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1HomePageMap small w 0816Local news stories affecting the auto body industry in California, NevadaOregon, Washington, Idaho, Montana, Hawaii, Alaska and Wyoming

The California Assembly Business and Professions Committee, chaired by Assembly member Mary Hayashi (D-Hayward), will hold a hearing Tuesday, June 22, on two measures dealing with collision repair parts after our press time.
Senate Bill 350, the original version of which was sponsored by the Certified Automotive Parts Association (CAPA), would add a new section to the California Business and Professions Code that currently requires consumer disclosure in order to use aftermarket crash parts on a repair.

In addition to the current consumer disclosure requirement, SB 350 would add an additional list of requirements that must be met in order for an insurer to specify the use of aftermarket crash parts. Among them, the bill would require any insurer specifying the use of aftermarket parts to warrant that those parts are “of like kind, quality, safety, fit, and performance as original equipment manufacturer aftermarket crash parts.”

This requirement is already contained under Section 2695.8 (g) of the California Code of Regulations. The bill serves to codify existing law.

The bill, originally introduced by Senator Leland Yee (D-San Francisco), passed the Senate last year and is now awaiting approval by Hayashi’s committee. Hayashi is the Assembly member who in 2008 sponsored and passed Assembly Bill 1200, the measure that changed California’s anti-steering laws effective January 1, 2010.

The hearing is also scheduled to consider Senate Bill 427, introduced by Senator Gloria Negrete McLeod. SB 427 would require repairers to provide, on a signature page of the final invoice, a statement that installing parts other than those described on the estimate without prior approval from the customer is unlawful.

Both bills have already been approved by the Senate. Readers can go to www.autobodynews.com for an update on the results of the meeting.

The California Autobody Association (CAA) was invited to participate in a meeting on June 24 with both the California Department of Insurance (DOI) and the California Department of Justice to discuss the issues surrounding aftermarket replacement crash parts and provide recommendations in developing “policy and legal issues relating to the use of replacement crash parts.”

According to the CAA, this meeting is a culmination of a series of discussions and meetings CAA has been having with the DOI and the Attorney General’s office for the last several months which recently resulted in the DOI issuing a notice to all insurers specifying non-OEM replacement crash parts for the repair of an automobile. The memo stated that all non-OEM parts specified must be at least equal to the OEM parts in terms of kind, quality, safety, fit and performance, specifically noting aftermarket bumper reinforcement bars, and that the parts must have must have permanent, non-removable identification of the part manufacturer.

The CAA noted that California regulations Section 2695.8(g)(4) requires that “all original and non-original manufacture replacement crash pads, manufactured after the effective date of this subchapter, when supplied by repair shops shall carry sufficient permanent, non-removable identification so as to identify the manufacturer.”

As discussed with the DOI, the issuance of this notice to insurers is the first step in establishing a traceability system for parts in the state of California that will allow manufacturers to identify and track their parts in the event of a recall concerning safety, fit, and quality.

The CAA conducted a very successful stakeholder meeting in March of this year to begin addressing the need of tracking aftermarket crash parts. Many of those that were at that meeting will be in attendance at the June 24 meeting in Sacramento with the Department of Insurance.

The CAA’s position is that the issue of being able to have a uniform system to track aftermarket crash parts for the industry is a priority project that needs to happen now. Consumers should have the confidence that if a part fails or has been identified for possible failure there is a process in place to rectify it.

Peter Conlin, Counsel to the Commissioner, said in a letter to the CAA, “Commissioner Poizner places his highest regulatory priority on promoting consumer safety and I believe the CAA could play a significant role in developing a new policy consensus in the area.”

California Insurance Commissioner Steve Poizner today filed a cease and desist order against two California men and several corporations for allegedly operating unlicensed insurance companies and using deceptive and illegal telemarketing. Robert Lewis Chapman, James C. Sletner and several corporations they own and manage, including SafeData Management Services, Inc., d.b.a. Consumer Direct Warranty Services, Warranty Administration Services, Inc., and Warranty Administration Solutions, Inc., face substantial fines. 

“If you want to sell insurance in California, you must obtain a license, have adequate financial reserves and you must not deceive consumers,” said Commissioner Poizner. “In order to protect California consumers, there are specific requirements for insurance companies seeking to do business in California. If companies do not abide by these requirements, they will not be permitted to sell insurance in our state.”

The Department of Insurance alleges that Consumer Direct sold insurance policies and vehicle service contracts without a license and in blatant disregard of numerous, longstanding legal requirements designed to protect California consumers. The unlawful insurance policies, which promise to repair breakdowns to engines, transmissions and other parts, typically sell for $1,500 - $2,500. Chapman, Sletner and Consumer Direct each face a fine of $5,000 for every day they conducted business in California, or five times the revenue received from California consumers, whichever is greater.

Douglas Auto Body in Pasadena, CA, founder, George K. Daghlian, passed away May 22nd, leaving Takouhi, his wife of 47 years, four children and many grandchildren. His oldest son, Armen, and youngest son, Kevin, started Douglas Auto Body with George, and will continue to operate the collision repair facility.  The funeral was held at Forest Lawn Hill's Red Church on May 27th, and a memorial dinner was given at Verdugo Hills Country Club in Glendale.

George had an unusually extensive background in the collision repair industry, both in the U.S. and abroad. He began working in a body shop at the age of 13, in Aleppo, Syria. At the age of 18, he opened his own shop in Kuwait, and five years later he returned to Aleppo, and opened a shop there. When he saw that life in Syria could become difficult and even dangerous, he brought his family to the United States and opened a shop in Pasadena, in 1987. The shop grew every year until in 2006, George could celebrate fifty continuous years in the collision repair business, with a shop that had now grown to about 50,000 square feet.

The California Autobody Association (CAA) learned last week about fifty-three Orange County estimators and owners that were arrested and charged on felony insurance fraud following a 5-month investigation by the Orange County Automotive Insurance Fraud Unit that targeted auto body repair shops. The OCDA conducted 152 undercover operations throughout Orange County between January and May 2010.

These undercover sting operations have been going on periodically since the early 2000’s throughout California. An undercover investigator will bring a car into a shop in which the investigator wants the shop estimator to help him / her defraud their insurance company. At this time, the undercover investigator makes it clear that it is his / her intention to present this estimate to the insurer to commit insurance fraud. At this time, the investigator is recording or videoing the
conversation.

Attorney General Edmund G. Brown Jr. has announced that he has asked to intervene in a lawsuit in order to protect newly adopted motor vehicle emission standards that are estimated to save nearly two billion barrels of oil and reduce greenhouse gas emissions by approximately one billion tons.

Brown filed a motion to intervene in the U.S. Court of Appeals in support of the federal Environmental Protection Agency (EPA) in a suit brought by energy companies and other industries challenging the EPA's authority to enforce the tough emission standards beginning in 2012.

"The thousands of barrels of oil spilling in the Gulf of Mexico each day are a graphic reminder that we need to cut oil consumption in America," said Brown. "These regulations would do that, as well as vastly reducing pollution from tailpipe emissions."

The fallout from the Orange County auto body sting operation which swept up 53 shop owners and estimators earlier this month has already cost many of those implicated their DRP arrangements. Several major shops involved, with the notable exception of two of the state’s three Sterling shops owned by Allstate, have already had their DRPs cancelled by their insurer partners.

Details of the specific charges are still forthcoming, but those involved will likely be charged  under CP code 550b(2), which reads, in part:

(b) It is unlawful to do, or to knowingly assist or conspire with any person to do, any of the following:

(1) Present or cause to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact.

(2) Prepare or make any written or oral statement that is intended to be presented to any insurer or any insurance claimant in connection with, or in support of or opposition to, any claim or payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact.