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Southern Automotive Journal
September 2016 Issue


SCRS Launches Industry Career Center



CNN investigates steering, DRPs and inadequate collision repairs

We've heard it before from independent collision repair shops not engaged in a direct repair program, or DRP: steering of customers by insurance companies to specific collision shops is unfair to both shops and customers. A report by CNN echoes that sentiment, providing examples of unfit parts and unsafe repairs. Steering, according to the report, harms customers and, as lawsuits by 500 body shops in 36 states suggest, may result in inadequate repairs that endanger drivers.

The segment aired on Anderson Cooper 360 and was produced by Senior Investigative Correspondent Drew Griffin. Griffin interviewed Bill Byrne, an auto repair expert, who revealed repairs to a vehicle he deems unfit. With a "repaired" vehicle up on a lift, Byrne found an unrepaired rip in a rail that would be difficult for a consumer to spot. Byrne says insurers are intentionally sending work to shops that will cut corners to save reduce insurers repair costs.

"Insurance companies are involved in a deliberate system to send you and your car to shops that are preselected by insurers to do the absolute bare minimum to fix it," Byrne said, "even telling body shops to use used or recycled parts because they're cheaper."
Matt Parker of Parker's Auto Body in West Monroe, Louisiana, echoed the sentiment and provided an example of a recycled part that he says insurers are encouraging collision repairers to use. Parker showed Anderson Cooper 360 cameras a headlight assembly from a Toyota Tacoma that had apparently been damaged, then salvaged for reuse. State Farm, Parker said, told him to use the part for repairing a customer's vehicle.

"If we refuse to put [a remanufactured part] on a car, [State Farm] labels us as a shop not willing to go along with their program," Parker said. "Then they try to steer... our business away from us."
Parker is familiar to industry watchers. In an interview earlier this year, Alysia Hanks of Lousiana Collision Industry Association told Southern Automotive Journal Parker intends to run for state insurance commissioner with the support of the organization.
Another familiar face, attorney John Eaves who is representing numerous shops in their fight against the insurers, made an appearance in the segment, too. Eaves alleges that State Farm is serious about steering customers away from shops that refuse to substitute recycled or aftermarket parts for new, OEM components.

According to Eaves, the practice of steering work to shops that skimp on repairs in an effort to save money are widespread.
"Every state in the union has experienced the same sort of struggle here between the body shops trying to do the work the right way and the insurance companies trying to cut corner and force them to use unsafe parts and unsafe methods on their cars," Eaves said.
Mississippi Attorney General Jim Hood cited insurers' clout -their ability to make or break a shop's success – as a factor in coercing compliance with their directives.
Insurance companies "use their economic power to grind down working people,"Hood said. Those that don’t comply, he said, get "blackballed."

Collision industry professionals understand that customers, not insurers, decide where to have damaged vehicles repaired. But drivers do not always understand that the choice is theirs. As a result, customers are often swayed by insurers' recommendations and are unaware that they may be accepting less-than-adequate repairs.

State Farm declined to comment on camera, but did respond to Anderson Cooper 360 in a letter: "Our customers choose where their vehicles are going to be repaired. We provide information regarding our Select Service program while at the same time making it clear they can select which shop will do the work."
The owner of the vehicle with the ripped rail, a Chevrolet Malibu, disagrees. Progressive, the insurer responsible for the claim, stated it told its customer Eugenia Randle the choice was hers. Randle told a different story, though.
"They didn't give me a choice," Randle said. "They just told me to take it to their preferred body shop."
Griffin drove the car in question and found it unfit for the road, shaking violently at speeds over 50 mph. In addition to the ripped rail, the Malibu had three bent rims that had not been repaired.

He returned it to the Service King shop that performed the sub-par work, but was asked by the store manager to leave.
After Randle hired an attorney and CNN began their investigation, the Progressive declared Randle's car a total loss and compensated her accordingly.

Cooper called the story "unbelievable," and said he had no idea before this story that insurers were skimping on repairs to gain an economic advantage, endangering all those on the road as a result.

Gunder defeats Progressive Insurance’ Motion to Dismiss and Invoke the Appraisal Clause:

On February 23rd, 2015, the Honorable Judge Susan B. Flood of the County Court of the Tenth Judicial Circuit in and for Polk County denied Progressive Casualty Insurance Company’s motion to dismiss the complaint and strike claim for attorney’s fees. Furthermore, the court denied Progressive’s motion and defeated the insurer’s efforts to invoke the Appraisal Clause as provided for in their policy contract.

The lawsuit was filed by Raymond Gunder of Gunder’s Auto Center acting on behalf of his customer who executed a Durable Limited Power of Attorney allowing Gunder to stand in his shoes for this litigation. The suit was necessitated by Progressive’s failure to pay for the reasonable and necessary costs to perform repairs to Gunder’s customer’s damaged vehicle.

“Progressive tried hard to keep our legal action from going forward by invoking their bogus “appraisal clause” and motion for dismissal, stated Gunder after learning of the judge’s ruling.  

“I sat in that courtroom and watched our brilliant Attorney, Brent Geohagan, destroy Progressive’s legal counsel’s arguments and offer the Judge reasoning as to why our position was correct. The Judge agreed and rendered her decision in favor of our customer.”

Ray went on to say: “This ruling is huge as it allows us to proceed with the multiple lawsuits we currently have in process on behalf of other customers who have been shortchanged by this insurer as well as other insurers who have underpaid their policyholders.”

The lawsuits seek full payment of the underpayments, plus costs, expenses, attorney fees, prejudgment and post judgment interest.


Three-C Body Shops and State Farm Insurance Reach Agreement to Settle Multiple Lawsuits

After two and a half years of legal jousting, involving over 140 separate claims seeking damages in excess of $300,000.00, Bob Juniper of Three-C Body Shops and State Farm Insurance have reached a settlement.

Widely regarded as a consumer advocate and offering high quality repair and services, Bob Juniper is no stranger to controversy and doesn’t shy away from the spotlight. Well known for decades for his company’s pro-consumer, in-your-face, tell-it-like-it-is marketing strategies, Bob Juniper, second generation owner and CEO of Three-C Body Shops, Inc. filed a lawsuit against State Farm Ins. on behalf of 146 of his customer’s.

The issue stemmed from Three-C’s billings associated with the handling of total loss vehicles of which the insurer declined to provide ample compensation to their customers. The issues included, but were not restricted to processes such as hazardous waste, labor related to dismantling, mechanical, diagnostic time, access, rough pulls, accessing codes, relocation of disabled vehicle , fluid/debris clean-up, collision wrap, clean-up of broken glass, administrative time performing research for factory repair methods and numerous other processes incurred.

"The time and efforts involved in vehicle once considered repairable and then deemed total losses are often considered by insurers to be a "cost of doing business", however, when a vehicle becomes a total loss, such labor and administrative activities become burdensome and take considerable time away from our efforts to serve our repair customer’s. Such activities, time and activities are all too often unappreciated and ignored and we sought to receive due compensation for our efforts” stated Juniper. "The costs involved in processing total losses are often higher than the amounts State Farm had been willing to provide for and our ongoing efforts to amicably resolve the issues on behalf of our customers were unsuccessful. The only recourse left was to seek a court’s ruling on the matter; and as such, I took an Assignment of Proceeds (AOP) from our customers and sought recovery on their behalf."

Juniper went on to state; "We are pleased to have settled this group of cases and I presume State Farm is as well. It is never a good situation for the customer when an insurer and repairer clash over such issues, especially when litigation results. I’m confident the settlement will enable our two companies to better serve the needs of our customers and our respective businesses regardless if a vehicle is repairable or should be deemed to be a total loss."

Louisiana Attorney General Buddy Caldwel Files Suit Against State Farm Auto Insurance Louisiana v. State Farm

Download A full copy of the lawsuit (PDF File)

Louisiana Attorney General Buddy Caldwell today filed a lawsuit against State Farm Insurance alleging the nationwide insurer has engaged in a pattern of unfair and fraudulent business practices aimed at controlling the auto repair industry and forcing unsafe repairs on vehicles without the knowledge or consent of Louisiana consumers.

Attorney General Caldwell said, "State Farm has created a culture of unsafe business practices in which consumer vehicle repairs are performed with cost-savings as the primary goal rather than safety and reliability."

The suit, filed in Louisiana’s 19th Judicial District Court, alleges State Farm violated Louisiana’s Unfair Trade Practices Act and Monopolies Law by using scare tactics to steer Louisiana consumers to State Farm’s preferred repair shops and forcing shops to perform vehicle repairs cheaply and quickly, rather than in accordance with consumer safety and vehicle manufacturer performance standards.

The lawsuit alleges that State Farm steers consumers to direct repair providers that have signed agreements with the insurance company. As part of the terms of the agreement, those repair shops must comply with the standards for repair laid out by State Farm. The insurance company, not the repair shop, dictates how long the repair should take, what types of repairs are made and the quality of replacement parts. In many cases, the repairs are completed with sub-standard parts without the consent of the policy holder.

"In some cases, we’ve found that these parts are nothing more than used junk yard parts. In others, we've found them to be foreign knock-off parts of questionable quality," said Caldwell. "Auto repair is not an industry where you can cut corners to save a little money," he said. "It could be a matter of life and death."

Caldwell says the suit aims to change the culture of unsafe business practices led by State Farm in the auto insurance and repair industry. State Farm currently holds the largest share of auto insurance policies in Louisiana. In 2012, State Farm wrote one third of all auto insurance policies in the state totaling over $1 billion in premiums.

"Each month Louisiana consumers give their hard earned money to State Farm under the assumption that the insurer will take care of them if an accident occurs. This simply isn't happening. Quite frankly, State Farm has been there for State Farm, not the Louisiana consumer," Caldwell stated.



Ohio Repairer Three-C Body Shops Pursues Multiple Lawsuits Against State Farm for Short-Pays.

Three-C Body Shops is seeking recovery of short-pays, fees and court costs from State Farm Insurance for the insurer’s repeated underpayments for services generally rendered and charged to their customers when their vehicles have been deemed to be total losses.

Currently there are approximately 89 active lawsuits between Three-C’s and State Farm which began in November, 2012. Generally the suits stem from total-loss billings whereas Three-C Body Shop is seeking an estimated $296,807.93, of which State Farm has agreed to pay only $31,565.03, leaving an unpaid and contested amount to date of $265,242.90. Similar lawsuits will likely be filed.

Bob Juniper, second generation owner and President of the 58 year-old family owned company is no stranger to controversy or to taking on the challenges the collision industry presents. He was one of the first shop owners in the nation to ‘put his money where his mouth is’ by his hard-charging and often controversial local television and radio consumer awareness ads and commercials regarding Direct Repair Programs (DRPs).

Bob Juniper stated; “When a vehicle becomes a total loss we cease normal repair related activities and change to another mode of operation, and as such, charges for such activities are assessed that may or may not be consistent with a repair. Such charges may be processes including but not limited to clean-up from fluid leaks, relocating a disabled vehicle, storage, protection, research, documentation, administrative activities, parts handling and others. We have closely studied the high cost of handling and processing total loss vehicles. In the Columbus area insurers understand and pay for such charges, all but one that is. State Farm continues to be ‘the odd-man-out’ in settling such claims fairly. 

We must be paid for our efforts and liabilities associated with the handling involved in total losses as such activities are not "the cost of doing business”.  We have decided to let the courts decide who is right and who is wrong. Our efforts to work things out with State Farm directly were unsuccessful. I believe the facts will show that the money is owed. We look forward to sharing the results of these cases with the collision repair industry.”

Todd A. Fichtenberg, one of Three-C’s attorneys of the law firm Skinner & Associates, LLC of Columbus, Ohio stated: “Ohio lacks the statutory provisions that have made those like Ray Gunder in Florida so successful in the recovery of fees and costs. Without that statutory framework, we are using Ohio’s existing laws and good faith arguments for the extension of those laws in an effort to recover Three-C’s fees and costs”.

Three-C Body shops was founded in 1956 and currently has six (6) locations including two satellite locations (inspection-estimating, drop-off and delivery) which help feed their four (4) repair production locations in and around the Columbus market area. The company does $10 million-plus in annual sales. More information on Three-C Body Shop may be found at their website at www.threecbodyshop.com or one can reach Bob Juniper at 614-403-1408.


Florida Shops Rally to Stop Parts Trader and Recover Short-Pays

Ray Gunder of Gunder's Auto Center in Lakeland introduced John Mosley, of Clinton Body Shop, Inc. of Clinton Mississippi, who, along with several other Mississippi Shop Owners and Plaintiff Attorney John Eaves, flew into Lakeland, whereas with local Florida Attorney Brent Geohagan held a meeting to share their national efforts to stop implementation of PartsTrader and State Farm's attempts to impose it upon an unwilling collision repair industry and their suppliers who were also in attendance.READ MORE

Federal District Court in"Steering" Lawsuits Filed Against Progressive Insurance

Federal judge denies Progressive Insurance's Motion to Dismiss Price's Collision Center's "Tortious Interference With Business Relationship" and "Breach of Contract" claims, which challenge improper insurance company steering and underpayment of claims.READ MORE

Oregon Repairer Chooses Not to Re-Negotiate State Farm's Select Service Agreement.

Beaverton, OR, : During a meeting with the area State Farm Estimatics Manager, Ron Reichen, President of Precision Body and Paint in Beaverton Oregon, chose not to re-negotiate his company's Select Service agreement with State Farm Insurance, the nation''s largest personal auto insurer. A relationship which lasted over 17 years and of which accounted for $2 million dollars in business over the past year.
"It was actually a business decision we had been considering for some time" stated Reichen;"Discussions came to an impasse over fair and reasonable rates and allowances for aluminum repair. Our terminating the Select Service agreement stems from our company being a certified Tesla repair facility and the investments in time, equipment, training, specialized equipment and facilities which we could not offer for the rates State Farm was willing to pay. This will no doubt enable our company to re-evaluate and revise our pricing on other goods and services for the other manufacturers of which we are a certified repairer for including Porsche, Audi, Volkswagen, Nissan, Volvo, GM, Chrysler and several others." READ MORE



21st Century Insurance Sued Again by Florida Repairer for Short-Pay's

EddieQuintela, Owner and President of Collision Concepts of Delray Beach, FL has once again found it necessary to file a lawsuit against 21st Century Insurance on behalf of his customer who made a claim under their policy with the carrier.
In 2012, Eddie Quintela, on behalf of his company's customers, filed three separate lawsuits against 21st Century of which the insurer agreed to pay before the trial dates. In addition to the disputed amounts, the insurer paid all of Eddie's legal fees and costs.
In spite of recent claims whereas the insurer has provided full payments, as of late, 21st Century claims representatives have elected to once again deny payments for the repairer's posted labor rates, processes and procedures as deemed to be reasonable and necessary to properly restore their customer's vehicle. As Such, Quintela, on behalf of and with the full support of his customer, has found it necessary to once again file a lawsuit against the insurer on his customer's behalf for such denials.
"As in the past with this company", states Eddie,"they pay us only after we file suit but before they go before a judge and/or jury. Thereafter they pay in full for every needed material, process and rates for a while… then abruptly change back to their old ways. I'm puzzled; as I am confident their company share-holders would be as well, since the insurer has often paid 20 times the amounts in dispute, often paying upwards of $2,500.00 in legal fees and costs for a dispute that may be under $100.00!"  "I don't care" said Eddie Quintela;"it would be much easier for their policyholder if they just paid what they owe without the need for litigation, but when they don't, I'll be helping my customer to have their ‘day in court'; As I see it, they [insurers] can either pay fairly now…or pay much more later!  "It doesn't make a lot of sense and even makes less"cents"says Quintela.

Allstate Concedes to Gunder's Labor Rates to Settle Pending Lawsuits;

Allstate provides full payment to Gunder's to settle twelve pending lawsuits for short-pays on labor rate differences plus attorney fees and costs.
In June 2013, Allstate claim's management contacted Ray Gunder and requested a meeting to discuss Allstate's interest in bringing closure to the lawsuits of which Ray had filed against the nation's second largest insurer on behalf of a dozen of his customers.
During the meeting with Allstate's Tom Travis and Greg Ashley it was agreed, based upon service and quality, that Gunder's Auto Center was indeed entitled to their labor rate, however, not all repairers deserve the same labor rate, and concern was expressed, that should the word get out, how Allstate would pay Gunder's labor rate without having to do so for other shops. Ray advised he would continue to share his journey with the industry, and regardless, if a settlement with Allstate was reached or litigation continued, others would find out as his intent was that all repairers and their technical staff would be compensated fairly for their efforts, not just Gunder'.
In July Gunder's was advised that Allstate would settle all twelve pending lawsuits by paying the full labor rate and all related attorney fees and costs. Full payments for each were received last week. Allstate makes the 44th insurer to date which has agreed to pay Gunder's full labor rates and materials.
Ray stated:"I am very appreciative of the way this was handled by Allstate. No one wants litigation, however sometimes it is needed to get disputes resolved. My hope is this is that this is truly a new way Allstate does business nationwide and they speak to the entire industry with one voice. Not all shops are the same and as such they deserve to be compensated based upon the quality of their service and offerings."
"We'll be in depositions all week with GEICO representatives and have continued lawsuits with State Farm. Perhaps the nations #2 insurer agreeing to our rates will encourage GEICO and State Farm to pay rates and allowances that are"fair and reasonable"! One can be sure that we'll continue to"pound the rock" until they do!"

NABC Announces New Focus To Help Re-Launch
Operation Comfort's AutoMotivation Progra

In an effort to meet the immediate rehabilitative needs of wounded soldiers through Operation Comfort's AutoMotivation program, the National Auto Body Council (NABC) announced it will focus efforts on coordinating collision industry resources to re-launch AutoMotivation as soon as possible.
The AutoMotivation program has been dormant since March 2012 when its previous facility in San Antonio, Texas, was sold. This move prompted the NABC to rally industry support for a capital campaign to purchase a permanent training facility and provide an accredited job-training curriculum for the veterans.
In recent meetings, the Boards of the NAABC and Operation Comfort have jointly determined that collision industry resources would benefit disabled veterans more immediately with a priority focus to fund and support the AutoMotivation program, rather than funding the capital campaign to purchase a permanent facility.
"Our primary concern is for our wounded troops who have been without the valuable occupational therapies and rehabilitative benefits of AutoMotivation this past year," said Chuck Sulkala, NABC C Executive Director."Many disabled veterans will be better served today with industry resources re-focused on helping AutoMotivation become fully operational so they once again have the opportunity to receive the positive therapeutic benefits they deserve."
According to Sulkala, a NABC committee e will be appointed to help its members and others in the collision industry that wish to support disabled veterans through the AutoMotivation program. Committee efforts will help promote awareness for AutoMotivation as well as help procure equipment, training or financial support to meet program needs.
Funds raised to date from the industry-supported Operation Comfort Capital Campaign will be used to provide an immediate space to house the e program or kept in reserve for future use towards a permanent facility. Efforts to identify leased or donated space are underway by Operation Comfort board members.
"Whether it is simply changing a tire or working on restoring a complete vehicle, these activities are important first steps in the recovery process for many participants in AutoMotivation," said Janis Roznowski, Executive Director of Operation Comfort."We are extremely grateful to the many individuals and companies in the collision industry whose generous contributions enable us to continue supporting our wounded soldiers through AutoMotivation."
For more information on how to support Operation Comfort's AutoMotivation program, contact Chuck Sulkala at chuck@autobodycouncil.org.

About Operation Comfort AutoMotivation program:
Operation Comfort is a nonprofit organization founded in 2004 to serve wounded Service Members coming in from Iraq and Afghanistan. The focus has been on teaching skills in automotive body and engine repair through their AutoMotivation program, rehabilitative adaptive sport programs, and family financial assistance. For more information please visit www.operationcomfort.org, Operation Comfort's Facebook page or call 210-826-0500.

About the National Auto Body Council:
The National Auto Body Council is a non-profit organization dedicated to enhancing the image of the collision industry. Our ongoing and continued success is a direct result of the efforts and support of our sponsoring companies and membership. Please contact the National Auto Body Council directly for membership information. Call 1-888-667-7433 or go to www.autobodycouncil.org.


North Carolina Body Shop Wins Short-Pay Arbitration Against Nationwide Insurane

Michael Bradshaw, VP of Operations of Hickory North Carolina's K&M Collision was awarded claimed short-pays in a court ordered Arbitration. The binding Arbitration was the result of Bradshaw filing a lawsuit on behalf K&M Collision's customer against Nationwide Insurance for the insurer's underpayments of what was determined to be reasonable and necessary repair costs. In North Carolina every lawsuit files goes to binding arbitration and only after same can either party then seek a trial if so inclined.

The insurer's short-pays included: labor rates ($48 Body & Refinish, $80 Mechanical and $65 Frame), procedures (i.e. sand and buff, final detail, road test, color tint and collision access time), invoiced paint & materials, sublet markup, fixture usage and a $250 Damage Analysis fee which included a comprehensive part by part inspection of all components including: exterior panels, inner structure, mechanical components and SRS and seat belt systems. The award also included storage charges at a rate of $50 per day for the total amount of $2,506.98 plus accrued interest until the insurer's full payment is made.

"I'm glad the courts recognized whom the repair experts were." says Bradshaw."From the beginning I was very confident we would succeed through our legal system in proving all our charges to be both reasonable and necessary. For any insurer to expect all shops to operate by the same rates, procedures and charges regardless of training, manufacturer certifications, equipment and facilities is ludicrous.  The fact is we have made a commitment to repairing vehicles properly, adhering strictly to all manufacturer repair methods and guidelines and what we're consistently finding with some insurers is they care very little about manufacturer certifications and proper repairs and only about bottom line cost and the cheapest repairs possible.  My Father (CEO) and I decided if we were going to stay in business and continue to repair vehicles properly we could no longer accept insurer dictated repair costs.  We found that short-pay litigation was necessary to stop insurer underpayments and provide our customers with the factory certified repairs their policy affords them."Bradshaw credited assistance and advice from Erica Eversman, Ray Gunder, Barrett Smith and many other industry experts as well as his legal team of Jason A. Orndoff and William E. Morgan for his legal victory.
"I hope our actions and results encourage other quality-minded repairers to seek similar actions against the less than ethical insurers. We learned a great deal in this initial case and I have had to embark on two more cases against Nationwide for short-pays in the amounts of $5,663.24 and $10,135.52. I'm confident we will prevail as I know we are in the right. I know such actions are necessary to stop such behavior and to best serve our community members, our employees and our company," Bradshaw said.  "We'll continue to share our efforts with others so they may know that they no longer have to accept insurer dictation of repairs, rates, materials and charges."








SCRS' RDE Session Presents International Perspective on
Insurance Parts Procurement Programs at SEMA Show

Ted Smith with Flordia Automotive Dealer Assocation and Dave McBroom discuss this program that will effect both dealers who own a collision body shop or those that sell OEM parts to one. - VIDEO

Collision-Repair Labor Rate Survey Reveals Gaps
Insurance Company Labor Rates Lagging Behind Collision Center Costs

Nebraska Collision Repair Survey
Yields Surprising Results

One-of-a-Kind 850-Horsepower 2013 Ford Shelby GT500 Cobra Created
as a Tribute to Carroll Shelby

Squeeze-Type Resistance Spot Welding How and Why - ViDEO

AASP/NJ E.D. to State Farm:"Don't Insult Our Intelligence"

Parts Bidding, Steering, and Insurer Reimbursements
Ranked As Top Concerns by Nebraska Collision Repairers

Alldata Plans To Assist 200 Collision School Programs With Subscription Product Donation Through Collision Repair Education

Parts Bidding, Steering, and Insurer Reimbursements

Parts Bidding Statement from ASA Arizona

GCIA Legal Seminar Addresses Steering and Short Pays

2014 Impala Focuses on Crash Avoidance From All Angles

Collision Forum Discusses Parts Bidding Program

PartsTrader, State Farms Testing New Pricing Model for Parts Procurement






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