Ten body shops were closed down and 35 people arrested, 29 of them body shop employees, in a Santa Clara County insurance fraud sting operation. The operation used an undercover agent who approached body shops in the Bay area and asked them to write inflated estimates so that minor body damage, often intentionally inflicted by the vehicle owner, could be increased to cover total repaint jobs and upgrades like spoilers or new seats. The Santa Clara District Attorney's office has issued additional felony arrest warrants. The sting operation was the largest of its kind in the nation, according to the National Insurance Crime Bureau.
California Gov. Gray Davis signed on Sept. 23 the nation's first family leave bill, providing benefits for up to six weeks a year payable from the state disability insurance program to workers who must care for sick family members - children, spouses, parents and, in the case of gay couples, domestic partners. The family leave can also be taken to "bond" with newborn children, newly adopted children and new foster children.
Five body shop owners in Texas have filed suit against State Farm for damaging their businesses. The group, represented by Dallas attorney Christopher Davis, alleges that State Farm interfered with their businesses and acted unlawfully to restrain trade and commerce in the markets where the plaintiffs have (or had) their businesses.
Monday, July 29, Dave Cooper was working at his home office, planning events to celebrate the fifth anniversary of his PPG Platinum Distributor location in St. Louis, Missouri, when he received a call informing him that his store, Cooper Color, was on fire. When he arrived at his store 25 minutes later, he said, "I knew it wasn't good."
Holmes Body Shop, the largest independent chain of collision repair shops in Southern California, has settled confidentially the lawsuit brought against it by DuPont for breaching a contract to buy its paint from DuPont.
"Working Small and Effective" was the title of a class at the International Autobody Congress and Exposition (NACE) in Dallas, Texas in early December, but it could have been an apt theme for the event. Many wondered whether NACE would "feel the impact" (the actual theme of the show) of the five major paint companies being absent from the trade show floor. Indeed, attendance by both shops and vendors was down. (For details, see "NACE by the numbers".)
A Texas state senator promised at NACE in Dallas to introduce a bill in the Texas 2003 Legislature that would prohibit an insurance company from acquiring any financial interest in a collision repair facility and require that any insurer currently owning body shops divest their interest by Sept. 1, 2006.
A Texas appellate court's decision last month to slash a monetary award in the a major mold-related insurance claim case should have a positive effect on the state's insurance market and help quell the national mold hysteria it engendered, according to the Alliance of American Insurers (AAI).
The Texas legislation unveiled at NACE that would prohibit an insurance company from holding or acquiring an interest in an automotive repair facility was scheduled to be introduced in Austin as early as February 4, this according to Jay Propes, a legislative consultant in Austin who is working with supporters of the bill.
Caliber Collision is blaming the California Bureau of Automotive Repair (BAR) for the rash of lawsuits that have been filed against it and thousands of other auto repair shops based on violations of BAR regulations.
Owners of small businesses ranging from auto repair shops to restaurants and nail salons have been howling about the lawsuits being filed against them in massive numbers by attorneys who allegedly abuse a section of the state's Unfair Competition Law known commonly as the Private Attorney General Act (Business & Professions Code Section 17200). The attorneys can use Section 17200 to sue small businesses and then pressure them for a quick settlement. In the case of auto repair, over 2,000 mechanical and collision repair shops have been sued, many of them for nothing more than a technical violation of BAR regulations such as failing to renew their registration on time - matters which they have since corrected. While many call such suits frivolous, they can never-the-less be costly to defend, and many business owners have chosen to settle them.
Two bills that prohibit automobile insurers from having an ownership interest in an auto body repair facility have been introduced in the Texas legislature and appear to enjoy considerable support. Texas Senate bill 435, introduced by State Sen. John J. Carona (R-Dallas) on February 17, has 14 co-sponsors and has been referred to the Business and Commerce Committee.
A bill to strengthen the California anti-steering laws was introduced in the California State Senate by Sen. Jackie Speier (D-San Francisco) on February 20. The bill would prohibit an insurer from recommending that an automobile be repaired, or not be repaired, at a specific auto body repair shop, unless the claimant specifically requests a referral. It would allow a claimant or repair shop damaged by a violation of this provision to recover damages and costs.
Attorney General Bill Lockyer on February 26 filed a consumer protection action against the Trevor Law Group of Beverly Hills, alleging the firm committed unfair business practices in slapping thousands of small businesses with abusive lawsuits filed solely to obtain nuisance settlements and attorneys fees.
The State Bar of California announced in mid March that it has filed a petition to enroll inactive three attorneys from the Beverly Hills firm Trevor Law Group who allegedly defrauded small business owners under Business & Professions Code Section 17200.
When John Garamendi was campaigning last fall to be elected California Insurance Commissioner, he addressed the California Autobody Association and said one of his priorities would be to revisit and strengthen the Fair Claims Settlement Practices (FCSP) regulations - the regulations that govern how insurers must handle claims.
A Los Angeles County judge has dismissed nine lawsuits filed against thousands of LA County mechanical and auto body repair shops by the Beverly Hills law firm Trevor Law Group. The lawsuits enraged the defendant shop owners and caught the eye of the media, resulting in a myriad of actions begin taken by the State Attorney General, the State Bar Association and the State Legislature.
Texas House Bill 1131, sponsored by Reps. Kino Flores (D-Mission), Kenny Marchant (R-Carrollton), Joe Driver (R-Dallas), Allan Ritter (D-Nederland), and Rick Hardcastle (R-Vernon), now has over 80 co-sponsors. The bill will make it illegal for an insurance company to have any ownership interest in an auto body repair facility.
The proposed Texas law that would prohibit insurance companies from owning body shops took major steps forward in April, passing the Assembly (HB 1131) and securing enough sponsors to insure passage in the Senate, but ran into stiff opposition from Texas Lt. Governor David Dewhurst, forcing a redrafting of the legislation into a more comprehensive bill, but one that would allow Allstate to keep its current Sterling Collision Centers.
The issue of reuse of non-deployed airbags from salvaged vehicles returned to the spotlight at the Collision Industry Conference in Phoenix in April with a panel discussion that included information on a program being developed to certify such airbag modules.
The California Senate Committee on Insurance has passed Senate Bill 551, a bill that would prohibit an insurer from recommending a motor vehicle be repaired at a specific shop unless the insured requests such a referral. It allows an insured or other claimant or repair dealer to recover damages, if harmed by a violation of this provision.
The Beverly Hills attorneys who filed over 2,000 lawsuits against auto repair shops and other small businesses in California, making headlines throughout the state and leading to calls for action against them by state legislators and an investigation by The State Attorney General, were placed on involuntary inactive status by the State Bar Court in late May. In other words, their licenses to practice law have been suspended as disciplinary proceedings toward possible disbarment continue. In its ruling, the State Bar Court agreed with its prosecutors that the lawyers had filed thousands of frivolous lawsuits with the intent of forcing quick settlements.
Bill Heard Enterprises, the world’s largest Chevrolet dealership group, employing approximately 2,700 people, announced on Sept 24 that it would cease operations at its 13 stores, almost all of which operated body shops. The 13 locations are in Alabama, Florida, Georgia, Nevada, Tennessee and Texas.
On Sept 29, Heard filed for Chapter 11 bankruptcy protection blaming a ‘perfect storm’ that included fuel price increases and the Chevrolet product mix of trucks and SUVs. It also said 10 Heard stores had used floorplan loans from GMAC Financial Services, which GMAC pulled Aug. 21.
Bill Heard Enterprises’ dealership in Sugar Land, Texas, is also apparently closed.
None of the Heard dealerships is operating, attorney Robert Rubin said at the bankruptcy hearing Monday, Sept. 29. Rubin is a lawyer representing Bill Heard Enterprises.
The Texas Senate on May 27 passed House Resolution 1131, the insurer-owned repair shop legislation, by a unanimous vote of 31 to 0. On April 8, the Texas House of Representatives passed the bill by a voice vote.
Body shops and consumers in Texas have reason to celebrate! Republican Texas Governor Rick Perry signed into law on June 20 Texas House Bill 1131, the Insurer-Owned Repair Facility Legislation. Earlier, the Texas Senate passed the legislation by a unanimous vote of 31 to 0.
Late breaking news
The State Bureau of Automotive Repair (BAR) announced on July 2 that it has filed accusations against five more Caliber Collision Center locations, including El Cajon (N. Johnson Avenue), Riverside (Indiana Avenue), Costa Mesa, Chino and Murietta.
The California Autobody Association (CAA), which had been "patiently waiting this year," according to Executive Director David McClune, to see if Texas would be successful in passing legislation prohibiting insurers from owning collision repair shops, now says it may be ready to try again.
Aftermarket parts manufacturers and CAPA are likely vexed by the newly-released Crash Parts Certification Study, published in July by the California Bureau of Automotive Repair (BAR). The report blasts the parts certification process, concluding that "certification has no value to the customer . . . if there are problems with the certified product the certifying entity does not stand behind their own certification process."
California's anti-steering legislation, SB 551, took a major step forward on July 9 when an amended version passed the Assembly Insurance Committee by unanimous vote and then moved to the assembly floor. Bill sponsor Sen. Jackie Speier (D-San Francisco) plans to move forward after she and supporters of the bill - the California Autobody Association (CAA) and the State Department of Insurance - can work out clarifying language. The bill passed the State Senate in early June.
Contending that they need to comply with restrictions placed on them by Texas House Bill 1131, Allstate Insurance Company is introducing a new direct repair program in the state of Texas. The new law, which was passed on June 20, requires Allstate to change its existing relationships with auto body repair shops and provide uniformity between its owned (Sterling Collision Centers) and non-owned auto body repair operations.
Now that SB 551 has been signed into law, it is the responsibility of collision repair shop owners to become familiar with its provisions and implications. Kelly Swenson, first vice president and president-elect of the California Autobody Association (CAA), spoke passionately at the CAA Annual Convention in October about the victory achieved for the collision repair industry by the passage of SB 551. Swenson suggested that all shop owners post the law in their facilities and indicated that training on the law and its implications would be offered early in 2004. The law goes into effect January 1, 2004. Enforcement falls to the Department of Insurance.
There's good news for Oklahoma body shop owners who want to take immediate action to stop the steering they believe is rampant throughout their state. A grassroots group of shop owners has started an effort to get anti-steering legislation put on the books. Representative Bill Paulk (D-District #92) agreed in late October to sponsoAutobody News - Administration [Joomla]r the bill when the legislature meets again in the spring of 2004.
Is the onset of fall and impending winter making your blood run cold? It's not too late to pack your bags and head for Florida to attend NACE 2003 - the global collision repair event that draws all segments of the industry together. It's a great source for new products, education and networking - and, of course, a little Florida sunshine.
The Certified Automotive Parts Association (CAPA) is calling on repairers to leave the CAPA seal on all certified parts in order to demonstrate the use of a CAPA part and to aid in tracking the part, should it be necessary.
Once the fog burned off, the San Diego day was almost too beautiful to stay inside, but that's exactly where nearly 100 attendees at the California Autobody Association (CAA) Convention spent that temperate mid-October Saturday.
When HB 1131 was signed into law in Texas, it required that companies with an ownership interest in auto body repair facilities provide for equal referral of work to their owned and non-owned facilities within DRP programs. In order to be compliant with the new law, Allstate was forced to evaluate the make up of the current DRP program, which included owned and non-owned facilities. And the program was redesigned to help ensure that Allstate is complying with the new law.
From a crack-down on fraud to attempts to halt the growth of insurer-owned shops, it's been an interesting year for the collision repair industry. Here is our annual year-in-review wrap-up, a collection of some of the most memorable, important, interesting or enlightening quotes heard around the industry during 2003.
Insurance Commissioner John Garamendi, responding to the workers' compensation crisis dampening California's economy, announced he has significantly lowered the advisory pure premium rate by 14.9%, effectively returning it to the July 2002 level.
The Texas law passed earlier this year that puts a halt on the growth of insurer-owned shops is nine pages long.
Michael Spears is serious about his business. He is results-oriented and motivated by the challenges representing the collision repair industry. Spears is part owner and general manager of Green Valley Collision Center, a brand new 30,000 sq. ft. auto body shop in Las Vegas, Nevada. Green Valley is a member of The Auto Body Group, along with Falconi's Collision Center and Speedway Truck and R/V Center. In addition, ground is to be broken on another 38,000 sq.ft. collision repair center in spring 2004.
The issue of shops needing multiple estimating systems to meet insurer direct repair program requirements may not be resolved soon, according to panelists at a NACE Town Hall meeting that focused on automated claims processing.
At the last International Autobody Congress and Exposition (NACE) expected to be held anywhere other than Las Vegas, attendees had an opportunity in early December to enjoy a welcome party at Universal CityWalk in Orlando, Florida, participate in 45 educational sessions, hear a keynote address from news commentator Bill O'Reilly, and browse a 176,000-sq.-ft. trade show featuring 488 companies.
Attorney General Bill Lockyer filed a $50 million lawsuit against Irvine-based Caliber Collision Centers and its subsidiaries on December 4, 2003 alleging they committed widespread fraud by billing consumers for services and parts that were not provided.
Nine owners or employees of area auto repair shops were arrested and charged December 17, 2003 with auto insurance fraud following a lengthy investigation by a multi-agency task force headed by the Los Angeles County District Attorney's Bureau of Investigation, LA District Attorney Steve Cooley announced. Two others were charged but were not yet in custody.
Allstate has won a round in its fight to own collision centers in Texas. In the U.S. District Court of North Texas, Dallas County, Judge Ed Kinkeade granted a motion for a preliminary injunction against enforcement of H.B. 1131 as requested by the plaintiffs in Allstate Insurance Co. and Sterling Collision Centers Inc. v. Greg Abbott, Attorney General of Texas and Carol Keton Strayhorn, Texas Comptroller of Public Accounts ("defendants").
From "unintentional fraud" to "estimating database abuse" and the added costs created by the lack of standardization among direct repair programs, the Collision Industry Conference (CIC) plans to address a wide range of topics in 2004.
Joey Buttafuoco, co-owner of California Collision, a Chatsworth auto body shop, pleaded guilty to one count of auto insurance fraud and has been sentenced to one year in county jail and five years probation, the District Attorney's Office announced.
State Insurance Commissioner John Garamendi announced the arrests of nine suspects today by the California Urban Auto Fraud Task Force for embezzlement, conspiracy and tax evasion in connection with an "insider" insurance scam. Investigators from the California Department of Insurance Fraud Division, the California Highway Patrol and the Sacramento County District Attorney's office made the arrests in Oakland, Richmond, Vallejo, Fairfield, Norwalk, California and Raleigh, North Carolina. Each suspect could face a maximum of five years in state prison and/or fines up to $50,000.
Louisiana Attorney General Charles C. Foti, Jr. announced a guilty plea in an insurance scam that cost insurance companies and consumers hundreds of thousands of dollars. Foti said the case is even being watched nationally as other states may follow Louisiana's precedent of prosecuting windshield repair scams.
The recently completed Space Draw for the International Autobody Congress & Exposition (NACE) 2004 event in Las Vegas showed an increase over 2003 in the number of participating companies and the amount of space assigned, indicating a strong start to NACE being held during Automotive Aftermarket Industry Week (AAIW) in November.
In a ruling that bucks the national norm, The New Mexico Supreme Court ruled last month that consumers could sue insurance companies for failure to negotiate reasonably once liability has been established in an automobile accident. It's called "third party bad faith" and it gives a motorist the right to sue the other party's insurance company when that other party is at fault and his insurer makes an unreasonable or "low ball" offer to settle the case.
In the marathon of Arizona politics, the baton has been passed from the Fairness for Automotive Consumers (FAC) legislative committee members - David Fait, Brad Beebe, Randy Maddox, and Cindy Beckes - to State Representative Gary Pierce (R), and lobbyists Barry Aarons and Art Chapa.
California Department of Consumer Affairs (DCA) Director Charlene Zettel has presented her department's report on the Bureau of Automotive Repair (BAR) to the 2004 Sunset Review Committee with three recommendations for improving the BAR. The recommendations include consideration of a statutory definition of "fraud," a term that has been hotly contested in the collision repair industry over the past year.
Two of the remaining four defendants in the national class action lawsuit that alleges price- fixing in the automotive refinish industry have settled for a total of $48 million while still denying the allegations in the lawsuit. In the late April settlement, Dupont agreed to pay $36 million and BASF $12 million to settle dozens of suits filed all over the country that were consolidated into Federal District Court in Philadelphia. A third defendant, Akzo Nobel, settled its share of the suit for $18.75 million in February 2003 while denying all liability. PPG and Sherwin Williams remain as defendants as the federal civil case moves forward in Philadelphia.