Friday, 23 March 2012 21:40

NY Shop President Mike Orso Sues 3 Insurers for Capping and Short Payments

Mike Orso, President of Nick Orso’s Body Shop in Syracuse, NY, announced that his attorneys would file approximately $1,000,000 in “short pay” collection suits against various automobile insurance companies this month. The insurers are: Adirondack, Allstate, and State Farm. Additional causes of action, interest and penalties increase the various suit values to over $3,000,000.

Attorney Joseph R. Talarico, Esq. said, “Included in these suits are causes of action for violations of the NY State Insurance Regulation 64. Additionally a cause of action for violation of N.Y. GBS LAW § 349.” Section 349 specifically addresses deceptive acts and practices unlawful in NYS. The provisions of the law found on a NYS law website state; “a person who has been injured by reason of any violation of this section may bring an action in his own name to enjoin such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions. The court may, in its discretion; increase the award of damages to an amount not to exceed three times the actual damages up to one thousand dollars, if the court finds the defendant willfully or knowingly violated this section. The court may award reasonable attorney's fees to a prevailing plaintiff.

Talarico added, “There is one common element of these cases that should lead to a resolve and when it finally hits them they settle. Any first year law student should be able to recognize it. In addition, the continued pattern of serious violations resulting in these “short pays” exposes carriers to some major costs. Some of these topics are simple one-item facts. Class Action attorneys love one-item venues. How long before they jump in? It should make for some interesting attorney-client conversations on the insurance company side.”

“In a few words I can sum up these suits; “capping and short payments,” said Orso. The longer version by and large, they consist of “shorting” or “capping” of labor rate, paint materials per itemized PaintEx, “Data base P-Page” denials, omissions, and a host of arbitrary caps. Some of the caps are related to clear coat labor and materials or refusal of necessary body materials. Some itemized deficiencies are for parts cost, OEM vs aftermarket and used parts that we refuse for relevant reasons.”

Orso added, “Most claims are on newer vehicles still under factory warranty at the time of loss. A law protecting a consumer’s warrantee is the basic subject matter of a West Virginia vs Liberty Mutual and Greg's Body Shop suit. Now that a body shop has been brought into the crosshairs, body shops need to wake up.” Another $22 Million award in February against a San Diego car dealer for failure to follow industry standards and negligence is another wake up call. Shops must back up what the do with documented procedures and have standards or face immeasurable liability.” 

“Its our policy at Nick Orso’s to NOT use parts that are; un-crash tested, are of questionable origin, have quality, fit or finish issues, have material differences or are not appropriate; they are flatly refused. “We don’t mind using an aftermarket service part, oil filter, light bulb, shock, tie rod end.” We may use an aftermarket item to replace a rusted fender on an “out of warranty vehicle” provided that is the owners choice.” Mike said. 

“Some of the shortages in these claims are the result of denied labor, on ill-proposed repairs to vehicles later “totaled” during the process because of shortsighted insurance decisions to repair totaled vehicles. These are the vehicles that if appraisers followed our blueprint after teardown would have been totaled earlier before we expended labor and resources. Lets not forget the stress the consumer goes through. The car then gets “totaled” in the wash bay. Some insurers then want us to return purchased parts and deny labor expended, that’s unacceptable.” Mike said.

“We take a lot of time educating consumers before, during and after we repair a vehicle. In the real world a customer typically does not know what: weld damage, clamp damage, zinc primer or cavity wax, buffing, clean up, debris disposal etc. is. But when explain it they get it. We’re the experts, we feel that’s why they hire us, we’re their only advocates. My customers are most upset when we tell them their insurer has flat-out refused to address safety related repairs and inspections. These same companies produce these touchy feely commercials to sell insurance create an image where consumers expect to be showered with goodness after a loss, then reality hits. In the trenches consumers would be shocked to know how their safety is disregarded. After some commercials I see even I might be fooled, but I know better. At the appraiser level I think some want to do the right thing but often fail miserably to address certain items. Often communicating they don’t have authority to pay.” Mike said.

“Frustrating are the refusals for basic I-CAR recommendations and manufacturer recommended repairs. We have one appraiser who refuse’s to allow clean up of Sodium-Hydroxide residue after airbag deployment. Makes you wonder if he would want his child to eat a cookie off a seat with a little Sodium Hydroxide dust on it? Another appraiser denied replacement of a wire harness where documented manufacturer recommendations said, (paraphrasing) “Do NOT repair damaged wires. Replace the harness completely.” Well that’s pretty clear! We submitted documentation and he still refused. Orso’s also charges for disposal of accident debris. “After a home fire a contractor rolls a dumpster in your yard and loads all the debris from your house in. Different items go in different dumpsters. Insurance companies regularly pay for that. We bill for it too as “dispose of the debris.” I have 3 dumpsters. We also line item a fee for EPA required disposal of bulbs, ballasts, NiCad batteries and other chemical related items. Because they won’t pay does that make us exempt?” Mike asked.

“I’m being sarcastic to make a point, but levity is a survival tactic. We keep seeing the same nonsensical issues over and over its ridiculous. I think this is going on more and more because the shops don’t push back or…. appraisers keep dictating the same nonsense over and over in shops everyday everywhere. After a while it becomes the normal practice. Some shops have never known it differently. We’re told its “market price” that sets rates and fees. We think its the allocated and dictated rates and fees that set the market price? I’m sorry to let the cat out of the bag, but not all shops are the same,” said Mike.

“Nick Orso’s has no DRP contracts because ultimately we know the shop is liable for the repair. Shops can design and use all the disclosures, contracts, hold harmless releases they want. Insurers can warranty and guaranty and re-engineer car after car and get away with “short pay” day in and out in shops across the country. I don’t have to accept it. Ultimately shops still hold all the liability. In a court of law our decisions during repair is really the only one that matters. Insurance appraisers are not the experts. Shops need to stop believing its ok to just accept what’s offered and make it work. We also gave up waiting for government to ride in on a white horse long ago. Complaints filed with the Insurance Department often result in responses that said, “to resolve this matter of fact, a court of law must decide.” So, we go to court.” Mike said.

Nick Orso’s markets and advertises heavily, has an in-house rental fleet of 40 cars, does a weekly radio show based on consumer advocacy assistance, operates a Wreck Check Car Scan post repair inspection program, has used the “assignment” process successfully collecting “short pays” from insurance companies since 2007. “To date collections have amounted to well over $1,500,000. One batch of cases settled for almost $100,000 early last year and one factor settles them quickly. This is not bragging its reality. No way to put a dollar value on the companies who now negotiate and play fair at the desk. “I can say this, 2011 was our best year in 58 years, 2012 is headed in the same direction,” Mike said. 

Orso’s attorney, Joseph R. Talarico said, “Assignments of proceeds rights are well established in NY State Law, dating back almost 150 years. Consumers are allowed to assign proceeds to claims after a loss. Orso’s uses the process to collect on collision, comprehensive and tort related damage claims through a system of specific procedures and documentation they developed. In 2009 Adirondack Ins. a made a motion on “standing” in Syracuse City Court. The motion was that Orso’s did not have “standing” to sue for recovery due to policy restrictions on assignments.”

Talarico went on to say, “In June 2010, Nick Orso’s v Adirondack Ins. won an appeal in Onondaga County Court. Supreme Court Judge William D. Walsh, affirmed that by law, “assignments of claim proceeds” on “post-loss assignments” are indeed allowed under NYS law regardless of policy language.” Attorney Talarico was Orso’s lead attorney with Erica Eversman providing amicus curiae. According to court record Adirondack settled the “short pay claims” related to Orso’s suits within days of the decision. Talarico said, “Mike spent big bucks to file that appeal. There is a lot involved preparing an appeal but he knew a lot was at stake. It was clear the insurance side knew the potential also based on the effort expended trying to defeat us. By winning Mike cleared the way for himself and others to use the assignment process.”

Talarico said. “The reason some of these cases were delayed in filing is two fold;  on-going negotiations and the motion for standing. Some of the current suits filed this month were actually delayed while that appeal navigated through the courts for 2 years. The word spread fast when Adirondack won their initial motion and some on-going negotiations stalled. The week we won the appeal some companies called and paid up.”

Orso said,“ Since late 2007 we have been using the assignment process for customers who want or need help. NY Regulation provides that a person may appoint a knowledgeable person to negotiate a damaged vehicle’s repair settlement. We are willing to negotiate if authorized. If Orso’s handles the loss and negotiates, its because most consumers don’t have the time or expertise to pursue collection on their own.

In early 2012 Nick Orso’s hired attorney Joseph Talarico Jr. Esq. directly as in-house council where he can devote more time assisting the shop on a variety of legal issues including all sorts of legal matters that evolve day-to-day. “Joe even stepped in when a heath insurance carrier was denying certain coverage for one of our corporate officer’s who was sick in a local hospital. I tried my best to handle it but I detected the same deny, delay, defend tactics we see at the shop. At that point I said, “My attorney will be in touch shortly.” They said, “Yeah sure right we hear that all the time.” One hour later Joe showed up at the Hospital and within 20 minutes he phoned to say, it’s done.” The carrier had agreed to follow the Dr’s advice.” Joe is now looking into the next phase of protecting the shop from tortious interference and illegal steering.” Orso said.

The current suits were filed after requests for payment were denied at the shop level. Then adjusters at the company level refused us. “One adjuster told me, “His job was to beat us down.” Another said, “Someone should take Orso’s out.” I don’t think he meant on a date,” Mike said. “In some cases the actual attorneys for the insurers refuse settlement or delayed, denied and defended their clients actions, then justified their own actions by saying that they have no authority to settle claims or that the claims had been negotiated and settled. Orso’s position on these claims is this; “if the claims were settled we would not have to take it to the next level. Time to settle has passed. If I have to go to court the cost of settling will be more. If they need to pay an attorney is that not clear?” Orso asked.

“Interesting, we’re finding Insurance attorneys and deposed claims personale are stating that appraisers in the field DO HAVE authority to settle claims and negotiate. We all know that’s not what shops hear or experience everyday. I think someone is confused. We notify every company of deficiencies in writing. Some requests are disregarded or responded to late or cherry picked and/or brushed-off by the same repeat offenders. Let me ask this: Are we supposed to beg??? We list the same details over and over on each claim deficiency notice. The same offenders deny them. You know who they are? No one likes to go this route, it’s expensive and time consuming but the cost of doing nothing as you can see by the numbers, is unsustainable,” Mike said.

“I’m assuming we all got into this business to make a living. I didn’t wake up one-day and say; I think I’ll fire off a few lawsuits. When you’re running a collision paint and body shop you’re always looking at new equipment, shop esthetics and ways to improve customer service and operations. At the end of the day we all need a return on investment and a profit. Sooner or later we’ll need a new roof. Right now we’re looking into installing 2 new energy efficient spray booths. We are quickly finding that getting paid in a manner that is sustainable is key and solves a multitude of issues. We measure per square foot per hour profit and we find the attorney’s office we installed is very productive space that is working very well. Claims have never gone this smooth before. There may be a claims in collection but by comparison many claims are settled on the spot and the amount of “short pays” are smaller by percent than when we started.” Orso said.

“While Nick Orso’s operation keeps Talarico busy, as in house council. His responsibilities also include coordinating outside legal services for Nick Orso’s including service provided by Collision Billing Services. Due to the monetary size of some collections, a large Central NY law firm was retained that specializes in collections. Bousquet-Holstein PLLC of Syracuse was retained last year. “Since we hired them they have already settled many cases over the phone.” Mike said.

Large firms are equipped with resources a smaller law firm typically does not offer like a staff of secretaries, assistants, paralegals and more than 30 experienced attorneys. The firm specializes in business and consumer law and litigation. The Syracuse firm was formally known as, Green and Seifter Attorneys PLLC; they also have an accounting division in Syracuse.

Mike Orso is President of Nick’s Garage, Inc. dba Nick Orso’s Body Shop and Service Center. A second generation, privately owned collision shop in Syracuse, NY. Mike is the President of New York State Auto Collision Technicians Association.

*The opinions here in are that of, Mike Orso and or Joseph Talarico, Esq.


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