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For those interested in the next meeting to discuss the Collision Repair Code of Ethics, make plans to attend the Northeast Regional Autobody/Automotive Trade Show in Suffern, NY.

Northeast Regional Autobody/Automotive Trade Show Rockland Expositions, Trade Show and Exposition Services and Rental Equipment

If you would like to see the changes that were made to the COE since October, 2007, click here for the CR Code of Ethics version 6 with tracked changes.

If you just want to see what it contains now, without the mark-ups, click here for CR Code of Ethics version 6.

Technorati Tags: collision repair, code of ethics, Northeast Trade Show, ACAR, professionalism, autobody, auto body, accident

“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

eAutoclaims has created “Collision Repair Centers” of America to try to get a piece of the direct repair program action. But when you dig deep enough, the consumer-friendly-looking site turns out to be just another face of the insurance business.

crcofamerica.com - Would you trust your family’s safety with anything less than a CRC Auto Repair?

Apparently faking consumers into thinking they are joining a “consumer organization”, eAutoclaims has created its own “direct repair program” for consumers to join that tries to cover up the fact that this is a network of repairers put together by an insurance claim processing entity. But if you scratch the surface, you’ll find eAutoclaims lurking behind this face.

Take a look at the “terms and conditions” page which spells out that any agreement is between the user (this is under the “Consumer Agreement”) and eAutoclaims.

Worse still are the terms eAutoclaims makes the repair shops sign to get into the program. It repeatedly states that only eAutoclaims can “authorize” the repair to the consumer’s car — which is a direct violation of some states’ laws.
Consumers need to be aware that there are websites and companies all over the internet and country posing as consumer organizations that are actually business-oriented entities that seem to be designed to pull the wool over unsuspecting eyes.

Don’t be like Little Red Riding Hood and ask Grandma what big teeth she has. If you see anything that looks like big teeth, RUN. After all, if it’s just Granny, you can figure that out while running away, but if it’s the wolf, you’ve already been eaten.

Toothpick, anyone?

Technorati Tags: insurance, AutoMuse, cars, trucks, vehicles, collision repair, auto repair

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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

Well, it’s about time someone senior at Progressive got told the company’s claims adjuster mantra, “We don’t pay for that.” Buh-by, Brian J. Passell. Guess we’ll keep you’re salary and kickers to help pay for our tanking stock prices. Progressive Announces Management Change - Forbes.com

Passell is the guy who brought us the “Concierge Program” — fanfared with a company press release so full of fiduciary language statements that I could hear the lawyers salivating from one end of the country to another. Here’s the April 8, 2003 press release title:

Progressive To Customers: We’ll Take Care Of Everything
Company is First Auto Insurer To Handle Entire Claims/Repair Process From
Soup to Nuts, Provide One-Stop Convenience and Peace of Mind

‘We have knowledge and access to resources that many of our customers don’t have.
Our intent is to use that experience to provide a superior level of service everywhere
we do business,’ said Passell.

Do you think these guys ever run anything by legal before they blurt out something that just sounds good to their own ears? Didn’t think so.

Progressive reported a 27% drop in third quarter profits in 2007, and in January 2008 reported another 41% decrease. Progressive chalks up the decline to lower prices for auto coverage that reduces premium revenue. Hm. Couldn’t have anything to do with the fact that Progressive is getting sued all over the country for the way it treats customers, handles claims, and treats collision repair shops? Or maybe the fact that the Connecticut Attorney General, Richard Blumenthal, has held press conferences in the last month decrying the unsafe and dangerous repairs Progressive is passing out of its Concierge Program shops? Nah. It must be that pesky competitive auto insurance market.

Technorati Tags: collision repair, insurance, auto, claims handling, motor vehicles, Progressive,

Again this year, Connecticut Attorney General, Richard Blumenthal, is trying to ensure that repaired vehicles returned to his State’s and the nation’s highways are safe.

At yesterday’s press conference Connecticut’s Attorney General demanded that consumers be permitted to exercise their free choice in selecting the shop to repair their vehicles. Standing next to college student, Lyn Moreau, who’s vehicle had been unsafely repaired at a Progressive “concierge” facility, Mr. Blumenthal stressed that legislation is necessary to stop insurers from directing consumers to use “preferred body shops”.

Consumers deserve to choose where a car is repaired. No insurer should straightjacket or corral consumers, forcing them to use a so-called preferred shop. This legislation, which I have advocated for years, would preserve consumer choice and industry competition - deterring anticompetitive relationships between certain insurers and auto repairers.

AG Blumenthal was joined in his call for legislative reform by Republican State Senator Leonard Fasano, demonstrating that this problem is a concern for both political parties. Senator Fasano said,

It is clear we can no longer rely on existing laws to protect consumers following an auto accident. Consumer protection is a bipartisan issue. It’s time to make our laws stronger so people like Lyn Moreau will no longer be at the mercy of the insurance giants.

And that’s just where Lyn Moreau found herself in her dealings with her insurer, at its mercy. Unfortunately, she didn’t get any. After initially recommending she use its “concierge” facility, Progressive allowed the vehicle to be handed back to Ms. Moreau in an unsafe condition. She discovered the safety problems when she took her vehicle to a different body shop, and that shop told her the bad news. When Moreau addressed the issue with Progressive, her insurer told her to take her vehicle back to the “recommended” repair shop that butchered it originally. So much for that “Lifetime Repair Guarantee” Progressive claims it gives you if you patronize one of its direct repair shops.

Most interesting is that under Progressive’s “direct repair program agreement” with repair shops, Progressive retains exclusive authority to write all of the repair estimates and supplements, thereby dictating the manner in which a vehicle is to be repaired. It would certainly be interesting to see if Progressive was responsible for “writing” the unsafe repairs, or whether the shop simply cut corners.

Nonetheless, Progressive woos consumers to use the concierge service and maintains that it inspects the vehicle after it is returned from the repair shop to ensure the quality of repair. Lyn Moreau’s vehicle repair is evidence that the Progressive concierge quality inspectors can’t tell safe repairs from dangerous ones — which should scare all of us.

More on this story at the Hartford Courant.

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Progressive announced last Saturday that it will pay 57.6 million over the next 16 years for the right to rename the Cleveland Indians home, currently called Jacobs Field, to Progressive Field. Progressive Field, New Home of the Cleveland Indians

Perhaps this explains the vicious job cuts at Progressive the Thursday before Thanksgiving. The P had to find that $3.6 million a year to get the company’s name up on a sports field, and the money just had to come from somewhere. Who needed those employees anyway? They just suck up the profits, and, besides, cutting them loose right before Thanksgiving and all the other holidays keeps the money in the company coffers so it can be spent on important things; instead of bonuses and tiresome, non-productive things like, hmmm… how about insurance? Now, paying to have your company name on a sports field — that really means something, and we can corporate-speak it as “value added”.

And I was so hoping Progressive would earmark some of that money to train and educate their employees about the true legal requirements insurers owe consumers in their respective states — rather than just letting them make up denials of claims based on misstatements of a state’s law. Let’s hope the company at least springs for some training for Heather Hinkley so this “claims specialist” and Progressive won’t look quite so idiotic by misstating a state’s insurance law.

Despite the name, the Tata Nano is a car. Yes, a motor vehicle — at a cost of $2,500. Of course, that reminds us all of the Yugo days (OK those of us who are actually old enough to remember the Yugo). India’s auto maker recently unveiled the world’s most inexpensive car. According to Body Shop Business, a leading collision repair industry magazine, the average vehicle repair cost is around $2,500, thus, virtually guaranteeing that a wreck in a Tata Nano is a total loss. Now, if only it ran on an available fuel source other than a petroleum product. That would be really great.
HT: Ed of Blawg Review and Infamy or Praise: It’s getting better all the time.

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

I-CAR - Current Events/News: e-newsletters: Advantage Online: December 3, 2007

I-CAR recently published its Advantage Online Newsletter for December questioning whether general sectioning methods were appropriate for today’s modern vehicles. I-CAR’s conclusion? General sectioning methods are no longer recommended.

If you visit the newsletter edition link above, you can access a video demonstrating the reduced strength and earlier failure point of high-strength boron alloy steel when exposed to even small amounts of heat typically used in the repair process. The video presents a useful, visual demonstration that is easy to understand and can assist people without engineering or collision repair backgrounds to understand just why it is a bad idea to ignore manufacturer repair recommendations or fail to investigate just how your vehicle is to be repaired.

I’ve received a number of comments from people about the Collision Repair Code of Ethics and have asked permission to share those comments here so that others can consider them. Don’t forget, you can comment directly here at AutoMuse® — after signing in. Comments don’t appear immediately, unfortunately, because of spammers. Real comments get posted — even when they disagree or are controversial — so don’t hesitate to post because you have a different opinion.

A quick scan of your code of ethics brought to my attention the part that speaks to damage analysis. I believe that your expectation on that matter and the 10% deviation is unrealistic. I notice also the absence of any discussion of a professional being compensated for this damage analysis. I believe that need be part of any document such as this that outlines the professional conduct of the trade. I will review more and forward comments unless you are not interested. Thank you for letting me be part of this process…

Mark Cobb
Cobb’s Inc D/B/A Cobb’s Collision Center
Accident Inspection Services
7 Heathwood Drive
Windham, ME 04062

While attending some outstanding presentations on the first day of the Coalition for Collision Repair Excellence (CCRE) fall seminar in October of 2006, I realized that one of the significant impediments the collision repair industry faced in business was that it had no uniform principles governing ethical conduct. I was extremely troubled by that fact given that we all put our lives in the hands of collision repairers on a consistent basis. Even if the vehicle you are driving has never been involved in an accident, what do you know about the condition or safety of the vehicle on the road in front of you, in the opposite lane, or carpooling your kids to soccer practice? As I have often said, if attorneys or accountants act unethically, the typical result is that someone loses money. But if doctors or collision repairers act unethically, people can die.

With that thought in mind, I set about creating the first-ever Collision Repair Code of Ethics. It is designed as a framework for collision repairers nationwide to adopt governing principles for ethical behaviors of those involved in the industry and to establish a mechanism of self-governance to ensure those ethical mandates are met. I offer it as a set of principles that can be molded and adapted to meet the requirements of each state’s laws, and to assist industry members to address conflicts and pressures they experience from outside interests.

I have little doubt that the Collision Repair Code of Ethics will spark significant discussion within the collision repair industry. To assist in that discussion, there is a conference organized by ACAR scheduled October 19^th, 2007 at the National Press Club in Washington, D.C. Information about how to participate at this historic meeting is available here. ACAR Conference Information

Thank you to all of the people who provided information for the development and refining of the Collision Repair Code of Ethics – particularly Wade Ebert of American Autobody in Springfield, Illinois, whose insight is always meaningful.

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.

Lucky for this customer that she went to an independent collision repair facility rather than one willing to simply follow the dictates of an insurance company bent on saving money.

Williamsburg, Ohio shop owner Jim Krotchen, of All Makes Collision Repair Service, determined that his customer’s 2002 Honda CRV needed to be repaired using a new suspension, rather than one coming from a total loss vehicle from the salvage yard.  In Krotchen’s opinion as a collision repair expert — who is liable if there is a problem with the repair — installing a used suspension on this vehicle was an issue of safety.  There simply was no way of ensuring that the salvaged suspension had not been structurally fatigued.  As a result, Krotchen installed a new Honda suspension on this consumer’s vehicle.

The insurer, whose adjusters often receive no more than two weeks of “training” before being cleared to write estimates for repairing other people’s vehicles, decided that a used suspension would have been just fine for this repair and refused to pay for the new suspension.  As a result, All Makes Collision Repair Service is being forced to sue for the remainder of the repair bill.

It never ceases to astonish me that insurers feel justified in putting people’s safety at risk simply to save money.  This isn’t an issue of waste or extravagance.  This is about ensuring that this consumer’s vehicle is safe to drive and, thereby, protecting her, her passengers, and every other traveller on the road.

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.

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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Sometimes I just like to hop around the auto arena to see what my fellow autobloggers are talking about.  And I always find interesting stuff I want to share.

Here’s something fun from cynic Joe Sherlock on how to solve the Chrysler spin-off problem for DCC by offering Chrysler as a time share proposition.  Likewise Buickman, Jim Dollinger, over at General Watch slayed me with the editorial Cannibals and the Secretary.  In a Dilbertian view of relative importance within any organization, the cannibals definitively  know whose flesh will be noticed if it goes missing.  I admit; I sent this to all my friends toiling in the Middle Earth of corporate America.

Carpundit writes a good deal this week on automated law enforcement tactics.  CP wonders whether red light cameras are rigged, and how the Chicago Police Department is now using automated license plate readers. CP also wonders about the Chicago PD publicly asking why thieves are stealing catalytic converters.  What I find interesting is that the Chicago PD has launched an “official” blog Checkerboard Chat.  Maybe this is a widespread trend that I’m not aware of, but it seems to me that a blog is a great way for a police department to allow the public to participate in significant law enforcement issues.  After all, isn’t that part of what makes the Amber Alert so effective — getting the public involved as soon as possible to be on the alert for a missing child and suspect?

The Georgia Collision Industry Association has launched its blog, Collision Solutions. GCIA is welcoming articles and information from industry members, as well as offering the ability to comment on those articles.  The industry association tells us that: ”The purpose of this blog is to educate, inform, and allow like minded individuals in the Collision Industry to post message about issues affecting their businesses.  Please send all articles that you would like posted to gcia at gcia.org.”

Dave Williams at Safe Collision Repairs provides interesting information on customer satisfaction surveys with his post Auto Repair Quality not Usually Reflected in CSI Scores.  Dave’s article talks about the lack of important questions and information being incorporated into the surveys given to customers.  The most important appears to be that no one involved in the customer service indexing process cares about the actual quality of the repair. 

And the Oscar closer comes from John Shortell of BodyShopSolutions for The Wonderful World of Claim Handling Companies.  As only John can write it, at least one insurance company out there is paying $105 for an hour’s worth of work for an outside estimating company to write an estimate chisling the body shop, when insurers insist on paying body shops a prevailing labor rate that is less than half that amount.  Actually, John puts it quite eloquently, “You can’t get half of that from the same insurance company for skilled labor, repairing the vehicle, but they’ll pay some flunkies $105 per hour for clerical work.” (emphasis added.)

John was being circumspect there.  I happen to know that the insurers’ alleged “prevailing competitive price” in the State of Connecticut, the state at issue — for the entire state (Hartford, Greenwich, Stamford, you name it) – is $45 an hour.  That’s the gross profit for an hour’s worth of work from which the skilled technicians and employees must be paid, rent, workers comp., utilities, supplies, accounting fees, license fees, taxes, etc., and, oh yes, insurance.  I doubt you could hire a teenage babysitter in Greenwich, CT for $45 an hour.  And insurers think a body shop should take the responsibility of peoples’ lives in their hands for substantially less than paper-pushers get for an hour’s worth of work?  Get real.

Perhaps even more offensive is the language at the bottom of the appraisal invoice: “The shop estimated damage at $4318.59. We appraised the damage at $3614.19. A savings of $704.40!”

Anyone can appraise the damage for less.  Doing so honestly, legitimately, and without depriving the claimant of a proper and safe repair is the challenge.  Not that this concept seems to worry too many appraisers working on behalf of an insurer, even ones charged with the ethical obligation to handle every claim in an unbiased manner.  Can you imagine if a claimant hired an appraiser whose invoice included this phrase at the bottom:  The insurance company estimated damage at $3614.19.  We appraised the damage at $4318.59.  An increase of $704.40! 

Insurers would lose their minds.

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.
 

Don’t we all think it’s important to know who actually benefits from side deals before we give any company our business?  You bet we do.  I don’t think anyone liked hearing that commercial customers were paying substantially too much for insurance because of insurance broker/insurer arrangements that paid enormous commissions for fraudulently placing insurance with certain companies.  It makes us all wonder if we are really getting a good deal on our individual insurance, too.

So, it’s about time some regulatory entity looked at the relationship created between insurers and collision repairers by “direct repair programs” that consumers are vigorously encouraged to patronize.  The Illinois Attorney General’s Office, Department of Consumer Protection is looking at the agreements insurers get repair facilities to sign to become members of the insurers “network” of “preferred” shops.  Insurers push consumers to these network shops for reasons that are good for the insurer, but not necessarily good for the consumer.  To get into these networks, repair shops have to agree to give the insurer discounts, look for “betterment” (i.e. the flip side of diminished value), agree to use aftermarket (non-original equipment manufacture), salvage, or rebuilt parts, and/or agree to indemnify the insurer.  The scary part of the indemnification provisions in many of these agreements is they require shops to indemnify the auto insurer for anything relating to the claim.  That could mean intentional acts, attorney fees, inherent diminished value payments — all things not associated with whether the repair properly fixed the car.  Most importantly, the way insurers market these networks is to tell customers how beneficial it will be to the customer — which may or may not be the case.

Certainly, an insurer will tell you that an adjuster will address the claim right away and you can get the repairs underway immediately.  OK, that’s probably good for both of you.  It saves the insurer money on the rental car expense and helps the customer obtain a prompt repair.  Yet, sometimes the insurer uses this languange and deliberately withholds sending an adjuster to a non-network shop to impress upon customers how difficult it will be if they choose to have their vehicles repaired at these non-”preferred” facilitites.   Nonetheless, insurers also typically say that you get a guaranteed pick-up date and that they will guarantee the repair.  Well, that may sound good, but is it?

A guaranteed pick-up date is good for the insurer because it allows them to minimize rental car expenses and have certainty in the reservation of the claim.  However, the insurer often determines how long it thinks the repair should take, not necessarily how long a proper repair must take.  Customers assume that when they pick up the vehicle it has been repaired correctly and safely — which simply may not be true.  Because the repair shop has to absorb any additional rental car expenses or other fees if they go over the projected ready date, they have every incentive to push the customer’s car out of the door by the pick-up date, ready or not, safely repaired or not.  What if a part is on back order and it will take two weeks to obtain the necessary part?  Again, the incentive for the shop is to find something, anything, that will substitute for that partt rather than be penalized by the insurer for failing to meet the deadline.  Overall, the danger to customers likely outweighs the benefit of an artificial pick-up date.

Then there is the warranty/guarantee the insurer promises.  Virtually all body shops guarantee their work.  After all, just how long would a repair shop stay in business in a free market economy if they didn’t satisfy customers?   (Of course, this has changed completely with insurers selecting repair shops because they don’t necessarily reward for the same things consumers do.)  So, this alleged guarantee is nothing new, other than the fact that the insurer now says that it guarantees the repair.  Well, the insurer typically sends the customer back to the same body shop if there is a problem — which is what the customer would have done if they had selected the repair facility.  So, insurers are piggy-backing on existing repair shop guarantees. The hard part is to get an insurer to truly honor one of these “repair guarantees”, rather than just dumping the problem back in the lap of the customer and the body shop.  Of course, the obvious question is, how well do you think the repair shop that butchered your car in the first place will fix it the second time around?  Or the third? Or fourth?

Illinois AG examining insurer/repairer relationships - Consumer protection statutes are center of the debate - ABRN (Automotive Body Repair News)

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.

 Have you any recommendations as to my situation?

Last year while driving my new 2005 Toyota X runner truck I had a 30 mph fender bender on the 405 frwy that damaged the left front head light, fog light, bumper, hood left corner, the left tower attached to the frame to secure the also damaged fender & skirting. No damage to the right side at all. Although the airbag deployed the impact caused no damage to the radiator or engine and the vehicles driving ability otherwise was not affected. The vehicle was taken to the dealer for repair. The estimate to repair the damage was twenty three thousand dollars! My insurance company informed me that the vehicle damage was severe. Although I disagreed, they declared it a total loss. I retained the vehicle by paying the amount the insurance expected to get from the sale of the damaged vehicle. I subsequently had the vehicle repaired at another body shop for one third of the cost estimate accepted by my insurance provider.                  

Forced to accept a salvage title to renew license.  Although the actual damage was far less than was accepted my insurance provider, they are insistent on a salvage title. Even though it does not warrant the change. This adversely affects me. I am unable to drive the vehicle unless I accept the title change and if I agree I am loosing by having a vehicle with a diminished vehicle value associated with a salvage title. 

 I have not been able to renew the registration because the DMV has a pending salvage title change notice on file from my insurance company. DMV has told me all I need is a letter from the insurance company withdrawing the change, however my insurance company is unwilling to change their decision even after I have proved that the damage estimate was wrong. I have spoken with the state insurance commissioner’s office who suggested I write directly to the insurance company main office headquarters. This resulted with them sending me back to another adjuster who has said they will again look at it however he informed me that there obligation as the insurer is only to the actual amount of the damages and although he didn’t actually ’say it’ he eluded to the potential that I may be responsible to repay them if a inaccurate estimate was paid. I feel like they are punishing me for their decision to pay an exaggerated estimate (I objected to their decision in the first place) and possibly, may use this as a condition (if they are willing) to release the salvage title determination. Can you offer any suggestions that may help get my title released from the ”salvage” determination and help the insurer accept responsibility for their decision. Not try to recover from me for their decision. This is a very time sensitive mater that I am dealing with, any thought regarding this is much appreciated.