Wednesday, 22 May 2013 18:20

Rhode Island Industry Attorney: “Body Shops Suffer From an Image Problem”

In Rhode Island, the annual State House auto body shop war has renewed, with an exasperated Jina Petrarca-Karampetsos telling weary senators — more than four hours into a late-night hearing: “Body shops suffer from an image problem.

“And that image problem is perpetuated by individuals who don’t know the facts, who portray us as greedy thieves,” the sister of former Rep. Peter Petrarca — and lawyer for her father’s Providence Auto Body — told the Senate Judiciary Committee.

“We’re body-shop people. We protect your second-biggest asset,” but “we are not doctors. We are not even carpenters. We’re body-shop people so we actually are, amazingly, people that make victims of insurance companies.

“Some people actually feel bad for insurance companies when they compare them to us.”

She suggested the senators see the insurers instead as “unreasonable” people who “refuse to negotiate.”

However, the hours-long hearing and debate drew little attention outside the two affected industries. The hearing ran more than 5½ hours. It drew executives and lobbyists from Nationwide Mutual, PCI, Amica, the American Insurance Association, among others, and from the other side, the Auto Body Association of Rhode Island and a number of its members, including John Petrarca.

The battle centered on this year’s version of the right-to-sue legislation that cleared the General Assembly at 2:58 a.m. in the final hours of last year’s session, which Governor Chafee ultimately vetoed.

The bill co-sponsored by Senate Majority Leader Dominick Ruggerio and Majority Whip Maryellen Goodwin would require insurers to negotiate payment rates with body shop owners and give the body shops the right to sue the auto insurance companies if these negotiations do not result in an “agreed price.”

This year’s bill is not identical. For example, the rewritten bill would no longer require an insurer to pay the legal bills of an auto body shop that prevailed in court.

But it is substantially the same. And so are the arguments pro and con. And people affiliated with the body shops gave at least $18,850 from Jan. 1-March 31 to the campaign funds of House Speaker Gordon Fox and Senate President M. Teresa Paiva Weed and their top deputies.

Campaigning for a veto last year, the American Insurance Association (AIA) issued this statement: “No other state in the nation allows auto body shops to set non-negotiable rates and attempt to force them on third party payers under threat of litigation.”

In his subsequent veto message, Chafee said: “While I understand the desire to ensure auto body employees are adequately compensated for their skills and attention to safety, I believe this bill would hurt Rhode Island consumers by raising their auto insurance rates and impairing their existing contract agreements with their insurance companies.

“With many Rhode Island families continuing to struggle as our state economy recovers, I do not believe it is appropriate to pass on any unnecessary additional costs to consumers,” Chafee said.

Rhode Island drivers already pay the fifth-highest collision insurance premiums in the nation, $351 here compared with $290 on average nationwide, according to a March 11 “Special Report” from the Property Casualty Insurers Association of America.

But Petrarca-Karampetsos told the senators that more than 70 of the 700 companies that write property casualty insurance in the state “pay much higher than $45 an hour. Much higher. They pay over $70 an hour.”

“All it asks them to do,” she said of the legislation, “is negotiate. … It is beyond me how this is such an unconscionable controversial thing that makes us look like greedy thieves.”

Goodwin is sympathetic. “I just believe [for] the auto-body industry, it’s a matter of fairness,” she said Tuesday. “These have been ongoing disputes for years and years and years between the auto-body industry and the insurance industry.”

Asked why the state should intervene in a private dispute over how much repair shops should be paid, Goodwin said: “People have the right to sue all the time when they can’t come to some type of agreement. What is so wrong about going into court and having a court settle something that cannot be settled?”

As for warnings that higher rates will follow, Goodwin said the insurance industry “has some of the deepest pockets in America. They can battle back. … I am looking out for the small business owner, the little auto body shop and the consumer at the same time.”

Added Ruggerio: “I am not concerned about it because, personally I think if the auto bodies have that leverage, then the insurance industry would deal a little more fairly if they had something like that hanging over their head.”

In the weeks leading up to this year’s hearing, the Property Casualty Insurers Association of America launched a $30,000 radio ad campaign.

“If you think this all sounds all too familiar, you’re right — the auto body shops are at it again!,” the ad begins.

If passed, the bills “could be harmful to drivers by increasing the cost of having a vehicle repaired following an accident, potentially forcing you to pay even more for your insurance coverage.”

“Let’s stop the auto body repair rip-off, once and for all,” the ad said.

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