AutoMuse® auto legal & consumer issues

Like the phoenix rising from its ashes, the Avery v. State Farm billion dollar aftermarket parts case is back — and with a vengence.

Attorneys for the plaintiffs, with the support of former U.S. Senator and presidential hopeful Fred Thompson, have filed a Petition to Recall Mandate and Vacate Judgment asking the Illinois Supreme Court to vacate its 2005 decision overturning the jury’s verdict in favor of plaintiffs and the trial court’s award of damages in excess of $1 Billion against State Farm.  Why, you may ask?  On the basis that an investigation by a retired FBI agent established that State Farm 1) deliberately solicited Karmeier to run for the open seat on the Illinois Supreme Court; 2) ran his campaign; 3) funnelled at least $2.5 Million — and perhaps as much as $4 Million to Karmeier’s campaign; and 4) lied about its support of Karmeier to the Illinois Supreme Court in its court papers.

All of this in the land of Honest Abe?  It hardly bears thinking about.

After the August 2005 decision, AutoMuse wrote excessively (see end for related posts) about the impropriety of Justice Lloyd Karmeier participating in the decision — even when State Farm’s support of him was only admitted to be $350,000.  And that was just financial support.  Little did any of us know that State Farm employee, lawyer and lobbyist Bill Shepherd actually recruited Karmeier to run for the open seat, vetted him, and apparently declared that he had “passed all the tryouts we need.” Next, it appears that a State Farm controlled individual ran Karmeier’s campaign, directed fund raising, media relations, and speeches. Finally, we get back to money — and it’s not the “modest sum” State Farm said was contributed. 

Through its own direct contributions to Karmeier, its alleged control of the Illinois Civil Justice League which contributed almost $1.2 Million to Karmeier, and its $1 Million contribution to the U.S. Chamber of Commerce (which apparently saw fit to send that money and an additional $1 Million to the Illinois Republican party — which then used almost all of that money, $1.9+ Million, for Karmeier’s campaign) State Farm contributed excessively to Karmeier’s campaign.  Petitioners also claim that an additional $700,00+ was provided to Karmeier as “in-kind” contributions that Karmeier neglected to report on his financial disclosure statement.

Ouch.  Talk about a fraud on the court.

If anyone else feels sickened by all of this apparent display of corporate greed, dishonesty, manipulation, hypocrisy and judicial impropriety, feel free to let me know.

Illinois Supreme Court Overhauls Avery v. State Farm

More Thoughts on Avery

Infamous Avery is Back

Justice for Sale?

DeLay Gets a New Judge but State Farm Keeps Karmeier?

Avery Plaintiffs Ask High Court to Give Some Justice

Avery’s Petition for Certiorari Shanks Due Process

Avery Boomerangs to Bite Karmeier

Avery Tanked:  So Much for Ethics

AutoMuse Cited to the U.S. Supreme Court

1) Progressive’s electronic claim file for the property loss claim at issue (”PACMAN”). To preserve confidential attorney-client communications, Progressive blacked-out sections toward the end of the claim file. This is how the exhibit appeared when introduced at trial in 2008. Progressive utilized this same exhibit 11 at the second trial in 2010.

PACMAN Bilik Claim

2) Michael West trial testimony 2008

West 2008 Testimony

Technorati Tags: insurance, consumer, consumer protection, insurance, auto repair, lawsuit

Fox News in Atlanta, GA continues its investigation into the efficacy of using aftermarket parts for our collision repairs.   Frighteningly, Jack Gillis of the Certified Aftermarket Parts Association (”CAPA) suggested the body shop owner was responsible for creating a false impression about the potential use of a specific part in the repair of a BMW.  Mr. Gillis neglected to point out that it was the insurance company adjuster who demanded the use of the wrong part  in the first place, which was encouraged by the improper information in the database used by both insurers and collision repairers, and by CAPA failing to take responsibility for the fact that the part continued to be identified as a CAPA certified part within that database for a year after being notified of its improper inclusion.
I-Team: Aftermarket Response

The bottom line, folks, is that insurers are still demanding the use of these parts that are not made of the same materials as the auto makers’ parts, not made with the same specifications and dies, and are not made with the same designs to help the vehicle retain its crashworthiness as are the original equipment parts.

Once again, the National Conference of Insurance Legislators (NCOIL) is trying to convince the U.S. that we should have a model “aftermarket” parts act to sanction the use of imitation parts, even if they really are junk. Which means those of us concerned about whether consumers are entitled to have their insurers pay for safe, decent repairs will be heading to Austin, Texas the weekend before Thanksgiving.

The silly thing is that most of the bill is about regulating collision repairers, not insurers. Which leads us all to ask, why is an organization of insurance legislators so focused on passing a model act that endorses the use of imitation parts and regulates how collision repairers will deal with the consumer and those parts? Why isn’t it focusing on making insurers crash test these parts and endorse their safety by accepting full and complete liability for their use in consumers’ vehicle repairs?

I could handle this in one easy sentence — let’s try this: “If an insurer pays for the cost of installing an imitation part in the repair of a collision-damaged vehicle, the insurer is solely responsible for all liability, malfunction, or negative consequences arising from the use of the part, and no action may be brought against a repairer for having installed such part.”

There. Was that really so hard? Now, can NCOIL get back to regulating insurers?

Click here for NCOIL’s proposed model act

After twenty years of wrangling and being told that imitation vehicle replacement parts are as good as original equipment parts (the parts the car maker uses and approves) and hearing epithets such as “like, kind, and quality”, some members of the collision industry and one of the auto makers has had enough. They’ve put together some tests to compare actual vehicle parts and their imitation counterparts, and what those tests show is downright scary.

ConsumerReports is also warning people about the potential danger of allowing insurance companies to talk them in to having their vehicles repaired with these imitation parts. ConsumerReports warns that using these parts in a vehicle’s repair can materially interfere with important safety measures like whether the airbag deploys at the correct time to save your life — or whether it will deploy a millisecond too early or late and crush your chest or head like pumpkin on Halloween night.

Ford Motor Company posted a video on YouTube comparing some imitation parts to their genuine Ford counterparts, pointing out the significant differences — oh, little things like Ford’s part is make of cast magnesium and the cheap imitation part is made of plastic, and don’t let me forget that you can saw through the aftermarket part like its a turkey cooked for Thanksgiving.

While many insurers have put a moratorium on demanding the use of these imitation parts in upcoming collision repairs, what about all the vehicles that currently are driving around with these unsafe parts already installed on them? Insurers typically say they guarantee these parts. Why aren’t insurers issuing recalls to make sure the parts they talked people in to having installed on their vehicles are replaced with ones that function as the car is designed to do? What good are those guarantees now?

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The National Association of Insurance Commissioners (NAIC) today released a press statement defending its members from insurer criticisms of slow administrative filing processes. Kansas Insurance Commissioner and President of NAIC, Sandy Praeger, refuted the criticism from “high-paid insurance lobbyists” and noted the irony of insurance representatives complaining of slow action on the part of the state insurance regulators.

“It is ironic that as they complain about process delays, consumers tell us that some insurance companies are slow to pay claims. In fact, 60 percent of consumer complaints reported to the NAIC by states are the result of claims handling problems caused by insurance companies. A large majority of them due to slow claims payment processes or outright denials.”

Commissioner Praeger had some other searing comments for the insurance industry, and noted that slow approval often lay with insurers’ failures to comply with state laws or to offer sound products.

“Insurance products are often complicated. They contain separate premium rates for every zip code, application forms with confusing questions, and an abundance of advertising materials promising everything from peace of mind to health and wealth,” said Praeger. “When insurers carefully review their requirements and submit good applications, the approval process is very fast. When companies fail to comply with state laws or offer questionable products, it takes time to review and correct their work to make sure that products deliver the benefits promised to consumers.”

“State regulators invest heavily in tools like SERFF to provide the industry the speed-to-market that companies need to compete,” said Praeger. “It is time for the industry to address speed-of-payment to consumers.”

Consumers will be cheering statements such as these, especially because some insurers take considerable time investigating claims or simply tell consumers, “We don’t pay for that.” Given the fact that state laws have rendered all drivers on the roads a captive market for insurers, consumers have every right to expect strict accountability of insurers by state insurance regulators. NAIC would serve consumers well if it started looking into actual grass-roots-level claims handling practices of insurers. I have little doubt regulators would be troubled by what they might find.

Technorati Tags: insurance, consumer, consumer protection, insurance commissioner, NAIC, lobbyist

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For those interested in the next meeting to discuss the Collision Repair Code of Ethics, make plans to attend the Northeast Regional Autobody/Automotive Trade Show in Suffern, NY.

Northeast Regional Autobody/Automotive Trade Show Rockland Expositions, Trade Show and Exposition Services and Rental Equipment

If you would like to see the changes that were made to the COE since October, 2007, click here for the CR Code of Ethics version 6 with tracked changes.

If you just want to see what it contains now, without the mark-ups, click here for CR Code of Ethics version 6.

Technorati Tags: collision repair, code of ethics, Northeast Trade Show, ACAR, professionalism, autobody, auto body, accident

How many unsafe vehicles have to come out of “Direct Repair Program” or “Concierge” shops before consumers, legislators, and governmental officials say “Enough is Enough!  We want cars traveling our roads to be safely repaired!”?  Yet another Progressive concierge-repaired vehicle was discovered recently to have been unsafely repaired.  In this instance, the driver was lucky that the second accident didn’t result in dire injury.

Officials: Car Repair ‘Steering’ Cuts Corners - I-Team News Story - WFSB Hartford

I know I have been trying to help the Attorneys General and Departments of Insurance across the country understand what an enormous problem insurer involvement in the repair process is because it leads to corner-cutting and other problems that have a tremendous negative impact on consumers  to enable insurers to save money.

States require us to buy auto insurance if want to be able to drive.  We are a captive market for them.  So, why aren’t our government officials looking at all of these problems and allegations of unsafe repairs in these insurer-repair shop networks?  Why are we having to twist their arms to get assistance?  Do we really have to wait until someone is killed or horribly injured before we make changes?  Let’s hope not.  Especially because that death might be your loved one.

Technorati Tags: insurer, auto insurance, collision repair, accident, body shop, direct repair program, concierge

California joining other locals to stop insurance company referrals to “preferred” body shops.

Steered wrong? | Santa Rosa Press Democrat // News for California’s North Bay and Redwood Empire

Technorati Tags: insurer, auto insurance, collision repair, auto body, accident, legislation

“Chicago — Choosing the best body shop to repair
your car is never an easy decision. Now, some customers complain that
some insurance companies are steering them to body shops that might not
be best for their cars. Larry Yellen has this investigation.”

MyFox Chicago | Are Insurance Companies Steering Car Owners to Bad Body Shops?

In many instances the answer to that question is, “Yes”.

Take a look at the story that aired on Chicago’s Fox News Station on February 26, 2008. The insurance industry spokesperson states that a consumer always has the right to choose the body shop and that the insurance companies have essentially “vetted” the body shops for the quality of their work. What she doesn’t say is the insurance company will hound you to death as a consumer to take your vehicle to a “preferred” shop for repair, and will try to achieve that by having the claim representative say things like, “we can’t guarantee the repairs”; “it will take two weeks for an adjuster to even look at your car”; or “that shop charges too much and you will have to pay out-of-pocket for repairs.” What the industry representative doesn’t tell us is that we have the right to choose any body shop we want, AND have the insurer pay for the repairs, AND not be pressured by the insurer about which shop we chose.

What she also doesn’t say is that insurers don’t actually go out and look at the repair work each shop performs, nor ensure they have the proper equipment, training, education, and materials to safely and properly fix each vehicle. Instead, insurers simply rely on the statements in the “direct repair program” document the insurer forces collision shops to sign that says the shops “warrant” to the insurer they have the necessary equipment, personnel, experience, etc. to properly repair vehicles. Many DRP shop owners with whom I’ve discussed the various insurer networks have frankly told me they never read the document before they signed it. They just knew if they didn’t sign the document and join the insurer’s network, they should close the doors to their businesses now. In other words, they don’t even know or care what they agreed to — as long as they have work and can keep their businesses open. As a result, many of these shops owners would have agreed to have Big Foot or pink elephants doing the repairs if that’s what they had to say to get on the insurer’s program.

Technorati Tags: collision repair, car accident, insurance, repair network, consumers

eAutoclaims has created “Collision Repair Centers” of America to try to get a piece of the direct repair program action. But when you dig deep enough, the consumer-friendly-looking site turns out to be just another face of the insurance business.

crcofamerica.com - Would you trust your family’s safety with anything less than a CRC Auto Repair?

Apparently faking consumers into thinking they are joining a “consumer organization”, eAutoclaims has created its own “direct repair program” for consumers to join that tries to cover up the fact that this is a network of repairers put together by an insurance claim processing entity. But if you scratch the surface, you’ll find eAutoclaims lurking behind this face.

Take a look at the “terms and conditions” page which spells out that any agreement is between the user (this is under the “Consumer Agreement”) and eAutoclaims.

Worse still are the terms eAutoclaims makes the repair shops sign to get into the program. It repeatedly states that only eAutoclaims can “authorize” the repair to the consumer’s car — which is a direct violation of some states’ laws.
Consumers need to be aware that there are websites and companies all over the internet and country posing as consumer organizations that are actually business-oriented entities that seem to be designed to pull the wool over unsuspecting eyes.

Don’t be like Little Red Riding Hood and ask Grandma what big teeth she has. If you see anything that looks like big teeth, RUN. After all, if it’s just Granny, you can figure that out while running away, but if it’s the wolf, you’ve already been eaten.

Toothpick, anyone?

Technorati Tags: insurance, AutoMuse, cars, trucks, vehicles, collision repair, auto repair

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Yesterday, the U.S. Supreme Court denied Allstate Insurance Company’s last chance to override a Texas law that prohibits insurance companies from owning collision repair shops.  Docket for 07-775

Allstate, and its wholly-owned subsidiary Sterling Collision Centers, Inc. (OK, I’m being lazy — Sterling is actually a wholly-owned subsidiary of Allstate Non-Insurance Holdings, Inc. — which is an indirect affiliate of Allstate) have been fighting with Texas since 2003 over the enactment of Tex. Occ. Code § 2307.002 that states “an insurer may not own or acquire an interest in a repair facility.”  The Texas Legislature enacted the statute because of grave concerns involved with the inherent conflict of interest present when an insurer collects premiums and provides the collision service to the policyholders as well.

Allstate and Sterling have been fighting tooth and nail to have the Texas statute declared unconstitutional — without riveting success — and despite having pulled out Allstate’s moldy wallet to spring for the likes of Kirkland & Ellis (the Washington, D.C. office, no less) and Mr. Pricey himself, Ken Starr.  Yes, Ken Starr of Monica Lew… well, probably the less said, the better.

The district court decision found that Allstate actively referred unsuspecting claimants to its Sterling shops — even when those shops were providing poor service and some were given failing marks by Allstate’s own surveys.   Yet, Allstate had a financial interest in making Sterling profitable, so claims representatives continued to shove insureds and third parties to the Sterling shops, many of whom naively patronized the collision repair facilities on Allstate’s recommendation.  As a result, the court had no trouble appreciating the Texas Legislature’s concerns and desire to protect consumers.

Allstate claimed that the statute violated the Dormant Commerce Clause of The U.S. Constitution.  I know, I know, lawyers everywhere are now dusting off their Con. Law textbooks — except for the 11 of you legal geeks who actually dwell on the DCC and use it daily (I’ll bet you have pocket protectors).  Allstate/Sterling’s argument was that the Texas statute had a negative impact on interstate commerce because it discriminated against large insurers and chains of collision repair facilities in favor of local ones, and was passed to accomplish that discriminatory goal. 

Needless to say, there are many sexier issues being presented to the Justices than the DCC, so it was always likely that our highest court would pass on this one.  But, you just never know with the Big Black Robes.  The bottom line, however, is that the U.S. Supreme Court “just said, NO” to Allstate and Sterling.  Now Texas can go back to doing what it does best:  producing oil so, hopefully, our gas prices will go down.

The Automotive Service Association (ASA) deserves a big round of applause for all of its efforts in supporting the Texas Attorney General and by its action intervening in the case on his side from the beginning.  Most people probably don’t know that the Texas A.G.’s office didn’t even file a Brief in response opposing the the Petition for Certiorari.  (I don’t mean that critically, just stating facts.)  Fortunately, ASA did — and the organization deserves considerable credit for its efforts and all the money spent to help support a law keeping insurers out of the repair business and keeping collision repair businesses focused on serving the interests of its true customer, the consumer.

Technorati Tags: insurance, collision repair, Allstate, Texas, law, Supreme Court

Well, it’s about time someone senior at Progressive got told the company’s claims adjuster mantra, “We don’t pay for that.” Buh-by, Brian J. Passell. Guess we’ll keep you’re salary and kickers to help pay for our tanking stock prices. Progressive Announces Management Change - Forbes.com

Passell is the guy who brought us the “Concierge Program” — fanfared with a company press release so full of fiduciary language statements that I could hear the lawyers salivating from one end of the country to another. Here’s the April 8, 2003 press release title:

Progressive To Customers: We’ll Take Care Of Everything
Company is First Auto Insurer To Handle Entire Claims/Repair Process From
Soup to Nuts, Provide One-Stop Convenience and Peace of Mind

‘We have knowledge and access to resources that many of our customers don’t have.
Our intent is to use that experience to provide a superior level of service everywhere
we do business,’ said Passell.

Do you think these guys ever run anything by legal before they blurt out something that just sounds good to their own ears? Didn’t think so.

Progressive reported a 27% drop in third quarter profits in 2007, and in January 2008 reported another 41% decrease. Progressive chalks up the decline to lower prices for auto coverage that reduces premium revenue. Hm. Couldn’t have anything to do with the fact that Progressive is getting sued all over the country for the way it treats customers, handles claims, and treats collision repair shops? Or maybe the fact that the Connecticut Attorney General, Richard Blumenthal, has held press conferences in the last month decrying the unsafe and dangerous repairs Progressive is passing out of its Concierge Program shops? Nah. It must be that pesky competitive auto insurance market.

Technorati Tags: collision repair, insurance, auto, claims handling, motor vehicles, Progressive,

Again this year, Connecticut Attorney General, Richard Blumenthal, is trying to ensure that repaired vehicles returned to his State’s and the nation’s highways are safe.

At yesterday’s press conference Connecticut’s Attorney General demanded that consumers be permitted to exercise their free choice in selecting the shop to repair their vehicles. Standing next to college student, Lyn Moreau, who’s vehicle had been unsafely repaired at a Progressive “concierge” facility, Mr. Blumenthal stressed that legislation is necessary to stop insurers from directing consumers to use “preferred body shops”.

Consumers deserve to choose where a car is repaired. No insurer should straightjacket or corral consumers, forcing them to use a so-called preferred shop. This legislation, which I have advocated for years, would preserve consumer choice and industry competition - deterring anticompetitive relationships between certain insurers and auto repairers.

AG Blumenthal was joined in his call for legislative reform by Republican State Senator Leonard Fasano, demonstrating that this problem is a concern for both political parties. Senator Fasano said,

It is clear we can no longer rely on existing laws to protect consumers following an auto accident. Consumer protection is a bipartisan issue. It’s time to make our laws stronger so people like Lyn Moreau will no longer be at the mercy of the insurance giants.

And that’s just where Lyn Moreau found herself in her dealings with her insurer, at its mercy. Unfortunately, she didn’t get any. After initially recommending she use its “concierge” facility, Progressive allowed the vehicle to be handed back to Ms. Moreau in an unsafe condition. She discovered the safety problems when she took her vehicle to a different body shop, and that shop told her the bad news. When Moreau addressed the issue with Progressive, her insurer told her to take her vehicle back to the “recommended” repair shop that butchered it originally. So much for that “Lifetime Repair Guarantee” Progressive claims it gives you if you patronize one of its direct repair shops.

Most interesting is that under Progressive’s “direct repair program agreement” with repair shops, Progressive retains exclusive authority to write all of the repair estimates and supplements, thereby dictating the manner in which a vehicle is to be repaired. It would certainly be interesting to see if Progressive was responsible for “writing” the unsafe repairs, or whether the shop simply cut corners.

Nonetheless, Progressive woos consumers to use the concierge service and maintains that it inspects the vehicle after it is returned from the repair shop to ensure the quality of repair. Lyn Moreau’s vehicle repair is evidence that the Progressive concierge quality inspectors can’t tell safe repairs from dangerous ones — which should scare all of us.

More on this story at the Hartford Courant.

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In yet another shocking display of hubris, Allstate Insurance Co. — you know, “the good hands people” — defied the Florida Insurance Commissioner’s subpoena to produce documents pertaining to the insurer’s relationships with insurance trade associations, risk modeling companies, and others. Mind you, the Florida insurance agency asked to see these documents as part of its determination as to whether Allstate should be permitted to raise its rates. That’s right. Allstate started this by asking for higher premiums, but it wants those higher premiums without anyone looking into its relationships with others. One could say that Allstate just wants the State of Florida to “take its word” for the fact that it really needs more money.

When Allstate failed to comply with the State’s subpoena, the Insurance Commissioner pulled Allstate’s license to write new policies in Florida. Whack! This penalty adds to the list of defiant acts taken recently by the insurer. In the State of Missouri, a court fined Allstate $25,000 a day for refusing to produce a copy of the McKenzie & Company report that is the subject of the book, “From Good Hands to Boxing Gloves”. Allstate was ordered by a Missouri court to produce the report in a pending case. Allstate flatly refused. The court held Allstate in contempt and ordered the $25,000 per day fine until the insurer produces the report. So far, the fine continues to accrue.

It should be plain to everyone that an insurer as arrogant as Allstate, one that has no qualms about defying legitimate orders from government entities and courts, will have no difficulty treating its insureds with contempt as well. If you think you are likely to receive a fair claim settlement from this insurer, think again. We, as consumers, are fleas to such an insurer, incapable of inflicting any real pain to it. If $25,000 per day fines or the inability to write new policies don’t affect the company’s behavior, consumers have no chance at all.

This is just another good example of why this country needs meaningful insurance reform and a repeal of the McCarran-Ferguson Act exempting insurers from the application of the federal antitrust and other laws.

CollisionWeek News - Florida Pulls Allstate’s License to Write New Auto Policies

Progressive announced last Saturday that it will pay 57.6 million over the next 16 years for the right to rename the Cleveland Indians home, currently called Jacobs Field, to Progressive Field. Progressive Field, New Home of the Cleveland Indians

Perhaps this explains the vicious job cuts at Progressive the Thursday before Thanksgiving. The P had to find that $3.6 million a year to get the company’s name up on a sports field, and the money just had to come from somewhere. Who needed those employees anyway? They just suck up the profits, and, besides, cutting them loose right before Thanksgiving and all the other holidays keeps the money in the company coffers so it can be spent on important things; instead of bonuses and tiresome, non-productive things like, hmmm… how about insurance? Now, paying to have your company name on a sports field — that really means something, and we can corporate-speak it as “value added”.

And I was so hoping Progressive would earmark some of that money to train and educate their employees about the true legal requirements insurers owe consumers in their respective states — rather than just letting them make up denials of claims based on misstatements of a state’s law. Let’s hope the company at least springs for some training for Heather Hinkley so this “claims specialist” and Progressive won’t look quite so idiotic by misstating a state’s insurance law.

Despite the name, the Tata Nano is a car. Yes, a motor vehicle — at a cost of $2,500. Of course, that reminds us all of the Yugo days (OK those of us who are actually old enough to remember the Yugo). India’s auto maker recently unveiled the world’s most inexpensive car. According to Body Shop Business, a leading collision repair industry magazine, the average vehicle repair cost is around $2,500, thus, virtually guaranteeing that a wreck in a Tata Nano is a total loss. Now, if only it ran on an available fuel source other than a petroleum product. That would be really great.
HT: Ed of Blawg Review and Infamy or Praise: It’s getting better all the time.

Although losing twice before in a Texas district court and before a 5th Circuit appellate court, Allstate Insurance and Ken Starr are hoping to convince the U.S. Supreme Court to take review of the Constitutionality of the Texas statute prohibiting insurance companies from owning collision repair shops.

Although Federal District Judge Ed Kinkeade wrote a compelling and well-reasoned decision identifying the inherent conflict of interest involved with insurers owning body shops, which was affirmed by the 5th Circuit, Allstate didn’t like the answer.  Making some of those moth-eaten arguments most of us haven’t seen since law school, Allstate will once again argue that the Texas law violates the Dormant Commerce Clause of The Constitution.

 Well, maybe Mr. Starr will fair better back in Washington, D.C. where his “starr” quality may have more appeal.

Allstate v. Abbott, U.S. Suprme Court Docket

Senate OKs CAFE hike - Automotive News

With the current legislative session running out of time, the Senate finally approved the increased CAFE standards that the House has already voted on and passed. All we need now for the new CAFE increases — moving vehicle fuel efficiency up to 35 miles per hour by 2020 — to go into effect, is for the President to sign the bill. Some of Senators supporting passage of the higher CAFE standards declared this to be a victory for the U.S. Perhaps I am just being cynical, but it’s a victory that came 20 years too late.

When I drove the Hummer H2, as much as I liked the vehicle, I cringed because of the wasteful consumption in which I wallowed. I want Hummers to be the most fuel efficient vehicles on the market, because they are comfortable, stable, and so much fun to drive. But I want to feel good about myself driving one, too. So, my challenge to you, AM General, is to make any future Hummer the most fuel efficient vehicle available in its class, and let my dream come true.

I-CAR - Current Events/News: e-newsletters: Advantage Online: December 3, 2007

I-CAR recently published its Advantage Online Newsletter for December questioning whether general sectioning methods were appropriate for today’s modern vehicles. I-CAR’s conclusion? General sectioning methods are no longer recommended.

If you visit the newsletter edition link above, you can access a video demonstrating the reduced strength and earlier failure point of high-strength boron alloy steel when exposed to even small amounts of heat typically used in the repair process. The video presents a useful, visual demonstration that is easy to understand and can assist people without engineering or collision repair backgrounds to understand just why it is a bad idea to ignore manufacturer repair recommendations or fail to investigate just how your vehicle is to be repaired.

I’ve received a number of comments from people about the Collision Repair Code of Ethics and have asked permission to share those comments here so that others can consider them. Don’t forget, you can comment directly here at AutoMuse® — after signing in. Comments don’t appear immediately, unfortunately, because of spammers. Real comments get posted — even when they disagree or are controversial — so don’t hesitate to post because you have a different opinion.

A quick scan of your code of ethics brought to my attention the part that speaks to damage analysis. I believe that your expectation on that matter and the 10% deviation is unrealistic. I notice also the absence of any discussion of a professional being compensated for this damage analysis. I believe that need be part of any document such as this that outlines the professional conduct of the trade. I will review more and forward comments unless you are not interested. Thank you for letting me be part of this process…

Mark Cobb
Cobb’s Inc D/B/A Cobb’s Collision Center
Accident Inspection Services
7 Heathwood Drive
Windham, ME 04062

While attending some outstanding presentations on the first day of the Coalition for Collision Repair Excellence (CCRE) fall seminar in October of 2006, I realized that one of the significant impediments the collision repair industry faced in business was that it had no uniform principles governing ethical conduct. I was extremely troubled by that fact given that we all put our lives in the hands of collision repairers on a consistent basis. Even if the vehicle you are driving has never been involved in an accident, what do you know about the condition or safety of the vehicle on the road in front of you, in the opposite lane, or carpooling your kids to soccer practice? As I have often said, if attorneys or accountants act unethically, the typical result is that someone loses money. But if doctors or collision repairers act unethically, people can die.

With that thought in mind, I set about creating the first-ever Collision Repair Code of Ethics. It is designed as a framework for collision repairers nationwide to adopt governing principles for ethical behaviors of those involved in the industry and to establish a mechanism of self-governance to ensure those ethical mandates are met. I offer it as a set of principles that can be molded and adapted to meet the requirements of each state’s laws, and to assist industry members to address conflicts and pressures they experience from outside interests.

I have little doubt that the Collision Repair Code of Ethics will spark significant discussion within the collision repair industry. To assist in that discussion, there is a conference organized by ACAR scheduled October 19^th, 2007 at the National Press Club in Washington, D.C. Information about how to participate at this historic meeting is available here. ACAR Conference Information

Thank you to all of the people who provided information for the development and refining of the Collision Repair Code of Ethics – particularly Wade Ebert of American Autobody in Springfield, Illinois, whose insight is always meaningful.

If you are or have been a party claiming diminished value against a Progressive insured in Connecticut, you might have been put off by a misleading statement by a Progressive claims representative. One such claimant’s attorney was told blatantly that the Connecticut Insurance Department refuses to allow insurers to offer diminished value coverage, and, therefore, no diminished value claims can be paid. CT Diminished Value Correspondence

Say, what?

Here is “Claims Specialist” Heather Hinckley’s July 9, 2007 response to a third party claimant’s demand for the inherent diminished value suffered as a result of a Progressive insured’s negligence:

At this time, the State of Connecticut, Department of Insurance does not allow Progressive Insurance or any other company to sell Diminished Value coverage for a vehicle. As the State doesn’t allow sales of the Diminished Value coverage, we are not able to afford Diminished value coverage. For these reasons, but not limited thereto, Progressive Insurance must respectfully deny your claim for damages. I am sorry that I could not advise you more favorably regarding this matter, but trust that you will understand our position.

Counsel for the claimant took the issue up with the Connecticut Insurance Department, which responded on September 26, 2007 stating that:

Heather Hinckley of Progressive Insurance has responded that the Connecticut Insurance Department does not allow diminished value coverage to be sold and therefore claims for diminished value cannot be made in Connecticut. In response to Ms. Hinckley’s assertion this is not correct. The Connecticut Insurance Department does not prevent claims made for diminished value and an insurer can request to include provisions of diminished value in their policy.

The CID also included a letter from a Progressive Claims Manager responding to the complaint that said:

I am writing in reply to your inquiry dated Aug. 21, 2007. I reviewed the complaint as well as the claim file and am able to provide you with the following information.

The letter sent by Heather Hinckley dated July 9, 2007, is incorrect.

Well that’s nice. Glad we got that all cleared up.

Of course, several questions remain. Has the Connecticut Insurance Department taken any action to ensure this misstatement of Connecticut law/regulation does not occur again? Has Progressive taken any action to make certain that its employees do not make this misstatement of Connecticut law/regulation again? But the one that has me really wondering is whether Heather Hinckley is still a “claims specialist” or whether she’s been knocked down to “claims representative”, “file clerk”, or “doughnut person”? After all, inquiring minds want to know.

It also bothers me that someone labeled a “claims specialist” by an insurance company can’t tell the difference between what is owed to an insured (first party) and what is owed to someone making a claim against an insured (third party). Ms. Hinckley’s comment about Progressive not offering “diminished value coverage” has nothing to do with a third party claim. The only portion of the policy any third party cares about is the section that tells the insured, “We’ll pay for anything for which you become liable up to the policy limits” (excepting, of course, intentional torts). How much of a specialist is a claims specialist who can’t tell the difference between a first party and third party claim? That’s covered in Insurance 101.

Probably, the most pertinent question is how many other people accepted the Hinckley line about diminished value not being permitted to be paid and simply went away? Well, Connecticut, your Insurance Department has spoken. Demand your diminished value. It’s really not illegal after all.

Lucky for this customer that she went to an independent collision repair facility rather than one willing to simply follow the dictates of an insurance company bent on saving money.

Williamsburg, Ohio shop owner Jim Krotchen, of All Makes Collision Repair Service, determined that his customer’s 2002 Honda CRV needed to be repaired using a new suspension, rather than one coming from a total loss vehicle from the salvage yard.  In Krotchen’s opinion as a collision repair expert — who is liable if there is a problem with the repair — installing a used suspension on this vehicle was an issue of safety.  There simply was no way of ensuring that the salvaged suspension had not been structurally fatigued.  As a result, Krotchen installed a new Honda suspension on this consumer’s vehicle.

The insurer, whose adjusters often receive no more than two weeks of “training” before being cleared to write estimates for repairing other people’s vehicles, decided that a used suspension would have been just fine for this repair and refused to pay for the new suspension.  As a result, All Makes Collision Repair Service is being forced to sue for the remainder of the repair bill.

It never ceases to astonish me that insurers feel justified in putting people’s safety at risk simply to save money.  This isn’t an issue of waste or extravagance.  This is about ensuring that this consumer’s vehicle is safe to drive and, thereby, protecting her, her passengers, and every other traveller on the road.

PRESS RELEASE: Cerberus Takes Over Majority Interest In Chrysler Group and Related Financial Services Business for $7.4 Billion From DaimlerChrysler - Automotive News($)

So, Cerberus Capital Management has agreed to buy a controlling interest in Chrysler and Chrysler Financial Services. Let’s recap, shall we?

In 1998, Daimler-Benz paid $36 Billion for Chrysler under the leadership of JÜrgen Schremp. That transaction occurred when the dollar was strong, so $36 Billion really meant something.

Rather than miraculously having the Mercedes brand heal the traditional ills of Chrysler group products — pounding brakes, unreliable transmissions, electronic failures — Chrysler seemed to have infected Mercedes. For the first time, we began seeing significant product liability lawsuits against Mercedes. And they were entirely justified.

Not quite a decade later, the big “D” is bailing out, it’s leading products badly damaged in reputation and performance, without much to show for its good time. Cerberus is paying $7.4 Billion for slighly over an 80% share of Chrysler and CFS. That’s $28.6 Billion less than the big D paid with dollars of a higher value. The 2007 dollar is performing woefully against the Euro, so Cerberus’ 7.4B in today’s dollars is truly a tiny fraction of what the big D paid in 1998 for the privilege of owning Chrysler. Ouch.

By the way, isn’t Cerberus the three-headed dog who guards the entrance to the underworld to make certain none of the dead escape. Yeah, I thought so.

The third circuit ruled that allowing a policyholder to pursue a claim against his disability insurer brought under the federal Racketeer Influenced and Corrupt Organization Act does not run afoul of the McCarran-Ferguson Act.  Weiss v. First Unum Life Insurance Co. No. 05-5428 (3rd Cir. 2007)

Apparently, NJ state insurance laws do not provide, nor do they prohibit, a private right of action for a policyholder to bring a claim against the insurer.  As a result, the Third Circuit interpreted the federal RICO act as complementary of the state’s laws.  Here is the panel’s closing thoughts on the issue. 

	04-05-07 | New York collision repair shops and consumers are tired of insurers trying to push them to give business to the insurers’ “preferred” shops. Shops allege insurers use any tactic to coerce consumers to patronize their contract shops. After being accused of committing fraud, one shop owner threw down the gauntlet and filed suit against Progressive for $40 Million.
http://www.fox23news.com/mediacenter/local.aspx?videoId=57363

NY appears to be following closely behind CT on its interest in protecting consumers and halting the coercive practices of insurers.  “Steering” is the term used to describe an insurer’s attempt to direct claimants to shops with which they have an agreement.  That agreement doesn’t necessarily contain terms that are good for consumers.  But they are always full of terms that are great for insurers, like ensuring that shops agree to repair vehicles per insurance company dictates and to completely indemnify the insurer from any fall-out related to the claim.

Just about a year ago, I had a high-powered investment banker/venture capitalist say to me that if a big company hadn’t pounced on a particular idea for a new product or service, it must have already looked at and rejected the idea as unprofitable because big companies are run by smart people who know what they are doing, and they have the ability to hire outside experts to look at the question if they don’t have the in-house expertise.  I really had to bite my tongue and be politic, because what had been said to me was idiotic drivel, and I was surprised he didn’t know that.

Take a look at the automotive industry as a prime example.  The Detroit 3 are so far out to sea on how to profitably manage a large company and have been for so long that it’s actually astonishing they still exist.  And, in the dire straits they currently find themselves in, they go right on making irrational decisions that undermine the very companies they are supposed to be saving.

Take General Motors’ recent SEC filing on the bonuses and stock options the company granted to its top executives.  GM has announced that it is giving millions of dollars in stock, and stock options (and there is a plan afoot to allow GM executives to convert their options to cash from the company) to its top 18 executives.  Yet, GM posted a $2 billion loss last year, and a $10 billion loss the year before.  Call me idealistic, but it seems to me that a company that has not earned a profit has absolutely no business paying people in control of the company any bonuses.  After all, where does the money for bonuses come from when you are consistently reporting losses?  Worse yet, how do you pay bonuses to the people responsible for the health and well-being of the company when they are driving it into the ground?

GM’s timing could not possibly have been worse.  It is about to negotiate a new contract with the UAW, and everyone expects GM’s management will ask workers for concessions on labor costs, health care, and pension benefits.  How do you ask people who earn a fraction of what the top executives make to give up current and future benefits, when you are paying the company’s wealthiest workers far more than their salaries as a reward for their decisions that have been bad for the company overall?

  (more…)

Welcome to AutoRepairLegal.com

Collision Repairers and Consumers should all know about the launching of AutoRepairLegal.com, a website enabling people to peruse the laws and regulations of a particular state, and to submit information for upload.

I almost always refrain from writing off-topic, but something just made me want to tell the world that we are now allowed to sell “defense articles” and provide “defense services” to the Republics of Montenegro and Serbia, per recent presidential order. 

The only thing I know about Montenegro is what I learned from Rex Stout’s Nero Wolfe, the fat, orchid-loving, food-obsessed, misogynistic detective. 

The Republic of Serbia, on the other hand.  Wasn’t that one of the countries that recently engaged in ethnic cleansing and a bloody war with Croatia?  I guess if you label them as ”defensive” articles, that means those articles can’t be used offensively.  Does the God of War get to play referee and send someone who breaks the rule to the penalty box for a well-deserved time out?  As Asimov wrote in Foundation, “It’s a poor atom blaster that doesn’t point both ways.”

Oh, and when I looked up the female-hating word to make sure I spelled it correctly, I got stopped by “scrofulous” which – besides being of, like, or having scrofula — means “morally corrupt”.  I like that one.

Auto Body Association Protest
	03-28-07 | Members of the Auto Body Association of Connecticut protested at the State Capitol in Hartford in support of legislation to tighten the law against auto insurers steering drivers to specific repair shops. Videographer Alan Chaniewski          Video, as requested.  This video only plays with Windows Media Player.  Click below to download.
You’ll need a version of Windows Media Player 7 or higher to view the video. If you need to download it, go to http://www.microsoft.com/windows/mediaplayer/en/default.asptarget=_blank The video player is supported by Microsoft IE 5.0 and above.

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 Don’t look now, but there is a convoy of tow trucks in Connecticut’s capitol.

Frustrated with the fact that they have to pay annual licensing fees, comply with regulations of the Department of Motor Vehicles, maintain expensive insurance policies, and pay high rates of workers’ compensation to operate their businesses, while employees of Progressive’s Concierge facility in the Hartford area admittedly disassemble customers’ vehicles without a repair license, members of Connecticut’s repair and towing industries are taking their fight to Progressive’s doorstep.

And their message is clear.  Stop letting Progressive compete without making it comply with the repair licensing laws. 

Attorney General, Richard Blumenthal, is on board with the repairers and tow companies.  Literally.  Blumenthal is scheduled to give a press conference from one of the tow trucks.  After the press conference, the convoy is headed to Progressive’s Concierge facility in Newington, Connecticut — which Progressive’s website identifies as its Hartford Concierge facility. 

Unable to face the rumble, Progressive is reportedly shutting down that facility for the day.