House Bill 2463 makes it a criminal act to bill insurers for false or inflated windshield repairs. (Ed: Fraud, of course, is already illegal.) It would also force auto glass businesses to disclose where the service was performed and prohibit a business from telling an insured that the insurer will pay for the entire repair unless that business has a contract with the claimant’s insurer.
The provisions set forth in HB 2463 would define several unlawful practices: submitting claims in instances where the work wasn’t provided; submitting claims with references to geographic areas in which the work was not completed; submitting claims in which the owner of the vehicle didn’t authorize the work; and showing work performed on a date other than when it was actually performed.
The bill also would prohibit auto glass businesses from signing a work order or claim form “falsely” on behalf of a policyholder.
HB 2463 also includes several provisions about “misrepresentations.” It prohibits auto glass businesses and associates from misrepresenting their relationship to a policyholder’s insurer; the cost of the proposed repairs; and whether the insurer has improved the repairs or replacement.
The proposal also would make it illegal for auto glass businesses to “represent to a policyholder or other person that the repair or replacement will be paid for entirely by the policyholder’s insurer and at no cost to the policyholder unless the person making the statement is employed by or is a producer contracted with the policyholder’s insurer.”
The bill specifies that it is illegal to “add to the damage of auto glass before repair in order to increase the scope of repair or replacement or encourage a policyholder or other person to add to the damage of auto glass before repair.”
Finally, HB 2463 also outlaws performing working “substantially beyond the level of work necessary to repair or replace the auto glass.”
The bill is a revision to Section 1, Title 20, Chapter 2 of the Arizona Revised Statutes and had its first reading in the House on January 21. It has been assigned to the Banking and Insurance committee, Rules committee and the Judiciary committee.
The text of the bill reads as follows:
A. It is an unlawful practice for a person who sells or repairs auto glass to knowingly:
1. Submit a false claim to an insurer for auto glass repair or replacement or for related services, including a bill for auto glass repair or replacement or for related services:
(a) If the services were not provided.
(b) Showing work performed in a geographical area that in fact was not the location where the services were provided.
(c) Not authorized in writing by the owner or lessee of the vehicle.
(d) Showing work performed on a date other than the date the work was actually performed.
2. Falsely sign on behalf of a policyholder or another person a work order, insurance assignment form or other related form in order to submit a claim to an insurer for auto glass repair or replacement or for related services.
3. Misrepresent to a policyholder or other person:
(a) The relationship of the glass repair facility to the policyholder’s insurer.
(b) The cost of the proposed repairs.
(c) That the insurer has approved the repairs or replacement.
4. Represent to a policyholder or other person that the repair or replacement will be paid for entirely by the policyholder’s insurer and at no cost to the policyholder unless the person making the statement is employed by or is a producer contracted with the policyholder’s insurer.
5. Add to the damage of auto glass before repair in order to increase the scope of repair or replacement or encourage a policyholder or other person to add to the damage of auto glass before repair.
6. Perform work substantially beyond the level of work necessary to repair or replace the auto glass.
B. A violation of this section is subject to enforcement under this article.
C. For the purposes of enforcement, a policyholder’s insurer is considered to be an agent of the insured for determining liability under this section. For the purposes of determining whether a defendant knew of any particular element of the prohibited activity, it may be presumed that the person had knowledge if the person was engaged in a pattern of the prohibited activity.
AZ Glass Representative Objects
Kerry Soat, of Fas-Break, in Chandler, AZ, a manufacturer and supplier to the industry and one of the largest windshield repair and replacement franchisers in the U.S., has taken strong exception to the the legislation calling it “written by an insurance company for the sole benefit of the insurance companies.”
Continues Soat in an editorial released to Autobody News, “It also is a total waste of the Arizona taxpayers’ time and money to even consider what is proposed in this bill. It was my assumption that the legislature was more concerned about our budget deficit this year than unfairly singling out an industry to please the insurance companies. Maybe that has something to do with our budget deficit. I don’t know.
If we are going to pass a law that applies to the collision and comprehensive sections of an insurance policy it should apply to “all industries” that use it, like the auto body shops, auto repair shops, tow companies, auto rental agencies, dent removal companies, head light restoration companies and any other companies that provide work to the insurance companies under an auto policy.
Under Section A, Number 1. It states that it is illegal to make a false claim to an insurer. It is already illegal to make a false claim to an insurer; contact the Arizona Department of Insurance and ask them. This bill spells out the items of making a false claim:
a. If services were not performed. There’s already a law against this—it’s called fraud.
b. Showing work done in a geographical area other than where work was performed. This only applies to the way an insurance company pays claims. It should not be illegal to put down a person’s “home address” on the invoice when they got the work done in Phoenix or Tucson because they live in Prescott or Sierra Vista. It only applies to the way the insurance companies pay claims. Why are we making a law to protect the way an insurance company decides to pay claims?
c. Not authorized in writing by the owner or lessee of the vehicle. There is already a law on the books protecting this action. It is illegal to bill anyone for anything they never authorized to have done.
d. Showing work done on a date other than when performed. How does this injure any insured or vehicle owner other than the way the insurance company pays claims? This has nothing to do with a fraudulent practice to anyone in the state of Arizona.
Under Section A, Number 2. Falsely sign on behalf of a policyholder on a work order. The Privacy Act has covered this part very well with penalties and fines to apply to anything regarding falsifying signatures. What about the forgery laws already in place? I think the Attorney General or City Attorney’s offices would like to keep their jobs.
Under Section A, Number 3. Misrepresent to a policyholder:
a. The relationship of the glass facility to the insurance company. When a glass shop has been successfully paid by an insurance company to their client’s satisfaction and the insurance companies satisfaction, evident by the check, will it be illegal to state we have done business with that insurance company? Would it be illegal to state they have approved of our work since they have paid for it? Why do insurance companies pay for work if “they” are not satisfied with the work performed? Do they need a law to stop this? Doesn’t the insured vehicle owner already have legal actions available to them for unsatisfactory work?
b. The cost of the proposed repairs. This item is very vague to be included without more explanation. The cost to whom? The insured after a deductible, the insurance company after the deductible or the total invoice cost before sales tax or after sales tax? When dealing with an insurance claim what is the proper cost explanation to whom?
That the insurer has approved the repairs or replacement. This item would be totally impossible to comply with since insurance companies use “third party billers” to handle their glass claims. Call any 800 number glass claim phone number and see who answers the phone. It is not your insurance company but another company usually a competitive auto glass company. Why is this legal?
The glass shops, repair personnel, and the insured’s very rarely talk to the insurance company regarding approval for a glass claim. This clearly gives an insurance company an out on every invoice submitted by any glass shop for any job since none of the claims are “preapproved” by the actual insurance company. Does this make all “third party billers” illegal in the state of Arizona if this is passed? Maybe this would be good?
Under Section A, Number 4. To represent to a policyholder that the repair or replacement will be paid by the insurer “at no cost” the policyholder. With a $0 deductible state law, how can this be made illegal when it is the fact? This clause is so ambiguous it needs to be totally deleted.
The insurance companies themselves advertise nationally that Medicare Advantage plans have $0 or No Cost plan premiums when in fact the insurance company is paid by the Medicare Part A for the plan.
Since they are not an auto glass company this law wouldn’t apply to them but the statement is exactly the same. Insurance companies do not pay for claims where they are not “legally bound” to pay for, no matter what was stated by the auto glass company. What does anything the auto glass company says have anything to do with “binding” the insurance company? This part is ridiculous.
Under Section A, Number 5. Add to the damage before repair. This action is already against the law as insurance fraud and fraud in general. The Attorney General’s office already has the power to prosecute this action. It doesn’t need to be spelled out in this separate law. This law should apply to auto body shops, auto repair shops, and all repair shops in general not just auto glass shops. I’m not sure if this one section wouldn’t make this law un-constitutional due to its lack of scope.
Under Section A, Number 6. Perform work substantially beyond the level of work necessary to repair or replace the auto glass. By whose standards would this apply? Those of the insurance company, the state of Arizona, the Auto Glass Shop, the Auto Glass installer, or AGRSS and ROLAGS? The majority of auto glass companies are not AGRSS-registered, but I am, in addition to being a qualified trainer. One example of this is when an auto glass company runs into existing “rust issues” when the windshield is removed; it is against the AGRSS Standard to replace it without repairing the rust first for a safe installation.
The insurance companies know this and also allow “extra charges” for this service if the auto glass company can repair it to the AGRSS standard. For the convenience to our “clients,” which happens to be the insured of the vehicle, not the insurance company, most auto glass companies will repair this issue and take it up with the insurance company “after” the installation. In some cases the vehicle will be referred to an auto body shop for extensive rust repair. Quite often the insurance companies will refuse payment for this service because it wasn’t “pre-authorized” but for a safe installation it had to be performed to stay within the AGRSS guidelines. I can almost assure you the AGRSS or ROLAG Standards were never considered during the writing of this bill.
B. A Violation of this section is subject to enforcement under this Article. Does this mean “none” of the other sections are subject to enforcement? Why is this section so important? Read the next section and you will see why.
C. For the purposes of enforcement, a policyholder’s insurer is considered to be an agent of the insured for determining liability under this section. Does this law give the insurance company the power to prosecute? Does the Attorney General’s office know this? Do the insurance company’s legal departments get to bill the State of Arizona for this prosecution ability for “enforcing this law”?
Who in the world wrote this? Since when does an insurance company “need to” or have the “right to” take over the legal rights from an insured to enforce a law without the permission of the insured? Doesn’t the insurance company only have the legal obligation to pay the invoice for work performed under an insured loss by an insured according to the insurance contract?
Since when do the insurance companies need to become caped crusaders to protect their insured’s from the evil force of auto glass companies? I am sure this is un-constitutional but I’m not an attorney.
Not only that, if you read the rest of this section it even refers to “presuming” a person’s guilt by knowledge of a particular element of the prohibited activity. I thought we were innocent until “proven” guilty. Only an insurance company wouldn’t want to take the time to consider a person’s innocence and since this law gives them the rights to “enforce” these actions why not “presume” guilt also.
Since when do any of these actions not already covered by Fraud, Privacy, and General Business Conduct, laws obtain the level of a Class 6 Felony?
When does writing an invoice with someone’s home address and doing the work at their doctor’s visit in Phoenix constitutes a Class 6 Felony? Where has the Arizona Legislature gotten to by writing this law other than campaign contributions? I want a list of campaign contributions for all of the Legislators who have “authored” this bill and any that would sign it.
Auto glass companies are small business people sometimes one man operations working out of their homes trying to build their dream of building a larger business and hire employees. What does this country need now, more employees? How counterproductive is this law?
Why would the people of Arizona need more legal protection from these operators than what is already on the books? It might be possible more “enforcement” might be needed for the laws we already have but when do insurance companies get to become “law enforcement agencies”? What other state has ever passed a law like this one?
Where are all the consumer complaints to make this law necessary? How many articles to the editor have we seen regarding these mass fraudulent actions by the Auto Glass Companies? The only complaints I get from clients are for “over aggressive” sales tactics at car washes. This gives the Insurance Companies the right to “enforce” this law?
I think if you tally complaints, you will find more complaints at the Arizona Department of Insurance regarding the payment of claims and the handling of the claims by insurance companies than the fraudulent actions of a few auto glass companies.
The Arizona Department of Insurance has done an outstanding job at policing Fraud in the auto glass industry and the insurance industry also. Why take this ability away from them and turn it over to the Insurance Companies? If our legislators can’t see what they are doing then the Insurance Companies are having their way with them.
Soat Gets Feedback from State Rep Laurin Hendrix
In a personal communication from Arizona Representative Laurin Hendrix to Kerry Soat, Hendrix wrote: In addition to having owned multiple auto repair facilities, I have also visited with two of your direct competitors to discuss the ramifications of the proposed bill. Many of your comments express agreement with the points in the proposed bill but argue that they are duplicitive. I do not find merit in any of your arguments. I do not find any elements in the proposed bill that would damage an honest and reputable establishment.”
Soat responded to Hendrix: “Thank you for your response and willingness for further dialog. ... I can get passionate about making business practices subject to “felonies” without an opportunity for input from the industry itself.
Please find attached possibly clearer explanations (Ed: see next section) for my position which should provide a more direct look at where I am coming from. None of these comments are meant to have any sarcasm in them and should only be viewed as questions I would really like an answer to. If ______ was one of the two competitors you discussed this with, you may find why they have a very vested interest in seeing this bill pass.
To give you a better understanding as to my position on this issue, I do not operate a retail glass shop. I am a manufacturer and supplier to the industry and set up auto glass and windshield repair operators who are licensed to use my trademark. I have been doing this since 1974, having trained and set up 1000’s of these around the entire country for the last 35 years. www.fas-break.com
I also have an Arizona Insurance License (300183) and an education on how insurance works. I believe this gives me a little insight as to how this bill affects the auto glass and the insurance industries.
I hope these discussions would help shed some clearer light as to the problems I see with this bill. I am sure you will be receiving more input from the industry and media in general including a formal letter from the Arizona Glass Association.
If time could be given to take a deeper look at the way the bill is written and apply it to the real world applications; and not just a grocery list of what the insurance companies feel they need to police the auto glass industry, I feel a more meaningful bill could be passed with a real impact on protecting the citizens of Arizona.”
Signed, Kerry Soat
Soat Expands on his Arguments
Soat continued his points in an another document addressed to Hendrix: “A big concern is the bill focuses only on the Auto Glass Industry when it should apply to “all” automotive repair companies. Auto Body Shops have the ability to create more damage by, say, hitting fenders and creating more dents. Auto Repair Shops have the ability to create more damage by cutting belts and piercing hoses, etc. This bill should cover them also.
The duplicative law parts of the bill do not bother me other than why is this bill necessary if not to cover “new situations” not currently covered by law. Reputable shops operate within the laws now on the parts that are duplicated, so you are right, these would not upset anyone in the auto glass industry except for being singled out by this bill.
The parts I do have a question with are:
Showing work done in a geographical area other than where the work was performed. This only applies to how insurance companies pay claims and to the price they are willing to pay. They have different pricing rates by geographical areas. I do agree to create an invoice to take advantage of this pricing structure isn’t right but what makes the insurance company’s pricing structure correct to begin with?
Currently, if you are located in Phoenix, you are priced by the Phoenix market. If you are located in Prescott, you are priced by the Prescott market which can be higher than Phoenix. If a Prescott shop comes to Phoenix to do a job they currently get paid via the Prescott pricing. If a Phoenix shop goes to Prescott and does a job, they get paid via the Phoenix pricing. How is this fair? Obviously, Prescott located shops would like to operate in Phoenix with more people to market to and get paid the Prescott pricing which is what this section is all about. Some shops set up in areas and market in different areas to take advantage of this pricing structure which I agree isn’t right, but, again, how is this pricing structure right?
Shouldn’t this bill include a statement like “the pricing for a job should be based on the geographical area where the work was performed” rather than the location of the shop performing the work? If this clause was added to this bill, all incentive to play games with the insurance company’s billing system disappears.
Why is the price determined by the insurance company to begin with? What makes the insurance companies pricing structure fair and reasonable when no one can dispute it as to their formula for creating it? It is dictated by them. They take the cheapest price available for a windshield and that becomes the [de facto] price without taking into consideration other factors that might apply to the sale.
Of course, a lot of [insurers] don’t care about the other factors since they want the cheapest installation possible even if safety is not taken into consideration. We demonstrated that last year for you with the demonstration of the airbag deployment at the capital. I was there and participated in the demonstration to show just how unsafe some windshield installations are according to the AGRSS Safety Standard.
Shouldn’t pricing be determined by the marketplace in a true competitive business and not dictated by the insurance companies as it is now? If an insurance company was to call and ask if we would perform the work for a certain price then the insurance company is the client and has the right to expect the price agreed upon.
If a client comes into the shop and wants a job done, the price should be determined by fair market pricing, client needs or requests, such as time or materials or the ability of the glass shop to offer a safer installation when compared with other glass shops. The fact the client has insurance coverage shouldn’t matter to the price.
Because clients have insurance coverage, we bill insurance companies as a convenience to our clients and wait for payment. It shouldn’t affect the pricing except for the cost of waiting for payment which has been known to take as much as 90 days, which in some states is against their laws if not paid in 30 days.
Most of the hold up on payment is because a third-party billing company sends the shop the payment, not the insurance company. These actions should fall under price fixing statues and I’m not sure why they don’t.
I believe this part should be expanded to a better explanation of what it is you are trying to cover. It is too broadly written and could apply to “un-fraudulent” practices.
Showing work done on a date other than when performed. Here again this applies to the way an insurance company pays claims.
The List Pricing of Windshields, the cost of windshields, and the price insurance companies pay for windshields changes quarterly. They set a determined date as to the pricing of the windshield based on the new List Pricing.
Shops are caught by buying windshields from the warehouses on the latter costs and installing the windshield for the client at a later date. The only way to get paid by the insurance company fairly for the job “already negotiated” and determined is to “back date” the invoice. It could clearly be for no other reason than the client has postponed the installation to a later date.
Back dating sometimes is the only way for the insurance company’s claims system to pay for it fairly. Here again the price of the windshield should be determined by the glass shop based on its costs for the product and the client’s needs not how it fits into the insurance companies method of claims paying.
Insurance companies quite often are not willing to make adjustments to these situations because it doesn’t fit into their claims paying systems, but to make a “Class 6 Felony” out this situation seems a little extreme.
I can understand the insurance companies desire to make this illegal because they wouldn’t need to “accommodate” a client’s needs in their systems, the shop would be held accountable for this misfortune. Here again a Class 6 felony seems to be too extreme for this situation and this part of the bill should be removed or at least spelled-out better to cover the situations it is intended to protect.
Misrepresent to a policyholder: The relationship of the glass facility to the insurance company. This is written too broadly to see what is meant by this clause.
What represents a relationship with an insurance company? For some insurance companies, we sign agreements which spells out our relationship with them. Not all insurance companies offer any kind of sales agreements at all. If I have agreed to their terms what would be considered a misrepresentation of our relationship? This clause should be defined more clearly to spell out what is a misrepresentation. If you have a shop that hasn’t signed the agreement but says they have, it should be spelled out clearly.
The cost of the proposed repairs. As I stated before, the cost to whom? The cost to the insured?, the cost to the insurance company?, the total invoice with sales tax or no sales tax?, with labor or no labor?, etc. What cost explanation would be legal? This clause should be expanded to cover exactly what it is that you want to make illegal.
That the insurer has approved the repairs or replacement. This is a big one for me. As I stated, when you call a glass claim into an insurance company it is usually handled by a “third party biller.” Even when you get a claim number or a referral number from this billing company, it is not a guarantee of payment by the insurance company. I have seen jobs given a claim number and then payment refused by the insurance company because the client didn’t have coverage at the time of loss. If we had talked to the insurance company, we would have been able to find this out immediately and could have handled it accordingly with the client.
The phone call was to provide the necessary information to file a claim, determine if the client had coverage, and the third party billing company will usually provide the claim number, saying “it is approved.” Only later is true coverage determined and the claim denied. The insurance company is not legally “bound” for coverage by saying “it is approved” as they would if we had discussed this with them. A third party billing company cannot “bind” coverage like an agent or the insurance company even though this is the only contact we have for a glass claim.
Since the only contact we have with the insurance company to file a claim is through a third-party billing company how can we be assured the repairs or replacement are “approved,” or not, by the insurance company?
If we were to say they are approved and provide the service to the client, then find out later the insurance company refused to pay the bill for lack of coverage, we would have violated this section of the law, thereby making ourselves liable for a Class 6 Felony.
As long as “third party billing companies” are used to handle claims and they are not subject to “binding” coverage for their statements, this section should be deleted.
No Auto Glass company, except the ones who operate third-party billing companies (like ______), could ever legally abide by this clause when dealing with an insurance claim since the Auto Glass Company does not have direct contact with the insurance company to actually find out if the job is approved, or not, by the insurance company.
Most clients are not willing to schedule an appointment for a windshield replacement without first finding out if their insurance company is obligated to pay for it. That’s what prompts the call to the third-party billing company to “verify coverage” and file a claim if it applies.
If language could be added to this section to include “approved by a third party billing company representing the insurance company” legally, then this section could apply and accomplish what it is intended to do.
I’m sure the intent of this section is to assume clients are being led into replacements by auto glass companies telling them it is already approved by their insurance company but sometimes it is the insurance companies via third party billing companies telling us “it is already approved,” when, in fact, it isn’t.
To represent to a policyholder that the repair or replacement will be paid by the insurer “at no cost” to the policyholder.
How can this be illegal when it is a fact? Insurance companies sell $0 deductible glass coverage to policyholders for an extra premium. Insurance companies “waive deductibles” for windshield repairs [regularly]. These are facts.
In both of these instances, there is no cost to the policyholder to have their windshield repaired or replaced. How can it be illegal to explain this to a policyholder who has this coverage? Safelite just spent millions of dollars on television advertising explaining this very thing to consumers.
In Arizona, this is a legitimate fact that applies to the policyholders who have purchased this coverage and to the policyholders who are with the insurance companies who “waive deductibles” for windshield repairs as is spelled out in some insurance policies. Would spelling this out in their insurance policies be a violation of this law?
As I stated earlier, Medicare Advantage ads “nationally” represent they are “$0 cost or No cost” plan premiums when in fact the insurance company providing coverage is paid by Part A of the Medicare system for these plans. Check out the next AARP TV ad.
If you make the above item illegal it should cover all industries, including Medicare Advantage Plans.
Perform work substantially beyond the level of work necessary to repair or replace the auto glass: My earlier comments with regards to this section should clearly explain why this might not fit. By whose “standards” would this apply?
For the purpose of enforcement, a policyholder’s insurer is considered to be an agent of the insured for determining liability under this section.
It should be included “with the permission and cooperation of the insured.” No one should take my right to proceed on my own, or not, on my own actions away from me, the “injured party,” and pass it off to my insurance company. My insurance company has an obligation to me via a contract but shouldn’t have the right to determine if I have been injured or not and proceed with enforcement actions “without my permission.” The insured’s permission should be required and added to this language.
Kerry D. Soat, CEO, Fas-Break, Inc.
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