Wednesday, 25 June 2014 13:48

Attorney and AASP-MN Lobbyist Kevin Walli is Minnesota’s Shop Champion

Kevin Walli has been the lobbyist for the Alliance of Automotive Service Providers (AASP-MN) for the past 20 years. He is a shareholder in the law firm of Fryberger, Buchanan, Smith and Frederick in St. Paul, MN. We got in touch recently to discuss the recent history of legislation that has impacted the collision industry in Minnesota in the past five years.

Q: How did you become the lobbyist for the AASP-MN?
KW: I’ve been representing the collision industry in Minnesota for 20 years now, after working in government affairs for many years prior to that. A friend of a friend knew someone at the AASP-MN and told me they were looking for some representation and more support at the Capitol. Over the years, we’ve been working hard to provide more balance between the interests of the collision industry and the insurance industry, because there’s an ongoing tug-of-war there obviously. I believe that there has been a constructive approach by the two industries to try and communicate with one and other. So, what we’ve done for several years running is that we sit down usually a few times per year to air out our issues and sometimes there’s a response from the insurance companies that indicates that maybe we can address some of these issues ourselves. But in other cases, we end up saying let’s agree to disagree and arm wrestle it out at the Capitol.

Q: You’ve dealt with legislation regarding steering?
KW:  Yes, and we’ve had some success with legislation concerning steering. We’ve been able to find more clarity on the laws dealing with steering, so that we can understand what steering is and provide some direction in the law. The purpose of the language is obviously to protect consumers from being steered and we’ve had some success with that.  Steering has always been an issue and it still is in many ways, so we’ve developed legislation to address that. We sought language a few years ago to prevent an insured or claimant from being required to take their vehicle to a particular drive-in claims center and we were able to get that changed. We also added a section that restricts an insurer from specifying the use of particular vendors for the procurement of parts or other materials necessary to perform a satisfactory repair. Now this very issue is still being contested.

Q: There’s been a battle in Minnesota between the insurance companies and the body shops, because the insurers want the shops to use certain parts, products and management platforms, correct?
KW:  Yes, we had some legislation this year that we did not succeed with (House File 2690/Senate File 2542-the Auto Repair Claims Processing Bill) that would have prevented insurance companies from dictating certain business practices at repair shops. I think there’s a sense with the body shop owners in Minnesota that there are more and more situations in which insurers are dictating what estimating systems and materials they should use. And we’re concerned that it’s a slippery slope where the insurance companies will take away the autonomy of the collision repair shop owner. We had some proposed legislation that would have restricted insurance companies from specifying or requiring that repair shops have to utilize specific vendors, manufacturers, suppliers, business platforms or internal processes and we got the bill introduced and some great authors for the bill both in the House and in the Senate. But ultimately, we couldn’t get movement for the bill on the Senate side. The Chairperson there (Senator Jim Metzen, who was also a co-author of the bill) was uncomfortable with the onslaught of input he received from the insurance industry. Some of what they had to say was legitimate, and some was not, but that’s not unusual. When we proposed the legislation and it was circulating at the Capitol, the insurance industry came forward and said that they hadn’t heard of this bill. They said “Hey—we’ve had this practice for several years of discussing legislative proposals with the collision industry in advance of the Legislative Session.”  They argued that they hadn’t had such a discussion on this proposal.  In addition, this year’s Legislative Session was shorter with very tight deadlines for getting bills heard, so that also played a role in the death of the bill. But, we’re going to bring it back in a new form, after getting some valuable feedback from the insurance side. They said that we were trying to kill the DRP system, which was never our intention at all. So, we have to address that issue and re-work some of the language the next time around, so that it’s clear we’re not trying to change the fundamental relationship that exists between body shops and insurance companies.

Q: I imagine you haven’t been supportive of programs like PartsTrader?
KW: Exactly, because our concern has always been that if a body shop is required to use a particular parts vendor, the shop doesn’t have a relationship or a history with that vendor. As a result, parts that aren’t appropriate for the vehicle can enter the picture, because the communication between the shop and the vendor is not present. Shops spend a lot of time and effort to developed business relationships with particular parts vendors and then all of this goes out the door when they are forced to work with someone else they don’t know anything about.  In addition, we have had an ongoing dialog with the Department of Commerce regarding its enforcement and there is an investigation that’s open in this matter and the Department of Commerce is continually gathering information about how PartsTrader system is working or not. We were hoping that the statute would provide enough guidance for enforcement action. But now they’re gathering information and studying the marketplace and as an industry we’re trying to provide information for the Department of Commerce in this matter.
Some time ago, we also added language to the same statute that “prohibits an insurer from unilaterally and arbitrarily disregarding a repair operation or cost identified by an estimating system…” This means, if you’re using an estimating system that you and the insurance company have both agreed that it’s acceptable to use, then they can’t deny the repair operation and cost without some clear justification. This kind of shifts the burden to them and it’s now their responsibility to prove the repair practice should not be recognized.

Q: What other issues have you’ve tackled on behalf of the members of AASP-MN?
KW:  We had to deal with some tax provisions in recent years. There was a sales state tax on paint and supplies for shops when they were purchased at wholesale. But, we were able to shift the point of imposition on the tax from the wholesale to the retail level. That way, shops are able to pass that tax onto the consumer. The repair shops were eating that tax cost before. Most of the other states were already doing it this way and Minnesota was kind of an island in that regard, so the legislation was much-needed.

Q: You have an annual Legislative Day where shop owners can meet with their legislators, right?
KW:  We’ve been doing a Day at the Capitol on occasion, where we meet with our members and give them an orientation of how things work at the State Capitol. Then, we ask them to talk with their Representatives and Senators and walk the halls to discuss the legislation we’re working on. The insurance industry is extremely well-represented and they have a lot very smart people working for them, both in-house people as well as consultants that they’ve retained. The sheer numbers can be rather daunting at times, to be honest. So having the shop owners converging at the Capitol and meeting with their Legislators puts a practical perspective on our issues--so it’s been a very positive thing. Plus, it helps me to do a better job for the AASP-MN, because after these Senators, for example, have met with one of their constituents, we can follow up to emphasize the point made by the shop owners.