Bryant said the Commission most recently has taken the proposal to license the mobile repairers off the table, placing the issue “on hold indefinitely.”
Assignment of proceeds discussed
Mike Parker of Parker’s Classic Auto Works in Rutland, Vt., said he recently received nearly $12,000 from Nationwide Insurance after successfully suing the insurer in small claims court for unpaid amounts owed to 31 Nationwide insureds who had their vehicles repaired at Parker’s shop.
Parker used the “assignment of proceeds” process in order to sue the insurer on behalf of the vehicle-owners for labor and materials on Parker’s final invoices that was not paid by Nationwide.
He said Nationwide’s attorney at the 2-day trial last summer argued unsuccessfully that the case should be moved to Superior Court, in part because many in the jury pool had also had their vehicles fixed at the shop or had heard the shop’s radio ads. The jury decided in the shop’s favor after 45 minutes of deliberation, and Nationwide’s initial appeal was denied. The insurer then appealed to the state Supreme Court, and also offered to settle with Parker for the amount owed (about $11,000) less only the interest on that amount the court had also ordered paid. Parker declined the settlement, and Nationwide subsequently dropped its appeal.
Despite Parker’s success, another attendee at the event urged caution when using the “assignment of proceeds.”
“It’s a very powerful document, but if it’s misused, it will come back and cost you a ton of money,” said Tony Lombardozzi of the Coalition For Collision Repair Excellence.
Lombardozzi said anyone considering using the process should work with an attorney that is well-versed in how it works and who also understands the collision repair business.
Massachusetts Labor rate bill returns
Peter Abdelmaseh, executive director of AASP of Massachusetts, said that group hopes the third time will be the charm, as it tries again to get a labor rate bill passed in that state. Abdelmaseh said shop labor rates in Massachusetts are the lowest in the country, an average of $5 less than those in the 49th state.
Under the proposed legislation, a newly-established commission would determine the average labor rate nationally. The established rate in Massachusetts would be based on that rate but adjusted up or down based on how average technician wages there (as reported by the US Bureau of Labor Statistics, compare to other states.
The commission would also define three levels of shops based on verifiable requirements for such things as equipment and training. “A level” shops would receive not less than the rate established by the commission; “B level” shops would receive not less than 90 percent of that rate. Shops that did not apply or meet the A- or B-level requirements would not have an established minimum rate.
Abdelmaseh said the association has estimated that under the legislation, A-level shops would receive an hourly labor rate above $50 rather the current mid-$30s. Insurers have said this would add $100 million to their annual costs, but Abdelmaseh said those estimates are based on all shops receiving the A-level rate.
“We have said out of the 1,800 shops (in the state), we think that only 200 shops will be getting that A-level rate, and maybe 300 more getting the B-level rate,” Abdelmaseh said. “Those shops will be doing about 60 percent of the jobs, because they tend to be higher-capacity shops.”
The association has estimated the rise in costs for insurers to the bill to be about $28 million per year, or about $6 per policyholder in the state. He said the association has proposed or worked with insurers on other changes to regulations that would help offset much of this higher cost.
Insurer free speech discussed
Those at the meeting in Secaucus also discussed recent events in Rhode Island where the Property Casualty Insurers Association of America (PCI) is suing two Rhode Island officials in an effort to halt the enforcement of that state’s law that prohibits an insurer from recommending repair shops once a claimant has indicated that he or she has made a shop choice.
The suit names as defendants Rhode Island Director of Business Regulation Paul McGreevy and the state’s Attorney General Peter Kilmartin. The PCI is asking a court to declare that the law is an unconstitutional interference with free speech, much as courts in several other states have when anti-steering laws have been challenged.
Janet Chaney of the Iowa Collision Repair Association said that group is making a second effort at pushing for a state law that would in essence allow Iowa shops to transfer the expense of sales tax on paint materials they purchase to insurers or customers. Chaney said currently shops pay the sales tax on such purchases but a decades-old state law prevents them from seeking reimbursed for it by insurers.
An Iowa House committee last year had approved a similar bill, but it failed to make further legislative progress.
Chaney said another recent bill in Iowa, which would have established a commission to study the effects of direct repair programs on shops, insurers and consumers, was introduced on behalf of a shop in that state, not the association, and is not expected to pass.