolutely jam-packed with lawyers in attendance to forward their clients/employers’ specific interests — for three days at a shot. Anyone who has ever been trapped in a room with more than one lawyer at a time will appreciate the heated back and forth that often ensued. Yet, the NCCUSL members on our drafting committee were calm and civil the entire time.

States can start implementing the Uniform Certificate of Title Act, if they choose. At a minimum, they have a clear, ready-made guide to work from.

I am delighted to announce that my AutoMuse blog has been reviewed on the Small Business Trends PowerBlog Review. Small Business Trends: PowerBlog Review: AutoMuse

I am also delighted that AutoMuse has been chosen by Forbes for its “Best of the Web” awards. Thanks for the recognition!

As I have written about before, one of the issues the Antitrust Modernization Commission is considering is a possible recommendation to Congress for the reexamination, limitation, or repeal of the numerous immunities and exemptions to the federal antitrust laws. Particularly troublesome for many is the insurance exemption to the application of the majority of federal laws, including the federal antitrust laws, via the McCarran-Ferguson Act. The AMC issued a call for public comment on the topic of immunities and exemptions which were due July 15th. Some interesting comments were submitted.

Probably the most interesting comment on the immunities and exemptions issue came from, where else? The Office of the New York Attorney General. The NY AG’s Antitrust Bureau is still hot on the trail of abusive insurance practices and its comment identified that “our investigation of the insurance industry disclosed serious, well-substantiated evidence of bid-rigging that resulted in artificial inflation of commercial insurance rates in the absence of real competition.” (Pg 9) The comment goes on to note that this is a pervasive national problem that involves 10 cents of every dollar produced in the U.S. Gross Domestic Product.

Consider that the National Association of Attorneys General adopted a Resolution on the Principles of State Antitrust Enforcement at its spring meeting affirming its opposition to any legislation that weakens antitrust standards for specific industries, and I would say insurers may soon have some explaining to do to in front of a state enforcer with substantially more clout than the Insurance Commissioners.

PCI and AIA both submitted comments outlining that McCarran-Ferguson is necessary for the proper operation of the insurance industry. Yet, there is an acknowledgement that MFA would not be necessary for those insurers who elect to opt in to a proposed optional federal charter.

It certainly will be interesting to see what develops. In Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko LLP, 540 U.S. 398, 415 (2004), Justice Scalia stated that, “The Sherman Act is indeed the ‘Magna Carta of free enterprise’”. That being the case, even the King was not entitled to an exemption from the application of the Magna Carta. In point of fact, no one was.

The National Association of Mutual Insurance Companies (NAMIC)issued a news release apprising its members of 19 newly enacted state security breach notification laws and warning more states will likely follow suit. Given the recent spate of alarming security breaches, most notably at ChoicePoint and Lexis/Nexis, states are moving to follow California’s lead requiring businesses to notify customers of security breaches which expose personal information to non-authorized persons. Before these highly publicized security failures, California was the only state requiring disclosure to consumers that their information had been compromised. Without California’s law, I doubt we would ever have heard about the problem.

Given the amount and extent of personal information insurers collect in claims processing, NAMIC is smart to inform its members about these new laws and what they require. I shudder to think what information identity thieves could get if they hacked into insurer files.

Security Breach Notification Laws Should Concern Insurers, NAMIC Says (RR)

I will be slow on posts as I am off to testify on behalf of consumer interests at the NCOIL hearing on aftermarket parts. Anyone interested in what I will be saying can read the written testimony submitted.

ABRN (Automotive Body Repair News) - AASP/NJ applauds consumer aftermarket parts bill

With the National Conference of Insurance Legislators about to consider its Certified Aftermarket Crash Parts Model Act, which many collision repairers oppose, it may seem confusing that New Jersey’s Alliance of Automotive Repairers supports an aftermarket parts bill introduced in that State. As with any legislation, the difference lies in the terms and goals of that legislation.

New Jersey’s Assembly Bill 3682 has been drastically modified since its introduction. While it still includes language disallowing any description of an aftermarket part as “approved” or “quality” — which is a good thing as consumers often believe the description “quality replacement part” means they are getting OEM parts in their repairs — it strikes portions which were significant for consumers. It also requires the estimate to list the difference in price between the aftermarket and a new OEM part.

Yet, prior versions of bill went out of the way to inform and protect consumers. One example is that the consumer notification, when aftermarket parts are used, was to include language that stated that the parts may not equal the OEM parts, and “may reduce the value of your vehicle.” It went on to say that, “Any vehicle warranty which might otherwise apply to this part(s) and any adjacent or related parts may be voided by the use of such aftermarket collision parts.” These are the realities damage and repair have on a vehicle’s warranty. It was nice to think that consumers would have a real understanding of what they were agreeing to if they decide to accept aftermarket parts in their vehicles’ repair. Now it just says that the estimate has been prepared using non-OEM parts and the customer must approve the use of the parts. It doesn’t tell consumers that they have a choice to refuse the parts, so what good is it?

Who isn’t happy with the bill? Insurers. ABRN (Automotive Body Repair News) - Insurers angry over New Jersey vote; other sites like Property and Casualty.com carried the identical article, as did ClaimsGuides.com and a variety of other news entities. It just goes to show you the power of the press release.

The strange part, however, is the insurance industry’s displeasure with the bill as modified. It has been virtually sanitized of its insurer-unfriendly provisions. The bill that was under consideration by the Assembly Regulated Professions and Independent Authorities Committee in May of 2005 was much uglier for the industry and prohibited insurers from including terms in their policies requiring insureds to accept aftermarket parts. It also mandated that insurers pay consumers the difference between the aftermarket and OEM part if they agreed to have the aftermarket part installed. In other words, insurers would have been required to pay the value of a repair with all OEM parts, whether those parts were used or not.

Now that seemed like a provision that would have understandably outraged insurers — but the vanilla version of this bill? I just don’t see it.

The Antitrust Modernization Commission issued its formal notice requesting comments on wide-reaching aspects of the current federal antitrust law.

For anyone interested in commenting publicly on the issues currently being reviewed by the AMC, there are rolling deadlines depending on the subject area. June 17, 2005 is the deadline for comments on the remedies offered under antitrust laws, July 1, 2005 is the deadline for comments on the Robinson-Patman Act, and comments on the remaining subjects, including the Immunities and Exemptions issues, can be submitted until July 15, 2005.

Instructions and contact information is available here.

toledoblade.com

Ohio agrees to a spanking to the tune of $4.5 Million to settle its second class action suit for charging DUI offenders twice for the privilege of reinstating their licenses.

As if once wasn’t enough, the Ohio Bureau of Motor Vehicles continued to charge DUI offenders a $250 administrative fee and another $250 judicial reinstatement fee after a 1999 decision holding the State’s interpretation of the law as allowing both was erroneous. According to the BMV, the agency was convinced its position would be vindicated on appeal — so it just went on double dipping. With its unsuccessful appeals exhausted, however, the agency gets to refund the money it knew was being improperly collected. Apparently, the offended offenders get interest, so I sure hope the State put that money to good use.

What is particularly interesting about the trial court’s 1999 decision holding that the State’s interpretation of the law as allowing two fees was inappropriate is the mere fact that it was successful. When the DUI law was revamped in 1993, Ohio made the DUI process much stiffer, with an automatic administrative license suspension upon arrest, followed later by a criminal license suspension (and fines and/or jail) if convicted. Many people charged under the DUI law argued that the criminal conviction, with its fines and punishment, on top of the automatic administrative license suspension, with its fees and impounding of vehicle, constituted double jeopardy. The courts fairly consistently held that this arrangement did not violate the Fifth Amendment because the administrative interests of the State in immediately removing potentially dangerous drivers from the road was not punishment and was separate and unrelated to the State’s interests in criminally punishing offenders.

I always thought that was a sneaky interpretation because the hassle a person went through was significant, and the fees and payments that had to be made just to administratively get the license back were often higher than the criminal fines. (You had to pay the towing charges, and the fee to have your vehicle released from inpound, as well as the administrative reinstatement fees.) Therefore, I am surprised that the trial court in the first class action found that the interpretation of the DUI law as allowing for the administrative and judicial reinstatement fees was improper. I am even more surprised that the judge’s decision was upheld by the Ohio Supreme Court which has become increasingly conservative over the last several years.

But wait! Ohio agencies are not yet done questioning whether the courts really know what they are doing. The Ohio Liquor Control Commission doesn’t seem to think that the U.S. Supreme Court’s recent decision about laws prohibiting wineries from shipping their alcoholic products across state lines directly to consumers applies here.

See, now if the Liquor Control Commission would let wine be shipped directly to consumers, they could just stay home rather than going out, drinking, and then driving home unsober. That way, we address some of the DUI problem, keep the BMV out of trouble for its interpretation of the DUI law, and make wine drinkers happy all at the same time.